Epistemic Status: Early concept
The Gist of it: To support sane risktaking, an institution should generally grant career capital in proportion to a quantitative record of the harms and benefits of a decisionmaking entity's past funding decisions. An impact market seems to be the best way of doing that. I explain impact markets. I also propose rewarding or punishing investors with returns in a special domain-specific credit, rather than raw cash. This allows the balance of investors to correct more quickly in line with total generated value, instead of only being moved in line with available public funding, while also significantly decreasing opportunities for embezzlement.
Markets are good at rewarding successful risktaking, but there are many critical public goods that they reliably fail to fund in proportion to their importance. Examples include information sources, existential security, all non-excludable goods and unmeterable infrastructures, these are the holes left by the coordination problem of free-riding and they are generally left to governments to fill. Unfortunately, any large, long-lived institution, including most government funding bodies, tends to demand burdensome degree of legibility of their projects, they only allow simple, respectable-sounding projects, and they either forbid or disproportionately punish risktaking.
In most institutions, the downside for visibly taking a risk and failing is significant, while the upside of taking a risk and succeeding will be nowhere near proportionate to the downside. Sometimes the positive contributions you make wont protect you at all from being dismissed the moment you lapse, so institutions don't take risks, so nothing novel gets to happen, and most systemic change would be novel, there's a sense in which any sort of substantial improvement must be novel.
Being duly supportive of eccentrics is just naturally difficult for a large organization. Doing it without appropriate systems in place to protect disruptive decisionmakers from perverse political structures and collective loss aversion biases is like trying to hand-draw an even circle without a compass. It's easy to imagine that happening, but it doesn't really happen.
I have not seen a suitable compass, before finding this one.
Venture Granters (VGs) act as participants in a public goods market, investing their marks to take stakes in various projects and companies. The investment of marks in a project corresponds to the allocation of public spending to that project.
While a venture capitalist's career capital comes to them in proportion to their holdings' captured profits, a Venture Granter's career capital comes in proportion to their holdings' expected captured and uncaptured value. What constitutes uncaptured value is defined and reported by the the principled, patient, methodical and often precisely operationalized judgements and metrics of the weighers.
As with private stock markets, money travels in correct proportion to the expected outcomes, there is no bias against risk, a bet can be leveraged, and stakes can be sold for marks to other VGs, providing exceptional VGs with early exits from their investments so that they can often go on to make other investments long before of the eventual arrival of the evaluations of the weighers.
Creative experimentation propels our culture forward. That our stories of innovation tend to glorify the breakthroughs and edit out all the experimental mistakes doesn't mean that mistakes play a trivial role. As any artist or scientist knows, without some protected, even sacred space for mistakes, innovation would cease.
~ technology critic, Evgeny Morozov
Leaders must foster an environment that appropriately tolerates mistakes, errors, and challenges to existing ideas.
~ US Marine Corps Doctrinal Publication 7 (2020)
The weighers soberly weigh the manifestation of value, once it's as obvious as it is ever going to be, in a somewhat predictable way. Their evaluations determine the payouts, so, the job of the VG is, approximately, predicting what the weighers are going to say (comparable to the concept that has been floating around the community of having lower courts just be prediction markets about the decisions of higher courts, with escalations random or in response to appeals.)
The weighing institution is a big, complicated, fallible part of the design that warrants as much and possibly more discussion as the VGs.
I would look into social impact bonds, impact certificates, and retroactive public goods funding. I think these are three different attempts to get at the same insight you've had here. There are incipient efforts to get some of them off the ground and I agree that would be great.
Interesting, I'll look for some of those. I guess prizes/bounties would be impact bonds, yeah? (Some recent examples: Musk's 100M USD xprize for carbon capture, or MIRI's 1.2M USD prize for generating a dataset associating sections of prose with the intentions of the author.)
I notice that there are sort of two ways of scaling down a public goods market for small-scale tests. We could call impact bonds horizontal down-scaling, narrowing it down to particular sectors or problems, while the VG system is a way of achieving vertical down-scaling, it's a way of letting the market decide what to do for itself while looking over every problem in the world, despite having funding sources that are much smaller than the world's needs, but without the funding being diluted away to a barely audible background noise, which is what I'd expect to happen with a lot of retroactive public goods funding?
And I think letting the public goods market decide for itself which problems to go after may actually be crucial! Most governments are not prioritizing the actual root causes (press, digital infrastructure and x-risk), unfortunately, good cause prioritization doesn't seem to be democratically legible, it is part of the illegible component of the problem that has to be left to VGs, with their special illegibility-compatible accountability mechanism.
On the other hand, if we're scaling down in order to run a demonstration, maybe fixating our systems onto very specific pre-determined goals would be preferable, the reality we live in is a crypt world where the past owns all of the foundations upon which the future can be built, the system has to be made convincing to these risk-averse organizations that do not like surprises. They do not want to find out that we should be pouring all of our money into some weird abstract indirect root cause, instead of the causes they were already invested in.So maybe we should just keep doing horizontal stuff.
A paraphrasing of Venture Granters concept written for some friends working on an Impact Certificate market system:
The Venture Granters system would be a closed impact certificate market, fractional, with a special currency that seems like it would probably eliminate most losses to speculation.That's important, as losses to speculation are otherwise potentially large enough that it could undermine the whole concept of an impact cert market and irrecoverably crash it: If there are too many losses, final buyers wont participate, the market wont be made
Venture Granters don't deal in real money, instead dealing in an inflationary currency that translates directly into real money for the worker (taken from the yearly national budget/funding stream) on the first sale of the impact cert.This also solves the issue that there may be no practical way of taking enough taxes to get venture granters' relative career capitals to quickly line up with the value that they've produced for the world, as the uncaptured value produced by public goods, which we're trying to measure, can easily grow larger than the GDP. With an internal currency, any quantity can just be minted.
(I know that inflationary currencies are scary, a marketplace is always tempted to run out on them and crash them. I get the impression that this is totally answered by the fact that VGs are an altruistic captive market, they neither want to, nor, can abandon the currency. There's an extent to which they can: They can try to hold their wealth in impact certs rather than marks, but isn't that just investing? Isn't that what we want?)
: An aside, can anyone tell me what "real money" actually means? I'm not sure I know.
By "losses to speculation", I meant the amount you have to pay the speculator that doesn't make it through to projects. On reflection, I don't think this is a problem at all: You have no way of just paying the project. If you did, you're saying you know a way of always beating the impact market, and that your home-team impact investors would always make perfect investments.
The amount you lose to the market is simply the inescapable cost of the market's insight.
If I'm really going to bite down on the "people who are good at this will be kind people", then is it really possible for "losses to speculation" to be a bad thing, given that the people catching the losses are so good?
Scott then did a blog about these sorts of systems: https://astralcodexten.substack.com/p/lewis-carroll-invented-retroactive
While, the weighers are uniquely interested in making this fair and regular. They'll try earnestly to come up with a procedure for making these decisions from an omnibenevolent perspective, and also in a way that's predictable for VGs!
Why would they be uniquely interested in that? How do you incentivize them for that?
Internal legibility, rules, and democratic pressure. These incentives are good enough for some kinds of work.
They are not good enough for project prioritization and entrepreneurship, which can't be (reliably) internally legible, which follow no regular patterns that fixed rules can accommodate, and judging them takes lots of time and specialist knowledge. So we end up needing this special qualitative post-hoc accountability mechanism that is more suited to them.
But not everything requires that sort of mechanism.What I think I might have done here is separated the work of public goods funding into two departments that run under different incentive systems, each suited to the job they're assigned.
We should consider the much simpler design of getting the regular VC market to care about public goods by having weighers throw money at whoever produces them.
I think it would be less cost effective, and would impel very little evolutionary pressure, when the budget is much smaller than the potential public goods market (which it will be in small scale tests), and it'd be a lot more difficult to sell politically, but maybe there could be a cryptoeconomy where none of those issues matter at all.
It does seem a lot more elegant.