Technology and System — Which is the primary productive force? by The Ontology Team OntologyNetwork Jun, 2022

Hope, Confusion, and Practice of Web3

For most of history, “technology” and productivity have always been closely linked, and “concepts” are the driving force for the transformation of production relations. Therefore, people usually think of productivity as technological progress, and link production relations to group thinking models. Although changes in technology sometimes promote or affect the organization of production relations, the direct goal or direct impact of most technologies is still the improvement of productivity. But there is one technology that seems a little different. Its proposition has always been not to solve a single productivity problem, but to build a new collaborative organization. From this point of view, it is more like a mix of “technology” and “concept”. Its “concept” brings people hope and even imagination, and this “technical” practice is constantly facing the dilemma of overlapping hopes and troubles. It is the blockchain “technology” and the Web3 “concept” behind it that alternate between hopeful fanaticism and misunderstanding disputes.

The Productivity Myth

In a conventional context, many daily discussions of productivity are involuntarily linked to hard technology, big bangs, machinery equipment, etc.

Indeed, from an intuitive point of view, the progress of technology, including the progress of manufacturing technology and the progress of production capacity, has indeed directly promoted the development of the whole society. However, no matter if it is from a historical point of view, or from a global perspective, there is another question that is equally important. That question is why these technologies were born, and why they were born here, not there. This has become an important issue of technological development.

Going further with the comparison of productivity, macroscopically speaking, the production capacity of the whole human being can be represented by the most advanced regions, the most advanced groups, the most advanced countries or the most advanced companies in human production. However, from the micro level, everyone of us , every country, every organization, as small as each individual, is actually more concerned about its own productivity, its advantages in this big competition, and its own productivity in the competition.

Therefore, the commonly used indicators for evaluating the productivity of different regions, organizations and countries are using a total factor productivity, which is not common. The development capability of science and technology that we are accustomed to think about, also includes organization and collaboration, etc. and other dimensions and evaluations.

“Total factor productivity refers to the “efficiency of production activities in a certain period of time”. It is a productivity indicator that measures total output per unit of total input, that is, the ratio of total output to total factor input. The growth rate of total factor productivity is often seen as indicative of scientific and technological progress, its sources include technological progress, organizational innovation, specialization and production innovation. The general meaning of factor productivity is the efficiency of the development and utilization of resources (including human, material, and financial resources). From the perspective of economic growth, productivity and capital, labor and other factor inputs will all contribute to economic growth. From the perspective of efficiency, productivity is equivalent to the ratio of the output of the national economy to the total input of various resource factors in a certain period of time. Essentially, it reflects the ability and effort of each country (region) to eradicate poverty, and increase economic development in a certain period of time, and it is a comprehensive reflection of the role of technological progress on economic development. Total factor productivity is an indicator used to measure production efficiency. It comes from three sources: first, efficiency improvement; second, technological progress; third, scale effect. In terms of calculation, it is the “residual value” after removing the input of labor, capital, land and other factors. Since the “residual value” also includes factors that have not been identified to bring about growth, conceptual differences and measurement errors, it can only relatively measure the extent to which benefits improve technological progress.

From this evaluation dimension, although there are three elements, it can be regarded as the common collaboration of two elements. The first is the advancement of technology and science, and it is also the way we are familiar with productivity advancement. The other can be included as the efficiency of organizational collaboration, and the improvement of scale. The last element can be regarded as the improvement and progress of production relations, so from an overall perspective, the ability of an organization is the simultaneous progress of technology and production relations.

If we call one of these two elements technology, the other can be summed up as a system. The system here does not refer to a narrow political system or some corporate system, but refers to the organizational forms and forms of organizational cooperation in various activities. These two factors constitute the total factor productivity indicator of productivity. Now, we need to go deeper and ask another question, whether these two factors develop independently or depend on each other, whether they promote each other, or come one after one. This question has been debated in all economic discussions.

The systems discussed in this paper do not refer to political systems in a narrow sense, but to various cooperative mechanisms in a broad sense. In the debate on the importance of technology and systems, there are basically two viewpoints, one is that technology promotes changes in systems, and the other is that systems incubate technology。

For example, the industrial revolution in history is an obvious technological revolution from an intuitive point of view. The technological innovation represented by the steam engine has brought industrial production to a new height. The process of revolution is not a technological breakthrough at a certain point in time, but small technological changes throughout a long period of time, a cumulative technological change. The people who were in the middle of industrial civilization at that time, were not going through some sudden breakthrough technological change. Many things are slowly accumulating and coming into life naturally. It can be said that even if there is no Watt, a steam engine will be born at that point in time, but it may be that another person or several other people appear at the same time. The fact is that many new inventions and breakthroughs in basic science and technology at that time were invented by different people in different parts of Europe at the same time, which proves that the accumulation of science, technology and culture in Europe at that time had reached a certain level. New technologies and new models emerge naturally.

But there is another question, in what region are these new technologies born and developed? Is it accidental or inevitable? Or is it the result of the influence of other factors behind it? It can be compared in a narrow sense to the level of science and technology. Although the industrial revolution has always been considered to have appeared in the United Kingdom, when comparing the level of science and technology, the UK was not absolutely the leader. France on the other side of the strait also had very deep basic scientific and technical talents, but most of the technological innovations of the industrial revolution were ultimately based in the UK as the main foothold and source of development. What was the reason behind this?

A large number of studies on the history of the industrial revolution have found that the advantages of Great Britain in the construction of systems and cooperation mechanisms helped to incubate the birth of the industrial revolution, such as its patent system, and its social and political system dominated by industry and commerce. These all allowed more technologies to be born and incubated or to be moved to the UK to thrive. Therefore, from this perspective, the collaborative mechanism or system is an important catalyst for technology and an environment for growth. Although technology is a kind of knowledge shared by all mankind, where this technology occurs, where it is used, and even where it is controlled is very important.

However, because of this analysis, it is easy to fall into the comparative advantage of the political system in the narrow sense, so that many subsequent constructions emphasize the political system as the core element. This leads to thinking that as long as certain advanced political systems are adopted, all other development progress happens naturally, but looking back, in the end, many countries with very similar political systems also have great differences in economic development and technological development. Some countries with completely different political systems have also developed very well, and have different iterative paths of economic development and technological development.

Therefore, everyone gradually realized that the system is a good foundation and incubator for technological and even economic development, but much attention only focuses on the narrow political system. For the organization, it is the construction of organizational rules and structure in a narrow sense. It is felt that the adoption of some advanced political system or corporate governance structure will naturally bring about technological development or economic development.

Historically, this process has encountered a lot of contradictions, and many good top-down plans and good designs have ultimately failed to achieve the expected results, and even brought negative catastrophic effects. What is the core reason? In the development of technology, productivity, and society, there are a large number of uncertain elements and uncertain environments. A single top-down plan will play a catalytic role at certain points in time, but it cannot achieve long-term, continuous, and perfect control and design.

Therefore, there is a new concept that the system or cooperation mechanism is not designed, but emerges from the bottom up from the society itself.

More than 100 years ago, Alexis deTocqueville, a young French political scientist, made his first inspection of American democracy and wrote the book “Democracy in America”, which introduced the democratic system construction in the United States in a systematic way, but emphasized that the the spirit of society, civic spirit, social cooperation and participation in social governance are the key elements to ensure the integrity of this system and its sustainable operation.

Another American sociology book, “Bowling Alone” by Robert D. Putnam, observes from another angle and finds that because of new technologies, such as television and the Internet, people’s communication has become more independent. The result is that in the physical world, there is less and less participation in social governance around the community and organizations. It is also pointed out with concern that such a trend is a threat to the American political and democratic systems, because its underlying bottom-up system is becoming weaker and more fragmented.

Therefore, many people soon found that just designing a good collaboration system, according to a template, cannot solve the problem once and for all. Because in actual collaboration and social development, there are a large number of new scenarios, new collaboration methods, new business processes, and new social governance needs in social and economic development, which will continue to emerge. The so-called perfect system is difficult to solve long-term problems once and for all. Even in the new situation and environmental changes, such a perfectly designed system may actually hinder development.

So, this brings up a new question, how can a bottom-up social system that can iterate, adjust and even innovate itself be born?

The previous section mentioned the bottom-up nurturing environment of a society. There have been many studies in this area, including the aforementioned civic community and social studies in the United States, and also crowd’s behavioral culture are studied in the intersection of sociology or anthropology in China, etc. The concept of “social capital”, which has been very popular in recent years, is also an important point of view in this regard. Social capital is a measure of the quality of a society’s resources.

The earliest narrow concept of social capital refers to the resources available to individuals in society. Subsequently, many sociologists have proposed that social capital is a characteristic of the infrastructure of the whole society, and it is the social resources and social capital required for the development of organizational cooperation, economic development, and social governance. The following is one of the broad definitions of social capital.

“The similarity in the connotation of social capital is reflected in the fact that researchers view social capital as either a productive resource that promotes cooperation among actors within a social network, or as an ability to facilitate individuals to obtain resources and benefits in a social network. Scholars will add the social and cultural essentials of network, trust and regulation into the framework of social capital theory, enriching the connotation of “social capital”.”

From the broad definition of social capital, it can be seen that social capital is a comprehensive evaluation index, which includes a social culture, organization, collaboration methods, the concept of citizens, and the perfection of various infrastructures, etc. Simply speaking, it is the measure of progressive fertility of the society in this area.

Just like farming, when you have a very fertile land, or a better ecological environment, you can naturally grow into a place with ecological diversity, and the types of animals and plants will be very rich, and they promote and affect each other, forming a positive cycle. Putting it into the real society, this also eventually brings prosperity and development of regional or national corporate organizations.

From this point of view, going back to the previous discussion regarding the industrial revolutions, Britain first sprouted before the European continent. It was also because in the hundreds of years before the industrial revolution, Britain’s cultural, political, and economic development had nurtured the formation of such social potential.

The social capital that has nurtured the system that is conducive to technological innovation and technological development is not only a single system factor. Just like in the UK, a better patent system will emerge, because of its previous concepts/values, culture and social capital naturally formed the system and concept.

From this perspective, social capital can be seen as an upgraded version of the system, a root, and a soil component that grows towering trees.

The complementary relationship between so many technologies and systems have been discussed above, which brings us to the question: what is the relationship between Web3 and them?

Web3 is a special product, in the eyes of some people it is technology, in the eyes of others it is a system and a concept, so it is a bit like the wave-particle duality of light. From here, we are more willing to define Web3 as a comprehensive product of technology and systems.

I talked about the integration and incubation relationship between so many technologies and systems. From the perspective of Web3, it wants to create an environment that encourages free iterations and innovations — social capital or grassroots soil. But as mentioned before, whether it’s the glorious revolution promoted by the British industrial and commercial capital to the service of the industrial revolution, or the formation of the social mechanism and civic spirit of the American social system, it is more or less spontaneous, driven by history and religion, culture and other reasons. Web3 is a bottom-up, free collaboration infrastructure that wants to be realized for society.

What are the core elements of Web3? Some people may mention decentralization, and of course decentralization also has degrees, so this single element may not be enough to fully summarize Web3. From my personal point of view, the core element of Web3 is to give people the “tools” and “ideas” to collaborate freely without relying on third parties.

Historically, various collaborations in various major commercial societies will have certain dependencies on third parties. New collaboration systems, collaboration tools, and collaboration platforms need to be supported by different providers, and this provider will be embedded in the collaboration process like a link.

Without Internet companies, we may not be able to do social networking, e-commerce transactions and a large number of online jobs. Without the services of financial companies, we would not be able to do more large-scale transactions and capital collaboration, etc. These are all made possible with third party’s collaborative support, which of course is not free and will inevitably become part of the transaction cost. In addition, because the third party controls information, data, matching power, etc. in the intermediary link, a series of problems such as monopoly and privacy are derived. Further, you can only choose existing third-party services to complete your collaboration. If your collaboration tasks are special or do not have third-party support, many of them will not be able to get effective support even if they are willing to pay the cost.

Therefore, the concept of Web3 also arouses people’s hope, love and vision from the two aspects of technology and system. Technically, it is indeed possible to use a series of technologies to allow everyone to have a general decentralized collaboration tool, although it is still in the early days, but in constant iterations, everyone can do all kinds of collaborations. In terms of concepts, it has brought you a new concept of free collaboration, free combination, and self-control, a free combination of free people, which has formed a special concept.

Of course, you will also see some confusion in the process. First, Web3 itself is a concept that advocates bottom-up emergence, bottom-up free composition and decentralized collaboration, but Web3 has not yet been applied to the mainstream on a large scale. The concept of Web 3 itself comes from the planning of big ideas, the vision planning of Web3 is also based on concept first principles. How to find a balance between top-down planning and bottom-up emergence? That path is the main driver for the next phase of Web3.

In addition, between free collaboration and core promotion, when you only have free collaboration, you do not have the ability to execute effectively, and you cannot provide more effective services to society. Concepts touch many people, but often when it is time to actually use services or even definitions, concepts and interests conflict, and sometimes there are obstacles, and not everyone is willing to pay for new concepts.

At this stage, the concept of Web3 itself is more like a concept proposal. There is even a top-down design of such a decentralized collaboration concept, so its birth has a certain bottom-to-bottom effect. Because, frankly speaking, Web3 has not been widely used in a large number of mainstream application scenarios, and is still in the early stage of exploration and concept development, there will be many new hopes, contradictions, confusions, and uncertainty, we will discuss these issues of Web3 in the next part of this series.