Warning: You are using a browser that does not support angularJS. Some site functionality will not be available to you. Please consider updating to a newer version.
FEE.org does not currently support Internet Explorer. Please use a supported browser such as Google Chrome or Mozilla Firefox.

Government Needs a Blockchain, and a Hard Fork

Jeffrey A. Tucker

Health care, taxes, education, foreign policy – everything needs to be reformed, and fast. The situation with Congress, however, is impossible. Every Democrat is dedicated to opposing anything put forward by the Republican majority. Within that majority, there are three or more factions, now testing their influence and even sinking legislation. Has there ever been a more daunting impasse?

Elusive Consensus

The aggrieved party can secede and build on another platform. This is not an uncommon problem in life. There are many things that require a consensus in order to be accomplished. Think of software, for example. Open-source platforms like Wordpress need constant change in order to stay ahead of trends. It’s a platform anyone can contribute to changing, but only the best code survives. Changes are made by consensus.

Or Wikipedia. The need for consensus is obvious. There has to be something on the main display page. The editors who are most interested in a particular topic tend to prevail and this is probably as it should be. It is not a perfect system. Marginal views get pushed aside often. But there is a paper trail and everyone is in a position to evaluate rule compliance. Most of the time, the results are very good.

If they are not good, the aggrieved party can secede to build on another platform. This is possible because not only is Wikipedia based on an open-source model, but so is the whole technology that runs the site. Anyone can start his or her own wiki.

The Blockchain

But there is an even better analogy for dealing with the need for consensus. Look at the blockchain, which is the underlying technology that supports Bitcoin. It works as a ledger system to keep track of processes, exchanges, and who owns what. Because it is public, it contains immutable information bits. These days, the system is used for many purposes beyond Bitcoin. It registers property. It processes transactions. It is used to issue and sell ownership rights.

What happens when there are insoluble conflicts? One group wants one thing and another group wants another thing. No matter how much they negotiate, each side holds to its principle.

It so happens that this is exactly what is happening. You have two big camps: those who want to expand the limits on the six blocks in the chain, and the other side that wants to find a different path to obtaining scalability.

A hard fork sets up a test: who is right?For the first time in the history of Bitcoin, there is now talk of a “hard fork” in the Blockchain. What this means is that one camp is so frustrated with the failure of the other camp to come around, it is threatening to break the chain and start a new coin that will carry forward a tremendous amount of the credibility of Bitcoin itself. No one knows in advance what the results will be. Maybe the original will gradually go down in price and the new fork will become the hottest commodity in town. Or maybe the reverse will happen. Much of the reluctance to go this route is due to the uncertainty of the market response.

The crucial thing here is that this hard fork would set up a test: who is right? The market will be the ultimate decision maker. The administrators of the system can advertise, write articles, appeal to the public in every way. But the verdict will be rendered by the market. And that verdict is actually never final. The plebiscite, so to speak, is ongoing.

Sounds rough? Maybe. But actually, this is the peaceful way to deal with irreconcilable conflicts. It is not destructive. It is potentially creative because it unleashes a learning process.

Hard forks do not represent the failure of a system, but the capacity of a system to adapt in the presence of entrenched disagreement.

Hard Forks in Government

The American founders anticipated the merit of the hard fork. They created many opportunities to create them as part of the desire to keep peace. They built in checks and balances in government to prevent one party or one interest or one branch from coming to dominate the entire system. This was part of a general conviction that consolidation of power is always dangerous.

But there was an even more important check in place. The locus of control of public institutions was located in the states, as a matter of Constitutional mandate. The states themselves could become the “laboratories of democracy,” trying out various policies and subjecting them to a market test. People could vote with their feet.

You might consider the states to be nodes of the system, any one of which could break off and do its own thing. It could reject federal policy through nullification and try a different path.

In 1860, an aspiring Southern nation wanted a hard fork but there was evil at the heart of its proposed protocol.Even now, you can see this working in a few policy areas. Some states have higher minimum wages than the central government requires, and others have permitted marijuana use on a limited basis as a way of repudiating the unworkable war on pot. States today have also regulated on other controversial subjects such as abortion and treatment of migrant populations.

Even in the limited way this system works today, you can see why Lord Acton called American “federalism” the single greatest contribution to political theory ever to emanate from our shores.

These are all hard forks in government. Sadly, this system works far less well the more government comes to be centralized in Washington, D.C. The issue of slavery in the 19th century broke the federal system. In 1860, an aspiring Southern nation wanted a hard fork but there was evil at the heart of its proposed protocol. So it was crushed. Tragically, that set in motion a consolidation process that intensified as the decades rolled on.

Now, in the 21st century, we see the costs. Government is centralized and managed from the top. But that has not gotten rid of irreconcilable conflicts at the heart of public affairs. There are still people who want life to be managed from the center, and those who believe freedom itself is a better way.

Needed: A New Hard Fork

If Congress were a blockchain, the solution would be rather simple. The Democrats would create their own hard fork, taking all the code from present policy and adapting it to their own purposes. They would have their way over welfare policy, unemployment policy, the health care system, and tax policy that moved money from the rich (if they can find them) to the poor (which will be ever-more numerous). But the experiment would only help or harm those who subscribe to it. 

The Republicans could have their own chain that makes dramatic changes in the code to lower taxes and regulations and so forth. And when splits appear within that consensus, they could create sidechains that specialize in particular applications that can return to the main chain. They might discover that the plan to build more nukes or tax imports is not something that the market desires. Or if the difference of opinion grows too intense, they could create another chain. 

Good systems don't give bad people the opportunity to do damage to the whole. It could be like the 19th century but adapted to the 21st century. Each group could even has its own coin: Torycoin, Laborcoin, Greencoin, and Liberalcoin. I know which one I would choose.

If you take this idea far enough, you end up with a whole range of fascinating ideas, including polycentric law. It is not anarchy as commonly understood. It is a system that brings the force of competition to bear on the kinds of rules under which people prefer to live.

This is the peaceful way. Not everyone, however, wants that. Some prefer war that forced unity requires.

Good systems don’t give bad people the opportunity to do damage to the whole.

There will be no reconciliation until we figure out how to decentralize power in government the same way we have figured out how to do this with technology.

See what we've been working on.   Network with FEE's sponsors and donors at FEEcon this June. Visit FEEcon.org.