Introduction

We are living through a turbulent age with democracy at a crossroads. On one hand, it struggles under the weight of growing global crises such as climate change, disinformation, mental health epidemics, and geopolitical tensions. On the other, the system itself seems increasingly ineffective in tackling these challenges. Public disillusionment with governance is spreading, sparking debates about the sustainability of democracy as we know it. Is the democratic model outdated, unable to manage our interconnected, complex world? Are authoritarian systems like China's or even an AI-powered governance models the answer?1 Or can democracy find its necessary new forms to be the way we govern ourselves? The question around what kind of governance can deliver the kind of future we seek has not been more pressing in the last few centuries.

We seem to talk about various issues from the rise of populism, to climate inaction, biodiversity loss, economic inequality, and the mental health crisis as if they are unrelated. They are essentially the symptoms of the deeper issue: our public governance systems cannot deliver. Our democracies were designed in the nineteenth century and only slightly adapted in the twentieth, are simply not fit to solve twenty-first-century challenges.2

Politicians are incentivized to focus on short-term popularity, not long-term solutions. Transparency and accountability are often afterthoughts. We do not have a way of linking policies to the results they create, or mechanisms to follow through. The art of governance has turned into a spectacle, where narratives, often twisted or outright fabricated, matter more than facts. Adding to the dysfunction is the influence of money and media in politics. Major media outlets are politicized, and focus on click bait over truth in public discourse. Our representatives focus on securing re-election and respecting party lines, whilst dancing between narrow interest groups and the story that resonates with the public, instead of what is in essence in public interest.

This misalignment between governance and societal well-being is fracturing our social contract. And innovation in governance is virtually nonexistent.

This is the "metacrisis," the common thread that lies beneath our environmental, social, and political crises. It is a crisis of democracy itself in failing to protect and serve the collective good. The democratic systems that once facilitated human progress now appear outdated, unable to generate the leadership and vision we desperately need.

In this book, I present Merit Democracy, a radically different framework to reimagine governance. Merit Democracy is not just about tweaking the existing system but proposing a comprehensive overhaul. It draws inspiration from the organizing principles of the data-driven marketplaces and innovative powers of tech companies, and merges them with the need for public service. It bridges the gap between private incentives and the public good to draw individuals in crafting legislation and companies in delivering public service. In Merit Democracy, citizens aren't merely voters; they are active participants and are rewarded based on their contributions to society. Similarly, companies are not merely catering services to us as consumers, but also as citizens, and get compensated for their impacts. In Merit Democracy, data and markets become powerful tools for collective benefit.

The Pressure for Change

Time is running out in order for us to realize a new kind of public governance. Our social troubles show in various statistics. In the past three decades, inequality has reached unprecedented levels in the west. In the United States, the richest 1% now own as much national wealth as the bottom 92%. At the same time, homelessness tripled and adult depression and anxiety rates doubled to 10% and 20% of Americans, respectively. Half of Americans report feeling lonely, which is a worldwide trend despite the digital connectedness and material abundance some enjoy.

This system also trashed the environment like there is no tomorrow: Climate change is accelerating with latest Intergovernmental Panel on Climate Change trajectories showing a trend toward 2.2 to 3.5 Celsius warming by 2100 (IPCC, 2023). But let's not get stuck in on the climate issue, as there are many others that are also more local. The United States lost about 75 million acres of forest in the past 35 years, an area equivalent to Poland, about 50% its insect and 30% of its bird populations, while plastic waste went up a whopping 20 times to 42 million tons a year. In our cities, we let cars take most of available public space, and deal with their noise and pollution as if they are a given. Not to mention nitrification of soil due to fertilizers in agriculture, or acidification of oceans.

Meanwhile, technological innovations continue to accelerate. We are entering an era of AI which is already enhancing human capabilities significantly. Many seem to expect tech innovations will fix our public governance issues. They can't: Technology is an enabler; it accelerates the dynamics already at play. Social media can connect us with loved ones, while also making us lonely and insecure. AI can be our assistant to guide and solve problems for us, just as it can manipulate us. No, new technologies on their own cannot save us. They need governance; the incentive structures and regulatory frameworks to ensure their capacities are directed at solving our collective challenges, not adding to them.

Reimagining Democracy

The next democracy we create must be at least as strong in creating an economy for the public goods as the neoliberal system we created that focuses on the private. To do so, it must leverage the most powerful technologies, just as the companies it intends to regulate, do. More specifically, this book proposes experimenting with a set of ideas towards a completely new public governance structure:

1. Pricing and Measuring Public Goods: Public goods like clean air, safe streets, and social trust are difficult to quantify but vital. In our future democracies, we can define these goods and measure them through metrics that citizens can directly engage with, creating a transparent framework for tracking progress.
2. A Marketplace For Legislations: Laws and policies could be developed and evaluated through prediction markets, which we know do well in aggregating opinions and knowledge from commodity futures to sports games. Proposals with highest value would be presented for a (liquid) vote. Successful policies that yield measurable benefits would result in rewards for their creators, aligning personal motivations with the public good.
3. Aligning Companies' Incentives with Public Outcomes: Using data analysis, the impacts of products and services on public goods could be clearly linked to financial incentives. Companies would need to consider the societal and environmental consequences of their operations, as these would directly influence their profitability. This transforms companies' focus from merely consumer value to social value, harnessing their innovative powers.
4. Data as Core Competence of the State: State would generate, aggregate and process data, ensuring privacy, integrity, and security of it. When we trust our governments, we must also equip them with the most valuable asset of all, our data, just as we do with the leading tech companies.
5. Continuous Improvement: Unlike our static, outdated political systems, our future democracies would be agile and iterative, constantly refining itself to deliver better outcomes. It would monitor its own performance and adapt as needed, embodying the principles of agile governance.

The power of markets lies in their efficiency and adaptability. Capitalism has demonstrated that markets are excellent at allocating resources for private goods, where consumer demand and producer supply are in a dynamic balance. Yet, when it comes to public goods, markets have failed us. Neoliberal capitalism has driven extraordinary wealth creation but did so at the cost of: social fragmentation, environmental degradation, and political instability.

Similarly, data-driven companies like Meta and Alphabet have mastered the art of prediction, using data to know us better than we know ourselves. Data is the power fueling tech companies, enabling faster innovation through experimentation. Yet, such data capabilities have not been a part of our legislative processes or public service.

Our next democracy needs to harness these powerful concepts, and redirect them at the service toward solving collective problems. The dysfunctional democracy we have is our heritage, but not our destiny. We can design democracy where markets and data can enable societal advancement.

A Call to Action

This book argues that the solution for a sustainable future isn't in returning to some nostalgic past but lies in creating something radically new. We must design a governance system that rewards evidence-based decision-making, fosters long-term thinking, and aligns individual success with societal well-being.

We are at a crossroads: innovate or watch democracy further erode. Ideas behind what I call "Merit Democracy" could provide us with inspiration for necessary evolution. This book is a call for a democratic vision where governance is as responsive, transparent, and efficient as the companies and markets it needs to regulate. Where we are empowered not just to vote but to actively and transparently shape the future and be rewarded for it. Where our...