Surveillance Capitalism & the Surveillance State: A Comparative Institutional Analysis

Originally published in GMU Working Paper in Economics

What is the connection between mass surveillance and institutions of individual agency, freedom, and self-governance? Recent literature on “surveillance capitalism” argues that over the past two decades, the capitalist system has been transformed by Big Tech companies, which have commodified personal data for profit. This commodification goes beyond gathering information to improve the products provided by the collecting organization directly and entails using data to predict what people will do, the sale of that data, and its use to modify the behaviors of unknowing consumers. According to critics, this erodes individual dignity and freedom and threatens democracy. This paper offers an alternative framing of surveillance and data collection based on comparative institutional analysis. While data collection and attempts at persuasion are present in private and government settings, the welfare effects vary due to institutional differences. We leverage the comparative institutional framework to analyze the differences between private data collection (“surveillance capitalism”) and government data collection (the “surveillance state”). Our analysis sheds light on how data collection in the private, for-profit sector has different welfare consequences from those in the surveillance state.

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