In his seminal 1937 essay, The Nature of the Firm, economist Ronald Coase explained why companies exist—to reduce the friction and transaction costs of contracting individual work on the free market. While perhaps a truth of the past, traditional corporations with bloated management and poor incentives for employees and users no longer effectively create value. Rather than focusing on practicing the craft at hand, tremendous energy is wasted optimizing for zero-sum games of equity vesting, salary negotiation, and organizational politics.
We've seen a collective stirring around redefining work through the creator economy and platform economy, which offer individuals the flexibility and autonomy to discover demand for their gifts. The last generation of innovation in platforms accelerated the inevitable rise of a globally distributed workforce. Companies now recognize that, without a steep increase in transaction or bureaucracy costs, they can flexibly scale up or down throughput through a new class of labor—freelancers.
On the one hand, the silhouette of a self-deterministic, dream-bearing, free-roaming, modern-age worker emerges as an aspiration. Ironically, these workers are also often the most alienated from the fruits of their labor. The dichotomy between 'us' and 'them' is stark. The product sees an absence of credit or attribution to freelancers at an organizational level. While their work may have persisted in sustaining the essence of a product, their very own identity as a contributor is abstracted away by the company.
Many recognize this stark reality despite the compelling narratives around the future of work. While freelancing offers the flexibility in individual lifestyle, individuals may not feel incentivized to invest in the long-term success of the collective. Traditional companies, with rigid hierarchies but abundant resources, make competing for attention internally exhausting for all participants.
It’s clear that the most thorny problems facing humanity today—climate crisis, cybersecurity, income inequality to name a few—will not be solved by one corporation or one individual. These problems need to be addressed with the scale and efficiency of a corporation, without compromising on individual autonomy, creativity, and ownership. They require fluid and multidisciplinary collaboration that transcends the borders of institutions, from corporations to nation-states.
Pioneering collectives have persisted throughout history, and we are seeing a new form also begin to emerge. These groups are congregating online in forums, on Twitter, in Telegram groups, mobilizing resources and exchanging information.
The viral emergence of DAOs is simply a symptom of the demand. We desire to become a 'core contributor' to a historical moment. As collective participants and owners, we get a taste of long-lost idealism, community, and optimism since COVID has taken hold of our daily rituals. PleasrDAO's bid for Snowden’s Stay Free. ConstitutionDAO's bid for the US Constitution. The Kraus House’s bid for an NBA team. Group bids are fleeting moments of glory. They demonstrate how with a clearly defined goal and a well-defined action — contributing capital — a group of people can be coordinated in record speed.
It's become clear, however, that pure exuberance can't last forever. Without guardrails on how to further their impact and continuously bring their unique value to a collective, contributors can feel lost, unrecognized, and eventually leave. In the absence of a management team or an HR department to delineate the paths of a contributor, how can we incentivize everyone in a network of communities to discover where they can contribute the most value? How can we empower each other to work flexibly and autonomously, while still fostering a sense of security, belonging, and identity?
The promise of DAOs lies in self-governance. With the appropriate tools and mechanics, contributors can onboard, coordinate, reward one another, rather than relying on one single point of failure. In absence of such infrastructure, decisions will continue to be made arbitrarily and consensus cannot scale across the network.
Contributors must be able to port their body of work across organizations. In the current labor system, workers are made legible by the institutions they belong to. A worker's entire identity—their work, reputation, relationships—exists in the blackbox of an insular permission-controlled database. Once a worker leaves the organization, their identity is effectively erased and they must rebuild and retell their narrative within the context of another institution. Web3 allows contributors to have ownership over their body of work while their entire system of record exists on-chain, providing the context needed for contributors’ reputation to become legible to multiple communities. Contributors can even thrive through pseudonymous accounts that ensure privacy.
Contributions and credibility must be interoperable and fluid. To create a network of fluid organizations, we can no longer rely on traditional enterprise software with rigid control permissions and a centralized database. In an interoperable world, a contributor's work to one community can be leveraged in another, as on-chain data and smart contracts are largely interoperable by default. Reputation is another currency coveted within a traditional corporation, and one that is often lost in the realm of purely individualized work. There is no standard for inter-organizational reputation. The concept of "co-signs" or "endorsements" aren't new but lack legitimacy across different communities. Infrastructure that is designed around interoperability will allow stronger inter-network cooperability and fluidity to emerge.
Power and authority in the contributor economy must be emergent, not assigned. In traditional systems, compensation and authority are explicitly defined and pre-negotiated (titles, roles, and compensation), even though trust and responsibility are implicitly earned. Token mechanisms create infinite possibilities for how credit can now be attributed granularly to all project contributors. For example, imagine your contribution is assessed on multiple programmable vectors rather than on a say of a single person or single metric. Tokens also enable stronger value allocation among contributors, as votes of high trust or appreciation. Creating more multidimensional opportunities for power and authority to flow between individuals and communities will enable a higher degree of overall decentralization.
Web3 has opened the gate of opportunity to reexamine the building blocks of an organization from the bottom-up, to assess the appropriate role of technology in sociopolitical progress, and to question the relationships between capital, contribution, reputation, and power. Understanding these relationships will pave the pathway for a fundamental redistribution of value, rather than relying on normative presumptions of 'this is how the world works.’ The future of work is coming, and we are all its contributors.
The future of work is coming, and we are all its contributors.
If these are questions you’d also like to explore, we invite you to become a contributor to the Station protocol or to participate in our research efforts through Newstand, Station’s publication focused on exploring the possibility of work in an era of hyper connectivity and fluidity. Station Newstand is open 24/7 for submissions and experimentations from contributors around the pluriverse.