books

Cryptodemocracy: how blockchain can radically expand democratic choice

Book published with Lexington.

Abstract: A cryptodemocracy is cryptographically-secured collective choice infrastructure on which individuals coordinate their voting property rights. Drawing on economic and political theory, a cryptodemocracy is a more fluid and emergent form of collective choice. This book examines these theoretical characteristics before exploring specific applications of a cryptodemocracy in labor bargaining and corporate governance. The analysis of the characteristics of a more emergent and contractual democratic process has implications for a wide range of collective choice.

Reviews

“The problem of democracy is that it simultaneously invests power in the people while removing any incentive to use their power wisely. Cryptodemocracy is a thorough and rigorous investigation into an innovative solution: Turn votes into a kind of tradeable property right and allow voting markets. New blockchain technologies allow us to overcome the problems of older voter market proposals. This is a book that deserves to be widely read and discussed—and we owe it to ourselves to experiment with its suggestions.”
— Jason Brennan, Georgetown University and author of Against Democracy

“Public choice theory has now ossified around the conventional practices of voting and legislation. In this volume, Darcy Allen, Chris Berg, and Aaron Lane show how that ossification might be transcended by bringing ideas from blockchain technology to bear on democratic governance. While the authors recognize that they have not written the final word on this topic, they have surely created a template that will provide analytical points of departure for pursuing political economy in new directions.”
— Richard E. Wagner, George Mason University

“We stand on the edge of revolution not just in the way democracy works, but in the very idea of what democracy can be. Blockchain technology can immediately solve all the problems of voter fraud, low turnout, and expensive recounts, while expanding the ability of citizens to delegate their votes and register their views on important topics that are now decided behind closed doors. This landmark book is the first thing I’ve seen that understands the potential, both benefits and risks, of the cryptodemocracy on the horizon — a turning point in the literature connecting political science and technology.”
— Michael C. Munger, Duke University

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Journal Articles

Cryptodemocracy and its institutional possibilities

Forthcoming in the Review of Austrian Economics

Abstract: Democracy is an economic problem of choice constrained by transaction costs and information costs. Society must choose between competing institutional frameworks for the conduct of voting and elections. These decisions over the structure of democracy are constrained by the technologies and institutions available. As a governance technology, blockchain reduces the costs of coordinating information and preferences between dispersed people. Blockchain could be applied to the voting and electoral process to form new institutional possibilities in a cryptodemocracy. This paper analyses the potential of a cryptodemocracy using institutional cryptoeconomics and the Institutional Possibility Frontier (IPF). The central claim is that blockchain lowers the social costs of disorder in the democratic process, mainly by incorporating information about preferences through new structures of democratic decision making. We examine one potential new form of democratic institution, quadratic voting, as an example of a new institutional possibility facilitated by blockchain technology.

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Book Chapters

Blockchains and the boundaries of self-organized economies: predictions for the future of banking

Book chapter published in Banking Beyond Banks and Money

Abstract: This chapter uses economic theory to explore the implications of the blockchain technology on the future of banking. We apply an economic analysis of blockchains based on both new institutional economics and public choice economics. Our main focus is on the economics of why banks exist as organizations (rather than a world in which all financial transactions occurring in markets), and how banks are then impacted by technological change that affects transaction costs. Our core argument is that blockchains are more than just a new technology to be applied by banks, but rather compete with banks as organizations, enabling banking transactions to shift out of centralized hierarchical organizations and back into decentralized markets. Blockchains are a new institutional technology — because of how they affect transaction costs in financial markets — that will fundamentally re-order the governance of the production of banking services. We then explore this implication through broader political economy lens in which banking moves out of organizations and deeper into markets. We examine this as a form of institutional economic evolution in which the boundary of catallaxy — i.e., a self-organized economy — is enlarged, at the margin of the banking sector. Such institutional competition enables evolutionary discovery in the institutions of banking.

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