New Year, New Ideology: Can digital governance succeed where liberalism fails?
21st Century answers to, "What comes after the End of History?"feat. decentralized dictators, liquid democracy and a Nounish answer to public good funding.
Every year, thousands of college freshmen are introduced to Francis Fukuyama. In his 1989 paper, The End of History, Fukuyama argued that after the Cold War, the ideological struggles of our time had ended.
Fascism was dead. Socialism was buried. Liberal democracy had won. Its triumphant spread might not be smooth, but it would be inevitable.
But then the Great Recession, a surging China, Russian imperialism (the time they took Crimea), Brexit, Trump, Hungary, Turkey, COVID, racial riots, QAnon Shamans, Jan 6, the withdrawal from Afghanistan, surging inflation…
And suddenly liberalism’s ascent was less certain.
Not a great fifteen years for Francis.
But the thing is: challenges to liberalism are nothing new. The Big 3 Problems with Liberalism have been known for over a century:
The Spiritual Problem. Liberal democracy works best when we leave thorny questions like the “meaning of life” or “God’s Will” outside of government. This is good. Religious wars and religious oppression are bad. But it also creates a spiritual vacuum. The focus of domestic policy becomes wealth creation because everyone agrees GDP Number Go Up is probably good. But buying shit doesn’t provide people with a durable purpose. A good government system should aspire to do more than reduce human beings to economic actors.
The Capital Capture Problem. It also costs a lot of money to run for office. So the governing class of liberal democracy tend to be funded by the very wealthy. The very wealthy, in turn, tend to like policies that protect their wealth at the expense of trivial things like the rights of other human beings.
The Interest Group Problem. As new interest groups organize in a democracy, they issue vetoes over valuable public policy or demand appropriations from the government in exchange for their support (Olson 1982). These narrow interests undermine the collective good - think homeowners blocking new construction or industries lobbying for protectionist tariffs.
The 20th Century provided two (terrible) answers to these three problems: socialism and fascism. Socialism and Fascism are both authoritarian systems that override the interest group problem. Fascism does so to solve the spiritual problem by telling citizens their purpose is national glory. Socialism does so to solve the capital capture problem by eliminating the capital class.
But it has been 80 years since the fascist powers lost World War II. It’s been thirty years since the Soviet Union collapsed (and longer since China stopped being really communist).
So perhaps the best reason to believe Mr. Fukuyama’s thesis is that uh… there don’t seem to be any other systems on offer? Is it really the case that, as Winston Churchill said, democracy is just “the worst system except for the others”? Is there room for improvement?
A Silicon Valley truism is that today, building is the best way to complain. One of the joys of the internet is that decentralized technology and the open-exchange of information (and increasingly value) allow for today’s Thomas Jefferson and James Madison to try radical experiments in new political systems online. So I thought it would be fun to check in on some experiments that are testing alternatives to representative democracy.
New year, new government.
Choose-Your-King: The Dark Enlightenment and the Marketplace for Dictators
To a certain set of Very-Online-Humans (™), Urbit is a phenomenally interesting project to re-architect the internet from the ground-up by replacing the client-server architecture of the modern net with a peer-to-peer system. To most of us that live in the real-world, that sentence is utterly meaningless.
So let’s make the differences inherent to a peer-to-peer internet tangible. If I want to chat with you today, we both sign onto our texting app. I send a message, it goes through a centrally owned server and arrives on your phone. That’s the cient-server model. Client: phone. Server: … er, server.
But, imagine instead of using a shared server, I “hosted” our chat. If you wanted to talk to me, you connected to my computer and sent me a message directly on it. Now there’s no central server holding our information or determining if our message is appropriate. There’s just you dropping by to say hey. That’s a peer-to-peer model.
Got it? Cool.
Now we don’t do this p2p thing today because managing your own server is terribly annoying and also chat works fine for 99.9% of people just by using Google or Apple or Facebook’s server.
But Urbit is right that anytime there’s a middleman, there’s a potential for censorship, tyranny etc. We just kind of ignore those trade-offs in our quest for convenience. But if you are a true political believer than those trade-offs might be unacceptable.
And that’s why it’s notable that Urbit was founded by Curtis Yarvin, the court philosopher of Peter Thiel and the guiding voice of the Dark Enlightenment movement.
The Dark Enlightenment is sometimes called neo-fascism and sometimes literally accused of wanting to bring back Kings and Queens. But while it shares fascism and monarchy’s obsession with a strong, singular executive, it really is not totalitarian. Just like Marx wanted a strong-central government to bridge people to socialism, Yarvin and his ilk want a strong central authority to ring in an anarcho capitalist era.
Like most libertarian fantasies, this works well if you are rich or powerful, and not so well if you are poor or weak. It, therefore, ignores the class complaints that animated the socialist critique of liberal democracy. It also has no place for spiritual musing – Yarvin detests the common masses that fascism sought to suppress individualism in favor of. Instead, Yarvin’s movement takes aim at the sclerosis of modern liberalism and seeks to replace it with something far more nimble – like a marketplace where you can choose a strongman that aligns with your tastes.
And this is where the connection with Urbit is important.
Urbit decentralizes power and preserves individual choice…. To serf for any digital lord of your choosing. Indeed, Urbit sometimes describes its addresses (think of them like an email/IP address for your server) as digital land. This land is allocated by a cascading system of “Lords.” As Yarvin explained in 2013:
“Since there is contention for civil forts, some central party must allocate them. Since the SFN is an SFN, there is only one way to do this: there has to be a root public key in the SFN. This uber-key is the root of all certificate chains. The rules for signing forts are simple:
Pawn P is signed by lord (P & 0xffffffff)
Lord L is signed by earl (L & 0xffff)
Earl E is signed by duke (E & 0xff)
Duke D is signed by duke 1 (the first duke)
Duke 1 is hardcoded in the SFN.
The master of this public key is the *prince*.”
Each fiefdom carries its own rules, its own services and its own fees. The idea is to create a competitive market of digital feudal lords. Digital citizens then vote with their digital feet. Now, this is interesting stuff for a fringe network.
But what’s more interesting is that this idea is jumping the chasm to the mainstream internet.
For a long time, the digital social networks – Facebook, Twitter, YouTube – styled themselves as neutral platforms. This was always somewhat a fiction, but it was a useful one. Then Elon Musk’s Twitter gave up the game. Elon’s platform policies were proud and defiant statements that the primary policy of the network was… Elon’s whim-of-the-day. Truth Social, of course, does something similar with Donald Trump. And even Mastodon seems to have this type of an approach – with each server having its own rules and ruling elite.
The result is an internet that increasingly looks like Yarvin’s vision: a thousand little autocracies. A marketplace for feudal lords. A decentralized directory of little dictators. May the most benevolent digital duchy win.
Ok so anarcho-capitalism isn’t for you. What if we tried a little shareholder democracy?
The default governance system for most DAOs and protocols today is token-governance. A project issues governance tokens. Members can create and vote for proposals. Their voting power is proportional to their ownership stake. So far, so familiar. This is, after all, a simple version of how shareholder corporations work.
Liquid democracy differs from the shareholder system because it vests far more power (and higher expectations) in the token holder. Unlike in the modern company, there is no central management team that shareholders just casually oversee. Token owners are expected – sometimes begged! – to comment on proposals, vote on policies and otherwise be engaged in the business of running the organization. If they are unable to do so, they are expected to “delegate” their power to representatives that will vote in their interest.
Liquid democracy tries to solve some of the spiritual problems of liberal democracy. It is not enough – most of the time – to vote and delegate your authority to a political party. Instead, you are an active citizen and participant in the organization. You are expected to study the issues, engage with them and vote accordingly. You are not an investor, you are an owner-operator of the project. As Seed Club says, DAOs are in the business of “making something that people want to be a part of.”
But, if anything, Liquid Democracy renders the “capital capture” problem of liberal democracy even worse. When voting power is a financial instrument, vote buyers can “borrow” voting power by taking out token loans. In fact, if they “short” the project, they temporarily hold significant voting power while actually betting that the protocol will fail. This unbundling of economic and governance interests is potentially devastating. A bad actor could short a project, borrow huge amounts of shares, and intentionally sabotage it while profiting handsomely. To combat this, protocols need to implement protective mechanisms like timelocks or “vetoes” by trusted insiders.
This challenge is not insurmountable. Vitalik Buterin has suggested some potential fixes. But it’s also not yet… surmounted. Until then liquid democracy remains even more vulnerable to the Capital Capture problem than its liberal cousin.
A Nounish Liberalism
NounsDAO (you may have seen them on Twitter using this emoji:⌐◨-◨) has quietly been incubating the most interesting public good funding infrastructure in a generation.
Nouns is an NFT art project. On August 8, 2021, the project began minting one NFT per day. The Daily NFT was then auctioned on its nouns.wtf website to the highest bidder. All of the proceeds from its sale were placed into the group’s collective treasury. Today, that treasury contains ~28,000 Ethereum (or roughly $40M USD).
But Nouns didn’t have a clear mission. There was no clear path for deploying the capital the community had acquired.
So the Nouns team has developed and open-sourced a piece of infrastructure called Prop.House to let the community decide how to allocate its treasure. Every few weeks, it opens up another “Grant Round” which specifies a reward and a number of recipients – for example, 10 ETH to be split between 10 projects. Members submit proposals of work that they think would benefit the community. Then each NFT holder receives 10 votes to allocate their support behind specific proposals.
It is governance stripped to its barebones: taxes in, spending out.
While this governance is limited in scope, that’s actually part of its appeal. A simple model invites easier participation.
Representative democracy was developed because leaders believed that citizens could not be trusted to stay informed or engaged with the day-to-day work of governance. Their solution was thus — let people choose representatives to govern them. Nouns take a different approach. It reduces the cognitive load of governance, but increases the expectation of citizen engagement.
Each voting round demands voter participation. Members get meaning from deciding how to spend their money. They feel ownership over the art and technology that the community creates. This differs from representative democracy. When was the last time you felt personally proud to support a US government that invests in art or science? This provides a solution to the spiritual problem of liberalism.
And while individuals could purchase voting power by owning more NFTs, the prohibitive price tag of a vote (currently roughly $30,000 to buy an NFT that would offer 10 votes) makes the capital capture problem less dramatic.
Because the whole community votes on each proposal, the model also seems less likely to be weighed down by narrow interest group politics.
All of this is to say that Nouns might up the ante on Fukuyama. What if we did away with the corrupting layers of representation in democratic governance and increased transparency and voter participation? What if the answer to liberal democracy’s problems was… just a more liberal, transparent democracy?
The march toward Fukuyama’s End of History continues – one Nouns DAO proposal at a time.
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