Bruce Schneier: Liars and Outliers

Bruce Schneier. Liars and Outliers: Enabling the Trust That Society Needs to Thrive (Indianapolis: John Wiley & Sons, Inc., 2012).

Schneier’s latest is a survey of all the social mechanisms that maintain the level of trust a functioning society depends on. As he argues, most people are honest and cooperative most of the time as a result of our neural wiring for cooperative behavior, our moral conditioning, and our desire to maintain a good reputation. Security mechanisms beyond this basic level are second lines of defense against the “liars and outliers” for whom the basic incentives are insufficient. Institutional mechanisms for maintaining trust are reinforcements in the minority of cases when evolutionary psychology and social pressure fail.

Behavioral experiments have consistently found that people behave cooperatively more of the time and defect less frequently than abstract game theory would predict. That’s because most people, most of the time, are predisposed to behave more or less ethically, and to assume that others are likely to do so as well.

The order of progression for trust mechanisms in Schneier’s schema, beyond the most fundamental level of our evolutionary predisposition toward cooperative behavior, is moral conditioning and social pressure, reputational effects, and institutional mechanisms. Of the three, two — moral conditioning and social pressure — can operate entirely without a state, and the third — institutional governance mechanisms — includes at least as much voluntary association as state coercion. And new tools of network organization and identity verification increase by several orders of magnitude the amount of institutional trust enforcement that can be accomplished by voluntary association.

The clear implication is that the vast majority of reinforcement for cooperative behavior and honesty comes from non-state mechanisms, and that the remaining portion currently enforced by the state could plausibly be replaced by networked governance mechanisms and local economic platforms.

This is of great interest to me, because my book currently in the works — provisionally titled The Desktop Regulatory State — is about the ability of networked organization and superempowered individuals to constrain the power of powerful institutions in ways once believed to require government action.

Schneier’s treatment of reputational and quality assurance mechanisms in the marketplace dovetails in many ways with the literature I’ve been researching on networked economic platforms like the phyles of Neal Stephenson and David de Ugarte, or Daniel Suarez’s Darknet economy. As the regulatory state becomes increasingly hollowed out, the reputational mechanisms pioneered by Angie’s List and eBay will become the basis of economic trust.

The present system has reached a level of insupportable complexity, with an unwarranted public faith that the centralized state’s top-down regulatory mechanisms will protect them from corporate malfeasance. As this system breaks down, the logical alternative — in Eric Raymond’s words — is to “decentralize and harden.” That is, to break the larger, anonymous cash nexus economy down into manageable trust networks like phyles.

As the imploding cost of small-scale manufacturing facilities increases the share of total consumption needs that can be met within local resilient economies, the governance of most economic activity by such trust networks becomes increasingly feasible. The result is likely to be something like a high-tech version of a revived guild economy like that of the late medieval towns as described by Kropotkin.

Schneier’s familiarity with the work of Elinor Ostrom on non-state cooperative mechanisms for governing commons and communal property is a plus. Ostrom’s work is perfect for reading in conjunction with Kropotkin; their treatment of pre-state, horizontal mechanisms of securing trust and enforcing good behavior, are a much-needed antidote for the modern assumption that only a Panoptic state and top-down legibility can prevent defection within the marketplace.

Schneier has a well-deserved reputation as a security analyst, as anyone knows who’s read his previous book Beyond Fear or followed his scathing commentary on the TSA’s “security theater.” Liars and Outliers lives up fully to that reputation.

Citations to this article:

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory