Making Order From Chaos

I talk a lot about libertarian versus statist views in the context of cryptocurrencies. We talk a lot about decentralised finance versus central bank finance in the context of CBDCs and such like. In general, many are discussing democratisation through decentralisation versus centralisation through control. Who wins and who loses? When the network does not recognise the control, who is in control? Is it anarchy and chaos or law and order?

These are fundamental questions which have always been answered in the past by human developments and those developments represent biological forms. The societies of humanity follow similar principles to any society of animals. Some are in control, and some are controlled. There’s a Queen Bee, worker bees and drones. Humans are pretty similar to be honest.

That’s why, when I was thinking about how companies manage, they are similar to any colony of animals or insects. There are managers and workers. Companies who tried to reinvent this with pure decentralisation fail; companies that try to over-manage with too much control, fail. There is a balance.

I sensed this years ago with the debate over command-control companies versus coach-counsel. On one extreme is the company that structures itself like an army. The front-line troops do all the customer engagement and the hierarchy controls what they can and cannot say. The head office management take all of the rewards and throw a peanut or two. On the other extreme, you have everyone discussing and debating everything till the cows come home and no-one can achieve or do anything.

There’s a balance.

So, it interested me reading Andrew Hill’s column at The Financial Times about management. Apparently, the management guru Gary Hamel said to him a decade ago that “we will see more dramatic change in the way management is organised in the next 10 years than we’ve seen in the last 60 or 70”. I have not seen that and nor has Andrew, so Gary’s reputation is trashed. Or is it?

In management there is a trend running alongside decentralisation that focuses upon the human side of management. In other words, yes you can flatten companies and still control them, as long as you have lean human connectivity that works well.

For me, this can then be translated to the network. You can let the network control everything but need to have lean human governance oversight to ensure it works right. This is necessary for anything that is decentralised as, without some form of governance oversight, it is pure chaos and anarchy. A bee colony with no Queen bee is not a colony. It’s a mess. A human structure – whether a company, network or currency – with no governance oversight is an anarchy.

Thing is that when I write this most libertarians claim that if I use the word governance, I mean central government and am a statist. I have made it clear, in retort, that I do not mean central governance. I mean governance of some form. Some governance oversight has to be there to control the network and ensure trust. That can be provided through the network – it does not have to be a human government – but it has to be transparent and trusted.

Show me the trust is far more important than show me the money.

Related: What if You Had to Fire 1 in 10 People Every Year?