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True distributed governance is off-chain

One of the most groundbreaking uses of blockchains, according to techno-utopian blockchain fans, is governance. The thinking is that having some sort of blockchain-based direct democracy will disrupt our governments and fix the issues we are facing as a society.

The problem is not one of technology though and it cannot be solved through technology, be it blockchain or anything else. Any solution to our governance problems should in fact be solved on a societal level and involve a very low tech solution.

For the past year I’ve been living in Bali and I started to understand more about Bali’s and Indonesia’s governance and politics. While on a first look it functions like a slightly broken modern democracy, it takes a deeper and outside the box look to start understanding that it is in fact a very interesting multi-layered distributed governance system.

Indonesia’s system

Indonesia is a good example of distributed governance that, while not perfect, works surprisingly very well in practice. What’s amazing about its system is that it scales in a way that a blockchian-based solution could not scale.

Indonesia is a country of almost 300 million people spread across thousands of islands speaking 700 languages and having hundreds of indigenous religions.

Its complex governance system is not clearly explained anywhere as far as I know. One has to live in this country long enough to understand it and even then, they might have a feeling of how things work without being able to explain it in absolute terms because the system is vague enough that different people can perceive it in different ways. Here is how I see it:

  1. The base layer is a set of simple and universal rules, called pancasila.
  2. The “traditional government” part which, like in any modern democracy, works according to the separation of powers — legislature, executive and judiciary and is based on a constitution which is protected by a constitutional court. This layer of governance is further divided in a hierarchy that goes from state level all the way down to province, regency, district and village as in most modern nation states.
  3. Local governance systems which vary widely from area to area and culture to culture. Aceh has sharia law, some places in Java have sultans and local communities with various levels of authority, Bali has banjars, and some more remote areas in Maluku or Papua live by their own tribal laws as they have always lived. Some of these systems have their own police force, parallel to the state police, which imposes their own rules and sometimes has arguably more authority than the state police.

So in Indonesia we have a complex, multi-layered, distributed governance system unlike anything I have seen in western countries.

What I want to talk about in what follows is the base layer, the pancasila.

The base layer

When the Republic of Indonesia was founded in 1945 a set of basic principles were defined. This happened before a constitution was adopted and are until today ingrained into everybody’s consciousness. I argue that this is the cornerstone of what makes Indonesia’s democracy work at such a scale.

There are a few reasons as to why this approach was necessary.

The main one is the fact that Indonesia is by definition a multicultural society with people from a huge number of different cultures and religions, and although Muslims form a religious majority and Javanese form an ethnic majority, the country could not hold together if it was to follow Muslim laws or Javanese principles. That approach might work under a totalitarian government where everybody is forced to have the same beliefs or end up in concentration camps but Indonesia chose to not take that route.

Another reason for this is that Indonesia is a country started “from scratch”. It did not exist as an independent entity before. So it was necessary to have some principles that bring people together in addition to a national language. Just having a constitution would not do, as that is too sterile and rigid for people to believe in. People need simple principles to keep them united rather than complex rules that are hard to even understand.

The implications of having such a setup are much more profound than the reasons though.

I am not sure whether the founding fathers thought as far as this or they were simply looking for practical ways to bootstrap a new country. Either way, the result is a huge social experiment that has been working quite well for 75 years now.

One implication is the immutability of the pancasila. Because it is internalized by the almost 300 million citizens it is very hard to alter, unlike a constitution. A constitution can be modified with a referendum whose results could easily be manipulated using social media these days. But in order for the pancasila to be modified, Indonesia would require a dictator that would brainwash people for at least one generation. This approach is strikingly similar to the way the Bitcoin network works, in that the immutability of the protocol is guaranteed not by the immutability of the code itself but by the fact that every node runs its own copy of the code which makes altering the code on a majority of the nodes impractical.

The issue with centralized governance

Centralized governance in modern democracies is great from many perspectives but it also has some serious flaws.

The main issue is that it programs people to believe that the state is above everything because it is the entity that issues laws after all. In the same way in which the Catholic Church was, at its peak, able to collect “fines” from people in order for their sins to be “forgiven”, the state is now in a position to both issue laws as it wishes and to enforce them even if those laws are against its own citizens when in fact any law should be there to serve people rather than to hinder them.

Distributed governance

The way Indonesia’s pancasila system works is very unique and yet beautifully simple.

It basically works like this:

  1. There is a set of principles that everybody is supposed to follow, including the government and the constitution.
  2. These principles are simple enough that they can not only be easily remembered, but fully internalized by every individual.
  3. These principles are vague enough that there is plenty of room for interpretation so that they can suit people from very different cultural and religious backgrounds.

The reason this scales better than a potential blockchain-based solution is that it scales not only up to the state level but also down to the individual level. The way I settle disputes with my neighbor is really my business and my neighbor’s business. We should first and foremost treat each other as human beings and only if that fails should we fall back to calling the police or invoking state laws.

Think of a distributed system in which the complex problem of defining all possible interactions between nodes is redefined as the simpler problem of letting nodes interact with each other on a case by case basis. Then instead of using a supercomputer to run this massive simulation we simply let the individual nodes do their part of the job. While the “world computer”, or blockchain, would need to account for (potential) interactions between every two nodes, we have now shifted the computation to the individual nodes without even letting the system know about all the micro-decisions involved. We gain both efficiency (scaling up) and flexibility (scaling down).

Two parallel systems

This whole story might seem scary to some. It might sound like Indonesia is a country where there is no “rule of law” and everybody does whatever they want. Which is a crazy thought. And it is partially true, except that Indonesia is also a modern democracy with a constitution and a somewhat working legal system. In the same way that people are subordinated to the pancasila they are also subordinated to the constitution and they can at any time take advantage of the courts to settle disputes if they choose to.

The beauty of the system is that it places the responsibility of every decision on the individual first while also providing a legal framework to fall back to in case things don’t work out.

Personal responsibility leads to personal accountability

Such a system does not in fact lead to a less safe life. People don’t start killing each other on the streets because “they interpret the laws in different ways”. I highly believe that humanity is universal and that true believers of apparently opposing religions will by default just respect each other and collaborate.

However, the effects on the society of placing responsibility on the individuals first are profound. People will behave better when they are the first to hold themselves accountable for their actions.

Personal accountability is like a muscle. It can be trained. And as one trains his muscles by lifting heavier and heavier weights, one trains his virtues by taking more and more responsibility. This of course means that both the families have to tend to give children more responsibilities and the state has to push more rather than less responsibilities over to every individual. But the two go more or less hand in hand.

Also, people will hold themselves accountable for every action if they know they had a choice in the first place. So delegating more responsibility to the individuals rather than less is the only way to build a healthy and antifragile society that “just works” according to people’s moral compasses as opposed to a fragile society defined by a bureaucratic set of rules.