Discussion on Justice in Web3 System from "Curtain of Ignorance"

This article was originally published in Harvard Business Review by Li Jin and Katie Parrott.

Web3 is considered one of the most powerful narratives in the movement around a better, fairer Internet. Specifically, Web3 proponents envision an Internet world in which users are able to wrest power back from a few exploitative, centralized institutions, and where everyone with an Internet connection is able to level the playing field. take part in it.

However, the original intention of Web2 is similar, promising to empower individual creators and eliminate the intervention of middlemen, but this promise has not been fulfilled. Now, standing on the brink of a new era for the Internet, we should ask ourselves: Does Web3 truly democratize opportunity? If not, how should we better design platforms and governance systems to promote fairness?

A thought experiment called "the veil of ignorance" proposed by social and political philosopher John Rawls in his seminal 1971 book A Theory of Justice provides a useful framework for these questions . In building the foundations of an ideal society, Rawls argues, we should imagine that we don't know where we will be in it, that is, we should adopt the veil of ignorance. A just society is "one that, if you knew everything about it, you would be willing to join in a random fashion". Rawls added:

An important feature of this situation is that no one knows his or her place in society, class position, or social position, nor his luck in the distribution of natural wealth and abilities, such as intelligence, strength, and so on. I'm even assuming that the parties don't know their understanding of the good or their particular psychological predispositions.

Rawls's thought experiment is especially relevant to where we are now, because we are standing at exactly the kind of inflection point that the veil of ignorance envisages. Web3 provides the opportunity to build a new Internet from scratch, and even a new economic system. So the question becomes: what kind of Internet should we create?

One could argue that Web3 is still young and these issues will sort themselves out over time. But questions about impact and externalities were dragged too late in the design of Web2, with consequences ranging from election manipulation to widespread vaccine misinformation. Some indicators suggest that early design choices in Web3 are replicating or exacerbating inequalities in Web2 and the real world.

If we want Web3 to live up to its promise that it can substantially improve the situation of everyone in the ecosystem, not just the few at the top, we need to design it according to principles that will make it happen.

**How do we decide what is fair? **

For centuries, philosophers and thinkers have discussed how to best allocate resources among the actors in society. The body of thought devoted to answering these questions is called "distributive justice," and within the discipline there are different schools of thought:

• Strict egalitarians believe that the only just system is an absolutely equal distribution of resources, in other words, everyone should have the same amount of material wealth. This principle is rooted in the belief that every human being is morally equal and therefore should have equal access to goods and services.
• Luck egalitarians argue that what matters is equality at the start, and that any inequality that arises afterward can be justified by individual merit. *Classical liberals believe that individual liberty should be the only consideration and that any effort to reallocate resources would violate this liberty.
• Utilitarians believe that the most just system is the one that maximizes the total happiness and well-being of all participants. Under utilitarianism, wealth redistribution is desirable because every penny does more to improve the well-being of the poor than the rich.

Common to these theories of justice are two equally important but often opposing values: liberty and equality. In a society where all actors are completely free, large degrees of inequality are likely to arise because individuals differ in their motivations and behavior in the pursuit of wealth. Conversely, in a perfectly egalitarian society, liberty is restricted because individuals cannot act in any way that would make them unequal to others, even if that unequal outcome is acquired through hard work or skill.

Using reasoning under the veil of ignorance, Rawls developed his own theory of distributive justice, dubbed "Justice is Fairness." It has two parts: the principle of greatest equal liberty and the principle of difference. The principle of maximum equal liberty provides for all citizens equal rights and liberties to the greatest extent compatible with the enjoyment of those liberties by others. Justice requires equal rights for everyone.

The Difference Principle holds that any social or economic inequality that exists in a society should satisfy two conditions. First, they must be "connected to positions and functions of fair equality and opportunity for all". Social positions, such as jobs, should be open to everyone and assigned according to merit. In other words, a person's prospects for success should reflect their level of talent and willingness to use it, not their social class or background. Second, any inequality that exists should benefit the most disadvantaged. This is a profound principle. According to this principle, it is acceptable for doctors to be paid more than cleaners because this difference in pay motivates doctors to pursue their careers and ensures that cleaners (and others) receive quality medical care when they are sick.

Rawls's theory is nuanced and complex, but in short it is unique in its resolution of the central tension between liberty and equality. By requiring that inequality benefit the most disadvantaged, Rawls establishes a natural corrective mechanism for the rampant inequality that can arise in a system that prioritizes liberty.

This balance between liberty and equality makes Rawls's theory very attractive as a philosophical framework for the Internet. It provides builders with rewards for their contributions, which is necessary to incentivize smart, ambitious people to build in the ecosystem. At the same time, it has a duty to these builders, and the ecosystem as a whole, to build in a way that creates opportunities for less privileged players.

Evaluate whether the current Internet conforms to the principle of fairness or fairness

To what extent does the current Internet comply with Rawls' principles? In many ways, the Web2 Internet expands opportunity and exists under conditions much closer to Rawls's difference principle than in the pre-Internet world. Before the internet, opportunities to participate in a variety of industries were limited to a handful of portals, ranging from movie studios to music labels. The Internet and social media platforms have made it possible for anyone to participate in content creation and distribution, allowing more creators to be successful.

But you don't need to travel far to find evidence that the Web2 Internet has fallen short in other ways. Just consider a few examples of how Web2 platforms inhibit equality and violate the principle of difference: gig economy platforms bring in billions of dollars, while frontline workers delivering services earn poverty wages and are excluded from activities that affect their lives. outside of the decision. Social media companies and media platforms make billions in advertising revenue through algorithms that boost disinformation and harm vulnerable communities. Platform creator funds typically reward those creators with the most views and interactions, resulting in income being concentrated among those who already have substantial income streams, while failing to expand opportunities for aspiring creators who are less affluent. We’ve written before about the internet’s original sin of failing to enable payments, leading to the exploitative ad-based business models that now define the Web2 economy.

But not only does the Web2 platform fail to meet the Rawlsian standard of justice, Web3 in its current form also exacerbates inequality. Web3 projects typically issue encrypted tokens as digital representations of value. The early way of token distribution led to an unsustainable dynamic where bounties were given to those who increased the value of the network through actual use, not speculators. Some earn-and-play games implement a dual-token system where users earn income but have no governance power, which increases the risk of wealth inequality just as workers in the current economy get paid but don’t have equity. equality. Business writer Ivan Armstrong points out that there are strong parallels between some current NFT projects and multi-level marketing schemes, where those who join the ecosystem later cannot achieve the same success as early adopters due to the system design level.

How to ensure that Web3 follows the principle of justice is fair

We have seen that neither the Web2 Internet nor the early versions of Web3 fall far enough to ensure a free and fair playing field under the most unfavorable conditions. So what would a Rawls-compliant internet look like? Some common anti-principles start to become clear:

• Don't build a system where only the rich benefit, because what if you're poor?
• Don't build systems that are overly biased toward early adopters, because what if you don't participate in the networks that give you early access to knowledge?
• Don't build systems that require extremely technical skills to be successful, because what if you don't have the talent or resources to learn those skills?

Guided by these anti-principles, builders and participants in the Web3 ecosystem can ensure that they conform to Rawls' ideas of the principles of freedom, equality, and difference in three ways: first, promote self-determination and initiative; second, reward participation , not just capital; and third, include initiatives that benefit disadvantaged groups.

Promotes self-determination and initiative

One of the main principles of Web3 is the concept of self-determination: unlike the Web2 platform, where a small group of founders, executives and shareholders hold all the power, the Web3 community will be controlled by its members. This is consistent with economist Albert O. Hershman's "Exit-Voice-Loyalty" model, which describes the choices individuals make when organizations and countries face unsatisfactory situations. Ideally, on a Web3 platform, users can speak up to try to change their situation; exit to a new platform; or wait for the situation to resolve out of loyalty.

But the current reality is more complex. Early governance structures basically implemented token-weighted voting, and the result was a plutocratic system not too different from the boards they were supposed to correct. The problem with the chaebol system, whether it happens on the board of directors or the DAO Discord channel, is that those who hold power are likely to only care about their own interests.

In order for the future of Web3 to align with Rawls' principles of justice, participants and builders of the Web3 ecosystem need to promote democratic governance systems that give voice to all members, not just a few. Everyone should have equal rights in the system they participate in.

There are other governance systems that can counter plutocracy, such as:

• Reputation-Based Governance: Delegate greater governance powers to those with higher reputations.
• Delegation: Enables community members to nominate others to vote on their behalf.
• Pods / subDAOs: Smaller groups within an organization whose governance can be limited to their mission.

An example of a project interested in diversifying its membership base is Mirror’s airdrop of $WRITE tokens, which are used to register custom subdomains on the platform and, in the future, to participate in governance. In order to expand the user base capable of influencing governance, tokens are distributed according to an algorithm designed to maximize different social groups. According to Mirror, the airdrop "further democratizes the selection process and broadens the scope of inclusion criteria...The growth of the Mirror community will be determined by those who have had the most impact on it by far".

In addition to the importance of voice—the ability for people to change the system from within through governance—participants also need a viable exit path. Web2 platforms enforce user loyalty through network effects and closed data, and exiting the platform leaves creators without a connection to their audience or content. Web3 presents the opportunity to build systems that foster user initiative and self-determination through true digital ownership, open data and networks built on open source software. Such as YakiHonne, YakiHonne.com is a decentralized long-content media protocol based on Nostr, which supports various users to curate their own media front-end, and subscribes, distributes and rewards content based on open relay.

** REWARDS PARTICIPATION, NOT JUST CAPITAL **

One of the core philosophical tenets of Web3 is that providing value in the ecosystem is not limited to capital, and that this value should be earned through effort, not just purchased. This is a fundamental break with the existing structure in which those who own capital earn more through investing than people earn through work, leading to a progressively widening wealth gap.

Distributing ownership to participants is also a significant shift from the way existing platforms are built, where meaningful ownership goes to employees and investors, but excludes the content and contributions of users that make these platforms valuable.

An important step in aligning Web3 with the principle of justice as fairness is to ensure that everyone is on an equal footing and can be empowered or rewarded for their talents and contributions. The current reality is that those in the right knowledge network can increase their wealth through strategies such as Sybil Farming (creating multiple accounts) for additional token airdrops. While early token distributions often in turn incentivize short-term employment behaviors, such as participating in mining, and then exiting after a few days in search of higher yields, we have the opportunity to iterate and improve the process to support the long-term retention and sustainability. One way is to gain ownership through ongoing participation in the network, not just capital investment. Some projects that actively contribute to broaden access to ownership include RabbitHole, Layer3, DoraHacks, BanklessDAO, and FWB.

Integrating initiatives that benefit disadvantaged groups

The Difference Principle is based on the idea that inequality itself is not a bad thing. Where fair equality of opportunity presupposes, inequality remains an inevitable consequence of the level of people's innate ability and desire to work hard to earn money. But do these arrangements benefit those less fortunate in society when inequalities arise?

Applying this principle in the technical world is challenging. But, consider the following question: Are current social network feed algorithms promoting content that is in the best interest of the least fortunate? For platform creator funds paid to content creators, is this unequal payment premised on viewership and engagement maximally benefiting the least fortunate among its users? The answer is likely no. Top creators have many ways to make money and can maintain their output independent of Creator Fund payouts, while the unluckiest may not be able to participate in content creation due to financial constraints.

The difference principle is critical to the democratization of Web3, as participants will enter this ecosystem with different times, backgrounds, incomes and levels of technical proficiency and access. There are already many projects utilizing cryptocurrencies to maximize the well-being of the least fortunate. For example, SuperHi, a for-profit creative education platform, plans to decentralize ownership among its members and instructors and expand access to creative careers by undertaking a basic income program. DAOrayaki is the first to use decentralized funding to more fairly fund creators to carry out research and reporting, instead of dispersing funding to top creators. Projects like Proof of Humanity and ImpactMarket aim to use blockchain technology to provide basic income to those in need. Communities like LaborDAO are leveraging building blocks to empower workers, while others like she256, We3, and Komorebi Collective are focused on increasing diversity in the blockchain space.

With the exception of projects with social good as an explicit mission, all Web3 networks should be incentivized to follow the principle of difference and maximize the benefit of the least fortunate, as this approach maximizes the attraction of new participants and drives further network effects . A fair network is one in which participants are willing to enter anytime, anywhere, at any token level.

A fair and equitable internet is possible

Web3 presents an opportunity for meaningful correction—reimagining the Internet and building new platforms from first principles. But in order to do that, we need to come to a consensus on what the principles should be and why they are in place. Rawls' principles of impartiality provide a useful starting point. Without fully understanding where our place will be, our goal should be to design new systems rooted in fairness and care.