Discussed the core ideas and practical cases of radical markets, and combined with the possibilities of blockchain technology, decentralized autonomous organizations, etc.
This issue's reward: $135
Class Representative | Terry
Review | Han Ya
Typesetting | Wingo
Introduction#
This podcast is the seventh episode of "Green Pill", hosted by Kevin Owocki, with guest Glen Weyl. The theme is Weyl's book "Radical Markets". They discussed the core ideas and practical cases of radical markets, and explored the possibilities of blockchain technology, decentralized autonomous organizations, etc.
Glen Weyl was born in June 1985. He graduated with honors from Princeton University with a bachelor's degree in economics in 2007. He then completed all the coursework for a Ph.D. in economics at Princeton in just one year and graduated. His graduate thesis was published in the top economics journal, the American Economic Review. After graduating, he worked as a researcher at the Institute for Advanced Study at Harvard University until 2011, when he moved to the Department of Economics at the University of Chicago.
Eric Posner, another author of "Radical Markets", is a renowned legal scholar and economist who teaches at the University of Chicago Law School. He is the son of Richard Posner, a former Chief Judge of the United States. Eric Posner has conducted extensive research in the fields of international law and law and economics, and has published a book titled "Climate Change Justice".
For more information about Glen Weyl's publication of "Radical Markets" and the establishment of the RadicalxChange Foundation, please refer to the previous podcast guide, "DeSoc: Pluralism is the Romantic Collection of Individuals".
Quadratic Voting, Radical Markets, and Gitcoin#
Owocki mentioned at the beginning of the podcast that the explanation of quadratic voting in "Radical Markets" greatly inspired him and served as his entry point into the Ethereum field. He said, "When I entered this field, the first book I read was Glen Weyl's 'Radical Markets'."
The development of Gitcoin through quadratic funding has become the foundation of Gitcoin donations. As of the time of the podcast, 18 rounds of quadratic funding have been conducted, reflecting on the benefits of public goods funding and market utilization. Therefore, Owocki believes that there is a symbiotic relationship between Glen's ideas and Gitcoin. Gitcoin puts these ideas into practice to fund open-source software and public goods using Ethereum.
Glen mentioned that neither he nor Eric Posner are cryptocurrency enthusiasts, and they did not initially publish research in the field of blockchain. It was the "disruptions" in the existing political system and the development of capitalism that led to the writing of "Radical Markets". Their initial work was in the field of financial regulation, and they were very interested in the potential transformative nature of new social mechanisms.
Glen talked about the beginning of exploratory writing: "Around 2016, things in the political world started to get very strange, including Brexit and Trump's election. We felt a drive to put some of the ideas we had been developing academically out there in a form that different communities could interact with. We didn't expect one of those communities to be the blockchain world. Vitalik wrote me a 25-page response when discussing this book, and our discussion led to the publication of the paper on quadratic funding."
Quadratic voting, quadratic funding, or quadratic donations are essentially a voting method that allows everyone to express their preference intensity for different options using game theory and mathematical logic mechanisms. Each person has a certain number of credits that can be used to vote for or against options they support or oppose. The total number of credits each option receives represents the level of support or opposition it receives.
However, each additional vote requires more credits to be spent. This prevents a minority from influencing the outcome with a large number of credits and encourages a majority to express their opinions with a small number of credits. In fact, quadratic voting has groundbreaking significance, from the governance of the current blockchain community to the operation of democratic political mechanisms today, as it opens up the possibility of a more equal-oriented market regulation.
Of course, after the publication of Glen Weyl's papers and books on quadratic voting mechanisms, there has been much discussion and controversy in the field of traditional economics. Glen himself has also reflected on and criticized it based on the theoretical assumptions of sovereign individuals and absolute game theory. (https://www.radicalxchange.org/media/blog/why-i-am-not-a-market-radical/).
Regarding the topic of quadratic funding, Owocki introduced the current situation of quadratic donations operated by DAO in Gitcoin. Media projects and platforms jointly donate funds to digital infrastructure and other public goods. One remarkable possibility is that we have found a way on the Internet to involve more people in the demand for digital public infrastructure, to constructively build better solutions through genuine public participation, whether it is the provision of digital infrastructure or the regulation of the entire crypto industry.
Glen said that quadratic funding has many different applications, one of which is within companies. Although Ethereum is not a company, it is, to some extent, a private, loose, and decentralized entity.
Projects like Gitcoin support the operation of this ecosystem to some extent.
Within Microsoft, the CTO's office plays an important role in resolving conflicts between different organizations. Some organizations are not willing to contribute to the infrastructure that benefits the entire company; they only care about the bottom line of their individual work in order to gain recognition.
Quadratic funding provides a possible mechanism for the CTO to have a large funding pool instead of a growing bureaucratic system. This funding pool is not commanded by executing orders, but is matched through a decentralized process, similar to a virtual team, where teams come together and believe that "doing this for the company" is necessary, and then provide funding for common infrastructure based on the team's wishes, and match the funds through a common pool.
As a radical experimentalist in governance, Glen is concerned about the broader expansion of relevant mechanisms beyond the crypto community, to create a truly broad community of builders based on existing practical foundations. He mentioned a quadratic funding social experiment during the COVID-19 pandemic in 2021, which conducted quadratic funding activities in Boulder City to raise more than 250 donations for businesses such as comic book stores, bookstores, and yoga studios.
"One of the most interesting things to me is that this mechanism can be expanded whether you are in the crypto market or not," Glen said.
Common Ownership Self-Assessed Tax, Data Dignity, and Public Goods#
Common Ownership Self-Assessed Tax (COST), or more commonly known as the Harberger tax, is an idea proposed in "Radical Markets" to reform the property rights system.
Specifically, this is a method that allows everyone to freely buy and sell the resources they own or use (such as land, houses, stocks, etc.). Everyone must assign a price to the resources they own or use and pay taxes to the government based on this price. If someone is willing to offer a higher price to buy the resource, then the original owner or user must sell or transfer it. This prevents resources from being hoarded or wasted inefficiently and promotes the flow of resources in society, using tax design to promote social equality and the provision of public goods.
The design of the Common Ownership Self-Assessed Tax is often closely related to Universal Basic Income (UBI), where the government or collective organization uses the tax to maintain the surplus of the organization and distribute it to every individual in the organization in the form of UBI for redistribution. This radical left-wing reform proposal does not completely abolish private property rights, and personal items are excluded from the tax system within a reasonable range.
It should be noted that Glen believes that the combination of Common Ownership Self-Assessed Tax, quadratic funding, UBI, and central fund allocation will bring about strong institutional innovation. However, the practice of quadratic funding will bring new possibilities to the existing centralized UBI model. These concepts are not simply combined by simple aggregation.
Glen illustrated the possibilities of using external social funding incentives for market failures and tragedy of the commons issues through examples such as road congestion charges and market competition. When discussing public goods, Glen suggested that we move away from the traditional binary perspective of public versus private and consider the concept of "community goods". Taking the indivisible surface space of Lake Washington as an example, they are community goods, not global public goods or private goods.
Once you consider this, you will realize that most of the people you interact with are not anonymous strangers who only interact with you in the market. In fact, some people have stronger or weaker social relationships with you, depending on how much community goods you share.
This feeling will be amplified in the crypto world, where people participating in different projects and organizations will have stronger cross-overlapping effects. Solidarity among individuals should be an effect that grows with the sharing of community goods, and it may even be a pre-existing predisposition to solidarity.
This is also a shortcoming of the quadratic voting mechanism based on the complete assumption of game theory. It relies too much on the assumption of rational individuals and atomized independence. Therefore, Glen believes that future efforts should be made to better design mechanisms that aim for this goal.
Glen also hopes to see the application of quadratic funding in other situations, such as infrastructure construction. Many projects have both a business model and a social public goods aspect, and a balance needs to be found between the two. In community-based projects, social relationships between people have an impact on the operation of quadratic funding, while the QF model assumes that everyone is an independent individual and ignores the importance of social relationships.
Therefore, Glen hopes to better understand and utilize existing social relationships and solidarity to promote collaboration and the formation of new social connections, thereby improving the allocation of funds.
During the conversation, Glen talked about the concept of "digital dignity", which is a way to protect individual data rights and privacy. Everyone should own their own data and be able to benefit from it. This idea should not be unfamiliar to believers in Web3. The exploitation of platform data is an important topic in labor theory, Marxist research, and government-social relations.
Glen envisions a blockchain-based digital dignity platform that allows users to control their own data and collaborate with other users in a community framework to share benefits. This model undoubtedly enhances democracy, innovation, and social fairness.
Further Reading#
Through the shared learning in this podcast, especially Glen's own statements, we can clearly feel that "Radical Markets" is not a research work exclusively for the crypto world. It focuses more on the market regulation issues in the real world of capitalism, which involves the arrangement of democratic systems and the reform of property rights systems, and the crypto world provides the technical means and practical possibilities for these ideas.
It is difficult for us today to simply judge and describe a work of political science or economics using left-right labels, especially in a book like "Radical Markets" that could be opposed by both extreme left and extreme right. But we can still use the traditional spectrum for description. The free market is undoubtedly the foundation of the book, but the more obvious value orientation towards equality (whether it is quadratic funding, Common Ownership Self-Assessed Tax, or UBI) can be labeled as "left-liberal" (or even stronger).
The crypto world is not isolated from the traditional world. The economic and social activities of the traditional world will have an impact, and the thought experiments and governance of the crypto world continuously provide new possibilities for the traditional world. The social value thinking brought by "Radical Markets" easily reminds people of the famous "Capital in the Twenty-First Century" by Piketty, who proposed a global progressive tax system to address inequality in the operation of capitalism.
Quadratic funding provides an improvement to the provision of public goods, and the design of Common Ownership Self-Assessed Tax and digital dignity platforms are the answers provided by "Radical Markets" for the same orientation. If you want to better understand "Radical Markets" and its institutional concerns and economic positions, we recommend comparing it with "Capital in the Twenty-First Century" and reading a concise guide, which is available here: "The Mystery of 'Martians Owning Earth' in 'Capital in the Twenty-First Century'".
Vitalik also shared his thoughts after reading this book: Vitalik's Reading of Radical Markets
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