Original Video on dPAN’s | Local Chains as a Civic Coordination Framework |
In my previous writing, I introduced the City/Sync project and, in doing so, touched on a fundamental concept central to the vision I am presenting. Upon reflection, I realize I did not provide the explanation it deserves. I am going to take the time to rectify that now.
The discourse surrounding modes of production is often oversimplified. Terms such as capitalism, socialism, and communism are constantly being invoked as if they were discrete labels defining entire nations, when in fact they are conceptual tools, and not absolutes. The reality is that every country, even those considered paradigms of one system or another, operates across a spectrum of production modes, blending public and private mechanisms in ways that are situationally utilized and often operating unconsciously. The United States, typically identified with capitalist ideology, relies on substantial public sector control mechanisms within infrastructure, social welfare programs, regulatory oversight, and emergency fiscal intervention (hello bailouts).
China is frequently cited as a model of socialism or state capitalism (or whatever tf they morphed into today), and allows extensive private enterprise in consumer markets and global trade, while the state retains strategic control over critical sectors. Across all nations, these modes of production coexist in a patchwork of overlapping initiatives, where public interventions supplement private markets and private innovation fills gaps left by public planning. The allocation of resources, the enforcement of rules, and the balance of risk v. reward shift constantly, often in response to political expediency or emergent crises rather than systematic economic design.
In this intermingled reality, the costs of hybridization manifests itself clearly, and illustrates how public resources are strained by private capture, private actors are constrained by regulatory capture, and citizens often bear the consequences through inefficiency and the erosion of public trust.
For myself, recognizing these patterns raises a fundamental question: might society benefit from explicitly defining the boundaries between public and private economic activity? A bifurcated economy does not advocate for rigid isolation of sectors nor for some monolithic ideological purity. Instead, it formalizes the separation of domains so that each can operate according to its optimal logic. The public economy (if it existed) is designed to produce and manage collective goods, to allocate resources according to shared priorities, and to reward contributions that enhance societal well-being.
The private economy focuses on innovation and risk-bearing capacities, generating wealth through voluntary exchange of value through the lens of competitive markets. By delineating these boundaries, societies can reduce friction, clarify incentives, and create distinct logic that optimizes outcomes for both sectors.
Historical examples offer insights into the consequences of failing to create such distinctions. During the first couple decades of this century, Venezuela over-utilized the enforcement of socialist price and production controls to achieve their political and social welfare goals, eventually impacting private enterprise which led to shortages, hyperinflation, and eventually economic collapse. In contrast, during the post-2008 financial crisis, Western governments intervened in private banking systems to stabilize markets, rescuing private actors at the cost of public debt and long-term moral hazard. Both of these examples illustrate that when public and private logics collide without clear boundaries, inefficiency and instability are almost inevitable.
The philosophical justification for bifurcation is rooted in ethics and logic. Public resources are communal wealth and should be managed with collective responsibility and transparency. Private markets operate under a different ethical framework, incentivized by profit, innovation, and the assumption of risk. Mixing these logics without explicit design produces misalignment.
Public choice theory demonstrates that political actors, when given control over resources without clear constraints, may act in ways that prioritize personal or political gain over social welfare. Similarly, economics shows that markets excel at allocating private goods but frequently fail at distributing public goods efficiently. By separating the domains, each can function according to its own epistemology and incentive structures. The public sector can measure value through contributions to civic infrastructure (wink), social services, and community well-being, while the private sector can pursue competitive innovation and market-driven efficiency without interference.
We should acknowledge that the ethical dimension of bifurcation is inseparable from its economic logic. Public sector activity should prioritize equitable access to essential services and the efficient use of communal resources. Allowing private incentives to dominate the management of public goods will continue to distort collective priorities and reduce social welfare and impact. Similarly, allowing public imperatives to intrude excessively into private markets will continue to stifle innovation, misallocate capital, and reduce economic growth.
By separating the two domains, society enforces a philosophical principle that the allocation of communal resources must be guided by collective responsibility, while the creation of private wealth is best governed by competitive and voluntary exchange. These fundamental principles ensure that each sector adheres to its optimal functional logic while maintaining mechanisms for coordination where interactions are necessary, such as public procurement or tax policies.
An additional benefit of separating these domains is that when public and private sectors operate independently, risk is contained. The introduction of a public-sector currency for example, provides a foundation for local economic resilience, allowing cities to maintain internal circulation even under national or global financial stress. Separation enables transparency in accounting and governance, reducing the opportunity for misallocation and corruption. From a risk perspective, it recognizes that society is composed of actors with distinct objectives and capacities, and that a one-size-fits-all economic logic will inevitably produce conflicting incentives and destroy economic protections.
The mechanics of creating boundaries are both operational and conceptual. Legally, public resources should be segregated, audited, and managed through transparent mechanisms distinct from private accounts and activities. Economically, incentives should be aligned within each sector to reflect its underlying logic (ex: public sector rewards measurable civic contributions, while private sector rewards profit generation). Governance structures must be separate but interoperable, ensuring that coordination occurs without conflating decision-making authority.
The crazy thing is that the consequences of failing to separate public and private domains are both observable and quantifiable. Public resources are constantly being consumed by rent-seeking private actors, undermining service provision. Private actors constantly face regulatory uncertainty, the mispricing of risk, and suffer from unintended subsidies that distort competitive dynamics in the market. Citizens experience these failures directly in reduced access to services and inflated costs. The combination of ethical misalignment and economic inefficiency reinforces the argument for a bifurcated approach that separates our public and private domains. This should not be a theoretical or ideological preference but a practical necessity for maintaining functional and equitable economic systems.
Separating public and private economies is a practical, evidence-based response to the failures of hybrid systems that dominate contemporary economics. Philosophically, it ensures that ethical imperatives governing collective resources are not subordinate to private gain. Logically, it aligns incentives, contains risk, and allows both public and private sectors to operate efficiently and predictably.
While the practical implementation of civic-backed currencies or tokens is one expression of this philosophy, the core argument overshadows any specific coordination technology...a bifurcated economy represents a reasoned and defensible framework for optimizing both social and economic outcomes in complex societies. If we can figure out a way to delineate boundaries, properly align incentives, and respect the distinct logic of each domain, societies can create a more resilient and efficient economic system capable of meeting the challenges of this century.
Central to the vision of a bifurcated economy is the idea of a public-sector currency that reflects civic contributions rather than relying exclusively on fiat. Money is a social technology, a system of trust and collective agreement that allows the exchange of value across time and space. The United States dollar is a prime example of this principle. It is not backed by gold, silver, or tangible resources. Its legitimacy derives from widespread trust, enforceable contracts, and universal acceptance for taxes. By this standard, a currency backed by proof of civic contributions can function as a reliable medium of exchange, store of value, and unit of account. Every token earned through volunteering, municipal service, or engagement in public projects represents measurable social value.
The City/Sync project seeks to operationalize these principles through the evolution of $CITY tokens. Initially, $CITY operates as a budget-backed voucher redeemable for public goods and services. Citizens earn tokens through verified civic contributions, establishing a direct link between engagement and economic value. Over time, the system can transition to service-backed circulation, allowing $CITY to fund essential municipal operations, such as public transit, utilities, and educational programs through dPAN's. This creates a self-reinforcing loop in which civic participation generates currency, which is then spent within the public-sector economy, further sustaining collective infrastructure. Vendor participation ensures that $CITY circulates effectively while remaining distinct from private-sector economic flows. Eventually, $CITY aims to detach entirely from fiat, evolving into a fully autonomous public-sector currency backed by civic contribution, service utilization, and municipal assets.
Implementing such a system will require careful attention to operational design. The relationship between $CITY and $VOTE tokens exemplifies how governance can be intertwined with currency without undermining circulation. Every $CITY earned generates a corresponding $VOTE, ensuring that economic power is aligned with public-sector governance. Redemption pathways are structured so that only approved vendors can accept $CITY for high-value goods and services, creating a natural cap on practical liquidity and preventing accumulation from undermining civic objectives. Hoarding, while theoretically possible, is functionally mitigated because $CITY derives value from utility rather than speculative fiat accumulation. Historical and modern experiments in complementary currencies confirm that when tokens are tied to real utility, circulation flows naturally, and trust is maintained.
The broader economic implications of a bifurcated model are significant. Public sector operations gain efficiency and create new forms of utility and incentive structures. Civic labor is recognized and rewarded, producing measurable economic value independent of private-sector volatility. Private markets can operate unencumbered by public-sector distortions while participating in well-defined transactions that interface with the public economy. This separation reduces friction and strengthens trust in both systems.
The big difference in traditional conceptions of bifurcated economies and the vision for City/Sync lies in the role of the state. Marx explained why a separate public mode is coherent with distinct relations and aims, and Polyani explained why that separation is necessary. They both operated under the constant of centralized states. Ostrom explained that it is governable without central planning. And now we have the tools to coordinate it.
These are the intellectual insights that this project seeks to combine. dPAN’s offer a pathway for extending the canon by offering a new conceptual framework that moves away from central states into a networked public; a Commons mode of production enabled through cryptographic verifiability and programmable institutions that elevates social reproduction (conditions that produce labor power) to an autonomous mode (structurally distinct system).
The fundamental question remains…is a hypothetical public-sector economy merely a functional appendage of capitalism (to stabilize markets, supply infrastructure, absorb unemployment), or can it mature into an independent mode of production with its own internal logics? That's what I want to find out.
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