“Can’t we improve democracy?” A conversation worth having. Pt 3: A blockchain based future (conversation starter)
This is part 3 of a 3-part series which focusses on pushing boundaries of existing systems of government
Part 3: A conversation starter — the blockchain economy
A quick recap
To recap, we’ve established that (ideally) governing systems exist to reduce chaos and increase good outcomes for the nation as a whole. However, even if many leaders share this end-goal, there can be different means of achieving the same end.
One aspect that differentiates the different means is the amount of compromise that is expected of citizens while the government tries to achieve the twin goals mentioned. In general, lower compromise is preferred.
However, since too much freedom of choice could lead to chaos, we must be careful in choosing how to reduce the levels of compromise. In particular, we must focus our attention on objective 2 type systems.
Finally, economic systems seem like an important & impactful area to dig deeper. Let’s see if we can further reduce the amount of compromises people have to make while interacting with economic systems in their respective nations — even if they happen to live under a liberal democracy.
An ideology-based economy? Tell me more!
A unique set of circumstances are leading to a new world order. The rise of 3rd party logistics and strong information technology is weakening (if not severing) the link between commerce & physical location.
And once that link starts weakening, participants in an economy are not forced to interact with whoever is around them for their needs. People that are physically in our vicinity may believe in very different things than us. Over time, this difference has led to certain “common denominator” attributes taking on an outsized role in most purchase decisions — price and quality perceptions.
Introducing nuanced ideological criteria for transactions seemed impossible and harmful.
However, improvements in telecommunications and commerce have changed things. We can now have a situation where a consumer’s needs could be met by geographically dispersed sellers — sellers whose principles are much more aligned to the consumers.
How would such an economic system work? A few thought-starters (by no means close to done).
A potential future could be imagined where multiple economies exist, but rather than being demarcated along geographical lines, they are demarcated along ideological or principled lines. Each of these economies could rest on a separate blockchain network built for the purposes of that community.
- Each economic blockchain has a manifesto or core belief system associated with it
- By applying for “full” membership (becoming a node in the blockchain) you essentially pledge your allegiance to that set of beliefs
- Membership is a license to consume and/or sell on that blockchain.
- Membership to each blockchain is open but no entity (individual or organisation) can be a “full” member of more than 1 blockchain
- Partial membership is allowed. Partial members are those who have not bought into the core ideology of that particular blockchain. However, they can still transact on the blockchain. Partial members will have to bear an extra burden (in form of money) to sell or buy on the economic blockchain. This seems fair as they will be “outsiders” who are leveraging other people’s belief systems to create value.
Citizens are given absolute freedom of choice. If you change your mind, you can simply switch membership to another blockchain to consume or produce. However, you may be forced to pay an “estate tax” / “change of belief tax” on existing assets or moving to another blockchain — primarily to keep out artibragers.
The most important implication would be that people will be allowed to choose an economic system based on their ideology — without compromise but with some of the consequences.
An understandable criticism of such a system could be that it would lead to lesser innovation due to lesser ideological diversity. However, one could also argue that this system would lead to greater diversity along other metrics (race, sex etc.) and also that the interaction of different economic systems themselves would constitute as increased diversity (where there was one economic model before, now there are many).
An unintended consequence will be that market participants may lose some economies of scale. I.e., because Nike can only have full membership in one blockchain, there is an incentive for other players to take up Nike’s spot in an alternate blockchain. Even though a shoe may be marginally more expensive, this set-up should also lead to lesser concentration of power at a national level. Which has all sorts of good consequences (lack of monopolies, less concentration of wealth etc.)
To me, one of the most satisfying results would be that people would have lesser reason to complain — as they would now possess the optionality to put their money where their mouth is. If you don’t like something about the way your economy is run or how companies act, just switch economies.
Why it’ll never work 😊
As mentioned earlier, I’m aware of how many problems beset such an idea. In particular there are two practical and one philosophical concerns that would need to be thought through.
Practical problem #1: The economy is intricately tied to money & money is the primary mechanism that fuels mini-systems of objective 1 as well.
This means that while different economic systems may exist, they will all have to come together to share fruits of their labour with mini-systems such as armed forces, policing, judiciary etc. It could be imagined that a specific economic system/blockchain could exert undue influence on such Objective 1 systems, so as to lead to a more unjust society (one whose institutions disproportionately favour the economic blockchain that contributes the highest funds).
We want to avoid this development as it seems “unfair”. BUT it is interesting to note that this is exactly how most governing systems operate today — they are usually exceptionally well-suited to the elites.
Practical problem #2: The distinction between objective 1 & objective 2 mini-systems aren’t always clear-cut. And the economy is a good example of this.
It could be argued that a single-choice economy actually helps prevent disorder and chaos from taking over & therefore should be considered an objective #1 system.
In truth, most mini-systems are likely to serve both objective 1 & objective 2. However it is also true that many systems steer one way (reducing chaos) or another (improving status quo) in terms of their most critical functions.
More frequent conversations & debates of whether certain systems belong under objective 1 or object 2 is kind of the point of this article. I hope more debates around this topic happen.
Philosophical problem #1: Risk of making existing echo chambers even more powerful.
Given that economic activities constitute a major chunk of activities that people engage in, there is a risk that people will only interact with others just like them. Therefore the economic system will start to resemble how religion looks.
What can be done about that? I think a good starting point is to revisit how valuable freedom of choice should be as an ideal. Sure it makes sense, but are there other values that trump even that? For example., “compassion towards those different” is also a worthwhile ideal. However, if freedom of choice leads to less compassion, is that really a good thing?
While everyone knows what is best for themselves, they also tend to put other people’s needs below their own. And increasing the intensity of echo-chambers is sure to lead to further loss of tolerance towards others.
Improving tolerance towards others can’t simply be solved by use of technology — blockchain or otherwise. It has a lot more to do with the our relationship with faith than about different incentives around us.
To make a more tolerant society we must change ourselves. But that easier said than done, as this article discusses.