The Network State vs. Coordi-Nations, the Tragedy of the Commons as a Governance Challenge and New Institutional Structures for Global Cooperation

Ep. 57 with Primavera De Filippi

This episode features an alternative approach to governance innovation in response to network states called “coordi-nations”, and resulted in insightful debates on the tragedy of the commons and (de-)merits of private and public approaches to solve them.

Primavera De Filippi is a researcher at several institutes, including the Berkman Klein Center for Internet & Society at Harvard University.

Her research focuses on the legal challenges and opportunities of blockchain technology and artificial intelligence, with a specific focus on governance and trust.

Primavera is the author of the book “Blockchain and the Law,” published in 2018 by Harvard University Press (co-authored with Aaron Wright).

Primavera led a collective effort during Zuzalu (Vitalik Buterin's pop-up village in Montenegro) to offer an alternative to Balaji Srinivasan's "The Network State".

Her main critiques are its overreliance on market- and exit-based approaches.

This conversation highlights the differences, but Primavera cautions that there are more commonalities between these different approaches than differences. Most importantly, they share the goal to experiment with governance and approaches to sovereignty to improve on failures of the private and public sectors.

We start by defining the problem of the tragedy of the commons: individually rational behavior can lead to collectively worse outcomes.

There are three approaches to overcome the problem:

a) the Leviathan approach where a public authority manages the commons

b) the market-based or proprietarian approach with defined property rights and trade

c) the polycentric governance approach with a mix of incentive designs

The last one was developed by Vincent and Elinor Ostrom (the latter receiving a Nobel Price for her work) and is the starting point of Primavera's approach.

I like the polycentric governance approach, but I have more confidence in market-based solutions than Primavera, so a fruitful discussion ensues discussion the potential pros and cons of different versions of these approaches.

We both agree that pluralism is the right way forward, trying out different approaches to solve issues such as climate change, immigration, or poverty.

The Coordi-Nations approach is encapsulated in a recent blog article, but it's just at the beginning of being formulated and will be discussed in future iterations of Zuzalu and within Ethereum/web3 and governance innovation circles.

Theses for Further Discussion

A couple of notes on where we disagreed and I’d love to discuss deeper. I really enjoy these debates when they’re driven by curiosity, just like the one Primavera and I had:

• My thesis is that a polycentric governance approach, especially in a pure digital web3 environment, is downstream of a proprietarian approach. And that’s a good thing. Infinitely divisible tokens and low transaction costs are helpful tools that offer greater flexibility for any kind of solution (e.g. Primavera’s “Entanglement” idea is a perfect example of a proprietarian solution)

• My critique of nation-states is stronger than Primavera’s: at one point she said the public sector is “inefficient for a reason”, i.e. that it works on very hard problems, e.g. infrastructure or national security. I am more confident that BOTH market-based or polycentric governance solutions can perform better

• The proprietarian approach is underrated: profit and competition are a good thing, they are in fact synonymous with pluralism and I think when Primavera is talking about non-monopolistic governance she describes exactly how markets are supposed to work (e.g. increasing costs to exit is a moat-strategy)

• Exit is most important for poor people. I think governments in poor countries are far worse than in developed countries and hundreds of millions are willing to exit and would significantly upgrade their life with better options

Happy to come on any podcast to discuss this further!