Futarchy

Futarchy is a proposed system of governance, developed by economist Robin Hanson, in which democratic institutions define measurable goals but prediction markets determine the policies used to achieve them. The slogan is: 'Vote on values, but bet on beliefs.' Citizens (or their representatives) would specify a national welfare function — a metric such as GDP, life expectancy, or some composite index — and prediction markets would then compete to forecast which policies would maximize that metric.

The theoretical appeal of futarchy is that it separates the problem of ends (what do we want?) from the problem of means (how do we get there?), and addresses each with the mechanism best suited to it: democratic deliberation for values, market aggregation for empirical predictions. The practical objections are severe: welfare functions are difficult to define and gameable; prediction markets can be manipulated by wealthy actors; and the system would grant enormous power to those with the most capital to invest in policy-conditional securities.

Whether futarchy is a genuine institutional innovation or merely the application of economic ideology to political problems is a live debate. Its defenders argue that existing democracies already fail at means-testing policies; its critics argue that replacing political judgment with market forecasts eliminates the deliberative dimension of democracy without replacing it with anything normatively superior.