Network states: not-too-distant future or impossible fantasy?

Is the United States the Microsoft of Nations?

This is the question that Balaji Srinivasan raised in a 2013 speech (which I highly recommend watching). One could argue that Big-Tech companies behave like nations in many ways. Take Facebook as an example: the Facebook executives (government officials) control user registration (citizenship), platform rules & enforcement (law & order) and they are launching Libra cryptocurrency (money circulation).

Here comes the focal question of this post: Can a “network state” be founded and held together by technology? Assuming yes, then can a network state coexist with — or even replace — nation states as we know today?

Let’s first start by understanding what a network state is.

A network state is an exit (alternative) to the traditional nation state

Imagine you are concerned about the system that you are in, be it a school, a company or a nation state as an example. You are dissatisfied enough that you decide to do something about it, as opposed to simply letting it be. You have two options:

1. Voice = seek reform from within, i.e., “let’s stay and try to improve”;
2. Exit = opt-out and find an alternative, i.e., “let’s go somewhere else that is (or at least appears to be) better:

The choice of exit may appear avoidant or contrary to the conventional wisdom of “never give up”, but it has its merits. In the words of Balaji:

Exit means giving people the tools to reduce the influence of bad policies over their lives without getting involved in politics. The tools to peacefully opt-out.

Network states are proposed by Balaji as the ultimate exit of Silicon Valley from the rule of the Paper Belt — the cities that run the US after WWII (including DC for laws & regulation, Boston for higher education, New York for business & media and LA for entertainment & creative arts). Network states are opt-in societies that are run by technology instead of traditional nation state infrastructure.

What separates a network state from a nation state (e.g., US) are:

1. Network states are run by technology vs. nation states are run by force at its foundation.
2. Network states could be founded by peaceful means vs. nation states are founded by conflicts (product of wars).
3. Network states allow its members to be pseudonymous (e.g., interact with others with user names) vs. nation states rely on an accurate record of everyone’s identity.
4. Network states render geographical boundaries — and immigration by extension — irrelevant (e.g., a purely online state) vs. nation states are defined by borderlines.

Feasibility of network states

This comment on network states doubts whether their existence is even possible, as nation states not only have every incentive to prevent network states from materializing, but also have every means to do so:

I think he’s [Balaji] hugely underestimating the power of violence. Physical force can’t break math, but it certainly can quite easily force you to surrender your key or physically take possession of any infrastructure […] including but not limited to power and wiring, and all that is very easy to physically possess or physically destroy.

[…] This “cyber-Platonism” forgets about physical reality. Information systems are physical embodied things. Bits actually do take up space. “Virtual” is an illusion.

The argument above boils down to the essence that physical force is the ultimate power that controls humans, because we cannot escape the physical reality of morality (at least for now). Therefore, whoever controls physical force controls morality, and have their fingers on the on/ off switch between life & death. Not a coincidence that the right to life is the most fundamental human right.

The question then becomes: for network states that are 100% online, who controls physical force and protects the physical safety of communities? We have two broad options:

1. Physical force is controlled centrally by a trusted entity - this would be the nation states we have today that own the military & weaponry centrally.
2. Physical force is decentralized and it's every man for his own safety. The wealthier people could afford to set up their private arms of security force. There may be a few benevolent wealthy people who voluntarily protects their community as well, but it is not a reliable source of protection to be counted on.

I would vote for option #1 as both more desirable and more likely to happen. Human beings need reasonable assurance that their physical security are and will be taken care of. I do not yet see how such sustainable guarantee could exist without the form of nation states. My view is hence nation states will be here to stay.

That being said, I do see some functions that are traditionally under states' (monopoly) control can and are being moved to online communities. Take Bitcoin as an example - it is a digital experiment to fully decentralize money creation & circulation. States are realizing the threat and taking actions, such as more regulations around cryptocurrencies and/ or issuing their own central bank digital currencies. I do believe crypto is here to stay (disclaimer: I own Bitcoin) and states' monopoly over money is ending.

To sum it up, my thesis is nation states will be here to stay, but their monopoly power over factors other than physical force will be diluted. Over time, the most important factor for people in choosing which country to live in will be considerations about the physical environment that cannot be digitized (e.g., water & air purity, crime rates). Everything else that we have the tech to move 100% online (e.g., education, financial services, entertainment) will decrease in importance.

Related discussion: What is THE purpose of technology?

Taking a step back, a related (and bigger picture) question is this: what is THE ultimate purpose of technology? Balaji put forward a bold statement in his 2020 post:

If the proximate purpose of technology is to reduce scarcity, the ultimate purpose of technology is to eliminate mortality.

In my view, reducing the scarcity of distribution is the most important of technology development in the 21st century. Today, anyone with an Internet access can post their content on the likes of YouTube, Instagram, Facebook etc., instead of having to rely on a few print press to accept their work. That being said, technology reduced the scarcity of (or proliferated) both “good” and “harmful” content, though arguably on the whole tech helped information spread faster, which enabled more innovations to be delivered in a shorter period of time, as it is far easier for people to learn about what “past wisdom” of others around the globe and prevent reinventing the wheel.

What I find particularly interesting about Balaji’s view is that he sees mortality as the ultimate scarce resource, and therefore “life extension is the most important thing we can invent.”

I would add on to that and say life extension is the ultimate purpose of life itself. From humans to other mammals to all forms of life, the reason we exist in the first place is to propagate our genes. The sole drive to extend life beyond ourselves is what leads to the constant evolution.