DAO Politics is a series of podcasts from ForkLog, in which we, together with invited experts, understand how decentralized autonomous organizations, and talk about their conceptual and technological foundations. The guest of the final episode of the first season is Synoptic, a corporate law expert and programmable economy enthusiast. Together with him, we understand the key shortcomings of the theory network state and find out what alternative projects of the society of the future exist.
The Network State is a concept of a socio-political organization proposed by the former CTO of the crypto exchange Coinbase Balaji Srinivasan in the book of the same name and based on the use of blockchain and related technologies. The creation of such formations implies the presence not only in the virtual, but also in the physical dimension. The latter is achieved through the acquisition of land around the world, which are then combined into a networked archipelago. If you have ambitions, any community of like-minded people can theoretically become a network state.
Network State Vulnerabilities
Balaji Srinivasan’s ideas about the need to create a network state outside the current jurisdictions are quite understandable. The whole historical process in one way or another leads to this. Network State, in fact, is one of the options for the implementation of a planetary state with a single world government. All these thoughts in the current conditions are probably obvious: there is a sense of the completion of a large historical cycle and the importance of rethinking a huge number of concepts.
It is not so easy to give a clear definition of the Network State, even within the framework of the theory of state and law. Some of Srinivasan’s ideas can be confusing. For example, one of his theses reads: “digital primary, physical secondary” – first the figure, then the physical reality.
That is, he proposes to recognize as a fact that we have a new form of life – digital. Now we will go to the metaverse with our Telegram and Discord chats, where we will unite with all the people on the planet and we will produce activity. And this activity will be primary, and your daily life will be secondary. This approach confuses me. I don’t believe in its viability.
In the classical definition of the state, there is such an element as territory. If it does not exist, then there is no state. Our whole history in its classical sense is the history of the struggle for territory.
We, as people, also live not in virtual reality, but in a specific physical space. And every time we wake up and open our eyes, all we see is the state. We live in a house built by a company operating within economic reality. We pay for the Internet, which is provided by a huge amount of infrastructure that exists within the state. We drive on roads.
Wherever we stumble, we will somehow interact with a certain format of either state or public property, or relations that are possible only within this structure. Is it possible to pull a person out of this territory and place him in some kind of digital reality, completely tearing him away from it? I don’t see how to do this as long as we remain physical beings. A particular state (China) has created a system that allows it to monitor its own population on its territory. Moreover, all governments follow this path. But this does not turn people into numbers.
If the network state remains in the cloud, then there is a high probability that it will not reach the real me, will not be able to solve some pressing issues. If a thief comes to your apartment, where will you go? In Network State? How can the network state return what was stolen from you?
Talk to people and start a business process? This is possible in the network state. Adjust some social processes? Undoubtedly. People have always had the opportunity to unite, and it has always been an effective tool for solving some problems. What problems this network state will solve is not yet said in the book. Therefore, I believe that the Network State will not be able to replace the traditional state, but, perhaps, will find some form of parallel coexistence with it.
An ideal model is possible when ideal people exist. And they don’t happen. Any network state will be created by people, and along with them conflicts of interest, different views on the world and different strategies will come.
States strive for integration. If we turn to history, we will see that small countries first appear in different territories. Then they begin to seize each other or conclude unions, unite. In any case, it is always the desire to grow.
The state is constantly expanding, constantly comes to the neighbor and begins to sort things out with him. And at some point, when the entire territory was dismantled, and the wars became too fierce, states of the next level begin to form. These are either confederations or various kinds of federal formations. In any case, this is the next form of join. The European Union, the United States of America are associations of states that have become a single entity with one form or another of the penetration of common regulation. The USSR was organized according to the same principle.
In the realities of the information age, we instantly learn about any event on the planet, and we have the ability to respond quickly. I think that in the current conditions it is quite possible to create a kind of “luxury communism” based on a programmable economy. Within its framework, it is possible to reproduce both capitalist and planned economic models. And I think that the future lies with multiple models – both globally and locally. The programmable economy opens up wide prospects due to the very rapid flow of information and the fact that the entire accounting system is simultaneously the world’s computer. We have everything in one, and it is very convenient.
The main criticism of the capitalist economy is that the additional product that each person creates is appropriated by the owner of the means of production. The communist model suggests that factories and machines should be publicly owned. The criterion for the distribution of goods here is human needs. This is what planning is for.
One such means of production that would be logical to socialize is artificial intelligence. To give out its product, AI uses information that has been produced by a huge number of people over several generations. And the profit that each specific artificial intelligence will generate would be fair to distribute not between the shareholders of the company, but between the people who created the raw materials for feeding neural networks. This, probably, will be luxury communism.
Barriers to the Programmed Economy
The first obstacle is the world of open information. On the one hand, you want to live in it. It gives us Open Source, the Ethereum virtual machine, process transparency. On the other hand, there is the example of China, where information is open, just for some part of the people. So how will it be used? Most likely, there will be zones of influence that, for one reason or another, will not want to disclose some of the information relating, for example, to the state budget. This is contrary to the principles of complete openness declared by Web3.
The second barrier is intellectual complexity. The more difficult it is to explain the model, the more difficult it is to integrate it into our lives. This is a problem with regulators and with conservative thinking, for which, in principle, the state is responsible. He has no task to run forward and look for something new.
The third hurdle is hacking problems. We have a new form of evil will. The protocol itself can be written perfectly, it will work properly, but it can be completely broken. You can extract money from it. That is, this is a new form of criminal activity that needs to be dealt with. And if we don’t come up with such a quantum computer tomorrow that will be one step ahead of any encryption methods, we will generally lose this unique element that allows cryptoeconomics to exist.
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