Platform Cooperativism and Blockchains

I’ve been more than a little worried about people interested in building a democratic “sharing economy” who fervently embrace blockchain technology, and most troubling of all, enthuse about distributed autonomous organizations (DAOs).

The attraction isn’t difficult to understand: blockchains are open, decentralized systems that cannot be owned or controlled by corporations or states. They also work by “consensus”, which certainly sounds like the political structures envisioned for post-capitalist society.

So, some say, let’s build our new platform cooperatives using blockchain technology, and organize as a DAO or similar.  A better world, and technically sexy, too!

To directly quote one example, Backfeed (“A Social Operating System for Decentralized Organizations”) “relies on blockchain technologies to provide an indirect coordination mechanism for people to collaborate and cooperate, without the need for any intermediary authority or centralized agency.”   This is, as they imagine it, “decoupled from the rigidities of hierarchical structures.

What’s wrong with this idea?

This month Mitar Milutinovic posted a thoughtful comment at “The Internet of Ownership” blog, on one of the key points: “One Person, One Vote or One Dollar, One Vote and Blockchain”.

He points out that the same terms and concepts of “democracy” are used to describe popular democracy (one person, one vote) and shareholder democracy (one dollar, one vote). A small-d democrat can favor one, the other, or both forms of governance, and each might have its place in some circumstances. But they are scarcely identical, and, indeed, may have conflicting or opposite results.

The point, of course, is that Nakamoto-style “consensus” is “one cycle, one vote”, which correlates pretty directly to “one dollar, one vote”.  Milutinovic warns that “we have to be wary of attempts of everything being transitioned to this type of voting because we might lose true democracy of “one person, one vote” without even noticing. This is often not conscious and is just a consequence of uncritically applying blockchain technology to the problem.”

He points out that blockchain based “one dollar, one vote” are just as susceptible to concentration of power as any other, which has been seen in the governance troubles of the Bitcoin and Ethereum networks.

He concludes that “we have not really solved the problem of a decentralized true democracy where each user person would have only one vote and where we would have an open membership. We still do know how to do achieve both at the same time.”

In short, blockchain technology “solves” this problem by substituting a form of populist plutocracy for democracy, which is not really a solution at all.

Yes, indeed. He’s nailed this point nicely.

I would add that the model of “consensus” used by blockchain based systems is a very peculiar form of “agreement”, based on secession and/or segregation. “Agreement” via “separate but equal” networks. This is a dark and dangerous twisting of the language of “democracy”, and seems to be based on a poorly thought out, nihilist rejection of the possibility of human agency.

As Vlad Zamfir put it to IEEE Spectrum, faced with the failures of human governance, people are turning to the blockchain to be “a tool that we put outside of our jurisdiction in order to have it govern us.”  The whole idea is to create an ungovernable robotic system, “operating solely with the steadfast iron will of unstoppable code(to quote the  web site of the now defunct “The DAO”).

I also have noted that these concepts do not necessarily even work. The concentration of power Milutinovic complains about leads to disastrous mismanagement, as illustrated in the Bitcoin blocksize disaster and the Ethereum DAO catastrophe. I would say that it is not only concentration of power, but also the lack of accountability inherent in the entire idea of “autonomous distributed” decisions. If no one can be held responsible for the results, then it is inevitable that the system will crash under the weight of blocking minorities (Bitcoin) or backroom deals (Ethereum) or other variants.

As Milutinovic says, “when somebody talks about voting, consensus, and democratic decentralized technologies, listen very carefully if they are talking about “one person, one vote” or “one dollar, one vote”.

Hear, hear!


Cryptocurrency Thursday


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