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Tuesday, January 15, 2013

Aaron Swartz' Blood for Oil

A man died on Friday. He should have lived. His death was entirely preventable.

Aaron Swartz was a victim of overreaching malicious prosecution. He hung himself, leaving behind a gaping hole in the public sphere, and among his friends and family. Over 25,000 people signed a Whitehouse gov petition to remove the head of the US Attorney's Office overseeing the prosecution.

Thousands die every day, and their deaths of entirely preventable poverty. By one estimate, 21,000 of them are children.

These facts are not unrelated, even if exactly how eludes people. Timothy Burke, a history professor at Swathmore writing, for Inside Higher Ed writes a j'accuse:
Faculty who tell me passionately about their commitment to social justice either are indifferent to these concerns or are sometimes supportive of the old order. They defend the ghastly proposition that universities (and governments) should continue to subsidize the production of scholarship that is then donated to for-profit publishers who then charge high prices to loan that work back to the institutions that subsidized its creation, and the corollary, demanded by those publishers, that the circulation of such work should be limited to those who pay those prices.
"Academe Is Complicit" January 15, 2013
His central argument is that now legal arrangements are being used to substitute the protection that print used to offer: a physical barrier to information, in order to limit access.



Info-Rent
 
In itself, this is not entirely a new realization. The fear that machines would put people out of work, and into poverty led to movements we call "Luddite," from an anti-textile movement that flowered in 1811, and culminated in smashing textile machines.
By the 1940's speculative fiction was confronting the new reality of mass production: the ability to rapidly and cheaply produce almost anything as undermining value systems is the main topic of the Venus Equilateral series by George O. Smith. The answer to the question of mass production attracted the economic intelligence of John Maynard Keynes, who concluded, in line with an idea by Malthus and expanded on by Veblen, that once subsistence was met, leisure would become the goal of economic activity.

In the post-war era, one can define the "post-modern" problem as the point where production of information undermines information monopolies, this includes money, religion, and academia. This leads, in Marxist and Marxian thought to the continental movement now labelled "post-structuralism," the work of Derrida, Lacan, and others. On the right it leads to fundamentalist movements and traditionalism. Both left and right assert what I will label the "neo thesis." The neo-thesis states that the early 20th century was a disruption, that it is impossible to return to the time before it directly, but, largely agreeing with Hayek, that the disruption can be returned to by re-asserting a social control. What Derrida calls "the game itself," is the means to return to a Pre-World War II normalcy. Hence, a neo- world, where movements assert a three fold argument: the present is corrupt, the solution is to return to some imagined better moment, and the means is by having some particular ideology as the primary one which rules over others. Thus fights, even over small disagreements, become brutal, because the are a fight over the very most basic rules of social participation, the "other" is alien, not merely in disagreement.

However this ideological framework is not dominant for randomly or because of its intrinsic aesthetic appeal. It grew up because the reality is that control of a few key pieces of capital, knowledge, and resource, dominate over all the others. It was Derrida who quipped that two things would never be viritual: oil and Jerusalem, everyone wants the real thing. In this he encapsulated the problem: control over the keys to the mechanized economy and control over the brand equity of the "game itself" are the basis of all power, and since power is needed to maintain the benefits of the present, the basis of present society.

Oil was called by Yergin "The Prize" and it exhibits a unique power because of its property of both creating fungible labor, and portability. If Adam Smith lived in the "labor theory of value," that is the value of anything is the cost of labor to make or obtain it, and Marshall in the marginal theory of value: the cost of everything is the cost of the last one that can be made and break even, the our value is the value of the last barrel of oil that can be made. However, it is a mistake to oversimplify to oil alone, but to understand that it is the ability of oil to substitute for other rents. What Smith observed as the trade off between pay a land rent, and pay in time. Oil, enough of it, allows that trade off to be institutionalized. It means that people can turn non-tradeable value, such as land, into tradable value, that is oil and the capital which uses oil.  Rather than paying your peer competitor a higher rent, and then face him using the money you just paid him to bid up the very things you want to buy, or paying an employee to afford a house near your business, which may well have been located near where the owner of the business lives, buy oil, and give money to people who do not bid up the price of the land you live on, the cars you buy, or the food you buy.

To unpack this: oil's power is that it allows people to avoid paying money to people they compete with. It is a trade off of rents.

When the West had to start importing oil – the US reached peak oil production in 1972 – this created a problem, very quickly the oil producers formed a cartel, and raised the price of oil. While the revenues from oil are small compared to the revenues from the revenues of capital, their advantage is that a small core of people can produce most of the value, and thus there are few stakeholders. The enormity of the costs of social control as a percentage of revenues is seen by the large sums of money spent on defense, and on religious rationing: using religion as a means of convincing people they do not want to buy Western entertainment filled with "sex, drugs, and blasphemy."

This allowed enormous concentration of liquidity in few hands, and this wealth was invested, largely, in the United States. This created a cycle: the United States had use of the oil, and the physical prosperity, at the cost of losing control of the capital base.

The answer to this, in the west, was the Red Queen's Race: fight the concentration of wealth in the resource regions, by allowing concentration of wealth here. Thus wealth inequality became a goal of political economy: cuts in "capital gains" taxes, cuts in income taxes, ending restrictions on consolidation, deregulation and privatization to allow turning public functions into profit making businesseses, change from saving to "retirement accounts," all have the effect of creating larger streams of private revenues at a profit, those profits become stock value – the value of stock is, after all, the market estimation of the value of its future earnings available for dividends and stock buy backs.

Temporize, and bet that technology and capital would eventually overwhelm rents. It had the additional virtue of creating a plutocratic upper class, and an entrenched and privileged suburban class, as well as funding the security industrial complex, creating a society which was meaner, as being too "soft" was seen as the cause of the crime and chaos of the late 1960's. The Dirty Harry myth became social policy. 

Because oil's distribution was fixed a priori, it is a rent. In the end to temporize meant that everything in the West had to be turned into a rent, and that stream of rents had to match against the rents of oil. To make up the difference between what we sell, and what we buy – and that gap is oil, and oil in drag in the form of cheap exports, we must sell capital and "services," which includes education, and finance.

Enter Intellectual Property, and the role of academia. The West had two important rents: one is the path dependency of finance, which the very nature of the oilarchies could not easily duplicate, and the other was the path dependency of knowledge creation, which the oilarchies did not want to duplicate.

Thus part of the drive to create streams of income, was to propertize information, at the same time, cut the oil cost of its storage and transmission. These two goals are in fundamental contradiction: knowledge, the more it is digitized, and internetworked, acts less and less like property, and more and more like heat. It diffuses.

This is what bothered people who dealt with this system. Viewed in terms of the marginal, that is capital, cost, a copy costs almost nothing, and enough copies, and the value is enormous. At the same time that information became more important, the value of creation dropped to almost zero. The value of a song writer is less than zero: most musicians spend more on the tools to make music, than they earn. Rent has a value, thus a brand name musician, who is easy to find, is worth a million hits for nothing.

Academia is part of the path dependent rental advantage of the US, and as such, its price rose through the roof, going up by far more than inflation for the last 30 years.

It is this connection: the need to create rents to say ahead of the ability of low stake holder resource billionaires, that made IP and Academia behave like rents. The problem is that while academia does, indeed use rents all the time, for example, naming mathematical theorums after the creator, scientific laws after the discoverer, footnoting and textual apparatus, these rents are difficult to impossible to monetize directly. Academic rent created the drive to larger and larger administrative systems, and more and more power being given to people who controlled the money flow. With every passing year, there was the need to squeeze larger rents.

Consider academic publishing: it takes work done as the goal of being an academic, that is work that would have been done for free, pays nothing for peer review, and turns this into a rent: it reinforces the value of US acamdemic institutions, gather the best and  the brightest, and forcing them to go through an extended period of indentured servitude. That is what is being defended, a rent.

On the other side of this coin is the social utility of the people who are privileged in this system. Wealth inequality makes the very rich, very much richer. Mansions, massive yachts, buying islands, flying by helicopter, access to special health care, all of these things are positive luxuries largely unavailable to similar levels of wealth 40 years ago. There is also the matter of control: power for those who want it, is worth more than money.

The collision course is that the enforcement culture needed to turn everything into property, and to incarcerate those who disturbed the system, is more than a marginal utilitarian decision, it is a social choice, and creates a class of people whose role it is to torture, threaten, bully, kill, and torment others. As anyone who has worked with lab animals knows, there are many people, who get perverse pleasure out of causing pain. Couple this with rewards for being "a crusading US attorney" and the ability to enter into the upper class by running a private prison, and there is an environment ripe, quite distant in people's minds, from its ultimate purpose. The Carmen Ortiz was thinking about higher office, not about the need to protect rents as part of an means of political economy. What was a policy regime was turned into laws: the anti-circumvention aspects of the Digital Millennium Copyright Act, and the extensions to the Computer Fraud and Abuse Act.

That these laws, and other IP laws, are matters of public policy, rather than public morality, is seen by the extreme differences between harm done and potential penalty, compared with similar commercial violations. Swartz was facing a potential maximum of over 50 years in prison, and the government was going to seek 7 years at trial. The plea bargain offered required a guilty plea to 13 felony counts, and years of prison time. Ted Rall points out that this is less time than the average rapist.

This has been contrasted with the absolute lack of sentences for crimes committed as part of the massive housing bubble collapse, with the picayune sentence for killing people with untested medical devices, to the complete absence of prosecution of a pharmaceutical company which created a fungal meningitis outbreak that has killed 44 people, and destroyed the lives of many more. Economically necessary activity cannot be punished as harshly, for the same reason that robbing a store at gunpoint can bring someone the death penalty, where as killing someone in a drunk driving accident can lead to almost no charges. We sell liquor, we need people to drive. Mortgages underpinned the US financial advantage: they were the paper we sold for oil, the Red Queen's race requires creating paper to sell. Swartz was treated so much more harshly than an banker, because a banker was upholding the order, and Swartz threatening it.

Contradiction

What this case shows is that people have completely lost sight of why the system was created, the are alienated from their own political economy. It also shows that the morality of toughness and property created to run the political economy, is now on a collision course with the society that it is part of, and with itself. Aaron Swartz created value, that in turn became paper. Without the bright, inquisitive, inventive, personable individuals like Aaron, there is no value to turn into paper, no paper, no red queen's race. The very suburbanite world that the Reagan coalition was created to foster, is aimed at producing a bright child who does well in the world.


This means that the thousands who die from preventable poverty, because it is better to extract quinoa, or diamonds, or coffee, or even sex trafficked children, from them, are not part of the consciousness of ordinary members of the developed world. It is not worth the oil to keep them alive. However, that same system has metastasized into the very heart of the developed world. Viewed from the outside, a child being beaten and sold into servitude to make rugs, is no worse that driving someone to suicide, however,  in the second case, the suicide was of one of the people that the society was designed to protect. The same disease kills both the civilians bombed in a geopolitical war, and the young man whose sin was to want to make public knowledge public.

The dominant narrative is that this case represents and abuse. It is not, it is a necessity. Aaron was not the first hacker driven to take his life by the Massachusetts US District Attorney's office. He is far from the first questionable prosecution for computer crimes. Draconian sentences, such as a $675,000 fine for sharing 21 songs, are routine. Aaron Swartz' death was not an abuse of the system, it is the system. His death merely underlines that the profits and benefits of the system are going to fewer and fewer, while the costs to those who do not receive them, are getting higher and higher. It underlines that the kind of people who can run the Red Queen's Race, are increasing divorced from the people the rule over.

This points to a coming moment, where the next wave of people will reach the de Tocqueville Limit:
Ce n'est pas toujours en allant de mal en pis que l'on tombe en révolution. Il arrive le plus souvent qu'un peuple qui avait supporté sans se plaindre, et comme s'il ne les sentait pas, les lois les plus accablantes, les rejette violemment dès que le poids s'en allège. Le régime qu'une révolution détruit vaut presque toujours mieux que celui qui l'avait immédiatement précédé, et l'expérience apprend que le moment le plus dangereux pour un mauvais gouvernement est d'ordinaire celui où il commence à se réformer. Il n'y a qu'un grand génie qui puisse sauver un prince qui entreprend de soulager ses sujets après une oppression longue. Le Mal qu'on souffrait patiemment comme inévitable semble insupportable dès qu'on conçoit l'idée de s'y soustraire.
Or if you prefer the English translation:
It is not always going from bad to worse that a government falls to a revolution. It often happens that people who bear without complaining, and as if they did not feel the laws most damning, violently rejects the weight when it is alleviated. A regime destroyed by Revolution is almost always better than the one that had immediately preceded, and experience teaches that the most dangerous moment for a bad government is usually when it begins to reform. It takes a great genius who can save a prince who undertakes to relieve his subjects after long oppression. Evil patiently endured as inevitable suffering seems unbearable if when one conceives the idea of escape.

In other places he details the softening of feeling toward the public in the late regime, and how this lead to a belief that change was at hand. He was writing this under the Second Empire, and to a great extent was warning the then current government that the prosperity it was producing would not save it from Revolution in due course. 

The de Tocqueville limit, is that point when the people in power no longer see the necessity of the harsh measures required for the order that the run. The very success of an era creates a break between what is done, and why it is done.

The contradiction: Marcy Wheeler patient lays out that creating intellectual rents requires intellectuals, and intellectuals live and breath freedom to read, speak and know. But the government is now dedicated to secrecy. This is exactly correct as far as it goes: the people who are the knowledge workers, who can make value with out buy oil, threaten what is being sold. This contradiction creates intolerable cognitive dissonance. 

Wheeler summarizes it this way: 
The government, when it explains why it will neither prosecute banks for both foreclosure and LIBOR fraud on a massive scale nor for helping drug cartels and terrorists finance their crimes, points to their systemic importance.

The explanation is from the above, we sell information as a rent, but to reduce the cost, we remove the protections of physicality that make it a rent. The post-modern problem was how to do this, the answer is power. What happens when the two arms of that power are in conflict?

While that wealth inequality creates the inability of bright people to access what they need to be intellectuals, that the system of thuggery required to maintain the property system of those rents kills the very people who do the work of creating value. But free exchange, is in opposition to rent. The people who must do the work, now will realize that they are not hindered by bureaucracy, but hunted by technocracy. The game requires that people believe in it, and as dozens of essays show, even people who accept the premise that the work of academics that is not paid for, can be give to another to collect a rent, for example Larry Lessig, cannot stomach the means needed to enforce it. What is policy required, that is ethical under the current system, is no longer morally commensurable.

This was not one prosecutor, it was not an exception, the draconian laws are to protect with overwhelming force that which physics makes difficult.

The next wave is not revolution, but "reform" designed to ease the consciences of those who must run the system, find ways of making the right exceptions, but these cannot be made without creating more corruption: an exception is, by definition, inconsistent, and the same cognitive dissonance will simply alight at the new boundary.

Aaron Swartz died of the system of paper for oil, by challenging the rent that generates paper, and privilege, for those that run that system. But without Aaron, and people like him, that have a boundless faith in meritocracy, the people left behind come to understand that the State, the Society, are intrinsically inimical to the very lives they lead. Reform will weaken the very architecture that enforces the creation of intellectual rents, and path dependent rents of finance and capital creation, but without it, the very people who create the original value which is turned in to product, will be dead, swinging from a cord in their room, to be found by a friend or family member, and mourned by the people who knew them.