You only lose if you’re attached.

Every so often I find myself feeling as if I’ve lost something.  I begin to search my pockets, checking on my keys, my wallet and the tokens I carry with me.  I’ve not lost anything over the past few days (except my spectacles, which I kept by my bed yesterday and can’t find today, I suspect I’ve been sleep-walking, something I’ve never done before), in fact I’ve carried things with me I shouldn’t have.  This is a sense of loss, but I can’t say what I’m to make of it, I may have partial explanations that rest on received conceptions of the self, but nothing firm.  Meanwhile I continue to search my pockets every so often.  It isn’t a part of me that’s missing, but an appendage I use to function in the world.

First Amendment Rights and the CDA

On February 8th, 1996 President Clinton signed into law the bill known as the Telecommunications Act of 1996, technically S. 652/H.R. 1555. Most of the 200 page bill deals with various amendments and changes to the Telecommunications Act of 1934, but stuck away around page 150 is the section called Title V “OBSCENITY AND VIOLENCE SUBTITLE A–OBSCENE, HARASSING, AND  WRONGFUL UTILIZATION OF TELECOMMUNICATIONS FACILITIES” and within it Sec. 507 “Clarification of current laws regarding communication of obscene materials through the use of computers.” People who have followed the fortunes of Senator Exon’s proposed amendment to the Telecommunications Act, will find this section familiar. In fact Sec. 507 is the Exon amendment duly altered twice after uproars that arose last year. When the Communications Decency Act, (CDA) was proposed last year, it’s incorporation into the then in progress Telecommunications Bill was approved in the Senate by a vote of 84 to 16. Packaged within the much larger Telecommunications Act, the CDA has been signed into law. Perhaps this says something about the reality of politics, yet it’s a little too late to bother about that. Right now we must evaluate the possible effects of this bill.

A number of organizations have already looked closely at the CDA. The American Civil Liberties Union, the Electronic Privacy Information Center and a number of other civil liberties organizations including the Electronic Frontier Foundation filed a case with the District Court of Eastern Pennsylvania claiming the CDA is unconstitutional. On February 15th, Judge Buckwalter granted a partial Temporary Restraining Order to the ACLU and other plaintiffs in the case stating the law was “unconstitutionally vague”. The TRO will not prevent the prosecution of persons who place or provide “indecent” material on a computer network where a minor can read or view it. Undoubtedly, this is an important decision, but the TRO leaves standing other sections of the Act. Amidst all the gloom, we have a little to be thankful for, the CDA in its present form does not make service providers fully responsible for the content transmitted over their networks. This is a change from previous versions of the CDA which sought to make all computer network operators liable for anything and everything transmitted over their wires, perhaps in the hope that this would spur “voluntary” censorship. Even in its present form, however, the CDA will only exempt a computer network operator from liability if she is unaware of the activities of her users and or has “taken in good faith reasonable, effective and appropriate actions under the circumstances to restrict or prevent access by minors”. In effect, the operator of a computer network is not afforded the same immunity granted to a local telephone operator. Before she is free from liability under this law, the computer network operator has to take the extra step of verifying a user’s age. The network access provider is not given the protection a common carrier is afforded though it is acknowledged that she may have no editorial control.

A large proportion of the confusion in free speech law seems to stem from the form the communication takes, not its function or content. For instance, the “indecency” clause cannot be applied to the print media and a court cannot indict a newspaper for publishing material that may be “indecent” or “patently offensive as measured by contemporary community standards”. Yet, if the same article is made available over a computer network and the on-line newspaper is accessible to minors, the content provider can be fined and imprisoned for up to two years. This sounds Orwellian, but it is the case across a broad variety of media, teletext is not granted the same First Amendment protection as a newspaper, a radio broadcast is subject to much more regulation than a book, and cable TV is treated very differently from broadcast television. Some aspects of these differences in regulation do appear reasonable and others seem quite unreasonable. In particular, it has often been suggested that the appropriate paradigm for the Internet is a library and not the broadcast media. Similarly it has been held that electronic mail be granted the same protections surface mail is.

Part of the problem seems to be the search for paradigms, trying to find analogies for the new media, see what form of old media is closest to the new. The problem is that the new media may use a telephone or television wire to facilitate communication, yet perform the exact same function as a print publication does. At times it almost seems as if the law treats the “freedom of the press” as exactly that, the freedom of printing presses and nothing else. Laws it seems, must be refashioned with the advent of every new technology.

Some of the controversy surrounds the nature of the content and the definition of “community standards”. The suit filed by the ACLU relied, in part, on affidavits provided by a number organizations disemination information about AIDS over computer networks. The providers of such health and safety information are concerned that some of their material may be “indecent” and a number of them stated they “did not understand what indecent or ‘patently offensive’ meant”. It would indeed be quite unreasonable to demand that such services require all users to identify themselves and verify their age. Not only would this be contrary to the nature of the service, which demands anonymity, it would be quite expensive to impliment. This is just one example of how the CDA might affect speech we would consider valuable to protect; other instances range from silencing a forum on breast cancer to hounding writers distributing drafts of works in progress over computer networks.

It is abundantly clear that the federal government and indeed the Supreme Court itself are prone to deal with electronic and paper communication in very different ways. In 1928 the Supreme Court held that warrantless wiretapping was not unconstitutional because “[t]here was no searching [and there] was no seizure”. Apparently the Fourth Amendment was not applicable in the case of wiretaps since “[t]he United States takes no such care of telegraph or telephone messages as of mailed sealed letters” (Olmstead v. United States, 277 US 438, 464 [1928]). Apparently, if it’s electronic, it’s fair game. In 1967 (Katz v. United States, 389 US 347 [1967]), the Court had changed its views and now held that the Fourth Amendment “protects people not places”, consequently warrantless wiretapping was made illegal. We must now consider with all seriousness whether the CDA and indeed the government’s response to Computer Mediated Communication in general is not simply a rerun of the wiretapping case. The US federal government’s position on encryption technology and content on the Net would suggest that it is. If we are about to enter another era of unreasonable legislation we must be aware that this legislation will dramatically influence the evolution of the new media and might even stifle its development altogether. This is a serious question and the exponential growth of Computer Mediated Communication leads me to believe that many people will be affected by government policies pertaining to CMC in the future. Those among us who have not had the opportunity to use the new media will find themselves absorbed in it in a few years, it is then that the effects of these laws will becomes completely apparent.

The CDA was proposed by a retiring senator who was shocked at some of the material he found available on the Internet. He decided the best way to express his concern about the digital environment his grand-daughter would be to pass a broad bill to illegalize all “indecency” on the Net. The generations that are going to be most affected by these new laws have had no say in the matter, decisions have been made on their behalf by people who know very little about the new medium. Sen. James Exon (D-Neb) knows little about Computer Mediated Communication, at 75 it is unlikely that he will live to see the long-term effects of the CDA. The former governor of Nebraska retires from the Senate this year, but unless the law is repealed, he will have left behind as a legacy the Communications Decency Act of 1996, something future generations will have to grapple with for many years to come.

The most intrusive section of the CDA has been restrained, for the time being, but the rest of the act is still law. How is one expected to posit “contemporary community standards” on a network that spans the entire globe? Does that concept have any meaning at all in such a context? Where does the line between the political and the personal lie? Is a declaration of one’s sexual orientation “indecent”? How is one to function as an adult in a world which is by default restricted to content appropriate for a child?

These are questions we must answer, and answer fast. Unless there is a discourse beyond the rather narrow circle of dedicated computer users, we might see the medium shackled as it tries to hobble its way into the next century. The future of computer networks concerns each and everyone of us, very intimately. Almost every aspect of our lives is linked, or will soon be linked, to the new communication technologies. The Communications Decency Act of 1996 will have ramifications for all of us, if not tomorrow, then definitely next year.

This article draws heavily on Robert Corn-Revere’s paper “Lost on the Infobahn: The need for a Coherent First Amendment Approach”, presented at the 1994 Telecommunications Policy Research Conference.

Further references can be found at Electronic Frontier Foundation ; American Civil Liberties Union ; Cato Institute A paper by Robert Corn-Revere, “New Age Comstockery: Exon vs the Internet” can be viewed at

Borges’ Dream

One of the earliest promises of a large-scale computer network was that it would make the dream of a digital library possible.  It seems as if that vision is slowly, hesitantly coming alive.

Those of us who are interested in issues of literacy and access to knowledge have been closely following the growth of what are called E-text (Electronic Text) projects.  The broad aim of these projects is to translate information from traditional paper media to electronic media to make such texts available over global computer networks.  The benefits of such a “translation” are enormous, both for the scholar and the individual.

Perhaps the most important aspect of these projects is their ability to preserve fragile documents that might otherwise be lost.  Printed paper is subject to numerous hazards, is difficult to reproduce and eventually deteriorates.  An Electronic book, however, can be reproduced at the push of a button and is exceptionally cheap to store.  At $.50 per Megabyte of magnetic storage media, it costs only a dollar to store 1,000 pages of text.  Since it is easy to copy electronic-texts it becomes unnecessary to physically ship books through the post, one has only to send a copy of the original (a perfect copy, no possibility of a generation loss unlike photocopies) over a network to the person who is interested in the content.

None of these things are new, many people have been aware of them for decades, but we are seeing a proliferation of such libraries only at the present time.  This is partly due to the increasing importance of computer networks in our society and the technological advances made over the past few years.  As computers and networks become ubiquitous it is only a matter of time before a large part of the knowledge now contained in, and constrained by, the shelves in our libraries will become mobile.

In an electronic library one would not be told “the book has been checked out”.  At an electronic book-store no book can be sold-out, no book can be out of print.  Yet these possibilities force us to ask other questions, specifically ones related to copyright.  If it is possible to make a perfect copy of a book by pushing one button, how is one to enforce copyright laws.  This is an important question and it is being tackled by publishers the world over as they experiment with solutions like encrypting the text or making it viewable only with software that would not permit copying.  Solutions will be found by those who have the greatest incentive to develop them, namely publishers.

Most E-Text projects today concentrate on books that are no longer protected by copyright, i.e. they are under public domain.  So one can find the complete works of William Shakespeare, Aesop’s Fables or Adam Smith’s “The Wealth of Nations” in digital libraries across the globe. Most of these libraries do not charge users access fees, in a sense it is not worth doing so.  Managing a fee-structure would probably cost too much.  Since these projects are largely run by volunteers and with the assistance of donations, there is no desire to earn revenue from them. In any case, translating a book to E-text is so cheap that it is not necessary to charge for access.

There are a number of problems with the vision of large scale digital libraries.  It is uncertain whether many people will make the transition from reading books printed on paper to those on viewed on screen.  There are concerns that large amounts of time spent in front of antiquated computer screens may be harmful to the eyes.  With the present level of computer technology it’s difficult to see how you could curl up in bed with a electronic book.

A particular concern today is the accessibility of E-Texts.  Some E-Text projects store books in one format and others decide to present them in others.  It is possible that some books may not be accessible to certain people because they lack the software necessary to view them.  It is possible that certain formats that are popular today (HTML for instance) may not be around forever and we wonder what will happen to E-Texts stored in those formats.  Hopefully tools will develop that will permit translation between different formats.

Some of these concerns might be invalidated as technological advances are made, others may not.  It is difficult to imagine a world without paper books (though this might just save our forests), and I for one will hold on to every volume I own.  What is perhaps more likely is that this medium will compliment the traditional paper media.  It certainly has many advantages, it is cheaper, easier to transport and copy and increases access to rare and out of print books.  One point that is often not made is that electronic books are accessible to disabled persons (such as the blind) while the printed page may not be.  These are all significant advantages and I do expect to see many more electronic texts in the future.

But perhaps the factor that will convince most of us of its superiority is the fact that students might be able to read books on computers for far less than it would cost to buy them.

More information on Electronic Texts, and links to various digital libraries can be found at

Computer Advocacy @ NYU

This post was originally published in the Washington Square News


Capitalism, Socialism and Democracy

Review of “Capitalism, Socialism and Democracy“, Joseph A. Schumpeter;
Harper Torchbooks, 1976; ISBN: 0061330086

The man of system… seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard.  He does not consider that the pieces upon the chessboard have no other principle of motion besides that which the hand impresses upon them; but that, in the great chessboard of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.  If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful.  If they are opposite or different, the game will go on miserably and the society must be at all times in the highest degree of disorder.

Adam Smith: The Theory of Moral Sentiments, Part 6, Chapter 2.

Schumpeter is of course aware of this argument and acknowledges its validity, yet the kind of society he conceives in “Capitalism, Socialism and Democracy” will not, he predicts, have to content with any such difficulties.  This is of course easily demonstrated in Schumpeter’s taxis.  The socialist engine is clearly much more conducive to promoting authoritarian discipline, and this is, for Schumpeter, one of its great merits.  Yet the valuation of a command economy is one of the many claims Schumpeter makes that are questionable.

Schumpeter goes to great pains to demonstrate to us the great efficiency of the capitalist system.  He is entirely convinced that Capitalism is the sole explanation for us being where we are.  With his characteristic candidness he dismisses all arguments that fail to bestow laurels on Capitalism.  Yet beginning from this conviction, Schumpeter goes on to indulge in a socio/psychological analysis and finally tells us that

“… the ever-rising standards of life and particularly the leisure that modern capitalism provides for the fully employed workman… well, there is no need for me to finish the sentence or to elaborate one of the tritest, oldest and most stodgy of all arguments which  unfortunately is but too true.  Secular improvement that is taken for granted and coupled with individual insecurity that is acutely resented is of course the best recipe for breeding social unrest.”[pg. 145]

So, beginning with an acute analysis of Marx and a piercing critique of Marxist economics, Schumpeter finally declares the Marxist prophecy to be true.

It would be quite futile to argue against any such theory, and to an extent the rest of this tract is formulated by this pivotal statement. Schumpeter has reconciled himself with the inevitability of an increasing demand for Socialism, and as he himself notes this is because “Political criticism cannot be met effectively by rational argument.”[pg. 144]  As the book progresses however, Schumpeter modifies his stance somewhat and we find various defences of Socialism that come rather unexpectedly after the first two sections of the book.  This may be simply an attempt by an eternal optimist to see a half-full glass where there is nothing at all, but this is the portion of this tract that needs to be looked at most closely.

If there is one thing Schumpeter cannot be accused of, it is lack of thoroughness.  He has challenged almost all, and answered many, criticisms of the socialist schema in this rather wide ranging book.  Yet there are a few that he has shrugged off rather flippantly and it is here that we must focus our attention.  Along with all the other dismissals that Schumpeter hands out to economists and social scientists of all persuasions, he has answered the Hayekian critique in a few sentences [185], and Mises’s reservations concerning the socialist order with equal brevity [172-3].  Schumpeter’s responses do not do justice to the Austrian critique.

Unanswered questions

Schumpeter details an elaborate plan involving vouchers and price-fixing which a socialist state could adopt in order to make distribution a “distinct operation” that “in logic at least, is completely severed from production.” [173]  Schumpeter then goes on to claim that though this separation may become a determining factor as far as the society’s attitudes are concerned, it is completely arbitrary from the economic standpoint.  By separating distribution and production, however, Schumpeter’s hypothetical socialist state is forced to find a replacement for the price system that will convey information regarding the market to those making production decisions.  The tool that is readily available is of course an efficient bureaucracy infused with an adequate amount of espirit de corps.  Schumpeter fails to realize however that a bureaucracy cannot but be less responsive than the price system.  Renouncing the market price system entails giving up the most effective information dispersal mechanism we have chanced upon.  Despite his claims to the contrary [185], this bureaucracy will not function as efficiently or rationally as the market does.  Again contrary to Schumpeter’s expectations, such a bureaucracy will not require less intelligent managers than a modern capitalist enterprise; at worst it would require omnipotent beings, and at best those with very different thinking capacities.  Schumpeter fails to tackle the problem of gathering particular information for such a bureaucracy to process, and with rather irritating confidence declares that certain macro-economic variables, and other production data would suffice.  With surprising naiivete, Schumpeter assures us that it would be possible to set up a system of incentives to ensure that the bureaucracy makes the right decisions.  Of course this only makes us ask the question of a higher authority, and in the socialist schema there is always a higher authority.  So we finally have to put this question to those on the top. What are your criteria for making decisions?  The answer can only be that there are no criteria, that there are no laws, no rules, that all decisions are made arbitrarily as the “needs of the moment” dictate.  So much is implied in the Mises-Hayek doctrine.

Of course it is rather easy to see where Schumpeter has derived his vision of the “socialist engine” as a big enterprise from.  After all it with St. Simon that the imagery of the “one workshop” originated [F. A. Hayek, The Counter-Revolution of Science, pg. 121].  (Curiously, this is the one figure Schumpeter fails to denegrate, treats with positive veneration [307] and goes to the lengths of adopting an apologetic tone.)  Yet Schumpeter can hardly, at this juncture, defend this concept solely on the basis of its origins and he does not.  Not
surprisingly, Schumpeter has another surprise in store for us.  In perfect harmony with the refined Marxist prophecy Schumpeter declares that the capitalist system has itself created an environment where individuals are being trained to accept the all-encompassing bureaucracy.  Big business becomes for Schumpeter, the progenitor of the state economy. Ignoring all the problems such a claim presents, (the promiscuity of small businesses in new and emerging technologies, the phenomenon of consultants to provide small enterprises with the expertise they lack, the re-emergence of the self-employed entrepreneur in all fields…) it is rather amusing that Schumpeter informs us, countering Marx, of the white collar workers resistance to socialization.  The driving force behind this almost unanimous clamour for the “socialization of the economy” is Schumpeter’s (and in his view society’s) thirst for stability.  Writing in the post-depression moment, Schumpeter has perhaps been greatly shaken by, what appears to him to be, the naturally catastrophic undulations of the capitalist structure.  So Schumpeter opts for a system that places direct control in the hands of a few authorities, and by his thinking, consequently involves less arbitrariness, more “rationality”, less “creative destruction” and more stability.  The irony of it all is that Schumpeter is forced to acknowledge the need for regular changes, or repairs, to be undertaken on the socialist engine and (considering the bureaucratic aversion towards change in the absence of a direct threat to its own survival) this can only increase the uncertainty and friction he wants so much to avoid.

Even if we do accept that socialism might provide us with more stability, it becomes necessary to ask: At what cost?  Interestingly, Schumpeter has reversed Mises’ argument somewhat and in a rather fiery response to Keynesian economics and other “half-way” socialist measures, condemns them as mere platitudes that will only serve to delay the inevitable socialization of society and must be opposed by all true socialists.

But the question remains; at what cost?  Quite candidly, Schumpeter acknowledges that democracy becomes dispensable in a socialist environment.  This argument is preceded by a rather incisive analysis of what democracy is commonly understood to be and its own inherent limitations.  Yet, after concluding with this analysis Schumpeter does acknowledge that any form of democracy is quite incompatible with full-fledged socialism.  Once we are done with destroying this cherished myth, Schumpeter goes on to applaud the virtues of the socialist engine embodied in its ability to “impose hardships” [210], “eradicate the bourgeois separation of powers”, “empower social admonishment” [215], “insert the stock of the bourgeois extraction into its proper place within that machine” [207].  Sadly, Schumpeter seems to have rationalized the loss of individual freedom this would entail.  Paradoxically, he appears to be very concerned about rights abuses in Russia, yet even this concern is qualified by an elaboration on the uniqueness of the Russian situation, in that Russia was not a fully-evolved capitalist economy on the eve of the Bolshevik revolution.  None of this detracts however, from the fact that Schumpeter does not protest the subjection of the individual in the interests of “society”.  Rather, he would go as far as to suggest that such subjection of the individual is rational and desireable in that it enables society to harness the abilities of each individual more effectively.  The validity of that claim is highly questionable.

Despite all the reservations one may have about the thesis presented in the book, it is almost impossible to refuse to acknowledge Schumpeter’s thoroughness.  This book is a quite comprehensive discourse on Socialism, and one can hardly accuse Schumpeter of setting his sights too low.  It must also be said that the book is a delight to read, if only to taste Schumpeter’s irreverence.

The piece was written in Fall 1995 as an assignment in Prof. Kirzner’s
course on the “Foundations of Capitalism”.

Information sources for Economists

Since this is my page I must add links to my own papers. None of them are what would generally be considered “economic” in nature or content. Nevertheless they may shed some light on something obscurely related to economics.

But the great number [of the Athenian Assembly] cried out that it was monstrous if the people were to be prevented from doing whatever they wished… Then the Prytanes, stricken with fear, agreed to put the question–all of them except Socrates, the son of Sophroniscus; and he said that in no case would he act except in accordance with the law

Xenophon, Helenica, I, vii, 12-16; as quoted in F. A. Hayek, “Law, Legislation and Liberty, Volume 3: The Political Order of a Free People”

One might as well attempt to grasp the game of poker entirely by the use of the nathamatics of probability

Vannevar Bush, As we may think

And here are some other useful sites for Economists on the web.

Hayek’s The Road to Serfdom

The page numbers refer to the Fiftieth Anniversary Edition, University of Chicago Press; 1994; ISBN: 0226320618.

The Road to Serfdom

In the original introduction to “The Road to Serfdom“, Hayek describes this book as a “pamphlet”, which he wrote in his spare time. Yet as Hayek himself was aware much later, this book contained the gist of the argument to which he was to devote the rest of his life. “The Road to Serfdom” deals with so much material that it would be futile to attempt a review of the book in five pages, I can at most enumerate its most striking features and try to string them together in a semblance of order.

Order seems like a good place to begin. Many years after “The Road to Serfdom” was published, Hayek wrote the first volume of “Law, Legislation and Liberty” and gave it the title “Rules and Order”. The concept of the rule of law remains central to Hayek’s later work, and his emphasis on this institution is apparent in “The Road to Serfdom”. Hayek is convinced that the rules of the game cannot be arbitrary if individuals are to be able to function within a working market order. Though circumstances are constantly changing, the entities within any structure must be aware of limitations on other players if they are to be capable of forming plans. For Hayek these limitations are essentially restrictions on the powers of government to coerce specific individuals in order to achieve a particular outcome. Hayek contends that if we permit the state to invade the individual’s private sphere “in the interest of society”, the incentives to engage in market activity will largely disappear.

This argument that the rule of law serves as a means to facilitate the formation of plans which individuals can attempt to realize in the market, is supplemented by Hayek’s understanding of the nature of arbitrary power. Hayek does not fail to remind us of the dangers inherent in a structure that relies on the use of arbitrary power to achieve broadly defined objectives. Under a system where “society’s interests” are represented by the state, and where these interests take precedence over individual rights, we can be sure that these objectives will soon be perverted and the powers conferred on the state used to serve ends that they were not intended to serve. In Hayek’s own words, in a situation where the state is expected to plan out and solve the problems of the economic sphere, “As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of the directing power” [pg. 92, F. A. Hayek, The Road to Serfdom, 1994]. Since it will often be necessary to exercise this power ruthlessly, Hayek believes that only those who are capable of using brute force shall be appointed to or attain positions of power, the gentler amongst the population would tend to drift away from posts where the use of force would be necessary. We can see how in replacing the dynamic of unaligned forces that constitute the market with a strict hierarchy it becomes necessary that the hierarchy have a ruler. Thus Hayek’s conclusion (and that of many socialists) that such a structure would of necessity turn into a totalitarian order.

Unlike the situation in a free market, a consistently planned order would force us to adhere to a common set of values. Whereas the market is capable of serving the needs and desires of numerous individuals by a process that achieves a relative ordering of these values with the aid of the price system, an enforced order would force us to choose “whether it shall be we who decide what is more, and what is less important for us, or whether this is to be decided by the planner” [pg. 100]. Thus the individual effectively abrogates all right to self-determination. If all actions are intended to serve one set of purposes, it is easy to see how the process of determining these ends constitutes the complete loss of individual liberty. Hayek is well aware that the degree of concurrence towards desirable ends that such a system requires simply does not exist. This is why we are warned of relying on the democratic procedure to guard against a deterioration to a totalitarian order. Once it has been demonstrated that such a system cannot function if it requires the approval of a large proportion of the population, the need for such approval will itself be questioned.

Since Hayek ascribes to the Mengerian notion that “civilization advances by extending the number of important operations we an perform without thinking about them” [pg 87, The Counter-revolution of Science, quote from A. N. Whitehead], a planned economy seems to him a step back as far as solving the “economic problem” is concerned. Since we would by opting for a planned economy, be refusing the services of the price system as a tool to convey pertinent information in a concise form, a planned economy would involve a degree of complexity that cannot perhaps be comprehended or abstracted by the human mind. In a mercurial environment –which the economic sphere is, if only because of our constantly shifting tastes and desires– it is essential that responses be quick and effective. Yet by making economic decisions on a large scale subject to conscious thought, indeed by giving such movements the character of a decision, destroying the only institutions capable of producing such responses. As Prof. Boettke notes in another essay on this book “rather than spontaneous adaptation” such an order ” requires conscious adaptation, and there are epistemological limits to this procedure”. As always Hayek remains aware of the sort of effect an imposed economic order will have on our understanding of our needs, how these are to be satisfied, and the very concept of justice itself. The market process Hayek believes is highly “impersonal”, yet an imposed order cannot but recognize the differences between individuals and treat them in different ways. In such circumstances it is highly likely that an individual’s dissatisfaction with her/his position will be channeled into attempts to improve that position by petitioning the state. If such attempts are unsuccessful however, it is easy to see how a violent conflict might arise between the individual and the authorities, or even among groups that have alienated themselves from one another. As Hayek himself stresses “Although competition and justice may have little else in common, it is as much a commendation of competition as it is of justice that it is no respecter of persons”.

“The Road to Serfdom” may appear to some as a prophetic text. Indeed Hayek’s convictions are portrayed with such strength that it is easy to believe Hayek is outlining a sequence of developments that is inevitable. Yet this book is not a prophecy, nor is it a theory of history and the nation-state. It is however an analysis of the sort of institutions that might develop in an environment where the individual is not free to choose. As such it demonstrates tendencies, not immutable consequences. After all, as Hayek himself said “if we can regain the belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost” [The Intellectuals and Socialism].

This paper was written in Fall 1995 for Prof. Israel Kirzner’s class
“Foundations of Capitalism”. One grammatical error has been

PGP and Cryptography

“In furtherance of world peace and the security and foreign policy of the United States, the president is authorized to control the import and the export of defense articles and defense services and to provide foreign policy guidance to persons of the United States involved in the export and import of such articles and services.”  –Arms Export Control Act (22 USC Sec.2778)

Sounds pretty harmless right.  After all, it is in the interest of world peace.  But things are not always what they seem, especially in the murky world of federal law.  The provisions in the Arms Export Control Act have been applied to all sorts of exports of cryptographic material, material which most reasonable people would hesitate to call “arms”.

What is cryptography?  Cryptography is literally “secret writing”.  It is the art of encoding or enciphering material such that it is unreadable to anyone except those who have the “key” to decode it.  So what is the US federal government doing restricting the export of complicated locks? This is something many of us fail to understand. After all, locks are used to protect one’s property and who’d think of them as being harmful to world peace?  And we’re not even talking of physical locks here. Cryptography will only encode information, and is information in itself.

The Department of State has however used these laws to restrict the distribution of cryptographic material to foreign nationals, and to an extent attempted to control its application within this country.  The reason we cannot transmit data over computer networks as securely as we would like, with as much ease as we demand is precisely because of laws such as this.  These laws will not permit software authors to implement freely available cryptographic techniques to make transmissions over networks as secure as they can be.  If someone wants true security in transmission they currently have to encode the data manually and then transmit it.  Ideally this should all be done behind the scenes so that the user will not have to be concerned about it.  Precisely because it is such a bother, most users on computer networks do not care to encrypt information they transmit over computer networks.  Quite obviously this means that all e-mail you send, all files you transfer can be read by anyone while in transit.  Why doesn’t the US federal government want you to have access to the best locks available?

But it seems rather silly to ask such a question.  Of course we know why they don’t want your conversations to be secure.  For the exact same reasons that they want you to use a cryptographic system (the clipper chip) to which they always have a back-door, i.e. one that is not completely secure.  It is also why the federal government would like to pass the “wiretap” bill forcing telecommunications companies to invest in producing switching exchanges that will permit federal agents to listen in on your phone calls whenever they want to.  And they want to subsidise the telephone companies as they go about doing this.  what the federal govenrment really wants to do is use your taxes to spy on you.  Sound like big brother yet?

Thankfully there are people who are fighting govenrment regulation and action that will threaten your privacy.  One such individual is Phil Zimmerman.  Phil Zimmerman is the author of PGP (Pretty Good Privacy), an encryption program that is currently imossible to crack.  Phil Zimmerman has made PGP available to the world free of cost for a number of years.  He has been spending large amounts of time further improving this program to provide people all over the country with the degree of privacy that they desire.  Phil sounds like a nice guy doesn’t he?  But the Department of State doesn’t think so.  They’re accusing Phil and a number of other people involved with PGP of exporting munitions outside of the US.  The Department of State considers PGP a threat to “world peace”.  Incidentally the law invoked against Phil (International Traffic in Arms Control Regulations, ITAR) classifies Automatic Teller Machines as “Auxilliary Military Equipment”.  Yes those machines you use to get money from your account at night are considered lethal.

Phil Zimmerman is apparently being prosecuted because software he has written may have found its way outside the country.  This is undeniable; it must have.  After all, “information wants to be free”.  The point is however, that Phil has not been directly involved in any such distribution.  These can only be called “trumped up charges”.  Other questions are raised of course, questions that had been asked during the cold war.  Is it really in the interest of humanity that we hoard our knowledge and force each nation to re-invent the wheel?  Is it not much more desireable that the international academic community share its finding so as to minimize wasteful repetition of research efforts?  The US government doesn’t seem to think so.  The Department of State has turned down requests from academics who wished to post their own work on cryptography on worldwide discussion groups.  On the other hand the US supreme court has upheld the right of a publication to print instructions on constructing a homemade nuclear bomb, we can only hope that the judiciary will display similar judgement and guard our rights when these cases do come to court.  As is to be expected, the department of State has managed to find all sorts of excuses to delay hearings in most of these cases.

But this isn’t all, these laws constitute an infringement of free speech as well.  In it’s “Munitions Control Newsletter, No. 80”, the department of state stated: “The public is reminded that professional and academic presentations and informal discussions, as well as demonstrations of equipment, constituting disclosure of cryptologic technical data are prohibited without the prior approval of this office.”  What this means is that any foreign students at NYU who may have taken a course in advanced algorithm design, and their instructors, may have violated US federal regulation.  Something must be wrong here, after all the first amendment grants us the right to free speech right?

Phil Karn wrote a book on cryptography called “Applied Cryptography” that was distributed within the US with a floppy disk containing some programs that were described (and printed) in the book.  When Karn tried to distribute the book outside the US however, the Department of State did not permit him to sell the floppy disk with the book.  This seemed rather silly because the C code on the disks was printed in the book anyway.  But this tells us something about the federal government’s thinking.  Though the information may be the same, they are apt to treat printed matter and digital data in very different ways.  Why?  Because they can.

The federal government does not wish to stunt the growth of the computer industry, in fact various departments are working towards assisting companies in this sector become more viable in the global market.  The federal government has also for a number of years supported the activities of real defense manufacturers and encouraged the export of advanced weapons to countries all over the world.  Obviously world peace is not as much of a value when we’re considering a government supported company, but world peace is of prime importance when an individual attempts to disseminate information.  But the federal government works in mysterious ways.  What is of great concern however is that those rights which are afforded to the print media are not afforded to digital media.  With a very warped reading of the First amendment, the federal government has managed to convince itself that Computer Mediated Communication is not protected speech, and that it can therefore run rough-shod over the individual’s right to speak on a computer network. This becomes very clear when we understand that it is politically impossible for the federal government to censor the press, but that the populace in general knows so little about the digital medium that laws restricting free speech in a networked environment become non-issues. Yet, as the world becomes networked, or webbed or whatever, all of us will have to rely on computers and telecommunications to accomplish much of our work.  How would you like to have your telephone conversations tapped, or your faxes intercepted and read, or your e-mail opened?  The US govenrment cannot open your surface mail and we must ensure that no-one can read your computereized correspondence either.

We must remember that it was a struggle to pass the First amendment and it will be a struggle to pass a “Telecommunications privacy bill of rights” as well.  The government’s attitude on this is clear, in a letter to the administrators of the acadmeic computer network BITNET, the Commerce department stated that : “You have mentioned that BITNET does not monitor traffic on the network.  It is a non-secure network.” The question of course is non-secure for whom?  Is a netowrk that ensures privacy to its users, non-secure for them?  Of course not.  Is it non-secure for a tyrannical state?  Pirobably.  We must remember that free speech has been a value this country has been founded on.  The Federalist Papers, essays that moulded the future of this country were published anonymously.  If an individual’s right to privacy is not protected, the world will soon be an unbearable place.

Those interested in finding out more about these issues may wish to search the excellent archives maintained by the Electronic Frontier Foundation,  The Phil Zimmerman Legal Defense fund can be found at http://www.netresponse/zldf/.  I maintain a page that contains information related to these issues.


Students are an often overlooked at risk population for Repetitive Strain Injuries (RSI).  However, the combination of full or part-time work, keeping up with coursework and now, the addition of e-mail and the Internet/WWW has added to time on the computer. In fact, students often use computers as frequently as many workers do, sometimes under stressful conditions and for extended lengths of time.  Few people are aware that our bodies are not suited to working on computers in a stationary position for hours at a time. Perhaps the gradual onset of RSI has something to do with this.  We continue to campaign for more safety features in cars and airplanes, but hardly bother about the machines we interact with more frequently and which can be just as injurious.

Bad work habits and a poorly designed work environment can leave you just as injured as a car accident might.  We tend to view computers as enabling devices, they let us do so much more than we would be possible otherwise.  But we often forget that every tool has to be used properly or it can be harmful.  Repeated keying, just like lifting even the lightest of weights over and over again, can injure your body permanently.  Most people whose jobs involve lifting objects are trained to use the right posture while lifting. Hardly ever do we hear of such training given to computer users. There are many forms of RSI–Tendonitis, Carpal and Cubital Tunnel Syndrome, and trigger finger, to name just a few–and it is the fastest growing work-related health problem in this country. RSI when related to computer use is generally caused by a number of factors which can include, unhealthy work-station setup, bad keyboarding habits, posture, work flow factors and stress.  Both lack of information and misinformation contribute to injuries.  The use of computers over the past few years has grown exponentially, across the population.  There are few health professionals knowledgeable enough to advise and treat patients suffering from RSI-related health problems.  A general practitioner may be unaware of current techniques and recent advances in physical therapy and might recommend treatment which could compound your problems. What complicates things further is the fact that RSI-related health problems can affect your entire body, and are often difficult to diagnose.
Contrary to popular wisdom, Carpal Tunnel Syndrome is not the only form of computer-related injury affecting computer users.  In fact, there are numerous other ways in which you could injure your arms, hands, and indeed your entire body.  Also called Cumulative Trauma Disorders (CTDs), these range from problems with eyesight, neck and back injuries, fatigue, insomnia and even digestive problems.  Yet, some of the measures one can take to ensure a safer work environment are extremely easy to implement.  For starters, one should always take frequent breaks.  Small breaks every ten to fifteen minutes, used to perform simple exercises let the muscles and tendons relax and flex, reducing the strain placed on them by extended bouts at the computer.  Placing your monitor and keyboard at a more natural height can help reduce the risk of RSI a great deal, as can evaluating and improving one’s posture.  The temperature and climate conditions in the work area influence the body’s responses and can have a significant effect on one’s health.  Taking small snacks and frequent sips of water can prevent dehydration and general discomfort.

What is most important, however, is that more of us recognize the risks associated with computer use.  As little as an hour or two of working with a computer every day can cause injury if the environment is particularly unhealthy.  Since RSI is gradual, it is often difficult to notice and diagnose in its early stages.  More often than not, when one begins to notice pain and discomfort, it is too late for curative measures and you can only hope to prevent the further deterioration of your health.  Preventive measures taken early on are really the only “cure” available to us today. Like almost everyone else, NYU students are using computers more than ever before.  Consequently the health risks they face are as acute as those that threaten the well-being of any worker.  Often, one finds students who use computers both at work and while studying.  The end result is heightened risk, often in work environments one has no control over (computer labs, libraries etc.), where it is difficult to find or create a comfortable position and set-up.  A set-up appropriate for a tall person can cause acute discomfort for someone who is short and has small hands, so it is important to have adjustable chairs and workstations when  these are used by many people.  Laptops, on the other hand, create problems for people with long fingers who find it uncomfortable to use the small keyboards.  A portable computer generally means you will find yourself working on library tables, lounge chairs, park-benches, subway cars, etc., none of which were ever designed with computer users in mind.  Many NYU students will be using laptops in all sorts of environments, without being aware of the impact this may have on their health.

The most important step you can take right now is to become informed about the health problems that may be caused by computer use.

With the health of the NYU community in mind, Computer Advocacy @ NYU is cosponsoring a conference entitled “How to Survive Your Computer: Staying Healthy at Work”.  The major sponsors are the New York Committee for Occupational Safety and Health (NYCOSH) and the Mount Sinai-Irving J. Selikoff Center for Occupational And Environmental Medicine.  The conference will be held at Loeb Student Center (566 LaGuardia Place) on Saturday, October 12, 1996; 8:30am – 4:30pm.  There will be various workshops and talks by health professionals who treat patients suffering from RSI on a regular basis.  Flyers for the conference, and registration material is available from the Information Center, 50 West 4th Street.  More information about the workshop is available from Computer Advocacy’s homepage at or by calling NYCOSH at 212.627.3900

[originally published in the Washington Square News]

What brave new world we’ve wrought

For a while now, people at NYU have been wondering when we, like students and staff at other universities, would be able to publish our own web pages.  Well the capability has just arrived.  As of September 14, anyone with an NYU-Internet account (one of those ACF IS/IS2 accounts) can publish web pages that would be available to anyone, anywhere inthe world, who is interested in reading them.  Yet what exactly does this mean?  Is this like hiring out a billboard on 42nd street with red and white lights, is it equivalent to having a page to yourself in the telephone directory, or is it like publishing a book?

Writing pages for the web is perhaps analogous to writing a book, yet not exactly, and as we will see, the web might just change the way we look at publishing itself.  The World Wide Web, like the global computer network we call WorldNet affords possibilities that have never existed before. Never has it been as easy to distribute information to people half-way across the globe, it has never been as easy to engage in discourse with individuals whom one has never met.  And for the first time, anyone with the will to do so and a little spare time can become a publisher.  Though these opportunities exist, one is often unaware of what is to be made of them.  How are we supposed to do this, and why?

Some people write web pages to inform, and many other to entertain. Your homepage is often the only chance you will get to describe yourself to people on the Net, this is where you indulge yourself, write about your dog, your ant-farm, maybe even list your CD collection.  A homepage becomes an extension of your person, the place where people who’ve been conversing with you about the relative merits of non-stick frying pans, as opposed to traditional ones, go when they are curious enough to find out more about you.  And this is also the place to tell people what you’re having for lunch.  There are however, other uses for the web. One can use it to promote a personal political cause, make some writing freely accessible or simply provide information that may be of interest to a group of people.  What is astounding about the Web, and Compter Mediated Communication in general, is that individuals can interact on a scale hitherto unknown.  The Web makes it possible for anyone to utilize the same medium the New York Times or NBC would.  Unlike the sort of pre-packaged, processed entertainment and information we have been become accustomed to with the advent of radio and television, the Web provides us with a variety of sources that is in itself astounding.  It is no longer necessary to “believe everything you read in the paper”, or see on television for that matter, you can simply find out from someone who is close enough to know about the details.  And if you have the inclination, you can be the person who informs the Net community about a particular issue.

In a sense this is a move back to the times when people in a particular community actually gathered together every evening to exchange news and  talk about it.  The idea remains the same, but the community has enlarged to embrace a large part of the world.  The standards by which we judge what is worth paying attention to however haven’t changed. Though any web page is ostensibly available to anyone and everyone in the world who has access to the web, it’s unlikely that everyone on the Net is going to visit the page.

Unless, there’s something of interest there.  The web has the power to create a new media, one that is fed by individuals with personal concerns, not by large institutions.  Yet, if this capability is to come into its own every individual has to work towards realizing it.  The competition has never been fiercer yet never has the market for information been as open.  The probability that the web may become another distribution network for packaged media runs very high.  We only have a commercial media today because the costs of providing accurate information have always been very high (and will remain high for the forseeable future), this is especially true of the news media.  “The Press” has evolved because it is virtually impossible for individuals to provide the sort of coverage the press can without formalizing the relationship between the consumer and the producer.  Yet this is just the tip of the iceberg. After the large newspapers, wire services and cable networks come the fringe media.  A mosaic of ‘zines, pamphletes, newsletters and grafitti this discourse is sustained by a community of “information providers” who can touch upon topics that the increasingly national and international media cannot.  It is this group of people, call them activists, idealists, or even fetishists if you will, who will dress the web in its finest.  Yet this will hardly happen if we fail to provide the thread out of which this quilt is woven, or the eyes with which to appreciate the dedication of the maker.  The web is perhaps the closest analogy we have for the sum total of human knowledge (the only problem is that the majority of material on the web is in English).  We have in the web a continuously evolving structure of closely/loosely bound documents that are being revised by many people at the same time, that create a space for us to exchange ideas and thoughts.  The web contains both the ephemeral (individual discussion and maybe even IRC), the semi permanent records of our interests (web documents) and even a little of the virtually permanent (the classic web documents that will remain as reminders of what was).  This is nothing but an outline for the sort of interaction that has been occuring amongst individuals for aeons in one guise or another.  The only way to assure that the web evolves into such an entity is to place your own mind up there to be seen and wondered at.  This has always been true for writers and speakers who could make their views known to the world, and it is now potentially true for everyone.

Almost everyone has a cause, a concern, something they like talking about. If you’ve never been able to find a forum to discuss these issues in, or a place to go to find out the latest on this topic, the web might be the place for you.  If you can’t find a page on a particular topic, make one yourself, register it at the “web catalogues” and watch a community build itself around you.  The greatest service any member of the WorldNet community can render to others is to provide information of this sort, whether it is a political issue, something to do with entertainment or just life in general.  This is after all exactly what we’d been promised the Net would do for us, create an environment within which we could find expression for those selves within us that had never before been exposed
to the world.

[originally published in the Washington Square News]

Ludwig von Mises, “SOCIALISM: An Economic and Sociological analysis”

Ludwig von Mises, “SOCIALISM: An Economic and Sociological analysis“; Yale University Press, New Haven; 1962; translated by J. Kahane; LCCN: 51009080; ISBN: 0913966620 (1981 edition)


Prices are the cornerstone of the market, they are the rule by which all agents measure value.  This is admittedly a presumption Mises has made before embarking on his analysis of “Socialism”.  Yet it is not an altogether preposterous assumption.  Mises claims that without the assistance of prices one is at sea in the market; it becomes impossible to effect any rational thought process because such processes presuppose the tools necessary for calculation.  Any rational economic process must have some method with which to rank the various means and ends at our disposal, without such an ordering a rational (i.e. one which permits agents to make informed, rational decisions) economic system is inconceivable.  In the price system Mises finds a highly evolved process which distills the various signals received from all agents in the market and determines the value society ascribes to a particular commodity.

With the assistance of the price system, all actors in the market can make decisions that promote the general good and assist in the satisfaction of the desires of individuals.  Guided by their own self-interest, producers and consumers can make decisions that reconcile their subjective values with those of all other individuals.  Prices provide us with an invaluable table of costs that accurately reflects the desires of all other individuals.  Without prices no agent has accurate and succinct data on which to base her decisions, consequently such a system cannot sustain rational behaviour.  Mises’ fundamental critique of Socialism is that with the abolition of private property it will, with the disappearance of the price system, become impossible to calculate.

Unless we are free to bid for products, based on the value we believe they have, the market is unable to arrive at a price for the product. An alternative system, short of one that has direct access to the minds and hearts of all individuals, will not provide us with information that accurately reflects the desires of society.  This is not of course a claim that goods will have different prices under Socialism, non-monetary costs will substitute to make up for under-priced commodities.  Yet a system that relies on long lines and overflowing warehouses as the only signals on which to revise production decisions is wholly inefficient.  Mises argues that Socialism is exactly such a system.

Since no one under a Socialist state will have access to prices it is entirely reasonable to suppose that inaccurate decisions will be made due to lack of appropriate measures of value.  This not only destroys the much vaunted “rationality” of Socialism, it also suggests that a Socialist economy may be unable to perform as well as a Capitalist market system. If we are aware that redistribution of the present wealth of society will not in itself be sufficient to ensure for each individual the standard of living the Socialists promise, it is difficult to see how an economy that is more prone to “persist in error” [Reuven Brenner, “Labyrinths of Prosperity”] can create enough wealth to enhance our individual positions so dramatically.  Mises assures us that the Socialist system is hardly an “improvement” on the Capitalist structure and as such will produce an inferior result.

Once “the fundamental question whether the socialist order of society promises a higher productivity than Capitalism” has been answered in this manner, little remains of the material rationale for socialism.  The Socialist is then forced to evoke other forms of reasoning to support his agenda.  One of these is an appeal to an acquisitive urge that is present among most of us, and which is sparked when we are presented with the opportunity to “take from the rich what is rightly ours”.  Proponents of such actions, quite apart from the fact that they lack any respect or understanding of rights, assume that they can redistribute in such a manner without affecting the total value of the economy’s product.  Such a position fails to comprehend the subtle relationship between production, distribution and consumption.  Yet this is not surprising when we realize that these claims are forwarded by authoritarians who presume to free us from all cares by replacing the capitalist’s “monopoly” over these three functions with their own.  It is clear that any tampering with either of these processes will radically change the end result of an economic process.

Yet any process that fails to acknowledge the nature of the human agent in the economic sphere and fails to create an incentive structure that forces us to weigh the benefits of consumption and saving can hardly be called economic [pg. 458].  After demonstrating the impotency of the socialist scheme in the economic sphere, Mises has to retaliate to the alleged “materialism” of the bourgeoisie.  At this point however, it is rather futile to argue about the merits of poverty and Mises rests his case after drawing various parallels between socialism and a particular interpretation of Christianity.

There are more problems in the discourse on Socialism than would otherwise be imagined.  One of the points Mises highlights, is the apparent ease with which Socialists (and particularly Marx) use words in different ways, imposing on them a variety of contexts and connotations, till the very logic of the argument has been lost in what Mises calls “word-play”.  This happens, Mises argues, in Marx’s writing where the terms rebellion and society are used at different times to mean different things.  It is not clear whether this is done intentionally, to obscure the argument or whether it is accidental.  In either case, it is clear that such verbal acrobatics simply make it even more difficult to conduct this discourse since one is never completely certain of the arguments advanced by others. These issues become crucial in Hayek, where the very word “Law” is imbibed with a halo that the legislature attempts to acquire by cloaking legislative decisions in an exterior of legality.  A similar conception of language is at work in Hayek’s “The mirage of Social Justice”, where he claims that the term “justice” is abused when employed in referring to an outcome that is not generated by an authority, but which is the outcome of an impersonal process.  Oddly, Mises does not seem to have stressed this mode of thought, and claims that “on this [the relative justice of the outcome produced by these two orders] point science can give no judgement” [pg. 273, also pg 436].  Yet, this has to be reconciled with Mises’ insight that “one is not permitted to ask whether a particular price is justified or not” [pg. 435].  The issue becomes a little clearer when we notice the value Mises has ascribed to the term “science”, and why he would wish to keep away from issues that could “only be evaluated subjectively” [pg. 436], or those that appear to require the application of a particular value structure.

Perhaps what comes out most clearly in this book, is that the structures described in Socialist literature cannot be accepted as they are.  As such these visions of Socialist societies are Utopias (ou + topos, no place), in the sense that they prophecy circumstances that Economic analysis tells us cannot be sustained with the institutions under consideration.  These visions are imaginary places because their structure fails to take into account the nature of the human animal and the way in which we make decisions.  We cannot reconcile Socialist Utopia with our Economic and Sociological knowledge of the nature of human action.

This paper was written for Prof. Kirzner’s class “The Foundations of Capitalism”, during Fall 1995.