Information and organisation: Introduction
Phuah Eng Chye (28 September 2019)
Countries like Japan foresaw the coming of the information society[1]. But early conceptualisations of the information society fell short because it focused on ICT. In recent years, it has become more apparent the information society revolves around information or data. This transforms information from its supporting role in the industrial economy to becoming an end in itself[2] in the information society.
Recent technological advancements are bringing us closer to the tipping point of the transformation process. The new technologies such as sensors, AI, IOT and cloud have changed the way we collect and use information; in particular minimising manual processing. This has altered the features of information. Automated data throughput is massive; it is real-time, accurate, multi-dimensional and connective. Data is no longer limited to alpha-numeric but encompasses the senses of sight, hearing, smell, taste, touch as well as emotions.
Unlike technology (hardware and software) which is continuously upgraded, data is a record of historical events and is permanent. Actions are increasingly triggered by historical data patterns rather than by human decisions. Societies are becoming data-centric and data-driven. Some economists perceive data as replacing labour, capital and even oil as the most valuable resource in an economy.
The core challenge in managing the transition to an information society relates to organisation. In this regard, information has been a game changer because it alters economic meanings[3], relationships and disrupts organisational structures[4]. In this context, the legacy roles, organisational structures and regulations can be considered to represent solutions to address information asymmetry, information and knowledge shortfalls and lengthy time lags in a low-information environment. Today, information is widely available and production is dictated by demand-pull rather than supply-push considerations. Information sufficiency and efficiency shifts bottleneck points and makes traditional organisational structures, processes and thinking redundant.
But we lack a robust theoretical framework to guide us in the transition to an information society. In particular, there are gaps in the current economic theories on organisation. Most theories have been “concerned with the obstacles to coordination of activities inside and between organizations (firms, alliances, institutions, and market as a whole)” [5]. Prominent approaches include the transaction cost theories (e.g. theory of the firm), agency theory (governance and conflicts of interest) and contract theory (agreements and issues to relating asymmetric information). They do not satisfactorily confront the realities of information disruption.
Chris Shaw proposed an interesting view on the evolution of the relationship between information and organisation. “The initial organisation of capitalism and markets was premised initially upon the centrality of private property and individual ownership…In a world that was extremely inefficient…It would be inefficient to buy things from the market and so entrepreneurs would tend to accumulate large payrolls. Most people would work full-time jobs for large firms. If you wanted to take your family to the beach twice a year, you would need to own the beach house because it would be too inefficient to rent, the reality before online marketplaces like AirBnB showed up. Consumers would need to own nearly everything they might conceivably need.”
He suggests that “in situations where markets aren’t fully efficient or competitive, ownership is an extremely important concept as it delineates where things lie, and thus allows for individual control and allocation over one’s resources and contractual relations…Government as well formed a part of these of interconnections as they provided regulatory stability and infrastructural provision that creates economies of scale (and by extension subsidises diseconomies). This could be adequately summed up by the great compromise of Keynesian fiscal management and post-war capitalism, where labour, firms and government formed a tripartite system of interrelated services and obligations. The first limited strikes and guaranteed labour market stability. The second provided long-term hierarchical job structures and linked pay with productivity. The third provided a regulatory environment that limited both the previous actors’ excesses and a series of services (welfare, monetary and fiscal policies) that maintained national stability”.
Chris Shaw notes that “when markets and software begin to eat the world, these relations suddenly become redundant. A system of clearly-defined ownership and individual obligations organised through rigid institutions could not cope with the increasing globalisation of economies of scale and the fluidity of fiscal and monetary policies created by tax competition, floating exchange rates and international money and capital flows. New logistical possibilities grew from the internet and the technics of platform companies (Amazon, Facebook, Apple, etc.) that reduced triangulation costs (by making it easier to source, produce and find products through international trade flows) and transfer costs (by bringing together and facilitating the negotiation of mutually beneficial commercial or retail deals)…this goes further as the concept of individual ownership is superseded by the idea of sharing in networks of mutually beneficial relations…You own almost nothing, but have access to almost everything. You, nor your neighbors, have a job, at least in the traditional sense. You pick up shifts or client work as needed and maybe manage a few small side businesses”.
In this regard, “there isn’t a production line of divided labourers with specific mechanical tasks, but instead a series of open-ended tasks and processes. Organisations become singular subsistences with management ethoses and mission statements. They are endowed with individual rights and given levels of social responsibility, where they act as much as governing operators as companies aiming for profit. Companies and organisations are aggregators of social relations related to branding, stakeholders and ethical reasoning. They are not simply collections of individuals organised into groups with set tasks, but a series of learning organisations that are meant to grow and adapt as complexity multiplies levels of knowledge and information and divides these mechanical task-based groupings into constituent parts…What are stakeholders if not new dividual elements in corporate organisation, beyond the individuated picture of a consumer/customer. What is governance if not the increasing complexity of organising resources and labour within markets and plans, where government(s) is subsumed in this wider governance”.
Chris Shaw notes that “as these relations are put under the rubric of universal exchange, exchange itself is morphed into different systems of relations, different linguistic and definitional variations that posit not systems of profit but modes of potentiality beyond capitalist ontology. When markets eat everything, the catallaxic complexity this breeds information-distribution problems that create constant subversion and with it significant externalities (environmental, social and infrastructural). However, reality shows that these externalities come attached with real actors who suffer the consequences of market ignorance due to pricing failures, and that in dealing with this governance there cannot simply be a market ontology of constant changes in decision-making due to financial and/or logistical flux. It will come up against alternate ontologies in battlespaces and intercursive frameworks, whether these be ecological, platform-based, state-based or posthuman. These interactions define our fields of potentiality as old problems contract and new problems expand, increasing the potential for experimentalism and exit, as well as new forms of design and voice. However, in this expansive field the potential for white noise and sublimation are also increased”.
“Platforms and international companies are able to incorporate multiple stakeholders through their governance mechanisms by controlling the flow of information and goods…governance structures that are ordered by wider responsibilities involving fiduciary responsibilities, information gatekeeping, market structuring and other governing pathologies. This follows a further transformation in the state as sovereignty segues outwards, toward trade bodies, international regulatory agencies and TNCs who lobby and help codify standards. Here we then see a potential intersection in the posthuman subject-user field, as these platforms allow for both a clannish insularity that protects people from technological acceleration through the mechanisms of corporate social responsibility and corporate charters, and potentially allows for their own supersession through internal dynamics that they can’t control, such as fake news, botnets, populist subversion, ontological clashes between human and machinic users (such as over how algorithms govern what we see and hear) as well as other informational complexities”.
Chris Shaw suggests that “markets in everything then expands the addressability of lives and relations between things, further adding informational complexity as well as producing sub-routing potentials that both decentralise knowledge, information and capital, as well as allowing actors to wall off and border blockchain topologies, developing specific blockchain sovereignties and differing levels of techonomic autonomy. This creates varieties of market beyond current institutional controls, thus moving us beyond institutional modernities toward multiple modernities and modes of regulation as a meta-anarchy of sovereign and sub-sovereign relations collide. Market ontologies of various kinds combine and contrast with posthuman user-subjects, creating new areas of private totalitarian control as well as new methods of independence and autonomy away from our current institutional modernities”. “New forms of citizenship and integration are borne as we define ourselves by either our anonymity/pseudonymity on blockchains, or through our corporate nexus within platforms and social media. These systems (corporate, blockchain, platform, citizenship) are developing their own methods of cognition from their constituent parts, combining and contrasting their subsystems to continually adapt and survive, as well as thrive”.
Chris Shaw concludes recent political events are not being “fought on policy, but rather on imagery and perspectival lenses that are incommensurable. As these events have metastasised, the original ideologies that inculcated these groups have hardened, producing new political maps that intersect politics along lines of remain/leave or nationalism/cosmopolitanism. Networked tribes are formed out of this conflictual sovereignty as dividual lines have been drawn that treat ideological markers as methods of group identification, subsuming the individual to the group and focusing on alternate methods of organisation, rhetoric and propaganda…When these networked tribes do use electoral politics, its primarily to further an agenda or develop a platform for legitimation rather than use these avenues as means for debate and policy-making. There is no real policy from things like a second referendum on Brexit…except as simplistic solutions that further the conflict already present. Instead policy-making as the act of improving individual’s lot in national and/or international spaces is subsumed or ignored as ideological markers and tribal identities are formed from geographic concentrations and social media activity that intersect individual concerns and prise group identity as the primary mechanism for political ideology. Formed through campaign groups, marketing tools and the echo chambers of social media, the individual is a-centred as a political subject”.
Hence, understanding the effects of information on organisation requires a holistic perspective on the changing forms of business and household organisation[6] and their impact on social (dislocation) and economic (e.g. employment, capital formation, production, consumption, prices, financial balance sheets and markets) organisation. The dilemma arises from the resistance from legacy organisations which block or delay the introduction of new information-driven approaches to delivering services and transactions. If economies hesitate to facilitate organisational change, not only will they be unable to take advantage of the new opportunities, they will be preoccupied with addressing the costs of prolonging decay. Below are several aspects of the relationship between information and organisation that requires attention.
- Ownership and use of information. Information is non-rivalrous and abundant. Unlike physical goods, the same information can be consumed by an infinite number of users. In fact, increasing the number of users increases the quality and social value of information. Therefore, there are social benefits in expanding usage of information by the public. Against this, there are arguments for usage restraints in relation to intellectual property rights and for privacy and security considerations. The debate over how value is created from information and how the benefits and costs (including ownership rights, externalities) are distributed[7] will become more heated as the value of information rises.
- Information, development and monetisation. Economic development can be framed as a learning process for society in using information and organising processes to improve the value of human capital, assets and activities. For example, property values are enhanced by information innovations to fragment property ownership into small pieces and to enhance their tradability. It can similarly be argued that the value of individuals or human capital is enhanced by more information[8]. For example, famous people generate more value (though it may not accrue to them). In contrast, poor people lack identity (e.g. even an address) and are unable to generate value. The lack of information on individuals is a major cause of poverty. In this regard, attempts to overcome poverty by increasing the value of assets (property redevelopment) ends up displacing the poor. Overcoming poverty therefore requires not only providing individuals with identities but it also by ensuring they are endowed with assets (property, education, health, access and opportunities). When information is not widely distributed or if there are informational imbalances, then inequality will emerge. The relationship between information, development and monetisation[9] are important because they have wide-ranging economic and social effects. In this context, development strategies should adopt a human-centric approach by focusing on the use of information to improve the value of human capital.
- Purpose of using information. Is information being used for private profits or for public good[10]? Price and profit were powerful motivating forces for developing society in a low-information environment. But price and profit may not be the best guide to building society in a high-information environment. This is because abundance overrides the need for incentives to increase output to overcome scarcity. Information sufficiency also provides us the ability to choose non-output and non-profit based targets. For example, with the information now available, algorithms can be redesigned to maximise income for the largest number of taxi drivers rather than to maximise market share or revenues for firms. Alternatively, algorithms can be re-jigged to minimise the use of cars or the number of taxis roaming the streets. The point is that the answers we get from information are dependent on the questions we ask. The question therefore is whether we are asking the right questions. Information frees us of limitations and expands our choice in relation to the types of problems we want to solve. Governments should thus be asking “public good” questions when shaping policies as the private sector will attend to the profit issues.
- Freedom and choice. The debate on information is often skewed towards physical environments and traditional organisational structures that are hierarchical and centrally controlled. This overlooks the critical change that information, which used to be the preserve of governments and large corporations, is now widely accessible to individuals. Hence, information is no longer centrally controlled but distributed over a network. Another feature is that information expands the ability to cooperate with strangers without the need for common beliefs or relationships. As a result, information is autonomous. In accommodating diversity, it increases interactions and interdependencies between diverse communities and views. But this leaves a vacuum in terms of reconciling or converging values and beliefs. This leaves us with two important questions. The first is the privacy question. Does more information mean less freedom? Are there boundaries we should place on the capture and use of information? The second is the cooperation question. How do we get different stakeholders to agree on common goals and to cooperate given the diverse objectives? It will be interesting to see how societies evolve when all citizens become informationally sophisticated and are able to actively participate in shaping future outcomes given that different groups are likely to seek to control information to expand their power commercially[11] and politically.
- More information, more rules. The inevitable reality is that more information will lead to more rules and more rules will lead to more disputes. The traditional regulatory frameworks are inadequate. New rules will be needed to clarify the boundaries in relation to technologies, data, content, AI, platforms and networks. The effects of re-regulation in information-related areas are far-reaching and will affect all other regulations e.g. the rules on work, industry (e.g. in relation to safety, liabilities and competition). There are multiple ongoing initiatives to overhaul legacy regulations. The problem is that these piecemeal efforts will results in gaps, overlaps and inconsistency. There is a need for a coherent framework, particularly at the international level. Overall, the multiplication of rules will increase complexity. This will be accompanied by an increase in the number of disputes. Hence, the information society requires, most of all, an efficient mechanism for the resolution of disputes.
Information-driven organisational change is thus at the heart of transition to an information society. In earlier decades, technology and information use were allowed to flourish without restraint because most regulators didn’t want to impede innovation. But as technological firms built dominant positions and national rivalries for technological supremacy intensified, governments have begun to intervene. This marks the end of innocence[12]where naivety on the impact of technological innovation on information is being replaced by sensitivity to its effects. Restrictions on information flows relating to privacy, ethics, taxation, employment, competitiveness, discrimination and national security are being considered or imposed.
We are at a crossroads. In this context, we are no longer held back by technological know-how but by social and political considerations on the capture and use of information. The imposition of restrictions on information will undoubtedly impede organisational evolution as it will limit the quantity and quality of information. It could also potentially cause economic and social regression. We will not be able realise the full potential of the information society until we learn how to organise information effectively. Surprisingly, the first hurdle is to resolve the debate on surveillance and privacy rights as they cut across all other issues in determining the amount of information that will be available for use.
References
Chris Shaw (14 July 2019) “Fields of potentiality: Part 2 – Posthuman developments and flows”. The Libertarian Ideal.
Economicsofinformationsociety.com: Articles (July 2017- March 2019)
Joseph E. Stiglitz (September 2017) “The revolution of information economics: The past and the future”. NBER. https://www.nber.org/papers/w23780.pdf
Phuah Eng Chye (2015) Policy paradigms for the anorexic and financialised economy: Managing the transition to an information society.
Phuah Eng Chye (6 January 2018) “The sharing economy: Sharing, social media and information”.
Phuah Eng Chye (3 March 2018) “Organisation of households: Changing household structures and dependency”. http://economicsofinformationsociety.com/organisation-of-households-changing-household-structures-and-dependency/
Phuah Eng Chye (25 August 2018) “Future of work: Challenges from the changing organisation of employment”. http://economicsofinformationsociety.com/future-of-work-challenges-from-the-changing-organisation-of-employment/
Phuah Eng Chye (5 January 2019) “Future of work: Redefining work (Part 6: Monetising participation)”. http://economicsofinformationsociety.com/future-of-work-re-defining-work-part-6-monetising-participation/
Phuah Eng Chye (2 March 2019) “Future of work: Transition to the information society”. http://economicsofinformationsociety.com/future-of-work-transition-to-the-information-society/
Phuah Eng Chye (27 April 2019) “Defining the information society”.
Phuah Eng Chye (25 May 2019) “How information alters economic concepts”. http://economicsofinformationsociety.com/how-information-alters-economic-concepts/
Phuah Eng Chye (8 June 2019) “The information society landscape”. http://economicsofinformationsociety.com/the-information-society-landscape/
Phuah Eng Chye (22 June 2019) “Policy conversations and the language of information”. http://economicsofinformationsociety.com/policy-conversations-and-the-language-of-information/
Phuah Eng Chye (14 September 2019) “Information and development: Escaping the industrial maturity trap and moving forward to an information society”. http://economicsofinformationsociety.com/information-and-development-escaping-the-industrial-maturity-trap-and-moving-forward-to-an-information-society/
[1] “Defining the information society”.
[2] As reflected by the rise in information’s share of output and value in national economies and globally.
[3] “How information alters economic concepts”.
[4] “The information society landscape”.
[5] https://en.wikipedia.org/wiki/Organizational_economics.
[6] See earlier articles. Economicsofinformationsociety.com: Articles (July 2017- March 2019).
[7] See Joseph E. Stiglitz.
[8] This is reaffirmed by the current debate on the value of personal data. The value of individuals is also a function of identity and attention.
[9] “Future of work: Redefining work (Part 6: Monetising participation)”.
[10] “In reality, the key battle is over grabbing or limiting rents, over structuring of markets and the rules of game which affect the magnitude and distribution of rents. The rules of the game matter – markets don’t exist in a vacuum. Different rules affect the well-being of different groups…The public interest, of course, is to create institutional frameworks for corporate and public governance which benefit ordinary citizens and society as a whole…Governance is crucial – who makes the decisions, and the rules under which the decisions are made. Indeed, the rules of the game matter in every aspect of the economy – corporate governance, financial sector, monetary policy, bankruptcy, anti-trust, labor”. Joseph E. Stiglitz
[11] “Many key battles will be about information and knowledge (implicitly or explicitly) – and the governance of information”. Joseph E. Stiglitz.
[12] “Ralph wept for the end of innocence, the darkness of man’s heart”. William Golding, Lord of the Flies. https://www.goodreads.com/work/quotes/2766512-lord-of-the-flies