Status, Wealth, & Power: Network Effects Demand a New Social Contract

&gt; And we believe it’s up to tech Founders, VC’s and employees to do something about it. It’s up to us. Governments and other traditional forms of hierarchical power are ill-equipped to understand the network economy and evolve the new social contract.<p>Hard pass, I&#x27;ll take a social contract defined through democracy every time.<p>Founders and investors, in particular, are uniquely unqualified to evolve the social contract because they have overwhelming financial interests.

This reads as though written by someone who has never experienced being on the losing side (the long tail) of all the systems they&#x27;re advocating for. It utterly fails to answer why anyone not at the top of the power curve would want society to be structured this way - most of the described &quot;Social Contract&quot; seems to imply precarity, replacability, and living at the edge of financial disaster for most. Meanwhile, there&#x27;s little mention that those who hold <i>real</i> power in this kind of system are not part of the curve at all but are those choosing the algorithms and AI systems that rank everyone else.<p>Then there&#x27;s this:<p>&gt; Trickle down doesn’t work because it existed in a hierarchical structure based on the scale production technologies of the times before 2000. There was much more friction in that old system. But in a network economy, the means of production have shifted. It’s 10X more fluid, can create wealth at a much higher rate, decrease costs at a much higher rate, and the network can raise all boats.<p>To me this reads as &quot;Trickle down didn&#x27;t work last time, but <i>this time it&#x27;s different</i> and it&#x27;ll definitely work&quot;. <i>How</i> it will work <i>this time</i> is left as an exercise to the reader.

The Social Contract is one of the most misleading ideas that has ever been created - it&#x27;s not a contract, and it&#x27;s not voluntary. It&#x27;s a sleight of hand, to for those in power to justify the use of force of on others.

I recommend the PBS documentary on the fed:<p><a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=9RbL8lTsITY" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=9RbL8lTsITY</a><p>Imo we need to change the social contract back to what it originally was. The fed has too much power and its been used (perhaps inadvertently) to centralize power further. There’s a reason the bank of the US was abolished back in the 1800s.<p>Also, I think most people forget just how diverse the U.S. is. A great example: I don’t think guns are necessarily good in the city. But in the country I need a gun because I have mountain lions and bears in the area (and county sheriffs would take an hour or more to respond). So federal gun laws don’t make a ton of sense. States don’t have the same interests (see Florida vs Washington state) nor ethos.<p>The way the US stayed together was each state was sovereign. Some authority was seeded to the federal government for the betterment of all. That being said, both political parties are attempting to consolidate power, and neither likes what the other wants.<p>Imo the premise is correct we need a new social contract, but imo we need to reinstate the one we already had.

This guy wants to pretend globalization and monopolistic private ownership of networks is part of a futuristic society instead of just a naked power grab where production moves to the lowest paid location globally and the superrich use monopolist and cartel tactics to create huge spy networks to guard their hoard.

Network effects are at the heart of most of the tech&#x2F;culture&#x2F;economy discussions that crop up here. Aside from the very obvious company spin, this is a good stab at the issue.<p>However, any system that rewards only 10% of its participants, is essentially Hollywood. It’s not sustainable, and people will simply check out. The only way to prevent that is to either change the odds, or to sell propaganda.<p>I like the gambler&#x2F;house analogy. It’s also has intuitive suggestions on how they can be handled.<p>What is to stop governments from just taking over that spot? It’s perfect for what governments are meant to do, or think they are meant to do.<p>“You will have access to training” is a few rungs below the “lift yourself up by your bootstraps”. Especially after acknowledging that only 10% of the population actually perform fast enough for the system to reward you.

Other stuff aside, can we <i>please</i> not go around capitalizing the word &quot;founder&quot;? I&#x27;ve seen it before in a few other blogs that get posted here. Makes it sound like an exalted priesthood, and it&#x27;s pretty nauseating.

I cant help but observe that the &quot;Power law&quot; is more or less +1-2 SDs above mean... The network effect is leveraging those in the top (say) 5%ile across all people.<p>Anyone with internet can use the software of the top 5% of programmers. Anyone with youtube can view the top 5% of Skateboarders (or whatever content) Etc.<p>This concentrates all the wealth onto them.<p>If we want to combat this concentrating force we need to also work on dispersion forces. We can ensure that those near the mean participate in the wins. For many this looks like equity.<p>across society we need to be bringing this equity to the public markets sooner. If I were the SEC I&#x27;d be working on rules that say companies cannot block sale&#x2F;liquidity of shares (it is one&#x27;s property after all). This would help create liquidity for the lower&amp;middle folks who get equity in small businesses and allow large institutions to bring this opportunity to all (via index ETFs). Then instead of holding shares in some small startup you could, for example, sell some and hold an entire pool of startups (VC style) and spread your time investment in a single company across many, without job hopping.

&gt; And we believe it’s up to tech Founders, VC’s and employees to do something about it.<p>Nobody stops Silicon Valley from saving the world, it&#x27;s just that it is harder than creating Wi-Fi connected juicers and apps, even if that app is Facebook.<p>I understand the hubris, everyone uses these apps, but getting people hooked on something we are predisposed to want like sugar, social media or loot boxes only qualifies you as a predator.

Glad that someone is talking about the reality of how things are. The death of the nation state and other hierarchical organizations and of broad-based democracy is written in the mathematical structures of networks.<p>It just makes no sense to treat all nodes in a complex network equally since they are unequal by virtue of network structure itself. And it certainly makes no sense to create large C&amp;C hierarchies when well-positioned nodes and clusters carry far more value and information.<p>And reality does not tolerate inefficient structures in the name of ideology for long in the modern world especially since all ideology is variable and none fundamental.<p>It will of course be covered up by various PR for a long time. But the writing is on the wall.

Maybe part of the problem is in the first paragraph. Founders&#x2F;VC types seem to think that being able to make money off of people&#x27;s usage of your product is the same as &quot;creating value&quot; for those people.<p>To take an extreme example, if someone says I&#x27;ll burn down your house if you don&#x27;t pay me, is value created?<p>Ok and if an advertising based economy&#x2F;culture creates a phony demand for something, and then people purchase that something, is value created?

The proposals presented here basically boil down to: You give up your privacy and I promise I won&#x27;t use my big brother like knowledge of everything about you to force you under my thumb even further.<p>I&#x27;ve seen this movie before and the deal always gets altered further

This may not be popular here because a lot of Ycombinator&#x27;s wealth depends on this not happening, but competition laws need to change to allow developers&#x2F;taxi drivers&#x2F;home renters&#x2F;etc. to collude openly against platforms.<p>Shareholders get to collude, even against consumers, by merging companies, and the government goes to great lengths to give specific minority shareholder rights to boost the collusion. But a group of small businesses don&#x27;t get to if they don&#x27;t merge; I think they <i>should</i> be able to collude against platforms backed by network effects, hardware lock in, etc., I&#x27;m not saying they should be able to collude against consumers.

Nothing will change so long as we continue to stick with the outmodded, hypercapitalist notion of an economy defined purely monetarily. Money erases all actual social values and establishes only exchange value (abstracted from things that are actually important, like the fact that a vast majority of exchanges are destructive for the species and probably shouldn’t be happening) thus we’ve let ecosystems basically reach the point of collapse.<p>A proper economy needs to be <i>general</i> in Bataille’s sense. It needs to incorporate social goods as its measure, not just abstractions like gdp and exchange value.<p>This article is right that society has failed to adapt to rapidly proliferating digital technologies, leading to the complete erosion of social structures, without sufficient replacements, but in my estimation it does not go far enough<p>Much of Bernard Stiegler’s work centers around establishing such alternatives: <a href="https:&#x2F;&#x2F;arsindustrialis.org&#x2F;manifesto-2010" rel="nofollow">https:&#x2F;&#x2F;arsindustrialis.org&#x2F;manifesto-2010</a>

When individuals are wealthy enough to pay a state&#x27;s National Guard to deploy on the border, then they are too wealthy for a healthy democracy.<p>(this is independent of whether you approve of sending them to the border, of what your opinion is on border&#x2F;immigration issues).

Interesting that NFX posts always get showcased in HN in front page.Plus, any top comments on other posts also link to NFX website. Guess there is a big pro NFX lobby lurking in HN.

While I agree the network effects expose everyone to the power law distribution of outcomes, and awareness of that is and will continue to be jarring, you can mitigate those effects with privacy and distance. The problem isn&#x27;t that people are rich or poor, it&#x27;s that we have addictive technologies that prevent you from avoiding them.<p>His premise requires this network cohesion and continuity stays the same or increases, where I think we&#x27;re at the threshold of social re-balkanization, where the weak links in networks (social media, class, etc) simply collapse on their own weight into traditional strong sub-networks based on family, region, ideology, religion, ethnicity, etc. Whether you see that as reactionary against inevitable progress of history, or hope for survival, it&#x27;s the counter-bet to what he&#x27;s predicting. I disagree that a new equillibrium he predicts will be a cohesive cultural homogenization mediated by network technologies. Like some globalized China or Singapore.<p>I think the social polarization we&#x27;re seeing now is an example of weak-link network collapse in very fast motion, and an example is social-credit&#x2F;vaccine passports, where you are going to see the resurgence of subcultures to the point of internecine civil conflict over them and measures like them. I would make a bigger bet on all-against-all conflict than what he in-effect describes as an efficient, China style, dominating, technologically empowered planned elite.<p>As someone who has spent a lifetime travelling in various subcultures, there will always been an underground, they will always be the future, they always prevail because that is where all non-linear growth comes from. The political middle and the comfortable have desire and symbolic comforts, but they do not have <i>necessity</i> and that&#x27;s what makes me willing to always bet big against beliefs in a managed future.<p>The whole thing is predicated on ideas like, &quot;Don&#x27;t worry, everything will be provided for you, except dignity, but soon everyone will have forgotten what that was anyway. It was the only thing standing in the way.&quot; When I hear sentiments that map to that, the only meaningful question to me is how to get short.