Introducing the liquid cooperative
Without reforming how our organisations are designed and built we will be forever applying bandaids to our economic system. Prevention is better than providing a cure, and I feel it’s time to meet the problem itself and rethink organisational design.
I am proposing Typehuman experiments with something we are calling liquid cooperativism: A new way of organizing that offers people the ability to become more than just wage takers, and to accumulate capital (in crypto-assets) as a means of long-term wealth generation.
Several decades ago, back in my home town of Adelaide, my dad was heavily involved in the labour union movement during a critical time for those working at the printing press. I learned at his funeral that he was the father-of-the-chapel; which saw him lead the negotiations for the fair redundancies of many workers who were being laid off as a result of the newspaper industry’s digitisation. He and I didn’t speak about it much, but this glimpse into his time in the union put a new perspective on many of the conversations he and I did share. He was always very careful to not let statistics get in the way of having us understand that someone struggling is someone struggling. To them, it does not matter if they are part of 3% or 50% of the population, or if they were just collateral damage in an economy attempting to re-calibrate inflation. They are struggling, and deserving of our compassion and help.
Labour markets today fall short of delivering the value intended by the union movements’ collective bargaining efforts of the past. Stagnating wages, household debt, and mental health issues are all real problems faced by many workers today. The old ways of unions and collective bargaining do not shift governments anymore, and our generation has not yet found a way to uphold a ‘fair go’ for workers. If anything, we are at risk of going backwards before going forwards; unwinding many labour rights established by previous generations as we race to embrace the new “gig economy”.
This is because work itself has become more complex. The globalisation and casualisation of the workforce, reduced time spent employed with organisations, and the need to have several careers within a lifetime all make the old ways of collective bargaining and unions impractical for many new workers today.
An explanation of what’s driving labour market conditions, and our society’s wealth gap is offered in Thomas Piketty’s insightful book, Capital in the Twenty-First Century.
Piketty predicts a widening class divide. As economic growth outpaces wage growth, those who hold capital earn a relatively greater share of income compared to wage earners. A better explanation of this than I can provide is here. What it means for us is that if Piketty is correct, we could expect to see the income generated by capital in society increase, while income derived from labour wages stagnates or declines.
This is what we are starting to see in Australia. This is what the erosion of the middle class looks like. The difference between the income derived from those who hold capital, and the income derived from those who work is increasing. The latest figures on income published by the Australian government tell us that wages have been stagnant since 2013. The problem is that while certain classes in society accumulate more income producing capital, the rest are becoming more dependent on declining earned income.
“Technological change is seen to have brought substitution of capital (especially information and communications equipment) for unskilled labour.”
In the coming years, the automation of skilled and unskilled labour brought about by artificial intelligence will only accelerate this capital accumulation trend. Those with the means to invest in automation will do so, and will own the income it produces.
Public and private sector alike seem to acknowledge this problem. And a popular solution that seems to be emerging is the provision of a universal basic income (UBI). Elon Musk has come out stating that UBI will be necessary, YCombinator is running a UBI experiment, along with governments such as Scotland’s.
UBI might become a part of the solution, but at least in the short term seems politically impossible given the leadership required to mount what would be a massive wealth redistribution campaign within the current political environment. Even if it were successful, it only offers people a wage and does not help more people in society accumulate capital and become less dependent on earned income.
There are, of course, many ways to effect social change and better empower workers. Social business, social enterprise, impact investing, the non profit sector, unions and public policy all play their own critical roles and will continue to do so. However, we also need to start reinventing the organizational structure itself to bring it into the 21st century.
Could our organisations pay wages in new forms of capital, in an attempt to close the widening wealth inequality gap? Could crypto-assets be used to distribute income to workers so that they have a greater opportunity to amass assets over their life time by owning part of the entity they work for, reducing their dependency on earned income?
You cannot observe a blockchain project today without also witnessing an experiment in how people are organising and distributing value to those participating in it.
In 2016 we saw The DAO experiment; projects like Colony are developing the tools for meritocratic collaboration; and projects like Decred (amongst many others) are experimenting to find the most effective means of operating a decentralised organisation.
The interesting thing with these new experiments in organising is that crypto-assets are used to reward individual contributions. Crypto-assets become both earned income, and equity-like capital. For the first time in history, workers have complete choice as to whether they would like to earn a salary, receive capital, or some combination of both.
Workers can participate transparently and early enough in a project to earn a significant capital allocation, and they can better manage their risk because these new assets are now highly liquid. Bringing about a future where workers earning what we would describe today as capital for their labour, not cash. Bridging Piketty’s capital and earned income gap.
Organisations who use this new asset class, along with a governance process that provides workers with a voice in the decisions that impact their well-being is what I would like to call a Liquid Cooperative.
The desired outcome of a Liquid Cooperative is to maximise the well-being of its members. Probably structured as a DAO, a Liquid Cooperative uses mechanism design to incentivise group behaviour in pursuit of the well-being outcome.
Well-being is a multi-objective optimisation problem, which seeks to maximise and trade-off between extrinsic and intrinsic needs of the members. Therefore, I propose the liquid cooperative DAO offers value to members by:
- Establishing a common fund (the DAO) where liquid cooperative assets are held and managed;
- Supporting extrinsic needs by remunerating participants with a crypto-asset token which represents a relative claim on the assets under management in common fund; and
- Supporting intrinsic needs by offering participants the ability to influence the direction of the liquid cooperative, and the decisions that directly affect them
The next article will provide more detail into our liquid cooperative experiment.
I’m Nick Byrne, the CEO of Typehuman.com: a decentralised venture studio.
This is my personal inspiration behind leading Typehuman, and motivation shared by all of the Partners and our team. We not only aim to accelerate the realization of Web 3.0, but set the standard for how we can do this in a way that defines a new way of organising work.
If you’d like to join us in this experiment, we’d love to hear from you:
- email me directly nick [at] typehuman.com
- sign-up for our newsletter
