Posting Conference Draft of "Measurement, Assessment and Reward: The Challenges of Building Institutionalized Social Credit and Rating Systems in China and in the West": Presentation for Chinese Social Credit System Conference “ 法与信用体系国际研讨会”预通知 (Shanghai Jaiotong University (上海交通大学) 23 Sept. 2017)

(PIX © Larry Catá Backer 2017)

In a prior post I included information about The Conference, Global Perspectives on Law and Social Credit, will take place at Shanghai Jiaotong University (上海交通大学)) 23 Sept. 2017. It is organized by Shanghai Jiaotong University; East China University of Political Science and Law ; Shanghai Law Academy (Research Center of Banking Law Practice); Tencent Holdings Ltd (Intellectual Property Office);and the Foundation for Law and International Affairs.

I will present my paper Measurement, Assessment and Reward: The Challenges of Building Institutionalized Social Credit and Rating Systems in China and in the West. I post here a link to the preliminary conference draft for review and comment. It can be accessed HERE. Following below is the abstract and introduction (English and 中文)

More on the conference in later posts. Index of Social Credit Posts.

Measurement, Assessment and Reward: The Challenges of Building Institutionalized Social Credit and Rating Systems in China and in the West

Larry Catá Backer[1]

ABSTRACT: This short essay has two objectives.  The first is to examine the challenges that social credit, ratings or assessment systems pose for effective implementation. To that end, Section II considers first the difficulties of separating the role of social credit as a set of techniques and as a means of advancing ideological principles and objectives.  It then considers social credit as a project of informatics.  It then examines the control element of social credit systems, and ends with a consideration of social credit as governance.   To understand the shaping of law today (and soft law as well) one must understand social credit. The second is to examine some aspects of Western rating and accountability systems to consider resonances with Chinese social credit. To that end Section III considers some of the ways in which Western efforts at social credit institutions have sought to meet these challenges. It considers the context of social credit systems in the West, and its operationalization, principally in the private sphere. It examines the use of asocial credit as a technique of governance and as a means of embedding international standards in domestic behavior.

I. Introduction

                  Years ago, when the attention of influential thinkers was occupied elsewhere, I noted a curious development in the nature of the forms of governance and its objectives within Western liberal democracies.

Surveillance has morphed from an incident of governance to the basis of governance itself. It is both government (apparatus) and governmentality (its self-conception and complicity, the prisoner becomes his own keeper). In this sense, surveillance has become the new regulatory mechanism. And law is becoming its servant. And the state, either as the traditionally conceived apex of political order, or as the repository of large aggregations of power within an international state system, now serves as a (but not the) nexus point for the regulatory power of technique. It is in this sense that we can speak of the “death” of the “state” or the “rise” of a transnational political system, or the “death” of the public/private divide or even the construction of non-public autopoietic systems. (Backer, 2008).

These changes, I thought, had the potential to change significantly the relationship of the state to law, and of the character and role of law in the governing of states. Moreover, they appeared to signal a new era of management that would fuse the authority of public and private institutions in new and uncharted ways. There was a sense that the appropriate approach to the management of behavior (by states or private institutions) was increasingly centered on the ability of decision makers to deploy data within algorithms to develop finely tuned systems of reward and punishment to manage appropriate behavior, to hold individuals accountable, and to contribute to social development.  That system of discretionary decision making built on data-algorithm-consequence models would have to further the command of law and the public policies of which law was an expression.  But it appeared increasingly clear that rule of law was moving toward data driven systems implemented through development of compliance practices of individuals and enterprises, and  overseen by administrators exercising constrained decision making authority for the public good

                  Yet an initial consideration might have dismissed this trend as irrelevant to the development of the productive force of law and its system. The phenomenon wasn't law; it had been the object of an abstract and remote elite political philosophy since the 1970s;  and it appeared most valuable for the extent to which one could pronounce this area "eccentric" than for any value where it counted--for tangible value for academics concerned about the collective intellectual movements of their field. (cf. Majone 1997). But suddenly all that appeared to change. The trigger was the action by China, which appears to have ascended to the position of principal global driving force in political theory and action, when the Chinese State Council published its 2014 Notice concerning Issuance of the Planning Outline for the Construction of a Social Credit System (2014-2020) (the “State Council 2014 Notice”). This project, a development of ratings and rewards systems, means to unify and integrate systems of monitoring, of transparency and of compliance within the traditional law-administrative regulation construct of state systems, appears to be one of the most innovative and interesting efforts of this decade. 

                  Social credit can be understood in two senses. First, Social Credit itself references the specific project of the Chinese state to create a comprehensive legal and regulatory mechanism that they have named "social credit." Second, it refers generally to a new mode of governance that is emerging in both China and the West that recombines law and governance, and the public and private spheres in new and hybrid ways that will likely transform the structures and principles on which legal, governance, and societal regulatory systems are now understood and through which they acquire their legitimacy.  In both senses, the structures of social credit are similar. In each case the system seeks to rate or score or assess the object of regulation through a process that requires the acquisition of specific and relevant data, which is then interpreted through the application of an algorithm to produce an assessment or a score or a measure which can be used to assess compliance with underlying objectives. Those scores than serve to guide the application of legal or administrative decisions—they can trigger rewards or suggest punishment (Backer 2017). But the components of the standards themselves can also be used as incentives to conform.  The more that the individual or institution conforms to the expectations built into the algorithm the higher the rating score and the greater the likelihood of reward. For example, a rating standard for corporate governance that is based on the creation and operation of a corporate compliance and monitoring system with certain characteristics is itself an incentive for enterprises to adopt such systems if they want to see their ratings scores increase.

                  Social credit and rating systems evidence changes in the way in which the old divisions between government and the private sector are being transformed (Harlow 1980).  The forms of governance that were once the province of private enterprises are becoming essential tools of government; the functions of government are being devolved to enterprises and other social organs, and the way that government and enterprise relate to people are transformed in turn (Backer Transnational Legal Order 2017). The triangular relationship between governmentalization (of both public and private institutional actors with managerial power), the mass of the population (which is its object and now its foundation), and the ‘statistics’ (that both define and serve to manage the mass of the population) is the essence of the problem of transparency in the twenty-first century. (Backer 2013).  But it also describes the change in the way in which government understands and implements its social and political role (Murray Li, Tania. 2007). At its limit, the enterprise of social credit suggests both the emergence of a new field of law as well as the negation of the privileging of law within economic and political structures. On the one hand, one might be tempted to see in the social credit enterprise a notion of the dissolution of the constitution of law within itself; that is that the structures of legality, and its constitution, will have consumed itself. What will emerge from that self-consumption will be the methods and systems that it had once generated and which had been deployed in the service of the constitutional project—that the success of the constitutional notion will ultimately consume it so that where once there was constitution there will only be mechanics; where once there was principle, there will only be data; and where once there were norms, there will be “statistics.” This is bound up in the more fundamental idea of the end of law and the irrelevance of lawyer except as technician of a new system the lawyer no longer controls. On the other hand, the success of social credit may require and indeed may be dependent on the simultaneous development of a law for the digital and data age. That is, in the digital age, society (however constituted) is even more in need of law's nomos and narrative. That nomos and narrative may vary depending on the societal and political context, but it must nevertheless develop alongside the re-constitution of the principles, customs and manners of governance. To understand social credit, one must understand the evolving structures of the relationships, in law and politics, of the relationships between states, its masses, and the institutions through which it operates.

                  This short essay has two objectives.  The first is to examine the challenges that social credit, ratings or assessment systems pose for effective implementation. To that end, Section II considers first the difficulties of separating the role of social credit as a set of techniques and as a means of advancing ideological principles and objectives.  It then considers social credit as a project of informatics.  It then examines the control element of social credit systems, and ends with a consideration of social credit as governance.   To understand the shaping of law today (and soft law as well) one must understand social credit. The second is to examine some aspects of Western rating and accountability systems to consider resonances with Chinese social credit. To that end Section III considers some of the ways in which Western efforts at social credit institutions have sought to meet these challenges. It considers the context of social credit systems in the West, and its operationalization, principally in the private sphere. It examines the use of asocial credit as a technique of governance and as a means of embedding international standards in domestic behavior.

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[1] W. Richard and Mary Eshelman Faculty Scholar and Professor of Law and International Affairs, Pennsylvania State University; Board Member, Foundation for Law and International Affairs; Coalition for Peace & Ethics. This Conference Draft was first presented  September 23, 2017 the  KoGuan Law School, Shanghai Jiao Tong University, for the International Symposium on Rule of Law & Social Credit Systems, Guided by the Shanghai Reform and Development Commission, and the Shanghai Public Credit Information Service Center, and presented by Shanghai Jiao Tong University KoGuan School of Law, East China University of Political Science and Law School of Economic Law, Shanghai Law Academy Research Center for Banking Law Practice, Shanghai Jiao Tong University Research Center for Internet Law Innovation, East China University of Political Science and Law Research Center for Rule of Law, The Intellectual Property Office of Tencent Holdings Limited, and the Foundation for Law and International Affairs

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多年以前，当那些有影响力的思想家在关注时事风云之时，我曾注意到西方自由民主世界中关于治理的模式及其目标有了新的解读和发展。

“如今监视的性质已经发生变型，监视从作为治理的一部分转为治理的基础。监视既是政府的制度同时也是“治理术”（一种自我定义的概念，囚徒成为自己的看守者）由此监视成为一种新的管理手段。而法律则为其服务。国家要么作为传统意义上的最高政治秩序，要么作为国际体系下主权的集合。如今国家的存在为治理制度的发展而服务。因此，我们认为传统意义上的国家在消亡而新的跨国政治秩序在崛起。换言之，公与私的界限的消亡，或者私人自我治理的体系在形成。”

我认为这些新的发展将使得国家和法律的关系，以及法在国家治理中扮演的角色发生重大的变化。此外，这些新的情况彰显了融合公权力和私人机构的治理结构新天地。有一种观点认为政府以及私人机构已经开始越发关注管理者可以利用大数据和计算机算法来开发精密奖惩系统引导恰当的社会行为的能力。这一建立在大数据-算法-结论模式之上的治理权将进一步发展新的法律和相应的公共政策。不过越发清楚的是法治正向以大数据为基础的，在行政机关监督下的个人，企业合规体系的方向发展。

最初人们把这一新趋势视为和生产力发展法则不相关的产物。可是这一趋势不是自然发展的结果，而是自70年代西方政治哲学精英努力的目标。表面上看这些努力的价值不过在于体现时代的独特性而非学术圈关注于某一学术思潮运动中特定的具体价值观。不过这一切都突然发生了变化。变化由中国的变革而触发，并由于《国务院关于印发社会信用体系建设规划纲要（2014—2020年）》的发布而跃升到国际政治理论和实践的高度。社会信用体系建设规划整合了传统国家司法行政制度下监督，透明化以及合规制度，似乎体现了近十年来最新颖的举措。

                  社会信用可以按照两个层次来理解。第一，社会信用是指中国政府建立一套全面的法律规章制度，名称为社会信用。第二，社会信用一般指代新型的治理模式，即融合法律和政府，公权力和私权利以形成新举措改变传统的法律，政府，社会治理结构。在两种层次下，社会信用制度的结构是相似的。两个层次都要求通过相应的数据反馈来评估和丈量监管客体。新型的举措则利用了算法来产生评估等级以评价监管客体的行为，并输出奖惩结论。

治理术（公权力和私权利的管理权），群众（管理的对象和基础）以及大数据（定义群众的范围以管理群众）三者之间的关系是21世纪的透明化制度的核心问题。社会信用制度及体现了法学发展的新领域以及对法居于社会经济结构中的否定。一方面，人们也许会期待与社会信用制度作为法解体后的替代，法将自我消融。法的组成机体将在法组织消融后显现。即法的原则被数据替代，法的规则被统计替代。未来，法将终结，律师失去存在意义，因为新的治理制度下技术人员掌握了一切。另一方面，社会信用的成功需要在大数据和信息时代下开展法的创新。即社会将更加需要具体社会和政治情景下的行为规范。不过这些规范需要建立在重新发展的原则，习惯以及治理方式之上。为了理解社会信用，人们必须理解人与人之间的法律政治关系处于不断的发展，人与社会与国家的关系也会不断发展。

                  本片论文有两个目的。首先本文将审视社会信用制度，评级以及标准制度实施中面临的挑战。由此，本文第二部分思考区分社会信用制度作为一种手段和作为一种新的意识理论的不同。随后本文将思考信息论，审视社会信用制度中的操控元素以讨论社会信用作为一种治理方式。如今，法的创新与发展离不开社会信用。本文第三部分将讨论西方社会发展社会信用面临的挑战。即西方社会实施社会信用的背景，在民用领域的实施。本部分将审视社会信用制度作为治理的手段以及如何融入国际法制度中来约束人们的行为。