End of DDM

End of Delegated Decision Making

Opinion Tech review

At cross-roads

In just a matter of 3 months, a pandemic has ripped apart the social fabric of the world and exposed the illusory and transient nature of the very things that we depend on. Think again about dining out or attending a casual social gathering. Now it has become a liability and an affair of great cost to do the same activities that we have taken for granted in the past. The cost is not merely restricted to economic value per se but involves great sacrifices to both personal health and well-being. While many of us remain indoors, there are those who are battling in the front-lines against an unseen enemy. Both are exposed to the dangers on long-term physical and mental stresses of social isolation and economic deprivation.

We are also at a critical cross-road of an ideological warfare. One that is subversively demanding individuals give up their privacy in the guise of a coordinated action around achieving rapid control of the pandemic and economic recovery. The individual is being cornered and deceived into a narrative that describes the current failing of economic activity solely on the virus. Instead, the inherent weakness and growing incompetence in financial policy and decision-making that precedes the pandemic appears to have been adequately dismissed.

Delegated decision making?

A complex world requires high precision decision-making based on data collection and real-time analysis. This should supplement the critical decision that steers society and humanity forward. It is a task that far too impossible for structures of power created during a period of time when computers did not exist and entities did not have access to vast information resources. The pandemic is laying bare the increasing irrelevance of our traditional institutions of power.

Outdated centralized domains of power today struggle with the information overload that faces them at every juncture. Organization and institution built around centralized locus of decision making contributes more to the problem rather than point the way forward. While there may be attempts to divert the blame on technology and it’s protagonist, the obvious spotlight is squarely on growing gap between what the human mind can perceive, absorb and process against rapid onslaught of information.

Decentralization of power

Decentralized decision making could be the only valid option forward. In the physical world, this would mean handing greater autonomy to individual organizing units. We are deliberately calling this individual organizing units here as the concept applies to both government structures and those of private companies. Not to be mistaken with falsely or ill-devised decentralization that has become the mouth-piece of freedom movement activist, the concept goes even further. In fact, the organizing unit has to be accorded with sufficient power to decide on the fate of resources that it manages. Relationship between the central organizing unit and the many individual organizing units should ideally focus on how best the central structure could function to meet the needs of the peripheral units rather than the inverse.

To visualize this clearly, think of cities managing resources completely on their own while having to report little back to a state or national government. The same concept applies to the private sphere where the very concept of a company becomes diffuse and individual employees become both owners and managers. And no, this is concept has no underpinning of socialism.

The idea is extremely radical that incumbents within traditional power structures are going to vehemently resists relinquishing power while labeling the concept as heresy. However, we are at a point in history where delegated decision making that has served us for many decades now is holding us from further progress.

Distributed Autonomous Organizations (DAO)

The evolutionary call that we need to tune in is comes in the shape of decentralized autonomous organization (DAO). DAO is turning a reality as the off-shoot of the advancements in Internet and blockchain technology in recent years. Protocols that allow decentralized decision making can be built fairly quickly with a token economics that allows fair compensation among holders for every decision made on governance issues related to the protocol.

An excellent example of this is the Maker DAO. Holders of the MKR token having voting rights to decide on the interest percentage that is assigned to the DAI stable-currency. The DAI stable-currency is collateralized by a number of other digital assets. Remits of decision making assigned to MKR holders even goes beyond the interest rate decisions into other areas involved in the governance of the Maker protocol.

Extending from a simple DAO like Maker, the concept could be pushed to other organizations beyond the blockchain space. Ingredients for building DAOs are becoming more accessible with wider availability of blockchain technology and data oracles. Oracles especially are critical in bringing information that is available beyond the closed enviroment of the blockchain and two-way interaction or transaction capability. Therefore, we can now envision completely decentralized organizations owned by individuals located hundreds of miles apart that relies heavily on machine learning algorithms for arriving at specific decisions which then etches this information into a blockchain transaction.

In other words, we could potentially remove traditional leadership structures at the center of organizations with algorithms that continuous processes voluminous data with highly precise outcomes. All this superior benefit can be achieved while avoiding politics and rent-seeking issues that are highly prevalent within present structures of power. Conversely, the concept rewards individuals at the peripheral who are closer to real value production who enrich the algorithms with data or other equivalently valuable input.

Concept of ownership

We are also at a juncture where the concept of ownership could change and mirror more minimalism than consumerism. Fractional ownership and utilitarian concept will move to the fore while materialism and consumption based economics will dissolve. As value production at the periphery takes higher importance, economic interest will shift towards obtaining units of utility that enables decentralized production process. It is yet unclear how this might look like but we can just look to 3D printers as the precursor of massive change soon.

Fractional ownership of centralized organization could become less important as centralized organizations will be deemed inefficient and unable to compete with decentralized organizations that can scale much faster and achieve a network effect. Instantly dwarfing traditional organizations, these new structures will place priority on utility over stocks or securities.

It is very intriguing that we had to develop technology to the current state in order to go back to the way nature organizes itself which is ultimately all decentralized. The missing element in all of history for this to happen was the capability to seamlessly interchange data while ensuring immutability and trust. You will be able to see close parallels to this in nature by the imprinting of centuries of evolutionary history on the DNA and molecular make-up of cellular biology.

End game

Delegated decision making was never in the order of complex systems and would only be an impediment to our evolutionary march. Evidently clear is the toxic effects of wars and discriminatory policies adopted by centralized power structures against others. In trying times such as the one we are experiencing today, it is those who produce value at the periphery who will emerge victorious and lay the foundation for a decentralized future. Delegated decision making and it spectrum in any form whether democratic, socialist or communist deserve their pages in the history books.

Decentralized algorithmic future with an emphasis on utility is the future. It’s taking place behind the scenes and will engulf everything that we recognize and know today.

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With an early exposure to computers and the Internet, Nathan has always had a keen interest in technology. His educational background is in the medical field but that does not stop him from dabbling with computers. Upon learning about blockchain and its potential role for humanity, Nathan got deeply involved into this field as both an investor and as an advocate.

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