In the new information age, technological innovation fundamentally transforms our economy and the incentives that drive it. Markets are increasingly dominated by inputs no longer characterized by scarcity, calling into question some of the most basic economic models for maximizing efficiency and value.
This study tackles four of the classic wicked problems of social welfare, thought to be unsolvable under conditions of market capitalism: (1) the redistribution of wealth, (2) the principal-agent problem, (3) the institution of property rights, and (4) the supply of public goods. We reframe these challenges as issues of centralized monopoly control, problems that are now being intensified by the evolving nature of our increasingly digital global economy.
We hypothesize that decentralized ledger technologies (DLTs) could form the foundation for a new class of digital institutions. These institutions have the potential to offer novel solutions to these persistent problems by expanding individual agency and resilience, realigning market incentives, and restoring true competition to the free market. To explore this, the study analyzes four distinct cases of digital institutions built on distributed ledger technologies, each designed to address one of the aforementioned problems.