When it comes to Capitalism, most people I’ve talked to have this view that Capitalism is a poor economic system, but is still better than all the others.
And I partially agree with this statemen. This does not imply that we cannot create a better system. After all, the same thing could have been said by the peasants in the middle ages: “Yes the feudal system has its problems but it grants us protection from invaders and other systems have already collapsed.”
Can we come up with a better economic system than capitalism without recycling any old system?
The main reasons Capitalism is better than Socialism is because the socialist system was very centralised.
After all, a central planning authority will never be able to manage the complexity of the entire economic system. There may be hundreds of thousands of shops in one country it is very hard if not impossible for a central authority to know what each shop has in store, what to provide and where.
So, in this sense, the evolution of economic and social systems is a struggle towards decentralisation of control.
The more decentralised the society and economy is, the better it fares.
However, decentralisation should not imply the absence of law, anarchy or extreme libertarianism.
Building a decentralised society
On 3 January 2009, the Bitcoin network came into existence with Satoshi Nakamoto mining the genesis block of bitcoin (block number 0), creating the world’s first cryptocurrency but also the world’s first immutable decentralised ledger. A ledger where we can write who transacts how much with who and when, without anyone being able to alter it in any way.
The ledger is public and anyone can see, for example, the user with the address 17daiNtwSRTd4NTCZj9NLzyC6saowv76ZC has sent 0.01951215 Bitcoin to 3NQZvyRRvhqTSEDKUv2bxPvjg8q43AmHp.
It is public, transparent and at the same time provides anonymity.
The next step was made in 2015, when the Ethereum ledger was created, a ledger that allows us to easily write currency transactions, information transactions, to create and store smart contracts.
Why is a distributed ledger important? Well, we now don’t need a single person or institution to check and guard information. Anyone can check it and no one can alter it.
What central authority can be replaced by smart contracts and a distributed ledger? it is up to our imagination and politicians’ willingness.
The limits of Capitalism
A) Governments and central banks:
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford
The present economic system is very skewed in favour of the already rich and it puts unnecessary hurdles for the people with low income.
The central planners of today financial systems, the central banks, are printing money (Quantitative easing) to pump the company’s shares at the expense of a population that is only seeing their money losing value.
The Japan central bank already owns more than 75% of the ETFs and is the biggest owner of stocks in the country.
Another example is that the rich people have a very favourable investment mechanism: Angel Investing.
Statistics say that 10% of the start-ups succeed, so if you invest in 10 business with high chances of scaling you have very good chances to get 1000x the investment.
Peter Thiel invested in Facebook when it was a small start-up and got 2000x the investment. If you invested $100 in Facebook then, you wold now have $200 000. But to have access to Angel Investment you need a lot of money. If you don’t, you are stuck with playing the lottery or other games with an almost impossible chance of winning.
Note that when a company goes public and you can buy shares, it has already consumed the 1000x growth that is reserved to the very rich, and you are left with a 5x growth, from $100 to $500.
But probably the biggest flaw is debt. Governments are heavily incentivised to take debt as it is very unlikely that they will be the ones paying it back.
Although the general view is that the US will never default on its debt as it can simply print more money and pay the debt. But this is just a technicality, as the people will see their money losing value and experience a sharp drop in their standards of living.
The biggest beneficiary of today rigged financial system are the very rich and the few people that manage it.
If you think about it, a corporation is a totalitarian and very tyrannical institution, with one or very few people deciding what all employees should do.
Because the investors that control the corporations are so heavily invested in it, they will only care about profit. If making profit will destroy the environment so be it.
Few corporations own and control the information and can influence our thoughts without us knowing. The first article we read online after we do a search is the truth.
The solution politicians propose is the government supervising them but letting 10 more people to have access to this system will not change anything.
Also, corporations no longer operate in a free market. If you have a start-up that makes money, a big corporation will copy you and will over compete with you with their finance, their monopoly on information and their user reach.
At a higher level the state and the corporations are very well connected, and the government in many cases legislate for big corporations.
At that level the society looks more like feudalism than capitalism.
Decentralised Capitalism or Decentralism
It is obvious that technology in our current capitalist model is a force of centralisation, and that in 20–30 years the world might be an Orwellian dystopian future.
To better understand how Decentralism will work we need to look at some examples of what people are working on right now:
- Nature 2.0:
A good example would be self-driving cars, as there are millions of taxi and truck drivers around the world.
A) In our current economic environment, a company like Uber will incorporate the self-driving car technology. This will cause 2 million drivers to become unemployed as it will increase the company’s profits 10-fold. And so, the inequality gap will increase even further.
The 2 million drivers will become a social problem that economists will find no one to blame but the drivers. After all, the AI revolution will create jobs for them and all they have to do is learn TensorFlow and how to build stuff like GAN (Generative adversarial networks).
Realistically speaking very few of them if any at all will learn this kind of stuff so they will all became a social problem.
B) We can take a decentralist approach to this problem and build an ownerless AI-DAO (Decentralized Autonomous Organization) of self-driving cars, basically cars that own themselves and pay almost all of their profit as taxes, minus repair costs and electricity/gas.
This model will allow for something like Basic income to be paid as the profit will not go to UBER shareholders but to the social security system:
“Artificial intelligence is the future, not only for Russia, but for all humankind. It comes with colossal opportunities, but also threats that are difficult to predict. Whoever becomes the leader in this sphere will become the ruler of the world.” — Vladimir Putin
There are mainly 3 types of AI, narrow AI, where we are today, AGI (artificial general intelligence) an AI with the same intelligence as ours, and SGI (Artificial Superintelligence)
In 2009, 21 AI experts participating in AGI-09 conference were surveyed and they believe AGI will occur around 2050, and plausibly sooner. But the road from AGI to SGI is much faster, SGI may happen in 10–20 years after AGI.
However, by the time we reach AGI there may not be a single thing we can do better than it, the pace of change will be too fast for us to keep up, and we will end up 100% dependent on AGI.
And by the time we reach SGI we may not be able to understand it.
When we speak, we exchange few bytes of information per second, SGI can make their own language, and transmit as much information per second as the connection speed between them. Imagine sending the Shogun in a fraction of a second.
We would be more like pets to such intelligence, and IT like a god for us, omnipresent thanks to our connected devices and “omnipotent” thanks to our deepening entanglement with technology.
With this in mind it is easy to understand why he who controls the AI, until the point they will not be able to, will rule the world.
If a company achieves the AGI, the state will step in to take control of it and by doing this will make Orwell’s 1984 book look like a vision of the future, not a just a novel.
But have no fear SingularityNET is here:
By using the blockchain in order to make sure that no single entity can control the AI, SingularityNET will make decentralised AI possible, allowing for a better distribution of the AI revolution rewards.
You will no longer need to live in Silicon Valley in order to create and monetize your AI.
The state will not have any single target to go after but millions of people, each owning a few algorithms. It will be the closest we can get to an AI by the people for the people.
Is a decentralised central bank with its own stable coin, DAI.
The main, if not the only real beneficiary of the monetary policies today are the people that control and administrate the system. For the rest of us it is just money now, borrowing in the future. What we gain now we will lose in the future.
MakerDAO allows anyone who wants to make money by keeping the DAI coin price fixed. In order to do this MakerDAO have set in place a complex system of rewards that allows people to trade and keep the coin stable. Many people do this, and the coin has now been stable for more than a year.
Give people access to the 1000x growth of business reserved for the very rich.
Because of the centralisation of finances, the free markets are not that free, especially at a global level. Good luck starting a company in Africa and competing with a copycat of your business from the United States.
Government will have reduced power over people as it will not control the printing press and they will consult people more often, as blockchain elections will be almost free and easy to set up, making lobbying harder, if not impossible to do.
These are only a few examples of how the blockchain and the decentralised economy can make the money more available to the people.
This type of system can scale up to the state level.
We can imagine in the future a state backed cryptocurrency where the state is mining the transactions and gets a fee for each block mined.
In this future a company will not be required to have any form of accounting if they do business with this currency, and tax evasion will be impossible. The society can be a DAO that votes how the mining fees is allocated: to education, to healthcare, etc.
The difference between this decentralised capitalist economic system and capitalism will be as big as the difference between capitalism and socialism.
How can we build this decentralised future?
A company is not a bad model, we just need a more complex economic ecosystem where companies live alongside DAOs.
The backbone of the internet, the AI and other very disruptive technologies, should be decentralised because the impact a company that control this technology has on the society is too big for a dictatorial organisation to make. On this decentralised backbone we can have many private companies operating.
Bitcoin will allow us to build a decentralised global financial system, and Ethereum will allow us to build a decentralised economic system.
Don’t let economist tell you what the future of the finance looks like, they are the postman of the 90s. Many of them have realised the potential of the crypto and are scaring people away just to lower the price and to buy cheap.
So, you need to learn how to build on public and permissionless blockchains, learn how to build DAOs, and when possible, extend your business into a DAO.
Get involved, spread the word, make sure that people learn what blockchain and crypto is about: decentralisation.
Investment in the crypto space is very needed. Only a tiny percentage of the entire world’s population is invested in crypto. The more people that are invested, the smaller the risk of a central authority moving against crypto.
No central authority will want to abandon their power that easily so we need to build working systems and scale them from bottom up, until there will be no doubt that the systems work.
You are not cool if you work for a big corporation, and the only difference you are making is giving fuel to a dictatorial organisation to capture the lifeline of the society.
It will not be easy and there will be a lot of failed systems built on top of blockchain, but we don’t have much of an alternative. We have to make this work.
The blockchain is now like the internet was in the 90s. It was impossible then to predict social media, YouTube, Amazon and all the applications the internet has today.
We are unable now to predict just how much the liberalisation of money and the removal of central control will improve our life in the future, but the trend is easily to see, money just like information will be available for anyone.
Just like the Magna Carta reduce the rights of the king so blockchain will reduce the power of the government and big corporations.
“It is easier to imagine an end to the world than an end to capitalism” Slavoj Žižek
But if it looks impossible to change the current system just remember that some time ago the king’s right to rule was granted by god and he had absolute power. Now, no more.
Change is a certainty!