The Why

Economics is evolving

Historically, capitalism dominated the economic world. That won’t always be the case.

Cooperativism as coordination -vs- capitalism as extraction

The Observation

Capitalism has outlived its usefulness. Despite driving innovation for the last two hundred years, it has caused wealth to become hyper concentrated in the hands of a tiny minority. This minority is then using that wealth to further increase their own power, at the expense of everyone else. Fortunately, cooperatives have the power to eliminate excessive wealth inequality (and therefore the imbalance of power) that late-stage capitalism has generated. By fairly distributing ownership amongst those who produce value (rather than amongst those who simply have capital), civilization can finally solve not just wealth inequality, but arguably every human-centric problem on the planet.

The Thesis

Because a standard corporation is legally required to maximize returns for its shareholders, the capitalist demand for extraction is not reducible. Put another way: if the corporation can extract more value, it is legally obligated to do so. The often missed extrapolation here is that this shareholder profit comes at the expense of both the employees who work for the business and the customers who purchase from the business. In economic terms, shareholder profits are dead weight loss (DWL) on transactions between producers and consumers. An equivalent business that does not incur this DWL could both charge less and pay its employees more.

Meanwhile, cooperatives are not structured with the same incentives. The "owners" are not shareholders, but members: they are sellers, buyers, users, patrons, etc. The cooperative does not exist as a profit maximization entity, but rather as a cost minimization entity for everyone who interacts with it.

The key question for comparing economic efficiency then becomes:

Does coordinating a cooperative cost less than what an equivalent capitalist organization extracts?

Historically, the answer to this has been no. Coordinating votes, coming to consensus, and accessing capital are all activities that democratic cooperatives must wrestle with much more than any un-democratic privately-owned business. Crucially, however, cooperative coordination costs can be reduced, and this reduction has only recently become possible due to the explosive advancement of digital technology over the last two decades.

The Enabling Technology

Blockchain technology (or more generically "distributed ledger technology", DLT) is a heavily underutilized resource for solving coordination problems. DLT, in its initial incarnation as "decentralized finance", rightfully earned its stigma. Unfortunately, that stigma now prevents many from rationally evaluating alternative use cases. Far beyond merely digitizing a Ponzi scheme, DLT enables large communities to achieve consensus more cheaply than ever before in human history.

DLT’s capacity to trustlessly facilitate voting, governance, data storage, provenance, escrow, payments, and countless other online activities will inevitably revolutionize every digital industry. Using marketplace cooperatives as the point of entry, DLT could power an economic revolution capable of upending the entrenched pro-capitalist order...

First slowly, then all at once.