Public and Private Keys, Part II
What ‘Hard-Boiled Wonderland and the End of the World’ can teach us about risk: Distributed or Centralized Identity; Caucuses; Travel Shorts; Media Identity
“How was it possible for a life of misery to be happy overall? But then I understood, that misery could be limited to the future.”
― Haruki Murakami, Hard-Boiled Wonderland and the End of the World
Risk Developments this letter:
Distributed or Centralized Identity
In the Shadow of Uncertainty
To find yourself you risk losing your mind. This uncomfortable proposition underpins Haruki Murakami’s “Hard-Boiled Wonderland and The End of the World.” To some it may seem fanciful or like psychobabble, but it is a practical idea with deep roots and many applications. As a concept it is best explained by the psychoanalyst Carl Jung (whose influences on “Hard-Boiled Wonderland and the End of the World” are numerous), and in an applied sense, it is useful in a subfield of cybersecurity called identity management.
Identity is a big concept that is difficult to get your arms around, so breaking it into a few components is helpful. If you read Public and Private Keys, Part I, you will have an intuitive understanding of some of these ideas from the End of the World summary. To provide a more structured overview of Jung, I suggest this 13 minute video on his key concepts:
Individuation - the process by which the individual self develops out of the collective unconscious to form an integrated personality. It deals with the question, “what does it mean to be a distinct entity?” and is typified by the Hero’s Journey, which we have discussed here before.
Persona - the mask that one presents to the world. In the internet age, one way this manifests is social and online identity. In the excellent Interaction Ritual, Erving Goffman explains how personae are calculated displays with expected payoffs and risk taking.
Shadow - a part of the unconscious mind, usually the bad traits that the conscious mind suppresses, but also a source of creativity and knowledge beyond the grasp of one’s conscious mind.
Anima/animus - another part of the unconscious mind, is the archetypal opposite sex from one’s self and the ultimate source of one’s creativity
Self - the final and most important part of the unconscious, and it also encompasses the conscious. A healthy self synthesizes both conscious and unconscious archetypes, without becoming too drawn to any single type.
Collective unconscious - the historical, cultural and environmental factors represented in the unconscious mind
It’s the End of the World, and I Feel Fine
These archetypes have direct parallels in the End of the World. The shadow is, of course, the shadow. The unicorns are the anima, as accessed through the librarian. The self is the dream reader. The collective unconscious is represented by townspeople and the unicorn dreams he attempts to read. Just take a quick look at the similarities of the map of the town and a diagram of the brain below:
There is plenty more depth to go into in Murakami, but let us turn back to risk and uncertainty a moment. George Box, one of the greatest statisticians and contributor to time-series modeling famously said, "all models are wrong, but some are useful." The simplification of phenomenon into tractable models for risk management is a mask. It is the persona or social identity we fashion to grapple with an underlying process. Jung believed that one of the most common and dangerous psychological pathologies is overidentification with the persona. You are not your instagram account or your work self or even an agglomeration of various selves, just as a model or set of models can never perfectly describe the phenomenon it is modeling.
To put this in Jung and Murakami’s terms, you might say that the librarians in both the Hard Boiled Wonderland and in the End of the World represent the imagined, a fantasy. It is no coincidence that in all of the librarian scenes in the Hard Boiled Wonderland are driven by inexhaustible desires for food, drink and sex, a point we will return to shortly. The corollary to the imagined is the unimaginable. In Jungian terms this is the collective unconscious. These are the embedded systems of our minds, the microcontrols of history, culture and evolution that are not only beyond our consciousness, but beyond our understanding. Accessing these intergenerational truths is a mystical and artistic process. Finally, there is the subconscious or our repressed side. To repress something is to stop it before it starts, but stopping something requires acknowledging it on some level. This is the shadow.
What You Won’t Find on the Org Chart
Organizations have shadows as well. These are the taboos, the unspoken cultural rules and the explicit rules that are meant to be broken. Anytime someone pulls out a bottle of alcohol at the office, uses a private email account, or uses private chat in a group video conference, that’s the shadow. One big security risk organizations today face is shadow IT. This is technology that employees are using that’s not officially sanctioned, such as Slack, excel macros, external email, various messaging platforms and mobile devices.
The key to organizational individuation is to integrate the unconscious, including the shadow. Often this requires facing ugly truths that conflict with the company’s persona. For example, “We are transparent,” but information is treated as internal currency and data gets locked up in privileged systems. Another example, “We are innovative,” but procurement takes months to years, numerous gatekeepers can veto any idea and risk tolerance is low.
Integrating the unconscious is not easy for people or organizations, and identity management is a struggle for any entity. As a field, we have come up with some ways to understand and categorize these challenges. The three main components of identity management are:
Identification - who do you say you are?
Authentication - how do I know you are who you say you are?
Access - what permissions do you want and why?
We can divide these into two categories, identification and access are questions about the nature of being, which philosophers call ontology. Authentication is a question about the nature of knowledge, which philosophers call epistemology. Taking these one at a time we can understand the challenges better.
First, let us deal with question of identification by introducing another psychoanalyst, Jacques Lacan. Lacan’s greatest contribution to psychoanalysis is the mirror stage. He posited that persona is formed when we first recognize ourselves as a separate entity from others. This happens literally through a mirror, or figuratively with language. We bring ourselves into being by articulating who we are. To return to the overarching theme, an entity does not exist in the undifferentiated chaos of uncertainty, but emerges, by speaking itself into existence, into a world of risk. This is exactly what happens online when a user completes a sign up flow.
Access is a set of permissions granted to an entity. These permissions may be granted based on the administrator’s discretion or there may be a systematic model of access control, often related to the tasks an entity needs to perform for their role, but there are also those permissions beyond necessity. Lacan differentiates between demand, which is necessary, and desire, which is a craving for recognition by the Other. This is why hackers first started hacking, and why criminals often want to be caught.
The ontological question of authentication connects back to Part I on encryption and digital signature. The ability to authenticate a user by a credential, usually something they know, something they have or something they are, is what links identity to access. The dream reader in the End of the World is attempting to access the unicorn dreams, the collective unconscious, and to do so he needs to authenticate himself through a process of individuation.
Form Org Charts to Org Hearts
Just as authentication, by means of encryption, is what synthesizes identification and access, individuation is the synthesis of conscious and unconscious. Murukami’s Hard Boiled Wonderland is a dystopian war between totalitarianism (the System) and anarchism (the Factory). You must choose your tribe and are defined exclusively along those lines. There is no room for ambiguity, for nuance, for grace. It is a world where the self cannot fully integrate the collective unconsciousness and shadow elements. To find himself the protagonist must walk a fine line between being overly attached to his persona in a world of black and white and losing himself to his shadow in a world of uncertainty.
All entities, whether organizations or individuals face this challenge. Self is innate, not simply an overlap of personae or tribal affiliations. While organizations are keenly aware of competition and how their customers view them, the greatest threats are internal and uncertain. Facing your shadow and reaching deep into your unconscious wisdom is how we transmute uncertainty into risk. This is just as true for technologies, businesses and nations as it is for our personal lives.
Distributed or Centralized Identity
Two weeks ago we talked about the theory of the firm, in my discussion of the relationship between myths and teams. One great line of Matt Levine’s is that banks are socialist collectives. What makes this insight so funny is that people think of Wall Street as populated by upper class conservatives. Given what we’ve just discussed about identity, is this so unexpected? If your persona is defined by a class system and laissez-faire economics, your shadow will be collectivism and socialist economics. The same can be said to be true in reverse. At this point it’s not even funny to observe that the Communist Party of China is “a [capitalist] paradise run for the benefit of its [party members],” it’s just a truism. So authoritarian right, and the libertarian left are each other’s persona and shadow, but what about the identity of the authoritarian left and libertarian right?
Well, cybersecurity reporter Thomas Brewster has a fun story about just such an authoritarian left organization, MITRE. The non-profit research organization for the U.S. defense and intelligence communities has a vested interest in centralizing information for the public good, but pesky corporate governance and commercial pressure prevented wild ideas with long timelines from getting funded, like collecting fingerprints from images people post online. The piece ends with an ode to MITRE’s impressive reputation. If your primary motivation isn’t profit, reputation becomes a kind of currency.
There are others who are motivated by profit, who also struggle with pesky corporate governance (warning cursing in link). You might think of MITRE’s shadow as the anonymous marketplace. One tell is that the take down of Silk Road gets a mention in Brewster’s piece as one of MITRE’s greatest accomplishments. If we were to plot nonprofit research corporations and anonymous marketplaces on the same axis I used to describe banks, it would look like this:
The trouble with this libertarian right vision of identity, is that it is distributed (libertarian) and profit driven (economic right), and if the identities are distributed and you can’t keep people accountable through reputation systems, there’s a big incentive for people to try to misrepresent themselves online. It looks like just that is happening as over $1B of bitcoin was moved from a dormant wallet associated with Silk Road deals. Technology has made libertarian possible on the right, but not without risks.
I’ve been keeping an eye on the conflict between Azerbaijan and Armenia, a story of clashing identities, and fortunately there’s some good news. A peace deal has been struck, and it looks like the violence will stop for now, but the identity conflicts are not fully resolved. As a region, the tectonic plates of Russia, Iran, Turkey and Europe will continue to push up against each other causing frictions and eruptions from time to time.
One of the best commentators on that friction is Bruno Macaes, former Portuguese Secretary of State for Foreign Affairs. His analysis of the Karabakhian peace is excellent, but if you only read one thing by him this week, I’d make it his reminiscence of contemporary art in Iran. It’s an evergreen piece that highlights some of these frictions, and asks deeper questions about the role of governments, national identity and our collective unconscious.
Last week’s vaccine news boosted travel stocks, making it a painful time for short sellers. Byrne Hobart has a great analysis of who benefits from reduced travel (subscribers only) using the example of the consulting industry. Clients could get a price cut. Consulting firms could get a small cost benefit. Consulting firms could get a large increase in operational efficiency.
It all comes down to whether travel improves or impedes productivity. Collocation is great for managers who have to check in frequently with multiple reports, but can be pretty awful for those who require deep work. So will we have shifted to a new equilibrium post vaccine, in which companies realize more work gets done with less management? Maybe, but I’m not so optimistic. Part of the value is the performance of work, not just the work itself. The persona of work, if you will. Sure, it’s healthy not to over identify with that persona, but you can’t just retreat entirely into your own world either.
My guess is that firms will continue to restructure along functional lines, as they have been for some time, with deep workers traveling less and performance workers traveling more. On net, this should be good for everybody. Clients get the performances they want, consulting firms can deliver the work they promised, travel companies have fewer, but more frequent fliers, which means their loyalty programs (where they make their money) are even more robust.
Last on the docket for today is this piece from the CJR on substack. Obviously I am not without bias writing here on Substack, but as a graduate of Columbia University (Business and International Affairs, not Journalism) I do feel torn. The piece, loaded with identity politics and taking pot-shots at the founders, is not a good faith attempt at journalism, as exhibited by Ben Thompson of Stratechery:
Yet, the arguments should not be too readily dismissed. Columbia Journalism Review, like MITRE is a nonprofit spin out from academia. Substack is a distributed marketplace for writing. The parallels here are clear, and one reason there is so much tension between the two is that CJR is “a [capitalist] paradise run for the benefit of [industry insiders],” while Substack is “a socialist paradise run for the benefit of its [writers].” In some sense, it’s a race between the two to integrate their shadows.
A big thanks to all the writer’s works I drew upon this week Matt Levine, Byrne Hobart, Bruno Macaes and Ben Thompson! Also thank you to On Deck Writers Fellows, Andra Oprişan, Sam Barkley and Chris Sparks for their support!