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Contracting-out Contract Law

Contracting-out Contract Law. Importing Trust into Low-Trust Societies Electronically Mark S. Miller CTO, Combex Inc. Open Source Coordinator, ERights.org Director, Extropy Institute. What Went Wrong?. End of communism Great liberation from oppression

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Contracting-out Contract Law

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  1. Contracting-out Contract Law Importing Trust into Low-Trust Societies Electronically Mark S. Miller CTO, Combex Inc. Open Source Coordinator, ERights.org Director, Extropy Institute

  2. What Went Wrong? • End of communism • Great liberation from oppression • New leaders include many free market folk • Vaclav Klaus, Miseans in the Baltics, Poland, etc. • Soros, others, eager to help • “It is easy to turn an aquarium into fish soup, but not • so easy to turn fish soup back into an aquarium.” • –Lech Walesa

  3. Low-Trust Societies • From “Trust”, “The Other Path”, E. Dyson • Absence of oppression isn’t enough • Complex extended cooperation requires trust • Besides culture, what? • Accumulated “capital” of widely trusted intermediary institutions • Secures relationships & contracts among others

  4. Hubs of High Trust Actual Virtual

  5. Low-Trust TragedyNot no trust. No trust hubs. Actual Virtual

  6. Hubs: Trusted Intermediaries • Arbitrators, Banks, Notaries, Visa, • Underwriters, Lloyd’s, Sotheby’s, • Exchanges, Brokers, Funds, Escrow, • Consumer Reports, Roger Ebert, …, • Courts, Law, Enforcement, Money • yeah, but still better than their absence

  7. Bits Without Borders • Can now purchase e-goods & e-services from across the world as easily as next door. • Escape old limits of geography & jurisdiction. • Can trust-hubs escape too? • Can they be made purely electronic? • Mostly independent of physical interaction • Many 1st world hubs are trusted worldwide

  8. Remote Trust Bootstrapping 1st World 3rd World

  9. Smart Contracts • Contract as Program Code • Terms enforced by program’s execution • Inescapable arrangement vs. punishment. • Contract host == trusted escrow & enforcer • Private law provided per-contract • Nick Szabo’s www.best.com/~szabo • Our “Capability-based Financial Instruments” at FC00

  10. Contracts as Games • Players make moves, but only “legal” ones • Move changes state of board • Board-state determines move “legality” • ERights are “pieces” placed on board • Game escrows pieces, • Pieces/ERights released only by play

  11. A Simple Exchange Game

  12. A Covered Call Option

  13. The Game Design Game • Contract Negotiation as Game Design • Framework as the Game of Game Design • Design rules for game all are willing to play • Write “board manager” for that game • Agree on a mutually trusted host • Pay host to run the board manager • Host verifies everyone agreed on same game

  14. World Isn’t Purely Electronic

  15. Why the 3rd World First? • Less burden of installed base • Like cell-phones in Eastern Europe. • Where legal system isn’t thought legitimate,legitimate businesses need not be legal. • Especially given alternate source of legitimacy.

  16. “Rule of Law & Not of Men” • The Classical Liberal ideal • A neutral simple framework of rules • enforced impartially & justly • enabling cooperation without vulnerability • The old “right of contract” • Any mutually acceptable arrangement • Law secures it, as a trusted intermediary

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