Chow Metagov 20240314
Speaker 1: Okay. Great. Hi, folks. It's my pleasure today to introduce Wes Chow. So, Wes is a researcher at the MIT Media Lab. Formerly, he was head of engineering at the MIT Center for Constructive Communication, which is, I think, wonderful series of alliterations, previously at Cortico, where he was a senior technical advisor and CTO. And today, he will be leading us in a discussion of why...
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Transcript
Okay. Great. Hi, folks. It's my pleasure today to introduce Wes Chow. So, Wes is a researcher at the MIT Media Lab. Formerly, he was head of engineering at the MIT Center for Constructive Communication, which is, I think, wonderful series of alliterations, previously at Cortico, where he was a senior technical advisor and CTO. And today, he will be leading us in a discussion of why we cooperate, which is, I think, very, very close to the hearts of many of the folks here. So without further ado, Wenz.
Great. Thank you. Thanks. So, yeah, I'm I've been looking forward to this. I think I've been I've been in Medigov's orbit, I think, for some time, but this is the first time that I've actually made any kind of real contact. So, yeah, you know, it's a great opportunity, I think, to talk about some, some of the ideas that I've been thinking about recently. So, you know, so I had a a very, kind of a last minute, change in topic for, for this seminar. So, apologies that this is a little bit rough around the edges. But, yeah, I I I just thought that, like, maybe I could go go a little bit deep into into a couple of topics and essays that I've I've I've been thinking about on cooperation. And then you know, I have a couple of questions. We can, you know, have some have some discussion on this. This, this talk is, drawn from a class that, I just taught at MIT. It's a January period class. The spring semester at MIT starts in February, but students are expected to be back on campus in January. So there's four weeks where people kind of, put forth, like, experimental classes or activities and students as well as staff and alum are encouraged to join. So this is this is based off of a seminar called decentralized cooperation society and plurality. And the, it was a reading list, you know, in discussion seminar, and the, the class materials are public. So at the end of of, of this talk, I'll actually post that so you you can see what what we were, what we were up to. And I I co led this with, I was with Manan Raval, who who I believe has, given some talks in this seminar series as well. So just to give you, like, a, like, a brief, idea of, like, what this class is about, it was four weeks long, and we, we broke this up into four different sections. The, the first week was on, was on the mechanisms of cooperation. So, you know, so, like, a little bit of economics and game theory. The second week was on sociology. So it was really about human relationships in groups. The third week was on voting, on voting theory. And then the fourth is on technology. So that's that's where we put things in, like, like, material on DAOs and quadratic voting, like, things that are, like, of of much much more, much more of a technical nature. So, what I would like to focus on here is, is, two of the pieces from, from this. The first is, is an essay from, Joseph Heath, who is a philosopher at, I believe, the University of Toronto, and it is called, the benefits of cooperation. And the second is from, Yale law professor Henry Hensman, a piece titled, cooperative firms in theory and practice. And, there where where he talks about cooperative firms, it's actually the not the broad sense of cooperative, but the, but the actual, the actual corporate entity cooperative in The US. So, so I'll give, a brief overview of the, of the first piece. We can talk about a little bit, and then I'll give a brief overview of the second piece, and we'll we'll, just discuss that one as well. Alright. Let me, let me start the slideshow and share my screen in such a way that you can't see my notes. Give me one second. Alright. Alright. Everyone can see that? I will assume so. I've lost most of the Zoom screens. Okay. So do. Alright. The benefits of cooperation. So, so he's I I particularly like this essay because it it it it really, gave me, I think, my first, kind of rigorous grounding in, what cooperation actually means and why people do it. So he starts off, in this essay talking about, catalaxy or this, which is this, he, he defines this as a system of order established through exchange and how standard, economic sort of arguments around cooperation really tend to deal with with with markets and exchanges. So, you know, a good example would be Hayek's notion that prices are, you know, our way of transmitting information, like, through a system. Yeah. You know, there's a closest theory of the firm. Right? It's, it's it's a method for, for reducing the the transaction costs, in a foreign exchange or collaboration between parties. So what he said is no. No. No. We should stop thinking about it as as this, kind of an exchange thing and just think more broadly about what are the benefits of cooperation. And so he lays out, five benefits, slash mechanisms, you know, slash principles, I guess. The, and so, you know, I'll go through these, these all briefly and give a give some some examples. Okay. So the first he says is, as economies of scale. The, a very simple example here would be, something like, there's a giant boulder that is on a plot of land. You would like to, build a house there, but you can't move the boulder yourself. But two people could move the Boulder. So you, find you find somebody to help you, you know, go and push this thing down the hill so that you can, you know, get get what you want. So it's this, abstractly, it's this notion that, there are things that we can achieve, when there are more of us that we wouldn't be able to do on our own. The second benefit is gains from trade. And here he, he makes a bit of a distinction between consumer gains and producer gains. This is more of like classical economic theory. So, consumers have different preferences and so the ability to trade allows people to, resort the things that they own. Right? So that they, hold more of the things that they want. You know, so it's a strict improvement over, not being able to trade. For, for the producer side, people have different skills and different, desires to be doing certain activities. So again, it's, you know, it's kind of like a, like, a gain from a sorting mechanism, you know, or in this case specialization. Right? You can, if you're, if you're using trade people can specialize in the things that they're actually good at. Right? So this is like the Adam Smith idea of specialization. The third benefit is risk cooling. The idea here is that there are, many things in life, that, have a lot of variance, and you probably wanna stamp out some of this variance. A, one example might be, you go out hunting for big game. Most of the time you come back with nothing. Sometimes you come back with more than you can actually consume. Right? So it's a high variance activity. If you pull together with with other hunters, then you might be able to even out that variability. The fourth benefit is self binding. This is there's a classical illustration here, which is the story of Odysseus. And, you know, he's, he's sailing by the muses and the muses have, I'm sorry, not the muses, the, the sirens and the sirens have this song that will entice sailors to, jump off their boats, swim to the ocean, then presumably, get eaten when they, actually meet the sirens. So he wants to listen to the song, but he knows that there's this danger involved. So what he does is, he tells his crew, everyone has to plug their ears. So you all can't listen
to the song, but I'm gonna listen
to it. But what you're gonna do is tie me onto the mast. And while we're sailing past the sirens, I'll listen. Whatever I say, ignore it. Don't untie me until we actually get past and we're and and we're safe. But, you know, be warned. I will be, shouting shouting these orders at you, and you should be ignoring me. So, yeah, so that's an example of self binding. And then, the, the last benefit here is information transmission. And I think the, the kind of clearest example is, is education. It's like the, the ability for people to really come together and teach things to each other or to observe like how things are done very quickly allows us to accomplish more than we would otherwise. Right? It's very useful to teach everybody how to read at the very start. So, you know, so we can progress faster than than otherwise possible. So okay. So yeah. So these these five benefits, what what I thought might be interesting is I I I have a couple of other examples here that I will run through, and perhaps we can, we can have a discussion on, which of these five benefits, each of these examples best, best illustrate. So I'm gonna, just so that I can actually see all the faces on Zoom, I'm gonna stop sharing, and I will paste the five benefits into the Zoom chat so you have them. And then whoops. And then we can we can start talking. Give me one sec. And, actually, as long as we're stopped for a moment, are there any are there any questions before we start the discussion? Nope. Alright. Great. Okay. So so example number one, health insurance, which, which of these do you think, health insurance best applies to? And I think, are we a small enough group that people can just kind of turn their mics on and say stuff? I see Steve is Steve is saying number three, which is oh, sorry. My my paste, didn't come in very well, which is risk pooling. Let me, let me repaste it with without the producer consumer stuff. So we're all looking at the same thing.
Right.
Yeah. I guess I would also say three.
Yeah. Yeah. I think this one is fairly straightforward. You know, like, health insurance helps to even out any kind of in any kind of variability and what sort of injuries you might have.
I think that it would also be economies of scale and because the whole point of creating health insurance is creating a network of, like, a wider reach.
Mhmm.
Yep. Yeah. Good point. How about peer review?
Maybe information transmission?
Mhmm. For sure. Yeah. Yeah. Yeah. Especially, you know, think about the actual the actual journal mechanism. Right? It's, like, very literally information transmission. Yeah.
Maybe also games from trade?
Can you explain that?
Well, what is peer review? It's sort of like you scratch my back, I scratch yours kind of thing. You know, like, when you go to a conference, you're forced to do peer review, but that's so that you can you know, your paper gets evaluated. So it's effectively kind of a trade.
Mhmm. Yep. Yep. Yeah. I can do that. I I thought maybe there's some some element of of economies of scale here, like, in the sense that that, like, you know, the the ultimate goal of peer review is is, for you to have your ideas critiqued and corrected and improved on. So in the absence of a peer, who can appropriately critique your ideas, maybe you do not you do not really produce as much knowledge as you could otherwise. Right? Anything else?
Oh, we're just talking about we're just talking about peer review. Right?
Yeah. Mhmm. I
don't see self binding there, really.
I do think there is some some element of self binding. Right? So it's it's, if if you think about peer review is, like, maybe, like, one kind of a mechanism of, like, science in general. Right? It's like this idea that that in order for you to get at truth, you are restricting your you're supposed to be restricting your opinions of things that are critiquable and well formed and right. So I I think there's, you know, maybe something into there. There's also, you know, this is becoming less and less common now, but there there there was, for a while this practice of, you know, saying that you shouldn't really be self publishing anything. Right? You should if you, if you have a paper, you should, withhold that knowledge from the public until it go gets peer reviewed and it goes through a journal. These days, people just throw things on the archive, and I, you know, I think when that when that happened, like, it it it was, seen as, like, a little bit of a, you know, you know, like, a bit of a norm violation.
That also seems to have created a new norm, right, or accelerated other ones.
Yeah. Certainly, in in the in the modern era, like, it does feel like it created a new norm. I I actually think, like, in in the history of peer review, this idea of, like, only going through journals, I think, was actually, like, a relatively recent thing, like, in the last, let's say, like,
fifty to
a hundred years. But before that, people just publish all the time. But
yeah. Yeah.
Well, then there's that other trend of moving towards prepublication, you know, itself going back to this framework. That's then economies of scale. Right? Because it allows for a much larger scale and faster transmission of information.
Mhmm. Right. Yeah. Yeah. Alright. Next example. Screen Actors Guild.
I think this one is interesting.
It's a, you know, it's a form of a labor union, but I feel like acting has a little bit of, different dynamics than, traditional employment. Any thoughts on this?
Steve? This just brings me to something you're probably gonna get to later when we talk about the second guy. But what the Screen Actors Guild delivers also is solidarity, which I'm not sure I see represented on this line here, which is a felt experience of, you know, you know, almost the bodily benefits of cooperation that, like, that, like, fire in your chest that comes from cooperation. We're all getting this done together. That's that is I don't know how that's accommodated in this list, but I'd
say that's a big part. Yeah. That's a really good point. Actually, I I love this word solidarity. I've I've had I've had this notion for a while, but have not been able to, like, actually put a put a word or a label on it. So I'm, yeah, I'm I'm glad that you bring this up. I do feel like there's, like, something missing about, like yeah. Right? Like, a group effort or, you know yeah.
Well, was
it also that, like, this model and I haven't read the actual essay, but is it also there's a kind of presumption of, like, rational actors, right, that's not necessarily effective dimension or the emotional dimension of
Right.
Which Right. Coming out of economic theory, no surprise there. Right? Even, like, that that's such a a strong assumption about the nature of human behavior and trade.
Yeah. That's a good point. Even though all evidence all evidence points to otherwise, if you're familiar with Kahneman at all. Mhmm. Yeah.
With with acting, I think there's a there's a kind of a a, like, a a a combination of randomness and power law distribution to the payouts in acting that doesn't exist in most other, in most other areas. So if you, you know, if you think, for instance, that, like, like, if if you take the extreme and you say that actually, like, the people who, become A list actors, it's a 100% based on ability and, like, absolutely nothing else. Then something like SAG, like, shouldn't really exist because people would just be like right. Right. Like, why do I join the union if I believe I'm the best actor? I'm I'm going to just go off and do things Right? So I think it's this realization that actually there is quite a bit of randomness that, like, you know, you have to be in the right place at the right time. You have to then discovered or, you know, your audition had to have gone well or something. Right? There there's, like, quite a bit of randomness there that, you know, that being a part of the union and enforcing, like, a minimum to sort of living standards actually helps out there. Yeah. So I think it's, you know, you know, it's like a risk pulling thing. I think, more traditional labor unions. Right? So there is this, you know, this kind of risk pulling thing going into effect, but also labor unions, have oftentimes provided, other sorts of mutual aid benefits. Right? Like, you know, like things like health insurance. And then they also I think there's, like, a kind of economies of scale thing going on too when they when they enter negotiations. Right? Yeah. Any individual wouldn't have the same kind of negotiating powers, like, a group of individuals. Right?
Some unions too also act as hiring halls.
And I I know some unions that I would
Act as hiring halls. Right? So they're also providing, especially this kind of gig work. But my brother is a member of the Motion Picture Editors Guild. And so, you know, for him, like, he works sort of film or TV show to TV show, and most of his jobs come through these kind of internal referrals through the union, which also provides a protection. So for instance, when he's between jobs, he does not have to follow the normal justify like, kinda the requirements about filing for unemployment. We have to constantly justify, you know, saying, okay. Has, you know, filed or applied for x number of jobs every week because it's just built into the unique contract and the structure of it.
Mhmm. Right. Yeah. Oh, that's interesting. So, yeah, so that's that's kind of like an information transmission thing. Right?
Mhmm.
Yeah. What about technical protocols? So, you know, things like SMTP for email or, you know, or, like, HTTP.
So you could you repeat that?
Technical protocols. Right? So things like, you know, things like SMTP or, you know, or, like, standardized APIs.
Seems a combination of self binding and information transmission is self binding, you're self binding yourself to the protocol. Mhmm. You have to operate within those constraints, and you're broadcasting that you're willing to operate within those constraints.
Mhmm. Yeah.
I wonder if there's the addition of economies of scale if you're doing that for the hope of being able to transmit information at a much greater scale than you would without it because we're all conforming and self binding to it.
Mhmm.
Right.
So just
to be clear, when you talk about we're evaluating different forms of cooperation. Right? So you're you're interpreting a technical protocol here as a form of cooperation?
That's right. Yeah. The or more generally, perhaps, like, a creation of a standard. Right? Like, a standard way of communicating.
Yeah. Because, like, there's, like, different like, you know, a group of people might work together to create a standard, then it's, like, a slightly different thing to, like
Right.
A larger group of people choose to adopt a standard. Right? And then what what person which set of things are we talking about?
One one is this right?
Yeah. Yeah. Sorry. I I I I was thinking of of the latter. Right? Like, the group of people who are who are adopting a standard.
Yeah.
Yeah. Definitely. Interesting
question there. Right? Like, an object like, a a thing versus a process and the, like, level of involvement with the process. Right? And therefore, how that fits. Like, the same thing with creating a, you know, a different health insurance system, right, as opposed to just participating in it.
Mhmm. Right.
Yeah. I would say, like, it's it's economies of scale. It's gains from trade. It's risk pooling. It's something to be self binding. It's I mean, depending on the standard, it could be supporting some certain kinds of information transmission as well. Though the act of adopting any given standard is I mean, it's finding transmitting, like, little pieces of information, like metadata about the fact that you've adopted, but it's not necessarily, like, a whole lot of information transmission. Mhmm.
Yeah. I, yeah, I like this one because because it because it is, like, so all all encompassing of all the benefits. Also, probably of, more interest to this group than the average person. So, is there a the yeah. Does anybody have a, have an example that they'd like to bring up and have us discuss? I I I'll move on otherwise. Something about DAOs? Like, wait. Wait. Wait. What is this DAO house? Can I so I'm sorry? Can I hear hear an explanation about the DAO house?
There.
I'd yeah. I'd be happy to. So, basically, I guess, is there a specific thing you'd like me to focus on or discuss? Just give a quick overview.
Just just a quick overview and yeah. Yeah.
Okay. So, basically, I spent a number of years in the in the web three DAO space, and my background is in digital governance. And I kinda had the sense that people were aiming almost too high and and that they were going for these, like, big authority complex, high level problems like changing world government. I was kinda like, you know what? I feel like proving out mechanisms is gonna go a lot better if you choose a very, very, very small scale. And I have a background in in housing cooperatives, and I've lived in them, and I've always enjoyed that as, like, a domain. And I was sort of like, what if you could apply all of this brainpower to making sure that the dishes are done? Right? It's like a problem that people just don't wanna think about, but it's actually a real problem. And so, I took a lot of the kind of the knowledge that, you know, I and others have developed and basically applied it to these very simple problems of how do you get, you know, five, six, 10 people to share space without having to appoint, like, a manager or a CEO. And that was basically the project. And I I developed some mechanisms. I acquired and built a house, and I filled it with people. And, for eighteen months now, the house has been running, and the mechanisms have been working pretty well. The dishes get clean. People feel respected. It's not perfect, but I I I would say it's an order of magnitude more functional than typical, like, co living situations without a meaningful management layer. So I think that in terms of demonstrating that these things are possible, I think it's pretty conclusive at this point.
Mhmm.
And how many residents do you usually have?
We have 10 now. Mhmm. Yeah. So now I'm at the point where the yeah. So the the mechanisms themselves, I've yeah.
I I sorry. Just just, you know, just just for clarification. And and so you're you're you're actually using using, like, web three or or, like, blockchain technology for coordinating some of these So kind of So the the back
end is still the back end it's a great question. The back end is web two. So it's actually web three more in spirit than in practice. I I specifically chose not to deploy to a blockchain mostly because after having worked in crypto for so many years, it was just this is as a sole developer, I have just had zero interest in, you know, tying one hand behind my back
Mhmm.
At least until the product itself was more mature. I really do think that doing product development in web three is just like, it's just doing it on hard mode. There's nothing wrong with that. But I would say
if you can if you have
a mature product, porting it to web three back end is was the strategy that I chose. Okay. Yeah.
You know,
I think that porting like, I think the you know, porting to web three back end is is definitely a good project for down the road, but I did not think that it was critical for this part of the project.
Right. Yeah. Yeah. That makes sense. Yeah.
Yeah. I mean, it's
an important question. It's something I struggle with a lot.
Mhmm. Yeah.
Yeah. But I I guess just to the point of this conversation, it's basically showing that coordination does meaningfully reduce a lot of costs. Because, you know, one of the one of the ideas was, you know, if you can avoid having to appoint a manager, then you can deliver housing at a lower cost. So there was a big cost of housing angle. It is if you can have 10 people in a house without having to pay for a full time manager, then you can deliver housing at a much lower price point than if you have to build in the cost of a management layer. So that was that was practically a big part of the motivation.
Yeah. Yeah. Okay. Okay. Cool.
Yeah. I I actually wanna come back to that point in our for our next discussion on on cooperatives. Let me sorry. Let me let me share my screen again, and I will whoops, I will move on. One second. Alright. So that looks okay. So so so I've been thinking a little bit actually about this, this fourth thing, self self binding, something that surprised me actually in the, in the January class was how much time people spend really, wanting to discuss self binding. So, this, this, this got me thinking actually that, you know, I think that, these other four benefits, are really, they all involve, some element of self binding. So, like, for instance, going back to that example of, like, two people decide to, to go, like, move a boulder. Actually, a better example is, you know, you know, let's say that there are 10 people in the town who wanna build 10 barns, and they need, 10 people to raise a barn. Like, each person on their own can't do it, but with 10 people, you could raise ten ten barns. But, after the first barn gets raised, like, maybe that first person decides to just not cooperate anymore and then right. You know, then nobody else has a barn. So there's, like, a kind of, like, a, like, commitment kind of mechanism that has to happen in order for, you know, for I think a lot of these other benefits to actually get get play. So I was wondering actually, you know, self binding is this is this kind of a anarchistic, like, you know, voluntary notion of, like, entering into a commitment. But, what if we had, and, you know, in fact, we do have, uneven instances of coercive binding. Right? So, what do those four benefits look like if, you are forced to enter into some kind of an agreement. So, an example here would be for economies of scale. Right? This is forced labor. We can, like, build things like pyramids. Right? If you're if you're forced to actually go and cooperate on this. The second, gains from trade, I think, copyright might be an example here. Right? Like, the idea of, like, ownership of an idea is, like, a, like, it's completely a, a socially constructed thing that is enforced by rule of law. If you don't agree that an idea can be owned by, by a person, and you go off and you start to do a bunch of copyright violations, then, you know, eventually you will get fined or thrown into jail. So, you know, so this is an example of, like, establishing sort of clear rules around how ideas can be owned and transmitted allows people to, you know, to go into create these gains from trade. Risk pulling. I think an example here would be any kind of, like, nationalized health care system, you know, perhaps something like UBI, like, things that are paid for through through taxation, you know, Social Security. And then, for information transmission, so what does, coercive binding plus information transmission look like? I had a little bit of difficulty with this one. I I think, the best thing I could come up with is, some kinds of religions. And, like, particularly religions in which, like, the community and the religion are, like, very strongly tied. So you you cannot, operate in the community if you do not share the same religious beliefs. And religion, I think, serves oftentimes as, like, you know, like a shorthand to, like, teaching people how they're supposed to act and behave and and cooperate as, you know, as well as in some cases, like, teaching people about the dangers of, like, certain things. Right? Like, you know, don't eat unclean animals, for instance. Right? That that that was a real problem back then. Right? So yeah. So I I I yeah. I've I, I I think it's important for us to have an idea of of what, what these benefits looks like in course of, binding situations because they are so so, so common in real life. Alright. So, the next piece that I'd I'd like to talk, about, let's see how much time do we have, seventeen minutes. Okay. So, let's let's see if we can go quick is, it's Henry Hanspin's cooperative firms in theory and practice. So, the first thing that he really goes into actually is a, he he he tries to, like, at the same time, broaden, but also clarify, like, what exactly a cooperative is. And, you know, and he and he goes into several examples of of, cooperative enterprises, and goes so far as to say, actually, a, private investor owned, enterprises are also cooperative enterprises. Okay. So alright. So we'll get there real quick. So, two common, cooperative, categories, you know, probably the ones that you think of first, like, when somebody says cooperative are, worker co ops and consumer co ops. I used to live in New York. In Brooklyn, there's a Park Slope food co op, which is a, it's a grocery store and if you want to have access to all the great groceries in the food co op, you have to volunteer and spend time actually working in the co op. My daughter went to a went to a preschool as a cooperative as well. So, you know, all the parents had to, you know, had to spend time in functions that would generally have been contracted out, you know, like, otherwise. And then in the Basque region in Spain, there's a very large, like, collection of cooperatives of it's it's a cooperative cooperative It's called called Mondragon. And the Mondragon network accounts for some enormous some there's some enormous proportion of the of the jobs in the region. So, you know, so that is probably our our, largest example of, you know, of a worker co op. Consumer co ops, a large example in The US is REI. You go buy camping gear or, you know, or or, like, hiking gear from REI. As a member, you get a dividend at the end of the year, and you also get the votes in who actually runs REI. And then and and then another, very, common, classic property is actually is franchises. So so, like, oftentimes, like, you know, like, Dunkin' Donuts or something like that might be. I'm I'm not sure Dunkin' Donuts is actually run as a cooperative, but, you know, but those those those sorts of, you know, those sorts of, companies do, you know, do exist. So so another, class of, cooperatives, probably, lesser known, would be producer cooperatives. So, a common example in, I think I I don't know if this is nationwide, but at least in the Northeast, a lot of grocery stores stock, produce from Organic Valley. And it's generally I think it's almost all dairy. It's like eggs and and and, and milk and butter. Organic Valley is actually a cooperative of, lots of dairy farms. And so they, they come together and they, cooperatively, own and manage the distribution networks in the marketing for a single brand. You know, but the eggs you buy from, you know, from organic value, could come from a variety of different farms. We don't normally call them cooperatives, but they, they are in spirit of partnerships. So things like law firms are oftentimes organized as, you know, as these partnerships, you know, as well as medical practices And there, it's, like, you know, a bunch of partners in the law firm, come together to, you know, help pay for the office space as well as, like, a bunch of kind of, shared infrastructure and staff, you know, like paralegals, you know, like, all of the trade association fees and marketing and all that stuff. So so generally in a cooperative, there's a a contribution of, like, I either either a physical good or some sort of, you know, some kind of skill, right? Like, your, your labor, which gives you membership in, in the corporation and then also gives you a kind of voting rights in the corporation. Hansmann makes an argument that actually money, like capital is essentially a physical good, or it's like a thing that you need to produce your goods. And so, people who are contributing capital, right, and then, gaining voting rights, from contributing to the capital, well, you know, that's essentially that's a cooperative, you know, as well. It's just the contrib the the, the type of the contribution is different than you might expect. So that's that's his argument for, you know, for saying that, you know, that actually investor owned things are, you know, cooperatives. A key difference though is that, with, private investor owned, corporations, we generally have very clear, protocols for leaving. You know, when someone someone wants to leave and and and have their contribution distributed. In cooperatives and partnerships, oftentimes, the same type variable specified, and he says this is actually, like, a real problem that, you know, that there isn't, like, more of a standardized way of doing this. Yeah. So so he says, the major reason why cooperatives tend to form is to is to deal with this, this, you know, what he says are market failures. That generally what, people or groups of people would would want to do is go to the free market to get the services that they need, but oftentimes there's some kind of a failure, which which causes them to come together to, you know, to go and, take care of things on their own. So, one example here might be, State Farm, you know, State Farm insurance, I think in the early nineteen hundreds, it was pulled together by, by a bunch of farmers, who wanted to, they wanted to get, auto insurance at cheaper rates. But the issue was that, the, there were no insurance companies that actually serve that market and so they would get lumped in with, with urban motorists, and the premiums, that will be higher. Presumably you get into more accidents if you're driving around in the city. So that that was a start of State Farm. And then, you know, and and then over time, they start to add more and more services. REI is another example here. It started off as a buying club for mountaineering gear that was hard to find in The US. So people found that they could order this stuff from from overseas. But they would have to do it in a group, right, to keep the transaction cost low. So so I think this is an interesting way of thinking about the purpose of the cooperative, like, why it should form or be exist or, you know, or, like, why it should exist. And here here actually Cataloxy kind of reenters. Right? I don't know. Like, I I I suspect that if, we were to form, that you know, I I think I think, like, REI would not formed today. I think with the, the advantages of, like, you know, having global trade and, like, amazon.com and, you know, these well established, you know, like, shipping methods and everything. Right? Like, the the idea that you would need to form a cooperative in order to buy mountaineering equipment, like, seems like, you know, that's that's not that's not a good enough reason anymore. Right? That the market has has kind of stepped in and, you know, figured out a solution to what was previously a market failure. So I think, in my circles, like, there's there's generally, like, a feeling that, hey. We need more cooperatives. Why aren't there more cooperatives? But I think it's important to ask this or, you know, you're you're you're you know, like, you think carefully about, like, the reasons why cooperatives were formed in the past. You you know, the possibility that those reasons no longer exist and that if you do want more cooperatives now, you should look for different kinds of reasons or different kinds of things that cooperatives can do that, you know, that the market cannot. So, let me see. My final exercise is, is, is this. Suppose, we have a, a group of writers who want publishing tools. Right? So they want to make something like Subsect, but they wanna do it as a cooperative. So my question for the group is, like, why why would they do this? It can't just be a cost of goods thing because, you know, if they're looking for, like, publishing tools, for instance, I mean, there are, like, plenty of open source things out there, but also publishing tools, like, don't don't have like, there's there's no real market failure problem there. Like, you can let the market, let companies form to create the publishing tools and let them compete on features and pricing and everything. And, you know, and a and a writer can just use the cheapest best thing out there. There has to be, in my opinion, like, a greater reason, right, than just having, having access to tools, to form something like Subsec as a cooperative. So I, you know, I thought it might be interesting to, kind of speculate on that. Let me stop the screen share so that we can see each other again.
Sorry. Just just quick. Just to clarify, when you say Substack, you mean a Substack, right, not Substack the platform?
Yeah. Yeah. Something yeah. Like like, suppose you wanna make a Substack competitor, but you wanna form it as a cooperative as opposed to, you know, as opposed to another private enterprise. Like, why what advantage is, you know, is there to to do something like that? You know? And I I think it's helpful to to think back on, like, the five, you know, those five benefits to cooperation and, you know, see if any of those things apply in this case.
I mean, my inclination is that cooperatives or as soon as my intuition is that cooperatives are not particularly good at building technology. Right? And Substack is a technical platform.
Mhmm.
You could say, like
It's a it's a very precise intuition for those two use cases because I just see it all the time. Or, actually, I I see exactly the opposite all the time and people moving away from it all the time.
Sorry. Can can you elaborate on that? Like, people moving away from from, like, what kind of situations?
So, like, obviously, there are, like, open source repos. Right? And, you know, collectives in this sense build, you know, build tech, like, open source tech. The the version where, like, a co op of people build and, like, ship a techno a technical platform on the order of, like, Substack. Right? Mhmm. Generally speaking, I I don't see this happening that much. And, certainly, like, in Web three, what tends to happen is there's, like you know, there's a cooperative that maybe runs a technical product once it already exists, but then there's a development company that's relatively centralized Mhmm. That, you know, executes the actual technical product, right, and, you know, ships, like, software upgrades to it and and compensated or own some portion of shares for it. And it's a it's a very common pattern.
So yeah. So maybe one one one part of your argument here is that to develop software actually in a cooperative structure? Like, the actual development of the software is, like, a very difficult thing to do cooperatively? Or
It's just an empirical point. That that's it. It's it's I'm not Okay.
Talking about that point.
Yeah. Yeah.
Yeah.
Yeah. It's a really important question.
This is something that comes up a lot. I feel like on one end, you could say yes. You know, a lot of cooperatives are things like cafes and bakeries where the work is fairly, like, routine, and so that's appropriate for a cooperative structure. On the other hand, you look at companies like Valve, which, is very famous for having a flat structure that produces amazing software. So I think Valve would be the alternative example to wrestle with. And you could say, well, Valve is flat, but flat and cooperative don't mean the same thing. You know? Like, their their compensation practices are based on peer review, but it doesn't mean that everyone's paid the same. And so maybe there's a there's, like, a different that it's actually a different structure. There's a great book, Reinventing Organizations by Frederick Laloux, which I'm sure a lot of people here have read. Mhmm. And he he really does review a fair number of of technically sophisticated companies that have flat structures. So it's an interesting it's an important question, but I I don't know if it's quite as simple as, like, corporatives can't build software. But there's definitely there's definitely a lot to it because that is often the case. So it's sort of like there's I feel like there's maybe one more layer of structure. Like, there's a a framework that we've yet to develop on this one.
Mhmm. Yeah. Yeah. That's a great point. I I, yeah, that's, yeah, that's the kind of stuff that, yeah, that is very interesting to me, right, to try to figure out, like, what is this framework or, like, a principle way in which we should we should be thinking about that.
On on the flip side, you know, Valve makes amazing games, and they don't make games for ten years. So, you know, it could be that, in fact, that example does answer itself. You know, they made half life two, and then they didn't make half life three forever. Ever. So, you know, you could say that that works occasionally, but then fails the rest of
the time. Like, maybe it's a good model for doing something that's, like, very inventive and creative in the moment, but it's not a good model for, you know, for long term sustainability of, you know, some product or something. Right? Because, like, Valve is more of, like, a research lab than a you're right. Than, like, a full fledged, like
I mean sustainable component. Comes down to the fact that complex strategy can't be assembled by committee. And and often large projects require complex strategy that that can, you know, hopefully get approved by a larger body of people, which is why another thing Colony, another company that Daniel works with is has that sort of a subsidiary where it it it goes to larger larger bodies of appeal as as decisions become more solidified. So that's part of the approach, I think, ultimately. Mhmm.
Yeah. I think going back to these, you know, the five benefits of of cooperation and and how this relates to a group of writers, like, trying to make a subset competitor. And I suppose that that the technology exists. Right? That that, like, essentially, you get everything that you want from, like, WordPress and plugins. You know, you get to as close to future parity as you need. What is the benefit to a group of people coming together to organize a thing as a cooperative? There I think there are some economies of scale benefits just like the maintenance of, like, the running system, right, is lower, like, on a per person basis, the more people that you have. But I also wonder if there are any benefits to, like, risk cooling, for instance. Right? Like, you could say, this is a collective of writers. Right? If and and if if any particular writer's reputation really takes off, then, you know, maybe there's reputation, like, that gets spread to the other to to the other writers as well. Right? There might be gains, like, you know, like, for instance, Substack has, like, recommendation algorithms that will, like, send you to another person who, you know, like, it'll it it will suggest a substack to you that is similar to the ones that you are currently subscribed to. Right? Like, maybe there's, there's some sort of games there that can be done by, you know, that can be had by a group of people who are more coherent. Right? Josh?
I was just gonna say because I've actually
I I
find it funny that you can bring this up because I was thinking a lot about this recently for a project that I kinda wanna build with community. And my okay. Okay. So I'll just give a really quick version of this. I just thought it was really funny because you mentioned Substack and literally doing this through Substack. So I literally created a Substack. It's currently live at joshwood.community. But the the goal is to actually use the substack a substack, not not I'm not recreating the substack platform. But using a Substack, as a mechanism to start organizing what I think of as, like, like, a path to, like, cooperatively building a certain kinds of technical, technical project. And for me, it's like yeah. So I'm just, like, I'm completely, like That's it. It's just, like it's so obvious that, like, a large community, even, like this is, like, a relatively trusted community that might wanna fold in here. There's, like, there's no way they could possibly, building of this technical software. Right? This is, like, never gonna happen. On the hand other hand, you know, there may be elements where there could be, like, a partnership kind of style arrangement or a cooperative style arrangement. And it's like, how do I how do I sort of, like, create this hybrid structure where, like, one part of the sort of system is, you know, located elsewhere, and one part of the system is located where, like, okay. Here's where an actual partnership or cooperative type structure would actually make sense. And when I say it makes sense, I mean, like, would presumably perform even better than, you know, a typical hierarchical or investment based arrangement. Right? Like, that's that's, like, really where I think we could or something could be nice where we say, like, this part of the structure is best operated through a cooperative structure and the other parts, like techno technology management and release. The question I have is, like, how these things, like, need to get connected to facilitate what I was doing what I think of as, like, maximally efficient and effortless coordination. That to me is, like, the big open problem that I would love to figure out how to solve.
Mhmm. Yeah.
Anyways, that's not probably not a not a problem we could solve today.
Right. In our in our, like, negative two minutes of Zoom. Yeah.
Yeah. But I think to me, it's it's kinda interesting to to point out that, like, these different platforms, like Substack, for example, you know, offer a means for, you know, communities to coalesce.
Mhmm.
But they also define specific structures for for interaction, and then you can layer, like, you know, ownership structures on top of that. Right? So you have the communication meeting, so then you layer the ownership structures.
Yeah. Yeah. And we can think of sub stack itself as, like, maybe being being a kind of a protocol. Right? It's like a human protocol. Like, once you've created the subsect, they're, like, ways of interacting with the people who are involved in everything. Right?
Yeah. Yeah. Sort of like Slack kinda imitates more of a flat structure. Right? Mhmm. Where Right. Everybody can email everybody in in the in these things. I don't I mean, obviously, you can subdivide into little channels. Mhmm. And Reddit is also much more open. Telegram is very limited because, you know, if it's so many and such, it gets really noisy. Substack offers a slightly different approach. Right? Yeah. Anyways
Yeah. Yeah.
Okay. I I should stop not monopolize and slash Wes, if you need to jump, feel free and we can
Let me just let me cover the last slide and then yeah. And then and then we can and then we can jump. Let me share my screen again. Okay. So, so just, you know, very quickly, like, why why I'm interested in, you know, in these, in these kinds of questions and these these these frameworks. I think, cooperation is very important to, to avoid ex x risk, of course. You know, whatever we can do to, increase the amount of time before somebody sets off a new, for instance, you know, I think that's worth a lot. So, a really interesting question that I've been using on recently is, what what happens in in this kind of a utopian hyper local world where, like, everything is sustainable and you can, you know, you you have access to, like, cheap energy, because of, you know, lots of solar panels or wind power or whatever, and you have magical, nanotechs, three d printing technology that can, like, construct any kind of, of, like, any kind of an object that you need. So when the vast majority of your needs can be taken care of in a very hyperlocal way, is there actually any reason to cooperate? And I think this this this question is, like, maybe, like, it, maybe reveals a little bit about, like, the the personality of the, you know, of the person who is answering, whether or not you think that, people will just kind of, silo and not talk to each other anymore or whether or not you think that people will, move into, like, a, you know, like a Star Trek like universe where some grand, you know, grand enterprise of, like, you know, space exploration, for instance, right, will cooperate and go and, you know, go and do that. But, yeah, I I I I don't have a whole lot of full full full form thoughts on this, but this is the thing that's, you know, that's that's, I I guess been interesting to me recently. And then, this this last question actually, I think is a very important practical question, which is that, you know, this is going back to protocols. I think I'll make a strong claim that if you look at any successful decentralized protocol, like something like, like activity pub or SMTP for email, If you look at these, at these protocols, they all tend to re centralize in some way. So the vast majority of email is actually handled by Google and Microsoft essentially. And then it's not just that, but they also form a cartel. So, like, in in in in principle, you could, run your own email server, but you would never get past their spam filters. So, the protocol itself, might look decentralized, but the actual, activity is not. If you look at the fediverse, before, Elon Musk acquired Twitter, the vast majority of, fediverse usage was on a small handful of Mastodon servers. I think it was like, I think, like, 90% of where you know, it was on on on, like, three servers or something. I think that distribution has, it's become a bit more, diverse, since Musk acquired Twitter, but it might reverse again, if threads, ever comes online in the Fediverse. Threads will, most certainly concentrate the vast majority of users into into a single instance. You know? And again, it's like a protocol that is in principle decentralized will eventually move into, like, a highly centralized solution. So I am I am curious, whether or not there are major exceptions about this, like, what, like, how we should be thinking about it. And this is also why I am, interested in the benefits of cooperation given a world in which there is a coercive binding. Right? It's like if you want to operate with email, you, at this point effectively, have to, do so through one of the major players. You know, the same thing with, with the Fediverse. It's probably gonna be the same thing with Blue Sky, for instance. Right? Like, you will probably be operating through the Blue Sky servers. So if we, if we maybe pessimistically, I don't know, accept that there's going to be coercive binding. Can we do so in such a way to ensure that there's a, you know, kind of a neutrality and that decentralization can be built on top of the course of binding? I think an example here might be something like HTTP. Right? It's like the protocol itself is like, if you if you wanna talk to any, website, if you want to build anything in which people are gonna use it, you have to use the HTTP protocol. You're, like, essentially, coerced into that one protocol. However, using that one protocol, there's a, there's a kind of neutrality that's built into it, which allows, like, anybody to build a website, for instance. So the, you know, the ecosystem that's that's on top of HTTP is much more diverse than the actual, set of, widely used communication protocols. But, yeah. So I will end there. If if you wanna see what else was in this, in this, January class, go here. Bitly I a p dash co op dash 2,024. I'm always interested to talk with people about this stuff, so feel free to send me an email if you have any any questions or comments. So, yeah, stop the share. I don't know if there's any last last thoughts or or questions that people have before we close.
I think given the time that we are nine minutes over, I'm gonna end it here, though people are kind of welcome to hang out for longer if they wanna keep discussing. But as is tradition, I would invite everybody to please unmute and join me in a raucous round of applause for Wes. Thank you so much for joining us. Thank you so much for joining us. It was really quite awesome. I look forward to it. We we got those papers.
Cool. Thank you. Thanks,
Wes. Thanks, everyone.