classical liberalism and the problem of technological change · 2018. 4. 5. · 3 this analysis,...
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Classical Liberalism and the Problem of Technological Change
Justin “Gus” Hurwitz & Geoffrey A. Manne
ICLE Innovation & the New Economy Research Program White Paper 2018-1
2
13
Classical Liberalism and the Problem of Technological Change
Justin(Gus)HurwitzandGeoffreyA.Manne
Introduction
Therelationshipbetweenclassicalliberalismandtechnologyissurprisingly
fraught.Thecommonunderstandingisthattechnologicaladvanceis
complementarytotheprinciplesofclassicalliberalism–especiallyinthecaseof
contemporary,information-agetechnology.1Thisismostclearlyondisplayin
SiliconValley,withitsoft-professedlibertarian(classicalliberalism’skissing
cousin)affinities.Theanalyticalpredicateforthiscomplementarityisthat
classicalliberalismvaluesliberty-enhancingprivateordering,andtechnological
advancebothisgenerallyfaciallyliberty-enhancingandfacilitatesprivate
ordering.
1Thischapterfocuseson“contemporarytechnology.”Thatis,generally,
thosetechnologiesassociatedwiththeinformationrevolutionofthepastgeneration:computers,theInternet,andrelatedinformationcommunicationsandprocessingtechnologies.Atreatmentoftherelationshipbetweenclassicalliberalismandamoregeneralizedconceptoftechnologyisbeyondthescopeofthischapter.Itis,however,theauthors’viewthatthediscussionofferedhereisrelevanttosuchabroaderconceptualization.
3
Thisanalysis,however,isincomplete.Classicalliberalismrecognizesthat
certainrulesarenecessaryinawell-functioningpolity.2Theclassicalliberal,for
instance,recognizesthecentralityofenforceablepropertyrights,andthe
concomitantabilitytoseekrecoursefromathirdparty(thestate)whenthose
rightsarecompromised.Thus,contemporarytechnologicaladvancesmay
facilitateprivatetransactions–butsuchtransactionsmaynotsupportprivate
orderingiftheyalsoweakeneitherthepropertyrightsnecessarytothat
orderingortheenforceabilityofthoserights.
Thischapterarguesthattechnologicaladvancecanattimescreate(or,
perhapsmoreaccurately,highlight)atensionwithinprinciplesofclassical
liberalism:Itcansimultaneouslyenhanceliberty,whilealsounderminingthe
legalrulesandinstitutionsnecessaryfortheefficientandjustprivateorderingof
interactionsinaliberalsociety.Thisisanimportanttensionforclassicalliberals
tounderstand–andonethatneedstobe,buttoorarelyis,acknowledgedor
struggledwith.Related,thechapteralsoidentifiesandevaluatesimportant
fracturelinesbetweenprevalentbranchesofmodernlibertarianism:thosethat
tendtoembracetechnologicalanarchismasmaximallyliberty-enhancing,onthe
onehand,andthosethatmorecautiouslyprotectthelegalinstitutions(for
example,propertyrights)uponwhichindividualautonomyandprivateordering
arebased,ontheother.
2See,forexample,JOHNLOCKE,TWOTREATISESONGOVERNMENTat§57(“[T]heendofthelawis,nottoabolishorrestrain,buttopreserveandenlargefreedom.For…wherethereisnolawthereisnofreedom.”);FRIEDRICHA.HAYEK,LAW,LEGISLATIONANDLIBERTY,VOLUME1:RULESANDORDER(1978)at33(“Liberalism…restrictsdeliberatecontroloftheoverallorderofsocietytotheenforcementofsuchgeneralrulesasarenecessaryfortheformationofaspontaneousorder,thedetailsofwhichwecannotforesee.”).
4
Thischapterproceedsinfourparts.PartIintroducesourunderstanding
ofclassicalliberalism’scoreprinciples:anemphasisonindividualliberty;the
recognitionofalimittotheexerciseoflibertywhenitconflictswiththe
autonomyofothers;andsupportforaminimalsetofrulesnecessaryto
coordinateindividuals’exerciseoftheirlibertyinautonomy-respectingways
throughasystemofprivateordering.PartIIthenoffersaninitialdiscussionof
therelationshipbetweentechnologyandlegalinstitutionsandarguesthat
technologyisimportanttoclassicalliberalisminsofarasitaffectsthelegal
institutionsuponwhichprivateorderingisbased.PartIIIexploreshow
libertarianphilosophieshaveembracedcontemporarytechnology,focusingon
“extreme”and“moderate”views–viewsthatcorrespondroughlytoliberty
maximalismandautonomyprotectionism.ThisdiscussionsetsthestageforPart
IV,whichconsidersthetensionsthattechnologicalchange–especiallytherapid
changethatcharacterizesmuchofrecenthistory–createswithintheclassical
liberalphilosophy.Thecentralinsightisthatclassicalliberalismpositsasetof
relativelystablelegalinstitutionsasthebasisforliberty-enhancingprivate
ordering–institutionsthataregenerallydevelopedthroughpublic,notprivate
ordering–butthattechnology,includingotherwiseliberty-enhancing
technology,candisrupttheseinstitutionsinwaysthatthreatenbothindividual
autonomyandtheprivateorderingbuiltuponextantinstitutions.
5
I What Is Classical Liberalism? A Technology-Relevant Account
Itmayseemunnecessarytoprovideabackgroundunderstandingofclassical
liberalisminasinglechapterinanentirebookonthesubject.But,althoughthe
generalcontoursareconsistent,thereisnouniversallyacknowledgedstatement
oftheprinciplesthatdefineclassicalliberalismandtheyvaryenoughfrom
understandingtounderstandingthatitisusefultodefinehowthetermisused
here.Moreover,thediscussionthatfollowsaddresseshowtechnologyaffects
whatwethinkofascertainofthedefiningcharacteristicsofclassicalliberalism.
Assuch,itisparticularlyusefulforustoplacethesecharacteristicsonthetable
andexplaintheirimportancebeforeconsideringhowtechnologymayaffect
them.
Attheoutset,itisworthclearlystating,asamatterofdiscursive
convenience,thatweclassifyclassicalliberalismandlibertarianismasclosely
relatedbutdistinctphilosophies,wherelibertarianismencompassesamore
restrictiveviewonwhatisproperlythepurviewofthestate.Thisisnotintended
tobeanalyticallyrigorousnoracompletecharacterizationofeither.Rather,itis
basedintherecognitionthatmanytechnologists,bothinacademiaandin
industry,stylethemselvesaslibertarian(or“cyberlibertarian”),andthatthereis
acertaincomplementaritybetweensomeoftheseviewsandourunderstanding
ofclassicalliberalism.Theviewsofself-styledlibertariantechnologiststherefore
presentausefulframethroughwhichtoconsiderthebroaderfeaturesofthe
classicalliberalunderstandingoftechnology.
6
Othercontributionstothisvolumediscusstheoriginsandprinciplesof
classicalliberalisminmoredetailandwithmoresophisticationthanisrequired
here.Forourpurposes,itisenoughtoexplainclassicalliberalismasapolitical
philosophythatvaluesrelianceonaminimalsetofautonomy-respectingrulesto
facilitatevoluntary,welfare-enhancingtransactionsbetweenindividuals.3Byand
large,these“autonomy-respectingrules”arepropertyrights.4
Importantly,thissetsupaninherenttensioninclassicalliberalism.
Propertyisnotthesamethingaslibertyand,infact,itisaconstraintonliberty.
ThenineteenthcenturyFrenchanarchist,Pierre-JosephProudhon,famously
declaredthat“[p]ropertyistheft!”5and,inasense,itis:Byrecognizingorby
definingandassigningpropertyrights(andbyenforcingthem),thegovernment
3Amongmanyothersourcesforthisgeneralconceptionofclassical
liberalism,see,forexample,RichardA.Epstein,Let“TheFundamentalThingsApply”:NecessaryandContingentTruthsinLegalScholarship,115HarvardLAWREVIEW1300,1302(2002)(“[A]strong(butnotabsolute)institutionalpreferenceforconsensualoverforcedexchanges;thelegalsystemshouldfindtheformerpresumptivelyacceptableandthelatterpresumptivelyunacceptable.Fromthisframework,wecanmountadefenseofprivatepropertyandfreedomofcontract,subjecttotheusualprovisosregardingtheroleofgovernmentinprotectingindividualsagainsttheuseofforceandfraud,regulatingmonopoly,andprovidingpublicinfrastructure.”).
4Intheeconomicsense,asmuchasthelegalsense,insofarastheyestablishnotonlyastablelegalorderforachievingdistributivejusticeinNozick’ssense,see,forexample,ROBERTNOZICK,ANARCHY,STATEANDUTOPIA149–52(1974),butalsoenableanefficienteconomicorderbyreducingtransactioncosts,see,forexample,ArmenA.AlchianandHaroldDemsetz,ThePropertyRightParadigm,33JOURNALOFECONOMICHISTORY16(1973).
5PIERRE-JOSEPHPROUDHON,WHATISPROPERTY?ANINQUIRYINTOTHEPRINCIPLEOFRIGHTANDOFGOVERNMENT(1840;BenjaminR.Tucker,trans.,1890),availableathttp://bit.ly/2t0xPDC.
7
removessomethingofvaluefromthecommonsthatwasformerlyaccessibleby
anyoneandtransfersittoaparticularperson.
Butjustasimportantly,thebenefitsofpropertyareenjoyedbyeveryone.
Thesystemisdecentralizedsuchthatanyonemay,inprinciple,claimaproperty
rightoverwhatevershechoosesprovidedsheisthefirstto,say,possessesa
pieceofland,orotherwiseassertherrightastheresultofvoluntaryexchangeor
byoperationoflaw.Moreover,theincentivestoinvest,hireworkers,produce
thingsofvalue,andtradeenabledbyasystemofpropertyrightsresultin
widespreadsocialbenefit.Forclassicalliberals,thejustificationforthe
constraintonlibertyentailedbypropertyrightsarisesnotfromanappealto
naturalorder,butfromtheperceivedsocialadvantageitconfers.AsRichard
Epsteinhaswritten:
[T]heserightsaredefensiblebecausetheyhelpadvance
humanhappinessinawiderangeofcircumstances,sothattheir
creationunderasetofgeneralprospectiverulessatisfiesthemost
exactingofsocialcriterion.Theytendtoleavenooneworseoff
thaninastateofnature,andindeedtendtospreadtheirnet
benefitsbroadlyovertheentirepopulation—includingboththose
whogainpropertyrightsunderthestandardrulesofacquisition
byfirstpossession,andthosewhoparticipateinthesystemonly
throughtheownershipoftheirownlaborandtheirabilitytoenter
intovoluntarytransactionswithallindividualsfortheexchangeof
labor,propertyorboth.6
6RichardA.Epstein,WhyLibertariansShouldn’tBe(Too)SkepticalAbout
IntellectualProperty,Progress&FreedomFoundationProgressonPointPaper
8
Suchasystemhasatleasttwoimportantcharacteristics.
First,becauseitispremisedonrespectforindividualautonomy,including
rulesthatprovidefortheprotectionanddispositionofallindividuals’property,
classicalliberalismisbuiltuponwhatiscommonlyacceptedtobeasoundmoral
foundation.7Second,becausesuchruleschannelinteractionsbetween
individualsintovoluntarytransactions,thesetransactionstendtobewelfare
enhancing.Atthesametime,becauserespectforautonomynecessitatesthatan
individualcannotuseordisposeofherpropertyinawaythatinterfereswiththe
rightsofothers,thesetransactionstendtoenhance(or,atminimum,notdetract
from)socialwelfare,aswell.
Themechanismbywhichtheseprinciplesoperate–andalsotheir
ultimategoal–isprivateordering:“Whatreallymattersisthatwedevelopa
systemofsecurepropertyrightsthatallowspeopletotransactatlowcostand
highreliability.”8Ratherthanrelyonanexternal,third-party,decisionmakerto
attempttheefficientorderingofindividuals’affairs,classicalliberalismadvances
asystemthatrecognizesthelimitsofknowledgeandtheriskofabuseofpower
inherentinthatmodel.Instead,classicalliberalismadvancesasystemthat
dependsuponindividuals’localizedknowledgeandtheirownself-interestto
No.13.4,at2(Feb.2006),availableathttps://papers.ssrn.com/sol3/papers.cfm?abstract_id=981779.
7Weobservethat,atleastinitsbasicdesign,aclassicalliberalordercansatisfythemoralityofabroadarrayofthinkers.Forinstance,onRawls’account–someonenottypicallyconsideredaclassicalliberal–“justiceasfairness”requiressomethinglikePareto-optimalityinthedistributionswithinasociety.JOHNRAWLS,ATHEORYOFJUSTICE58(1999).
8RichardA.Epstein,ThePropertyRightsMovementandIntellectualProperty,REGULATION58,63(Winter2008).
9
ordertheirconduct.Thekeyvirtueofsuchasystemisthatitdoesnot
presupposetheexistenceofanexternaldecisionmakerwithsufficient
knowledge,ability,andincentivetoordertheaffairsofothers.And,again,sucha
systemhasthevirtueofbeingmorallysound:Whereasasystemthatreliesupon
anexternaldecisionmakermustempowerthatdecisionmakertouse
(potentiallyarbitrary)forcetoimplementitssocialorderinginthefaceof
intransigentparties,classicalliberalismadvancesasysteminwhichtransactions
arevoluntarilyachievedbyvirtueofmutuallybeneficialexchange.
Inpartbecauseofitspreferenceforprivateordering,classicalliberalism
isoftencharacterizedasbeingopposedtogovernmentregulationandespousing
extremeviewsofregulatoryminimalism.Butsuchcharacterizationsareoverly
simplisticandfundamentallywrong.Classicalliberalismproperlyunderstood
bothrequiresandrespectsstronglegalinstitutions–particularlywell-defined
propertyrights–inordertofacilitateandenforcetheprivateorderingthatisits
sinequanon.Moreover,manyclassicalliberalsrecognizethatthesystemof
privateorderingespousedbyclassicalliberalismnecessarilyadvancesonly
allocativelyefficienttransactions;itdoesnotnecessarilypromotedistributive
efficiency,andsuchdistributionaladjustmentsofwealthbygovernmentmaybe
necessaryonthebackendofthesystem.9Andclassicalliberalismmayeven
admitofthepossibilityofregulatoryinterventionthroughpubliclawinstitutions
whereprivatelegalinstitutionsareinsufficientorrelativelyinefficient.10
9See,forexample,Hayek’sdiscussionofthepotentialneedforsomeform
ofwelfareprogramsinsufficientlywealthysocieties.F.A.HAYEK,THEROADTOSERFDOM133–35(1994).
10See,forexample,RICHARDEPSTEIN,SIMPLERULESFORACOMPLEXWORLD280–81(1995)(describingtheshiftfromacivillegalregimetowardapublic
10
Incontemporarydiscussions,thecoreprinciplesofclassicalliberalism
arenotinfrequentlyframedintermsofCoaseanandwelfareeconomics.These
perspectivesfocusattentiononallocativeefficiency.11Thepredicatesfor
classicalliberalism,however,wereestablishedwellbeforeMarshallandCoase,
andallofthefoundationalideasarecontainedincontemporariesoftheScottish
Enlightenment,mostnotablyintheworksofDavidHumeandAdamSmith.12
Thatsaid,bothwelfareeconomicsandCoasean,transaction-cost
economicsareparticularlyusefulforunderstandingtheclassicalliberal
perspectiveontechnology.
Welfareeconomicsoffersausefullensforunderstandingclassical
liberalism’sconcernwithindividualautonomy.Animportantconceptinwelfare
economicsisthedistinctionbetweenPareto-efficienttransactionsandKaldor-
Hicks–efficienttransactions.APareto-improvingtransactionisonethatmakesat
leastonepartybetteroffwithoutmakinganypartiesworseoff.Forinstance,
Orlandohasanapplebutprefersoranges;Alicehasanorangebutprefersapples.
IfOrlandoandAliceexchangefruits,eachisbetteroff(andneitherisworseoff).
InatransactionthatisKaldor-Hicks–efficient,however,partiesmaybemade
worseoffprovidedthat,onnet,societyismadebetteroff.Thus,Orlandohasno
regulatoryregimeforthemanagementofdamagesfromsmallamountsofpollutionaffectingalargenumberofparties).
11See,forexample,ArmenA.AlchianandHaroldDemsetz,ThePropertyRightParadigm,33JOURNALOFECONOMICHISTORY16,21–22(1973).
12See,forexample,ADAMSMITH,ANINQUIRYINTOTHENATUREANDCAUSESOFTHEWEALTHOFNATIONS(1776)(EdwinCannan,ed.,1904),availableathttp://oll.libertyfund.org/titles/smith-an-inquiry-into-the-nature-and-causes-of-the-wealth-of-nations-cannan-ed-in-2-vols;DavidHume,OnGovernment,5(1777)(LibertyFund,ed.,2013),availableathttp://lf-oll.s3.amazonaws.com/titles/2472/Hume_OnGovernment1777.pdf.
11
fruitandAlicehasanorange.OrlandolikesorangesmorethanAlicedoes.Ifhe
simplystealsAlice’sorangehehasgainedmorethanAlicehaslost.Undera
Kaldor-Hicksstandard(assumingnoexpenditurestopreventthetheft),thisisan
efficient,socially-beneficialtransaction.
ThejustificationforKaldor-Hicks–efficienttransactionsisthat,in
principle,AlicecouldbecompensatedforOrlando’stheft.Forinstance,the
governmentcouldtaxOrlandoinordertocompensateAlice;orAlicecouldsue
Orlandoandrecovercompensatorydamages.And,thetheorygoes,itisbetterto
allowOrlandotoputAlice’sorangetosocially-valuableusesthantorisklosing
outonthebenefitofthoseusesbecauseofAlice’sintransigenceordifficulties
thatOrlandomayface(i.e.,transactioncosts)inbringingsuchatransactionto
fruition.
Fromtheclassicalliberalperspective,however,onlyPareto-efficient
transactionsarepresumptivelylegitimate.Suchtransactionsareinherently
beneficialtoallparties(or,atleast,beneficialtosomepartiesandnotharmfulto
any),andthesebenefitscreateincentivesforpartiestoengageinthesewelfare-
enhancingtransactions.Iftheyaretrulywelfare-enhancing,nocoercionshould
benecessaryforthemtooccur.Ifthereareobstaclestothesetransactions
occurring,classicalliberalismholdsthatweshouldaddressthoseobstacles
ratherthanadopt(Kaldor-Hicks-efficient)rulesthatwouldallowOrlandoto
violateAlice’sautonomy.Doingsofacilitatesprivateorderingandprotects
individualssuchasAlicefromundueencroachmentbyeitherOrlandoorthe
state.(Aswewillsee,however,extremecyberlibertarianismwouldreadily
countenanceKaldor-Hicksimprovements).
12
Thebackgroundconcernfortransactioncostsimplicitlyrunsthrough
many,ifnotall,legalconstructsthatdevelopedatcommonlaw.AsTomMerrill
andHenrySmithhaveobserved,13thegoalofcreatingandusinglegalconstructs
istomanagethetransactioncosts(“informationcosts”intheiraccount)inherent
inaworldofscarceresources.Forinstance,theydescribethedifferencebetween
applyinganinremregimeandaninpersonamregimeformanagingproperty.
Thewisdomofapplyingoneortheotherinanygivencontextcomesdownto
theirrelativeabilitiestomanagetheinformationcostsassociatedwithsettling
disputesrelatingtoownershipanduse.14
Coasesimilarlyoffersausefullensforunderstandingclassicalliberalism’s
focusontherelationshipbetweenlegalinstitutionsandprivateordering.For
Coase,theconceptoftransactioncostsiskeytounderstandingtherelationship
13See,forexample,ThomasMerrillandHenrySmith,The
Property/ContractInterface,101COLUMBIALAWREVIEW773,792–797(2001).14OnMerrillandSmith’saccount,inremrightsprovideawayof
minimizingtheoverallinformationcostsassociatedwiththesedisputesbecausethelocusofownershipisfixedonthepropertyitself.Intheend,whatmattersinaparticulardisputeiswhichpartygetstherighttouseapieceofproperty;butthewayyouarriveatthatconclusionmattersagooddeal.Ifrightstousewerealwaysattachedtoindividuals,thedisputeswouldnotjustbebetweenA(theputativeownerofapieceofproperty)andB,butbetweenAandallpossibleB’s,asituationthatwouldexponentiallygrowthesocialcostsassociatedwithsettlingpropertydisputes.Bylocatingtheattributesofownershipwithinthepropertyitself,however,thecostsarelinear,aseachBwhowouldchallengeauseexaminesherclaimsagainstasinglerecordofentitlementsattachedtothepropertyitself.ThegoalofestablishingthisorderistocreateanefficientsystemofprivateorderingthatismorelikelythannottopromotePareto-optimaltransfers(intheory,ifnotinpractice).
13
betweenindividualactors’actions,legalinstitutions,andefficientoutcomes.15
Startingwithacounterfactualworldinwhichtherearenotransactioncosts,he
explainsthatlegalinstitutionsinsuchaworlddonotmatterbecauseindividual
actorswillalwaysengageinaseriesoftransactionsthatresultinallresources
beingputtotheirhighest-valueuse.But,hegoeson,becauseintherealworld
therearealwaystransactioncosts,well-designedlegalinstitutionsplayacrucial
roleinensuringoptimaloutcomesbyreducingthetransaction-costimpediments
toefficienttransfers.ThisperspectiveisverymuchinlinewiththatofScottish
Enlightenmentphilosophers,whosimilarlyascribedgreatimportancetolegal
institutions.
Moretothepoint,Coase’sfocusontransactioncostspreciselycaptures
whytherelationshipbetweenclassicalliberalismandtechnologyisso
fascinatingandimportant.AswediscussinPartII,newtechnologyisoften
developedandadoptedpreciselybecauseofitseffectsontransactioncosts.But
anychangeintheincidenceorleveloftransactioncostscansignificantlyalter
theoptimalinitialassignmentofrightstomaximizethelikelihoodofvoluntary
exchange.Thismeansthattechnologymaydisruptthestructureofthelegal
institutionsnecessarytofacilitateefficient,welfare-enhancingoutcomes.Atthe
sametime,thedistributionoftheseeffectsisoftenuneven,acrossboththe
specifictransactionsthatwillbeenteredinto,aswellastheindividualswhowill
benefit.Thismayfurtherexacerbatetheeffectsoftechnologicaldisruptionsupon
existinglegalinstitutions,creatingthepossibilitythatatechnologicaladvance
couldbothdramaticallybenefitsomepartiesbutdramaticallydisadvantage
15Seegenerally,RonaldH.Coase,TheProblemofSocialCost,3JOURNALOF
LAWANDECONOMICS1(1960).
14
othersinindirectandunpredictableways.Wherethisisthecase,technologyhas
thepotentialtoundermineboththemoralfoundationsandthewelfare
justificationsforclassicalliberalism.
II Why Technology Matters to Classical Liberalism
Technologyinitsbroadestsenseismerelythemeansbywhichwedothings;
technologicaladvanceisachangeinthewaywedothingsthatincreasesbenefit
and/orlowerscost.Thewaterwheelallowedustouseaconstantlinearforce
(theflowofwater)todrivearotationalshaftthat,inturn,couldbeusedtodrive
arangeoftools.Itwasavastimprovementoverhuman-oranimal-powered
machines.Theadventofthesteamengineofferedevenmorebenefitbyallowing
ustodrivethesamerotationalshaftalmostanywhere,withouttheneedfora
sourceofrunningwater.Theadventoftheinternalcombustionengine,inturn,
providedyetanotherimprovement,allowingustodrivearotationalshaftona
morereliableandefficientscale.Inthesameway,theInternetisatechnological
evolutionofthetelephone,whichisanevolutionofthetelegraph,whichisan
evolutionofpostalcarriers,whichisanevolutionofprivatecouriers–all
technologiesthatallowindividualstocommunicatewithoneanotherata
distance.
Technology,andespeciallytechnologicaladvance,isimportanttothe
maintenanceandadvanceofclassicalliberalism.Technologyisakeyinputinto
liberty,effectivelydefiningwhatindividualscando:thatis,definingthepractical
15
boundariesofanindividual’sliberty.And,astechnologicaladvancecanexpand
thescopeoftheseboundaries,itisoftenliberty-enhancing.
Suchgainsarerealizedinmultipleways.Forinstance,sometechnology
enablesnewtypesofconduct.Thetransitionfromthewaterwheeltothesteam
enginetotheinternalcombustionenginedramaticallyexpandedwhere
individualscouldliveandincreasedtheirqualityoflife.Othertechnologyaffects
howpeopleareabletoengageinconductthattheyalreadyenjoy,largelyby
reducingthecostsassociatedwiththatconduct.Improvementsintechnologyfor
writingandcommunications,forinstance,reducethecostsofinteracting(and
transacting)withothers:Thecostsoftransactionsinaworldwhere
communicationsarerecordedonpapyrusandtransmittedbycourierare
dramaticallydifferentthanthoseinaworldwheretheyarerecordedasbitsona
computerthataretransmittedviawires.
Asaresult,asaninitialmatter,theclassicalliberalpositionentailsa
distinctskepticismofthedevelopmentofnewrules,oreventheapplicationof
existingrules,toimpedetechnologicaladvance:
[T]hereisarobustbodyofliteratureestablishingthe
contributionsoftechnologicalinnovationtoeconomicgrowthand
socialwelfare…[E]venapparentlysmallinnovationscangenerate
largeconsumerbenefits.Itisbecauseofthesedynamicandoften
largelyunanticipatedconsequencesofnoveltechnological
innovationthatboththelikelihoodandsocialcostoferroneous
interventionsagainstinnovationareincreased.16
16GeoffreyA.ManneandJoshuaD.Wright,InnovationandtheLimitsof
Antitrust,6JOURNALOFCOMPETITIONLAWANDECONOMICS153,168(2010).
16
Thestoryoftechnologyisnotnecessarilyallpositive,however.Assessingthenet
effectoftechnologicaladvanceisparticularlycomplicatedbythepossibility(or
likelihood,even)thatitseffectonliberty,autonomy,andtheinstitutional
environmentmaysimultaneouslypushinopposingdirections.
Foronething,thebenefitsoftechnologicaladvanceortheproblemsthat
newtechnologycan(orcannot)improveuponwillinevitablyfallunequally
acrossmembersofsociety,thusaltering,andoftenimpeding,social,legal,
commercial,orotherrelationshipsinunexpectedways.Theadventofthe
waterwheel,forinstance,endowedthosenearrunningwaterwithbenefits
unavailabletoothers,anddivertedeconomicresourcesawayfromactivitiesthat
couldnotbenefitfromtheoperationofthewaterwheel,allwithoutrespectto
thoseactivities’relativesocialvalue.
Foranotherthing,technologiesthatbenefitprivatepartiesandexpand
theirlibertiescanalsobenefitgovernmentandexpanditspower(andconstrict
thepopulace’sliberties).Whiletheadventofthetelephone,forexample,
certainlyconferredenormousbenefitandsubstantiallibertyuponthepopulace,
italsoextendedthereachofgovernmentandjustascertainlyfacilitatedtothe
riseofamorecentralizedandinvasivestate.17
17SeeHenryG.Manne,ReconcilingDifferentViewsaboutConstitutional
InterpretationinTHECONSTITUTION,THECOURTS,ANDTHEQUESTFORJUSTICE55,60(RobertA.Goldwin&WilliamA.Schambra,eds.1989)(“Asapracticalmatter…[e]ffectiveapplicationoffederallaw[atthetimeoftheConstitution’sdrafting]wasseverelyconstrainedbytheprimitivetechnologiesoftransportationandcommunications…Buttherapiddevelopmentofcommunicationandtransportationtechnologythroughthenineteenthandtwentiethcenturiesmadephysicallypossibleadegreeoffederallawenforceabilityinconceivablein1787.”).
17
Moreover,newtechnologiesthatincreasetheeaseoforbenefitsfrom
transactionsbetweenprivateparties(andthusexpandopportunitiesforprivate
ordering)mayimposegreaterexternalcostsuponthirdparties,eitherbecause
thenatureofthetransactionsmayentailnewexternalitiesorsimplybecauseof
theincreaseinthenumberoftransactionsthatimposeexternalities.
Theseconcernsarenotuniqueto“technology,”althoughtheymayappear
particularlyacuteinthecontextoftechnologicaladvance.Andthiscritique
shouldnotbereadasanti-technologyLuddism.Tothecontrary,“problematic”
technologicaladvance,whereitoccurs,oftenaccompaniesgreatsocialwelfare
gainsfromincreasedproductivityandwidespreaddispersionofwealth.
Moreover,suchproblematictechnologicaladvancefrequentlyspursbeneficial
advancesinresponse.TheclassicexampleisSchumpeteriancompetition,in
whichfirmsleapfrogoneanotherinaseriesofshort-livedmonopolies,each
achievedthroughtechnologicaladvanceandmaintainedonlysolongasthethen-
monopolistcanmaintainitsadvantage.Whilethismaybearthesuperficial
hallmarksofmonopoly,suchdynamiccompetitionintechnologymarketsis
actuallyperfectlyconsistentwithstrongcompetitionandprocompetitive
outcomes.18Eachsuccessive“winning”firmmustbecommittedtoinvestingits
profitsindevelopingnewandbettertechnologiesinordertotrytopreemptor
co-optthenexttechnologicalwaveandmaintainitsposition.Thebenefitsofthis
18See,forexample,ThomasM.JordeandDavidJ.Teece,AntitrustPolicy
andInnovation:TakingAccountofPerformanceCompetitionandCompetitorCooperation,147JOURNALOFINSTITUTIONALANDTHEORETICALECONOMICS118(1991).Notealsothat“competitionforthemarket”canbeasconstrainingaswithin-marketcompetition.SeeHaroldDemsetz,IndustryStructure,MarketRivalryandPublicPolicy,16JOURNALOFLAWANDECONOMICS1(1973).
18
“free-marketinnovationmachine,”asWilliamBaumoldubbedit,19redoundnot
onlytothefirm,ofcourse,butalsotoitscustomersandtosocietywritlarge.
Thus,furtherconfoundinganyevaluationofthebenefitsoftechnological
advance,suchchangesmustbeconsideredinadynamiccontext.Themerefact
thatanewtechnologyhassomedeleteriouseffectstodaydoesnotnecessarily
justifycorrectiveinterventionthroughlegalinstitutions;rather,today’sapparent
technologicalcostsmayactuallydriveSchumpeteriancompetition,creating
incentivesforfurthertechnologicaladvancetoimproveuponthoseeffects.
Theimportantinsighthereisthat,asnoted,classicalliberalismis
concernedwithprotectingandadvancingboththelibertyoftheindividualas
wellastheautonomyofotherindividualsandtheabilityoftheinstitutional
environmenttofacilitateprivateordering.Technologiesthatareliberty-
enhancingmaynonethelessbeconcerningfromtheclassicalliberalperspective
iftheyriskencroachingupontheautonomyofothersorimpedingwelfare-
enhancingtransactions.
Theeffectoftechnologicalchangeontheinstitutionalenvironmentis
particularlyimportantandunderappreciated.Changesthatexpandlibertyfor
somepeoplemayalsoaltertherelativeincidenceoftransactioncostsbetween
contractingpartiesandthusalterorimpairthe(previously)efficientallocation
ofpropertyrights.Theinstitutionalenvironmentisnot–norshoulditbe–static.
Justaslibertarianismisconcernedwithensuringthatlawsandregulationsnot
needlesslyimpairwelfare-andliberty-enhancingtechnologicalprogress,it
19WILLIAMJ.BAUMOL,THEFREE-MARKETINNOVATIONMACHINE:ANALYZINGTHE
GROWTHMIRACLEOFCAPITALISM(2003).
19
shouldbesensitivetothewaysthattechnologicaladvancemayalterthe
desirabilityofstatusquoinstitutions.
Becauseofthereallocationofrelativerightsandpowersinherentin
technologicalchange,evenanefforttomaintaintheconstancyofinstitutions–
nottochangetheminresponse,inotherwords–resultsinareordering.Perhaps
mosttroublingly(andinafashionseeminglywoefullyunderappreciatedbymost
classicalliberals),thisexogenoustechnologicalchangeeveninherentlyaltersthe
fundamentalpoliticalorderingembodiedintheConstitution:
In1787,[]theideathatthefederalgovernmentcould
effectivelyregulatemattersrelating,forexample,tocoalmine
safetystandardswouldhaveseemedabsurd,notmerelyasalegal
matterbut,muchmoreimportant,asapracticalmatter.Itwasnot
physicallypossibleforthefederalgovernmenttoserveitswrit
widelyenoughtoallowiteffectiveauthorityovereverydetailofall
commercialmatters…
Then…enormoussystemsofroads,telephones,radio,
television,airplanes,andcomputersappeared…Asaresultagross
alterationofthefederalgovernment’sphysicalpowertoregulate
commercehadoccurred.Yetwhenthecourtslookedtothewords
ofthedocumentandtothe“originalintent…,”[t]helegalconcept
ofinterstatecommercegrewparipassuwiththefederal
government’sabilitytoadministerlawslocally.Whilethewords
didnotchange,theSupremeCourtallowedtheconstantexpansion
20
offederalregulatorypowersinkeepingwiththechangesin
marketsandmarketstructureoccasionedbythenewtechnology…
Whathadactuallyhappenedtochangeourconstitutional
realityinthisdrasticfashion?Hadtherebeenanamendmentora
revolution?No,therehadbeenonlytheinventionorintroduction
ofnewtechnologiesbynonelectedscientistsandentrepreneurs…
Inotherwords,theaccidentsoftechnologicaldevelopment
determinethereallimitsontherestraininginfluenceofthe
Constitution.20
Atthesametime,classicalliberalismmustdealwiththeeffectoftechnologyon
theperceiveddistributionofrightsandrentsthroughpoliticalinstitutionsand
theefforttochangethemaccordingly.Atminimum,totheextentthat
technologicalchangealtersthesocialdistributionoflibertyandautonomyunder
existinginstitutions,classicalliberalsmustgrapplewiththerealitythatthe
backlashagainstsuchchangesmayresultindemandfor–andpolitical
acquiescenceto–subsequentinstitutionalchangestorestoretheprevious
distributionofrightsacrosssocietyinwaysthat,evennetofthegainsfrom
technologyitself,aresociallyharmful.
Inotherwords,althoughtechnologicaladvancecan(andusuallydoes)
increaseoverallsocialwelfareinbroadstrokes,thepoliticalresponsetothe
redistributionofrights,power,andrentsitmayentailcanleadtoanetreduction
inwelfare–includingthroughreductionsinprivateordering.
20Manne,ReconcilingDifferentViewsaboutConstitutionalInterpretation,
supranote17,at66–67(emphasisadded).
21
Thisproblemisparticularlyacuteinthecaseofimplementationsof
technologicalinnovationwherethenarrowredistributionofrentsmaybe
immediatelyapparent,butthebroad,socialbenefitsofnewtechnologyornew
businessmodelsadaptedtoitmaynotbeunderstoodforsometime.Importantly
foraconsequentialistapproachlikethatofclassicalliberalism,thiseffectmaybe
abettedbynon-politicalactorsincludingeconomistsandlegalscholarswhotend
tounderappreciatethelimitsoftheirknowledgeaboutnoveltechnologyand
novelbusinessarrangements.21
Consideranimportantandcontentiouscontemporaryexample:privacy.
Priortothemodernerainwhichagreatnumberofsocialinteractionsare
carriedoutonline,itwasrelativelyeasyforindividualstokeepinformation
aboutthemselvesprivateanddifficultforthirdparties(includingthe
government)toobserveandrecordthatinformation.Today,bycontrast,itis
comparativelydifficultforindividualstokeepsuchinformationprivateandeasy
forthirdpartiestoobserveandrecordthatinformation.Despitechangesinthe
valuepeopleattachtoprivacythatinevitablyaccompaniedthatevolution,
changedtechnologymayhaveshiftednotonlytheefficientdelineationofprivacy
rights(fromaregimeinwhichindividualswereassumedtohavewaivedcontrol
ofinformationabsenteffortstoretainittooneinwhichtheyareinstead
assumedtoretaincontrolabsentvoluntarywaiverofthatcontrol),butalsothe
21See,forexample,RonaldCoase,IndustrialOrganization:AProposalforResearch,inPOLICYISSUESANDRESEARCHOPPORTUNITIESININDUSTRIALORGANIZATION59,67(VictorR.Fuchsed.,1972)(“[I]faneconomistfindssomething–abusinesspracticeofonesortoranother–thathedoesnotunderstand,helooksforamonopolyexplanation.Andasinthisfieldweareveryignorant,thenumberofununderstandablepracticestendstobeverylarge,andtherelianceonamonopolyexplanation,frequent.”).
22
perceptionoftheappropriatenessoftheresultingallocationofrights(suchthat
a“correction”wasrequiredtoshiftfromapresumptionofwaivertoa
presumptionofprohibitionabsentaffirmativewaiver).
Indeed,themodernAmericanpoliticaldiscourseonprivacyanditslegal
andregulatorytreatmenthasitsoriginsinSamuelWarrenandLouisBrandeis’s
seminal1890article,TheRighttoPrivacy,22whichwaswritteninsignificantpart
inresponsetotheadventofadisruptivenewtechnology:theportablebox
camera(theKodakcamera),introducedin1888.ItisworthquotingWarrenand
Brandeisatlength,notonlybecausethearticleaddressessodirectlytheproblem
ofadaptingexistinginstitutionstotechnologicalchange,butalsobecauseitisan
importantprogenitorofonebranchofthecontemporarycyberlibertarian
approachtotechnologyandinstitutionsthat,perhapsexcessively,elevates
libertyoverprivateordering:
Thattheindividualshallhavefullprotectioninpersonand
inpropertyisaprincipleasoldasthecommonlaw;butithasbeen
foundnecessaryfromtimetotimetodefineanewtheexactnature
andextentofsuchprotection.Political,social,andeconomic
changesentailtherecognitionofnewrights,andthecommonlaw,
initseternalyouth,growstomeetthenewdemandsofsociety.
***
Recentinventionsandbusinessmethodscallattentionto
thenextstepwhichmustbetakenfortheprotectionofthe
person…Instantaneousphotographsandnewspaperenterprise
22SamuelD.WarrenandLouisD.Brandeis,TheRighttoPrivacy,4
HARVARDLAWREVIEW193(1890).
23
haveinvadedthesacredprecinctsofprivateanddomesticlife;and
numerousmechanicaldevicesthreatentomakegoodthe
predictionthat“whatiswhisperedintheclosetshallbe
proclaimedfromthehouse-tops…”[T]hequestionwhetherour
lawwillrecognizeandprotecttherighttoprivacyinthisandin
otherrespectsmustsooncomebeforeourcourtsfor
consideration.
***
Itshouldbestatedthat,insomeinstanceswhereprotection
hasbeenaffordedagainstwrongfulpublication,thejurisdiction
hasbeenasserted,notonthegroundofproperty,oratleastnot
whollyonthatground,butuponthegroundofanallegedbreachof
animpliedcontractorofatrustorconfidence.
***
Butthecourtcanhardlystopthere.Thenarrowerdoctrine
mayhavesatisfiedthedemandsofsocietyatatimewhenthe
abusetobeguardedagainstcouldrarelyhavearisenwithout
violatingacontractoraspecialconfidence;butnowthatmodern
devicesaffordabundantopportunitiesfortheperpetrationofsuch
wrongswithoutanyparticipationbytheinjuredparty,the
protectiongrantedbythelawmustbeplaceduponabroader
foundation…[S]incethelatestadvancesinphotographicarthave
rendereditpossibletotakepicturessurreptitiously,thedoctrines
24
ofcontractandoftrustareinadequatetosupporttherequired
protection,andthelawoftortmustberesortedto.23
Regularlychangingdelineationsoflegalentitlementsthatmayoccurduring
periodsofrapidtechnologicalchangearepotentiallyproblematicforthevery
conceptofproperty,reducingthedurabilityofpropertyrights,injecting
uncertaintyintothecontoursofownership,andultimatelylimitingtheviability
ofprivateordering.Indeed,evenifthesechangeddelineationsimproveoverall
efficiencyintheallocationofentitlements,themerefactofthechangeimposes
transactioncoststhatcan,inprincipleatleast,besubstantial.Thisisparticularly
thecasewherechangeisfrequent,suchthatsystemsbuiltuponlong-term
expectationsofpropertydelineationsarekeptconstantlyoutofequilibrium.
Scholarshavelongrecognizedthatlegalinstitutionsareshapedby
technologyandthatchangingtechnologymaychangethoseinstitutions.For
instance,Romancitizensenjoyedaverydifferentconceptof“freedomof
contract”thanwedotoday;theywerefreetoenterintoanyofafinitenumberof
pre-definedcontracts,buttheywerenotfreetodraftcontractswiththeirown
bespoketerms.Today,largelyanytermsthatcanberenderedintorecorded
prosecanbemadecontractuallybinding.Thedrivingdifferencesbetweenthese
paradigmsarethecostandavailabilityofunderlyingtechnology:atRomanlaw,
literacywaslimitedanditwascostlyanddifficulttorecordterms;todayliteracy
isassumedandrecordationiswidespread.
Similarly,atearlyEnglishcommonlaw,courtsrecognizedafinitenumber
offormsoflegalclaims(trover,covenant,assumpsit,detinue,trespass,and
23Id.at193–211.
25
replevin).Theseformswererecognizedtostandardizelegalprocess:Thecosts
ofrecordingandtransmittingprecedentwerehigh,socourtschanneled
precedentintostandardizedformstoreducetheburdenuponjuristsand
counsellorstofacilitatethedevelopmentanduniformityofthelaw.
Butthiscameatacost.Courtswouldoftenfindclaimsthatcouldnotbefit
intooneofthestandardformsnonjusticiable.Butastechnologyimprovedand
thecostsofrecordingandtransmittingprecedentdecreased,commonlawcourts
developedageneralizedformofaction,trespassonthecase,whichplaintiffs
couldargueincaseswheretheirclaimsdidnotfitintoastandardform.Over
time,thisgeneralizedformlargelydisplacedhistoricpractice,tothepointthat
thehistoricwritshavebeenabolishedinfavorofgeneralizedrulesofcivil
procedure.
Thesametrendhasalsobeenseeninthecaseofthetransitionfromin
remtoinpersonamrights.Overtimethelawhasincreasedtheclosednumber
(numerusclausus)offormsofinrempropertythatitrecognizes,including
allowingforanincreasedrangeofproperty-liketransactionstoberecorded
throughinpersonamcontractualrelationships.Aswiththeexpansionsinthe
formsofcontractandformsofactionrecognizedbythelaw,theexpansioninthe
formsofpropertyhasbeendrivenbyadvancesintechnologythatreducethe
relevanttransactioncostsandconsequentiallyaltertheefficientstructureof
legalinstitutions.
Theseexamplesdemonstratetheever-evolvingrelationshipbetween
technologyandlegalinstitutions.Buttheyarealsoexamplesthathavenot
provenproblematicforclassicalliberalismbecausetherateoftechnological
26
advancehasbeenslowenoughthatlegalinstitutionshavebeenabletoevolve
apace.
Butthisalignmentbetweentherateoftechnologicalandinstitutional
changeisnotalwayspresent–asinthecurrenttechnologicalsetting(and
perhapsthatofmostfuturetechnologicalchanges,giventheirseemingly
inexorablerateofincrease).TheICTrevolutionhasseenthetransitionfrom
mechanicalprintingpressesandanalogtelephonestopalm-sized
supercomputersandtheInternetoverthecourseofalifetime,andfrom
individualswhogrewupwithouttheInternettoindividualswhogrewupwith
omnipresentInternetaccessoverthecourseofhalfageneration.Evenmore
starkly,theadventofthe(inexpensive)portablecamera,alongwith
photographicpaperandfilmrollsthatenabledeasyandcheapprocessingof
photographicimages,ledtotheextremelyrapidandwidespreaddiffusionofthe
abilitytorecordanddisseminatevisualimagesinthelate1800s.Asevidenced
bythetone(andinfluence)ofTheRighttoPrivacy(publishedascanttwoyears
aftertheinventionoftheKodak)thisledtotherapidanddistinctdisruptionof
thelegalinstitutionssurroundingprivacy–adisruptionthathascontinued
throughthedevelopmentofmoderntechnologyandthatwearestillworkingto
resolvetoday.Insuchasetting,technologicalchangeandlegalinstitutionscan
easilybeintension.ThistensionisexploredinPartIII.
27
III Dueling Views of Contemporary Technology and the Law
Elementsofclassicalliberalphilosophyhavefeaturedprominently,if
accidentally,incontemporarydiscussionsoftheregulationoftechnology.
RoughlymirroringtheadventandgrowthofthecommercialInternet,many
technologists–and,inmanyways,thetechindustrywritlarge–haveembraced
variousformsofliberty-focused,andgenerallyliberty-maximal,philosophies.By
andlarge,theseindividualslabelthemselvesaslibertariansofoneformor
another(whetherlibertarian,cyberlibertarian,cryptolibertarian,
technolibertarian,cryptoanarchist,orsomeothervariant).Althoughtheyrarely
identifyas“classicalliberals”(indeed,itislikelythatfewareevenfamiliarwith
thatterm),theirpriorsarenonethelesscloselyrelatedtothoseofclassical
liberals.Theseviews,therefore,provideausefulsurveyofviewsonthe
contemporaryrelationshipbetweentechnology,liberty,andthelaw.
Thediscussionthatfollowsdividestheseviewsintotwobroadcategories:
“extreme”and“moderate”libertarianviews.Inbothcasesthereferenceisto
little-llibertarian,indicatingthattheseareliberty-focusedphilosophies.The
extremelibertarianviewgenerallyviewstechnologyasliberty-maximizing,so
tendsinturntobestronglypermissiveoftechnologicalchange.Themoderate
viewalsoviewstechnologyasliberty-enhancing,butismorecircumspectabout
technology’sabilitytounderminetheprotectionofimportantautonomyvalues.
28
A The Extreme Libertarian Embrace of Technology
Libertarianismisrelatedto,but(wecontend)morerestrictivethan,classical
liberalphilosophy.Initsmoreextremeform,ittakesthepreferenceforprivate
orderingthatclassicalliberalismrestsuponandextendsittoitsmaximum
extent.Underthisform–oftenreferredtoasavariantofanarchismoranarcho-
capitalism–theonlymorallyacceptableorderisthepurelyprivateorder.The
state,basedasitisonamore-or-lessinvoluntarypremise(i.e.,thatithasa
monopolyontheuseofforce,andanindividualcannotoptoutofit)istobe
avoidedasasourceforrulemakingandenforcement.
Inthecontemporarytechnologicalsetting,thisbranchofthoughtoften
fallsintooneofthreecategories:cyberutopianism,cyberexceptionalism,or
cyberanarchism.Thesearenotmeanttobepreciselydefinedcategories–indeed,
thereissubstantialoverlapbetweeneach.Butthiscategorizationtypifieskey
featuresofcontemporary,extremelibertarianviewsontechnology.
Cyberutopianism,asexemplifiedbyJohnPerryBarlow’sDeclarationof
theIndependenceofCyberspace,isthenotionthatthetraditionallegalrules
developedtohandledisputesinthe“real”worldarewhollyinappositeinonline
environmentsbecausetheinnate,exaltedcharacteristicsoftheonlineworld
renderthemsuperfluous(andevendeleterious):
GovernmentsoftheIndustrialWorld,youwearygiantsof
fleshandsteel,IcomefromCyberspace,thenewhomeofMind.On
behalfofthefuture,Iaskyouofthepasttoleaveusalone.Youare
notwelcomeamongus.Youhavenosovereigntywherewegather.
29
Wehavenoelectedgovernment,norarewelikelytohave
one,soIaddressyouwithnogreaterauthoritythanthatwith
whichlibertyitselfalwaysspeaks.Ideclaretheglobalsocialspace
wearebuildingtobenaturallyindependentofthetyranniesyou
seektoimposeonus.Youhavenomoralrighttoruleusnordo
youpossessanymethodsofenforcementwehavetruereasonto
fear.
***
Youclaimthereareproblemsamongusthatyouneedto
solve.Youusethisclaimasanexcusetoinvadeourprecincts.
Manyoftheseproblemsdon’texist.Wheretherearerealconflicts,
wheretherearewrongs,wewillidentifythemandaddressthem
byourmeans.WeareformingourownSocialContract.This
governancewillariseaccordingtotheconditionsofourworld,not
yours.Ourworldisdifferent.
***
Wearecreatingaworldwhereanyone,anywheremay
expresshisorherbeliefs,nomatterhowsingular,withoutfearof
beingcoercedintosilenceorconformity.
Yourlegalconceptsofproperty,expression,identity,
movement,andcontextdonotapplytous.Theyareallbasedon
matter,andthereisnomatterhere.
***
30
Wemustdeclareourvirtualselvesimmunetoyour
sovereignty,evenaswecontinuetoconsenttoyourruleoverour
bodies.WewillspreadourselvesacrossthePlanetsothatnoone
canarrestourthoughts.24
Barlow’sviewscapturedthezeitgeistofthemoment–asincerebeliefthat
“cyberspace”wasanewandbetterplacethanthephysicalworld.Itwasaplace
inwhichindividualscouldexploreandexpresstheirlibertyinthepurestand
mostextremeformspossible,andcoulddosofreeoftheconstraintsofthe
physicalworldorterritorialgovernments–andpossiblyevenwithoutconcern
forencroachingupontheautonomyinterestsofothers.25
Today,theutopianismofBarlow’svisionofthecyberhasfallenfromits
oncedominantintellectualposition,thoughstrandsofitremaininthe
cyberanarchistperspective(discussedbelow).Rather,astheInternetgrewin
social,economic,andpoliticalimportance–and,importantly,astheInternet
cametodistinguishitselfmoreforitstransformativeabilitytofacilitate(and
extend)thesamesortsofsocialinteractionsthatoccurredoffline,ratherthanas
thebirthplaceofanentirelynewkindofsocialorder–thesamesocial,economic,
andpoliticalinstitutionsimportantintheofflineworldnaturallycametoexert
influenceintheonlineworld.Theseeffortsoccurredlargelythroughthe
24JohnPerryBarlow,ADeclarationoftheIndependenceofCyberspace
(1996),availableatwww.eff.org/cyberspace-independence.25Barlowwasnotaloneinhisviews,althoughhispowerfulprose
capturedtheimaginationofmany.Seealso,forexample,EstherDyson,GeorgeGilder,GeorgeKeyworth,andAlvinToffler,CyberspaceandtheAmericanDream:AMagnaCartafortheKnowledgeAge,Progress&FreedomFoundationFutureInsightNo.1.2(Aug.1994),availableatwww.pff.org/issues-pubs/futureinsights/fi1.2magnacarta.html.
31
operationofexistinglegalprinciplesand,wherenecessary,theestablishmentof
newlegalrulesdesignedtoextendthoseprinciplesintotheonlineworld.This
intrusionofofflineinstitutionsintothenewonlinespacegaverisetothenext–
andarguablystilldominant–waveofextremecyberlibertarianism:cyber-
exceptionalism.Thecyberexceptionalistperspectiveistoaccedethatcyberspace
canbebroughttoheelbytraditionalinstitutions,butthatitshouldbeexempted
fromsuchtreatment.
Oneofthemoreinfluentialstrainsofcyberexceptionalismisso-called
permissionlessinnovation.Permissionlessinnovationholdsthatindividuals
shouldbeabletooperateandinnovateonline(and,infact,intherealmof
informationtechnologymoregenerally)withoutimpedimentfromany
authority.Initsmostextremeviewthisincludesnotonlygovernmentactors
directly,butalsoprivatepartieswhoseassertionofpropertyorcontractual
rightsmight“impede”others’abilitytofreelyinnovate.26Initsmostfully
developedform,permissionlessinnovationholdsthatthestateshould,shortof
compellingcircumstances,refrainfrominterferingwithprivateorderinginthe
digitalcontextentirely.AdamThiererhascharacterizedthispositionas:
thenotionthatexperimentationwithnewtechnologiesand
businessmodelsshouldgenerallybepermittedbydefault.Unlessa
compellingcasecanbemadethatanewinventionwillbring
26SeeGeoffreyManne,PermissionlessInnovationDoesNotMean“No
ContractsRequired,”TRUTHONTHEMARKET(Jun.26,2014),http://bit.ly/2t0k6fV.Thisversionofpermissionlessinnovationthusimplicitlyhearkensbacktocyberutopianism,shunningevenprivateorderingifitisfacilitatedbytraditionalinstitutions,denying,ineffect,thatthe“harm”ofcontractorpropertylawviolationsexistincyberspace.
32
seriousharmtosociety,innovationshouldbeallowedtocontinue
unabatedandproblems,ifanydevelop,canbeaddressedlater.27
Thisviewisfocusedalmostentirelyonthepositivevalueofinnovation,holding
thatthegainsfrominnovationwilltendtooverwhelmanypotentially
complicatingrealities,orthatpotentialcomplicationswillthemselvesbe
addressedbysubsequentinnovation.Thus,Internetplatformsshouldbe
permittedtoexperimentwithnewserviceswithoutexanteconstraint,even
thoughweunderstand,forexample,thatthird-partiesoftenusetheseplatforms
forillicitpurposes.Theexceptionalistperspectiveisthatconcernaboutthose
illicitusesdoesnotjustifyplacinganylimitsonthedevelopmentofnew
technologicalplatforms.
Theadventoftheautomobile,forinstance,wasoverwhelminglypositive
forsociety,eventhoughitupendedmuchoftortlaw.Likewise,theadventof
driverlesscarswillcertainlyleadtonewwaysforpeopletobeinjuredandhard
questionsforthelawinassessingandapportioningliabilityforthoseinjuries–
butitwilllikelymakeautomobilessubstantiallysaferthantheyaretodayand
increasetheefficiency(anddecreasethecosts)ofdrivingsosubstantiallythat
weshouldpushaheadinthedevelopmentofthenewtechnologyandaddress
suchconcernsoncethetechnologyhasarrived.
Similarly,theInternethasunquestionablybeenoneofthemostbeneficial
andimportantdevelopmentsinthehistoryofhumankind–butithasalso
facilitatedchildpornographyandotherformsofexploitationonascalenever
beforeknown.Theexceptionalistperspectiveisthatthenewtechnologyshould
27ADAMTHIERER,PERMISSIONLESSINNOVATION:THECONTINUINGCASEFOR
COMPREHENSIVETECHNOLOGICALFREEDOM1(revisedandexpanded,2016).
33
beforgiventheseillsinfavorofitsoverwhelmingbenefits.28Particular
implementersorusersofnewtechnologywhouseittoharmothersshouldbe
penalizedaccordingly,butthetechnologyitselfshouldnotbeconstrainedin
ordertodetersuchharm–evenifthemost(oronly)practicalwaytodosoisby
limitingthetechnology(andevenifusers’abilitytoevadethelawis,infact,a
functionofthenewtechnology).Theexceptionalistperspectiveholdsthisview
evendespitethefactthat,innumerousofflinesituations,justsuch“intermediary
liability”iscommon.29
Therationaleforthisexceptionalismisthatnewtechnologiesareless
likelytodevelopiftheirdevelopersareheldaccountablefortheharmsthatsome
willinevitablyusethemtocause.Suchliabilitywouldincreasethecostsofnew
28Accordingtomanyproponentsofcyberexceptionalism,infact,thisimmunity
hasbeenwrittenintoUSlaw.See47USC§230(c)(1)(“Noprovideroruserofan
interactivecomputerserviceshallbetreatedasthepublisherorspeakerofany
informationprovidedbyanother[provideroruser].”).Courtshavelargelybeen
willingtogoalongwiththeexceptionalistinterpretationofthislanguage.See,for
example,DavidS.Ardia,FreeSpeechSaviororShieldforScoundrels:An
EmpiricalStudyofIntermediaryImmunityUnderSection230ofthe
CommunicationsDecencyAct,43LOYOLALAWREVIEW373,435(2010)(finding
thatSection230providedimmunitytodefendantsinoversixtypercentof
relevantcases).29Courtshavelongdealtwithout-of-reachoffendersbyenjoiningthe
conductofintermediaries:forexample,byprohibitinglocalstoresfromsellingforeign-manufacturedcounterfeitgoods,orrequiringthattavernspreventpatronsfromdrivingdrunk.
34
technologies–especially“generative”technologies(i.e.,technologies(like
platformsopentouser-generatedcontentandpeer-to-peerinteractions)that
cangiverisetonew,unpredictable,uses).Atthesametime,oncethetechnology
isestablished,suitableinstitutionscanbeputinplacetoprotectagainstspecific,
harmfulusesofthetechnology.
Thisviewofpermissionlessinnovationisliberty-maximalist,bothinthe
shortrunandthelongrun.Itfreesinnovatorstodevelopnewtechnologiesas
theyseefit,furtheringtheirlibertyinterests.Andsuccessfultechnologieswill
tendtobethosethatbenefitothers,enhancingtheirlibertyinterestsasnew
technologiesaredevelopedandpermeatethemarket.
Butthisviewisalsoautonomy-agnostic.Itpaysnoheedtoconcernsthata
giventechnologymaytendtobeusedtocauseharmtoitsusersortothird
parties,andexpresslyarguesthatharmedpartiesbedeniedrecourseagainstthe
implementersofthetechnologyforsuchharms.Importantly,thisisthecaseeven
wherefutureharmsarepredictable,andevenwherethetechnologyisdeveloped
insuchawaythatitmakesitparticularlyeasyforpartiestobeharmedor
difficultforthemtoseekredress.Inotherwords,underdominant
cyberexceptionalistviews,platformsandintermediariesareundernoobligation
todesigntheirtechnologiesinwaysthatpreventharm,allowforrecoverywhen
harmoccurs,orevenfacilitateactionbeingtakenagainstthepartycausing
harm.30
30Again,thisapproachlargelyharkensbacktothecyberutopianviewthat
inaveryrealsensetraditionalconceptionsof“harm”donotapplyonline,becausecyberspaceisnotboundbythephysicalorsocialconstraintsoftherealworldthatpreventaharmedpartyfromremovingthemselvesfromaharmfulsituationorengaginginself-help.
35
Thethirdcategoryofextremelibertarianviewsontechnologyisdifferent
inkind,althoughitdrawsonideasfrombothcyberutopianismand
cyberexceptionalism.Cyberanarchismviewstechnologyasaremedyagainstthe
sinsofthestate.Thisviewisparticularlyprevalentincontemporarydiscussions
aboutprivacy,surveillance,encryption,andcryptocurrencies.Cyberanarchism
viewsgovernmentsurveillanceinparticular–whetherthroughwiretapsand
warrants,theintelligencecommunity,collectionofpublicinformation,or
issuanceofsubpoenastocollectinformationfromprivateplatforms–asan
undueencroachmentonindividualautonomyandanimpermissiblelimiton
liberty.Technologycanandshouldbeusedtofrustratethesegovernmental
functions,therebyenhancingliberty.
Thereis,ofcourse,anobvioustrade-offwithsuchanapproach.
Cryptocurrencies,forinstance,weredevelopedatleastinparttoprovidean
anonymousandlargelyuntraceablealternativetofiatcurrencyandtraditional
onlinepaymentsystems.Inmanycontextsanonymityinfinancialtransactionsis
valuable,ofcourse,butcryptocurrenciescanbeandareusedtofacilitateharmful
orcriminalconduct.Likewise,TORandotherencryptiontechnologieshave
enabledindividualstotradeillicitgoodsandservicesaswellasnonillicitgoods
andservicesunderanonymousconditions.Privacy-enhancingencryption
technologiesarealsobroadlyseenastoolstocircumventstaterestrictionson
speech(particularlyinhostileregimes),andtoavoidstatesurveillance.
Althoughitistruetosomeextentforallofthedifferentstrainsofthe
extremelibertarianview,forprivacyandcryptocurrencyadvocates,in
particular,technologyisviewedasameansforresistinganygovernment
36
regulation–andevenprivateorderingabettedbygovernmentinstitutions–
completely.
Cyberanarchismhearkensbacktothecentralcyberutopianviewofthe
fundamentalillegitimacyofgovernment,especiallyinthetechnologicalage–
thatthose“GovernmentsoftheIndustrialWorld,[]wearygiantsoffleshand
steel…,arenotwelcomeamongus[and]havenosovereigntywherewe
gather.”31Ofcourse,thisassumptionofillegitimacyisrejectedbytheclassical
libertarianperspective.Itissurelythecasethatsomeofthegovernment
functionsthatanimatethesecausesareillegitimateexcesses.Butothersarenot,
andthesetechnologiesdonotdiscriminatebetweeninterferingwithillegitimate
andlegitimategovernmentfunctions.32
B The Moderate Libertarian Embrace of Technology
Itisalmostamisnomertocharacterizethemoderatetechno-libertarianposition
asan“embrace.”Themoderatelibertarianorclassicalliberalperspectiveon
31Barlow,ADeclarationoftheIndependenceofCyberspace,supranote
24.32AprimeexampleofthistensionwasthecourtorderrequiringAppleto
renderassistancetolawenforcementbydefeatingencryptionononeofitsiPhones.SeeIntheMatterofSearchofanAppleiPhoneSeizedDuringExecutionofaSearchWarrantonaBlackLexusIS300,CaliforniaLicensePlate35KGD203,No.ED15–0451M,2016WL618401(C.D.Cal.2016).Althougharguablyrestingonfairlywell-establishedlegalfooting,thecourt’sorder,basedontheAllWritsAct,28U.S.C.§1651,wasmetwithcriesofoutragefromcertaintechno-libertarianquarters.Thisoutrage,again,waspremisedontheideathatthereissomethingunusualaboutdataanddigitaldevicesthatwarrantsacompletelydifferentlegaltreatment.But,aswithotherinstancesofsuchextremecyberexceptionalism,theexplanationaboutjustwhyitisthattechnologyshouldbeinalegalclassofitsownwasneveradequatelyexplained.
37
technologyis,atroot,nothingspecial,insofarasclassicalliberalsdonotpresume
thatanysocialconstructshouldreceiveapersedifferenttreatmentunderthe
law.
Themoderatelibertarianviewadmitsroomforthestatetoestablisha
frameworkofneutrallyadministeredandenforcedrulesagainstwhich
individualsarrangetheirprivateordering.Technologyisevaluatedbyitseffects
upontherule-basedexpectationsofindividuals,andisnotregardedas
inherentlyoutsideof(butactingupon)thelegalorder.Fundamentaltothis
approachistheviewthattechnologyisnotregardedasexceptionalinanya
priorisense;itmattersonlyhowitisusedorhowitaffectstheoptimal
institutionalordering.Technologicalinnovationsdooftenoffersignificant
benefits(notonlyintermsoflibertyandautonomy,butgeneralconsumer
welfare),ofcourse,andanybenefitsarisingfromtheadaptationandapplication
ofexistinglegalrulesshouldbeweighedagainstthepossiblecostsofdeterring
thecreationorwelfare-enhancingdeploymenttechnology.Butinprincipleany
technology,nomatterhowrevolutionary,canbebroughtwithintheambitof
predictable,neutrallyadministeredlegalrules.
Onekeycomponentofthemoderatelibertarianviewisthatimmunity
fromestablishedlegalprinciplesshouldnotbeassumedevenifextensionof
thoseprinciplestonewtechnologyrequiresnovelapplicationsofcommonlaw
precedents,oreventheadoptionofnewregulationsorlegislation.Internet
platforms,forexample,mayentailadifferentliabilitystructure,butthereisno
reasontobelievethattheyshouldengendernoliabilityasaresult.
38
Unlikethemoreextremeapproaches,themoderatelibertarianapproach
totechnologywouldnotinherentlyobjecttoextraterritorialapplicationofa
country’slaws,forexample,asisoftennecessitatedontheInternet.Whilecloud-
basedactivityandcross-borderdataflowscanbeparticularlycomplicatedto
untangle,thisdoesnotmeanthatterritorialcourtsshouldbepresumedunable
toadjudicatedisputesarisingoutofmulti-nationdigitaltrade.Courtsareskilled
atparsingconflictsoflaws,aswellasparsingfactsincomplexordifficultcases.
DeterminingjurisdictionalcompetenciesforInternet-baseddisputesisonlya
differenceofdegree,notofkind.
Similarly,underthemoderatelibertarianview,technologiesthatareused
tosecureprivacyonlineorinthecloudwillhavetoyieldinsomecasestothe
needsofthestate,justasintheofflinecontext.Forinstance,althoughtheanswer
maynotbetobuildinpurposefulsecurityholessuchasbackdoors,incases
whereafirmcouldtheoreticallyhelpoverrideencryption,asintheApple-San
Bernardinodispute,33theycanlawfullyberequiredtodoso.
Intellectualproperty(“IP”)drawsintostarkreliefthedistinctionbetween
thehard-coreandmore-moderatelibertarianapproaches.IPpresentsarather
uniquecircumstance.Bydefiningapropertyrightaroundanoveltechnological
idea(patent)ororiginalexpression,includingoftechnologicallysophisticated
softwarecode(copyright),IPcomesclosetotreatingtechnologicaladvanceitself
(asopposedtotheuseorimplementationoftechnology)asexceptional.34Inthis
33SeegenerallyJustin(Gus)Hurwitz,EncryptionCongressmod(Apple+
CALEA),30HARVARDJOURNALOFLAWANDTECHNOLOGY355(2017).34Itisimportanttonote,however,that(underUSlaw,atleast)both
patentandcopyrightlawencompasscoreelementsthatmitigatethisexceptionalismtosomeextent.Foranidea(invention)tobegrantedapatent,for
39
sense,itcouldbeargued,themeredefinitionofIPrightsrepresentsa
problematicextensionofthelegalorderbeyondasystemnecessaryfor
mitigatingtransactioncoststoonethatinherentlycurtailslibertyregardlessof
countervailingsocialgain:BecauseIPrightsaregrantedbeforeanywelfare-
improvingtransactionisundertaken,evenessentiallyvaluelesstechnologycan
receiveIPprotection,subjectonlytothe(largelyarbitrary)costtoanapplicant
ofobtainingit.35Formoderatelibertarians,however,asystemofIPrightsreadily
overcomesthisapparentdefect.
Notsurprisingly,however,thehard-corelibertarianargumentagainstIP
extendsfrompreciselythisapparentquirk.Hard-corelibertariansgenerally
advancetwoargumentsagainstIP.First,IPisacreationofgovernment:As
suggestedabove,notonlytheexpostregulationoftechnology,butitsvery
example,itneedstobeuseful:Itcannotexistmerelyasanabstractidea,butmustbeafunctional“process,machine,manufacture,orcompositionofmatter.”35U.S.C.§101.Andfororiginalworkstoreceiveacopyrighttheymustbe“fixedinanytangiblemediumofexpression…fromwhichtheycanbeperceived,reproduced,orotherwisecommunicated.”17U.S.C.§102(a).Again,itisclearfromthisstatutorylimitationthatabstractionspersewillnotreceiveprotectionunlesstheyareactuallyimplementedinausefulform.Nevertheless,theseeligibilityrequirementsdonotentirelyunderminetheideathat“technology,”ratherthan“theuseoftechnology”isprotectedbyIPrightsbecause,oncetheconditionsofeligibilityaremet,IPprotectionsextendbeyondthoselimitationstorestrictothers’implementationofthenewtechnology.
35Becausecopyrightattachesautomaticallytoanyoriginalexpressiononceitisfixedinatangiblemedium,eventhislimitationdoesn’texist.Ofcourse,theinvestmentrequired(includingopportunitycosts)tocreateapatentableinventionorcopyrightableworkactsasalimitation,aswell,andonethatisdecidedlymorecloselyrelatedtoexpectedsocialvalue.Butevenideasdiscoveredaccidentallyand(nearly)trivialworksofauthorshiparestilleligibleforprotection,sothereremainsasignificantscopeforlegalconstraintstoattachevenwithoutanyindicationoftheirsocialvalue.
40
definitionthroughpatentorcopyrightisan“artificial”functionofstatute.
Moreover,becausethisgovernment-createdpropertyrightentailsarightto
preventunauthorizeduseofprotectedtechnologyandtheconcomitantrightto
extractmonopolyrentsinexchangeforauthorization(license),itamountstoan
unjustifiable(andpossiblyinefficient)governmenttransferofrents.Second,
unlikerealandpersonalproperty,another’suseofanidea(orcopyingofan
expression)isnotinherentlyrivalrous:itcanbeaccomplishedwithoutdepleting
theideaorexpressionandwithoutlimitinganyoneelse’sabilitytoimplementor
copyit.Similarly,absentenforcementoftheartificial,government-granted
monopoly(orconcealment),itisverydifficult(ifnotimpossible)toexclude
othersfromtheuseanideaorofcopyright-protectedcontent,particularlydigital
content.Ontopofallofwhich,thesystemforgrantingandenforcingIPrightsis
costlyand,inevitably,complex.Asaresult,sotheargumentgoes,IPrightserect
artificialandcostlyimpedimentstothelibertyofpeopletodo(andsay)what
theywillandshouldnotbeenforced.36
Butthisis,yetagain,acaseofcyberexceptionalism.Propertyrights,if
theyhaveanymeaningorutility,arealwayscreaturesofthegovernment.Infact,
aswehavenoted,acentralfeatureoflibertarianismistherecognitionthatthe
definitionandenforcementofpropertyrightsisinarguablyavaluablefunctionof
government.Withouttheimplicitimprimaturofthestateonone’sclaimtoa
particular“thing”(whethertangibleorintangible),thevalueofthatclaim(and
thusthethingitself)isapproximatelyzero.
36See,forexample,TomW.Bell,IndelicateImbalancinginCopyrightand
PatentLaw,inCOPYFIGHTS:THEFUTUREOFINTELLECTUALPROPERTYINTHEINFORMATIONAGE4(AdamThierer&ClydeWayneCrewsJr.eds.,2002).
41
Noonecandefendanysystemofpropertyrights,whether
fortangibleorintangibleobjects,onthenaïveviewthatit
producesallgainandnopain.Everysystemofpropertyrights
necessarilycreatessomewinnersandsomelosers.Recognize
propertyrightsinland,andthelawmakestrespassersoutof
peoplewhowereoncefreetoroam.Wechoosetobearthesecosts
…becausewemakethestrongempiricaljudgmentthatanylossof
libertyismorethanoffsetbythegainsfrommanufacturing,
agricultureandcommercethatexclusivepropertyrightsfoster.
Thesegains,moreover,arenotconfinedtosomeluckyfewwho
firstgettooccupyland.No,theprivateholdingsinvariousassets
createthemarketsthatusevoluntaryexchangetospreadthese
gainsacrosstheentirepopulation…[T]heinconveniences[IP]
generatesarefullyjustifiedbythegreaterprosperityandwell-
beingforthepopulationatlarge.37
Itisalsoimportanttonotethatthepresumed“monopoly”grantedbyIPrightsis
notactuallyamonopolyinanymeaningfulsense.Becausepatentrightsand
copyrightsarelimitedinbothtimeandscope,theydonotforeclosethe
developmentandimplementationofcompetingideasorcompetingexpressions
anymorethantheownerofasinglehousecanavoidcompetitionfromher
neighbors.
37RICHARDA.EPSTEIN,INTELLECTUALPROPERTYFORTHETECHNOLOGICALAGE8
(ManufacturingInstitute,2006).
42
IVA Classical Liberal View of Technology and the Law?
Onfirstblush,itseemsthatthemoderatepositionontechnology(more
accurately,technologicaladvance)enjoysthebetterclaimtothemantleof
classicalliberalism–andinmanywaysitdoes.Whiletheextremeposition
appearstobemoreacutelyprotectiveoflibertyfromgovernmentinterference,
itsmyopicfocusonfreedomfromallconstraintsleadsittorejecteven
transaction-cost-reducingrulesthatfurtherautonomyandvoluntaryexchange
andthusoverallsocialwelfare.
Considertheconceptofpermissionlessinnovationagainwhich,asnoted,
isimportanttoboththemoderateandextremeliberalpositionsregarding
technology.Ontheonehand,theextremeversionofpermissionlessinnovation
doesnotstandforneutralapplicationofgenerallyapplicablelegalrulesand
principlestonewtechnology,butfortheavoidanceofalllegalrulesthatmight
constraintheabilitytodevelopanyparticular,newtechnologicaladvance.This
viewofpermissionlessinnovation–theextremelibertarianview–treatseven
privateconstraintsarisingoutofenforceablepropertyrightsasinherently
outdated.Itis,underthisapproach,aproblemnotonlythatinnovatorsmight
havetoseek“permission”fromthegovernmenttodeploynewtechnology,but
thattheymighthavetoseekitfromprivatepropertyholdersthroughcontractor
license–bytransactingwiththem,inotherwords.Onthisview,thetransaction
itselfbecomesanunjustifiedcost,andrulesthatenablerightsholderstolimitan
innovator’sliberty–evenifefficiently–areproblematic.Thisseemstoo
43
solicitousoflibertyandtoodismissiveofautonomyandthebroader,systemic
benefitsofwell-definedpropertyrights.
Ontheotherhand,themoderateviewrunstheriskofnaïvedeontology,
embracingandpreservingrulesfortheirownsake.Themoderatepositionisthat
permissionlessinnovationdenotestheabilitytoexperiment,enterinto
transactions,anddevelopanddeploynewtechnologywithoutrequiringthe
adoptionofnewrulesthatapplywithspecialforcetonewtechnology,that
overlyconstrainitoutofexcessivefearofitspotentiallyharmfuleffects,orthat
protectincumbentsfromnewcompetition.Itwould,attheextreme,seemwilling
tosacrificeevenwelfare-enhancinginnovationforthesakeoflegalconstancy:
thecontinued,neutralapplicationofexistingrulesandtheavoidanceofnew
rules,regardlessofwhethereitherwouldclearlyfurthertechnologicaladvance.
Theproblemwiththisview,ofcourse,isthatthereisnoinherentreason
tothinkthatthespecific,statusquostructureofrightsisoptimalinthefaceof
anygiventechnologicalchange,particularly,aswehavenoted,whenitis
relativelyrapid,disruptivechange.Theclassicalliberalembraceofrulesand
legalinstitutionsisconsequentialistandutilitarian,notdeontological:public
rulesareneededsolelybecausewegainmorefromtheirabilitytofacilitate
privateorderingandpreserveautonomyintereststhanwelosefromthe
constraintsonlibertytheyentail.Butthat(emphatically)doesnotmeanthatany
specificrulesperseareworththecost.Thechallengeisunderstandinghowrules
shouldevolvealongsidechangingtechnologies.
Wefrequentlyseethisonvividdisplayinregulatedindustriesthat
undergotechnologicaldisruption:asthecostandreliabilityofairtravel
44
improvedleadingtocommoditization;aselectricitygenerationwasseparated
fromtransmissionandbecameincreasinglycompetitive;asnewnetwork
technologiesenabledthetransitionfromamonopolytelephonenetworktoone
ofwidespreadintermodalcompetition;asride-sharingplatformslikeUberand
Lyfthavedisruptedheavilyregulatedtaximonopolies.Mostclassicalliberals
wouldcheerthedisruptionoftheselegalregimesandcelebratethetechnological
innovationthathastenedthetransitionawayfromindustry-specificregulatory
regimes.
Infact,thisisthecaseevenaswecanrecognizethelossesfacedbythe
energycompanywithstrandedinvestments,thetelecommunicationscarrier
whoserateofreturnwasdependentonregulatedprices,andthedriverwhopaid
$1millionforataximedallionthatisnowworthaquarterofthat.RecallRichard
Epstein’simportantpointthat“[e]verysystemofpropertyrightsnecessarily
createssomewinnersandsomelosers…,[but]theinconveniences…arefully
justifiedbythegreaterprosperityandwell-beingforthepopulationatlarge.”38
The“losses”herearelargelyonlydistributional;theyarisebecausethe
rejiggeringofpropertyrightsenablestechnologytoexpandthesizeofthepie,
evenasitalsoredistributesthepieces.Butitisthetransitionfromonestateof
affairstoanother,frequentlybroughtonbytechnologicaladvance,thatcreates
theappearanceofloss.Behindthemetaphoricalveilofignorance,everyone
wouldprefertechnologicaldynamismtostasis,evenwiththedisruptionit
entails.Forthesamereason,classicalliberalismshouldcountenancesome
reorderingofrightsinordertofacilitateorrespondtonewtechnology.
38Id.
45
Thus,animportantandunderappreciatedroleoftechnologicalchangeis
tohighlightthesefaultlinesbetweenappropriate,transaction-cost-reducing
backgroundrulesandthoselawsandregulations(orspecificenforcement
decisionsofotherwise-desirablebackgroundrules)thatmayappeartofacilitate
trade,butreallyimpedethecreationofwealthandtheexerciseofliberty.
NotthatitrequiresanUbertoseethattaximedallionsarealmost
certainlyexamplesofthelatter,andnottheformer.Theyconstrainnon-
medallionholders’libertywithoutevenfacilitatingvalue-maximizing
transactionsforthosewhoholdthem.ButitdoesoftentakeanUbertobringinto
reliefthebut-forworldthatsuchlawsdeter.Absentthisinformation,the
classicalliberalapproachisfarlesslikelytosucceedininfluencinglawand
policy–inovercomingthepoliticsandrent-seekingthatpropupwelfare-
limitingor-reducinglawsorallowthemtocomeintoexistenceinthefirstplace.
Thereisthusasecond-order–andironic–benefittothemoreextreme
libertarianposition,whichwould,atthemargin,enabledeploymentofmore
disruptivetechnologies,somenumberofwhichwillconferthispoliticaleconomy
benefit–improvingthereliabilityofthelaw–independentofthedirectbenefits
theymayalsoentail.
Iftheextremepositioncanbetoo…extreme,themoderatepositioncan
betoocautious,overweightingpresentautonomyinterests(theprotectionof
existingpropertyrightsandtheabilityfortheirholderstodemandlicense)and
underweightingfuturelibertyinterests(theabilitytoundermineexisting
propertyrightsforthesakeofdynamicefficiencygains).Butunlessweareable
toreducetransactioncostsfarbeyondwhatislikely,theoptimalclassicalliberal
46
positionwillstillrequirebackgroundrules:Solongastransactioncostsexist,
ruleswillberequiredandthechallengewillbetoimplementtherulesthatyield
themostefficientofoutcomes.
Whiletherecanbelittledoubtabouttheinefficacyofmaintainingstatus
quoregulatoryregimesinthefaceoftechnologicalchange,theclassicalliberal
positionisnotsoobstinate.Whenitcomestotheintrusive,industry-specific,
regulatoryoversightoftheadministrativestatethathascometodominateinthe
contemporaryera,theclassicalliberalpositionisinvariablyskeptical,and
technologicalchangeisoneofthemostimportantreasonsforclassicalliberal
effortstounwind(orprevent)suchregimesinthefirstplace:Fortheclassical
liberal,mostsuchregimesareill-advisedfromthestart.
Butthingsaremorecomplicatedwhenitcomestorulesofgeneral
applicability.Itismoredifficulttocountenanceabruptshiftsinoverarching
regimesgoverningthingslikecompetition,intellectualproperty,privacy,and
consumerprotection(amongothers).Notthateventheseregimesarelikely
optimalexante,ofcourse.Buttheinherenttensionbetweenlibertyand
autonomyinterestsissomewhatmorecomplicatedtoresolvewhen
technologicaladvancedisruptsthem.
Thisisparticularlytruewheresuchregulatoryregimeswereadoptedto
addressperceivedlacunasinthebasicrealmsofoperationofthecommonlaw,
oftenbroughtaboutbyprevioustechnologicalchange.Inthemain,itis
importanttonote,classicalliberalsfavorcustomaryandcommonlaw.39These
39SeegenerallyFRIEDRICHA.HAYEK,THECONSTITUTIONOFLIBERTY(1960);
FRIEDRICHA.HAYEK,LAW,LEGISLATIONANDLIBERTY:ANEWSTATEMENTOFTHELIBERALPRINCIPLESOFJUSTICEANDPOLITICALECONOMY(1973).
47
evolutionarysystemsadapttotechnological(andother)changesovertime,
maintainingrelativeconstancy,minimizingthefrustrationofexpectations,and
eschewingpreemptiveconstraintsthatmayturnouttobeinefficientor
otherwiseundesirable.Butstatutoryrulesofgeneralapplicabilityalsoevolve
throughiteratedjudicialenforcement(inpartinresponsetotechnological
changes),andalsoeffectanallocationofpropertyrightsandsetexpectations.40
Whiletheslow,deliberateevolutionofthecommonlawiscertainlypreferable,
wheretheyexist,therelativeconstancyoftheselongstandingstatutoryschemes
issimilarlyimportantinmaintainingthebackgroundrulesagainstwhich
transactionstakeplace.
Thecentraltensionhereisthatclassicalliberalismpositstheneedfor
legalinstitutionstopromoteprivateordering,buttheseinstitutionsthemselves
areoftenestablished,maintained,enforced,andupdatedthroughaprocessof
publicordering.Indeed,eveninstitutionsthatevolvethroughprivateordering
quicklytakeonapubliccharacterinanysocietybeyondatriviallevelof
complexity.41Andsuchrulescaneasilyfallvictimtotheperilsofpublicchoice,
erringonthesideofexcessiveconstraintduetolimitedknowledge,anexcessof
caution(theso-calledprecautionaryprinciple),andthelureofrentextraction.
40TheoperativelanguageofSection1oftheShermanAct,forexample,comprisesthefollowing:“Everycontract,combinationintheformoftrustorotherwise,orconspiracy,inrestraintoftradeorcommerceamongtheseveralStates,orwithforeignnations,isdeclaredtobeillegal.”15U.S.C.§1.Thecourtshave,forthe125orsoyearsofthelaw’sexistence,beenresponsibleforinterpretingthelawandgivingititsrealcontent(subject,ofcourse,tothestronginfluenceofenforcementagencies’exerciseoftheirprosecutorialdiscretion).
41SeegenerallyELINOROSTROM,GOVERNINGTHECOMMONS:THEEVOLUTIONOFINSTITUTIONSFORCOLLECTIVEACTION(1990);ROBERTELLICKSON,ORDERWITHOUTLAW:HOWNEIGHBORSSETTLEDISPUTES(1991).
48
Theveryrulesthatclassicalliberalismdependsuponinordertoensureprivate
orderingandautonomycanbecapturedthroughpublicmeanstolimitprivate
orderingandundermineautonomy.Theextremelibertarianpositionhasthe
undeniablevirtuethatitisapurelyprivatemechanism,onethatcandisrupt
legalinstitutionsthathavelosttheirway–evenifthatdisruptionhasgreatcosts.
Sotoodoestheclassicalliberal’scommonaffinityforthecommonlaw–an
institutioninwhichchangestothelawarepredicatedonprivatedisputes,which
servestochecktheproblematiccharacteristicsofpublicordering.42
Conclusion
Classicalliberalismisoftenconflatedwithlibertarianism,and,onissuesrelating
totechnology,libertarianismwritlargeisoftenconflatedwithparticularstrains
ofanarcho-capitalismandtechno-andcrypto-libertarianism.Thesestrains
embraceextremeviewsoftheliberty-enhancingpotentialoftechnology.But
theyarealsointensionwiththeclassicalliberalacceptanceofaminimalsetof
legalinstitutionsasnecessarytoprotectindividualautonomyandpromote
stableprivateordering.Indeed,thehallmarkofmuchofthetechno-libertarian
idealisdisruption–includingdisruptionoftheveryinstitutionsthatclassical
liberalismidentifiesasnecessaryinordertopromoteindividuallibertyand
socialwelfare.
42See,forexample,Justin(Gus)Hurwitz,DataSecurityandtheFTC’s
UnCommonLaw,101IOWALAWREVIEW955,981(2016)(discussingthat,whilecommonlawjudgesdomakelaw,“theydonotembracethisfunctionwarmly,”andthevariousobstaclesthatexisttolimitthescopeofjudicialrulemaking).
49
Thissuggeststensionsbetweentheclassicalliberalandtheascendant
libertarianimpulsesthatdrivemanyinthemoderntechnologysphere.These
tensionsarereal.Butthegreatertensionsarewithinclassicalliberalismitself.
Classicalliberalismaccepts–evenposits–theneedforlegalinstitutions,but
doesnotprovideanendogenousexplanationfortheorigins,extent,ornatureof
thoseinstitutions.Contemporarythinkersintheclassicalliberaltraditionare
likelytogroundtheseinstitutionsinwelfareandtransactioncosteconomics.But
technologicalchangescanleadtomeaningfulchangesintransactioncostsand
shiftsintheallocationofsocialwelfare(thatis,theefficientorderingofprivate
resources).Inotherwords,technologyisexogenoustotheprinciplesofclassical
liberalism,suchthatthefundamentalinstitutionsofclassicalliberalismare
themselvesdefined(atleastinpart)exogenously.Thisleadstothepeculiar
resultthat,lackinginternalprinciplestoguidetheprivateorderingofits
institutions,classicalliberalismmustrelyinpartonapublicorderingofthe
institutionsthatgoverntheprivateorderingthatitseekstofacilitate.
Themoderneraofdisruptivetechnologyhasmagnifiedthistension.
Thereislittlequestionthatmuchofmoderntechnologicaladvanceendsup
enhancinglibertyandpromotingprivateordering.Butdisruptionalmostby
definitionimplieswinnersandlosers,andthespoilsofdisruptiondonot
necessarilyfallefficiently,eithertothewinnersorthelosers.Theclassicalliberal
prefersParetoefficienttransactions,andisrelativelyaversetotransactionsthat
aremerelyKaldor-Hicksefficient.Buttechnologicaladvance–andespecially
disruptiveadvance–placesussquarelyintheuncomfortablerealmofKaldor-
Hicksefficiency:Eitherweallowdisruption,allowingharmtothosedisrupted;or
50
wedenydisruption,denyingbenefitstowould-bedisruptors.Withoutbotha
senseofthemagnitudeofharmandanefficientmeansbywhichtocompensate
forit,wearenolongeroperatingintherealmofvoluntaryprivateordering–
thatis,intherealmofclassicalliberalism.
Thesafestresponsetothisconundrumforthecommittedclassicalliberal
islikelytorecommittothebasicprincipleofsimplerulesdevelopedthroughthe
common-lawmechanism.Theseareleastlikelytobedisruptedandmostlikely
totransferrelativelyunscathedbetweentechnologicalregimes.Toooftenlegal
institutionshaveembracedcomplexity,eitherontheirownorinresponseto
specifictechnologies.Suchcomplexityrunscountertoclassicalliberalismand
compoundstheconfoundingconundrumthattechnologyposestoprinciple.
Instead,whenconfrontedwithtechnologicalchange,classicalliberalism’sfuture
morelikelyliesinitspast.Asusual,RichardEpsteingotthingsright:“Theproper
responsetomorecomplexsocietiesshouldbeevergreaterrelianceonsimple
legalrules,includingolderrulestoooftenandtooeasilydismissedascurious
relicsofsomebygonehorse-and-buggyage.”43
43RICHARDA.EPSTEIN,SIMPLERULESFORACOMPLEXWORLD21(1995).