Decentralized Autonomous Organizations (DAOs): Changing The Nature Of Labor

For the last half century, we saw a major shift in power in the workforce. Due to the addition of tens of millions of Baby Boomers entering the workplace in the developed countries, we saw the paradigm shift in favor of employers. This is no secret yet did have a major impact upon the income and wealth inequality.

Since corporations were able to dictate what was taking place, those who benefited from the new arrangement were few. This took on an added dimension as technology entered the picture.

Here we see capital and labor were at odds. Individuals were forced to accept conditions that did not financially benefit them, at least not to the same degree as the other party. Over the decades, this kept expanding.

It is not difficult to see how the shareholders and employees were at odds. This is something that many tried to alter yet it appears to be a simple case of supply and demand. When there is an abundance of workers, it does not take genius to figure out how that will tilt the power equation.

And that is exactly what happened.


The Commoditization Of Labor

Corporations found themselves in an interesting situation. Certainly, when it came to the most capable of workers, these entities were in a competitive situation. They were fighting against each other for the top notch talent.

Here is where we see the financial benefits. Those who were engineers, software developers, or turn around experts found themselves in high demand. It was a situation that provided a great financial windfall to them.

There is another piece to this puzzle that is still shaping up today. While the corporations were fighting for talent on one hand, they were also trying to commoditize it on another. With the addition of automation, the goal is to get things as standard as possible. This would make people interchangeable. When this occurs, their value is lessoned.

For example, a mason can be a high demand individual. Depending upon the talents, this person might generate some unique designs that people are willing to pay top dollar for.

This all, however, goes out the window when anyone can slap some stucco on a building. As products became commoditized, so did labor. In this situation, home construction, it is hard to deny that most residences in a subdivision all look the same.

We can apply this concept to the application-based delivery services. After all, do you really care who brings the food you ordered or takes you to the mall? To you, that person is commoditized also.

The situation is now going an extra step as technology seeks to automate as much as possible. We can see the potential of tens of millions of jobs eliminated through the implementation of technology. This will, obviously, have an even greater impact upon labor.

Decentralized Autonomous Organizations (DAOs)

The DAO seeks to change all of this. We are looking at a situation where the automation aspect of things is taken in consideration. Since we know this is going to be a standard going forward, what can we do to alter this?

When we break the DAO down to its basic components, we see that what it really does is alter the "ownership" of the automation. Those who participate, in whatever form, are also stakeholders. This is an entirely new concept that only came about as a result of cryptocurrency.

One of the keys is that while a DAO is automated, that does not mean that specialized labor is not required. There are a host of services that a DAO might need to fulfill its obligations to its stakeholders. For this reason, it can hire individuals to provide the necessary labor. Here we see that people are not commoditized since they are free to accept, or reject, what the DAO is offering. Of course, since it most likely being paid in the token of the DAO, one is simply not getting a "paycheck". Instead, one immediately is granted stake in the organization.

Participants, in whatever capacity, are owners.

Of course, this does not have to just be temporary or gig work. DAOs can employ people full-time, providing the bulk of their incomes.

It is not a concept that is entirely novel. Stock options are something that seeks to do the same. The idea is to align work with ownership. Unfortunately, these are often only available to the most sought after of employees. Those that the company is trying to commoditize (the bulk of the workforce) do not share in this compensation alternative.

A DAO really has no choice in the matter. Certainly we could see the situation where payment is made in something like Bitcoin. However, the likelihood is that the DAO cannot do anything but to pay out in its native token. This means that no matter what the level of compensation, ownership stake is being provided.

The Elimination Of The Corporation

This is a business structure that was used over the past couple hundred years. Certainly, it provided a major thrust in the progress of society. However, the drawbacks to the corporation are becoming evident.

Here is where we could see the new structure take over. This will take many decades to come to fruition, mostly due to the fact that we need technology to advance to the point where automation is taking over. It is hard to have a DAO without a major component being in this fashion.

It is for this reason that many existing entities cannot be converted. Those that depend upon labor do not fit into the DAO model. Of course, as technology moves forward, the ability to automate more increases. Here is where the DAO is the ideal business structure.

If we ponder it for a bit, we can see how a DAO resolves a host of issues. Inequality on the wealth and income side is immediately addressed. Since much of this stems from the masses having little to no ownership stake in our economic productivity, we see this resolved. Also, the issue of distribution is answered since that process is spelled out in the code itself. Everyone is well aware of how things operate before entering.

This does not mean that all issues are resolved. DAOs are relatively new and require a lot of experimentation. They are not perfect entities. Governance models are being worked upon that can address the needs of the greatest number of individuals involved. Is the present governance system going to be what is used in the future? It seems likely that we will see tentacles forming as different models are produced.

Nevertheless, in spite of the flaws, we can see how cryptocurrency opening up the world to the DAO is already having an impact. Today, few are involved in such things. However, in another 5 years, we could see hundreds of millions of people who have stake in these entities. This is going to give them a slice of the overall economic productivity that is generated, something that has not taken place for most.

Just consider what things will be like with millions of DAOs in operation, all looking for people to assist in whatever way they can. It stands to reason this will certainly change the nature of labor.

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