Good day everyone, and welcome to another episode of the Momenta Edge Podcast, this is Ed Maguire,
I’m so happy to be here, thank you for having me.
First, just to provide a bit of context, could you share a little bit about your background, and some of the factors that have shaped your thinking, and we’ll get into it a little bit later. But I think your book really takes a unique and very broad historical view of a lot of the forces that are coming together, to drive this decentralization trend.
Sure, and it’s never occurred to me until this moment that a question about my background would somehow inform my thinking now, but I guess it really has. Let me put it this way, I did my graduate work in philosophy, and philosophy is a pretty useless
So, I got pulled into writing about tech by a friend and got hooked on everything to do with technology. But marrying that with the background in political philosophy, philosophy of mind, which is what I did my graduate work in, and then having to do a job writing about emerging technologies, those things started to weave together, those interests started to weave together in ways that I think have only now reached their fullest expression, and I’m very happy to talk about that.
That’s great. Philosophy comes up in the discussion of decentralization,
I really do think that being able to think about the world is hugely useful in pulling together all these different threads.
I’d love to get a bit of a sense of the forces and the context that
Well, it’s interesting because in thinking of it in philosophical terms, which not everybody is used to doing that. There’s a couple of what we might call levels of description to this phenomenon, let’s call the phenomenon the social
Philosophically I think what’s interesting about it is, the fact that at some level of description there is a non-ideological aspect to this, or should I say, it’s not ideological per
So, when that process happens, we join communities of practice, opting out of old systems and into new systems that are much more
But if we think too much about it, our head starts to spin, suffice it to say, decentralization allows for much more experimentation, many more systems of governance that we can opt into, and in doing so we’re going to find far better ideas or perceptions of the good, far more diversity in the kind of communities we can create, and also I think the kind of businesses we can architect which aren’t based on old legal structures that we’re used to.
Let’s talk a bit about hierarchies, and in your book and your talks you talked about the origins of social hierarchies, and the role that having these centralized organizing model adds value, but also the way that our current structure has evolved, has resulted in horrifically polarized culturally and political environment in our country, where it’s become as I think you’ve described it, its trenched warfare. Wherever you fall on the political spectrum, I think all of us are concerned that there are many incentives that really do not encourage people that at their best are the most civil. Again, it resulted in some real
It’s such a fascinating and complex question that you’ve just
- This is really a theme of the book, ‘The Social Singularity’, which reappears over and over again in the book, and that’s a quote from a guy Marshall McLuhan, a social theorist from Canada who is no longer with us, but he was really an important 20th Century figure in social theory. This fellow has a quote which he is credited with saying, ‘We shape our tools, and then our tools shape us’, I develop corollary to that which is, we shape our rules, and then our rules shape us. So this vacillating tandem between the rules we live by and the cultural aspects of our lives, the way we behave, because any time you have a rule set you
createa set incentives, incentives are not just like I pay someone to do something, and they do it or not, or I offer to pay them something and they do it or not. It’s also that any time you have a rule that gets enforced through whatever means or providea framework of movement in certain directions and not in others, you create an incentive system, and that’s just the way things are, slowly over time these incentive systems shape culture. Now, that’s not to say that culture does not also shape the systems, it most certainly does;but focusing on this causation going from the rules to the culture for a minute is important, and here’s why.
- This whole business of why politics is so awful and acrimonious. You mention hierarchy and that’s certainly what politics is meant to sure-up and protect, but social hierarchies are a phenomenon and that will be part three, which I’ll come back to in just a moment, but the little detour here is in terms of American politics, and I don’t want to alienate any readers from other countries, because I’m quite sure they suffer from similar kinds of partisan stripes to the United States, but to be centered on us for a moment here in the US, we have a two-party system and it seems that people are interested in both the spectacle on the one hand, and in arguing over who gets to sit at the top of the hierarchy to make the rules for everyone else.
In practice even if we thought this was a good idea, this is not really how things exactly play out, there’s tons of compromises, horse-training, and all kinds of other influence by special interests that really does govern so much of what we do, so even if we thought our votes counted or mattered, which they really don’t in some grand statistical sense here, you’re trying to change the tide to your teardrop in the ocean, it just isn’t terribly effective. But those special interests they really do hold sway in so much of what’s going on, and the areas where we might have more control or influence over the political process where we install people at the top of the hierarchy, would be much more effective if we paid attention to local politics, but we don’t.
The dynamic is such that it’s always about what Trump said, or it’s always about what Trump’s opposition said, or what sort of shenanigans are going on at the national level, when we have much-much more direct influence over things that are happening locally, that people really don’t care; most people don’t know who their congressman is, and their senator they might, but beyond that your alderman or your city council person, respectively you may not know.
So, this is a problem, but I think it is really an evolutionary feature of the system within which we find ourselves, and the media creates a set of incentives, the political system creates a set of incentives, and it’s really designed to be rather
That may seem a little weird to hear for your audience, but I think largely it’s the case, and it’s not to say that democracy isn’t better than the past where we were living under dictators, or where we resolved conflicts with bullets instead of ballots. But now we have the ability to do better, and I mean much better, we’re starting to see that in some of the technologies coming online.
So, to part three quickly, if my brain can handle it! And then we’ll get to the next question, I promise, and that’s this whole business of hierarchy.
So, protecting territory was of utmost importance, and the difference between not just mine and thine in a private property sense, but ours and theirs, was very much on the minds of people in a tribe, and if you wanted to act quickly, if you wanted to act quickly in unitary fashion against the enemy, i.e. those who are going to compete for resources, you had to organize yourself in a hierarchy quickly, and have someone who was strategically quick on their feet, a strong leader. In order to do that, that’s how you’ve maintained the territory, that’s how you protected your people, and that’s how you moved quickly relative to any sort of external circumstances such as a tax on that territory.
The development of hierarchy is an
So, that is a lot Ed, and I really appreciate you letting me talk about it, but these are all interconnected things, and this phase, this phase of hierarchy and partisan politics that we’re seeing now is coming to a close, and how it evolves, how it changes is a scary thought. My hope is that it is an easy transition, that people rapidly adopt the technologies we’re talking about, and see the benefits of them quickly, just as we’ve stepped out of the cab into the Uber as it were. But it’s not clear that’s going to happen, there may be big wars between hierarchies and network relationship situations that are ahead of us. It’s just hard to predict.
No doubt. Well, the reason I asked about politics, and on a podcast series where we’ve been focused a lot on connected industry and advanced technologies, it might seem a little bit out of left field. But there’s a reason that I asked
I had a fascinating conversation with David White who is a cognitive anthropologist several episodes ago, and David was an old buddy of mine from my jazz musician days, so it’s funny how we all end up in different places. David had talked about the difficulty that organizations have dealing with digital transformation, so in larger businesses or economies that are shaped by businesses that are adopting technology, and having to really adapt both their cultures, their business models and even fundamental processes about what people do, you do have the same phenomenon of incentives that evolve, that shape people’s behavior and they get fixed into these patterns, and it becomes very difficult to shift patterns of behavior, or recharacterize roles.
Anyway, there’s a lot of relevant lessons to
Well, there are a lot of factors I think that lead up to this, and as a prelude to answering the question, I want to go very quickly to your friend David’s observation, or both of your observations, that people get stuck in systems. There are network effects in systems that make it very difficult to exit, and we have to look at network effects, but it can all be boiled down to two T-costs I guess you could call them, which is transition costs and transaction costs; is it at some level easy for me to transition to the new system, whether that be through a not so steep learning curve where I can easily
All these transition and transaction costs question are really-fundamental to the way we do systems thinking, and that’s the abstract part of this.
But to your more concrete question about 2008, you mentioned that year, and I think everybody is very clear, particularly those folks who are in the financial sector and in the business sector, with everything that happens with the housing market, the economic collapse, the financial sector at the precipice, and there’s a lot of debate about whether or not the financial sector should have been bailed out, and you have this phenomenon of privatized profits and socialized losses. Some of the poorest people and
Now, we can get into some ideological conversation about whether or not it was the right thing to do to
That sort of radical Cypherpunk philosophy I think had a very definite set of cultural and ideological dints for Satoshi Nakamoto, so, here’s an example of maybe culture affecting the rules because what Satoshi set about to do in the Bitcoin white paper, was to create a situation whereby there was no third-party, there was no central bank, no financial intermediary whatsoever, except for the entire community itself organized as a network, a network of both contributors, minors, and by now most folks probably are aware of the way the bitcoin/blockchain works, how money works.
As imperfect as it is, it was a quantum leap past the way we think about our financial institutions. It very much still is, it’s still an evolving eco-system with a lot of different participants and people, who benefit from the creation of that eco-system, its organized in such a way that you might call it decentralized or also self-organized. That feature where the need for a mediating structure like a
Very often, the way people learn about systems is not through abstractions, they learn through use, they learn through adoption. I think that is really the most promised… and by the way Ed, Dan Hughes or someone like me who loves to think and write about abstractions, and loves to teach people about things, teaching philosophy in higher education, or writing articles or writing books is what I love to do, but I think most of this is going to be catalyzed through people like me perhaps, who want to talk and write about this stuff, but ultimately mass adoption is going to happen through other means.
There’re some fascinating examples in your book, you talk about the importance of decentralization as a new social,
Yes, I think the best I’ve heard it perhaps described is by Andreas Antonopoulos who is a cryptocurrency evangelist. He describes it as dumb networks, the Internet is a dumb network; so, we went from an era, remember back when they had to break up the bills into baby bills, and Ma Bell’s was no longer. We spent time away with consolidation for various reasons, but back then, I think it was the eighties, there was a time in which it was amazingly byzantine system of people in the background, or systems in the background, particularly back in the old days, the forties where you had people staffed to plug in different plugs to connect people in the network, and that was all highly centralized. You would go to a place and when you dialed the operator, they would connect you with someone else, and that was something that happened not peer-to-peer, or person-to-person, but through that great big byzantine intermediary.
When you can create certain kinds of protocols that allow for lateralized and peer-to-peer relationships, that’s a game changer, and it tends to be the case that the relative complication of the rules that
But when you design protocols that are like done networks and create opportunities for people to connect and lateralize their relationships peer-to-peer, the game completely changes and self-organization is enabled to happen. That’s what we’re seeing now in some of these decentralized technologies, and with so much experimentation it’s starting to look like the basics of a coral reef almost, you’re starting to see this whole array of different – I guess you’d call them species or different system types that people can join or exit, and that’s because of the development of dumb network protocols, and the ability to enter and exit systems as is beneficial to the agents who are opting into those systems.
This process is going to push us to the social singularity whether people like it or not. And of course, partisans don’t like this, because no partisan wants to hear that there’s something valuable in what every other partisan has to say. Conservatives are right in that we have to be very careful about
If you take the wisdom of different partisan tribes and weave them together, and synthesize them, you don’t have to have arguments about politics anymore, just like businesses and start-ups are out there trying all sorts of iterations on ideas, to see which one is going to work best in the evolutionary fitness landscape of the market. If we transpose our ideological priorities to that marketplace, you might call a marketplace of governance, if we’re going to see just an array of systems that we haven’t been able to imagine before, then the best systems are going to win. The weaker ones, the ones that are not as successful, the ones that depend on pacts and threats are going to eventually lose ground to those that are able to have their own gravity, by pulling people into their orbit.
Yet, paradoxically, the ones that are successful may be much more communitarian than we can anticipate, so it’s not a political or partisan position at all to make that claim, it’s a reconciliation for different partisan positions, and that’s going to be different, and it’s going to change our culture I truly believe.
It is really fascinating what you’ve just described, essentially this marketplace for the best ideas to win an implementation. The capabilities of Blockchain of course as, we’ll say, the fundamental engine of implementation for decentralization, there’s a lot of key innovations, and I’d love to get your quick take or your reflection on some of the more important innovations that have evolved from the decentralization principles into blockchain. One of the features or capabilities of smart contracts, there’s tokenization,
I say this with the
It’s sort of
But we are seeing opportunities, for example in some of these systems, I think some of the guys behind Holochain like Arthur Brock and Eric Harris-Braun, were motivated also by the 2008 phenomenon. They saw a bunch of highly-wealthy people, they saw a bunch of very-very powerful government officials, and they all colluded to basically rescue a system that was broken, until the next time it would have to be addressed. They kicked the can down the road in large measure using
Then you had Satoshi Nakamoto, the developer of the original blockchain, who had the same kind of sentiments. In the genesis block of
But back to the question, what would I put my money on? Personally, I think HOT is a very interesting token, and the technology behind it
So, we’re designing our organizations… any kind of technology that allows us to run our organizations more like organisms instead of machines, where
I think you’ve really hit on the fundamental precept here that it is this idea of redesigning incentives as a seed for what you refer to as human fractals, that allow organizations to develop organically. This is a pretty new idea, we haven’t had the capabilities or the technology, or frankly the connectivity to enable this mass self-organization before, but I think it’s incredibly exciting.
I’d like to flip the focus to at least what you see as some of the challenges to mainstream adoption of these decentralized technologies, whether
To me, it’s easy to state and hard to fix, and that’s three things, simplicity, security, transaction fees. If you can make it cheap to adopt in terms of transaction fees, that once you’re using it, every time you use it its cheap to do so, that’s great.
Security, if I don’t have to manage all sorts of wallets, and figure out all kinds of private keys, writing them down somewhere, stuffing them somewhere else, and there’s some mechanism by which if I die someone else can access the private key. There’re all these other considerations for security that in order to have security adds layers of complication, which I think are not doing as much justice in terms of adoption.
So, that then leads to simplicity, just make it easy for people to use. Now, one of the reasons that Coinbase is so successful is, when you get on there it’s just like breathing. But Coinbase is a central house exchange; in order to use
Yes, no doubt. One final question, you’ve eloquently covered some extraordinarily complex topics in our conversation here, but I think your last point boils down to the fundamental precept of when we’ll see a real inflection in adoption, and that is simplicity. The implications are incredibly complex and powerful, but assuming that does come sooner than later, what are some of the implications that you’re
The way I would put it is this to answer your question, this is a pretty well-played, beat up, and hackneyed example, but I’m going to use it anyway, because I think it gets us to where we want to go, in this broader question of how we move towards a social singularity, and to that inflection point where society is more lateralized than it is hierarchical, more networks than it is hierarchical, which is loosely how I define the social singularity, at that point when we’ve gone over the
The example is as follows. Uber is from a technical standpoint technology-wise highly centralized, but what they created with that technology is a peer-to-peer marketplace where buyers and sellers of services could meet, you could awaken capital in your automobile that was heretofore dormant, you could use that capital to make some extra money, and people who needed a ride find a ride. So, drivers and riders had a matchmaking service.
This operated within a legal grey area, and everybody’s familiar with the story of how people migrated from taxis to Ubers, and of course the taxi cab monopolies threw up a fit, and understandably so, because they had to invest in these artificially restricted taxi medallions whose supply was artificially scarce to government policies and so-on. They were understandably upset if they owned one of these medallions, because suddenly there’s this company operating in a legal grey area, and it’s taken over the world, rapidly, very-very rapidly. But the constituencies that were built up around Uber so quickly made Uber much more a force to be reckoned with, than we have ever seen before.
So, Uber and bitcoin, both are what we might say are the first examples of our ability quickly and easily to flip, and this is going to sound a little nerdy but I’ll just try to describe it in as simplest terms I know how; there’s this great old economist who is no longer with us named Mancur Olson, he described the decline of a lot of civilizations over time, in terms of what you might call concentrated benefits dispersed costs. So, we’re not aware that we pay a fraction of a penny to subsidize mohair industry, but ever since the World Wars, maybe even World War I, we’ve been subsidizing mohair which is a form of wool, in order to make jackets for the military, so that we could get through harsh winters in Europe in World War II say. So, our boys needed the mohair, so we subsidized it and made it cheap, at least I think that’s the story. But anyway we subsidized mohair, and we’ve never been able to get rid of the subsidy,
So, we have this ignorance problem for all the things that get funded in these fat bloated subsidized industries. But we also have very little
That is an inversion, it’s a slit, a kind of a flip of a switch, so people always say, ‘Well Max, all this decentralization stuff sounds great and everything, but how is it going to work?’ I say, ‘If you can create something, and within a year you have 20 million users, that is a heck of an unstoppable force’. Uber’s still around, Bitcoin is still around, and its growing and growing, and more and more of these kinds of structures are forming on this earth, and yes there’s probably some sort of arms race going on behind the scenes between the regulators, the Russians… I say the Russians, jokingly! But there’s all this stuff going on behind the scenes in terms of how to maintain the current social order against the onslaught of these new networking technologies.
It’s going to be interesting to see which prevails, it could be the central power prevails, but it’s going to take us into a dark-age in a very-very hierarchical situation, even totalitarian in order to stave off the network age, the social singularity. It would take very-very totalitarian means to do so, but I wouldn’t put it past. If history is our guide, we’ve got to be careful about that. But you asked me why I’m hopeful and why I’m optimistic, the reason I’m optimistic is people power. Really these technologies are harnessing the energies and the incentives of millions of people, and it’s just a beautiful thing to see.
It really is something brand-new and incredibly exciting, and I do share your sentiments as well.
One final question, and Max this has been fascinating. I can’t believe the time has just flown by, and it feels like we’re barely scratching the surface of this topic, I always like to ask my guest for a recommendation of a resource or a book that you find valuable, that we can share with the listeners.
There’s just so much out there I love, and so I promised me when you sort of intimated that this question might come up at the beginning of the show, I said, well Max take the first one that comes from the top of your head, and that’s what I’m going to do. I want to get the title of the book right, Matt Ridley has a book that I don’t think did very
It’s not ‘The Rational Optimist?’
Oh, that’s a good one, that is absolutely a good one! I would say this is a more recent one called ‘The evolution of everything, how ideas emerge.
I haven’t read that one, I’m definitely going to get that. That’s terrific, I did read the ‘Rational Optimist’, but I hadn’t read the new one. Thank you for that.
And now I just need Matt Ridley to go on a podcast and tell everybody to read, ‘The Social Singularity’, and I’ll be rich.
It is a terrific book.
Wrapping up our conversation again, this has been a conversation with Max Borders the author of the book, ‘The Social Singularity’, and founder of Social Evolution. This has been Ed Maguire, Insights partner at momenta with another episode of our edge podcast. Max thank you very much for a great conversation.
Always my pleasure Ed, thank you.