DAOs, culture and politics

DAOs

Algorithmic decentralization is an ideology that finds its origin in the cypherpunk movement, which championed cryptography as the only tool to ensure people's freedom on the Internet. This techno-utopianism promotes decentralization as a tool for the elimination of hierarchies and the dissolution of power. Blockchain technologies, and therefore cryptocurrencies, are born in the wake of these expectations and they embrace a political spectrum that goes from extreme leftists to right-wing cyber-libertarians. However, now that traditional finance, big corporations, and even centralized institutions are more and more conquering the crypto-space, the utopia of decentralization has shifted from currencies towards a new tool, the DAOs.

Decentralized Autonomous Organizations are internet-native organizations collectively owned and managed by their members. According to DeFilippi and Wright's "a DAO is a particular kind of decentralized organization that is neither run nor controlled by any person but entirely by code. As opposed to other decentralized organizations --- which are operated by individuals who hold the ultimate decision-making power --- DAOs are designed to run autonomously on a blockchain." (1) The authors call the set of rules accepted by the community lex cryptographica, an order created without and the law through the underlying protocol of a blockchain-based network.

Before them, back in 1999, Lawrence Lessig had already theorized that "Code is Law". And with those glasses, we can see DAOs as the operationalization of a "moral person's" operating principles and mission into something that can't be deviated from without a governance change. This process reduces the chance of rogue executives messing with something.

Implementation

British anthropologist Evans-Pritchard suggests that a political community is a group of people that accepts some common rules to solve conflicts as a law. Therefore, in accepting "The Rule of Code" DAOs can be considered a political community. The implementation of DAOs is still rudimentary but today they basically allow people to vote on proposals and execute the decision (somewhat) automatically. The members share a collective wallet (treasury) that is only accessible with members' approval and decisions are taken through proposals voted by the group. To give some examples, people vote on what parameters to tweak (like the fees), which projects to fund, which investments to make, which NFTs to buy, and which information to publish. The different voting options that are being invented (like staked voting, veto-only, points to distribute...) represent the capacity of complexifying our democratic tools through technology. The core idea is the techno-utopianism of implementing projects governed by people rather than through a top-down hierarchical leadership structure. Based on the principles of collaboration and collective decision-making, they aim to improve democratic tools for society as a whole.

For sure DAOs are not the first attempt to democratize the economy. Cooperative enterprises are a way to integrate capitalist firms and democracy by human-centered businesses. Cooperatives are "autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned enterprise"(2). All coops rely on 7 principles among which the "one head, one vote" is probably the most famous one. As in democratic systems, everybody can express his/her opinion through voting, without any discrimination. Everybody can enter the cooperative autonomously, every member has to economically participate in it and profits are equally shared among members.

Despite the aspiration for equality, it creates (at least) three different interest groups within itself: the membership, the management, and the board of directors. The optimal co-operative governance is the one that, in any different circumstances, finds the right incentives for managers and directors to pursue goals that improve the livelihood of the members. Sometimes it is not the case and mediocre management or oligarchic local boards of directors are caught in a downward spiral of poor performance or lack of member involvement(3). DAOs supporters are trying to tackle all these inefficiencies.

DAOs do also resemble the so-called stateless or acephalous societies studied by anthropologists. These are characterized by the absence of explicit forms of government: they do not have a king, a chief or one single institution that centralized power. The political structure of a society of this kind distributes power among its people on the basis of some characteristics that we generally associate with the private sphere: family, lineage, kinship, gender, just to mention a few. Among the Masai, for example, people have different prerogatives, rights and duties within the community depending on their age. Everyone is called to play different social roles in life according to the functions that belong to that age class (young, warrior, elderly): in this way power is distributed and it becomes an ability to carry out social activities based on the group to which they belong. Power becomes the exercise of a social activity aimed at strengthening cooperation and community bonds rather than the mere exercise of force. But in the end, power is not "structureless", it always follows some roles and people are never completely equal.

The dream of relying solely on an algorithm to ensure complete decentralization is still far from being real. To create, maintain, and spur the purpose of DAOs, to incentivize the participation of the people is still a human matter and therefore, from an anthropological perspective, a cultural one. Therefore it is strictly dependent on how developers and users will use the technology and for what purposes. As the Internet evolved into something quite different from what its builders first imagined (with big platforms centralizing information and data), we cannot imagine the different forms (de)centralization can take in the future.
DAOs can certainly be seen as an effort towards building a better society, therefore as a new form of resistance or even civil disobedience to quote Thoreau. The effort which tries to find new possible forms of democracy able to replace vertical hierarchy in economics and (maybe) even in the political sphere. However, anthropology (as well as cooperative experiences) teaches us that even a decentralized society creates a division of labor that ends up giving status and privileges to a part of the community. The only difference is in how those can be wielded. Whether the utopia of decentralization will find its form of full realization or, once again, switch to new objects on which to pour out its hopes, the story will tell. In the meantime, it is probably worth it to give DAOs a chance. Worst-case scenario, we'll learn something new (?).

Written by Camilla Carabini.

Economic anthropologist interested in money, finance, and cooperatives. She works as an independent researcher and she is a board member of Fondazione Finanza Etica in Italy. She is an expert on international cooperative development: before choosing the freelance career she was director of an NGO engaged in the promotion of social and cooperative enterprises in Africa and Latin America. She has lived, studied and worked in Argentina, Cape Verde, Colombia, Ghana, Mozambique, Spain, Togo, and the UK. She is @camunz on Twitter.

Footnotes:

(1) De Filippi, Primavera, and Aaron Wright. 2018. Blockchain and the Law: The Rule of Code. Cambridge, Massachusetts: Harvard University Press. p. 148

(2) International Cooperative Alliance Definition of cooperatives https://www.ica.coop/en/cooperatives/cooperative-identity#:~:text=Back%20to%20top-,Definition%20of%20a%20Cooperative,owned%20and%20democratically%2Dcontrolled%20enterprise

(3) Birchall, Johnston, Lou Hammond Ketilson, and International Labour Office. 2009. Resilience of the Cooperative Business Model in Times of Crisis. Geneva: ILO.