okay um good afternoon everybody or possibly good morning or something else depending on where you are and welcome today to today's retro seminar my name is alan morrison i'm professor of law and finance at the side business school i'm joined here today by rita moto who's the enteiso sao paulo research fellow also at the business school who co-convenes these seminars with me and by our speaker toby sharding toby's a philosopher who applies formal ethical theories to managerial decision making she's particularly engaged with the ways that managers can evaluate the ethics of new workplace practices and new technologies that lie outside many of our existing accounts of managerial decision making she's a research fellow of the institute for ethical leadership at rutgers business school she's very widely published in leading journals including business ethics quarterly journal of business ethics and business society review and her book this is business ethics was published by wiley blackwell in 2018. i'm very excited that toby was able to join us today before i turn the floor over to her which i should do in just a moment i'm going to make a few quick remarks about the seminar some of which some of you have heard before retro stands for reputation ethics trust and relationships at oxford it's a seminar series that's concerned with the ethical and normative content of trust and reputation in organizational life it's one of a wide range of seminars and conferences that occurs with the generous support of the center for corporate reputation which is an interdisciplinary research center directed here at the side business school in oxford by rupert younger retro has been online since the start of the clovid19 crisis even as people started to return to the office in greater and greater numbers vita and i have decided to retain the online format for the time being because this works so well as a way to stimulate fascinating conversations amongst people from all over the world that we otherwise wouldn't easily get to talk to but making it happen in this ways hard work so i'd like to thank all of the people who've contributed to the effort in particular thank you to rupert younger who's the director of the ccr and tahana cooper chris page mark hughes morgan and darius joer i'm particularly grateful to anita without whom none of this would happen her energies her ideas and her expertise are completely essential to these seminars the corporate reputation center is very concerned with trust with how it's created how it's sustained how it might be lost and then possibly how it might be rebuilt today's for talk focuses on these questions in a in a not in a particular context table is going to talk about a new conceptualization of trust that she calls technological trust it's associated with technologies like blockchain you might ask whether the sort of trust you'd have or do not have in your in your friends or in your workplace colleagues is the same as the trust you have in your blockchain and if not what is technological trust for what's different about it and anyways trust supposed to be for anything toby's talks can help us to think about these questions and we'll highlight their relevance for business i think it's going to be fascinating tabi's talking about a top topic that is very important and also very hot at the moment so i anticipate quite a lot of discussion as usual we're going to be slightly formal about the q a process uh if you have questions please put them into the q a box and not into the chat another heater or i will relay them to toby she's going to speak for between 20 and 30 minutes and after that i hope we'll have a reasonably wide-ranging discussion as usual finish bang on time at five o'clock gmt so tabi thank you again for joining us and the floor's thank yours so much uh thank you to uh to to to the the hosts for inviting me thank you to all participants who are here i'm delighted to be uh speaking with you today let me go ahead and get my slides started sorry about that i had uh flipped through the slides so we were at the end of the slides and they're still getting a preview backwards um uh welcome so my name is toby shardy i'm delighted to be here today speaking with you about the utility of trust um as you know i will be discussing three different forms of trust interpersonal trust into institutional trust and technological trust on my introductory slide i have selected two somewhat cryptic images which are intended to provoke you in rather an open-ended way concerning these these topics and so i think i will leave it at that hoping that you are suitably provoked and will be engaged and interested in my presentation um so thank you for the introduction just a a bit about me i am of course a philosopher teaching business ethics at a business school this gives me a natural interest in deploying the uh the rich resources of the philosophical tradition particularly focused on philosophical ethics uh for use in evaluating applied problems in business um so i take a particular focus on issues concerning finance technology and risk all of these are going to be present today so i'm very excited about this presentation and of course as the title uh uh sets forth i will be using the ethical theory of utilitarianism to hopefully shed some light on issues concerning uh the the new blockchain technology along with um the general role of trust in business um one thing that you may notice i do have my slides set on automatically advanced this has led people in uh in in previous presentations of this topic to say well do you can you really trust the oh the the technology that you're using namely your powerpoint slides and i'll say yes it will occasionally advance um against my uh against my wishes but it does help me to keep up the pace and and to to get through um the the slides in a timely manner so we can get to our discussion uh so the the main so i will be examining one particular research question in this seminar um ethically speaking how should conventional financial intermediaries us so conventional financial intermediaries is a technical way in the blockchain literature that scholars talk about banks particularly big banks like uh bank of america wells fargo city group big banks um how should big banks like these respond to blockchain's challenge to conventional forms of trust so the assumption here is that uh banking institutions financial institutions rely on trust in some crucial way from an ethical perspective and that blockchain challenges this so i will be considering two possible responses the boxes on the uh the the right side of the screen should intermediaries invest resources in developing the technological forms of trust associated with blockchain one way of responding or should intermediaries invest resources in preserving conventional forms of trust mainly the uh institutional trust in particular and to a lesser extent interpersonal trusts that have um governed these institutions before the the blockchain uh disruption um so to uh to address this question i will be uh focusing on three main things so first setting forth that challenge including uh a brief and decidedly non-technical overview of what blockchain is uh slightly more technical account of these three forms of trust from the uh the management literature in particular uh that i will be working with um as long as a brief discussion of how businesses use blockchain or propose to use blockchain i will then discuss how ethically uh big banks should respond to this challenge including explaining why i've decided to use utilitarianism as well as setting for some technical details of utilitarianism that are useful in evaluating this problem including the good and bad utils and disutils associated with trust itself as well as a distinctive theory of good and bad in business and finance that i will be employing that is more um i'll say a more eccentric or more unusual way of using utilitarianism in this context and then i will carry out the utilitarian evaluation itself focus on a thought experiment involving four toy societies so named because they are particularly simple clear pleasing to work with um and that these toy societies i hope will help us to arbitrate between the three forms of trust that i am discussing today and i will briefly conclude by discussing um the extent to which these uh the results of this thought experiment can be readily applied to business um so what is blockchain um so for our purposes today the most important thing about blockchain is it is it is a technology that allows individuals to make secure financial transactions with one another um in other words typically to make a secure financial transaction individuals will will rely on a banking institution for example to um uh to use a credit card to assure that the credit card is charged accurately and is charged only by those those uh parties uh that the the credit card user authorizes to be charged so blockchain is a way in which uh people can make those kinds of transactions independent of a banking institution and this is a brief way in which it does so and why uh users regard the technology as being secure um so the so blockchain is is is aptly named it is a chain of blocks that each block contains data specifically a set of transactions for over a particular time period along with uh reference to the block before it um couch in a particular kind of uh hashing algorithm um and this this uh this algorithm and this uh this this the chain and the decentralized nature allows blockchain to have three characteristics that make its transaction secure so it is transparent all blocks can be viewed going back to the original block that means every single transaction um and the the blocks can be viewed by any member of a peer-to-peer community that has the authority to uh to to make transactions to uh to execute and authenticate transactions the blockchain is immutable well that means that the blockchain cannot be changed um except under one specific circumstance and that is if a majority of the members of the peer-to-peer community agree that there is a problem in the uh a a flaw an error or that something went wrong in uh in in one of the records of the transactions if such an agreement uh uh occurs then the peer-to-peer community is able to make what's called a hard fork and actually uh change the blockchain or create and create a new blockchain with the uh corrected information as the peer-to-peer community gets larger and larger it becomes less and less likely that this consensus will occur um meaning that the blockchain is uh uh that we can regard the blockchain as being immutable or very close to immutable and then thirdly the blockchain is decentralized um so that means there's not uh a central there's no there's no executive structure or chain of command regulating the blockchain in the way that there's an executive structure chain of command at bank of america or other financial institutions rather the blockchain is what is is run on a widespread network of computers as a what's known as a distributed ledger that is accessible at all times to all members of the peer-to-peer community um so the members of this community process the transactions forming new blocks that are entered on the blockchain um so why is blockchain regarded as being trust free or what is the particular challenge that blockchain raises vis-a-vis convention conventional forms of trust so this trust free uh status comes actually from the original 2008 white paper that introduced bitcoin in particular to the world but it actually introduced blockchain as well although bitcoin has gotten um more more uh more attention in in some ways um and so the uh the the introduction to this white paper explains the the the attack on trust we can we can think about that or the the um the challenge to trust that that bitcoin and blockchain are going to raise um so the so to quote commerce on the internet has come to rely almost exclusively on financial institutions big banks serving as trusted third parties to process electronic payments while the system works well enough for most transactions it still suffers from the inherent weaknesses of the trust-based model so the author or authors of this white paper are looking to to substitute something else that will not be vulnerable to the weaknesses of the trust-based model so they say what is needed is an electronic payment system based on cryptographic proof instead of trust allowing any two willing parties to transact directly with each other without the need for trusted third parties um so that's the sense in which blockchain is trust free not that uh the users don't need to trust anything but just that they don't need to trust a third party um and so from this uh from this new conception of trust um or from this uh uh criticism of conventional forms of trust this this uh this third-party financial intermediary form of trust has uh has emerged a beautiful literature about the new form of trust technological trust um i have a slide about you the ways in which businesses are using blockchain um i'm actually going i'm gonna put off discussing that now i may discuss it at the at the end of the presentation if there's time um but it is so businesses are using blockchain but what's uh what's far more interesting i think for our purposes is the uh the possible ways in which businesses could use blockchain or the ways in which it may transform financial services so i'm going to instead get started by discussing briefly these three forms of trust that i am focusing on um and just to mention you notice that the quotation at the bottom of this slide i wanted to uh just give a shout out to the vast literature on trust which i am largely um not using in this in this presentation um uh but i am i do i do take a general definition of trust from this from this vast and and rich and wonderful literature um namely uh this this quotation uh by an art from an article by denise rousseau and her colleagues uh from 1998 in the academy of management review in which they define trust in the following manner trust is a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another and i want to highlight that what interests me in particular about this uh this definition was useful to me in particular is the focus on vulnerability um so uh so i will be conceiving of financial transactions as involving this essential kind of vulnerabilities but in particular the vulnerability uh to of of occasionally occasioning a financial loss um the the vulnerability that another party to the transaction will will defraud the the trusting party the um the trust door party um and so i'll be they'll be thinking about these three forms of trust as ways of compensating for that vulnerability or making up for the vulnerability in a way that allows the financial transaction to go through producing at the end mutual benefits so three different forms interpersonal trust most basic form of trust parties trust the other people with whom they transact um as i mentioned i will not be referring to the huge and wonderful literature on trust uh but rather to a particular subset of articles that have been written basically in the past 10 years or so um by scholars who are specifically grappling with technological trust and trying to understand how it relates to other forms of trust um so i've i've included um a couple of these papers here and the way the terms that they use to refer to interpersonal trust so trust in peers social trust peer-to-peer trust and i think these other these alternative terms are useful in conceptualizing this basic form of trust i also have a a little visual visualization to um to illustrate the relationship of interpersonal trust with that vulnerability and then uh the financial transaction so this arrow uh the downward pointing arrow illustrates the um uh the uh the the the order of the financial transaction um the the the process of the trading financial transaction from the initial transaction to the successful completion and achievement of mutual benefit at the end um so we have a self-interested transactor a uh transacting with self-interested transactor b these transactors are self-interested in the sense that they are not transacting for the for the other party's benefit but for their own benefit they're seeking to obtain a mutual benefit at the end of the financial transaction and most importantly they could be tempted to defect from the uh from the agreement if um if opportunities arise so they are opportunistic potentially they're not necessarily going to defect but they could they're not they they could defect um and so in this transaction what compensates for that vulnerability is the interpersonal trust i've also substituted as you can see on this slide uh icons to um which i think helps to to to simplify the um the the image to some extent so transactor a transactor b the vulnerability occasion by their financial transaction is compensated for by their trust in one another institutional trust in turn uh parties may be complete strangers they need not trust each other personally they need not even know each other um instead they trust institutions to mediate their transactions with others in the literature this is also called trusted platform organizational trust intermediary trust visually we have self-interested transactor a transacting at the bottom with self-interested transactor b via this conventional financial intermediary and what compensates for the vulnerability of uh to a financial loss that these parties are experiencing is one of two things in in in institutional trust um so either as you see on the right side institutional trust itself that that would be uh trust in the conventional financial intermediary itself so trust in bank of america trust in citigroup and on the other hand there's a dispute in the literature about in institutional trust what is really trusted is it bank of america itself or is it rather the united states law in the case of bank of america to which um the bank is uh is is subject in other words uh that not that not that the transactors necessarily trust bank of america not to uh defraud them but rather they trust the united states law to sanction bank of america if it if it were to defraud them and that this threat of sanction uh for the self-interested transactors is enough to hold the conventional financial intermediary in line and thus compensate the transactors for their vulnerability that they are experiencing in engaging in the financial transaction and so here's my visualization technological trust finally uh so in technological trust parties trust technologies to perform correctly the functions that they have been programmed to perform such as executing and authenticating financial transactions um uh i use this for my visualization i use the same structure as institutional trust which seemed interesting to me as i was constructing uh these visualizations although i'm not sure if i have anything else to say about that but you see uh self-interested transactor a self-interested transactor b both experiencing vulnerability um in virtue of using blockchain's peer-to-peer network and algorithm um in uh one difference between the technological trust visualization and institutional trust is that what compensates for the vulnerability that these transactors are experiencing is just technological trust so in in relying on blockchain technology for example there is no um there's no promise that uh that a national that a national uh legal system is going to protect the users rather the users are standing apart from national legal systems and so that is a big difference of technological trust as compared to institutional trust in institutional trust the institution is bound by the laws of a particular country in technological trust the um the users are not that they're free from those from those laws but they are less closely regulated at this at least at this time than uh users of conventional financial intermediaries um okay um so now getting to that to the heart of the matter um the utility of the utility of trust so now i'm going to do my ethical evaluations and try to understand which of these uh forms of trust uh it is most ethical for conventional financial institut uh finance conventional financial intermediaries to base their uh business policies upon uh so i'll begin by explaining why i've chosen utilitarianism um then explain what form of utility i will be using pleasure preferences individual opportunity and finally explaining how i will conduct the utilitarian evaluations and then moving on to the utilitarian evaluations themselves so i have selected utilitarianism for a couple of reasons um so first of all the trust literature itself uh has a utilitarian account of trust you could see this even in the um the denise and colleague denise russo and colleagues definition of trust with which i uh introduced this section of the of the presentation um the the definition of trust focuses on the consequences of trust um the the benefits to the parties of trusting one another um so this particular article uh so there was just an article like just published a couple of weeks ago in the journal of business ethics um uh accounting or uh uh giving and giving an account of how the trust literature has its utilitarian account of trust of course these uh dutch scholars are quite critical of the trust literature for this reason from my perspective i am quite pleased to see that the trust literature is seen to have a utilitarian account of trust because it reinforces my decision to use utilitarianism to evaluate this this novel form of trust technological trust um so what interested me more before uh encountering this this new article um led me to choose utilitarianism is the incredible benefits that are associated with trust in particular the benefit of cooperation and the production of mutual benefit based on a trusting relationship either interpersonal trust or institutional trust i thought that this was an incredibly powerful aspect of trust itself um and in uh investigating trust from an ethical perspective it led me to to want to use a consequentialist ethical theory namely utilitarianism um then finally i'm really asking and essentially comparative question here so not looking to uh to simply evaluate a form of trust and say is is technological trust ethical um my assumption is that technological trust is ethical according to other ethical theories like conte and ethics or virtue ethics um and within that assumption i'm interested in what is it is it so it's ethical but is it better from an ethical perspective for businesses to be investing in technologies like blockchain or should they um uh should they uh should they dig in in their their conventional forms of trust um and so uh most uh most other that the main ethical theories answer the absolute question is you know are is is technological trust ethical um so my examinations i'm more interested in the comparative question but i will say that the results here are conditional on further evaluations of technological trust as being ethical by these other ethical theories so the particular form of utility that i will be examining is not pleasure associated with classical hedonic utilitarianism not preferences associated with 20th century utilitarianism but rather i'm interested in the opportunities that financial transactions extend to individual people as a way of becoming able to to pursue and realize their distinctive aims so this account of finance was set forth um by robert schiller uh the nobel laureate in a 2012 book called finance and the good society in which he explains the ways in which finance helps individual people to pursue and achieve their distinctive aims so what i'm interested in terms of utility here is the ability of um individuals to to to get into the game and uh and engage in financial transactions um now of course in terms of how am i using utility i am seeking to use utilitarianism in an elegant and compelling way in the ways that i have found most inspirational in particular actually uh in the foot 1967 thompson 1985 that refers to the trolley problem and that that idea is it more ethical to save five lives or to save one life um this like really clear use of utilitarianism really inspired me of the the value of considering the numbers of people affected and so i'll be striving to do that in my utilitarian evaluation um just a caveat the good that i will be considering is not that the total sum of good but rather it's whether people are in the game so it's the the good of getting involved in the the game of financial transactions so therefore each person included in the financial transactions produced by a particular form of trust is going to count as one util in favor of that forum so not the uh the actual person's output as a result of uh their financial transactions but just the fact that they are in the network for engaging in financial transactions so the networks created by interpersonal trust institutional trust and technological trust which leads me to my thought experiments um so here i will be uh briefly considering four toy societies so these these societies have only one characteristic the particular form of trust that they're using um so so they're so this is the sense in which they are simplified societies um and i will be thinking about four different societies a no trust society as a comparator and then the interpersonal trust institutional trust and technological trust societies thinking about the extent of utility produced in each society according to the definition of utility that i have set forth so society won no trust in this society people refuse to transact financially with strangers so here i'm defining a stranger as any person outside their immediate family this means that financial transactions are limited to the network of the family so because people refuse to transact with non-family members their resources are neither made available for financial transactions with others uh nor do they gain access to non-family members resources by way of financial transactions so the overall utility of this society i'm saying is five assuming that five is an average family size of a family as you'll see given my comparative project it doesn't really matter if uh if you think that the average size of a family is two or the is is ten um the point is that here in the the no trust society the overall utility is pretty small basically single digit number moving on to society two interpersonal trust so in this society people are willing to transact financially with people outside their immediate family whom they personally trust so basically they have to know these people to know that they trust them in this society financial transactions occur between non-family members allowing people to put resources that their family does not need to use uh people will only transact financially with others whom they personally trust limiting the extent of financial transactions so i'm estimating in the interpersonal trust society the overall utility is the dunbar number 150 so the dunbar number is of course the view of how many people can you can you how many people can you know well um and again it doesn't really matter if you think that the done bar not whether the number of people you can know well is more like 50 or is more like a thousand the point is it's a more of a medium number for society to interpersonal trust moving on to society three institutional trust so in this society people are willing to transact financially with self-interested strangers uh so again self-interest just refers to the the possibility that they could be defrauded um people are willing to do these transactions via a financial institution that they trust to execute transactions correctly so they trust the financial institution either because they trust bank of america itself or because they trust um the national law that governs the institutions uh activities and they and they know that that bank will be sanctioned if they defraud them um so in this society transactions flourish on a national basis again because of that national law so the transactions are limited only by trustworthiness of the national government along with the fact that people outside of the national borders may lack access to transactions so the network is uh is one country and here i'm estimating the overall utility at a million as a as a um uh an average number of adult transactors in a country again it doesn't really matter and you're seeing more with the comparative nature if the the uh if the if the country has um 100 000 people or 20 million people that the number here is clearly larger than society too clearly larger than society one and so the question is is the number as big as society or technological trust so in this society people are willing to transact financially with self-interested strangers who could defraud them via trusted blockchain technology and again that trust means they trust the technology to execute their transactions correctly that they will not be trans they will not be defrauded they will be able to get to the end of that financial transaction and achieve mutual benefit in this society trade flourishes globally limited by people's vulnerabilities to losses where no trusted government exists to mediate disputes the overall utility here i'm estimating as a billion people uh on the on the assumption that there are a billion people in the world uh willing to transact in this manner of course as you can see the um the actual number doesn't matter the the the the important thing is that it's bigger so much bigger than society three leading to my overall evaluation to maximize utility conventional financial intermediaries should develop resources related to technological trust um thank you very much for your attention i look forward to your comments and criticisms thank you toby um should i should i stop sharing yeah why don't you stop sharing we'll go into the um we'll go into the q a so um can i encourage people to put their questions into the q a box um while they do so i have a i have quite a lot of questions so let me ask one of them and then i'll need to have a go and then we'll move on to audience questions so um one one question i have about your notion of trust um is that it's it seems like a reasonably thin understanding of trust so maybe um when i trust some your initial definition identify trust as placing myself at the at the risk of being damaged by someone whose intentions or behavior could harm me and i wonder if it even makes sense to talk about um intentions trust given that there are intentions in the blockchain and no intentions at least until they can pass the turing machine touring test no intentions any sort of artificial intelligence it's not clear that this is a meaningful um way to to compare things it feels almost like we are really doing is comparing the size of trading networks and um an economist will tell you that bigger trading networks generate better outcomes in which case i wonder if you're really saying anything that we didn't understand 50 years ago and a related question which genuinely is related i think is if your if your notion of utility is shillers that it's about creating opportunities i think the notion of the the idea of opportunity that you have in mind is one option to to establish gains from trade i guess so you know i have a car you have some money i'd like some money you'd like a car and if we can find a way to trust each other to make the exchange um we have an opportunity um but perhaps some of the opportunities i would like to develop are opportunities to engage in certain sorts of relationships so i'd like to develop a close relationship with someone who really understands me who gets inside my skin with whom i can partner and maybe the sorts of technological trust you're talking about actually prevent me from doing that in a world that's very atomized where i can do everything through the blockchain maybe i can't become as much of the sort of person i'd like to be or than i ought to be as i otherwise could do so i also wonder relatedly whether the word opportunity here is also being used in a rather thin way so i'm sorry to open with a challenging question but i'm interested to hear your thoughts you must have heard this one before great uh great points and very very challenging um and as regards the that's also i'll just i'll try but uh the the they're so challenging i don't think i'll completely satisfy you um but as regards the first question the thin the thin notion of trust um i completely agree and i think that that is um it's just it's a characteristic of this particular kind of of project uh that does want to bring in these these three forms of trust that are somewhat unlike one another um the um and other work i've set forth uh that blockchain actually is the trusted the technological trust in blockchain can't be exclusively like just is the technology going to work because the technology of course is not independent of human beings it depends on that peer-to-peer community um in particular from from my point of view the peer-to-peer community has to be incentivized to continue uh doing the work of of executing and authenticating those um those transactions and so typically the community is incentivized by being paid in the cryptocurrency that is associated with a particular blockchain um uh uh with a particular blockchain um and the but the the the characteristics of the bitcoin the trust of the cryptocurrency and the um uh the trustworthiness of the cryptocurrency i think are really key things that can interfere that can cause um financial losses to result to the to the to the users um so i've chosen a somewhat thin notion of trust so as to bring in the the users of uh to to bring in bitcoin as a possible uh trustee an object of trust but i don't think it's completely thin in other words i don't think it's um i don't i don't think that it's it's i don't think it's completely technical that the um that the blockchain will uh uh that uh that the blockchain will uphold its end of the bargain and execute and authenticate this those transactions accurately um but i do i do take that concern about the the notion of trust um regarding the um the the the the idea about the the size of the the trading network so it's i guess i mean it i think so i think that i mean so i have received that criticism uh previously kind of in the sense that isn't your isn't your conclusion kind of obvious like don't we like don't we kind of like know this isn't this clear that the the blockchain network is going to be the biggest because it's the it's the most global and i think it is and i think it there is something that's that's obvious about it i actually think that's a virtue of the of the evaluation if as if the other steps are accepted like if it's accepted as an interpretation of utilitarianism if it's accepted as an ethical evaluation um i think that the the uh the the the end conclusion that it it's not just that um that uh that that the the businesses should invest in um uh uh in in blockchain technologies because it increases the size of the pie produces more profit but because it's the it's the more ethical thing to do i think is a new contribution um and then finally the idea of the what i would consider the the downstream effects of uh technological trust though the way in which um uh technological trust could that's the voices yeah atomizes it could like take away some of the benefits associated with the other forms of trust if if blockchain or if technological trust becomes like overwhelmingly the the form of trust that is the basis of society um i think that is a is a huge problem i've been trying to develop a view on that um and i'm still working on that so i just uh so thank you for highlighting that um i think that is a that is a big problem for technological trust and i'm not sure what the answer is great thank you peter well thanks so much that was fascinating and uh like al and i have many questions but uh our attendees are already putting a lot of questions of their own on the q a box so i'll just ask one um i i was wondering about the conclusions that you derived from your analysis so you you seem to be suggesting suggesting actually you know the the most ethical thing to do is to invest in this type of technology and so to invest in this form of trust but i wonder if um with such narrow parameters for your analysis um if it's not too risky to suggest such a blunt conclusion because i mean in the the models that you presented for these different types of societies it seems very straightforward i mean i agree with everything you said within those parameters but in real life blockchain for example has a tremendous environmental impact and there are a number of considerations that might come into play when you're thinking about the decision or the morality of a decision to invest more in this type of technology so so what are your thoughts on that oh so that is a that is a great uh great criticism a great challenge i actually have never received that challenge before it's really good um [Music] i i i guess i mean the way in which i would want to respond to that i mean i do i do uh i mean as i mentioned to to uh to alan i mean i think that the the conclusion and with him that that is the conclusion a novel conclusion um but also is the conclusion like justified in being uh so blunt as as you say depends on the uh the the earlier steps in particular like using using schiller's idea of the um the opportunities created by engaging in financial transactions or the role of engaging in financial transactions in leading to a good life is that is that really a is that a fair conceptualization of utility uh on the lines of um uh pleasures or pleasures that have been used for years or individual preferences have been which has been used more recently um i guess i mean my sense is that my intuition is that it is that the the opportunities to realize um to realize individual ambitions by gaining access to financing by gaining access to credit by by gaining the uh the material ability to pursue those ends whether or not they're successful um that's that seems to me that it that it is of like that level of importance like of the level of satisfying individual preferences or um producing producing pleasure um but i'm not i'm not entirely sure if i so i was supposed to say um if i if i can't uh prove that that the uh that in individual opportunities to gain in to engage in financial transactions are that important then i would have to draw back the conclusion and then and make it more modest um [Music] if i were able to to prove that point which would be quite a quite quite a point to prove um i think that the at least by my lights the conclusion would be justified in a blunt form okay thank you um i think we should move on to the audience questions alan we have a lot okay you have a lot of questions i'm going to start with one from judith fedor who um asks whether she asked she she has three sub questions i think there are two main points in her question and it's quite long so i'm going to pray see it a little bit but her basic question is why we should readily assume that technology enjoys trust um because most of us have no idea how the blockchain works and i guess that means um i know slightly but only fractionally more than you said in your talk and i think i'm reasonably clued up so most people have no idea how it works and they kind of trust it because they're told they should trust it so um there's a question here as you know to what extent actually this type of trust is is feasible and is it really separate from other forms of trust so i in order to trust the blockchain i have to trust the person who tells me that the blockchain works and i have to understand what they're saying and the second point she makes is whether whether it deserves our trust in some sense because um she makes the point that there is a rich literature on the social construction of algorithms and the fact that algorithms and technology can carry forward biases so in ai that's well known you know screening cvs that sort of thing but presumably um blockchain refi certain sorts of power relationships and certain sorts of um you know legitimacies and maybe that's something that you know if we trust the blockchain maybe we're making implicit judgments that we shouldn't make or that may go against schiller's notion that these things increase opportunity i hope i'm not then you know that means there's going to be a spectrum of trust and it varies by culture so i think i've effectively summarized if i have a dude if i'm sorry but anyway that's i think these are interesting questions what are you what are your thoughts toby that's that's fantastic um so i think that the the um the first question is is like really important to to me in particular criticize other uh financial instruments for being impenetrable and therefore like being unethical just in virtue of being impenetrable and i think that there is something about blockchain that also is subject to that charge of impenetrability particular these these hashing algorithms like how exactly do they make it immutable like can i understand it if i don't have a phd in computer science um and the answer is no you really do need uh technical expertise to understand what makes the algorithm so immutable but that's not all you need and the so as lay people we have it we have a strategy too namely we can watch blockchain as it is uh uh uh traversing the world and be becoming uh used by more and more people uh hopefully at least most of those people do have an understanding of how blockchain really works and we can see is blockchain effective is it maintaining the security of these people um and so what we've seen so far is that blockchain blockchain is has not been hacked um and so i think that that's that's uh really useful useful evidence for us lay people who don't understand the technical aspects that make uh blockchain secure but we see well but it hasn't been hacked we know that there are i think there are trillions of dollars in associated um with with various with various blockchains um uh the the their they're ready sources of money that that people would want to hack but they haven't been able to uh to be hacked and so i think that uh as so i think that no we don't need uh the technical expertise to be able to trust blockchain rather we just need common sense to understand um what's going on in the ways in which people have uh encountered difficulties with blockchain in particular for getting their um uh their their ids um and losing hundreds of millions of dollars as regards the second question that's really interesting so i'm i'm i'm very very concerned about issues of bias in algorithms but i will say i haven't i haven't seen uh at least scholarly writing about bias in the blockchain um perhaps because the um the the nature of the blockchain is is different from a hiring algorithm it's not conferring a like a unique benefit for a prestigious uh position but it's just it's it's a it's conferring uh a an ability to to engage in a financial transaction so pretty pretty small kind of benefit um so less at stake um so the ways in which uh so i think that so i guess the first thing i want to say in response to this question is a great point and this is something that really should be uh should be researched by empiricists um to understand how like what kinds of how does the blockchain um uh incorporate various biases in particular like access to computers um access to uh so with with bitcoin so bitcoin is a big user of energy and so people who have access to less expensive energy people in iceland for example which i didn't know people in xinjiang have access to less expensive technology although there's obvious less expensive electricity for a problematic reason but so those people would have uh increased ability to um to to uh to to to mine the cryptocurrency or to uh to to to be the the parties that will add blocks to the blockchain but it doesn't it doesn't challenge their ability to to use blockchain to make transactions um so also in response to that question i think it's a great point i'm not personally aware of biases in blockchain or work having been done on this topic and i think it should be done so maurice taco is asking three i think very interesting questions um the first is about whether the the types of trust that you've been uh discussing are based on individual preferences or on society-wide norms um the second is if you've considered the if if you've considered the implications or the consequences of combining more you know two or three types of trust um and finally if interpersonal trust um could be based on loose reciprocity like gift exchange um if that type of interpersonal trust could be would be excluded from a utilitarian approach great um so uh so the the first the first question um something that i something that i have not uh thought about much actually um if the if the conception of trust uh primarily involves individual preferences or society-wide norms um i suppose i mean i think it's it's more involving individual preferences in the sense that the um the the form of trust is what is uh enabling people to achieve particularly particular forms of cooperation um rather than relying on um society-wide norms um but i'm not exactly sure i suppose i think that it may differ based on the form of trust itself whereas interpersonal trust i think would be more dependent on society-wide norms to the extent that um the people are conditioned by uh by behavioral norms about what makes a person trustworthy like how do i know that someone is trustworthy or not um can i do it based on what they say can i do it based on on what they do etc um i think that uh institutional trust may be maybe more dependent on individual preferences i'm not really i'm not exactly sure though i know that's not a satisfying answer so thank you for the question um in as regards the second question i think that that's a that's a really great suggestion um uh combining the combining the different forms of trust i think would be a good way uh if i had thought of it to respond to both alan and rita so uh so uh combining the forms of trust could make the um uh could could mitigate problems of relying over much on technological trust if i could have a hybrid society that had interpersonal trust institutional trust and technological trust um and it might also and it would also uh blunt it would or it would it would blunt the bluntness of the conclusion it would it would make the maybe maybe make the conclusion a little bit more palatable that the the best society overall is not you know just a technological society but rather more about hybrid society that does um offer a place for um the the important functions played by these conventional forms of trust um and then finally uh so i so i will uh so so thank you for that uh for that that comment i think that's that's very useful and i think that that would um improve the improve the analysis uh to to allow for the the the difference the for for hybrid societies um and finally gift giving and interpersonal trust um i think that i think that is interesting i mean i think that that could be perhaps addressed by a like a more precise definition of um uh the antecedents of of individual trust so can individual trust be be um be purchased in a way i mean so i mentioned there's a vast literature about trust and i was not availing myself of this wonderful literature but there are um definitely uh resources that can be useful there concerning um like notions of calculative trust and is this a form of trust um as opposed to more holistic or organic forms of trust um so it's very interesting and helpful point i may not be able to avoid the uh the literature on trust as as much as i would like to to be honest thanks toby allen okay we have probably time for one more question um although we'll make sure that you get everything that's in the chat um there are a bunch of questions here from andy bushman and um including a reference that i wasn't aware of about um biases in the blockchain so i'll make sure oh great um he does he asks one of his other questions is kind of interesting um what if if i ask you to do something um and if you don't do it i'll be harmed and i tell you that if you don't do it i will um hit you or throw a throw throw something at you or fire a gun at you or use a weapon um is what and then you do it because you fear me um and i am exposed because if you didn't do it it would hurt is that trust is this a fourth sort of trust based on violence because i'm exposed you have free will obviously it's going to hurt if you don't do it that's the show what i so would i say i wonder what what exactly is being trusted he wants to know if there's a full form of trust based on the potential use of violence so um i i'm trusting you when i expose myself to possible harm because i don't do something but if you don't do it i will you know hit you with a with a bat or something so you're not doing it we'll meet with violent sanctions because i have a weapon pointed at you um is that trust or is it just coercion um so that was so that's that's interesting that would be a kind of using the uh the sanctions argument from institutional trust uh in the interpersonal trust i take it um so the so i can i can um uh i can i can uh uh the the vulnerability is compensated for either because i trust that um that that the other party won't define because because i uh you know i know him to be a reputable person or because i know that i have a bat and that i will beat him into uh uh uh record the like the the um uh uh i will i will i will and i will ensure i will make him um fulfill his his obligation um well i think that i think i mean i would say no that's certainly that's certainly not a form of trust and i think that that uh i don't know if it gives the lie to the idea that the sanctions form of trust associated with institutional trust could be a form of trust um that's the point i always kind of think he's getting at yeah yeah um is that is that a form of trust i mean that's it does it makes it it um i think i think what it what it uh one of the really interesting thing that that it's doing is highlighting the um so the difference in institutional trust between do i do i have trust for citigroup itself or do i just trust the government to come in and coerce uh citigroup to uh to to fulfill its obligations or its stated obligations to me um i think it's i think it relates to a concern about blockchain namely is the is the trust with blockchain and other technologies is it just this technical kind of trust that the the the uh the the transaction is gonna get done it will be executed it will be authenticated or is there something deeper involved is there a kind of uh interpersonal component um uh and i think that i mean in in response to that concern i want to say there there should be an interpersonal component to trust um specifically that like when when wells fargo is is trusted it's not just the institution but it's the people behind the institution it's there i mean to take a more philosophical view of trust in a a thicker view of trust it's their their good will that is uh that is that is trusted um uh i think that that i think that that kind of thicker form of trust may have to play a role both in institutional trust and the technological form of trust okay and there's an interesting remark in the chat from someone with an acronym as a name pointing out that hla hearts account of the authority of law um might speak to this debate too but we're going on five o'clock which means um uh it's time to it's time to stop because we're gonna stop the time thank you so much toby for a really fascinating and excellent conversation um there's an awful lot of stuff in the q a that we didn't get to and we'll make sure you receive a copy of all of it um thank you thank you thank you many of the audience will be here for our next uh retro seminar which takes place on the 9th of march um harry van buren will be talking about structural injustice approach to business ethics but for now we're done thank you again toby
2022-03-24