Ayn Rand vs. Elinor Ostrom: The Fight for the Future of Social Media

Yves here. While this piece discusses some useful frames of reference for thinking about social media, it is nevertheless striking to see the author criticize Musk’s interventions at Twitter and not mention the government censorship campaign aimed at Twitter and other platforms.

By Pia Malaney, Senior Economist and Director of the Center for Innovation, Growth & Society. Originally published at the Institute for New Economic Thinking website

Elon Musk’s recent takeover of Twitter paralleled, in some sense, the 2016 earthquake when Donald Trump unexpectedly took over the Oval Office. In both cases, a populist billionaire put an existing entity with millions of members under radically new management. Unsurprisingly, whereas alarmed Americans had signaled a desire to escape to Canada in 2016, alarmed tweeters in the fall of 2022 signaled their trepidation by announcing their intention to move as well. But the most commonly threatened exit was to a structure of which few had ever heard: Mastodon.

Mastodon is but one of many new social media sites, alongside Post, Steemit, Planetary, or the Dorsey-funded Nostr, that are drawing attention in the face of Musk’s inscrutable decision-making with respect to the banning of journalists, the firing of personnel, and algorithmic changes. Many of these new sites focus specifically on shifting away from the centralized architecture of today’s tech behemoths like Twitter and Facebook.

It can be difficult to remember that a mere quarter century ago, the very social networks that have now demonstrated the terrible pitfalls of the social media revolution known as Web 2.0, were the objects of fanfare and genuine idealism. Facebook set out to “Connect the World,” while Google sought to make available all human knowledge for everyone at no cost. The latter went so far as to embrace the unofficial slogan of “Don’t be Evil.” In the spring of 2018, it was finally deliberately removed and retired from the preface to Google’s code of conduct when the obvious absurdity of the statement coming from an enormous hierarchical corporate leviathan made it more of an embarrassment than an asset.

These social media sites are perhaps the best example of the destruction of the idealism that characterized the development of the internet in the late 1960s. A time of flourishing countercultures, there was a belief, captured effectively in Richard Brautigan’s poem, “All watched over by machines of loving grace,” that we were entering a technological utopia, where machines would protect humans, and “mammals and computers (would) live together in mutually programming harmony like pure water touching clear sky.”

The idealism infected many of the original engineers of these social media sites. Evan Henshaw-Plath, one of the first employees of Twitter, points to the origin of Twitter as an open platform, a space by which people would build APIs and could interact with third-party services. The structure of the market, however, forced it away from that. The market has also defined the reality within which much of the architecture defining other social media sites was developed.

A neoclassical economic framework would tell us that this sort of manipulation of consumers should be kept in check in a well-functioning market by competitive forces, the way Facebook was able to outcompete Myspace in 2008 by promising a better user experience and increased privacy. But social networks are intrinsically natural monopolies – most users would prefer to be on a site that hosts all their friends than to have to spread out over several different sites. When Facebook took over as the dominant site in this space and proceeded to share highly personal user data while promising to keep it private, there was very little the market could do to rein in what was essentially a monopoly.

Much of the dissatisfaction with the Web 2.0 services is not based on the quality of the software engineering, as the market has provided many of the world’s most talented coders and tech managers the opportunity to build a highly reliable architecture that is given away to users for no monetary cost. Oddly, since the services are “free,” the problem stems instead from non-monetary market failures in the form of asymmetric information and principal-agent problems in a monopoly setting. The for-profit model of Twitter, Facebook, and other giant social media networks has increasingly been an advertising model which has obscured the real costs to the user in terms of privacy – hence the well-worn adage, “If you aren’t paying for the product, you are the product.” As the Supreme Court prepares to hear arguments in the case “Gonzales vs. Google,” where the family of an American killed in an ISIS terrorist attack blames YouTube for promoting terrorist videos, the debate about Section 230, which protects platforms from responsibility for content hosted on their sites, rages on. But more than the issue of hosting content the case points directly to the algorithms that suck viewers to increasingly darker and more toxic content because that has been proven to be the most effective way to keep them watching. It is the profit-driven imperative to increase engagement, and thereby ad revenue for the corporations, that drives these algorithms, and inevitably causes the problem, as powerfully captured by the movie “The Social Dilemma.” Fears of harassment and bullying, selling of personal data, and abuse of government backdoors, are all tied to the fact that users have become dependent on monopolies, where the costs paid are not in dollars but in safety, privacy, and manipulation by unseeable forces.

In the face of this manipulation, the notion of decentralization is increasingly attractive to users, and there has been a push to develop peer-to-peer or federated systems that emphasize distributed ownership and control, privacy, and control over one’s own data. The blockchain is one example of this, and there is a push to develop social media networks based on the blockchain architecture.

From its inception, the Blockchain has been deeply grounded in libertarian ideology. If there is an analog of Rand’s famous redoubt, free from institutional control, tech’s most likely parallel for Galt’s Gulch is Web 3.0. In fact, the parallel seems so tight that the fictional question of “Who is John Galt?” is literally replaced by the real-world question of “Who is Satoshi Nakamoto?” given the reliance of Web 3.0 on blockchain technology. In this digital gulch, the blockchain protocol allows for transactions that do not require a central authority building the concept of digital tokens as currency into the foundations of Web 3.0. The development of these protocols is largely backed by venture capital in the traditional economics of tech innovation.

There is, however, a counter move; one that harkens back to the idealism of the early internet, a belief that the technology can be used to build a more connected world. Through organizations such as the Internet Archive, a community is growing around the notion of a Decentralized Web (DWeb), where there is a push to build decentralized protocols that do not use the blockchain. This technologically-savvy future-oriented community has formalized a set of values, the DWeb principles, grounded in the Nobel-winning theories of Elinor Ostrom on game design for the solution of Garrett Hardin’s tragedy of the commons. The aim of this movement is to architect systems that can avoid the pitfalls of control of speech and interaction centralized in the hands of tech billionaires such as Musk or Zuckerberg controlled by cryptic algorithms designed to maximize corporate profits. While it is impossible to simply separate protocols into DWeb vs. Web 3.0, the general orientation of the DWeb community is to focus on designing or structuring systems built around models of governance that encourage community cooperation rather than relying on the market to resolve issues.

The common critique of Ostrom’s approach, however, is that while it might work in small-scale, locally governed commons, it is less likely to do so in the case of larger, national, or even global cases.[1] While farmers in a Swiss village may be able to develop institutional frameworks and agreements to prevent overgrazing, how do Ostrom’s principles work when attempting to, say, govern large oil companies driven by a profit motive and with significant resources at their disposal to lobby regulating bodies or change governments? In the case of social media, where the government itself has significant interests and incentives to exert power and control, as witnessed by reports of FBI involvement in Facebook content, or the revelations of the Twitter Files, and where giant tech corporations are managing billions of dollars in profits, do these institutional design principles really have the ability to scale?

In the end, the issue with social networks comes back precisely to the question of scaling. At a technical level, decentralized networks have the advantage of being more robust; when faced with attacks that destroy some nodes, other nodes, and links can be decoupled, limiting damage.

At an ideological level, they attempt to break from the capitalist, profit-driven models that lie at the heart of many of the current problems of social media. But the economics of the platforms cannot get around the fundamental issue of the economies of scale. Each of the links in a network cost something to run. While these costs can be distributed among users or a non-profit structure can be created to raise resources to support networks, it will require very creative architecture to push back against the inherent tendency towards a monopolistic structure.

Nonetheless, the contrasting ideologies at play in this tech sector mirror, to a surprising extent, the conflicting ideologies in economics between the most extreme, Ayn Randian version of libertarianism and its reflection in the neoliberal economic models of the Chicago School and the more heterodox, community-oriented approach of Ostrom. It is possible, and perhaps likely, that what we are watching is the nth iteration of a cycle that we seem powerless to exit. In this view, Ayn Rand might represent the thesis that the power of atomized market selfishness is sufficient and optimal for converting greed into a catalyst for pro-social greatness through the counterintuitive genius of the market’s invisible hand. By contrast, Elinor Ostrom represents the antithesis, as market failures due to monopoly, public goods, principal-agent problems, regulatory capture, etc. pile up until they torture the honest market argument into a form where it is almost no longer recognizable or easily defensible. What we are missing now is a synthesis into a harmonized model combining the insights of two existing schools.

This tension is not peculiar to decentralization. One man one vote (democracy) is likewise pitted against One Dollar One Vote (the market); Nonprofits vs For-profits; Open Source vs Proprietary software; Citizen Journalism vs Professional Reporting. In all cases, the structures appear side by side because the tension appears as yet unresolvable. And perhaps the overarching idea is that what we are dealing with is different failure modes of human beings. In the case of designing around communal values, we forget that anti-social elements form communities, just like pro-social elements, so simplistically empowering the community through optimally designed architecture without oversight, will likely always lead to inadvertently supercharging destructive actors. Likewise, the market will always succeed brilliantly until it finds its market failures, at which point we may find ourselves with tech oligarchs and digital dictators after the initial corporate idealism burns off and shareholder value takes over.

A perspective seldom shared is that while Ayn Rand and Elinor Ostrom may appear as antagonists battling for victory, their true function may be as an intellectual version of Heðinn and Hǫgni whose function in Germanic heroic legend is to sustain the Hjaðningavíg, an eternal legendary battle between antagonists which can never be won or lost. If this is in fact correct, the battle protects us against either pure failure mode by constantly rebalancing the power via dialectical tension. If this turns out to be true, we can look forward to seeing both intellectual frameworks presiding over new armies when we begin to hear about Web 4.0, 5.0, 6.0…ad infinitum.



The author is grateful for comments from Thomas Ferguson, Michael Grossberg and Eric Weinstein.

[1] See, for example Araral, Eduardo. “Ostrom, Hardin and the commons: A critical appreciation and a revisionist view.” Environmental Science and Policy 36 (2014) 11-23

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  1. Polar Socialist

    Blockchain’s inception was 18 years before bitcoin was published. It was originally meant to solve the problem of authenticating digital documents in a non-trust environment.

    So saying it was “deeply grounded in libertarian ideology” is stretching it a bit, even if enforcing contracts is a big problem in a libertarian world.

    At my work we did talk a lot about using blockchains as “public ledgers” for messages between parties that do not trust each other or who need to have shared chain-of-proof. In each case we did end up with something else, most often developing procedures that created trust between the parties rather than trying to work around that main issue. It often turns out that technology can’t solve “political” issues organizations have.

    As for decentralizing the social media, we already have all the needed tech in the form of domain name system. It allows computers to find other computers in the Internet, so it would be (relatively) trivial to have something similar allowing any account to follow any other account – no matter what platform they like to use. All we need is a standard format for the content (like, say, html) and way to resolve where the content I like to follow is (like, say, DNS).

    1. Matthew G. Saroff

      I was unaware of this origin of blockchain, thanks. Gotta link?

      Also, if blockchain is 41 years old, David Chaum wrote his paper in 1982, why is it not in widespread use after all this time? It is rather telling that beyond prosecution futures (crypto currency, NFTs, etc.) it has found no application.

      You are correct that blockchain and Bitcoin are conflated in terms of the Libertarian ideology, though Chaum has made it clear over the years that he was motivated by a philosophy that if not Libertarian, is certainly Libertarian adjacent.

      1. Polar Socialist

        I think Haber & Stornetta, 1991 is the original paper.

        At least according to my anecdata, there really aren’t that many problems the blockchain can solve. I personally like the idea, but even when it has seemed to be part of the solution, it has turned out to be lacking or too cumbersome. After all, it does add several layers of complexity to any solution, so the payoff should be big.

    2. gf

      Polar Socialist

      It is my impression that blockchain tech is very energy intensive with all the messaging that must happen to negotiate agreements throughout the chain.

      Is that correct?

    3. tevhatch

      Yes! A blockchain authenticated Minsk 1/2 agreements isn’t going to make agreement-incapable liars into honest brokers.

    4. digi_owl

      > It often turns out that technology can’t solve “political” issues organizations have.

      The basic issue cyberpunk scifi rises in response to the raygun (star trek) scifi of the 60s. Technology simply can’t fix social issues. Yet humanity keep trying time and time again.

  2. BeliTsari

    Somehow, I suspect: replacing Democracy with autonomous extractive kleptocracy is just another distraction, while they upwardly redistribute any nascent “value” (homes, labor, equity) in unnoticed increments. I’d lost interest in Mike Judge’s ‘Silicon Valley,’ way before he’d flipped his ‘Office Space’ schtick of stealth algorithms; vacuuming up unreported fractions of value by “enormous hierarchical corporate leviathan” makes it more of an embarrassment than an asset. I remember when nerds at Carnegie Tech got into the draft board’s mainframe, while they were busy making blue & black boxes to make free overseas calls, used TI’s programmable calculator to count cards & unleashed robots on locals, making-out, stoned on Flagstaff Hill. Nobody paid them NO mind. Is anybody else curious, why media hasn’t blamed the train wrecks or pipeline explosions on Chinese PV powered balloons… yet?

  3. Peter Nightingale

    Social media effectively are public utilities; they require meaningful public governance. This is inconceivable within the U.S. one-party system with its corporate media, the Blue and Red Pravda. The capitalist kleptocracy has successfully obscured what should be a self-evident truth, as both sides in this Hearing on the Weaponization of the Federal Government demonstrate throughout.

    1. digi_owl

      That is the basic thing about online services, they are trying their best to avoid being regulated as a “common carrier” like ma Bell etc was back in the day.

      Effectively they want to have their cake while eating it. As seen when the likes of Google’s Youtube, or Meta’s Facebook, earn big bucks placing ads around user provided content, but claim to have no editorial role regarding what gets shown.

  4. Michael Fiorillo

    Given it’s Cold War and surveillance/NatSec origins, as described by Yasha Levine in his book Surveillance Valley, I’ve always assumed the Internet was born in sin, and that evil cocktail of hyper-surveillance and Libertarian ideology was baked in from the start.

    1. David in Santa Cruz

      I’m a big fan of Yasha Levine. The Internet was absolutely “born in sin.”

      I find it useful to silo my diverse interests under various aliases and by using different browsers. This makes it more difficult to profile me but I get to take advantage of the connectedness. I use the ads that I’m served to track whether my various web personae are bleeding over into each other.

  5. bassmule

    Style comment: “The aim of this movement is to architect systems…” You mean “design”?

    1. cfraenkel

      In this context – computer systems – ‘architect’ is the accepted terminology. ‘Design’ carries a meaning focused on one particular implementation or product, where ‘architecture’ means more how do many differing components work together. The term goes back all the way to 1959 – see https://en.wikipedia.org/wiki/Computer_architecture

  6. reg

    Why not turn to protocols like good old e-mail: I can send/receive mails to anyone with any mail provider, as long as it follows the protocol. Are not diaspora and the likes working this way?

    1. digi_owl

      In theory yes, in practice Google now has a stranglehold in email policy via gmail.

      Trying to run a independent email server while communicating with a gmail user is virtually impossible, as even with all the boxes ticked Google is liable to spam hole your emails.

      It has happened even to long time Linux developers with decades of history on the LKML.

  7. Daniel Raphael

    ‘Social media’ as a term is accurate and meaningful only when & where the participants in the system it names own, maintain, & democratically administer its daily activity. This is not beyond the realm of possibility even now, but as my own experience of censorship at Mastodon recently illustrates, having a lot of decentralized “little Elons” is not qualitatively better than being misruled by a moody tyrant. Democracy–mutual, consensual collective self-rule–is the key to defining the ‘social’ in social media. Without it, it’s just more of the same.

    1. Susan the other

      The word democracy has no clear meaning. Schroedinger’s cat. At any given point in time democracy is volatile enough to do a 180-degree switch. It’s a miracle that we can come to a consensus on anything, so all we can ask for is a slim majority to make decisions. And it occurs to me that this is the definition of probability – probably this is the best decision. And a slim majority might actually be the best decision since landslides often prove to be mass delusion. So maybe I’m just getting old and weary of the constant analysis required to make ever more complex decisions. But I think we should actually attempt to clarify the choices we have. That is, if we actually have any at all. I’m more inclined to believe that our choices are winding down to very few, but they are critical. And still they are being avoided and obfuscated relentlessly.

  8. JustTheFacts

    The fact money grabbers grabbed onto the blockchain doesn’t mean the ideas of the blockchain are about making the money grabber class money, only that they steal ideas that don’t belong to them and they could not come up with if they think they can make money from them.

    Galt’s Gulch was actually full of individuals working together to achieve mutual benefit without governmental interference. Kind of like the decentralized internet… It wasn’t a place where people stole from others.

    The social media companies of today, that the author claims represent Ayn Rand’s ideology, are places where people’s views are controlled and censored by the government as Matt Taibbi et al testified to the Congress yesterday. Hardly something Ayn Rand’s stories paint in a good light.

    It’s all very well to hate Ayn Rand, but it’s becoming a caricature of the hate minute of Emanuel Goldstein in 1984. Criticize people for what they say, not for what you think they said.

    The author also seems incredibly naive if he believes democracy means one man one vote. Not in a world in which the DNC can eliminate Bernie Sanders, not in a world where “one man” is supposed to maintain his independent judgement when surrounded by lying media.

  9. some guy

    As a mere layman and an old analog refugee in this new digital world, I wonder if/when someone will suggest that “Digitized Social Media” is a natural monopoly type of space and should be regulated like electric companies were regulated during the Golden Age of New Deal. We could have a ” Social Media Utilities Holding Company Act” . . . ( SMUHCA to rhyme with PUHCA).

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