Economic Spacing
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Economic Spacing

Why DPO, not DAO?

The ECSA network has been talking about Distributed Programmable Organisations (DPO) instead or as an addition to Distributed Autonomous Organisations (DAO), in connection to designing and structuring economic spaces. Why is that? Here is one view.

Decentralised autonomous organisations and their promise

Anthropologist David Graeber — often credited for having come up with the Occupy slogan 99% — has speculated that bureaucracy is bureaucracy in its terrible Kafkaesque form only when it is backed by the threat of force. His point is that impersonal mechanisms as such may not be against the idea of freedom, not if these mechanisms are not too pervasive and if they are entered into voluntarily.

Most often, we think of bureaucracies as state and other public sector behemoths, but Graeber also emphasises that currently the lion’s share of bureaucracy is company bureaucracy. Here, the threat of force is embodied either directly in private security or indirectly via the legal apparatus of the state (for instance, in the US, one of the 40 countries empolying more private than public security personnel, there are 1,1 million private security guards compared with about 660,000 police and sheriff’s officers; amazingly Arjun Jayadev and Samuel Bowles claim that up to 20–24% of the workforce in the US is engaged in some form of guard labour).

This is an interesting place where the left-anarchist dream of freedom that Graeber advocates may touch on the anarcho-capitalist dream of (central-)bureaucracy less libertarianism. Enabled by cryptographic primitives, verification and replication, the need of threat of physical force, the need for trust, and the reliance on third parties that mediate transactions, are becoming obsolete. As Satoshi Nakamoto put in the Bitcoin Whitepaper:

What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.

While the (negative) possibility of avoiding trusted third parties, such as banks and governments, might be reason in itself for a cryptocurrency like Bitcoin, from another perspective the crucial benefit of cryptography is the (positive) possibility of creating peer-to-peer relationships. Cryptographic tools can facilitate coordination amongst people that don’t know each other and that do not necessarily want to institute a company or organization. Likewise, they can facilitate practices that are transparent, while the users keep their privacy (whereas the status quo is institutional secrecy and individual non-privacy).

The opening that luminaries like Satoshi Nakamoto, Nick Szabo and Julian Assange have empahsised is to build systems that do not rely on the threat of violence, but on the laws of mathematics. What’s not to like?

The concept of a DAO

The idea of the decentralised autonomous organisation (DAO) exemplifies this dream. Cryptography, in general, promises security and privacy through algorithmic rigor. Likewise, the DAO promises a way to run an organisation in an impersonal and effective manner, without the recourse to a threat of force.

The idea of a DAO is simple. Organisations are sets of rules. Computer programs can implement rules. An advanced blockchain, like Ethereum, provides a way of running any computer program on a distributed world computer. These small(ish) programs are called smart contracts. Code the rules of an organisation into smart contracts and deploy them on a distributed world computer like the Ethereum blockchain and a presto, you have a DAO.

A lot of interesting things follow. DAOs sidestep human meddling, they can be international, cross-jurisdictional, open source, unstoppable, uncensorable… At best, as Vitalik Buterin writes, a DAO could function with no management at all, just through the use of a set of programmed smart contracts.

“The DAO”

The first famous and infamous incarnation of the DAO concept was a DAO simply called theDAO. Per Wikipedia, “The DAO was a digital decentralized autonomous organization and a form of investor-directed venture capital fund”; the point was that investors, i.e., DAO token holders, vote with their tokens on where to invest.

TheDAO was a “programmed behaviour” model that “organises people” around it self. This may have been result from Vitalik´s writing that had a strong technology perspective:

the ideal of a decentralized autonomous organization is easy to describe: it is an entity that lives on the internet and exists autonomously, but also heavily relies on hiring individuals to perform certain tasks that the automaton itself cannot do.

This description hints that DAO itself is something more than what people coming under it are.

The experiment gathered $150 million and people with differing and even conflicting values who were now to operate under one “law”. Conflicts showed themselves immediately in decision making. These were results of the social/political design which supposed that members with more money should or could make better decisions for all (voting with the invested money and not regulating how much money one can/should invest).

TheDAO members were then robbed by hacker who claimed to have taken the money “rightfully”, as the rules embedded as code allowed for it. This of created a huge problem since the hacked DAO existed on a public blockchain. A problem for the few became a problem for many. Eventually, a famous hard fork followed.

One of the strong factions in the discussion on the hack and the fork was arguing for the view that “code is law” — that the way in which the organisation is supposed to work is implemented in the code and as the code is executable, it does not need any external interpretation. This view often translated in the positions that a) the unidentified hacker used the code as it was, so did nothing wrong and b) there should be no retrospective change in the “immutable” Ethereum chain. This argument was playing the hand descibed above: taking the human element out of the equation can provide predictability and level the operating field — at least with regard to the agents currently able to legislate and to bend the law.

Philosophical digression

There is a long-standing philosophical discussion of what following a rule is, in the first place. One of the topics in the discussion is the potential of infinite regression. In order to know if a rule has been followed, we would need rule-number2 that governs the use of rule-number1, and then a rule-number3 for rule-number2, and so on. In practical contexts, the regress does not happen, as at some point there exists an implicit understanding of the context and meaning of the rule — if it has been followed and what is its meaning, and whether some higher-order context is needed to override the context where the rule and its following can be explicitly defined. This implicit context or backgound is used as a basis of negotiation when evaluating the priorities of different values — for instance, in the discussion on the hard fork, where groups of people evaluated the weight of the value “immutability” differently.

One quick-and-dirty way of understanding why a completely rule-governed system without room for implicit human understanding is a pipe dream is to consider the ever enlargening context of interpretation and understanding. At some point we arrive at deep philosophical questions that do not — outside of rigorous ideologies — have clear cut answers. If we ask, for instance, why do we want immutability, we enter into discussions of values and politics, and after a couple of more “why do we want … “ questions pretty soon we are discussing the meaning of life, universe and everything. If the answer to these is something else than “42”, we have to accept that explicit rule-governed systems are always embedded in non-explicit contexts which become meaningful through human interpretation.

… and back to im/mutability

If one wants to argue that “code is law” or at least that it should be such, and that is the way theDAO contract is/should be interpreted, then it follows that the attack was well within the parameters of what is “legal”, as the pastebin “open letter” argues. On the other hand, if one wants to say that the attacker’s actions broke the intent of the contract, and are illegal, then one is also arguing that the original DAO contract could not have been the DAO code, but something beyond it. Whether that “something beyond” is a contract explained in English or something else, one is also pretty much pointing out the fact that the DAO itself failed to follow the securities law — something that the SEC also just made explicit. One can not have it both ways: saying that the DAO is “legal” but the attack not, or saying that the attack is “illegal” but the DAO not. Notice here how the concept of “legality” functions as a higher order background against which the “rule-following” of theDAO and the DAO hacker, the forkers and the classicists, is evaluated.

The point of theDAO story is simply that an immutable DAO easily behaves like a bull in a china store — also the store of the people setting up the DAO. The “china” here are the social and economic backgound understandinsg of the human participants. Moreover, an immutable DAO can become a problem for a much larger crowd than those voluntarily consenting to its mathematical rule. The irony is here: non-violent mathematical immutability may turn into a form of structural violence — as often happens with bureaucracy.

Distributed Programmable Organization (DPO)

To assume that “code is law” fails to take into account the complexities of human-machines assemblages. DAOs should be able to be partially autonomous, but still humanly governable and designed from the start to be re-programmable. A computing fabric like Gravity allows for a full spectrum of Distributed Programmable Organisations from fully automated to partially automated and mostly manually operated ones. Consequently, the notion of a Distributed Programmable Organization (DPO) describes better the type of the organizations launched on Space — even though “hard-wired” DAOs are also implementable. In contrast to rigid immutability, it is important to to emphasise the possibility to reprogram, even shut down and completely rewrite, a “DAO”: therefore a DPO.

But the point is not only negative, in trying to avoid the rigidity of a DAO. There is also the more positive side of how the benefits of technological automation are understood.

Rather than relying on the impoverished notion of autonomy — as autonomous from human intervention — autonomy can be seen in a richer, more politically textured conceptual register. In the discussions around ECSA, autonomy has been seen as the capacity to set the attractors for one’s own behavior and create new self-governance structures. In this sense, autonomy involves the power to collectively decide and encode incentive mechanisms and choose specific valuation metrics of non-monetary assemblages (from relationality, trust, and quality to land, labour, and material goods) in smart contracts. This allows us to tailor our own economic spaces, orienting collaborative behaviors and modes of collective self-organization. It is very unlikely that we will get these governance structures right at the first attempt. But that is no reason to not to use the benefits of resilient and unforgeable distributed technology. What we want is the ability to program and re-program tools for economic interaction: a paper and pen, rather than something written in stone.




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Tere Vadén

Tere Vadén

Co-founder, Economic Space Agency, Inc.

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