written by Twone
When faced with economic inequality, uneven resource distribution, and investment institutions monopolizing industries, and digital labor being exploited by ubiquitous algorithmic models, what would you do?
Would you challenge the Arasaka Tower like V in "Cyberpunk 2077," or would you conceive a "radical" reform theory and try to put it into practice, attempting to make this world a better place?
This book, "Radical Markets," cannot be considered a perfect solution to the problems of the real world mentioned above. It is more like a rough diamond that is yet to be polished, with flaws, but filled with a lot of thinking and determination to solve problems.
As the author said: This is only a "thought experiment."
By reading "Radical Markets" this time, I hope to think together with everyone about the era we are in today, and what changes and practices we can make.
Book Introduction#
"Radical Markets" is a book co-authored by Eric Posner and E. Glen Weyl, published in 2018. The core idea of this book is to promote broader social welfare and fairness through fundamental reforms of market mechanisms.
The starting point of the writing is a series of new challenges in the world today: despite global economic growth and a narrowing gap between countries in recent decades, inequality within countries is increasing, and social and political divisions and conflicts are becoming more serious.
The book is divided into five chapters, addressing five different problems that need to be solved, and proposing five "radical" solutions. These include private property, market mechanisms, investment, immigration policies, and data and labor.
About the Authors#
- Eric Posner: Professor at the University of Chicago Law School, Fellow at the American Academy of Arts and Sciences, and member of the American Law Institute.
- Glen Weyl: Chief Economist at Microsoft, known for his work on Quadratic Voting (QV), and founder and chairman of the social organization "RadicalxChange."
From Sun Yat-sen's Equal Land Rights to Taiwan's Practice: Tang Feng's Recommendation of the Book#
Tang Feng is a software programmer and political activist from Taipei, currently serving as the Minister of Digital in Taiwan.
This book proposal is of particular significance to Taiwanese readers, as some of the concepts have influenced the thinking of democratic governance in Taiwan, and some practices have even been implemented in Taiwan. For example, the "Common Ownership Self-Assessed Tax (COST)" mentioned in Chapter 1 is an extension of Sun Yat-sen's proposal for "equal land rights." The "Quadratic Voting (QV)" in Chapter 2 is a solution to the inability of the traditional system of one person, one vote to truly reflect differences in group preferences, making the discussion of public issues more meaningful.
The Taiwan Presidential Hackathon has been using Quadratic Voting since 2019 to select advancing teams; this method is applicable to various collective decision-making processes and highlights the qualitative differences in voting. The concept of "data and labor" in Chapter 5 is similar to the traditional practices of cooperatives and mutual aid societies.
The inspiration that Taiwan's experience provides to the world lies in our willingness to experiment in real life and turn these theories into practical tools.
Introduction of the Reviewer#
Twone: World game player, Uncommons core contributor
Reviewer's Comments#
This book is the fourth book in the "Cypherpunk Classic Reading" series conducted by Raw School, and it quotes a lot of economic theories, models, and thinking on law, politics, and sovereign state relations.
When I first read this book, to be honest, it was not an easy book to get into. The complex thinking from various ideological perspectives and political positions, as well as the so-called "radical" solutions proposed by the author, may not be fully agreed upon.
However, the more I delved into this book, the more I realized that the world is complex, and since we have all seen these problems, it is our responsibility as human beings living on this planet to respond and try to solve them in our own ways.
Since the author of this book has attempted to establish his own theory to improve the well-being of the world, what are our views on these issues? From our own perspectives, what can we do?
This is the biggest reflection I had after reading this book.
Also, I would like to share this with you, who read the book together.
Starting from "Radical": Fundamental Change#
The word "radical" is derived from the word "root," so "radical" not only means "radical," but also means "thorough."
The radical aspect lies in the spirit of radical social change, which allows people to break free from existing mental models and better grasp the essence of the problem; the thorough aspect means that we can no longer rely on superficial solutions and need to understand the underlying logic of social operation and reform through changes in market mechanisms.
Throughout the book, it is not particularly radical, but rather hopes for thorough reform to solve problems such as inequality, inefficiency, and monopolies, and make the economy and the world better.
From history to the present, from mercantilism to free trade, the authors traverse time and draw on past theories and practices, proposing a new form of "partial ownership" between private and public ownership - through Common Ownership Self-Assessed Tax (COST) or Harberger Tax, as well as mechanisms such as Quadratic Voting (QV), aiming to solve problems such as hoarding of private property, inefficiency of market and voting mechanisms.
Political Spectrum Test: Understanding Your Perception of Basic Issues#
The political spectrum, also known as the political compass, is a tool used to measure individual political leanings.
This book uses a lot of theories and viewpoints from political economists and philosophical radicals as arguments, including Adam Smith, Condorcet, Jeremy Bentham, John Stuart Mill, Henry George, Léon Walras, and Beatrice Webb. These perspectives and theoretical viewpoints cover both right-wing liberalism and left-wing egalitarianism. The five solutions mentioned by the authors in the book require readers to think about their own viewpoints.
Therefore, before entering the actual chapters of this book, it is recommended that everyone take a political spectrum test.
Understanding your own judgments and perceptions of certain issues can better help us read this book and clarify the author's train of thought.
Always remember that the theories in the book do not need to be fully accepted. You only need to have your own judgment and think from their perspective.
"Theory is gray, but the tree of life is evergreen."
You can also establish your own theoretical system.
Selling Rio: A Thought Experiment#
Economically, Brazil is the most unequal country in the Western Hemisphere. In wealthy countries where inequality is intensifying, the phenomenon of "Brazil" can also be found. The economies of these wealthy countries are also stagnating, and political conflicts and corruption are on the rise.
Many people used to have hope that developing countries like Brazil would eventually follow the path of the United States and become developed countries. However, over time, this optimistic belief has been challenged, and people have begun to worry that things may be developing in the opposite direction. Traditional reform strategies - whether increasing taxes and redistribution, promoting marketization and privatization, or enhancing the capacity of governments and experts - seem to have failed to effectively address issues such as inequality, stagnation, and political and commercial corruption.
In the case of Rio, poverty, strict control of land, and political struggles are portrayed as interconnected problems. The existence of favelas demonstrates the limitations of redistribution policies and the inadequacy of property rights reforms, and these problems deeply affect the health of the political and business environment. The control of the city center by the wealthy leads to the waste of public resources and the inaccessibility of services, while exacerbating social inequality and political corruption.
If existing methods cannot effectively solve the problems existing in Rio, then let us think together: What if the entire city of Rio is auctioned indefinitely?
How would this affect our perception of urban management and ownership?
Property Rights Reform: Creating a Competitive Market through Incomplete Ownership#
"The legitimacy of private property has appeared long before capitalism. At least in the eyes of Aristotle, he realized that what people care most about is what they own."
In Chapter 1, we will explore how to promote more effective circulation and use of property, optimize the investment and allocation efficiency of private property.
Here are three thought-provoking questions:
- Thought Question 1: How much money would you be willing to sell your belongings for?
- Thought Question 2: To what extent do your belongings belong to you? (e.g. right to use, ownership)
- Thought Question 3: To what extent can you accept a world without private property?
Private property inherently has a monopolistic nature, where owners can hold property without effectively utilizing it, which also prevents others who can make more effective use of the property from acquiring it. However, extreme public ownership can lead to the "tragedy of the commons."
Therefore, the authors propose a new form of property rights that strikes a balance between public and private ownership - Common Ownership Self-Assessed Tax (COST), also known as Harberger Tax. It encourages property owners to assess the value of their property and pay taxes based on this value, while also requiring them to sell the property at this price to any willing buyer.
The COST of wealth is also the cost of holding wealth. "Common ownership" refers to the way traditional private property is adjusted through taxation. The two most important "batons" in private ownership are "right to use" and "exclusion right." With COST, both of these rights are partially transferred to the general public by the owner.
COST challenges the traditional concept of private property and proposes a more flexible and dynamic framework of property rights. Under this framework, property is no longer a permanently unchanging private possession, but a social resource whose use and distribution should reflect broader social interests and principles of fairness.
Example: Anna's House#
Anna's situation: Anna owns a house that she loves very much. However, there may be people who value this house more than Anna and are willing to pay more to buy it.
COST tax mechanism: Under the COST mechanism, Anna needs to set a price for her house, which is also the basis for her tax payment. The tax rate is set based on the probability of the asset changing hands, assuming it is 30%.
Impact of setting the price: If Anna sets the price of the house higher than the price she is actually willing to accept (the reserve price), she may benefit from the higher price. However, she also needs to pay more taxes (at a 30% tax rate) based on this higher price, which means that her additional income is offset by the additional tax.
Finding a balance: In order to not lose money or lose the house, Anna will eventually set the price to her reserve price - the price she truly believes the house is worth. By doing so, only those who are truly willing to pay more than this price will buy the house, and Anna will not pay extra taxes due to setting a high price.
Discussion and Reflection on COST#
- Who sets the tax rate? How to ensure the accuracy and fairness of property value assessment?
- Maintaining a sense of security and social stability: How to deal with the social stability issues that may arise from frequent property turnover due to taxation?
- Definition of property and currency: This chapter does not provide a clear definition of what "assets" and "currency returns from sales" mean, and the examples given are all about land, houses, and other means of production. But what about things like virtual currencies? Do they need to follow COST? If not, can we avoid COST by converting all physical assets into stocks, virtual currencies, etc.?
- Treatment of personal belongings: Are there design flaws in COST for items that are of great significance and emotional value to individuals? (Assuming in extreme cases, someone maliciously purchases at a high price?)
- Setting aside real-world resistance, can COST help with minimalism (reducing people's dependence on belongings)?
Institutional Design: Application of Quadratic Voting (QV)#
"In market transactions, people can convey their preferences for goods and services by paying more or less. This is why many economists believe that price systems can achieve efficient results, while voting cannot."
Here are two thought-provoking questions:
- Thought Question 1: Do you think Quadratic Voting to some extent contributes to better decision-making? Or are there better solutions?
- Thought Question 2: How do you view the application of Quadratic Voting in blockchain? (e.g. combining the current use of Quadratic Voting in communities or DAOs; funding public goods, etc.)
Traditional voting methods often only express a single dimension of "for" or "against," ignoring the fact that people have vastly different levels of concern for different issues.
Quadratic Voting (QV) solves this problem by using a mathematical square rule: the cost paid by voters for each vote increases with the square of the number of votes they purchase. This means that although voters can buy multiple votes to express a strong preference for a certain issue, the cost increases quickly beyond the increase in the number of votes, thereby inhibiting the incentive to buy votes without restriction. This mechanism design makes it expensive to express strong preferences, so only those who truly care about a certain issue will choose to invest more votes in that issue, allowing the voting results to more accurately reflect the true preferences and priorities of society members.
How QV Works#
In the Quadratic Voting system, voters can not only vote for options but also purchase more votes based on the intensity of their preference for a certain issue. However, the cost of voting increases with the square of the number of votes purchased. In simple terms, if you want to cast 1 vote, you may only need to pay a cost of 1 unit; but if you want to cast 4 votes, you need to pay a cost of 16 units; and so on. This means that although increasing the number of votes can increase support for a certain option, the cost also increases significantly.
The introduction of QV theoretically provides a possible solution to the collective action dilemma, free-rider problem, and tyranny of the majority in democratic decision-making. It attempts to establish a more dynamic and flexible voting system that is closer to the actual needs and preferences of society members, thereby improving the fairness and effectiveness of policies.
There is already a QV voting tool developed by "RadicalxChange":
In terms of application and practice, QV has been applied in blockchain communities and organizations such as Ethereum and Gitcoin, and the Taiwan Presidential Hackathon also uses QV to select advancing teams.
Easter Egg: Political Spectrum Test After the Reading#
Many students found that they are in the left-wing liberal stronghold after taking the test, but we also have our right-wing liberals! 🎉
But every question can be debated.
Student 1: Does economic individualism/collectivism refer to the redistribution of taxes and welfare? 🤔 The former is low tax and low welfare, while the latter is high tax and high welfare.
Student 2: Starting from the present, with history as the line, changing to the left, maintaining the status quo, or even returning to the past as right?
Student 3: But honestly, I think it depends on what position you are in when taking the test. Sometimes I switch between the two ways of thinking of left-wing and right-wing.