Why analyzing the governance of DAOs in the light of Machiavellian thought can be perilous, particularly when addressing a global ecosystem?

"In his political theory, Machiavelli emphasized the importance of maintaining power, that is, the ruler's ability to remain in government, to preserve the state and social order."

Machiavelli advocates the idea that a strong state relies on an effective ruler, and for one to be good, they must possess sound political skills. Relevant characteristics of a good prince, according to him, include being kind, charitable, religious, and moral. Of course, we are referencing "The Prince" here, but we must not forget that Machiavelli's thoughts and works consistently culminate in the pursuit of power. Thus, we encounter a fundamental problem because we cannot endorse decentralized governance within a political model geared towards the ascent of power. When addressing the ascent of power, we cease to discuss cooperativism, and in this case, they stand in opposition.

This headline from Cointelegraph caught my attention because when Machiavelli, FIX, and decentralized governance are mentioned in the same sentence, the common and almost automatic thought, based on Machiavelli's ideas, is, "So, does FIX mean centralization in decentralization?" It's like saying the devil can fix the flaws of Catholicism. I understand that, indeed, the Devil can scrutinize the faults of religion, but systematically, it is not he who will fix it. In reality, what will do so is a consensus among the members. And if we are not reaching that consensus, it is not the devil we should call upon.

The article is essentially well-written; there are many things in it that I agree with and find constructive. However, let's dissect this throughout this text. What I want to raise here is that the foundation of this thinking, aimed at fixing decentralized governance, should not be based on Machiavelli's thoughts, or at least it shouldn't. If everything boils down to its primary sense, we should not have a philosopher who wrote books for monarchs as the cornerstone of a technological and decentralized path. What I truly want is to present the reflections I have gathered and share them with you so that we can, together, reach a consensus.

Let's move on to the article's title (I don't want to go through every line because I am web3 full-time and confess that I am taking time and energy that I don't have to discuss this matter, but I found it necessary to raise certain questions):

“How incentivizing competition, empowering rivals, and using non-token based voting can fix decentralized governance in web3”

The attributes we will address here are

1. Competition

2. Empowering rivals

1. Competition

Competition is a rather interesting theme, be it said. We acknowledge that it is an attribute that brings, almost necessarily, engagement from the parties involved, which can be a powerful tool when it comes to agility in decision-making, something that is significantly lost if we opt for decentralization (thus, here, a point against decentralization). As we can observe below in the decision-making trilemma of DAOs

But from a certain perspective, competition as a guide can be an attribute of mass mobilization. We observe this movement between left and right, Democrats and Republicans, among other diverging points of view that serve as devices for population control and perpetuation of political narratives that, ultimately, are centralized.

So, how do we bring cooperation to the forefront at the expense of competition?

I will refrain from citing Owenist theories because we should not aim for utopian socialism. Ultimately, this discussion about competition could resemble a secular debate between capitalism and socialism, but that is not my point here. The point here is to find a common and functional middle ground that may not lean toward centralization, as that goes against the very concept of DAOs. At the same time, we should not aim for a dystopian monarchy because I find the approach of nepotism and centralization questionable when we talk about DAOs, and Machiavelli is, above all, an author who writes about this; one only needs to examine his context and his works.

How to attribute all the points raised to a writer or a narrative that is not, well... a writer who wrote for monarchs?

To steer clear of Robert Owen's utopian socialism, let's bring Herbert Mead to the forefront, thus allowing us to move toward the more scientific and less ideological side of the situation. Mead's major contribution to the field of social psychology was his attempt to show how the human self arises in the process of social interaction, especially by way of linguistic communication ("symbolic interaction"). In philosophy, as already mentioned, Mead was one of the major American Pragmatists.

"The authors share the Meadian idea that, for an individual to belong to a social group, in a certain way, they need to reproduce values and symbols shared by the collective to which they belong, adapting to it but asserting themselves as autonomous individuals struggling against massified collectivization."

De Souza, R. F. (2011). George Herbert Mead: contributions to the history of social psychology. Psicologia & Sociedade, 23(2), 369–378. https://doi.org/10.1590/s0102-71822011000200018

His initial statement seems to resonate strongly with the narrative of a DAO! A core that binds members while still reaffirming the autonomy and individual capacity of each. These ideas equally encompass positive relations such as conflict, domination, exploitation, consensus, disagreement, identification, and, above all, indifferent cooperation with one another. Participants in each of these relationships share the common task of constructing their actions by interpreting and defining each other's acts.

To begin, it is crucial to understand that joint action does not arise from the simultaneity or uniformity of behaviors among participants. Each individual necessarily takes a distinct position and acts from that perspective, contributing to the execution of singular and distinct acts.

It is essential to emphasize that dissent (or competition) of values or their disintegration leads to disunity, chaos, and instability. This conception of human society undergoes a significant transformation when we consider that society is composed of the interconnection of individual actions to form joint actions. This alignment can occur for various reasons, depending on the circumstances that necessitate joint action, and does not necessarily require the sharing of common values. Therefore, joint action is the result of the aggregation of these diverse actions.

2. Empowering Rivals

It is something that seems interesting, indeed, because when we empower rivals, we have a greater chance of innovation (strictly addressing market functioning). Consider capitalist competition or even the workings of a free market. However, when we talk about this, we are addressing the competition between two ecosystems of joint actions (does that make sense?). In other words, this would make sense if it were an empowerment of a rival DAO, another set, another ecosystem. But in a microcosm, I believe the approach should be different. The input cannot be based on rivalry, but perhaps the output can.

If members of a DAO work to empower their rivals, we will have a more robust ecosystem. But if members of a DAO treat other members as rivals, we will have an environment that is, consequently, inclined toward centralization rather than cooperation among individuals.

For this case, I will bring Émile Durkheim: the social division of labor.

He believed that every society formed around a certain degree of consensus. In other words, individuals in that group shared, to some extent, a belief that kept the society together. This unity was termed social cohesion. In the transition from traditional to modern societies, Durkheim observed a shift in the mechanism of social cohesion and societal unity, a mechanism known as social solidarity.

But how to maintain the views of Mead and Durkheim within a DAO, addressing individual contribution and social solidarity, without relying on a centralizing narrative? Because, theoretically, we already have the narrative of cooperation, and it is not working, correct? Incorrect.

The narrative of cooperation works. What is not working is decentralization. The governance models attributed to various DAOs still rely on various human factors, from ethics to integrity in some cases.

Up to this point, I agree with the measures raised in the a16z that aim to improve governance systems. My disagreement here is to base this thinking on Machiavelli, once again.

“Without hierarchies, DAOs face significant challenges that traditional hierarchical organizations avoid or are built to navigate.” – (Machiavelli for DAOs: Principles for Fixing Decentralized Governance (part 1) - a16z crypto. (2023, September 21). A16z Crypto. https://a16zcrypto.com/posts/article/machiavelli-principles-dao-decentralized-governance/)

And I agree with this passage; in fact, in my MBA classes, I emphasize the importance of hierarchy. However, note that I approach hierarchy from a very different perspective (even addressing decentralization and hierarchy together). Let's go back to 1937 when Ronald Coase released "The Theory of the Firm." This theory was written to create efficient mechanisms; responsibilities must be distributed (with a focus on the word distribution here) among key participants in their respective areas, establishing an independent system, entrusting decisions to those most capable of making them. Therefore, it was based on a structure of task and competence division within companies. The economist then challenged the established models of market giants like Dupont, Standard Oil, and General Motors. Gradually, the concepts of his theory were applied in practice, and the results demonstrated their efficiency. In other words, companies continued to have hierarchies, but for the sake of efficiency, they distributed or decentralized sectors and some decision-making processes.

That is to say, it is possible to maintain social cohesion (or a common goal) even if hierarchies are present, without the need for an abrupt centralizing factor. This implies that Federalist documents or the design of the USA should not be seen as a goal, given that the authors argued in favor of the need for a stronger and more effective central government to unite independent states into a more harmonious federation. The cascading effects of Machiavelli's writings lead to centralization, inevitably. But cohesion is not only found in centralization:

"Instead, consensus can reflect the power of some groups to shape things according to their own interests. This idea is more closely associated with the Conflict Perspective and the works of Karl Marx and Max Weber, who argued that cohesion and order are, to some extent, created and maintained by coercion and domination, particularly through institutions like the State. Societies where there are oppressed minorities, for example, may continue to exhibit social cohesion not only because of a true consensus of values but also because they may fear that, if they dare to demand social justice, they could become victims of even more violence and persecution." (JOHNSON, 2016, pp. 41-42).

On the other hand, we need to work on reinforcing the norms, values, beliefs, and code structure of a DAO if we want to move towards a decentralized and cohesive future.

"Cohesion is the degree to which individuals participating in a social system identify with it and feel obligated to support it, especially concerning norms, values, beliefs, and structure." (JOHNSON, 1997, p.41).

Regarding a few quotes on a16z article:

"Autocratic tendencies are inherent in any organization"

"Leaders want to maintain and expand their power and privilege"

"Power tends to corrupt, and absolute power corrupts absolutely"

I would like to understand why the choice of these three quotes (Popper, Michels, and Acton, respectively) and not

"Despotism is a legitimate mode of government in dealing with any people, provided the end be their material prosperity and the means justified by their transcendent expediency." (John Stuart Mill) or the perspective of Jean-Jacques Rousseau, who argued in favor of a form of government based on the general will and citizen participation, aiming for a more just balance of power, or even Immanuel Kant, who discussed the importance of morality and law as limitations to power, emphasizing the idea of an ethical duty that transcends the mere exercise of power: "Act in such a way that you treat humanity, whether in your own person or in the person of any other, never merely as a means to an end, but always at the same time as an end."?

Is the path indeed to take a narrative focused on centralization and suggest technical and governance improvements for DAO from there? Or can we choose other thinkers and, from their perspectives, understand governance flaws without having to base our thinking on Machiavelli or Federalist writings?

I refuse to lead my (very few) readers to believe that the narrative behind DAO innovation is Machiavellian. We cannot fix governance that way. And no, the ends do not justify the means.

Why analyzing the governance of DAOs in the light of Machiavellian thought can be perilous, particularly when addressing a global ecosystem?

"In his political theory, Machiavelli emphasized the importance of maintaining power, that is, the ruler's ability to remain in government, to preserve the state and social order."

Machiavelli advocates the idea that a strong state relies on an effective ruler, and for one to be good, they must possess sound political skills. Relevant characteristics of a good prince, according to him, include being kind, charitable, religious, and moral. Of course, we are referencing "The Prince" here, but we must not forget that Machiavelli's thoughts and works consistently culminate in the pursuit of power. Thus, we encounter a fundamental problem because we cannot endorse decentralized governance within a political model geared towards the ascent of power. When addressing the ascent of power, we cease to discuss cooperativism, and in this case, they stand in opposition.

This headline from Cointelegraph caught my attention because when Machiavelli, FIX, and decentralized governance are mentioned in the same sentence, the common and almost automatic thought, based on Machiavelli's ideas, is, "So, does FIX mean centralization in decentralization?" It's like saying the devil can fix the flaws of Catholicism. I understand that, indeed, the Devil can scrutinize the faults of religion, but systematically, it is not he who will fix it. In reality, what will do so is a consensus among the members. And if we are not reaching that consensus, it is not the devil we should call upon.

The article is essentially well-written; there are many things in it that I agree with and find constructive. However, let's dissect this throughout this text. What I want to raise here is that the foundation of this thinking, aimed at fixing decentralized governance, should not be based on Machiavelli's thoughts, or at least it shouldn't. If everything boils down to its primary sense, we should not have a philosopher who wrote books for monarchs as the cornerstone of a technological and decentralized path. What I truly want is to present the reflections I have gathered and share them with you so that we can, together, reach a consensus.

Let's move on to the article's title (I don't want to go through every line because I am web3 full-time and confess that I am taking time and energy that I don't have to discuss this matter, but I found it necessary to raise certain questions):

“How incentivizing competition, empowering rivals, and using non-token based voting can fix decentralized governance in web3”

The attributes we will address here are

1. Competition

2. Empowering rivals

1. Competition

Competition is a rather interesting theme, be it said. We acknowledge that it is an attribute that brings, almost necessarily, engagement from the parties involved, which can be a powerful tool when it comes to agility in decision-making, something that is significantly lost if we opt for decentralization (thus, here, a point against decentralization). As we can observe below in the decision-making trilemma of DAOs

But from a certain perspective, competition as a guide can be an attribute of mass mobilization. We observe this movement between left and right, Democrats and Republicans, among other diverging points of view that serve as devices for population control and perpetuation of political narratives that, ultimately, are centralized.

So, how do we bring cooperation to the forefront at the expense of competition?

I will refrain from citing Owenist theories because we should not aim for utopian socialism. Ultimately, this discussion about competition could resemble a secular debate between capitalism and socialism, but that is not my point here. The point here is to find a common and functional middle ground that may not lean toward centralization, as that goes against the very concept of DAOs. At the same time, we should not aim for a dystopian monarchy because I find the approach of nepotism and centralization questionable when we talk about DAOs, and Machiavelli is, above all, an author who writes about this; one only needs to examine his context and his works.

How to attribute all the points raised to a writer or a narrative that is not, well... a writer who wrote for monarchs?

To steer clear of Robert Owen's utopian socialism, let's bring Herbert Mead to the forefront, thus allowing us to move toward the more scientific and less ideological side of the situation. Mead's major contribution to the field of social psychology was his attempt to show how the human self arises in the process of social interaction, especially by way of linguistic communication ("symbolic interaction"). In philosophy, as already mentioned, Mead was one of the major American Pragmatists.

"The authors share the Meadian idea that, for an individual to belong to a social group, in a certain way, they need to reproduce values and symbols shared by the collective to which they belong, adapting to it but asserting themselves as autonomous individuals struggling against massified collectivization."

De Souza, R. F. (2011). George Herbert Mead: contributions to the history of social psychology. Psicologia & Sociedade, 23(2), 369–378. https://doi.org/10.1590/s0102-71822011000200018

His initial statement seems to resonate strongly with the narrative of a DAO! A core that binds members while still reaffirming the autonomy and individual capacity of each. These ideas equally encompass positive relations such as conflict, domination, exploitation, consensus, disagreement, identification, and, above all, indifferent cooperation with one another. Participants in each of these relationships share the common task of constructing their actions by interpreting and defining each other's acts.

To begin, it is crucial to understand that joint action does not arise from the simultaneity or uniformity of behaviors among participants. Each individual necessarily takes a distinct position and acts from that perspective, contributing to the execution of singular and distinct acts.

It is essential to emphasize that dissent (or competition) of values or their disintegration leads to disunity, chaos, and instability. This conception of human society undergoes a significant transformation when we consider that society is composed of the interconnection of individual actions to form joint actions. This alignment can occur for various reasons, depending on the circumstances that necessitate joint action, and does not necessarily require the sharing of common values. Therefore, joint action is the result of the aggregation of these diverse actions.

2. Empowering Rivals

It is something that seems interesting, indeed, because when we empower rivals, we have a greater chance of innovation (strictly addressing market functioning). Consider capitalist competition or even the workings of a free market. However, when we talk about this, we are addressing the competition between two ecosystems of joint actions (does that make sense?). In other words, this would make sense if it were an empowerment of a rival DAO, another set, another ecosystem. But in a microcosm, I believe the approach should be different. The input cannot be based on rivalry, but perhaps the output can.

If members of a DAO work to empower their rivals, we will have a more robust ecosystem. But if members of a DAO treat other members as rivals, we will have an environment that is, consequently, inclined toward centralization rather than cooperation among individuals.

For this case, I will bring Émile Durkheim: the social division of labor.

He believed that every society formed around a certain degree of consensus. In other words, individuals in that group shared, to some extent, a belief that kept the society together. This unity was termed social cohesion. In the transition from traditional to modern societies, Durkheim observed a shift in the mechanism of social cohesion and societal unity, a mechanism known as social solidarity.

But how to maintain the views of Mead and Durkheim within a DAO, addressing individual contribution and social solidarity, without relying on a centralizing narrative? Because, theoretically, we already have the narrative of cooperation, and it is not working, correct? Incorrect.

The narrative of cooperation works. What is not working is decentralization. The governance models attributed to various DAOs still rely on various human factors, from ethics to integrity in some cases.

Up to this point, I agree with the measures raised in the a16z that aim to improve governance systems. My disagreement here is to base this thinking on Machiavelli, once again.

“Without hierarchies, DAOs face significant challenges that traditional hierarchical organizations avoid or are built to navigate.” – (Machiavelli for DAOs: Principles for Fixing Decentralized Governance (part 1) - a16z crypto. (2023, September 21). A16z Crypto. https://a16zcrypto.com/posts/article/machiavelli-principles-dao-decentralized-governance/)

And I agree with this passage; in fact, in my MBA classes, I emphasize the importance of hierarchy. However, note that I approach hierarchy from a very different perspective (even addressing decentralization and hierarchy together). Let's go back to 1937 when Ronald Coase released "The Theory of the Firm." This theory was written to create efficient mechanisms; responsibilities must be distributed (with a focus on the word distribution here) among key participants in their respective areas, establishing an independent system, entrusting decisions to those most capable of making them. Therefore, it was based on a structure of task and competence division within companies. The economist then challenged the established models of market giants like Dupont, Standard Oil, and General Motors. Gradually, the concepts of his theory were applied in practice, and the results demonstrated their efficiency. In other words, companies continued to have hierarchies, but for the sake of efficiency, they distributed or decentralized sectors and some decision-making processes.

That is to say, it is possible to maintain social cohesion (or a common goal) even if hierarchies are present, without the need for an abrupt centralizing factor. This implies that Federalist documents or the design of the USA should not be seen as a goal, given that the authors argued in favor of the need for a stronger and more effective central government to unite independent states into a more harmonious federation. The cascading effects of Machiavelli's writings lead to centralization, inevitably. But cohesion is not only found in centralization:

"Instead, consensus can reflect the power of some groups to shape things according to their own interests. This idea is more closely associated with the Conflict Perspective and the works of Karl Marx and Max Weber, who argued that cohesion and order are, to some extent, created and maintained by coercion and domination, particularly through institutions like the State. Societies where there are oppressed minorities, for example, may continue to exhibit social cohesion not only because of a true consensus of values but also because they may fear that, if they dare to demand social justice, they could become victims of even more violence and persecution." (JOHNSON, 2016, pp. 41-42).

On the other hand, we need to work on reinforcing the norms, values, beliefs, and code structure of a DAO if we want to move towards a decentralized and cohesive future.

"Cohesion is the degree to which individuals participating in a social system identify with it and feel obligated to support it, especially concerning norms, values, beliefs, and structure." (JOHNSON, 1997, p.41).

Regarding a few quotes on a16z article:

"Autocratic tendencies are inherent in any organization"

"Leaders want to maintain and expand their power and privilege"

"Power tends to corrupt, and absolute power corrupts absolutely"

I would like to understand why the choice of these three quotes (Popper, Michels, and Acton, respectively) and not

"Despotism is a legitimate mode of government in dealing with any people, provided the end be their material prosperity and the means justified by their transcendent expediency." (John Stuart Mill) or the perspective of Jean-Jacques Rousseau, who argued in favor of a form of government based on the general will and citizen participation, aiming for a more just balance of power, or even Immanuel Kant, who discussed the importance of morality and law as limitations to power, emphasizing the idea of an ethical duty that transcends the mere exercise of power: "Act in such a way that you treat humanity, whether in your own person or in the person of any other, never merely as a means to an end, but always at the same time as an end."?

Is the path indeed to take a narrative focused on centralization and suggest technical and governance improvements for DAO from there? Or can we choose other thinkers and, from their perspectives, understand governance flaws without having to base our thinking on Machiavelli or Federalist writings?

I refuse to lead my (very few) readers to believe that the narrative behind DAO innovation is Machiavellian. We cannot fix governance that way. And no, the ends do not justify the means.