HOW THE BLOCKCHAIN CAN SAVE THE YOUNG (from themselves)
Navigating The Real Politics of the Blockchain
In my last piece on this subject I explored how young people are searching for community and identity online, either through aesthetics like Cottagecore, or through economics, with things like DAOs and how, as a result, they had been captured by a brutal and isolating form of “pay-to-play tribalism”. Instead of finding the true utopian community that provides “food, fire and friends beside water” their interactions have been atomized and monetized by the neoliberal hegemony. I have thoughts on how to fix that….
So, how do we fix that? It’s not easy, and there are lots of inherent problems to navigate.
Let’s start with thinking about the discourse between the people running DAOs and the people running old-school incorporated cooperatives in the conventional nation state system.
Cooperatives have worked for centuries, at enormous and truly revolutionary scale. There was a time when so much of the British economy was going to coops that the State started to suppress them to try and maintain the existing feudal-capitalist power structure. How did coops work? Basically the administrative systems of feudal capitalism, owned by the people.
Cooperatives have worked for centuries
Now this is, I think, an important distinction. The coops were not new administrative structures. Paper records, bookkeepers, shopkeepers, money, trade — it was all the same processes — but:
1) without extractive profit making
2) accountable to service users, not a faceless Lord
So we have the same structure as the capitalism of the era in terms of the business processes but different owners. This is informative. The innovation is in power but not necessarily in process. Same processes serving different masters.
We have the same structure as the capitalism but different owners
This is in sharp contrast to Free Software. Free Software is why we have Linux, Wikipedia, and Open Source. It started as a revolutionary movement which stated that software users had human rights. It expressed those human rights in the form of a binding legal licence applied to software distributors
Free Software was started by the most likely deeply autistic, and slightly frightening, Richard Stallman. I find that he’s become scary weird as he’s aged. Stallman wrote a staggering amount of software, consulted with lawyers, and gave it away under a licence agreement which enforced human rights. Stallman’s use of software licensing to enforce human rights is a stunning creative leap. It’s the kind of constitutional brilliance on which great nations are founded. He was shivved in the back by the capitalists, who took the economics of free software and stripped rights. You know this movement as the Open Source movement. Open Source took the collective, collaborative economics of Free Software — economics intended to deliver a commons in which human rights were respected — and took out the human rights.
We live in the shell of a dead revolution
It’s worth going back and reading about the Free Software vs. Open Source split — the personality types will be familiar to anybody from the blockchain space. The Bitcoin / Ethereum split — where Bitcoin refuses to evolve smart contracts — is kinda similar. This stuff is prehistory, but the corporate capture of Free Software, stripping out the human rights stuff, and creation of Open Source as a shallow imitation of a revolution ought to be of interest to all blockchain people.
Sounds like Central Bank Digital Currency (CBDC), yes?
This stuff is the real political history of the high tech age. Richard Stallman is our Jefferson, our Gandhi. He’s the one who did the key foundational thinking about human rights in the age of technology. A lot of you have never heard of him and this is not by accident, OK?
You have never heard of Richard Stallman, and this is not by accident
So what I want to point out here is the dynamics where revolutionary cultural innovations are stripped of the elements which empower ordinary people, and then co-opted by capitalism or feudalism or whatever form power takes at the moment. Blockchain people do have this fear too. Elsewhere, I’ve talked about the dire need to reform the blockchain and bring in ways to purge it of rampant scamming. If we don’t, that’s what will happen; everything we value about it will be stripped out and the husk co-opted by the established hegemony for uses it was never meant for and of which its originators do not approve.
So let’s go back to young folks and DAOs. The dream is simple: economic and cultural empowerment through new mechanisms for effective collective action. Community that really works for people. Everybody puts their money into a bucket. They vote on how the money is used. Revolutionary stuff gets done. Money flows back.
What DAOs have found in practice are all the same human-nature problems which plague cooperatives:
1) members are passive
2) managers wind up doing all the work, and getting all the power as a result
3) wasting other people’s money is easier than watching it closely
Manageable? Maybe. DAOs with seriously activist membership are theoretically possible but it’s like looking for political parties where the entire membership are actively engaged in policy debates. Rather than what we get in practice: people just show up to vote and otherwise live their life. And so we wind up with the Principal-Agent Problem (PAP)
The people working on your behalf to manage your DAOs or coops or banks turn out to be working on their behalf not yours. They know the business better than you too, so they’re super hard to watch. Something very complicated and subtle happens here. We inject an ultra low transaction cost environment with the potential for very, very cheap audits and tight control of administrators via smart contracts into a known-difficult area of human affairs
The managers turn out to be working on their behalf not yours
What changes? Solution? Well, certainly not so far. The various governance and management problems of DAOs are pretty well known. The archetype is that even the well-governed and well-managed DAOs are either:
1) run by three people in a pub running the multisig, or
2) clueless popularity contests for $
This has clear parallels with all sorts of similar problems too: DAOs and holders, voters and representatives, shareholders and management, supporters and team owners, fans and record companies, and so on. Experts with power do what they can get away with; or “the people” are in charge, but clueless.
Can this problem be fixed with technology?
Efficient, transparent administration watched over by an activist population that takes the time to understand the issues and expresses their political power consistently and coherently?
Never going to happen. Not a thing.
So now what?
Let me just double down on this for a moment. The Principal-Agent problem is an unsolved repeating pattern in human society from the beginning of time. DAOs simply restate that problem in a new way with new tools, but nothing about those tools presents a solution to the PAP. The blockchain presents a pretty decent solution for the CAP Theorem (a fundamental problem in distributed systems engineering) but it does not obviously present a solution to the PAP. I think we need to face this head on: we can get to the PAP in record time, but THEN WHAT?
DAOs simply restate that problem in a new way
Let me link to an old thread about “Meditations on Moloch” which looks at Moloch as the dark god of zero sum games, in particular iterated zero sum games, and why Moloch is a worse problem now than in previous ages. The perspective is that fundamentally Moloch is a thing humans have always managed to defeat by changing culture.
David Graber and David Wengrow looked at the archaeological and anthropological evidence for social evolution and culture change in The Dawn of Everything and showed we lived in large, complex, but decentralised communities for millennia and that the current centralised, capitalist, nation state is not inevitable; all kinds of other structures have worked just as well, if not better, for humans. They also found that repeatedly humans have turned their back on ways of managing communities that no longer work, reinventing structures and systems so that they suit people better, usually without violent upheaval and revolution. This is the kind of thing we need to do again, and the blockchain gives us one way of doing it.
Repeatedly humans have turned their back on ways of managing communities that no longer work
We need to look at DAOs and the rest of it in the context of a response to a Moloch-type lock-in where the global economy is stacked by the Boomers against the young, and stacked by everybody against future generations because of climate change.
A simple NFT drop with no further involvement from the team gets rid of the Principal-Agent Problem by not having Agents. Each person owns their NFTs. They’re in it together, alone. Community etc. are “soft” not administrative. But if those NFTs are being used as a way of fundraising for something like a video game or a cartoon show something changes. The NFTs represent property which is made more valuable depending on the success/failure of the Agents — the owners of the brand who are continuing to work. This probably has some interesting implications for securities law down the line but I’m going to leave that can of worms to the lawyers. It’s a hard problem no-doubt. Ditto ERC20 type tokens or shitcoins: here there’s almost always a principal-agent factor, a team working.
DAOs have split functions.
1) They’re social anchors: people buy into the group and so will stick around. People can invest in getting to know each-other.
2) They’re profit-making enterprises with Principal-Agent problems.
This is where they fail as social organisations, they are enabling that “pay to play tribalism” that gives the illusion of community, but in fact opens participants to rapacious exploitation. So what does it take to provide buy-in tribalism without having the Principal-Agent Problem turn into members being exploited by their administrators?
The answer would be to remove the agents from communities. Issue 200 seats or whatever. No more will be issued. No further work. You literally wind up with collectible badges: 200 seats here, 500 seats there. The seats become more valuable or useful, they change hands. But “useful” can’t refer to central services offered by administrators acting as agents for the holders. It can’t be a fundraising thing.
The answer would be to remove the agents from communities
Ironically I think something very clever could be done by selling seats in some kind of scheme where the proceeds of the sale are split *equally* among all the people that bought in. The folks who buy in early do better financially. Those who buy in later do worse. But 0 agents. And that approach leaves no kitty to be managed: scarcity is demonstrated on the buy-in, but after that the token’s paid for and you get your cut of the proceeds. I don’t know if that would work in practice, but it’s a way of issuing scarce badges for money without creating PAP.
And if the DAOs and NFTs are about creating small communities in an endless anonymous sea of the internet, maybe that function should be strictly separated from the economics of Ponzi schemes and starting investment funds together. Because binding these together is a problem. You can easily see how it happened: economic necessity, Ponziconomies, and social isolation resulting in a fusion of team-and-tribe into a Strong Bond which then just causes a ton of common PAP problems: fraud, incompetence and laziness from agents & apathy from membership.
Can we take the “cult” out of subculture?
Because if you think it’s bad with DAOs and NFT projects, wait until you see the social fallout from failed Network State projects. It’s all the same social dynamics, but now with real estate and law in the mix.
I don’t mean to be a Luddite here, or anti Weird Futurist Culture, but I think we have a predictable set of problems here and “let 1000 flowers bloom” does not help when they are weeds growing on toxic brownfield soil.
The combination of social solidarity and commerce is unsafe, which takes us back to the Cooperative movement and the Labour unions. With an educated and engaged population these institutions thrived. But as people became depoliticised and disengaged, unions turned into corrupt corporations and the coops diminished into shops.
The combination of social solidarity and commerce is unsafe
To go forward, we need to decisively separate the commercial from the social. We need to have clear rules, we need law so that when agreements are made, their basis is clear, and so that when someone buys or sells something it is clear what is being bought and sold to and by whom. The combination of the blockchain and what we are doing at Mattereum makes this possible.
We need to decisively separate the commercial from the social
The outcome is a situation where the community building can go on independently of money games because people are no longer relying on charming and exploiting other community members to extract money from them. It puts a stop to the zero sum game, where for every winner there has to be a loser, and makes the whole space deeply unappealing for scammers. Communities are built on trust, and clear rules and fair processes build that trust. DAOs have the potential to be the basis for the kind of community people yearn for, but the governance needs to be sorted out, to separate the grift from the community and lay down the bedrock of trust on which to build.
Mattereum’s purpose is to build the structures that make eradicating grift and building community possible, and we’ll keep doing it. We need a better world and if we have the power to help make that happen, we need to use it.
