Pluralistic: The cod-Marxism of personalized pricing; Picks and Shovels Chapter One (Part 3) (11 Jan 2025)


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A Soviet propaganda poster depicting two workers holding flags in front of a locomotive. The flags have been replaced with US flags. The locomotive's face has been replaced with the glaring red eye of HAL 9000 from Kubrick's '2001: A Space Odyssey.' The maxim below has been replaced with the lettering from a Walmart 'everyday low prices' sign. The background has been replaced with a posterized grocery aisle.

The cod-Marxism of personalized pricing (permalink)

The social function of the economics profession is to explain, over and over again, that your boss is actually right and that you don't really want the things you want, and you're secretly happy to be abused by the system. If that wasn't true, why would your "choose" commercial surveillance, abusive workplaces and other depredations?

In other words, economics is the "look what you made me do" stick that capitalism uses to beat us with. We wouldn't spy on you, rip you off or steal your wages if you didn't choose to use the internet, shop with monopolists, or work for a shitty giant company. The technical name for this ideology is "public choice theory":

https://pluralistic.net/2022/06/05/regulatory-capture/

Of all the terrible things that economists say we all secretly love, one of the worst is "price discrimination." This is the idea that different customers get charged different amounts based on the merchant's estimation of their ability to pay. Economists insist that this is "efficient" and makes us all better off. After all, the marginal cost of filling the last empty seat on the plane is negligible, so why not sell that seat for peanuts to a flier who doesn't mind the uncertainty of knowing whether they'll get a seat at all? That way, the airline gets extra profits, and they split those profits with their customers by lowering prices for everyone. What's not to like?

Plenty, as it turns out. With only four giant airlines who've carved up the country so they rarely compete on most routes, why would an airline use their extra profits to lower prices, rather than, say, increasing their dividends and executive bonuses?

For decades, the airline industry was the standard-bearer for price discrimination. It was basically impossible to know how much a plane ticket would cost before booking it. But even so, airlines were stuck with comparatively crude heuristics to adjust their prices, like raising the price of a ticket that didn't include a Saturday stay, on the assumption that this was a business flyer whose employer was footing the bill:

https://pluralistic.net/2024/06/07/drip-drip-drip/#drip-off

With digitization and mass commercial surveillance, we've gone from pricing based on context (e.g. are you buying your ticket well in advance, or at the last minute?) to pricing based on spying. Digital back-ends allow vendors to ingest massive troves of commercial surveillance data from the unregulated data-broker industry to calculate how desperate you are, and how much money you have. Then, digital front-ends – like websites and apps – allow vendors to adjust prices in realtime based on that data, repricing goods for every buyer.

As digital front-ends move into the real world (say, with digital e-ink shelf-tags in grocery stores), vendors can use surveillance data to reprice goods for ever-larger groups of customers and types of merchandise. Grocers with e-ink shelf tags reprice their goods thousands of times, every day:

https://pluralistic.net/2024/03/26/glitchbread/#electronic-shelf-tags

Here's where an economist will tell you that actually, your boss is right. Many groceries are perishable, after all, and e-ink shelf tags allow grocers to reprice their goods every minute or two, so yesterday's lettuce can be discounted every fifteen minutes through the day. Some customers will happily accept a lettuce that's a little gross and liztruss if it means a discount. Those customers get a discount, the lettuce isn't thrown out at the end of the day, and everyone wins, right?

Well, sure, if. If the grocer isn't part of a heavily consolidated industry where competition is a distant memory and where grocers routinely collude to fix prices. If the grocer doesn't have to worry about competitors, why would they use e-ink tags to lower prices, rather than to gouge on prices when demand surges, or based on time of day (e.g. making frozen pizzas 10% more expensive from 6-8PM)?

And unfortunately, groceries are one of the most consolidated sectors in the modern world. What's more, grocers keep getting busted for colluding to fix prices and rip off shoppers:

https://www.cbc.ca/news/business/loblaw-bread-price-settlement-1.7274820

Surveillance pricing is especially pernicious when it comes to apps, which allow vendors to reprice goods based not just on commercially available data, but also on data collected by your pocket distraction rectangle, which you carry everywhere, do everything with, and make privy to all your secrets. Worse, since apps are a closed platform, app makers can invoke IP law to criminalize anyone who reverse-engineers them to figure out how they're ripping you off. Removing the encryption from an app is a potential felony punishable by a five-year prison sentence and a $500k fine (an app is just a web-page skinned in enough IP to make it a crime to install a privacy blocker on it):

https://pluralistic.net/2024/08/15/private-law/#thirty-percent-vig

Large vendors love to sell you shit via their apps. With an app, a merchant can undetectably change its prices every few seconds, based on its estimation of your desperation. Uber pioneered this when they tweaked the app to raise the price of a taxi journey for customers whose batteries were almost dead. Today, everyone's getting in on the act. McDonald's has invested in a company called Plexure that pitches merchants on the use case of raising the cost of your normal breakfast burrito by a dollar on the day you get paid:

https://pluralistic.net/2024/06/05/your-price-named/#privacy-first-again

Surveillance pricing isn't just a matter of ripping off customers, it's also a way to rip off workers. Gig work platforms use surveillance pricing to titrate their wage offers based on data they buy from data brokers and scoop up with their apps. Veena Dubal calls this "algorithmic wage discrimination":

https://pluralistic.net/2023/04/12/algorithmic-wage-discrimination/#fishers-of-men

Take nurses: increasingly, American hospitals are firing their waged nurses and replacing them with gig nurses who are booked in via an app. There's plenty of ways that these apps abuse nurses, but the most ghastly is in how they price nurses' wages. These apps buy nurses' financial data from data-brokers so they can offer lower wages to nurses with lots of credit card debt, on the grounds that crushing debt makes nurses desperate enough to accept a lower wage:

https://pluralistic.net/2024/12/18/loose-flapping-ends/#luigi-has-a-point

This week, the excellent Lately podcast has an episode on price discrimination, in which cohost Vass Bednar valiantly tries to give economists their due by presenting the strongest possible case for charging different prices to different customers:

https://www.theglobeandmail.com/podcasts/lately/article-the-end-of-the-fixed-price/

Bednar really tries, but – as she later agrees – this just isn't a very good argument. In fact, the only way charging different prices to different customers – or offering different wages to different workers – makes sense is if you're living in a socialist utopia.

After all, a core tenet of Marxism is "from each according to his ability, to each according to his needs." In a just society, people who need more get more, and people who have less, pay less:

https://en.wikipedia.org/wiki/From_each_according_to_his_ability,_to_each_according_to_his_needs

Price discrimination, then, is a Bizarro-world flavor of cod-Marxism. Rather than having a democratically accountable state that sets wages and prices based on need and ability, price discrimination gives this authority to large firms with pricing power, no regulatory constraints, and unlimited access to surveillance data. You couldn't ask for a neater example of the maxim that "What matters isn't what technology does. What matters is who it does it for; and who it does it to."

Neoclassical economists say that all of this can be taken care of by the self-correcting nature of markets. Just give consumers and workers "perfect information" about all the offers being made for their labor or their business, and things will sort themselves out. In the idealized models of perfectly spherical cows of uniform density moving about on a frictionless surface, this does work out very well:

https://pluralistic.net/2023/04/03/all-models-are-wrong/#some-are-useful

But while large companies can buy the most intimate information imaginable about your life and finances, IP law lets them capture the state and use it to shut down any attempts you make to discover how they operate. When an app called Para offered Doordash workers the ability to preview the total wage offered for a job before they accepted it, Doordash threatened them with eye-watering legal penalties, then threw dozens of full-time engineers at them, changing the app several times per day to shut out Para:

https://pluralistic.net/2021/08/07/hr-4193/#boss-app

And when an Austrian hacker called Mario Zechner built a tool to scrape online grocery store prices – discovering clear evidence of price-fixing conspiracies in the process – he was attacked by the grocery cartel for violating their "IP rights":

https://pluralistic.net/2023/09/17/how-to-think-about-scraping/

This is Wilhoit's Law in action:

Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.

https://en.wikipedia.org/wiki/Francis_M._Wilhoit#Wilhoit's_law

Of course, there wouldn't be any surveillance pricing without surveillance. When it comes to consumer privacy, America is a no-man's land. The last time Congress passed a new consumer privacy law was in 1988, when they enacted the Video Privacy Protection Act, which bans video-store clerks from revealing which VHS cassettes you take home. Congress has not addressed a single consumer privacy threat since Die Hard was still playing in theaters.

Corporate bullies adore a regulatory vacuum. The sleazy data-broker industry that has festered and thrived in the absence of a modern federal consumer privacy law is absolutely shameless. For example, every time an app shows you an ad, your location is revealed to dozens of data-brokers who pretend to be bidding for the right to show you an ad. They store these location data-points and combine them with other data about you, which they sell to anyone with a credit card, including stalkers, corporate spies, foreign governments, and anyone hoping to reprice their offerings on the basis of your desperation:

https://www.404media.co/candy-crush-tinder-myfitnesspal-see-the-thousands-of-apps-hijacked-to-spy-on-your-location/

Under Biden, the outgoing FTC did incredible work to fill this gap, using its authority under Section 5 of the Federal Trade Commission Act (which outlaws "unfair and deceptive" practices) to plug some of the worst gaps in consumer privacy law:

https://pluralistic.net/2024/07/24/gouging-the-all-seeing-eye/#i-spy

And Biden's CFPB promulgated a rule that basically bans data brokers:

https://pluralistic.net/2024/06/10/getting-things-done/#deliverism

But now the burden of enforcing these rules falls to Trump's FTC, whose new chairman has vowed to end the former FTC's "war on business." What America desperately needs is a new privacy law, one that has a private right of action (so that individuals and activist groups can sue without waiting for a public enforcer to take up their causes) and no "pre-emption" (so that states can pass even stronger privacy laws):

https://www.eff.org/deeplinks/2022/07/federal-preemption-state-privacy-law-hurts-everyone

How will we get that law? Through a coalition. After all, surveillance pricing is just one of the many horrors that Americans have to put up with thanks to America's privacy law gap. The "privacy first" theory goes like this: if you're worried about social media's impact on teens, or women, or old people, you should start by demanding a privacy law. If you're worried about deepfake porn, you should start by demanding a privacy law. If you're worried about algorithmic discrimination in hiring, lending, or housing, you should start by demanding a privacy law. If you're worried about surveillance pricing, you should start by demanding a privacy law. Privacy law won't entirely solve all these problems, but none of them would be nearly as bad if Congress would just get off its ass and catch up with the privacy threats of the 21st century. What's more, the coalition of everyone who's worried about all the harms that arise from commercial surveillance is so large and powerful that we can get Congress to act:

https://pluralistic.net/2023/12/06/privacy-first/#but-not-just-privacy

Economists, meanwhile, will line up to say that this is all unnecessary. After all, you "sold" your privacy when you clicked "I agree" or walked under a sign warning you that facial recognition was in use in this store. The market has figured out what you value privacy at, and it turns out, that value is nothing. Any kind of privacy law is just a paternalistic incursion on your "freedom to contract" and decide to sell your personal information. It is "market distorting."

In other words, your boss is right.

(Image: Ser Amantio di Nicolao, CC BY-SA 3.0; Cryteria, CC BY 3.0, modified)


A remix of the cover of the Tor Books edition of 'Picks and Shovels,' depicting a vector art vintage PC, whose blue screen includes a male figure stepping out of the picture to the right. Superimposed on the art is the book's title in a custom, modernist font.

Picks and Shovels Chapter One (Part 3) (permalink)

This week, I'm serializing the first chapter of my next novel, Picks and Shovels, a standalone Martin Hench novel that drops on Feb 17:

https://us.macmillan.com/books/9781250865908/picksandshovels

The book is up for presale on a Kickstarter that features the whole series as print books (with the option of personalized inscriptions), DRM-free ebooks, and a DRM-free audiobook read by Wil Wheaton:

https://www.kickstarter.com/projects/doctorow/picks-and-shovels-marty-hench-at-the-dawn-of-enshittification

It's a story of how the first seeds of enshittification were planted in Silicon Valley, just as the first PCs were being born.

Here's part one:

https://pluralistic.net/2025/01/09/the-reverend-sirs/#fidelity-computing

Part two:

https://pluralistic.net/2025/01/10/smoke-filled-room-where-it-happens/#computing-freedom

And now, onto part three!

The logo for the Computing Freedom was a stylized version of an inverted Fidelity Computing logo, colored magenta, just a few shades off of the mauve of the Fidelity family of products.

Their catalog was slimmer than Fidelity’s, omitting the computers themselves. Instead, it was filled with all the things that went with the computers: printers, ribbons, paper, floppy drives and disks, RAM and modems. Unlike the Fidelity catalog, the CF’s catalog had prices. They were perfectly reasonable prices, maybe even a little on the high side.

“Our computers, they’re a system,” Bishop Clarke said. “We provide everything, and guarantee that it will all work together. Our customers aren’t sophisticated, they’re not high-tech people. They’re people who organize their lives around their faith, not chasing a fad or obsessing over gadgets.”

“We hold their hands,” Rabbi Finkel said. “There’s always someone who’ll answer the phone and help them, whatever problem they’re having. It’s like a family. One of their computers breaks, we send them another one! That way, they can keep working. We know the system is important to them.”

“It’s not cheap,” Father Marek said. “That kind of customer service isn’t cheap.”

“We filed suit as soon as we found out,” Bishop Clarke said. “We didn’t want to.” He looked sad. “What choice did we have.” It wasn’t a question.

CF managed to fly under the radar for a couple of months. They started with sales calls, cold calls to their old contacts, their best customers, explaining that they had created a new business, one that could supply them with high-quality, interchangeable products for their Fidelity systems. The prices were much lower than Fidelity’s, often less than half.

“Sure they were less than half,” Father Marek said. “When you don’t have to pay a roomful of customer-service people, you don’t have to charge as much.”

The customers were happy, but then a San Antonio stake president was invited to dinner at the home of a local prominent businessman, the owner of a large printshop who relied so heavily on Fidelity systems to run his business that he kept one at home, in his study, with a modem that let him dial into the plant and look at the day’s production figures and examine the hour sheets and payroll figures.

The president noticed the odd-colored box of fanfold printer paper behind the congregant’s desk, feeding a continuous river of paper into the printer’s sprockets. He asked after the odd packaging and the parishioner gave him a catalog (CF included a spare catalog with every order, along with a handwritten note on quarter-sized stationery thanking the customer for his business).

The president assumed that this was some kind of new division of Fidelity, and he was impressed with the prices and selection in the catalog. Naturally, when he needed a new box of floppy disks, he asked one of the girls in his congregation for a box of the low-cost items—

“Why would he ask a girl in his congregation? Didn’t he have a Fidelity sales rep?” I’d filled much of my little steno pad with notes by this point. It was quite a story but I wasn’t quite sure where I fit in with it.

Bishop Clarke started to answer, but Father Marek silenced him by clearing his throat in a loud and pointed way. The priest stared at me for a long time, seeming to weigh me and find me wanting. I can’t say I liked him, but he fascinated me. He had such a small bag of tricks, those glares and noises, but he was a virtuoso with them, like a diner cook who can only make a half dozen dishes but prepares them with balletic grace.

“Mr. Hench,” he said. He let the words hang in the air. “Mr. Hench,” he said again. I knew it was a trick but he performed it so well. I felt a zing of purely irrational, utterly involuntary anxiety. “We don’t have a traditional sales force. The sales groups are small, and their primary role is Empowerment.” He leaned so heavily on the word that I heard the capital letter.

“Our sales groups travel around, they meet people in each place who know their communities, people who have the knack for technology, who need a little side business to help them make ends meet. The sales groups train these people, teach them how to spot people who could use our systems, how to explain the benefits to them. They use their personal connections, the mutual trust, to put our machines where they can do the most good.”

Bishop Clarke could see I wasn’t quite following. “It’s like the Avon Lady. You know, ‘ding-dong Avon calling’? Those girls are talking to their neighbors, helping them find the right products. Their friends get the best products for their needs, the girls get a commission, and everyone is happy.”

I got it then. Fidelity was a pyramid scheme. Well, that was a waste of time. I almost said so, but then I held my tongue. I didn’t want to get into an argument with these men, I just wanted to leave.

“We’re not a pyramid scheme,” Rabbi Finkel said. Had it shown on my face? Maybe rabbis got a lot of practice reading people, hearing the unsaid words. “We follow the rules. The Federal Trade Commission set the rules in 1979 and we’ve always followed them. We are a community-oriented business, serving faith groups, and we want to give back to them. That’s why we pay commissions to local people. It’s our way of putting some of our profits into the communities that depend on us.”

“That’s so well said,” Bishop Clarke said. “So well said. Perfect, in fact.”

“Perfect,” Father Marek said, with a scowl that made it clear he wasn’t happy to have been interrupted.

Hey look at this (permalink)


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#20yrsago Sheet-music for Super Mario https://web.archive.org/web/20050112012306/https://gprime.net/images/mariopiano/

#20yrsago Jailed for a Song: Human-readable copyfight explanation https://web.archive.org/web/20050121142031/http://www.jailedforasong.com/

#20yrsago Free beer that’s free as in speech https://web.archive.org/web/20050121093653/http://www.voresoel.dk/main.php?id=70

#20yrsago IBM turning 500 patents over for free implementation https://web.archive.org/web/20100505080603/http://www.groklaw.net/article.php?story=20050110235654673

#20yrsago Fundie denounces sf for atheism, nudism https://web.archive.org/web/20100111034704/https://www.wayoflife.org/files/2fd19aa02a25c87c4946a653a20f1344-486.html

#15yrsago Bruce Schneier’s TSA logo redesign contest https://www.schneier.com/blog/archives/2010/01/tsa_logo_contes.html

#15yrsago Secret London: guide to the weird and wonderful secrets of London-town https://memex.craphound.com/2010/01/11/secret-london-guide-to-the-weird-and-wonderful-secrets-of-london-town/

#5yrsago William Gibson talks about scrapping and rewriting a novel after the 2016 Trump election https://www.theguardian.com/books/2020/jan/11/william-gibson-i-was-losing-a-sense-of-how-weird-the-real-world-was

#5yrsago Departing Kotaku writers post a farewell message to their private equity asshole boss: “Sup dude. Suck it.” https://kotaku.com/goodbye-from-josh-and-gita-1840936478

#5yrsago America’s most popular governor: the lavishly corrupt Larry Hogan [R-MD] https://newrepublic.com/article/156183/popular-crook-america

#1yrago The real AI automation threat to workers https://pluralistic.net/2024/01/11/robots-stole-my-jerb/#computer-says-no

Upcoming appearances (permalink)

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Recent appearances (permalink)


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Latest books (permalink)


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Upcoming books (permalink)

  • Picks and Shovels: a sequel to "Red Team Blues," about the heroic era of the PC, Tor Books, February 2025

  • Enshittification: Why Everything Suddenly Got Worse and What to Do About It, Farrar, Straus, Giroux, October 2025

  • Unauthorized Bread: a middle-grades graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2025


Colophon (permalink)

Today's top sources:

Currently writing:

  • Enshittification: a nonfiction book about platform decay for Farrar, Straus, Giroux. Status: second pass edit underway (readaloud)

  • A Little Brother short story about DIY insulin PLANNING

  • Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FORTHCOMING TOR BOOKS FEB 2025

Latest podcast: Picks and Shovels Chapter One https://craphound.com/overclocked/2025/01/10/picks-and-shovels-chapter-one/

This work – excluding any serialized fiction – is licensed under a Creative Commons Attribution 4.0 license. That means you can use it any way you like, including commercially, provided that you attribute it to me, Cory Doctorow, and include a link to pluralistic.net.

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