Panopticon to Cryptopticon- or How Scary Surveillance Gave Way to Invisible Data-Driven Exploitation

Siva Vaidhyanathan has a must-read analysis in the Hedgehog Review of how to think of “privacy” in the modern era of big data. He starts by invoking an older trope of the Panopticon, Michel Foucault’s model of how the rise of visible, threatening surveillance by government and corporate actors changed the nature of modern patterns of life.  Prison towers tracked prisoners throughout a prison yard, foremen tracked workers with stopwatches, and governments induced obedience with cops on the beat.  
Privacy in that older mode of existence was about hiding from that surveillance and protecting freedom to act without retaliatory discipline.  One feature of that older form of Panopticonic surveillance was it didn’t matter whether the employer or government was actually watching you; people changed their behavior to either obey for fear of being caught or hid from surveillance in certain ways induced by the margins of freedom left out of that surveillance.  
The Stasi police state is the prototypical Panopticon of obedience induced by fear of surveillance.  However, in the modern, democratic world of  data-driven overlapping worlds of family, work, finance, and public life, we are now less fleeing specific centralized surveillance than, in Vaidhyanathan’s words, trying to "manage our various reputations within and among various contexts.”  
Visible surveillance gives way to endless data collection, but he argues that this rise of Big Data is less driven by specific technological opportunities than economic imperatives which have increased "incentives to target, trace, and sift” for profit opportunities.  
Instead of the scary Panopticon,  Vaidhyanathan argues for the emergence of an almost invisible “Cryptopticon", where instead of being frightened by surveillance, we are induced to share as much of ourselves, our data, our relationships as possible. "the Cryptopticon is not supposed to be intrusive or obvious. Its scale, its ubiquity, even its very existence, are supposed to go unnoticed.”  We may know we are being tracked but we cease to care.  
Where the Panopticon depended on forcing people to act in ever more uniform ways to induce obedience along particular lines demanded by those in economic and political power, the goal of the Cryptopticon is to encourage people to voluntarily "sort themselves into “niches” that will enable more effective profiling and behavioral prediction."
The key here is that the old Panopticon was dependent on scaring people into uniform action, but the Cryptopticon has the data to exploit the myriad differences among people for greater power and profit.  Every incentive is given to individuals to share the maximum amount of data and the market is designed to reward ever more sharing of that personal data, even as society as a whole may be losing out — a point I argued recently in This Time is Different: How Big Data Has Left the Middle Class Behind
With the market lacking any incentives protecting personal data, Vaidhyanathan argues that government regulation has to step in to "mandate a default 'opt-in status that would require firms and governments to convince us we should be watched and tracked because there would be some clear reward."
What Vaidhyanathan highlights is that “freedom” in classical thought was so much defined by valorizing the ability to evade the Panopticon that we are ill-equipped in public debate to discuss freedom in terms of resisting Big Data exploitation of our own desire to assert our individuality.  


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