Civic Virtue in Social Credit and Blockchain based Systems - Wessel Reijers

Transcript

[Music] All right, thank you. Um, I guess my presentation should appear somewhere or should I click like here? Oh, yeah. Okay, that works. Okay, great. So, uh, thank you for having me here. It's really nice to, uh, finally be at an Ethereum conference. I haven't never been at one. Um and today I would like to share a little bit about my work um uh which is about both social credit systems and blockchain systems and I will try to explain to you why I think there is actually some interesting

philosophical commonalities between the two. So about myself so I'm a typical academic I put some books there. Um my work spans from um on the one hand philosophical hermeneutics to uh we wrote a book about blockchain governance which is focusing on kind of the political legal philosophy of blockchain but I'm also doing works on technology ethics so all kinds of things um and yeah so and the the kind of the two uh main case studies that have inspired me over the last years on the one hand blockchain systems but on the other hand something quite completely different. So I've also been very interested in the Chinese effort to build the social credit system. I think that many of you

have heard about this system. I was it was actually the reason why I was asked to do a presentation here and I thought I can just give you like a nice descriptive overview but I think it's more interesting now to go into the philosophy of of of um of this system. And I think uh what inspired me to uh study these two very different phenomena is because I think they're very different. Of course, like it's obvious that uh you know blockchain is decentralized, the social credit system is centralized, blockchain is um built by private actors, the social credit system is state driven. There's lots of differences, but I think there is also something that they have in common. And you could say that both

technologies try to grapple with the question of trust. That is maybe the obvious answer. Um and they give different answers to this question of trust. Um and underlying this I think lies a very interesting philosophical theme that has been quite central to um the history of political thought which is the the notion of civic virtue. I think these days we often associate virtue with, you know, virtue signaling like it's often called into the media and like, you know, there's the the so-called woke mind virus. There's all this discourse about people using or like being corrupted in terms of virtue.

But I think this is kind of a distraction largely because uh while this discourse is going on um it's it's my understanding that actually we are in the middle of a transformation of civic virtue uh not through kind of superficial rhetoric but rather through the implementation of large scale digital systems and here uh this is actually where I think both social credit system and blockchain systems kind of intersect And I I will try to explain to you why. So let's go back all the way to Aristotle to start. Um with this notion of the ship of state, you probably heard it before. There's American politicians who mention it. Um

but it al actually tells us something very fundamental about political thinking. So for Aristotle in the politics, political philosophy is really about trying to understand the relationship between citizens and the state. And in the politics, he draws an analogy with a ship. So he says, well a state is something like a ship. So you have like a Greek triim and a crew and every crew member has their own qualities and dispositions. Um but at the same time they need to have an aim in common. you have to have a common t- loss and this the t- loss for example if you if you're in a ship is safety and coordination while navigating the seas and this is actually Aristotle's way to introduce the topic of civic virtue

because civic virtue are those dispositions that citizens have that mediate between their individual existence and the aims of the political community. So that's why it's actually it's a very fundamental concept at least in Arisilian political philosophy that I think we have to uh go back to. I will I will skip this because it's a bit too long. Um but okay. So I think civic virtue is the underlying theme that connects the civic the social credit system and uh blockchain technology and let let me start with the one side of the picture. So the social credit system and I think we have to understand the emergence of the social credit system not just in its recent iteration but we have to understand it against a longer historical background and this longer

historical background also shows that actually the system is not necessarily just a Chinese system actually it's it's it shows us kind of a mirror because we have a lot of similar type of technologies in our societies as well and here this is like an interesting example we so in our historical research we found this peculiar book by Cynthia Braov uh about uh an entrepreneur in 16th century China called Yuang Huang um and he was a kind of a yeah entrepreneurial figure and what he did was he made his own business basically by um promoting the use of moral self-help books among the elites in China. This was quite a big phenomenon.

So uh in in the course of like a few decades suddenly a lot of uh people in the Chinese elite were using diaries or like kind of moral bookkeeping books where they would keep track of their good deeds and their bad deeds and they would quantify them. And the idea here was it is like it has like a religious connotation. You might also think like in you know in in Western Europe we had in the in the middle ages we had confession and a kind of treasury of merits. So this is an interesting parallel there. And the idea is that if you quantify your good deeds and your bad deeds, you have some kind of cosmic benefit of that. So it it kind of it you can get some luck by actually doing this type of moral bookkeeping. Uh so like an early form of virtue signaling so to

say. But of course the underlying idea is that that it actually is about civic virtue. It's about those dispositions that should give you uh a good standing in society. Okay. Then we skip a a few years and then we go to this figure. Uh this is you might know him. is Kan Shuan. Very interesting. He's like a hero in China, but a lot of people in the west don't really know about him. But he's uh he he worked on the Manhattan project in in the in the in the Second World War. Uh so first his career was actually in the US, but then in the Red Scare they thought he was a spy. So uh he fled to China basically and he became one of the main figures in the under the communist regime who was who are like behind the Chinese rockets

uh science program and the um nuclear program. Um but that was not his only feat. The other feat was that he was also using cybernetics to do social engineering and this has also had a profound impact on Chinese policym. I mean uh like the one child policy for example in China uh is in part the result of also uh the implementation of of of cybernetic modeling. Um so what he promoted was this idea that that we have to look at society from a kind of cybernetic point of view of it being something what he called like an open complex giant open complex system um where it's all about trying to put uh make kind of qualitative

dispositions and um wishes and needs of citizens quantifiable in order to have machines that could interpret those dispositions and you know build some kind of governance system. Um and this is actually this lies very much behind also the thinking of the design of the social credit system. So the people who are instrumental to its uh its well coming into being were very much inspired by the school of Kuzen and also because this was kind of the only type of science that survived the cultural revolution because we often think that all the sciences were kind of crushed in the cultural revolution but actually this branch survived and after the

reforming opening up or during the reforming open up opening up era it became a very important branch. Okay, then let's let's go to the social credit system. So the social credit system actually was uh conceived of in the 1990s um because of um well this is like the the guilded age also in China. So there was a lot of economic growth but at the same time there was a lot of corruption. Um so event so in the beginning the idea was we need some kind of way to build trust in society to make like trustworthy business transactions. Um and um well we can look at the United States. In the United States we have like things like FICO and uh you know like FICO scores like ways of credit

rating, credit scoring in order to build some kind of trust. But um interestingly this early initiative is taking up in the larger ideological kind of setting in which there is um this this notion of rule by virtue. So the idea was that the idea is that the state is not only trying to build these more um low-level kind of uh creditworthiness but at the same time it also wants to do some kind of moral education. It's about bringing citizens up with with regard to their level of virtue. And how does it do this? I think there's often like a misconception that we think that's kind of some Instagram kind like scoring system where there's like a super score and everybody is affected by that. But actually it's like

more of an umbrella of different policies. Uh the most important national policies is that there's a centralized database with credit information that is linked to black lists for sanctions and red lists for rewards. Um and next to that there are so-called model cities. So the the central government is incentivizing uh local local governments to experiment with social credit systems. So there you also have like the typical like uh point systems. you know, you get a thousand points and you can lose some if you do something bad. If you do something good, you can gain some. Um, and there's a and there's um a coordination of commercial rating agencies. Uh, so maybe you have heard of like Sesame Credit that comes

out of the initiative to incentivize big tech corporations to build like alternative credit scoring mechanisms which now are actually consolid consolidated. So now there is a national consolidation effort where there's a national institution by hung credit where which is now the primary well rating institution that is governed by the Chinese state. So it's kind of being centralized again. So why is this such an interesting case? I think it's not because of its effectiveness per se because its effectiveness is very dubious. It's not so clear whether this is actually a very good idea because on the one hand it does give you a stronger sense of control. On the other hand, it also creates a huge administrative burden and whether this is good or not, we have to

see. But this I think is so interesting because it's of its scope because it makes something explicit that I think is happening all over the world which is that the scope is citizenship. It's not just financial credit in a very narrow sense. No, it's really about make building good citizens. It's about exactly this Arisetilian idea of fostering this relationship between the citizen and the state in accordance with virtue. That's exactly what it's about. So, we can use political philosophy to think about this a bit more. Um, here's the late Alistair McIntyre uh who just died like a week ago, I think, unfortunately. um but he's like a major figure in like the the revival of virtue

ethics and he says that um well he has an interesting way of approaching this question of moral excellence. So he says um virtue basically are those dispositions that realize internal goods and practices. That sounds a little bit like comp complex perhaps but um you can relate it for example to pianists playing a beautiful piano piece or a concerto. Um the idea here is that the goods that practice brings forth so to say are not external to that practice. So they emanate from the practice itself. It's not like that he plays so really so so nicely piano because he gets paid for it or because he has a great reputation.

No, it's actually the the very practice that stimulates us internal goods. So that's like the way in which we can distinguish virtue from other types of dispositions. And he says that well actually and we know about this because we have certain delivered standards of excellence that inform our practices that are embedded in some kind of uh trai like narrative that we we call tradition. So because we have these like long-standing practices with their standards of excellence, we can actually say something about virtue beyond the particular moment. So in in a way you could say like well actually social credit is trying to do kind of this you know I mean it's like trying to capture these sense of excellence in order to bring out moral excellence in the citizens citizenry but

at the same time we can use also McInty's um um or like system philosophical system to critique what's going on here because the whole point of the social credit system is that all the leveraging or all the um or the process by means of which people cultivate their virtues is through incentives or you could say through carrots and sticks, you know. So the reason why you would do something is not because there's some kind of intrinsic worth in that particular practice but because you can gain certain reputation or not be shamed or because you can gain certain uh resources sometimes political resources.

So uh and there's like an interesting literature also in social psychology about like how external goods can actually crowd out these kind of internal motivations. So you could say then actually then actually these um these standards of excellence that are formulated by something like the social credit system um are corrupting rather than supporting virtue in this McIntyre in sense. Um creating some kind of a pathology of civic virtue like some some form of confirmism rather than people pursuing uh like goods deeds out of their own in out of their own intrinsic motivation.

And this is of course something that has been a theme in liberalism for a long time. So here's John RS. Um one of the things is that liberals are generally very skeptical about virtue in the first place. Uh because virtue implies some idea of the good life. It's like you know we want to say this is the good life and want to impose it on everybody you know and liberals are very sus suspicious of that for good reasons. U because we live in a society of plurality. So we everybody has their own conception of the good and we cannot in we cannot impose a particular conception of the good on the general populace. So that's why John Ross for example says like a just society is a society that draws boundaries around spontaneous action rather than a society that shows

the point. He says a society that actually imposes the good on on our behaviors which is of course a nice ideal but this is also liberal societies. Uh this is JP Morgan. Um so if we look back into history uh at the the early credit reporting mechanisms that that uh emerged in the United States after the guild or in in the course of the guilded age in the US. Um, credit reporting was an extremely sophisticated and very huge surveillance industry with um where where very intimate details about people were actually being gathered like intimate details about even like their marital

state status, whether they were honest businessmen, those kind of things. They were all like collected by credit bureaus. And um in the early 20th century there was a hearing by the US Congress about this and and and they asked JP Morgan about like so this whole credit rate reporting business isn't this all about money. Isn't this all about whether somebody can pay their bills? And he said no the first thing is character. The first thing is virtue. is actually something that we cannot buy as bankers but we want to try to grapple with. Um and and um and one of the people at at these credit bureaus also said like well credit reporting is something like has a moral force that only is surpassed by the church. So this

you know even in liberal societies we have these like surveillance-like institutions that also uh promote a form of civic virtue at but at the expense of liberal principles one could say. And why is this the case? Why is this a dilemma that also liberals have to deal with um is because people can cheat. you know there's like the confidence man Hammer Melville um where I think one of the themes is that confidence is actually something so confidence civility is built through common institutions in society like through like a common language common currency but at the same time this kind of scaling of society in modern in modern times also creates a hidden vice

so the confidence man exactly embodies this vice the person who can cheat his way through the common commonalities that we all have. Um so in order to counter this vice we have to have a gra we have to grapple with reputation of people's character. So we have to have some kind of knowledge about virtue so to say. Um, but the problem is, and that's also interesting because the the book of the conference men was was based on an actual story of a guy in New York who was uh swind swindling people to get their wallet to get their watches, the golden watches, and somebody in the in the in the newspaper wrote about it and said like, well, this is great that we

got this guy, but the real confidence man, they actually live on Wall Street. So it's like an an early critique that very much resonates with Satoshi Nakamoto's paper basically, you know, like actually the problem is all the way up there like where where we we have the confidence man. So in a way like like on the surface level you could say like well blockchain is actually like a perfect answer to this different difficult dilemma of trust. um uh tackling this implicit problem of vice that you have uh and and offering kind of a liberal uh solution to this problem like structure without agency.

So there's like the ros in idea you know you have a boundary you set you set like a digital boundary within which uh spontaneous action can occur you could say like so so in a way this um this brings out so a very thin sense of civic virtue in those people who are interacting through a blockchain and in one of our papers and in which we also do in the book uh we talk about this as characterizing blockchain not as a trust trustless technology but as a confidence machine and we we say this because um in the English language there's this interesting distinction between trust and confidence that is leveraged by uh um Lumman the sociologist where he says that well trust is this very personal uh attitude where we can address

ourselves towards somebody you can be betrayed you put yourselves into a position of vulnerability and you take some active risks confidence is actually not like that confidence is built by systems and and um it's it is um generated through structural predictability rather than through like somebody that you trust and that you can address. So there's nobody you can address. Like similarly with the blockchain, there's nobody you can actually address. And if something goes wrong, it's not a betrayal. It's kind of a bug or it's like a failure or like we we we call it differently basically. Um so you can say like this is need a confidence machine. But interestingly, I think the history of blockchain so far shows really clearly that confidence man still persists like not and not in

little degrees. There's a lot of very interesting cases where there's a lot of swindling going on. Um and the same with status of exception but that's a different topic. Um and this is I I think a related interesting thing about this is that uh whereas I think uh the initial ideology behind blockchain is very much liberal in the sense of like focusing on free speech and personal freedoms property rights there's also like a really strong sense of dogma dogmatism like more and more I think where you have communities that are that are increasingly difficult to talk with each other Because even though we believe in these kind of

liberal principles, at the same time we think that you know only my chain is right or like there's only like one uh one dogma that that is that is the right one. And I think that is the the reason for this is like is we it's like similar to like the the distinction between like virtual signaling and this like underlying transformation of virtue by means of digital technology is that actually dogmas plays at the level of rhetoric. under that there's actually like a vast territory of vested practices and dispositions um that we have to look at that that actually explains why there is this dogma the dogmatism I think um that's a little bit of a side note

but um going back to uh to the need then for reputation I think that's still you know so the the thing with even blockchain systems is like you even though it's a confidence machine you cannot uh completely outrule uh trust in the thickest sense. So we still you could say like trust is actually another word for civic virtue. So we need um mechanisms as well to build a certain type of civility to trust each other more than just in a very thin sense because the infrastructure is predictable. And there are some interesting cases where like where people are thinking about like zero knowledge reputation management systems and I think that those are actually quite important to

pursue and in order to understand what type of civic virtue that we actually get if we do that we can think of a different type of political philosophy. So this is Philip Petit he is representing the new republic and school of thought and he talks in his book. So his his thought is all about like how can we build a republic uh that promotes freedom as non-domination and in order to do that he says there is actually something very crucial that you need to cultivate in society which which he calls civility and civility according to petit is this sense of beneficence that we have towards one another because we implicitly always interact with each other in a form of reputational game. So

whenever we interact there is always a tit for tat reputational game and that builds into a history and that's why as a community we can live together. Um and I think that this is exactly the thing that uh things like zero knowledge reputation management systems try to replicate in the digital realm which is good but at the same time I think we have to be careful as well because what Pet says is like this this way or this like um yeah process by which civility is is cultivated happens first of all uh decentrally and also um non-intentionally. So when we whenever we interact like we build reputation but

we don't mean to. It's like you know we we have a nice conversation you build a reputation but not because you're actually actively pursuing to be reputable so to say. And this is actually an important thing because once that is uh done differently there is um there is what he calls like or there is this threat of domination which and I think that also is something that in blockchain systems you have to be really really critical about because this is a threat that is not easily circumvented. I think um because we could say like okay well blockchain of course is decentralized but I put here like uh Alexis the Tok um because we we have to think about decentralization in

different aspects like for example he talks about the United States in uh the time that he visited the this like young democracy and he said like well this is actually a perfect example of political decentralization you have all these townships that's actually where the power lies the federal government is very powerless basically so it's a very decentralized system of governance, but at the same time he said like well America is maybe the most centralized state in the world. How can it be? How can these two things interrelate? Because he makes a distinction between political and administrative centralization. He says like as administrative centralization has nothing to do with having a centralized power that administrates. It has to do with standards and with common language.

It has to do with um uh standardizing for example the those uh measures of merit or standardizing those measures of virtue in that sense. So um and that's I think the type of centralization that uh is hard to circumvent in blockchain systems. That's something that we have to really think about really deeply and at the same time also like this non-intentional aspect is really hard not to implement digitally because in the especially because you don't know each other often like on on sharing platforms or elsewhere reputation is built very intentionally like whenever we give each other like a a star uh rating or a comment or something that's exactly an intentional

form of reputation building. So there is there are some threats here and I think that's important to look at. Um just to to finish I think I'm almost out of time. Um uh so to to wrap up I think civic virtue is a theme that connects surprisingly connects the social credit system and blockchain systems. Um and um and what I think we need to think about when we attack these threats that I just talked about like these these problems that might arise is uh that eventually if this is a political system we need some form of a public sphere because the public sphere is that uh place or that configuration if you follow for example Hana Island in which we can act and

speak in concert and um realize our political freedom basically and and there are certain initiative atives. So I think for example the plurality book is really good way to to address this um even though I also critical about these initiatives um but I think that these things these type of initiatives deserve a lot of attention from us because that's where eventually we can make a difference between um yeah building a political community through blockchain technology that is actually conducive of virtue rather than one that is detrimental do it. All right, that's a long talk. So um I hope you enjoyed it

and uh thank you for your your attention and I think I have time maybe for one question or two and I know like it's very little but thank you only [Applause] one or if there's no question I'm also happy to just talk with you in a break. Great. Then I think uh thank you again and um I'm looking forward to the other speakers. So thanks [Music]