Original Version https://maxwickham.substack.com/p/futarchy-and-tyranny-of-the-minority

Given the chaos of the current political system, especially over the past decade, the temptation of this slow descent into authoritarianism across the West is not hard to understand - or at least to sympathise with. The success of states such as Singapore, which I would argue enact democracy only in the most superficial sense, or the economic miracle of China over the past half-century, which has rejected the ideology entirely, all seem to point at a dirty truth: democracy, at least as we generally understand it, is not a particularly efficient form of government.

The problem though with efficiency through totalitarianism, unfortunately, is that it relies on a core assumption: that those with absolute power have motives aligned with the interest of the people - and, on even shakier ground, that this alignment will persist in perpetuity. So the question remains: is there a system that removes the inefficiencies of elective democracies while ensuring its goals remain aligned with the populace?

In the early 2000s, economist Robin Hanson proposed a new system he named “Futarchy,” along with the, (I would argue rather catchy), slogan: “Vote Values, But Bet Beliefs.” I would recommend anyone to read his 2013 paper on the subject[1], for the sake of this article I will include a brief explanation here that differs slightly from Hanson’s method but I think is easier to understand (economically they are roughly equivalent anyway I believe). The core idea is simple. Instead of people voting on policy, even indirectly through elected representatives, the population votes through some democratic mechanism on a metric of success. For the sake of example, let’s say the metric chosen is a nation’s GDP - although in reality this would be a terrible measure on its own.

This metric then determines the outcome of a betting market open to anyone. Given some proposed policy action, each participant places a monetary bet and states what they believe the GDP will be after a set period if the policy is enacted and if it is not, (two separate predictions).

Once bets are placed, the policy option with the highest predicted GDP, weighted by the amount each participant has wagered, is enacted.

Finally, once the time period has elapsed (say, a year), the actual GDP is measured and the market is settled. Pa...

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