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Is Democracy The Best We Can Do For The Metaverse?

Published date: November 23 2021
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Is Democracy The Best We Can Do For The Metaverse?

The Metaverse has gone mainstream. While the latest Facebook news generated considerable hype, it’s worth remembering that numerous teams, projects, and individuals have been working on this kind of tech for years now.

Either way you look at it though, these universes will be entirely different from the traditional one: The lines of code used to create them and the human behavior within them will hold hundreds of millions of years of social and technological evolution, creating conditions that promise great technological and social advances.

It therefore, stands to reason then to ask ourselves: Can the emergence of metaverses be seen as an evolving extension of our lives? Extensions where we are able to correct the defective aspects and improve them for the next stage of humanity’s evolution.

Something that I have been deeply considering these last few weeks is what mechanism civilization will use within our metaverses to make these evolving adjustments. IE: What kind of governance structure should our metaverses be employing? And with such tragic failures of democracy in recent years, is it truly our best way forward?

In this post, I will explain what I think will be the best form of governance for “the metaverse”, hence my title: Is Democracy The Best We Can Do?

It is absolutely imperative to have a voting mechanism in order to give everyone a voice within The Metaverse. We don’t want to be living in technocratic “monarchies” governed by the founders of the companies that built and sustain them. Now, the vast majority of us have experience with how standard democracy works in modern society. It has become the world's primary political system, and no one can deny that having the ability to decide on important social and political issues is a priceless value that cannot be lost. But is democracy the best we can do? Do we have the ability to choose the important things, or do we only choose on "packages" of important things under the label of one big "less important" label?

At this point it’s worth raising an important disclaimer: In order to better understand what I’m writing about here, I strongly recommend checking out the following texts located in our guide on prediction markets: https://github.com/Whisker17/PMThings/blob/main/futarchy/README.md

Democracy Problems

The democratic process as such has lagged behind technological and social advances. It is clear that the existence of these problems raises the question that there may be something better. Here I will mention the problems that I think are the most significant.

  • Lack of incentives to inform the voter base:

This is a fundamental problem for the Democratic process. Let's think about this in terms of a country: national authorities offer voting as a right for each and every citizen of that country (provided they are of legal age). Under this perspective, the electoral process under a democratic regime can be considered as a public good. IE. It is available to everyone and its personal use does not limit the use of others. As a public good, it logically faces the following problem: the lack of incentives for citizens to maintain that good.

We can refer to the information-input that voters are willing to receive before making democratic decisions as “maintenance” of the asset. Take for example the following table extracted from Robin Hanson’s work (2007):

Is Democracy The Best We Can Do For The Metaverse?

The table shows the significant percentage of US citizens who thought controversially about certain topics. This indicates that voters do not always inform themselves adequately before voting, either due to ignorance (wilful or unintentional) or their selection of unreliable sources of information.

  • The costs of creating a "data-driven democracy" are high

Currently, democratic processes have not advanced in accordance with the enormous progress in technology, data generation, and data mining we’re seeing in what is being termed the “fourth industrial revolution”. The voting mechanisms are still mostly presential; the control and audit mechanisms are manual in many cases, and there is also no efficient way to compare the initial proposals of the candidates.

On the other hand, the costs of creating a data-driven democracy are prohibitively high which would be restrictive for poorer and technologically underdeveloped economies, further increasing the gap between rich and poor nations.

  • Failing to adequately aggregate information

When it comes to voting, democracy often fails to incorporate all the information available to make the final decision, resulting in sometimes harmful, suboptimal, or biased outcomes.

For example: Suppose we have a candidate with a strong media presence promoting certain policies to ensure the prosperity of their nation. Their charisma and way of saying things make their speech very convincing, but the latest applications of the politics that they defend have been shown to negatively affect their society. At the same time however, this candidate has previously been part of a political party accused of corruption and embezzlement. It is possible that this information is not sufficiently considered by most voters, either out of ignorance or because they believe that this candidate will have a favorable impact on the nation’s future despite the contrary evidence.

You see, modern democracy is about deciding on a set of issues where individuals do not have the incentives to find out about each proposed policy at the time of voting. This means that the information collected at the end does not correspond to the total number of variables that can truly influence a voter’s choice (or worse, the choice can be influenced and subsequently determined by media & marketing strategies that have little to do with true democracy).

Another reason may also be that, since there are no direct costs in the act of voting, individuals may end up opting for decisions that are not always in favor of their specific values or the general welfare of their country. EG. There may be a number of voters who choose to give a "vote of faith" to a specific candidate due to what they know about their background. This "vote of faith" has its origin in the absence of direct costs in the vote. This is akin to buying a car based on the salesperson and not the car itself: It’s pretty unwise to say “this car seems to have been in several crashes, its engine makes a strange sound, and it seems that rats have lived inside it, but I will trust the seller who told me that everything is in perfect condition, so I’m going to buy it anyway.”

  • An ideals-based democracy always leads to polarization

It is also important to note two great phenomena that interact with each other in the influencing of the democratic process: Social Sorting and Confirmation Bias. When we talk about Social Sorting, we refer to the tendency we have to define ourselves, relate to and identify with people who are related to our ideals. On the other hand, the Confirmation Bias is a propensity to give more importance and credibility to the data that fits our beliefs than to those that contradict them, although initially, both arguments are equally well-founded. §These two phenomena complement each other and create feedback loops that, added to the lack of incentives to be informed when voting, generate a malleable society and, consequently, polarized by the different ideals that may be debated. Ahlstrom-Vij (2021) gives a good explanation of this, quoting Robert Talisse’s book called Overdoing Democracy: Why We Must Put Politics in its Place (2019)

"Talisse makes a convincing case on the basis of the empirical literature that such polarization does not even require active engagement with members of one’s group; all it takes for someone to polarize in the aforementioned sense is the perception (true or not) on the part of the person that some particular view is popular or otherwise endorsed by people sharing their social identity."

This means that the democratic process gives candidates a certain possibility to polarize the electorate based on important issues on their agenda, which is beneficial for them in the short term, but detrimental to society in the term.

  • Overlapping decision-solving problems

Today the electoral processes are strictly executed within sovereign economies or national jurisdictions. This is because, among other things, finding common incentives and arranging the logistics of the electoral process is costly.

When speaking of metaverses, it is highly probable that there are overlaps between them, either intentional (speaking, for example, of two metaverses that share users or specific interests) or without explicit intention (metaverses that experience a common problem to be solved). Whatever the case, we must consider that establishing a cross-democratic process between national jurisdictions is extremely complicated in terms of incentives on the one hand, since the inhabitants of each nation will prioritize their own interests over those of the whole, and in logistical terms on the other.

That is why we must recognize that the electoral process in a democratic regime is applicable only internally, without being able to be used between different economies.

Zeitgeist’s Solution: Futarchy

At Zeitgeist, we propose futarchy as the most viable choice of governance for metaverses. Here we will explain why we believe this, and how the framework is being built so that it can be adopted as a platform for governance. It is worth clarifying that this post does not conceptually describe futarchy (you can find that in the previously mentioned articles here). Instead, the purpose of this section is to briefly introduce why futarchy is a superior choice to traditional democracy.

The futarchy model consists of selecting a group of leaders whose function is to establish a general indicator of welfare, and then audit the current state of that metric versus what is expected. The way to reach this goal? Specifically created prediction markets.

Why prediction markets? Because, as mentioned, there is empirical evidence that prediction markets are better at aggregating information than simple surveys and polls.

For example: In a country, there are a set of candidates willing to propose and audit different metrics to measure welfare, with the key metric being GDP. From now on, the decisions of this nation must have the purpose of making GDP increase. From an economic perspective, there are many measures that can be theoretically implemented to make this metric grow: Modify the money supply, public spending, the interest rate, manipulate the exchange rate, etc. In a democratic process, the candidates should, in aggregate terms, go with the majority preferences, but it is highly probable that not all their candidates will implement growing GDP policies.

For example, a candidate may potentially have an excellent solution to the problem of increased poverty caused by the recent pandemic but does not have a solid policy to combat inflation. This is where futarchy shines: This candidate will have to audit the state of the welfare variable, but the policies required to reach this goal are determined by citizens via prediction markets. They can then decide whether the level of public spending is too low or too high, if the interest rate should vary or not, or if the amount of money in circulation is sufficient or not. Once these have been decided, the policy in question becomes law for a certain period, after which, the authorities audit the state of the economy, share the results, and again open markets to continue working on the welfare variable chosen.

Why do we say that this mechanism is an improvement to democratic processes?

In contrast to our daily, “real world” economy, the metaverse is based on a tokenized economy. This means that you can create participation incentives by charging a certain amount of tokens to partake in the voting process. This already improves the democratic process because by inducing a cost to the voting process, participants are further incentivized to inform themselves as much as possible.

Another important aspect is the way in which events are recorded in the metaverse: Each action is stored in a block that everyone can later access. It is thus possible to keep track of the measures used in the past and then examine their respective results, which improves the provision of information in decision-making and encourages the adoption of policies based on data and not on mere ideals.

Summary

Futarchy offers the participative nature of democracy but is able to make more granular decisions based on a well-being metric set from the beginning, allowing the establishment of an economic 'north'. Likewise, the token-based structure of the metaverse allows generating incentives to participate in a conscious way on the decisive topics since, on the one hand, the incorporation of the tokens implies that the voting cost ceases to be zero, and on the other hand the use of prediction markets generates a reward for the individuals who successfully predict the most beneficial result (ie the result that implies an improvement in the welfare metric), thus generating incentives to reveal their true opinions in question, and not fall into ideological or irrational arguments. Also, the way in which the blockchain is structured allows keeping records of voting, audits, and the way in which the welfare metric evolved, providing much-needed transparency and a record of information for possible future decisions.

It is important to talk about the promising scenario generated by the incorporation of futarchy on the blockchain: By improving public good incentives and using a data structure that allows organizing and streamlining the auditing and counting process, we can achieve interactions between different metaverses/economies under an electoral process, something that until today was very difficult to achieve. Based on our idea that the electoral process is a public good, we are now entering the realm of Regional Public Goods, a concept used by the IDB defined as:

"Goods, services or resources that are produced and consumed collectively by the public sector and, where appropriate, by the private non-profit sector [...]"

From this perspective, we can speak of an electoral process made up of multiple nations/metaverses without taking into account biased incentives or organizational problems related to counting, logistics, speed, or auditing, which were previously impossible to achieve.

Complementary Bibliography:

Ahlstrom-Vij, Kristoffer (2021) Why we should stop fetishizing democracy. Journal of Philosophical Research 46, pp. 145-154. ISSN 1053-8364.

Estevadeordal, A., Frantz, B., & Nguyen, T. R. (Eds.). (2004). Regional public goods: from theory to practice. IDB.

Hanson, R. (2013). Shall we vote on values, but bet on beliefs?. Journal of Political Philosophy, 21(2), 151-178.