I, Spy

I saw this recent CEI production of Leonard Read’s “I,Pencil” posted at Coordination Problem. CEI dubbed this production a modern makeover of the famous essay, but I just sort of shrugged it off with a feeling of “how quaint.” Frankly, I don’t think I’ve used a pencil in 15 years(and it’s only on relatively rare occasions that I use a pen–for financial transactions). A more modern analog would substitute the smart phone for the pencil. And the essay itself would be a bit different in composition from the original, evidenced by a new apropos entitlement: “I, Spy.” I, Spy wouldn’t just document the spontaneous order of the production of our piece of electronics, the smart phone, it would also document the planned order of the massive intelligence complex that uses your phone–after you have purchased it for your ends– for its own ends.1

It occurred to me that “I,Spy” could perhaps shed some light on this current “Capitalism vs Free Market” debate that is taking place in the libertarian blogosphere. Unfortunately, the “laissez-faire” position isn’t quite getting through to many of our esteemed libertarian scholars. I keep reading that the “left-libertarian” position is guilty of methodological and rhetorical errors regarding state and market. Unfortunately, many, but not all, left-libertarians are undercutting the argument by trying to rationalize a moral preference, which is something you really can’t do in a social theory. The argument then becomes misplaced, shifting to a debate about what degree of hierarchy is “rational.” But the rationality of hierarchy is a function of the rent-seeking social context. And this is where the “dialectics” should kick in, understanding that what is rational in one context is not necessarily rational in another. But I think this type of debate is a distraction to the actual topic at hand.

The laissez faire position should be more or less silent on hierarchy. By this, I mean it is not a method primarily geared toward deconstructing market hierarchy vs statist hierarchy. More generally, it is not a method to validate a specific moral preference. Instead, it starts with human agency. Today, that means 3 billion plus agents and 3 billion plus moral preferences. Unlike religious and philosophical eschatology that views history as progressing toward some goal–and hence, human agency as merely an end product of something that humans actually do not control–the laissez-faire position holds to no such singular goal. Its social theory of advancing civilization is merely one of 3 billion plus moral ends coordinating to expand (and satisfy) human wants and desires.

A common critique of libertarianism is that it reduces life to the market. But I think how strange: a critique of reducing human life to human agency. That’s typically the critique of the cleric. And I would answer: by all means, let us reduce human life to the moral preference of those who deem themselves fit to define proper human agency for all us–and in some, cases, to those who simply deny it altogether. I think not. But my response carries an explicit premise that “the market” is indeed an expression of human agency. That is, the ends of market exchange serve the ends of those who make the exchange. There is no exogenous agency whose ends are furthered other than the exchanging agents. If there is such an agency that you can use market agent’s means as means for its own ends(with the two ends more or less conflicting), then I have essentially have no argument against the cleric. None.

So let us return to “I,Spy,” the modern analog to “I,Pencil.” I, Spy gives us not only the “spontaneous market order of production” but also the planned order of surveillance. When you buy your smart phone, your phone is also being used by a massive intelligence complex for its own ends(for spying, tracking, recording, data analytics)—to be potentially used against you. This introduces a rather glaring incentive-incompatibility agency problem into market exchange. It’s a sufficient problem to destroy the entire social theory of market exchange agency. The classical libertarian method(i.e, “class theory,” which I would equate to the left-libertarian method) in addition will predict that this incentive-incompatibility agency problem will be subjected to relentless rent-seeking.

Now I already can anticipate the counter-objections. (1) interested parties can circumvent the spying by adopting evasive techniques such as encryption. And there are firms who will provide these services. True, but the problem is that encryption is not a sufficient condition for circumvention. Indeed, there will come a time, if not already, when the act of circumvention fires up the red flags for increased surveillance. The problem is that encryption as a means of circumvention can be circumvented itself by a broader scope of data-analytics.2 You can’t encrypt your entire life. And cracking your circumvention will be a prime area of relentless rent-seeking.

(2) things like advertising and data-analytics in a free market could potentially introduce the same type of incentive-incompatibility agency problems. No doubt. And I can’t prove that this same problem would be overcome or highly mitigated against/counter-acted. Of course, you can’t prove either that it wouldn’t be. But the State gives us the certainty of this problem.

“I, Spy” provides a pretty clear demonstration of the dichotomy between laissez-faire and capitalism. People like Steve Horwitz will look at the regulating agency regarding the spontaneous production side and say we only have a little bit of statism. The likes of David Gordon will look at the price setting agency and conclude– if it is not a monopoly–that we have an instance of capitalism. But what they fail to look at is the incentive-incompatibility agency problem of the planned order. This is what I deem their serious methodological and rhetorical errors regarding state and market. The root of this error is the perpetuation of viewing state actors through a microeconomic lens. The incentive-incompatibility agency problem of State Agency, however, resembles something more along the lines of a firm. In plain terms, this means you can model State agency as something that views human agency as a threat. Hence our distinction between laissez-faire and capitalism can be stated thusly: one is a means for advancing civilization while the other a means for social control. Two very different evolutionary endpoints.

Frankly, I don’t think it is even a matter of debate, any more than “sticking your hand in a fire will result in it being burned” should be a point of debate. If you want to test it, just simply challenge the planned order. In this sense, there is no need to ask Steven Horwitz or David Gordon whether or not there is a firm. Ask Julian Assange…

1 The smart phone is the real world analog of Orwell’s screens

2 Data analytics can be thought of as an applied exercise in graph theory, whereby the data analysis attempts to reveal patterns in the data in order to construct a graph object. A graph is simply a collection of vertices and connecting edges. If you can relate a sufficient number of unencrypted edges to an encrypted edge, you can likely determine the general subject matter of the encrypted edge without having to decipher it into a clear text communication. This for example, is why you can only think of something like Bitcoin as pseudo-anonymous and not truly anonymous.

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