Deep Dive - The Network State
Technology has enabled us to start new companies, new communities, and new currencies. But can we use it to start new cities, or even new countries?
A network state is a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states.
Different states will focus on different metrics; imagine a network state premised on improving its citizens’ overall life expectancy, or one aimed at provably right-shifting the income distribution for all. You get what you measure.
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So without further ado, here is a preview of my deep dive into The Network State, by Balaji Srinivasan.
The Network State
A network state is a highly aligned online community with a capacity for collective action. It crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states.
A traditional nation state has three essential qualities:
A shared history
Shared values
Internationally recognized borders and sovereignty
To get a more in depth understanding of nation states and the current state of the world system, click → here.
A network state has the following essential qualities:
A digital first social network with a moral innovation
A sense of national consciousness
A recognized founder
A capacity for collective action
An in-person level of civility
An integrated cryptocurrency
A consensual government limited by a social smart contract
Eventually, an archipelago of crowdfunded physical territories
An on-blockchain census that proves a large enough population, income, and real-estate footprint to attain a measure of diplomatic recognition.
A key concept is to go cloud first, land last — but not land never — by starting with an online community and then materializing it into the physical world
You start with a simple online community, with aspirations of something greater. Anyone can found one, just like anyone can found a company.
The key idea is to populate the land from the cloud, and do so all over the earth.
Unlike an ideologically misaligned and geographically centralized legacy state, which packs millions of disputants in one place, a network state is ideologically aligned but geographically decentralized.
A key point is that we can apply all the techniques of startup companies to startup societies.
Financing, attracting subscribers, calculating churn, doing customer support — there’s a playbook for all of that. It’s just Society-as-a-Service, the new SaaS
Imagine billions of humans springing up on the map, forming clusters.
We want to be able to peacefully start a new state for the same reason we want a bare plot of earth, a blank sheet of paper, an empty text buffer, a fresh startup, or a clean slate. To build something new without historical constraints.
Indeed, if we imagine a world where you couldn’t just obtain a blank sheet of paper but had to erase an older one, where you couldn’t just acquire bare land but had to knock down a standing building, where you couldn’t just create a new company but had to reform an existing firm, we imagine endless conflict over scarce resources.
In these times and places, making a fresh start has been technologically infeasible, politically impossible, or judicially punishable.
And that’s where we are today with countries, cities, nations, governments, institutions, and much of the physical world. Because the brand new is unthinkable, we fight over the old. But perhaps we can change that.
The network state concept stacks together many existing technologies, rather than requiring the invention of new ones. At the same time, it avoids the obvious pathways of election, revolution, and war – all of which turn ugly, and none of which provide much venue for individual initiative.
The concept is that you don’t want or need to start an entirely new religion to build a startup society, but you do need a moral innovation of some kind.
If all you have to offer is a higher standard of living, people may come as consumers, but they won’t come for the right reasons. The consumer-citizen is coming to enjoy a great society, not to sacrifice to make a society great.
They won’t understand the values that underpin your startup society’s valuation. And you likely won’t be able to build that high valuation or higher standard of living without a higher purpose, just as neither Apple nor America itself was initially built for money alone.
You want to recruit producers, not consumers, and for that, you’ll need a purpose.
Social networks change many things, but a critical one is that they change the nature of community.
Your community is your social network, not necessarily the people who live near you.
When the network identity is more salient than the neighbor relationship, it challenges the very premise of the Westphalian state which is:
(a) people who live geographically near each other share values
(b) therefore laws should be based on geographic boundaries.
But why? Why do we need the ability to found a network state? Why can’t we reform one of the perfectly good countries on the planet?
First, these countries are not perfectly good. Just as it was easier to start a new digital currency than reform the Fed, it may be easier to start a new country than to reform yours.
Second, we want new countries for the same reason we want blank sheets of paper, fresh plots of land, or new startups: to begin anew without baggage from the old.
And third, for certain kinds of technologies – particularly transformative biotech like life extension – we need new jurisdictions with fundamentally different levels of risk tolerance, and clear-eyed consent by all who opt in.
There’s something in it for both engineers and activists, for both the technological innovator and the political progressive.
If you’re a community organizer, network unions give you a digital community to organize, sometimes against states and corporations, but also for the benefit of individual members’ open source projects, businesses, and consulting gigs.
If you feel constrained, politically homeless, or feel like no current politician represents your interests, the network state allows you to congregate with people who share your values.
If you’re an advocate for a stateless nation like the Catalonians or the Kurds, network unions and eventually network states give a new path to recognition.
If you’re a policy wonk, network states allow you to run ethical experiments on policy, with opt-in participants that are as interested in governance innovation as you are. You can experiment with digital democracy, new forms of government, or anything you think is interesting.
If you’re an idealist, network states bring back the voluntary communes of the mid-1800s America, where people could opt-in to build their own vision of utopia.
If you’re an anarchist, network unions offer a vision of horizontal collaboration in the absence of traditional governance and without coercion.
If you’re an urban planner, network societies allow you to build support and amass funding to crowdfund your vision of the good.
In short, whether you want to experiment with reforms or entirely new forms of government, there’s likely something in the concept of network unions, network societies, and network states that will suit you.
Moreover, these structures are far more democratic than the coercive governance structures of the legacy system, because they’re all opt-in.
100% of members of a network union or network state have chosen to be there, rather than 51% imposing their will on a reluctant 49%.
Network states are models for 100% democracy, not merely 51% democracy.
Network states give a wholly new way for states to expand. They can grow peacefully in the digital world rather than violently in the physical world. The network state formation process can begin with a single founding influencer and scale to a million person physical community.
What underpins the new dynamic of network states is the intrinsic lack of scarcity of digital territory, the return of unclaimed land and terra nullius, the reopened frontier. As we discuss later on, it was this frontier, this room for experimentation, that built America in the first place. Voice was important, but so was choice.
Thus, just like a tech company or a social network, a network state provides a smooth path from a single person with a computer and no other resources, to a million person global network. Constant, nonviolent growth is now possible — not by conquest or coercion, but through volition and innovation.
The nation state was enabled by maps of the world, tools to communicate laws, and the guns to enforce them.
The network state is enabled by the creation of a new world (the internet), the software to code and communicate policies, and the cryptography to enforce them.
History
We don’t yet have eternal mathematical laws for society. History is the closest thing we have to the physics of humanity.
The right course of historical study encodes, in compressed form, the results of innumerable social experiments.
You can learn from human experience rather than re-deriving societal law from scratch. Learn some history, so as not to repeat it.
The rock you throw into the air doesn’t take decades to play out its flight path. Humans do.
So a historical observer can literally die before seeing the consequences of an action.
History is a cryptic epic of twisting trajectories.
Cryptic, because the narrators are unreliable and often intentionally misleading.
Epic, because the timescales are so long that you have to consciously sample beyond your own experience to see patterns.
Twisting, because there are curves, cycles, collapses, and non-straightforward patterns.
And trajectories, because history is ultimately about the time evolution of human beings, which maps to the physical idea of a dynamical system, of a set of particles progressing through time
Another way to think about history is as a set of expensive experiments, where people often made certain choices that seemed reasonable at the time and ended up in calamitous straits.
That’s communism, for example. A persuasive idea for many, but one that history shows does not actually produce great results in practice.
This is a powerful analogy for civilization. A group of people who don't know who they are or where they came from won’t ever make it to the moon, let alone to Mars.
Blockchain
We are not arguing that Bitcoin is infallible. We are arguing that it is the best technology yet invented for recording human history.
And if the concept of cryptocurrency can endure past the invention of quantum decryption, we will likely think of the beginning of cryptographically verifiable history as on par with the beginning of written history millennia ago.
Future societies may think of the year 2022 AD as the year 13 AS, with “After Satoshi” as the new “Anno Domini,” and the block clock as the new universal time.
This is a breakthrough in digital macro-history that addresses the issues of silos, bots, censors, and fakes. Public blockchains aren’t siloed in corporations, but publicly accessible.
They provide new tools, like staking and ENS-style identity, that allow separation of bots from humans.
They can incorporate many different proof techniques, including proof-of-existence and more, to address the problem of deep fakes.
And they can have very strong levels of censorship resistance by paying transaction fees to hash their chain state to the Bitcoin blockchain.
Leviathans
The collision between the top-down and bottom-up views of history, between history as written by the winners and history as written to the ledger, between political power and technological truth. . . that encounter is a collision of Leviathans.
To understand this, imagine two schoolboys fighting on a playground. It’s not long before one of them says “my dad can beat up your dad!”
There’s profundity in this banality. Even at a very young age, a child believes he can appeal to a higher power, a Leviathan. A powerful man who can sweep the field of his enemies.
Men are not so different from children in this regard. Every doctrine has its Leviathan, that prime mover who hovers above all.
For a religion, it’s God. For a political movement, it’s the State. And for a cryptocurrency, it’s the Network. These three Leviathans hover over fallible men to make them behave in prosocial ways.
Movements that aren’t God-worshipping religions are often State-worshipping political movements or Network-worshipping crypto.
By the late 1800s, Nietzsche wrote that “God is dead.” What he meant is that a critical mass of the intelligentsia didn’t believe in God anymore, not in the same way their forefathers did.
In the absence of God, a new Leviathan now rose to pre-eminence, one that existed before, but gained new significance: the State.
And so in the 1900s, why didn’t you steal? Because even if you didn’t believe in God, the State would punish you.
The full global displacement of God by the State (something already clearly underway in France since 1789) led to the giant wars of the 20th century
Democratic Capitalism vs Nazism vs Communism. These new faiths replaced g-o-d with g-o-v, faiths which centered the State over God as the most powerful force on earth.
That brings us to the present. Now, today, it is not just God that is dead. It is the State that is dying.
Because here in the early innings of the 21st century, faith in the State is plummeting.
Faith in God has crashed too, though there may be some inchoate revival of religious faith pending.
But it is the Network — the internet, the social network, and now the crypto network — that is the next Leviathan.
Encryption thus limits governments in a way no legislation can.
And as described at length in this piece, it’s not just about protection of private property.
It’s about using encryption and crypto to protect freedom of speech, freedom of association, freedom of contract, prevention from discrimination and cancellation via pseudonymity, individual privacy, and truly equal protection under rule-of-code — even as the State’s paper-based guarantees of the same become ever more hollow.
Favorite Quotes
God made men, but Sam Colt made them equal.
Political fashions just come and go in cycles, so the absolute measure of societal progress is a culture’s level of technological advancement on something like the Kardashev scale.
Many “progressive atheists” worship the State as if it were God.
To be clear, the Network does not win every conflict with the State. In many cases the actual outcome is “State > Network.” Indeed, the conflict between these two Leviathans will shape this century like the conflict between the God and State Leviathans shaped the last.
As Larry Ellison put it, “choose your competitors carefully, because you’ll become a lot like them.” This is a tech founder’s version of the Hegelian dialectic, where thesis and antithesis mix to form a synthesis.
The key concept is that much of America’s control circuitry has evolved to live outside the formal State, thereby making it resistant to displacement by democratic election.
They laud “democracy” but avoid it in practice, through dual class stock, tenure for their bureaucrats and professors, tax-exempt compounding for their foundations, and ideological purification of their organizations
The problem with America’s left-authoritarians is also that they’ve built a terrible culture. A society that puts Watergate on a pedestal is just fundamentally different from one that puts NASA (or SpaceX) on a pedestal.
Because if what’s applauded is putting a man out of work, rather than putting a man on the moon, there will be a lot of cancellation and not a lot of creation. Firing someone should be a necessary evil, not the highest good.
While the red secular nationalist maintains an implicit Hollywood movie-style belief in a US military that can beat up anyone, the blue left-libertarian persists in their belief that the State’s civilian government could fix anything at home if only enough people willed it.
Using the lens of the Leviathans, these are both clearly ways the State becomes a stand-in for God, in its Old Testament Father and New Testament Son forms respectively.
China’s neighbors in Southeast Asia know the dragon would throw its weight around without a US military presence. Right now it can’t, because China is boxed in by the US military. Conversely, at home the CCP has no organized domestic political opposition, so it can be absolutely ruthless.
The US establishment has the opposite set of constraints: unlike China, it doesn’t face organized military opposition abroad, so it’s highly incautious in its foreign policy. But also unlike the CCP, it does face organized domestic political opposition at home, so it can’t be as ruthless domestically as it wants to be.
The ambitious intellectual who would in a previous life have become an academic theorist, jurist, or journalist is now a founder, engineer, or investor.
Put another way, the people of the Network start by thinking about getting a piece of the network to call their own. A domain name, something they can build up from scratch, starting with a bare website like reddit.com and ending up with a massive online destination that everyone voluntarily seeks out. The primary goal of the technological progressive, the tech founder is to build — and for no one to have power over them.
By contrast the people of the State start by thinking about capturing a piece of the state. To win an election, to influence legislation via a nonprofit, to write an article that has “impact” in the sense of impacting policy, to be appointed Undersecretary of something or other. . . this is their mindset. The goal is to get a piece of this gigantic baton that is the government, to get a club to coerce people (for their own good of course), to maybe get a little budget along the way, and to finally “change the world” by changing the policy.
Social media is American glasnost and cryptocurrency is American perestroika.
So as the internet scaled, and Americans actually got the rights to free speech and free markets that they were nominally promised, the establishment started to feel threatened.
Because while speech only influences volitional behavior (like voting), volitional behavior in turn influences coercive behavior (like legislating). So, if the US establishment lost control over speech they would have lost control over everything.
After many generations in which technology favored centralization (railroads, telegraph, radio, television, movies, mass production) since about 1950 it is now favoring decentralization (transistor, personal computer, internet, remote work, smartphone, cryptocurrency).
The Frontier Thesis:
the period of European greatness corresponded to the open frontier from 1492-1890
the period of total war corresponded to the closing frontier from 1890-1991 which ushered in a necessarily zero-sum world
the peaceful reopening of the digital frontier could lead us again to a time of greatness
the American and Chinese establishments are trying to close that frontier and trap us into the same steel cage match of the 20th century
but with sufficiently effective technology, we might be able to escape these political roadblocks
and reopen not just a digital frontier, but a physical one: on remote pieces of land, on the sea, and eventually in space. This is what we refer to as the generalized Frontier thesis.
The left tactic is to delegitimize the existing order, argue it is unjust, and angle for redistributing the scarce resource (power, money, status, land), while the right tactic is to argue that the current order is fair, that the left is causing chaos, and that the ensuing conflict will destroy the scarce resource and not simply redistribute it.
You can think of circumstances where the right was correct, and those where the left was. A key concept is that on a historical timescale, right and left are temporary tactics as opposed to defining characteristics of tribes.
For example, Protestants originally used left tactics relative to the Catholic Church in the time of Martin Luther. Then, hundreds of years later, the American descendants of those revolutionaries - the Protestant establishment, the WASPs – used right tactics to defend its position as the ruling class.
Many such flippenings occur in history, where a given tribe uses leftist tactics in one historical period and its cultural descendants use rightist tactics in another.
We’ve also seen firsthand that a successful tech startup is typically a left/right fusion.
It has the leftist aspects of missionary zeal, critique of the existing order, desire to change things, informal dress and style, initially flat org chart, and revolutionary ambition.
But it also has the rightist aspects of hierarchy, leadership, capitalism, accountability, and contractual order.
If you only have one without the other, you can’t really build a meaningful company.
Right without left is at best Dunder Mifflin Paper Company
Left without right is an idealistic co-op that never ships a product.
The point is that in any holy war, the left is the word, and the right is the sword. It’s the priest and the warrior; you need both.
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