Exit and voice

One of the biggest points of comparison between the basic framework of associative democracy that I have proposed and the more typical state-centred democracy is that instead of one set of democratic institutions that have all the power centralised in them, the democratic power is decentralised across a range of associations - and new ones can pop up all the time.

This difference allows for people to use two feedback avenues for associations such as giftmoots: exit, and voice. Exit is the choice to leave an organisation (either as a member, a customer or a worker) and go somewhere else. Voice is the choice to stay with the organisation but provide feedback. So, for example, if someone were unhappy with the quality of bread at their local bakery, they could choose to exit and find another bakery (or give up eating bread), or give feedback (perhaps in the form of a complaint) so that the bakery can learn and the bread can get better.

Exit is a pretty typical choice to make when goods or services are poor in an exchange economy. Customers evaluate that the product is a waste of money, and move elsewhere to get a better product. If a few people do this, the business gets the signal that their product isn't satisfying that particular part of the market, and they can start to find ways to improve it. If a lot of people do it, then the business might collapse.

Exit is often championed as the ultimate freedom in a market, with the ability to take your money somewhere else. However, it has a downside: the business might not have an idea as to why their customers are leaving, putting them in a position where they don't know how to make their product better. Now, perhaps this is okay for some market advocates, and businesses failing is part of the overall process of an economy as whole figuring out what people want. But for other market advocates, this is a problem, because it is a waste of resources to have the business fail when a few minor amendments would have ensured people got what they wanted with greater efficiency.

In these cases, there is an advantage to using voice. At least with voicing a complaint the company has some data to learn from, and the situation won't arise where a few businesses fail because they all making the same mistakes. Voice allows businesses to get customer input, to reflect, and to adapt. Some businesses are well set up to engage with voice, with customer feedback surveys, complaints departments, and market research. Others have little resources to dedicate to this area, and rely on people regularly giving quality feedback.

There are some types of organisations where exit isn't really an option, such as in a situation with a monopoly, where people are allocated to an organisation (such as students to public schools), or state democracies, where the only way to exit is to leave the state. In these situations the most viable option is voice, where a lot of complaints can have an impact of the products or policies that organisation offers. In some cases this might be relatively futile - some monopolies aren't really responsive to complaints, for example. In other cases the organisation is well set-up for voice, such as democracies where the people can regularly vote to influence the leadership and their decisions.

Giftmoots offer both exit and voice: people can leave giftmoots (and join others or make their own), or they can use the democratic processes to influence change within them. Having a strong set of democratic processes allows a giftmoot to be responsive to its members, to aggregate supply and demand signals, and to promote behaviour and policies to satisfy those members. On the other hand, if a member doesn't like the outcome of a vote, they don't have to actually accept it. Unlike in a state democracy, where leaving the state might be costly or impossible and the only option is to live with the outcome, a dissatisfied giftmoot member can instead leave the giftmoot and go to another one.

This solves a significant potential concern for giftmoots as financial institutions, which is that the voices of minorities might go unheard because of the voices of the majority. In a democracy where the minorities are bound to a single democratic institution and where their voice has little impact, their ability to influence affairs is incredibly limited. But when they can exit and start their own association, their voices can come out in full.

This is not to say that if a group of people start a giftmoot they will automatically be allocated resources and that exit is therefore always a successful strategy. But it does provide another option that neither exit in an exchange economy or voice in a state-centred democracy offer. Consider, for example, a group of 100, where 10 of them form a sub-group that express different needs. In an exchange economy where a business doesn't cater to those needs, they could reasonably exit and move to another business that does - if such a business exists. They could also start their own business, but only if they had the resources (including their labour, if that were constrained). In a democracy which they can't exit, their voices are often unlikely to be able to influence the other 90 (this does depend, of course, of the quality and context of the democracy, but it's worth imagining this worst-case scenario).

In a giftmoot economy, however, things are a little different. It is still the case that the voices of the 10 might be drowned out by the voices of the 90, and their needs are not attended to. But the context is a little different. The giftmoot, for example, might prioritise getting certain types of resources that the majority have requested, and put in that request to suppliers. The 10 get nothing supplied to meet their needs. But here they also have the chance to exit and form their own giftmoot, and then put in their own request to suppliers. So even though they are a smaller number of people, and even though their request isn't guaranteed to be fulfilled, they now have the ability to be heard by the supplier where before they could not.

This scenario imagines a case where the giftmoot uses democracy to produce winner-takes-all outcomes, where the majority have influence and no one else does. But this isn't necessarily realistic - many forms of democracy provide ways for minorities to have influence, and the members of a giftmoot might be very inclined to look after their fellow members. Giftmoots don't have to vote on every measure. There's no reason why even if only one person requests a particular good that the giftmoot could not use its logistical power to obtain that good on their behalf, the way that a store might have no problem ordering in one of an item for a single customer. This discussion of giftmoots is not here to suggest that this is the only way that giftmoots should operate, but rather that the set-up of giftmoots allows for more flexibility in general than other types of democracy.