Can large groups of people, working in a distributed manner, accomplish complex social tasks as well as (or better than) traditional heirarchies? Some say yes, and point to everything from online activism to Burning Man to make their point. A new experiment in arts funding may provide further fodder for the debate -- Vienna's NetzNetz will be distributing government arts funding through the use of social software and reputation economics:
Now for first time ever, a local government has agreed to support a local net community to decide over the distribution of its own funding. ... The modular funding structure -- developed with lots of discussion effort and contribution of more then 30 groups -- was boldly presented by the community and accepted by the commissioner. ... 50% of the funding are reserved for infrastructure ('backbone projects'), newbies ('microgrants'), and common representation ('annual convention') and is to be distributed by the administration together with the community in the course of an open space conference. Financial support facilitating the contributor's everyday work, which usually is not funded at all, is to be designated by the communities itself through 'network grants' (50%).
It seems Wikipedia is one of the best examples of this. With 550K+ articles it has vastly larger datastore and better fact checking than most encyclopediae.
It seems the crucial ingredient in making these work is the motivation. With Wikipedia the motivation is knowing that one's work is freely given to all, not profited upon by a few. With this form of network grant, I wonder whether the right to appropriate funds to certain contributors will be sufficient incentive to keep this program alive.