privacy and the information economy

PRIVACY AND THE INFORMATION ECONOMY Dr Marco De Boni Leeds Metropolitan University School of Computing The Grange Beckett Park Campus Leeds LS6 3QS [email protected]

Dr Martyn Prigmore South Bank University Computing, Information Systems and Mathematics South Bank University 103 Borough Road London SE1 0AA [email protected]

ABSTRACT The development of information systems and the growth of the information society has stimulated interest in individual privacy. Individual information systems researchers and practitioners have made important contributions to the ongoing debate. We examine current approaches and question their efficacy in protecting privacy online. We identify two key areas of concern: the cost to the information economy of current privacy protection measures, and their mono-cultural origins. We then propose a new approach derived from Hegel's investigation of the concept 'private', and show how it has a broad application to privacy issues in the information society. KEYWORDS privacy, economic right, information economy, information society.

1.INTRODUCTION The rise of the information society, the commodification of information and the growth of the information economy have led to growing interest in privacy. Much has been written about the nature of privacy, the extent to which it should be protected, and the mechanisms we might use to protect it. The approach that currently dominates the Internet is based on the empiricist tradition of Anglo-Saxon philosophers such as Locke and Hume. It is, perhaps, most widely known through the development of international human rights law since the founding of the United Nations in 1945 (see (UN 1945) in particular the Preamble, Article 1 par. 3 and Article 55 par. c). The 1948 the United Nations Universal Declaration of Human Rights (UDHR). includes an explicit right to privacy in Article 12: "No one shall be subjected to arbitrary interference with his privacy" (UN UDHR 1948). A similar right is included in the International Covenant on Civil and Political Rights (UN ICCPR 1976), which expands and clarifies the civil and political rights set out in the UDHR. Thus: "In the international law of human rights 'privacy' is clearly and unambiguously established as a fundamental right to be protected." (Michael 1994). However, this is only one approach to privacy. "It is a commonplace that privacy is culture specific" (Michael 1994), and that different peoples have different views on what should be kept private and what can justly be made public. As the information economy expands beyond its European and American origins, companies must strive to understand and leverage cultural diversity to gain competitive advantage. For

example, Stoney and Hutchinson have investigated the ramifications of cultural difference for web site design (Stoney 2001). From the user perspective, Roth has questioned the contention that the Internet is culturally neutral territory: "Why should we expect Internet institutional systems, structures, sites, services and access and user politics to be any different from those evident in the societies from which they emerge?" (Roth 2000). Feminist thinkers have also questioned whether the Internet, as currently constituted, meets the needs of women (see for example (Herman 1999)). Thus the growth of Internet based e-commerce presents IS professional and businesses with a new challenge: catering for cultural diversity in a global village. Managing varied cultural expectations of privacy is an important aspect of this challenge. A more familiar criticism of the human rights approach to privacy protection is that it restricts the growth of the information economy by placing undue burdens on businesses that seek to exploit the potential of ecommerce. This criticism is aimed squarely at data protection laws, and there is a growing body of work advocating alternative approaches to protecting the privacy of personal information (see for instance (Ellis 1972), (Wacks 1989), (Laudon 1996) and much of (NTIA 1997)). In this paper we seek to explore some of the tensions present in current approaches to privacy protection, with particular emphasis on their impact on the growth of international e-commerce and the information economy. We summarize the results of our investigations over the past three years and suggest areas that would benefit from further research.

2.CULTURAL ASPECTS OF PRIVACY "Of all the human rights in the international catalogue, privacy is perhaps the most difficult to circumscribe and define" (Michael 1994). This is clearly illustrated by the fact that, even in the context of “Western” thought, the human rights approach to privacy, rooted in the Anglo-Saxon empiricist tradition, is just one of a number of different approaches. This is not only true diachronically, with the philosophy of the Ancient Greeks being radically opposed to the philosophy of modern individualism, but also synchronically, with a number of widely differing views being held by different philosophers at the same time, as is the case, for example, of German Idealism and Utilitarianism. What follows is an overview of a very small number of differing approaches to privacy within the western philosophical tradition. In the Greek philosophical tradition, specifically the tradition of Plato and Aristotle, a person was seen to only fully realize the nature of humanity as a citizen, a member of a polis, the Greek City-State. Indeed, the Aristotelian definition of mankind was zoon politikon, an animal that distinguishes itself by being a citizen, a member of a polis: it is only as citizens that humans differentiate themselves from animals, fully becoming humans; in Aristotle's words, only a god or a beast can be self-sufficient, not needing to be part of a polis (Aristotle, Politics, 1453a 25-30; an English translation is available as (Aristotle 1984)): man (and Aristotle did mean the male gender) therefore cannot exist as a “private” individual, and must as a necessity renounce his privacy and conduct a “public” life as a member of the state. Philosophers who advocated a “private”, self-sufficient, life were branded as beasts: more specifically, they were labeled dogs, hence the name of the “cynical” (literally: “dog-like”) school of philosophy, which was radically opposed to the idea that mankind (in this case without gender bias) could only be truly human by renouncing privacy and becoming part of a State. The tradition of Aristotle and Plato was elaborated further by Roman thinkers. As if to corroborate the ideas of the Greek philosophers, an etymological examination reveals that the Latin word for privacy literally means "deprived", indicating that privacy was an incomplete and imperfect state: only by renouncing privacy, becoming a full citizen who shares all aspects of life with other citizens can a human being truly find fulfillment, happiness and, ultimately, humanity (for an example of Roman thought on the importance of citizenship, see Cicero's De Officiis, available in modern edition as (Cicero 1994)). The supreme good is therefore not the private good, separated from the rest of the community, but the common good, literally, the res-publica, "republic", in the sense of State which is not a separate entity from the individual, but is an enhancement and completion of the individual. This concept changed in the Italian Renaissance with the political realism of Machiavelli (see Machiavelli’s Il Principe, available in English as (Machiavelli 2000)), who saw (“cynically”, one may add) the separation of individual and citizen, with the realization that in actual fact the State did not operate in the best interest of the individual, but was simply an instrument in the hands of the ambitious Prince.

The idea of the separation (and perhaps even opposition) of individual and citizen opened the way to the idea that individual freedoms could be separated from the laws given (indeed, imposed) by the State. This in turn brought, with Hobbes and Locke, the idea of the primacy of individual rights (for example the right to property) which are guaranteed by a contract: humankind is no longer seen as being fulfilled as part of a society; rather, society is seen as guarantor for those rights which enable humans to be humans. For GreekRoman thinkers, the role of the State was to fulfill humankind rendering humans truly human; for Hobbes (see Leviathan, in modern edition as (Hobbes 1981)), Locke (see the Second Treatise of Government, available in modern edition as Locke (1986)), and their more recent successors, such as Rawls (1999) and Dworkin (1987), it was to protect the rights derived from the "state of nature" of humankind. Hobbes’ and Locke’s idea of the primacy of individual rights was further examined by thinkers such as Rousseau (Contrat Social, available in English as Rousseau (1998)), forming the basis of the ideals of freedom and interest of the individual found in the French revolution. The ideas at the basis of the French revolution were profoundly influential on the next generation of thinkers, forming a constant point of reference in European thought. One of the most influential thinkers of this period, Hegel, has indeed been seen as giving "a theoretical interpretation of the French Revolution" (Marcuse 1955), providing a conceptual underpinning to the ideas of freedom and individual rights that the French Revolution sought to realise. However, according to Hegel, rights are not to be considered as abstract ideas existing in an imaginary "state of nature” as was the case with Locke and Hobbes; rather, he attempts to give a sound foundation to these rights by deriving them logically from the idea of abstract right and free will (see his Philosophy of Right, available in English as Hegel (1991)). On the other hand, Hegel also justifies the Greek idea that the individual must be part of a State in order to fully realise humanity, showing that individual rights (such as the right to privacy) only make sense within the wider scope of the State, through which, and only through which, they attain full reality: in other words, rights make sense according to Hegel in relationships between individuals, but must be renounced in relation to the State, as the State is a “higher” reality in which citizens no longer need to appeal themselves to rights. The ideas of Hegel were further developed by Marx and his twentieth-century followers, who argued that not only could the individual’s humanity only be fully realised as a working member of society (albeit not the present society, but a future society still to be built), but, more radically, that the so-called “bourgeois” rights (including the right to property and to privacy) precluded humankind from realising its true potential (see (Marcuse 1955) for an exhaustive discussion on Hegel’s legacy). The Hegelian approach, however, did not remain unchallenged, and was opposed, for example, by the individualism of philosophers such as Kierkegaard (and, in the twentieth century, Heidegger) who saw introspection, and therefore the private sphere of individuality, as the only way to “truth”. A reaction both to the radical individualism of existentialist philosophers such as Kierkegaard and empiricist philosophers such as Hobbes and to the “socialism” of Marxist and neo-Marxist philosophers was, in the twentieth century, the so-called “Personalism” of philosophers such as Jacques Maritain (see, for example, (Maritain 1947)), who tried to find an alternative in the philosophical tradition of the mediaeval thinker Thomas Aquinas. According to Maritain rights (and hence privacy rights) are grounded in natural law; however, differently from what occurs in Hobbes or Locke, they relate specifically to the common good: it is this common good, and not individual rights, which forms the basis of the state. The right to privacy would therefore have to be revisited in the light of the idea of a common good, which takes precedence over the claims of the individual.

3.ECONOMIC ASPECTS OF PRIVACY A second major criticism of the human-rights approach to privacy concerns the cost to business, and the wider economy, of implementing such a right. This criticism is one rooted in economics, transaction cost theory and free trade. A good starting point for our discussion is the criticism of the EU Data Protection Directive (Council Directive 95/46/EC). This is very much in the Anglo-Saxon empiricist tradition of individual human rights. It has been criticized in (Gindin 1998), (Hosein 2000) and (Pounder 2001) among others. The basic argument is that in an information age, data protection legislation could become "overly bureaucratic and cumbersome" (Cavoukian 1999), since it requires the state to regulate almost all use of personal information. This regulation necessarily imposes costs on any business that stores personal information, and may restrict the flow of information between them: an unwelcome brake on the developing information industry.

Worries about bureaucracy and the cost of regulation have led to several proposals to establish a form of economic right to information privacy. The idea is that market mechanisms can achieve an equitable balance between an individual’s desire for privacy and economic efficiency; something that the human rights approach cannot do. The best example is Kenneth Laudon’s proposal for a National Information Market (Laudon 1996). In Laudon’s scheme, individuals would ‘deposit’ their personal information in a local ‘information bank’. The ‘information banks’ would then pool their information deposits and trade them on a ‘national information exchange’, with a fee being paid to the individuals whose personal information had been traded. However, some argue that such a system would be just as costly to manage as the current privacy regime. Laudon himself recognizes that there would be “information-handling charges for both the local banks and the exchange, as well as any brokers involved”. Whether the value of an individual’s personal information is sufficient to offset these transaction costs is not clear. This opens the way for a Coasian re-allocation of property rights: if there are “significant transactions costs to making contracts … an efficient allocation of rights would be one in which the transactions and negotiation costs are minimized” (Varian 1997). In other words, if the cost of trading information is greater than the value of the trade to the individuals who ‘own’ it, then the property rights to that information should be re-assigned. Typically, property rights would be transferred from the individual to whom the information pertains to the organization that collected the information. This may be sound economics, but is hardly an effective privacy protection regime from the individual’s perspective. Whatever the costs involved, whether setting up a bureaucracy or funding a transaction, it is clear that some form of privacy protection is necessary to assist the free flow of information. "Consumers are uneasy with their personal information being sent world-wide" (Privacy International 1999) and require some assurance that it will not be misused. Without the trust of consumers, the development of the information economy may stall (Cavoukian 1998). It was a concern to promote the free flow of personal information that led to one of the early attempts to agree basic data protection rules: the ‘fair information practices’ of the OECD’s Guidelines On The Protection Of Privacy And Transborder Flows Of Personal Data (OECD 1980). This sought to ensure that differing data protection regimes did not restrict international trade in personal information. This is at the heart of the debate over the EU Data Protection Directive, which prevents the transfer of personal information about EU citizens to any non-EU country lacking adequate data protection. Cost is not the only reason for advocating a switch to a property right in personal information. As early as 1972 the British Computer Society advocated that "personal information, whether of an individual, group or institution, should be defined as a property right" since " ... there is little to be achieved by attempting a philosophic definition (of privacy), and that concentration on this elusive goal may well seriously delay practical measures to establish desirable levels of protection." (Ellis 1972). Thus as early as the 1970s some authors had begun to recognize the tension between the value individuals place on privacy, and the value of their personal information to business. For Ellis, the key problem was the difficulty of agreeing a definition of privacy for personal information. This ties in nicely with our discussion of cultural aspects of privacy; just whose definition of “private” should we adopt? Lacking any agreed definition, Ellis regards a property right as the next best thing, since it will allow individuals to make choices over what they reveal and what they keep private. More recently, James B Rule, considering privacy protection in the USA, has also suggested that "legislators should ... create a property right covering commercial uses of personal information" (Rule 1998). This would "protect privacy without any new government agency - and without further misplaced trust in industry self-restraint" (ibid.). These remarks suggest that neither cost nor cultural sensitivity are the main influence on Rule’s call for an individual property right to personal information. Instead, he does not trust business to play fair with the consumer, nor government to regulate the information economy effectively. Others share Rule’s concerns: Privacy International has noted that "Companies regularly flaunt laws, collecting and disseminating personal information" and that "concern over privacy violations is now greater than at any time in recent history" (Privacy International 1999). Interestingly, N. Edouard and W. White, in a report for the UK Management Consultancies Association, claim: "The key battleground lies with the competing aims of individual (and corporate) privacy versus what can be described as national interest" (Edouard and White 1999). Thus businesses also worry that their privacy is under threat, even as they seem to threaten the privacy of their customers. A property right to information is not the only market-based model for privacy protection. Various selfregulatory and compensation schemes have been suggested as alternatives to both the human right and the property right approaches to privacy (see for example (NTIA 1997), in particular the contributions in Chapter

1: Theory of markets). A real-world example of such a regime is TRUSTe. TRUSTe is an independent, nonprofit privacy organization, which aims to promote, within Internet e-commerce, a form of industry selfregulation that it terms "self governance". Here, industry self-regulation is framed within existing laws and industry best practice under the scrutiny of an "informed marketplace" (TRUSTe 2001a; 2001b). Consumers can trust any organization that gains the TRUSTe seal of approval to play fair with their personal information. Unfortunately, TRUSTe is itself under criticism for a having “slipped from a consumer advocate to corporate apologist” (Boutin 2002). The accusation is that large Internet organizations have continued to use the TRUSTe seal despite what most Internet users would regard as sharp practice with respect to their user’s privacy. This case illustrates the main criticism of self-regulation: that it is based on “wolves herding sheep - for the benefit of the wolves, not the sheep” (Clarke 2000). Thus we are faced with a conundrum: to promote free trade in information, and the development of the information economy, we must ensure consumer trust by protecting privacy. Yet the most effective mechanisms to protect privacy may undermine the development of the information economy, through high cost. Worse still, the cheaper alternatives may actually undermine what consumer trust there is. Our focus throughout this section has been on information privacy: the privacy of personal data and personal communications. This was necessary since few authors writing on economic approaches to privacy protection consider other aspects of privacy. To date, most developments in the information economy have been concerned with trading such data and monitoring such communications. This is likely to change. Privacy of the person, the right to refuse invasive procedures such as electronic tagging, is currently facing significant challenges. Developments in cybernetics, for example the use of electronic tags or implants to monitor an individual's whereabouts, are one such challenge. Schemes to monitor the whereabouts of offenders using electronic tags are already in place in the UK (see (Elliot et al 2000), (Airs et al 2000) and (Dodgson et al 2001, p iii).) Privacy of personal behavior may be threatened by developments in surveillance technology. For example Solution Products Systems Ltd, offers a tool that uses infrared cameras to analyze which products catch shoppers' gaze (see (SPS 2002)). Linked with iris recognition systems this technology could potentially track an individual's browsing habits. Thus, as technology progresses, the anonymity of the crowd, one of the main protection mechanisms for the privacy of personal behavior, could well disappear. It is difficult to see how current proposals, rooted in existing technologies and the decades-old problem of information privacy, can be applied to resolve these new challenges. The differences of opinion over the nature and extent of the right to privacy; the profusion of competing protection mechanisms; and the perceived conflict between individual privacy and economic efficiency suggest that a fresh attempt at a philosophic definition of privacy is required. This definition must build on the work done in defining privacy as a human right, but acknowledge both alternative cultural approaches and the economic aspects of privacy.

4.A HEGELIAN APPROACH TO AN ECONOMIC RIGHT TO PRIVACY As seen above, the concepts of "private" and "privacy" have been examined by a number of philosophers. Few however have looked at the economic aspects of the problem: one of the most compelling approaches, which, in looking at the concepts of "private" and "privacy", examines the relationship between the idea of rights and the socio-economic reality into which these rights must be realised, has been by Hegel, most notably in his Encyclopaedia (Hegel 1817) and Grundlinien der Philosophie des Rechts, ((Hegel 1821), available in English with the title Philosophy of Right, as (Hegel 1991)) . We shall concentrate here (and with no claim to exhaustiveness, given the density of Hegel's writing) on Hegel's Philosophy of Right, showing how an Hegelian approach can form a basis for an economic right to privacy. For Hegel the idea of "private" is derived from a reflection on "right" itself: it is therefore the careful reflection on the abstract concept of rights which brings us to the idea of a right to privacy. The starting point for the idea of a "right" is for Hegel the concept of freedom, and, more specifically, the concept of a free will (Grundlinien der Philosophie des Rechts, par.4): hence, to understand the meaning of "right" we must first examine the concept of "freedom". For Hegel the starting point for the foundation of any right is not any "law of nature", but the fact that human beings are, as human beings, capable of making free decisions: it is this freedom to choose, or free will, that makes us human and which in turn determines our rights as humans. This means that when talking about rights we are talking about the expression of freedom, or, in other words, the expression of an individual free will. A right is in the first instance, to use Hegel's words, the "immediate

being" of freedom (par. 40): freedom is a being which finds itself opposed to a nature which is different from itself and therefore is revealed as the being of a subject (free will) in contrast to an object (nature) (par. 39). Human beings find that their free will is not infinite, but is constrained by surrounding nature: the free will therefore strives to act in order to take away these objective limitations to itself. In everyday terms, people, beings with a free will, find they are not infinitely free: their freedom is restrained, by nature, the world and other people. But people want their freedom, notwithstanding these limitations. Rights in general, and in particular the right to privacy, are therefore a solution to the contrast between the free will and the limitations imposed on this free will by the existence of other beings who also have a free will: rights are therefore derived from the desire for a person to be free in opposition to the will of others and who in turn want to express their liberty by intruding into this same person's freedom. Rights arise therefore when I seek to deprive others of their liberty in order to be able to express my liberty: what I consider my private sphere of action is deprivation (taking away of the private) for another who is not me. Privacy, therefore, intended as the right to be "private", belonging to me and not to others, is essentially a right which ensures the freedom of each individual. A discussion of the right to privacy therefore leads directly to Hegel's treatment of property. Property is for Hegel the sphere of personal freedom (41), the first element of "Right", and, as such, the expression of the abstract free will (40). Property is the exterior object which I claim as my possession (45) and is therefore private property (45), or, in other words "mine"; it is therefore in the same relation to others as we have seen is privacy: its being mine de-prives others of its being theirs. The right to privacy is therefore essentially the right to property: the concrete expression of personal free will. As we have seen, however, the free will is not isolated, and in reality individual freedom can only have existence in relation to the freedom of other individuals (70). Private property is consequently not just the result of my subjective will, but the result of a common will, the contract (70): I can't lay claim on something as mine without an agreement with all the other people who could also lay claim on that object. Moreover, a person is not an isolated owner of private property, but has needs which necessitate interaction with other people who are also owners of private property: this interaction, which may take place as exchange, gift, commerce etc., is the place of the contract and allows me to divest myself of my property. Hence the contract allows me to cease being an owner of something and grants ownership to another person (74). In Hegelian terms, I can alienate what is my private property (65): what I owned ceases to be mine and is seen as something essentially different ("alien") from me. In the case of privacy, this means a person may "alienate" what was seen as their "private" sphere of being through a contract: what is commonly referred to as "privacy" is merely a type of private property and, as such, may be subject to contract, given away, exchanged or sold. The moment my privacy is subject to contract, it ceases to be mine and hence also ceases to be private: it becomes something "alien" which I may dispose of as I will. It is therefore perfectly reasonable to subject "privacy" to a contract in the same way as is work: as a free person I may decide to sell my work for a certain amount of hours a day, subjecting "my" work to contract so that it is no longer "mine", but belongs to the other party in the contract (a firm, for example) for the agreed term. But work is only one of many things which belong (are private) to me: work is, in other words, one of many examples of my private property or of my sphere of privacy. In the same way as I sell (by "alienating" it) my work, I can therefore sell other instances of my privacy by subjecting them to contract: indeed, the same contract that regulates my work may regulate the other aspects of privacy I wish to dispose of. As can be seen, the central elements of this discussion are freedom and contract: because I have free will, I may dispose of my privacy through a free decision to enter into a contract with another person. A contract is therefore the result of an act of free will (75): it is my decision, free and unconstrained, which allows me to de-prive myself of my privacy by subjecting it to contract. Once this has been done it makes no sense to redress the issue as the contract was the embodiment of my freedom: I could have decided not to enter into the contract just as I decided to enter into it. A firm may therefore appropriate any aspect of a customer's privacy that was subject to contract: the crucial element is that it must have been subject to a contract which was freely entered into by individuals capable of exercising their will freely. It is a customer's free decision whether to enter into that contract or not, but once entered into, the customer may not break the contract without committing a crime (see par. 82103 on illegal acts, fraud and crime). In short, a business has a "right" to its customer's privacy insofar as this was subject to contract, and a customer has no right to grievance insofar as the contract was entered into freely.

5.CONCLUSION We have discussed two different criticisms of the current approach to privacy protection. First, we have seen how it is rooted in a culturally specific view of the relationship between the individual and society: AngloSaxon pragmatism. There are other philosophies, other cultural viewpoints, and it is clear that in a globalized economy these viewpoints must be considered. Second, there are doubts about the economic efficiency of the current approach. Again, we have discussed some alternative approaches and shown how very different motives can be ascribed to advocates of very similar positions. Seeking to provide global solutions to the problem of privacy in the information age, we have turned to the philosopher Hegel, and his general theory of rights. With its emphasis on free will, this seems a particularly appropriate philosophy for post-industrial society with its emphasis on the value of selfexpression. We have seen how Hegel's investigations into privacy provide a clear foundation for privacy as an economic right. Hegel's analysis, being general, can be applied to all privacy issues, not just information privacy. Thus it may prove more robust in the face of changing technical and social circumstances. The Hegelian analysis also addresses some issues of cultural diversity. It does not rely on the notion of natural rights, derived from a state of nature about which different cultures may disagree, but from a careful reflection upon the idea of right itself. By pushing deeper into our shared humanity, beyond social structures into more fundamental notions, we can hope to overcome some cultural objections. Furthermore, Hegel's work does not see the individual as isolated, but as part of intertwined social structures: the family and the state. We are currently investigating the role of the family in protecting children's privacy, and other rights, online. Further work includes the role of the state, and privacy in the workplace. By investigating privacy using Hegel's philosophical analysis we hope to provide new insights into this important topic.

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