Capitalism after Satoshi: Blockchains, dehierarchicalisation, innovation policy and the regulatory state

With Sinclair Davidson and Jason Potts.

Abstract: What are the long-run economic and policy consequences of wide-spread blockchain technology adoption? We examine the structural economic effects of this institutional innovation as disintermediation in markets, dehierarchicalisation of organisations, and growing private provision of economic infrastructure for exchange, contracting and coordination. We predict that these institutional economic dynamics undercut the historical rationale for much modern economic policy, originally formulated to enable capitalism to cope with market power, to control hierarchy, and to furnish public infrastructure for trust. We argue that capitalism built on distributed ledger technology requires different economic policy settings to industrial capitalism, based on centralised ledger technology. We formulate the institutional logic of this dynamic co-evolutionary model, and discuss policy settings for an economy coordinated with blockchain infrastructure and associated distributed digital technologies for economic coordination (Web3, Industry 4.0). We find that much modern economic policy will be differently instantiated (e.g. hard-coded in platforms) or variously no longer necessary (because of new institutional solutions to problems of trust and coordination). We argue that the institutional innovation of blockchain engenders a new post-industrial economic era that requires new policy rules. This paper seeks to explain why this change will occur, and to explore a new framework for economic policy adapted to economic infrastructure built on distributed ledgers.

Available at SSRN.

Blockchains and Constitutional Catallaxy

With Alastair Berg and Mikayla Novak

Abstract: The proposition that constitutional rules serve as permanent, fixed points of interaction are challenged by observations of contestable rule amendment and the emergence of de facto authority. This observation not only applies to conventional political constitutions, but to the fundamental rules which govern interactions by numerous people using new forms of technology. Blockchain technology aims to coordinate action in a world of incomplete information and opportunism, but the governance arrangements in blockchain protocols remain far from settled. Drawing upon recent theoretical developments regarding constitutional change, we interpret changes to the fundamental working rules of blockchain protocols as central to the adaptive, emergent nature of activity within this technological space. We apply this concept of “constitutional catallaxy” to selected blockchain platform case studies, illustrating the dynamism inherent in establishing protocols within the blockchain. Blockchain coordination changes and adapts not only to the technological limitations of the available protocols, but to mutual expectations and influence of interacting stakeholders.

Available at SSRN

From Industry Associations to Ecosystem Associations: Blockchain, Interest Groups and Public Choice

With Mikayla Novak, Jason Potts and Stuart J Thomas

Abstract: Conventional public choice literature suggests that interest groups have a largely malign effect upon the economy. Suggesting that interest groups are primarily established to lobby governments for rents, the public choice approach essentially rests upon normative presumptions concerning the appropriateness of relationships between interest groups and the state. This analysis tends to overlook constructive roles undertaken by interest groups to facilitate economic coordination, including the facilitation of technology adoption, and to collaborate with political and other actors to overcome obstacles to innovation and industry dynamics. The development of blockchain technology in recent years serves as a useful case study illustrating the role of interest groups in contributing toward the development of a blockchain-enabled economy. We provide support for our general hypothesis of a beneficial economic contribution by interest groups by profiling the activities of blockchain industry associations. This paper also considers to what extent interest group involvement in blockchain coordination and governance is designed to pre-emptively avoid more stringent governmental action, or respond to perceived inadequacies in public policy settings. This study contributes to a revision of public choice scholarship regarding the appropriateness of interest group activity.

Available at SSRN.

Outsourcing vertical integration: Distributed ledgers and the V-form organisation

With Sinclair Davidson and Jason Potts

Abstract: This paper introduces the V-form organisation, a new form of firm organisation where vertical integration is outsourced to a decentralised distributed ledger (a blockchain). V-form organisations rely on the coordination of a (trusted) third party. It looks specifically at two instances of V-form organisation being established on the IBM-Linux Foundation Hyperledger permissioned blockchain. The paper concludes with four recommendations for strategic management about how to adjust to a V-form world, and four recommendations for policymakers.

Available at SSRN

Should I use a blockchain?

With Sinclair Davidson and Jason Potts. Originally a Medium post.

Blockchain as a business model can be imagined in one of two ways. It can be thought of as being a new general purpose technology. This category of technologies includes electricity, transistors, computers, the internet, mobile phones, and so on. To this way of thinking a blockchain can be represented as the next generation of the internet.

But if this is how people come to think of a blockchain we believe that many are going to be disappointed. Here the blockchain would be — what economists call — a factor augmenting technology. This is the standard economic story about how technology drives economic growth. People adopt a new technology because it reduces the productions costs associated with producing a given output. Technology ‘economises’ on scarce resources. We do more with less. This is the better-stronger-faster-cheaper model that we have come to associate with new technology.

But there is a problem with this approach to blockchains.

It is not immediately obvious that a blockchain is better-stronger-faster-cheaper for many general purpose uses. If managers are looking for improvements to their back room operations they will likely be underwhelmed by what a blockchain has to offer. There are many existing database software solutions that will very likely outperform a blockchain.

Another way to think about blockchains is as an institutional technology. As The Economist magazine insightfully suggested some years ago the blockchain is a trust machine. We have argued that blockchains industrialise trust. This is where the gains to using blockchain technology originate — not that it economises on production costs, but that it economises on transactions costs — especially trust.

When Satoshi Nakamoto solved the Byzantine general’s problem he also provided a solution to what economists call the coordination problem. Historically economists have recommended the price system, bureaucracy and managerial hierarchy as solutions to coordination problems. Now we also have the blockchain.

That blockchains are fundamentally an institutional rather than a technological innovation is not mere semantics. This distinction matters because it focuses attention on what is actually driving the creative-destruction this innovation generates.

What has changed is the technology of economic coordination and governance.

In the real world there is a trade-off between the price system and bureaucracy and hierarchy. The price system provides clear incentives — prices and profits determine what should be produced, how it should be produced, and who will produce it. In bureaucracy and hierarchy, however, those high-powered incentives are missing. But large scale economic activity generates large transaction costs and a lack of trust means that prices and profits can’t weave their magic.

This is where blockchains have a competitive advantage — the decentralised ledger technology provides a platform for coordination where transactions costs are dramatically reduced and trust industrialised. In an environment of complex economic activity that previously relied on bureaucracy and management we can now have prices and profits doing their magic.

Those adopters who think blockchain is just another backroom business tool are missing the main game. The blockchain is going to be your business model.

Blockchain: An Entangled Political Economy Approach

With Darcy Allen and Mikayla Novak. Published in the Journal of Public Finance and Public Choice.

Abstract: This paper incorporates blockchain activities into the broader remit of entangled political economy theory, emphasising economic and other social phenomena as the emergent by-product of human interactions. Blockchains are a digital technology combining peer-to-peer network computing and cryptography to create an immutable decentralised public ledger. The blockchain contrasts vintage ledger technologies, either paper-based or maintained by in-house databases, largely reliant upon hierarchical, third-party trust mechanisms for their maintenance and security. Recent contributions to the blockchain studies literature suggest that the blockchain itself poses as an institutional technology that could challenge existing forms of coordination and governance organised on the basis of vintage ledgers. This proposition has significant implications for the relevance of existing entangled relationships in the economic, social and political domains. Blockchain enables non-territorial “crypto-secession” not only reducing the costs associated with maintaining ledgers, but radically revising and deconcentrating data-conditioned networks to fundamentally challenge the economic positions of legacy firms and governments. These insights are further illuminated with reference to finance, property and identity cases. Entangled political economy provides a compelling lens through which we can discern the impact of blockchain technology on some of our most important relationships.

Fast track available at the Journal of Public Finance and Public Choice

Blockchains and constitutional catallaxy: an EOS case study

With Alastair Berg. Originally a Medium post.

The EOS mainnet launched earlier this year.

In EOS we are witnessing the emergence of what Ludwig von Mises and Friedrich Hayek would recognise as constitutional catallaxy — open source constitutional orders in which participants are continually developing the rules of the game even after the game has started.

EOS operates under a Delegated Proof of Stake (DPoS) consensus mechanism, with 21 Block Producers (BPs) overseeing the validation of transactions. As an open source constitutional order, the jurisdiction of these BPs has been guided by de jure constitutional arrangements. In the pre-launch phase of EOS, documentation was drafted and debated outlining an EOS Constitution, while users were to include a hash of that document in their transactions to acknowledge their understanding and acceptance of it.

However, open source constitutional orders like EOS also have stakeholders who may exercise de facto authority in the absence of formal procedural rules or technical constraints.

The launch of the EOS mainnet provides examples of how de jure and de facto constitutional arrangements can diverge. While no token holder vote has taken place on the EOS Constitution (via their proxies — BPs), de factosovereignty was quickly exercised through the banning of seven (and later many more) accounts following a conference call between BP representatives and a body known as the EOSIO Core Arbitration Forum (ECAF).

As a result of this call, BPs chose to exercise de facto sovereignty and freeze these accounts. Only retroactively did this dispute resolution body ECAF issue a statement which indicated their support of the actions of BPs.

Similarly, 6 weeks after launch, an announcement was made to fundamentally change the way in which economic value is distributed across the EOS protocol. On July 28 Brendan Blumer, CEO of block.one (the organisation which developed the EOS mainnet), announced changes in the way EOS inflation is to be allocated. This will see new EOS tokens being distributed to users who stake tokens and vote for BPs, in addition to the rewards BPs receive for overseeing the validation of transactions.

These actions have drawn support as well as opposition. Some have called it a successful demonstration of off-chain governance, while some see it as jurisdictional overreach by emergent institutions.

In previous articles, we have argued that blockchains are a lot like countries. These (usually) open source protocols are constitutional orders which define how individuals interact and transact — complete with their own currencies, property, laws, corporations and security systems.

Blockchains, along with nation states, attempt to coordinate action in a world of incomplete information and opportunism — while computer scientists and economists have different vocabularies, Byzantine fault tolerance and robust political economy are the same thing.

Systems of governance for blockchain protocols are not new — the genius of Satoshi Nakamoto was to allow the Bitcoin network to reach consensus when two equally valid blocks are presented by miners, in effect solving the double-spend problem.

Yet now we can observe the emergence of — and have debate over — other governance arrangements in blockchain protocols. (Who writes and has permission to change the law (code), who enforces the rules, the role and method of voting, the role of developers and token holders, on-chain and off-chain governance etc).

What’s interesting is that these are analogous to the debates that individuals had during the emergence of nations. Consider the United States. With little to guide them but the musings of philosophers and radical thinkers, individuals grappled with a myriad of competing principles and interests as they set the ground rules for how their new constitutional order was to be governed.

Previously, constitutional orders emerged from revolution, civil war, conquest and other usually violent means — much like the constitutional order that emerged in the 13 American colonies.

In the real world, the emergence of institutions — as well as the jurisdiction which they exercise power over — can take many years after their formal establishment. The Supreme Court of the Unites States has the now familiar power of judicial review, evaluating the constitutionality of legislation and executive action. However it was only 16 years after it was established that the Supreme Court granted itself the power to declare acts of Congress unconstitutional as a result of Marbury v. Madison. Similarly, the role of the President has significantly expanded over time, with the term the Imperial Presidencyaccounting for the increased powers gradually vested in the US executive since the administration of George Washington.

The US Constitution has similarly been amended, challenged and otherwise interpreted in a myriad of different ways over its lifetime, demonstrating a real-world divergence and interaction of de jure and de facto constitutional arrangements.

Constitutional catallaxy

Likewise, blockchains are constitutional orders governed by social norms as well as technical constraints. The de jure constitutional order which governs how BPs represent EOS token holders, and the ways in which disputes are resolved, are ultimately subject to the exercise of authority by those who have the means.

What we are seeing is a process of constitutional entrepreneurism — constitutional catallaxy — in the establishment of new economies. The institutions that coordinate activity in these economies change and adapt to both the technological limitations built into the protocols, as well as the mutual expectations and power of interacting stakeholders.

Crypto Public Choice

With Alastair Berg and Mikayla Novak

Abstract: This paper presents ‘crypto public choice’ which examines the economics of collective decision making in the functioning of blockchain protocols and among related communities of users. We introduce the blockchain community to public choice theory and show how it can be applied to the study of this technology. Public choice offers an extensive literature that can be applied to blockchain design, can interpret the actions of different types of blockchain users, and can explain governance problems and challenges in each of the blockchain protocols. Blockchains are institutional technologies which provide new ways in which to produce public goods including consensus over shared facts and the security of property rights. Collective decision making by users of blockchain protocols relates to consensus over the contents of a shared ledger, as well as the initial design and subsequent upgrading of these protocols.

Working paper available at SSRN

Imagining the Blockchain Economy

With Sinclair Davidson and Jason Potts. Meanjin, vol. 77, no. 2 (winter)

For the first few years after its invention, the laser was described as ‘a solution in search of a problem’. Now lasers are everywhere. They’re used to scan barcodes, remove tumours and analyse chemical compounds. But initially no-one was quite sure what to do with this new technology. We have the opposite problem today. We’re facing down a wall of radical inventions and innovations that we can easily imagine will transform our world.

Take autonomous cars—the most public and obvious change that is now just years, perhaps months away. Autonomous vehicles are already being used across our transport networks. Driverless trucks shift iron ore out of mines. Driverless trains move minerals across the Pilbara. Pilotless cargo ships send goods across the planet. Self-driving vehicles for consumers will change the way we commute, how we travel, how we relate to distance, sprawl and density.

Autonomous vehicles are possible because of advances in a few fundamental under-lying technologies—smart sensors, data mapping, artificial intelligence, machine learning and neural networks. Autonomous vehicles need high-resolution maps of the world around them, so cartographers are building digital maps of the world that are close to a 1:1 scale and dynamically updated. Some autonomous systems teach each other about obstacles and unmapped hazards in real time—the computer in an autonomous system draws its intelligence from the network, not just its own power. Machine learning and neural networks are set to be endemic in every industry, every supply chain, every ‘production function’ (as the economists would say) in the economy.

In the next decade we’re going to see biological and chemical breakthroughs join these advances in computer science. Biological innovations—such as CRISPR gene-editing technology—allow us to tackle disease and human ailments at the most fundamental biological level. When the economic historian Joel Mokyr was in Melbourne in early December, he told his audience that these nondigital innovations and inventions are just as likely to shape our future—in work and as a community—as any of the more prominent digital inventions.

The regulatory and public policy hurdles facing these changes are of course immense. Consider again the challenges posed by autonomous vehicles. Road rules have to be restructured. Infrastructure may have to be redesigned. Figuring out the legal liabilities of vehicles that are in accidents is a huge issue. Who is to blame in an accident: the driver, the company that wrote the autonomous software or the network of other drivers and other autonomous units that mapped the obstacles? How we regulate gene editing, robotic ships, distributed autonomous organisations, cryptocurrencies, 3D printers so powerful that they can print illegal firearms, and so on will be a problem for federal and state parliaments for decades to come.


New technologies always have distributional consequences. Jobs are replaced or eliminated in some sectors and not others. Some workers find themselves in a bull market, some in a bear market.

In an excellent book, Changing Jobs: The Fair Go in the New Machine Age, Jim Chalmers and Mike Quigley outline from a social democratic perspective how artificial intelligence, automation and robotics might change the industrial relations system, effect the education system and influence patterns of inequality in Australia. Chalmers is the member for Rankin in Queensland and Quigley a former telecommunications executive. Their book represents what is hopefully the start of a parliamentary reckoning with long-term technological trends.

Chalmers and Quigley don’t tell a hackneyed ‘robots will take all of our jobs’ story. They try to reckon with the now inevitable: any job that is repetitive or can simply be represented by an algorithm will very shortly be automated. The jobs in those categories are blue-collar and white-collar. Low-end white-collar jobs such as call centres have already been automated. High-end white-collar jobs such as many legal industry jobs are also likely to be automated.

The first question is, what happens to the people who now perform those roles? This is a problem, but not a new one. We have managed these sorts of structural shifts before—sometimes well, often poorly. A combination of reskilling (both publicly subsidised and privately funded), social welfare investment and (unfortunately) premature retirement is the usual approach.

An equally pressing question is how to prepare new workers for this new age. Chalmers and Quigley rightly put a lot of emphasis on education, and the sorts of education they foresee as necessary for an era of disruption. The key skills the authors identity are the ability to self-educate, formal maths and science education, and proper statistical thinking. The problem with any recommendations about the future of education is it is hard to plan for a future that has never been less certain. Happily Chalmers and Quigley do not insist all Australian students learn to code. This proposal (which incidentally is Labor Party policy) is faddish and short sighted. More people should learn to code, of course. Computer programming is going to be increasingly in demand. But just as everyone who drives a car doesn’t need to know how an internal combustion engine functions, coding will remain subject to specialisation and the division of labour.

The third question Chalmers and Quigley address is inequality. They reject, rightly in our view, the idea of a universal basic income (UBI)—a fixed standard ‘welfare’ payment given to all citizens regardless of their employment status. Though they do not make this argument, the theoretical appeal of a UBI is that it is given to everyone unconditionally and replaces the vast majority of other transfer payments. The political system being what it is, no such theoretically pure policy is ever likely to pass the Australian Parliament, and an imperfect UBI may be worse than no UBI at all.

Rather, Chalmers and Quigley propose a range of less ambitious reforms to the existing social welfare system. For instance, they recommend ‘a “social safety net” that uses big data for good in the social security system’, more emphasis and attention paid to caring roles and bringing people with disabilities into work, and income smoothing for taxation purposes. They are oddly sympathetic to Bill Gates’ idea of a tax on robots. Robots, of course, can’t be taxed—only their owners can. When does a ‘machine’ become a ‘robot’? Are algorithms robots? Nevertheless, their interest in a robot tax represents the limit of their radicalism.

Changing Jobs is a very valuable contribution from a parliament that is hardly awash with deep thinking about the future. We can only hope that some enterprising liberal or conservative politician is thinking about these ideas as well. But to our minds Chalmers and Quigley make a key fundamental error—one made by nearly all of the best thinkers on this topic from Nobel Prize winners down. That is an assumption that the institutional structures of the society will remain fixed while new technologies are squeezed into them.

Consider again the idea of a tax on robots. Gates would like to peg the tax to the salary of the worker that the robot replaced. If the worker was earning $50,000 a year, then the robot tax would be equivalent to the income tax that worker would have paid. The assumed economic dynamic seems to be this: one robot joins the assembly line, one person leaves the assembly line. But the factory remains. Yes, the factory may be relocated to China or Bangladesh. But it remains as a discrete unit of production: four walls, large and expensive equipment, and a single corporate owner.

We don’t think this is how it will be. Along with robots, automation, machine learning, gene editing and neural networks, we are now seeing a revolution in how our economic institutions are structured. This revolution in governance will have profound effects on how we as individuals and communities interact with old and new technologies and institutions. But to explore this we have to talk a little bit about blockchains.


Blockchains are the underlying technology that powers cryptocurrencies such as bitcoin. A lot of ink has been spilled trying to identify who the bitcoin inventor, the pseudonymous Satoshi Nakamoto, is. But more important than Nakamoto’s personal identity is the community from which he emerged—a group of ‘cypher-punks’ or ‘crypto-anarchists’ who in the 1990s and early 2000s were experimenting with the use of cryptography (as one prominent member, Timothy C. May, declared) ‘fundamentally [to] alter the nature of corporations and of government interference in economic transactions’.

What did Nakamoto invent? Digital currencies are vulnerable to the ‘double spending problem’. Any digital item is easy to copy. If we want to create a digital currency, what stops a holder of a unit of digital currency from copying it and spending it twice? Previous solutions to the digital spending problem relied on having some central authority validate transactions to ensure money wasn’t being spent twice. Nakamoto’s invention was the blockchain—a mix of existing technologies that allowed a distributed ledger of digital currency to be updated securely without any need for a trusted centralised authority.

It turns out that blockchains can do much more than power digital currencies. Block-chain technologies developed in just the last couple of years allow people to write contracts that self-execute, form organisations securely and across national borders, and shift records of ownership and property at close to cost and instantly anywhere in the world.

Blockchains are fundamentally a technology of governance. They are not perfect. Right now blockchains are expensive to run and often risky to use. The history of blockchains starting with bitcoin is, undeniably, a history of scandal, criminal activity, fraud, incompetence, speculation, a fair bit of disappointment and massive uncertainty. But it is not unusual for any new technology, especially one so open to the public, to be targeted by fraudsters and opportunists.

Blockchains are significant because (if nothing else) they are a proof of concept for a form of economic governance that we didn’t know was possible. We know now that it is possible to run a decentralised ledger—a ledger spread across a computer network—without the need for any single central authority in charge. And it turns out that ledgers are everywhere in the economy. After bitcoin we now know that money can be thought of as a ledger of ownership. Indeed, much of what governments do is manage ledgers—ledgers of property titles, ledgers of taxation obligations, ledgers of entitlements, ledgers of citizenship.

But firms are ledgers too. Firms are networks of contracts and capital arranged in a way that produces economic goods. Imagine a firm as a list of relationships that maps who works in what department, who has responsibility for what production, which machines and production inputs are owned (and where to buy more of them), and how primary inputs move through the firm to become useful things to sell to others. That’s a ledger.

Firms are hierarchical because their ledger has to be managed, operated and updated. New economic conditions, changes in the costs of inputs, changes in consumer tastes, changes in the workforce all demand a managerial class to make strategic decisions that can filter down the hierarchy. Alternative corporate forms—such as workers cooperatives—have not thrived at any scale because they have been unable to make the sort of strategic moves at which traditional large firms excel. Blockchains offer a new way to structure a cooperative firm: to achieve decentralised consensus about economic and strategic priorities among workers with a common interest.

We’re used to seeing technological change in production. Electricity, the internet, lasers, penicillin, the aeroplane, mobile phones—all have had huge effects on our lives, but we sort of know how to integrate them into our thinking, even as they rip up industries and certainties as they go.

But we don’t see technological change in governance very often. Arguably the last revolution in governance was the invention of the corporation—the joint stock company of the seventeenth century that became the governing structure for corporate and financial capitalism in the twentieth century. Perhaps we could say that representative democracy (the parliament) is another such structure of governance.

Distributed systems allow production to be distributed too. Those single four-walled factories could be obsolete. Why own expensive capital equipment when you can easily and flexibly rent access to equipment when needed? One interesting blockchain application is Golem: a decentralised, distributed network that allows users to rent idle computing power on any computer signed up to the network anywhere in the world.

The owners of that computing power are paid with Golem’s native cryptocurrency GNT. Since the Second World War firms have been installing supercomputers for computationally intensive tasks; now that sort of investment can be spread globally across thousands of idle, less powerful, less costly computers. And it can be done without the need for a trusted authority or firm to manage the service.

This sort of application is not trivial. Hollywood needs a massive amount of computer power to render complex CGI scenes. Academic researchers need access to powerful computers to exploit the huge volume of data now available. As economic activity becomes digitised—more and more of us now spend our lives producing while sitting in front of an LCD monitor—the possibilities for this sort of simple decentralisation and disaggregation of capital investment grow. The demand for cloud computing is a big factor underpinning the competitive dominance of firms such as Amazon and Google. In these early blockchain experiments, we can see a vision of a future where those large firms compete against open protocols.

The technological revolution we face consists of revolutionary production technologies matched and empowered by revolutionary governance technologies. Mass production is ceding priority to mass customisation. We will order custom products sourced from across the globe by suppliers that are being coordinated not necessarily by people but by artificially intelligent, automatically self-executing production lines.


Popular writing on the future of work is not exactly blind to changes in economic governance. When we talk about the gig economy, the sharing economy or the increasing casualisation of the workforce, the growth in independent contracting (real or ‘sham’), we are really talking about changes in the structure of the firm, changes in the way we relate economically to each other, to our ‘employers’, and to the disaggregation of the mid twentieth-century big corporate form.

The sharing economy refers to the idea that mobile phone technology can be utilised for short-term use of idle resources (cars, drivers, rooms). It’s controversial for many social democrats in part because it still looks a lot like a variation of the employer–employee relationship. Uber is still a company, Airbnb is a company. But those institutions are now on the cusp of change. Even Uber, the great disrupter, can be disrupted. If you want a vision of the blockchain economy, imagine a decentralised Uber, where drivers and passengers find each other on the street, securely and safely, without the need for a big American company to manage their interaction. That’s what May meant when he talked not just about preventing government from intervening in the economy, but undermining big corporations as well.

In this context, the questions raised by Chalmers and Quigley are even harder to answer. Even high-tech, highly educated, highly skilled workers fully versed in coding are going to be facing an economic landscape that looks completely different from what we have now. Even fundraising and venture capital—the way we finance new projects—will be done in new ways. The ICO craze in the second half of 2017 (an ICO or ‘initial coin offering’ is a way of financing blockchain applications through the sale of the cryptocurrencies that power them) was rife with scams and frauds but nonetheless offered a vision of how even the fundamentals of industrial structure are up for grabs. Learning to code will not offer our children the institutional certainties that our parents or grandparents may have enjoyed.

Governance technologies present their own challenges from the perspective of inequality. Inequality is in part a function of what economists call the ‘superstar effect’. Superstars such as Beyoncé and Mark Zuckerberg fill out the extreme tails of the income distribution spectrum thanks to their global platforms and recognition. Globally decentralised markets powered by distributed networks raise the possibility of superstars in all walks of life. When it is possible to hire the best programmer, accountant, doctor, consultant, lawyer or manager on the planet and integrate them seamlessly into local economic activity, the world’s best are going to enjoy the sort of incomes that were previously reserved for sports stars and musicians. The effect on measures of inequality in this world would be significant.

The blurb of Changing Jobs asks, ‘how should we prepare ourselves, our children and our grandchildren for the changing world of work?’ But before we can prepare we need to understand. Revolutions in governance have their own logic and consequences. Public debate in Australia comes nowhere near these questions—noble exceptions such as Chalmers and Quigley notwithstanding. Long-term reckoning with future trends has been insipid. We can think of the Gillard government’s Asian century, perhaps (if we are being charitable) the Rudd government’s National Broadband Network, and the Howard government’s intergenerational reports. But our political system isn’t even that agile now.

This may come to be a problem. We will inevitably muddle through, but economic transitions are costly and often traumatic. Well-targeted government reform—which will be ceding responsibility as often as assuming it—is not a tool we want to be without. Technological revolutions have made human society richer and better to live in. In the nineteenth century technology pulled us out of the sluggish growth that was until then the natural state of human society. The revolution we have described here is exciting and will make us better off. But we need to be ready for it. •

Also available at Meanjin and informit

Institutional Discovery and Competition in the Evolution of Blockchain Technology

With Sinclair Davidson and Jason Potts

Abstract: Blockchains are an institutional technology for facilitating decentralised exchange. As open-source software, anybody can develop their own blockchain, ‘fork’ an existing blockchain, or stack a new blockchain on top of an existing one – creating a new environment for exchange with its own rules (institutions) and (crypto)currency. Since the creation of Bitcoin in 2008, blockchains have proliferated, each offering iterative institutional variation. Blockchains present a discrete space in which we can observe the process of institutional discovery through competition. This paper looks at the evolution of blockchains as a Hayekian discovery process. The public nature of blockchains – most blockchains offer public transaction – allows us to observe experimentation and competition at an institutional level with a precision previously unavailable compared to other instances of institutional competition.

Available at SSRN.