Web3 and Post-State Technocracy

on Thursday, February 17, 2022

In this episode we explore the aspirational transition from the existing US-led international order to a world in which blockchain technology and technocracy are the new foundations for global human governance.


Episode Notes

Summary

In previous episodes Rufus and Stephen have discussed positions that largely regard either monetary or financial reconfiguration (reinstate the gold standard, get rich quick). In this episode they start engaging with political imaginaries about “making the world a better place”.

In this episode, Rufus and Stephen engage with the vision laid out by technologists and venture capitalists of a transition from the existing US-led international order to a world in which blockchain technology and technocracy are the new foundations for global human governance.

This thesis has been put forward in various forms. So far, the most fully articulated form that we have found is from Balaji Srinivasan. See the show notes below for links to source material.

A note before we get stuck in

A Network State

  • These ideas are all based on the overarching conception of the self-sovereignty of cyberspace.
    • “A network state is a social network with an agreed-upon leader, an integrated cryptocurrency, a definite purpose, a sense of national consciousness, and a plan to crowdfund physical territory.” - 1729
    • Constant push inside of libertarianism to create ideal communes of pure libertarian thought. Buying towns, islands, seasteading, etc …
  • This is not a completely new idea, we see echoes of this going back to the early internet days of the 1990s Electronic Frontier Foundation and Barlow’s ‘A Declaration of the Independence of Cyberspace’.
  • Classic problem in political science and philosophy to create justifications for sovereign states. There are many schools of thought.
    • Thomas Hobbes argued that the absolute power of the sovereign was ultimately justified by the consent of the governed, who agreed, in a hypothetical social contract, to obey the sovereign in all matters in exchange for a guarantee of peace and security.
    • Jürgen Habermas argues the modern state plays a large role in structuring the economy, by regulating economic activity and being a large-scale economic consumer/producer, and through its redistributive welfare state activities.
    • Conflict theories of state formation and the claims of a legitimacy based on conquest and a subsequent monopoly on violence. This is a popular view in libertarian circles. The state is in perpetual frozen conflict with the individual and taxation is a protection racket not unlike the mob.

Steel-manning the position

  • Claim 1: We’ve hit a wall on physical progress, so the “digital realm” is the only frontier accessible - Peter Thiel thesis on human progress.
    • The state is holding back progress in physical sciences.
    • The research taboos of the past need to be revisited.
    • Cryptocurrencies, seasteading, transhumanism, space travel, and life extension are the foundational ideas of the next era of human development.
    • Why do they want to build a network state?
      • A network state can allow biomedical research and human genetic experiments that are prohibited in other countries - explanation from 1729.com
  • Claim 2: The state can (and should) be hollowed out
    • Nation states are being dissolved from within. The internet is global, the internet is the basis of human life, so borders should not exist. Citizenship is an anachronism.
      • “The 21st century doesn’t belong to China, the United States, or Silicon Valley. It belongs to the internet.”
      • “There is a coming war between the United States government and the forces of China, Bitcoin and the internet.” This war is extremely desirable and we should work to accelerate it.
    • We can replace all of its legacy functions with software, and the public goods that it once supported can be replaced by either the private sector or blockchain apps.
    • The traditional functions of the nation state are being replaced by cyberspace and citizenship.
      • Citizenship grants me: access to a physical space, the people there and the services provided most obviously physical defense, social security, participation in governance.
      • Cyberspace and citizenship offer: Physical access (to other people); Physical access to jobs; Control of a currency; Regulation; Property rights enforcement nationally & internationally (justice and arbitration?); Redistribution (and addressing redistribution) and public goods
  • Claim 3: Modern nation states are simply too big. People reason about community and politics at a Dunbar’s number level.
    • Joseph Henrich has made a strong case that Western high-trust cultures are weird by most historical and global standards. It may be a “pathological” form of organization and something better may exist.
    • A more optimal form of human self-organization is somewhere between a tribe and the modern nation state. The direct democracies of ancient Greece or authoritarian capitalist city-states like Singapore are an ideal middle-way that produces greater prosperity.
    • Blockchain-friendly hubs are being created across the world (El Salvador, Singapore, Zug). These cities can be purchased using crowdfunding to give blockchain technology the rights of sovereign states and create utopias which will attract top talent looking for low-taxes, business opportunities and like-minded communities.
  • Claim 4: "Crypto is the smartest people in the world exiting into their own economy"
    • Problems like climate change show that liberal democracies and the existing international order are highly vulnerable to paralysis on global tragedy of the commons problems.
    • Just like evolution, corruption is the natural state of being, so we need to embrace corruption rather than live up to the ideals of liberal democracy.
    • Instead of a strong man to save us, we need strong tech.
  • Claim 5: web3 is a paradigm shift akin to the Industrial Revolution. Our current reading of economics is incommensurate with the inevitable new world order that will exist after blockchain and tokenization subsume all of human life.
    • We can’t stop runaway phenomena. We simply have to embrace them.
    • Crypto is inevitable. We can’t put the toothpaste back in the tube.
    • Creative destruction is unpredictable but in the end it’s right.
    • Historical inventions like the printing press were fraught with concern and risk, and yet humanity survived those paradigm shifts. The disruption of the financial system is no different than the printing press.
    • The train of progress only goes one direction, get on or get off. There’s no place for Luddites in the future.
    • Matt Damon Superbowl ad is the soft form of this worldview.

Evaluating the position

  • Overview:
    • This perspective on web3 is an embodiment of what the political theorist Macpherson calls "possessive individualism", a philosophy in which an individual is conceived as the sole proprietor of his or her skills and owes nothing to society for them. These skills (and those of others) are a commodity to be bought and sold on the open market and in such a society is demonstrated a selfish and unending thirst for consumption which is considered the crucial core of human nature.
      • Ronald Coase's theory of the firm as an economic answer to possessive individualism.
        • Why aren’t we all sole proprietors?
        • Transaction costs model
    • The position is built on a disdain for top-down command and control structures and the conception that a classless and hierarchy-free world is possible.
    • A worldview from a venture capitalist echo chamber talking their books or trying to strongarm their heterodox views using capital.
  • Claim 1: "We’ve hit a wall on physical progress, so the “digital realm” is the only frontier accessible."
    • The entire argument is predicated on the technology being able to do the things they claim, perhaps at some point in the future. This is falsely treated as a technical reality and an inevitability.
      • The claims of cryptocurrencies or “algorithmic central banks” having the capacity to serve as national currencies seems unsubstantiated by evidence.
      • Postal service claim - In the 1700s nothing moved faster than a horse. Yet the advent of the steam engine and capacity to send information faster than horse didn’t fundamentally alter our notions of statehood and justice.
      • Comparisons to kibbutzim and moshavim.
      • Biomedical experimentation outside of the regulatory perimeter is generally considered a bad idea for very good reasons.
      • "Crypto is the smartest people in the world exiting into their own economy"
  • Claim 2: "The state can (and should) be hollowed out"
    • "Nation states are being dissolved from within. The internet is global, the internet is the basis of human life, so borders should not exist."
      • “No borders politics” is legitimately a divergence from classical right wing positions. Usually resonates with far-left positions. This is an interesting shift in thinking.
    • "We can replace all of the state's legacy functions with software, and the public goods that it once supported can be replaced by either the private sector or blockchain apps."
      • Replacing the DMV and the tax authority with automation is a genuinely appealing idea to many people. Replacing it with the private sector is more controversial.
      • People have successfully built antifragile services that exist outside the regulatory perimeter that have endured the test of time:
        • ThePirateBay has existed since 2003 despite government attempts to remove it from the internet. No government cares enough to really pursue it because it only infringes on the private sector and there’s no political will to shut it down.
    • "The traditional functions of the nation state are being replaced by cyberspace and citizenship." There is a grain of truth in this:
      • Zoom and Twitter connect people across the world.
      • Remote working is now a reality
      • Transferwise and wire transfers have lower barriers to remittences
      • The sufficiency of self-regulation in the private sector is a popular perspective
      • Digital commodities are regulated internationally (ICANN, web hosting)
      • Self-organizing communities (everything from good things like Linux and Open Source to bad things like 4chan and QAnon) have proved enormously influential in shaping culture and creating public goods.
    • However, the state exists for a very good reason. It’s the only structure proven to sustain public goods at a civilization level and be the guarantor of last resort for justice, defense, and monetary issuance.
      • Property rights over physical goods are not enforceable with cryptography.
      • Dispute resolution between humans can rarely, if ever, be reduced down to code.
      • We still need magistrates and courts.
      • We still inevitably need a structure like a central bank
      • How does this solve the public goods problem? There appears to be no coherent connection between crypto coins and solutions to this problem.
      • Who will fix the potholes in the road? Why will they fix the potholes? c.f. Cartmanland
  • Claim 3: "Modern nation states are simply too big".
    • There is a kernel of truth in all this, western democracies are slow and sclerotic and public trust in institutions is at an all time low. The Americans legitimately elected an imbecile to control their nuclear arsenal … things are clearly not working optimally in democracy.
    • Infinite supply of whataboutisms talking about the genuine deficiencies in the American hegemony and rules based international order.
  • Claim 4: "Crypto is the smartest people in the world exiting into their own economy"
    • A tech-led plutocracy, not a utopia.
    • The result would be an oligarchy: the technical elite and those with access to capital rule.
  • Claim 5: "web3 is a paradigm shift akin to the industrial revolution. Our current reading of economics is incommensurate with the inevitable new world order that will exist after blockchain and tokenization subsume all of human life."
    • This is a vision of the future detached from the lived experience and day-to-day economics of the vast majority of people globally.
    • We'll all be full-time FX traders at face value makes zero sense. Price discovery is important but who will smelt the aluminium for your MacBook?
    • How will this new economy function when their financial system can't even be used to buy goods and services?
      • “Crypto doesn’t currently function as money, not because of technical or economics limitations, but because statists won’t give up their power.”
      • Doesn’t include the view that the economics of the system are wrong to give rise to a medium of exchange.

Conclusion

  • This is a bleak dystopian vision of the future.
    • Neal Stephensons’s Burbclaves
    • We can’t run nation states like we run tech startups.
    • Skeptical about finding a quick-fix in technology or politics. There is wisdom in learning from the past and the institutions that exist.
    • Esperanto-style solutionism has never worked for societies or economies.
    • Anna Neima’s book The Utopians is full of similarly minded people and communities. They usually dissolve or collapse.

Concepts Covered


References

  1. Neima, Anna. The Utopians: Six Attempts to Build the Perfect Society. Pan Macmillan, 2021.
  2. Henrich, Joseph. The WEIRDest people in the world: How the West became psychologically peculiar and particularly prosperous. Penguin UK, 2020.
  3. Barlow, John Perry. 2019. ‘A Declaration of the Independence of Cyberspace’. Duke Law & Technology Review 18 (1): 5–7.
  4. May, Tim. 1994. ‘Cyphernomicon’.
  5. May, Timothy. 1992. ‘The Crypto Anarchist Manifesto’. High Noon on the Electronic Frontier: Conceptual Issues in Cyberspace.
  6. ‘1729 - The Network State’. n.d. 1729. Accessed 4 March 2022. https://1729.com/.
  7. Brody, Ann, and Stéphane Couture. 2021. ‘Ideologies and Imaginaries in Blockchain Communities: The Case of Ethereum’. Canadian Journal of Communication 46 (3). https://doi.org/10.22230/cjc.2021v46n3a3701.
  8. Coase, Ronald Harry. 1937. ‘The Nature of the Firm’. Economica 4 (16): 386–405.
  9. Faria, Inês. 2019. ‘Trust, Reputation and Ambiguous Freedoms: Financial Institutions and Subversive Libertarians Navigating Blockchain, Markets, and Regulation’. Journal of Cultural Economy 12 (2): 119–32. https://doi.org/10.1080/17530350.2018.1547986.
  10. Groos, Jan. 2021. ‘Crypto Politics: Notes on Sociotechnical Imaginaries of Governance in Blockchain Based Technologies’. In Data Loam, 1:148–70. https://doi.org/10.1515/9783110697841-009.
  11. Husain, Syed Omer, Alex Franklin, and Dirk Roep. 2020. ‘The Political Imaginaries of Blockchain Projects: Discerning the Expressions of an Emerging Ecosystem’. Sustainability Science 15 (2): 379–94. https://doi.org/10.1007/s11625-020-00786-x.
  12. Hussain, Syed Omer. 2020. ‘Prefigurative Post-Politics as Strategy: The Case of Government-Led Blockchain Projects’. The Journal of The British Blockchain Association 3 (1): 1–11. https://doi.org/10.31585/jbba-3-1-(2)2020.
  13. Srinivasan, Parag Khanna, Balaji S. n.d. ‘Great Protocol Politics’. Foreign Policy (blog). Accessed 22 February 2022. https://foreignpolicy.com/2021/12/11/bitcoin-ethereum-cryptocurrency-web3-great-protocol-politics/.
  14. West, Sarah Myers. 2018. ‘Cryptographic Imaginaries and the Networked Public’. Internet Policy Review 7 (2): 1–16. https://doi.org/10.14763/2018.2.792.
  15. Zhang, Zhexi. 2019. ‘The Aesthetics of Decentralization’. PhD Thesis, Massachusetts Institute of Technology. https://dspace.mit.edu/handle/1721.1/123614.