We have a global, borderless communication and transaction platform. We have global, borderless money. Why not a global, borderless justice system? An opt-in justice system. One that serves the community. Designed by the community, for the community. A robust system, that can address simple issues quickly and inexpensively, but can also address complex issues when needed. One that offers options, layers of choices, like who will decide (with options of one person or algorithm, pools of random jurors, pools of experts, collaboration of the parties, a mediation DAO, etc.), how long the decision-making process will take, and whether the dispute and the resolution will be made public or remain private. Local court systems don’t offer these choices. More importantly, local courts cannot adequately deliver justice in a global, borderless, identity-optional system.
In the last week or so, many in the Bitcoin & Ethereum communities have been enthusiastically (sometimes with the usual tribalism) discussing “The DAO,” an Ethereum implementation of a decentralized/ distributed autonomous organisation (DAO) or corporation (DAC); in this case, it comes in the form of a venture capital fund, though it was proposed as a testing ground for other types of enterprises (and technically, a DAO/DAC would probably be classified as a general partnership, not a corporation). “The DAO” consists of smart contracts on the Ethereum blockchain, based on an automated management system of collective voting using DAO tokens purchased with ether.
“Taken collectively, the smart contracts amount to a series of by-laws and other founding documents that determine how its constituency — anyone around the world who has bought DAO tokens with ethers — votes on decisions, allocates resources and in theory, creates a wide-range of possible returns.
Unlike a traditional company that has a designated managerial structure, The DAO operates through collective voting, and is owned by everyone who’s purchased a DAO token. On top of that structure is a group of so-called Curators that can be elected or removed by DAO token holders. The current list of Curators include a number of well-connected Ethereum contributors including inventor Vitalik Buterin.
The DAO’s objective is to support sharing economy projects delivered by “contractors” by allocating ETH raised during its creation phase. The project has currently raised $51.1m worth of ETH by selling tokens — or voting rights — in exchange for ETH or other returns.” [CoinDesk]
I was asked to cover this topic of DAOs, decentralized law, and its implications. I’m not at all involved in Ethereum and have never owned a single ether, so I have mostly been ignoring the news (or eye-rolling at their hyperbolic language), but any advancement in decentralised technology which promotes peaceful, voluntary human interaction certainly interests me.
Recently, a new project regarding a decentralized civil law system has been proposed by Third Key Solutions — the Decentralized Arbitration and Mediation Network (DAMN).
Decentralized Arbitration and Mediation Network (DAMN)
The goal of DAMN is to create an opt-in contract and dispute resolution network, capable of addressing both simple and complex civil issues using Alternative Dispute Resolution (ADR) methods within the global jurisdiction of private arbitration. The essential features are:
- Decentralised
- Identity-optional
- Inexpensive
- Delivered by a simple user interface
- Able to be incorporated with both traditional and smart contracts
- Enforceable similar to traditional arbitration
- Applicable on a transnational/ multi-jurisdictional scale
Since the proposal is readily available, I won’t reproduce its details here; instead I would like to share my thoughts on what problems this proposal offers solutions for, if successfully implemented as outlined, and some of its limitations.
- Transparency and Clarity
- Consistency
- Border-less Enforceability / Executability
Most legal code can be pretty terrible in being both difficult to find (transparency) and understand (clarity).
One might think that writing everything as code, rather than natural-language legalese, would be a burden. But my guess is that it will actually be a great benefit. And it’s not just because it will let contracts operate more easily. It’s also that it will help lawyers think better about contracts. It’s an old claim (the Sapir–Whorf hypothesis) that the language one uses affects the way one thinks. And this is no doubt somewhat true for natural languages. — Stephen Wolfram, founder of Wolfram Alpha
A system that is designed to be inherently transparent not only increases trust but efficiency, and makes it easier to identify areas for improvement. A contract that will be executed through software will work only if the terms are clearly defined.
“DAOs are said to offer advantages to conventional business entities because (a) their activities are limited to that of the code used to operate them, (b) all terms, conditions, and governance are expressly disclosed to the investors, and (c) DAOs are based on blockchains, which generally provide increased transparency.”[CoinDesk]
From international to singe-state jurisdictions, legal systems are a patchwork of often conflicting laws and policies. Consistency seems a hard-enough task at the local level; for the most part, practically impossible internationally due to varying cultural values & political agendas (anyone who has frequently travelled abroad from their native country understands this quite well). Having a dispute resolution process created and managed in a predictable manner is very valuable.
Note that the obvious limitation of this civil system is the enforcement of final decisions, which would still rest in whichever territories the parties are located. If this model were to act independently of state enforcement agencies, at the moment it would obviously be constrained to situations where money is the method of compensation or restitution (e.g. imagine parties sending funds to a multi-signature, multi-party wallet within a smart contract that will dictate under what conditions the funds are released after the arbitration has ended).
Related to consistency, the fact that it will be implemented as a transnational network, accessible from anywhere by anyone with a decent internet connection, will be the biggest change — considering the overwhelming majority of disputes are carried out in local meatspace. Additionally, a network which can produce decisions that are legally legitimate and recognisable (mostly) regardless of location is very valuable, especially for people in countries which don’t have sufficient infrastructure for accessible and inexpensive arbitration services.
Brett Scott gave a talk called “The Good, the Bad, and the Chain: On the Ethics of Cryptocurrencies and Blockchain Technology” for The Conscious Fintech Meetup, Berlin, which had some great comments about DAOs and technological solutionism in general.
A lot of the original rhetoric around ‘blockchain’ was: “We will be able to mutually contract with each other and these contracts will not be able to be changed; this is empowering, they cannot be tampered with.” If that’s true, you really better hope that people engaging in contracts with each other have the same level of information and the same level of power… This goes back to the Leviathan point. The original Leviathan concept wasn’t just that the third-party institutions protect contracts, it’s also that they were arbitrators between people. They would say “I’m going to judge on this situation here — you’re in the right, you’re in the wrong, and we’re going to change something.” This is what’s happened with a lot of liberation movements in the past, is they contest contracts. Contracts that were put in place, for example, by a corrupt regime; you change the regime and you break the contracts. This has been going on throughout human history, for example in these peasant revolt movements where they break debt contracts. The question you want to ask yourself is, are irreversible contracts really a good thing or can contracts actually be used to solidify power? I would tend to say that, historically, contracts are used by powerful parties to ensure their own interests; if you cannot break them, you’re potentially in a difficult situation. [50:39 – 52:30]
I wanted to highlight this point because the accounting for the problem of imperfect information is going to vital in building good smart contracts, especially when there are elements of automated execution. The clarity of the language in these contracts will be just as important, if not more so. As Brett says, more powerful parties will have access to greater legal resources, so when contracting with a less powerful party, those differences in legal understanding must be accounted for so that the imbalance in legal or code knowledge is not abused.
In the game of chicken, in which two cars are speeding toward each other, each with the option to swerve and be disgraced or continue forward and risk a crash, the classic strategy in the literature is to toss one’s steering wheel out the window – signaling to one’s opponent that one has given up the option of swerving. (One might alternatively blacken one’s own windshield, the information-avoidance equivalent of tossing the steering wheel out the window.) A contract is the cooperative version of the steering wheel out the window: it limits one’s future strategies and serves as a costly signal that one will pursue a particular course of action, so that the other party will be motivated to act in accordance with one’s self-limited strategy (from ‘Cooperative Ignorance‘).
— Sarah Perry
Here he is criticising the mindset of technological solutionism, or the rather technocratic belief that all problems can be solved through technology, especially computer programs:
This is a problem we find in the blockchain technology community right now and the technology community more generally. This is something to consider when people make claims. This technology is top-down in the sense that it’s being developed in places like Berlin and London and New York by, essentially, global elites. It’s then presented to the world as being something you use to solve social and political problems. Now when I say “inorganic problems out of context,” a lot of the talk that I hear — For example, when I go to blockchain technology conferences and they say stuff like “blockchain technology will solve corruption.” Superficially it seems to make sense: “A technology we’ve designed will solve corruption because of transparency.”
This is completely inorganic though, it’s taken completely out of context. If anybody has actually studied anything about how social systems works, you realize that something like corruption is not a technological problem. it’s not something you “solve.” Corruption is something that emerges from the structure of your society. It’s to do with your socio-economic situations, your levels of education, your ability to obtain opportunities in society. There’s entire structural layers to what leads to corruption. Merely putting a technology into that does not solve corruption. Actually what’s more likely to happen in this scenario is that if you put that technology into that context, is the technology will be corrupted because you’re putting it into a situation where it’s likely to be used for that purpose. I guess this is a point, thinking about technology more generally, that you have to think about it in a holistic context with other things as well. By itself, it doesn’t really do anything. It can’t really solve problems…
If you think about how state systems actually work, in modern-day times, state systems operate through a lot more subtle processes than violence. State systems are essentially held in people’s heads; they’re held collectively, by entire populations, by the way that they think. A state is not an external entity that can be solved. it’s an entire mindset and way of living. [57:34 – 1:00:20]
He also objects to the language used on the website for The DAO, particularly the ethereal ambiguity of “existing simultaneously nowhere and everywhere” with “the steadfast iron will of unstoppable code.”
(Note: At 1:02:20 he references the non-aggression principle as inherently “conservative libertarian,” that its main concern is with “tampering with property,” and that it means “the community has no right to tell me anything.” The NAP, a simpler version of the Golden Rule used in many philosophies across the world, is used as an ethical foundation for many subcategories of libertarian philosophy — including those falling on both the so-called “left” and “right” sides of the spectrum. There are various interpretations regarding whether “tampering with property” should be considered an act of aggression. Some believe that it exclusively covers individual human bodies, not property. Those who believe property is covered argue that using force against legitimately owned property — breaking, stealing, or manipulating it in any way without permission — is essentially like subjecting the owner to a retrospective form of slavery. More simply: theft of the labour they used to create or obtain the property constitutes an act of aggression against their body. The NAP also doesn’t restrict speech or criticism towards an individual within their community, as speech, outside of certain degrees of harassment and threats of physical violence, for the most part is not classified as ‘force.’)
Meredith Whittaker’s essay for the Berline Biennale contemporary art exhibition, “All Problems Can Be Illuminated; Not All Problems Can Be Solved,” offers a similar perspective on technology and justice:
The Real World of Technology can be read as a remapping of the common story of progress; it looks not at the stuff progress makes but at the systems it instantiates and the imprint they leave on us.
Echoing French sociologist Jacques Ellul, Franklin defines technology as a shared practice.2 It is the way we do something, not the familiar description of “the sum of the artifacts, of the wheels and gears, of the rails and electronic transmitters.”3 Instead, it is a practice that consists of “organization, procedures, symbols, new words, equations, and, most of all, a mindset.”4
Propelling our current innovation juggernaut are what she calls prescriptive technologies. These are practices that split the doing of something into small, identifiable tasks, each performed by a separate person or specialized unit (i.e., the division of labor, as in the assembly line or the production of complex software). Under prescriptive technologies, “control over work moves to the organizer, boss, or manager.”5
Backstopped by an eighteenth-century Western worldview that imagines humans as mechanical entities whose activities can be calibrated for increasingly efficient output (from La Mettrie to Taylor to CrossFit)6 and driven by the introduction of mechanized labor during the Industrial Revolution and by the high-modernist vogue of master planning,7 prescriptive technologies are accepted today as the way activities are organized. Enabling management from afar, mass scale, and the ability to measure outcomes across finely tuned variables.
While producing wonderful artifacts and mind-blowing techniques, prescriptive technologies create a world in which it’s normal to do what we’re told, and to do so without the ability to control and shape the process or the outcome. They also require a command and control structure. A class of experts — the architects, the planners — and others who follow the plans and execute the tasks. This structure creates a “culture of compliance . . . ever more conditioned to accept orthodoxy as normal and to accept that there is only one way of doing ‘it.’” 8 A view through Franklin’s lens reveals that, as a “byproduct” of what we call progress, we have created societies easily ruled and monitored — and accustomed to following orders whose ends they don’t question.
… While justice can be understood, can be felt, there is no template to follow, or checklist to work through for ensuring a just outcome. The requirements are humility, a respect for context, and a willingness to listen to the most marginalized voices. Let these define the basic requirements of whatever you do. You must “put yourself in the position of the most vulnerable, in a way that achieves a visceral gut feeling of empathy and perspective — that’s the only way to see what justice is.”
Like Brett, she urges that attention is given to context and that we remain vigilant against the oversimplification of complex issues.
This isn’t a frenzied call for revolution. The bigger the scale, the bigger the vision for just change, the more difficult it will be to “get it through” a system in which power is aligned against justice (and, of course, the more difficult it will be to truly understand this vision’s vast impact on vulnerable populations and thus ensure it really supports justice.) Not that working to build practices and plans isn’t worthwhile — it is incredibly worthwhile. But you’re unlikely to have much real impact if you start with a grand announcement. “To proceed in a hostile world,” Franklin suggests, “call it an experiment. Admit that you don’t know how to do it, but ask for space and peace and respect. Then try your experiment, quietly.” In conditions not conducive to success, situate yourself out of the spotlight and proceed subtly, humbly, and be willing to downplay expectations while new forms incubate.
… Her parting words were meant to comfort me. “For your own sanity, you have to remember that not all problems can be solved. Not all problems can be solved, but all problems can be illuminated. If the eggs are scrambled, they’re scrambled. You can’t unscramble them. All you can possibly do is cook them and share them with somebody.”
Update: On June 17th, TheDAO fund was “hacked” by “exploiting” a recursive calling vulnerability, resulting in the transfer of $50 million of ether to the hacker. This event raised a number of questions which need to be addressed if the use of smart contracts is to become more widespread:
- If “code is law,” and someone finds a ‘loophole’ or ‘bug’ in the code that allows them to execute the contract in their favour, did that person commit theft or was it a legitimate execution of the contract code?
- Outside of the code, do the original intentions of the coders / investors / contracting parties matter?
- If a contract is executed in a way not favourable to the coders / investors / at least one of the contracting parties, and there is a way to reverse it (ex. “re-seize” funds), is the system truly decentralised? Unstoppable? Is the reversal ethically or legally sound?
- Who is responsible when the “unstoppable code” fails?
Technology can give agents an alternative means to approaching a problem by reducing specific difficulties in overcoming it; or, as Whittaker wrote about, it can merely illuminate problems, but not necessarily become a mechanism for achieving the solution — it may instead exacerbate a problem in order to make it visible.
Regarding this topic, Kranzberg’s Laws of Technology are often cited but fundamentally misunderstood when it comes to his statement that technology is “merely neutral.” By “neutral” he does not mean technology cannot be used for good or evil purposes, but that it has no agency of its own; rather it is an invitation to agents.
Lynn White, Jr., for example, suggested that the technology “merely opens a door, it does not compel one to enter.” This is a compelling metaphor. It captures the view I’ve taken to calling “technological voluntarism,” technological determinism’s opposite. Technology merely presents an opportunity, the choice of what to do with it remains ours. Yet, while working with an element of truth, this view seems ultimately incomplete. And by pursuing the open door metaphor itself, Kranzberg suggests the inadequacy of a view that focuses too narrowly on the initial choice to use or not to use a technology:
“Nevertheless, several questions do arise. True, one is not compelled to enter White’s open door, but an open door is an invitation. Besides, who decides which doors to open-and, once one has entered the door, are not one’s future directions guided by the contours of the corridor or chamber into which one has stepped? Equally important, once one has crossed the threshold, can one turn back?“
[Credit: The title “It’s the DAMN DAO” is a quote from TKS CEO Pamela Morgan.]
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