> The principal danger is the concentration of power.
Absolutely. Good people can cooperate or reach compromises for mutual benefit. Bad people are each in it for himself - while they do form alliances sometimes, ultimately working together is unnatural for them and often temporary.
Requiring any position of power to be always distributed among many people obviously makes it hard for a single person to abuse power but less obviously disadvantages bad people by its very nature on a deeper level.
> local communities and institutions
I have an idea which I for now call consent-based society. I need to think about it a lot more but for now:
People talk about rights and freedoms but can't decide where the rights of one person end and another person's begin. If we focus on consent, it may become simpler. People could then form larger and larger groups based on agreement (consent) to rules - a house, small village, city, state. But only as long as it benefits them - consent can be revoked at any time.
But of course, historically, nation states emerged because large hierarchical power structures are advantageous at war and it'll take a long time to get people away from considering them natural, correct or inevitable.
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Anyway, I don't think your post really answers my question though. From what I read, liquid democracy seems like a form of bottom up governance.