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Alternative EFT developments and the quality of life
Alternative EFT developments and the quality of life A theoretical
analysis
Rob Kiing
This article develops a theoretical position for studying the impacts of different electronic funds transfer (EFT) arrangements upon the quality of life. A conception of quali*/ of life is defined which emphasizes the relative power of participants in a social setting as well as their personal resources and sentiments. A ‘design space’ for characterizing alternative EFT designs is then set up, and the social textures of different EFT arrangements are examined. The author
is with the Department
Information and
and
the
Public
Organization California
of
Computer Policy the
of
Science Research
University
of
at Irvine, Irvine, CA 927 17,
USA. C.C. Gotlieb provided helpful comments on an earlier draft of this article.
’ Harvey Brooks, ‘Comments on man and machine: prospects for the human in Martin Greenberger. ed. enterprise’, Computer Communication and the Public interest. Johns Hopkins University Press, Baltimore, 197 1. that automobiles 2 Notice, however, which seem ‘individually controllable’ are in the first set, while telephones which continued on page 53
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Electronic funds transfer technologies are rapidly emerging. The many different technologies which are collectively called EFT systems provide for transfer of credits and debts, and for a variety of related information services. They are likely to be widely used and to penetrate easily our everyday lives. If they become pervasive, they could alter social life as intensely as the radio, automobile, jet plane, electricity, telephone and television. In their early years, new technologies offer tremendous promises to increase the quality of life of their consumers. However, when high technologies are adopted on a large scale, they often lead to growing social problems, which are merely treated as economic externalities by producers, suppliers, and consumers alike.’ The social dynamics are often quite different when the high technologies are used by a few people or groups, from when they are so commonplace that major institutions are shaped around them. Cars, for example, were an optional novelty and recreational vehicle in the horse and buggy Los Angeles of 1900. Today they dominate the social architecture through freeways which link sprawling suburban tracts, regional shopping centres, and widely scattered workplaces. Most complaints about the social problems raised by modern industrial technology focus on specific technologies. Generally, large scale, relatively inflexible technologies with centrally managed infrastructures bear the curses: the automobile, television, jet planes and nuclear power. On the other hand, individually controllable technologies such as the telephone, cameras, pocket calculators, electric typewriters and photocopiers have been applauded or silently accepted.* It is not technology per se, but the social institutions that surround a technology, the demands it makes upon people who prefer not to use it, and its overall impact on the texture and quality of social life which result in praise or mistrust and complaint. EFT systems are
0308-5961/79/010052-13
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IPC Business Press
Alternative
EFT developments
and the quality of life
in a very early stage of development - similar to the situation of motor vehicles before 1900. Many choices are still to be made over ways to shape EFT systems and the social institutions which will develop around them. Many of the potential impacts of EFT arrangements on social life are still uncertain. For example:
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continued from page 52 rely upon a centrally
managed infrastructure are in the second. These characterizations are suggestive, not precise. 3This article examines a wide variety of social and institutional arrangements. It is systematic. but not complete; perhaps no account of this topic can be. For example, the impacts of EFT systems on US postal operations are not considered in this account. a Daniel Bell, ‘Teletext and technoloov’, Encounter, Vol48. No 6. 1977, pp 9-39: 5 Duane Elqin and Arnold Mitchell, ‘Voluntary simplicity’, Business Intelligence Program Report No 1004, Stanford Research Institute, Menlo Park, CA, June 1976. Elgin and Mitchell’sviews contrast with those of many analysts who accept an increasing standard of living as a ‘trend’ that will characterize the 1980s. ’ Herman E. Daly, ed, Towards a Steady.Stare Economy, W.H. Freeman and Co, San Francisco, 1973.
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Will common EFT arrangements actually increase the ease with which people can carry out their business in dealing with large financial institutions and retailers? Will extended versions of EFT and other message communications systems shrink geographic boundaries by altering social time and distance? What is the likelihood or desirability that EFT services (and possibly other forms of electronic message communications) will be controlled by a few very large institutions? Will people and business become so dependent upon particular EFT arrangements that they will be difficult to alter even if they do not prove socially effective?
These questions inquire about the impacts of EFT arrangements on the everyday affairs of people using them, and the collective arrangements for negotiating social and economic activity relative to EFT systems on a larger scale.3 Research studies can shed light on the impacts of different EFT arrangements on important social values and patterns. However, investigators make important assumptions when they select particular patterns and values to study. It is easiest to select ‘dominant social trends’ such as the increasing aflhrence, urbanization, market concentration and levels of social integration which have characterized US life during the postwar years. One can project these trends forward and view their interaction with particular EFT arrangements. Such an approach is attractive because it recognizes that EFT systems are developed by major institutions that shape and are shaped by other trends in US society.4 However, the criteria for selecting some trends rather than others are rarely made explicit. The choice of which trends will characterize the future often lies in the eye of the beholder. For example, Elgin and Mitchell5 view decreasing affluence through ‘voluntary simplicity’ as a new trend which will alter the postwar affluence of US society. Trend analyses often obscure the possibility of important social choices. If the banking industry has been marked by increasing concentration in the past two decades, need that continue? Is it necessary or desirable that all EFT arrangements support that trend? Are there EFT arrangements that would foster deconcentration of the banking industry? While most EFT arrangements are promoted in a way which is consistent with a consumption oriented growth economy, are any EFT arrangements particularly consistent with a steady state economy. w Such questions are hard to ask, let alone to answer, with casual trend analyses. This article analyzes the potential impact of alternative EFT technologies on the quality of social life. This analysis differs from trend extrapolation by suggesting that certain social forms are much more desirable than others and ought to be sought. Such analyses are beset with problems. ‘Quality of life’ is a diffuse concept and there are few good theories for framing discussions about alternative
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AlternativeEFT developmentsand the qualityof life
conceptions of the term. A framework describing the quality of life in a given social order is set forth below, primarily with the aim of studying alternative EFT arrangements. The social repercussions of specific EFT arrangements (eg nationwide point-of-sale networks) are difficult enough to reason through without adding yet another level of abstraction.’ Nevertheless, it is essential to find a way to analyze very different kinds of arrangements. To facilitate such analyses, this article will also introduce a ‘design space’ of EFT characteristics (eg scale of operations). Taken together, the design space for EFT systems, and the explicit theoretical approach adopted for characterizing quality of life, provide a way to study the impacts of different EFT arrangements on quality of life.
Quality of life
the digital buck: ’ R. Kling, ‘Passing unresolved social and technical problems transfer systems’, in electronics funds Public Policv Research Organization, WP76-13. Irvine, CA, May 1976: and Arthur D. Little, ‘The consequences of electronic funds transfer - a technology assessment of movement towards a less cash/less societv’, Report C-76397, check Cambridge, MA; 30 January 1975. 8 Frank Andrews and Stephen Withey, Well-Being: Indicators of Social Americans’ Perceptions of Life Quality, Plenum Press, New York. 9 Burkhard Strumpel, ed, Economic Means for Human Needs: Social Indicators of Well-Being and Discontent, Survey Research Center, Ann Arbor, Ml, 1976. lo E. Gerson, ‘On “quality of life”‘, American Sociological Review, Vol 4 1, No 5, 1976. pp 793608. ’ ’ Ibid.
Social worlds are experienced in very concrete terms: enjoyment of coffee with a friend, frustration over the noise of a radio or plane, or disappointment in love. Out of the continual stream of such events, we ‘define’ the quality of our lives. ‘Quality of life’ denotes the subjective meanings placed on experiences and opportunities. Some analysts treat quality of life as a wholly subjective phenomenon.8 During the past decade, such work has focused on defining, collecting and analyzing indicators of social well-being. Analysts in this tradition define a good quality of life both by peoples’ expressed personal satisfactions and by the absence of discernible social problems such as crime and unemployment. Although there are growing bodies of empirical research about the social and personal antecedents of perceived quality of life,9 theories of quality of life are rare. Gerson, lo however, has developed a position which merits serious attention. It emphasizes the relative power of participants in social settings as well as their relative social resources and satisfactions. The theory circumvents the common difficulty of conceptualizing quality of life, and therefore does not naturally lead to a ‘managed society’. Gerson’s theory forms the basis of the analysis presented here. Six criteria for identifying alterations to the quality of life of a social group are presented below. First, however, the social theory which justifies selecting those particular criteria must be defined. The theory begins with a concept of social order which develops in and through a process of ongoing negotiations. Negotiations may take place between pairs of people, and on up through groups of any scale negotiations are size. As Gerson points out, smaller continuously taking place in larger scale settings. Each participant faces the problem of how to do as well as possible in the various settings in which he/she participates. The same can be said for any group which acts as a unitary actor relative to other parties. In this perspective, the problem of reconciling the good of individuals with the good of the largest collectivity in which they act is that of ‘creating and managing a pattern of negotiations which is viable throughout the range of (social) scales at which it takes place’.” People and groups participate in a multiplicity of overlapping settings. Each setting can be characterized, in part, by the array of resources brought to it by its participants, by the investments they have made in the setting, and by the constraints for altering resources that the participants make upon each other. Social settings are
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simultaneously constraining and enriching. The participants must make contributions and be bound by negotiated constraints. But they may also have access to resources and opportunities which would be otherwise unavailable. Resources include both material goods such as time and money, and social goods such as skills and sentiment (pride, embarrassment, state of mind). This conception of social life emphasizes joint participation in multiple settings. The subjects of negotiation in each setting are flows of resources, and constraints upon them. The quality of life of a participant in a specific setting increases with the resources at his or her disposal and with the participant’s ability to negotiate new resources. Changes in one setting may influence both the kinds of resources and the negotiating ability of a participant in other settings. From this point of view, new technologies can alter the quality of life by: 0 0
Directly altering the actual resources (money, time, skill, and psychological well-being) available to various parties. Indirectly altering such resources by changing the relative ability of the various parties to negotiate new arrangements that alter their resources.
EFT arrangements in particular may influence quality of life on two different levels. First, they may influence the resources available to individuals in everyday life and their ability to negotiate with each other and with organized groups (public and private). Second, different EFT arrangements may alter the resources available to specific organized groups (public or private) and influence their ability to negotiate resources and commitments with other groups in larger scale settings. These alterations can be viewed from two complementary perspectives: the everyday life experiences of ordinary citizens and the large scale organization of (US) society. These abstractions can be made concrete through specific questions. Everyday life. Assume that point-of-sale (POS) networks become commonplace in many stores, both large and small. What is the texture of daily life for people who transact their business through POS networks? To what extent do people’s lives become more or less hectic? To what extent do people lose some ability to negotiate with firms using POS, when there are errors because they do not understand the mechanics of transaction processing? Relations among organized groups. EFT systems may be built primarily to facilitate large scale information exchanges among institutions. How will different EFT arrangements for sharing facilities alter the net costs (in energy and non-renewable resources) of the payments infrastructure? How will EFT arrangements that couple many services in a common medium (eg, payments processing and electronic mail) alter the resources of organizations that provide and use them? To what extent will large scale and highly developed EFT services provided by banks further serve to concentrate the banking industry? How will EFT arrangements alter the ability of agencies, such as the Federal Communications Commission (FCC), Federal Trade Commission (FTC) and the Federal Reserve Board, to carry out their regulatory roles? In order to-provide a systematic way of thinking about the influences
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Alternative EFT developments and the quality of life Table 1. Characteristics
of social settings
Resource distribution Opportunity
-The kinds of resources that an EFT arrangement -The extent to which specific EFT arrangements of scarce non-renewable resources.
Ecology Coordination
Negotiating Intelligibility Dependency Agency
adds to a particular social setting. save or consume disproportionately
-The extent to which specific EFT arrangements alter the ease with which activities across all the settings in which he participates.
large amounts
a party can manage
his
ability -The extent to which social, organizational or technical arrangements can be understood by the participants in a specific setting. -The extent to which the participants in a specific setting can choose to use or not use specific EFT arrangements without bearing ‘excessive’ costs in resources such as money, time and sentiment. -The extent to which participants in a particular setting can influence the social, organizational or technical arrangements in force.
of alternative EFT arrangements upon the quality of social and institutional life, six characteristics of social settings are presented in Table 1. Each has somewhat different interpretations in the large and small settings. In an ideal world, EFT arrangements would increase opportunities for all parties and be ecologically efficient. Relative to current arrangements, they would be more intelligible, increase all parties’ sense of agency, and generate so little dependency that consumers could choose to get on and off with negligible costs. In the actual world of human affairs, these values trade off against each other. EFT arrangements that offer greater opportunity may also be too complex for non-specialists to comprehend. In order to analyze the ways in which alternative EFT arrangements influence the six aspects of negotiated social life, different EFT arrangements must first be characterized.
EFT technologies
‘* Kling, ‘Passing the digital buck, op cit. Ref 7; F. Balderston, E.J. Carmen and A. ‘Computers in banking and Hoggatt, marketing’, Science, Vol 195, 18 March 11 15-l 119: National 1977. PP Commission on Electronic Fund Transfers (NCEFT), Interim Report, EFT and rhe Public Interest, Washington DC, February 1977; NCEFT, EFT in the Mired Stares: Policy Recommendations and the Public Interest, Washington DC, October 1977: and Arthur D. Little, op cir, Ref 7. I3 R. Kling, ‘The broader social and institutional meanings of electronic fund in Technology and transfer systems’, Public Policy: The Case of EFT, Kenneth Kramer and Kent Colton, eds, Plenum Press, New York, to be published. I4 NCEFT, Interim Report, op cit. Ref 12. I5 J. Rule, Value Choices in Elecrronic Funds Transfer Policy, Office of Telecommunications Policy, Executive Office of the President, Washington DC, October 1975.
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Most analyses of EFT systems are developed in terms of either specific EFT arrangements (eg, point-of-sale networks, automatic tellers) or specific services (eg, debit cards, pre-authorized payments). i* However, for shaping public policy, it is important to be able to distinguish among EFT arrangements (technologies and their associated social organization) that have different abstract features.i3 For example, a point-of-sale (POS) network which serves the major department stores to help them improve their cash management may be more effective if it is national rather than regional in scope; and a national network may be much more convenient for people who travel cross country than would a set of regional networks. However, the disruption caused by an unreliable POS network would be less severe if it were regional in scale rather than national. Many discussions of the opportunities offered and problems posed by different EFT arrangements are reasoned through in terms of certain properties of EFT systems. Discussions of the accessibility of EFT arrangements to smaller banks, for example, focus on different ways of sharing facilities. l4 While the impacts of different EFT arrangements on personal privacy are discussed in terms of the richness of the data they contain and the extent to which people access such systems.” Analyzing alternative EFT arrangements can be facilitated by
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developing an appropriate set of attributes to characterize this analysis seven ‘internal’ features are proposed: 0 0 0
0
l
0
0
them. In
Versatility. The variety of services provided with a particular EFT arrangement. Scale. The number of points of contact and people served by a particular EFT arrangement. Coupling. The extent to which EFT systems that provide separate classes of service, or which could be factored to serve separate geographical regions, are joined together. Reliability. The extent to which specific EFT arrangements are trustworthy, eg, that the equipment will not fail and that data or funds will not ‘leak’ unexpectedly from the system. Richness. The volume and variety of data in a specific EFT that can be linked to a particular account holder or class of transaction. Accessibility. The ease with which people or organized groups may gain access to the services or data which are collected or provided by a specific EFT arrangement. Production costs. The costs of fabricating, administering, operating and maintaining a particular EFT arrangement.
These features can characterize a variety of EFT arrangements. For example, under current arrangements, automatic teller machines provide a few specialized services, are not very versatile, operate on a small scale, are not highly coupled, are relatively reliable, are data poor, and are relatively accessible to bank customers. In contrast, national automated cheque processing networks would be more versatile, operate on a large scale, may or may not be coupled with other services, are of uncertain reliability, and would be data rich and very accessible. This set of features can be used to compose many important characteristics of EFT systems. For example, convenience increases with ease of access, reliability and versatility. Similarly, Rule’s16 concept of ‘surveillance capacity’ combines the concepts of richness, scale, and accessibility described above. Perhaps this set of characteristics should be expanded. The features are not completely independent. For example, the coupling of two diverse EFT operations (such as a POS network and a credit card transmission system) could lead to a more versatile product. These internal features characterize EFT systems independently from the environment in which they reside. The world in which the specific EFT systems are embedded must also be considered. For example, automated cheque systems will be substantially more convenient if electronic records are accepted as proof of payment. This motivates a sole ‘external’ characteristic:Jt, the degree to which the conventions of a given EFT arrangement match those of the social, legal, political and economic order within which it is used.
Assessing EFT impacts
l6Ibid.
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A design space for EFT systems and a set of features to describe the quality of life in specific social settings have been developed above. In this section the ways are discussed in which different EFT arrangements may alter the quality of life of participants in social settings permeated with EFT systems.
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Alternative EFT developments and the quality of&e
The analyses developed here will be organized under each of the six aspects of quality of life presented in Table 1: opportunity, intelligibility, dependency, agency, ecology and coordination. Each of these aspects will be considered from the perspectives of the everyday lives of individuals and of institutional arrangements.” Opportunity Increases in opportunity
are the raison d’t?tre of EFT developments.
Everyday le. To what extent do EFT systems add to the variety of means available for people to conduct their daily affairs? Presumably, many individuals would gain access to new financial and related services.‘* It appears in general that consumer opportunities increase with the robustness, scale, accessibility, coupling and reliability of EFT arrangements. Yet, while EFT systems may increase opportunities for some people, they may diminish opportunities for others. For example, some EFT arrangements might endanger the existence of unpopular political groups by enabling abusive with surveillance and harrassment. I9 These threats compound increases in the richness, scale and accessibility of EFT systems.
I7 It would be tempting to display a matrix to illustrate the cross impacts of different EFT design characteristics leg. scale) with different aspects of quality of life (eg, agency). As the discussion in the text shows, the interplay between EFT designs and social life is much less deterministic than such a matrix would indicate. Thus, there is no matrix, but a more extended discussion. ‘*Arthur D. Little, op cif. Ref 7. j9 Ft. Kling, ‘Value conflicts and social electronic funds transfer choice in systems developments’, Communications of rhe ACM, Vol 21, No 8. 1978. pp 642657. *OArthur D. Little, op cit. Ref 7; NCEFT, Interim Report, op cit. Ref 12: and Sanford Rose, ‘More bang for the buck: the maqic of electronic banking’, Fortune, Vol95,No 5, 1977, pp 202-226. *’ NCEFT, Interim Report, OL) cif, Ref 12. 22 Some leads may ‘come ‘from research on human memory. For example, 20 years ago, George Miller publicized his famous finding that people could retain ‘seven plus or minus two’ chunks of information in short term memory. This result is suggestive since the number of distinct things that people can remember and compare depends upon the ways in which their characteristics are coded. It also appears that individuals cannot easily remember or cope with the details of an arbitrarily large number of choices. (See L. ‘Complexity and the limits of Winner, human understanding’, in Todd La Porte, Organized Social Complexity, Princeton University Press, Princeton, NJ, 1975.) In economic terms, the ‘information costs’ borne by consumers may increase as different EFT arrangements become available.
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Institutional arrangements. Most EFT systems have been developed by private businesses which seek to open new markets and increase operating efficiencies. They have been supported by public agencies such as the Federal Reserve Bank which seek to enhance their institutional efficiency and effectiveness. Since most accounts of EFT arrangements emphasize the enhanced opportunities the technology provides, they will not be elaborated upon here. *O In general, EFT arrangements will offer greater opportunity to larger institutions with increases in all the design features except production costs. Intelligibilit_v Everyday life. Many observers have noted that modern urban life 6ffers a bewildering array of opportunities. Advocates of a consumer society hold that simply increasing the number of people’s available choices is an inherently good thing. For example, the National Commission on Electronic Fund Transfer (NCEFT) argues that EFT developments should be fostered so as to maximize the number of available kinds of EFT based services2i Yet, how do different EFT arrangements alter people’s ability to understand their dealings? Different EFT arrangements can alter the coherence of people’s business relations in two primary ways. They can simplify or complicate specific transactions and financial contracts. They can also alter the demands made upon people to understand available products. As personal choices increase, so do the demands upon them for understanding the array of options available and the relative benefits of each. We have little knowledge of the conditions under which people experience increased choice as bewildering.22 A second issue is the complexity of particular financial Altering the complexity of one or two routine transactions. transactions, such as paying a utility bill, has minor ramifications. In this case, authorized pre-payment schemes may have mixed effects: they may simplify routine payments, but make it more difficult for consumers to detect and correct errors. However, if EFT
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Alternarive 23 However,
the intelligibility of EFT systems also is influenced by purely technical issues. As J. Weizenbaum in Computer Power and points out Human Reason (W.H. Freeman. San 1976). large computer Francisco, programs develop in such a way that they cannot be easily understood by their designers or implementors. This issue has many difficult aspects. Some concern the limited ways we have of representing the and behaviour of computer design auditors of Users and programs. computer programs have occasion to ask questions: What different very computations (tasks) can these programs perform? What kinds of computing resources will they consume in the course of carrying out a specific computation? How much money will these programs cost to construct? How long will it take a group of given size and skill to construct these programs? Under what conditions will these programs fail to operate properly7 Under what conditions will data ‘leak’ from one path to another in these programs? Each of these questions requires a different ‘viewpoint’ to answer it (Peter personal communication, 2 Freeman, May 1977). Each viewpoint is a way of representing a computer system design that helps answer different questions. Currently. computer specialists have very few means of representing system specifications. These difficulties are compounded by the ways in which large software systems are developed by teams of specialists who factor large problems into small segments. On such projects, many architectural details which are unspecified in a grand design are resolved (or altered) by specialists who are working on complicated subproblems. Software alterations are unlike physical alterations in a skyscraper which might be visible on a casual inspection and subsequently noted on the building plans. Software alterations are usually embedded in the sequence of logical tests performed by a program and are relatively invisible except upon careful inspection. Such inspections or line-by-line auditing rarely occur on large computer projects. The net effect is that it is common for many programmers to introduce minor but significant design which details are essentially undocumented. But even when design alteratlons are documented, they are rarely studied in sufficient detail to insure that all appropriate documents are properly altered to reflect the change. Most software systems are poorly documented at all the levels that one needs to answer the array of questions posed above. The quality of available documentation is strongly influenced by the widespread distaste many professional programmers feel for documenting their work. If one chooses to use professional documenters. one finds continued on page bU
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EFT developments and the
qualityof life
become so widespread that they are the medium for most routine payments for essential services, then individual consumers may find the technology not altogether ‘labour or attention saving’. Presumably, consumers will bear the increases in transaction costs that occur through EFT systems. arrangements
Institutional arrangements. One societal arrangement is preferable to another ifit can be easily comprehended by lay people as well as by specialists. Versatile EFT arrangements which provide a myriad of related information services (such as funds transfer, accounting and electronic mail) to a variety of institutions can easily confuse most people. Large scale EFT arrangements should be judged by a criterion of ‘manageable complexity’. This means both that people can understand the contours of an EFT system, and that EFT arrangements should not blur the regulatory distinctions between banking, communications and so on, and the domains of the regulatory agencies such as the FCC and FTC. EFT systems become less coherent as they increase in versatility, scale and coupling. Precisely those features that increase the opportunities provided by EFT systems to some parties can render them incomprehensible to the people who are authorized to act on behalf of the public.23 Dependency To the extent that people depend upon a particular arrangement, they may lose their power to negotiate alternatives later on. While this point is quite clear in the case of drug addiction, for example, it is less well understood for people and institutions dependent on high technologies.24 Everyday life. Benign technologies provide people discretion in their decisions either to use them or to reject them. Arrangements upon which people become dependent diminish their ability to maintain a position of active negotiation. Dependency increases with reliance upon a particular good or service, and reliance upon a single or small set of suppliers. Social life is based on complex patterns of mutual dependency. However, ‘good’ social relations allow some parity between parties. Central to understanding the kinds of dependencies fostered by technologies is the concept of ‘reach’, eg, the extent to which a given technology provides either new capabilities or current capabilities more cheaply than do alternative technologies. New technologies such as computing in general, and EFT systems in particular, attract many consumers because they extend their ‘reach’. The same can be said for electricity, automobiles and the telephone. Problems emerge when complex forms of social organization are developed which are dependent upon the reach provided by a single technology or system.25 Institutional arrangements. Not all pervasive technologies are essential. Plastic wrap, for example, could disappear from the supermarkets, and even television could be discontinued, without a major national emergency. 26 However, it would be more difficult to discard telephones, electricity and automobiles. To the extent that EFT services replace current means of payment, in terms of
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continued
from page 59
that they often have trouble verifying their comprehension of the system they are codifying. While different strategies for software production and organizing preparation being are document developed to help minimize these difficulties, there are, in general, no clear and reliable solutions today. Again, the ‘problem’ of incomprehensible programs becomes especially acute in EFT systems that operate on a large scale, provide a rich array of services and are highly coupled. z4 During recent discussions of gasoline rationing in the USA, for example, it was commonly argued that Los Angeles residents should receive several times the rations allotted elsewhere because of the population’s dependence upon driving large distances to work, shop and play. z5Thus, the power failure of 1969 in the USA was particularly northeastern disruptive because people had few alternative energy sources for illumination and appliances. From this point of view, transportation in New York city is less subject to disruption than surface transit in Los Angeles, because in New York one between walking, choose can automobiles, subways and taxis. Los Angeles residents are primarily dependent upon automobiles. ZBOf course, certain individuals or groups upset if some these may face technologies disappeared. Any change can bring complaint when it hurts some interest. For example, newspaper editors complain that they can’t easily alter their choice of comic strips without outraging some readers. *‘The Bay Area Rapid Transit (BART) system in the San Francisco Bay Area provides a particular object lesson here. See L. Winner, ‘Complexity and the limits of human understanding’, in La Porte, up cif. Ref 22. 28 Edwin Mansfield, Microeconomics, 2nd edition, W.W. Norton and Co, New York, 1975. 29 Kling. ‘Passing the digital buck’, up cit. Ref 7. 30 See, for example, Abbe Mowshowitz, of Will: Information The Conquest Processing in Human Affairs, AddisonWesley, Reading, MA, 1976, pp 63-64; and E. Drake Lundell. Jr, ‘IBM trial begins this week: after six years, 122 days’, in Computer World, Vol 9, No 2 1, 21 May 1975, pp l-2.
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dependency they will become more like electricity than plastic wrap. Dependence upon technologies and social institutions may be considered from the point of view of either the individual or the larger society. In the former case, a particular person may feel more or less dependent upon a given technology. The difficulties in the case of EFT systems are compounded by the extent to which the systems are essential and complex. Payments mechanisms are an essential part of a social infrastructure. In this way they are like transportation and personal communication. Once an attractive new technologically based capability is developed, many institutions can alter their style of business so that they effectively depend upon it. ‘Essential’ infrastructure is simply difficult to replace, which is why, in part, EFT promoters are finding it difficult to gain acceptance for new payments media. Large scale, specialized, complex technologies take a long time to plan and to implement. In the course of developing a plan, thousands of people may become involved. Thus, even ‘feasibility plans’ develop tremendous inertia. For example, the critical decisions over whether or not to manufacture the Bl bomber seemed to hinge more on its impact on the economy than on its military efficacy. Even when major design flaws are found, it is difficult to redesign or retrofit large scale systems. ” In general, the larger the scale, versatility and accessibility, and the less costly an EFT service becomes, the more likely dependence upon it becomes.
Agency In the western liberal tradition, personal influence is a central moral and political value. In the US political system, in theory, the voter is sovereign; and in the neoclassical theory of the free enterprise system, the consumer is held to be sovereign.28 Social and technical arrangements should be valued to the extent that they enhance the sovereignty of individuals. To the extent that they enhance the influence of already powerful groups over weaker groups, they should be viewed with caution. Everyday lif. There is little understanding about the ways in which different EFT arrangements may alter the influence of people in daily dealings with business enterprises and government agencies. EFT technologies can enhance the control of either individuals or EFTusing institutions. The actual patterns of control that emerge have less to do with technical capability than with institutional prerogatives. For example, while it is easy to implement ‘stop payment’ mechanisms in automated cheque processing systems,29 proposals for such systems usually neglect these features. In fact, studies of consumer preferences seem to show that most people who use some combination of cash, cheques and credit cards are satisfied with the sense of control over their finances that these payment media offer.
Institutional arrangements. One may wonder whether particular EFT arrangements alter the ability of the polity to act as a collective agent on its own behalf. The recent court cases brought by the US Department of Justice against IBM30 indicate that it is easy for a corporate giant to overwhelm the resources of a federal agency.
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the quality of life
Specific EFT arrangements may lead to an even weaker balance of power between federal or state regulatory agencies and large EFTusing institutions. This may happen by certain EFT arrangements fostering further concentration of capital in selected sectors of the economy.31 The emergence of ‘superbanks’ would be one such development.32 EFT arrangements may also become so complex that EFT operations could not be easily influenced by focused collective action such as federal legislation or regulation. Such observations do not lead to easy policy positions since federal regulatory agencies have also been an imperfect device. They have been criticized both for insensitivity to the public, and for being whimsical agents for businesses to deal with.33 In general, the larger the scale, the more versatile and the more highly coupled EFT operations become, the more they are likely to foster large enterprises on one hand, and demands for Byzantine regulatory devices on the other. Ecology In a period of limited resources, technologies resource efficient must be emphasized.
31 Rose, op cir, Ref 20; and S.R. Reid, The New Industrial Order: Concentration, Regulation and Public Policy, McGraw Hill, New York, 1976. 32 While there over 14000 are commercial banks in the USA, over 70% of all deposits are controlled bY the 100 largest banks. However, much of this concentration seems to be a by-product of mergers in recent decades rather than the outgrowth of sheer competition in the marketplace. See Reid, ibid, Ref 3 1. 33Reid, op cit. Ref 31 ; and Roger Nell, Reforming Regulation, The Brookings Institution. Washington DC, 197 1. 34E. Parker, ‘Social implications of computer/telecoms systems’. Telecommunications Policy Vol 1, No 1, 1976, pp 3-20. 35 P. ‘Moving Cowan, transportation instead of mass: communication instead of transportation’, in Communications Technology and Social Policy. G. Gerbner, L. Gross and W. Melody, eds, John Wiley and Sons, New York, 1973. 36 Charles Lave. ‘Rail rapid transit: the modern way to waste energy’, Transportation Research Record, National Academy of Sciences, Washington DC, to be published.
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which are energy and
Everyday lif. There is a common assumption that telecommunications technologies are usually more energy and resource efficient and conservative than their precursors. 34 This is particularly believed to be the case with teleconferencing systems that allow people to communicate without travelling long distances.3’ Such projections have to be carefully assessed for specific technologies in specific settings. For example, while computer based document processing was hailed as a milestone on the way to paperless offices, that prophecy has not yet materialized. Rather, it seems that users of computer based document processing systems print a larger number of intermediate revisions and drafts than they did with manual systems. The quality of reports may have increased; but no paper is saved. Similarly, narrow estimates of the paper saving efficiency of photocopiers would focus on the amount of carbon paper saved. However, copiers have created new opportunities and new markets for copies: books, articles and memos for all conceivable parties. In most settings where copiers are used, paper and energy consumption have probably increased. This is not to say that photocopiers ought to be restricted; rather that projections for resource conservation need to be made based upon expected volumes of service rather than upon efficiency criteria alone. Institutional arrangements. On a societal scale, the resources consumed by particular EFT arrangements must include the costs of capital construction as well as the resources to operate them. In a recent analysis of the economics of mass transit, Lave3’j has argued that rail systems have lower operating costs than automobiles and buses. This is conventional wisdom. However, he has also argued that they have higher overall costs when one factors in the costs of constructing rails and vehicles. Is it possible (or likely) that the same patterns hold for large scale EFT- arrangements relative to their manual (paper based) precursors? An ironic development with some current EFT arrangements used
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Alternative EFT developments and the quality of life
by banks is that they are used to increase the volume of financial transactions generally.37 Thus, a current side-effect of some ‘paperless’ EFT systems is a net increase in the amount of paper flowing through the banking system. Ecological considerations will continue to increase in importance. While ‘limits to growth’ have most directly influenced transportation and energy industries rather than the financial industries and retail, ecological considerations may play a strong role in decisions over EFT developments. If energy prices continue to rise, the relative attractiveness of EFT based services and the traditional alternatives will shift. For some analysts, such shifts need not be an explicit focus of investigation. After ah, they say, as the prices of various resources shift relative to one another, the prices of different services will also shift. In short, the marketplace will reallocate peoples’ choices consistent with scarcity. This argument is examined below, and it is simply noted here that EFT developments, like other complex infrastructure developments, occur over long periods of time. If particular EFT arrangements are clearly conservative of resources, they might be promoted through positive public policy. On the other hand, those EFT arrangements that are relatively expensive in energy and non-renewable resources might be discouraged. Coordination It is an open question whether specific EFT arrangements increase or decrease the ease with which users and others can manage their social and business relations. Everyday l$z. A common observation is made that ‘labour saving’ devices seem, on the whole, to have exacerbated the plight of the ‘harried leisure class’.38 While EFT advocates proclaim the array of ‘conveniences’ that EFT arrangements may provide, these claims seem to be oddly isolated from the overall problems of time and management that they may induce. When they work well, some EFT systems may lead to small increases in convenience for consumers. In addition, new information services, such as accounting-like payment summaries, may help people organize their business affairs. However when payments records are in error, the cost of coordination, eg increase over those under current correcting errors, may arrangements. Generally, people can spend less effort coordinating their lives in a society that depends upon a large variety of EFT related services, to the extent that such services lead to greater intelligibility, greater agency and less dependency.
37Arthur
D. Little, op cif. Fief 7; and ‘A society’, the cashless retreat from Business Week, 19 April 1977. pp 80-90. a8Stephan Linder, The Harried Leisure C/ass, Columbia University Press. New York, 1970. 39Rose, op cit. Ref 20.
62
institutional arrangements. In a recent article, Rose39 suggested that small and large businesses may be al?!? to increase their fisra! control through bank-related cash management services. In theory, the same characteristics of EFT systems that lead to lower costs of coordination for individuals and larger institutions should be identical. In practice, the larger institutions can purchase greater expertise than smaller businesses and individuals. Thus, we expect larger institutions to gain more from EFT based information services when they work well. They will also be more able to cope with information services that are complex and difficult for smaller enterprises. However, large and small organizations will ease their burdens of coordination to the extent that EFT systems grow in versatility, richness and reliability.
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EFT
developments and the quality of life
addition, enterprises with geographically dispersed activities, already a large and growing fraction of private enterprise and public agencies, will benefit from increases in the scale of EFT arrangements.
In
Broader social patterns
@‘A central concern is ensuring that the parties who reap the benefits of EPT technologies also face the problems. severe difficulties in There are internalizing the costs and benefits of high technologies within the traditional market arrangements. See R. Kling, ‘Six models for the social accountability of computing’, lnformarion Policy, Vol 1 No 2. 1978. pp 62-70. 4’ Kling. ‘Passing the digital buck’, op tit, Ref 7. .a’ John K. Galbraith, Economics and the Public Purpose, New American Library, New York, 1975. 43 Alfred Eichner, The Megacorp and Oligopoly, Cambridge University Press, London, 1976. 44 Currently, computer equipment suppliers are primarily selling financial institutions on the virtues of EFT systems rather than responding to existing demands from those institutions for equipment to build large scale EPT systems. The ‘cascaded’ structure of the market for computer based systems places consumers at the far end of a long series of technical and institutional developments. New products presumably benefit consumers, but consumers exert little control over the shape of the technology. See R. Kling and Elihu Gerson, ‘The social dynamics of technical innovation in the computing world’, Symbolic Interaction. Vol 1, No 1, 1977, pp 132-l 46.
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Most of the potential boons and problems of EFT systems depend upon the specific services offered and the particular institutional and technical arrangements for providing them. This article has developed a design space for analyzing different EFT arrangements. To the extent that EFT systems increase the intelligibility of social arrangements, ease of coordination and social agency, while decreasing dependency for the public, they may be thought of as especially benign technologies. It appears that EFT systems of certain design (eg, smaller scale, less coupled) present fewer potential social problems than others. A major thrust in the analysis presented here is that, as EFT systems are substantially more complex than current payments mechanisms, they offer both new social and economic opportunities and new problems. 4o However, EFT systems are not all alike. Some, such as automated tellers, may be more prone to small scale operations than, for example, automated cheque processing.41 This is a clear example of the interplay between EFT technologies and policies for regulating them: if automated tellers were absolutely unregulated, they could be developed as part of nationwide networks. But automated tellers are also technically and economically feasible if organized in small country-wide networks. We have the technical skill to build large systems that are so complicated that few specialists can truly understand their architecture and operation. We have lawyers clever enough to devise business arrangements, the mechanics of which defy the ingenuity of ordinary citizens. While much of this complexity serves private or specific institutional interests, little of it serves the broader public. The challenge for EFT suppliers and providers is to design the most attractive EFT systems that admit the least complexity. Perhaps there should be bounds on the most complex arrangements which receive public support. As a society, we still have a wide range of choices over the kinds of arrangements to support. Despite such normative considerations, EFT developments are emerging in the current industrial system and the existing legal and regulatory arrangements. Under these arrangements, large enterprises are driven to expand their operations. Whether one accepts Galbraith’s4* ‘political economy’ argument or Eichner’s4j sharper microeconomic formulation, growth is a dominant feature of large enterprises. Both the computer and financial industries are highly concentrated. For expansion seeking suppliers of computing equipment, EFT systems offer a lucrative new market. EFT systems offer financial institutions strong potential for increasing their market share.44 Firms in both industries may gain from large scale, rich, and versatile EFT systems. Such EFT designs need not evolve through long term conscious planning. Rather, on the margin, most EFT suppliers, providers, users and consumers increase ‘opportunity’ by incremental integration of the EFT services available at a given time. As such services spread, failure to integrate several related services
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Alternative EFT developments and the quality of life
45Charles
K. Rowley, ‘Pollution and public policy’, in Economic Policies and Social Goals. A. J. Culyer. ed. Martin Robertson and Co, London, 1974. 46Quoted in W. Harman, An Incomplete Guide to the Future, San Francisco Book Co, San Francisco, 1976.
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that are manually linked by different users or consumers may appear oddly inefficient. Thus, the integration of large scale, highly versatile EFT systems may be less the product of a grand design than the byproduct of many small locally rational decisions. Unfortunately, in such developments, the tyranny of small decisions easily leads to an overall arrangement which no one would have sought had the long term designs been made explicit at the start.45 It is commonplace to notice that some values trade off and that others are mutually supportive. In the case of EFT designs, richer and more highly coupled EFT systems will be generally capable of supporting a more versatile array of services. When viewing the impacts of EFT systems upon the social settings in which they are used, systems which are designed to be more intelligible will be less likely to diminish the agency of people who use them. Both of these examples illustrate mutually supporting values. Some design values and social values conflict. In design, more reliable technical systems often have higher production costs. In the analysis presented here, larger scale and more versatile EFT systems are likely to provide more opportunities for users and consumers. But they are also likely to be less intelligible and diminish agency when compared with less expansive EFT systems. Whether speaking of value conflicts or tradeoffs, the social choices faced are no longer very simple. As a cartoon caption has pointed out: ‘There’s a price tag on everything. You want a high standard of living, you settle for a low quality of life.‘46
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analysis
Rob Kiing
This article develops a theoretical position for studying the impacts of different electronic funds transfer (EFT) arrangements upon the quality of life. A conception of quali*/ of life is defined which emphasizes the relative power of participants in a social setting as well as their personal resources and sentiments. A ‘design space’ for characterizing alternative EFT designs is then set up, and the social textures of different EFT arrangements are examined. The author
is with the Department
Information and
and
the
Public
Organization California
of
Computer Policy the
of
Science Research
University
of
at Irvine, Irvine, CA 927 17,
USA. C.C. Gotlieb provided helpful comments on an earlier draft of this article.
’ Harvey Brooks, ‘Comments on man and machine: prospects for the human in Martin Greenberger. ed. enterprise’, Computer Communication and the Public interest. Johns Hopkins University Press, Baltimore, 197 1. that automobiles 2 Notice, however, which seem ‘individually controllable’ are in the first set, while telephones which continued on page 53
52
Electronic funds transfer technologies are rapidly emerging. The many different technologies which are collectively called EFT systems provide for transfer of credits and debts, and for a variety of related information services. They are likely to be widely used and to penetrate easily our everyday lives. If they become pervasive, they could alter social life as intensely as the radio, automobile, jet plane, electricity, telephone and television. In their early years, new technologies offer tremendous promises to increase the quality of life of their consumers. However, when high technologies are adopted on a large scale, they often lead to growing social problems, which are merely treated as economic externalities by producers, suppliers, and consumers alike.’ The social dynamics are often quite different when the high technologies are used by a few people or groups, from when they are so commonplace that major institutions are shaped around them. Cars, for example, were an optional novelty and recreational vehicle in the horse and buggy Los Angeles of 1900. Today they dominate the social architecture through freeways which link sprawling suburban tracts, regional shopping centres, and widely scattered workplaces. Most complaints about the social problems raised by modern industrial technology focus on specific technologies. Generally, large scale, relatively inflexible technologies with centrally managed infrastructures bear the curses: the automobile, television, jet planes and nuclear power. On the other hand, individually controllable technologies such as the telephone, cameras, pocket calculators, electric typewriters and photocopiers have been applauded or silently accepted.* It is not technology per se, but the social institutions that surround a technology, the demands it makes upon people who prefer not to use it, and its overall impact on the texture and quality of social life which result in praise or mistrust and complaint. EFT systems are
0308-5961/79/010052-13
$02.00
0 1979
IPC Business Press
Alternative
EFT developments
and the quality of life
in a very early stage of development - similar to the situation of motor vehicles before 1900. Many choices are still to be made over ways to shape EFT systems and the social institutions which will develop around them. Many of the potential impacts of EFT arrangements on social life are still uncertain. For example:
0
0
0
0
continued from page 52 rely upon a centrally
managed infrastructure are in the second. These characterizations are suggestive, not precise. 3This article examines a wide variety of social and institutional arrangements. It is systematic. but not complete; perhaps no account of this topic can be. For example, the impacts of EFT systems on US postal operations are not considered in this account. a Daniel Bell, ‘Teletext and technoloov’, Encounter, Vol48. No 6. 1977, pp 9-39: 5 Duane Elqin and Arnold Mitchell, ‘Voluntary simplicity’, Business Intelligence Program Report No 1004, Stanford Research Institute, Menlo Park, CA, June 1976. Elgin and Mitchell’sviews contrast with those of many analysts who accept an increasing standard of living as a ‘trend’ that will characterize the 1980s. ’ Herman E. Daly, ed, Towards a Steady.Stare Economy, W.H. Freeman and Co, San Francisco, 1973.
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Will common EFT arrangements actually increase the ease with which people can carry out their business in dealing with large financial institutions and retailers? Will extended versions of EFT and other message communications systems shrink geographic boundaries by altering social time and distance? What is the likelihood or desirability that EFT services (and possibly other forms of electronic message communications) will be controlled by a few very large institutions? Will people and business become so dependent upon particular EFT arrangements that they will be difficult to alter even if they do not prove socially effective?
These questions inquire about the impacts of EFT arrangements on the everyday affairs of people using them, and the collective arrangements for negotiating social and economic activity relative to EFT systems on a larger scale.3 Research studies can shed light on the impacts of different EFT arrangements on important social values and patterns. However, investigators make important assumptions when they select particular patterns and values to study. It is easiest to select ‘dominant social trends’ such as the increasing aflhrence, urbanization, market concentration and levels of social integration which have characterized US life during the postwar years. One can project these trends forward and view their interaction with particular EFT arrangements. Such an approach is attractive because it recognizes that EFT systems are developed by major institutions that shape and are shaped by other trends in US society.4 However, the criteria for selecting some trends rather than others are rarely made explicit. The choice of which trends will characterize the future often lies in the eye of the beholder. For example, Elgin and Mitchell5 view decreasing affluence through ‘voluntary simplicity’ as a new trend which will alter the postwar affluence of US society. Trend analyses often obscure the possibility of important social choices. If the banking industry has been marked by increasing concentration in the past two decades, need that continue? Is it necessary or desirable that all EFT arrangements support that trend? Are there EFT arrangements that would foster deconcentration of the banking industry? While most EFT arrangements are promoted in a way which is consistent with a consumption oriented growth economy, are any EFT arrangements particularly consistent with a steady state economy. w Such questions are hard to ask, let alone to answer, with casual trend analyses. This article analyzes the potential impact of alternative EFT technologies on the quality of social life. This analysis differs from trend extrapolation by suggesting that certain social forms are much more desirable than others and ought to be sought. Such analyses are beset with problems. ‘Quality of life’ is a diffuse concept and there are few good theories for framing discussions about alternative
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AlternativeEFT developmentsand the qualityof life
conceptions of the term. A framework describing the quality of life in a given social order is set forth below, primarily with the aim of studying alternative EFT arrangements. The social repercussions of specific EFT arrangements (eg nationwide point-of-sale networks) are difficult enough to reason through without adding yet another level of abstraction.’ Nevertheless, it is essential to find a way to analyze very different kinds of arrangements. To facilitate such analyses, this article will also introduce a ‘design space’ of EFT characteristics (eg scale of operations). Taken together, the design space for EFT systems, and the explicit theoretical approach adopted for characterizing quality of life, provide a way to study the impacts of different EFT arrangements on quality of life.
Quality of life
the digital buck: ’ R. Kling, ‘Passing unresolved social and technical problems transfer systems’, in electronics funds Public Policv Research Organization, WP76-13. Irvine, CA, May 1976: and Arthur D. Little, ‘The consequences of electronic funds transfer - a technology assessment of movement towards a less cash/less societv’, Report C-76397, check Cambridge, MA; 30 January 1975. 8 Frank Andrews and Stephen Withey, Well-Being: Indicators of Social Americans’ Perceptions of Life Quality, Plenum Press, New York. 9 Burkhard Strumpel, ed, Economic Means for Human Needs: Social Indicators of Well-Being and Discontent, Survey Research Center, Ann Arbor, Ml, 1976. lo E. Gerson, ‘On “quality of life”‘, American Sociological Review, Vol 4 1, No 5, 1976. pp 793608. ’ ’ Ibid.
Social worlds are experienced in very concrete terms: enjoyment of coffee with a friend, frustration over the noise of a radio or plane, or disappointment in love. Out of the continual stream of such events, we ‘define’ the quality of our lives. ‘Quality of life’ denotes the subjective meanings placed on experiences and opportunities. Some analysts treat quality of life as a wholly subjective phenomenon.8 During the past decade, such work has focused on defining, collecting and analyzing indicators of social well-being. Analysts in this tradition define a good quality of life both by peoples’ expressed personal satisfactions and by the absence of discernible social problems such as crime and unemployment. Although there are growing bodies of empirical research about the social and personal antecedents of perceived quality of life,9 theories of quality of life are rare. Gerson, lo however, has developed a position which merits serious attention. It emphasizes the relative power of participants in social settings as well as their relative social resources and satisfactions. The theory circumvents the common difficulty of conceptualizing quality of life, and therefore does not naturally lead to a ‘managed society’. Gerson’s theory forms the basis of the analysis presented here. Six criteria for identifying alterations to the quality of life of a social group are presented below. First, however, the social theory which justifies selecting those particular criteria must be defined. The theory begins with a concept of social order which develops in and through a process of ongoing negotiations. Negotiations may take place between pairs of people, and on up through groups of any scale negotiations are size. As Gerson points out, smaller continuously taking place in larger scale settings. Each participant faces the problem of how to do as well as possible in the various settings in which he/she participates. The same can be said for any group which acts as a unitary actor relative to other parties. In this perspective, the problem of reconciling the good of individuals with the good of the largest collectivity in which they act is that of ‘creating and managing a pattern of negotiations which is viable throughout the range of (social) scales at which it takes place’.” People and groups participate in a multiplicity of overlapping settings. Each setting can be characterized, in part, by the array of resources brought to it by its participants, by the investments they have made in the setting, and by the constraints for altering resources that the participants make upon each other. Social settings are
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Alternative EFT developments and the quality of lif
simultaneously constraining and enriching. The participants must make contributions and be bound by negotiated constraints. But they may also have access to resources and opportunities which would be otherwise unavailable. Resources include both material goods such as time and money, and social goods such as skills and sentiment (pride, embarrassment, state of mind). This conception of social life emphasizes joint participation in multiple settings. The subjects of negotiation in each setting are flows of resources, and constraints upon them. The quality of life of a participant in a specific setting increases with the resources at his or her disposal and with the participant’s ability to negotiate new resources. Changes in one setting may influence both the kinds of resources and the negotiating ability of a participant in other settings. From this point of view, new technologies can alter the quality of life by: 0 0
Directly altering the actual resources (money, time, skill, and psychological well-being) available to various parties. Indirectly altering such resources by changing the relative ability of the various parties to negotiate new arrangements that alter their resources.
EFT arrangements in particular may influence quality of life on two different levels. First, they may influence the resources available to individuals in everyday life and their ability to negotiate with each other and with organized groups (public and private). Second, different EFT arrangements may alter the resources available to specific organized groups (public or private) and influence their ability to negotiate resources and commitments with other groups in larger scale settings. These alterations can be viewed from two complementary perspectives: the everyday life experiences of ordinary citizens and the large scale organization of (US) society. These abstractions can be made concrete through specific questions. Everyday life. Assume that point-of-sale (POS) networks become commonplace in many stores, both large and small. What is the texture of daily life for people who transact their business through POS networks? To what extent do people’s lives become more or less hectic? To what extent do people lose some ability to negotiate with firms using POS, when there are errors because they do not understand the mechanics of transaction processing? Relations among organized groups. EFT systems may be built primarily to facilitate large scale information exchanges among institutions. How will different EFT arrangements for sharing facilities alter the net costs (in energy and non-renewable resources) of the payments infrastructure? How will EFT arrangements that couple many services in a common medium (eg, payments processing and electronic mail) alter the resources of organizations that provide and use them? To what extent will large scale and highly developed EFT services provided by banks further serve to concentrate the banking industry? How will EFT arrangements alter the ability of agencies, such as the Federal Communications Commission (FCC), Federal Trade Commission (FTC) and the Federal Reserve Board, to carry out their regulatory roles? In order to-provide a systematic way of thinking about the influences
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Alternative EFT developments and the quality of life Table 1. Characteristics
of social settings
Resource distribution Opportunity
-The kinds of resources that an EFT arrangement -The extent to which specific EFT arrangements of scarce non-renewable resources.
Ecology Coordination
Negotiating Intelligibility Dependency Agency
adds to a particular social setting. save or consume disproportionately
-The extent to which specific EFT arrangements alter the ease with which activities across all the settings in which he participates.
large amounts
a party can manage
his
ability -The extent to which social, organizational or technical arrangements can be understood by the participants in a specific setting. -The extent to which the participants in a specific setting can choose to use or not use specific EFT arrangements without bearing ‘excessive’ costs in resources such as money, time and sentiment. -The extent to which participants in a particular setting can influence the social, organizational or technical arrangements in force.
of alternative EFT arrangements upon the quality of social and institutional life, six characteristics of social settings are presented in Table 1. Each has somewhat different interpretations in the large and small settings. In an ideal world, EFT arrangements would increase opportunities for all parties and be ecologically efficient. Relative to current arrangements, they would be more intelligible, increase all parties’ sense of agency, and generate so little dependency that consumers could choose to get on and off with negligible costs. In the actual world of human affairs, these values trade off against each other. EFT arrangements that offer greater opportunity may also be too complex for non-specialists to comprehend. In order to analyze the ways in which alternative EFT arrangements influence the six aspects of negotiated social life, different EFT arrangements must first be characterized.
EFT technologies
‘* Kling, ‘Passing the digital buck, op cit. Ref 7; F. Balderston, E.J. Carmen and A. ‘Computers in banking and Hoggatt, marketing’, Science, Vol 195, 18 March 11 15-l 119: National 1977. PP Commission on Electronic Fund Transfers (NCEFT), Interim Report, EFT and rhe Public Interest, Washington DC, February 1977; NCEFT, EFT in the Mired Stares: Policy Recommendations and the Public Interest, Washington DC, October 1977: and Arthur D. Little, op cir, Ref 7. I3 R. Kling, ‘The broader social and institutional meanings of electronic fund in Technology and transfer systems’, Public Policy: The Case of EFT, Kenneth Kramer and Kent Colton, eds, Plenum Press, New York, to be published. I4 NCEFT, Interim Report, op cit. Ref 12. I5 J. Rule, Value Choices in Elecrronic Funds Transfer Policy, Office of Telecommunications Policy, Executive Office of the President, Washington DC, October 1975.
56
Most analyses of EFT systems are developed in terms of either specific EFT arrangements (eg, point-of-sale networks, automatic tellers) or specific services (eg, debit cards, pre-authorized payments). i* However, for shaping public policy, it is important to be able to distinguish among EFT arrangements (technologies and their associated social organization) that have different abstract features.i3 For example, a point-of-sale (POS) network which serves the major department stores to help them improve their cash management may be more effective if it is national rather than regional in scope; and a national network may be much more convenient for people who travel cross country than would a set of regional networks. However, the disruption caused by an unreliable POS network would be less severe if it were regional in scale rather than national. Many discussions of the opportunities offered and problems posed by different EFT arrangements are reasoned through in terms of certain properties of EFT systems. Discussions of the accessibility of EFT arrangements to smaller banks, for example, focus on different ways of sharing facilities. l4 While the impacts of different EFT arrangements on personal privacy are discussed in terms of the richness of the data they contain and the extent to which people access such systems.” Analyzing alternative EFT arrangements can be facilitated by
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Alternative EFT developments and the quality of life
developing an appropriate set of attributes to characterize this analysis seven ‘internal’ features are proposed: 0 0 0
0
l
0
0
them. In
Versatility. The variety of services provided with a particular EFT arrangement. Scale. The number of points of contact and people served by a particular EFT arrangement. Coupling. The extent to which EFT systems that provide separate classes of service, or which could be factored to serve separate geographical regions, are joined together. Reliability. The extent to which specific EFT arrangements are trustworthy, eg, that the equipment will not fail and that data or funds will not ‘leak’ unexpectedly from the system. Richness. The volume and variety of data in a specific EFT that can be linked to a particular account holder or class of transaction. Accessibility. The ease with which people or organized groups may gain access to the services or data which are collected or provided by a specific EFT arrangement. Production costs. The costs of fabricating, administering, operating and maintaining a particular EFT arrangement.
These features can characterize a variety of EFT arrangements. For example, under current arrangements, automatic teller machines provide a few specialized services, are not very versatile, operate on a small scale, are not highly coupled, are relatively reliable, are data poor, and are relatively accessible to bank customers. In contrast, national automated cheque processing networks would be more versatile, operate on a large scale, may or may not be coupled with other services, are of uncertain reliability, and would be data rich and very accessible. This set of features can be used to compose many important characteristics of EFT systems. For example, convenience increases with ease of access, reliability and versatility. Similarly, Rule’s16 concept of ‘surveillance capacity’ combines the concepts of richness, scale, and accessibility described above. Perhaps this set of characteristics should be expanded. The features are not completely independent. For example, the coupling of two diverse EFT operations (such as a POS network and a credit card transmission system) could lead to a more versatile product. These internal features characterize EFT systems independently from the environment in which they reside. The world in which the specific EFT systems are embedded must also be considered. For example, automated cheque systems will be substantially more convenient if electronic records are accepted as proof of payment. This motivates a sole ‘external’ characteristic:Jt, the degree to which the conventions of a given EFT arrangement match those of the social, legal, political and economic order within which it is used.
Assessing EFT impacts
l6Ibid.
TELECOMMUNICATIONS
A design space for EFT systems and a set of features to describe the quality of life in specific social settings have been developed above. In this section the ways are discussed in which different EFT arrangements may alter the quality of life of participants in social settings permeated with EFT systems.
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Alternative EFT developments and the quality of&e
The analyses developed here will be organized under each of the six aspects of quality of life presented in Table 1: opportunity, intelligibility, dependency, agency, ecology and coordination. Each of these aspects will be considered from the perspectives of the everyday lives of individuals and of institutional arrangements.” Opportunity Increases in opportunity
are the raison d’t?tre of EFT developments.
Everyday le. To what extent do EFT systems add to the variety of means available for people to conduct their daily affairs? Presumably, many individuals would gain access to new financial and related services.‘* It appears in general that consumer opportunities increase with the robustness, scale, accessibility, coupling and reliability of EFT arrangements. Yet, while EFT systems may increase opportunities for some people, they may diminish opportunities for others. For example, some EFT arrangements might endanger the existence of unpopular political groups by enabling abusive with surveillance and harrassment. I9 These threats compound increases in the richness, scale and accessibility of EFT systems.
I7 It would be tempting to display a matrix to illustrate the cross impacts of different EFT design characteristics leg. scale) with different aspects of quality of life (eg, agency). As the discussion in the text shows, the interplay between EFT designs and social life is much less deterministic than such a matrix would indicate. Thus, there is no matrix, but a more extended discussion. ‘*Arthur D. Little, op cif. Ref 7. j9 Ft. Kling, ‘Value conflicts and social electronic funds transfer choice in systems developments’, Communications of rhe ACM, Vol 21, No 8. 1978. pp 642657. *OArthur D. Little, op cit. Ref 7; NCEFT, Interim Report, op cit. Ref 12: and Sanford Rose, ‘More bang for the buck: the maqic of electronic banking’, Fortune, Vol95,No 5, 1977, pp 202-226. *’ NCEFT, Interim Report, OL) cif, Ref 12. 22 Some leads may ‘come ‘from research on human memory. For example, 20 years ago, George Miller publicized his famous finding that people could retain ‘seven plus or minus two’ chunks of information in short term memory. This result is suggestive since the number of distinct things that people can remember and compare depends upon the ways in which their characteristics are coded. It also appears that individuals cannot easily remember or cope with the details of an arbitrarily large number of choices. (See L. ‘Complexity and the limits of Winner, human understanding’, in Todd La Porte, Organized Social Complexity, Princeton University Press, Princeton, NJ, 1975.) In economic terms, the ‘information costs’ borne by consumers may increase as different EFT arrangements become available.
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Institutional arrangements. Most EFT systems have been developed by private businesses which seek to open new markets and increase operating efficiencies. They have been supported by public agencies such as the Federal Reserve Bank which seek to enhance their institutional efficiency and effectiveness. Since most accounts of EFT arrangements emphasize the enhanced opportunities the technology provides, they will not be elaborated upon here. *O In general, EFT arrangements will offer greater opportunity to larger institutions with increases in all the design features except production costs. Intelligibilit_v Everyday life. Many observers have noted that modern urban life 6ffers a bewildering array of opportunities. Advocates of a consumer society hold that simply increasing the number of people’s available choices is an inherently good thing. For example, the National Commission on Electronic Fund Transfer (NCEFT) argues that EFT developments should be fostered so as to maximize the number of available kinds of EFT based services2i Yet, how do different EFT arrangements alter people’s ability to understand their dealings? Different EFT arrangements can alter the coherence of people’s business relations in two primary ways. They can simplify or complicate specific transactions and financial contracts. They can also alter the demands made upon people to understand available products. As personal choices increase, so do the demands upon them for understanding the array of options available and the relative benefits of each. We have little knowledge of the conditions under which people experience increased choice as bewildering.22 A second issue is the complexity of particular financial Altering the complexity of one or two routine transactions. transactions, such as paying a utility bill, has minor ramifications. In this case, authorized pre-payment schemes may have mixed effects: they may simplify routine payments, but make it more difficult for consumers to detect and correct errors. However, if EFT
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the intelligibility of EFT systems also is influenced by purely technical issues. As J. Weizenbaum in Computer Power and points out Human Reason (W.H. Freeman. San 1976). large computer Francisco, programs develop in such a way that they cannot be easily understood by their designers or implementors. This issue has many difficult aspects. Some concern the limited ways we have of representing the and behaviour of computer design auditors of Users and programs. computer programs have occasion to ask questions: What different very computations (tasks) can these programs perform? What kinds of computing resources will they consume in the course of carrying out a specific computation? How much money will these programs cost to construct? How long will it take a group of given size and skill to construct these programs? Under what conditions will these programs fail to operate properly7 Under what conditions will data ‘leak’ from one path to another in these programs? Each of these questions requires a different ‘viewpoint’ to answer it (Peter personal communication, 2 Freeman, May 1977). Each viewpoint is a way of representing a computer system design that helps answer different questions. Currently. computer specialists have very few means of representing system specifications. These difficulties are compounded by the ways in which large software systems are developed by teams of specialists who factor large problems into small segments. On such projects, many architectural details which are unspecified in a grand design are resolved (or altered) by specialists who are working on complicated subproblems. Software alterations are unlike physical alterations in a skyscraper which might be visible on a casual inspection and subsequently noted on the building plans. Software alterations are usually embedded in the sequence of logical tests performed by a program and are relatively invisible except upon careful inspection. Such inspections or line-by-line auditing rarely occur on large computer projects. The net effect is that it is common for many programmers to introduce minor but significant design which details are essentially undocumented. But even when design alteratlons are documented, they are rarely studied in sufficient detail to insure that all appropriate documents are properly altered to reflect the change. Most software systems are poorly documented at all the levels that one needs to answer the array of questions posed above. The quality of available documentation is strongly influenced by the widespread distaste many professional programmers feel for documenting their work. If one chooses to use professional documenters. one finds continued on page bU
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become so widespread that they are the medium for most routine payments for essential services, then individual consumers may find the technology not altogether ‘labour or attention saving’. Presumably, consumers will bear the increases in transaction costs that occur through EFT systems. arrangements
Institutional arrangements. One societal arrangement is preferable to another ifit can be easily comprehended by lay people as well as by specialists. Versatile EFT arrangements which provide a myriad of related information services (such as funds transfer, accounting and electronic mail) to a variety of institutions can easily confuse most people. Large scale EFT arrangements should be judged by a criterion of ‘manageable complexity’. This means both that people can understand the contours of an EFT system, and that EFT arrangements should not blur the regulatory distinctions between banking, communications and so on, and the domains of the regulatory agencies such as the FCC and FTC. EFT systems become less coherent as they increase in versatility, scale and coupling. Precisely those features that increase the opportunities provided by EFT systems to some parties can render them incomprehensible to the people who are authorized to act on behalf of the public.23 Dependency To the extent that people depend upon a particular arrangement, they may lose their power to negotiate alternatives later on. While this point is quite clear in the case of drug addiction, for example, it is less well understood for people and institutions dependent on high technologies.24 Everyday life. Benign technologies provide people discretion in their decisions either to use them or to reject them. Arrangements upon which people become dependent diminish their ability to maintain a position of active negotiation. Dependency increases with reliance upon a particular good or service, and reliance upon a single or small set of suppliers. Social life is based on complex patterns of mutual dependency. However, ‘good’ social relations allow some parity between parties. Central to understanding the kinds of dependencies fostered by technologies is the concept of ‘reach’, eg, the extent to which a given technology provides either new capabilities or current capabilities more cheaply than do alternative technologies. New technologies such as computing in general, and EFT systems in particular, attract many consumers because they extend their ‘reach’. The same can be said for electricity, automobiles and the telephone. Problems emerge when complex forms of social organization are developed which are dependent upon the reach provided by a single technology or system.25 Institutional arrangements. Not all pervasive technologies are essential. Plastic wrap, for example, could disappear from the supermarkets, and even television could be discontinued, without a major national emergency. 26 However, it would be more difficult to discard telephones, electricity and automobiles. To the extent that EFT services replace current means of payment, in terms of
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Alternative EFT developments and the quality of life
continued
from page 59
that they often have trouble verifying their comprehension of the system they are codifying. While different strategies for software production and organizing preparation being are document developed to help minimize these difficulties, there are, in general, no clear and reliable solutions today. Again, the ‘problem’ of incomprehensible programs becomes especially acute in EFT systems that operate on a large scale, provide a rich array of services and are highly coupled. z4 During recent discussions of gasoline rationing in the USA, for example, it was commonly argued that Los Angeles residents should receive several times the rations allotted elsewhere because of the population’s dependence upon driving large distances to work, shop and play. z5Thus, the power failure of 1969 in the USA was particularly northeastern disruptive because people had few alternative energy sources for illumination and appliances. From this point of view, transportation in New York city is less subject to disruption than surface transit in Los Angeles, because in New York one between walking, choose can automobiles, subways and taxis. Los Angeles residents are primarily dependent upon automobiles. ZBOf course, certain individuals or groups upset if some these may face technologies disappeared. Any change can bring complaint when it hurts some interest. For example, newspaper editors complain that they can’t easily alter their choice of comic strips without outraging some readers. *‘The Bay Area Rapid Transit (BART) system in the San Francisco Bay Area provides a particular object lesson here. See L. Winner, ‘Complexity and the limits of human understanding’, in La Porte, up cif. Ref 22. 28 Edwin Mansfield, Microeconomics, 2nd edition, W.W. Norton and Co, New York, 1975. 29 Kling. ‘Passing the digital buck’, up cit. Ref 7. 30 See, for example, Abbe Mowshowitz, of Will: Information The Conquest Processing in Human Affairs, AddisonWesley, Reading, MA, 1976, pp 63-64; and E. Drake Lundell. Jr, ‘IBM trial begins this week: after six years, 122 days’, in Computer World, Vol 9, No 2 1, 21 May 1975, pp l-2.
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dependency they will become more like electricity than plastic wrap. Dependence upon technologies and social institutions may be considered from the point of view of either the individual or the larger society. In the former case, a particular person may feel more or less dependent upon a given technology. The difficulties in the case of EFT systems are compounded by the extent to which the systems are essential and complex. Payments mechanisms are an essential part of a social infrastructure. In this way they are like transportation and personal communication. Once an attractive new technologically based capability is developed, many institutions can alter their style of business so that they effectively depend upon it. ‘Essential’ infrastructure is simply difficult to replace, which is why, in part, EFT promoters are finding it difficult to gain acceptance for new payments media. Large scale, specialized, complex technologies take a long time to plan and to implement. In the course of developing a plan, thousands of people may become involved. Thus, even ‘feasibility plans’ develop tremendous inertia. For example, the critical decisions over whether or not to manufacture the Bl bomber seemed to hinge more on its impact on the economy than on its military efficacy. Even when major design flaws are found, it is difficult to redesign or retrofit large scale systems. ” In general, the larger the scale, versatility and accessibility, and the less costly an EFT service becomes, the more likely dependence upon it becomes.
Agency In the western liberal tradition, personal influence is a central moral and political value. In the US political system, in theory, the voter is sovereign; and in the neoclassical theory of the free enterprise system, the consumer is held to be sovereign.28 Social and technical arrangements should be valued to the extent that they enhance the sovereignty of individuals. To the extent that they enhance the influence of already powerful groups over weaker groups, they should be viewed with caution. Everyday lif. There is little understanding about the ways in which different EFT arrangements may alter the influence of people in daily dealings with business enterprises and government agencies. EFT technologies can enhance the control of either individuals or EFTusing institutions. The actual patterns of control that emerge have less to do with technical capability than with institutional prerogatives. For example, while it is easy to implement ‘stop payment’ mechanisms in automated cheque processing systems,29 proposals for such systems usually neglect these features. In fact, studies of consumer preferences seem to show that most people who use some combination of cash, cheques and credit cards are satisfied with the sense of control over their finances that these payment media offer.
Institutional arrangements. One may wonder whether particular EFT arrangements alter the ability of the polity to act as a collective agent on its own behalf. The recent court cases brought by the US Department of Justice against IBM30 indicate that it is easy for a corporate giant to overwhelm the resources of a federal agency.
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Specific EFT arrangements may lead to an even weaker balance of power between federal or state regulatory agencies and large EFTusing institutions. This may happen by certain EFT arrangements fostering further concentration of capital in selected sectors of the economy.31 The emergence of ‘superbanks’ would be one such development.32 EFT arrangements may also become so complex that EFT operations could not be easily influenced by focused collective action such as federal legislation or regulation. Such observations do not lead to easy policy positions since federal regulatory agencies have also been an imperfect device. They have been criticized both for insensitivity to the public, and for being whimsical agents for businesses to deal with.33 In general, the larger the scale, the more versatile and the more highly coupled EFT operations become, the more they are likely to foster large enterprises on one hand, and demands for Byzantine regulatory devices on the other. Ecology In a period of limited resources, technologies resource efficient must be emphasized.
31 Rose, op cir, Ref 20; and S.R. Reid, The New Industrial Order: Concentration, Regulation and Public Policy, McGraw Hill, New York, 1976. 32 While there over 14000 are commercial banks in the USA, over 70% of all deposits are controlled bY the 100 largest banks. However, much of this concentration seems to be a by-product of mergers in recent decades rather than the outgrowth of sheer competition in the marketplace. See Reid, ibid, Ref 3 1. 33Reid, op cit. Ref 31 ; and Roger Nell, Reforming Regulation, The Brookings Institution. Washington DC, 197 1. 34E. Parker, ‘Social implications of computer/telecoms systems’. Telecommunications Policy Vol 1, No 1, 1976, pp 3-20. 35 P. ‘Moving Cowan, transportation instead of mass: communication instead of transportation’, in Communications Technology and Social Policy. G. Gerbner, L. Gross and W. Melody, eds, John Wiley and Sons, New York, 1973. 36 Charles Lave. ‘Rail rapid transit: the modern way to waste energy’, Transportation Research Record, National Academy of Sciences, Washington DC, to be published.
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which are energy and
Everyday lif. There is a common assumption that telecommunications technologies are usually more energy and resource efficient and conservative than their precursors. 34 This is particularly believed to be the case with teleconferencing systems that allow people to communicate without travelling long distances.3’ Such projections have to be carefully assessed for specific technologies in specific settings. For example, while computer based document processing was hailed as a milestone on the way to paperless offices, that prophecy has not yet materialized. Rather, it seems that users of computer based document processing systems print a larger number of intermediate revisions and drafts than they did with manual systems. The quality of reports may have increased; but no paper is saved. Similarly, narrow estimates of the paper saving efficiency of photocopiers would focus on the amount of carbon paper saved. However, copiers have created new opportunities and new markets for copies: books, articles and memos for all conceivable parties. In most settings where copiers are used, paper and energy consumption have probably increased. This is not to say that photocopiers ought to be restricted; rather that projections for resource conservation need to be made based upon expected volumes of service rather than upon efficiency criteria alone. Institutional arrangements. On a societal scale, the resources consumed by particular EFT arrangements must include the costs of capital construction as well as the resources to operate them. In a recent analysis of the economics of mass transit, Lave3’j has argued that rail systems have lower operating costs than automobiles and buses. This is conventional wisdom. However, he has also argued that they have higher overall costs when one factors in the costs of constructing rails and vehicles. Is it possible (or likely) that the same patterns hold for large scale EFT- arrangements relative to their manual (paper based) precursors? An ironic development with some current EFT arrangements used
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Alternative EFT developments and the quality of life
by banks is that they are used to increase the volume of financial transactions generally.37 Thus, a current side-effect of some ‘paperless’ EFT systems is a net increase in the amount of paper flowing through the banking system. Ecological considerations will continue to increase in importance. While ‘limits to growth’ have most directly influenced transportation and energy industries rather than the financial industries and retail, ecological considerations may play a strong role in decisions over EFT developments. If energy prices continue to rise, the relative attractiveness of EFT based services and the traditional alternatives will shift. For some analysts, such shifts need not be an explicit focus of investigation. After ah, they say, as the prices of various resources shift relative to one another, the prices of different services will also shift. In short, the marketplace will reallocate peoples’ choices consistent with scarcity. This argument is examined below, and it is simply noted here that EFT developments, like other complex infrastructure developments, occur over long periods of time. If particular EFT arrangements are clearly conservative of resources, they might be promoted through positive public policy. On the other hand, those EFT arrangements that are relatively expensive in energy and non-renewable resources might be discouraged. Coordination It is an open question whether specific EFT arrangements increase or decrease the ease with which users and others can manage their social and business relations. Everyday l$z. A common observation is made that ‘labour saving’ devices seem, on the whole, to have exacerbated the plight of the ‘harried leisure class’.38 While EFT advocates proclaim the array of ‘conveniences’ that EFT arrangements may provide, these claims seem to be oddly isolated from the overall problems of time and management that they may induce. When they work well, some EFT systems may lead to small increases in convenience for consumers. In addition, new information services, such as accounting-like payment summaries, may help people organize their business affairs. However when payments records are in error, the cost of coordination, eg increase over those under current correcting errors, may arrangements. Generally, people can spend less effort coordinating their lives in a society that depends upon a large variety of EFT related services, to the extent that such services lead to greater intelligibility, greater agency and less dependency.
37Arthur
D. Little, op cif. Fief 7; and ‘A society’, the cashless retreat from Business Week, 19 April 1977. pp 80-90. a8Stephan Linder, The Harried Leisure C/ass, Columbia University Press. New York, 1970. 39Rose, op cit. Ref 20.
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institutional arrangements. In a recent article, Rose39 suggested that small and large businesses may be al?!? to increase their fisra! control through bank-related cash management services. In theory, the same characteristics of EFT systems that lead to lower costs of coordination for individuals and larger institutions should be identical. In practice, the larger institutions can purchase greater expertise than smaller businesses and individuals. Thus, we expect larger institutions to gain more from EFT based information services when they work well. They will also be more able to cope with information services that are complex and difficult for smaller enterprises. However, large and small organizations will ease their burdens of coordination to the extent that EFT systems grow in versatility, richness and reliability.
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addition, enterprises with geographically dispersed activities, already a large and growing fraction of private enterprise and public agencies, will benefit from increases in the scale of EFT arrangements.
In
Broader social patterns
@‘A central concern is ensuring that the parties who reap the benefits of EPT technologies also face the problems. severe difficulties in There are internalizing the costs and benefits of high technologies within the traditional market arrangements. See R. Kling, ‘Six models for the social accountability of computing’, lnformarion Policy, Vol 1 No 2. 1978. pp 62-70. 4’ Kling. ‘Passing the digital buck’, op tit, Ref 7. .a’ John K. Galbraith, Economics and the Public Purpose, New American Library, New York, 1975. 43 Alfred Eichner, The Megacorp and Oligopoly, Cambridge University Press, London, 1976. 44 Currently, computer equipment suppliers are primarily selling financial institutions on the virtues of EFT systems rather than responding to existing demands from those institutions for equipment to build large scale EPT systems. The ‘cascaded’ structure of the market for computer based systems places consumers at the far end of a long series of technical and institutional developments. New products presumably benefit consumers, but consumers exert little control over the shape of the technology. See R. Kling and Elihu Gerson, ‘The social dynamics of technical innovation in the computing world’, Symbolic Interaction. Vol 1, No 1, 1977, pp 132-l 46.
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Most of the potential boons and problems of EFT systems depend upon the specific services offered and the particular institutional and technical arrangements for providing them. This article has developed a design space for analyzing different EFT arrangements. To the extent that EFT systems increase the intelligibility of social arrangements, ease of coordination and social agency, while decreasing dependency for the public, they may be thought of as especially benign technologies. It appears that EFT systems of certain design (eg, smaller scale, less coupled) present fewer potential social problems than others. A major thrust in the analysis presented here is that, as EFT systems are substantially more complex than current payments mechanisms, they offer both new social and economic opportunities and new problems. 4o However, EFT systems are not all alike. Some, such as automated tellers, may be more prone to small scale operations than, for example, automated cheque processing.41 This is a clear example of the interplay between EFT technologies and policies for regulating them: if automated tellers were absolutely unregulated, they could be developed as part of nationwide networks. But automated tellers are also technically and economically feasible if organized in small country-wide networks. We have the technical skill to build large systems that are so complicated that few specialists can truly understand their architecture and operation. We have lawyers clever enough to devise business arrangements, the mechanics of which defy the ingenuity of ordinary citizens. While much of this complexity serves private or specific institutional interests, little of it serves the broader public. The challenge for EFT suppliers and providers is to design the most attractive EFT systems that admit the least complexity. Perhaps there should be bounds on the most complex arrangements which receive public support. As a society, we still have a wide range of choices over the kinds of arrangements to support. Despite such normative considerations, EFT developments are emerging in the current industrial system and the existing legal and regulatory arrangements. Under these arrangements, large enterprises are driven to expand their operations. Whether one accepts Galbraith’s4* ‘political economy’ argument or Eichner’s4j sharper microeconomic formulation, growth is a dominant feature of large enterprises. Both the computer and financial industries are highly concentrated. For expansion seeking suppliers of computing equipment, EFT systems offer a lucrative new market. EFT systems offer financial institutions strong potential for increasing their market share.44 Firms in both industries may gain from large scale, rich, and versatile EFT systems. Such EFT designs need not evolve through long term conscious planning. Rather, on the margin, most EFT suppliers, providers, users and consumers increase ‘opportunity’ by incremental integration of the EFT services available at a given time. As such services spread, failure to integrate several related services
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45Charles
K. Rowley, ‘Pollution and public policy’, in Economic Policies and Social Goals. A. J. Culyer. ed. Martin Robertson and Co, London, 1974. 46Quoted in W. Harman, An Incomplete Guide to the Future, San Francisco Book Co, San Francisco, 1976.
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that are manually linked by different users or consumers may appear oddly inefficient. Thus, the integration of large scale, highly versatile EFT systems may be less the product of a grand design than the byproduct of many small locally rational decisions. Unfortunately, in such developments, the tyranny of small decisions easily leads to an overall arrangement which no one would have sought had the long term designs been made explicit at the start.45 It is commonplace to notice that some values trade off and that others are mutually supportive. In the case of EFT designs, richer and more highly coupled EFT systems will be generally capable of supporting a more versatile array of services. When viewing the impacts of EFT systems upon the social settings in which they are used, systems which are designed to be more intelligible will be less likely to diminish the agency of people who use them. Both of these examples illustrate mutually supporting values. Some design values and social values conflict. In design, more reliable technical systems often have higher production costs. In the analysis presented here, larger scale and more versatile EFT systems are likely to provide more opportunities for users and consumers. But they are also likely to be less intelligible and diminish agency when compared with less expansive EFT systems. Whether speaking of value conflicts or tradeoffs, the social choices faced are no longer very simple. As a cartoon caption has pointed out: ‘There’s a price tag on everything. You want a high standard of living, you settle for a low quality of life.‘46
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