Kassandra Learn: What is the Social Contract? (Part 3)
Ways in which smart contracts can change the world
We’ve looked into the practicalities of the social contract in our daily lives. We’ve also begun to explore the impact that smart contracts have on a personal level. Now let’s scale up and see how smart contracts will radically improve society as a whole.
In a nutshell…
Just as you go about your daily life with the social contract in action all around you but don’t need to give it any thought from moment to moment, smart contracts should also be able to invisibly govern how we interact with each other and with larger groups. Smart contracts’ “trustless” nature means we can depend on innovative automated processes to enforce agreements that we implicitly and explicitly make with one another.
In this way, smart contracts have the potential to transform any written and verbal contract into a self-governing agreement. We’re going to explore some of the benefits below.
Let’s consider some example “use cases” about how smart contracts could be put into practice as means of paying employees and contractors. The changes might seem subtle, more of an upgrade to the engine that drives a company rather than to the customer-facing exterior.
Such “under the hood” changes involve greater transparency and efficiency with company payroll services. Payroll already involves pain points when it comes to cutting checks and spending out on intermediaries to serve functions involving paying employees, to the point where many companies prefer to farm out these tasks to third party providers to deliver these services. Rather than relying on an antiquated system for distributing everyone’s rightful earnings, smart contract technology means companies can automate employee and contractor payments with minimal oversight. This allows businesses to optimize the flow of work and labor.
But this increase in efficiency goes beyond automation. Human beings can make mistakes, software simply does what it’s designed to do. The design of such systems can always be improved, but this simply means that smart contracts for payments can easily develop and grow to support new use cases and new payment scenarios. After all, human agency also needs periodic review and skills updates. Rather than taking laborious efforts to train up people to understand the intricacies of such cases, smart contracts replace fallibility and skills investment with out-of-the-box solutions that simply work as designed and developed, every time.
And this has more implications than simply cost-saving, there are also radical implications for pay transparency. We’re all aware of the perennial issue around pay discrepancy, especially when it comes to gender and race. People in the same organisation with the same title and responsibilities are not always paid the same. This is often in the interests of multinational companies: driving down costs by discouraging discussions around getting paid what you’re worth. True externally accessible and totally visible pay transparency only seems to apply to the top earners and c-suite employees in the world’s biggest companies (if you can trust that they’re not making extra on the side or devoting enough time to their jobs).
It’s time that ordinary workers benefit from the same policies as their bosses. As blockchain records can be made visible and understandable to all who access them, the transparency offered by smart contracts allows all people to know their true worth. Furthermore, smart technology lets people know what kind of company they’re doing business with, and really see if they’re not just all talk when it comes to equality.
Using smart contracts in a legal context also offers improvements in terms cost and speed. The overall cost of preparing and submitting legal forms can be automated by minimising human intervention to when specialist help is truly needed. Meanwhile, the laws that govern societies can be made more transparent using blockchain technology.
Most legal systems are not easily accessible or understandable, and local and regional variations to law can often catch people out at a micro-community level (anyone who has ever fallen foul of a Homeowner’s Association rule and regulations can tell you that). Smart contracts could offer a macro and micro solution to issues around accessibility and understanding.
Let’s look at existing innovative examples where web 2.0 technology has already improved the legal process. Automated legal advice websites offer direct example of how the internet is already being used to democratize law. By taking base guidelines for basic but time-consuming business processes (such as starting an LLC), or personal legal processes (like writing a will), sites and bots can work out the minimum amount of information necessary to carry out complex legal procedures and make them a reality.
This proves the viability of optimizing legal interactions using templates, with an external authority like a lawyer only needed to step in to handle anything out of the ordinary. This is where Web3 can really shine, with smart contracts taking this process of legal democratization a step further still. Once the template and needed information for a legal process have been determined, a paid service is no longer required at all: a smart contract can write and enforce itself! People would no longer need an expensive lawyer to take painstaking time and money completely redrafting documents or chasing up withheld payments, drastically reducing the amount of time contract writing takes and massively improving financial and intellectual efficiency.
The greater transparency built into an accessible blockchain of interwoven agreements brings benefits for civil society as well as business. Voting can be made more efficient, more resilient, and more accessible through smart contracts.
Consider the problems that currently plague the old-fashioned way that national elections are run; such as complaints about absentee votes, double counting, and human error to name just a few. Then there are the cost implications of current democratic systems. Mailing voting and informational materials to people has huge costs and an environmental impact. And don’t forget the time and manpower needed to count (and inevitably recount) votes.
These problems can be neatly solved through the mechanism of properly implemented blockchain technology. Setting rules and standards via smart contracts could eliminate all of the aforementioned issues, all while reducing expenditure. In many locations, voting system vulnerabilities and queuing during a workday are seen are an unnecessary hassle that put people off participating in democracy. Other issues include outdated, overpriced and opaque voting hardware that needs to be thoroughly investigated at best, and replaced at worst.
Technology like smartphones are already available to the vast majority of Americans. Meanwhile, counting and recording votes with blockchain technology, underpinned by smart contracts, makes instantaneous results a reality. Immediate and transparent voting records would finally make events like the infamous 2001 “hanging chad” truly a thing of the past.
Politicians are more easily held to account, too. If a candidate or a politician makes an agreement or a promise, there will be a definitive record and consequences can be written into smart contracts for breaching these conditions. Flip-flopping, airbrushing the past, or simply abandoning voters once in power: these can all be combatted through smart contract technology.
With increases in the efficiency and availability of voting procedures, smart contracts can even make Swiss-style direct democracy more practicable and practical in larger, more complex democracies for decisions regarding matters that are more local, regional, or administrative in nature. This re-enfranchisement of voters will have a noticeable impact in terms of voter confidence and result in a greater awareness of, and participation in, wider civil society.
Clearly, smart contracts can bolster existing voting systems and improve faith in our democracies. They can also help to re-enfranchise voters by giving the individual user of any voting system the ability to see what’s happening and record the results instantly and immutably. Under such a system, people could actually ensure that what they wanted to happen happens when they vote for a candidate, initiative, or by-law. This ability to vote anywhere and at any time directly links smart contracts with the shared social contract we all participate in by enforcing our choice of government and ensuring we have a greater say in what gets passed.
The main point to take away is that smart contracts won’t change the social contract we share with each other. Instead, they’ll affect how we approach the social contract conceptually: in a way that is transparent, inherently trustworthy, and efficient.
The end user shouldn’t notice an immediate difference except for the indirect benefits from a societal standpoint. Smart contracts just free up manpower and resources to enable greater automatization of processes that are naturally inclined to automatization.
The “how” of these matters should be obvious to users, with people able to log on and do things the same they have always done; only feeling the change in terms of the cost of external processes and how things are optimized. With a payroll regulated via the blockchain, for example, if you’re getting paid then you still get paid.
Thanks to blockchain technology, the social contract has never been more relevant or applicable to our daily lives. Smart contracts give us a new way to enable and enforce how we live and work together in a manner that is ultimately more efficient, direct, democratized, and transparent.