Homo Oeconomicus
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Discussion
The Pitfalls of Homo Oeconomicus
Vitalik Buterin:
"What's the problem with everyone acting much more like homo oeconomicus? For this, we can take a detour and peek into the source, Wendy Brown's Undoing the Demos, itself. The book helpfully provides a list of the top "four deleterious effects" (the below are reformatted and abridged but direct quotes):
- Intensified inequality, in which the very top strata acquires and retains ever more wealth, the very bottom is literally turned out on the streets or into the growing urban and sub-urban slums of the world, while the middle strata works more hours for less pay, fewer benefits, less security...
- Crass or unethical commercialization of things and activities considered inappropriate for marketization. The claim is that marketization contributes to human exploitation or degradation, [...] limits or stratifies access to what ought to be broadly accessible and shared, [...] or because it enables something intrinsically horrific or severely denigrating to the planet.
- Ever-growing intimacy of corporate and finance capital with the state, and corporate domination of political decisions and economic policy
- Economic havoc wreaked on the economy by the ascendance and liberty of finance capital, especially the destabilizing effects of the inherent bubbles and other dramatic fluctuations of financial markets.
...
Nathan (Schneider) 's article follows along with analyses of how these issues affect DAOs and governance mechanisms within the crypto space specifically. Nathan focuses on three key problems:
- Plutocracy: "Those with more tokens than others hold more [I would add, disproportionately more] decision-making power than others..."
- Limited exposure to diverse motivations: "Cryptoeconomics sees only a certain slice of the people involved. Concepts such as self- sacrifice, duty, and honor are bedrock features of most political and business organizations, but difficult to simulate or approximate with cryptoeconomic incentive design"
- Positive and negative externalities: "Environmental costs are classic externalities—invisible to the feedback loops that the system understands and that communicate to its users as incentives ... the challenge of funding"public goods" is another example of an externality - and one that threatens the sustainability of crypteconomic systems"