Decentralizing Governance

Daniel Larimer
Jun 28 · 10 min read

History is littered with failed attempts at governance, the primary aim of which is to create a level playing field in which mankind can prosper. The primary threat of all governance systems is tyranny of the majority by a minority or any system that creates an unleveled playing field. A level playing field is like a board carefully balanced on a point, once it starts to lean it gains momentum with a positive feedback loop which accelerates the rate at which the board is tilted until it is completely falls over.

The key to keeping a playing field level is to have multiple points of support and ensuring no one side is stronger than another. It requires the creation of negative feedback loops which restore balance over time.

The anarchists among us long for a world without government, a world where there is no one making laws that everyone else has to follow. This world can only exist when all people are equally able to defend their interests. The voluntarists recognize that government by consent is useful and primarily aim to develop non-violent (and therefore voluntary) solutions to government. This world, when fully realized, utilizes sanctions to cut people off from society by coordinated shunning. Anyone who doesn’t respect the sanctions becomes subject to them.

The challenge such a voluntary society faces is that there are always people willing to use violence and sanctions can force those sanctioned to resort to violence as a means of survival. In other words, sanctions (or excommunication), are a great way to police one community, but only work to the benefit of society if there are many communities (countries) living at peace and ready to accept those sanctioned by other countries. Imagine if the United States decided to end its prison problem by deporting criminals? What would happen if no other country wanted to take them?

There is tremendous value to joining a community of people, but joining any community requires adhering to that communities rules. A community without rules defaults to the law of the jungle and loses its very identity as a community. If we are to establish a community and create rules for such a community then we enter the realm of joint decision making and a need for consensus. This is the very heart of the governance challenge.

There are entire classes of social coordination problems where it is to the benefit of the individual to act in ways that harm the community. For example, we all benefit by having a market with many choices for food; however, if one party is able to sell food at prices below all other parties ability to make a profit, then that one party will end up with natural monopoly.

Once one party has a monopoly on producing food and everyone else in society loses the ability, that party has unprecedented bargaining power in the market. If you don’t do as they say then you get cut off from food.

Naturally, it is in everyone’s interest to ensure there are many competing food providers regardless of the difference in price. The number of providers should be large enough that they cannot effectively collude and all members of society can find someone from whom to buy food. If each individual always chooses the cheapest provider, then all other providers will go out of business and everyone becomes enslaved. Unless enough people cooperate to pay higher prices, other providers will go out of business. It is this situation where community rules for governance that enforce decentralization are required. By its very nature, these rules will have to interfere with the voluntary trade that causes everyone to defect out of personal self-interest. That said, it is in everyone’s interest to voluntarily agree to these rules if they have reasonable assurance that they can be enforced.

We have now come to a situation where we have proven that communities need rules, and these rules necessarily sacrifice some individual freedom to prevent an outcome of losing all individual freedom. This leaves us with the challenge of deciding what these rules are and preventing this system from being captured for private profit. Like the provision of food, society needs assurances that governance is decentralized and not captured by a minority.

I have long held that to escape the law of the jungle, where might makes right, mankind must establish a peace treaty. This peace treaty defines things such as property rights and dispute resolution policies. Ultimately, it is the peace treaty that serves as the foundation of all governments.

Part of every peace treaty is a means for the community as a whole to make joint decisions; however, if a minority can co-opt the decision making process they can control the majority which feels bound to recognize the existing peace treaty rather than risk returning the the law of the jungle and civil war. For this reason it is critical that whatever treaty we adopt, it cannot be permanently captured by a few and that there are constant decentralizing pressures on the process.

Democracy has Failed

Democratic systems where the people elect representatives to vote for laws was an attempt to keep control decentralized. Presumably the masses would never elect people who would continuously act against their interests. You could view democracy as proof-of-popularity.

The theory is that anyone could run for office, present good ideas, and a smart and discerning public would elect them. With an assumption that the majority of people are honest, it is reasonable to assume that a committee, congress, or other body of individuals would carry out the will of the people.

Studies have shown that regardless of how popular or unpopular a particular policy is, the odds of it being implemented as law are the same. In other words, there is no correlation between the will of the people and peace treaty (aka government) they end up being forced to accept or else default to law of the jungle (aka civil war).

Selection Bias for Politicians

The problem with democracy lies in the Pareto Principle which observes that in many areas of life 80% of the results are achieved by 20% of the effort. In other words, 20 people have more influence than the other 80 combined. It is a recursive principle which states that of those 20, 4 have more influence than the other 16 combined, and 1 person has more influence than the other top 3 combined.

This distribution applies to everything from population of cities, to wealth, to the popularity of celebrities. It also applies to the distribution of natural talent in any industry. Not everyone can be a star athlete, the best chess player, the best looking, the most popular. Only a very few are able to reach the pinnacle of their area of expertise. This also applies to politicians.

The skills required for advancing as a politician, and the skills required to make good governance decisions are very different. In many cases, the best governance decisions are polar opposite of the best political decisions.

As a society, we have established a method for ranking our leaders that rewards those who are cunning, deceitful, and tell us what we want to hear rather than the truth. A system that handicaps the honest and rewards the dishonest. A system that puts people in power who are best able to manipulate the masses. Once in power, the key to maintaining power is to weaken the masses further through miseducation, divide and conquer, and confusion.

The theory of democracy and the reality of the skills required to win that game are completely out of alignment and the only solution is to devise a new selection criteria. This means devising a new competition where the best, brightest, and most honest people rise to the top. Of course, the design of any system must account for the fact that there are people who will break the rules to win. This occurs in election rigging, assination, etc.

Imagine how people would react if society was ruled only by those who are the best fighters among us? Television has given us many examples of communities where the king is decided by a battle to the death. Under such a system, the weak and frail have no representation and the culture will favor those who are strong, cunning, and most fit and it will not favor those with empathy, caring, etc.

This method of governance has fallen out of favor, but in its place we have erected a new system that favors a different kind of warrier with different weapons. We are still a society ruled by a minority of people adept at a different kind of combat. Instead of strength, weapons, and battlefield strategy we have good looks, propaganda, and political strategy. We no longer submit to people that dominate others physically, we submit to people that dominate others mentally and emotionally via lies and deceit.

Designing a new Governance System

I really do believe that the majority of people are honest with good intentions. In a random sampling of the population you would find the dishonest people would lose and that the laws that are passed would tend to represent what is truly popular. This is direct democracy by random sampling rather than full sampling. Any statistician will tell you that the results will be the same assuming passing a law requires a statistically significant difference in vote and the sampling is truly random.

The problem with Random Sampling is that the majority of people don’t actually want to govern others nor do they have the time/desire to participate. This means that the result would still be biased toward the power-hungry and away from the leave-me-alone types. Over time this bias could allow the system to be corrupted to further favor the power-hungry via manipulation of the “random sampling” which is difficult to audit.

Random sampling puts the “masses” in charge, but the reality is that the “masses” are not truly in charge of themselves. Their decision making is conquered by the minority skilled in the art of propaganda. Tragically, the majority will vote in ways that are against their own best interest out of ignorance or disinformation. So while a direct democracy by random sampling would more closely follow the “will of the people”, the “will of the people” might not actually be theirs.

What if there was another way to take a “random sample” from society that did a better job of filtering below-average quality personalities and didn’t have the weakness of gradual corruption of the randomness?

Democracy of the Best of the Best

What if we could select for the best and brightest among us without biasing toward those adept at manipulating others? I believe the solution is to have a large number of competitive games that require a vast range of skills and/or genetic predisposition. Today we have one competitive game, winning votes by hook or by crook. But what if we had other games with objective winners such as the Olympics, Chess, Typing Speed, Poker, Star Craft, race car driving, memorization, spelling bee, etc. What if some of the metrics were the “largest land holder”, the “largest single gold holder”, etc. We could even host a provably honest lottery to select some people at random.

The key component of this is that there should be 1000 different competitions requiring a diverse set of skills that no single group of the population can possess. If you are not a good politician, you can still get into government assuming you can dedicate the time and energy to become the best of the best in any one of 1000 different fields.

Once the best of the 1000 different fields are selected, governance would require 2/3 approval.

To prevent life-terms and the establishment of an elite club, each individual can only serve for a limited term. So you don’t have to be the fastest man alive if the fastest man has already served his term or doesn’t want to participate. This opens up governance to the top 10 or more people in every competitive category.

The added benefit of this approach over democratic approaches is that those who get into government are not beholden to campaign donors nor vulnerable to media smear campaigns. Those in charge would have to work hard to become the best at what they do and will naturally be biased toward policies that favor those who work hard and against policies that interfere with success. They will understand sacrificing today for the future. They will be free to act on their conscience and intelligence rather than pandering to the masses on which the very job of politicians depend.

Most importantly, these people will come from all walks of life and races and would represent a wide cross section of society. It would break the link between wealth, fame, and political connections which create barriers to entry to government and enable capture by a ruling class.

The key to decentralization of governance is keeping it open to new people and avoiding creating barriers to entry that are biased toward any single minority.

Governance on Blockchains

When it comes to governing blockchains the same rules need to apply. Any single metric, whether proof of stake or proof of work will become dominated by an entrenched few who are most adept. This is why blockchains should be governed by many different proof-of-work, proof-of-burn, proof-of-stake, proof-of-person, proof-of-location, etc. The more pareto distributions and the more independent those distributions are the more decentralized the network will become.

Blockchains based upon any single proof-of-x metric will become centralized even if those in power spread propaganda about how decentralized the system is. It is important that we maintain the ability to discern the illusion of decentralization from real decentralization.

It is only through true decentralization of governance that a community can make and enforce the joint decisions necessary to save mankind from societies prisoners dilemma. It is only through open-entry and objective competition that we can drive society forward without it becoming corrupted by incumbent insiders.

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