The Dark Side of Decentralization: Polarization, Anarchy, and the Lack of Public Goods
Original Author: Kayla Phillips
This article is from the WeChat public account The SeeDAO.
This article is from the WeChat public account The SeeDAO.
This article reflects on the hype surrounding web3. By imagining an extremely decentralized society, the author points out that in terms of media and communication, government and social order, absolute decentralization will lead to more serious community division, government dysfunction, economic collapse, and even social unrest and the threat of war. The authors predict that future societies will end up being only slightly more decentralized than today.
As an investor deeply involved in Web3, I am of course both very optimistic and excited about its huge potential. But in a way, we early practitioners seem to just dive in blindly, selectively looking only at the positives of Web3 and decentralization without critically analyzing the negatives. It's scary and dangerous.
What I mean is: I understand that we are at a social, cultural and technological inflection point. A myriad of things are exhausting us all: political polarization, COVID-19, global warming, job burnout, inflation, and looming World War III, to name a few. We're fed up with the status quo and eager to embrace the new, so we're all-in on Web3 and the autonomous, anti-establishment movement it represents.
However, the reason why we do this is largely seduced by the false excuse that "Web3 can solve all the problems of Web2 and this world". It's overly optimistic, and it's also wrong. Because some of the most maligned things in Web2 may be worse in Web3... However, no one is really talking about this.
As Web3 entrepreneurs and investors, we have a moral responsibility to be critical of the future we are building and funding. So I have some initial Black Mirror-esque thoughts on this topic, which I hope will spark more conversations about how we should deal with the inevitable challenges ahead.
Let’s map out a spectrum of levels of centralization socially, politically, economically and technologically.
At one end of the spectrum is centralization in its purest form: a society ruled by a dictatorship, and a private marketplace built with Web2 technologies. Web2 technology has allowed the three or two big tech companies to come out on top because the data-driven engine has built a huge moat for them and eliminated almost all competition. Power is concentrated in the hands of only a few players.
At the other end of the spectrum lies the most extreme form of decentralization: a society run on libertarian principles, with a private marketplace powered by Web3 technologies. Web3 allows many companies (in the DAO structure) to coexist, but the crowded environment makes it difficult for them to scale. Power is distributed among many players.
Today, society as a whole is more centralized. We have central governments and central banks, most people live in democracies (not autocracies or libertarians); Web2 technologies have given some big tech companies enormous power and ownership to sway private markets and our increasingly digital lives. In the future, the entire society may be more decentralized, because Web3 technology enables new decentralized organizations to be effectively formed and operated. This shift will go some way towards improving the competitive environment by limiting the influence of tech giants and creating market opportunities for new entrants.
Now, to illustrate the possible dystopian side effects of this decentralized shift, let’s imagine an extreme scenario in which our world becomes fully decentralized, running entirely on Web3:
Media and Communication
Over the past few years, we’ve seen the data-driven economy in Web2 prosper the tech giants while also polarizing society, causing significant harm. According to researchers at Princeton University, “Social networks don’t just reflect polarization — they influence it.” Personalized, targeted content enables people to self-reinforce their beliefs over time , and thus become isolated. This has created an echo chamber effect and extremist groups that deeply divide our society.
In the extreme Web3 world we imagine, decentralization will lead to greater polarization. People would fragment into many different decentralized communities, creating more divisive and extremist groups. The echo chamber effect will be further exacerbated in these communities, as each community speaks for itself and only relies on its own niche news sources. We may come to a point where there is no longer a central media outlet delivering information to the public, leaving only niche news outlets reinforcing the beliefs of niche decentralized communities. This could lead to a war between numerous ideological groups rather than a potential civil war between left and right.
Globally, we will become more closed off, less open to new ideas and less willing to work together. We can become ignorant and ignorant, lack empathy for those outside our inner circle, and deny ourselves the opportunity to benefit society as a whole. We will no longer be able to educate and mobilize the masses to act on critical efforts like saving the planet. We will experience a reversal of mind-sharing, innovation and globalization. Ultimately, the outcome is worse for everyone.
Government and Social Order
Considering the damage done by decentralized media and communications, society could be plunged into anarchy. Governments may lose the ability to effectively communicate policies, goals, and impact to voters. Mass ignorance, dissatisfaction, and a sense of helplessness combined with a perceived inability to control or improve one's life can lead to revolt—as seen in the January 6 riots. Storming of the U.S. Capitol in 2021).
Some conclusions from Princeton University research on political polarization:
"A complex systems perspective suggests that the loss of diversity associated with polarization gradually impairs cooperation, and society's ability to provide the public goods that contribute to a healthy society [...]."
"As social interactions and individual wills isolate people into recalcitrant camps, the political system becomes incapable of addressing a range of problems or crafting the kinds of solutions -- all that are necessary for the functioning of government and the delivery of critical services in society "
in conclusion
in conclusion
Well, I know I'm talking dark! Just to clarify, I don't think the world will become fully decentralized. This is an extreme example to illustrate my point. To be realistic, we'll probably be somewhere on the centralized spectrum that's a little bit more decentralized than it is today. Still, I hope this example sparks new ideas and actions that allow us to shape the future to be better than the status quo we are trying to disrupt.
One final thought - centralization isn't all bad. Some degree of centralization and Web2 is necessary for society to function and improve the quality of life in general. Web2 and Web3 should not contradict each other; they need to coexist and complement each other.
All in all I think we'd all be fine in a slightly more decentralized society. I will continue to invest in Web3, but with a socially conscious mindset about its opportunities and threats.
