Decentralized Autonomous Digital Economies

Not too long ago, the singer Grimes stated in a now infamous tik-tok video that artificial intelligence (AI) is the fastest path to communism. It would take days to address the myriad of incensed reactions and social media trolling that followed her post but to sum it up, it would be an understatement to say the internet did not take kindly to her remarks.

However, Grimes is not the first person to refer to the possibility of “technology-enabled communism.” Books, such as Fully Automated Luxury Communism, The People’s Republic of Walmart, and others, address the subject, often stating that capitalism in its current state, an economic model that relies on the assumption of scarcity and the power of supply and demand as “regulators” is not fit for today’s world.

Proponents of these ideas argue that we live in a world of abundance where, eventually, machines will perform most jobs and the capability to fulfill the basic necessities of every human being will be within the grasp of any government. Furthermore, leveraging AI, connected devices, and other technologies, it will now be possible to acquire and process all data necessary to plan and even execute extremely efficient resource allocation, analogous to what large companies like Amazon and Walmart do today but at a societal level. In other words, central planning, a key component of communist economies, is now possible and should yield considerably better results than those we now read about in history books. In some cases, they take the argument further, claiming that this is not just possible but necessary, as under these new paradigms our current capitalist system will continue to yield increasing levels of wealth concentration and inequality. Hence, some new kind of techno-communism, they argue, is necessary.

As one could imagine, there are plenty of counterarguments to these ideas, many of them are technical, revolving around the real possibility of efficient central planning and the impracticality or lack of depth of the proposed new systems. Others are simply political and historical, pointing out the well-known failures of communist experiments and doubting that technology would be the only variable required to succeed where these have failed.

While I am firmly in this last camp, I am personally a big believer in the power of technology to bring abundance and continually improve the human condition. There is no doubt that unprecedented advances in technology are changing every aspect of society and that this will require adjustment to our economic and governmental systems in years to come. What is baffling about these arguments, however, is that given all of this, they would center around communism versus capitalism. After all, while human civilizations started forming about 6,000 years ago, modern capitalism and communism have only been around since the 18th and 19th centuries, respectively. During those times of equally disruptive technological changes, it would be hard to imagine a big movement advocating for a return to the feudal system, so why would we need to frame our discussions about the future in these terms?

Future systems will no doubt evolve as a progression of what existed before with technology as a catalyst to change and improve upon it. Although many would agree that capitalism, combined with democracy, is the best system we have produced so far, it is also true that the system is flawed and inequality and lack of representation must be addressed. It could be said that many of its current drawbacks revolve around the concentration of wealth and power. In turn, these stem from inefficient and highly centralized structures that have been the only viable alternative to manage these systems, such as central governments and corporations. In essence, centralization is a byproduct, only necessary as a management tool.

When it comes to technology, it is in this realm of decentralized governance where perhaps the most interesting experiments are taking place, leveraging blockchain technologies and the concept of Decentralized Autonomous Organizations (DAOs). These technology-enabled governance systems allow individuals anywhere in the world to create borderless self-governing democratic institutions around basically any set of joint goals. Some examples of active communities involve decentralized investment funds, content marketplaces, social clubs, and even a DAO exclusively created to make a failed bid to purchase and preserve an original copy of the US Constitution (some examples here). Rules can be enforced via voting and smart contracts, allowing for true communal ownership of assets, and efficient community-driven decision-making.

Although DAOs are still in their infancy and plenty of challenges remain around access, scalability and regulatory frameworks that could involve multiple jurisdictions, their emergence does open up the possibility of a future where individuals anywhere, voting with their (digital) feet, could create Decentralized Autonomous Economies and governance entities, pledging significant assets to them and participating democratically in their destiny. These entities could control significant capital as well as the means of production and become relevant players on the world stage, perhaps on par with today’s national governments and corporations, which could start to lose relevance. In this new order, each DAO’s governance system would have its own characteristics or preferences, reflecting those of its members and interactions among them could dictate those between millions of people.

Is it possible then, that rather than a hyper-efficient, technology-governed centralized planning system the future is instead a DAO-driven ultra-democratic and borderless world? Maybe. What we can be sure of is that experiments like those being carried out with DAOs today and their outcomes will help us imagine and shape the future.