Governance is a specific form of relational dynamic, based on the assumed equipotency of its participants, organized through the free cooperation of equals in view of the performance of a mutual activity within a community, for the creation of a common good, with forms of decision making and autonomy that are widely distributed throughout the members of the the marketplace.
[Big breath]
Governance is a specific form of relational dynamic, based on the assumed equipotency of its participants, organized through the free cooperation of equals in view of the performance of a mutual activity within a community, for the creation of a common good, with forms of decision making and autonomy that are widely distributed throughout the members of the the marketplace.
[Big breath]
The form taken by governance is important for sustainability of individuals and of the broader socio-economic system of which they form a part. The current absence of a global governance framework for the global financial regulation has allowed fraudulent activities to proliferate, serving to undermine confidence in capital markets. Global sustainability depends upon the existence of an effective framework for establishing strategic objectives, determining the most appropriate and effective means of achieving them and monitoring performance. It also requires appropriate and enforceable mechanisms by which individuals and groups are incentivised and monitored.
Most often governance, brings to mind political governance. The institutions that, according to a system of rules and laws, make up our various levels of government. Political governance includes processes like democratic elections, votes held by representative bodies like parliaments, and the particular responsibilities and powers given to different institutions.
We might also think of corporate governance: the processes used by corporations to make decisions. Corporate governance includes processes like shareholder votes, board meetings and the different levels of power and responsibility given to executives and committees.
Why bother with an alternative Governance framework?
The driving forces:
- technologies peddled as the holy grail solution to all social ills, which have zero governance capabilities.
- economic prosperity, freedom and global access to information, coupled with a reality of globalization and interdependence of all parties.
- the insurgency attributes that have characterized many wars, suggest that the objective of warfare has shifted from the kinetic destruction of military forces to the non-kinetic impairment of the enemy’s will to fight, this is basically the battle of the hearts and minds of the world population. Inclusion and belonging to a social community is the thrust of this framework.
- it is technically impossible to detect a bad actor or even determine bad intent of any actors within the marketplace
- a individual marketplace participant, can only be secure if all marketplace participants are equally secure.
The relationship to the existing forms of governance
While the language and some of the ideas and definitions draw upon the Anglo-Saxon tradition, the fundamental concerns they embody, justice, truth and liberty and the search for a good life, are universal concerns. These values must be pursued and protected in different ways in various societies. They are interdependent as well: accountability requires transparency, both function best where a governance framework is sound and widely supported, and the equitable enforcement raises major questions of accountability and transparency, to cite just a few interdependencies.
Hence in order to move forward we will seek to map this governance framework onto the existing framework, to demonstrate a like for like, incremental evolution towards a free marketplace.
Good governance, the rule of law, transparency, and accountability embody partnerships between, and among citizens— partnerships sustained not by good intentions alone but by lasting, converging incentives, the primary incentive being self interest and continued membership of a community.
Rule of law: the exercise of collective individual and community power using, that embody widely-supported social values, avoid particularism, and enjoy broad-based public support.
Transparency: trade conducted in such a way, where substantive and procedural information is available to, and broadly understandable by, individuals and groups in society, subject to reasonable limits protecting security and privacy
Accountability: requiring those who seek to influence others to define community wide acceptable processes and outcomes, and to demonstrate that they have followed those procedures, via a secure and transparent attestation process
In summary, I propose good governance as the legitimate, accountable, and effective ways of obtaining and using power and resources in the pursuit of widely-accepted individual and community based social goals, not that different to the current governance objectives, just without any centralized or state based players.
Let's start at the beginning..
In this post we focus on a practical and commercially viable solution, for a constrained solution space, the Global Marketplace. In addition this framework seeks to achieve a very limited set of objectives within the Global marketplace, namely protection of marketplace participants against: Force, theft, fraud, and bad actors in general, and the enforcement of all trade contracts. The premise is by limiting the functions of the Governance framework there is a lower probability that the framework will violate any marketplace individual's rights. This Governance framework is designed to promote trade on the basis of mutual consent and enforcement of the trade contract in a fair and equitable manner, without the need for any individual to delegate "power, authority or control" to any second or centralized entity.
We have a particular emphasis on a governance framework for the Global Block Chain Marketplace. As a free[4] marketplace, this places a different set of requirements on the governance framework, hence let's define what we mean by governance within this environment.
Governance: the establishment of policies, and continuous monitoring of their proper implementation, by the marketplace members. It includes the mechanisms required to balance the powers of the members (with the associated accountability), and their primary duty of enhancing the prosperity and viability of the marketplace.
Centralized organizations and the problem of scale.
Throughout history, centralized political organizations like State, bureaucracy and representative democracy have been a solution to a scaling problem. They have been mostly developed for the purpose of reaching consensus and coordination between heterogeneous or distant groups of people, facilitating their mutual interactions.
It's all too hard, let someone else do it..
State as a Single Point of Failure
Although they were built in response to specific historical necessities, organizations with top-down centralized coordination and hierarchical structures tend to be inherently inefficient: they are based on the application of force though power projection, they often lack flexibility and capacity to evolve, providing inadequate responsiveness to challenges and to the growing societal demands. In particular, governments are proved to be systematically exposed to significant risks, such as lack of transparency, corruption, regulatory capture, misuse of power and even regression into authoritarianism, due to the concentration of power in the hands of a few.
Power corrupts; absolute power corrupts absolutely
A centralized authority in any hierarchical organization can be defined in computer terms as a Single Point of Failure: if its functioning is not optimal.
Power of individuals and politics by instant, atomic interactions
While the State bases its authority upon the use of force or threats, this governance framework provides services in a efficient and decentralized way, without having to rely on force or threats. This allows a more horizontal and distributed diffusion of authority, in which the source of legitimacy are the individuals themselves. It is recognised there exists a need, for a form of social coercion, effected though the members, individually and collectively.
Under economic and political points of view, these community-based models are more efficient than pooled-models and potentially offer “a more representative and equitable way of interacting with complexities of a market place”.
It is recognised that the complexities of a typical marketplace governance, cannot be "codified" in any meaningful or complete way, and hence cannot be represented or enforced by any instantiation of any form of computer code. The operating history of ambiguous laws, has demonstrated this simple fact, throughout our collective social history.
If any marketplace Governance could be ubiquitously codified, then it would become a self deprecating centralised system.
Governance services for a global and border-less Market Place
Just because one lives in particular geography, should not restrict one's ability to conduct trade with any individual on the planet. Indeed, individuals are increasingly mobile between nation-state and could benefit from one overall governance system rather than the host of inefficiencies directly related to complying with multiple nation-state based marketplaces which exist today.
The end point is not lawlessness and anarchy, but a governance framework which has become more granular and personalized to the individual situation.
Delegative democracy
A type of democracy that combines direct democracy with representative democracy to create a much more fluid and transparent governance structure. Citizens can vote on bills directly to ensure their voices are heard if they feel informed or passionate about a certain issue. For the lazier or less aware, they can delegate their vote on the issue to anyone they desire, for example a professional in that particular field.
The reality is all institutions process only limited scope of actors and resources, and exist under limited rules. These limitations predetermines the range of feasible outcomes, and the likelihood of those within the range of possibilities.
Hence while this approach has some merit, within the wider discourse of democracy within a general society, it is mentioned here only to exclude this approach from the marketplace. It is our belief that only a direct and individual, P2P governance model is suitable for a P2P marketplace, and any form of delegates or validators shall be deprecated, as these introduce an unnecessary counterparty risk.
The vision
A solution which requires very limited domain of "agreement" and prevents revocation of any agreement via mutual dependencies the age old mutually assured destruction. Governance is an extended domain, which is greater than the above, but less than what is traditional, and is primarily predicated on goodwill of the counterparties or marketplace participants.
The vision is underpinned via Public transparency (why I push this very hard) as it is essential to defeat bad actors within any marketplace.
This governance framework does not break the immutable ledger, and uses governance to address the very real, and often complex, operational issues within any marketplace or Financial Market Infrastructure.
The underlying premise, is governance like trust and goodwill is not computable. There is No concept of code based Governance, governance is part of the human condition.
Trust is Not embeddable, or codifiable within any technologies, it is the human condition, with all of its complexities, frailties and unknowns.
Principles
- Based on the assumed equipotency of its participants, organized through the free cooperation of equals in view of the performance of a mutual activity within a marketplace community
- Utilises the creation of a common good, with forms of decision making and autonomy that are widely distributed throughout the members
- Deprecates the "tragedy of the commons" though a net zero balance, i.e all gains are offset by losses, there is no debt within the marketplace
- There are no centralised rules, no constitution
- There are no common code blobs, as there is no centralised rules
- Imperious to the formation and ongoing survival and market domination by Artificial Intelligence algorithms and automation robots forming price fixing cartels
- There is no centralised enforcement or power projection, there are no courts or lawyers
- Powered by "empowered individuals" the "Network" or Market Place.
Within this environment, stakeholders are able to self organize with others according to whichever shared goals or ideas they may possess. This means they can apply themselves to where they believe they can add the most value to the marketplace, as well as choose which underlying protocol rules they use and support.
As the marketplace is a Free market, there is no compulsion to use or participate within any Block Chain Marketplace. By definition all free markets must remain unregulated, this is essential to allow the Governance framework detailed within this post to operate.
A word of caution
“To push the antigovernment button is not to teleport us to Eden. When the interests of government are gone, other interests take their place. Do we know what those interests are? And are we so certain they are anything better?” Lawrence Lessig
The dominant discourse mostly emerged through the media, and generally dominated by IT specialists and financial operators, sees governments “as somewhat of an encumbrance – too slow, too corrupt, too lacking in innovation, and benefiting too few” It is important to note, however, that there exists a variety of positions towards the role of the State in decentralized governance, and the dividing lines between disintermediation of government services, free market and even anarchism are often blurred.
We are at a stage in history when individuals can gradually overcome any centralized political institution through distributed consensus and create the conditions for an idealistic society of equals, characterized by P2P (flat), rather than hierarchical, structures.
My mantra is always look under the hood with understanding, this includes the motives of all players, this is especially important within any Governance frameworks.
"If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” ― Sun Tzu
Technological utopianism
Technological utopianism, is a hypothetical ideal society, in which laws, government, and social conditions are solely operating for the benefit and well-being of all its citizens, where advanced science and technology will allow these ideal living standards to exist; for example, post-scarcity, transformations in human nature, the abolition of suffering and even the end of death?
Readers need to understadn this article is written by a technologist, these are common objectives we all have, but one needs to temper any "technologist" viewpoint with other perspectives, it's a simple fact “people don’t live their lives behind a desk with their hands on a keyboard".
The objective of this post is to present the opportunities which technology allows mankind to make social, economic, political, and cultural advancements, in particular to contribute to a new form of marketplace Governance.
Technology democratizes society: The expansion of access to knowledge and skills led to the connection of people and information. The broadening of freedom of expression created “the online world...in which we are allowed to voice our own opinions.” The reduction of the inequalities of power and wealth meant that everyone has an equal status on the internet and is allowed to do as much as the next person.
Free Market
A Free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by any centralised, price-setting monopoly, or other authority.
A free market does not mean a market without governance, but rather a market without external intervention. In a external or state-regulated economy, competitive market forces are diminished or suppressed.
The issue is, who or what, provides the market governance?
Bureaucrats, who necessarily have limited knowledge and perverse incentives, regulate by threat of physical force. In contrast, market forces operate peacefully through millions of cooperating participants, each with intimate knowledge of her own personal circumstances and looking out for her own well-being. Bureaucratic regulation is likely to be irrelevant or (more likely) inimical to what people in the market care about. Not so regulation by market forces. We use the term free market when referring to markets that are unregulated or unfettered by any external party including any government or institution. As long as we know what we mean, the expressions are unobjectionable.
As long as the state regulates, the possibility of private profits will lure those with power and resources into that game and it’s a game they will inevitably win. And the losers will be those without the power and resources.
Free markets don’t give us utopia, but I believe they do better by the poor and the global community as a whole, than do regulated markets
Tragedy of Commons
Hardin’s idea was based on the premise that the cost of individual use of common goods is distributed to the community. Individuals may then act according to their misguided self-interest and utilize any common resource to depletion – an individually undesirable state.
Within the context of this article, the Tragedy of the Commons, is an underprovision of a marketplace goodwill.
In 1971 Robert Trivers coined the term "reciprocal altruism" or "you scratch my back, I scratch yours" as a short description of the mechanism of rewarding someone for their good deeds, this framework makes use of the latter effect. The strategy is one should initially cooperate and then reciprocate your opponent i.e. start by being nice and then do what your opponent did to you last time - also known as direct reciprocity.
The proposed solution does not require the normal collective rational decision result,as this may not be in each individual's' best interests. The only requirement is that the two counterparties achieve a consensus result (a contract) and affords a negative social feedback result to the bad actor within any trade.
The key observation is there is no need for a perfect solution, just one that is fit for purpose and meets the collective counterparty objectives within a marketplace.
Artificial Intelligence and Automation
Price setting algorithms allow collusion among machines, even within a free market.
The rise of AI may create a more durable cartel, finding ways to prevent collusion between self learning algorithms is one of the challenges that has been designed to be addressed by this governance framework. Within a digital marketplace we are talking a velocity of decision making which is not human. All of the existing governance models are based upon human incentives and what we think humans rationally will do. Its entirely possible that not all of that learning is applicable to a digital marketplace.
The existing legal frameworks are also deficient and cannot afford any protection, there is no legal basis to attribute liability to a computer engineer fro having programmed a machine that eventually "self learned" to co-ordinate prices with other machines. In the hands of bad actors automated systems and algorithms can help one to do bad things faster.
It is an observation that perfect information, a hallmark of free market theory might potentially harm rather than empower consumers. An extreme example is the interaction between pricing algorithms which caused an Amazon $113 book "The making of a fly" to be priced at $2.3 Million. Another example is Uber's Surge pricing algorithm, which artificially manipulates supply and demand by imposing surge pricing on drivers who would otherwise compete against each other on price.
Stripped of human emotions like fear and greed, an algorithmic based cartel, might persist indefinitely?.
What happens if machines realise, at the speed of light, that it is in their interest to systematically raise prices in a coordinated way without deviation.
The point is that any Governance framework must address the seemingless possibilities for both chaos and mischief which a digital marketplace offers AI and automation robots.
What is human trust?
"Trust is a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another."
"trust is deeply biologically grounded and different from our intuitive understanding of trust as volitional, rational, and conscious activity".
The need for trust arises from our interdependence with others. We often depend on other people to help us obtain, or at least not to frustrate, the outcomes we value (and they on us). As our interests with others are intertwined, we also must recognize that there is an element of risk involved, as we often encounter situations in which we cannot compel the cooperation we seek.
Therefore, trust can be seen as an essential element which underpins all financial transactions within a marketplace.
The more recent approaches to trust, suggests that trust is built upon relational dynamics of human interactions, and progresses along a continuum of stages, such that as trust grows, it becomes stronger and more resilient and changes in character.
This Governance framework is how do one applies what is essentially human "state of mind" to a concrete, and logical digital marketplace.
Creating and Enforcing Governance
Two central dilemmas about social norms, are how they are enforced and how they are created or modified. The sanctions for the violation of a norm can be categorized as automatic, guilt, shame, informational, bilateral costly, and multilateral costly. The choice of sanction is related to problems in creating and modifying norms.
The objective of a Governance framework is to promote desirable norms and to repress undesirable ones.
It is understood that within this Governance framework a norm, is a social derived rule which does not depend on government or centralised entity for either promulgation or enforcement. It is also recognised Norms may be independent of laws, or may overlap them as required.
Laws are promulgated by public institutions, such as legislatures, regulatory agencies, and courts, after well-defined deliberative procedures, and are enforced by the police power of the state, which ultimately means by threat of violence. Norms are not necessarily promulgated at all. If they are, it is not by the state. Often a norm will result from (and crystallize) the gradual emergence of a consensus. Norms are enforced by internalized values, by refusals to interact with the offender, by disapproval of an offender's ( bad actor) actions within a defined scope of community membership.
A norm is more a form of a public goodwill than a law, because no one person or centralised entity can claim credit for creating a norm. Also, the cost of inflicting penalties for violating a norm cannot be financed by mandatory taxation, and so must be shouldered voluntarily by those who enforce the norm. Norms, like laws, can be bad, so that the obstacles to their creation and enforcement must actually promote the social well being and cohesion of each indivdual and the collective marketplace.
Typical forms of norm enforcement are Automatic sanctions, Guilt, Shame, Informational sanctions, Bilateral costly and Multilateral costly sanctions; this Governance framework does not prescribe, or mandate any specific form of sanctions, these are solely determined by the individuals and the collective marketplace...
The end game is to exclude or isolate bad actors, or at least identify and hence limit their ability to disrupt or harm any indivdual within a marketplace.
Reputation based Governance
Reputation measures how much the marketplace trusts you, and is calculated on your previous transactions and interactions with the marketplace. The greater your reputation, the more trustworthy you are seen to be on the marketplace and, with a user’s reputation on the line, users choose to behave more honestly in the marketplace. At present, eBay has the most widely used reputation system and processes over a billion transactions per day. Each transaction could result in two reputation scores being left (one from the buyer, the other from the seller); it is therefore essential that reputation systems can handle a large number of transactions, and have adequate sources to handle this level of data.
Although successful reputation systems have been implemented on multiple web services, they are all based on the centralised server model which makes them unsuitable for deployment in a Peer-to-Peer marketplace, where the principal purpose is decentralisation of control away from a single entitle.
The proposed P2P reputation system, is a single-dimensional systems, with each peer only leaving one bit of data about the transaction that has taken place; this enhances efficiency and also reduces load on the network. The calculation of reputation is entirely the funtion of the Individual there is no centralised reputation calculation proposed within this governance solution. However it is noted that there is extensive experience within online e commerce marketplaces, via a general calculation method for each peer that their reputation is based upon a percentage based rating (sum/total) and the individual time weighted positives and total number of reputation feedback transactions provided. Furthermore, the system is designed to to ensure the reputation left by an individual is accurate and is based on a real transaction, which is publicly verifiable by any relying party within the marketplace.
The framework will apply to each individual marketplaces and all individuals within each marketplace, this will support deprecation of both bad actors at all levels within the global marketplace.
It is recognised there is a initial latency in any reputational based governance systems, this is by design, this governance framework has incorporated a secure boot process via the SIN infrastructure.
We are judged by our actions..
The model?
While there is no centralised rules or enforced model for the proposed governance framework as it is essentially "in the eye of the beholder" as individuals and collective, this section outlines the expected trajectory of the governance framework from the boot process forward, given an expected Multivariate normal distribution of the participants and the marketplace activities. This section is to convey the thought process of the author, rather than dictate a solution or even try and enforce a generalized response characteristic of the Governance framework. It is based upon the human condition, not rules based code.
The framework makes use of a generalized Hidden Markov model (HMM), in order to seek convergence of the governance framework result..
The following picture presents a Bayesian Network of a HMM, where the true state x is assumed to be an unobserved Markov process, and the measurements z are the observed states.
The method involves the following processes:
- filtering: when we estimate the current value given past and current observations,
- smoothing:when estimating past values given present and past measures, and
- prediction: when estimating a probable future value given the present and the past measures.
In simple words, you take what you know about the world (i.e your prior distribution), then take the new data and try to evaluate if this new data conforms with your prior knowledge. Evaluate the second distribution and you get an update belief about the world, which in next iteration you can use as your new prior distribution/belief.
In effect, the system has been designed as a negative feedback system, which will seek a steady state stable solution..
If we compare this with the definition of trust:
Trust means being able to predict what other people will do and what situations will occur.
We see an alignment of indivdual and collective motives though the Governance framework, this is by design..
The lesson to take from the above is any new governance framework, must be seeded in order to prevent the "boot vulnerability" this is effected through the seeding of the Xk-1 state.
The Power of Probabilistic Reasoning
Bayes’s Rule is a theorem in probability theory that answers the question, "When you encounter new information, how much should it change your confidence in a belief?" It’s essentially about making decisions under uncertainty, and how we should update or revise our theories as new evidence emerges.It can also be used to help us avoid common mistakes and fallacies in our thinking.
Bayes’s Rule tells us that if we have a certain belief about something, and then you get some evidence, the Rule tells us how to choose that degree of belief in order to come up with a new, or updated, strength of belief. Hence this rule provides us with a means to determine trust within a marketplace between any two participants.
To make Bayes practically useful within a marketplace, we have to start with the belief of how likely something is. Then we need to ask the question of evidence, and whether or not we should increase the confidence in our beliefs by a lot, a little, and so on.
The governance framework make use of Bayes’s Rule within the population that behaves like the Hidden Markov model.
Swarm Intelligence and Governance
This governance framework has several attributes of the theoretical swarm intelligence at the social or local and global marketplace operation. These follow observed natural ( insects like ants) and evolutionary devopments, predicated on the survival of the fittest.
“The emergent collective intelligence of groups of simple agents.” (Bonabeau et al, 1999)
Self-organization is a set of dynamical mechanisms whereby structures appear at the global level of a system from interactions of its lower-level components with the following characteristics:
- completely distributed system of interacting peers
- performance optimisation and convergence towards trusted peers
- self organised, decentralised control and coordination
- distributed trades without any external interference
The basics for self organisation and hence this governance framework:
- positive feedback (amplification) of good actors
- negative feedback (for counter-balance and stabilization) of bad actors
- multiple interactions of peers
Characteristics:
- structure emerging from a homogeneous startup state
- multistability - coexistence of many stable states
- state transitions cause a change of the system behaviour
- trade matching as behavioural response to the marketplace state
- marketplace operation/modification serves as external memory
Feedforward Governance
Within this block chain framework, governance information moves in only one direction, forward. There are no cycles or loops in the governance information.
Within a block chain feedforward solution, we use of Perceptron as the basis for the ongoing evolution of this governance framework. This approach forms a type of linear classifier, i.e. a classification algorithm that makes its predictions based on a linear predictor function combining a set of weights with the feature vector. The algorithm allows for continuous learning, in that it processes elements in the training set one at a time.
In essence we see that the sum of the products of the weights and the inputs is calculated by each individual which is a member of the marketplace, and if the result is above some threshold (typically 0) the output fires and takes the activated value (typically 1); otherwise it takes the deactivated value (typically -1).
Simply decisions are an essential element of any practical Governance framework.
As the boot or initial state of any Governance framework is critical to its future stability, and to limit the classic boot vulnerabilities, the implementation of the framework is predicated upon a practical perceptrons which have been defined have outputs of 1 or -1 with a threshold of 0
As this framework is a decentralized form of governance, this seeding may be transitional and will evolve as will all aspects of the governance framework.
The fully decentralized, anonymous, secure identity.
Any global distributed marketplace, must be predicated upon a secure marketplace for all participants.
This framework is predicated upon the simple concept that a Secure marketplace requires:
Liberty, Justice and Equality for all participants.
The Global Secure Identity is part of the Governance framework and is designed to support the objective of a secure global marketplace.
The Global Secure Identity(SIN), this is a digital identity that may be securely used for any type of transaction within a marketplace.
A SIN(s) is the global attribute identifier, the key concepts are:
- there is no centralized infrastructure or entity required
- there is no centralised registration process or entity, all Secure Identities are created within a fully decentralised process, by each individual
- an Entity has Primacy over all the identities and activities of its personae
- entities must never be compelled to reveal a persona, or that two (or more) persona are linked to the same core identity
- the secure identity is under the total control of the Individual
- shall securely support the full range of Identity and authentication requirements
- negate the need for any form of federation
- prevent re-use of personas across multiple hosts or services, to prevent linkability
- all identities are mutable, disposable, and support the right to be forgotten
- the strength of the identity attributes offered will allow any relying party to identify the level of trust that can be placed in the related persona
Technical Details
This will come, it has existed in our POC for almost 12 months, once we have all the building blocks in place within this post, we will enumerate the technical solution for the governance framework., please stay with us the journey is important..
A new dawn, for global markets has arrived.
Stayed tuned, this is an evolving article, come on the journey with us, the techncial details will be released over a period of time, consistent with the associated technology releases. The objective is to ensure an alignment between the vision and commercial reality.
Side Discussion
Why Global Regulation Failed
No Governance framework proposal can have legitimacy, without addressing why the existing regulatory framework failed and cannot be considered to address a Global marketplace within a digital world without any borders or timezones.
The issue of jurisdiction is also complicated in the transnational context; such regulators do not fit neatly within existing legal and territorial jurisdictional boundaries. Their mandates are uncertain, and it is not clear on whose behalf they purport to act and to whom accountability should be owed. In principal agent terms, who is the principal for whom these bodies are acting? Lack of jurisdictional boundaries and the problem of identifying “principals” complicate questions of who has a right to call them to account, and how the boundaries of their accountability should be drawn. If principles of democratic accountability are to be introduced, who should be eligible to participate in that democratic process? If mechanisms of legal accountability, such as judicial review, are to be used, which courts have jurisdiction, and how does the jurisdiction of national courts relate to transnational regulators.
It is practically impossible to hold the standard setter to account for the ways in which the rules have been enforced, but potentially difficult to hold the enforcer to account for rules it did not write. The simple reality it is impossible to call to account a constellation of regulators, as shared accountability is in fact zero accountability.
My contention is the range of accountability and legitimacy issues that contemporary governance and regulatory regimes pose is such that these cannot be addressed within any regulatory regime. We can then begin to understand the dynamics of legitimacy and accountability relationships, a necessary prerequisite for any attempts to try to develop new relationships or alter existing ones.
This Governance framework is predicated upon the realisation that there cannot exist any practical form of global regulation. The need for any regulatory authority to have a defined and universally codifiable set of centralised rules, which are universally accepted across the world's population clearly demonstrates the "impossible" problem.
The key to understanding both how accountability and legitimacy are forged, are embedded within this governance framework principles and operational models, while recognising legitimacy is thus not a question of legal validity. Legitimacy thus lies as much in the values, interests, expectations, and cognitive frames of those who are perceiving or accepting the regime.
Accountability and Transparency
Accountability as we define it includes: information available to accountability-holders, who can then apply the standards in question to the performance of those who are held to account; and the ability of these accountability-holders to impose coercion to ensure negative feedback to any bad actors. The need for information means that a degree of transparency regarding the marketplace’s operations is essential to any form of accountability.
The problem with the existing marketplace regulation is existing patterns of accountability are inadequate from a normative standpoint, and, in view of the pervasiveness of normative disagreement and uncertainty, there is insufficient provision for their contestation and improvement. Hecne we assert accountability without provision for contestation of the terms of accountability is insufficient for legitimacy.
This Governance framework has been designed to enshrine a legitimate accountability through equal access, public transparency for all activities, to all marketplace participants.
The legitimacy of global governance of the marketplace depends in part upon whether the collection of local marketplaces operate in such a way as to facilitate principled, factually-informed deliberation about the terms of accountability..
References
- The Global Block Chain Marketplace
- Your Identity is yours, and yours alone
- Trust is Not about Technology
- Free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by any centralised, price-setting monopoly, or other authority.
- Mutually Assured Destruction, emerged out of the theoretical approach to human behaviour and international relations. It is in no-one’s interests either individually or collectively to launch a nuclear war in the knowledge of their own assured destruction. Unless of course they were mad!
- Trust is a psychological state, comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another.
- Relational Dynamic, emerges, sometimes unexpectedly, when people interact with one another in a specific relational and cultural environment. It’s a mysterious dynamic that sparks and sustains desire, trust, movement and transformation.
- Historical institutional analysis of pre-modern trade in medieval Europe by Milgrom et al. (1990) shows that an institution, known as the Law Merchant in 12th and 13th century Champagne fairs, enabled impersonal exchange to occur. The Law Merchant enabled trade through a reputation system that stored information about traders’ past behavior and sanctioned violators of the commercial code.
Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.
