Chapter 8: Free Market Parity Through Decentralization
Chapter 8: Free Market Parity Through Decentralization
Originally Published 9/27/19
The following quotes illustrate foundational ideas and warnings for a free market to flourish which I believe have been lost in what has been rendered, especially through the lens of the evolution of the web to date as a centralized force beholden to shareholder growth over stakeholder interests.
“They say nothing concerning the bad effects of high profits. They are silent in regards to the pernicious effects of their own gains. They complain of only those of other people”
―Adam Smith, The Wealth of Nations.
“How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it.”
― Adam Smith, The Theory of Moral Sentiments
“Labour, therefore, is the real measure of the exchangeable value of all commodities. The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.”
― Adam Smith, The Wealth of Nations
It is important to note the mission of this essay is not to devalue the importance of the shareholder or corporations in the market but to call out the evolution of the free market away from core principles tied to the productive exchange of labor to a reliance on shareholder growth we see today. Where the stock price of a good or service has become more important than the efforts and interests of the stakeholders (workers/consumers) involved. A reality more reflective of a game of roulette than a plan for a representative market, better at keeping a few freighters afloat than lifting most boats.
All shareholders are stakeholders and some stakeholders are shareholders so the quest for balance is either within us or among us. Either way, the lack of parity between the two fails the tenets of capitalism’s promise of enlightened self-interest in a mutually beneficial environment for trade. A reality bearing down on an exchange of value attached to a perpetually moving bottom line chasing quantity sold at the expense of quality delivered or raising the threshold of quality outside the reach of the average stakeholder.
In a free market, McDonald’s stakeholders have a right to eat or make an endless supply of big macs and shareholders have the right to profit from it. Just as shareholders have a right to profit from stakeholder’s insulin shots, their college degrees, or the information they consume but at what point does the pendulum swing too far to shareholder interests where the health of the market is sacrificed? Where the lifeblood of a free market, the enlightenment of self-interest, are either priced out of the market or under-served by the quality of it.
In the mid-90s, the birth of the World Wide Web was the great hope to bring stakeholders into parity with shareholders through the power of choice but Web 2.0 arrived and corralled stakeholders into silos of corporate influence widening the gap instead of narrowing it. A gap fueled by a top-down exchange feeding off an increasingly non-productive exchange of labor rapidly moving stakeholders through information rather than into it where the potential of labor erodes not only from the distractive forces of the web but also through the replacement of labor through automation. It seems the lever of technology through market forces appears to be more of a facilitator to benefit provider influence than a catalyst for users to benefit from the spoils of their labor. We have to ask ourselves if we are in a free market or an influenced market? The argument here is that we are in the latter.
What then is the best course of action to achieve parity between the stakeholder and the shareholder toward a more representative free market? In my mind, it is not through fiat or redistribution of wealth but through the distribution of opportunity to enlighten self-interest in a mutually beneficial environment for trade. And It so happens we have the best mutually beneficial environment at our disposal, connecting over 80% of the developed world’s producers and consumers. But the problem is the world wide web has been co-opted by commercial pursuits influencing self-interests more than manifesting self-interests from user’s agency. Where a lack of user/stakeholder control over their own experiences tamps down the broad spectrum of human ingenuity available within a free market of ideas, especially in a connected one.
What is possible when the stakeholder retains control over the experiences they consume and what they produce? When they have agency over what they find rather than what Facebook, Twitter, Google, or Apple finds for them. When they are in control, connected, and not distracted, what could stakeholders find or produce at work, at play, in competition, in their community, in their government, or in their relationships to drive better realities forward? To cross-pollinate value derived from their efforts regardless of their station in life to bring more human capabilities to a market rapidly being outsourced by automation.
As the web continues to become the gateway to the market through an endless collection of public websites, productivity apps, social silos, corporate intranets, sensor data, and e-commerce transactions, an opportunity exists to elevate the role of the stakeholder to bring back foundational ideas of labor driving the free market. Not through the centralized, top-heavy web, we see today influencing engagement but through a decentralized connection inspiring influence to emerge from a user base of stakeholders in technology, business, community, civics and the market in general. A connection strengthened by user inquiry, collaboration, and context to push the market forward in the interests of the connected rather than the connecting.
What would a decentralized connection look like? Many potential solutions are arriving on the scene today but there is one legislative framework and three foundational technological frameworks I believe speak well to moving stakeholders away from an influenced market to a free and influential market through decentralization.
A Bill of Data Rights
This might be the most important of the four as technology frameworks are a combination of 1s and 0s but the information created and consumed is at the core of the human experience. When humans do not own their experiences, how influential could they ever really be? The EU’s General Data Protection Regulation (GDPR) is looking to answer this question of ownership by protecting user data rights through legislation, illuminated through the following opening passage of the GDPR, “The protection of natural persons in relation to the processing of personal data is a fundamental right.” An opening salvo establishing personal data rights as the U.S. and the rest of the world grapples with the political and economic realities of putting a genie monetizing user experiences back in the bottle.
No easy task as monetizing user experiences are at the very core of Big Tech’s business model and part and parcel of their continued push to influence consumer demand. Big tech may be a small slice of the entire market but now that data is the most valuable asset in the world, with a handful of companies effectively controlling the flow of consumer data, the stakeholder is becoming less influential in the market limiting the scope of human potential. But is the fix a question of data ownership or data rights?
An essay from MIT technology review titled, It’s Time for a Bill of Data Rights, argues data ownership “not only does not fix existing problems; it creates new ones. Instead, we need a framework that gives people rights about how their data is used without requiring them to take ownership of it themselves”. Now that Facebook includes user ownership in their terms of service, we have to ask ourselves, can we trust them or any other information provider with our data? Should we ever have? But establishing universal data rights at a policy level is a difficult proposition in the absence of a technological framework to ground these rights to as it is difficult to enforce rules without clear boundaries.
Three technology frameworks coming onto the scene may help establish these boundaries by grounding data rights to the will and control of the individual user. To balance the interests of stakeholders with shareholders not only through Adam Smith’s division of labor but through a distribution of labor only possible through a secure and decentralized connection. A bottom-up connection better realizing Smith’s notion of an invisible hand pushing people to create, compete, and consume through the pursuit of their own self-interests to release human ingenuity into the market. Maybe the lack of a resonant connection between the exchange of producers and consumers is what has tied Adam Smith’s invisible hand behind the back of social progress all along.
The Decentralized Web
This is the first of the three technological frameworks I believe will help put the genie back in the bottle by re-engineering the web as a distributed connection to secure and empower user experiences over the interests of providers. Although there are browsers (Brave), Search portals (DuckDuckGo.com), and Social sites (Minds.com) committed to protecting user data, the vast majority of web destinations continue to collect user experiences to influence user behavior or sell these experiences to third party providers. Why would providers do otherwise when mechanisms in the market fall short of establishing and enforcing guidelines to favor the user? Why change when the public at large continues to devour experiences targeted toward their behavior over their explicit interests? If inquiry were a mouse a better mousetrap is needed to prime demand for deeper and more purposeful engagements across a wider swath of stakeholders. To empower human experiences from within and across personal domains rather than experiences only powered by corporate domains. This is the potential of the decentralized web, to securely store user experiences in a distributed and structured environment, serving as a culture in a petri dish of collective knowledge.
At the forefront of the push toward a decentralized web is the father of the world wide web, Tim Berners Lee and the startup Inrupt, built off of Mr. Berners Lee’s work at MIT on the Solid Framework. What makes the Solid framework stand out? At the core of the technology is the protection of the user experience through Personal Online Datastores (PODS) separating data produced, consumed, and shared by the user from the applications accessing the data (Social Media, Search, Browsers, Smartphone apps, etc.). A framework providing access to personal vaults or series of vaults protecting user data rights and their self-interests from the influence of outside forces. What is the point of enforcing user data rights at a policy level without a means to secure these rights at a system level? But the Solid framework is less a system of control than a standard to build off of providing developers an open environment using principles of structured data and the semantic web to move control over to the users.
What is possible when the user gains trust in the information they create, consume, and share? When they can manifest experiences to serve themselves and their communities better within a marketplace of education, healthcare, technology, entertainment, government, and social welfare? When a student can store their interests and situations in a secure environment (Solid PODS) to tune curriculum found in a learner application to help increase a thirst for the encountered subject. When someone facing a mental crisis could immediately match and securely connect their situation, insurance coverage, and billing information with the secure profile of a counselor with similar attributes bypassing the institutional trappings of a centralized approach to mental health. A couple of examples serving as only a glimpse of what is possible in an encrypted intentional exchange backed up by a “Bill of Data Rights”.
If the decentralized web were to be a trusted canvas to lay experiences on what are the motivations or best use of applications to render the most from the efforts of the stakeholders? In my mind, the following makes the shortlist.
Applications to;
Inspire deeper conversations
Allow for more controls over the filtering of information
Verify the authenticity of sources
Encourage the portability of information across domains
Increase associative properties between people, places, things, tasks, situations, and information
Enable the highlighting, bookmarking, linking, and sharing of information within documents
If you look hard enough you will find examples of these technologies in the corners of the web waiting for a framework to value the user over the provider. From the thoughtful and deep conversations surfacing from startup Cake.co‘s social network to a redefinition of skill development through the immersive and associative properties of Microsoft’s Hololens, innovative technologies exist to empower the role of the stakeholder in the market. What could be done to invite communities of innovators both small and large into helping build the future of a decentralized web? Regardless of whether the information is rendered through a computer screen, smartphone, tablet, smartwatch, or in the future smart glasses, windows, or mirrors, the experiences collected and shared could define who we are and who we could become. When stakeholders lack the proper tools to harness these experiences for the betterment of their own realities they will always be under-served in the market.
The current iteration of the web compromises user’s identities and is a distractive force of popups and experiences failing to capture the true potential of the user weighing heavily on the promise of self-interests engaging fully in a marketplace of ideas and goods. The Solid framework and what can be built on top of it is a great start toward fixing this by moving controls and protections over to the user for a web more representative of the stakeholder but structure is not the only ingredient in a decentralized connection to elevate the role of the stakeholder.
Decentralized Artificial Intelligence
If the decentralized web is the culture in a petri dish of collective knowledge, decentralized artificial intelligence could be the catalyst or the cheese in a mousetrap of inquiry. Artificial intelligence, not as a crutch for the human condition, but as a lever requiring human effort for the stakeholder to help balance the scales of the free market. Where centralized artificial intelligence is home to massive applications only affordable to the likes of a Facebook, Google, scientific institution, or governmental body; decentralized AI is an open and distributed framework allowing small scale deployments outside the control of large-scale corporate domains. What is possible when a group of precocious high schoolers harness advanced AI toolsets to help their community members crowdsource mental health solutions or farmers find a new organic compound to maximize crop yields through a crowdsourced initiative to tap into the minds of engaged learners.
Ben Goertzel and the team at SingularityNet.IO are leading the charge in this space by building a decentralized framework to tap into an unmined marketplace of knowledge to elevate user interests within the exchange. A democratic toolset to bring the power of artificial intelligence to the will of the user over the command of the provider. What is healthier for the market, one thousand developers creating AI solutions for one thousand use cases across one thousand domains or one thousand developers creating an AI solution for one use case within one domain? The latter may be healthier for shareholder growth but how could it be argued this better serves the self-interests of the user. Just as the decentralized web could inspire a distribution of labor beyond a division of labor, decentralized AI could inspire a distribution of knowledge beyond a division of knowledge. A distribution of knowledge leveraging sensor data to increase situational awareness for the benefit of users, parse and analyze words to help users find what moves them the most, help users mine the digital landscape to leverage the potential of their self-interests to resonate in the market, or help validate the authenticity of sources shared or to share.
But out of all the possible applications tapping into the promise of decentralized artificial intelligence, Singularitynet’s concept of Offer Networks stands out to me. Where the current exchange is dominated by primarily extracting monetary value from the market, a decentralized offer network adds the value of extracting skills, knowledge, and possessions from the exchange outside the influence of a central authority. In an offer network, AI would serve as a means to optimize self-worth between what is offered and what is needed or desired. An exchange based on the currency of self-worth paying dividends to a connected society when and only when the connection is free from centralized control.
Ben Goertzel refers to this as moving toward a post-money economy which may not please those in control of the flow of money but may revolutionize the way stakeholders participate in the market in the future. When I imagine Offer Networks, I often think of Jon Bon Jovi’s Soul Kitchen restaurant in New Jersey, where the hungry clean dishes in trade for a square meal. An analog equivalent of technology reaching inside human capabilities to serve self while meeting others needs or desires. If connected purposefully, what could a stakeholder provide to meet the specific needs of another? With a skill? An idea? A task? A different outlook? An item? An answer to a question? An exchange based less on one’s station in life and more on one’s interest in engaging with it reaching beyond physical or mental limitations or societal perceptions. An alignment of an offer not limited by proximity or conventional modes of an exchange tied to linear monetary rules but fueled by a non-linear alignment of interests assisted by AI. A currency of self-worth traded in a free market of possibilities engaged around the principals of money but not defined by it.
Money will always be necessary to buy goods and services but under the current model stakeholder interests remain muted by the static forces of a monetary exchange. In theory, offer networks will liberate stakeholders from the confines of a two-dimensional exchange to surface and validate interests and capabilities from within the individual and into the exchange. What task, skill, or information could a single welfare mother provide to an apartment complex in exchange for a reduction in her rent? How could AI align the offer with the need? Could the government provide an offset on this voucher with verification of her effort? Is this not a just use of labor in a free market? How many other scenarios could there be between people, between people and businesses, between businesses, and between people and their government representatives? With roughly half of the world’s population connected to the internet and rising, opportunities are within reach and lie within each of us to impact real human progress. No amount of money will ever move society forward like billions of stakeholders being useful in a connected world.
Blockchain
At some level, the core of the technologies described above speaks to the fundamentals of blockchain technology where the decentralization of the connection is carried out through a distributed ledger to empower consensus amongst users with information shared. The following quotes from an article (Blockchain and Decentralized Consensus) summarize the concept of Blockchain and consensus ~ “Decentralized systems are distributed systems where a group of independent but equally privileged nodes operates on local information to accomplish global goals. These systems lack a central controller that exercises governance, supervision, and control over the system, thus allowing power to be distributed over the network in a more uniform and fair manner.” “Consensus is a shared view of reality that is agreed upon between different parts of a system”.
The last quote serving as a powerful statement toward the heart of this essay which is to build a network (market) of users (stakeholders) through consensus outside of centralized control. Currently, users on the web agree to the provider’s terms of service but more often than not, control is ceded as they log into the experiences created, consumed, and shared. A binary decision forced on the user to either go all in or not, relinquishing control of experiences in trade for new ones. But just as ant colonies communicate directly with each other as a collaborative effort outside instruction from the queen ant, as described in Steven Johnson’s book Emergence, blockchain offers a rethinking of the pathways between human experiences. Not through a centralized consensus of the majority pushed to users but as a distribution of experiences based on individual consensus pushed from users outside the purview of the queen ant.
In theory, in a blockchain, the more users individually connect the more powerful the connection would become. Imagine one million users connected from all over the world collaborating around ideas to help the poor lift themselves out of poverty. A chain representing users from all conceivable backgrounds and interests adding ideas, sources, votes, funding, and new potential connections to local, regional, country, or global chains. Where both monetary value and the value of effort would be aligned in the exchange based on the merits of individual contributions outside the confines of siloed experiences forming new pathways of granular transactions in service of finding and funding solutions. From crowdsourcing talent to help develop skills in local communities, pooling micro-funding to clean up blighted neighborhoods, or incentivizing self-help through the trading of utility tokens, humanitarianism could see a rise in the role of the individual stakeholder through the secure and distributive nature of blockchain technology.
In a TED talk on How the Blockchain is Changing Money and Business, Dan Tapscott spoke about an internet of information evolving to an internet of value through blockchain technology, where the ownership of experiences, objects, money, and land would become immutably attached to the owner. Mr. Tapscott used an example of 70% of land ownership throughout the world is considered tenuous where another party could dispute ownership due to poor record-keeping. Maybe this does not seem like much of an issue from a 1st world perspective but it does cut to the core of what is at stake when what we own is not attached to our own identity with no recourse to protect what is ours. What is possible in a future less reliant on intermediaries to maintain trust in the market and more reliant on self in the areas of philanthropy, business, science, health, government, and community development? Where a reliance on peer-to-peer insight rather than institutional oversight could be a catalyst for prosperity.
Admittedly, the Blockchain protocol has a ways to go to fulfill the promise of becoming a foundational technology for the future of the web as the tech remains energy-intensive and overly complicated. For now, cryptocurrency is the darling of the blockchain space reserved for crypto miners with deep pockets and code junkies with a penchant for puzzles but the real potential for human progress lies within the underlying fabric of blockchain technology. An environment more closely aligned with the natural human connection and the possibilities that lie within the depths of it. Which is why it should be incumbent upon thought leaders, legislators, investors, and the tech community at large to help drive these technologies forward.
Such as with Wikipedia co-founder, Larry Sanger’s address to a blockchain developer group where he asks what can be done to make the tech more accessible and usable to increase adoption. Or through congressional engagement such as with the Blockchain Promotion Act of 2019 setting a requirement for the commerce department to establish a recommended definition of distributed ledger technology within one year. Or through the continued experimentation and development of technologies using elements of the blockchain protocol such as Etherium’s Dapps, Everipedia’s Blockchain Dictionary, Orb’s Hybrid Blockchain, SingularityNet’s Decentralized AI, Inrupt’s Decentralized Web, and countless other innovative solutions harnessing the potential of distributive technologies.
But imagine a future where we have the world laid in front of and around us through VR, AR, and spatial computing. Where the speed of the connection removes the limits of what we experience. Where AI will predict what we know before we know it. Now imagine these technologies carried out in a non-distributive way where central authorities optimize these experiences outside the interests of the stakeholders. If we think the information flow is amplified and noisy today we are in for a rude awakening in what will be rendered in the future if the connection is not grounded to the interests of the users.
If we are looking for a cleaner, more equal, more just world, we might want to think about how we see it first as this influences how we act. Is it a trustworthy view or are we being manipulated by the fog of media elevating the whims of the masses over the inspired actions of the individual? Historically, the human connection has never had a mechanism to fold trust into the exchange the way it may be possible through a peer to peer relationship between users, objects, money, services, and information. Blockchain may turn out to be this mechanism by emerging and converging self-interests purposefully and securely into a market of ideas, goods, and services. A potential new paradigm extending value beyond the worth of possessions to the value of self-worth.
In closing
Every human being regardless of their station in life has a value of exchange residing inside. EVERYONE!! Could they solve a problem for someone else? Could they finish a task for another? Could they teach another from their mistakes or their successes? Could they entertain, resolve, or inspire? Sometimes the exchange would hold monetary value. Sometimes philanthropic. Sometimes just a simple exchange of information, possessions or capabilities. But the more the interests of the participants become aligned with each other, the more likely the exchange will validate the efforts of the giver and enrich the receiver. An exchange adding value from the pursuit of self-interest, which is the core tenet of a healthy free market.
This increase in value between both parties in the exchange is what is possible through a decentralized connection in a free market, aligning self-interests rather than influencing them through a centralized connection. Where a centralized connection favors a monetary exchange, a decentralized connection would favor an exchange of monetary, philanthropic, and human value. For those who argue against the necessity of technology to move this forward, imagine people who completely understand the intricacies of all of your value propositions, now imagine the likelihood they are all your next-door neighbors. For those who argue for the status quo, look around…is this the best the market can do for human progress?
This essay is not an affront on the road to prosperity but an exploration into bringing more stakeholders onto the road. Now that the technology is possible to render a decentralized connection what can be done to encourage the building of applications to elevate the role of the stakeholder? Decentralization alone is not the answer as there are many examples of decentralization used for ill-gotten gains but there is a symbiotic relationship between a distributed connection and the human connection that could serve humanity well if stakeholders are given the proper toolset. Tools to help uncover the best parts of what it is to be human. To place their hands of self-interest on the levers of the market to engage a community of ideas, services, and goods.
What could be discovered and exchanged in the self-interests of the poor, the ostracized, the forgotten, the disadvantaged, or even the rich or the advantaged? What could be found within self regardless of race, color, or creed? Ultimately this is a human problem but the stakeholder will never achieve parity with the shareholder when they are not demanding more from the technology representing their interests, expect more from their government representatives to write legislation to protect their data rights, and encourage investments in technologies to not only carry a monetary reward but a societal one as well.
Whether delivering search results tuned to the explicit interests of the user (outside provider influence), aligning opportunities with user capabilities through distributive AI, building intuitive interfaces to engage and protect the interests of both young and old, or building apps to optimize rather than commoditize human interests, an opportunity exists for the stakeholder to become a driving force in the market to balance out a reliance on shareholder growth. A dream outside the reach of Adam Smith and other enlightenment thinkers of his day due to the limitations of the human connection but within the grasp of those who dare to challenge the status quo today.
These are the stakeholders who will change the world for the better. Not through technology alone or the rhetorical promises of big tech but by identifying, creating, and using technologies to empower the human condition. These will be the stakeholders who dare to put their hands on the lever of the market to demand an equal stake in its success. A success based on a value of contribution coming from deep within the exchange rather than being influenced by it .
