Data Rules: Exploring the Interplay Between Data, Economy, and Society in the Digital Age

“Data Rules” is a book about data, but not just about big data crunching. A book about the relationship of data with economic institutions and society, but also about the interplay with data technologies by which data are being generated and processed. A book that is critical, but not ideological.

This is how Jannis Kallinikos describes “Data Rules: Reinventing the Market Economy,” a book co-authored by himself and Cristina Alaimo and recently published by The MIT Press.

Jannis Kallinikos is Full Professor of Organization Studies and the CISCO Chair in Digital Transformation and Data Driven Innovation at LUISS University, Rome. This is where we met to talk about the key concepts in “Data Rules”.

Kallinikos’ research focuses on the impact of information and communication technologies on organizations and economic institutions and draws on several social science fields, including organization studies, sociology, communication theory and semiotics, and information systems.

Prior to LUISS, he worked for a long time at the Department of Information Systems at the London School of Economics, and was a visiting professor at various universities. He has published widely in IS, Management, and Sociology journals, written several monographs, and is a journal editor and board member.

Understanding data generation and use

No surprise then that when asked about the primary audience for “Data Rules”, Kallinikos readily admits it’s a book geared towards academics. But “Data Rules” is not a strictly academic book.

Yes, academics across the fields of management, sociology, organizational sociology, social psychology, media and communications, information systems, and presumably, data science and statistics are the primary audience. But that’s not all.

“Data Rules” is meant to be approachable by a wider audience, including leaders in critical positions as well as anyone with an education and an interest in understanding where this society is going. Kallinikos believes this is a sizable audience, and has the ambition to reach it.

The core of the book as per Kallinikos is the effort to understand the forces of society and economy that generate and use masses of data for everything from making money to inducing behavior. Starting with a brief history of data, the book contends that data is more than what statisticians and data scientists call data points.

Beyond amassing and processing data, Kallinikos claims that data should also be viewed as cultural records. The book lays the foundations of data in the three opening chapters. It then goes on to trace the impact the digital revolution brought to all records, drawing on fundamental information science concepts as laid out by pioneers such as John von Neumann and Claude Shannon.

How data is breaking boundaries

One of the claims made in the book is that well-established boundaries of modern societies, such as those between work and private life or between the economic and the social spheres, are less clearly demarcated from one another in the data age. Intuitively, that statement may resonate. Still, we wondered if there are any metrics on this, or whether the claim could be otherwise qualified.

Kallinikos did not refer to metrics. Metrics are not examined in the book, although Kallinikos posits they would probably be easy to come up with, for example from utilities. But he did elaborate by stating that platforms like Facebook or TikTok mediate private life to make it the center of their business model.

“Money here is not made by producing a product in a secluded organizational setting – the factory, the bank, or the insurance office. Money is being made by crunching data that comes from our life. This is the most conspicuous fact.

What was once relatively separate, your private life and the economic and institutional life, have now come together. This is what grounds our observation. We have seen this growing and growing”, Kallinikos said.

Platforms and choice

Even communal life, Kallinikos went on to add, is being moved to digital platforms, where it’s tracked and monetized. And modern homes have become data centers, equipped with a variety of devices, from Internet of Things-powered solutions to AI assistants. That also applies to cars, and progressively all modes of transport as well, we might add.

Another key observation to be made here is that while this phenomenon is undeniably happening, it would appear that it is in fact happening voluntarily. People are signing in to these platforms and sharing their intimate thoughts and moments on their own accord.

Even though there are many recorded incidents of people who faced consequences in their workplaces for things they shared online, for example, that does not stop people from sharing. In many ways, however, sharing may not be as voluntary as it seems. Since the norm in modern society is the casual use of these platforms, abstaining is not an easy choice, if it is a choice at all.

Even people such as the Amish, whose culture and values are very much different from those of the mainstream, are forced to use technology to some extent. Kallinikos concurs that choice is very limited indeed, to the degree perhaps we could call it the illusion of choice.

The illusion of objectivity

In “Data Rules”, the authors refer to the interlocking of data with socioeconomic institutions, and Chandler’s identification of the emergence of modern corporations in the first half of the twentieth century to the systematic generation of a variety of internal records. This brought to mind another reference, a reference to Sombart who discussed the role of double-entry book-keeping in unleashing and stimulating the business activities of capitalism.

The reference to Sombart was made in “Peer to Peer: The Commons Manifesto” by Bauwens et.al. The authors of that book claim that double-entry bookkeeping has played a fundamental role in shaping today’s socio-economical institutions. By extension, they suggest that a reform in bookkeeping could lead to different socioeconomic institutions.

Kallinikos does not believe that double entry bookkeeping is a superior technology in terms of supporting profit generation, as this could have been done even without double-entry bookkeeping. But the practices of managing large corporations would have been impossible without the data produced by double entry bookkeeping.

At the same time, Kallinikos points out that what accounting has chosen to record or not record in terms of economic activities and their outcomes should be subjected to critical review. There are externalities that have not been dealt with, such as environmental impact for example. This shows that even this data that may at first seem hard data, is the outcome of several assumptions, predilection, interests, and bias.

A key claim made in “Data Rules” is that data are not objective entities in the sense that many people think of them. From a data modelling perspective, this claim is supported by the fact that there are many ways to model the same domain. Depending on the purpose, the choice of tools, but also on the person who is doing the modeling, the generated data models may be quite different.

Algorithms, agency and surveillance

In their analysis on “Data, Technology, and Algorithms” Kallinikos and Alaimo discuss the interplay of the technological nature of digital data and the formalized operations embodied in software systems and devices by which they are produced. We asked Kallinikos about his views on what we may call non-deterministic algorithms, i.e. machine learning.

Kallinikos believes that the ability of neural networks to incorporate lessons from data, revise their answers, and produce something that didn’t exist previously gives them powers that deterministic algorithms never had. He goes as far as to assign agency to machine learning algorithms.

That may be a somewhat controversial point, depending on how one defines agency. What is a more or less universal concern is oversight, ethics and transparency for the decisions made by such algorithms, that are affecting people and organizations at an increasing rate.

“Data Rules” also tackles the issue of privacy and surveillance in a controversial way. The thesis here is the rejection of the widely accepted straightforward understanding of surveillance as evil, as crystallized in the popular “Surveillance Capitalism” work by Shoshana Zuboff.

Zuboff is a friend, Kallinikos said, but “Data Rules” does not ascribe to the “Surveillance Capitalism” narrative. The authors draw on Foucault to build up the idea that surveillance does not only subjugate but can also serve. Kallinikos described this as “a critical re-approach to surveillance and privacy.”

From market and design rules to data rules

The book, Kallinikos noted, aims to establish a third point of view to the analysis of socioeconomic systems. Traditionally, the main lens for such analysis has been the “standard economics discourse” – markets, competition, prices and so on. Another lens that Kallinikos referred to is the so-called Design Rules, introduced by the eponymous book by Carliss Baldwin and Kim Clark.

In “Design Rules”, Baldwin and Clark argue that technology shapes markets and how the economy performs not just in terms of its direct economic performance, but also in terms of how it forces divisions and creates ecosystems.

In “Data Rules”, Kallinikos and Alaimo present their evidence to claim there is a third system of rules that have to do with how data is generated, its availability and accessibility, and the terms under which these takes place.

The concept of interoperability is a relevant starting point for this conversation. For example, technical interoperability such as the one imposed in the EU for mobile phone equipment can have direct consequences in the respective ecosystems.

For data, interoperability in the form of standards and protocols is an enabling layer. And it’s no accident that interoperability is actively sabotaged by platforms wishing to strengthen their position by means of user lock-in.

However, Kallinikos argues, what really matters is commensurability. Commensurability is the term “Data Rules” uses to describe what Kallinikos referred to as “porous channels of interaction between people’s private lives, domestic lives, intimate even lives, and the world”. This is how the book concludes, emphasizing the potential of data to bring worlds together.

This is an aspect of the function of data which may be obvious to most data professionals, and usually seen as a good thing. But that may not necessarily be the case for the general public. It’s worth considering this as the key takeaway from “Data Rules”.