Book Review - Balaji Srinivasan - The Network State

Balaji Srinivasan [@balajis] has released “The Network State”, a primarily online book about how to start a new country. But not any old country, but a Network State.

What is a Network State? In one sentence:

A network state is a 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, an archipelago of crowdfunded physical territories, a virtual capital, and an on-chain census that proves a large enough population, income, and real-estate footprint to attain a measure of diplomatic recognition.

How do you build a new state?

According to Srinivasan, there are now 7 ways:

Elections, revolutions and war are well known ways to create states. The other ways are less “traditional”.

4. Micronations: Claim a disputed patch of land or an old offshore oil platform, plant your flag and declare yourself the leader of this new state. This has historically failed.

5. Seasteading: That is an idea of Miton Friedman’s grandson Patri. The idea is, that humanity is capable of building huge floating structures, like cruise ships. Make them permanent habitats in international waters and make your own rules. This has not been tried out.

6. Space: Start a new country by colonizing other planets or space habitats (like O’Neill cylinders). This does not seem to be technical feasible today, apart from questions about how independent such a colony could become. Interestingly, this route seems to be the most socially acceptable and the most glamorized in popular culture.

The seventh path is new.

7. Network States. This idea proceeds cloud first, land last. It starts with a digital community, a startup society and organize this into a network union, which is capable of coordinated actions in the physical world. After that, the union crowdfunds the physical nodes of a network archipelago and should eventually negotiate for diplomatic recognition to become a “true” state. The physical territory is not necessarily contiguous territory, because internet allows network enclaves. Thousands of separated apartments in different cities could form a new fractal polity with a virtual capital in the cloud. Each “node” could be the “frontier” to expand this state physically.

Why would you want to build a new state?

But why would you even want to start a new country? Well, the most obvious answer is that you live in a country that does not perform according to your expectations or liking. People of different political traditions have often come the same conclusion: libertarians are disgruntled by taxes and foreign wars, progressive by x-isms and inequality.

Srinivasan has rather insightful explanations. It starts with trajectories. The trajectory of a system describes it current position, information about its past and estimates for its future.

On history

We can observe that information about the current state of affairs is often tainted by the relative political persuasion of the journalist. “If the news is fake, imagine history!”. We know that “winners write history”. Sometimes they rewrite it. The Soviet Union is known to have erased people from photos, once they had fallen out of favor. That leaves us with a bad situation, because if we cannot really know where we are and do not really know where we have been, our predictions of the future will be off.

According to Srinivasan, blockchains represent an opportunity, to turn opinionated news into cryptographically verifiable event feeds that could get persisted in the blockchain “forever”. This makes history immutable over time. Each Network State could have its own history integrated into its cryptocurrency and people could voluntarily subscribe to that version of history. This should increase our capacity to actually learn from history, instead only seeing one-sided narratives.

Another interesting observation by Srinivasan is that “left” and “right” tactics remain constant, while the ideologies using them “rotate”. “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.” “What’s the guideline for when a tribe will use left or right tactics? The tribe that’s defending (the ruling class) uses right tactics, and the tribe that’s attacking (the revolutionary class) uses left tactics. Because institutional defenders tend to win, each individual member of a revolutionary class feels like they’re losing. But because institutional defenders have to constantly fight swarms of revolutionaries to hold onto their position, the ruling class also feels like it’s on the back foot.”

He considers “left” and “right” as temporary tactics, that have been adopted by all ideologies given their relative position of power over time.

On the present

For Srinivasan, today there are three poles that try to legitimize themselves by appealing to a societally useful concept taken to its extreme in a form of “schismogensis”. These tendencies also shape the current news.

For him, China’s CCP is working on the “submission” concept. It is the leviathan and crush you, but it can also help you. Fear it. Serve it.

The “American establishment”, which for Srinivasan is best symbolized by the NYT, is working on a more subtle concept: it demands “sympathy”. The “NYT” designates an ever-growing number of “privileged categories” - like being white, or cis or abled or wealthy - and because you are a member of a privileged group, you are by your very existence oppressing someone on some dimension. To rid yourself off your (mostly inborn) “guilt”, you have to support the cleansing policies that are favored by the establishment. Else, you are an x-ist and deserve cancellation.

The third pole, represented by bitcoin, demands that the individual must be “sovereign”. Rather than bowing to the CCP power, or being guilt-tripped by NYT demands, you are supposed to hold your head up high. Hold your private keys to money and communication locally, don’t trust centralized corporations or governments.

All of these concepts have some usefulness and become pathological in the extreme: too much control results in totalitarianism, too little in anarchy, too much sympathy results in religious witch hunts, too little in MadMax-style societies, too much sovereignty results in post-apocalyptic survival horror of too many zombie movies, while too little brings us back to totalitarianism.

Srinivasan would personally err much closer to the sovereignty pole than our current culture, but he also recognized that different people will opt for different coordinates spanned by these poles.

The network state combines aspects of all three. It ensures “every citizen has the right to freely leave should they choose, that coinholders also have a say, and a number of other digital checks and balances”.

On the future

Projecting the uncertain current trajectory of the world into the future, Srinivasan identifies several possible futures. One of the scenarios is called “American Anarchy, Chinese Control, International Intermediate”:

American Anarchy

In this scenario, Srinivasan assumes that for the media-controlled State of America “[wh]at’s coming isn’t fascism or communism, like the left-wing and right-wing pundits would have us believe, even though they don’t believe it themselves. What’s coming is the exact opposite of that, a world where the civilized concepts of freedom and equity are extrapolated to their decivilizational limit, where you ain’t the boss of me and we are all equal, where all hierarchy is illegitimate and with it all authority, where no one is in charge and everything is in chaos.”

Chinese Control

For China, with its state-controlled media, there “could be the most intense crackdown on domestic opposition we’ve ever seen. It would be an AI-powered ripping up of Chinese society by the roots that puts every citizen under suspicion and makes it very difficult for Chinese nationals to leave with their property, to “runxue”. It may also be accompanied by deniable (or overt) Chinese […] targeted shortages of key physical goods to exacerbate American inflation and supply chain woes.”

International Intermediate

Given the choice between the failed centralization of NYT, the total decentralization of Bitcoin Maximalism or the totalitarian centralization of the CCP, the best choice might be: none of the above. Instead of choosing either anarchic decentralization or coercive centralization, volitional recentralization opens another way.

The International Intermediate “[a]re just the people who don’t want their societies to descend into American Anarchy, but also want a better option than Chinese Control. That’s India and Israel, but also American centrists, Chinese liberals, global technologists, and people from other places that want to steer a different course from the US establishment, from crypto-anarchy, and from Chinese Control. [I]nsofar as there is a third technological pole outside the US and China, it will probably have significant Indo-Israeli character, with servers positioned in their respective territories[. Because] it’s ’everyone else’, by default this International Intermediate is just raw material – the 80% of the world that is not American or Chinese is just a formless mass without internal structure. Indeed, that’s what happened to the “Third World” during last century’s Cold War. The Non-Aligned countries weren’t just not aligned with the US or USSR, they weren’t aligned with each other. This time, however, rather than being the Third World / non-aligned movement, a subset of the many billions of people in the International Intermediate can align around web3 to try to build alternatives to American Anarchy and Chinese Control.”

And these alternatives could be a whole swath of Network States.

Network State

For Srinivasan, there are a lot of benefits by recreating the ability to start societies. It reopens “the frontier”. “[It] is the crucial driving force in American history. At that time, it was understood that the free land of the frontier was crucial to the US in several ways - as a way for the ambitious to seek their fortunes, as a national aspiration in the form of Manifest Destiny, as bare land for social experiments.” People that have innovative ideas can go to the frontier to try them out. “The would-be revolutionary doesn’t necessarily have to use left tactics to overthrow the ruling class anymore, resulting in a right crackdown in response. They can instead leave for the frontier if they don’t like the current order, to show that their way is better, or alternatively fail as many startups do.”

Tech founders build startup companies to effect economic change, and political activists build social movements to effect moral change. A startup societies combines aspects of both. Srinivasan advises to forming one-commandment societies: “[C]ome up with one commandment. One new moral premise. Just one specific issue where the history and science has convinced you that the establishment is wanting. And where you feel confident making your case in articles, videos, books, and presentations.” Of course, people would “disagree with each other on how to live”, but they “can nevertheless support the meta-concept of many different one-commandment-based experiments.” This means 100% of people are there because they choose to. They could leave at any time. Examples of such one-commandment societies could be a “Keto Kosher” society banning sugar, or an “Internet Sabbath” society, turning off the internet from 9PM to 9AM.

Building a Network State is the bottom-up forming of a nation with a purpose. Web3 logins could be used for example to unlock smart locks to cars or apartments in the physical world belonging to a specific Network State, or they could give you access to a subnet of virtual worlds that hosts the “digital capital”. There are even first experiments regarding conflict resolution with digital trials.

Digital currencies, robotics, web3 technologies and remote work are just a few of the technological innovations that make this concept more feasible today than ever before. Srinivasan claims that much of the value creation is digital now and more will become so soon. So it should not be impossible to have digital-first communities with sizable GDP. Robots and AI could do a lot of the work, creating some form of “Aaron Bastani’s fully automated luxury communism, where the communistic parts would be the robotic parts — as they would lack any economic interests of their own, and move as one.” Robots could also do a lot of the law enforcement. This has of course also its downsides. If a (legacy) state produces lots of drones and uses them for war, there is no need to pay soldiers and no need to persuade them, cutting off the two major reasons to end wars.

On the point of state-level defense, Srinivasan notes that “[i]deally there’s a third way, a better choice - and that third way may simply be decentralized defense, where countries like Japan and Germany re-arm, rather than outsourcing everything to the US or folding to China. This has its own issues, of course — but if we’re moving back into the 1800s and 1700s, as per the Future is Our Past thesis, limited wars between gold-limited great powers are arguably preferable to gigantic global conflicts between unlimited superpowers.”

Opinion

The concept of Network States is far-reaching and deep. It is not surprising that the book cannot answer all questions yet. But I think some important ones have not been answered satisfactorily and might warrant an addendum:

How citizens of such a Network State would pay for physical stuff, especially if members of the Network State are located in a hostile “legacy state”, is not really discussed. A rather unsatisfying reference to using “legacy systems” is given, which of course begs the question of how these systems are going to be financed, if most the transactions of the Network State happen in a digital space and are “invisible”. Taxation in general seems to be omitted.

I am missing considerations about physicality. Not everything is an app. You need physical compute, storage, energy, water, food, shelter and so on. The cloud has a rather large physical footprint. It is an interesting question of how to “conceal” these from possible raids, sabotage etc.

The interaction between many of the integrated cryptocurrencies of the Network State could be interesting, because you are possibly neighboring many states with different currencies. A reserve currency would certainly help, but the current one is backed by immense firepower. It is an open question, whether BTC can take that role via voluntary decisions.

It is unclear, how a person can opt into a Network State legally.

I think public perception might be another problem. If your neighbors are visibly living by other moral ideals than you are, this might create strife. This seems especially true, if there is not one border, but thousands. Additionally, if a caste of super-rich founders, and let’s be real, the median and average founder would be well off, builds their own utopia, opt out of general society, do not pay taxes and arm up with drones, it sounds pretty much like Galt’s Gulch with a dystopian touch. That’s of course the scaremongering version, but the idea will have to defend against such accusations. And I am willing to bet that this accusation will be raised.

My current thinking is that a few “tweaks” to existing states could deliver like 80% of the benefits of Network States via “special economic zones”. The same technology; facial recognition, public-private key encryption and identification, digital signatures etc. could of course also be used by states of any form. I have no idea, whether that is easier or more promising or more sustainable than Network States. Maybe it is just closer to my personal risk profile.

Network States would be decentralized, permissionless experiments. But this makes them also possibly problematic regarding “moral” innovations. But given that my own political proposition would have “testing it” as commandment, I think it would be well worth a try.

“The Network State” is a very interesting concept and read. I hope it will spark a debate about voluntarism, innovation and possible futures: “Fully automated luxury” might be in the cards, if we play our hand right. Tyranny or Anarchy might be waiting, if we play it wrong.

We need to have a discussion about autonomous robots, AI, governance and societal purpose. Balaji Srinivasan has just started it.