Lawyers are annoying. I would know: I’m one of them. We are so annoying in fact that they are the subject of endless jokes, some of which are quite funny.
But lawyers will not be replaced by blockchain technologies. Neither will accountants, bankers, or any other job role.
Rather these job roles will be “disrupted” meaning that their current essential roles will change. An example might help…
From computers to computers
Until the 1950s, “computers” were largely assumed to be humans. That’s right: humans who computed data.
Starting from advances made during World War II, machine technology became increasingly sophisticated so that these roles would be played by machines. A business or government no longer needed a small army of human computers: just a few people who could work a calculator or a machine computer.
So what happened to the small army?
A small number of them got became the first group of (machine) computer programmers. They had a direct hand in crafting how these machine computers would operate along with other technical experts who helped initially create them.
A slightly larger number got retrained on the new machines and worked them. Their jobs were now different, but in many ways the same. They were still in charge of computing large, complicated numbers but, with the aid of machines, they were able to do more with less effort per calculation.
The largest number simply moved on, either to other jobs or no jobs at all. Though the hope is that the new technology causes a net increase in jobs, this is difficult to test and the reality is much more complicated.
These changes are the essence of Clay Christensen’s famous “disruptive innovation”, a term and concept largely cribbed from Schumpeter’s “creative destruction”. They are explanations of how capitalism creates innovation and are essential components of why capitalism beats out centrally planned economies, espoused most famously by Schumpeter, Hayek, Mises, and the rest of the Austrian economic school.
The proponents of blockchain as disruptor implicitly assume that this is how economies and industries work. So let’s play out the argument…
The Austrian Blockchain Argument
The essence of every “blockchain will disrupt X” argument is that “creative destruction” and “disruptive innovation” is coming for X. I would know: I’ve made this argument myself!
And the argument goes something like this:
Industry X requires trust in a specific set of humans to currently function.
Blockchain, a trustless trust system, streamlines the need for these specific humans.
Blockchain will therefore put these specific humans out of job or fundamentally alter the nature of their work or both.
Simple. Elegant. Rooted in theory. All good.
This argument leaves out the role of the humans seeking to be replaced, a point that the Austrian school frankly has little by way of response.
Interest groups and Fiduciaries
The humans whose jobs will be replaced are treated by this argument as if they have little say in the matter. Capital owners will force these changes on them.
But in the industries that are most likely to be transformed by blockchain, those who will supposedly be distrusted are themselves substantial capital owners — bankers, doctors, lawyers, and accountants are the largest capital owners in modern society, especially in the United States.
How likely is it that these folks will allow their capital to be used to destroy their own capital? Not terribly likely.
They will use two means to do this: their own interest groups and their legal roles as fiduciaries.
Interest groups play an outsize role in politics and law-making. You can expect that bankers, doctors, lawyers, and accountants will use their interest groups to at first block the blockchain (pun intended) then to delay it as long as it takes for them to be able to take economic advantage of it (and thus retain their capital).
Imagine if the human computers had a better union.
These industries also have carefully defined legal roles as fiduciaries. Licensing regimes ensure their role as sole arbiters of who is allowed to provide these services and to ensure quality standards among those in the profession.
It is this second component that will hold back much of the blockchain enthusiasm and expansion.
Blockchain proponents will have to show to a very high standard that blockchain is a better protector of secrets and ensurer of trust than the current system provides.
The only way this will happen is if massive frauds occur using the existing systems that could have been prevented with a blockchain (or at least blockchain-assisted) system.
It’ll take time (and crime)
Basically, here’s what will happen.
Some companies or providers start using blockchain while others don’t. The ones who don’t see poorer results and more fraud. This is demonstrable and irrefutable over time. Those in the interest groups who are really concerned about their fiduciary responsibilities will come around first and corner the market. The rest will fight for scraps until they are forced into submission by changing legal regimes.
Remember: all this will play out over decades, not days or weeks or months or even years. And it will look scattered and disorganized to us living it. In the future, it will seem like a smooth, stable, upward trajectory. Much like how we conceive of earlier industrial revolutions.