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Softcracy: Software-driven governance in the digital age

Nitin Upadhyay

During late 17th century Gottfried Leibniz conceived the idea of delegating decision-making and settling arguments by a machine. What we see today is the actualization of Leibniz’s ideas. Human society today is being pervaded, shaped and mediated by intelligent software programs. All credits go to advancements in computational, information, and communicational infrastructures and networks. On a closer look at Leibniz’s idea, we can see that the idea has an uncanny resemblance to the software agents that can act on our behalf. The native language of these software programs or agents are algorithms and the fuel is the data. We have now hardwired within the web of such software programs.  These programs learn on their own by looking at the patterns. Besides, programs also able to correct their mistakes and recommend suggestions to the world. Further, not only do these software programs influence us but they are also capable of making (non)biased decisions on our behalf. Welcome to the age of softcracy, which is characterised as the system of governance that is ruled by intelligent software programs that structures, constraints, incentivises, nudges, influences, manipulates, or encourages different types of human behaviour. Accelerated growth opportunity in the softcracy is quite evident by the combinatorial effect of artificial intelligence along with the supportive range of disruptive technologies. A leading firm states that the potential economic impact from emerging technologies would vary between $14 trillion and $33 trillion a year in 2025. In another report, it is estimated that government digitization, using current technology, could generate over $1 trillion annually worldwide. With the speed at which softcracy is emerging and growing, it is not very far that resulting changes will have an impact on the businesses and society leading to the new trillion-dollars industries.

The series of failed government coalition walloped Iceland’s citizens, and over that, Panama paper II leaks in 2019 left no space for them to appreciate the governance structure. They decided to overthrow the government with the hope of getting transparency, openness, democracy, and simplicity in the governance model. The whole paradigm shift and the transformation were led by the Pirate party resulting in the establishment of softcracy, where software programs rule Iceland’s entire portfolio of political, finance and legal governance system. Even firms are transforming their governance system by adopting softcracy. For example, a leading law firm, Hothouse Lawyers, formally eliminated the first and entry-level positions of lawyers. They claimed that they had developed applications that showcase near-human levels of intelligence, at least applicable to the entry-level positions. These applications are driven by the artificial general intelligence (AGI) in the specific domains of interest, such that the highly skilled and elite lawyers can focus on more specialised tasks where specific experience, expertise and intuition are required. The softcracy around their legal support system is continuously evolving, and it is capable of learning, adapting, and acting with the needs of the practitioners and stakeholders it supports.

Boston-based law firm, Ether law, has pioneered the distributed law and has claimed to develop the solutions to ease out the process of contract execution through automation. Moreover, they demonstrated that their solutions have successfully executed contract variations and anomalies, and negotiated agreed outcomes in almost 90 per cent of the cases. Their solutions are marked as “off-the-shelf”, and counterparties can take the benefit of entering into fully automated contracts. There are certain shreds of evidence where software programs that are fuelling the softcracy are found to be biased. For example, in investigative analysis, reporters from ProPublica found that a prisoner scoring system – COMPAS that is being used by the law-enforcement agencies would give a higher risk score for a black person resulting in stricter convictions and longer sentences. It is pretty clear that such systems already have much say in society, but we need to find the appropriate way to co-exist with them.

It is of utmost necessity for the policymakers and key stakeholders to shape the societies and need to prepare for the dynamics of the softcracy. There could be many dimensions of learning. Firstly, they need to understand and be clear about the way that emerging technologies are shaping the global economy and society. Secondly, they need to demonstrate comparative advantages by employing a productive environment and ecosystems for the citizens. Thirdly, they need to establish a structured framework where the man-machine duo works in harmony. Such structure can be composed in three ways: human-in-the-loop (where ultimate decision-making authority is retained by a human), human-on-the-loop (where human over the softcracy retains ultimate veto power), and human-off-the-loop (where full softcracy functions without the human input or intervention). So next time, when your loan application is rejected or automatic ticket is being raised for a traffic violation, you are under the periphery of softcracy.

Softcracy is now getting redefined, as decentralised autonomous organisation (DAOs), due to the advent of blockchain technology and smart contracts. These technologies provide a higher level of transparency to the systems and reduce bureaucracy utilising self-enforcing codes. Further, it also results in the reduction of the age-old system of principal-agent dilemmas and subsequent moral hazards. DAOs can be established formally through the smart contracts, and people work according to the network consensus aligning their interests in the absence of the third parties. Though early evidence of the failure of DAOs in 2016 opens up several concerns of the softcracy, it is unclear who is accountable for the decision-making in case of unforeseen events. Softcracy has the potential to impact large-scale changes in the political, economic and social landscape. However, there exists significant challenges with softcracy, such as bias, influence, control, and manipulations. But we can also see optimism around the softcracy in delivering, managing and  controlling a productive and efficient environment. Nonetheless, effective leadership is required to circumvent the risk and challenges and make softcracy available for the citizens’ benefit. A complete rethink for every activity on the planet is expected as softcracy is here to

disrupt all of us.

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