DADA’s Invisible Economy
We propose a viable economic vision for our global community of artists, rewarding them fairly for their contribution.
Part 2 of 12
By Beatriz Ramos and Yehudit Mam
Part 1: Summary
Capitalism has created unprecedented wealth in human history
It has pulled millions of people out of poverty, but when it comes to wealth distribution, the global gap between the rich and the poor has widened to levels that, according to economist Thomas Piketty, are trending towards those of France before the French Revolution. Our current version of capitalism has decimated the middle class. Billionaires Bill Gates, Jeff Bezos, and Warren Buffett collectively own more wealth than the 160 million poorest Americans.
In Homodeus, historian Yuval Noah Harari argues that what sets homo sapiens apart and makes us more powerful than any other species on Earth is our ability to create fictional stories. Gods, nations, and corporations help organize millions of people but they only exist in our imaginations. According to Harari, for the Sumerians, the God Enki and the Goddess Inanna were as real as Google and Microsoft are for us today. In ancient Uruk, gods functioned as legal entities that could own fields and slaves, give and receive loans, pay salaries, and build dams and canals. Today, corporations are fictional legal persons that own property and money, hire employees, and launch economic enterprises. Understanding our future requires understanding how stories about Jesus Christ, the French Republic, and Apple, Inc. have gained so much power.
Fiction is vital, says Harari. “Without commonly accepted stories about things like money, states, or corporations, no complex human society can function.” In this sense, economies are fictions about how people interact with each other. Our predominant fiction today is capitalism, defined in this quote attributed to John Maynard Keynes as “the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
The modern era has been dominated by two ways of allocating resources in society: central planning (Soviet Union) and free markets (USA) with various iterations and combinations in between. Central planning pursues the equality of outcomes; that is, equality for all people regardless of their individual efforts, needs, or aspirations. Central authorities decide what people can or cannot do. They enforce equality at the expense of individual freedom. This is a fundamentally authoritarian system. In contrast, free markets favor individual freedom and, as a by-product, equality of opportunity. In free markets, the prices of goods and services are regulated by self-interested people competing against each other. This is a fundamentally antagonistic system. It is a zero-sum game in which someone’s gain is someone else’s loss. The extreme inequality produced by free markets undermines equal opportunity and freedom of choice.
It all boils down to freedom versus fairness
Keynes, whose economic theories dominated the post-Depression years, justified government intervention asserting that free markets have no self-balancing mechanisms and are unable to effectively respond to major recessions. The golden age of capitalism — the post-war global economic expansion from the 1950s to the 1970s — is largely thought to be the result of Keynesian economic policies. But it was the contrasting views of his friend Friedrich Hayek which paved the way for neoliberalism by demonstrating the efficiencies of free-markets.
Hayek won the Nobel Prize in Economics for his insights about the power of decentralized knowledge, also known as the wisdom of the crowds. He argued that knowledge is unevenly dispersed among different members of society. According to Hayek, a centrally planned economy could never match the efficiency of free markets because what is known by a single person is only a small fraction of the sum total of knowledge held by all members of society. Hayek believed that prosperity was driven by creativity, entrepreneurship, and innovation and that people should be able to move into unexpected areas and learn from their mistakes.
Keynes and Hayek arrived at their conclusions over a half-century ago. Today, it has become evident that markets are more efficient than central planning, yet they must be regulated to correct extreme inequality as well as the irreversible environmental damage they produce. At the time of this writing, we find ourselves under great economic uncertainty. The world is on a pandemic lockdown and there are signs we are heading towards a global depression. Harari argues that technology is evolving at such a fast pace that governments can’t lead a world they no longer understand and are thus relegated to a reactive role. It’s time to implement better fictions.
Freedom and fairness don’t have to be mutually exclusive
We can leverage the wisdom of the crowd without the pernicious, selfish, and competitive dynamics of the markets. This is not a new idea. For over fifty years, Noam Chomsky has been advocating for a well organized, free society built from the ground up: a more egalitarian system without hierarchies, in which people engage in spontaneous initiatives that arise from free consent where they have the autonomy to direct their own lives and fully develop their talents in the service of society. Chomsky argues that social anarchism is a more appropriate system for an advanced technological society like ours.
In today’s interconnected world, work no longer needs to be organized in top-down hierarchies. Peer-to-peer platforms coordinate people and foster a new kind of self-discipline arising from free consent. People want access to information networks and are motivated to contribute to these networks and to co-create value within them. Artists have made tens of thousands of drawings on our own collaborative creative platform, DADA, for the sheer enjoyment of connecting and creating art with others around the world. Wikipedia, the largest encyclopedia in the world, is published by self-directed volunteers who don’t expect remuneration. Their reward lies in contributing to a cause bigger than themselves: to protect free and open knowledge.
Wikipedia founder Jimmy Wales cites Friedrich Hayek’s “The Use of Knowledge in Society” as central to his thinking. In his book Drive, author Daniel Pink writes that in 1995 it would have been impossible to find an economist who would believe that the most popular free encyclopedia in the world was made by thousands of volunteers without any special qualifications, and could out-compete and ultimately kill Encarta, an encyclopedia owned by Microsoft and produced by well-paid, highly skilled writers and editors. “The popular observation is that Wikipedia only works in practice. In theory, it can never work” write Sheizaf Rafaeli and Yaron Ariel in Psychological Aspects of Cyberspace.
Wikipedia proved that decentralized knowledge can fuel a different kind of information network that doesn’t rely on market norms, self-interest, scarcity, and competition but rather on social norms, cooperation, creativity, and altruism. More importantly, by outperforming Encarta, built by the world’s most powerful profit-driven company at the time, Wikipedia demonstrated that its model could be more efficient than the markets. Still, Wikipedia operates on a donation-based revenue model.
We believe that information networks can be self-sustaining without relying on donations or traditional business models.
The Invisible Economy proposes a viable economic vision for our global community of artists. It rewards them fairly for their contribution without undermining the intrinsic reasons why they participate. It is built on two fundamental values:
1. The pursuit of the greater good through the empowerment of individual freedom.
The decentralization allowed by blockchain does not solve the freedom vs. fairness dilemma. If we were to remove the central authority in both the central planning and the free-market models while keeping their ideologies intact, in the first case we would arrive at collectivism, in which the group takes precedence over the individual, and in the second case, we’d get libertarianism, which champions unbridled free-markets without concern for the wellbeing of the community.
Ubuntu, translated as “I am because we are”, is a philosophy from Southern Africa that encourages empathy towards the other, community, equality, and the fair distribution of wealth. This collective responsibility is not understood as the community’s benefit having priority over the individual. Instead, it promotes the good of the community through the unconditional recognition and appreciation of individual uniqueness and difference.
DADA’s Invisible Economy is modeled on the values of Participatory Economics or ParEcon proposed by political activist and economist Michael Albert. ParEcon is a decentralized economic system based on participatory decision-making as the primary economic mechanism for the allocation of resources in society. ParEcon aims to give everyone equal opportunity regardless of identity and allows people to exercise freedom of choice while advancing cooperatively rather than antagonistically.
2. A person’s full potential can only be fulfilled if their basic material needs are covered.
As we will show later, decades of research have consistently found that when intrinsic rewards like the love of drawing or collaboration are replaced by extrinsic rewards like salaries, intrinsic incentives diminish and can even disappear. Expected material, tangible rewards like money and status ultimately hurt creativity and innovation. Market dynamics make people more selfish, more competitive, and less altruistic.
But DADA exists in a free-market world, and while DADA artists are motivated to participate for the love of it, they still need to earn a living as artists. Therefore, in order to preserve their intrinsic motivations and the community’s collaborative nature — that is to say, in order to preserve the very nature of our community — we need to separate the art from the market. The economy must be invisible. People who create value on DADA will continue making art out of pleasure and passion, without the pressure to sell, market, or produce, and they will still be automatically rewarded with a basic income for their contribution.
Part 3: Incentive Framework