What are innovation commons?

“An innovation commons is a system of rules for cooperation to facilitate pooling of information in order to maximize the likelihood of opportunity discovery”. That is how Jason Potts defines innovation commons in his book of that name.

Hopefully, that brings to mind hobbyists meeting in coffee shops, somewhere on the internet, or at backyard barbecues where they are tasting home brews and exchanging information about recipes. If so, you are on the track toward an understanding of innovation commons. If you have heard stories of successful entrepreneurs who obtained their most valuable ideas by interacting in similar ways, you might sense that innovative commons can be very important.

It might surprise you to learn that until recently few economists understandood the importance of innovation commons. Of course, those with an interest in technology would have read at some stage that Steve Jobs was once a member of the Homebrew Computer Club, and know of similar stories about other entrepreneurs who started as hobbyists or enthusiasts exchanging information freely with people with similar interests. However, it is one thing to know such stories and something quite different to realize that your professional understanding of the innovation process needs an overhaul.

Economists have thought of innovation in several different ways that view a single organization or individual as a prime mover. Innovative firms allocate resources to research and development, which leads to the launching of new products or adoption of cost-reducing technologies. Joseph Schumpeter’s bold entrepreneurs play the central role in innovation, leading to a dynamic process of creative destruction. Israel Kirzner’s innovative entrepreneurs are alert to profit opportunities. Edmund Phelps’ grassroots innovators are struck by new ideas, and then become investigators, experimenters and managers of innovation.

You might think that economists should be excused for overlooking the importance of innovative commons because they are a relatively new phenomenon. Jason Potts makes the point that common-pool innovation has existed since the beginning of market capitalism. He cites discussion of the Republic of Letters by Joel Mokyr, an economic historian. The Republic of Letters set up norms and incentives that supported a market place of ideas among the educated elite in Europe in the latter part of the 17^th and early part of the 18^th centuries (for a brief summary see my review of The Culture of Growth). In The Enlighted Economy, Mokyr makes a strong case that in Britain during the 18^th century the ‘legitimization of systematic experiment carried over to the realm of technology’. He suggests that the proliferation of provincial ‘philosophical’ societies discussing practical and technical issues often served as clearing houses for useful knowledge between natural philosophers, engineers and entrepreneurs (p 48).

Recent examples of areas of technology where innovation commons are important include blockchain, civilian drone technology, AI and gene editing.

Jason Potts’ own innovative contribution has been to develop an economic framework to explore the collaborative processes through which information comes to be available in a form that a potential entrepreneur can discern as a profit opportunity, if sufficiently alert. The framework Jason has developed contributes to understanding of the knowledge, coordination and governance problems associated with innovation commons. In developing that framework, he draws heavily on insights of Friedrich Hayek about the importance of distributed knowledge, and insights of Elinor Ostrom about governance of commons.

Innovation involves a knowledge problem because relevant information is distributed so that each person with relevant expertise can only know part of the picture, and there is great uncertainty about how that information might be useful. Innovation commons enable individuals with expertise to cooperate to pool information and discover opportunities. The formation of such commons is ad hoc and rules for governance develop spontaneously to promote cooperation.

Innovation commons tend to be temporary. Once they have created information about entrepreneurial opportunities, that valuable resource is likely to be exploited by some member who can effectively capitalize on it. At that point the conventional model of entrepreneurship comes into its own, and the commons collapses to some other institutional or organizational form.

Much of the book is taken up by discussion of rules of innovation commons, institutions such as industry organisations and a critique of conventional approaches to innovation policy (public investment in innovation and building infrastructure for innovation).

There is also an interesting discussion of ways to combat an increasing tendency for enemies of innovation to prevent it, thus contributing to a slowdown in productivity growth, particularly at the technology frontier. The enemies of innovation present themselves as having concerns with safety, sustainability, tradition, fairness, justice etc. even when their intention is to avoid the losses they are likely to incur from disruption of existing technology.

Who will engage those enemies? This is a collective action problem: the costs are borne individually, but the benefits are an industry-specific public good that accrue to all who follow.

In some instances, the first mover can capture sufficient benefits to make it worthwhile to engage the enemies of innovation. Uber may have done that with its ride-sharing technology.

Jason suggests that governments may also help. One role he suggests is promoting collective learning to demystify a new technology. He mentions public broadcasting in that context, but public broadcasters seem to have been more comfortable helping the enemies of innovation. At a more ambitious level, he suggests that governments should work toward “a social contract, culture and institutional system that are tolerant of innovation and prepared to engage with its enemies”. Good luck with that!

Jason also suggests that innovative commons can play a role in creating a large pool of participatory stakeholders, each with a vested interest in developing the technology and its institutional (regulatory) framework. Examples include open-source software and technologies that have emerged from hackerspaces, such as 3D printing and cryptocurrencies.

Are innovative commons likely to result in a fundamental change in society?

Jason Potts’ answer:

“The innovation commons—including the adaptive behaviors and the institutions that compose it—are … a natural part of an open, evolving, market economy. They are not prima facie evidence of an emerging turn to a new type of more cooperative economic society.”

That is probably right! Nevertheless, as previously discussed here, it is possible to conceive of circumstances in which new technologies that are evolving in innovation commons - blockchain technology and decentralized collaborative organizations – could result in some quite fundamental changes in society.

Is cultural change responsible for a long term decline in productivity growth?

The story of cultural change that Edmund Phelps tells in Mass Flourishing has a happy beginning and a sad ending.

Phelps’ cultural story of the advent of rapid economic growth in Britain and America in the 19^th century is much like that of Joel Mokyr and Deidre McCloskey (discussed here and here). The main difference is Phelps’ greater emphasis on grassroots innovation within firms.

Phelps makes a strong case that Joseph Schumpeter, famous for his theory of entrepreneurship, over-emphasized the importance of exogenous scientific discoveries (external to innovating firms) as a source of innovation. Phelps probably goes too far in downplaying scientific advances, but his story about the importance of grassroots innovation to the emerging modern economies seems highly plausible. He suggests:

“a modern economy turns people who are close to the economy, where they are apt to be struck by new commercial ideas, into the investigators and experimenters who manage the innovation process from development and, in many cases, adoption as well” (p 26).

Phelps describes a modern economy as “a vast imaginarium – a space for imagining new products and methods, imagining how they might be made, imagining how they might be used” (p 27).

A substantial part of the book is devoted to a discussion of socialism, as practiced in the Soviet Union, and corporatism, as practiced in Italy and Germany in the 1930s. The contemporary relevance of that discussion become relevant later in the book in his discussion of reasons for the decline in productivity growth that seems to have occurred in the U.S. since the 1960s.

Phelps’ focus on the U.S. economy as the main driver of technological progress seems appropriate. He notes that European countries experienced high productivity growth while playing the technological catch-up game, but their productivity growth has generally been lower than in the U.S. in recent decades. He attributes their lack of dynamism to ongoing corporatism over the decades since World War II. The classical corporatist model - involving state direction of industry and promotion of solidarity and social responsibility – has been augmented with codetermination of labour and capital (instead of owner-control) and stakeholderism (instead of a focus on income generation).

The author suggests that corporatism has also grown in the United States. Industries that have been subject to government policy interventions have been affected by a new populist type of corporatism as businesses have sought to use their political influence to mould government regulation to their advantage. The result is a “densely interconnected system of mutually beneficial relationships between private and public’, which tends “to redirect the economy’s innovation toward politicians”. He notes that supporters refer to that system as industry policy and detractors refer to it as corporate welfare. It should be referred to as rent-seeking.

The cultural change that Phelps sees as leading to a decline in economic dynamism is not fully reflected in changes in economic freedom indexes. He sees a deterioration in the “core functioning” of modern economies. This involves, among other things:

• Managerialism, short-termism and the rise of a “money culture” in business, with wealth-seeking turning people away from innovation.
• A rise in the litigiousness of American society - people who devote their time and energy to suing one another have less time and energy for innovation.
• Excessive patent protection resulting in an economy clogged with patents – “a creator of a new method might require as many lawyers as engineers to proceed”.
• More people aspiring to attain social station rather than to achieve something.
• Adolescent culture – less willingness to accept temporary austerity in the quest for achievement; less ability to concentrate intensely (unable to resist distractions of social media).
• A resurgence of traditional values putting more pressure on business to allow people to work from home etc.

Has this cultural change in U.S. business caused a decline in the long-term productivity growth rate? If so, what can be done about it?

In a series of posts written in 2015, I was sceptical that there had been a decline in long term productivity growth. I suggested that the slow-down in measured productivity growth in the U.S. and some other countries may be attributable, in part, to difficulty in measuring the outputs of the information and communications technologies (ICT) industries. I also noted research findings suggesting a technological diffusion problem, rather than a slow-down in technological advances, with productivity growth of global frontier firms remaining relatively robust.

The addition of a few more years of data seems to lend support to the view of the historical pessimists that there has been a long-term decline in U.S. productivity growth. And Phelps’s cultural change explanation does seem plausible.

Unfortunately, the remedies that Phelps offers are less plausible. He suggests that governments can act to restore dynamism if they become aware of its importance and gain some practical knowledge of how innovation is generated. He suggests:

“Nations will have to push back against the resurgence of traditional values that have been suffocating in recent decades and revive the modern values that stirred people to go boldly forth toward lives of richness”.

Edmund Phelps seems to be hoping that a reinvented corporatism, perhaps inspired by the starship Enterprise, will foster grassroots innovation and be less prone to rent-seeking than the industry policies it replaces. Good luck with that!

I prefer to put my faith in the potential for new technologies to disrupt and subvert populist corporatism.

Can the hope circuit help us to circumvent dysfunctional politics?

This question came to mind when I was reading the final chapter of Martin Seligman’s latest book, The Hope Circuit.

The book is an autobiography, but in discussing his own life the author provides readers who have little knowledge of psychology, people like me, with a painless way of informing themselves about some major developments in this field over the last century.

Marty Seligman played an important role - as a researcher, author of popular books, and transformational leader - in helping to bring about important changes in his profession. He made major contributions in encouraging the profession to study cognition, recognise evolution, embrace positive psychology, and give greater attention to prospection.

I will focus here on learned helplessness, learned optimism and the hope circuit. Marty, as he is accustomed to being called by just about everyone, made his name as a researcher in the 1960s for his work, with Steve Maier, on learned helplessness. Marty and Steve observed that when dogs were unable to avoid electric shocks by changing their behaviour, they subsequently tended to remain passive when they did have the opportunity to avoid shocks. The dogs appeared to have learned that nothing they did mattered.

Marty saw the potential implications of this research for understanding of mental illness among humans and developed the helplessness theory of depression on that basis. That theory was subsequently reformulated, with assistance from John Teasdale, to take account of the way people think about the causes of their feelings of helplessness. For example, those who see their current problems as likely to last forever and to undermine everything they do are likely to feel helpless long into the future. Pessimism leads to helplessness.

Marty’s popular book, Learned Optimism, published in 1990, integrated research findings on learned helplessness and explanatory style.  It advocated disputing pessimistic thoughts as the central skill of learned optimism.

Marty coined the term “hope circuit” in 2015 to describe the MPFC-DRN circuit of brain activity discovered by Steve Maier, who had retrained as a neuroscientist. Marty explains that Steve’s discoveries turned learned helplessness on its head:

“He showed that the arrow of causality that we had postulated was wrong and that it was not helplessness but control and mastery that were learned".

One of the implications of this research is that therapy that “creates end runs” around trauma and helps people to plan a better future is likely to be more helpful than therapy that tries to undo trauma by confronting the past.

What does all this have to do with dysfunctional politics? This passage got me wondering:

"Human history has, until recently, been a tale of woe: warfare, plague, famine, injustice, poverty, ignorance, and violent death. The last half century has witnessed, if not the eradication, a great reduction of these ills. When the world is a vale of tears, it is natural that politics, religion, science, medicine, and the arts should concern themselves with defense and damage. But what happens when the world is no longer a vale of tears?"

My initial reaction to that passage was the same as my reaction to Steven Pinker’s book, Enlightenment Now. I agree that massive progress has been made in human flourishing, but I see huge problems ahead for liberal democracy. We are confronted by widespread failure to adhere to the norms of self-reliance and reciprocity that underpin liberal democracy.

I became even more pessimistic when my thoughts turned to Jason Brennan’s book, Against Democracy. In my response to that book I mourned the declining power of the major political parties to shape political agendas in ways that moderate the ill-informed desires of electors. I raised the question of whether many voters would be likely to accept impartial advice on how to vote to achieve their objectives.

It is not obvious that there is anything that anyone can do now to save liberal democracy from political hooliganism.

So, why aren’t I feeling depressed and helpless?  The main reason is that a few months ago Max Borders’ book, The Social Singularity, gave me grounds to hope that technological advances will eventually enable citizens to circumvent dysfunctional politics. Rather than moaning endlessly about the decline of liberal democracy, we can look forward in the hope of a better future. There may even be practical things that we can do in cooperation with others to facilitate growth in opportunities for human flourishing.   

Why read a book providing advice to radicals?

I doubt whether many people would consider me to be a radical, even though I look forward to the withering away of the state as the social singularity subverts government activities. My views about politics have been most strongly influenced by people who were once considered to be radicals, including John Locke and Adam Smith, but these days people who hold such views are more likely to be described as conservatives. Following Friedrich Hayek, I reject the conservative label because I am strongly opposed to the use of the powers of government to resist spontaneous social change.

I have been reading Derek Wall’s book: Elinor Ostrom’s Rules for Radicals: Cooperative alternatives beyond markets and states. My main reason for reading the book was my previous advocacy, on this blog, of Elinor Ostrom’s approach to discussion of economic and social issues as a means of promoting dialogue across ideological divides. Elinor Ostrom argued that instead of presuming that individuals sharing common pool resources will inevitably experience the tragedy of the commons, we should leave ideology aside and seek to learn from experience why some efforts to solve commons problems have succeeded while others have failed. I suggested that if we apply Elinor Ostrom’s research methodology to national politics we should also seek to learn from experience why some countries have been more successful than others in coping with the tendency of interest group activity to have wealth-destroying impacts that are analogous to over-fishing.

Derek Wall describes himself as a “left-wing member of a Green Party”. When I started reading the book I didn’t expect to be able to endorse it as suitable reading for anyone other than people who self-identify as having radical views, or have some desire to be able to have a dialogue with radicals. The fact that I endorse it as worthwhile reading for a wider audience illustrates the potential for Elinor Ostrom’s views to have wide appeal across the ideological spectrum. The nonpolemical tone of the book is a credit to the author. The deep impression that Elinor Ostrom’s views have had on Derek Wall will be obvious to everyone who reads the book.

The rules for radicals that Derek Wall has derived from Elinor Ostrom’s writings are listed below, with some brief explanation summarised from the book:

1. Think about institutions. Economic activity is shaped by institutional rules. Formal rules are less important than the “dos and don’t that one learns on the ground that may not exist in any written document”.

2. Pose social change as problem solving. Those who look at politics and economics in an abstract way often fail to deal effectively with particular issues.

3. Embrace diversity. Polycentricism promotes good decision-making. The idea of a god-like leader or committee with perfect information is a myth.

4. Be specific. Move from slogans to analysis. Keep asking what can we specifically do in a specific context.

5. Listen to the people. People who participate in commons may be more likely to have good ideas about solving problems than outside experts.

6. Self-government is possible. The Ostrom approach of promoting self-government at a local level provides an attractive alternative to both top-down bureaucratic management and exercise of power by populist politicians.

7. Everything changes. Evolution happens. Technological change is creating new opportunities for collective economic activity e.g. Wikipedia.

8. Map power. If you can map flows of power, you are in a better position to change the flows.

9. Collective ownership can work. It is not always utopian and unrealistic.

10. Human beings are part of nature too.  Ecological problems are profoundly political. The politics of humanity has an influence on the rest of nature.

11. All institutions are constructed, so can be constructed differently. Communities need to keep adapting and reinventing institutions. Institutional development should occur constantly and engage all citizens.  

12. No panaceas. Imperfect humans cannot design utopia. If we attempt to construct institutional blueprints failure is likely.

13. Complexity does not mean chaos. Polycentricism and overlapping jurisdictions can be more efficient than hierarchical structures with linear chains of command.

It seems to me that most of those rules are as relevant to conservatives as to radicals. In all modern democracies conservatives and radicals seem to share the misconception that all economic and social problems can be solved if they can win and hold on to power at a national level.

Can MEMEnomics help us to predict social change?

MEMEnomics is the title of a book by Said Dawlabani, a cultural economist. The book, published in 2013, is an application of the psycho-social model of human development pioneered by Clare Graves and Don Beck. MEMEnomics has been praised by several prominent people, including Deepak Chopra and Bruce Lipton, but I have yet to see any praise by prominent economists. The author does not claim that his book is part of the economics mainstream.

Said Dawlabani suggests that MEMEnomics represents the coming together of two fields: memetics – the study of the replication, spread and evolution of memes - and economics. Just as genes carry the codes that define human characteristics, memes carry the codes that define cultural characteristics. The book is focused on value-system memes - the varying preferences and priorities that humans have in their lives depending on their level of development. The way human values may change with levels of human development was discussed in a recent post on this blog.

The author defines MEMEnomics as “the study of the long-term effects of economic policy on culture as seen through the prism of value systems”. Much of the book is devoted to attempting to explore the cultural implications of changes in economic policy in the United States. The author recognizes the desirability of ensuring that his model can explain history before it is used to attempt to predict the future.

There are three memenomic cycles identified in the book:

·         a “fiefdoms of power” cycle, peaking around 1900, in which American industrialists played a dominant role - large-scale exploitation, fraud and corruption came to identify the values of that era;

·         a “patriotic prosperity” cycle, peaking around 1950, characterized by economic expansion and government intervention – Keynesian macro-policies and social polices – and ending in stagflation;

·         and an “only money matters” cycle, peaking around 1980, characterized by monetarism and deregulation of the economy, and leading to the financial crisis of 2008.

I am not sure the author succeeds in demonstrating that changes in economic policies have led to cultural change. The cycles identified seem to me to be caricatures of beliefs held by powerful elites rather than accurate descriptions of deep-seated changes in values held by ordinary citizens. Nevertheless, it might be reasonable to argue that the cycles represent changes in ideologies of opinion leaders that have been reflected superficially in voting preferences and priorities of the American public.

The author suggests that we are standing on the cusp of a fourth cycle, “the democratization of information cycle”, in which technological advances are allowing social networks to play a pivotal role in affecting social change. That view has merit in my view, but I think this technology-driven change is better viewed as an exogenous factor rather than a new ideology emerging from the down-side of “only money matters”. At this stage it seems that, in the aftermath of the 2008 financial crisis, social networks have aided the return of economic nationalism rather than a policy environment placing higher priority on human development and living in harmony with nature.

As discussed in previous posts (here and here) there does seem to be scope for technological advances to have profound impacts on human values and the way we organise ourselves relative to each other over the next few decades. However, since some of those innovations threaten the scope of government, it seems unlikely that government policy will play a top-down role encouraging them to happen. Policy change seems more likely to occur in response to the demands of ordinary citizens for governments to get out of the way, so citizens can make effective use of new technology.

I enjoyed reading the final chapter of the book discussing the concept of a sustainable corporation. Inspirational examples are provided of corporation leaders setting out to define how the core values of their organisations can enable them to simultaneously pursue profits and a higher purpose. Unfortunately, some of the shining examples of 2013 do not all shine so brightly today.  Said Dawlabani has written an interesting article recently on the reasons why that has happened.

 Entrepreneurs who are selling new sets of values to investors, staff and customers will always encounter naysayers. In the face of this negativism some of these pioneers will succeed, many will not.

One of the messages I get from MEMEnomics is that individual entrepreneurs are likely to play a crucial leadership role in facilitating transition from a subsistence value system limited to expressions of selfish interests, to a value system that understands the interconnectedness of all life on the planet.

It strikes me that for economics to shed light on the role of the entrepreneur in this process it needs to recognize that the value created by entrepreneurs is likely to have a large non-pecuniary component in future. In pursuit of personal values some innovative entrepreneurs are offering investors the opportunity to feel that their funds are being used for the betterment of humanity and/or the environment, as well as generating financial returns. Similarly, they are offering employees the opportunity to feel they are engaged in a meaningful venture rather than just an income earning activity, and are also offering consumers opportunities to feel good about their purchases.

The economic model that seems most relevant in this context is 'identity economics' - as discussed in a book of that name by George Akerlof and Rachel Kranton. The key idea is that people gain satisfaction when their actions conform to the norms and ideals of their identity. In a tribal society, identity economics is like identity politics – people adopt the norms and ideals of the tribe to which they belong. In a cosmopolitan society the relevant norms and ideals are those of the market economy, incorporating a large measure of respect for the rights of others and social trust. Over the next few decades, hopefully the relevant norms and ideals will incorporate greater concern for the well-being of all humans and other living creatures.

How will human values evolve as we approach the social singularity?

As explained in a recent post, Max Borders has coined the term, social singularity, to describe the transformation in social organisation that could occur following mass adoption of secure networking technologies. Some existing mediating structures could become obsolete, new forms of coordination could emerge and we might collaborate as never before.

In his book, The Social Singularity, Max relies heavily on spiral dynamics to discuss the way cultural values may evolve as we approach the social singularity. Spiral dynamics was developed by the psychologist Care Graves and popularised by Don Beck and Christopher Cowan. It postulates that at different stages of development different values become dominant to help people to function in the life circumstances in which they find themselves.

The spiral is summarised in the graphic shown at the beginning of this post (copied from the toolshero web site). In brief, at first stage of the spiral, survival values are dominant. At the second stage, the dominant values are those of the tribe or clan. At the next stage, we have values related to power, glory and conquest. Then we have loyalty and deference to higher authority. This is followed by the values of science and commerce, and then the ethics of care and the politics of equality.

As we approach the social singularity, prior value systems will be transcended: more people will come to see themselves as interdependent beings, requiring some autonomy and respecting the autonomy of others. Beck and Cowan described the final, holistic, stage as an integrative system that “combines an organism’s necessary self-interest with the interests of the communities in which it participates”.  Max comments:

“This way of seeing the world is neither rugged individualism not crude communitarianism. It requires seeing ourselves through others and others through ourselves”.

What evidence do we have that humanity is heading in that direction? Questions have been raised as to whether spiral dynamics is firmly grounded in evolutionary biology and anthropology, but from the little I know of ancient history it seems to provide a plausible account of the way different cultures have emphasized different virtues. If we look at the economic history of the last few centuries, the story told by spiral dynamics seems consistent with the work of Joel Mokyr and Deirdre McCloskey about the emergence of a culture of economic growth, first in western Europe and then spreading to other parts of the world. The theory also seems consistent with the empirical work of Ronald Inglehart and Chis Welzel on value change, based on the World Values Survey. As noted on this blog a few years ago Chris Welzel’s book Freedom Rising provides evidence that as societies have advanced in terms of technological sophistication and education, emancipative values - relating to autonomy, choice, equality etc. - have more widely shared and the dominant life strategies of populations have shifted from an extrinsic focus on material circumstances to an intrinsic focus on emotional qualities.

That research doesn’t tell us how dominant values might evolve in the years ahead, but Max Borders makes clear that he sees people who are comfortable with subversive innovation – innovation that has potential to replace existing mediating structures including government agencies - as “the standard bearers for a future in which a better world can be dreamed by visionaries, socially constructed, and hard-coded into existence”. Max adds:

“As dreamers and doers, we are prepared to forgo the spectacle of elections and the blood sport of campaign politics. We want to take a vantage point from high above, looking at how we can reweave the latticework of human interaction to create a great reconciliation between private interest and community good."

If we view spiral dynamics and the values of the social singularity in normative terms, Robert Nozick’s suggestion that the pursuit of higher layers of ethics can be thought of as building on the ethics of respect, seems highly relevant. As I noted some years ago, Nozick saw four layers of ethics:

·         The most fundamental layer - the ethics of respect - mandates respect for the life and property of other people.

·         The second layer – the ethics of responsiveness – mandates acting in a way that is responsive to the inherent value of others, enhancing and supporting it, and enabling it to flourish.

·         The third layer – the ethics of caring – ranges from concern and tenderness to deeper compassion, ahimsa and love to all people (perhaps to all living creatures).

·         The top layer – the ethics of Light – calls for being a vessel and vehicle of truth, beauty, goodness and holiness.

Subversive innovation offers a basis to hope that the ethics of Light could one day pervade the cultural values of many humans rather than those of only a few saints and sages.

Should we look forward to the Social Singularity?

The social singularity should not be confused with the technological singularity, which Wikipedia defines as the hypothesis that invention of artificial superintelligence will abruptly trigger runaway technological growth, resulting in unfathomable change to human civilization.

The Social Singularity, as described by Max Borders in his recently published book of that name, relates to the way we (humans) organise ourselves in relation to each other. Max’s hypothesis is that at some point social organisation will be completely transformed as a result of mass adoption of secure networking technologies. When that happens some existing mediating structures will become obsolete, new forms of coordination will emerge and we will collaborate as never before.

What does that mean in terms that you and I can understand? The best place to begin is with the concept of subversive innovation. You might think it is tedious to begin an explanation by introducing another concept, but I promise to provide some concrete examples before long.

These days just about everyone knows what an innovation is. Most readers will be familiar with disruptive innovations that are making many goods more accessible and affordable. Subversive innovations “are those that have the potential to replace long-accepted mediating structures of society”. The mediating structures that Max is writing about include: hierarchical firms; group-think practices among the scientific establishment that have led to widespread acceptance of numerous findings that cannot be replicated; centralised education which views students as having “heads like buckets to be filled with information curated by central elites”; long-standing practices of financial intermediaries; mainstream media that once generated social coherence; and national governments.

Readers will already be familiar with some of the subversive innovations that are occurring. Some firms are replacing hierarchical command and control structures with decentralised systems in which self-directed individuals create order by establishing networks to achieve common purposes. The Internet has enabled informal networks of people, often including amateurs, who question scientific dogma e.g. the paleo-diet movement. Disruptive innovation has begun in primary, secondary and tertiary education. Long-established practices of financial institutions are being challenged by block chain technologies, and cryptocurrencies are enabling people to transact without using national currencies or financial intermediaries. The Internet has disrupted the role of mainstream media in generating social coherence - making it possible for populists to challenge political orthodoxy, but also reducing the potential for views to coalesce around a deeply flawed narrative.

The potential for subversive innovations to displace centralised government is in my view the most interesting idea in the book. We can already see this happening to some extent as innovating firms search out the weak joints in government regulation, particularly the regulatory barriers to competition that have enabled incumbents in various industries to prosper at the expense of the rest of the community. Think of how Uber’s ridesharing innovations circumvented regulations protecting incumbents in the taxi industry.

Max suggests that the potential for subversive innovations to displace centralised government will be enhanced by the advent of smart contracts in which a host of humans can act together to achieve a common goal without middlemen. The coordinating mechanism of smart contracts involves distributed ledgers, programmable incentives and blockchain secured tokens. Tokens can align the interests of producers, consumers and investors in ways that may have potential to enable many types of public goods to be produced privately by profit-seeking entrepreneurs. It doesn’t seem possible at this stage to provide a concrete example of how this might work. Perhaps it can be thought of as crowdsourcing on steroids.

Where might this take us? Max suggests that the potential for people to forge real social contracts - contracts they choose to enter voluntarily rather than the hypothetical social contracts of political theory - “could become the killer app of politics”:

"Communities of tomorrow will form entire systems of mutual aid through digital compacts that have nothing to do with borders or accidents of birth. … Humanity will upload important commitments into social contracts. Cosmopolitan communities of practice will form in the electronic ether. What remains on the ground—goods, services, and the relationships of flesh-and-blood neighbors—will be a far more localized phenomenon. The days of outsourcing our civic responsibilities to distant capitals are numbered."

What Max has in mind is polyarchy – competitive provision of goods that have been provided collectively. The basic idea is that if there is nothing intrinsically territorial about a system that provides goods like health insurance or education, you should be allowed to exit one system and join another without moving to a different system’s territory. You could take resources you were once required to pay in taxation and use them to pay for membership of another community or multiple other communities.

So, what reason do we have to think that governments might one day be willing to recognize the right of exit required to make polyarchy a reality?

Max notes that new constituencies are forming around the benefits of the sharing economy:

"Special interests that once squeaked to get the oil are confronted by battalions bearing smartphones. Citizens, fed up with leaving their prayers in the voting booth, are voting more with their dollars and their devices. Free association is now ensured by design, not by statute."

The Social Singularity mixes the author’s views on how things ought to evolve and how he expects them to evolve. Max acknowledges that he does this. The book offers readers an appealing vision of how the future could evolve and invites them to help make that vision a reality.

The book contains much that I haven’t written about in this short review. I should mention the link between the social singularity and spiral dynamics. Now I have mentioned it, I want to write more about it. Perhaps later!

I should also note before concluding that the title of the book, as presented on the title page, is The Social Singularity: A Decentralist Manifesto. Decentralization is a theme of the book. Max begins his chapter on the future of governance by quoting Vincent Ostrom:

“The fashioning of a truly free world depends on building fundamental infrastructures that enable different peoples to become self-governing”.

 In a post I wrote a few months ago I mused about how Ostrom’s vision of decentralisation of politics could eventually become a reality. If I ever write on that topic again there will be a reference to Max Borders and the concept of subversive innovations will feature prominently.

The Social Singularity deserves to be read widely and thought about deeply.

Postscript

1. You might also be interested in a follow-up post on how human values may change as we approach the social singularity.

2. Simon Saval has drawn my attention to his excellent hand-illustrated guides for Blockchain, Cryptocurrency, Bitcoin, and Ethereum which have been designed to help beginners understand the technology. If you are interested, please follow the link.