Creating a peer-to-peer transaction-based model for social and environmental damages
The assumption that the cause and the source of negative external impact that can be accounted as indirect, consequential damage is a value exchange activity most commonly known as transaction, and the parties to the deal are liable implies parity of the parties, of the seller and of the buyer, involved in the transaction. The transaction is assumed to be simply a trade of value at the disposal of one party for the value at the disposal of the other. And the value one gets is subjectively greater than the value he gives away. But when it comes to consequential environmental or social damage, it is generally assumed by common institutions that the manufacturer must bear the liability and costs. “Polluter pays”.
In practice if the manufacturer, who is usually the seller, accepts the costs, those are included into the price for the buyer to cover. In a “perfect market” that covers all of the costs in the transaction, price competition would resolve the issue of environmental and social costs without the need for interventions.
The seller usually does not accept the costs, and they remain as outstanding liability and damage for one or potentially both parties to the transaction. This is often the case and “informed consent” of the buyer to take potential liability would be justified. Informed consent of the buyer requires transparency of the product manufacturing processes and of the supply, of production and consumption chain screening all direct and consequential costs and damages, including environmental and social costs (environmental and social “footprint”), involved.
Consequential damages are both production and consumption-based with consumption-based damages often more evident and harmful. For example, consumption-based damages of fossil fuels or of weed-killers might well be more hazardous to health and environment than corresponding production-based damages.
To be fair, “environmental and social footprint”, consequential damages related to fiat currency that the buyer in most cases uses, is just as suspicious as “environmental and social footprint” of the goods and services in the transaction, unless cryptocurrencies with clear and trackable emission algorithm and protocol are used.
Once the government takes over to settle the issue with permits, licenses, standards, rulings, other institutions, usually backing the manufacturer, i.e. the seller, it becomes potential addressee for claims for damages. Considering the reciprocity of damages in question meaning that restrictive institutions prescribed to prevent consequential social and environmental damages are a burden that cause reciprocal damage, the government is vulnerable for grievances from all of the agents involved.
We might put it in a way that is not the government per se but institutions that settle the issue and the government merely enforces execution, that institutions for such “complicated issues” are formed by democratic process on the basis of experience, common law and target for the balance of interests of the parties.
However, in reality once we stumble upon “complicated social issues” it usually means that the establishment tells us “you are too dumb to comprehend, let the professional servants of the people do their job”. We might want to use “the establishment” instead of “the government” to define dominating group of economic agents that imposes a System of written and unwritten, verbal and nonverbal institutions to justify extortion of values from other economic agents.
Among others, the group includes corporations, NGOs, mass-media working at the fundamental level of public information. Description of the issue is followed by a message: “Don’t worry, we got it, we already have a plan and new institutions are designed”. An example from a painfully familiar theme:
In 2016 IBM announced the launch of blockchain-based carbon market platform in China.[i] To be more accurate it was Hyperledger-based, and it has not actually been launched by now, even in 2019.
In 2018 IBM launched yet another carbon trading mechanism with same effect.[ii]
Truly: “IBM Blockchain brings trust, innovation and efficiency to carbon asset development…”.[iii]
It’s probably not exactly a scam though definitely cock-a-doodle-doo not to salute the sunrise but to claim the territory. As Russian idiom says: “Rooster crowed, who cares for the sunrise”.
The issue is by far not as complicated as Poincaré conjecture theorem. There is no impasse for peer-to-peer settlement that includes all of the agents involved on the basis of universal clear and case-adjustable institutions.
Production and consumption data can be tracked “on-chain” with trusted hard- and software, processed and expressed in terms of quantifiable and verifiable indicators. The rest of the scheme has been discussed in previous papers.[iv]
To give an example of traditional settlement:
Dewayne Johnson, a 46-year-old former groundskeeper, won a huge victory in the landmark case on Friday, with the jury determining that Monsanto’s Roundup weedkiller caused his cancer and that the corporation failed to warn him of the health hazards from exposure. The jury further found that Monsanto “acted with malice or oppression” with a jury ruling that the company was liable for a terminally ill man’s cancer, awarding him $289m in damages.[v] The Claimant is the buyer to the transaction, the jury represents institutions, medical treatment is an instrument of in-kind mitigation of the damage. And let’s take into consideration enormous transaction costs for the claimant in terms of expenses, time, efforts and nervous tension to reach the award.
This paper is in no way an appeal to the establishment but rather the thoughts that accompany practical bottom-up creation of the semantic ecosystem, where the peer-to-peer transaction-based model for social and environmental damages settlement is possible.
[i] https://www.coindesk.com/ibm-china-blockchain-climate
[ii] https://www.cnbc.com/2018/05/15/ibm-veridium-team-up-on-blockchain-enabled-carbon-credit-trading.html
[iii] https://www.ibm.com/case-studies/energy-blockchain-labs-inc
[iv] https://medium.com/dao-ipci/quantization-of-the-environmental-impact-resource-transaction-based-model-of-settlement-of-a3477f40925c, https://medium.com/@antongalenovich/peer-to-peer-transaction-based-approach-for-negative-external-impact-bf09055e80c8, https://blog.goodaudience.com/third-party-fund-in-the-peer-to-peer-transaction-based-model-57106dc859cd, https://medium.com/dao-ipci/peer-to-peer-transactions-are-possible-and-make-sense-c4e1851b4893
[v] https://www.theguardian.com/business/2018/aug/10/monsanto-trial-cancer-dewayne-johnson-ruling
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