In the fable of the Blind Men and the Elephant, a group of blind men each touch a different part of an elephant — One feels the trunk and says it’s a snake, another touches the leg and thinks it’s a tree, a third man grabs the tail and claims it’s a rope, and so on.

In many ways this is our approach to the multitude of problems that society faces today.

We see a crisis of trust in media and institutions, the looming problem of AGI misalignment, job automation, social polarization, etc., and think these are all disparate problems.

But what if we’re like the blind men in the fable? We think we’re looking at separate problems when in reality many of these are different symptoms of the same underlying illness.

And what is this “illness”? The current inability of markets to value people’s contributions to society — a market failure in public goods.

In social media, we see this with web2 platforms unable to value the impact of user content on society — Instead, they opt for selling users’ attention to advertisers.

With AI, artificial intelligence companies cannot be compensated for the impact that this incredible technology has on society — Instead, they need to close down their codebase so that they can sell user subscriptions to individuals and companies.

And in news media, journalists cannot earn a living from the value their work brings to society — Instead, they have to monetize the “content” by competing in the attention economy for views, clicks and subscriptions.

In each case markets can’t value people’s contributions to society, and the alternative ways people and companies attempt to monetize their work — trying to turn public goods into consumer and commercial goods — creates perverse incentives and negative externalities.

We then look at the results of these perverse incentives and externalities (ie., polarization, crisis of trust, etc.) and try to treat the symptoms of the illness.

But merely treating the symptoms will never cure the illness. It will only lead to other (and perhaps more severe) symptoms as the illness progresses without treatment or a cure.

So now that we’ve diagnosed the illness, how do we even begin treating it?

If the problem is that markets can’t value people’s contributions to society, how can we change that?

Perhaps it’s useful to start with a quote from the late UK Prime Minister Margaret Thatcher, who said: “..who is society? There is no such thing!”

Thatcher is right… though perhaps not in the way she intended.

There is no such thing as society.

That’s true.

Society is just a large group of individuals. It is merely a social construct.

So is that why markets can’t value people’s contributions to society?

Well, not exactly. You see, companies are also social constructs that are made up of individuals (workers, investors, etc.)

In fact, come to think of it, even individuals are social constructs. Each of us is comprised of trillions of cells that work independently and in coordination with each other to produce the emergent property we call the “self.” Buddhism even teaches that the “self” is in fact an illusion.

But let’s not digress into deep philosophical discussions on the nature of life, the universe and everything and get back to the question at hand: what makes “individuals” and “companies” so different from “society”?

Why is it that we have markets for consumer goods (sold to individual consumers), and we have markets for commercial goods (sold to companies), but we don’t have markets for public goods (sold to societies, or communities)?

The difference is that individuals and companies are cohesive economic entities, but societies are not.

If you have a product or service that a company values, you can call the company and sell them your product. You don’t have to chase individual employees in the company to be compensated.

In fact, if you had to chase after employees to pay you out of their pockets you’d struggle to make any money.

Because one employee would tell you: “Why should I pay for this? Your product benefits workers in a different department than mine,” and another will tell you, “Why should only employees in our department pay for this? Everyone in the company benefits from our work!”

You’d have lots of freeloading and little compensation — and more broadly, you’d have a similar market failure in commercial goods as we have in public goods.

But wait, aren’t there governments for public goods?

Sure. But governments — at least in their current form — don’t have the agility or public trust to intermediate between the public demand for goods and the people supplying those goods.

Even in a democracy, representatives only truly care about public needs for a brief time window every 2 or 4 years. What hope is there for government to act as a trusted intermediary at the scale we’re talking about here?

Will millions of individual creators call their government representatives and ask them to compensate them — at taxpayer expense — for the content they create? And even if it did, would the public have any confidence that the money was distributed based on the public interest (and not based on whatever benefits politicians)?

Such an approach is neither realistic nor desirable.

What we need then is to enable communities to form cohesive economic entities organized around the common prosperity of the community.

Such entities — whether local communities, cities, regions, states, or networks of individuals with shared identity — could serve as cohesive economic units

By forming a cohesive economic entity, each community could signal what public goods it values and compensate those who produce them.

The benefit of such an approach is that it’s additive — and therefore scalable.

There is no need to wait for millions of people to join the economic entity for it to work. Rather, you can start on a small scale and form a market for public goods. Then, more communities can form their own entities, which would grow the overall market.

Since public goods are non-rivalrous (one group using the goods doesn’t prevent another from using them), the different entities would not be competing with each other for who gets the goods.

The magnitude of demand for different goods across the various entities would, however, dictate how resources are allocated by producers.

So now we have a framework for developing a “cure” to the public goods market failure illness.

The challenge still lies in designing the mechanisms to enable economic entities to bring members together, allow them to credibly come to consensus around what is valuable to the community, and sustainably compensate those who produce those public goods.

It’s not an easy challenge — but at least we’re no longer blindly stumbling in search of a cure.