Designing postcapitalist finance in Protocols for Postcapitalist Expression

Abstract

Protocols for Postcapitalist Expression, the Economic Space Agency’s latest experiment in radical economic design, explores the possibility of designing a digitally native economy that is geared towards care, the arts, and the environment, and which not only refuses to give up on the financial frontiers of contemporary capitalism, but actively seeks to marshal them towards innovative ends. The architecture of a novel economic space comes into view through a set of protocols, which integrate economic information within a social value framework. This ‘Economic Space Protocol’ involves crafting a new grammar for economic information production processes that have traditionally been tied to competitive market behavior. This essay interrogates the place of finance in the book, emphasizing price discovery’s generativity with regards to information. What is necessary in the imagination of any postcapitalist future are radical design initiatives that contend with both the necessity and the limits of the price discovery process.

Introduction

Can the seemingly antipolar functions of social value creation, on the one hand, and the complexities of modern finance, on the other, be made interoperable and mutually beneficial without the one devouring the other? Protocols for Postcapitalist Expression, the Economic Space Agency’s (ECSA) latest experiment in radical economic design, suggests they can be. The lofty promise of Protocols is a digitally native economy that is not only geared towards care, the arts, and the environment, but also declines to abandon the financial frontiers of contemporary capitalism. Co-authored by ECSA luminaries Dick Bryan, the organization’s Chief Economist, Jorge López, its lead architect, and Akseli Virtanen, its co-founder, the book’s ambitions are enjoyably vast: ‘to build an open, new economic space … a whole economy’ (Bryan et al., 2023: 33). ¹

In pursuit of this goal, Protocols announces the opening of a collaborative design space for the crafting of postcapitalist protocols. For the authors, ‘the economy is a programmable, designable medium’ that is ‘continuously open to its participants’ (33–34). New ways of producing value – which the authors prefer to call ‘performances’ to differentiate them from erstwhile modes of production – inculcate this element of economic agency by appropriating ideas from decentralized and traditional finance (staking, lending, risking, hedging, trading) and repurposing them to confront ‘issues of social meaning, shared risk taking, and affect’ (34). Performances are new forms of economic participation, valuation, and reciprocity that promise to contribute to the ‘[collective expression of] values and the creation and distribution of outputs’ (35). In Protocols, the individual design proposition is understood in terms of its contribution to a larger ‘economic grammar’ shared across the ‘new economic space’ (72, 77). Importantly, this point makes sense of the authors’ framing the book as an intervention in economic design: ‘rather than [establishing] a forum for trading’, what Protocols attempts is crafting a new economic language that would shift the nexus of economic activity from ‘individual decisions to buy and sell’ to ‘shared flows of value creation’ (35).

For this reason, ECSA invites external stakeholders to contribute to Protocols via co-publishing, a form of publication whereby users may purchase portions of the text (Units of Discourse) that will thereafter become publicly accessible, eventually resulting in an open-access publication. The aim of co-publishing, the authors write, is to foster ‘network curation’ of ideas in the book in order to get readers invested in those ideas; an arrangement which reflects the book’s investment in its readership as contributors to the new economic grammar (ECSA, 2023). Contributions to ECSA’s network coagulate in this co-created economic grammar, which operates as a ‘systemic layer of unification’ termed ‘the Economic Space Protocol’ (44). Insofar as ECSA imagines this protocol-grammar as bridging the present and a postcapitalist future, it is clear why one of the book’s stated goals is to develop ‘a network with a collective momentum’ (36).

Personally, I am continuing in conversations with ECSA, and I am especially interested in their ongoing design work. Therefore, what I see as the purpose of this essay is not so much to poke holes in any of the individual propositions elaborated in the book, but to raise a larger question about the text’s relationship to some of the economic techniques from which it borrows. In particular, I am interested in the relationship Protocols imagines between itself and modern finance. A chorus of voices is rising in both academic and non-academic spaces that demonstrates renewed interest in finance as a conceptual zone of inquiry not reserved for capitalist devotees (Zhang, 2023; Halpern, 2023; Noorizadeh, 2023; Blas, 2018). In the opening pages of Protocols, the authors announce their participation in this choir: ‘social and economic power has shifted dramatically since the 1970s from industrial capital, and the workplace-based unions who battled it, to finance, where there is little organized resistance, at least not the old kind of resistance’ (26). Given this, they argue that

if we want to build postcapitalism, we must start by recognising this power of finance and challenge it by building a different finance. The ultimate goal is an economy of production, animated by alternative social and ethical values, and the starting point is finance. (26)

What is meant by finance here? Not just banks or institutions: ‘[our] challenge means taking finance outside the state and current financial institutions’ precisely because ‘finance is too elusive, too liquid and mobile to be trapped in power battles with organized labor’ (28, 26). For ECSA, finance is a way of doing things with value: ‘we propose networks of people with their own financial capacities – units of account, distributed credit issuance and ways of investing, measuring and rewarding’ (28). What is a financial way of doing things but a mode of sensing through cybernetic information production and feedback processes? In the postwar period, biopolitics, which previously took life as its primary object of manipulation, gave way to infopolitics and information management (Kline, 2015). Finance’s contemporary ascendence traces its lineage to this turn. As the Protocols authors write, ‘Information processing is clearly critical to programming an economy’ (52). Today, finance functions by incorporating the diverse and dispersed information of market participants in order to generate sophisticated informatic measurements of present and future risk. As such, finance is best understood as the advanced outrider of contemporary information society, both in a temporal sense of its being the sensory apparatus aimed at measuring future risk from the standpoint of the present, and in a spatial one, of its being tasked with uncovering latent risks prior to their proper appearance as such. Feeding these sensations backwards gives rise to the science of calibration that we call risk management.

Protocols concludes with an invitation for debate and I accept this invitation here by staging a disagreement about finance’s place in Protocols’ elaboration of new economic space. The debate takes place with one prominent reader of Protocols, Jonathan Beller, who is author of the book’s foreword, ‘On Economic Intelligence’. In this essay, I mobilize this disagreement as a point of divergence for charting a reading of Protocols that departs from Beller’s. Beller understands Protocols as a call to reinvent economic information production from the ground up in line with Stefano Harney and Fred Moten’s ‘general antagonism’, i.e., as a methodological touchstone for germinating ‘a new form of revolution’ (Beller, 2023: 22). The image of finance the reader finds in here is not one that highlights its ascendency, novelty, nor its fluidity. Beller instead hones in on the old chestnuts, the rapacious pursuit of profit and the endless extraction of surplus value. Lost in his analysis is the goal of Protocols to ‘[build] a different finance’ (26). The Bellerian reading of Protocols suggests that the book’s economic redesign ambitions are tied to the necessity of divorcing economic information production from the price discovery process and its attendant competitive behavior. To put my skepticism succinctly, I am unconvinced that these categories are cleaved as easily as Beller would like to believe. Thus, my disagreement with Beller turns upon a question of whether financial markets merely sort through and speculate upon existing information, in which case they could be replaced by technological facsimiles, or whether finance in fact generates novel quantities of information, which might otherwise not exist. In arguing for the latter, I move from the debate with Beller to an analysis of the authors’ reading of Friedrich Hayek. In the final section of this essay, I offer my own proposal for the design of new economic space, which resolves the tension between social value and price discovery.

Protocols contra Beller

What Beller’s foreword offers the reader is an extremely strong sense of a communal ‘we’: not we, the reader, nor we, the extended network of ECSA, but we, the virtuous community. Throughout the foreword, the reader finds themselves hailed into this community: ‘we must see…’, ‘we require…’, ‘only then will we’, ‘we are ready…’ (Beller, 2023: 15–17). In the first instance, the contours of this group are colored in by the ways it is preyed upon by the immutable and extractive tendencies of the capitalist and by the fact that it must inevitably rise up in revolt – a kind of postcapitalist messianism. The other way this community takes shape is by being reflected against who or what it is not. This community is not, Beller writes, ‘what is currently wet dreamt by the ‘when Lambo?’ crypto bros going on about libertarian forms of self-sovereignty’ (Beller, 2023: 14). As time spent on retail investment forums clarifies, ‘when Lambo’ is not the rallying cry of the affluent, but of a precarious class that prays to a market-god to be rescued from financial insecurity through increasingly risky bets. The psychological operation performed in the phrase ‘when Lambo’ is a form of supplication, a transference of faith onto the financial system as a rags-to-riches miracle worker. Beller’s castigation of this group of gamblers-parishioners is a mistake, for these ‘crypto bros going on about libertarian forms of self-sovereignty’ are postcapitalism’s very constituents.

An attitude of moral antagonism characterizes Beller’s foreword. ‘We know that some ‘we’ or some parts of ‘us’ must now intervene…’ he writes (Beller, 2023: 10). What is this intervention on behalf of ‘some parts’ of the community but a Rorschach test for who one’s true friends are? What echoes in this formulation is the cadence of a thinly veiled threat and the promise of eventual rectification campaigns. In the context of reading Protocols, the danger of hailing such a moral community is that it positions finance on the side of ‘them’ and never ‘us’; ‘they make us sick’ (Beller, 2023: 13). Easily enough a reader may conclude that Protocols is a book that demands the elimination of finance tout suite. In larger context, because the bargain Beller outlines has stakes that are existential – ‘if the people and ecosystems of Earth are to thrive’ (Beller, 2023: 16–17) – whatever means are selected for accomplishing his desired ends, such as sweeping away extant monetary, financial, and computational forms, are forgiven in advance.

This image of finance as an extension of the enemy’s machinery of surplus value extraction and profit-making machinery concedes too much up front. It misunderstands the technical evolution of the financial system. Considered at a systemic level, the telos of finance is neither profit nor accumulation. While these factors motivate individuals and inject fuel into the financial system, the essential byproduct of this system-as-a-system is sensation and the secretion of a financial sensory order. The essence of finance is to be found not in turning gears profit seeking, but in the systemic output of prices discovered.

By imagining the ‘new economic space’ becoming populated by modes of ‘different economic calculus’ (53), the Protocols authors insist that ‘postcapitalism must be built ‘inside’ capitalism and find its own way to emerge ‘out of’ capitalism’ (33). This language situates the reader clearly within a framework of ‘evolutionary economics’, a phrase coined by Thorstein Veblen (1898) in his under-read article, ‘Why Is Economics Not An Evolutionary Science?’ This frame takes issue with the ‘revolutionary struggles … toward collective ends’ that Beller (2023: 23), quoting Jodi Melamed, impels his reader-partisan to take up: ‘Let’s do that’, he writes. Drawing on Veblen, Darwin, the French philosopher of technology Gilbert Simondon, the political economist Joseph Schumpeter, and the evolutionary biologists John Maynard Smith and Eors Szathmary, what evolutionary economics provides is more than a refurbished Fabianism. By bringing in ideas far beyond the domain of economics, it offers alternative perspectives on what systems of exchange fundamentally are and how they might be steered.

When the authors of Protocols invoke ‘collaborative finance’ or ‘CoFi’ (32) as one of their core ‘protocol design principles’ (181), they are performing the opportunities of evolutionary economics. Collaborative finance represents an invitation to repurpose existing financial techniques according to design principles that forefront distributed participation. ‘The goal of realizing the potential of Web3 for economic design … and building an economic space of many collective values … are our depiction of collaborative finance (CoFi) and the proposition that it is through finance that a network most actively coheres’ (32). The key point is to realize that today’s finance is not final; it can be redesigned, it can evolve. In the book, finance is imagined as evolving into an active store of social not just economic values. This is the bedrock of Protocols’ vision for economics functioning differently: not an omnivorous profit extraction machine, but a cultural and machinic webbing that leverages the market’s knack for collecting distributed knowledge and repurposing that power towards social interplay. This approach leverages ECSA’s belief in the ‘the radical rupture of bitcoin’ alongside CoFi towards the larger ‘agenda of expressing different collectively-defined means of defining and measuring value, to build an open, new economic space’ (33). The turn to social value represents, the authors hope, ‘a profound change in direction for cryptodesign’, and it is by leveraging the network effects of finance that this agenda acquires the escape velocity needed to transcend the eddies of the local and work towards the grander task of ‘[b]uilding a whole economy’ (33).

Present circumstances have borne witness to a variety of critical responses to finance, from modest attempts to leverage the power of the conscious consumer – for example, through Environmental, Social, and Governance (ESG) investing – to more radical efforts, such as calls for the interruption of markets in the form of a general strike. In arguing that what the book offers is ‘a new way to mobilize … the general antagonism, and with it, a new form of revolution’, Beller adjoins Protocols to this style of response (Beller, 2023: 22–23). For him, the explicit outcome is a rendering of the book as an extension of twentieth-century ideology with twenty-first century technology: ‘[t]his time, with another century of struggle and know-how, if we all listen to history and to the claims of the denizens of Earth, things may be different’ (Beller, 2023: 23).

ESG and general antagonism are two sides of the same coin. Each attempts to deactivate finance without identifying where finance has succeeded and why. Protocols corrects this through its proposal of new financial instruments and techniques, including social derivatives (145), power-symmetrical risk-sharing agreements (44), and mutually recognized and open-ended performance contracts that offer exposure to the social future (44, 147). In their most promising form, what these tools offer is not a means of mobilizing general antagonism, but of democratizing the information production process already at work in contemporary finance. This is a promise to democratize the logic that currently binds markets to the accumulation of profits. Contra Beller, this is not a promise for postcapitalism to destroy the price discovery procedure, nor is it a replay of the revolutionary moments of the twentieth century. The promise of Protocols, and of adopting an evolutionary economics perspective, is to make obvious the fact that the economic situation of the twenty-first century impoverishes the frameworks bequeathed to it by the twentieth. To begin, there must be new ideas and fresh thinking that crosses legacy moral and partisan lines.

Hayek revisited

Protocols spends a great deal of time thinking with Friedrich Hayek. For the authors, he, the godfather of neoliberalism and intellectual guru of Margaret Thatcher, is less his bad reputation and more a theorist of ‘spontaneous order’. Hayek therefore provides Protocols with a picture of markets as that which ‘generate[s] the sorts of information a network needs’ (53). Because Hayekian markets are seen primarily as ‘information-transmission processes’, ‘their logic is not innately extractive’ and they are judged as not ‘innately capitalist’ (53).

Recently, Hayek has re-emerged as a figure of interest for economic thinkers (Auerbach and Sotiropoulos, 2012; Halpern, 2023). Partly motivating this revival is a concurrent re-emergence of the Socialist Calculation Debates of the mid-twentieth century. Originally these debates took place during the interwar and postwar periods, including contributions from Ludwig von Mises and Hayek on the one side, Otto Neurath and Oskar Lange on the other. These and other participants argued over whether markets were best able to respond to economic circumstances or whether a wartime leader or central planning committee might be better equipped to navigate them. For Hayek, planning failed on account of its assuming away the core knowledge problem in believing that data are given and easily obtained by central planners. If one assumes away the core function of markets, which is to collect dispersed knowledge, planning indeed appears to function well. What planners do in fiat-ing through the knowledge problem is misrecognize social problems as technical ones. Hayek referred to this as the ‘skeleton in our cupboard’ of ‘a quasi-omniscient individual’ (Hayek, 1937: 45). Overlooked by this engineering point of view, Hayek argued, were fundamental inefficiencies in human communication.

In Chapter 2.4 of Protocols, ‘Hayek’s Dead End’, the authors advance two critiques of Hayek that I suggest are somewhat misplaced and reflect misunderstandings of Hayek’s arguments in the Socialist Calculation Debates. First, the authors suggest that the price discovery process entails ‘the reduction of complexly-layered knowledge to a single index’ (56). Second, they argue that ‘data about an output and the interactions around its creation and exchange are thereby lost when price is elevated as the form in which knowledge is transmitted’ (57–58). Starting generally, I note that these criticisms are derived in large part from Hayek’s famous 1945 essay, ‘The Use of Knowledge in Society’ (Hayek, 1945). But when it comes to finance, The Sensory Order (Hayek, 1952) and his 1968 essay, ‘Competition as a Discovery Procedure’ (Hayek, 2002) are the more useful sources. Regarding The Sensory Order, Hayek’s longstanding interest in psychology, which preceded his studying economics, affords the book greater importance in his oeuvre than it has traditionally been given. By taking this book more seriously, one can begin to understand Hayek not simply as a thinker of ‘spontaneous order’ or information processing, but also as a theorist of market epistemology, and this has significant implications for how one understands his writing about price (Caldwell, 2004). The fact that these publications post-date the 1945 essay is not insignificant, as his thought can be seen to have evolved as a result of his contact with cyberneticians and systems thinkers like John von Neumann, Stafford Beer, Norbert Wiener, Garret Hardin, and Ludwig von Bertallanfy (Caldwell, 2004; Hancock, 2022). Even more than a theorist of market epistemology, I contend that the later Hayek is best understood as a theorist of ‘market cybernetics’.

Turning now to the authors’ specific critiques and Hayek’s 1968 essay. In the first critique, the authors suggest that Hayekian price discovery entails the reduction of economic complexity into a single index:

For Hayek, price is the reduction of complexly-layered knowledge to a single index. With everyone speaking the language of price and the pursuit of profit as a singular objective for decision-making, market interactions are said to generate spontaneous order, but what they actually do is to structure the space of the possible. (56)

Elaborating in a footnote:

For example, when I pay $5 for a cup of coffee I am not actually going through a complex calculation of the costs of all the technologies, raw materials, transport, labor, taxes, consumer preferences etc. that lie behind a cup of coffee. I just reduce all that to the acceptance of the price, pass over the debit card, and receive the coffee. (57)

In the 1968 essay, Hayek writes that competitive price discovery is ‘a procedure for discovering facts which, if the procedure did not exist, would remain unknown or at least would not be used’ (Hayek, 2002: 14). Hayekian price discovery emphasizes the subjectivity, dynamism, and dispersal of knowledge that price synthesizes. Furthermore, Hayekian prices do not speak directly to questions of value; they are agnostic on this. As the Protocols authors confirm, ‘It is the process that Hayek valued not the outcome’ (52). Hayekian prices are therefore best understood as media technologies, in the literal sense of their mediating dispersed parcels of knowledge. Price discovery synthesizes the dispersed desires, beliefs, and know-how of so many individuals through the agonistic technology of competition. The outcome is a supplemental form of information, which emerges as a quantitative epistemic surrogate from having put the various multimodal inputs into relation with one another. As Edward Nik-Khah and Phillip Mirowski (2019: 43) put it: ‘What is this depersonalized and deracinated suprahuman knowledge, but a new virtual kind of information?’ What Protocols frames as the reductionism of prices is really their productivity, their generation of novel information, which would otherwise not exist. In contrast to autopoietic systems like cell nuclei, which reproduce the conditions of their own organization, the price discovery system is allopoietic, it generates something that is not itself.

In their second critique of Hayek, the Protocols authors contend that forms of complex knowledge will be lost in the transmission of pricing information:

In Hayek’s framing, price may be the condensation of a complex set of knowledges, but knowledge is not intended to be reverse engineered from price. All other data about an output and the interactions around its creation and exchange are thereby lost when price is elevated as the form in which knowledge is transmitted. (57–58)

Is there a commensurate loss of knowledge in the price discovery process, even while it produces epistemic supplements? On the contrary, Hayekian price discovery preserves traces of original knowledge without eliminating it. When one draws a map, the original landscape is not abolished. The map is not a replication of the territory, but a novel quantity of information, which without eradicating its referent provides an alternative means to interface with its information. Prices do not eradicate the local knowledge that generates them, but they do remediate it. Prices extend the local maxima of knowledge into new domains by inserting it into a communications network wherein isolated knowledge parcels may be combined with others. For the network of the Economic Space Protocol to acquire momentum, the communication system of prices is something it must avow. In a 1977 talk, Hayek forcefully develops this point:

In our whole system of actions, we are individually steered by local information – information about more facts than any other person or authority can possibly possess. And the price and market system is in that sense a system of communication, which passes on (in the form of prices, determined only on the competitive market) the available information that each individual needs to act, and to act rationally. (Hayek, 1982: 325–326).

Certainly, price discovery’s ascension towards higher degrees of abstraction creates distance between users who interface at the level of derivatives and users who interface at the original sites of creation. The impact of this distance, however, appears minor and potentially necessary. Most of all, it appears inevitable on account of technological development and globalization. On the other hand, absent price discovery, local knowledge remains subject to the same forces of entropy. The local is not preserved by being excepted from the price discovery process. Price discovery is epistemically negentropic, yet fears of the process, that it will eliminate local knowledges, may prime populations to support revanchist policies and epistemologies.

In their description of new economic space, the Protocols authors understand the process of price discovery as moving ‘from a commodity world to a financial world’ where ‘surplus is simply output values created that are not paid for’ (112). These unpaid-for-yet-created values are, for the authors, reflections of ‘the capacity of human endeavor to create’ (112). My rebuke is that the informational supplements of price discovery may likewise be considered examples of creative outputs not paid for (112). In this vein, the emergent informational products of the price discovery process are akin to how Georges Bataille (1991) characterized the energy provided organisms by sun: excessively generous, exceeding an organism’s local needs.

Price discovery’s problem is not that it is reductive, nor is it that local information is lost along the way. The problem of price has to do with the fact that the majority of people are locked outside of its discovery and that despite contributing knowledge to it, are never able to benefit from its generosity, all the while still being governed by it. This is what it means to talk about the cartelization of financial logic: forever an object of financial calculation, never a subject. Democratizing finance means democratizing this, the logic of the price discovery procedure, the ability to make financial sense.

Federating finance

If ‘reading trends (information) is the universal key to explaining the dynamics of value’ (174), then today, finance has acquired what Evgeny Morozov would call ‘control over the feedback infrastructure’ (see Morozov, 2019). Following Rudolf Hilferding (2019) and Shoshana Zuboff (2019), we might say that what has emerged from finance’s cartelization, combined with the dominance of mega-cap tech companies, is a dynamic that extracts, renders, predicts, and modifies behavior. As digital technologies probe unknown epistemic frontiers and render legible what lingers there as data, they inaugurate ‘behavioral futures markets’ through Skinner-box style conditioning (Zuboff, 2019: 96). From the point of view of financial cartels and mega-cap tech companies, individuals are little more than passive producers of signals, share-croppers of their own identities, which now reside in the cloud. Lacking control over the means of feedback infrastructure, people are financially poor in the world insofar as the knowledge produced by price discovery is overseen and delivered to them by a small caste of technician-priests (Heidegger, 1995). If finance today serves the political-theoretical task of sensing the future and ushering it into the present, then its cartelization names how this future is undemocratically governed. However, if ‘justice is an option’ in the context of finance, as Robert Meister (2021) puts it, then what makes justice possible is the potential of finance’s democratic redesign. In this final section, I outline my own protocological contribution to the new economic space as a form of reciprocal invitation to the authors to continue the discussion about the place of financial price discovery in the Economic Space Protocol.

I begin with an example from the laboratory space of professional sports. In the mid-2010s, ‘tanking’, or intentionally fielding an inferior squad of players to hopefully lose games and thereby acquire better odds at securing a high-draft pick, became a major problem for the National Basketball Association (NBA). Middling teams realized they had a better chance of eventually competing for a championship by abandoning pathways of organic improvement and instead working to acquire franchise-altering talent in the draft. The middle class of the NBA evaporated; on a given night during the season, half the teams might be actively trying to lose games, thus threatening the television product, the League’s main source of revenue.

In 2015, the blog 538 submitted Samuel Feldblum and Cody Cutting’s NBA Futures proposal to the league commissioner (Avrigan, 2017). What they suggested was beautifully simple: rather than receiving draft picks correspondent to one’s own record, picks would be allocated via a stock market-style futures system:

We could eliminate tanking by creating a world in which nobody owned their own pick, but instead owned stock market-style futures on other teams’. Teams get to pick other teams’ finishing positions in the following year as their own. The worst team gets to pick the team whose draft position they would like to have next year (not their own), next the second worst team would pick whose draft position they want, etc. (Avirgan, 2015: n.p.)

In essence, Feldblum and Cutting’s proposal sought to redesign the price discovery process for wins and losses in relation to draft picks. Whereas previously, management’s forecasts about their team’s potential success dictated team-building strategy, Feldblum and Cutting’s proposal barred this trickling-down. Under their proposal, teams would always strive to win, while management’s forecasts would be redirected towards predictions about other teams. Team and management would work independently towards different goals, with each’s work benefitting the organism of the franchise as a whole.

Feldblum and Cutting’s proposal is an example of federating economic decision-making. ‘Federated learning’ names a proposed solution to one problem with data for deep learning models. According to McMahan et al. (2016), the problem is that these models have ‘access to data of an unprecedentedly private nature’. They continue:

Federation resolves this privacy problem, because while a given model’s learning task is solved by a loose federation of participating devices … coordinated by a central server …, each client has a local training dataset which is never uploaded to the server. (McMahan et al., 2016)

In short, federation bars the private information of a local device from being communicated to the central server.

In the context of finance, designing a federated economy means separating intersubjective social life from its predation by price discovery. As in Feldblum and Cutting’s proposal, this is done is by cordoning off price discovery from designated aspects of sociality, a scheme that Darren Zhu, Will Freudenheim, and I have called ‘hyper- and hypo-pricing’ (Morgan et al., 2023). Rather than attempting to cleave price from profit and needing to reinvent the communication network of price discovery from the ground up, what federating finance promises is an economy where social life can be pursued either with or without price according to one’s wish. Instead of being ruled by price but unable to participate in it, in a system of federated finance, one decides how to live with price. On the one hand, matching algorithms’ provisions of services and their leveraging advancements in Artificial Intelligence abjure the need to think about price, hence hypo-price. On the other hand, hyper-price refers to one’s active participation in the financial price discovery process. The point is not that price discovery is evil, but that it can be harmful when it is allowed to invade every aspect of social life. Federating finance names the set of design protocols that allow finance to do what it does well, while also barring it from the areas it has wrought the most destruction while producing the least value.

A visual representation of this protocol is presented as a layering of Karl Deutsch’s diagram of cybernetic decision-making atop Stafford Beer’s Viable System Model (Figure 1). In the diagram, the Deutsch layer represents the financial sensory order, where price discovery functions as a fine-tuned system for predicting and sensing risk by leveraging the supraindividual knowledge of markets.

Figure 1. Deutsch-Beer diagram.

Source: Deutsch, 1963; Beer, 1981; Medina, 2011.

The Beer layer of operations is barricaded from price discovery and is a space where the performances of Protocols can be allowed to grow without fear of their being appropriated by existing economic tendencies. Market design proposals from heterodox economists like Robin Hanson, Eric Posner, Alvin Roth, Daniel Saros, and Glen Weyl could be imagined as unfolding alongside or intermingled with the propositions of Protocols (Hanson, 2016; Posner and Weyl, 2018; Roth, 2015; Saros, 2014). Quadratic voting could be combined with mutual staking to facilitate democratic decision-making, or matching markets (like the ones that exist for universities and organ transplants) could be combined with performances in the form of hypo-priced bundle or subscription services to provide consumer goods. The opportunity is interoperability and it is borne of the functionality of federation.