Why Tokens Signal the End of an Era
Commons (def.): Something belonging to the whole of a community.
What is a blockchain token for? Why and when is it needed? In the token market, billions now ride on the answer to those questions. Beyond the money involved, though, there is a great deal more at stake. Blockchain tokens may be heralding the ending of an era.
That era is often referred to as “late stage capitalism,”. Annie Lowry, an economics writer for The Atlantic, recently dedicated a piece to the term. She notes that malcontents have tossed it around since Marx, in other words for a at least a hundred years. If capitalism is ending, it is taking its sweet time.
Towards the article’s end, Lowry has a helpful flash of insight: we should define “late stage” not by how we feel about capitalism, but by how visible its replacement is. “Late” implies the sub is on the sidelines, dressed in a track suit, high-stepping around little orange cones. The athlete warming up, we argue, is the blockchain token. The game will change when they cross onto the field: from late capitalism, to early commonism.
Commonism, as in when society organizes scarce resources by assigning them, “to the whole of a community”.
If that claim sets people’s hype warning levels to “red”, it’s understandable. Tokens won’t cure world hunger. What they can do is change the way we coordinate human activity. It will be decades before we know their full impact, just as “late capitalism” has spanned decades.
Developments that big don’t come out of the blue, and tokens are no exception. Society has been evolving towards this. Two related, emerging world views have heralded it: one is the science of network behavior (aka “complex systems”); the other is post-modernism. Both of those have something to say about the role that networks, and especially the data they throw off, play in our lives. They represent alternatives to the dominant views that came before, and they impact fields as diverse as finance, economics, cognition, politics, evolution, medicine, design thinking…
Basically, the Enlightenment — the basis for capitalism — held that individuals, and their rational cognition, are at the root of society. They should be free to own private property and pursue their own happiness. How we organize ourselves today revolves around that view. Network theory and post-modernism introduce a different perspective. At its center is not the individual but their interaction in and with a network.
In short, it’s not, “I think, therefore I am”; it’s “we connect, therefore we are”. Even our own individual will — a foundational concept for the Enlightenment — is in question. Rather, what we think, the things we infer and intuit, are a result of network interaction, not a stand-alone intellect.
That’s all theoretical, so let’s skip to the practical. The “era of personal responsibility” stems from that free will premise. If we get Type 2 diabetes from Big Gulps, well, that is just us making bad choices.
The issue, of course, is that our choices are heavily determined by our networks: our friends’ and colleagues’ lifestyles, advertising, media. It is tough to weather this barrage of influence and emerge unscathed. Diabetes, in short, is a socially transmitted disease.
So, despite decades of appeals for self-discipline, we are in the middle of a raging diabetes epidemic. Estimates are that 600m people, globally, will have diabetes by 2040. That is a failure of free will-driven thinking on the scale of humanity. Late capitalism at work.
The network view replaces the Enlightenment one. If we want to tackle diabetes, we should take a community approach: a commonist one that allows groups of friends or employees or disease sufferers to band together on a decentralized basis and jointly pursue their health goals. What they need is shared personal health data, governance tools and the right incentives, all of which a blockchain platform and token can provide. If this sounds far-fetched, consider that it is also inherently human to inquire about each other’s health and well-being (“how are you?”) and support those who are sick. The platform just shifts healthcare closer to its original version, while adding a big dose of modern technology.
That health network should sound familiar: it is not too different from Facebook. Yet that company is emblematic of late capitalism, not early commonism. Facebook’s approach is to surveil our activities, piece them together with devices and locations, derive a complete picture of our network interaction, and, crucially, make out of that their own private property. “The product is you”, as they say (except, in reality, their product is “us”).
Facebook has fenced the data commons and its cattle are getting fat grazing on our data (to complete the analogy, the cattle — algorithms — are then sold off to advertisers). This is late capitalism not because this type of behavior towards the commons is anything new. It is so because, in this end-stage era, capitalism is mostly about using data to organize our activities. The Internet exists to enable corporations to do so. Sure, there are more decentralized use cases, truly cooperative ones. From a usage perspective, though, it is not even close. Traffic on the Internet produces profit for large companies who then use that data to coordinate the behavior of billions of people. This is not a part of our economy. This is our economy.
The true meaning of tokens is that they directly take on late capitalism at the key leverage point of network data. Tokens allow us to have decentralized data commons, ones that no one owns, and no central authority runs. It’s not anarchism because there are rules, ones that the infrastructure — i.e. the token — imposes on us when we “join” the network by buying it. It’s not capitalism because tokens give network participants use rights, not equity rights. It’s not communism because that led to control by a powerful central authority.
Instead, it is early commonism.
The token may seem like a minor component of commonism. To see why it’s not, it helps to touch on the work of an anthropologist with one of the widest views of human progress: Sapiens author Yuval Noah Harari. Harrari argues our species’ true cognitive innovation was our “imagined realities”. These are shared abstractions that enable large groups to engage in flexible cooperation. They include biggies like culture (i.e. religion), contracts and money. In that same rarified group, Harari also places the limited liability company.
The token follows logically from the absence of the limited liability company. Take Facebook as an example. Imagine that the company itself disappeared overnight, leaving its platform intact: the technology, infrastructure the two billion users would still be there. Who would own it then? No one. It is just that they would need, now, a way to govern the platform and its use in the absence of a central authority. That is what the token is for. So, early commonism replacing late capitalism is essentially the token replacing the limited liability company. Except that the token also replaces money, and the smart contracts it activates replace contracts, and, to a large extent, the token also eliminates the need for trust that stems from a shared culture. Check, check, check on Harari’s big three imagined realities.
Lastly, the token, and therefore early commonism, also has a “killer adaptation”. From an evolutionary standpoint, this is the neat little innovation that helps it survive and thrive in a tough environment. That adaptation is its “interoperability” with late capitalism. Commonism doesn’t have to “overthrow” late capitalism, it just has to generate tokens that create value. The more value created, the more capitalism will have an incentive to move to the commonist mode of organization. This process is just beginning, and the token market is its epicenter.
To recap, we know we are in late capitalism because a whole system for organizing network behavior is waiting on the sidelines; because that system is the outgrowth of a new emerging worldview about networks that spans from the hard sciences to sociology; and because the new system directly challenges the very redoubt that late capitalism is most reliant on (exploiting network data). The token could end up enabling the coordination of billions of humans in a way that is different, and most would argue better, than its predecessor. It doesn’t have to overthrow capitalism because it offers an “interoperability” migration path away from it. For all of these reasons, it ranks up there as a contender for Harari’s “most influential imagined reality” list.
Late capitalism still looms large on our screens, and pre-commonism is but a blip, but a growing one that is only partly fueled by the rocketing price of crypto-currencies and sizes of token offerings. This is not about speculation, but about a changing worldview of how networks behave, and of the role they can play in our lives.