Panopticon Reborn: Social Credit as Regulation for the Algorithmic Age

Privacy and Security and Artificial Intelligence

Article Snapshot

Author(s)

Kevin Werbach

Source

University of Illinois Law Review, 2022 (forthcoming)

Summary

Western scholars view China’s Social Credit System (SCS) as a repressive regime. However, liberal governments could adopt social credit systems to improve protection for rights and regulate data.

Policy Relevance

Social credit systems could replace traditional top-down regulation.

Main Points

  • China's Social Credit System (SCS) uses data, analytics, and software to promote compliance with law and social values; many scholars in other nations consider SCS an oppressive Orwellian venture.
     
  • A social credit system developed by liberal governments could improve protection of fundamental rights within capitalist society; we should not entirely reject the use of social credit systems as a tool.
     
  • Originally, SCS was developed because China lacked a consumer financial credit reporting system, a barrier to economic development.
     
  • SCS maintains a data repository for each of three domains: individuals, corporations, and government entities.
     
    • These databases are separate but linked.
       
    • Because the databases are linked, executives of a blacklisted firm might find sanctions follow them to new positions.
       
  • Official SCS subsystems rely on blacklists and redlists, which make up the Joint Punishment System; for example, citizens on the transport blacklists may be barred from buying rail or airplane tickets
     
  • Within the United States, algorithmic regulation could increase regulatory capacity and address the public perception that decision-making has become politicized, enhancing the capacity of the administrative state.
     
  • SCS is similar to rating systems in the West such as those used by Uber and eBay, but these Western systems are subjective, unpredictable, unregulated, and poorly understood; SCS was designed to be transparent and objective.
     
  • SCS threatens privacy, human rights, and the rule of law, but some Chinese citizens endorse it, believing it will reinforce even-handed law enforcement and bolster trust in markets.
     
    • SCS could reduce perceptions that state-owned enterprises or high officials are favored, and discourage bribe-taking.
       
    • SCS allows some human involvement in decisions, and could mask arbitrary or punitive behavior by authorities.
       
    • About 70 percent of Chinese are concerned about SCS abuse or overbreadth.
       
  • Where the rule of law is well established and corruption is restricted, a system of algorithmic governance like SCS might be used without abuse or oppression.
     
  • In Western society, the power of major corporations and successful authoritarian states like China challenge our commitment to the rule of law; social credit systems could address both challenges by constraining government and private power.
     
  • Social credit systems involve three key elements:
     
    • Infrastructure: Social credit treats the systems for aggregating personal data as public infrastructure with public benefits, supporting data protection regulation.
       
    • Feedback: Social credit gives users feedback, providing transparency insofar as subjects are able to observe the results of the systems’ analyses.
       
    • Oversight: oversight mechanisms would allow regulation of the state itself, replacing human discretion with data-driven decisions.
       
  • China is developing new blockchain technologies; blockchain technology makes it hard to tamper with information, and it could be used in connection with SCS.
     

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