Tuesday, January 7, 2014

The Electronic Silk Road: How the Web Binds the World Together in Commerce by Anupam Chander

I saw a caravan once, in Afghanistan. It was a little caravan: three camels and a small family. But it was enough of a caravan to invoke in my imagination the Old Silk Road. I wondered (until a French officer ordered me to leave the area) where the travelers came from and where they were headed. All I could take away was their direction of travel: East.

In the Electronic Silk Road, Anupam Chander describes digital trade routes. The new trade proceeds along electronic pathways; it is fiber and cable and not camels that transmits value across great distances. But the Electronic Silk Road Chander studies has a marked geography; place still matters. We find Silicon Valley and Bangalore and (as before) China, marking the major stops and starts along the way (Chander likes the word entrepôt).

And the poles of the Electronic Silk Road, like the Old Silk Road, have valency. Chinese goods seduced the West for centuries: spices and trade goods and the silk that gave name to the trading route. The problem for the West was China’s notorious indifference to Western goods -- the West did not produce much the Chinese wished to have. Money was only a partial solution. It could of course pay for Chinese goods, but money, even in the days of gold and silver, was effectively a future claim on the West held by China. The Old Silk Road did not fit the mercantilist design of offsetting streams of goods.



The Electronic Silk Road replicates this challenge, though its trade patterns (involving more poles) are more complex. The flow concentrates wealth in Silicon Valley -- where the giants of the new economy (Google and Facebook) are located. But in an odd way, it is somewhat harder to localize the origin of the value there. Facebook’s or Google’s troves of information about consumers in Brazil (their searches, their friendships, their likes) arise in Brazil and not California. Yet this flow of value -- the motion of the information harvest from Brazil to California -- does not take the form of an exchange or a transaction, and so is hidden. What is seen, along the Electronic Silk Road, is the increasing exaction of payments flows from others (who may themselves be located in Brazil or Germany or Taiwan) who would pay the California behemoths.

Bangalore represents the phenomena of offshoring -- a central concern of Chander’s depiction. Here the Electronic Silk Road serves as raw infrastructure (as if the camels walked to China on their own); the new economy is the effective employment of high level service providers half-way around the world (and many time zones distant). Ironically, offshoring is about staying put, and not trekking across Southern Asia.

Chander first concern is law’s response to the trading patterns he describes. Again, Chander is deeply aware of the persistent importance of place; he is no vague globalist. This corresponds to a continuing role for nations and national law -- as well as new opportunities for choice and avoidance of national law (there are, of course, tantalizing gaps where law fails to reach). To a great extent, The Electronic Silk Road is an updated exercise in the global allocation of the reach of national law. Chander sketches out a solution -- which he builds around the slogan ‘glocalization’ -- where continuing possibility for national legal expression is mediated by an overarching awareness of the functional necessity for generalized harmonization. To be sure, the harmonization Chander proposes resembles the harmonization practiced within the European Union (where Member States enjoy a rarely exercised privilege of impeding trade where justified by national vital interests), but the global legal system lacks the institutional foundation on which EU harmonization is built. There is simply no well developed theory of international law supremacy (outside of, perhaps, the domain of international human rights), no consensual instruments by which the nations of the world have ceded their sovereignty to global regimes (outside of the WTO system, which hardly touches much of digital trade) and no compulsion.

Here Chander turns soft. He argues (quite sensibly) that each nation should contain itself with regard to idiosyncratic regulation -- out of recognition of the needs of the larger system. Comity -- a form of sovereign self-abnegation -- can do the trick. I think Chander is right that comity (or some more mysterious form of spontaneous cooperation) can in fact create a world where states tread modestly. And the increased ability to slip outside the reach of any particular state may also have an effect of encouraging states to be sensitive and measured in their regulatory choices. But the hard questions remain. Will a government permit access to the internet (a new form of human right Chander supports) when the result is its own downfall?

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