The following is a rough transcript which has not been revised by The Jim Rutt Show or by Max Borders. Please check with us before using any quotations from this transcript. Thank you.
Jim: Today’s guest is the futurist, Max Borders. Max is the founder and executive director of Social Evolution, a nonprofit organization dedicated to liberating humanity through innovation. Max is also the co-founder of the Future Frontiers event, and he’s a former editor at the Foundation for Economic Education.
Max: Howdy. Thank you so much for having me, Jim.
Jim: Hey, it’s great. We’ve gotten to know each other over the years, first virtually, and then we hoisted a few in Austin, what, a couple of years back? Good to have you on the show.
Max: Oh, I’m delighted. I wish we could do this in person and hoist a few that way, but COVID’s not letting us do that, nor is distance.
Jim: Exactly. I loved Austin. Cecilia and I went out to hear our kind of music, Americana music, about four nights a week at the various bars in South Austin. Goddamn, I’d love to get back there and do that. Once the pandemic is over, we may have a chance to hoist a few again.
Max: I sure hope so.
Jim: Great. Well, today we’re going to mostly, although I’m sure as always, the conversation will go every which way, talk about Max’s book, The Social Singularity. It’s a quite thin book. What is it, about 175 pages? Something like that, in that range?
Max: I’d say something like that, yeah.
Jim: Yeah, before you get to the copious footnotes and index. But it’s an amazingly rich book. As people who listen to the show know, I do on the order of 10 hours of prep for each episode. Not only do I read the book, I go through carefully and annotate it, look up references, all kinds of stuff. The amount of stuff I pulled out of a 175-page book may be a new record. If you want to get into something deep, but readable and short, I can strongly recommend The Social Singularity. Not that I’m going to agree with everything Max says, as you’ll hear, there are some things I’ll have questions about, some things I’ll push back on. But, hey, that’s the way it is on the Jim Rutt Show.
Max: Well, we have a history of mixing it up anyway, Jim, but that’s what makes it fun to know you.
Jim: Exactly. Right. The thing I love about Max and many of the people that I work with, even that I disagree with on some things, is that we respect each other, and we always operate from a place of honesty and good faith. As long as you’re doing that, disagreement can be very healthy.
Max: Amen. I wish the world these days would take a leaf from that book, honestly, because discourse is dying, at least in this country,
Jim: The mind virus known as woke, which we’ll talk about a few times through here, is really clamping down on the way things ought to be. I mean, the idea of the enlightenment and universal liberal humanitarianism just going out the window, it’s disturbing as fuck, frankly. But anyway, let’s get down to it, and we’ll talk about that as we go.
Jim: First, you call yourself a futurist, and I think that’s cool. If I were to do my life over again, I might be a futurist. I remember reading the Foundation trilogy when I was about 10 years old. One of the central characters, who it doesn’t really come on stage as I recall, was Hari Seldon, the psycho historian, who had his formulas for predicting the future. Of course, that’s not really what futurists do. You actually had a pretty cool quote, which I’m going to pull up here, which is, “We have always tried to know tomorrow. In our attempts, we end up shaping it,” which is interesting. Can you talk a little bit about how you view the role of the futurist?
Max: Well, I think most of the time, futurist is a marketing label that people slap on themselves in the hopes of trying to sell a book or get a talk. I certainly fall into that camp, but if you were to look at it in terms of other circles of a Venn diagram, that participation in the creation of the future is really an aspect of it that I think is quite important. There’s a thing called a self-fulfilling prophecy. Self-fulfilling prophecies, that has a good connotation and bad connotation, depending on the content of whatever it is that is the prophecy. I like to think of myself as an optimist, even though I’m becoming increasingly pessimist with things I see around me in the world. We’re going to talk about that, as you say, but I try to remain optimistic for a couple of reasons, and you really, I hope see that or found it in the book, Jim.
Max: But this notion of an optimistic self-fulfilling prophecy, I basically get to surf on trendlines and find the ones that are favorable to human flourishing, point those out and write about them in what I hope is pretty prose. That is the extent of my futurism. I believe in the power of belief. What we’re seeing right now in terms of, as you suggested earlier, the woke sensibility is perhaps a negative example of that. But what this book tries to lay out is a more liberal, cosmopolitan sensibility for possibilities in the future.
Jim: Yeah, very well said. Essentially, I think you said that as you create, you’re pointing possible ways for people to think about what the alternatives may actually be. You go pretty far out in this book, which I like. I often point out to people how influential something as prosaic as Star Trek was, a mainstream commercial TV thing from the ’60s. It’s amazing the amount of ideas that came out of Star Trek, which actually pulled people forward towards the future. I definitely respect that role. Next, the title, The Social Singularity, what are you trying to convey with that title?
Max: Well, I think most of your listeners are going to be familiar with Kurzweil’s thesis of the technological singularity. Actually, Kurtzweil is really borrowing from other really great thinkers. Vernor Vinge was one of the science fiction writers you might be familiar with that hearkens to the future with some of his science fiction writing. Then prior to that, an old computer scientist whose name escapes me, really laid out the idea that at some future point, the machines will essentially wake up.
Jim: Yeah. Goode was his name.
Max: Goode. Thank you, yes. This sort of trajectory of thinking parallels the development of computer science, really, and of ideas in sci-fi. When you start to see this pattern, it becomes really meaningful in the sense of predicting the future. Of course, folks are probably familiar with Kurzweil’s variation of it, which is to extrapolate from Moore’s Law, you get a doubling of computing power every roughly 18 months. that Moore’s Law effect, that trajectory, appears in other kinds of technological advance, whether that’s storage, battery power, all kinds of effects, but there’s essentially this amazing swelling of computer power going into the future. The propagation of ideas, I believe, happens in this way.
Max: But I wanted to, with this book, harken to that and say, “Hey, but that’s not the only pattern into the future that’s seeing this level of progress and improvement. The way we interact with each other as human beings, the way we can use technology to lateralize our relationships, can also have a similar trajectory in terms of how we collaborate, how we work together, how we improve our collective intelligence and so on. These forces moving into the future, I guess you could say, allow us to have a parallel track to the technological singularity, which is the social singularity. That’s a really humanistic frame for, if I could write a parallel book to any number of books about the technological singularity, like the age of spiritual machines, it would be this book. It’s to say, “Hey, we’ve got these other. We are developing human practices and protocols that will allow us to be both more pluralistic, and yet more unified, but also more advanced in the what’s possible to create together.”
Jim: Yeah, here’s a quote from your introduction, which I think suggests that, with not maybe quite as much detail. You write, “I suggest if we reorganize ourselves and our systems, collective intelligence, we’ll be better as a species. The social singularity is a point beyond which humanity will have reoriented itself, will operate more like a hive mind.” Kind of interesting a hive mind, not what I would expect a libertarian quasi-anarchist to say.
Max: Well, that’s interesting that you point that out. I try to explain in the book that we want to stop short, at least at this point, of thinking of us as a single unified [inaudible 00:08:50] sphere, some kind of woo-woo concept of a super brain, not quite going there. What I’m trying to harken to there is the idea of programmable incentives, and the possibility of coordination that is possible in… Let’s take the example of starlings and murmuration, or of small fish, I guess they would be anchovies swirling to avoid the big tuna that come up under the sea. This synchrony of movements that you see in some species that allow them to defend themselves, that allow them to organize their efforts, requires a certain kind of simple protocol. These have been, since the ’70s and ’80s, this kind of synchronous behavior has been programmed with fairly simple algorithms that give rise to this highly complex state of affairs. You know all about this, Jim, given your involvement with the complexity science.
Max: The idea that we can have protocols that organize collective or collaborative behaviors is really the essence of what I’m trying to pull out of that. But that’s not to say that every single decision or every single phenomenon needs to be unified in some weird collectivist Borg brain, but rather we can have different programmable incentives in different communities of practice that allow us to coordinate and collaborate at scale, but these may compete with each other. These may be towards different ends. We say telos, which is the Greek for end. Our goals may be different from one to the next, but the possibility of collaboration at scale is becoming a phenomenon that’s getting closer and closer. Indeed, our collective intelligence in the way we measure it through programmable incentives is also starting to become more and more promising.
Max: Now I can talk a little bit about the collective intelligence aspect of that, too, in a moment, but just think about the way market prices, coordinate behaviors from people in different times and places and even disparate cultures around the world. It’s really staggering the kinds of flow systems that are possible based on the simple price system. It doesn’t include all the information, but it includes a lot. It’s really information wrapped in incentives and prices. Function really are at the center of a global ecosystem of flows of value. Those can be interrupted, of course. Those can be changed, but the market is itself a species of collected intelligence. The liberal anarchist in me is happy with that notion, but the idea of a hive brain is also in there that we can collaborate and scale towards ends that we happen to share as a human community.
Jim: Yeah, very good. I mean, I would kick it up maybe one level of abstraction, which is that, for sure, collaboration is one of the two or three human superpowers. We collaborate better, and in more detail and in more ways than any other species and to do collaboration, it’s pretty much a common place of information theory and complexity theory. There’s got to be some way information flows, so I call them signaling systems. I think what you’re talking about is a specific point of view on how do we upgrade our capability for collaboration using a set of signaling systems, which you describe. I would, again, say the abstraction’s a little higher level. Incentives is one form of a signaling system, but there may be other signaling systems. It may not have to be incentives. But one could imagine in kind of a nightmare dystopia, that the signaling system was literally right into your brain, made you do things. That actually might work quite well for collaboration, but I’d hate to know who’s in control that motherfucker.
Max: My kid is aware of certain kinds of incentives. The term incentives can be financial, but it can also be psychic rewards of certain kinds. My kid is a gamer, a gamer kid. He’s kind of an addict. I’ll admit that on the show. I don’t know what I’m going to do about his proper education, but at least he’s good at all the games. Now, this kid understands incentive systems in terms of psychic rewards. He’s actually tried to tell me, “Dad, you need more.” As I’ve been trying to develop certain kinds of technologies for collective intelligence, he’s like, “Dad, you need more badges. You need more gamification elements. You need more things that allow you to be perceived as higher in the pecking order, like leaderboards.” These are all things that have been done, but my kid understands this intuitively because he’s 13.
Max: There are also things like, how do we know that we’re helping someone? How do we become more empathic? How do we know that the things that we’re claiming are true are actually true, as in verified in terms of some mind independent reality. There are other kinds of incentive systems that might help with the truth or falsity or something, but there are also systems that may not depend at all. I think you have, if you’ve not already had Arthur Brock as a guest-
Jim: I have twice.
Max: I’m going to go back and listen to that, because he has a fantastic view of the different kinds of ways we can see currency. I think if he discussed that on the show-
Jim: Yeah, I did two episodes with him. One about holochain and the closely-related technologies, and then I did another one, which we just recently published, that we talked to him and Fernanda, his associate, about currencies in the abstract. That was extremely interesting. Again, that’s where we get to the idea that signaling systems can be all kinds of things.
Max: That’s right. That’s right. One more point about that quickly, because I don’t want to give the impression that The Social Singularity is a call for us to create a series of Skinner boxes for ourselves. Even if they’re different Skinner boxes, human beings are more than just creatures that respond to stimulus and response. There are a lot of indigenous capabilities about us as complex beings that are important to understand as we seek to form community, but starting with incentives is a good place to start. We just have to be very careful how we do it.
Jim: Very well said. Now, one of our signaling systems for collaboration, you bring a harsh spotlight to, and that’s politics. Politics as it currently exists, particularly in America, but I think you’re critiquing political infrastructures in the advanced democracies more generally. Here’s what you actually say about them, “Politics brings out the worst in us by tapping into tribal tendencies. Sure, trading barbs is better than trading bullets. We all know really nice people who participate in stinging and acrimonious exchanges online. Maybe we do it ourselves.” You further comment that, particularly the American political system and some of the others around the world, tend to collapse individual ways of relating to the world into a single dimension, which ends up with two teams, team red and team blue. You’re onto something there. What more can you say about politics as a broken signaling system for collaboration?
Max: Well, there’s a lot of dimensions to how it’s broken. There’re so many reasons why our contemporary political system is just utterly bankrupt in my view, and I can’t stress this enough. I use this metaphor at the beginning of the book about waking up one day, picking up your device and finding only two apps, the red app and the blue app. Imagine how restrictive, and by the way, neither of these apps works particularly well. The speeds of the apps are terrible. But the range of choices is pretty pitiful there. That metaphor is not only meant to unpack the problem of the range of preferences that people might have as complicated beings. but it’s also the fact that it’s not just a matter of those choices.
Max: It’s the fact that so many of our preferences get blurred together through the political process, that the outcome of an election is rarely ever determined by a single voter, much less yours. If I live in a state that is not a purple state, that’s one of the states that everybody fights over in elections, the chance that I’m going to affect the outcome of a national election is even more remote. But even then, to change metaphors quickly, the idea of democratic voting to me is like shouting at two teams standing on stage at Madison Square Garden and expecting my voice to be heard, or being at a concert and shouting, “Play Freebird,” at a Rush concert. Well, that wouldn’t work, because not only is it a different band, but I’m never going to be heard.
Max: This whole thing about making your voice heard, it’s all just such drippy notions of civic participation that actually don’t amount to anything in reality. I think another problem… I mean, I could go all day about this, Jim, but I guess I’ll button this point up by saying one of the real problems with democratic voting is that we don’t have any skin in the game in any meaningful sense. The people can hold wild views about things, because there’s no immediate consequence for holding that view, and voter voting is a great example of that. Whenever you vote for something and signal your rectitude, or your sanctimony, or your idea of morality in the voting booth, you’re not only crying a teardrop in the ocean and expecting the tide to turn, but you’re also not being punished for any kind of bad decision immediately that you can feel. Whereas, there are different mechanisms for decision-making and consensus systems that allow you to feel the sting of loss when you make a bad decision. Democratic voting doesn’t do that. I won’t even get started on the problem of special interests and all that stuff.
Jim: Well, we’ll get to that one, because that’s important. Well, here’s where I’m going to push back a little bit for the first time, which is my position is that the American constitution, while amazingly brilliant and precious in its day is now quite obsolete. These were some of the smartest people ever, and it’s amazing to remember that in 1776 the population in the United States was about 2.5 million, about the same as Kentucky. Could you imagine going to Kentucky and finding James Madison, John Adams, Ben Franklin, George Washington, the Masons, on and on and on, these brilliant thinkers. It was really quite an amazing, Athens-like moment that this tiny number of people came up with this, but it’s also important to remember 1776 was before fossil fuels basically. Yes, there were some coal in the UK being used, but there was no coal mined in the United States till 1804.
Jim: The main thing that’s happened since 1800, there have been a lot of things, but the main thing has been the intensification of energy applied to our systems, which allowed our systems to become more powerful, better. They tear the shit out of the earth, all kinds of things, but it mostly comes back to upgrading our energy density and 1776 was before that started to happen. When I critique politics, I step back a little bit and say, “Is the fundamentals of what you call… I thought that was quite funny… a democratic operating system or DOS? I’m old enough to remember when DOS was state of the art. Is that fundamental, or is it an institutional problem that we have? I’m not yet entirely sure that there aren’t better ways to institute democracy. Maybe we update from DOS to what I’ve always thought was one of the great operating systems of all time, NT 4.0. That was a Microsoft operating system. I guess it was around the year 2000, 2001, which was really fucking good and way better than DOS, not even in the same league.
Jim: As I was saying, let’s consider the NT 4.0 versions of a democratic operating system. First-past-the-post is one of the things where individual legislatures are elected one at a time by plurality vote in most states. A few states have run-offs, but not a lot. What happens if we did proportional representation like they do in Israel, where there’s a dozen parties that vary in multiple dimensions? What would happen if we went to rank choice voting rather than vote for one plurality wins, or my favorite, and I know you poo-pooed it in the book and that’s okay, liquid democracy where we each have proxies. In my version of liquid democracy, we each have proxies for as many issue areas as we want. Then we proxy our votes to people who we think are more knowledgeable than we are. For instance, I might want to proxy my abortion vote to a pro-choice organization. I might want to proxy my gun rights vote to the NRA.
Jim: Well, as it turns out in America, there are almost no politicians of note who are both pro-choice on gun rights and abortion, even though from the lens of Liberty, it would seem the pro-choice and pro-gun rights ought to be together in the same basket. As it turns out, our broken institutions don’t allow that to emerge, but liquid democracy does. It strikes me that the inherent institutional aspects of liquid democracy might actually reduce this temptation to tribalism, because nobody would be tribal. Each person would be a high-dimensional representation of their own view.
Jim: A high dimensional representation of their own views, and there’s some other alternatives. One that Athens used in the heyday of the first rise of democracy, is called sortation, where they pick people at random and you go, “What the fuck, pick people at random?” Well, there’s been some experiments done by guys like James Fishkin, scholar on deliberative democracy, where you can take people at random, and put them through a process which he calls deliberative democracy, where they really explore an area in detail. It’s probable they’d actually produce better results than our current broken system with all of its strange attributes and veto points, et cetera. I guess that’s my first big pushback is, are you giving up on democracy because our institutions are 250 years old and aren’t really state of the art anymore?
Max: I don’t think there’s a binary there. I think there’s a lot of interesting aspects to this question. Let me click back in order of magnitude and talk about this from the perspective of the above, because you started out talking about the U.S. Constitution. I’ll push back on you on the U.S. Constitution and say, “I don’t think it needs to be outmoded. I think it needs to be enforced.” That’s the first point. I’ll come back to that. The second point is, I do think that some of these rank choice voting, liquid democracy, all of these are interesting models in and of themselves and they would be probably a modest improvement, but I also think that they’re kind of tinkering around at the edges. If we were to pull back to that 30,000 foot view for a second and look at the system, let’s think of it as what is the best way to have a system of systems? Okay? Which is a pluralism of systems.
Max: People who like the idea of equality before the law may not like this, but we already have it in our federalism now. It’s just not as pronounced, because much of the action is going on at the federal level. That’s just what I find objectionable. First you have this idea that there is this monolith that should be governed over 350 million people and you’re right, that is outdated, but the constitution has provisions in it that are simply not enforced. The jurisprudence around, for example, the Ninth and Tenth amendment is just horrible. There is no uncertain terms about the kind of experimentation we could have in some sort of principle of subsidiarity that is given to us in the Ninth and Tenth Amendment. Now, we could have a constitutional amendment that made a provision for subsidiarity, but we really wouldn’t need it.
Max: We get most of what we need out of that federalism from the Ninth and Tenth Amendment, and it’s as if somebody just took a giant eraser and took it out of the Bill of Rights. 90% of what the federal… And I sound like an old conservative here, and I’m sorry, I’m just going to do that, but from a systems theory perspective, having this monolithic system, and most of what the federal government does is unconstitutional, not be able to be pushed down to the level or devolve to the level of the states means that we lack tremendous potential for experimentation. That experimentation could include stuff like different kinds of voting, and different kinds of consensus mechanisms, decision-making of all sorts. There’re consensus mechanisms that are coming out of the digital ledger community that were started by intellectuals, and they’re now being tried.
Max: A couple of them are both at George Mason, in fact, that are really interesting consensus mechanisms. One is by Robin Hanson. His idea of futarchy, I think it’s limited, but I think it has some things to recommend it. One of the things that Hanson points out, and people like Philip Tetlock point out, is that when you have this proxy voting by experts, or you have this… which is just giving you democratic tyranny of expertise, Philip Tetlock says, “Look, experts half the time don’t know what the hell they’re talking about. They’re just full of a lot of bluster.” Tetlock’s whole metaphor of the fox and the hedgehog really does show you the problem of expertise, especially in America. We have this tendency to rely, to outsource our sense of responsibility and cognition to experts, because well, they’re experts, but even experts get it wrong a whole lot of the time.
Max: So proxy voting and things like that, that allow us to sort of remove the responsibility for our own cognition, or our own civic engagement, I think is problematic, and that’s simply because most complex problems are too hard for any single expert or group of experts to solve any way. That’s not all problems, but many problems, and so the way I like to think about governance is let’s let a thousand flowers bloom, let’s try different experiments in governance, and then we can start to see what works better and what doesn’t.
Max: Just thinking about Switzerland, the way Switzerland is designed, and the canton system is I believe superior to the United States Government, but we actually have that enshrined in the constitution. So whatever ways you want to make decisions at the local level, where people have a greater sense of what’s going on, a closeness to the action, if you will, those kinds of decision making mechanisms would certainly be more appropriate for local elections, and also local referenda, but at the scale of widespread society, I’m not so sure. Just to button this point up, I think the way, what I’d like to see is much more experimentation, and you can start by not having sort of a jurisdictional monolith at the federal level.
Jim: Yeah. All the writing I’ve done on liquid democracy, I pointed out that while I believe the ideas are interesting, and if people are interested, a good place to start, check out my essay on Mediums called An Introduction to Liquid Democracy, and it points to some of the other documents I’ve written on it, is that it does need to be tested, because it’s a classic deep theory and it might be wrong. Right? Let’s test it at the level of cities or counties before we try it at the level of states and countries. I will say, this is an area where I think we’re very much in agreement, that subsidiarity sort of smells very right to the future that you’re alluding to, the social singularity and that other folks like Jordan Hall have been working on. I’ve been working on it in my own little way, et cetera, but again, I would push back that the U.S. Constitution, even if read as it was in 1929, is still not sufficient. We have all kinds of strange structural elements in there that are having to do with disputes about slavery and everything else.
Max: No, I agree with that. I mean, it is amendable, but the way the amendment process is designed is problematic, and yet it has protected us from a lot of the liberal action on the part of various legislatures over the years. I’m with you to a degree, you probably think it’s completely outmoded and scrapped, and by the way, Jim, I have a new book I’m working on right now and I discuss this very thing in part two, where I say, “Hey, if we can keep the constitution, this is what we need to do to fix it, and if we can’t, then I have all sorts of crazy ideas that are more like what you’ll read in the social singularity.”
Jim: Cool. We should have you on when that thing is out, it’d be fun.
Max: Oh, gosh. I’d be delighted, because obviously I want to sell a copy or two.
Jim: Yeah. I try to, normally, do these interviews right when a book is coming out or has just come out. In fact, one of my favorite interviews will be out in a couple of weeks when James Lindsay’s new book, Cynical Theories comes out. This thing is fucking great. I’m recommending everybody who wants to see the roots of wokeism and why it is a broken system of thought that’s much closer to Marxist-Leninism and Nazism than it is to universal liberalism, really needs to read Jim Lindsay’s book. I highly recommend it.
Max: Absolutely. I could not help but cheer on and second that emotion, and I just read an article of his, the other day, something to the effect of, and maybe this can go in the show notes, something to the effect of why a wokeist won’t engage with discourse in you, or won’t have a conversation with you, or argue with you, something like that.
Jim: Yep. Yeah. Yeah. The reason is, it’s like medieval Catholicism, it’s an unfalsifiable, closed, hermetically sealed system where questioning the system itself is a sin.
Max: That’s right.
Jim: It’s i.e., basically a bullshit cult and James Lindsay does an amazing job of dissecting this in a very calm, dispassionate, research based fashion, so call out to James here, but let’s get back to your work here. Again, I’m with you on subsidiarity. In fact, it’s oddly enough, an old Catholic doctrine. The idea that every problem should be adjudicated with governance at the level appropriate, and of course, in the past where we didn’t have these cool network tools, we ended up with something like the U.S. Constitution, with the federal government, and the states. Then we have counties and cities, but at least in the U.S. they are creatures of the state.
Jim: Here in Virginia. For instance, we have the very annoying thing called the Dillon Rule, which quite explicitly says that counties and cities have no rights whatsoever except those explicitly delegated to them by the state, so if you want, even, the ability to have a municipal power company in Virginia, you have to have specific legislation from the state legislature to do it. That seems fucking nuts to me. A fractal system where there can be multiple layers as appropriate, even county and city are pretty arbitrary geographic, and we’ll get to you some of your very cool ideas about geography being perhaps obsolete. When we think about watersheds, they’re kind of orthogonal to, or at least operate at a different dimension than cities and counties.
Jim: Airsheds, to what degree do we want to have food self-sufficiency in a region? There’s so many different scales at which social signaling could and should happen to provide high quality collaboration that a more general theory of fractal, self-organization using some form of social signaling, I like liquid democracy, but there could be others, may be closer to both of our spirits of true subsidiarity, rather than this two level model that we inherited from 1789.
Max: Absolutely. I just want to extend a big high five on that one. I love it. We argue a lot and it’s fun, but when we have moments of agreement, I just want to relish them for a moment. This idea of a fractal notion of governance is really important. If you’ve ever clicked down in an old Mandelbrot fractal, you can just sort of open another universe of possibility and see complete novelty when you do that. I think that metaphor really extends to life on planet earth, literally and figuratively, to the social life of human beings, but as well as to the ecosystems and the way these two apparently disparate systems interrelate.
Max: But, I want to take a moment to talk something interesting. There’s this article that the Game B community, and I’m sure your listeners are now familiar with the Game B community, but one of the sort of seminal articles for the Game B community came from a guy named Scott Alexander, who’s a brilliant fellow. I really love, I love his writing. I think it’s a man, and so does everybody else really. It’s just phenomenal work. He recently had to shut down his blog, because he was worried he was going to get canceled or trashed in his personal life. He wanted to remain synonymous. In any case. Scott Alexander had this article called Meditations on Moloch, which is one of his, a piece that went viral, and really has an important lessons about how we can protect the environment or guard against certain kinds of what some listeners might call existential threats, that are result of perverse human incentives.
Max: Usually these have to do with the way property rights are assigned. That’s goes back to the old tragedy of the commons, and of course Alexander’s aware of the tragedy of the commons. When there are no private property rights, everybody has a race to exploit some resource, and of course, commons problems can infect political allocation as well. You just have to know the right politician to be able to exploit the commons, but it still happens. The first Nobel prize winner in economics, who was a woman, her name is Elinor Ostrom, had this great research on the management of the commons. I would encourage folks to look at some of the historical and anthropological things that Elinor Ostrom was able to uncover about commons management, and solutions to these sort of problems of Moloch. Then go back to this general understanding of subsidiarity and seeing the sort of fractal development, bottom up fractal development of system, localized systems of commons management.
Max: I think we’ll see a lot more promise than some of our Game B community has with respect to these problems. She really did point out some things that can, especially if we have a local evolved sensibility, a sensibility towards local evolved mechanisms for protecting commons, we really can go very far indeed. Once we mix that with some of the technological inputs that something like Holochain, or other observation mechanisms for commons management, but also some of the incentive systems that can be developed locally for managing commons. There are a lot of really great solutions here, and I don’t think we need to worry so much about the God Moloch.
Jim: Mm-hmm (affirmative). I still worry about the God Moloch, but three cheers for Elinor Ostrom. I recently did an episode with Michel Bauwens of the P2P Foundation, and we talked a lot about the commons, right? He makes the good point that Garrett Hardin’s tragedy of the commons was actually a bad argument, that yes, in theory, you could have a tragedy of the commons in a completely unsocialized commons, but if you look at historical practice back to medieval shared fields, or fishing rights, and 12th century Portugal, or whatever, the commons were never just wild frontiers. There was always quite significant, sometimes suboptimal, but quite significant social system control of how the commons were used. Until we got to the modern age of, out of control, unregulated commons, the tragedy of the commons was relatively uncommon. A few cases, maybe Easter Island, but not too many.
Jim: Looking at that literature is actually very hopeful and a very good way to think about a subsidiarity related solution, particularly for things like the land, water, resources, pollution, et cetera, and so I think we’re sort of on the same page there, but I still do worry about Moloch, particularly in a regime where network effects allow Moloch, even if it’s a commercial Moloch to get really big.
Max: Yeah. I agree with that. Both commercial and on the government side. I think the collusion between the corporations and the state is responsible for having it lock in the suboptimal situation. I think you and I agree. I want to encourage people to… For people to look at your article on Game A to Game B transition. There’s a lot of really good stuff there, but I think on that point you and I agree.
Jim: Yep, interesting. Let’s go onto another topic, which you talked about quite a bit, which is science can’t be trusted. I have done a lot of thinking, and reading, and talking with people about what I might call the sociology of science, and I’m with you part way here, in that there is a lot in the way science operates in terms of the funding by the National Science Foundation, NIH, the details of peer review, how a career in science is actually defined and made fundable, et cetera, which could certainly be improved. And as people who listen to the show know, I’ve dug in a bit to the unreproducible result problem, which is indeed, as you point out, endemic, at least in certain areas of science.
Jim: In fact, we had Brian Nosek on the show, one of our relatively early guests, who is the guy who really started the ball rolling on the reproducibility crisis, particularly in psychology. He now runs the Center for Open Science. One of my favorite little organizations, that people are interested in how to fix science, just go to their website. About 75% of what we need to fix science is right on their website, but I would say this, that if you look at science on a continuum, and of course this continuum does great violence to a lot of things that aren’t on the continuum, but put physics at one end and sociology at the other. I think you will find that the crisis of science is more on the sociology side of the ledger than it is on the physics side of the ledger.
Jim: An awful lot of the social sciences have unfortunately become politics by another means, and aren’t even really science. I would put psychology kind of at the halfway point, and Nosek’s work showed somewhere between 35 and 50% of psychology papers are not reproducible. If you probably want the sociology, it might be a higher lot more than that, but I’ll tell you this, physics, it’s the other extremes. 95% are probably reproducible. I think it’s important to realize that the bulk of this problem is in the softer sciences, not in the harder sciences.
Max: Sure, and I never argued that the science is broken or irredeemable at all. I hope I didn’t give you that impression, and I hope I don’t give readers that impression. What I’m trying to do with that section is really disabuse people of the scientism strain, both in the soft sciences, as well as in medicine, for example. People will come online with this bludgeon, “Science says this,” or, that there’re even article titles, Science Says, as if science is this God that’s personified, but science is a collection of human beings that have biases, and cognitive distortions, and operate within different incentive systems. I just want to get people to continue to question expertise in the manner that say Karl Popper would’ve liked with his thesis of Conjecture and Refutation.
Max: We have to think of science as… Otto Neurath, a philosopher, had this great old metaphor for it as a boat that we’re constantly taking boards off, taking apart and putting them back together while at sea. It’s never finished. It’s never something that we can just… We can all just, “This is true, and we can all go home.” It’s this constant process of revision, and skepticism frequently drives that, but you’re right. There is a politicization of saying, “Science is definitive on this. The science is settled, move on. It doesn’t matter what the issue is.” People will use that as a way to sort of, to shut down conversation or to shut down skeptical perspectives.
Max: This is really a way of showing that disintermediation in science can help us with the project of putting together this mosaic, that is this, I guess, ever changing mosaic of scientific understanding. That’s really what I want to get across. Not that it’s broken, and not that it’s redeemable, but that some of the kinds of decentralization we’re seeing now can actually help us get a better resolution picture of different scientific subject matter, and areas of expertise.
Jim: Yeah, I will say, I think you maybe weren’t nuanced enough, at least for my tastes there, because I do agree with many of the critiques, but I think you hit it several times, and it could easily leave the flavor of people being more suspicious of science than they should be. To give a real world example here, probably, relatively soon, we’re going to have a vaccine or multiple vaccines for COVID. Whether one should take it or not is fundamentally a scientific question, and we’re going to have to use some good collective intelligence to come to that decision. Now we had Brian Hanley on the show sometime back. He actually has already made his own COVID vaccine. He’s a vaccinologist, and he gave it to himself and to a couple of his friends, I believe, even though he wouldn’t quite say that, and he seems to think it works.
Jim: I sure to shit, wouldn’t try his vaccine, and so it’s important that we have an appropriate level of skepticism about science. As you say, in general, anyone who said, “Science says it’s true that…” Is not a scientist, right? All real scientists know that science is contingent, that it’s an ongoing process of refinement and asymptotic approach towards what is probably true. That’s Popperian science, as you say. You put forth a claim, a hypothesis, you test it, you find some results that don’t refute it or confirm it, and then it’s good until someone does refute it. Look at the history of science, even ideas we thought were pretty bullet proof, like Newtonian system of space and time turned out to be only a first order approximation when Einstein did his thing in the relativistic space. Then we can stumble into wholly unexpected domains, like the very peculiar world of quantum mechanics, which we still don’t really understand, but we can at least measure it.
Jim: In general, science does not say, “This is true,” though there are some things that I think are so well established that sometimes we forget to say contingent, like the earth goes around the sun rather than vice versa, but for anything that’s even close to new, we should always keep in mind, it’s got a high level of contingency. But, that said-
Jim: …it’s got a high level of contingency. But that said, when it comes to whether I should try the COVID-19 vaccine that comes out in February, I’m going to carefully review the science. I’m going to look for signs of intersubjective agreement amongst groups of scientists that seems well founded, and I’m not going to pay too much attention to fucking cranks on Facebook.
Max: Exactly. I couldn’t agree more. And in fact, I’ve been horrified by some of the anti-vaxxer stuff that’s been going on. I’ve tried to discipline myself not to interact on social media anymore with people who seem just beyond help, but people who are really trying to tell me that medical science didn’t eliminate smallpox.
Max: And it’s like, “Look at the trend lines before the small pox vaccine came out. It was already going down. Well, yeah, it’s because people learned what germ theory was, and how to wash their hands, and how to stay away from people who have smallpox. I mean, just basic public health knowledge.” But it took the vaccine to really eliminate it from the planet as we’ve seen. It’s staggering to me the level of skepticism.
Max: Bryan Caplan writes about this idea a lot of rational irrationality. This is the kind of stuff that infects voters, and this is why I think voting is such a bad idea. For as many people who believe, and they could easily be a majority someday, believe that vaccination is bad, there’s very little direct consequences for holding that belief.
Max: Well, let’s just stipulate that I’m right and that you’re right, Jim, about vaccines, that they work and that they on net make us healthier because they eliminate deadly viruses. Okay? The fact that someone has this false belief of anti-vaxxer is that, even if they don’t vaccinate, they essentially free ride on people who do, and nothing happens to them.
Max: So they come under this idea, their kids don’t get smallpox, their kids don’t get measles much unless you’re in California, in which case you finally had to eat that because there was a measles outbreak from all the anti-vaxxers out there. But at the end of the day, it’s like, look, guys, this problem of not having direct skin in the game for the consequences of really dumb ideas is endemic to the democratic process. And in fact, it is endemic to the people who are making decisions on our behalf. They don’t have any direct consequences for making stupid decisions in Washington either.
Max: So I want to bring that full circle while agreeing with you that I’m going to take a good, hard look at the intersubjective agreement around vaccines for COVID-19, because I sure as hell don’t want it and I don’t want my kid to have it.
Jim: Exactly. Right. So this is actually a good test case, because in our current world in particular, and it’s something we may get to if we have time, for the first time ever, essentially, unmediated person-to-person communication on a worldwide basis seems to be breaking our sense-making at a pretty high rate. I mean, anti-vaxxers, flat-earthers, the election of an idiot like fucking Trump. How the hell could that happen? Something seriously has gone wrong in our sense-making.
Jim: And vaccine policy is probably an interesting test case for some of your ideas, skin in the game. What would be a Max Borders beyond the singularity way to make a decision about whether the government should be investing billions, which it is, and I think it’s a good thing, fast tracking vaccines and may even mandate vaccines, at least for certain things like access to public schools, access to airplanes, access to government buildings. What is the mechanism for making a decision like that, that could have skin in the game, or at least could have better sense-making attributes than our current system?
Max: That’s a complex question. So I want to try to disentangle it a little bit. And I want to make sure I understand the question. One thing I’m hearing is, what is a social singularitarian way of deriving some sort of consensus mechanism for a large group of people?
Jim: Yeah. Let’s break it down. The first question is: how do we get consensus to invest billions of dollars on fast-tracking the vaccines? Or even, should we? I mean, yeah, I suppose in theory, every county could fund its own vaccine program. That doesn’t seem too smart. It seems that vaccines is a nation-state level scale, takes billions of dollars, and global. So how do we get to a consensus that we should invest billions to fast-track the vaccines right now in the post singularity world?
Max: Well, the first thing is, the only reason that it costs that much money to fast-track vaccines is because there is such an onerous research and development process around what the FDA does. And you could probably do a whole episode around the FDA problem. The fact that we have this dual mandate on the part of the FDA of safety and efficacy, that these both are in question, and that you have multiple stage trials, it takes 10 to 15 years to get a compound to market, normally. And so that’s one problem. The other problem is that you have IP squatting on compounds.
Max: Anyway, there’s all kinds of public choice, which is rent-seeking issues, interest-seeking I guess you could say if you’re not familiar with that terminology, around medical compounds that come to the market. In my view, there’ll be a lot cheaper, more effective market mechanisms for determining whether something works and whether it is safe, than we currently have the regime we currently have. In great measure, a lot of the costs of the good things we enjoy from pharma are a result of the regulatory apparatus. Okay. So that’s one thing.
Max: So if we were to streamline that process, I don’t think it would cost as much money to get to vaccines. I also don’t think we would have loss in safety. But since that is currently monopoly, then we have to raise money to fast-track it. So the regulation begets more regulation, begets more subsidy, in that case.
Max: In the alternative universe that I would like to see, you would have a situation where much of that is dismantled, and you’d have a different, perhaps more market based mechanism for this, and then you would be able to tokenize compounds.
Max: What is tokenization, anyway? Anybody who has ever heard of a digital ledger knows that you’re able to find investment mechanisms. We’re in the trough of disillusionment right now for blockchain and associated cryptocurrencies. We went through the trough of disillusionment with the Internet in the year 2000, 2001, so everybody is familiar with that.
Max: That being said, we’re going to start to see a much more improved state of affairs for ways of collaborative investing in certain kinds of things. Now let’s say that, “Okay. Max is not going to get his wild, crazy Wild Wild West social singularity way of supporting something like this through some kind of tokenization effort, which would give people, a bunch of different individuals, an investment stake in some compound, or some vaccine, or a trip to Mars for that matter. You could tokenize a trip to Mars, rather than taking our tax dollars and giving it to Elon Musk without our permission.
Max: I think these tokenization efforts are tremendous in the way they could work. But let’s just say that, okay, I don’t want to be so doctrinaire in my sort of market anarchism. Let’s think of a different, like a middle ground. I think contests would be a much better mechanism for doing that, where you have maybe some very, very basics, R&D support for something. And otherwise, the winner is the first past the post, who are able to find safe and effective vaccine, get a really big prize. And that that incentive is much better than just subsidizing companies who may or may not come up with a vaccine and do it in time.
Jim: Yup. And of course, there has been some work there. DARPA has run some very interesting experiments, the XPRIZE guys. And I agree with you that, put out a $20-billion prize for a quite high standard vaccine would have been a good idea. Probably too late now, because they’ve gone the route of just throwing billions at lots of different companies and hoping something works.
Max: Yeah. It’s the spaghetti against the wall technique. That introduces so many bad precedents. And also, it’s just piling more and more problems onto what we’re already seeing with this “stimulus” that we recently went through, and these stages of stimulus that were just showering resources on these big companies, just complete political nonsense, half of them.
Max: It’s really quite staggering the way political allocation works. The horse-trading, the corruption, it’s awful. There’s not even a quasi-market mechanism involved there. There’s no connection between the output value and the input of basically debt dollars because we were in such deep debt that it doesn’t even make sense to talk about it in terms of taxpayer dollars anymore.
Jim: You stimulate some thinking there. Let me throw one out. I’m going to try to channel Max Borders here on vaccines. Prize idea is cool, but let’s say you had to have a high safety and a high efficacy. What about we got a little even more radical, a little bit more post-singularitarian here and we instead said, “Any company could put out a vaccine, but it must be radically transparent at the level of insurance that it has.”
Jim: So in other words, my buddy, Brian Hanley made a vaccine in his basement. He’s actually a viral vaccinologist and he knows how to do this. And he might convince a few rich guys in Silicon Valley to pledge parts of their fortune, the way Lloyd’s of London works, and he gets Elon Musk to say, “I’ll put up $5 million of indemnity,” and he gets Bill Gates put up 10 billion.
Jim: He says, “Hey, there’s hardly any risk here. This thing is safe as shit.” And people look and see his radically transparent efficacy results, and they see that he’s got $20 billion worth of indemnification. And then you just make your own decision on when to go forward and take the vaccine, based on radically transparent efficacy results and hard promises of indemnity in the Lloyd’s of London fashion.
Max: I love it, Jim. I love it. I think that’s a fantastic idea, and I’m going to steal it for my next book-
Jim: Feel free.
Max: …if you permit me. I think it’s a fantastic idea. I think this idea of insurance really does have a lot of interesting applications. There’s another immediate social problem where it could work, and that is requiring police officers to have civil insurance. Of course, you’d have to remove qualified immunity from police and make them directly liable for any injuries that happen on the job, but then they have to also carry insurance. And if you hurt too many people and you get sued too many times, your insurance will be unaffordable or you’ll get dropped. That’s another application I think is really interesting.
Jim: And it’s interesting. Actually, it does exist. My brother recently retired after a long and fairly glorious career in federal law enforcement. My dad was a cop, Washington, D.C., for his whole career. And one of my favorite cousins was a cop in Prince George’s County, Maryland, sort of infamous in its day for bad policing.
Jim: But anyway, I talked to my brother about this, he’s very smart and hangs out in all the online cop theory venues, and he pointed out that federal law enforcement already requires this. He as a federal law enforcement officer was required to carry a certain amount of indemnity insurance. And as you point out, the price was artificially low because of qualified immunity. So that’s an obvious way to get started.
Jim: Though, of course, we have to look at the bad faith attempts to exploit that. If there were these big pools of money around, there’d be all kinds of false charges and there’d be all kinds of settlements by the insurance company, and bad faith would reign. So we would also need some other institutional reform, such as, one I’ve always liked is the British style of litigation, where loser pays both sides legal costs. So you make a false claim, a violation of your rights by the police, well, you’re perfectly able to litigate that. But if you’re wrong, you pay both sides legal defense.
Jim: And then you say, “Well, the poor person on the street can’t afford to take that risk.” I say, “Well, how about this? Let’s allow the syndication of claims.” So there could be a marketplace of claims. So I’m Mary Smith, who was beaten up by the cops and can prove it, but I got no money to sue and I don’t want to risk my grandmother’s house to fund the litigation.
Jim: So instead, I take my video camera output, put it up on a marketplace, say, “Who wants to back my lawsuit? And how much do you want as your component of the settlement?” And an equilibrium point comes that she gets $2 million worth of litigation by offering 30% of what she collects, and then goes after him. I think that’s another market style reform, which then tends to mitigate the bad faith shakedown, which could occur otherwise.
Max: That’s also really good. Yeah. Yup.
Jim: Yup. I’m channeling Max Borders here. I’m thinking this way.
Max: I just need to call you up, and get more of your ideas and steal them.
Jim: Yeah. Feel free. I love to just get my ideas out in the world.
Max: Of course I’ll credit you, Jim.
Jim: Yeah. Fine by me. Either way. Let’s move on here. Unfortunately, as I had mentioned, there’s so much in this book. I mean, we could go on for hours. Let’s switch directions a little bit. You talk quite a bit and quite eloquently about how for the last, I don’t know, at least 10,000 years, and it may be more like 50,000 years, hierarchy has been the main way that we have organized collaboration, both in states or state-like things and in commerce.
Jim: And there may be some opportunities to move towards new open systems approaches, as we’d say in the Game B world, things that are network-centric, self-organizing and decentralized, as opposed to command and control hierarchical structures. And you give some examples. Maybe talk a little bit about that, maybe particularly in the context of governance of work, because I think that’s something that a lot of people feel alienated from the way traditional command and control structures have operated.
Max: Yeah. Another show notes kind of note here for your listeners, I want to encourage everybody to, if you aren’t already familiar with the work of Brian Robertson or Tom Thomason, both of them have done really interesting things respectively, when it comes to transitioning out of hierarchy, in terms of the way the firm is organized. Brian has certainly brought this kind of reform.
Max: And by the way, I work with a man who is out in California named Chris Rufer, who he runs a tomato empire; it’s like 2,000 employees, I think five tomato processing plants, and just a fleet of trucks that take tomatoes to these processing plants. So if you ever eat spaghetti or anything, you can find Chris Rufer’s products. He’s a mentor of mine. He’s a brilliant man. And his whole organization is completely non-hierarchical, or you might think of it as being the shallowest of hierarchies; which is to say Chris and the rest, but because Chris owns the organization and there’s a certain amount of heft that comes with that.
Max: But in any case, Chris has an organization that is completely self-managed, which is to say, there is no management hierarchy at all. This is a foreign concept to most of us, unless you’re familiar with holacracy.
Max: And Brian Robertson is the one who came up with the idea of holacracy. And it is really an internal social operating system that allows firms to self-govern and self-organize without managers, bosses and the like. And really, this transformation of the rules and protocols within organization is allowing people to live their work days in a much more participatory way, with a sense of ownership, and agency, and efficacy that people who are handed tasks and told what to do within traditional firms are not.
Max: I actually think systems like holacracy might actually be able to scale to the level of society. I don’t know that to be the case. And just like Jim, with your liquid democracy, I would want to see some test cases scale beyond a company to something bigger, to some bigger part of a jurisdiction.
Max: But holacracy allows us systems within systems, localized governance of holonic systems that nevertheless are bound together under a single… I guess you call it TELOS or mission. So the mission is the boss in these organizations.
Max: I find these really interesting and really promising, both for the fact that when you work in a holacratic organization, you feel less put upon by people who are basically Type A assholes. I mean, there’s that dynamic when you go to work, sometimes. It puts tensions in the workplace, front and center, to be resolved and adjudicated on a daily basis rather than passing the buck or relying on managers to settle conflicts and make decisions on your behalf. So that’s one really promising piece of it.
Max: The other, I think, goes to what you call corporate gigantism. And that is, this is Tom Thomason’s piece. He’s developed… you can find encode.org… is an organization that helps companies set up in a way where they use the old LLC model to develop companies that are not your traditional corporate hierarchies. The traditional corporate hierarchy is baked into the tax code.
Max: What encode does, and Tom’s team does, is they essentially adapt what we have in LLCs to function more like cooperatives. But there is more dynamism with respect to remuneration and also dynamic shares of the corporation, that track more closely to value input and more closely to how the rest of the team perceives you.
Max: So it’s not a cooperative in the classic sense of like Michele Balance… although that’s probably also true, Michelle does great working in this space… but there tends to be this default to democracy with cooperatives that’s shady and it doesn’t really work, and it tends to lapse into corporate socialism of one form or the other.
Max: Whereas these dynamics systems of both internal governance, like holacracy and the way that the company is formed, allow people to become dynamic shareholders as they continue to work and create value, so that there’s no boss who has like 55% of the company and do whatever they want and run roughshod over everybody and become rich beyond anyone’s wildest dreams.
Max: Instead, what you have is a multiple participatory arrangement where people can grow rich together. That means you’re never going to have a Jeff Bezos, but you’re also going to have a much, much bigger middle-class if these kind of dynamically operated and designed organizations were to be propagated, I guess you could say.
Max: So that’s a whole lot. It goes quite deep. But for now, I’d say holacracy and the encode model of the development of the corporation, if those two things could predominate, we would solve a lot of social problems, starting with corporate assholes.
Jim: Yeah. Yeah. What I often call Game A motherfuckers. Right?
Max: Yeah. Game A motherfuckers.
Jim: And I’ll confess to having been one back in the day, and a pretty damn good one at it.
Max: Bless you for that.
Jim: It’s a broken system, and we don’t want to go there. I’m glad to hear about this encode idea because I’ve been interested in cooperatives, but you point out the simple cooperative model doesn’t really work and it needs more juice to it. And so, there is a lot of work going on in hybrid cooperatives. And this encode may be one variant on that. I certainly want to look at it.
Jim: I was also very interested in learning about this Morning Star Company. I’d never heard of it. And I did a little research on it. And there’s a cool article in the Harvard Business Review, of all places, about-
Max: Gary Hamel.
Jim: Yeah, Gary Hamel. Very famous high-dollar management guru. It’s called Let’s Fire All the Managers. Actually quite cool. On the other hand, as I dug deeper trying to find out more, there ain’t much to find out, and there are very few articles, almost nothing, published on it since 2012. They used to have, Morning Star did, a Self-Management Institute. The website no longer works. They have a Facebook page about self-management, hasn’t been updated since 2015.
Jim: I can tell you the backstory on that. There’s a guy named Paul Green Jr., who actually is a professor at the B School here at UT Austin now, who used to work as the head of the Self-Management Institute. And when he went off to get his PhD in management, he left Morning Star and they didn’t really reconstitute it after that point.
Max: … And they didn’t really reconstitute it after that point. And so the idea was they wanted to spin this off as a consultancy model, but I think it never just got off the ground and Chris thought that… Chris Rufer, the founder, thought that it would be best just to focus on the core competency, which is making good tomatoes.
Max: I think that’s rather a shame and I’m close to Chris. I talk to him nearly every week because I work for him on a contract basis and I just think he’s an incredible man. I’m working on ghost writing a book for him as well and I think it’s just an amazing story that this company runs this way and it’s not perfect.
Max: Look, nothing is. We always have to ask, as compared to what? But when one does the comparative analysis and you actually talk to the people who work there, and some of them are seasonal workers from Central America, but there’s a real culture of dignity and collaboration there that’s almost like an emergent phenomenon of just respecting two basic rules, which is don’t ever threaten anybody with their job, or don’t ever threaten anybody, period and operate with integrity. In other words, honor what your word, what you say you’re going to do.
Max: And from that, they have some basic organizational processes that they implement, but it’s not even, it’s not as complicated as Holacracy. I think Holacracy is harder to learn and more promising in its scope, but as from a standpoint of being a heuristic, and it’s also probably more efficient. But from the standpoint of a heuristic, it’s more difficult to master, Morningstar being much simpler. So there’s all kinds of experiments and governance going on right now at the level of the corporation and if these really take hold, I think people will slowly start to disabuse themselves of these hierarchical models that currently run the country.
Jim: Yep. I agree. And I think this is a huge area for experimentation and work. Would your Morning Star guy will be interested in coming on the Jim Rutz show and tell us what he does?
Max: You mean Chris, the founder?
Jim: Yeah.
Max: Oh yeah. I’m sure he would. I’ll be happy to talk to him and I think you’ll find him a fascinating man.
Jim: I would love it. I mean, hell, I was an entrepreneur. I’ve helped start 17 companies. I know what it’s like and some of them were more humane than others. Probably none of them were as humane as this. So I’d love to have a conversation with him. You did mention Holacracy, and I looked at that pretty carefully back in 2013 when it was first starting to get some play, and I said, “Maybe.” Right.
Jim: And I was glad to hear it was tried, a place like Zappos, but I just did some research over the last couple of days and discovered that Zappos has backed away from it or at least changed it a lot. And as I suspected, it turned out to have too much overhead to be really good in the long term and that doesn’t surprise me. These are first assays, these are first attempts to do things.
Jim: And the key is to not be doctrinaire or ideological about them, rather to be ideological, write down an idea and try it. But when it needs to be improved, improve it. I do wish there were more literature about this. Wish there were a self management institute that would share the learnings from these various experiments because it’s going to be a really important part of crafting what comes next.
Jim: Actually getting to the point as we claim in game B, which we haven’t proved, which is that organizations run on this basis in a self-organizing network centric, decentralized fashion, operating in honesty and good faith and with a significant though, not total amount of economic sharing, will actually be able to out compete game A companies. We actually have to do that. We haven’t yet. And these experiments are really, really important in figuring out what works and what doesn’t.
Max: Honestly, Jim, I’ll share with you. I think what you just said is the single most important thing we can do for social change in this world right now. And I know it seems crazy to think about what corporations… Why would that be, with all that we have going on with the pandemic, with people toppling statues in the streets and burning Portland down and this, that, and the other, would the transformation of a corporation make a hill of beans to anything?
Max: But I really do think that when people spend eight hours out of their day creating value for each other, that is a linchpin. If we can transform organizations in such a way to be much more humane, participatory, efficient, effective, all of that stuff, as you said, it also shows the way for how we can organize ourselves in other domains and are currently not. That’s the promise of it.
Max: Let me also give you a quick note on the book. Reinventing Organizations is the name of the book they profile Morningstar and other organizations like Zappos, as well as Ricardo Zimler’s outfit, I think is in there, down in Brazil. There’s a lot of these kinds of organizations and they’re called teal organizations more broadly. The teal organization trope comes from teal and in integral theory, which is second tier, which is to understand complex systems as emergent phenomena and not as planned. That leap in cognition is known as teal in integral theory.
Max: So he calls him teal organizations, and this book really does give you a good idea about all of the possible variations, or at least it parameterizes the variations up to this point in what can be thought of as self-managed organizations.
Jim: Damage? Is that book out? Or are you guys writing it or what’s the deal?
Max: Yeah. Yeah. It’s Reinventing Organizations, it’s been out since about 2015, I think.
Jim: Now, I think we’re on the same page that these are very important. But I would add that at least in my view, these things are substantially pissing up hill, unless we also reform money and finance and also taxes because there’s a reason that socioeconomic evolution in game A has produced gigantic companies that do all they can to extract monopoly rent through corrupting the political process and just getting big.
Jim: And if we don’t have a money finance and taxation system to level the playing field so that people can’t mind giant network effects and fuck everybody over, the opportunity for these reinvented organizations, the barrier, the activation energy they need gets really high, and it may be so high that it’s really hard for them to succeed other than in niches. And of course, you write a lot in the book about Bitcoin. Personally, I’m not, I don’t like Bitcoin.
Jim: I think it’s got lots and lots of problems, but I do believe that one of the great things about this epoch is that people have finally realized that fractional reserve banking money managed by central bankers was not brought down from Mount Sinai by Moses. And that there’s lots and lots and lots of design space and money and finance and taxation that we haven’t even started to explore yet, and it’s really good that we are.
Max: Oh yeah. No, there’s no doubt about it. I mean, Bitcoin is the exemplar because it’s the first one and it itself is a continuously evolving both ecosystem of programmers, but also in its properties. It’s gotten faster, it’s more scalable now. It has a lot of problems, but it also has a lot of competitors. So if you see this as an evolutionary fitness landscape, this distributed finance, but also cryptocurrencies, it really… We did have to go through a dark time where people were throwing a bunch of money at a bunch of trash and they got burned by the market. They had skin in the game and they lost their asses.
Max: But now, now that that has shaken out a little bit, people are starting to realize what had staying power, what had utility and phase two, or the second wave of this stuff is going to be really interesting because we’re going to start to see not only how it transforms everyday users, because that was a really, that was a problem too. A lot of these, these geeks don’t know how to design for UX for ordinary people.
Max: So they were designing for themselves, and that meant that you had some really clunky software and some are really difficult security management issues that frankly, for someone who’s has a little bit of a right brain like I do, I found off putting, even though I was a cheerleader for all these things. But that soon is going to change because the UX designers are going to come on board, and then we’re going to see rapid adoption.
Max: And when we see rapid adoption, we’re going to start to, I hope, invert the process of what is known as Concentrated Benefits and Dispersed Costs and that’s to say, if it becomes more beneficial to own a crypto currency than to own a traditional Fiat currency, we could see a real change in the game there because there will be such rapid adoption and it’ll be so hard to have an enforcement mechanism. It may be that it’s game over for the system of central banking. But I’ll tell you what they’re doing their hardest to clamp down on anything that resembles competition and they’re being very effective at it right now.
Jim: Yep. And I will say for some good reasons, because unfortunately the design of most of the current cryptocurrencies basically means they’re only good for one thing, which, well two things. One is they’re excellent for payment of ransoms and the other thing is they’re good for criminal transactions. Right? Especially if you had a blender in the middle to get something closer to anonymity and they’re not really good for much of anything else. They take too long to settle. The transaction costs are too high.
Jim: The currencies are unstable and I could go down a long list of things that are wrong with most of the current currencies. But as you say, people are learning and are evolving and they’re second and there’s third and fourth generation currencies. And hopefully, some of them will learn the lessons from the first generation. Though I do believe, as a matter of principle, that the whole family of truly trustless, the allegedly trustless, currencies is a big mistake. That the value of radical trustlessness is way smaller than people think it is.
Jim: And it’s also false because in reality, at least in everyone I’ve seen at the end of the day, you end up having to trust a small group of software developers. And they’re the ones that fundamentally are the governance and they’re not really held accountable, et cetera. And yet, radical trustlessness comes at an insane price. The last time I did the numbers, which is around 2015, the cost of proof of work in Bitcoin amounted to about 7% of the market cap of Bitcoin per year, which is insane.
Jim: Even our fractional reserve currency system, which is grossly inefficient, central banker mediated fractional reserve currency system has overheads on the order of 2% per year. And so Bitcoins three and a half times less effective and is actually much less usable in a whole bunch of ways. So there’s a lot of room to improve, but I do believe that this area should be explored.
Max: Absolutely. And getting these cryptocurrencies to do these complicated problems of solving cryptographic puzzles and things like that in order to be trustless, there’s all kinds of different competing notions to how to achieve the same level of security at a lower price.
Max: And it’s incredible the rate at which these attempts are being made. So, disintermediation, it happens at different levels of the stack too, by the way, not just at the level of the coders and what they create, but it’s also when you create a network of people that, yeah, we might have to rely for a while on a group of Bitcoin coders. But at the level of human interaction, that right there is better than certain other kinds of transactions.
Max: So relativizing our sense of these different properties and how they will improve into the future following another Moore’s law type phenomenon, you’re right. There is a tremendous promise in it, and I think there’ll be an inflection point beyond which the game will be over for Fiat currencies. They’ll have to either be radically totalitarian in their approach to reigning them in, or they’ll just have to change the way they tax and maintain their monopolies.
Jim: Yeah. It’ll be interesting. And at least in the U.S. there has been some attempt to clean up the marketplace of the bad and absolutely fraudulent cryptocurrencies, but it is interesting in the U.S. it’s legal, it’s clearly legal to operate alternative currencies, which is actually a hopeful thing, I think for the U.S.
Max: I agree. Yeah. And for the moment it is legal. You can trade them and the problem is, is that you can’t create them anymore. In fact, Ethereum and really Ethereum and Bitcoin were grandfathered in, but I was… One of the things I was hoping to do with social evolution the little nonprofit that you mentioned at the beginning of the show was to create a consensus mechanism where people could be mutually supportive in their entrepreneurial projects and ventures at the very early stages.
Max: And we tried to come up with a consensus mechanism on a blockchain, and it seemed like it would be a really interesting… Well not, yeah, really interesting way of dispersing funds held in common by a group of people with similar aims. It functions like a mutual aid society, except for entrepreneurs. And this approach, I started talking to some real experts in the space and they were super excited about the idea, but they said, “Max, you’re going to have to move to another country to do this,” and he listed about six different regulatory agencies that would have precluded our doing this project.
Max: So, I’ve got kids, I’ve got a family. My parents are still alive. I don’t want to move to Malta to be able to pull this off or to Switzerland. That is an incredible barrier. The fact that I’m still in meet space meant that this idea of subversive innovation that I preach very hard that doesn’t mean I haven’t been a victim of the, hierarchical state that is going to look out for its interest and it’s going to mute the aspirations of certain kinds of entrepreneurs.
Max: Basically, you have to be well-funded and you have to be absolutely Cox sure of yourself to want to move countries to continue the revolution. But some people are doing that and let’s hope there’s just enough to continue doing it and people working on this stuff in other countries to pull it off. But I would say the regulatory apparatus of the state is quite potent and quite powerful right now. And it’s something that I underestimated in about 2015, for sure.
Jim: Indeed. Indeed. In fact, I had my own little encounter with it back in about 2004, I think it was. I got really excited by Robin Hanson’s idea of opinion marketplaces. And I actually put together a prodo venture to look into it and hired an international lawyer to figure out was it legal in the U.S. And if not, where? And this and that, and the answer came out, the optimal place to do it was the Isle of Man.
Max: And it still is. One of the good ones. This is really goes to this question of collective intelligence. I think the things in the vein of Hansen’s prediction markets, Futarchic systems are, they’re going to have to experiment with them, but Jim, that, I wish you could have done that because there’s so many interesting things that we can learn about the world and we can really improve our collective intelligence just by making it cost something to be wrong.
Jim: That certainly helps as we know.
Max: What did they tell you to do? Just that the Isle of Man was the only way to pull it off and you were going to run it. Right?
Jim: The Isle of Man I could have put up with, and I wouldn’t have run it myself. I would have hired someone to do it. But they also pointed out the very onerous criminal penalties for money laundering should you try to repatriate your winnings back to the U.S. And at that point, I said, “Fuck that.” Right? I’m willing to lose my money, but I’m not willing to get thrown in jail for five years for doing something, which I believe is good for the world. Right? So I just said, “Fuck all this. I’m not willing to get entangled with money laundering laws.” Right?
Max: It’s ridiculous. You can go to the New York stock exchange and buy shares in the future performance of some company, which is gambling, but you’re not allowed to invest in what your perception of truth assets are.
Jim: Yep. It would be a huge, as Robin has pointed out, it would be hugely useful in lots of ways, particularly if the market got big. I mean, it exists today, but it’s tiny, not big enough for the signal to have high fidelity. But if there were, I don’t know, $10 billion invested in these opinion marketplaces, those signals would be useful to everybody to help them make better decisions.
Max: Yeah. That’s that’s right. Even if you didn’t have any skin in the game and you didn’t have any money, you could certainly look at the performance of these. I don’t know what you want to call them.
Jim: Bets, wagers. Right?
Max: Bets, or wagers over time to see how they’re holding up. It adds a layer to that Popperian Model we were talking about earlier that’s staggering in its implications.
Jim: Yep. It is interesting that nobody has ever seen fit to see the importance of this and allow it. Which gets me to probably the most radical idea you have in the book, which the book is full of radical ideas. And that’s the idea of getting around problems like this through allowing multiple sovereignties.
Jim: So for instance, one could agree to be bound by the U.S. law on things like opinion marketplaces or the ideas you were doing there for startup entrepreneurs with the ability of mutual support and mutual help, et cetera. Or you could choose to make yourself subject to Estonian law. Right. Or the Isle of Man. Talk a little bit about this radical idea about how we break out of the box of geography when it comes to at least part of our interactions with the state.
Max: Yeah. I think, earlier Jim, we were talking about federalism and the idea. The idea there is what is known as polycentric law. But the idea of polycentric law means that it’s still this idea that law and the enforcement of law is coupled in some way to some swath of territory. When we think about the history of conquest and power, it’s easy to understand how law has come to be associated with territory. But we are living in an age where technological advance and systems of co-creation and collaboration, cross geographies.
Max: You’re sitting now some, I think, on vacation in Pennsylvania, and I’m here in Texas, and we’re, in a sense, collaborating on your show. Texas law applies to me, Pennsylvania law applies to you, and that is a very jurisdiction, coupled to territory kind of phenomenon. There’s this old liberal, liberal in the classical sense, Belgian man named Dupuis, who was riding on in about 1860. And he asked the question, “Why is it that rules should be coupled to territories?” And in fact, it really doesn’t make any sense. He said, “Why don’t we think of it as a situation where we could basically go to a registration office,” which in those times that’s what would be necessary, and you would essentially register for your rules of governance, okay.
Max: Other people would do the same. And then you would use essentially the common law to adjudicate between those different jurisdictional forms. But they wouldn’t have much to do with territory. And of course, you have to think about things that are certain kinds of goods or certain kinds of things that have something to do with territory, like your water rights and things like that earlier. But otherwise, most things that we do in this life, especially these days with so much of our lives being online, don’t really have anything to do with Terrafirma and they have everything to do with the rules of the game.
Max: And as I’ve tried to emphasize in this conversation and in the book, if experimentation with new rules of the game is going to help hasten this lateralization of human behavior, we’re going to need a set of protocols to do so and we’re going to need to experiment with those protocols. Polyarchy, or Panarchy allows us to do that.
Max: That Panarchy is his term for this, this phenomenon, which is you can essentially… I could say, “Okay, I really liked the Singaporean healthcare system.” So the Singaporean healthcare system allows you to have a large medical savings accounts. And they have a small single payer portion that keeps you from going bankrupt if you have an expensive medical procedure. But basically everybody pays out of their accounts and these are an interest bearing accounts. So people have these great incentives to watch their spending.
Max: Well, I think that’s a great idea. Maybe I should be able to adopt that model rather than the American model, which is governed by the ACA. But here where I’m not just buying into a certain kind of product. I’m buying a system I’m participating in a system and those systems, that cloud governance, can have conflicts with other people, but those can be adjudicated, as we say, with the common law. So there’s really interesting ideas of the decoupling of Terrafirma with rules. And that’s really probably the most radical idea in the book and I think that’s where we’re headed in the social singularity.
Jim: Very cool. I mean, I agree with you. I mean, I could argue at both the pros and cons of this, but it’s truly an innovative idea. And as you all have heard from reading this book, this book is full of all kinds of interesting ideas, packed into a nice compact package. So I’d recommend if you’re interested in the things we talked about, go out and buy it, The Social Singularity by Max Borders. Thank you very much, Max, for a very interesting conversation.
Max: I look forward to tipping a few back with you, Jim.
Jim: Hey, we got to do it. Next time we’re in Austin or if you head up to Virginia, hell yes.
Max: All right.
Production services and audio editing by Jared Janes Consulting, Music by Tom Muller at modernspacemusic.com.