Futarchy is an untried form of government proposed by economist Robin Hanson, in which officials define measures of national welfare while prediction markets determine which policies are most desirable. In Hanson’s words, “we would vote on values, but bet on beliefs.”
Futarchy is based on the assumption that poor nations are poor because their governments adopt flawed policies, despite expertise recommending otherwise. Although this assumption may be problematic, in that it boils economic stagnation down to sheer misjudgment, the question of how to render governments accountable to public opinion regarding the future is a valuable one. Futarchy intends to address this by having democratically-elected representatives formally define and manage after-the-fact measurements of national welfare, while allowing market speculators to determine which policies are expected to raise national welfare (Hanson). According to Hanson, “the basic rule of government would be: when a betting market clearly estimates that a proposed policy would increase expected national welfare, that proposal becomes law.”
Hanson was also involved in the creation of the Foresight Exchange (see image), an online play predictions market in which current market prices reflect consensus about the future, and FutureMAP, a (now cancelled) DARPA research project into the use of prediction markets for shaping government policy.
It’s possible to imagine participation in something like the FX as a civic duty in Futarchic societies, and specialized predictions markets emerging around particular issues, geographies, etc. For more information, including Futarchy’s potential shortcomings, refer to “Shall We Vote on Values, but Bet on Beliefs?” and visit Hanson’s website.
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