I see an additional sociological/psychological question on the background.
The success of humans is built on (a balance between) both individual and collective effectiveness and the efficiency of either requires a form of 'automation' so not to have to start from first principles/observations on every action. Trust is such an 'automation' (we assume trust so we spare ourselves having to check everything, we act automatically, not after deliberation) These systems want to change that to something that is built on the individual drive only, by creating effective mechanisms that do not require this trust (but — surprise — cost energy in other ways).
Is it a good idea (assuming it is possible) to try to build a society where technical means make sure all collective goals are supported by individual ones? Is it a good idea to build a society on the assumption of distrust, creating some technical mechanism (like blockchain) enforcing trustability instead, one that makes everyone free to distrust one another? In fact, is the 'risk of trust' not an essential element of having a society in the first place instead of a collective of distrusting individuals? Trust, after all, might require practice too, and the more you replace it with something else, the more you will probably damage its function elsewhere. We already see this after half a century of more and more individualism, which may be the source of us humans becoming worse and worse at trusting each other, slowly undermining one of our key strengths: collective actions.
PS. I read in the article linked: "Monarchs and presidents have minted money to wage war and inflate spending". I recall that today 97% of money is created by commercial (i.e. private enterprise, i.e. owned by — many — individuals) banks as debt/obligations on their books. This creates most of our money, out of thin air. Only 3% of money around in our economies is created by government. Is 'minting' money by the government really important?
To return the compliment - I just came across your piece on AI and liked it a lot. Maybe some conversation with this? https://www.programmablemutter.com/p/shoggoths-amongst-us There are a _lot_ of different definitions of money out there with different implications for how we think about what is going on in the economy (this was one of the reasons that monetarism never quite worked), but central banks do remain powerful. I am a consumer rather than producer of the literature, but I found Barry Eichengreen's work very helpful. What I have done work on (this is one of the main topics of Abe's and my book) is the power that the US gets from the dollar being the most important medium of international exchange. It has been able to turn the combination of this fact, and control over the dollar clearing system, into the foundation stone for a wide variety of financial sanctions and other related measures.
and on trust - there is an old literature that distinguishes between trust and confidence, attributing trust to relations between individuals who know each other, and confidence to the kinds of impersonal expectations that we rely on for larger scale institutions to function (e.g. we do not 'trust' the bank to clear our cheques, because we do not have a personal relationship with it, but we do perhaps have confidence in its workings). This does get pretty murky quickly - I have some ancient papers of my own suggesting that institutions involve trust too (this https://www.henryfarrell.net/distrust.pdf squares the circle by combining theoretical discussion of trust with an example of posthuman AI chosen specifically to tweak the nose of the editor, who liked to draw his examples from opera and nineteenth century novels ...)
[the Gary Miller book that is cited in that piece is also the source of most of the thinking on incentive compatible mechanisms that went into the Binance piece- it is just a really nice combination of simple math and clear sociological thinking about how trust and reciprocity have benefits that can't be replicated using command and control]
That 'sloggoth' piece was another enjoyable perspective, I must say. Recently, I've been publishing several pieces (and a presentation) about 'ChatGPT and friends', so I don't know which piece you came across, but thank you.
What I was reminded of is what I have been speaking/writing about before this ChatGPT-fever: discussing what the IT-revolution — and social media in particular — is doing to our society, an analysis which uses the boundary of Dunbar's number versus structures larger than that (like large organisations, nations, etc.). I have argued that a key element of these larger structures is 'shared values' (after this exchange, I guess one could say that one such easy 'shared value' is the value of money). That whole set from a few years ago is here: https://ea.rna.nl/all-that-it-what-is-it-doing-to-us/
In terms of the role of trust, I suspect it is a necessary/unavoidable element for reasons of efficiency/speed, because to be efficient/speedy we need a 'stability of convictions'. We cannot at each moment start from scratch, after all, not as an individual, not as a group. I've written about that here: https://ea.rna.nl/2022/10/24/on-the-psychology-of-architecture-and-the-architecture-of-psychology/ (apologies to spam you with these links). I suspect that both human 'weaknesses' where convictions influence observations and reasonings more than the other way around, are a foundational element for our affectivity as individuals and groups.
Yes, the blockchain (and the various lower-impact workarounds) enables trust in the binary object that is "cryptocurrency" in a massively decentralized system, but that was the easy part. It's those pesky humans where things get messy. A trusted object enforces nothing beyond the object's existence. I will once more pimp my invention, Fudd's 1st Law: (named in honor of Firesign Theater's Fudd's 3rd Law of Power: "if you push something, it falls over") "if there is a system, someone will try to game it". Crypto is as secure as the wallet you store it in. Getting rid of The State, or just its role in finance, may be a noble goal, but as always the sticky bit is what replaces it, and crypto's offer of unbreakable encryption does not inspire confidence. Fudd's 1st Law.
What a beautifully constructed/argumented piece.
I see an additional sociological/psychological question on the background.
The success of humans is built on (a balance between) both individual and collective effectiveness and the efficiency of either requires a form of 'automation' so not to have to start from first principles/observations on every action. Trust is such an 'automation' (we assume trust so we spare ourselves having to check everything, we act automatically, not after deliberation) These systems want to change that to something that is built on the individual drive only, by creating effective mechanisms that do not require this trust (but — surprise — cost energy in other ways).
Is it a good idea (assuming it is possible) to try to build a society where technical means make sure all collective goals are supported by individual ones? Is it a good idea to build a society on the assumption of distrust, creating some technical mechanism (like blockchain) enforcing trustability instead, one that makes everyone free to distrust one another? In fact, is the 'risk of trust' not an essential element of having a society in the first place instead of a collective of distrusting individuals? Trust, after all, might require practice too, and the more you replace it with something else, the more you will probably damage its function elsewhere. We already see this after half a century of more and more individualism, which may be the source of us humans becoming worse and worse at trusting each other, slowly undermining one of our key strengths: collective actions.
PS. I read in the article linked: "Monarchs and presidents have minted money to wage war and inflate spending". I recall that today 97% of money is created by commercial (i.e. private enterprise, i.e. owned by — many — individuals) banks as debt/obligations on their books. This creates most of our money, out of thin air. Only 3% of money around in our economies is created by government. Is 'minting' money by the government really important?
To return the compliment - I just came across your piece on AI and liked it a lot. Maybe some conversation with this? https://www.programmablemutter.com/p/shoggoths-amongst-us There are a _lot_ of different definitions of money out there with different implications for how we think about what is going on in the economy (this was one of the reasons that monetarism never quite worked), but central banks do remain powerful. I am a consumer rather than producer of the literature, but I found Barry Eichengreen's work very helpful. What I have done work on (this is one of the main topics of Abe's and my book) is the power that the US gets from the dollar being the most important medium of international exchange. It has been able to turn the combination of this fact, and control over the dollar clearing system, into the foundation stone for a wide variety of financial sanctions and other related measures.
and on trust - there is an old literature that distinguishes between trust and confidence, attributing trust to relations between individuals who know each other, and confidence to the kinds of impersonal expectations that we rely on for larger scale institutions to function (e.g. we do not 'trust' the bank to clear our cheques, because we do not have a personal relationship with it, but we do perhaps have confidence in its workings). This does get pretty murky quickly - I have some ancient papers of my own suggesting that institutions involve trust too (this https://www.henryfarrell.net/distrust.pdf squares the circle by combining theoretical discussion of trust with an example of posthuman AI chosen specifically to tweak the nose of the editor, who liked to draw his examples from opera and nineteenth century novels ...)
[the Gary Miller book that is cited in that piece is also the source of most of the thinking on incentive compatible mechanisms that went into the Binance piece- it is just a really nice combination of simple math and clear sociological thinking about how trust and reciprocity have benefits that can't be replicated using command and control]
That 'sloggoth' piece was another enjoyable perspective, I must say. Recently, I've been publishing several pieces (and a presentation) about 'ChatGPT and friends', so I don't know which piece you came across, but thank you.
What I was reminded of is what I have been speaking/writing about before this ChatGPT-fever: discussing what the IT-revolution — and social media in particular — is doing to our society, an analysis which uses the boundary of Dunbar's number versus structures larger than that (like large organisations, nations, etc.). I have argued that a key element of these larger structures is 'shared values' (after this exchange, I guess one could say that one such easy 'shared value' is the value of money). That whole set from a few years ago is here: https://ea.rna.nl/all-that-it-what-is-it-doing-to-us/
In terms of the role of trust, I suspect it is a necessary/unavoidable element for reasons of efficiency/speed, because to be efficient/speedy we need a 'stability of convictions'. We cannot at each moment start from scratch, after all, not as an individual, not as a group. I've written about that here: https://ea.rna.nl/2022/10/24/on-the-psychology-of-architecture-and-the-architecture-of-psychology/ (apologies to spam you with these links). I suspect that both human 'weaknesses' where convictions influence observations and reasonings more than the other way around, are a foundational element for our affectivity as individuals and groups.
Yes, the blockchain (and the various lower-impact workarounds) enables trust in the binary object that is "cryptocurrency" in a massively decentralized system, but that was the easy part. It's those pesky humans where things get messy. A trusted object enforces nothing beyond the object's existence. I will once more pimp my invention, Fudd's 1st Law: (named in honor of Firesign Theater's Fudd's 3rd Law of Power: "if you push something, it falls over") "if there is a system, someone will try to game it". Crypto is as secure as the wallet you store it in. Getting rid of The State, or just its role in finance, may be a noble goal, but as always the sticky bit is what replaces it, and crypto's offer of unbreakable encryption does not inspire confidence. Fudd's 1st Law.