1 An obvious feature, yet missing from the traditional ebook experience.
2 Note however that just as one does not simply “start a public company,” one does not simply “start a network state.” Instead, you begin with a startup society, which is to a network state what a startup is to Google. It’s the embryonic form.
3 Actions include: crowdfunding, job placement, bulk purchasing, and collective bargaining with corporations and states. Note that a network union is a useful endpoint in its own right. Just as small businesses can provide value to customers without going public, network unions can provide value to members without becoming network states.
4 Note the progression: from startup society, to network union, to network archipelago, and finally to network state. First build the collective muscle to do real things, then manage real money and real estate, and finally become recognized as a real state.
5 A LARP is a live-action roleplaying game. It also describes adults playing a seemingly pointless game of make-believe.
6 We actually think seasteading can be revived in the long-term. Why? Because it can be made part of the network state paradigm. You just need to grow a startup society capable of crowdfunding a cruise ship. Your society wouldn’t start with something so expensive, of course; it’d start by getting much more modest pieces of territory around the world and connecting them into a network archipelago. But once you have a startup society with tens of thousands of members, something as crazy as a crowdfunded cruise ship becomes a possibility.
7 The idealized technical fact exists entirely independent of what any human thinks (like the value of g, the gravitational constant), while the idealized political fact is entirely about what humans think (like the location of a national border).
8 Though Peter Turchin is working on it. See his monograph War and Peace and War. Then look at Ray Dalio’s Principles for a Changing World Order, Strauss and Howe’s The Fourth Turning, Will and Ariel Durant’s The Lessons of History, and Asimov’s fictional treatment of psychohistory.
9 Why do we refer to “startup societies” rather than “network states” here, and throughout this chapter? Because a startup society is the embryonic form of a network state, just as a startup is the embryonic form of a public company. Moreover, many startup societies will be able to achieve their goals without gaining the diplomatic recognition necessary to become a network state, just as many startup companies can operate indefinitely without going public. See Parallel Societies: Digital Network Unions to get a sense of what can be done as a purely digital network union, or as a network archipelago that just buys some land, without the need for full diplomatic recognition.
10 Here are examples of people writing about how socialism is good (Would Socialism Better Our Lives?), civility is bad (When Civility Is Used As A Cudgel Against People Of Color), law enforcement is bad (Yes, We Mean Literally Abolish the Police), and looting is good (In Defense of Looting).
11 When we write about moral premises, we intentionally omit the preposition for compactness and for effect. Rather than writing “hard work is good” we write “hard work good.” Why? Dropping the “is” reflects the underlying cognitive process. In the moment, it’s not really about thought-out arguments but visceral expression of fundamental moral values.
13 Lest you think I’m exaggerating how dire the straits were for NYTCO, here’s a quote from former NYT editor Jill Abramson’s book, Merchants of Truth: “The new digital reality nearly kills two venerable newspapers [NYT, WaPo] with an aging readership while creating two media behemoths [BuzzFeed, Vice] with a ballooning and fickle audience of millennials.” The internet posed an existential threat to NYTCO, so they became BuzzFeed in order to compete with them. What happened next will astonish you.
14 Here’s their history of slaveholding (https://nypost.com/2020/07/18/the-family-that-owns-the-new-york-times-were-slaveholders-goodwin/), opposition to female publishers (https://imgur.com/a/6eu5GxV), bias against gays in the newsroom (https://twitter.com/heerjeet/status/1270785679744618497), and track record of nepotistic succession (https://archive.ph/8MKmI#selection-665.0-665.299).
15 A common stratagem is to “report on but not investigate” an issue at another media corporation. This way they can claim a story was (nominally) covered, but Russell Conjugate it into impotence, changing enough words to assert the facts were reported while simultaneously removing all emotional response. The contrast to when they’re actually going for the throat and trying to get someone fired - as they frequently do to people outside media for trivialities - is stark.
17 Only a few countries, like Estonia and Singapore, are as yet
underpinned by a codebase in quite the same way as a tech company like
Google. But more will follow in their footsteps. That’s one of the
theses of this book; see here. And the concept of “recent history as
useful for debugging” still applies even if the equivalent of
git revert would be done in paper laws rather than digital code.
18 The concept of historical inevitability is found in both American democracy and Soviet communism, in many religions, and in fictional settings like Ozymandias. It’s even seen in mirror image in works like the Sovereign Individual. The way to understand this is that the “inevitabilists” are typically identifying a real and powerful trend, without modeling Sorosian reflexivity and individual initiative. That is, there’s a reflexive backlash to any trend (“the enemy also gets a move”), and there are also individuals who can start new trends.
19 It’s entirely consensual. If people like the society, they join as a subscriber; if they don’t like it after joining, they cancel their subscription.
20 WeWork deserves a mention here. I actually respect what Adam Neumann built; it’s a decent product that people used, which is insanely difficult to build, even if it didn’t work out as an investment. The issue with a WeWork, though, is that it wasn’t really a community. The acid test is that you couldn’t leave your laptop down in a WeWork, or have a conversation in a common area. The other people there were strangers. Yes, you could get enclosed offices within WeWorks, but the common areas were more like an airport lounge or Starbucks than a community. In short, you need both a physical membrane boundary and an ideological moral boundary in order to actually have a proper community.
21 Yes, it could break. If so, use an identical one from the same factory.
22 Functional programming aficionados will recognize this as
being similar to the difference between pure and impure functions. A
pure function like
sin(x) always returns the same output given the
same input. An impure function like
number_of_users() does not,
typically because there is some external state variable such as a
23 This is similar to the continuum between microeconomics and macroeconomics (disputed by the Keynesians, who say that governments aren’t households), or the continuum between natural intelligence and artificial intelligence (disputed by those who think human intelligence is sui generis, rather than something that was gradually formed by an evolutionary process and could be formed through a computational process), or the continuum between microevolution and macroevolution (disputed by those who think that sequence evolution isn’t species evolution, or [more reasonably] that abiogenesis isn’t yet fully experimentally demonstrated).
25 But how could those non-Bitcoin chains be cryptographically
verifiable if they aren’t based on proof-of-work, or are transitioning
away? The short answer is that even a proof-of-stake chain can have
its chaintip hashed to every Bitcoin block via
OP_RETURN. At roughly
10 minutes between blocks, that’s 144 transactions per day or 52,560
transactions per year. Though Bitcoin transaction fees may rise over
time, so far they’ve been as low as one USD or as high as sixty USD,
so this would cost something between 52k to 3M USD per year in Bitcoin
fees if you wanted to “back up to Bitcoin” every 10 minutes. If you
wanted to do it only every hour, it’d be 1/6 this cost, and at once
per day it’d be 1/144 this cost. These kinds of prices are affordable
for any external chain that is handling significant value. A group
called Veriblock did some research on this, which they called
proof-of-proof, and shipped a functioning product which at one point
was a significant fraction of so-called
OP_RETURN transactions, but
has now been discontinued as has USDT’s Omni-Chain.
Some people are against the use of
OP_RETURN in this way, but it’s a
feature of Bitcoin that can be used without anyone’s permission. So I
think it’s quite likely that high stakes proof-of-stake chains get
hashed to Bitcoin in some form. This addresses the issue Vitalik
Buterin has termed weak subjectivity, where some information external
to the blockchain needs to be used to figure out which chain is the
right one to follow - rather than the wholly objective measure of
Bitcoin, which says “the chain with the most accumulated chainwork is
the correct chain to follow.”
Such an objective measure would be helpful in the event that many real-seeming blockchains are put out on the internet at the same time by a motivated attacker who also has control over social media (like China), such that you’d need to pick the right chain from the head of this hydra with only your trusty computer. With something like proof-of-proof, you could first orient by finding the correct Bitcoin blockchain amidst this mess, and then use it to find the proper heads of all other chains.
The cryptopolitical implications of doing something like this are
humorous, because some Bitcoin Maximalists don’t like the use of
OP_RETURN, and some users of non-Bitcoin chains want to have their
own fully standalone ecosystems, but the combination here would
produce (a) a steady stream of fees for Bitcoin miners, helping
Bitcoin’s security budget and (b) give a last-resort backup plan for
the security of other chains.
26 All of this can be hashed to the Bitcoin blockchain as well via the Merkle root technique previously described, for the price of just one (1) Bitcoin transaction. That won’t solve the so-called data availability problem, but it will solve the proof-of-existence problem.
27 This would be to the ledger of record what a Central Bank Digital Currency (CBDC) is to Bitcoin; something that takes some of the concepts, but takes away the freedom. As we’ll get to, these correspond to benign and malign versions of the Network/State synthesis respectively.
29 Not all laws are counterproductive either, though many new laws are. That’s because new laws are like code that is pushed live to production without even being read (let alone tested), often in the face of tremendous opposition, affecting millions of citizens, with minimal monitoring to ensure they’re producing the desired results, an extremely slow customer feedback cycle, and few ways to truly opt out. Not all laws, though!
30 There’s an amusing meme which illustrates the limits of political history. “Time is real,” says Aristotle. “Time is an illusion of the mind,” says Immanuel Kant. “Time was invented by clock companies to sell more clocks,” says Karl Marx.
31 Of course, some regimes did interfere with the transmission of basic scientific facts. Trofim Lysenko famously said that wheat could become rye if only the working class willed it. He caused preventable famines and murdered Mendelian geneticists for their bourgeois belief in ineradicable biology. His ideology did gain him political power, for a time…but to what end? Subjects ruled under a political ideology that completely denied technological truth ended up dying, which meant political power over no one. From a 50,000 foot perspective, this was a form of natural selection pressure against the spread of Soviet communism specifically, and against a purely political determinist model of the world more generally. A mind virus that kills its host rapidly isn’t a great mind virus. In other words, there is a consequence for excessive untruth in service of political power, though that consequence might simply be death of both ruler and ruled.
32 In history, you can’t re-rerun the experiment. But for chess, you can. You can restore the initial condition and replay the game.
33 This is the open metaverse and augmented reality. But it’s also social networks and financial apps. A very large fraction of human interactions now have something digital in the middle, just as they grew to have a piece of paper from the state in the middle over the course of the last few centuries (eg birth and death certificates, property registries, and so on).
34 People deemed to be on the wrong side of history aren’t just losing, they’re fighting against a changing moral climate which will condemn them for fighting in the first place.
35 Naval Ravikant has tweeted about the concept of the “ender,” the single individual with the power to end humanity.
36 By this, we mean that if all truth is relative and a function of power relations, the political party in power can simply dictate what is true. It’s a fusion of Foucalt’s relativistic deconstruction and 1984’s social construction of truth. If 2+2 is whatever those in power say it is, then guess what? Those in power will say 2+2=5 if they want, and they’ll even get Fields Medalists to go to bat for them.
37 This is what the US establishment is set up to manipulate globally, and the Chinese establishment is good at domestically.
38 This is where the US establishment is particularly out of its depth, but where the Chinese establishment is fairly strong. Most US politicians don’t have technical backgrounds, prominent journalists can’t do basic math, and few of the people involved in the US establishment have built anything more complicated than a bookshelf. Meanwhile, the Chinese establishment is filled with engineers and has built up their country over the last 40 years, even if the next generation of Chinese leaders may not have such a background.
39 Blockchains do move more aspects of politics into technology, by turning societal agreement over a border into societal agrement over a number. But the software in people’s heads still matters, as blockchains only work if enough people hold their underlying asset (maintaining an nonzero price), agree to run the same version of node and wallet software, and so on. Contrast this to, say, a helicopter - which requires no societal consensus at all to work, as it depends solely on the laws of physics.
40 The Network is not a wholly new force in human affairs, but it is newly powerful. As one example of Networks before the internet, Communism can be thought of as a State/Network synthesis, with the Soviet state as primary and its international “Comintern” network of communist revolutionaries as secondary (especially after Trotsky’s murder). As another example, see this section on “Culture” as a third force alongside Church and State in Jacob Burckhardt’s Force and Freedom. He’d come to similar conclusions almost 200 years ago, which I only discovered years after my 2015 talk on God, State, and Network.
41 This works in another way: autonomous drones are a way for a state to wage war without paying as many people, as it just needs to charge up its drones. Propaganda delivered over social media is a different alternative to expensive boots on the ground. These techniques are, respectively, the CCP and NYT coalitions’ ways around the economic constraints on military action imposed by BTC. See the book Gold, Blood, and Power and our later chapter on The Tripolar Moment.
42 There’s a strong argument that the power of the presidency has been steadily declining since FDR, who can be thought of as a four-term dictator who consolidated power, prosecuted his enemies, and ruled till he died. All the “imperial presidency” stuff like John Yoo’s memos and Obama’s executive orders can be reconceptualized as attempts to still get something done from the White House despite the reality that the presidency’s power was ever more dilute.
Indeed, the US today has something similar to a “constitutional monarchy,” namely a “bureaucratic presidency” wherein the president is in key respects an increasingly vestigial figure. Some who recognize this think it can be turned around with a “true election.” Others think you’ll need to start over, with startup societies and network states.
43 Indeed, many events in America are now followed by a similar event in China, or vice versa. Some examples include (a) internet censorship, (b) nationalism + socialism, (c) social credit scores / cancel culture, (d) “human flesh search” and Twitter mobs, (e) COVID lockdowns, (f) increasing militarization, and (g) state takeover of tech companies.
44 A recurring theme in this book is that such a system of speech and thought controls arises when an existing regime desires to preserve its power and there isn’t sufficient ability of citizens to exit. If they could do it, Microsoft would ban the competition — and ban all their ads as disinformation. So too for NYT and CCP.
46 This is also why people are increasingly using Twitter as a search engine. Censorship is more detectable when it’s individual accounts being silenced. This is part of the transition to web3: the digitally signed web, where every single data structure has a digital signature, is a huge shift from web2.
47 It’s hard to ask them to unbias the results. What does that mean, 1998-2011-era Google? That’s hard to specify and hard to diligence. It’s easier to push for open, transparent, search algorithms. This may come true in web3; see this talk.
48 Substitute the word “resident” if you will for a city, as a city doesn’t have citizens in the passport-carrying sense.
49 What’s the alternative? Decentralize or be nationalized. The BTC/web3 pole that we introduce later gives a way for founders to ship protocols that are more robust to seizure by the American or Chinese establishments, as they don’t simply involve demonizing a company but instead a protocol with the scale of a country.
50 I’m somewhat sympathetic to some of the people of God, as thoughts and prayers are harder to screw up than rules and regulations. Moreover, when tragedies occur, the American people of God tend to be more genuinely charitable than the people of the State. The latter tend to feel that they “gave at the office”.
51 Why call blues “faux” internationalists? Because their relationship with other countries is not really one of equals. The NGO type wants pets, not peers. The State Department type wants members of the coalition-of-the-willing to get in line, not to go off script. The blues are slightly more diplomatic than the cartoonishly nationalist reds, but only slightly, and particularly in recent years they’ve shifted away from Obama-era multilateralism to their own variety of unilateralism. See Alvarez’s work here, here, and here, published in late 2020 and which has held up quite well.
52 There are still conventionally religious blues, people of God, but they are not among the elite.
54 They also aren’t diverse, despite how much they caterwaul about the topic. Look at techjournalismislessdiversethantech.com or Haidt’s study of committed progressives that shows the far left to be far white.
57 No, Ukraine doesn’t count. The US military failed to deter, pushed the country into another Syria-like conflict, and has basically been using Ukrainians to bleed Russians in a proxy war. A million Ukrainian refugees, their country blown to smithereens, thousands dead, soaring gas prices in Europe, a radicalized Russian population, and the threat of WW3 or even nuclear war - this is just chaos, rather than competent deterrence.
58 See also this section on “Culture” as a third force alongside Church and State in Jacob Burckhardt’s Force and Freedom from the mid 1800s. It maps to our concept of the Network, before the Internet.
59 Where do the red people of God land up? Well, it’s a wildcard, but some will stick with the devil they know, the state they grew up with, while others may bet on Bitcoin to enable the Benedict Option and opt out of a sinful society.
60 In the language of the political compass, the Reagan era was right-vs-left, whereas the Network-vs-State era would be top vs bottom.
61 Sometimes literally, as in the case of Messrs. Graham, Thiel, and Moritz respectively. Paul Graham was an academic computer scientist at Harvard, Peter Thiel has spoken about how he might have gone for a Supreme Court clerkship, and Mike Moritz was a journalist before he became a venture capitalist.
62 Not all prophecies fail, though. JFK did get a man on the moon prior to 1969. Einstein was correct that an atomic bomb could be built. Elon Musk did manage to get reusable rockets to work. The best technological prophecies are anchored in physical feasibility, not just human belief.
63 The blue side has written It’s Time for a Bluexit (TNR 2017), Maybe It’s Time for America to Split Up (NYMag 2018), and The Case for Blue State Secession (The Nation 2021). The red side has put out The Case for American Secession (Malice 2016) and National Divorce is Expensive, But It’s Worth Every Penny (Reaboi 2021). For an overview of both, see An American Secession? It’s Not that Far-Fetched (Bloomberg/WaPo 2021) and How Seriously Should We Take Talk of US State Secession (Brookings 2021).
65 Recall that Obama had been generally friendly with tech, called for a “reset” with Russia, dismissed concern over Russia as late as 2012, mocked Trump’s emphasis on China in 2015, and even produced the relatively pro-China movie American Factory in late 2019.
66 The establishment’s hostility to technology has been a constant as well. Here are their early denunciations of aviation (airplanes will never happen in a million years!) and rocketry (Goddard doesn’t know physics!).
68 The idea that the US military will win any battle where it really “tries” is the true faith of this age, believed by anti-imperialist leftists and American Greatness neocons alike. If that changes, everything changes. In this sense both sides believe in the State Leviathan, though the former thinks of it as Satan and the latter as God.
69 Even though anyone who actually runs a company is well aware just how limited its resources really are.
70 Though it is rarely pointed out on screen just how many of those reporters are, in real life, employed by evil corporations.
71 This is no exaggeration. Bezmenov and Venona documented this at length. Then read about John Reed (Lenin’s journalist), Walter Duranty (Stalin’s journalist), Edgar Snow (Mao’s journalist), Herbert Matthews (Castro’s journalist), and Pham Xuan An & David Halberstam (Ho Chi Minh’s journalists).
72 Note again how history informs morality!
73 Imagine a powered-up, open source, decentralized Google Lens-like thing that could scan the computational cues in your environment (centralized and decentralized) to match to historical patterns and tell you whether this looked like a good or bad idea based on thousands of samples from other people.
74 In the West, at least. The East is a different matter! It’s a whole essay in its own right, but the future may be a Centralized East and a Decentralized West.
75 A startup company can get away with mainly being technologically revolutionary, though there is often the subtext of being morally revolutionary too, which is why “change the world!” is a big motivation for many. Turning that subtext into text is crucial for a startup society, as opposed to a mere startup company, as missionary societies tend to outperform mercenary ones. See the One Commandment and the section on Parallel Societies.
78 Nietzsche prized heroism rather than victimology, and didn’t like how the inversion of values brought Rome low. But he also had to respect a winner, and somehow the victimologists did win. A vantage point that unites these conflicting observations is that winners tend to be content, while losers can be highly motivated. But not all winners remain content forever; sometimes there are defectors, who become counter-elites, and side with the “losers”. The counter-elites and “losers” then form, respectively, the leadership and base of a revolutionary movement that attacks the winners to establish a new ruling class — if successful.
79 There are of course tiers of victory below the “running a country” level. For example, most political founders would consider it a huge win to get government funding in perpetuity for their activist organization. That means their original philanthropist no longer has to bankroll it, and future funding comes off the public’s books. It’s similar to a VC who has risked capital on a small startup, and then seen it go public. Now they don’t have to shoulder all the risk, and can in fact begin reaping some of the reward. The difference is that when a political activist’s group goes “public” it is merging with the State, while when a tech company goes “public” it is merging with the Network of investors.
80 Best example: the surveillance votes are splitting Republicans and Democrats on the basis of Network vs State. The “libertarian” moment happened but not within the State, within the Network.
81 The concepts predate the French Revolution, though, even if that’s when those terms were first used. Left and right go back at least to Christians vs Romans, and probably to the dawn of human civilization.
82 If you watch Dinner for Few, an interesting point is that it implicitly reverses our helical theory of history, as the ending of the short film implies that every new turn of the left cycle leaves less resources for the next one. This is the Malthusian/Ehrlichian view of a finite pool of resources that gets spent down by humanity.
Now, there are actually some cases where this is true. The Soviet communists inflicted widespread environmental damage, including visibly draining the Aral Sea, leaving less for those that came after. And the Cambodian communists murdered anyone with glasses, likely inhibiting any future Renaissance. But those were both communist regimes, rather than capitalist ones, so where we may diverge from the talented filmmaker (Nassos Vakalis) is on the type of society that moves humanity forward – and whether progress is even possible.
After all, at one point all humans (or their hominid ancestors) were in the state of nature, lacked clothes and abodes. Then various technologies were invented that started creating wealth and separating man from ape. If we agree that a medieval peasant was in a sense richer than a paleolithic caveman, we are acknowledging that long-run progress is feasible. This contradicts the idea that every new turn of the cycle necessarily leaves us worse off.
83 We are in the middle of that realignment, both within the US and outside it.
84 Usually with the help of what Peter Turchin calls counter-elites, high-ranking members of society that are disaligned with the incumbent elites. In a startup’s case the counter-elites would be venture capitalists looking to fund disruption of a big company. In a revolutionary political movement’s case, they’d be disaffected nobles looking for a demographic to champion.
85 Even this is unfair to the fictional Dunder Mifflin Paper Company. Someone, probably the Dunders and Mifflins, must have had a lot of passion for paper at some point in time. You could imagine a time back when the interoffice memo system was basically the corporate intranet, that paper was to every business what internet connectivity is today. Anyway, someone must have found it exciting at some point. Because it’s just too hard to start a company as a pure dollars and cents endeavor. John Collison has similarly observed that almost everything you see — this chair, that fountain — was someone’s passion project, given how hard it is to ship something competitive.
86 Marxism postulates that the “poor” were always oppressed by the “rich”, even if these groups actually shift dramatically over time. But a simple calculation shows that it’s actually quite hard to maintain wealth across generations. Assume that a man has 2 children, and 4 grandchildren, and 8 great-grandchildren, and so on. Then even a very rich man would be splitting his fortune over 2N descendants by generation N. Assuming about 30 years between generations, few civilizations have enough long-term stability to allow the consistent doubling of a fortune every 30-odd years, especially if we take into account the annual debiting of living expenses. And this calculation assumes only two children in each generation, where it could be more. If primogeniture were applied, rather than equal distribution over all descendants, the eldest son would receive the whole fortune, but the other 2N-1 would be out of luck. So, it’s actually quite hard for a rich man’s descendants to remain “rich.” When you apply this concept not just to a single individual but the entire class of “rich” people, it vitiates an implicit mental model of Marxism: namely that there has been a static class of “rich” people lording it over the “poor” for generations.
87 Scott positions the switch from left to right as purely a matter of style, and there is some truth to that. But I think there is also substance — leftist tactics are for tearing down orders, and rightist tactics for defending them. So what he’s observing is more like VCs and founders leaving a successful startup to then found/fund the competitor to that startup.
88 Please note that I think Chiang Kai-Shek was far preferable to Mao in the Chinese Civil War, because the people of Taiwan were far better off than those in the PRC under Mao during the 1949-1978 period.
89 The (revolutionary) left rarely underestimates the (ruling class) right, because guns, tanks, wealth and other conventionally right-coded things are very tangible.
90 We can’t really do the full complexity of the relationship between the Western left and the Soviets justice in a few sentences, but see here. The short version is that prior to World War 2, Americans were pivotal to the founding and operation of the Soviet Union, to a degree that has been completely obscured today. Each thought of themselves as the senior partner in the relationship, as the one who was using the other. After World War 2, there was a genuine title fight between the two for world dominance during the Cold War, with residual Soviet sympathizers among the Americans and US-sympathetic defectors within the Soviet Union. But even as late as the mid 1970s, after the defeat in Vietnam, it was not obvious that the US would win the Cold War. Eventually the American establishment started thinking of the Soviets as beneath them, and started calling the most dedicated communists “conservative hardliners.” By 1991 the Soviets capitulated, not just because of internal economic issues or external military pressure, but also due to losing much of the soft power support from the Western left.
91 Using our terminology, within the context of the USSR, the Soviet government used rightist tactics, as it was the ruling class. In a global context, however, the Soviet Union used leftist tactics, as it was attempting to foment revolution.
92 Just as I sympathize with the working man, but know that the answer wasn’t socialism, communism, or fascism.
93 Until the Sino-Soviet split, which was notable because of how formal it was.
94 Note that wokeness does not actually benefit the “marginalized”. Communism promised liberation for the workers only to push them into the slavery of the Gulag. Wokeness purports to benefit the “marginalized” but is hard at work on fully immiserating them through inflation and destroying the stability of their neighborhoods. We’re still in the relatively early stages, but the signs do not look good.
95 Dinesh D’Souza would deny it happened at all! If you’re interested, here’s his case, and then also Eric Foner’s.
96 Everything didn’t shift, of course. Over this period the Republicans remained a nationalist party. But the Democrats flipped from being a secessionist party to an internationalist party. For example, Woodrow Wilson was all about the League of Nations, and one of FDR’s first acts in office was recognizing the Soviet Union.
98 Note that the logic of disparate impact typically isn’t applied here; lack of representation of a political class is not assumed to be due to discrimination. Yet note that Democrats only want to marry other Democrats, and Republicans typically marry other Republicans. So over just a generation or so, these political groups are fated to themselves become ethnic groups, much like what happened with Sunnis and Shiites or Protestants and Catholics. The ideology influences the biology.
99 The fact that the same two tribes keep fighting periodically over at least 400 years means we might reconceptualize the specific reasons for their fight as more irreducibly tribal than passingly ideological, more like Hatfields and McCoys than any grand battle of ideas. In this framework, if one tribe adopts left tactics the other must adopt right tactics, and vice versa.
100 Yes, the flip was already baked many years before this, but this is a particularly obvious public example.
101 Again, the reason we use the startup-to-bigco analogy so much is because it’s one of the few long-term cycles that millions of people are familiar with today. We can’t lean on the history of, say, Rome as heavily because it’s just not taught by schools or movies.
102 Facebook is the exception here, the tech company with the most potential for rebirth and internal alignment, because it’s still led by its original founder. It’s what Samo Burja would call a “live player.”
103 If you want a citation on Chinese ethnonationalism, the US DoD wrote about this in The Strategic Consequences of Chinese Racism: A Strategic Asymmetry for the United States. As they noted “In Chinese history and contemporary culture, the Chinese are seen to be unique and superior to the rest of the world. Other peoples and groups are seen to be inferior, with a sliding scale of inferiority.”
104 If you really need a cite on American ethnomasochism, here’s an employee of the establishment’s paper of record stating that “racism is in everything. It should be considered in our science reporting, in our culture reporting, in our national reporting. And so, to me, it’s less about the individual instances of racism, and sort of how we’re thinking about racism and white supremacy as the foundation of all of the systems in the country.”
105 For example, the Thin Blue Line flag is the Twitter cover photo of cryptocurrency pioneer Nick Szabo. His worldview is actually logically consistent, in that he’s effectively a minarchist rather than an orthodox crypto-anarchist. He is for the kind of positive-sum society that allows people to peacefully build wealth, and therefore against looting and rioting. While he can rely on cryptography to defend his Bitcoin, he supports the police to maintain order for everything else.
106 To make this explicit, see this declassified DoD briefing from 2013. Here, the US military recommends calling China ’racist’ to help win its defense competition, and to push these messages through pop cultural figures rather than directly through official spokesmen. Here’s a quote: “The ‘China is a racist state’ message of the United States will help win allies in global, popular culture, which is heavily influenced by ideals rooted in Western, left wing political thought, including strong currents of anti-racism. Popular cultural figures from film, music, television, and sports, will be far better able to call attention to China’s racism for younger audiences worldwide than will official or semi-official Washington.”
107 Seems like a high bar, but scholarly archives, search engines, and social networks keep getting silently censored. And sometimes not so silently. So you need something like IPFS or Bitcoin to store a state-resistant digital history.
109 Of course, fentanyl addicts were soon added in its place. But there was a window where people benefited from the walkable waterfront.
110 A doctrine can also be based not just on God, or State, but on the Network. That is, not just on religion, or politics, but on a global coin, like Bitcoin or Ethereum.
111 By “exit-constrained,” we mean that everyone present in a given startup society can cancel their subscription and leave at any time.
114 Woke Capital is a very real phenomenon. If you need proof, watch these two videos: Microsoft Ignite and Canadian HR. With that said, if the wokes succeed in getting people to stop calling them woke, or if they pivot from wokeness to American statism, as seems likely, you may need a term with more staying power. So you might also call these Dollar Capital vs Yuan Capital vs Bitcoin Capital (to emphasize the reserve currency). Or even Chinese Capital vs American Capital vs Internet Capital (to emphasize the state-associated nature of the first two, and the stateless nature of the third).
115 Wokeness is after all very much the same as the American Establishment, featuring many of the same folks on the “right” who advocated for the invasion of Iraq two decades ago. So it’s quite conceivable the establishment could dial up the “patriotism” and dial down the “progressivism” without breaking a sweat.
116 Understandably, neither the global internet nor China were recognized as possible new poles in his essay. Both were still at the base of their respective exponentials. To Krauthammer’s credit, he budgeted for known unknowns, poles that could arise which one couldn’t see at that time.
117 Huntington’s alternative Clash of Civilizations thesis began proving more apposite in the 2000s. He modeled the world not as unipolar, or as a sum of random interstate rivalries, nor as a group of atomized individuals, but as constituted of civilizational blocs that would eventually clash with each other.
119 See Douglas Hyde’s Dedication and Leadership Techniques.
120 Another way of thinking about it: the Soviets’ moral conviction gave them license to do highly immoral things, including assassination, terrorism, subversion, and espionage. Click those links or read Haynes and Klehr’s Venona.
121 “‘If the United States had not helped us, we would not have won the war,’ [Khrushchev] wrote in his memoirs. ‘One-on-one against Hitler’s Germany, we would not have withstood its onslaught and would have lost the war.’”
Read the full piece. The conventional wisdom is that the US won WW2. The unconventional wisdom is that the Russians did with sheer manpower. The v3 is that the US really did beat Nazi Germany, because Soviet communists couldn’t profitably coordinate their economy, and needed an arms bailout from the stable industrial base of the USA.
122 Of course, they don’t state it quite so explicitly. At least, they used to not do so. Nowadays the most zealous Sulzberger employees have been pushing for “moral clarity” in all of their articles. They seem not to realize that it was the facade of objectivity that gave them power, punctuated only occasionally by an emotive denunciation. Dropping this facade boosted their subscriber numbers, gaining them money at the expense of power.
123 Yes, technically a Stasi thing, but the GDR was a Soviet puppet state and trained by the Soviets.
124 Despite their 95M person scale, CCP members comprise only 7% of China’s massive 1.4B population, which is why admission can be so selective. Indeed, as described, the process selects for diligence, ideological alignment, and moderate levels of intelligence and initiative: enough smarts and ambition to fill out an application to be part of an important group, but not enough to do something off the beaten track. In other words, it’s similar to modern America’s college application process.
125 If you’re interested in a counterargument, Peter Zeihan has written at length about how weak he thinks China is, how its economy will fail, its demographics will mean it grows old before it grows rich, and how it can’t field a blue water navy. You can read his work here.
I disagree for the reasons stated here. In short, China makes physical things, so the underpinnings of its economy are more robust in crunchtime than one based on inflation and importation. It is amazing at automation, and robotics trumps demographics when it comes to manufacturing or military prowess. And it ships goods all over the world, is buying ports with debt-trap diplomacy, and can build infrastructure on a colossal scale even as the US is losing that capability — so it’s implausible that it won’t ever be able to field a blue water navy, though it might well be an unmanned one.
See also Christian Brose in the The Kill Chain and Kai-Fu Lee in AI Superpowers.
126 Once outside the US, it’s obvious that wokeness comes from America. See for example this piece by the Irish Angela Nagle, or this piece by the UK’s Economist, both of which can see wokeness’ American origins from the small bit of cultural distance that Europe still affords. Consider the episode when an American tried to cancel a Finn for using the Finnish word aave. Or the fact that the BLM protests spread digitally from the US to the rest of the world, while it’s hard to think of a situation where the reverse has happened. And consider that pronoun choice itself assumes the use of English (many languages lack gendered pronounces), such that “Latinx” is an American imposition on Spanish speakers.
127 As you will, Bitcoin Maximalism takes many libertarian leanings to their irrational limits, just as wokeness takes many liberal precepts to their (il)logical conclusions.
128 “At this moment, for example, in 1984 (if it was 1984), Oceania was at war with Eurasia and in alliance with Eastasia. In no public or private utterance was it ever admitted that the three powers had at any time been grouped along different lines. Actually, as Winston well knew, it was only four years since Oceania had been at war with Eastasia and in alliance with Eurasia. But that was merely a piece of furtive knowledge which he happened to possess because his memory was not satisfactorily under control. Officially the change of partners had never happened. Oceania was at war with Eurasia: therefore Oceania had always been at war with Eurasia. The enemy of the moment always represented absolute evil, and it followed that any past or future agreement with him was impossible.”
131 See the section here on the Tech Tree model of history to reconcile the “great man” and “historical inevitability” theories. The great man can steer the tech tree, but they can’t reinvent everything from scratch.
132 While we’re not able to give a full treatment of history, you might want to check out something like Will and Ariel Durant’s “The Lessons of History”.
133 It is of course partly tongue-in-cheek to cite the “why now” slide as a kind of history. But there’s a deeper point: just as the culture of the merchant was on the periphery of feudalism, and then became central to the whole thing as society transitioned from subsistence agriculture to industrial capitalism, so too are we transitioning from the industrial age to a technological age driven by entrepreneurs and investors. Tech culture, startup culture, and now BTC/web3 culture is becoming global culture. And the modest “why now” slide is a little piece of that - it’s history for pragmatists, functional history, history with a point, history that is not (as Henry Ford once said) bunk.
134 I learned to do this the hard way — in 2013 I gave a series of lectures, where some bits held up reasonably well, while others were very much time capsules from that era (GChat, anyone?). Benedict Anderson’s otherwise excellent book Imagined Communities has the same issue, as it opens with a reference to the conflict between Vietnam, Cambodia, and China as being a momentous event in the history of nationalism, which it arguably was not135 in retrospect.
135 As he describes, it was notable for a Marxist to see three newly independent, ostensibly communist countries fighting with each other in the name of nationalism. He thought of nationalism as an illusion; that was what led him to write the book.
136 For different views, you can Ray Dalio’s Principles for the Changing World Order, Barbara Walter and Stephen Marche’s writings on a possible Second American Civil War, Peter Zeihan’s work, or David Reaboi and Kurt Schlicter. All of them also think the current age will soon be giving way. Of them, I agree with Dalio on about 70%, but he’s a bit more bullish on China than I am and doesn’t take BTC or technology into account as a factor. I agree with Walter/Marche and Zeihan on perhaps only 20-30%, but it’s worth reading them for the US establishment and heterodox neocon views respectively. I agree with Reaboi and Schlicter that conflict will arise, but think the form of that struggle will be driven by international and technological factors to a much greater extent than most US conservatives currently appreciate, because the American theater is becoming the acted-upon, and not simply the global actor.
137 Another example is Bitcoin. It’s the Unix of money. You can
send millions with a keystroke or
rm your entire fortune. That’s
more upside and more downside, by making people power users, and
taking away the system administrator.
138 Financial status (money) is more measurable than social status, because your bank account balance is objectively measurable. But social status has become fairly measurable too, via likes, retweets, followers, replies, and backlinks.
139 You might still be able to visualize it if you embed the underlying graph into a manifold of some kind and then think of the wave as propagating on that.
140 100-1000X is not an exaggeration. A Caltrain station improvement lasted from November 2017 to fall 2020, which is about 3 years. Three years vs nine hours is (3 * 365 * 24)/9 = 2920, which means the US needs almost 3000X as long to upgrade a train station as China does to build one from scratch.
141 What’s my level of confidence in this? About what it was in my 2013 talk on Silicon Valley’s Ultimate Exit. I think that talk holds up reasonably well, but as per Soros’ reflexivity the trends I identified at the time gave rise to counter trends which were not yet observable, like the turnaround of Microsoft by Satya Nadella, the rise of Trump, and the web3 movement as an alternative to US and Chinese tech companies alike.
142 On a long enough timescale, this is arguably true. See the many graphs from Hans Rosling and Steven Pinker to this effect. Still, civilizational collapse does occur, and as everyone from Elon Musk to Matt Ridley will tell you, things like Moore’s law don’t happen by accident - people need to drive those innovations to keep us moving forward in time. As an antidote for anti-empirical doomerism, I’m all in favor of Rosling and Pinker, and indeed recommend their work. But we need to also avoid anti-empirical nonchalance. Thiel’s determinate optimism is better than the belief that someone else will take care of it.
143 It’s also not what the Maximalists or the CCP offer. The Maximalist interprets Bitcoin’s trust-minimization to mean that no one should be trusted, rather than thinking of Bitcoin as a way to choose whom to trust, as a tool to rebuild a high-trust society. And the CCP, like the US establishment, doesn’t really give a convincing message to the world at large on why it should be trusted, instead pushing a top-down message of loyalty through coercion.
144 It had many other flaws, like the suppression of individualism, political centralization, restriction of technological innovation, and mass seizure of assets. We’re not romanticizing it. But that mid-century ideology, which was itself the result of enormous conflict, was a recipe for a more stable order than what we have now.
145 Just as the Communist pathologized profit, and the Christian fundamentalist pathologized interest, the Maximalist pathologizes issuance. It’s certainly possible to abuse these financial tools, to exploit workers for profit, to charge usurious interest rates, or to issue fraudulent financial instruments. But the answer is a system of competitive regulators: not (a) zero regulation, nor (b) the monopoly regulation of the corrupt SEC, nor (c) the decentralized “regulation” of calling everyone a scammer all the time just as wokes call everyone x-ists, but rather (d) a system of multiple reviewers that provide checks and balances on market participants, and who are themselves checked and balanced by market exit.
146 A partial list of failure modes: (a) there could be a bug in the code, (b) centralized quantum decryption could come online faster than expected and without decentralized quantum-safe encryption to match, (c) miners could get pressured to censor transactions as Marathon was, (d) ESG attacks could be used against mining, (e) non-pseudonymous developers could be personally targeted, (f) enough BTC might be left on centralized exchanges to freeze it, (g) a Great Firewall-like approach could be used to interfere with Bitcoin at the port/packet level, potentially interfering with the protocol’s implicit assumption of a global, connected, relatively low-latency internet, and so on. I still think Bitcoin can succeed, but my confidence in cryptocurrency is bolstered by the fact that other coins exist with different failure modes.
147 Another issue where Web3 Technologists disagree with Bitcoin Maximalists is on the question of decentralization. Maximalists contend that Bitcoin is decentralized and all other networks are not, that decentralization is a binary property. Because they are mononumists, they sometimes refer to this in monotheistic terms as an “immaculate conception”, using a term from Christian theology. The short counterargument is that obviously Bitcoin wasn’t decentralized on day zero, when Satoshi Nakamoto was the only user, so it must have become more decentralized over time — and so how exactly did that happen, and what are the metrics for decentralization? A full counterargument, along with proposed metrics for intermediate levels of decentralization, is in this piece on Quantifying Decentralization.
149 There were times during the 20th century when American progressives thought the USSR was more modern; as Lincoln Steffens said, “I have seen the future, and it works!” But by the end, the Soviets felt gray and stiff, not revolutionary.
150 This is why Maximalists may actually push laws against holding other coins in their jurisdiction. You might think that such advocacy would be an ideologically inconsistent fusion of anti-Fed and pro-SEC, but there is a logic to the illogic. Maximalists are in favor of anything that makes “number-go-up”, what they think of as bringing the price of Bitcoin up in the short run. Many have convinced themselves that investment into the web3 cryptoeconomy actually harms the price of Bitcoin rather than supporting it. Again, just like a Communist pathologizes profit, or a Christian fundamentalist pathologizes interest, a Maximalist pathologizes the issuance or purchase of any digital asset other than Bitcoin.
151 There’s a perhaps apocryphal concept called “Paris Syndrome” for the shock experienced by those who’d only known the movie version of Paris, and then were faced with the dreary reality of what it actually is.
152 To be clear, even if the goal is to gain the minimum necessary sovereignty gradually and peacefully - which we strongly recommend! - the founder of a startup society will need an “army” in the sense that Gandhi had an “army.” That means a large group of people committed to building their network state. It’s a collective LARP, not just one person daydreaming to themselves.
153 El Salvador’s adoption of Bitcoin in contravention of IMF dictates is, in its own way, similar to a Protestant state flipping the bird to the Catholic Church.
154 Read Ben Horowitz on courage: “On the surface, it appears that if the decision is a close call, it’s much safer to go with the crowd. In reality, if you fall into this trap, the crowd will influence your thinking and make a 70/30 decision seem like a 51/49 decision. This is why courage is critical.” But courage alone is not always enough - you need sufficient control to be able to execute that courageous decision. That’s where founder control comes in.
156 There is a tendency to equate “elections” with legitimacy, but the Soviets held many elections, and communist states tend to proclaim themselves the Democratic People’s Republic of So-and-So. Didn’t make it so. What you really want is the consent of the governed, and some way to measure that, such as on-chain evidence.
157 ENS stands for “Ethereum Name System”. You can check it out at ens.domains. There are other crypto name systems as well, like SNS (the Solana Name System); ENS is just the adoption leader at time of writing.
158 The same techniques a network state uses to prove its own numbers on chain can be used to create so-called “shadow statistics” that replace the official statistics of legacy governments. For example, if you don’t believe the US government numbers for inflation, you’d do something like the post at thenetworkstate.com/inflation to generate an alternative on-chain dashboard for inflation.
159 This seems obviously bad, but because it’s easier to split up power than to consolidate it, you see this failure mode all the time - in San Francisco’s vetocracy, in the Polish Parliament, in public companies with too many board members, in bureaucratic DAOs, and in co-ops.
160 This is also why ultra-libertarian startup societies tend to fail. They’re right about the desirability of founding new societies, but wrong in their estimate of how much cooperation and self-sacrifice is needed to build said societies. Basically, the libertarian is correctly calibrated on how foolish it is to contribute to “social cooperation” in a declining-trust society like today’s US, where the establishment is essentially scamming its subjects out of their life savings (via inflation) and their lives (via invasions). But the libertarian often overcorrects, not realizing that while low trust is the optimal strategy for a failing state, high trust will be needed to build a desirable high-trust society. In other words, you just need a different mindset for living in a failing state than when building a startup society.
161 Note that this is complementary to Bitcoin. Just as any investor can choose to either hold shares in a corporation or liquidate them for dollars, they can now choose to hold dollars or liquidate them for Bitcoin. So too can they choose to hold a network state’s integrated cryptocurrency, or liquidate it for Bitcoin if they don’t believe that network state will grow faster than BTC.
For example, they might think the global Bitcoin economy will grow at only 5% per year starting in 2035, but that this network state will grow in annual income at 50% per year. Growth is of course not the only reason to buy and hold a network state’s cryptocurrency - there’s also a consumption/patriotism reason. For example, you want to see that network state succeed, because you want to see a post-FDA world or Keto Kosher society emerge.
Issuing a new digital fiat currency for a new state does not mean we’re just coming “full circle.” It’s the helical theory of history, where it’s a cycle on some dimensions and an advance on others. Think of it as a version 3.0 of the financial system: from the v1 of bad fiat dollars to the v2 of Bitcoin-only to the v3 of new opt-in fiat currencies checked by the power of Bitcoin.
162 San Marino is the exception that proves the rule, the only surviving city state that didn’t get rolled up into a 20th century universalist empire.
163 Think about how much people want to be in the top 30 coins on Coinmarketcap, or at the top of the Substack leaderboard, or among the list of unicorns. I agree with Thiel that often the goal is to escape competition. But competition can also sometimes be good, as it incentivizes people to work harder to win. And the competition to build startup societies into network states with large populations, incomes, and real estate footprints can be good…so long as we set it up from the start with an eye towards cryptographic auditability.
164 Paradoxically, the organization that demands trust can get less of it, while the organization that shows their work - thereby not asking for trust - builds up more of it. This is rational: if an outsider can independently confirm every claim that can reasonably be checked, they have more reason to give the organization benefit of the doubt on claims that cannot be so checked.
165 There are many intermediate forms here. We’ll call out two. First, the pre-existing government that first recognizes the network state - the “bootstrap recognizer” - may not be a UN member. It could instead be a city or province. Think about how Wyoming passed a DAO law and Miami’s mayor took a salary in Bitcoin, well before the US government as a whole formally embraced cryptocurrency. Even a positive press release by a city about a fledgling startup society gets it on base, moving them incrementally to the ultimate goal of recognition by sovereign states and eventually membership in the UN (or whatever succeeds it).
Second, diplomatic recognition is a negotiation, not a blank check. A sovereign state that recognizes another may revoke that recognition if the second one starts legalizing heroin or becomes a base for terrorism. Or it may just act like it’s revoking recognition, without formally doing so.
166 Think about the difference between the employees of Facebook Inc, vs the users of Facebook. The former can leave with their salaries and vested equity, and as such are OK with Zuck having total control as CEO. The latter are locked in, and cannot leave, and did not realize how valuable their digital property was to them.
167 Though as soon as you name something like that, you start asking whether it might be useful to build a social network around that tool, just like we have communities of plumbers and electricians.
168 Indeed, the purpose of this book is to show that network states are feasible and desirable, but not inevitable. We’ll have to work to create the future we want.