written by Twone
When faced with economic inequality, uneven distribution of resources, and investment institutions monopolizing industries, and digital labor being exploited by ubiquitous algorithmic models, what would you do?
Would you challenge the Arasaka Tower like V in "Cyberpunk 2077," or would you conceive a "radical" theory of reform and try to put it into practice, attempting to make this world a better place?
This book, "Radical Markets," cannot be considered a perfect solution to the problems of the real world mentioned above. It is more like a rough diamond that still needs polishing, with flaws but filled with a great deal of thinking and determination to solve problems.
As the author says: "This is just a 'thought experiment.'"
By reading "Radical Markets" this time, I hope to think together with everyone about the era we are in today, and what changes and practices we can make.
Book Introduction#
"Radical Markets" is a book co-authored by Eric Posner and E. Glen Weyl, published in 2018. The core idea of this book is to promote broader social welfare and fairness through fundamental reforms of market mechanisms.
The starting point of the writing is a series of new challenges in the world today: despite global economic growth and the narrowing of the gap between countries in recent decades, inequality within nations is increasing, and social and political divisions and conflicts are becoming more serious.
The book is divided into five chapters, addressing five different problems that the authors hope to solve with five "radical" solutions. These include private property, market mechanisms, investment, immigration policies, and data and labor.
About the Authors#
- Eric Posner: Professor at the University of Chicago Law School, Fellow at the American Academy of Arts and Sciences, and member of the American Law Institute.
- Glen Weyl: Chief Economist at Microsoft, the main proponent of Quadratic Voting (QV), and the founder and chairman of the social organization "RadicalxChange."
From Sun Yat-sen's Equal Land Rights to Taiwan's Practice: Tang Feng's Recommendation of the Book#
Tang Feng is a software programmer and political activist from Taipei, currently serving as a minister of the digital ministry.
This book proposal is of particular significance to Taiwanese readers, as some of the concepts have influenced the thinking of democratic governance in Taiwan, and some practices have even been implemented in Taiwan. For example, the "Common Ownership Self-Assessed Tax" mentioned in Chapter 1 is an extension of Sun Yat-sen's proposal of "equal land rights." The "Quadratic Voting" in Chapter 2 is a solution to the traditional system that cannot truly reflect the preferences of the group under the one-person-one-vote system, making the discussion of public issues more meaningful.
Since 2019, the Taiwan Presidential Hackathon has used Quadratic Voting to select the advancing teams; this method is applicable to various collective decision-making processes and highlights the qualitative differences in voting. The concept of "data and labor" in Chapter 5 is similar to the traditional practices of cooperatives and mutual aid societies.
The inspiration that Taiwan's experience brings to the world is that we need to experiment in real life and turn these theories into practical tools.
Introduction of the Lead Reader#
Twone: World game player, Uncommons core contributor
Comments from the Lead Reader#
This book is the fourth book in the "Cypherpunk Classic Reading" series at Raw School, and it quotes a lot of economic theories, models, and thinking on the relationship between law, politics, and sovereign states.
When I first read this book, to be honest, it was not an easy book to get into. The complex thinking from different ideological perspectives and political positions, as well as the so-called "radical" solutions proposed by the author, made it difficult for me to fully agree.
But the more I delved into this book, the more I realized that the world is complex, and since we have all seen these problems, it is our responsibility as human beings living on this planet to respond and try to solve them in our own ways.
Since the author of this book has attempted to establish his own theory to improve the well-being of the world, what are our views on these issues? From our own perspectives, what can we do?
This is the biggest reflection I had after reading this book.
Also, I want to share it with you, who read the book together.
Starting from "Radical": Fundamental Change#
The word "radical" is derived from "root," so "radical" not only means "radical," but also means "thorough."
The radical aspect lies in the spirit of radical social change, which allows people to break free from existing mental models and better grasp the essence of the problem. The thorough aspect means that we cannot rely on superficial methods that only address symptoms but not root causes. We need to understand the underlying logic of social operation and reform it through changes in market mechanisms.
Throughout the book, it is not particularly radical, but rather hopes for thorough reform to solve problems such as inequality, inefficiency, and monopolies, and make the economy and the world better.
From history to the present, from mercantilism to free trade, the authors traverse time and draw on past theories and practices to propose a new form of "partial ownership" between private and public ownership. This is achieved through mechanisms such as Common Ownership Self-Assessed Tax (COST) or Harberger tax and Quadratic Voting (QV), aiming to solve problems such as hoarding of private property, inefficiency of market and voting mechanisms.
Political Spectrum Test: Understanding Your Perception of Basic Issues#
The political spectrum, also known as the political compass, is a tool used to measure individual political leanings.
This book uses a lot of theories from political economists and philosophical radicals as arguments, including Adam Smith, Condorcet, Jeremy Bentham, John Stuart Mill, Henry George, Léon Walras, and Beatrice Webb. These perspectives and theoretical viewpoints cover both right-wing liberalism and left-wing egalitarianism. The five solutions mentioned by the authors in the book require readers to think about their own viewpoints.
Therefore, before entering the actual chapters of this book, I recommend that everyone take a political spectrum test.
Understanding your own judgments and perceptions of certain issues can better help us read this book and clarify the author's train of thought.
Always remember that the theories in the book do not need to be fully accepted. You only need to have your own judgment and think from their perspective.
"Theory is gray, but the tree of life is evergreen."
You can also establish your own theoretical system.
Selling Rio: A Thought Experiment#
Economically, Brazil is the most unequal country in the Western Hemisphere. Even in wealthy countries where inequality is intensifying, the phenomenon of "Brazil" can be observed. The economies of these wealthy countries are also stagnating, and political conflicts and corruption are on the rise.
Many people had hoped that developing countries like Brazil would eventually follow the path of the United States and become developed countries. However, over time, this optimistic belief has been challenged, and people have begun to worry that things may be developing in the opposite direction. Traditional reform strategies, whether increasing taxes and redistribution, promoting marketization and privatization, or enhancing the capacity of governments and experts, seem to have failed to effectively address issues such as inequality, stagnation, and political and commercial corruption.
In the case of Rio de Janeiro, poverty, strict control of land, and political struggles are depicted as interconnected problems. The existence of favelas demonstrates the limitations of redistribution policies and the inadequacy of property rights reforms, which deeply affect the health of the political and business environment. The control of the city center by the wealthy leads to the waste of public resources and the inaccessibility of services, exacerbating social inequality and political corruption.
If existing methods cannot effectively solve the problems in Rio, let us think together: What if the entire city of Rio is put up for sale indefinitely?
How would this affect our perception of city management and ownership?
Property Rights Reform: Creating a Competitive Market through Incomplete Ownership#
"The legitimacy of private property emerged long before capitalism. At least in the eyes of Aristotle, he realized that people care most about what they own."
In Chapter 1, we will explore how to promote more efficient circulation and use of property, optimize the investment and allocation efficiency of private property.
Here are three thought-provoking questions:
- Thought Question 1: How much money would you be willing to sell your belongings for?
- Thought Question 2: To what extent do your belongings belong to you? (e.g., right to use, ownership)
- Thought Question 3: To what extent can you accept a world without private property?
Private property inherently has a monopolistic nature, where owners can hold property without effectively utilizing it, which also prevents others who can make more effective use of the property from acquiring it. However, extreme public ownership can lead to the "tragedy of the commons."
Therefore, the authors propose a new form of property rights that strikes a balance between public and private ownership, called Common Ownership Self-Assessed Tax (COST) or Harberger tax. It encourages property owners to assess the value of their property and pay taxes based on this value, while also being required to sell the property at this price to any willing buyer.
The COST makes owning wealth costly. "Common ownership" refers to the way traditional private property is adjusted through taxation. The two most important "batons" in private ownership are "right to use" and "exclusion right." With COST, both of these rights are partially transferred to the general public by the owner.
COST challenges the traditional concept of private property and proposes a more flexible and dynamic framework of property rights. Under this framework, property is no longer a permanently unchanging private possession but a social resource whose use and distribution should reflect broader social interests and principles of fairness.
Example: Anna's House#
Anna's Situation: Anna owns a house that she loves very much. However, there may be people who value the house more than Anna and are willing to pay more to buy it.
COST Tax Mechanism: Under the COST mechanism, Anna needs to set a price for her house, which is also the basis for her tax payment. The tax rate is set based on the probability of the asset changing hands, assuming it is 30% here.
Impact of Setting the Price: If Anna sets the price of the house higher than the price she is actually willing to accept (the reserve price), she may benefit from the higher price. However, she also needs to pay more taxes (at a 30% tax rate) based on this higher price, which means that her additional income is offset by the additional taxes.
Finding the Balance: In order to not lose money or lose the house, Anna will eventually set the price to her reserve price, which is the price she truly believes the house is worth. By doing so, only those who are truly willing to pay more than this price will purchase the house, and Anna will not pay extra taxes due to setting a higher price.
Discussion and Reflection on COST#
- Who sets the tax rate? How to ensure the accuracy and fairness of property value assessment?
- Maintaining a sense of security and social stability: How to deal with the social stability issues that may arise from frequent property turnover due to taxation?
- Definition of property and currency: This chapter does not provide a clear definition of "assets" and "currency returns from sales," and the examples given are all about land, houses, and other means of production. But what about things like virtual currencies? Should COST be applied to them? If not, can people avoid COST by not holding any physical assets and instead converting everything into stocks, virtual currencies, etc.?
- Handling of personal belongings: Are there design flaws in COST for items that have significant meaning and emotions for individuals? (Assuming in extreme cases, someone maliciously purchases at a high price?)
- Setting aside practical resistance, can COST help with decluttering (reducing people's dependence on belongings)?
Institutional Design: Application of Quadratic Voting (QV)#
"In market transactions, people can convey their preferences for goods and services by paying more or less. This is why many economists believe that price systems can achieve efficient results, while voting cannot."
Here are two thought-provoking questions:
- Thought Question 1: Do you think Quadratic Voting to some extent contributes to better decision-making? Or are there better solutions?
- Thought Question 2: How do you view the application of Quadratic Voting in blockchain? (e.g., combining the current use of Quadratic Voting in communities or DAOs; funding public goods, etc.)
Traditional voting methods often only express a single dimension of "for" or "against" and ignore the fact that people have vastly different levels of concern for different issues.
Quadratic Voting (QV) solves this problem by using a mathematical square rule: the cost paid by voters for each vote increases with the square of the number of votes they purchase. This means that while voters can purchase multiple votes to express a strong preference for a certain issue, the cost increases quickly beyond the increase in the number of votes, thereby suppressing the incentive to buy votes without restrictions. This mechanism design makes expressing strong preferences expensive, so only those who truly care about a certain issue will choose to invest more votes in that issue. This design allows voting results to more accurately reflect the true preferences and priorities of society members.
How QV Works#
In the Quadratic Voting system, voters can not only vote for options but also purchase more votes based on their strong preferences for a certain issue. However, the cost of voting increases with the square of the number of votes purchased. In simple terms, if you want to cast 1 vote, you may only need to pay a cost of 1 unit; but if you want to cast 4 votes, you need to pay a cost of 16 units; and so on. This means that although increasing the number of votes can increase support for a certain option, the cost also increases significantly.
The introduction of QV theoretically provides a possible solution to collective action dilemmas, free-riding problems, and majority tyranny in democratic decision-making. It attempts to establish a more dynamic and flexible voting system that is closer to the actual needs and preferences of society members, thereby improving the fairness and effectiveness of policies.
There is already a QV voting tool developed by "RadicalxChange":
In terms of application and practice, QV has been applied in blockchain communities and organizations such as Ethereum and Gitcoin. The Taiwan Presidential Hackathon also uses QV to select advancing teams.
Easter Egg: Political Spectrum Test After the Reading Group#
Many students found that they are in the left-wing liberal stronghold after taking the test, but we also have our right-wing liberals! 🎉
But every question can be debated.
Student 1: Does economic individualism/collectivism refer to the redistribution of taxes and welfare? 🤔 The former is low taxes and low welfare, while the latter is high taxes and high welfare.
Student 2: Starting from the present, going back to history, changing is left, maintaining the status quo or returning to the past is right?
Student 3: But honestly, I think it depends on the position from which you take the test. Sometimes I switch between the two ways of thinking of left-wing and right-wing.