digital

Yesterday, BBH Labs wrote an interesting post commenting on some of my thoughts on internet transparency and gossip. The post itself, as well as the comments, are well worth a read. Since it’s one of my favorite topics, I naturally wanted in on the discussion myself, but as I started writing a comment on their blog, I realized it would probably be a bit long for a comment, and instead decided to make it a follow up post here.

Q: Is there any evidence of better behavior and less cheating?

A: I think we can see plenty of evidence to support the fact that the breakdown of brand privacy forces brands to behave better. User comments and ratings are in fact the backbone of much of e-commerce, and are really a form of digital gossip. Companies behaving badly are exposed all over the place. Companies behaving well are to some extent rewarded, even though gossip gravitates towards the negative for natural reasons (it’s often more expensive in nature to make the wrong decision than valuable to make the right one). On the individual level, Googling is a standard part of hiring these days, and cheating husbands and wives are exposed all over the internet every day. Just to mention a couple of examples.

Before language evolved, cheaters were easy to spot in small tribes, but not in larger societies. When language evolved, efficiency of gossip increased and we could now crack down on cheaters and reward contributers in bigger groups. Now, with the social web, gossip is made even more efficient, thus making it possible to spot cheaters and reward contributers in very large groups, spread out all over the globe. It’s the same basic psychology and the same economics behind it, but more efficient means of communication enable us to increase scale. The economics of gossip are very much the same as internet economics, or information economics in general: Providing gossip is virtually free, while receiving it can be very valuable. This creates growth. As a fun excercise, you can try applying these economics to the “piracy”-debate.

“Q”: On one hand it all sounds a little Utopian (and some might argue, less fun). On the other, it does sound rather attractive.

A: It may sound utopian, but it’s really not. I’m not talking about perfect transparency with zero transaction and coordination costs (which would be utopian and impossible). Instead, I’m talking about an increase in efficiency, which leads to a more precise control system that is harder to cheat. Harder, but not impossible.

And I really don’t think that it’s a question of attractive or less fun, but rather of us increasing our ability to coordinate as a species. An increase in ability to coordinate enables us to coordinate more quickly, thus becoming more adaptive to changes in our environment. Those who adapt the quickest to change will be the most fit for their environment, and the fittest will survive. If we let this continue without destroying the efficiency with legislation, this is where we will gravitate towards by Darwinistic law. It’s somewhat like asking if life became less fun or more attractive when language was introduced. I can’t answer that, and I don’t know if it’s a relevant question. I do think that it made us more civilized, and I think that the web will have the same effect.

Q: For other societal constructs, such as a nation/regime, hard to say. The world had pretty honest information on the Iran situation, but that didn’t make the regime behave more honestly. On the other hand if
victims in genocidal warfare in Africa had means of disseminating real time information would the world be more inclined to intervene and act more honestly by upholding basic human rights?

A: There are a few different questions involved here, and I won’t go into the specific situation for each country, but on the structural level you can say this: There is a huge shift in power going on all over the world. The monopolies of information distribution previously (and sometimes currently) held by institutions by economic neccesity, are falling apart. And this makes those depending on such monopolies less powerful. For these institutions, the social web poses a threat, and the only way to stop the threat is to stop entire services, and indeed this is what we are seeing in some of these regimes.

Unfortunately for them, this is also very costly in terms of not tapping into the growth engine of gossip and digital gossip that we spoke about earlier, and will leave them with the choice of handing over power by unblocking internet services or loosing out in the competition with free countries. Ultimately, I think and hope that fighting internet freedom is a loosing battle.

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