Harnessing Collective Intelligence better than LLMs w/ Sean Geobey
I spoke to Sean Geobey, associate professor at the University of Waterloo and Director of Groupthink Labs, about collective intelligence, cooperative economics, and what decentralized technology could actually offer the solidarity economy. We dig into how collective intelligence works at scale, from participatory budgeting experiments in Kitchener to the structural barriers that make setting up a cooperative three times harder than incorporating a business. We also get into the limits of GDP ...
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Transcript
AI systems, LLMs, tend towards model collapse if all that they are fed is the outputs of other AI systems because it needs to feed on those individual intelligences in order to survive. If it doesn't, it breaks down. When these sort of collective intelligence aggregation tools are used in a way which are essentially there to substitute for human judgment, decision making, values, and ethics, rather than support human decision making values and ethics, that's when they can get very dangerous. The main thing that impacts people's lives day to day is their economic positioning. And if that's off the table for political discussion, well, what's left? And what's left is often the most destructive thing. Right. The easiest thing to create in crypto or meme coins. For whatever reason, regulators are like, oh, it's just purely speculative nothing? Fine. Go for it. Web three is a world that fundamentally exists in silica. It exists in a virtual space. And wherever there are the connection points between the virtual space and the material world, things are always messy. You know, my view of risk as a worker is that, yes, I'd like to make more money this week, but it's more important to me that I make it home alive this week. Hi, everyone. You're listening to the Blockchain Socialist podcast.
And today, I am here with Sean Gobi, who is an associate professor at the University of Waterloo and director of Groupthink Labs. This was one of the rare times where someone reaches out to me asking about coming on the podcast, and I say yes. Because after I looked into a lot of Sean's work, I was really impressed. His research and learnings to maybe to roast Bread Cooperative a little bit, which is the worker cooperative that I started where we build solidarity finance applications using centralized technology like like crypto. But maybe before we do that, Sean, if you wanna give a quick introduction
thanks, Josh, and thanks for having me on. I've been a listener of the Blockchain Socialist podcast for a while. I thought it was great. I am a professor in social entrepreneurship at the University of Waterloo, which for your listeners who might not be familiar with it, it's sort of the leading tech and engineering university in Canada. Space so I teach social entrepreneurship regularly, alternative approaches to finance and governance for startups and business conversions with particular interest in nonprofit cooperative and social enterprise models. I think often been of interest to me in the the web three space is that there is a lot of promise and potential for large scale decentralized decision making there and collective economic action. And in way and there's a lot of directions that can go which are, really promising, which is why I like that Bread Co op is is getting up and running and that Blockchain Socialist and some similar, more progressive, approaches to thinking about Web3 three are there. And also a lot of directions in which this movement can be absolutely terrifying and embed the worst aspects of, kind of, modern capitalism and make them possibly even more destructive than a lot of, those aspects have been to our societies, our economies, and our environments.
There's plenty plenty of bad to to talk about in the world of crypto, but I think one of the things a research kind of area that you do is on collective intelligence, which I think is, like, at least for me, is one of those things that at least I have, like, felt my work is always trying to, like, find and discover and cultivate in ways that, like, move towards a a progressive direction of just, like, harnessing that collective intelligence for a collective, for the collective rather than kind of, like, the way that collective intelligence is kind of, like, siphoned off by, or taken advantage of by by large corporations. Before we, like, talk about that specifically, I think it would be good to maybe define what collective intelligence is and what maybe you mean by it as someone who's, you know, been in that, you know, research space for so long. Like, what how how do you define collective intelligence? Yeah. There's definitely a lot of ways that people could approach a term like that.
I view it from a perspective which is much more grounded and practical, which is collective intelligence is, how people, large groups of people in particular, collectively aggregate their knowledge, their insights, their creativity to make decisions and produce collective action. In a lot of ways, and this is here where it may get a bit woo woo, a lot of what collective intelligence is is not summing up, you know, what a thousand different people think. It tends to be a bit of an emergent kind of outcome, an emergent property of how those people all interact with each other and behave together. Social systems, tools that we have are really built to channel, guide, develop collective intelligence in different ways. As simple as a relationship where I go to the store, I buy bunch of grapes. Got some grapes beside me right now. You know, it seems like a fairly individualistic kind of act. I'm giving money to the cashier. The cashier is giving me a bag full of grapes. I take it back. But what that simple interaction has embedded in it is actually a really wide range of social norms around trust and reciprocity and how we use kind of economic tools and a huge range of invisible economic, social, communicative structures that have gone from, oh, these grapes came all the way from Chile. I'm buying them in Canada. There was a large series of steps that took them from the fields in Chile up here that involved really individual decisions, individual intelligences, but also some kind of collective intelligences as well. It's just simply we found them as the human impulse to work together. And we just do that in different ways at different scales using different tools.
So would you say that social media, for example, is that a form of collective intelligence? I think it's a channel for collective intelligence.
So the individual kind of intelligence of people who create and cocreate on social media. However, once you now open up those channels for multidirectional communication, multidirectional production of knowledge and consumption of knowledge, Sure. It looks like immediately one of the pieces, it speeds up those communications, but it also enables new types of communications, new types of networks, some emergent ideas to kind of, evolve that are different than what you would get out of either broadcast media or just kind of face to face conversations that people have. So I don't think that this the media that social media itself is collective intelligence, but we have a lot of different channels that change the way that collective intelligences interact with each other. So it's almost like it's it's more how does it compare to other other forms of bringing collective intelligences together.
I would love to know your thoughts on them, like, be just high level on, like, when it comes to AI and LLMs. And, of course, this is, you know, the thing on everyone's mind right now. I'm curious where is that another channel to you, or is that like a I had another guest previously where he talked about, you know, LLMs being one of the most collective technologies that we've ever had. You know? Yeah. It is and it isn't.
I often, when I talk about collective intelligence, will often almost do a definition in reverse, which is I will often contrast it with artificial intelligence at this point, because that's, I think, on people's minds for thinking about what intelligence is. What artificial intelligences are is they are you know, an LLM in particular because, you know, it's a big bucket AI, but LLM is where LLMs are where we're focused right now of all this aggregated data that comes together from all these different points, all these different tasks, all these different visuals and videos that are available on the Internet into a prediction engine. And the prediction tool, which comes up with better or worse sentences with fewer or more em dashes in it depending on how you structure them, is it it is drawing from the collective the individual intelligences of people and turning it into a collective. It is in itself not really producing new knowledge directly. So these things in a way which does some very interesting things. One of the pieces that I find really fascinating about LLMs compared to what I would think of as being a more kind of truly direct collective knowledge where there's co production between, you know, human beings and each other with these emergent outcomes, is that AI systems, LLMs, tend towards model collapse if all that they are fed is the outputs of other AI systems. So that, to me, is one of those interesting features that that really demonstrates the fact that artificial intelligence as a as a toolset is drawn from the kind of individual intelligences of people because it needs to feed on those individual intelligences in order to survive. If it doesn't, it breaks down. And so when we think about where AI and collective intelligence fit in there, like, AI can be seen as a a type or substantiation of it. But it has a whole bunch of features in it which are which I think pull it back from being something that I would say is truly in its own an intelligence. And basically the baseline is that is it does need to feed on on individual creativity in humans. And where I worry about a lot of the dangers from AI is when those systems get built in a way where there is a black box involved, and where it is unclear how humans actually loop into those decisions. When these sort of collective intelligence aggregation tools are used in a way which are essentially there to substitute for human judgment, decision making, values, and ethics, rather than support human decision making, values, and ethics, that's when they can get very dangerous.
I would like to go maybe more to the local level to make it more concrete for people maybe. Because one of the things that I saw that you did is you had done a I think one one of the ways that in which that I would consider to be collective intelligence is just kind of, like, collective forms of sense making. And one of those things that I often kind of point to is participatory budgeting. I'm curious how what was that experience like doing something like this, doing some participatory budgeting processes with ordinary people so that they can engage in a collective decision making when given this chance? Because, like, you know, for a lot of people, I think there is one thing that I've that I could idea that I've come back back again, you know, throughout doing this podcast is that it seems to be that for a lot of people, we we kinda lost or don't have the muscle for engaging in collective decision making. Like, I would say that's, like, probably there's a huge percentage of, like, the difficulties of working in something like a cooperative is, like, knowing how to interact and how to work with people in a collective way because we're just not used to it. You know, it's not taught, you know, in a certain way. But in this case, it's, of course, not not not a workplace, but it's kind of like a kind of like a city hall type of can be perceived as a very boring thing. But, yeah, is there I'm curious to hear what your experience is like doing that and Absolutely.
So for a bit of background for listeners who might not be familiar with participatory budgeting, this is a process that originally was developed in Porto Alegre, Brazil in 1989. So that was the first kind of use of participatory budgeting. And this was a few years after the end of the Brazilian military dictatorship. And through that dictatorship, a lot of civil society institutions, as well as public sector institutions and private sector institutions had been kind of compromised by their involvement with the military. So Porto Alegre was dealing with essentially a relatively low trust kind of local governance coming out of coming out of a dictatorship and into trying to revive, reinvent, redevelop its own democracy. So when it came to actually deciding how to develop municipal services, a small portion of the budget was turned over directly to the communities in Porto Alegre to make those decisions. So to the people living in the favelas, as well as the people living in the houses and in the the skyscrapers. So they developed this process over a couple of years, and it has since spread around the world. The last count I saw is that there have been about 13,000 participatory budgeting processes around the world. And interestingly, the laggard geographies are North America and Western Europe. It has tended to be the global South that has had much faster adoption. And even in Europe, it's Eastern Europe that has had a quicker adoption of it than than Western Europe as well. So it's it's it's one of those really interesting democratic innovations that has really moved from south to north in a way that we we don't usually see. Now when we were looking at participatory budgeting in the city of Kitchener, we were one of the things that I was really interested in doing was kind of develop voting models for how that end budget allocation worked. I have experience in the past. I was on the board of our our leading electoral reform organization in Canada, FairVote Canada. Germany uses a proportional representation system, which most modern democracies do. I live in Canada. We use first past the post. It's not a particularly good voting system. It's one that we share with The United Kingdom and The United States and is responsible for a whole bunch of, terrible political outcomes that we see in in our country and theirs. And so, when it came to actually looking at how participatory budgeting was working around the world there's a lot of different ways that those processes are undertaken. And I wanted to see okay if we built some voting models that actually were built on on proportional representation principles, would we see them perform well when we actually did these in practice? And so we in working with the city, we had the chance to look at two parks, just two urban small parks that were already slated for reconstruction because the equipment had reached the end of its life. And in both of those, we worked with city staff to do outreach to the neighborhood and ask people there, hey. What would you like to see in this park? And people came up with tons of ideas for each park. City staff vetted ones that just to make sure that they could actually build those things and costed them out. And then we went back to those neighbors in those neighborhoods and had people do votes. And one of the things that's really interesting about the local level of government and something as tangible as a park is it's really easy for people to envision how different structures of a park are going to serve them better or worse. And it's really easy for people to have conversations with their neighbors about what their priorities are. And so in the end, what we ended up seeing was a lot more kind of community engagement than the city usually sees when it does public outreach. And in in ways that in some of those park like in one of those parks, there was a particularly controversial proposal, which was a dog run. Some people were like, I don't wanna see more dogs in this park where all my kids play. That was like these these really immediate tangible things with those immediate tangible consequences get people really engaged and really involved. Now if we contrast that to how decision making, local decision making usually happens, It's usually that city council or city staff will come up with a proposal, will go to the public, hey can you give us feedback on this? There's some feedback. People maybe fill out surveys, maybe show up to a town hall or some other meeting, and it's very difficult for them to actually see how their voice has translated into a different decision. With an actual vote using a participatory budget, that it's there. It is transparent. It is clear. You can show a paper trail as to how the, you know, 100 or so people who voted, those turned into a park that ends up getting built. And part of the reason we did this these two sites is we actually ran, and we we ran it in a way that's a bit unusual for participatory budget where we actually did an experiment at each site. One of the one of the sites, we used a ballot, which was a ranked ballot. So 25 items. You said, okay, this is my favorite, this is my second favorite, third, all the way down as much as you wanted. The other one you scored each item between zero and ten. But based on those inputs, you can actually calculate results in a few different ways. So then we did a second round of voting, where in each of those parks, we presented three different packages that were calculated using three different voting algorithms and a fourth package, which was actually created by city staff. And so in that second round of voting, people were voting between four different park designs at each site. And at both sites, the staff model did quite poorly compared to the ones that were actually voted on by people themselves. And this is not to throw any shade on the staff. Like, these are smart people who know landscape architecture, know parks, know these neighborhoods. But inherently, there's something missing between you making your best guess, best on the base, best information you have as a trained professional and the people who are gonna be using those parks themselves. And the people using those parks themselves have different things that they're looking for. And it was really interesting to see that that was such a a substantial difference between the two. So it was really interesting to be able to run that, being able to see that, and to really be able to validate for people in those neighborhoods
that they now have parks that fit what they wanted and what they envisioned those spaces to look like. The type the type of thing that I wish was just, like, kind of a normal part of life, I guess, for a lot of you. You know? Just I wish that it was something where, you know, there was just, like, always an easy way for me to somehow provide input and feedback into my local parks is, like, one one example because, you know, yeah, I go through I walk through so many different parks, and sometimes it'd be nice if I can at least express that it'd be nice if there was a little bit of shade here because of the sun. You have a really good insight into what that park is going to look like. And it's a shame that we
have public systems for decision making that are often seem to be about separating decision makers and those who are making our public goods for us from the public, save for once every couple of years when you have an election. It's like, otherwise, why bother engaging people? Whereas if we think about how we can actually make, you know, make those decisions for what our public goods look like in ways that line up better with what people actually need, you know, the opportunities for containing costs to having a bigger impact with those dollars that are spent, I think are really compelling.
Yeah. And I think for me, why I think these are interesting as well is because, you know, by and large, as an actor in the economy, you are someone who is generally subjected to the interest of if you're at least working in the private sector, you know, you're you're subject to the interest of, you know, whoever owns the company to, like, design whatever they need to design in order to, like, extract profit. Park, because it was public, there isn't really I mean, maybe, like, what the state could have done maybe is, like, optimize for the minimum amount to not anger people because that you know, they got a park, but it was Yeah. It's super cheap. And, like, you you know, they didn't they didn't go over budget, and then they can use that money for for something else or or whatever. Here, the idea was to optimize for what it is that people wanted, which is something that is more like, that's not like a a number you can it's not like a purely quantitative thing that you can say is a better or worse, but it's something that's, like, very, very multifaceted. Research that was really interesting that I think is, like, a fundamental part of trying to answer the question around, you know, how do we make a more democratic economy was around this question around of, like, moving beyond capital focused measures of success, how it's framed. Yeah. For people who, like, haven't thought about this, I mean, one, maybe to share what's actually wrong, with how we measure whether an economy is doing well, like using the current types of measurements that we use now versus, like,
what we could be using. Absolutely. And I can think of this on almost two tracks. One is the kind of organizational, and one is the economy wide. The economy wide one, the main indicator we use is gross domestic product. One of the things I think is really interesting about GDP as an indicator of economic health and human well-being, Is the criticisms of it as an economic indicator go back to when that indicator was created. The person who created the indicator, he said right off the bat, please do not use this indicator as a measure of the quality of life of people. It is built to find out how much production there is in an economy, what kind of overall economic output. And this indicator was developed around World War Two. So it's like, what resources can we muster for doing for engaging in total war? Like that was where GDP came from. But it's since kind of seeped into other aspects of governance and policy making because, fundamentally, it is a very stable indicator. Like, it can be applied around the world and, can be used comparatively fairly easily. And numbers are kinda magical in people's thinking because in a lot of ways, numbers can short circuit judgment. It's really hard to decide between those balance that balance between, you know, do we want this park that is beautiful? Do we want this park that serves our needs, is better for health, well-being, fun? A lot of those are really hard numbers to track, but the amount of money that we spent on the park is pretty easy to track. So, okay, that's our number. That's where GDP comes from. And GDP misses a whole bunch of things when it comes to, environmental damage, social damage, doesn't care about inequality, and what that can do to really destroy societies and social cohesion. And in a lot of ways, you know, we can think of this at the aggregate level as being a very myopic way of measuring economic success. If We go to, like, the organizational level. You know, the standard organization that we're usually looking at or thinking of is a for profit corporation. And the goals of a for profit corporation are pretty simple. I'm trying to get bring in as much revenue as I can, with the lowest costs that I can. The difference between those two things is profit. Fine? Makes sense? But there's other ways that organizations could work or could be built. So if we think about Brad as a worker cooperative, one of the things about a worker coop is that if you were, you know, if you are doing your work, you're generating revenue, you're paying people, that's all great. But if you're thinking about what the ultimate goal of the worker coop is, is it profit maximization in that way? It's probably not, particularly because your biggest cost is probably your workers and people. Like, if you're bringing in a million dollars in revenue and then you're having a conversation as a worker co op, it's like, okay. We've gotta make sure everyone's wages are as low as possible so that we can make these profits for some reason. Whereas bringing that million dollars in revenue and making sure that, yes, some have set aside for reinvestments, some have set aside to cover your kind of external costs. But then in the end, going like, okay. So, you know, what would be profits we wanna give back to our workers? It can be as higher wages. It can be as dividends. It can also be reducing people's work hours or the intensity of of the time that's spent on the job. It could be providing people with better training, tools, or equipment to work with. It could be more time for benefits or paid time off. All these other things, those are all other goals that an organization can have that are real. They're valuable. They are worth discussing because every worker is going to have a slightly different combination of things that they're looking for. But it's also a very different logic than the maximize revenue, reduce costs at all to all ends. And because of that, it means that that worker co op will have a very different view on things like risk than a for profit corporation has, you know? Yes. I might want to get a dividend of 10% on my investment if I if I'm invested in a for profit corporation. And if working extra hard is going to do that, okay. Cool. Pushing employees and workers to work extra hard. If it is in an industry where that working extra hard is going to come at the expense of health and safety, you know, my view of risk as a worker is that, yes, I'd like to make more money this week, but it's more important to me that I make it home alive this week. And so I'm gonna prioritize that. And that is not necessarily where the prioritization
of an organization that's set up just to serve investors is going to look like. In my experience of having built up Bread Cooperative, and I think I've been wearing the old branding bread. But with starting the cooperative, the thing that I've noticed that's been interesting is that I am one, even though I'm the founder, like, worker member as with other worker members. At least for me, the feeling and I think if you ask the others, I know they're not here to share, but I think they would say that it does feel like we're in it together type of thing rather than necessarily, you know, we gotta work really hard so our manager can afford another sports car or whatever. There's, like, a very different relationship in the sense that when we make money, the point is really to try our best to sustain you know, it's to make good working conditions for each other rather than, like, like, things are too transparent even really to, like I feel like the way that that we do the budgets, like, quite quite transparent and where everybody kinda can see it and everyone knows how much money is coming out of it. So, you know, whenever we have to have those maybe more difficult conversations around, like, how much can we actually pay each other, like, what is actually possible, you know, it's it tends to be a lot more people. Yeah. It's definitely hard. It's gonna be it's always hard to, like, talk about, like, yeah. We can't really I know you would like to be paid this much, but, like, if we're all looking at the same numbers and, you know, if if we want to be because, I mean, there may be some disagreements about, like, how conservative or risky we are with the treasury or something like that, but we have you know, we try to make certain guardrails and certain expectations early on so people kinda know that. But, yeah, it's, like, a very different relationship than when I was working in, you know, very corporate settings where it's just completely opaque. You know? You wouldn't even know, like, how much are they charging for the clients, really. I'm one just, like, analyst in this project or something like that. I know how much I'm making in my paycheck, But then, you know, sometimes when you do find out how much they're actually charging for your hours, you're like, damn. I could be making a lot more money maybe if I was just, like, freelancing this instead of going through this company. And, you know, if I imagine, you know, a different reality where for some reason, Bread Cooperative was not a cooperative and I was instead, like, the main shareholder, then, like, in that situation, I am economically incentivized to make it opaque and to, like like, by making more profit, like, it doesn't it's like less amount of profit needs to be made for me individually to make a lot of money. It has, like, a a stake. We have to make a whole lot more profit in order for everyone to become, like, multibillionaires or something like that. But, you know, if I'm the shareholder of a company that, like, does well at a particular moment,
then I can really just, like, make a ton of money in a moment. And what do I care about the I've already made my money. And it it absolutely changes the risk risk for you as a as an owner there as well. Because if you're the sole shareholder, the the upside is huge, but so is the downside as well. The downside of things go bad is can potentially be catastrophic. And that's part of the reason I think that a lot of founders of a more traditional model often do push for a lot of the profit maximization even if they're, you know, even if personally on a regular day to day, these are, like, you know, nice people who wanna treat everyone, their customers, their employees, their suppliers really well. There's just so much at stake, for them personally that it incentivizes sometimes decisions that might not align with how they would regularly like to be operating. Whereas if you have this worker co op, you, yeah, you lose that extreme upside, but you also lose the extreme downside as well. And so that sharing of risk allows more it pushes for that transparency around budgeting and decision making and also transparency around what risks people are willing to bear, what trade offs people are willing to make in a way that I think leads to different economic consequences for both the people within and outside that cooperative too. And, you know, I don't think that necessarily we need every organization in the world to be a cooperative. But I do think we would be much healthier as societies if we had a lot more organizational variety. Because one of the things about for profit companies is that when they do bad things, they tend to do bad things in the same way. And the fact that the negative consequences can correlate can potentially lead to really catastrophic things for societies, for environments, for economies. And just even having more variety, being able to have not just for profit companies with their particular concerns, risks, and strategies alongside worker co ops with their own particular risks and concerns and strategies, consumer co ops with their own particular risks, returns, and strategies. Like, all these different varieties would make for a much more resilient and democratic society and economy. Yeah. Maybe I'll Sure. We'll get back there at some point. Because I think it relates
to Bread Cooperative itself. And we said we're gonna we'll do our the Bread Cooperative roast. Maybe for people who to to have context, Bread Cooperative is the cooperative that I cofounded. It was meant to kind of answer for what does the left do about crypto or, like, where do we play, how do we play. And the the project is what we came up with, and the main application that we've built is called the solidarity fund where anybody can give stablecoins. You receive back one to one bread, so one stablecoin, $1 is one bread. And in the background, the stablecoin is earning interest through DeFi, decentralized finance, and only the interest is being distributed to a set of projects within the solidarity fund that are kind of member projects, or kind of politically values. And as a user who holds bread, you're able to vote on how that distribution gets distributed to various projects. Half of it is based on just an even split, so every project gets a little bit every month. And then the other half is based on the vote. And so, yeah, when we were designing this, it was really meant to try and, like, answer for a little bit how we're going to fund ourselves and also kind of take inspiration from the already existing solidarity economy, which in this case was local currencies is where we were taking a lot of inspiration from. And perhaps you can say, like, cooperative banks or or credit unions as well. But, yeah, I mean, the, one of the things that, like, we've had to contend with for sure is, like, kind of the contradiction of needing to make money within a capitalist system while trying to live values that are not optimized for capitalist logic. Totally. No. Anyways, that that was a primer for you to
unfortunately, we live in the world that we were put into, not the world that we would like it to be. But we do have time in this world to try and make the world look a bit more like what it could be. And I think as a starting point, a decentralized financial cooperative like Bread, I think is interesting for absolutely trying to address some of the logic that is really just market oriented logic, but very, very investor centered market logic as well. To take a step back, one of the hats I wear is I do so on the board of a foundation. A foundation that's actually connected to a large insurance cooperative in Canada. And one of the pieces about foundation logic and structures generally is that, you know, different parts of the world, they look differently. In Canada, you know, if you have a foundation which has a $100,000,000 in its endowment, the expectation is every year you're gonna spend at least 5% of that giving out money as grants. So that's a $100,000,000 every year. $5,000,000 is going to go get spent on a grant, which is gonna do good work. It's gonna help the environment. It's gonna provide affordable housing. It's going to to get people off the streets. Really good, solid, impactful stuff. The other $95,000,000 is going to be probably invested in I mean, Canada, probably invested in extractive industries, in mining, or in the tar sands. Maybe it's invested in speculative real estate or international finance. The remainder of that money is going to be invested in things which are causing the problems that that $5,000,000 in grants are there to fix. And that that can be really to say counterproductive is a bit of an understatement there. That's an organization whose internal logic isn't congruent with itself. So one of those pieces when it comes to, okay, so you're making interest off of the bread, is what is making that interest? And is what's making that interest something that is actually values aligned in in how you're making money off off of these sort of DeFi tools? Because ultimately, you can have really good spending on the end with what you've accumulated in earning. But if where that's coming from is against the logic or values that you're trying to push forward, there can be there there can be a real danger there that you're doing more to reinforce the system as it is than you are to actually counteract the system as it is. That said, it's really hard to find alternatives to that type of mainstream investing. It's really hard to actually invest in cooperatives and set up cooperatives. I'm in Canada, we have a pretty robust series of rules and regulations around cooperatives, setting them up. We have legal structures in place. But what I can say is in Canada, you know, it's something as simple as setting up a co op. So I set up a co op, an investment co op last year, and I also set up a business last year, a traditional for profit corporation, and I've set up nonprofits in the past. I can say from my experience that, you know, I can set up a business in Canada in a day. I can set up a nonprofit in maybe a week or two. It took us almost three months to get the equivalent kind of incorporation documents set up for a co op. And that was far longer than I was anticipating. But it's one of those places where on paper, all of these things should be doable in the same amount of time. But in practice, the actual infrastructure, the resources, the regulatory environment, it's set up for one thing, which is a for profit business owned by investors. It's not set up for these other things. And whenever you try to do something outside of those norms, there's all of these invisible barriers and invisible strings
that you only notice when you're trying to do something outside the box. Like, in our context where we have a lot of people in different places of the world, like, there is no there's no international cooperative body that I can just create that is, like, easily interoperable between all the different countries that everybody lives in. So it gets really complex real fast. And if we try to do it, I mean, we could just be spending out of our asses on legal fees and, like, trying to set up in all these different countries. It's, like, totally just structurally not possible to to do. Because sometimes people ask me, like, oh, is it a real cooperative, or is it a like, no. It's not because we can't. Like, it like, operationally, it is. And that I think that's what ultimately actually what counts. But it's amazing how much, you know, you have to do those kind of workarounds because legal structures aren't set up for that. Certainly,
you know, it's difficult to set them up for that nationally, and it's impossible internationally to do it. Even though there's international associations, like there is the International Cooperative Alliance, but there is no equivalent international rule of law for cooperatives the same way there are for corporations and shareholder rights and IP rights for for those corporate bodies. And, you know, it's not just cooperatives. Like, this is an issue that befuddles labor unions as well. It's a one of the consequences of the internationalization of trade, globalization, is that it's very easy for a multinational company to operate in many country in many countries, on many continents, and play their own domestic labor forces off each other because they're you know, you can have an international corporation, but not an international labor union that can negotiate with that international corporation. And, again, similarly, an issue with the the coop sector as well. There's alliances, there's federations between cooperatives, but it's very difficult to actually have an international cooperative. And so often, it's these workarounds. So for example, I'm right now calling you from Montreal in Quebec. And because it's so big, Desjardins has operations outside of Quebec. They have operations in Ontario. They have operations in The United States. But as a cooperative federation, they basically are a cooperative within Quebec. A lot of people in Quebec, because Canada is cold, if they are retired, will spend their winters in a much warmer climate like Florida. So many years ago, Desjardins bought a banking chain in a a chain of banks in Florida so that they could better service their their clients while they were in Florida. But that's basically a wholly owned corporation. So it's a corporation in The United States that is owned by a cooperative in Canada because that was basically the way they could figure out how to make it work under these sort of international conditions. And rather than being a cooperative that operates in two countries because it's like, no. Legally, that's not a thing that the structures are set up to do. This is one of the points that I made. I
so I'm a ICDE fellow. It's a fellowship for people who are, you know, working researchers and, in my case, practitioner more in the cooperative space. And, I've just released a a blog article through them around, like, why why the cooperative should care about crypto still. And one of the reasons that I gave is exactly this, that, like, there is no existing international, like, interoperability with cooperatives. Like, one of the principles of being a cooperative is, you know, supporting each other. And, you know, I don't think borders should really stop being able to support each other and and, like, take part in being part of the cooperative movement. But, like, legally, that's, like, a really difficult thing to do right now. And, you know, for all of its for all of its flaws, blockchains being an international internationally, you know, retrievable database and back end that anyone can use, like, is great to do these types of international collaborations and interoperability. But, yeah, maybe I I wanted to, like, respond just, like, very quickly to the, to the comments you made about, you know, where we generate our Yeah. Very curious on that. So, like, in our just like because, like, in our case, it's it's generated from the Sky ecosystem or MakerDAO, it it used to be called. And, I mean, they they it's basically a revenue share is where their the the money that's being paid out is where it's coming from. And that revenue comes from a few different sources, one of them being the liquidation of, you know, people who take out loans through their their protocol in order to create stablecoins, create the the the sky dollar stable stablecoin. There it's a lot of it like financial institutions and maybe just, like, very wealthy individuals and also, like, small time people or whatever. But, like, you know, they they pay a fee to hold their position, and they get liquidated if, you know, the the rate their collateral ratio changes too much. So in one sense, I'm I'm like, to me, that seems I I mean, I don't know if that's ethical or not. Like, in in my my personal my personal ethics, I feel fine about it. I feel fine about, like, you know, someone else took the other side of a trade, and they and they lost. And we took the safe bet so that we only we earn, like, a smaller interest rate. They have the possibility of earning much more, but they also have the possibility of losing a lot more. And it's just, like, kind of, like, the system to play and maybe other other places they they fund this revenues, maybe from, like, US treasury treasuries and, like, yeah, I mean, there's a bunch of technical stuff. But as far as I'm there there might be more to it that maybe I'm not fully aware of, and maybe they're doing something that's kinda outdated. Like, as far as I know. Like a a Web three version of, like, derivatives sort of writing and trading, which is, I mean Yeah. Yeah. Fundamentally. But if you're gonna have if you're gonna have a capitalist,
there's gonna be a capitalist financial market, like, that's that's part of it. And, you know, I think it's fine. Like, funnily enough, like, I actually, my view of a lot of pieces like that, which are really those kind of like speculative derivative pieces, is that you're not actually investing in or owning anything fundamentally underlying it. In a way where I feel and I don't think I don't know if anyone else has to have this perspective. I actually feel a lot more comfortable owning a derivative on a diamond mine than owning a share in the diamond mine. Because my share in the diamond mine actually might be expanding that diamond mine. The derivative is just a bet on the value of of what that mine is going to look like. So even though derivatives have their own kind of consequences for financial markets, they are because they're not themselves the material investment, they're not necessarily expanding what is there. Investment and and investment returns is I don't think there's anything inherently unethical about investing and making returns on those investments. I think it's completely reasonable to expect to be compensated for providing resources to some sort of collective project. And that's what a corporation is. I think fundamentally what finance is about is about how people coordinate actions together over time. And if the actions that are being coordinated are destructive actions, that's the problem. However, coordinating activity over time can be for a whole range of really productive tools, really productive things that enable human flourishing, enable a better environment. And a lot of the challenges with what kind of our current mode of capitalism looks like is that tools which are designed and built and are useful for doing coordination over time, over a long period of time, are in an industry which has become the shortest term thinking industry on the planet, which is speculative finance. And that not only does it undermine, you know, cause direct environmental and social and economic damage, It also can, at its core, undermine its own capacity to be good at capitalism. That speculative finance is really bad at actually getting money and resources towards real projects and real investments. And so to me, thinking about where finance more broadly as a vehicle or as a tool for progressive change fits in, I think a lot of it has to be thinking about how we can do finance in different ways, how we can do finance in slower ways, how we can do finance in ways which actually connect to the communities and the societies and the environments that we're a part of, which is where, like, ultimately, like, more democratic control of the economy, I think, leads to a better economy. There is something you know,
it's this more happens in online than it does in person in my experience. But, you know, other people on the left kind of kind of deriding the idea of engaging in any type of financial activity in the first place is kind of it's kind of like a it's a it's a really big taboo on the left even though in some respect, like, a lot of people do engage in it, you know, no matter their politics, and probably there's definitely more of a a skewing towards the right. But, like, yeah, there's a hard question to answer, I think, for a lot of people on the left because of its taboo and, like, not looking at it. Like, thinking of it as this, like, dark arts over there that, you know, dark wizards engage in that I in this black magic that I don't know, that I know is destructive in in many ways. Like, it is, of course. There's plenty of evidence in in which it is problematic. But also that, like, I don't think that in the five minutes after socialism is achieved or whatever, you know, all these things are just going like, we have to finance, like or finance may look different, but we have to finance things and that we have to, like, borrow or use resources to,
like, create big projects and infrastructure. And Absolutely. We are still working within constraints. There's still material constraints. There's still human constraints. And how to how to achieve those things over time is, is a core challenge, no matter what the economic structure is. You know, the if if you think back to a a previous iteration of socialism that had a lot of damaging aspects of it, like one of the important features of a five year plan is the fact that there's a plan there. It looks like it's, you know, top down kind of command economy stuff, and it and it absolutely was. But embedded in there were estimates about how valuable different material was going to be over time. I mean, those are, if to use kind of, you know, finance technical speak, those are things like discount rates. Those are ways of thinking about interest. Those are, you know, that's that's public finance, which is a type of finance, which is about that coordination over time. But it's also not the only way that that can be run. I mean, one of the things that has fascinated me, for ages is the and I'm sure a lot of your listeners will be familiar with or have heard about, you know, Project Cybersyn, which was the, the experiment of the yeah. Exactly. It's in Chile, with a lot of coordination and support from Stafford Beer, who is a really compelling systems theorist. One of my kind of intellectual kind of North Stars is the word of word of Stafford beer. And a lot of that was about how to do decentralized planning and decentralized decision making about kind of longer term pieces there. A lot of how I think about scale and temporality, so how things work over time, comes out from thinking about how we actually make plans. We make plans day to day. We make plans week to week. We make plans year to year over over decades even for for some decisions. And when we make those plans, we think about them in different ways. Like, I think about my retirement planning in a different way than I think about my grocery my grocery purchases this week. And it's right for us to do that. Like, we discount. We think. We prioritize in different ways. But being able to actually do that across multiple scales and think about how we balance how we balance those trade offs between those different scales of time horizons, finance has really good tools for that. They don't have to be tools that are entirely about profit making. They can be tools which are about how do we make our green space better and more productive and more verdant. They can be tools about how do we ensure that everyone has affordable housing that they can live in that's safe, that's clean, that makes their lives better. And if we give up those powerful sets of tools to the most reactionary forces in our societies, then we're unilaterally disarming ourselves, in the contest of ideas. And I don't think that that is a productive way of going. Yeah. I kinda think of politics as
talking about the economy and, like, jockeying for how we talk about it and, like, where we think things will go. The economy is things actual like movement of resources and things being created. And then in between maybe is finance interpreting kind of, like, planning planning the economies. Like, finance to me is in a capitalist economy is, like, those are the planners of the economy,
is like giant fine it's like big financial firms who and companies who who plan it out. Our largest banks play the same role in our societies as the Politburo did in the Soviet Union. It is planning at a large scale with a long time horizon. I'll also add this, picking up on your piece there about politics as being conversations about the economy, because I think there is something to that. I also think we see the consequences of that when when the political consensus is, in fact, that the economy problem has been solved. We can think about the neoliberal consensus as which has been most of my life as being that. And one of the consequences of a political consensus around economy is it means that what politics then becomes about is tribalism and identity. Because the main thing that impacts people's lives day to day is their economic positioning. And if that's off the table for political discussion, well, what's left? And what's left is often the most destructive thing. Right.
Sure. Or whatever distractions about identity politics stuff or whatever, you know, like, things that that take away from, like, solving the root problem of
people's If if we can't talk about solving our own problems, like, what's left for us to do? It's to yeah. It's to get into to often some very self defeating pieces. At each other and
it's it's to argue with each other on Yeah. Basically. Canceling people because you have no other power in any other, like, political outlets. Yeah. So maybe kind of like to end it off, I wanted to like, maybe more concretely, I'm curious to hear from your perspective because you're not I mean, you're not in the crypto space in the same way that I am, of course. So I'm curious for you from where you sit in studying these things, like, around collective intelligence, where do you see the most genuine potential for decentralized technologies to support collective action? And, you know, maybe where where is it just, like, complete hype? So
at its core, a lot of what the web three space has that is really useful for collective intelligence at scale is is a lot of actually what we already talked about with Brett, is the fact that there's, you know, international as a baseline, that this is a space that can be global right from the start. There are a lot of activities in the world which are have really high material kind of transaction costs tied to them. And transaction costs not just meaning, like, the cost of transporting a good from here to there, but meaning, like, the cost involved in establishing who has ownership over something, what price it's gonna be bought or sold at, how many people are involved in its production, creation, consumption, all of those pieces. And but there's a lot of things with really low transaction costs. And a lot of financial instruments and tools and investments are are of that type. And I think there is a lot in in the web three space that actually has a lot of potential around decentralized finance in particular. I think there's a lot that can be is really, really interesting and where there's a lot of potential there. The big limitation, though, that I've really seen since the get go, since, like, the original Satoshi paper, is that web three is a world that fundamentally exists in silico. It exists online. It exists in a virtual space. And wherever there are the connection points between the virtual space and the material world, things are always messy. So even thinking about something like decentralized finance for investment in different cooperatives, huge potential there, I think, internationally. Like one of the areas where I think there's a huge potential for growth in the cooperative sector is business ownership transitions. A lot of baby boomers own small businesses. They're hitting retirement age. Maybe instead of selling to, another company or private equity firm, you can convert your company into cooperative. Great. Needs a lot of capital rallied to do that. But then where the capital rallies, you know, maybe it's in a jurisdiction which doesn't have coop rules. Maybe it's in a jurisdiction which has really lacks ones that are really easy to be able to do that with. Depending on your jurisdiction, once you take it off the blockchain, are these resources now considered securities that are under those particular legal jurisdictions in that place? Does, you know, like once you start taking things off the chain into the real world like that for the financing, it adds a whole bunch of complications that aren't necessarily tied to web three itself, but are tied with how the virtual and the material interact with each other. There's also a piece on the flip side. So I I, I work in the social entrepreneurship space. My faculty at my university is an environment faculty. Lots of conversations over the years about using blockchain technology to do measurement of impact, measurement of social impact, measurement of environmental impact, a lot of those things, which all looks conceptually great, except the data has to come from somewhere real. And, you know, the blockchain itself, the smart contract itself can't do that without other other things in the real world that bring thing on bring bring these things on chain. And so to me, the real limitations right now around web three, you know, are are a couple. One is the how you get how you get the real world on chain and how you get the virtual world off chain. And then the second big one is actually how you do aggregate decision making at scale. Kind of bringing us back to, you know, this is this is actually what drove my interest in participatory budgeting to begin with was, you know, if you think about a worker co op with five people, you can probably talk through most of your problems. If you think about a worker co op with 5,000 people, you need tools beyond just getting 5,000 people into a room to hash it out. You need structured decision making at scale. And there are ways of doing structured decision making at scale right now, which people default to. One big one that has been kind of a driver of society for hundreds of years is markets at an international scale, kind of bring us back to finance and currency transactions and all that. Another one is voting. And I think there is more murkiness in between voting and markets. But I think exploring that space of how we do that horizontal collaboration at scale, I think, remains a critical challenge in the Web3 space. But once that is sort of unlocked, I think it's sort of like that plus the, again, getting off chain and getting on chain kind of transitions really are the pieces that would enable this this space to be much more transformative. Now what direction that transformation goes in, I'm much more agnostic about. I think there's a lot of potential and more progressive ways of doing train that sort of transition to more kind of Web three decentralized technology kind of approaches. But there's also a lot of really, you know, nasty directions I can go into. They did make it very hard to actually
connect the on chain and off chain worlds kind of on purpose. Yes. Or at least that that's what happened in in, you know, regulatory. Like, the law said, like, no. You cannot do that unless, you know, to go through all these, like, big hurdles. And the only so that meant that the the easiest thing to create in crypto were meme coins because there was this explicit, no. There's nothing backing it At all. Yeah. Whatever. So, like, the bar for whatever reason, regulators were like, oh, you're just purely speculative nothing? Fine. Go for it, which is then what gave it its, like, really bad reputation. You know? You can be a conspiracy theorist about it whether or not that was, like, intentional by, you know, the existing financial system or not. I don't know. But that is what happened, I think. But I think the thing that one of the things that is making me a little bit excited about what are the potentials in the the, I would say, near future because the technology is basically theirs. I think it's a matter of, like, propagating it and and knowing the design patterns and stuff, but is zkTLS, which is like a particular cryptographic technique. I spoke about it in a previous episode with Ben from peer.xyz where they use it there where you're able to kind of verify you can provably verify data online through the TLS, which is, like, the the cryptographic primitive for, like, sending I remember that episode. It was really interesting to say. Yeah. Interesting pieces. Yeah. So I think, like, the the the actual extent of which ZK TLS could could play is a lot wider than than maybe than has been, like, rolled out for sure. Then it becomes really interesting because you can probably say, for example, like, you know, this invoice or, like, package order coming from SAP is a real package order. SAP is a giant, you know, CRM system for tons of different companies you can apply this to. If you know the patterns of all these different CRMs, then you can produce z k TLS proofs that, preserve privacy while also kind of, like, give this verifiable confirmation that at the very least, SAP said Yeah. This or the company said this. So there's still, like, you know, SAP could lie. There's still lying for Someone could still, maybe, put it wrong. For ambiguity.
Yeah. I think the inherent limitation of any smart contract is that there is no such thing as a perfectly specified contract that can apply universally no matter all contingencies. That said, you can still do a lot with those sorts of things. And the better that systems get at being able to do verification of off chain realities in the on chain, I agree that dramatically explodes the use cases for what these could look like.
Question is whether or not, you know, how much of that will be legal or, like, how much regulatory hurdle you have to go through to to make that reality. And will it make, you know, actually good things or not? It's at least a thing that would expand, you know, the scope of of what is possible. But, yeah, thanks so much for for coming on the podcast. Thanks for reaching out and and sharing your work. Would you like to leave any plugs? Anything you'd like to share? Any last bits for the audience before we go? Anyone in the audience
to look at our work at Groupthink Labs? So our main product right now, polls.groupthinklabs.com, is our primary participatory decision making participatory budgeting tool. And we'd love to just have more people use it, get out there, try it out. Certainly follow my work at the University of Waterloo in the School of Environment, Enterprise and Development. I try to keep pieces posted there. You can follow me on LinkedIn, reach out to me there. Love to connect with more people in this audience. Yeah. And it's a pleasure being on the show. I look forward to the continued success of blockchain socialist and seeing and hearing more interesting ideas that come out of this community.
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