Australia: The Greatest Happiness

The preserved body of the great English utilitarian philosopher Jeremy Bentham (1748-1832) can be seen on the Internet. Mr Bentham’s remains sit in a glass case in the foyer of University College London where a video camera pointed at his etiolated corpse updates images on to the Internet every five minutes for the world to see. Only those who know that Mr Bentham was the inventor of the Panopticon would appreciate the ironic significance of this macabre spectacle.

Utilitarianism’s simple objective and mantra was to achieve ‘the greatest happiness of the greatest number’. In pursuit of that goal, Mr Bentham turned his mind to the problem of crime and punishment in nineteenth century England. He invented a prison system which he called the Panopticon. The Panopticon was a prison with cells built around a central control tower manned by a guard. Each prisoner was entirely isolated from the others, but could be constantly observed by the prison authorities and members of the public.

Bentham’s thesis was that constant surveillance is the most effective form of rehabilitation. He believed that it would ensure that prisoners could never engage in any type of activity which might be inimical to their chances of eventually leading normal and useful lives. They would not be able to indulge in bad habits or discuss criminal activities with each other, nor would they be exposed to any external corrupting influence, including the prison guards themselves. Their lives would be totally transparent. They would be forced to constantly behave in an acceptable way until that pattern of acceptable and respectable behaviour had become ingrained and the old habits and patterns of criminal behaviour had been forgotten.

The real utility and sheer genius of Mr Bentham’s grand scheme lay in its economic attributes. The circular design of the Panopticon allowed one guard to keep twenty prisoners under surveillance at the same time. This would be impossible in a traditional prison building where cells are arranged in rows. In a conventional layout, it would be necessary to have one guard for every two prisoners to achieve the same result.

In fact, one guard in the Panopticon could not be observing all twenty prisoners at the same time, but that was not relevant. The beauty of the Panopticon was that prisoners thought they were under constant surveillance. The critical factor for the success of the scheme relied on the uncertainty principle. Even the least intellectually gifted prisoners could work out that no prison authority was going to pay a guard to watch them individually for twenty-four hours of the day. It was feasible, however, that the prison authority might pay one guard to watch twenty prisoners and that guard could watch an individual prisoner for at least three minutes of each hour of the day. The key to the success of the Panopticon was that each prisoner did not know which three minutes of each hour was devoted to them, so they would have to assume that, at any point in time, they were being watched.

The Panopticon was never embraced by the British prison authorities because the initial trials provide to be a disaster. Lack of privacy led to a decline in the mental health of prisoners at a much faster rate than simple solitary confinement ever had. It literally drove prisoners mad.

Mr Bentham’s notion that constant surveillance would have a positive remedial effect on the behaviour of prisoners proved to be completely misconceived. However, his discovery of the profoundly negative psychological effects of privacy deprivation and the power of the uncertainty principle have ever since been of significant value to the police forces of totalitarian regimes.

In his discourse, Crime and Punishment, the famous contemporary French philosopher, Michel Foucault, pointed out that the asymmetry of seeing-without-being-seen is the very essence of power, because ultimately the power to dominate rests on the differential possession of knowledge.

The uncertainty principle is exploited to the most devastating effect by the stalker, who can reduce a victim to a terrified, dribbling mess merely by letting the victim know that someone is out there watching him. The stalker could be an eighty five year old num who wants nothing more than a friend, but the victim will always assume that it is Hannibal Lecter or Laurie Oakes. Our survival instinct makes us assume the worst.

The Internet is the most sophisticated and insidious surveillance system yet invented. Cookies and web bugs allow marketing companies, political organisations, governments and cyber stalkers to find out everything they want to know about users from their height and weight to their political, religious and breakfast cereal preferences. Every time a user logs on, an electronic trace of their activities can be recorded, collated, assessed and manipulated to create profiles and databases. We don’t know precisely who may be doing it or for what purpose, but we know that it’s happening or could be happening. It makes the least paranoid of us disconcerted.

We are constantly annoyed by the receipt of junk mail from people with whom we have no connection whatsoever addressed to us as though we were old school friends, but we have generally become accustomed to it. We have become accustomed to or we are blissfully ignorant of the fact that we are being filmed as we make our way through department stores and down city streets and along motorways. We have generally accepted the security risks involved in credit card transactions. However, we have not become overwhelmed by the impression that the most invasive aspects of the 'Big Brother' state described in George Orwell's 1984 (not to be confused with the study in banality on Channel Ten) have become a reality. It is more the case that each little invasion of privacy has subtly and unobtrusively become a part of our lives over a long period of time.

The internet is bringing together in one dramatic, revolutionary, confrontational package, every one of these little invasions of privacy and crystallising every concern about privacy we ever had. Very few of us actually know precisely what is going on or what is possible in cyberspace, but we do know t hat every electronic move we make can be observed. The same technocratic masters of the universe who have succeeded in convincing us of the omnipotence of the internet are now asking us to trust the monster they have created. The very marketing hyperbole which has created the internet phenomenon of the last five years is now contributing to the biggest problem for the future of online retailing, the uncertainty principle.

It is one of the great paradoxes of the internet that, while it expedites commercial transactions by bringing people together and providing a more efficient mechanism for their conclusion, a simple cash transaction is far more information intensive online than off. Even the purchase of a newspaper or a toothbrush requires a comprehensive exchange of personal information.

As online retailers close their shops all over cyberspace, anxious questions resound around the bricks and mortar of their owners. What is the problem? What has caused the massive gap between the forecasts and the results? The reasons are numerous and complex, but one of them seems to stand out like canine reproduction equipment. Privacy and security concerns are the main reasons for the reluctance of internet users to engage in online transactions.

The Australian government appears to appreciate this point. it stated as much in its Explanatory Memorandum to the Privacy Amendment (Private Sector) Bill 2000.

When the Privacy Amendment (Private Sector) Act 2000 ('Act') came into effect on 21 December 2001, it was greeted with some discomfort by most organisations to which it applies and has since been largely ignored. This is bad news for online retailers, but it is entirely understandable. Given the stated intention of the legislation, its form is quite remarkable in the exceptions it incorporates and the lack of sanctions it imposes. Broadly, the Act implements the National Principles for the Fair Handling of Personal Information ('National Principles') which were developed by the Federal Privacy Commissioner as a basis for businesses to develop practices to ensure that the privacy of individuals is protected. The National Principles set out minimum standards in relation to the collection, use, disclosure and security of personal information.

However, the Act does not apply to individuals in a non-business capacity, small businesses with a turn-over of less than A$3 million per year, organisations acting under Commonwealth or State Government contracts, employee records, media organisations 'in the course of journalism' or political acts and practices. In the event that an organisation breaches the Act, there are no fines or sanctions of any kind. The organisation is merely obliged to apologise and undertake not to do it again. There is a vaguely worded provision which empowers the Federal Privacy Commissioner to take legal action in the Federal Court against a defaulting organisation only in circumstances where all else has failed.

The problem of online privacy is about dealing with the uncertainty principle. It is about minimising uncertainty and creating a perception that invasions of personal privacy are a serious matter and will not be tolerated. The internet may be a law unto itself, but there are aspects of its operation which governments acting co-operatively around the world can regulate. For privacy regulations to achieve anything, however, they must apply to everyone with virtually no exceptions and must contain onerous sanctions. There can be no doubt that small businesses are likely to be the main offenders when it comes to invasions of privacy. Large companies will be less likely to risk the public opprobrium associated with breaches of privacy, because it might affect their share price. Furthermore, they will be more inclined to be concerned about the reputation of the Australian marketplace from an international point of view because they will have global interests to consider.

This unsatisfactory situation has not escaped the notice of Australia’s highest profile and boldest civil servant, the Chairman of the Australian Competition and Consumer Commission, Professor Allan Fels. On 12 March 2002, a Memorandum of Understanding to facilitate co-operation and co-ordination between the Australian Competition and Consumer Commission (‘ACCC’) and the Office of the Federal Privacy Commission was signed. Professor Fels merely commented that "The standards interact with some of the existing fair trading rules". What this will mean is practice is not yet clear, but it offers a glimmer of hope for online retailers.

It would definitely add some teeth to the privacy legislation if breaches of privacy constituted misleading and deceptive conduct under the Trade Practices Act and if the ACCC were to take an active role in policing such breaches.

What is clear is that something must be done to further strengthen the privacy regime if Australia is to take "full advantage of the opportunities that electronic commerce presents". The excepted categories must be dramatically circumscribed and serious fines imposed for breaches of privacy. Mr Bentham’s utilitarian principles should apply to the drafting of the privacy legislation, as to any legislation. The Act extends to small businesses who trade in personal information as from 21 December 2002, but the application of this provision is likely to be very limited. Having an exception for small businesses at all is like introducing tough new stalking laws which apply to everybody except single men aged between 18 and 65 with previous convictions for sex offences.

Lionel Docker is a Sydney lawyer who specialises in technology law.