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23 November 2021

Dear frens,

In his seminal book, The Revolt of the Public, Martin Gurri explores how the modern media environment has simultaneously stripped elite institutions of the authority they once enjoyed and empowered the public to organize into mobs against the elite. This is all a matter of access to information.

The elites were authoritative when there was a scarcity of information. Not only were they the only sources of information, but information about them as people and institutions was virtually non-existent. The internet changed all that. Information became abundant, lessening elite’s power, but just as consequentially information about them grew as well and exposed their all-too-human incompetence, venality, hypocrisy, and vanity.

This same new media environment brought with it the tools for the public to find each other and coalesce into groups that could take action. Elite institutions–from Yale to the New York Times to the Treasury Department–are top-down and hierarchical and distant from the public. In contrast, what Gurri calls “networks,” Howard Rheingold called “smart mobs,” and today we might call “flash mobs” or just mobs, are voluntary associations of equals without hierarchy and without the capacity to develop a specific program.

Here’s Gurri (emphasis mine):

Against this citadel of the status quo, the [new information environment] has raised the network: that is, the public in revolt, those despised amateurs now connected to one another by means of digital devices. Nothing within the bounds of human nature could be less like a hierarchy. Where the latter is slow and plodding, networked action is lightning quick but unsteady in purpose. Where hierarchy has evolved a hard exoskeleton to keep every part in place, the network is loose and pliable – it can swell into millions or dissipate in an instant.

Digital networks are egalitarian to the brink of dysfunction. Most would rather fail in an enterprise than acknowledge rank or leaders of any sort. … Networks succeed when held together by a single powerful point of reference – an issue, person, or event – which acts as center of gravity and organizing principle for action. 

Typically, this has meant being against.  If hierarchy worships the established order, the network nurtures a streak of nihilism.

Examples of these mobs include much of the Arab Spring, Occupy Wall Street, the Tea Party, and more recently the Yellow Vests and BLM protesters. In every instance they stand against some status quo. They are about negation, not for accomplishing some specific thing. As Gurri puts it, “Advocating a positive program would have shattered these groups: participants felt energized by what they opposed, but were murky and divided about what they stood for. In fact, when circumstances demanded that they spell out an alternative to the status quo, [the] movements faltered and splintered."

And this brings me to ConstitutionDAO.

As you know, it’s a mob that came together in a matter of days on Twitter and Discord for the sole purpose of buying a copy of the Constitution at auction. It raised over $45 million in about a week but lost the auction. Now it is in disarray as its organizing principle has been removed but still sits on tens of millions of dollars. I think there are a couple of lessons here.

First, ConstitutionDAO shows us that modern mobs don’t just have to be about negation. They can be for something, as long as that something is specific and circumscribed. I think r/wallstreetbets presaged this a bit.

DAOs are a new tool in the toolkit of the networked mob. Now the public can not only find each other, communicate, and organize, but they can also raise funds outside the supervision of hierarchical institutions. In my view ConstitutionDAO was so successful at raising funds because they were for a clear, limited purpose–one that could be clearly communicated (memefied) and so narrow that it could draw wide assent. A DAO with a more complicated purpose would not have been as successful.

Second, once the “single powerful point of reference,” the organizing principle, is removed, the whole thing falls apart. But unlike other mobs, DAOs can have treasuries with tens of millions of dollars, so the mob won’t just fade into the mist. Instead they will be forced to decide what to do with the money, and we know that mobs “shatter” when pressed to put forward a specific agenda. A group of disparate individuals came together because they could find agreement over a very broad principle, and then they find they can’t agree on anything more specific.

I’m very keen to see how ConstitutionDAO resolves itself. Because it’s so focal, it will be seen as setting a precedent. I think there are a couple ways it could go.

Option One: The money is returned to participants. In my view this is the best option. For one thing, it’s what people who contributed expected would happen in the event of failure (as far as I understand it). For another, it’s a clean resolution and leans into the strength of mob DAOs, which is doing one big thing. If you want to do another thing, go start another DAO. I recognize this option is not without its problems given Ethereum’s high gas fees, but I still think it’s worth ending this way even if a lot of the money simply goes to miners.

Option Two: Find some other insane thing for the DAO to do. This is the second beset option because it will be difficult to find agreement on what that other big thing should be. If agreement can be found, the thing that’s settled on will probably be lame. That’s because you can’t capture lighting in a bottle twice. The memetic excitement was to do this one particular crazy thing, and you’re not going to be able to recapture that excitement from the same group with anything else. For example, some are trying to retcon the DAO’s mission as buying historical American artifacts–very lame.

If the DAO has to pick something else to do, I hope they do something really insane that’s a continuation of their project. Maybe they take the easy road and go for negation. For example, I saw someone suggest that the DAO buy the creamery that makes Ken Griffin’s favorite ice cream and I guess deprive him of it.

Option Three: Do something serious with the money. This would be the most dispiriting result. Same as Option Two, I think you’d be hard pressed to get enthusiastic agreement among participants, so anything that ends up being done would likely be forced and lame. For example, Decrypt reports that some participants have suggested the funds be used to “create a new Constitution for Web 3.“ Gag me with a flag pole.

I’ve also seen some Twitter charlatans valiantly step forward for the oh-so-selfless task of relieving the DAO of its treasury. Some want to spend it on political campaigns, of all things. I could be a beneficiary of such an outcome, but I can’t think of a more joyless and divisive thing to do. It would also be a real shame to see something this historic be co-opted by a white knight with no sweat equity. Again, people with big ideas should go start their own DAOs.

So, I’ll be watching with interest what happens. There are also other similar DAOs in the works (like this one that wants to buy an NBA team) and I hope they’ll learn some lessons from ConstitutionDAO. I also wonder if we’ll see DAOs adopt programmatic assurance contracts to avoid the problems that come if the specified goal isn’t achieved. Seems like the tech is there.

Let me know what you think. I write this stuff to help me work through what I think but also to get feedback, so don’t hesitate to hit reply.

If you enjoyed this newsletter, consider forwarding it to a friend so they can subscribe. (I’m not making these available on the web; only email.) Also, FYI, a new episode of Worker and Parasite, my book discussion podcast with Stably, is out. We talk about Robert Wright’s The Evolution of God. You can listen and subscribe to it here.

Happy Thanksgiving!

JB