Political Science V: Net Neutrality

“All traffic is equal but some is more equal than others”
The Pigs

Heuristically, there is no such thing as “net neutrality”…there hasn’t been since the 1988 Morris Worm. Without heuristic filtering by the tiered network providers, the public internet¹ would be practically unusable. It would certainly be unreliable.

The Administrative State implementation of “net neutrality” presages the end of civilian control of the internet, the fossilization of corporate monopoly over the “last mile” and the formalization of a surveillance regime against “unauthorized traffic” (read: IP). The Administrative State enforcement of a “public network” will invite the same censorship that the government imposes over that other decreed thing: “the public airwaves,” even though that thing doesn’t even really exist anymore.

On the one hand, the cognitive dissonance being displayed by so-called civil libertarians is stupendously mind boggling, after all this is the same Administrative State engaged in unnumbered secret activities to undermine an open, free and secure internet in the name of the geopolitical status quo(what it calls “terrorism”). If this was a FCC composed of three republicans instead of two, and they had voted to “save the internet” on a pretense of “we have to implement before you know what is in it,” then the chants would be “bloody murder” instead of self-congratulated “salvation.” Of course every school boy knows the difference between tyranny and liberty is “two republicans instead of three, three democrats instead of two.”

On the other hand, it is not only unsurprising, but predictable. This is the de Jasay method in full effect. States persist because everyone thinks they can use the State for their own ends, but the only result is the persistence of the thing itself, the only demonstration being how state and society interact to disappoint and render each other miserable.

vive le moment libertaire!

¹ The “public network,” that small network(small as in the number of hops between any two nodes) where the default condition is pass, is a emergent de facto phenomenon, not a de jure decreed thing.

Political Science IV: Hacked Knowledge Problem

If I was the NSA, I would target the same thing – all the crypto keys. I do the same on pentests, so why not? One target, huge ROI.

Kevin Mitnick

Again, as a reminder, The Hayek Knowledge Problem has been hacked. “The Use of Knowledge in Society” has different implications in 2015 compared to 1945. Economic science, like all sciences, is not written in the staid stone of theological scripture. But live on it will–in the classical liberal turf wars…

Political Science III

This cybersecurity bill effectively applies the drug war model to computer security.

Of course, as predicted.

In the 90s, I thought the internet presaged an era of unprecedented human liberty. Now I know better…

The Rule of Law

Of course, anyone with a modicum of computer science/IT skill knew the the FBI hacked the Silk Road Box at the application layer to obtain its IP layer address. And anyone with a modicum of political science knowledge would have easily been able to predict that these methods–which are in stark violation of the heuristic operability of the internet–would be gerrymandered into permissible legal status. The science of the rule of law is its rational pattern…

The Hayekian Knowledge Problem

FYI: It’s been hacked. Libertarian economic apologetics rooted in the 20th century socialist calculation debate…well, how quaint.

The State is its Own Agency

That the NSA has now commenced with overt pressure campaigns to countermand any legislative effort to curtail its vast surveillance enterprise cements an obvious liberal dilemma regarding the agency of the State. Make no mistake, totalitarian spying exemplifies an agency whose ends are in competition with the ends of its own citizens. This is a fatal violation of the liberal paradigm out in the open, staring you right in the face.

The germane question which moves to the fore of consideration hence pertains to the extent of government surveillance. Is it indeed totalitarian? If we were to constrain the scope of consideration strictly to the NSA itself, then the answer would probably be no. It’s modus operandi does not follow the traditional taxonomy of the textbook totalitarian spymaster. However, thanks to the documentation leaked by Edward Snowden, what we have now is confirmation of the cypherpunk dystopian model, which in a real sense, is much worse, for it portends a sustainable template of planetary social control. The NSA in and of itself is one thing. However, in the larger context of its coerced “strategic partnerships” with the top US internet & software companies–as means to facilitate/execute the data collection requirements–what we end up with is quite another: the equivalent of a libcap library on every one of your network devices persistently cataloging your “matrix” in the well-connected social graph, built and maintained under the “legal auspices” of a three-hop dragnet.

In light of the Snowden revelations, the NSA has embarked on the aforementioned pressure and information campaign to countermand the PR damage. Just yesterday, the NSA released two documents that purport to dispel the notion of it being an agency of totalitarian collection. Having just read them , I can say that the 1.6% statistic of “touched traffic” and 0.025% statistic of “reviewed traffic”, on a daily basis, are highly misleading. The first hoodwink is to point out that out of the exabyte daily traffic volume, roughly 60%-70% is ip video traffic¹, which shrinks our “basketball court” down to the size of a racquetball court. The second hoodwink is to infer the sampling follows a pattern of independent random trials–in the classic stats model, proving or disproving a hypothesis drawn from such a random sample–instead of what it actually is: the accumulation of a graph-based document store enabling a traversable, retrospective query system. The whole thing is just plain subterfuge.

By now, it should be apparent that I consider the cypherpunks to be the most relevant social scientists of our day. In no small part because they are at the forefront of the battle-lines of 21st century political economy. Assange, for one, has been singularly confirmed on a number of points. In particular, the US reaction of “Insider Threat” has to count as spectacular confirmation of his thesis of “conspiracy and networks.” The kernel of differentiated political and economic jurisdiction that always lurked beneath the rationale of wikileaks now seems obvious in light of what is required for secure and autonomous cloud computing platforms going forward². Assange’s contention that legal and regulatory entities were engaging in data-laundering–that is, ex post manufacturing legal reconstructions of “evidence” gathered from the NSA dragnet spying enterprise–has since been confirmed by Reuters with respect to two agencies: the DEA and the IRS.

In contrast, the “liberal” political and academic establishment are dinosaurs. No better example of this than this piece at “Bleeding Heart Libertarians,” The United States is not a Police State. The entire piece is a confirmation of my (quite prescient, as it turns out) old post, Free Market Fairness: A bridge to nowhere. Fernando Teson’s entire argument boils down to the position that truth should never stand in the way of mainstream recognition. Of course, as I pointed out in that earlier post, the “respectable libertarian formulation,” in the form of the chicago school, had held sway for thirty years in the domain of finance and “regulatory reform” leading to nothing but banking oligarchy and a permanent severance of political freedom from capitalism. As I pointed out at the end, all it would take would be a minority dissident faction to blow that entire thesis to smithereens and force the “bleeding hearts” to side with what everyone and their brother–outside of polite academic company–knew to be tyranny and oppression. I’m not surprised “Edward Snowden” doesn’t appear in any post on that site, outside one inclusion in an obscure link.

Frankly, the boogeyman of North Korea is tiresome as the singleton measuring stick of totalitarianism. For starters, the inquisitive person might ask just how long North Korea would last if not for China and the US directly and indirectly propping it up(which should trigger a deeper discussion of the taxonomy to begin with when considering States that prop up even worse monsters). However, the better question might be why the persistent singleton casting of 21st century totalitarianism in the mold of mid-20th century soviet model when that model–in terms of having any sphere of international influence–died out two decades ago?

In the recent book, “Cypherpunks: Freedom & The Future Of The Internet,” Andy Muller-Maguhn specifically outlines the stated intent of our 21st century spooks: the use of secrecy as a means to gain control of social processes. This presents a countervailing agency problem more along the lines of a “squishy totalitarianism,” but this is more than sufficient to eviscerate the liberal paradigm. In fact, it acquires a particular sinister aura because it appears quite apparent that most are quite comfortable persisting the liberal mythology within its confines. The industries of “social justice” and “the invisible hand of market social coordination” will continue to spit out oblivious drivel because after all, they are “industries.”

As I have noted on previous occasions, the planned order or surveillance introduces a potentially glaring incentive-incompatibility agency problem into market exchange. One that makes mincemeat of any position that uses the existence of markets as an immediate counterfactual to any claim of systems of social control. If we cast “spontaneous order” as a type of “social graph” and then analytically run it against the “planned order of surveillance” that exists to anatomize it, we obtain a “second-order dynamic” between the social graph and its surveillance that illuminates the distinction between laissez-faire and capitalism in a far greater clarity than the dinosaur methods of 20th century classical liberalism still mired in the roots of the socialist calculation debates.

Frankly, to avoid serious methodological error, one should start from the assumption of “the State as its own Agency.” Everything else flows from there…

¹ As I pointed out in this old post, Technology is not Freedom, ip video has its own extensive surveillance regime.

² Ideological preferences aside, the cloud, in any rent-seeking context, is where the internet goes because it is simply a much more efficient computing platform.

Desperately Rent Seeking Servitude

A recurring theme of this blog is that politics can be rationally modeled. This view leads one to dispense with the oft repeated exasperations regarding irrational policies. A prime example would be the drug war. No the drug war is not insane. Nor irrational. Instead we treat it as something that can be rationally predicted. In the context of social and political science this means we attempt to ascribe a consistent rational method or choice to agency action to derive predictable patterns of behavior. Rationality in this context does not mean “a” should be preferred to “b” or “b” preferred to “a.” That is, rationality is not assigned to preferences. Instead it is assigned to the pattern. So what would be irrational is a pattern that, say, gives us “a” > “b” AND “b” > “a.”

The application of Rational Choice to the patterns of politics and government is usually credited to the Chicago and Virginia schools associated with classical liberalism. Both schools apply the model of methodological individualism to political and state actors that is similar in treatment to actors in the economic arena. In this sense, Rational Choice gives us no such thing as the State itself. A minor hetereodoxy is Bryan Caplan’s “Rational Irrationality” that shifts the agency responsible for patterns of government to the individual voter. Caplan’s motivation in part was to explain the failure of the standard treatment to reliably produce a rational pattern. But to accept Caplan’s method would be equivalent to saying there is no such thing as the politician or the bureaucrat.

Frankly, Rational Choice would offer an unreliable model of government if not for the possibility of a third alternative. This alternative says, by golly, there is such a thing as the State. If we assume the State¹, then how then could we expect this thing to rationally behave(in the sense outlined above)? Anthony de Jasay should be credited as a pioneer in this third alternative. He gives a ready rational pattern of this thing, the State: a Firm that maximizes discretionary power.

It can’t be over-emphasized how much our third alternative is a radical departure from the standard treatment. We are dispensing with the methodological individualism of individual actors(like politicians, bureaucrats and lobbyists) usually assumed to be maximizing their own utility by a method entailing calculating the benefits against costs. Instead, the fundamental unit actor is The Firm. And our maximand quantity–the power to be used at one’s discretion–defies the usual neoclassical treatment of profit or Von Neumann utility.

If you are familiar with mathematical or computer science concepts, the third alternative more or less forces you to adopt an entirely different schema(meta constructs) to model(or make sense of) the patterns in the world. Hence, you avoid referring to such things as the banning of pressure cookers as irrational or stupid. No doubt, it would be stupid under the standard schema of neoclassical economics. But not under our alternative schema. Under this, it follows a rational and predictable pattern.

In de Jasay’s model, the discretionary power eventually dissipates into the “security of maintenance,” which means the use of power to simply stay in power. Writes de Jasay:

“Like the firm in the perfectly competitive industry that makes no profit, the state ultimately achieves only its own survival, and no one is satisfied by this relatively pointless result.”

I have dubbed this type of model by the shorthand name, “The Firm.” The extent of the departure of the political economy of The Firm from standard, neoclassical treatment requires an alternative vocabulary to adequately convey the schema at play. Things like “regulation” do not mean in The Firm what they mean in the neoclassical model. Public Choice concepts like “regulatory capture” are almost nonsensical when translated over to the model of The Firm. To see this, consider the neoclassical meaning of regulation: to internalize negative externalities so as to promote a regular functioning market. The public choice meaning of regulatory capture is to produce regulations that capture artificial rents by creating barriers of entry to competition. But the more appropos term when translating over to The Firm would be something like “docility,” which means something more along the lines of “yielding to submission.” Indeed, we can propose the following model translation:

regulation ————> docility
regulatory agencies —-> docility agencies
regulators ————> docilitators(we’re inventing a noun)

Under this language, the nonsensical nature of regulatory capture, translated to “docility capture,” becomes more readily apparent. It makes little sense. It seems to imply rent-seeking not as a power act but rather as an act of subservience. But nonetheless there is a rational pattern being hypothesized: any power accrued from rent-seeking docility rules will be dissipated via the “security of maintenance.” And there appears to be a bitter irony at play first noted by Orwell in his tract, “The Theory and Practice of Oligarchical Collectivism.” Oligarchical Collectivism produces a de facto peace. Following de Jasay, it may also produce a similar de facto end to the rent-seeking State.

Perhaps it would be instructive if we play a little language game with our model translation and apply it to this recent Reason article on Bitcoin authored by Jerry Brito, a senior fellow specializing in technology policy at Mercatus. Brito provides us with the classical rational choice defense for Bitcoin regulation. Ostensibly, he is treating the rationality of regulator in the standard way. This apparently leads him to formulate a dual struggle between an intransigent old guard of early adopters vs a dynamic new guard entrepreneurial class willing to bargain with regulators in order to launch a next gen Bitcoin application platform.

Writes Brito:

If the message wan’t clear enough, the Bitcoin Foundation—which helps organize Bitcoin’s development on the same model as the Linux Foundation—announced that it would be hiring a full time lawyer in Washington to represent the community’s interests. The thinking is that Bitcoin businesses and users are going to be regulated even if the protocol itself can’t be, so it’s time to engage the regulators and policy makers before they make any hasty moves.

This willingness to lobby and work with regulators, however, was not well received by many of the old guard. As one exasperated Foundation member tweeted, “I got into Bitcoin to improve this miserable planet and ESCAPE the iron grip of privileged moneyed interests, not JOIN THEM!”

But the fact is that Bitcoin is growing up. Its revolutionary potential is greater than most have yet understood. Entrepreneurs and venture capitalists are seeking to professionalize and legitimizing the network, and to do that regulators will have to understand and accept it.

It’s true that Bitcoin could continue to operate even if it was outlawed outright, but then it would only serve as an underworld currency, and its development would not doubt be hampered. The more subversive path may well be to let regulators create their rules for what at base is an uncontrollable system.

Translated into the model language of the Firm:

If the message wan’t clear enough, the Bitcoin Foundation—which originally organized Bitcoin’s development on the same model as the Linux Foundation—announced that it would now forego that model in favor of one predicated on hiring a full time lawyer in Washington to represent the Bitcoin Foundation’s interests. The thinking is that Bitcoin businesses and users are going to be docilely compliant even if the protocol itself can’t be, so it’s time to engage the docilitators before they make any hasty moves.

This willingness to be subservient to docilitators, however, was not well received by those who reject docile compliance. As one exasperated Foundation member tweeted, “I got into Bitcoin to improve this miserable planet and ESCAPE the iron grip of privileged moneyed interests, not JOIN THEM!”

But the fact is that Bitcoin needs to outgrow any revolutionary potential before it becomes widely understood. Thus Entrepreneurs and venture capitalists are seeking to create a professionally compliant network that can be easily understood and accepted by the docilitators.

It’s true that Bitcoin could continue to operate even if it was outlawed outright, but then it would only serve as an underworld currency, and its subservience would not doubt be hampered. The more subversive path, in contrast to the subservient one, may well be to let docilitators create their rules for what at base is an uncontrollable system.

Of course, the likes of Brito would read my translated version as satire. Fair enough. But I read his version as satire. The indisputable facts that even Brito would have to concede is that Bitcoin “regulation” has nothing at all to do with “regulation” and everything to do with compliance to an existing power authority. So what we have is a bargaining game between an open rent-seeking agency and an agency representing the maintenance and continuance of a power authority. But this type of bargaining is not actually in the standard rational choice/public choice literature. Remember, the standard treatment assume methodological individualism on the part of our regulators. There is no agency or agency representation of power on their end. Otherwise, we would be admitting the State or its agency thereof.

Interestingly, it would be well to point out that an agency like a “Bitcoin Community” is voided in the standard public choice literature, too. There are individual players, each competing for rents. Any coalition, at best, is temporary(straight from the bible of Public Choice, “The Calculus of Consent”). “Sticky” coalitions, to remain within the explanatory model of standard theory, can only persist by resorting to drastic inefficiencies/opaqueness in the rent-seeking technology(straight from the Encyclopedia of Public Choice)². But this thing with Bitcoin is far too transparent. Rent-seeking coalitions do not host open forums as an evangelist platform. For someone like Gordon Tullock, this would be the monkey wrench of all monkey wrenches.

So, to be clear, what I am pointing out is that Jerry Brito’s commentary at Reason regarding Bitcoin has no substantiating theory of political economy. It is purely a language game relying on buzz words to convey a rational argument. Words like “new guard,” “old guard,” “dynamic entrepreneurial class,” and “revolutionary application platform” don’t mean a damn thing in and of themselves. If pressed, Brito will almost certainly reduce his argument to something like it is rational to be subservient in order to have a legal market for a potentially revolutionary platform. But that’s just a premise begging for a rational method to justify the conclusion. And Brito has no method. Instead the very premise plays into de Jasay’s rational method of the State as a firm. The conclusion from this method is simply the maintenance and continuation of State power.

Finally, I would be remiss not to point out the pessimistic implications de Jasay’s method for the prospects of anarchism. Unlike classical liberalism, anarchism/libertarianism typically does not dispense with the agency of the State as some sort of fiction. However, the “standard class model” usually views the raison d’être of this agency as means to procurement of artificial rents. The State is the means and the “rents,” and the power resulting thereof, are the ends. So if we have a political economy, in this case a digital economy, where the marginal cost of digital goods approaches zero, the State is viewed as some inevitable dying order because its enforcement agency is doomed to obsolescence.

However, if we have a rational method that seems inclined toward the State as both means and ends, and our maximand quantity of this thing turns out to be simply discretionary power, then the thing that is supposed to kill it poses the possibility of being its eternal fountain of youth. The obvious weakness of “the internet as liberator” is that it is not a “decentralized network.” Rather it is a small network that follows a power law distribution. The very property that allows it to be a distribution channel approaching a zero marginal cost of digital goods³ also allows it to be a perpetual channel for social control. Rather than undermining the State, revolutionary ideas in digital economy, to the extent that a rational method entails them to rent seek subservience, is the very thing that persists the modern liberal state. Revolutionary opportunities follow a rent-seeking pattern that dissipate into a security of maintenance.

We should be reminded that in Orwell’s version of things, Big Brother wins. de Jasay’s rational method of political economy gives us the equally sorry prospect of the Entrepreneur as Emmanuel Goldstein.

¹ IMHO, the State as a Firm can actually be micro-economically derived by introducing frictional waste into rent-seeking.

² The industry of rent-seeking does not refer to the industry itself, that is, to the actual production of the widget or service, but rather to the industry of seeking special privileges for the production of the widget or service. So inefficient rent-seeking technology does not mean the production of the widget or service is deliberately made inefficient; rather, it means the process by which special privileges can be obtained is deliberately made inefficient. This then can explain the barrier of entry to others competing for the special privileges. Remember, the constraint or boundary condition of the Standard Theory is that outlays >= rents.

³ The efficiency of the internet is a product of a great deal of centralized coordination of standards(manufacturing and protocol) up and down the stack. It is not a spontaneous order. The more accurate description would be an efficient Hayekian Hybrid Constructivist Order as a sort of unintentional consequence of “planned competition.” The neoclassical consequence is a major unbalancing of the equation between marginal cost and marginal labor. Zero marginal cost should imply an end to wage labor. But it is an entirely unjustified assumption to think that the n degrees of standardized informal compliance, and in some cases, formal compliance, would persist if everyone became their own firm. If not, there goes your small network and with it, this zero marginal cost manufacturing base. If you think interoperability between windows and mac, or even different versions of windows is a drain of your modern life, you might want to rethink the degree of connectedness you would have if we had an unplanned shift that equilibrated marginal cost to the marginal product of labor. The point being made here is that you can’t assume the small network in anarchist pronouncements of technological triumphalism. If we are to assume the persistence of the small network, a more rational conclusion might be the expropriation of this “Hayekian Constructionist Order” for a more dystopian end than typically envisioned.

Cyberpunks Talk Libertarian Class Theory

After finishing up my most recent post, “Regulating the Panopticon,” I became aware of this fascinating 3 hour interview discussion featuring Julian Assange, Jacob Appelbaum, Andy Müller-Maguhn and Jeremie Zimmermann on Russia Today. This special 3 hour episode of Assange’s “The World Tomorrow” was dubbed “The Cypherpunks.”

Now if you haven’t already guessed, I am quite sympathetic to the hacker movement. Indeed, I would say I much greater sympathy for that movement than for the general libertarian movement which I find to be largely incoherent, inextricably conservative and obsessed with fighting old turf wars(e.g., Keynes vs Hayek, a topic which has long outlived its general relevance)¹. In particular, I am often flummoxed by the contentions of the leading luminaries of this movement that deny the US is a police state. To boot, we are additionally informed that we are living in a time of unprecedented freedom, justified usually by appeals to technological advances.

Now I would suggest that one’s failure of discernment regarding the status of the United States is a good indication of one posing no challenge to the status quo. If one were actually challenging it, one would probably have a different perspective on the matter. The gathered cyberpunks are actually challenging it. So you will find they have a bit of different opinion regarding the police state practices of the United States government. To wit, from my understanding, Jeremie Zimmermann was interrogated by the FBI when he entered the United States after sitting for this interview in London.

Judging by my stats, my previous 2 posts were traffic failures. Well, perhaps I’m just a bad writer, but the underlying message is important. So to save you from having to digest the verbosity, the summary would be: the internet provides the regime change mechanism for a political competition in technology: a rent-seeking game in data analytics. Data analytics is the last remaining frontier where competition is not outlawed. A political economy in data analytics results in the Panopticon.² I would encourage you to watch the above linked Assange episode. It greatly expands on this theme. So my writing may be boring. But you will not find that episode boring. Trust me.

Some Show Observations
Julian Assange is a doctrinaire liberal/libertarian but the others are not. Nonetheless, all four participants agreed that political reform was impossible and pointless. The consensus among the four was that the only means to combat the problem of the surveillance State is alternative institutions in economics, currency, etc. I find this interesting because it sort of illuminates an ongoing debate regarding the need/value of libertarian education. I would contend that libertarianism doesn’t have an educational problem. Rather, it has an empirical problem of revolution. American libertarianism will likely educate you into incoherence. But those who are actively involved in challenging the status quo, those who have no particularly affinity for the “capitalism” of american libertarianism, can see the problem quite clearly.

Toward the end, a bit of disagreement broke out regarding the ultimate foundation of freedom. Assange took the position that it ultimately rests with Free Trade. The others were not quite in agreement. But I would take Assange’s position. I ascribe to a method of libertarian class theory. Often, I think this method is misrepresented as the productive vs the unproductive or the taxpayers vs the tax eaters. That is the wrong way to think of it. It is simply Free Trade vs Political Economy. The economic life of Laissez Faire vs the economic life under the compliant auspices of the Polis. So I have to go with “free trade.” Free Speech is not the ultimate foundation of freedom in the observable sense of what the State can and cannot tolerate. It can tolerate “free speech.” It cannot tolerate “free trade.”

One particular observation from the cyberpunks might shed a little bit of light on this recent David Gordon criticism of left libertarianism. Gordon states that there is no midpoint between capitalism and socialism. By this he means economics is merely a duel world between capitalism and socialism. Monopoly status or legal monopoly pricing advantage is socialism. Everything else is capitalism. States Gordon:

As Mises again and again insisted, there is no third system intermediate between capitalism and socialism. The fact that a business has gotten to its position through government aid does not by itself change the way it sets prices. Neither is it the case that large firms operate by setting monopolistic or oligopolistic prices rather than competitive ones. (Of course, if government regulations set prices, or give a business the legal power to set prices, that is another matter altogether.) It is also not the case that wage determination rests on bargaining power: as Mises and Rothbard see matters, zones of indeterminacy are mythical.

To me, Gordon’s statement is why I would defect from capitalism as so defined. More specifically, it illuminates the difference Laissez Faire and Capitalism. I would contend that Mises/Gordon position is the wrong duel world. The political economy of prices, whether they are set by the Walrasian auctioneer or by competing firms, is not the illuminating question. The better question is who is the agency that sets the markets, not the prices. That is the Laissez Faire duel world. Gordon’s method really can’t explain why you would even have political competition. Since (1) political competition rarely results in monopoly price setting and (2) political competition without the advantage of monopoly has no bearing on competitive price setting (3) you really can’t explain political competition by the simple socialist-capitalist dualism model regarding a price-setter.

To return to the cyberpunks, it was pointed out that Russia had tried to bargain, but failed, to get Mastercard/Visa to process Russian credit card transactions in Russia. Why? Because all credit card transactions, including all global transactions, processed by Mastercard/Visa are immediately surveilled by the NSA. Within X number of minutes, every credit transaction by Putin and other members of the Russian political class is known and tracked by the US intelligence agencies(thus perhaps explaining why RT is the most libertarian oriented network broadcasting in the United States).

Now is this an example of capitalism or socialism? Mastercard and Visa do not have the monopoly power as price-setters to set transaction fees, but they do have the bargaining power that every single global banking credit card transaction will be interfaced with US Intelligence. This is oligopoly, but it is not the oligopoly of a price-setter. It is the oligopoly of the market setter. But this has to be considered capitalism according to Gordon.I would suggest that the (radical) Public Choice model of the economic governance of the total firm would be a far more predictive model here. But Gordon is still stuck in the Misean historical context of the Socialist calculation debates(which Mises lost,btw. One of Oskar Lange’s criticism of Mises’ tight compartmentalization between capitalism and socialism roughly followed the same line of argument I’m pointing out now).

¹ obviously, any coder knows that the technical community has its own cherished pastime of platform turf wars. But at least this debate can played out in some semblance of an empirical arena: the marketplace.

² A secondary theme perhaps relates a bit to the current "Spontaneous Orders" series being published by Roderick Long. We define a "Spontaneous Order" in a technical sense of complexity theory as emergent regulatory properties of complex systems. A Spontaneous Order then is a resilient order. The Internet could be defined as an efficient Hayekian Hybrid Constructivist Order derived from a principle of “planned competition.” The degree of efficiency of the Hybrid Haykekian Order introduces a scale-free, small network that follows a power law distribution(at least in the asymptotic limit) that is self-regulating. The tension between constructivism and emergent order is that while the network can regulate itself it nonetheless cannot defend itself particularly well against (external)constructivist intervention. The degree of efficiency of our evolved small network can be expropriated by a power consuming constructivist agency. I believe this argument is sort of similar to the published critique of Part III in that series.

Declaration of the Separation of Internet and State

Recently, there have been no less than three “Internet Freedom Manifestos” issued by libertarian and civil libertarian groups/coalitions.

Declaration of Internet Freedom Civil Libertarian
Noted Signatories: Free Press, Electronic Frontier Foundation, Mozilla, ACLU, Netroots Nation

Declaration of Internet Freedom Libertarian/Conservative
Noted Signatories: CEI, Americans for Tax Reform, Randy Barnett, Virginia Postrel

The Technology Revolution
Campaign for Liberty

The latter two statements were, in some sense, motivated by the first statement. But all three declarations of purported “Internet Freedom” are flawed.

The problem with the first declaration is the incoherence of duel objectives. Is the objective (1) increased access or (2) refraining from censorship and the protection of open standards? Anything that increases the responsibility of State Actors–promoting greater access–likewise increases its authority. Is increased State authority the best means to achieve an ends of no censorship and the protection of open standards? In addition, it is is greatly muddied by the participation of overtly partisan political groups whose sole objective is the increase of party authority and power. Groups like the ACLU, Mozilla, and EFF should resist being lumped in with partisan politicos like DailyKos and Netroots Nation.

The second statement, penned more or less as a response to the first, promotes a vision of the internet concerned solely with “the process of technological evolution, not the end result.” Of course, what if the end result is an efficient totalitarian surveillance order? You can have plenty of technological evolution and innovation toward that end. The promoted regulation regime is the typical conservative clap trap of the “rule of law” spliced with conservative economic rhetoric a la “open systems and networks aren’t always better for consumers.” Even worse, this group casts the conflict over internet freedom in terms of Thomas Sowell’s “liberal unconstrained” vs “conservative constrained” model. This thusly places the future of “internet freedom” in the palms of conservative cultural politics(and the conservative casting of “free markets”).

The third statement, authored by the Campaign for Liberty, reads like a crass piece of political opportunism penned by a Rand Paul flunkie. The degree of technological illiteracy and historical ignorance in that brief statement of principles is laughable. The implication that internet is a product of Microsoft(and others like them) innovation and the primary role of the State vis-a-vis the internet is to enforce Microsoft’s property rights.

In a previous post, “The Enforceable Obligations of IP and Copyright in Political Economy,” I discussed the actual role government played in our current internet implementation. The role was significant but, nonetheless, a largely informal one centered around a coordination problem of standards. The end consequence, however, was neither particularly intended nor centrally planned. The typical progressive clap trap that the Government invented “the internet” only applies to our current implementation. It certainly cannot be extended to a proposition that there would be no “packet-switch networking” if not for the State. And whatever progressive pride there is to take in the (informal) role the State played in the evolution of our current implementation is immediately cancelled by the fact that the State immediately began to formally enact measures to artificially exclude access to the one honest to god public good it accidentally managed to help create-human intellectual property. The progressive triumph leads to its own empirical refutation.

But I find C4L’s claptrap that our current implementation would somehow be the product of “decentralized” Microsoft innovation to be equally vulgar.

The degree of standardization required to create any degree of wide scale computer networking interoperability is substantial. For our current implementation, there were essentially two competing models in play: (1) tcp/ip, which originated out of DARPA, (2) OSI model originating from the European ISO(International Standard Organization). I would argue that tcp/ip became the dominant global standard as a consequence of the US Department of Defense declaring tcp/ip as the standard for military computing in the early 80s. The Arpanet thusly would soon switch to tcp/ip. This began to create a vendor lock-in as a consequence. Sun Microsystems began to build tcp/ip into the core of UNIX. The last piece of the puzzle involves the NSFNet evolving into the core of the first true “internet backbone.” The National Science Foundation’s project to link together academic research over it’s funded super-computer research centers–with the mandate that any university that received NSF funding to connect to network run tcp/ip over its own network–probably put tcp/ip over the top. This led to the European academic and scientific research centers to throw in the towel regarding tcp/ip adoption, even though the Europeans were heavily vested in their own OSI implementation. But fittingly, the killer app that would turn the internet into a large-scale commercial space for ordinary users and not just a domain for academics and hackers(and enthusiasts)–originated from CERN.

If we return to Microsoft, it should be noted that its a bit of a running joke of how badly Bill Gates mid 1990s book, “The Road Ahead” misjudged the coming dominance of the internet. Gates primarily referred to “the Information Super Highway” in his book and only saw “the internet” as a subset of sorts. What gates envisioned is what the “Microsoft Network” originally was, a commercial model extending a model pioneered by the likes of CompuServe, Prodigy, AOL, etc… in offering a proprietary “gated” portal community. Originally, these network providers operated over X.25 networks and were expanding by offering gateway(“gated”) access to the internet. Gates vision was how the Windows Desktop would become the commercial platform(“the window”, so to speak) to the information superhighway.

But the killer app turned out to be the “browser,” and the killer application protocol turned out to be HTTP delivering content semantically marked up in HTML. I would classify the primary pioneers responsible for the “quantum jump” of the internet to be:

(i) Tim Berners-Lee: Developed the HTTP Protocol specification(a tcp/ip specification) and a relatively simplified document markup language(HTML, a much more simplified language derived from the general ISO standard SGML)

(ii) Linus Torvalds: the first to make a “unix-like” kernel available for intel PC boxes. The kernel core for what we call “Linux”

(iii) Marc Andreessen, founder of Netscape, the company that developed the first “browser” with in-line multi-media display capability.

So Berners-Lee provided the app protocol specification. Torvalds’ contribution was on the server-side: unix-like boxes running on cheap PCs that allowed for inexpensive server scalability for hosting/delivering tcp/ip applications. And Andreessen’s contribution was on the client-side: turning the browser more or less into a consumer appliance. Of course, it should be mentioned that the original codebase for the Netscape Navigator browser, in part, stems from Andreessen’s work at the National Center for Computing Applications(operating from a grant by the US Government as a consequence of federal legislation passed in the early 1990s. Al Gore’s prominent role in the passage of the legislation is really the historical basis of his “I invented the internet” lore).

The end result was the quick death of Bill Gates’ original vision: the gated portal version of “the information superhighway.” Gated Portal means the integration of “ISP/Access and Platform.” The likes of CompuServe, Prodigy would fade. The corporate merger between AOL and Time Warner ranks as one of the worst business decisions of all time. Instead we saw, after the “privatization of the internet backbone,” explosive growth in bandwidth capabilities, with the Telcos becoming the ISPs(the access providers). The “browser” became the platform. The web application became the portal. Yahoo was an early example of what would become the “web portal.”

To give Bill Gates some credit, it should be noted he would soon realize his original “Road Ahead” was a dead-end. Microsoft would revamp around the “internet.” The “Microsoft Network” became the web portal, “MSN.” Microsoft would quickly launch its own browser, “Internet Explorer.” Of course, I’m not sure how many people are aware that Microsoft didn’t build IE from scratch. It was based on a codebase licensed from the National Center for Computing Applications. IE wasn’t free of that code until version 7.0. I’m pretty sure the flunkies at Campaign for Liberty don’t know this. Otherwise, it’s pretty embarrassing to have to spend time deflecting charges that Al Gore invented “Internet Explorer.”

Quick Summary
This is already a long post but the length doesn’t even come close to doing justice to the topic at hand. Open, coordinated Standards are at the foundation of the internet as a small network. To the extent that they are artificial, then the internet is “artificial.”

Contra Declaration II: open, coordinated standards are not in evolutionary, market competition with closed systems. Not over the internet as small network.

Contra Declaration III: Open, coordinated Standards are not the artificial consequence of collectivist, government enforcement.

The underlying text of Statement I is one of network neutrality. The argument is that integration of Access and Platform is a threat to the “open internet.” Statements II,III, which are being presented as the “libertarian response,” are not serious statements. Indeed, they are just more evidence that libertarianism’s continued alignment with conservatism will result in the movement writing its own death warrant.

But what should be a coherent libertarian response to Statement I? I would contend that “State Neutrality” is the more relevant and pressing condition for the continuation of an “open internet.” And the increasingly necessary condition for State Neutrality is the separation of Internet & State. This will be the topic addressed in part II.