Next Generation Democracy Overview

Wikis, Web 2.0, etc I think have the potential to fundamentally transform the way we are governed and radically reshape political philosophy. Not since the days of Locke, Hobbes, Rousseau etc do we have the opportunity and the tools to address the many short comings of democratic society, especially the domination of special interests and lobbyists.

As Churchill once commented "democracy is the worst form of government, but it is better than any other type of government we have ever tried." Democracy 2.0 represents an opportunity to redress the many short comings of the worst possible government we have -democracy as we know it today.

However, participative democracy through a million wikis and a million blogs does not necessarily constitute better government or democracy. While there is unquestionable value in crowd sourcing and participative democracy, humans in general are not rationale creatures. There have been several good economic studies lately demonstrating the irrational economic behaviour of most humans. The reality is that most people vote first with their wallet, then their feet, sometimes with their heart, but rarely with their mind. But computer assisted Democracy 2.0 tools working in analogous way how Google provides much better search results based on actual hits by user rather than humans tagging the data may point to a better way. "Futarchy" is a good example of such an approach.

One of the fundamental questions that must be asked is why do governments exist in the form that they do today? As Francis Fukuyama and Paul Kennedy have identified in their respective books "End of History" and "Preparing for the 21st Century" governments around the world have evolved largely into a tripartite structure horizontally - legislative, executive and judicial and a vertical structure of geographically based municipal, state/provincial and federal jurisdictions. Do these divisions make sense, especially in the later case of overlapping and competing services from municipal, provincial and federal jurisdictions?

The famous Nobel prize winner Coase, asked the same question with respect to businesses - why do they exist? Why don't we have individual contracts for services with each employee, instead of large corporate bureaucracies? He discovered that "transaction costs" were the biggest factor which necessitated the creation of bureaucracies. In some lines of businesses like construction - lots of small contracts with suppliers and trades makes a lot of sense and is the most efficient way of doing business. But in most white collar businesses, the cost of transaction of doing everything through contracts becomes extremely costly. It is easy to specify a contract to install 1000 sheets of drywall - but it is another matter entirely to draw up a contract to process and follow up with 1000 customer purchase orders. That is why it is easier to hire someone to do this type of work, rather than negotiating a contract.

But Wikinomics, enterprise 2.0, Web 2.0 and SOA has the potential to simply many traditional white collar jobs and allow for outsourcing and reduce the transaction costs of contracting for services rather than hiring staff. The big impact of Wikinomics will be to dramatically change the corporate bureaucratic culture as we know it today. The 200,000 person Fortune 500 corporation is a remnant of the 20th century. Instead, as we already seeing today, companies will outsource many of their non-core functions and focus on what they do best. This will introduce a new age of profitability, productivity and long term growth - in which I believe we are just starting to see the early signs.

So what does this have to do with Next Generation Democracy?

I believe governments exist in the form they do today because of the high transaction costs of providing their services in any other way. In the 20th century there was no other practical, cost effective, way of delivering services such as defense, education, health care, social services, dog licenses, etc etc. True contracting has been tried from time to time, (e.g.

mercenaries) but it usually has failed because of a misalignment of objectives.

So Next Generation Democracy, using the new tools of Web 2.0 allows us to ask some fundamental questions:

1. Why can't governments compete for my services? Is this fixed hierarchy of municipal, provincial and federal governments necessary? Why not let governments of any strata issue vouchers for services and let "me" the consumer decide who is best at delivering those services. Perhaps federal governments would be better a funding and delivering research or driver's licenses? Maybe municipal governments should look after health care, etc etc

2. Governments always claim that taxes are "our" money, yet few of us feel any direct connection between our taxes and the services we receive. With today's computers and networks citizens could be provided with individual accounts and track how their individual taxes are spent and disbursed. They may even be allowed to prioritize the areas of spending within their individual tax accounts. Ultimately through their individual tax account, is how citizens can be allowed to vote with their wallets (which is generally more reliable then their brains) on the services that they deem most important to them.

3. Why not neighbourhood or personalized democracy? With these tools maybe my neighbours and I can elect to beautify our neighbourhood using our tax dollars or accumulated value in our homes. We could elect to put flower boxes in front of every home, cobblestone the street, install fiber to each house, etc etc. This would not only beautify the neighbourhood but would significantly increase the value of our homes.

4. Finally can we use the Internet to allow citizens vote through their behaviour rather than their sometimes counter intuitive thinking?