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Shreyas Y H

Professor William Schwartz

Expository Writing IL

Essay #2 Final Draft

02/21/2020

How does Facebook’s platform and corporate ideology reflect or

relate to the “rent- seeking” practices that Stiglitz outlines?

The advancement in technology and social media has drastically transformed the very

dynamics of the corporate communications and the social lives of the people. Simultaneously,

there has been an increase in the complexity of the managerial aspects associated to these

advancements. Franklin Foer, in his article, ‘Mark Zuckerberg’s War on Free Will’ talks about

Facebook’s opacity and corporate ideology by emphasizing on of how it plans to use its powerful

algorithms to influence and alter the behavior of the people according to its corporate vision.

Joseph E. Stiglitz, in his article, ‘Rent Seeking and the Making of an Unequal Society’ talks

about how a few groups of people, who are in the top level of the societal hierarchy, circumvent

the laws and the regulations set by the government to create an imbalance in the social returns

and private rewards which further leads to inefficient market outcomes (or market failure).

‘Rent-seeking’, according to Stiglitz, can be defined as ‘getting income not as a reward to

creating wealth but by grabbing a large share of the wealth that would otherwise have been

produced without their effort’[CITATION Jos12 \p 390 \l 1033 ], or in simpler word, it refers to the

practice of manipulating public or economic policy as a strategy for creating an imbalance

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between the private rewards and social returns. Facebook exhibits rent seeking behavior as its

algorithms helps it to exploits its own opacity to extract more information from its users similar

to the rent seekers who do so to increase their own profits.

Facebook lacks transparency as most of the users are unaware about its algorithms.

Algorithms are a set of principles, when followed blindly, help in solving problems. Foer, in his

article states, ‘Algorithms are, by definition, invisibilia’ [CITATION Fra \p 73 \l 1033 ] . These

algorithms have helped Facebook gain huge amounts of power as it has eased the process of

collecting and analyzing data of its users while they are completely unaware about this and even

if some of the users find out about this process, they choose to remain ignorant, mainly because

of the complexity associated with the algorithms. By drawing a pattern about the users’

preferences, Facebook hopes to make the users completely predictable by inducing mechanical

thinking (automation of reasoning) among them. This helps Facebook hold power over them as it

gets to decide what kind of content/information would be available for the users to view, whilst

making the users believe that they have a choice in this process. Facebook, through these

complex sets of algorithms, is able to mask itself by not completely expressing its ideology and

becoming more opaque to its users.

Facebook uses its opacity to conceal the results of its experiments. Through these

experiments, Facebook aims to establish a mathematical equation about the human social

relationship, which helps in predicting the necessities of human life. Foer states, ‘Facebook likes

to boast of the fact of its experimentation more than the details of the actual experiments

themselves.’[CITATION Fra \p 75 \l 1033 ]. The complex psychological experiments are conducted

by Facebook with a main aim of gaining deeper insights about the human behavior. Neither the

data nor the results of the experiments are revealed to the public, since Facebook uses it for its
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own personal benefits at the expense of its users who are unaware of the fact that they are being

constantly experimented upon. The very idea that Facebook never reveals this data, gives it a

certain power over its users. Therefore, Facebook’s opacity enables it to conceal the results of its

experiments and use it for personal gains, in this case use it as a threat over its users to lead them

to live according to Facebook’s view.

Facebook, through the data that is collected, demands complete transparency from its users.

It confines its users to think and lead a life in a particular manner through its paternalistic view

that helps in the development of its belief. Foer, in his article, states, ‘advancement in the

transparency of individuals – or what it has called, at various moments, “radical transparency” or

“ultimate transparency.”’[CITATION Fra17 \p 60 \l 1033 ] . Facebook believes that its users lead a

life that lacks integrity and therefore, hopes to change it. To give effect to this profound idea,

Facebook’s algorithms help it collect data about its users. Facebook plans to use this data

collected for its own benefit. Facebook plans on using this data collected to hold power over its

users so as to force them to lead an integral life. The constant threat of exposure causes the users

to become more aware about one’s own self and accepting to others embarrassments. This would

prevent the users from having multiple identities in front of different groups of people and living

truthful life. Therefore, Facebook uses its algorithms to exploits the transparency of its users by

using the data it has collected to impose its idea of an ideal life on to its users.

Rent seekers exploit the opacity of the government to take advantage of the general public.

Government has an important role in giving effect to these rent seeking behaviors. Foer, in his

article, state, ‘financial sector had invested heavily in lobbying and campaign contributions, and

the investments had paid off.’ [CITATION Jos12 \p 394 \l 1033 ]. Here Foer is referring to the rent

seekers using their influence by using their lobbyists to control the decision making of the
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government. And this in turn helps the rent seekers to sell products to the government at above

market prices (noncompetitive procurement) [CITATION Jos12 \p 396 \l 1033 ] . The government has

no other choice but to purchase such products because of the financial influential power that the

rent seekers hold over them. This makes the government’s functioning more opaque to the

general public as they are covertly helping the rent seekers rob the money from the general

public as it is the tax payer’s money that is being used by the government for purchasing these

overly charged products from the rent seekers. Overall, these transactions leads the government

to become more clouded as its functioning and decision making is not entirely clear to the public

and this very opacity is exploited by the rent seekers to increase their own profits.

Rent seekers also use the asymmetry of information to increase their profits. This idea

refers to a situation where someone knows certain information that is vital for the effective

market trade which is not available to all. Stiglitz, in his article, writes ‘sellers are trading

constantly, and buyers enter only episodically, sellers have more information than the buyers,

and they use that information to their advantage’ [CITATION Jos12 \p 393 \l 1033 ] . Stiglitz tries to

paint a clearer picture about the various practices employed by the rent seekers to manipulate the

working of a market through an example of the bankers. To use the asymmetry of information,

these bankers solely depend on making the market less transparent and they do so by cleverly

concealing the derivatives, which in turn makes it difficult for the customers to understand

whether they are getting good deals or not. The hidden derivatives are then used by the bankers

to pull out information from the customers and extract greater sums of money from its

customers. By hiding the information about how the deals are bound to fail, the banks are

making huge amounts of profits at the expense of its clients/ customers which is a typical rent

seeking behavior.
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Facebook can be viewed to exhibit rent seeking behavior as it exploits its own opacity and

conceals valuable information about its users for their its own personal gain that is fulfilling their

view of forcing its users to live an ideal life filled with integrity. It uses its algorithms to

influence and alter its users to nudge them into the path which Facebook believes to be perfect.

Though not in terms of profits and wealth, Facebook does exhibit rent seeking behavior in terms

of its corporate view as a clear parallel can be drawn between how Facebook exploits opacity for

fulfilling their goal and how rent seekers do the same to increase their own profits. However,

some of the main difference that can be seen is that Facebook exploits its own opacity to fulfill

its vision of radical transparency for its users whereas the rent seekers tend to exploit the opacity

of the government and the markets to fulfill their goal of increasing their own profits and the

source of power i.e. Facebook gains its power from its algorithms which is internal whereas, the

rent seekers power arises by manipulating external factors such as the government and markets.

Regardless the difference in the source of power and the final outcome, a common aspect that is

shared by Facebook and rent seekers is that most of their current power in the society arises

mainly by taking advantage of general public.

Facebook’s power arises from its complex set of algorithms, which enables it to exhibit

this experimental ideology which can be linked to the rent seeking practices of a few business

elites who create an imbalance in the private returns and societal contributions, which leads to

the market failures. The power that Facebook has amassed over the past decade is frightening as

it outsizes those owned by any other regular corporate organization. These algorithms fuel its

sense of supremacy, leading Facebook to slowly become a powerful rent seeker in the years to

follow. This very idea of supremacy that Facebook has over other social media platforms creates
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a sense of terror as this rent seeking behavior will further enable it to control, manipulate and

influence the users and give effect to the utopian society that it envisions.

Works Cited
Foer, Franklin. "Mark Zuckerber's War on Free Will." Atlantic (2017).

Stiglitz, Joseph E. "Rent Seeking and the Making of an Unequal Society." (2012).
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