The All-Seeing Eye

Musings from the central tower…

Panoptic Power and Competition

It is fairly uncontroversial in classic economic theory that free and fair competition is often vastly more productive than limited competition or no competition.  Many economists view a monopoly as a market failure and believe that anti-trust laws must be created and enforced in order to preserve competition.  So-called “no-bid contracts,” in which firms are granted lucrative government contracts based on cronyism rather than competition, are slammed, correctly, for costing a great deal more money than competitive contracts would cost.  As a general rule, when agents compete on the market, the goods or services that the agents are selling become more productive and/or less expensive – in other words, competition allows buyers to get more for less.

How is this related to panoptic power?  Economic competition conforms closely to the panoptic model of power.  Let us compare economic competition to the two hallmarks of the panopticon:  self-surveillance, and isolation.

In the panopticon, self-surveillance is produced within a subject by causing that subject to behave as though at any moment she might be under surveillance by a central observer.  Who is the central observer of the competitive market?  The consumer.  At any time, the consumer might evaluate the quality of the products offered up for sale by the competitors.  Competitors earn reputations based on the quality of their products, and these reputations greatly affect the profits of the competitors.  The consumer is also somewhat unpredictable, in that one never knows exactly what a consumer’s preferences might be.  Perhaps your innovative new product might become the next iPod – or perhaps it might become the next Betamax. Competitors must strive towards innovation and invention and reinvention, and must also master marketing, and still success is not guaranteed.  The point here is that competitors are always being evaluated, and they may live or die based on the results of these evaluations.  This is a powerful incentive towards self-surveillance.

In the panopticon, isolation is caused by physically separating prisoners in individual cells.  In a competitive market economy, isolation comes in the form of patents, trade secrets, and the information asymmetries that arise when competing agents each try to find and maintain a competitive edge.  If you own a restaurant, you might make the best marinara sauce in the county, but if you give away your secret recipe, that will not be the case for long.  Isolation also comes from the fact that individual agents may earn more profits through competition than through cooperation – because there will be fewer people to share the wealth.  Laws against cartelization and other forms of corporate cooperation can produce isolation effects.  In a situation where workers are competing for jobs, the workers may become isolated from each other because some wish to go on strike for higher wages while others wish to take over their jobs.

If the productive power of a competitive market is related to the productive power of the panopticon, then do the same downsides exist?  Sure.  One of these is that PD-like situations may arise in which competitors end up reaching a suboptimal equilibrium state because of their isolation.  An example of this is an industry in which advertising costs comprise a significant percentage of the industry’s income but do not effect a significant redistribution of market share for any one firm nor attract a significant number of new buyers to the market.  Each firm would be better off if no firm advertised, but if any firm advertises, they all must in order to avoid losses.  In the end every firm advertises, and the entire industry essentially throws money away.  The tobacco industry is one such example (although you won’t hear me mourning their suboptimal profits.)  There are also cases like railroads or utilities where, without collusion or intervention, redundant services may be established (imagine the case of two competing rail lines running parallel to each other).

Because the effects of panoptic power are generally experienced as difficult and unpleasant, free markets tend toward a mix of competition and cooperation.  Many agents would like to collude with each other in order to avoid the panoptic effects – in other words, break isolation to resist the power of the panopticon.  A cartel is a good example of this – competitors get together and decide that rather than compete with each other, they’ll fix prices and production at a certain level so they can all profit equally.  These cartels often result in higher prices and lower quality and quantity for goods produced – they are less productive, but they make things easier for those involved.  Labor unions are a form of cartel for workers, who agree to band together to achieve higher labor prices (wages) and shorter working hours (less production).  Such cartels and unions suffer from the risk that one agent will defect or a new agent will enter the market, thus destroying the cartel or union, and as a result an equilibrium can be reached.

The free market, which depends on competition for its functioning, is thus an example of panoptic power at work.  This is an important insight because many experience panoptic power as something which imprisons them, which calls into question how much “freedom” agents in the free market actually have and provides a theoretical framework to contrast, rather than conflate, liberty and productivity.

October 25, 2008 Posted by | Economics, Power | , , , , , , , | Leave a comment

Cooperation and Membership

In Organized Labor: A Power Analysis, I examined the power relationships involved in the formation of a labor union. In one sense, the formation of a union follows the prisoners’ dilemma: the workers can cooperate with each other by striking, or defect by becoming scabs. If enough of them cooperate, they can be successful and gain a measure of power back from the employers. If enough of them defect, the strike can be broken and the striking workers fired. In this and other examples following the panoptic model of power, cooperation is a counter to the isolation that produces the panoptic effect. Once the workers are part of the union, the union acts on their behalf – negotiates wages, benefits, vacations, etc. The union thus becomes a symbolic agent – instead of saying that the workers took an action, we say the union did it. The union thus has metonymic power. In this example, we see that metonymic power is also a counter to panoptic power – membership in a group with a powerful symbolic agent allows people to act without self-surveillance.

Let me explain that claim a little more. It is safe to say that laborers are under direct and indirect surveillance. An example of direct surveillance would be when a foreman or supervisor actually watches the laborers and directs their activities. An example of indirect surveillance would be an inspector who checks the laborers’ work for defects. In either case, the laborers must constantly behave as though they are under surveillance – hence they regulate their own behavior to fit the standards imposed on them from outside. These standards are imposed through a fear of punishment. If the work is defective, the laborer may be docked. If the laborer behaves the wrong way he may be suspended or fired.

With the intervention of the labor union, workers have a degree of protection from arbitrary discipline. The supervisor or inspector has a burden of proof to satisfy if action is to be taken. The laborer can work knowing that his membership in the union provides a degree of protection from the surveilling authorities. The more powerful the union, or symbolic agent, the more protection the worker, or acting agent, has. The same is true for citizens of powerful countries – the symbolic agent – the king, or president, or country itself – has a power that allows its citizens to act with greater freedom. At the same time, the cost of this freedom is a loss of agency. This may seem paradoxical, however, we can see how a displacement of agency allows greater freedom of action with the simple phrase, “I didn’t do it.” Americans benefit from the privilege of America’s dominance at the same time as many or most of America’s inhabitants disavow their responsibility for the actions which lead to this dominance. Hence the soldier who is just following orders or the taxpayer who is just doing his share for society – yet their money and their lives are used to maintain America’s power in the world at a deadly cost for all who oppose us. Our privilege as Americans comes from a lack of self-surveillance: we do not carefully watch and regulate our actions because we do not fear the consequences of carelessness.

If cooperation and membership both serve to attack the basis of panoptic power, what is the cost of these tactics? The cooperating prisoner takes a risk – the risk that the other prisoners will defect. The member of an organization sacrifices their agency in return for the power of privilege. It seems then that the two goals of any project to mitigate panoptic power should be to decrease the risks of cooperation on the one hand, and to combat the displacement of agency on the other. How can either of these goals be accomplished? A question for the future.

March 16, 2008 Posted by | Power | , , , , | Leave a comment

The Prisoner’s Dilemma: A Semiotic Analysis

One of the many fascinating aspects of the Prisoner’s Dilemma is the way that it is framed. Take, for instance, this concise description from the Stanford Encyclopedia of Philosophy:

Tanya and Cinque have been arrested for robbing the Hibernia Savings Bank and placed in separate isolation cells. Both care much more about their personal freedom than about the welfare of their accomplice. A clever prosecutor makes the following offer to each. “You may choose to confess or remain silent. If you confess and your accomplice remains silent I will drop all charges against you and use your testimony to ensure that your accomplice does serious time. Likewise, if your accomplice confesses while you remain silent, they will go free while you do the time. If you both confess I get two convictions, but I’ll see to it that you both get early parole. If you both remain silent, I’ll have to settle for token sentences on firearms possession charges. If you wish to confess, you must leave a note with the jailer before my return tomorrow morning.”

First of all, what’s in a name? “The Prisoner’s Dilemma” tells us about a dilemma faced by a prisoner – note the placement of the apostrophe. In this example, though, there are two prisoners, and they both face the same dilemma. Why, then, do we not see this dilemma called “The Prisoners’ Dilemma?”

Well, the dilemma only comes about as a result of the separation of the two prisoners into individuals. If there were one player controlling both prisoners and trying to maximize her score, she’d have no dilemma. The Prisoner’s Dilemma, however, is faced by one individual, alone, isolated from contact with her fellow prisoner.

That leads to another question: why a prisoner? There are plenty of ways to propose the same paradigm – for example, two students who turned in identical examinations. Or an invading army offering a reward for whoever will open the town’s gates at midnight. The point is there are any number of anecdotes that match the payoff matrix of the PD, and perhaps infinitely many could be invented. Prisoners were chosen – why?

On some level, the prisoner’s dilemma applied to prisoners is well-understood. Plenty of people enjoy the legal drama as a story – plenty of people have been exposed, in our time, to Law and Order, Homicide, or CSI, and these modern shows have predecessors, and those predecessors use tropes set up in literature.

I would argue, however, that the choice of prisoners goes deeper than a simple familiarity. There is a match in situation between a prisoner and one caught in the prisoner’s dilemma. In other words, if this same problem were explained using students caught cheating instead of criminals caught robbing a bank, the students would still feel trapped. They would still feel like prisoners. And the person who reads the dilemma sympathizes with the subjects of the dilemma and feels their sense of being trapped. The situation that we call the Prisoner’s Dilemma works because of panoptic power, and panoptic power makes its subjects into prisoners, much more than it makes them into students, or frightened villagers.

When I say that people sympathize with the subjects of the dilemma, I mean, the reaction intended by the framing of the dilemma is that the reader puts herself in the place of the prisoner. The reader must ask “What would I do if offered such a deal,” and not “What would I do if I were the prosecutor and I had two prisoners?”

And that brings up another quite interesting point. We are told explicitly what the preferences of the prisoners are: they want to maximize their freedom, even to the detriment of their partner in crime. We are never told the goal of the prosecutor, although the prosecutor’s actions seem to speak for themselves. The prosecutor’s goal is, simply, to get convictions – to maximize jail time for the two prisoners. In our legal system, prosecutors build their careers by putting people in jail. If the goal of the prosecutor were to find out the truth, the Prisoner’s Dilemma would not be an effective tool. Imagine that one prisoner committed a crime and the other prisoner just happened to be in the wrong place at the wrong time. Who would be more likely to confess a crime, thus putting the other person in jail, and who would be more likely to maintain her innocence, thus going to jail?

If the panoptic model helps to maximize power, and the Prisoner’s Dilemma uses the panoptic model on behalf of authority, then it is a blind authority whose power is maximized. The authority does not care about the well-being of the society it has authority over; it is merely concerned with maintaining its own power. And indeed, this relationship is reflected by the names of the moves in the Prisoner’s Dilemma: defect and cooperate.

To defect is to cooperate with the authorities. To cooperate is to be defective from the point of view of the authority – a defective, criminal citizen, a defector, a saboteur of civil authority. The terms “defect” and “cooperate” refer to a presumed partnership between the two prisoners. I say presumed because nowhere in the description of the Dilemma is it stated or implied that the two prisoners have made any kind of agreement about how to handle such an eventuality as being placed into the Dilemma. The two prisoners are presumed to be partners only in the sense of (allegedly) participating in a criminal activity together; since nothing is stated about their guilt or innocence it may well be that neither of them has even met the other. The two are described as “accomplices,” but accomplices who prioritize each other’s well-being much lower than their own – in other words, hardly friends, or compatriots, or long-term partners in any sense.

However, the term “defect” implies something defected from, some country or alliance. Again, the term cooperate is ambiguous – the prisoners can cooperate with each other or with the authorities. We’ve already established that the authorities do not have the best interests of the prisoners in mind, and now we also establish that if the prisoners are to do any cooperating, it will be with each other, against the authorities. The authorities want to gain power by destroying the bonds of cooperation and causing someone to defect from society; the prisoners want to remain free by holding together as a society.

The choices could have been named differently. Confession could have been called cooperation – and certainly if we view the game from the perspective of the prosecutor, a confession would be a way for a prisoner to cooperate. However, again, the PD puts us in the place of the Prisoner, who is depicted as being in society with other prisoners but not with the prosecutor or the authorities.

Again, the PD does not have to be expressed in these terms that suggest that authority is opposed to, rather than part of, society. It doesn’t have to, but it is, and I consider this highly significant. The PD is not a dilemma about how we get justice – it is a dilemma about how we get freedom. And the freedom of the reduced sentences is not simply a freedom from jail, but a freedom from the power that would turn us against each other in pursuit of its own anti-social goals.

March 9, 2008 Posted by | Game Theory, Power | , , , | Leave a comment

Organized Labor: A Power Analysis

One place where the question of power has had a great effect on society is the relationship between employer and employee. Marx portrayed this as a class struggle, between the proletariat – those laborers whose physical activities produced value in the economy – and capitalists, whose role is to organize the activities of those laborers. Marxism generally holds that the capitalists do not produce value through their activities, and instead exploit the laborers by making profits (that is, unfair monetary gain) from the work of the laborers, who receive wages worth less than the value of their work.

The question Marxism must answer, then, is: how do the capitalists maintain this exploitation, if they are indeed adding nothing of value? Why do the laborers allow the capitalists to exploit them? Clearly, the capitalists must have some power over the laborers.

What is the nature of this power? To begin, the capitalists own the means of production. They may own land, tools, supplies, or other property that the laborers cannot obtain due to political or economic factors. Modern ownership of land goes back to feudalism, where all property rights flowed from the king, down through the nobility, and usually stopping there but occasionally ending in yeoman farmers. And of course colonial American plantations are a perfect example of workers laboring to make profits for a plantation owner who was granted the land by a monarch or the monarch’s representative. And plantation workers – often indentured servants or slaves – are a perfect example of the exploited worker who does not and cannot own property and, as a result, whose work benefits another. Furthermore, the system of property rights at the time of colonial America was so extensive that one person could own another, in the form of indenture, or slavery.

Aside from simply condemning this system as evil, it is worthwhile to analyze it further. The system of property rights is a way of organizing some or all of the things in the world (people, places, objects) so that each thing is accounted for in some way. This can be viewed from a functionalist perspective – in other words, the function of fertile land is to be farmed, and so it is up to the nobility to make sure that it is farmed so the people do not starve, and it is similarly up to the peasants to do the actual farming, for the same reason. In this way, power is not simply a tool of privilege, but a tool of productivity. As society advanced, the economy evolved, and the nobility was replaced by a more efficient system of administration. People who were better at organizing the means of production were allowed to be in charge, and to grow rich from their success, and these people are Marx’s capitalists. Capitalism proved more efficient at organizing productive power than its predecessors (mercantilism and feudalism) , but the power relationship that existed under feudalism was never really abolished. Instead, it is simply better organized.

One of the ways that the system is better organized is that it is better at sorting people based on their productive capacities. It is by no means perfect – the system is still marred by things like gender, class, and race discrimination – but it is certainly better than a system where a son of a farmer is automatically also a farmer. The system provides people with a range of options and then rewards those who choose the options that enable them to be more productive.

The individualism that comes with a system in which individuals feel that their lives are created by their choices provides a certain amount of resistance to metonymic power. Metonymic power involves a displacement of agency and an abdication of personal or individual responsibility. Individualism encourages people to take individual responsibility for their lives, and a broader range of choices provides people with a sense of agency. So in a sense, capitalism can be seen as a substitution of productive power for metonymic power – individuals become more productive (producing productive power) and also gain a sense of their own agency (reducing metonymic power). Another way of saying this is to say that the economic sphere has gained power while the political sphere has lost power.

The fact remains that under capitalism, laborers still find themselves the subjects of a form of power. The difference is that while metonymic power is explicitly linguistic (or at least semiotic) – the acting agent thinks of an action as having originated from a symbolic agent – productive power is more phenomenological: it is felt, experienced, performed, and quite difficult to express linguistically. In other words, while a peasant can express any number of symbolic agents (God, the King, his feudal lord, duty) to explain why he continues farming, and thus make it very clear that he is under the effects of a power relationship, the worker is denied these symbolic agents, and is left only with the idea that his labor is a personal choice, that he could choose to do something else, or nothing at all, that nobody is forcing him to work, and thus is told that he is the one with the power. And so we come across arguments that say that the laborer and the capitalist both have power – the capitalist offers wages, the laborer offers work, and thus an equitable bargain is struck, with no force, threat, or coercion – and the productive power that organizes the labor by organizing the laborer is obscured and hidden.

I have spoken a great deal about this productive power, but I have not yet described what productive power is. My answer, which I will elaborate upon later, is that productive power is disciplinary power, which is panoptic power, which in turn is inverted, or reflexive, metonymic power. I have teased you all a great deal with this answer, which opens up more questions than it answers. I believe my meaning will soon become clear. Continue reading

February 24, 2008 Posted by | Economics, Power | , , , , , , , , , , , , | 2 Comments