Blockchains and New Power

Published in

TypeHuman

10 min readMay 22, 2018

What is power?

Power is the ability to achieve intended effects. In the social world this involves the ability to influence others. Power dynamics are an inherent feature of biological systems, organisms compete for resources to reproduce, adapt tactics, form cooperative and symbiotic relations, and ultimately co-evolve, shape and are shaped by the ecosystem they inhabit. Power is an endemic feature of all human cultures and was historically closely entangled with violence. We can glimpse our evolutionary roots in the structure of most primate societies, where status within a dominance hierarchy is largely determined through violent physical encounters. Social status is then exchanged for access to food and mates. Whilst most human interactions have moved beyond these brute physical exchanges, this simian sociology still occupies a base layer of our lifeworld, and often brims to the surface in contexts where civil norms retreat, from bar fights to prisons.

Power within human cultures is not only characterised by the push of physical violence and coercive threats but also the pull of voluntary forms of cooperation. Friendships and romance, alliances and trade hold little meaning if not entered into voluntarily. Norms of resource sharing, and reciprocal matching through exchanging favours equally find their roots in the sharing and grooming practices of primate sociology. Life is better when we cooperate through specialisation and exchange rather than domination, but coordinating actions in this game is delicate, we require mechanisms to make deceit or defection more costly than cooperation.

Curiously, both the power of push and pull involve evaluating alternative stories of the future. Perceived threats push behaviour to avoid an undesirable state, promises pull behaviour towards pursuing an attractive state. Human agency resides within the organic ‘choice architecture’ framed by these push and pull dynamics. Whilst the dawn of human power began at the end of a fist or club, most of its expression today takes place within the mind.

Technology changes how power functions

New technology changes how power operates and can be deployed. Although technologies appear very different, they generally share the same underlying characteristic, they amplify the productivity of native human faculties. Whether employed towards economic or military goals, tools and weapons amplify physical abilities just as books and computers amplify cognitive capacities. Although traditional cultures often first viewed ‘innovations’ as deviances that threatened group survival, history has repeatedly demonstrated the military and economic victories that the combined application of new technology and appropriate strategy afford. The agrarian and industrial revolutions ushered in a host of new technologies, from wheels and ploughs, bricks and ramps, bronze and iron, caravans and ships, numbers and writing, that enabled new ways of organising, most notably in urban centres. The positive feedback loops of efficiency and productivity, coupled with innovation, knowledge accumulation and the growing capacity for long distance trade drove further specialisation of labour.

Social power has an underlying architecture

Pyramids became the archetypal shape of social power relations

Just as pyramids are the iconic monuments of this era, they became the archetypal shape of large scale human organisation. Hierarchically structured empires with wide bases and tall peaks grew. Whilst empires rose and fell, this fundamental shape persisted, the hierarchically structured organisation of military, economic and religious human activity was an obdurate feature of history for millenia. For the majority living under these conditions life was appalling.

But a few hundred years ago something happened that began to unravel this pattern. Gutenberg’s invention of the printing press drastically reduced the cost of producing books. Luther nailed 95 critical theses to a church wall, and thanks to Gutenberg these could now be reproduced and go viral. Copernicus and Galileo’s insights began to unpick the unquestionability of religious orthodoxy. Newton emerged from his house after a secluded eighteen months with a foundational framework for modern mathematics and physics. Voltaire championed freedom of speech and separation of Church and State. Rousseau imagined liberal societies governed by the ‘general will’ of the people. Smith began promoting the moral case for a market based, non-zero sum society. The American founders proclaimed it self evident that all men are created equal. This wave introduced the idea of progress, that human ingenuity can improve circumstances such that the future can be better, much better than the present. This worldview encouraged the wider availability of credit through money and capital markets, which in turn enabled entrepreneurs to begin experimenting with new ideas for wealth creation.

We commonly call these processes the Scientific Revolution, the Enlightenment, Capitalism and Democracy but each pattern was underpinned by a tendency towards decentralisation, a shift in power away from the authoritative top of an organisational pyramid towards a more open contestation of ideas. The new norm of embracing the sharing of novel information through social networks changed the way power functioned. The nascent norms of reason, science and free markets shifted social status towards new kinds of games, away from venerating past traditions and observing static rank and towards actors working to discover how the world actually is and imagine how the future might be different.

The dialectics of decentralising power

Our technologies, in concert with our legal and cultural institutions, craft the architecture of how power operates in society. These technological and institutional innovations of modernity shifted the configurations of power away from the old guard of agrarian regimes, but other patterns of centralisation and control also sprung up in the form of larger firms and states. Property rights and legally enforceable contracts were remarkable advances in promoting decentralised activity, parties could more easily agree in advance to a set of circumstances and trust the other actor to keep their end of the bargain. The previous methods for tackling this ‘agency problem’, kinship networks, swearing honour bound oaths, or declaring religious commitment were far less effective in securing future behaviour.

But the power to enforce these contractual agreements, although freely entered into by individuals, paradoxically relies on a highly centralised system of legal institutions whose efficacy ultimately rests on state violence to enforce. As Hobbes once said, ‘covenants, without the sword, are but words and of no strength to secure a man at all words’. Their dependency on powerful individual nodes renders them subject to errant manipulation by bad actors. Moreover these honeypots of power often attract the dark triad of sociopathy, machiavellianism and narcissism. To the extent that they depend on the fragile moral character of individual humans, legal systems are brittle, subject to corruption.

Concentrating power this way is not an ideal way of organising human society. But the capacity for communities to form their own sets of rules has historically required one of two conditions in order to enforce.

First, that agreements are formed amongst people within a small and closed social community within which the reputation costs of violating these agreements is high. This configuration only works if exiting these communities is extremely costly, a historical condition we are generally are glad to leave behind.
Second, that agreements are expressed through sets of contracts recognised by a legal system which is ultimately backed by the monopoly on violence of a Leviathan state.

These design mechanisms are crucial to get right, otherwise incentives point towards capturing other’s surplus rather than creating new value through entrepreneurship, specialisation and trade. These incentive structures are how the logic of violence shapes the structure of societies.

Smart contracts offer a new way of structuring power

The logic of smart contracts offers a new way of structuring power relations

Smart contracts, or ‘auto executing’ agreements, introduce a third option in coordinating incentives towards positive-sum games. Rather than rely on decentralised systems of reputation loss within a closed community, or centralised legal systems to correct transgressions, we can now bake these agreements directly into software. If condition A is met, then action B is executed. No need for an uncertain system of community enforced reputational loss. No need for costly appeals to legalistic third parties. This is code as law. We can now begin to eliminate the gap between proclamation and execution. This video by Gavin Wood gives a good overview of smart contracts if you’d like to know more.

Of course immutability and auto-execution introduce their own set of problems. Employment contracts for example, are useful precisely because they are incomplete. Imagine attempting to articulate every single task you perform in a professional role as a set of algorithmic steps (as an aside, if you can do this, you should probably change jobs as soon as possible because the robots will be coming for you). Smart contracts also foreground the differences between what information theory refers to as ‘syntactic information’ and ‘semantic information’. The former involves relationships between symbols, like mathematics, it can take the form of unambiguous true or false statements. This kind of information is ‘machine readable’, can be rendered in smart contracts. Semantic information involves the ‘meaning’ of these symbols, the intent or interpretation that humans (and increasingly machines) make of them. When we consider cryptoeconomics and artificial intelligence, the gap between the functional information and intended information can be extremely consequential. We are still in our infancy in understanding what aspects of social agreements can be programed as auto-executing contracts, and which dimensions require the messy iterations of human interpretation. But with time and experimentation, we will learn how to better codify these agreements.

New Power as a world of decentralised information

There is little doubt that the internet of information has changed how power functions. A new generation of actors has gained massive influence through their ability to ‘conjure the crowd’. Jeremy Heimans and Henry Timms have authored a new book called New Power which contrasts the ‘old power’ of hierarchical and closed systems with the ‘new power’ of open, networked systems. They are not the first to contrast an older managerial with a newer network society, or the shifting efficacy from the power of push to the power of pull. But they do present a timely and compelling set of case studies and some great visual models of successful forms of organising in the internet age. The book is worth reading as a story of the transition from the dominant mode of organising influence in the 20th century to the dominant mode in the early 21st century.

Heimans and Timms representation of old and new power values

Emerging Power as a world of decentralised money and agreements

I have previously argued however that this decentralised era of information coupled with centralised control of the underlying network architectures is responsible for many of our current social pathologies. The network society is only half built, and the gap is exacerbating an already polarised world. Until we consolidate an internet of value (through cryptocurrencies and cryptoassets) and an internet of agreements (through smart contracts) the nascent global, cosmopolitan network society will be tethered to the state and corporate pyramids, with all their negative effects, from decision making bottlenecks, to their vulnerability to corruption and capture by authoritarian or sociopathic leadership. Even the best and brightest individuals in these positions are usually inferior to the decentralised wisdom of crowds, so long as they are appropriately structured.

How decentralising the underlying architecture of power would look in practice

Smaller communities with high trust are able to create many of these ‘emerging power’ behaviours, but they cannot scale their efforts and it is difficult to translate gains between these groups. Some digital platforms incorporate elements of funding, producing and even shaping, but the power to participate is voluntarily offered by the centralised platforms, rather than hard coded into software. As such it can be changed anytime via nondemocratic or community governed means. Projects that incorporate admirable distributed activity, such as wikipedia ultimately rely on benevolent, centralised leadership and governance.

Heimens and Timms finish their book with an inspiring vision of a ‘full stack society’, where individuals and communities can voluntarily congregate to translate a prefered vision of an alternative future into a present constellation of human agreements. But this vision will always be hobbled until we hard code power into the hands of participants. This is the promise of a decentralised society of voluntary agreements, liberating the evolution of human associations from their entanglement with the power centres of the past.

This is our vision at Typehuman.com. We not only aim to accelerate the realization of Web 3.0 through our products and advisory work, but also set a new standard for how we decentralise power through new ways of organising work. If you’d like to join us in this experiment, we’d love to hear from you:

email me directly julian [at] typehuman.com

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References and further reading

Here is a selection of key sources that have contributed to the ideas presented here: