Governance as Conflict

* Article: Governance as Conflict: Constitution of Shared Values Defining Future Margins of Disagreement. by Eric Alston.

URL = https://law.mit.edu/pub/governanceasconflict/release/1

Often viewed as a way to reduce conflict within society, the traditional perception of governance is one that maintains stability with minimal disturbance. This article thoroughly examines new possibilities enabled by using conflict as a tool for institutional decision-making.

Abstract

"Sufficiently shared values lead to a common purpose that constitutes an organization, and this choice of constitutive purpose itself constrains constitutional choice. But collective action costs increase in an organization’s members’ heterogeneity of governance preferences, and are also partly determined by an organization’s constitutive purpose. Given that these costs of collective action are never zero, this makes mechanisms to accommodate conflict optimally present in impersonal governance contexts above a certain scale. Because of this ubiquitous institutional need, a variety of institutional mechanisms to accommodate heterogeneity of governance preferences have emerged in formal organizational governance. These mechanisms can be separated into ex-ante and ex-post solutions that respectively mitigate and resolve conflict among heterogeneous governance preferences. Mitigating and resolving future conflict are therefore both design priorities for collective action organizations, and the animating purposes of decentralized autonomous organizations (DAOs) present both conflict accommodation priorities with positive probability. Just as shared norms and accommodation of future conflict are interlinked and integral inputs to resilient organizational constitutional design in general, they are essential protocol design considerations for DAO designers as the complexity and magnitude of these organizations’ purposes increases alongside their user bases and assets managed."

Excerpt

Eric Alston:

From the introduction:

"Organizing collectively involves the constitution of the organization, although the complexity of this constitution varies considerably as a function of the organization in question, as well as its chosen purpose. Nonetheless, organizational constitution is predicated on a sufficiently shared set of values, or agreement as to the collective action’s underlying purpose. The constitution of decentralized autonomous organizations (DAOs), whether fully or partially governed by smart contracts delineated in comparatively rigid protocol, implicates a specific set of shared governance preferences. Yet for many organizational purposes, it is unclear whether this form of decentralized governance will dominate compared to traditional forms of private governance, especially in contexts where exit costs for users and consumers is low. Nonetheless, the constitutive potential of the values animating DAOs may be more than a narrow economic organizational analysis would suggest, because of the extent to which DAO members tend to intrinsically value a more decentralized form of governance, and the likelihood for institutional innovation in the organizational form.

Regardless of the set of shared values animating a constitution, though, such a characterization of organizational constitution derivative of shared community values is inexcusably rosy absent consideration of collective action’s inevitable structural costs. Collective action at scale poses mechanical representative losses to the individual preferences of organization members. The questions of central relevance to governance of impersonal organizations are those surrounding disagreement or dispute among members. This means the extent to which a given organization’s governance can accommodate heterogeneity in members’ governance preferences is also an integral input to that organization’s resilience. Despite sufficient agreement being a precondition to voluntary organizational constitution, that same organization’s survival will also depend on how well it mitigates and resolves disagreement.

Therefore, even if an organization assembles under the guise of well-understood and widely shared values, and continues to attract like-minded members, that organization cannot avoid the reality that its mechanisms for resolving disagreement as to how to proceed in the face of changed circumstances (or underlying membership demographics) are essential to resilient governance. Oddly, then, shared values and the inevitability of disagreement are the yin and yang of voluntarily constituting organizations. This makes a more rigorous understanding of these areas of constitutional and organizational theory (and their vexing underlying tradeoffs!) important for DAO designers. This analysis explores how shared norms and conflict remediation are interlinked and integral inputs to resilient protocol design for DAOs.

Section II examines in the context of DAOs how sufficiently shared values lead to a common purpose that constitutes an organization, and how this choice of constitutive purpose itself constrains constitutional choice. Section III proceeds by identifying the well-understood costs to collective action that increase in members’ heterogeneity of governance preferences, and are partly determined by an organization’s constitutive purpose. But given that these costs of collective action are never zero, this means that mechanisms to accommodate conflict are optimally present to some degree in impersonal governance contexts above a certain scale. Section IV therefore proceeds to describe a variety of institutional mechanisms that accommodate heterogeneity of governance preferences within a given organization. Because public governance entails the long-term rule-based ordering of heterogeneous groups with many competing demands over the many spheres of government authority, many of these institutional mechanisms are drawn from the study of public constitutional governance. Given the extent to which DAOs’ animating purpose can be likened to more democratic control of an organization in pursuit of a given purpose, it is likely that some of these emergent institutional remedies to the long-standing challenge of disagreement will appear in the context of DAO governance. This analytical narrative results in the conclusion that while the nature of ex-ante institutional solutions to conflict will be more tractable to protocol-based constitution, the need for ex-post institutional solutions is nonetheless non-zero in the case of DAOs with a sufficiently complex or large-scale constitutive purpose. Mitigating and resolving future conflict are therefore both design priorities for collective action organizations, and DAOs’ animating purposes present both priorities with positive probability."

(https://law.mit.edu/pub/governanceasconflict/release/1)