A question that keeps haunting me concerns the degree to which blockchains and decentralized networks can actually disrupt the way human institutions are structured and operate. I don’t mean quantitatively through enhanced efficiency, geographic reach, or automation, but qualitatively by collapsing hierarchies and enabling new and universal forms of empowerment, inclusion, and autonomy.
On the one hand, the whole premise of these networks is that — being decentralized, openly accessible, difficult to censor, and programmable — they differ fundamentally from the organizational models of the past. As such, they are often touted as preferable alternatives to what exists.
On the other hand, as I have pointed out before, the social and political dynamic within decentralized networks is very similar to any other system involving humans. The unequal distribution of network-specific resources inevitably leads to a power structure while maintaining or challenging that structure becomes a defining feature of network governance.
One thing more difficult than critical analysis is predicting the future. But here’s one possible scenario. While blockchain networks will continue to reinvent organizations that administer information and facilitate transactions connected to that information, on a societal level, the end result will look disturbingly familiar. I call this the full circle hypothesis.
There are a number of reasons for taking this rather undesirable prospect seriously. These include but are not limited to:
- Systemic tendencies towards institutionalization. Institutions — including successful networks — represent stable and enduring solutions to recurring problems. But they also contain points of control and decision-making. As such, they become objects of political and economic rivalry which leads to…
- Unequal distribution of wealth and influence. Even in systems designed to be maximally inclusive, there are always information and other asymmetries that trigger private interests and attempts to accumulate whatever is deemed valuable.
- Past experience and cultural inertia. Most problems of network governance, including those that appear unique for technical reasons, are actually not that different from challenges faced by traditional institutions. It shouldn’t therefore be surprising to see newly proposed governance mechanisms gradually evolve towards more tried and tested designs. This is foreshadowed, for example, by concerns over voter apathy and calls for checks and balances.
- Path dependency and network effects. Lock-ins exist not only on a technical but also organizational and cultural levels. It is expensive and tiresome to constantly learn, switch, and adapt. While technology can certainly increase the freedom of choice and action, in everyday practice, it is always weighed against the forces of convenience, stability, and network effects.
- Social embeddedness. Ultimately, everything humans create is embedded in and determined by the existing social system with its array of cultural norms, biases, practices, and antagonisms. This partly explains the idea that at the core of every social transformation gestate forces that will drive society towards new and more sophisticated forms of coercion and control.
Pushed to its extreme, this line of thinking leads to a type of fatalism that is not only boring and discouraging but obviously incorrect. Only out of ignorance can one deny the many improvements to society introduced by previous waves of technological and social innovation. At minimum, this one should also result in considerable incremental progress. But more optimistically, experiments with on-chain consensus rules, liquid democracy, prediction markets, quadratic voting, adaptive quorum biasing, decentralized dispute resolution, and other novel techniques that are yet to emerge could usher in a positively transformational era for societal governance more broadly. My hope is that this is indeed the case.
Building networks that democratize the data economy and enable unprecedented levels of digital autonomy is a difficult task as it is. Ensuring that the perennial challenges of governance such as short-termism, institutional capture, political exclusion, principal-agent issues, and corruption do not gradually re-enter through the back door makes it even more challenging.
But the list above represents merely a partial mapping of the key forces at play. It does not describe a predetermined or even a likely path forward. For now, the full circle hypothesis is just that — a hypothesis. And certainly one great way to leave a mark on the Information Age is to help disprove it.
Ten Theses on Decentralized Network Governance (September 2020)
FOSS Governance and Blockchain Networks (July 2020)