tl;dr

Recently in Bulgaria (EU country) we had a protest against the current political system [1]. One week after the strike, the government resigned. Three weeks within the protest, the non-government leaders of the strike separated ideologically and had different suggestions for fixing the system ( new constitution with more rights for people, participation of non-political organisations in the government, legal right to recall representatives from the Parliament, etc. ) and probably no change will come to the current government system, since we'll elect the same political structures, which existed since forever here.

Conclusion : Democracy will always work through representatives with strong ideas and power to establish media control with money. Nobody will ever listen to "open-sourced" law-suggestions, since they will be poorly funded and perhaps not very well understood by majority of people ( non-technical, retirees, people living in the villages, etc. )

The story :

I'm living in the poorest EU Country. In January, people here had huge electrical bills ( double of what they used to pay ) and for most people this means no money for basic needs ( gas for their vehicles, inability to buy quality food, stalling their mortgage payments, etc. ) [2]. Everyone here was so desperate that the only thing they could do is to get out on the street and protest against their poor income and way of living. On the second week more than 300 000 people participated in the protests ( Bulgaria has 6 million population ), which made the protests the biggest since the collapsing of communism here. Two days later one boy set himself on fire [3], protesting against monopolies, government and organized crime. More people went out on the streets, because of this fact and more of them set their bodies on fire.

What people actually wanted was blurry. The protests began against the electrical bills, went through the governing political party and ended with demands for changing fundamental ways of our democracy ( changing the constitution ). For one week the people of the streets even created non-political organisation with discussions what they should do next. There were many demands and ideas and no single leader ( there were some activists, who were acting like leaders, but too separated to become one ) to take the initiative and do something more about them. We were totally separated as a nation. There was even a pseudo-government from bloggers in Twitter which was between a joke and a real thing.

Later on a lot of disputes around democracy went through the media. And yes, the media is very powerful tool. Every political party here pays a lot for every single minute television time and nobody of the non-political small leaders of groups could actually say anything constructive ( they had poor experience, no PR agency against their back, no specialists to say "This is impossible", etc. ). The parties ( a lot of them corrupt [4] ) took control of the population again. Everything was a storm in a glass of water. No real change in the way our country is ruled.

The world is so digital now. The poorest country in EU has one of the fastest Internet access worldwide [5]. We had good programmers, who work cheap. Darin Dimitrov is on second place in the StackOverflow top users chart [7]. We have it all, as a structure, for more e-oriented government [6]. But in the end nobody out of the political system will ever want to change something so fundamental and loose power and money for letting people say "I disagree" more freely.

From my own experience nobody will ever try to integrate something so radical in the current democratic world ( In US everyone votes for two major parties, here the major political parties for the new elections are more than 6 ). And yes, the people are right, the democracy is illusion almost everywhere!

Here is a demo. What will happen if I as a member of the community want to change the StackOverflow background color, to say ... fuchsia. Will I ever be allowed to do that? Of course, not. What if I convince more people and even 6 / 10 moderators to do that. They won't do it, because nobody up there will ever do what most users want, but simply do what's ( probably ) better for the community. Which is great. But what will happen if I create a lobby and sponsor those moderators, it will be easier then. That's what real democracy is.

Linux is a great open-source model. But we all know who says "Yes" or "No" in many of the final decisions ( for good ).

I'm glad that hackers are very, very loyal and hardly influenced by selling good community-driven ideas for profit. But what will happen when someone else gets on top of such projects. Perhaps the government? I don't want to pay a "tax" for using the kernel, but everything else in my own country I'm using, comes with a tax ( pollution, rainwater, tax for green energy, tax for owning ( not driving ) a car, etc. )

So yes, it is a nice idea, but it will never work outside of small tech-community, since nobody puts irrational people ( thinking for their own profit ) and lobbies in the equation.

[1] : http://www.ibtimes.com/bulgarian-government-announces-resign...
[2] : http://www.huffingtonpost.com/2013/03/20/desperate-bulgarian...
[3] : http://en.wikipedia.org/wiki/Plamen_Goranov
[4] : http://news.yahoo.com/bulgaria-ex-minister-faces-corruption-...
[5] : http://www.bloomberg.com/slideshow/2013-01-23/top-10-countri...
[6] : http://en.wikipedia.org/wiki/E-Government
[7] : http://stackoverflow.com/users?tab=reputation&filter=all