Network nations would arise from cryptocurrency-based asset-funded cloud societies

This book proposes to create nations technologically, and not through the opening of geographic frontiers or demographic domains.

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THE creation of a new state through peaceful means in the present era is considered implausible, and does not rally support due to its incongruity with the global political order and established legal principles.

Nevertheless, humans have an echoic memory on a relative scale to global events spread across centuries. As stated by American investor and hedge fund manager Ray Dalio, political events are like financial cycles, which repeat when observed from a large enough time scale. A prime example is the creation of Israel arising from an idea spread through a pamphlet by Austro-Hungarian Jewish lawyer, journalist, playwright, political activist, and writer Theodor Herzl.

The creation of a new State, as absurd as it may sound, is extremely plausible, according to American entrepreneur and investor, Balaji Srinivasan's book 'The Network State'. The conventional methods of creating a new nation/State through civil wars, referendums or secessions are redundant, and evidence suggests that sovereigns created through such methods are not likely to achieve their long-term objectives. The author proposes a new method where nations are created not through the opening of geographic frontiers or demographic domains, but technologically.

In the book The Network State, Balaji Srinivasan proposes the creation of a nation/State using a new method where nations are created not through the opening of geographic frontiers or demographic domains but technologically.

The premise of the book is that due to technological advancement, new tech entities are gaining numerical and financial strength — and eventually, they would evolve into new sovereign entities. This framework would have a larger degree of success in sovereign geographic entities that do not subscribe to the nation-State paradigm such as the United States and India. In both these nations, no dominating culture or ethnic group exists, and they host multi-ethnic groups.

Societies are considered to arise out of the social contract theory, and a series of contracts between individual members, from a technological point of view, can be considered the code base. As society progressed, contracts got more complicated and inoperative.

The U.S. Food and Drug Administration has delayed the production of many drugs that could have saved thousands of lives. The erstwhile Soviet Union and China have caused the death of millions of its citizens due to their food policies.

Against the social contract paradigm that has been expounded by several liberal political philosophers such as the English philosopher and physician, John Locke; the Genevan philosopher, writer, and composer Jean-Jacques Rousseau; the English philosopher, Thomas Hobbes; and the American philosopher, John Rawls, Srinivasan demonstrates that redundant and hypothetical thought experiments which create the illusion of common debt towards society eventually have to pave the way for individualism, as elaborated by Russian-born American writer and philosopher Ayn Rand.

Srinivasan argues that blockchain technology, such as Ethereum and Bitcoin, would replace social contracts, and "On-Chain governance protocols" and "smart social contracts" are a viable replacement.

Through the implementation of such technology, unprecedented associations would sprout owing to the changes that can be potentially ushered. The blockchain-based cryptographic governance paves the way for novel systems and processes that would revolutionise commercial contracts, electoral processes and public ownership of common resources that are legally convoluted.

Transition from nation State to network State

Eventually, Srinivasan speculates, such networks would gain following from various like-minded individuals, grow in popularity and attain crowdfunding to obtain an archipelago of physical spaces and enclaves where such ideas are more researched.

Such well-networked organisations/associations would be a formidable force and seek a smidgen of political self-determination. Hence, Srinivasan states that unlike the Soviet Union, which evolved into a network of academia, media and non-political organisations after its collapse, the next nations would arise from cryptocurrency-based asset-funded cloud societies and finally reach the status of a network State.

The premise of the book is that due to technological advancement, new tech entities are gaining numerical and financial strength—and eventually, they would evolve into new sovereign entities.

In light of the well-researched hypothesis propounded by Srinivasan, the primary question is the necessity of a new sovereign in the form of a network State, and why not try to amend and rectify the faults in the existing system and not jeopardise the relatively peaceful global order, which took more than 500 -600 years to achieve.

Addressing this question, Srinivasan writes that the U.S. and China are the most powerful nations and within these nations, the ruling Democratic Party and the Chinese Communist Party ('CCP') hold clout over their domestic institutions. The people are divided on partisan lines, civil discourses are broken, and the administrative quality is on a steep decline.

To get a clear picture, the U.S. built the famous Golden Gate Bridge in under four years in the 1930s. Right now, the clearance time to renovate/repair essential public infrastructure is around eight years and still, no conclusive reports are out. In China, the State decides the number of babies a family can have. To make it worse, China is weaponising corruption in light of its failure to control corruption.

Hence, based on these actualities, society and the codebase which it is built on have crashed. Owing to the historical nature of States, any positive changes aren't possible. Hence, Srinivasan argues that it is much feasible to begin a new privately-owned, technologically based sovereign with a simple code designed to achieve basic objectives and make the system better with one objective at a time.

The objective, or the "One Commandment", as Srinivasan terms it, can be a moral innovation which seeks to pool a set of individuals and assists them to achieve the said objectives collectively. Such societies with one objective already exist such as "No-Fap", "Go Vegan" and "Paleo Diet", which are established with a sole objective.

What the book tries to achieve

Srinivasan speculates that a new State initiates as a start-up society and evolves its own internal policies based on smart contracts. Extrapolating this further, he propounds that such societies would eventually issue their own cryptocurrencies and establish "digital capital".

As the society grows in membership and financial strength, its members would eventually acquire physical properties across the globe to visit members, conduct research or formulate policies. Over a period of time, such societies based in both the physical and digital sphere would form a "network archipelago".

Owing to the historical nature of States, any positive changes aren't possible. Hence, Srinivasan argues that it is much feasible to begin a new privately owned technologically based sovereign with a simple code designed to achieve basic objectives and make the system better with one objective at a time.

Another question that arises is the appeal of a network State as a successor to the existing nation State model. Would the public in large take this new model and accept this paradigm? Srinivasan states that the network State is not designed for the public at large, but for individuals who believe that they are not considered equals by the establishment and yet can do better for society if provided a mechanism.

In the book, there are mentions of the Indian diaspora who are doing well in western nations while they could not excel in their home country due to reservation and other constraints. He also mentions the Runxue Chinese, Hong Kong refugees and Argentineans escaping inflation.

The U.S., a nation built on highly skilled immigrants, now holds a labyrinthine immigration system which makes the entire process difficult. Moreover, Srinivasan warns potential immigrants to not prefer the U.S., since it is a nation on steady decline.

The book propounds a theory where there are only three options for individuals who believe in the ideals of progress and freedom: a turnaround in a declining U.S., reform in the CCP, or starting anew with a formatted code base. The book proposes that starting a new is optimal, owing to the ability of individuals across the globe to coalesce into communities that are rooted in mutual loyalty and moral purpose.

Challenging the establishment through building alternative structures

The basis for stating that the primary two options of correcting the superpowers is not viable is that the code base is too corrupted. In the case of America, partisanship has created a situation last seen in the Civil War. Media houses, the bureaucracy and academia have turned extremely political and ineffective.

The U.S. has limited capability compared to its past. Its diplomacy has been a failure since the Soviet Union's fall. Its finances have been in ruin and the country is facing an inflation that is close to double digits. Based on these actualities, it would be delusional to expect the U.S. to protect the ideals of liberty, freedom and progress across the world.

Also read: Democracy subverted: What Oliver Stone's JFK tells us about nationalism, national security, big corporations and the Deep State

On the other side, China, which successfully boasts of the destruction of any opposition to the CCP, has built a potent surveillance State that employs artificial intelligence. The slightest western supporters are detected and data compiled on them.

Irrespective of its demographic decline, China's economy is robust and its foreign policy is yet to achieve its full potential. As Washington, D.C. is on decline, the rise of Beijing is alarming the aforementioned target group of Srinivasan. Hence, he argues that the third model of starting a sovereign State anew is the most viable option.

Against the social contract paradigm that has been expounded by several liberal political philosophers, the author argues that blockchain technology, such as Ethereum and Bitcoin, would replace the social contract and "On-Chain governance protocols" and "smart social contracts" are a viable replacement.

The merits of the book lie in the strength with which the arguments were advanced. The entire proposition lies on a set of well-researched assumptions that are highly unlikely unless the nature of the countries is transposed. Events such as the reconstitution of U.S. and its return to former capabilities, China's internal collapse — either demographic or economic — or the evanescence of Bitcoin and other cryptocurrencies are such events that would make the arguments advanced by the book redundant.

Also read: Secret detentions and enforced disappearances strike fear in China

Moreover, to strengthen the arguments advanced by the book, multiple projects based on cryptographic governance have been commenced. Organisations such as a potential Armenian Network State and Afropolitan (which promotes ethnic African writers, investors and artists), and so on, are promoted through an online network.

Another issue with this information-dense book is that the form is not solid. As per Srinivasan, who got this book self-published, books should not be static in nature and hence Srinivasan seeks to constantly update the book, and elaborate his arguments on the basis of constructive criticism and the constant flux of world events.

Overall, it is a fairly technical book, densely packed with theories and postulations meant to be consumed over a period. The book serves three major purposes: provide insight into major political and economic events that shaped modern history and current times, their intricate relationship with society and technology in general, and how technology would eventually shape the next generation.

While the ideas are robust, the chain of reasoning in the book gets stretched and allows room for excessive speculation. The book falls short of being a full-fledged thesis, but has the potential to act as a guide to gain insight and is a great menu for multiple ideas such as Marxism, maximalism and position shifting in networks or societal group formations to initiate a Ph.D. thesis.

Click here to view a PDF version of 'The Network State', available online for free.