The Value of Communities

Markets need information. Information is the gold of today. It is the product of the frontier that we find here on Earth, and which sustains the most industrious parts of the global economy. But our ability to think about this information as valuable is severely hamstrung by how we process data, and how free we feel to share information, or to even think about sharing information—the reception of your thoughts in the world feels less and less subject to the equities of a well-reasoned mind, and more and more the product of a warring, near-schizophrenically omnipotent and salacious metamodernity.

Lots of people are looking for solutions to this. Among the miasma, prediction markets stand out as some flame of truth. Because participants in markets have to commit money to a position on a given question, they incentivize finding truth. Liars are afraid to commit money to their beliefs; or at least, convert their conviction into a legible amount; misallocated capital meant to sway opinion just means more return for those who know the truth.

For example, polls may have shown that Donald Trump is not going to win the presidency, but PredictIt.com illustrated it demonstratively. In the future, that might mean that the DNC would use money to sway the prediction market, but this would only mean a higher return for those who could accurately tell the outcome of the 2016 election.

The feasibility of this classic example of a “prediction market” is only an extension of how markets dominate everything. We have long been using prediction markets for everything from a desire path in a garden to the votes in a democratic election, all of which come with some gesture of price and some common sense of wisdom of the crowd, all existed long before the pioneering economic work of Robin Hanson.

But now more than ever before, the fungibility of data and the processing of it in capable markets is both alluring yet fraught with a lack of resolve. These markets make truth. But how do we make markets? What do we want to know, and why, and how can we resolve on questions and usability that can render truth?

Clearly, the current status quo for markets on information are imperiled. And the stakes for lying about the past and colluding beyond reasonable measure can be extreme. Consider the following quote from a rhetorical speech:

You must chastise them, gentlemen, not only on account of the past, but also to give an example for the future: even so these people will be barely tolerable. Consider that great numbers in this business have been tried for their lives: so much profit do they make by it that they choose rather to risk death every day than to cease making illicit gain out of you.

χρὴ δέ, ὦ ἄνδρες δικασταί, μὴ μόνον τῶν παρεληλυθότων ἕνεκα αὐτοὺς κολάζειν, ἀλλὰ καὶ παραδείγματος ἕνεκα τῶν μελλόντων ἔσεσθαι: οὕτω γὰρ ἔσονται μόγις ἀνεκτοί. ἐνθυμεῖσθε δὲ ὅτι ἐκ ταύτης τῆς τέχνης πλεῖστοι περὶ τοῦ σώματός εἰσιν ἠγωνισμένοι: καὶ οὕτω μεγάλα ἐξ αὐτῆς ὠφελοῦνται, ὥστε μᾶλλον αἱροῦνται καθ᾽ ἑκάστην ἡμέραν περὶ τῆς ψυχῆς κινδυνεύειν ἢ παύεσθαι παρ᾽ ὑμῶν ἀδίκως κερδαίνοντες. (Lysias 20.22).

This quote is from 386 B.C., when the Athenian orator Lysias helped levy charges against the grain merchants of the city, who developed a monopsony to excise a monopoly; that is, they became the only buyer, as a union, and then used that agency as a collective to become the only sellers.

This is also the current status quo of how we think of computation and data.

Characteristic of all over-regulated markets, the need to expand to frontier defies control just as the assimilation of value to doing so becomes ever more pertinent. The more we make information resolution and truth-finding an empowering part of our society, the more the stakes are for regulatory bodies to act against this. This is because the truth is becoming more valuable.

The grain-dealers’ commodity spiked in value in 386 B.C.’s time of war, as the Athenian Empire was attempting a resurgence. Today, we see something similar with information and the coveted control of monopsony of it by corporate entities under the friendly auspices of the state. As we attempt to rediscover our sense of frontier, market making functions to find the truth become more valuable.

We want to know more about ourselves. And right now, one of the things we’d like to discover is why other people know so much more about it than they’re supposed to.

Your digital fingerprint is very simple. Your identity can be resolved by your rate of breathing in around 10 minutes. A submarine can be detected by the dispersion of centimeters of water from a satellite at orbit. Do you really think that your phone isn’t tracking the relative frequencies of your breathing to calculate where you stand in the shower, or at what time of day you sigh?

To say no to this bludgeoning steel pipe of monopoly on this information, or, the way the information is ‘sold’, we have tried to re-invent a passion for privacy. But we should focus also on how truth is being bought.

The CIA minted prediction markets for assassinations back in the early aughts, which were banned by Congress. This was our way of clarifying which market making functions are kosher; saying that while appreciate antitrust activism (there is a DOJ research paper on the above speech by Lysias), we do not like ostracization in a violent way.

Today, that hyperbolic division is less evident. Information markets that are not recognized as such are violent. Content changes souls and engineers self-harm; disaster. But beyond establishing this, it is first worth questioning the veracity of a true need for information games that play out with monetary stakes.

Consider Vitalik Buterin’s call for AI-based, agent-voting prediction markets, or recent venture interests in the aggregation of data in order to cryptographically verify the actions of multitudes and value it—or, the recent decoupling of regulatory consequences to running a centralizing prediction market, evident in the huge success and institutional involvement in Polymarket and Kalshi, respectively, today.

In a way, these are important questions, and the potential for markets is high. But we must be wary of the difference between public and private in both instances. Are we working in a high enough trust environment where it is necessary for all prediction markets to be free?

If everything is a market, then everything has a price. But not everything in life has a price.

Things without prices are often the most valuable. And yet the rationalists’ dream for market making functions remains infallibly convinced that making everything into a market can do justice for the world.

I’d agree with them on that in theory. But to the extent that prediction markets sacrifice personal sovereignty and privacy, they must be stopped. To the extent that we are a Western society that respects individualism, no matter how slim, the notion that ‘everything can be a market’ is offensive to the human soul, and a slippery slope when offered to traders of the truth who can game your life through them.

The task today for startups and inventors of new markets is converting information into money. Prediction markets are the most efficient and meaningful way to do this. But to do so risks drawing blood, and blood of the weakest and most vulnerable of our population: either those who are deceived into giving up control of their future agency through perpetration of their data into markets that will affect their future without their consent, fueling short-term horizons for bad actors (advertisers, REITs, Palantir, etc.), or those who are not deceived and instead are willing to be incentivized into giving up their future agency, in which case they are the most tragic of us all, those who, taken to full extension, are willing to sell the infinite value of the future for the temporary illusion of possession in the present.

To think about higher virtues is a pillar of the West. We must shun prediction markets that cannot be sovereign, because a sovereign perspective on market making functions is the only thing that can hold the previous paragraph’s twin failed yoked horses at bay. As market makers, both the appetitive and the moral beasts of burden in our lives have the highest stakes (to borrow from Plato’s Phaedrus, 246a).

Put simply, the reach for the eternal which is good informed by virtue will not be accomplished by anything but an uncompromising horizon of forever, which is definitionally outside of the grasp of prediction markets, because they are predicting things that are yet to pass, and you can’t ‘predict’ virtue, since virtue has been and always will be.

This doesn’t change the fact that the lover of wisdom’s pursuit of knowledge of what virtue is will at times require mythography. In that case, market making functions become important assets for the tyrant, which I believe should be an individual over one’s self, and no farther (maybe one or two exceptions after that).