The Legal Report

By Richard L. Field, Esq.
Email: field@pipeline.com

Mr. Field is a U.S. attorney specializing in payment systems and electronic commerce. He chairs the Electronic Commerce Payment Committee of the American Bar Association, Section of Science and Technology, and sits on its Section Council. He is an Adjunct Professor of Electronic Finance at Columbia University, Graduate School of Business, an Affiliated Research Fellow of the Columbia Institute for Tele-Information, and an International Advisor to the Korean Institute of Technology and the Law. Mr. Field also serves on the United States delegation to the United Nations Commission on International Trade Law, Working Group on Electronic Commerce.

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The banking industry has long feared disintermediation of its variousfranchises. Disintermediation in banking is the notion that, as technologymakes knowledge about borrowers, access to payment systems, etc., moreavailable to a wider audience, the banks will no longer be needed asgo-betweens: measuring risks and providing valuable services based on thespecialized information and infrastructures they alone possess. Investors,since they now have the means to measure a borrower's ability to repay,could lend directly in place of depositing their funds in a low-interestbank account. Payment providers could create thoroughly decentralizedsystems for money transmission.

Surprisingly, universal access to information and systems has not broughtabout significant disintermediation in finance. Instead, it has given riseto a new class of intermediaries, nonbank players astute enough to make useof these new business tools under new technological conditions, and able tooffer value in the marketplace.

By the same token, new technologies and a variety of other circumstanceshave created of late a "government hands off" atmosphere surrounding theInternet. In theory, the vacuum produced by the withdrawal of governmentcan be filled by all of us quietly governing ourselves, but things don'tseem to be working out that way.

In this month's Legal Report, I reprint, with permission of the author, abrilliant talk given in June 1998 by Professor Lawrence Lessig of HarvardLaw School on the subject of Internet governence. Professor Lessig observesthat something odd is going on; that the Internet community is not so muchmoving toward self-governance but rather substitute governance. Ironically,the new governance replicates many of the usual characteristics of ourdemocratic institutions, minus a place for democracy.

Professor Lessig is in the process of expanding upon these views. This talkand two subsequent versions are available at http://cyber.harvard.edu/lessig.html. His latest (3rd) draft of thistalk, given October 10 in a keynote address to the CPSR, can be found at http://cyber.harvard.edu/works/lessig/cpsr.pdf.

GovernanceLawrence LessigJack N. and Lillian R. Berkman Professor for Entrepreneurial Legal Studies,Harvard Law School.

Talk given at the New York New Media Associations http://www.nynma.org, June 10, 1998

Draft 1(c)Lessig 1998: All Rights Reserved

At a conference in Georgia - former Soviet Georgia, that is - sponsored bysome western agency of democracy, an Irish lawyer was trying to explain tothe Georgians just what was so great about a system of judicial review."Judicial review," this lawyer explained, "is wonderful. Whenever the courtstrikes down an act of parliament, the people naturally align themselveswith the court, against the parliament. The parliament, people believe, isjust political; the supreme court, they think, is principle." A Georgianfriend was puzzled by this, puppy-democrat that he is. "So why," he asked,"is it that in a democracy, the people are loyal to a non-democraticinstitution, and repulsed by the democratic institution in the system?" "Youjust don't understand democracy," said the lawyer.

* * *

We have no problem of governance in cyberspace. We have a problem withgovernance. There isn't a special set of dilemmas that cyberspace willpresent; there's just the familiar dilemmas that modern governanceconfronts-familiar problems in a new place. Some things are different; thetarget of governance is different. But the difficulty doesn't come from thisdifferent target; the difficulty comes from our problem with governance.

Here's what I mean:

Cyberspace is that space constituted by code - by software and hardwarethat together makes up the architectures that cyberspace is; architecturesthat settle what's possible in a particular place; architectures that definewhat values will be imbedded in a particular place; architectures thatdetermine the regulability of behavior in a particular place. Thesearchitectures are many; the values that they imbed - privacy, anonymity,access, control - are varied; and hence the choice about these architecturesis a choice about these values. Yet we are at a time when we are strangelydisabled from making choices about these architectures.

We are disabled for two very different reasons. One is quite local,particular to lawyers; a limitation in the way we lawyers think about thescope of constitutional law; the other is quite general, a symptom of moderndemocracy; our strangely Irish aversion to the products of democracy; ourexhaustion, or resignation, about how democracy works.

Consider the constitutional point first. Architectures constitutecyberspace; these architectures are varied; they variously imbed politicalvalues; some of these values have constitutional import. Yet for the mostpart - and thankfully - these architectures are private. They areconstructed by universities, or corporations; they are implemented on wiresno longer funded by the defense department. They are private and thereforeoutside the scope of constitutional review. Traditional constitutionalvalues of privacy, or access, or rights of anonymity, or equality - thesevalues need not trouble this new world.

Why this should be is not clear to me. For this code functions as law, andnot all constitutional democracies would be so limited in the reach theygrant their constitution over such "law." Yet none seem eager to extend thegovernance of constitutional law to the building of this new space. We arecreating the most significant new jurisdiction we've known since theLouisiana purchase, yet we are building it just outside the constitution'sreview. We are building it so that the constitution will not govern, andthis, I suggest, is our first problem of governance.

But it not the more important. The more fundamental problem is the problemof the Irish. The skepticism that we all bring to this question ofcollective governance.

I share this skepticism; I am not a naïve New Dealer; but we should thinkmore about its source; we should understand its nature.

Our skepticism about governance is not a point about principle. We are not,most of us libertarians. We may be antigovernment, but for the most part wedo believe that there are collective values that ought to regulate privateaction. We are, in the main, as my friends like to call it,techno-realist(1) - committed to the idea that collective values shouldregulate this emergingly technical world.

Our problem is that we don't know by whom. We, like the Irish, are wearywith governments. We are profoundly skeptical about the product ofdemocratic processes. We believe, whether rightly or not, that democraticprocesses have been captured by special interests more concerned withindividual, than collective value. So while we believe that there is a rolefor collective judgments, we are repulsed by the idea of placing the designof something as important as the internet into hands of governments.

The White House's recent domain name proposal perfectly reflects the point.To regulate policy for domain names, the White House has proposed thecreation of a non-profit corporation, devoted to the collective interest ofthe net as an international whole, with a board to be composed ofrepresentatives of stakeholders on the net, and charged with makingessentially the policy judgments that IANA had made. In exchange, thegovernment will give up continuing control over the domain name system, andsupport its transition to an autonomous, separate entity.

Now I think there's merit in the proposal. There are parts I would quibblewith, but the general structure seems right. But think for a second aboutthe kinds of questions my Georgian friend might ask. A "non-profitcorporation devoted to the collective interest"? Isn't that, he might ask,just what government is suppose to be? A board composed of representativesof stakeholders? Isn't that what a Congress is? Indeed, if he thought aboutit, my Georgian friend might observe that this corporate structure differsfrom government in only one salient way - that there is no ongoingrequirement of elections. This is policy making, vested in what is in effectan independent agency, but an agency outside of the democratic process.

Now again, I like the proposal, but isn't it really quite odd? What does itsay about us? Imagine we established a nonprofit corporation to makehighway policy, with the board members initially chosen from thestakeholders of highways, and then given the authority to set policy fromthat moment on. And if the highways, why not the telecommunications industryin general. And if them, why not the air transportation industry. Why notjust carve up the government into many private nonprofit corporations, andbe done with it.

Putting aside the constitutional questions of this for a second, the pointto notice is just how bizarre all this is for a democracy. The fact that theidea that a governmental body, whether American, or international, shouldset this policy, was not even considered, is profoundly interesting aboutus. It says something about us - about where we have come in this experimentwith democracy. It reflects a pathetic resignation that most of us feelabout the product ordinary government. And while I completely share theskepticism, and even disgust, I think it is important to notice howinfectious it has become. We have lost faith in the idea that the product ofrepresentative government might be something more than mere interest; that,to steal the opening line from Justice Marshall's last opinion on theSupreme Court, power, not reason is the currency of deliberativedemocracy.(2) We have lost the idea that ordinary government might work,and so deep is this thought that even the government doesn't consider theidea that government might actually have role in governing cyberspace.

Good that it didn't, I say. I'm with the Irish people, and against theparliament. But we should not miss - we, who live our life using reasonrather than power to persuade others, we should not miss - what this lossreally means; what this says about our intuitions about governance.

In a critical sense, we are not democrats anymore. Cyberspace has shown usthis, and it should push us to figure out why.

(1) See http://www.technorealism.org/

(2) See Payne v. Tennessee, http://supct.law.cornell.edu/supct/html/90-5721.ZD1.html, Marshall,dissenting.