Collaborative Economics: A Non-Violent Revolution Against Technocracy
This is the first in a series of articles introducing our collaborative economics design and describing how the Token Engineering community, in alliance with Commons Stack, used these designs to launch their commons economy. We hope other DAOs and organizations will find value in what we have learned and will experiment further with the underlying principles of collaborative economics.
“Democracy is based on the conviction that there are extraordinary possibilities in ordinary people.” - Henry Emerson Hosdick
To introduce the concept of “collaborative economics,” we need to start by challenging a prevalent idea: that ordinary people are incapable of understanding monetary policy. It is assumed to be complex and nuanced in ways our brains can’t possibly understand without multiple degrees and/or concentrated study in economics. But what if we, the people, were more directly involved? How much more would we learn and form opinions about? This pervasive idea, that people are incapable of understanding monetary or fiscal policies, keeps economic control in the hands of the few. It’s easy to imagine the 18th-century aristocracy scoffing at the idea of a government ruled by the people. The more things change, huh?
Democracy invites public participation in political decisions but not economic ones. For the 50% of the world’s population living in democratic nations, we expect our elected representatives to honor our political preferences. But that representation stops short of monetary policy, where decision makers are usually appointed for lengthy terms (and who may not even be appointed by an elected official). In the United States, the Federal Reserve’s Board of Governors have 14-year terms; regional Federal Reserve Banking Presidents are appointed by a board of directors made up of “Class B and Class C” directors of the banks, making them more representative of the banking industry than the people.
Monetary policies are designed and decided by small, unelected groups with little-to-no public input or debate. We (the people) have no real say and monetary policy decision makers no real accountability. David A. Levy asserts that democracy requires that “makers of monetary policy cannot stray far from the will of the people” in his paper whose title, Does an Independent Central Bank Violate Democracy, raises a point we should all be conscious of. If we don’t have democratic control of our monetary policy, we are subject to the golden rule: whoever has the gold makes the rules.
To talk about monetary policy, we must start with a shared understanding about money. Money is one of the oldest and most powerful memes — the cultural counterpart of genes, passed down generation to generation. Our culture would be entirely unrecognizable without money at its center — even something as fundamental as writing came about through the need for better accounting systems in 3500 BC. In more modern times, money is best understood by its three primary functions: store of value, unit of account and medium of exchange. Andreas Antonopolous posits a fourth function: a system of control. He reasons that money became a political tool with the Banking Secrecy Act of 1970, which enabled the surveillance of all financial transactions worldwide, effectively deputizing the financial services field into a branch of law enforcement with borderless reach and without due process or democratic control.
This fourth function of money is just one more reason why we need to apply democratic principles to monetary policy — which now, with token economies, becomes possible. On the first page of her seminal work, Governing the Commons, Elinor Ostrom writes that “…communities of individuals have relied on institutions resembling neither the state nor the market to govern some resource systems with reasonable degrees of success over long periods of time,” exposing the false dichotomy that managing shared resources requires either governmental control or privatization. Her groundbreaking analysis of economic governance in commons earned her the Nobel Prize in Economic Sciences and illustrates a greater point: commons are not just organizations, they are economies.
With Ostrom’s work as our North Star, we’ve spent years thinking about and developing the protocols for launching an economy through collaborative economic design. This approach ensures that decision making is in the hands of the community, counteracting the seemingly unavoidable technocracy of crypto economies.
We call this collaborative economics.
In the following articles, we will deep dive into the collaborative economics process and share learnings from the launch of the Token Engineering Commons (TEC).
This article was written by Tamara Helenius and Griff Green. We are grateful to Livia Deschermayer, Ivy Bagay, Gideonro, Kristofer Lund, Jeff Emmett for thoughtful feedback and Taxil for his editing wizardry. Special thanks to Algene Cutamora for getting the ball rolling on this series.
