A look into the new book “Radical Markets” by E. Glen Weyl and Eric A. Posner, and why its principles play so nicely with those of Ethereum.
Distributed ledger technology (DLT). Cryptocurrency. Blockchains. Although the world has begun to pay attention to these new technologies, society hasn’t changed much – despite all the talk of a “decentralized revolution.”
Many of the world’s leading companies and a few governments have begun to explore the advantages of DLTs. Even the United Nations is developing multiple use cases to aid in its humanitarian efforts.
But the “decentralized revolution” has yet to be actualized in a tangible way that truly changes things for the better. Even the creator of Ethereum, Vitalik Buterin, has stated the need to differentiate between “hundreds of billions of dollars of digital paper wealth sloshing around and actually achieving something meaningful for society.”
A new book released by Princeton University Press might hold the answer. “Radical Markets” is reinvigorating the Ethereum ecosystem with ambition to change the world for the better by helping to create a more just and fair society.
Buterin on “Radical Markets”
“Our premise is that markets are, and for the medium term will remain, the best way of arranging a society,” authors E. Glen Weyl and Eric A. Posner explain in “Radical Markets.” But the dilemma facing this position is that “while our society is supposed to be organized by competitive markets, we contend the most important markets are monopolized or entirely missing, and that by creating true competitive, open, and free markets, we can dramatically reduce inequality, increase prosperity, and heal the ideological and social rifts tearing our society apart.”
Buterin’s own review of “Radical Markets” makes it clear that, while there are strong parallels between the book’s thought experiments and the continually developing Ethereum ecosystem, the former goes far beyond notions of a “decentralized revolution” by drastically rethinking how to arrange our civilization.
By radically expanding markets themselves into previously untouched areas of our lives, Weyl and Posner postulate how to make a better world. “Even if some of these proposals ultimately prove unworkable in testing,” write the authors, “we hope that the Radical spirit behind our ideas will take broader root.”
A number of ideas penned by the authors could be unsettling for some, especially when it comes to concepts of property, money, and markets. However, their courage to fully embrace new possibilities and fresh insights is more than redeeming. Buterin himself agreed that “the book does go to considerable lengths to explain why each proposal improves efficiency if it could be done.”
In addition to endorsing “Radical Markets” for its “multifaceted and plentiful” intersections with Ethereum, Buterin further described three of its main selling points:
- There is a focus on “mechanism design to make more open, free, egalitarian and efficient systems for human cooperation.”
- The fact that “blockchains may well be used as a technical backbone for some of the solutions described in the book.”
- The technical and social challenges addressed by the book are akin to those facing the blockchain community.
Weyl on Ethereum
ETHNews had the opportunity to speak with Weyl about his inspiration for the book, the ideas therein, and why his work draws such strong correlations to Ethereum:
“I think that Ethereum is a fabulous platform for experimenting with our ideas because of the close philosophical alignment between their desire for a decentralized, just society and the detailed design we offer for how such a society might work … The openness and creativity of the community and the endless possibilities for experimentation generally make [the Ethereum ecosystem] a perfect place for trying out these ideas. And because Ethereum and other blockchain communities lack central, trusted authorities, they desperately need rules that can maintain their egalitarian values absent such authorities. I know of no other comprehensive system of rules that offers that possibility other than ‘Radical Markets.’ So, in this case, I think both sides really need each other and fit together incredibly well.”
A Solution To Economic and Political Stagnation?
In addition to “Radical Markets” being ideologically relevant to some aspects of Ethereum, the book comes at an ideal time to directly address some of the most pressing issues currently gripping our society in the 21st century.
“The arguments of both the Right and the Left had something to offer when they originated in the nineteenth and early twentieth centuries, but today their potential is spent,” Posner and Weyl write. “No longer bold reforms, they box us in.” In order to truly open up and explore new social possibilities, we need radical redesigns that create new paradigms, not just fix flaws in older ones.
The ways we live, work, and relate to one another as people are changing. Our technology is evolving so quickly, experts tell us the transformation and techno-social impact will be unlike anything humankind has experienced before.
While no one knows precisely how these changes will unfold, theories of this transnational period in our civilization are explored in what is referred to as the Fourth Industrial Revolution. This speculative phase stands to blur the lines between the physical, digital, and biological realms – synthesizing, fusing, and combining existing technologies into new configurations – giving birth to new possibilities and driving light speed advancements in our technology.
Yet, there is hardly cause for joy. While some parts of the world are set to embrace the coming changes, other areas are in danger of being left behind. Rising inequality, stagnating economies, and decreasing trust in our political systems have emerged as negative side effects of our modern age. Additionally, it remains unclear how these meta-trends will affect humanity if we surge forward technologically without conquering our societal demons first.
Mechanism Design to Conquer Evil
“Radical Markets” builds on the work of Henry George, who wrote about the prevalence of systemic poverty despite technological advancements in the 19th century. Although much of his work was widely forgotten by the time of the combative struggle between Capitalism and Communism during the Cold War, George’s ideas live on in academia via the field of mechanism design.
“Radical Markets” lays out five novel hypotheses that could help realize some of the potential George was trying to capture in the 1800s.
1) Common ownership self-assessed tax. It might sound crazy, but imagine that every owner of private property would self-assess the value of that property, pay a small tax on it, and stand ready to sell that property to anyone who wants to buy it at the specified price. Money would be paid into a pool and refunded as a “social dividend,” effectively as a type of universal basic income.
2) Quadratic voting (QV) is a system by which every citizen is allotted an equal amount of “voice credits,” which are used to digitally express opinions. (The book suggests that these could be managed via a smartphone app.) The system would allow people to allocate their credits to the issues they care most about. Weyl told ETHnews:
“Quadratic Voting makes people pay a cost for expressing strong opinions by forcing them to give up influence on other issues … Each voter is forced to prioritize what matters most and how much to them … The way QV does this is by making the ‘marginal cost’ of votes (the cost of the next vote) proportional to the number of votes already cast. Thus, when voters buy votes (as they rationally should), up to the point where the marginal cost of the next vote just matches the value they derive from a vote, the number of votes they cast will be proportional to the value of a vote to them. The quadratic function is the only one with this property, something I find remarkably simple and elegant, and that I suspect is also a draw for technically minded people like those in the blockchain community who appreciate beautiful and unique solutions to difficult social problems.”
3) The “Visas Between Individuals Program” is a scheme that could reshape human migration by funneling the benefits of migration away from large corporations, which often hire migrants, to ordinary people who would sponsor said migrants to live with them. The authors advocate for policies that create a more efficient and politically sustainable market for migrant labor.
4) Limits of financial holdings are needed in order to break the stranglehold that institutional investors have on the corporate economy, and current anti-trust laws are failing to keep them in check. The chapter on this is affectionately titled Dismembering the Octopus.
5) Perhaps most relevant to current events: Data labor markets must be addressed. Platforms like Facebook and Google are profiting off of our data every day. This is explored more in the next section.
What to do About Data Labor Markets?
Weyl elaborated for ETHnews about how data labor markets could emerge. “First, we need data laborers, folks like you and me and all of us, who have our productive data taken every day by digital platforms, to get #cyberwoke to the current unfair trade online, and band together to create data labor unions that can collectively bargain with data monopsonies/monopolies. I suspect this will happen through a new set of ‘personal data exchange’ and ‘data agent’ startups, many of them (such as Meeco) heavily using blockchain and even Ethereum technology,” the author said.
“Second, we need changes to government regulation to clarify individual ownership over data and erode the deceptive and monopsonistic practices of digital giants like Facebook and Google. The European Union’s new GDPR regulations are a good first step, and something like that should be passed in the US; I suspect these regulations coming into force at the end of the month will be seen as the real launch of the data labor movement. But we also need reforms to labor laws that are largely inconsistent with modern data labor … [This] could play a critical role in supporting the movement.”
He concluded with, “Finally, we need more competition from tech companies like Microsoft, Apple, and Amazon that rely less heavily on exploiting our data. They can help wake up data workers to how we are being taken advantage of and help build tools that can empower us.”
Hope for the Future
While Weyl is somewhat of an outsider in the cryptospace, he might be exactly the type of thought leader the Ethereum ecosystem needs. Not only do his ideas carry a special interest for current leaders like Buterin, but his obsession with fixing society’s broken systems and striving for something better is quintessentially Etherean.
Looking forward, Weyl mused, “Perhaps the most striking thing about the book has been its appeal to students. I have been amazed by how students and young people are entirely free of the prejudices and assumptions that close the minds of so many of my learned colleagues to thinking about new ways of organizing society … It really makes me believe that these ideas belong to their generation, not mine or Eric’s.”
