# Decentralization Against Isolation by E. Glen Weyl (Devcon4)

- Channel: [Devcon](https://streameth.org/devcon)
- Date: 2019-10-09
- Duration: 31:12
- Topics: blockchain, smart contracts, distributed ledger, Science & Technology
- Watch: https://streameth.org/watch/yt-TMSAA_nMv_E
- YouTube: https://www.youtube.com/watch?v=TMSAA_nMv_E

## Description

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https://archive.devcon.org/archive/watch/4/decentralization-against-isolation

We propose a design for philanthropic or publicly-funded seeding to allow (near) optimal provision of a decentralized, self-organizing ecosystem of public goods.  The concept extends ideas from Quadratic Voting to a funding mechanism for endogenous community formation. Individuals make public goods contributions to projects of value to them. The amount received by the project is (proportional to) twice the square of the sum of the square roots of contributions received. Under the “standard model” this yields first best public goods provision and some modest modifications can make it fairly robust against collusive or altruistic deviations from that model.  We discuss applications to campaign finance, development ecosystems, news media finance and, more broadly, implications for the liberal-communitarian debate. 

Speaker(s): E. Glen Weyl
Skill level: Beginner
Track: Society and Systems
Keywords: philanthropy, charity

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Devcon 4 was held in Prague, Czech Republic on Oct 30 - Nov 2, 2018.
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## Transcript

[Applause] so I wrote this book with Eric Posner that came out about six months ago and sort of surprisingly maybe a majority of all the interest in it has been from the blockchain space now why do I say surprisingly at least to me the book I think manages the mentions the word blockchain once and it's not even really a book about technology at all it talks a little bit about technology it's mostly a book that attempts to revive a historical political philosophy and update it with new insights that have come out of economics and sociology and so forth it's a political philosophy that Vitalik and I are increasingly calling liberal radicalism and so the question is what does a book about sort of like some modernization of the history of political philosophy have to do with blockchain why have people in this space gotten interested in it that's a question I get all the time actually especially from people outside of the blockchain space we were really puzzled by how these things are related to each other and I think that the answer comes from the fact that decentralization which is really the fundamental principle that animates what's going on in the blockchain space is not in fact such a new idea in fact decentralisation while it is a hot-button word in technology circles these days is actually just another way of putting probably the deepest and most persistent attitude in the politics of developed countries for the last 250 years a concept called liberalism so I would define liberalism as the political tradition that is opposed to centralized hierarchical historically derived arbitrary Authority and tries to break down that authority in favor of a market-driven society that's largely neutral across different ways in which people choose to live their lives and to define what it means to have a good existence and liberalism is the basis of most of the social institutions that exist in wealthy countries it was what motivated capitalism what motivated many modern democratic institutions people talk about the liberal international order that's what they're talking about so the principle of decentralization far from being some new thing associated with the blockchain is really an attempt to maintain this cherished political tradition in the face of new technological arrangements now the problem that liberalism has persistently faced and the reason why it needs to be renewed in face of new technology is that while being this deep important political tradition it's also in terms of how it's been instantiated in institutions traditionally been quite naive it's ignored some fundamental features of social life which make it operate in ways that might go contrary to its original intention so liberalism has this sort of individualistic character and yet almost all of human life all civilization is built around the notion that people can accomplish more together than they can accomplish on their own what economists would call economies of scale and liberalism has tried to deal with this by having some sort of democratic institutions that capture aspects of that and yet the problem is that there are minorities in most societies often persistent minorities and democracy may not deal with so well with those a fundamental liberal institution is capitalism and the private ownership of property and yet those things work well according to economic theory only if there's what's called perfect competition if there's lots of similar things and yet most assets most property are not identical to other things each house each flawed of land is in a unique place and a unique relationship to things around it liberalism is based on some way in which we communicate with each other and have some common political culture and yet those common political cultures can be a source of oppression there's a story from la petite prawns a famous book by antoine sun exuberant and presents basically the theory of general relativity in his turkish fez and he gets laughed off the stage and then comes back and presents it with a suit on and everyone you know applauds the minions of winning the nobel prize so just the ways in which we communicate the ways in which we try to make meaning together can be sources of illiberal oppression and capital tends to be far more concentrated than laborers so there's a natural tendency for capital to be a source of concentrated power if you don't find some way to restrain it and this is meant all of these issues which you could call radical critiques of liberalism have men that liberal institutions that have actually been built have ended up ironically undermining themselves that attempts to create decentralization have actually led to more centralization this has happened over and over again and if you look at the rhetoric around the early internet it's a perfect example of this so when we try to treat individuals as if they can just on their own in an isolated way in a trustless way you might say govern their affairs you end up getting concentrated powers taking over things and without some form of collective organization individuals can't oppose those concentrated powers democracy tries to be liberal and yet it can lead to the oppression of minorities by the majority property tries to protect a space for the individual and yet because property is not perfectly competitively used it can end up creating monopolies and concentrations of power that are sources of oppression and we can end slavery and institutions like that and yet find that the concentrated power of capital creates wage slavery in its place so liberal radicalism is a tradition as opposed to what I would call isolated liberalism or individualistic liberalism that tries to not just not forget about these challenges but to say look if we want to have a truly liberal decentralized society these are the challenges we have to solve this is the way that the world actually works and we need to design institutions that are non hierarchical that are decentralized that are open but they take into account the economic and social dynamics that they will create in the real world so that we can actually maintain a persistently decentralized society rather than turning back into some form of central power and this is a political tradition associated with many folks with pictures in black and white with Alexei de Tocqueville who talked about the role of communities in preserving American democracy John Stuart Mill who talked about the role of social organization and making capitalism possible Henry George who talked about common property and at the necessity of common property for true competition Beatrice Webb who helped found the modern labor union movement as a way to preserve the power of free markets Hannah Arendt who realized that the extreme capitalism and new broadcast technologies of the interwar period in Europe had so isolated people that they were vulnerable to takeovers buy totalitarian powers and of course my favorite William Vickery the father of modern mechanism design whose whole career was premise on trying to address these sorts of problem with creative new economic institutions and who is the inspiration for all the work we've been doing so what I want to try to do today is give you a few examples of how we can maintain a truly decentralized society if we move beyond superficially set liberal sounding institutions like private property and one-person one-vote and so forth and instead ask what will actually lead if we follow through the logic of the incentives created to persistent robust sustainable decentralization okay so let me start with the first example perhaps the most fundamental principle in liberal societies and certainly within the blockchain is the idea of private property and that sounds good that sounds like oh this is my stuff no one can touch it will maintain everyone will have their things it'll maintain their space but the problem is because things are not identical to each other because there's no sense of just everything being somehow equally divided and it just going forward from there because people end up through a social dynamic in unique places private property creates huge problems it leads to problems in bargaining it leads to the need for people to take on debt to buy assets it leads to speculation where people hold on to something and don't use that asset just to see it increase in value and that ends up leading to poor uses of assets two concentrations of power and in the process undermines the whole liberal project that motivated in the first place so how do we solve that well in this work with Anthony Lee Zeng who's a Stanford graduate student of Business School of Business student we argue for at least partly replaced replacing private property an absolute right to hold on to something unless you voluntarily agree to give it up with a system of auctions where people have to bid in order to maintain control of assets and have to stand ready to surrender that asset back to the Commons if someone else out bids them for control of it with the revenue that is thereby generated being distributed not through a state but through some sort of protocol in an egalitarian fashion and I'll talk about one way we envision doing that in just one second but what this system does is it maintains two centralization because everything is determined by individual bidding but it also maintains equality not just in the total number of resources people have but in the access that they have to compete for control over assets and you can read more about this idea in our book radical markets now another fundamental problem is that even if you have these competitive mechanisms for allocating property there's still the issue that most things in the world by their very structure are not appropriately supplied by capitalism or a competitive mechanism most things are in fact increasing returns to scale what does that mean that means that all of us can get more if we do it all together than if we did it each separately and that's kind of obvious if you think about it that's why most of us don't live in a shack in the woods most of us live in cities and with other people and we rely on the ideas that they create in fact the whole principle of civilization is increasing returns to scale that we can do more together than we can alone and capitalism because it's not built on a principle of public goods or increasing returns to scale it's built on a principle of individual payment tends to atomize people this is one of the oldest points in sociology it leaves them isolated and it leads to dramatic under provision of public goods as epitomized by the crumbling infrastructure we see so liberal societies have recognized that from the beginning it's one of the oldest arguments that we can't do without sort of collective organization and they've sought to solve that with things like the democratically governed nation state but demmick democracy is based on a principle of majority rule and especially increasingly wealthy societies are diverse there are earth no racial minorities there are sexual minorities there are all sorts of different groups that would be oppressed if we allowed a simple principle of one-person one-vote to rule and so both of these liberal solutions either capitalist applying things in a capitalist way or democracy fail so in work with Vitalik and with Zoey hits igloos a philosophy and economics PhD student at Harvard we propose a solution to this problem which is called liberal radicalism and is available in our joint white paper and before I go into the mathematics around it let me give you an illustration think about news media I think all of us realize that it's a ridiculous way to supply news to have it just be funded through private markets you think about if somebody were to discover that Donald you know completely clear evidence that Donald Trump was literally owned by Vladimir Putin that would obviously have a huge effect on world politics a huge amount of value and yet the number of times someone would actually read that newspaper and watch whatever ad they put aside it bears almost no relationship to the value that was created so clearly it's a public good but on the other hand and that's the nature of society most good things are public goods but on the other hand you don't want the government funding news the whole point of news is to be a check on the government so imagine that we had a system where through some public process like the tax revenue that we raised from this system that I was just describing from bidding for these control of these assets there was matching funds where individuals could make charitable contributions and these would be matched by some common resources smaller contributions would be matched more and the more people that contributed to something it would be matched more so that you would never have the attitude that I would contribute if everyone else would contribute but given that everybody else isn't going to contribute I'm gonna slack off and it turns out that you can perfectly solve that problem mathematically using a formula that Vitalik Zoe and I derived which is shown up here where the contributions that the the amount of funding that a charity or organization receives rather than being the sum of the contributions made to it are equal to the square of the sum of the square roots of the contributions made to it so again we match more contributions by more people and smaller contributions because those are the ones where someone is most likely to feel that they're a small part of a big community and therefore have an incentive to freeride on everybody else and in fact this instantiates a notion that comes out of philosophy which is called the categorical imperative which says you should always act as if by your action everybody else would also act in the same way that you did and for selfish people who don't act according to that principle you can actually through economic incentives recreate that using this formula as we've proven in this paper now there is a fundamental problem with this however which is that you can Sybil attack this system why is that well the quadratic function is not linear and because it's not linear you can do much better if you can pretend to be many people rather than just to be one and this is much the same problem that happens in democracy where if you can pretend to be many people you can commit voter fraud and you can control the democratic system however in trying to solve this identity problem many have I think incorrectly taken an approach which ignores the lessons of democracy which is that identity is fundamentally social identity is not something that can be meaningfully can meaningfully belong to just an individual in fact almost all the information that we call private or intamin is private or intimate in relationship to other people you even think about the you know most intimate things like your sexual history most of that was experienced with someone else right and that's the whole point the whole point is that things are social fundamentally all of our identities all the things about us are defined in relation to others so it's not even meaningful to think of a in an isolated ultra individualistic completely trustless way self sovereign identity but on the other hand we certainly don't want some single central trusted Authority running a whole identity system and I think that if we think about things in this way it again naturally select suggest a solution how can we get a notion of identity so that we can't get civil attacks in this without relying on some central authority well we have to recognize this social nature of identity which we're doing in this work with Matt Jax and a Stanford professor which we'll be releasing soon which recognizes that all that really goes on in in a quote centralized unquote identity system is that someone who's trying to verify someone else trusts a central authority and that central authority trusts the individual being verified but that's just one special case of a much more general structure where we all trust some people and those people trust some people and those people trust some people and they know things about other people and you can imagine every time you need to verify a property of a person sending a message along this network which doesn't need to be centrally stored it can be a lot like tcp/ip protocols work actually locally stored and you can do local graph search to find connections along that network and then you can send messages of verification along that Network and you can use these even without cryptography to disambiguate different individuals by asking enough questions that with high probability there will not be two different people that are the same that that will according to that set of questions and at the same time is there's so many things about us that we share with so many different people within our communities we can do that without ever telling the person trying to verify very much that's very meaningful about us so taking that view that actually your identity is a property of all the communities you're part of you actually get a far more robust sense than you do if you try to think of a individual on their own owning or controlling their identity now these are all ambitious long-term visions of how we can transform basic social structures in order to make a decentralized world but we're facing a more near-term problem than that at this moment right now we are in one of the most centralized periods of power in human history a few global platforms have established a control over the digital ecosystem that really is no parallel and I felt this before myself but travelling around Europe in the last week I was really amazed by this clear across the political spectrum in Norway I heard almost everyone I talked to use the word totalitarian in referring to their fears about what was going to happen with these digital platforms and we need things that start to push back and reduce that power today not just things that maybe we can test out and eventually scale we need ways to organize today to reduce that power or there's not going to be the space to build a better decentralized future and so in the interim until we can build these systems and and I love all the work that we're doing in building the system that's what I spend most of my time on we need to find a form of organization that is inspired by the ideas coming out of this other tradition but that doesn't rely on as much speculative technology to make them happen and in work with Jaron Lanier we've proposed a framework along these lines called mediators of individual data these would be organizations a bit like the way that unions were in the late 19th and mid 20th centuries that would serve three roles that we think are really important first they would act as collective bargaining organizations to protect the value of data and to ensure that a fair share of the value of that data goes back to the people who produce a second they would play a lot of the roles in these discussions we're having about information quality and fake news and so forth we can't allow those decisions to be made in a central set of platforms in Silicon Valley and we can't allow them to be made by governments and if we don't come up with a civil society based alternative to that that is not implementable in ten years scalable in ten years but scalable in the next two or three years that's what's going to happen and the moment that marine lepen gets elected the moment that you get a strong extremist government they are going to take that power and they are going to use it to establish potentially much more frightening totalitarian systems than we've ever seen before so we need to create these new civil society organizations that can be repositories not just of this economic value and these privacy issues but also of the information that we're getting and certifying that information is writing and as quality rather than at all being done in some central way and these are gonna have to help people deal with the tension there's a huge problem with attention hacking by these platforms and we can't just rely on the state or even a single civil society organization to give us the right answer in this there is no right answer we need to find a new way for people to organize collectively in order to manage their own agency and this is starting to happen this is something that can happen in the near term there are hundreds of startups that are trying to do things like this and and there are pluses and minuses we have a piece in the Harvard Business Review called a blueprint for better digital society that tries to discuss some of the principles they should obey but it's happening and Angola Merck will give a speech talking very much along these lines and even the large tech companies are increasingly thinking about this because they see the unsustainability of the extreme power that's being put in their hands and the risks of that being co-opted by someone else but we're also trying to build a movement of people around these things both near-term and long-term to allow them to communicate and talk and to start to transform people's ideas so that they can embrace these radical decentralized visions of the world and this is what we called radical exchange this is going to be a conference about 1/5 the size of Def Con in March and it's led by jeffrey lea who's the executive director and it is a community to bring together so many different types of people there have been enormous investments dozens of startups I'm sure there's many people in this room who are doing things related to radical markets within entrepreneurship and technology there's all sorts of research going on but there's also wonderful artists making things around this and art is so critically important because the truth is in a decentralized world power comes from people's ideas and their senses of legitimacy not from central authority so we can't just go to policymakers and make them implement this we have to be the change we want to see by actually helping these idea pervade the feeling of life of the broad public not just tech nerds and we're also engaging we're building all sorts of activist organizations these organizations are popping up on college campuses in countries all over the world and we have an incredibly diverse range of people involved with it because that's what we need to have robust systems that take into account all of the social problems that are necessary to really build decentralized future leading our ideas and research track is not another economist like me or a computer scientists it's a Nonya Chakravarthi a post-colonial historian at Georgetown University leading entrepreneurship and technology is your beloved Mamie Rheingold who is leading Devcon this year yeah let's give a hand for Mamie she's done an amazing job and we're so lucky to get some of her attention going forward for radical exchange and we've got a wonderful artist Jennifer Lin Marone who's been doing great work on data slavery and the way in which people are oppressed by the corporate form but it's not just lefty people these ideas speak to libertarians and they speak to socialists they speak to centrist and they speak to populist these are ideas that can connect so many of these different visions because they embrace the challenges of liberalism but seek for a liberal society and so leaning our activism and government track we've got one of the largest most the most important activists for charter cities Marc letter and I hope some of you out here will consider getting involved with this if you really believe in the principles of decentralization we need not just the cryptography we need not just the technology not just the data we need the social technology we need the social organization we need the institutions that can maintain decentralisation persistently so it doesn't degenerate into the plutocracy that I fear the naive principles that ended up getting embodied into a lot of block chains are leading us towards so with that I I guess I have one minute so if there's one question I'd be happy to take it and I'd love it if it was from a woman or someone from an underrepresented community anyone okay go ahead sorry for not being a woman yeah I know it's fine don't worry about it so unfortunately I haven't read your book yet yeah but I did read about harberger stacks yeah and your solution for the monopolizing assets yeah concretely real estate for example and is it applicable in these cases for social networks and marketplaces which basically are also can be concerned seen as a common good yeah yeah absolutely and I think I think that this can be applied to the ownership of intellectual property it can be applied to the ownership of corporations but also we can seek even more radically than that to fund organizations that are not based on a monopoly for profit principle but are based on a principle of the public good that they bring to people which is the idea of behind liberal radicalism so could also fund alternative new forms of organization that are actually based on this principle of public good with that I will leave things thank you so much and I'm looking forward to working with all of you in the future