The Future of DAOs, Part 3: The Product
Digital Cultural Capital and a Reworking of Bourdieu
“It is in fact impossible to account for the structure and functioning of the social world unless one reintroduces capital in all its forms and not solely in the one form recognized by economic theory.”
Pierre Bourdieu, The Forms of Capital
In the previous essay, I proposed the primary purpose—the mission—of DAOs as the creation of social value. DAOs will aggregate communal beliefs of value through open onboarding processes and novel governance systems. DAOs will then leverage token-based incentive structures to direct collective action towards those objectives deemed most meaningful by the community— those that maximize social value. In this essay, I claim that this value will accrue to DAOs and their participants as cultural capital.
A common refrain in crypto and Web3 asserts that by democratizing employment opportunities and ownership, the industry decreases the importance of initial capital in determining an individual’s success. But rather than removing the importance of capital altogether, this technological revolution engenders a shift from financial capital to cultural capital—an essential distinction. Elucidating cultural capital reveals sources of motivation and inequality within our incumbent capitalistic economies—sources traditionally hidden by the discipline of economics and its focus on asocial actors. Increasing access to cultural capital—a vital input that determines both an individual’s and an organization’s potential earnings—will help level the playing field and maximize productivity within digital communities.
In this, the final part of the “Future of DAOs” series, I outline what I see as a DAO’s ultimate product: digital cultural capital. Working from Bourdieu, I first define “cultural capital.” Extending the definition to crypto and Web3, I explain why and how this under-explored form of capital will become so important to the DAO ecosystem. Using two case studies, I explore how the fundamental features of blockchain technology and digital tokens form the foundation of a new system of credentialing, one which will produce completely novel ways to accumulate, utilize, and productize cultural capital. I conclude this series by positing how the true future of DAOs is the communal cultivation of culture.
Culture and Digital Cultural Capital
In a recent essay, entitled “Life After Lifestyle,” Toby Shorin of Other Internet tracks the origin of the term “culture” back to the concept of “cultivating” the social conditions for a healthy society. “Cultivation” originally meant the British elites who envisioned corrective measures to the wrongs of industrialism, such as poverty and moral destitution. These views concerned the type of people and society that industrialism was producing, along with the type of people and society that should be produced instead. Thus, culture has always been something that is created, or cultivated—a process that influences human behavior by defining the values society should work towards. This normative view of culture rewards those individuals who pursue socially-endorsed endeavors—an environment that fosters Mimetic Theory and the Social Proof phenomenon, wherein people believe an action or outcome is valuable when they see others doing it. And it is this perspective that causes Bourdieu to propose that often intangible, yet influential, rewards are accrued to individuals as cultural capital.
Bourdieu first presents the notion of cultural capital as a theoretical explanation for the unequal academic achievement of children from different social classes. For Bourdieu, cultural capital represents accumulated knowledge manifested in one’s skills, tastes, mannerisms, and speech—types of knowledge that promotes social mobility. He states that cultural capital is “external wealth converted into an integral part of the person,” differentiating not only between economic and cultural capital, but also objectified and embodied forms of capital. While objectified cultural capital—in the form of pictures and writings—can be transferred, the accrual of cultural capital in the embodied state—in the form of “culture,” or Bildung—requires the investment of labor and time on behalf of the actor. And since people from different classes begin at different starting lines, with the upper classes inherently involved in “higher-value” activities, cultural capital becomes a major source of social inequality. For this reason, Bourdieu explains that cultural capital acquired through education cannot be measured by a standard length of schooling, as it should incorporate an allowance for early domestic education.
For me, cultural capital transcends the specialized knowledge that Bourdieu uses to illustrate class differences. Importantly, cultural capital engenders in others perceptions of the possessor’s legitimacy, competency, and status—integral elements that constitute individual identities and produce certain advantages in a given social context. As a result, I argue that digital cultural capital will represent the killer product for organizations in the emergent crypto economy.
Digital cultural capital extends Bourdieu’s approach to a Web3 world—a new environment where digital activities and assets can be owned and aggregated to form more complete, self-sovereign identities. Individuals will accumulate this digital cultural capital in the form of blockchain-based tokens as a result of their on-chain achievements. A DAO too will accumulate digital cultural capital in a reflexive relationship with the activities of its participants. Cultural capital will be embodied as a digital identity—by both individuals and DAOs—thereby generating a verifiable reputation that reflects the legitimacy, competency, and status of its holder, as well as the potential advantages that cultural capital endows.
Crypto Credentialism: This Time is Different?
The combination of cryptocurrency and blockchain technology allows all users to claim digital ownership over their affiliations, contributions, and accomplishments. This fundamental feature will allow DAOs to productize digital cultural capital through on-chain credentialing, a process which will combine Web3’s ownership layer with emerging composable reputation and identity tools. In general, these tools—which include ARCx's passport, as well as Noox and Otterspace badges, among many others—already track crypto wallet transactions and issue on-chain identifiers that represent a user’s activities. The credentials and identifiers, typically in the form of tokens, will continue to be earned by individuals contributing to DAOs and subDAOs, engaging in protocol governance, and participating in the decentralized financial system—activities that are made public and verifiable by a blockchain. Importantly, any DAOs will be able to issue these credentials, allowing for bottoms-up digital cultural capital allocation. When tokenized, applications assigning credentials are increasingly opting for either non-fungible tokens (NFTs) or “soulbound tokens” (SBTs), which are both non-fungible and non-transferrable. Following Bourdieu, the focus on NFTs and SBTs highlights that embodied digital cultural capital will take an investment of time and labor to obtain, rather than be easily purchased or transferred. As a result, these tokens—and the capital they represent—will not need to be limited in supply, as their scarcity and value will be generated through the time, labor, and skill necessary to obtain them.
As an indicator of the possessor’s legitimacy, competency, and status—and thus, dictating access permissions and earnings potential—digital cultural capital will become a valuable product within the Web3 ecosystem. I will illustrate this point with two examples.
SourceCred: a tool for digital communities that measures and rewards value creation
Through SourceCred, “Cred” is a score earned by contributors, reflecting the value of their contributions. “Grain”—a digital currency with monetary value—is then rewarded to participants based on their Cred. In this system, SourceCred allows projects to allocate digital cultural capital (Cred) based on the community-defined value of individual contributions—cultural capital which, once earned, can be converted into economic value (Grain). The overt separation of cultural and financial capital also grants communities the optionality regarding how to reward bearers of digital cultural capital. Since most people require financial compensation for their time and labor, most DAOs will make such rewards financial (as is the case with Grain). Meanwhile, some DAOs, whose digital cultural capital becomes sufficiently valuable—and thus, indicative of even greater future rewards—may only need to reward contributors with reputation and status. However, this will present a major power centralization risk, as the most valuable digital cultural capital allocators will possess a massive competitive advantage.
LongHash Web (LHW): an on-chain contribution network enabling mentorship and advice for early-stage builders of Web3 infrastructure and applications
LHW will be distributing SBTs to participants in the LongHash Ventures accelerator’s network, identifying them as mentors and advisors. Further, embedded metadata will add both breadth and nuance to the mentor’s credential information, including areas of expertise and startups they have supported. This metadata will provide the more qualitative attributes required to fully develop an individual’s reputation—attributes that tokens alone cannot account for. (As a side note: the problem of rich identity data is also being addressed by verifiable credentials, issued by projects such as Disco.) By allocating digital cultural capital through this on-chain reputation system, LHW is trying to support the current mentoring and advising of the Web3 startups in their network, as well as promote similar value-added contributions in the future. However, this credentialing system is controlled by LongHash Ventures. In order to differentiate from centralized Web2 applications like LinkedIn, composability and ownership of digital cultural capital is essential. These qualities will allow all users to port their earned capital to any community or project, and enable all DAOs to produce and issue their own forms of digital cultural capital. As a result, this process of assigning and weighing credentials can and will be replicated by DAOs throughout Web3, thereby making digital cultural capital an invaluable product—a product that people will pay for in time, labor, and although it should be discouraged, money.
The crypto industry has a history of decrying credentialism. Yet, the institution of credentialism will not—and should not—be torn down. Instead, the practices that establish and allocate credentials—along with the resultant reputations and identities—will change. Rather than credentials passed down by institutions based on pre-defined criteria, these building blocks of cultural capital will be assigned by a distributed network of peers. Today’s paradigm of centralization has weakened the practice of credentialing, stressed structural inequality, and fueled resentment towards credentialed elites—thus revealing a dark side to meritocracy. Credentials should instead reflect earned cultural capital, mutually-assigned by a broad base of participants according to the collectively-calculated value of accomplishments.
The Productization and Liquefaction of Digital Cultural Capital
As individuals accrue digital cultural capital through value-added contributions, the DAOs to which they contribute will simultaneously accumulate digital cultural capital based on the aggregate social value of those contributions. In other words, DAOs will also acquire reputations and identities based on their perceived legitimacy, competency, and status. DAOs will then package and “sell” their digital cultural capital—in the form of tokens—to incentivize contributions by members and partnerships with other DAOs. The actors seeking out ways to improve their status and gain advantages in Web3—as well as the DAOs that offer the opportunities to do so—will then invest time and labor to earn their own digital cultural capital. This process completes the reflexive accumulation of digital cultural capital, thus supporting Bourdieu’s observation that capital, in all its forms, has a tendency to reproduce itself.
Cultural capital’s tokenization—and accordingly, digitalization—will also improve the liquidity of this form of capital, further driving demand and advancing its productization. While correlated to future financial success, cultural capital has never been particularly liquid. In this context, I use the term “liquid” to refer to the ease with which an asset can be converted into economic value. In particular, Bourdieu states that, unlike money, embodied cultural capital “cannot be transmitted instantaneously,” which presents particular problems for the holders who would otherwise like to use or exploit it. Conversely, tokens will facilitate more direct forms of monetization, such as collateralizing cultural capital in order to borrow, or staking digital cultural capital in order to perform—and collect remuneration for—some additional type of labor. When combined with the DAO communal ownership structure, tokenization enables new, bottoms-up methods to account for individual contributions and allows all members to claim their share of collectively-built cultural capital. These attributes transform the previously abstract concept of cultural capital and attach more direct financial value to it, thus reinforcing its influence in dictating collective motivation, entrenching it into DAO strategy, and promoting its accumulation throughout the crypto economy. In the end, digital cultural capital will become the foundation of a DAO’s “social operating system”, enabling the trust and permissioning required by all forms of social coordination.
Conclusion
In The Forms of Capital, Bourdieu states, “The social world is accumulated history,” claiming that capital—in all its forms—makes the “game of society” persist throughout time. Accumulated capital grants society continuity, whereby economic activity and social relations in one period depends upon the previous period. In this way, blockchain technology will act as societal memory, storing and promulgating a crypto-economically secure version of history—inclusive of all the activities performed and the digital cultural capital allocated—and thereby facilitating social coordination through consensus. And by giving this symbolic form of capital a more salient existence, tokens will foster its embodiment and construct the basis of individual and group identities. The assurance provided by blockchain technology will shift the focus of public deliberation away from what an individual or group has achieved, empowering DAOs to autonomously assess the value of each achievement. This shift will improve the efficiency of cultural capital allocation, diversify the perceptions of value that advance culture, and drive equal opportunities at digital cultural capital accumulation.
Therefore—and as a wrap on the series—I assert that the future of DAOs is the communal cultivation of culture. Shorin argues that companies and brands have assumed the primary role of cultivation in modern capitalistic economies—dictating behaviors, preferences, and values. DAOs will continue this trend within the crypto economy, using blockchain technology and digital tokens to replicate and disseminate perceptions of value at a global scale. However, standing in contrast to the controlling, normative origins of culture—whereby States and elites dictated the “right” type of individual—DAOs will promote bottoms-up, communal culture creation. While the knowledge that engendered Bourdieu’s cultural capital was prescribed, DAO participants will be empowered to influence individual perceptions of value. In this way, our digital society will reflect the process by which individuals and communities aggregate their beliefs regarding worth and meaning to advance their collective goals—the process through which social value creation is coordinated.
The crypto economy represents the first time in recorded history that financial markets formed prior to an underlying “productive economy.” One of the results of this phenomenon—among others—is the proliferation of the narrative that human beings are completely self-interested and solely responsive to financial incentives. If this perspective persists, humans will continue to be short-term profit-seekers and this technology will have only succeeded in recreating the current system. Crypto will have failed. However, I believe that DAOs represent the way to regain our sociality in crypto, on the internet, and throughout the world.