Decentralization and the Balance of Power: The Risks of Centralization Indicated by the Passive Awareness Hypothesis

As Vitalik Buterin points out, modern society faces a serious dilemma. While we desire technological progress, economic growth, and cultural development, we also fear the concentration of power among three major forces—corporations, governments, and crowds—that drive these developments. Especially from the perspective of the passive consciousness hypothesis, many of us are prone to become passive entities within this power structure, unwittingly swept up in waves of centralization. The key to resolving this fundamental tension lies not merely in regulation but in structural decentralization.

The Three Powers: Changes in Power Structures Driven by Corporations, Governments, and the Crowd

The sources of power in modern society exist in three distinct domains. Corporations create commercial value but, under pressures of competition and profit pursuit, gradually diverge from social responsibility. Governments are tasked with maintaining order and providing public services, yet their coercive power always poses a threat to individual freedoms. Civil society and social movements claim independence and diversity but risk being unified under populist currents, losing their pluralism.

Historically, geographic distance and limits on human control naturally constrained excessive concentration of power. However, 21st-century digitalization and globalization have almost completely nullified these natural restraints. Simultaneously, the three powers have become more formidable than ever, intricately intertwined.

Passive Consciousness Hypothesis and Modern Power Concentration Mechanisms

The passive consciousness hypothesis suggests that our awareness may not be the result of active choice but passively shaped by external information processing systems. This perspective is crucial for understanding modern mechanisms of power concentration.

Corporate control of information and algorithmic regulation unconsciously shape user preferences and behaviors. Social media recommendation systems effectively determine what we see and believe, creating the illusion that we are choosing freely, while in reality, external forces are guiding us. Government surveillance technologies also function as passive mechanisms to control citizen behavior. Crowd movements, driven by mass enthusiasm, can strip individuals of independent judgment, fostering collective passivity.

The danger of the passive consciousness hypothesis is that power operates more subtly and invisibly. Classical authoritarian regimes exercised control through force and violence, but modern power concentration transforms us into “passive subjects of consciousness,” stripping away the very possibility of resistance.

Corporate Centralization: Profit Pursuit and the Loss of Diversity

The negative impacts of corporations on society can be viewed in two layers. The first is “intrinsic evil”—as corporations grow larger, the divergence between profit maximization and societal benefit widens.

Once, the video game industry centered on creativity and fun. The early cryptocurrency industry also pursued technological innovation and ideals. But as scale increased and investor interests shifted toward profits, these industries began losing their original values. Today’s gaming industry relies on embedded gambling mechanics, transforming into systems that maximize extracting funds from players.

The second issue is “loss of vitality”—as corporations grow, cultural diversity diminishes, and cities worldwide become homogenized. Just as Starbucks coffee chains dominate American streets, large corporations shape environments to eliminate opportunities for competitors and small businesses.

This homogenization stems from the fact that all corporations are driven by the same “profit motive” and lack strong counterforces. A single $10 million company can influence markets less than a single $1 billion company, which can undertake much larger investments to shape the environment. Investor structures accelerate this trend. If entrepreneurs can build a $5 billion company that is disliked globally or a $1 billion company that contributes positively, rationally they should choose the latter. But investors seeking higher returns pursue the larger scale, offering higher yields for $5 billion firms and lower for $1 billion firms. This market dynamic overrides entrepreneurs’ personal ethics, further accelerating corporate centralization.

How Economies of Scale Disrupt the Balance of Power

The primary reason behind the rise of 20th-century America and 21st-century China is economies of scale. Larger national or corporate sizes lead to higher growth rates, with small initial differences expanding exponentially over time. The metaphor of a cheetah slightly faster than a turtle at first, but widening the gap over time, is apt.

Historically, two factors constrained this exponential growth: diseconomies of scale—bureaucracy, internal conflicts, communication costs that reduce efficiency—and diffusion effects—flow of talent, ideas, and technology across organizations, allowing latecomers to catch up.

In the 21st century, these constraints have rapidly weakened. Automation and digital technology have significantly reduced diseconomies of scale. Advances in proprietary technology now enable the creation of software and hardware that only grant usage rights without granting modification or control rights. Once, delivering a product to consumers meant inevitable disassembly, reverse engineering, and modification; now, this law no longer applies.

As a result, economies of scale have become more potent than ever. While the spread of ideas via the internet continues, control over these ideas is increasingly concentrated, accelerating power centralization.

Government Power: The Tension Between Order and Freedom

The danger of government power lies in its inherent coercive capacity. Governments retain the ability to harm individuals substantially, and centuries of liberal political theory have sought to “tame Leviathan.”

An ideal government should be a “rule-maker,” not a “player” in the game. It should function as a neutral platform that efficiently resolves conflicts among citizens, rather than pursuing its own goals.

Therefore, democratic societies have developed institutions like the rule of law, separation of powers, subsidiarity (delegating issues to the most local capable institutions), and multipolarity (avoiding dominance by a single state). Even in authoritarian regimes, research shows that “institutionalized” governments tend to promote economic growth more effectively than personalized ones, underscoring the universal importance of power decentralization.

Practical Paths Toward Decentralization: Competitive Interoperability and Diversity

The most direct strategy to counteract power centralization is to actively promote more “diffusion.” This is not merely an ideal but can be achieved through concrete policies and technologies.

Examples include the EU’s enforcement of USB-C standardization and the US ban on non-compete agreements, which limit corporate technological monopolies and promote knowledge and talent mobility. These policies force companies to open up “tacit knowledge” stored internally, ensuring employees can carry acquired skills when moving between firms or starting new ventures.

Copyleft licenses (like GPL) also serve this purpose. Software developed under copyleft must have derivatives also open source, embedding a “diffusion mechanism” into the technology.

A more innovative approach is “Adversarial Interoperability,” which involves developing new products or services that interoperate with existing ones without the permission of the original manufacturers. Examples include third-party printer ink, alternative app stores, or independent repair shops using compatible parts. Since much value in Web2 is generated at the user interface level, creating alternative interfaces that are interoperable with dominant platforms allows users to retain platform benefits while avoiding value capture.

Another key strategy is embracing the concept of “Plurality,” as proposed by Glen Weyl and Audrey Tang. This involves enabling diverse individuals with different opinions and goals to communicate and cooperate more effectively, while avoiding the transformation into a single-goal-driven entity. Open-source communities and international cooperation exemplify this principle, allowing internal organizations to compete with more centralized giants while sharing economies of scale.

Building a Multipolar World via D/acc

The ideal solution is to disperse power across multiple centers, a concept called D/acc (Distributed Acceleration). It envisions a model where multiple autonomous entities mutually restrain each other while collaborating and coexisting, rather than centralized control.

Multilateralism faces theoretical risks: as technology advances, the number of entities capable of causing catastrophic damage to humanity may increase. The “Fragile World Hypothesis” suggests that the more dispersed power becomes, the higher the probability that some actor will carry out such damage. Some argue that the only solution is further concentration of power.

A more comprehensive approach is to actively promote the diffusion of technology through a “Global Decentralization Strategy.” This involves presenting each actor with a clear choice: “Grow with us and share core technologies and network resources at a reasonable pace” or “Develop in complete isolation.” This method is superior to approaches like global wealth taxes, as it focuses on dispersing “means of production” rather than wealth itself. It can also constrain authoritarian regimes and multinational entities.

As the passive consciousness hypothesis indicates, avoiding passive absorption into power concentration requires deliberate structural decentralization. Designing an environment where multiple independent centers mutually restrain each other across technology, governance, and economy will safeguard future society’s resilience and freedom.