Experimenting with Governments: Can Crypto Disrupt the Oldest Institution In the World?

To understand the role of government in modern society, we need to revisit the work of two 17th Century English scholars — Thomas Hobbes and John Locke. In his literary work Leviathan (1651), Hobbes argued that “the violence and uncertainty of life in the state of nature motivate people to form governments.” He went on to make the case that “at the time of the government formation, people give up their sovereignty absolutely and permanently.”

Locke in his Second Treatise of Civil Government argued that “the contract people entered into with government is not permanent because they do not unconditionally surrender their sovereignty to their leaders.” He believed that “individuals would grant authority to a government so long as it provided for the common good protection from the dangers of the state of nature.”

The reason I bring up these two contrasting ideas is to remind people of two emerging trends in our contemporary world — consolidation of power into a single governing entity and people’s rising dissatisfaction with that consolidation. The rising stronghold of the BJP in India, the extension of Putin’s presidency in Russia, the large-scale upheaval in Cuba, and the assassination of the Haitian President are a few examples that come to mind.

These events raise an interesting dilemma that we, as the global citizenry, face in our world. Are governments worldwide working for the people? John Palmer astutely highlights in his essay that governments today are rigid power-grabbing machines that are no longer serving the best interest of the people. How accurate is his description?

To understand the answer to this question, I want to take you through the current state of governments and how I see it evolving in the future. Let’s dive in!

What Is the Current State of Government?

Governments today exist as a bi-party system, split across economic, social, and moral differences. The way I see it, governments worldwide fall into two distinct categories — democratic (USA, India, Great Britain) and communist (Russia, China, Cuba). However, the people under both these regimes are not satisfied with their respective government policies on the Covid-19 pandemic and its socioeconomic fallout.

Democracy: USA

Over the past year, the United States of America, revered as the model nation of liberal democratic governance, witnessed the largest show of disdain in its history. The Black Lives Matter protests, following the murder of George Floyd, saw participation from 15–26 million people. On January 6th, the nation witnessed an unprecedented storming of the US Capitol, the seat of arguably the world’s most powerful government. The polarization in the country is at the highest it’s ever been, and people do not seem to be content with the two options available at the ballot box.

Communism: Cuba

Over the past few weeks, Cuba has witnessed record-breaking participation in its protests against the incompetence of the communist regime that governs it. For a country where protests have been virtually non-existent in the past, it shows the people’s willingness to take a stand against its failing government.

To understand how governments got to this point, I think it would be wise to look at where governments exist and show up in our lives today.

Where Do Governments Exist?

The seat of government has historically existed in the capital city of the country. However, the past decade has witnessed a shift to the digital world as a medium of governance. Twitter and Facebook have disrupted the previously used government apparatus of regularly scheduled press conferences and television appearances. Politicians, and government institutions, use the platforms to gather political support, make public policy announcements, and voice official governmental positions.

However, as John Palmer points out, the mechanism and pace of policymaking have not evolved in tandem with the communication channels for propagating those policy changes. He draws on the example of the rate of change in free markets, where start-ups are constantly arising to disrupt the inefficiencies of incumbent players. Customers in the free market can “vote with their dollars” as to which solution best matches their needs. While he does state that the pace of policymaking is a feature, not a bug, I believe there is ample room for improvement.

So, where can the improvements be made? And, how will the governments evolve to build on these improvements?

How Will Governments Evolve?

Software is disrupting legacy industries to improve the quality of life we enjoy today (Think: Tesla in the automotive space, DeepMind in the pharmaceutical space). Therefore, I believe that it is not the government with the loudest voice or the highest number of Twitter followers that will win. Eventually, the agile government that adapts software in its policymaking framework will come out on top.

Version 1.0 of this evolution is playing out in the migration of tech folks to digitally progressive jurisdictions such as Miami. The migration is a manifestation of the capitalist approach to business as a form of continuous A/B testing for localized jurisdictions to attract capital and talent to their borders. Balaji S had made these predictions regarding the voice versus exit strategy through which people will gravitate away from Silicon Valley. Individuals vote with their ballot, feet, and wallet.

Version 2.0 of this evolution was touched upon by John Palmer, who paints a picture of a hybrid world where one can “buy citizenship in a digital nation, which could provide them with a set of rights and protections that the geographic nation doesn’t provide.” A mechanism for collective decision-making optimized for consent rather than convenience is vital for a hybrid existence.

Version 3.0 of this evolution is Decentralized Autonomous Organization (DAO), programmed for maximal trust, transparency, and freedom. As John Palmer puts it, “this is the most open, freely changing exploration of what is to come.” Balaji S describes this form of governance as a Network Union with a backlink structure that gives “the network union a social support base with a clear leader, a concrete purpose, and an internal conflict resolution mechanism.”

Closing Thoughts

Experimentation with governance is a frightening prospect but a necessary one in the ever-changing world we inhabit. Governments unable to incorporate new technologies to drive down inefficiencies will run the risk of becoming obsolete. I don’t think I know the exact shape and form of future governments. But one thing I will say is if they must allow software to eat them.

Running tests on the law and order system in the wake of the George Floyd murder or changing road systems to accommodate autonomous vehicles powered by the software are propositions the governments of today have a hard time wrapping their head around, forget executing. But as we move through the evolutionary cycle, such tests will become necessary for governments to optimize their jurisdictions to accommodate talent and capital, and consequently ideas and innovation.

Albert Einstein said it eloquently, “the measure of intelligence is the ability to change.”

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Harsh Kapadia

Harsh Kapadia

I like writing about Health Technology, Product Management, and the Crypto Economy