OTNS: Critiques and Alternatives from a Former Professional Libertarian
For this episode of OTNS, Primavera and I spoke to Chris Berg, a cryptoeconomist, co-director at the RMIT Blockchain Hub, and a "former professional libertarian". During the conversation we spoke about Chris' revisionist history of blockchains, the shortcomings of TNS from a libertarian point of view, and Balaji's state envy. Like we mentioned at the beginning of the series, we want to talk to people who have different views than us, but we found interesting about Chris is that he is a promin...
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Transcript
Hello, everyone. You are listening to the Blockchain Socialist Podcast, and we are continuing to overthrow the network states. I'm here along with my co host, Primavera de Filippi, the high priestess of Blockchain Gov. And we have our guest this time is Chris Berg. He is a crypto economist and director at the Blockchain Innovation Hub at RMIT, and he is interestingly a former professional libertarian, as he calls himself. So I think part of this series, so far, for the most part, has been largely people who are, I guess who would have already not agreed with Balaji in most instances, due to being on different parts of the political spectrum probably. But what we want to do as part of this series is to have people on who don't agree with us on everything, and who may have, different thoughts when it comes to politics, who may be more libertarian like Balaji is, or at least, he claims to be, so that we can dig a bit deeper into what are the things within the network state that are, I guess, attracting people to it and what is it good and what is it bad from different perspectives. But Chris, maybe before we dive into the network state, I thought it is really interesting that you describe yourself as a former professional libertarian. So I'd love to know, you know, how long was your career as a professional libertarian in on the the political court, the political field, and when did you retire and why?
So thank thank you so much for having me. Now I'm just a amateur literature. Right? So, it's no longer my day job. So I I have a background in, free market think tanks. I worked for a free market think tank in Melbourne, called the Institute of Public Affairs for about thirteen years, doing all sorts of things. And but a big focus of mine at the time was, civil liberties. So I did a lot of work on freedom of speech and privacy, particularly as they're debated in the Australian political context. It's an Australian focused think tank. As well as, thinking about regulation. So thinking about not just individual regulations, which, you know, as a former professional libertarian, I was by and large against a lot of the regulations that I was arguing about, but also what regulations does to the state itself. So thinking about what, the the nature of the way that we control the economy and society through this sort of morass of network, if you will, of laws, and that we call regulations, which is which is interesting. Right? So it's it's not it's not the only way you can control an economy or society. And historically, you know, Blockchain Socialist Podcast, we have nationalized things. Right? Well, that's something that, was done in Australia, in many cases, but, obviously, in in different political systems. But over time, a big part of my research and a big part of my focus was, well, when we we denationalize things, so we privatize things. But as we were privatizing, we built up series of regulations and rules and laws that sort of purported to give us the benefits of nationalization in the first place. And I was thinking through the political consequences of that, the economic consequences of that, but more generally, what it did to the way we think about think about the state. So that's sort of what I was doing in the think tank as a professional libertarian. And I did a lot of things in the libertarian movements in Australia and around the world, and I'm still a bit involved in that. Then I got a little bit bored by that. I got a PhD, actually, in banking regulation to sort of see if I could spin that story out for 100,000 words. And then joined RMIT University, where my colleague Jason Potts, who I believe you've already interviewed, he basically said to me, are you interested in blockchain? And I was. I'd written about Bitcoin in 2013 or so and been interested in it sort of on an amateurish level. And he said, are you interested? And I said, absolutely. And then now I'm trapped. Right. You and I both. Been doing that since since in 2017. And, yeah, it's it's it's a nightmare, but it's the most interesting nightmare that I've lived. It's it's it is genuinely the most interesting, intellectual thing I think you could be doing if you care about any of the stuff that I think, you and I, Primavera, and probably the listeners care about, which is, you know, how community is formed. What does well, what what does what does governance look like? What does action look like? What does economic activity look like in the future? Right.
So, yeah, I just wanted you to kind of, like, lay that out there so people can understand that, yeah, I mean, you are I'm horrifically biased, really. Of course. And me too. Like, and I'm open about it, and that's fine. We don't have to go into, like, too much, into the weeds of, those types of disagreements. But I think what's more interesting is just to show that, yeah, you you are someone who, I guess, for a lot of people who may be, looking from the outside, would assume or presume to be, like, a really big Balaji stan. You would be like his audience, right? Since he does, I mean, I don't know how explicit he's really been about it, but I mean, he's basically, he paints himself as a libertarian of sorts. And so, yeah, so I think this conversation is gonna be interesting because, you know, you, people thinking that you being a stan, they would also think that you would have loved the network states. But from what I understand, maybe love is too strong of a word, but I think maybe to start, Chris, if you could just kind of lay out, your initial thoughts on the network state. Was it something that maybe in the beginning you were interested in and then later that sort of changed and developed? What are the good? What are the bad, at a at a high level? And we can start from there.
Yeah. Of course. So, the network state is there's a lot of ideas in it, and, it's a very rich with idea book. And I say that in a very positive way, and there's a lot to tackle and to grasp. And and so rather than breaking down, you know, all the things that I precisely enjoyed, I share the diagnosis. I share, you know, to the extent that Balaji is a libertarian, I share a lot of the diagnosis that he has about the challenges of the existing status quo, the challenges of our existing political system. The things that I'm worried about is that morass of rules and unstructured governance that purports to be structured that that limits the freedom of action, limits innovation, limits economic activity, and and so forth. And so I share a lot of that diagnosis, and and I share a lot of the solution as well. I wanna be really clear about that, that at the highest possible level, what Balaji is recommending or spelling out as a solution to that is non state community or actually, I'll I'll I'll rephrase that. Non non existing state communities, using a combination of human centric governance and algorithmic governance through cryptocurrency, through smart contracts, and so forth to build alternatives to that existing political system. To do so to start at least on a global first level, to to build around communities of interest, and he's got a bunch of examples. The you know, obviously, crypto is one of them, but, you know, an anti carb community or pro buyer innovation community, all the all these sorts of things. You know, and without dwelling on any of those particulars, that's a solution that I 100% agree with. And and I'll explain my own take on on on how we go from here to there. But but it's something that I a 100% agree with. Where I think it falls down, and where I think that he's, where where I think he's gotten it wrong is that the book, one way to say the book has a weird state jealousy. It is jealous of the, political position of the state, traditionally conceived. And that, to my mind, is very weird because it comes out of nowhere. Obviously, it's spelled out in the first page, but it's you know, the book is mostly diagnosis, diagnosis, diagnosis, and that's how we're gonna get diplomatic recognition. And and that's where I I'm I'm really lost. Not because necessarily I I I think it's impractical and implausible. We'll put put those practicalities to the side. I just think the world is more interesting and the future is more interesting than that. We're not going to be building, new communities of technologically enabled, organization just to end up with capturing pieces of land so that we get a United Nations seat. We're gonna end up with much more complex cross communities so that we're not members of just one state or one state plus a Balaji network state, but where members of dozens, if not hundreds, of different voluntary communities that offer us very different things in very different contexts with very different rule sets so that we've got much more overlapping identity and membership rather than what he's sort of looking at, which is, well, now we just have more states. And there's an inherent appeal to the idea of more states. I think more states would be better rather than fewer. And where we are, I have a deep bias towards almost every independence movement in the world, and I'd I'd love us to have more more states. But but the idea of, the end result of all that we're building in crypto is, you know, admission to the United Nations seems to me to be Right. Sort of flat. He he seems to have if I can make
a hope hope it's a somewhat crude joke. He has a bit of, like, state envy, I guess.
No. That's that's absolutely right. And and it sit and it sits very poorly to his diagnosis, I think. Yeah.
But so has so it's it doesn't because you say, like, it says, like, we want more states, in terms of, like, numbers, but at the same time, like, from, if I take a a libertarian approach, I will I will assume that you actually want, less states, and the creation of those new network states in some way are designed to decrease the existing, encroaching of states by creating a much more lightweight type of states. Right? So, I'm I'm wondering, like, when you say, and I resonate a lot with the idea that we actually want a multiplicity of, allegiance to many different virtual communities. But when we actually, when we when we adopt the state based approach, then in some way, then you're just the more, like, the more community you create, if you need to create a state for every single one of these communities, then you end up with, like instead of, like, reducing the the quantity of institutional and governmental rules, you end up with, like, an accumulation and an agglomeration of those, of those rules. And how how is that, how does that align or not with the with the libertarian view?
Yeah. It's a it's a it's a great question. I wanna really distinguish between where I think that we have where I think that someone like Balaji could hunt for solutions and just a general principle I have about, about state formation itself. Because I don't think that Balaji should be looking at states as the solution to to to his problem. To, to stick with the state point, though, I think I want more states doing fewer things. I I I think that, the the closer or the smaller a political organization, the more likely, not the not a certainty, but the more likely it is to be responsive to the needs of the community itself. So, that that's a that's a principle that's both libertarian and democratic, I I I believe. But, also, I want those states to be granting their constituent members the ability to exercise more freedom, more liberty to exercise, you know, to to pursue the lives that they want. So more states, fewer with fewer powers, I think, is, is a general principle that I have. But, I mean, what is a state? A state is there are lots of different, definitions. A lot of people in libertarian communities will say a state has the monopoly of violence. Whether you share that view or not, a state is a monopoly, and, I don't want more monopolies. I want more capability to well, first of all, I want more people able to migrate between states. I want more people to be able to, use the public goods that may exist in some other territorial jurisdiction themselves. Excuse me. I want more people to be able to, break the bounds of the state as well. And I think that's that's my criticism of the Balaji book, which is that, I don't want more you know, I I don't wanna replace our existing states with network states. I don't think I don't think that gets us to where I wanna go, and I I don't think it solves the problem that Bellagio sets up as well.
Yeah. So, I think this resonate a lot with, like, a lot of the discussion we had in the previous podcast where, this focus on the state statehood side of network state, sounds a little bit kind of like, an oxymoron when when when you come from a libertarian perspective. Right? And instead, I think, and I'm curious from your perspective, like, when you talk about those, digital communities, like, you know, communities of kinship or whatever, like so I think there is a dis important distinction that we have, like, between the notion of so we have nation states today, but, it's actually useful to distinguish between the notion of the state and the notion of the nation. And it seems to to me, at least that, most of the things that we're we're talking about in terms of, being able to, to join and to belong to a variety of community, which might come with our own real, benefits and so forth, doesn't necessarily require the introduction of, of a of a state in the terms of this kind of, like, territorially based, government that, that govern a particular population, but rather, more of this kind of sense of collective identity and, also political anti entity, which, are cultural, identity that can, you know, identify means by which, collective action is possible, by which the shared management of resources is also possible. And and maybe, are going to explore what are the technological tools that are today available in order to achieve that, but without having to reinstantiate this bureaucratic machine that is the state, but instead by focusing on the nationhood and the notion of, like, nation that do not need to be enclosed into a particular territorial location, but rather more of like global communities with this additional power. So there's, like, we are moving away from just being an online community to being something else, which is the the the correspondence of the network states in in our alternative, conceptualization, which is it's more than a than an online community because it has coordination mechanisms for collective action and charter resources, but it's it's less than a state because it doesn't need the bureaucratic institutionalization of a government over a particular territory. And and I think this is this kind of things in the middle in between those two that is interesting to explore, and it's it's difficult to know whether it's, like, does it belong more to the notion of nationhood? Does it belongs more to the to the notion of statehood? Or is it something completely different that that that should have its own its own concept?
Yeah. No. I think that's a really nice way to put it. And and the way the way I think about these this is that, we've got a spectrum of, communities that we are part of. At the one end, there's the state, and we're only allowed to be a member of one state or maybe two if you've got dual citizenship or something like that. A very small number of states.
And Fun fact. I have three just to Oh, well, okay. Well, there are weird exceptions to this.
Sorry. And then and then there are Europeans. But but, you know, for the most part for the most part, they're sort of monopoly of identity. And then at the other end, there's, completely voluntary communities, let's just say a Facebook group, a Facebook group of a hobby that you're into or a forum that you you you join as well. And but that's a spectrum. That's a spectrum between I can join as many Facebook groups as I want, and I don't have to ask anybody permission for that. But I also you know, on the other hand, on the state, you know, you it's it's very complicated, and they've got standing armies, and they insist on monopoly of power, and they've got they've got territories. And it's and it's building out the, building out that spectrum, as you say, primavera, that I think is is really interesting and exciting. It's it's how I've always thought actually about the the the the, really, the addressable market for DAOs. We have so many voluntary communities that we are part of. Maybe you're a fan of blues guitar and you're on a forum with a blues guitar group, or or or you're you're in knitting groups or whatever it is on these on these hobbies that, you know, you you've got a lot of them probably. There's a lot of things that you're passionate about that are completely orthogonal to your your work or to to to your employment or what or or even your family necessarily. What if but but right now, they exist as just sort of independent forums or groups. They don't have any formal structure. They don't have any way to hold shared value. They don't have any way to allocate resources that if they held value, they don't have a way to allocate resources between their members to make collective decisions to, potentially decide who's in and out of the group or whatever it is that they wanna do for their particular particular needs. And the smart contracts and cryptocurrencies, they're actually starting to give those very informal communities some more formal tools and mechanisms that start that that that allow them to to grow and add value to to their members, to build more formal clubs to the extent that they ever ever want to. And you can see what Balazs is doing with the network status. He's he's taking that idea, and he's saying, okay. Well, at the very end, there are states. Okay? And and it's easy to see how we can get a a money in cryptocurrency. We can get coordination tools in smart contracts and all this cool stuff that we're building digitally. And then eventually, they'll start getting territory, and then eventually, they'll start getting diplomatic recognition. I think this is even though I've described this as a spectrum, I think it's a category error, because there is something, fundamentally monopolistic about, getting access to the community of nations and controlling controlling with the power of a state territory. And and and I I I just think that what we should be doing instead what I am urging my fellow libertarians to think about and to do is to empower as many voluntary communities with all the tools that they think are necessary to maximize the value that their members can get from, from that membership. And that might be all the way to a shared, a shared medium of exchange currency or something like that or or or coordination tools and encourage people to join many of them. And so I think where I disagree with you, Primavera, on on this is, that's not the concept of nationhood. Typically, the concept of nationhood is also a monopolistic one. It's you know, the the concept of nationhood is very fraught. The concept of nation as community is is, you know, very, very fraught historically. But but it's you you you typically just join one or or or a very small number, three in your case, Josh. But but for the most part, I think that it heads us in a weird direction, and it heads us in a direction that raises many of the problems Balaji it would raise the problems that Balaji has identified as the origin of his investigation, once again.
Yeah. This is fantastic. I don't personally, see I mean, actually, I don't necessarily so I see state as a monopoly to the extent that it has monopoly over a particular territory, and that's clearly, like, monopoly of of force and and and whatnot. But at the same time, you can be part of many states. And, a nation, while I think the problem today is that we oftentimes associate nation states as one single entity. But I wouldn't say that, nation I'm I'm not sure what is the monopoly of nation. Even though I do agree that most of the time, we identify with one or two nations, but that's also because our definition of nation today is very narrowly associated with nation states. Right? Like, if you ask me, like, what is your nationality? Immediately, I'm gonna tell you, well, my my my my my state based nationality. I'm not gonna tell you, you know, like and and actually, oftentimes, I joke and I say, actually, I'm I'm from the Internet. This is my this is my nation. Right? And and, actually, I think this is probably more accurate. I'm more from the Internet than I am from from France, but, from a cultural perspective at least. But, so I I I'm not sure, like, what is the degree of, monopoly? Like, what does while the state clearly has a monopoly of force over its own territory, where it has jurisdiction, what is the monopoly of nation? Like, what what is the monopolistic feature that that nation has, except for the fact that I think we just we have a tendency to identify with one or two, but nothing prevents us from identifying with many nations as, you know, it's less and and then I think it's more the question of, like, to which extent, can we just identify with a particular nation as opposed to also being recognized by the nation as being belonging to that nation. But but still, like, I'm I'm not sure, like, where do you see the monopoly on that on that lens?
Yeah. Look. I I I guess, without directly answering your question, I guess the, the the reaction that I have to the concept of nation is that historically, nations tend to be the result of states rather than the other way around. European history teaches us that. Australian history teaches us that as well. And the idea of bringing together a community that identifies itself as having shared nationality, is very even if you don't go nationality, is very even if you don't go as far as I would say, it's actually very hard to parse out from the history of state formation at the same time. And and so the the way I would rather think of these things are, you know, you've got communities and communities of identity, which can be on all sorts of dimensions. Now I might think of myself as Australian, but I also might think of myself as myself as also on the Internet or into crypto or libertarian, you know, part of a libertarian community that's global that, you know, I we give each other secret handshakes when we meet in foreign countries, all sorts of stuff like that. So you wouldn't say the libertarian nation? I wouldn't say the libertarian nation because I wouldn't I mean, because that would be that that that would be ideologically unsound. We are not formed by the state. We are formed in opposition.
I think I think that's that's what's kind of what we're saying. Yeah. Yeah. Exactly. Like, the the the we're not talking about the libertarian state. We're talking about the libertarian nation, like, in the in the Yeah. In the pure sense of nation.
Yeah. I I guess I'm just not convinced that it's a I'm not I'm not convinced that it's a useful con I'm not convinced that the nation is a construct that actually helps us identify the sorts of community formation that that that we're looking for. I think it's it's got it's got all sorts of complexities around around its origin and its implications. I think that, I I wouldn't replace the network state with a network nation.
Right. I guess you can also, I mean, just say provide a couple of examples. Maybe, like, you have, for example, the Kurds are a nation of people. Like, usually, there's, like, this there's, like, ethno linguistic roots to to nations is how we kind of think about it. And then it's almost like, when we think of nation states, it's like state capture of a nation.
Maybe, perhaps, you can you can think of it or how I thought of that. Yeah. Possibly. And and and and that's why it's probably a that's why I kinda think it's a bit of a dead end because you've got both you you've you've got both nations that exist without the state, and Kurds are a good example. You've got states that exist or or or nations that exist only because the state brought them into being and, you know, Germany.
So to me, like, the the reason that I I I'm actually not committed to the notion of nation, but I like it because at least it it showed the contrast with the state. And, and as you just said, Josh, I I will say that to me, the state is the institutionalization, is the institutional attempt at formalizing the coordination mechanism of which means government, of a particular nation. And so that's why oftentimes there is nation state that are associated with one another, even though sometimes the state actually does not actually the territorial boundaries of the state do not actually match the the the the reputation of the nation. But I think as a general rule, the now this the the state emerge because a nation wants to find a way to coordinate themselves in a particular manner, and they create a government, and then the government, claim sovereignty and monopoly force over the particular territory in which the population lives. And so the the the the interesting question, I think, is then well, this is one way in which nations can choose to coordinate themselves through the institutionalization of a state, and then we get the nation state. And then the interesting question, I think, today is, like, well, now we have a whole new set of interesting opportunities and technologies that exist, can those new technology enable us to find new ways of coordination, which might lead to a different type of institutionalisation that does not necessarily create the structure of a state, but but enable a particular nation or a particular community to coordinate itself in a way that enable collective action and shared management of resources without necessarily replicating the traditional structure of the state.
Hi, everyone. If you're enjoying this episode so far, be sure to subscribe, leave a review, share with a friend, and join the crypto leftist communities on Discord or Reddit, which you can find links to in the show notes. If you're enjoying the episode or find the content I make important, you can pitch into my efforts starting at $3 a month on patreon.com/theblockchainsocialist to help me out. As a patron, you'll get a shout out on an episode and access to bonus content, like q and a episodes you can submit and vote on questions you'd like me to answer, and I'll give my thoughts in roughly twenty minutes. In the last bonus episode, I analyzed applying an anti capture framework originally made for DAOs, but applied it towards left wing organizing. Of course, I'll still be making free content like this interview to help spread the message that blockchain doesn't need to be used to further entrench capitalist exploitation if we put our efforts into it, so if that message resonates with you, I hope you'll consider helping out. Also, in case you didn't see it yet, I recently wrote a book review for Outland Magazine on, no surprise, the network state focused on Balaji's misunderstandings of the role of land and statecraft and his insistence to think of everything as a codebase titled Fork Your Society, I Want Out. Additionally, I've written the piece under my real name, so I'm now officially doxxed. I can officially stop bleeping out whenever people say Josh, my name. It was time I came out of the Anand closet since this is all in preparation for announcements for a book that I've been writing over the past year and a half titled Blockchain Radicals, but more on that in a later date. For now, let's get back to the interview.
That that's right. So and and why I think this is a particularly interesting path to go down is because I I think it's poorly recognized that the state and the state that we have is a reflection of the prevailing technological infrastructure available to it. So obviously, as history has progressed, states have done different things. They have been enabled or limited by communication technologies, the need for building transport systems. You know, the move to, the move to build railways was quite a complex change to what states did. And you can make an argument that the twentieth century nationalism movement that we saw globally was in part because of the need or not the need, but in part because of the demand for someone to build large scale nation or country crossing, to move that away from that word, country crossing infrastructure. The communications revolution was potentially one of the sources of the democratic revolution. And and we've seen we've seen as technology change, the role of the state and the expectations of the state change as well. Now I I think what's revolutionary about, you know, crypto and blockchain and smart contracts and all these sorts of things and even even, you know, AI and and so forth or at least open source AI. What's revolutionary about those technologies is that, potentially, we discovered that there are things that the state doesn't have to do or can't do, one of those two. And and it does so at a different and unusual scale because, it's it's almost an obvious point. But, again, it's it's it's poorly thought thought through, poorly recognized, that everything that we build in this crypto or blockchain space or digital space is global first. It's inherently globalized. To build something in Australia is to build something for the rest of the planet, with one or two notable exceptions. And that has radical implications for the shape and capability of any given state to control the activity of the people within it. I I we can see this play out at the low level regulatory discussions with, you know, the SEC in The United States. We can see it play out, at at the high level when we're thinking about, well, how are we gonna be thinking about regulating AI? We can see it play out with, you know, Facebook's influence on political systems globally. But that reglobalization or the massive globalization that is pushed forward by, first, the internet and second, digital asset technologies on the Internet and smart contracts on the Internet, I think that that is a that is a radical change to what states can do, what they need to do, but really, what their actual capability is.
Maybe going from there since you were talking a bit about blockchains, because we talked about it a little bit before we started recording, but would you like to recite us a bit of your revisionist history of blockchains, as Jason described it to me before. But, and and I guess, of course, if you could, like, relate that to how, well, my my my impression is that it would relate to how Balaji kind of sees blockchains in his book.
But Yeah. Look. It's it's not dissimilar, to and and I doubt he would disagree with this at all. So I've been I've been teaching blockchain and crypto since about 2017 to students and to audiences, professional audiences, and so forth. And I've always started with, Bitcoin. And so you teach how Bitcoin works. So you teach proof of work, and you talk about hashing, and all sorts of, you know, Merkle trees and all all this sort of stuff, and you get right in the weeds. And I've increasingly been dissatisfied, with that because I don't I I've I've never been felt comfortable with the and then Satoshi just turned up and invented something completely new. Because, of course, he didn't invent something completely new. He invented it in a you know, Bitcoin was a was a really radical revolution, but it's in a tradition of distributed systems. We when we teach it, we have this hand wavy thing where we say, oh, remember the Byzantine generals problem? You need a little diagram of three generals or or four generals or what have you. And then we sort of just move away from that. But, of course, the Byzantine generals problem and Byzantine fault tolerant systems is is a is a long running research program in, in computer science and distributed systems. So revisiting its history of blockchain. What I wanna do is I wanna encourage us to think of what is being built today as part of a nearly century long development of the use of economic incentives in order to coordinate around computational systems and the use of economic incentives for computational resource management, which, in fact, to my mind, dates back to, well, almost the second World War with you know, John von Neumann's thinking about, well, how do you get redundancy in computer operations? And once you've got that redundancy, how are you going to manage the, redundant computer parts or redundant components, how are you going to manage the resource use between those redundant systems, which gets us all the way to Byzantine General's problem. But it also gets us to the sort of distributed systems that were being built at the early days of the Internet. So how are we going to pay each other for access to Internet resources when when DARPANet is being built and and and so forth? But what it does what it does is it gives us, I think, a very rich you know, if you follow this history down through the classic papers and ultimately to Bitcoin and ultimately to third generation proof of stake chains and so forth. What it does is I think it gives us a very rich idea of the role that the blockchains play in coordinating human activity, in social coordination because, we can now start genuinely integrating our thinking about how we coordinate nondigital societies with these new quasi autonomous, quasi human digital organizations, if we understand it as part of a long tradition. It isn't just in 2008, somebody invented magic internet money. It's how do we build global distributed systems across a planet using computational resources and economic incentives? One way to think about this is how do we build reliable systems out of the unreliable parts that are the components of those systems. We want a reliable system out of unreliable parts. What I like about that formulation is that's the problem of social science as well. That's the problem that computer scientists have been trying to solve. How can we build reliable systems out of reliable parts? But it's also how social scientists have been thinking about it. We've got unreliable people, and we want to build a system that reasonably protects their well-being and liberty and life and so forth. It's exactly the problem of constitutional economics and political systems is the same problem as computer science. And recognizing commonalities between these apparently quite far apart fields and realizing that the two have actually been working together since, as I say, the end of the Second World War, I think takes us in to some some really interesting areas. And it helps us it helps us better frame what the contribution of blockchain and crypto is to, to to to society and the economy. But it also helps the rest of the world understand that we're not just playing with weird magic Internet money. We're actually, part of a tradition that is rebuilding the way distributed systems work that has implications for every facet of life.
Yeah. I yeah. I'm I'm sympathetic to to a lot of what you said, and I completely agree. I think that, the way that generally people learn about crypto or blockchains is a bit frustrating to me as well. And,
Well, I mean we all did it, right? So that's, unfortunately.
We've all been through that. And, yeah, actually, I mean, just sidebar, I'm writing a book that's meant to, also provide a different sort of understanding and framework of blockchains and crypto. But so, like, one of one of the things, at least for me, my feeling was that, I guess, Balaji's use of blockchains in his, like, the the network state schema is something it's kind of I don't know. It's like such a simple or, like, I guess like, it doesn't get nearly the way there that of, like, the full spectrum of possibilities that you could be using blockchains and cryptocurrency for, that would be, like, I would think interesting even for a libertarian. But he doesn't really get there for him. It's just like, what if we just, like, make our own cryptocurrency money and that's what you're going to use for your network states, and then it also is the census. You know? It's Yeah. I'm I'm curious what your thoughts on that on that.
Yeah. No. No. I I I agree. And I think that's that's just a reflection of where he wants to end up, which is that you end up looking at the institutions of existing states and thinking, how can we how can we do simulacrums, or how can we do versions of that using the suite of technologies in front of us, which I just think is a oddly quite conservative approach to thinking about this. It understates the revolutionary nature of the technology. That it's not that we're just going to do the same thing but on the Internet. It's we're going to do different things. And that's what really excites me about building what we've called at RMIT institutional technologies that are that are blockchains, you end up making different institutions, not different versions of the same. And and so it's not so much that so so, you know, as an example, there's a school of thought in the crypto communities that decentralized autonomous organizations will replace companies, which, you know, would would be amazing. I am somewhat skeptical. But but that but to my mind, the real flaw in that thinking is just thinking, well, there are companies now. What if we replace them with DAOs? Yes. Yeah. Exactly. Whereas DAOs actually do new things. Yeah. Yeah. And they they they are better at different margins than companies are, but those margins we we've we've created new institutions that add to the stack of institutional choices we have in front of us. And I think Balaji, by getting to where he wants to go, which is and that's why we will get diplomatic recognition, sort of misses out, funnily enough, the radical possibilities here.
Yeah. And I think in some way it's, it's related to even the discussion today about, like, the legal recognition.
Primavera, could you are you, far away from your microphone or you're, like, very muffled.
That's that's is better? Yes. So, yeah, it's it's a little bit similar from the the current discourses around, legal recognition of those. And, a lot of the jurisdictions, they actually create a DAO bill or DAO legislation that recognize DAO as, blockchain mediated LLCs. Right? And it's like the only way in which you do recognize a DAO is when the DAO is actually instrumental to an existing corporate form as opposed to recognizing the idiosyncrasity of the DAO as a completely well, not completely novel, but as a different type of organization. And, and as you say, I feel like now what the way in which Balaji presents the use of blockchain technology in this context is more, can we create, like, blockchain mediated or blockchain enhanced states, where maybe, like, the bureaucratic machine of the state is now dealt with blockchain technology, but the blockchain is instrumental to the existing institutional structure of the state as opposed to, the blockchain being used for innovating and something something completely different. And, and I'm curious, Chris, in the work that you're doing with Jason and at the Hermiti on, on, like, this blockchain as new, as a new type of institutional, design system. Like, what are the what are the various new form of, institutions that you have identified that could potentially be, useful, instrumental to this new type of coordination that we're talking about in order to enable digital nations or digital community to engage into this type of coordination and collective action?
Yeah. It's a good question. The way I've been the thing I'm stuck on, when when I think about what the what what what blockchain is an institution itself. So blockchain my view, our view, is that blockchain is its own institutional form. It fits the criteria of institutions within the institutional economics literature that we work, which is that it reduces the cost of trust. It's a way to manage opportunistic behavior. So blockchain itself is the institution, as we see it. Like a corporation or a commons or a government or a market is an institution that manages the cost of trust. The thing that I'm stuck on and I think is actually very difficult for us to manage is, to come back to my earlier point, thinking about how states, traditional states, how they exercise power. And typically, states have exercised power under our current regime through identifiable corporations, really. It's easiest for regulators, professional regulators, to call someone up in front of Congress, to give a ring to, to send supervisors into a corporate structure, a centralized organization that you can, you know, with with identifiable people, with identifiable leaders, that you can you can up the liabilities on directors of companies as they've been doing, for decades now. You act through the corporate structure. That's the direction of which legal and regulatory power goes. In a decentralized world, that's just a lot harder. And I'll give you an example that's not from crypto. In Australia, like everywhere else, of course, we've had Uber. And Uber is or the argument made by Uber is that it's independent contractors who are just being matched by a platform. They're not employees of the Uber corporation. They're just independent contractors, writing effectively new contracts with every rider. And, you know, I don't want to dwell on the strength of that argument. But it creates a huge problem from the perspective of an industrial relations regulator because they would very much like to impose things like a minimum wage. They would like to impose things like you know, limitations on how many hours can be worked or minimum hours, minimum hours rules, the the the sorts of stuff that, have benefited many taxi drivers or many chauffeurs who are employed by companies or, or or or maybe certainly have much more strict regulatory regimes. And so the problem has become, in the Uber case, well, how can you impose a minimum wage on someone, on on on an organization that says that they're actually not employing anybody? There's no single person to give the minimum wage to. Instead, there's just a whole bunch of independent contractors. And that that where that debate lands is going to be different in every every place. But it's a very live debate among between, the Uber company, the industrial relations regulators, and the union movement. And it's frustrating, I think, to the regulators and unions because there's no single company. Or Uber is saying that it is not a single company. If you were going to impose rules, you'd have to impose them on all of these independent contractors that are floating out there freely. We the decentralized world we're creating in blockchain ramps that up to an order of magnitude, that challenge, that if we don't have single companies with single leadership running organizations, we just can't act through those companies. Who who is the CEO of Bitcoin? Who is the CEO of Uniswap? If you wanna have a, congressional inquiry or parliamentary inquiry into, dYdX, or or any of these platforms, how are you going to you know, how are you gonna act through? Who are you gonna act through? Who is the, mechanisms of the power of the state going to act through? You know, where are they on the planet even if you can't identify them? But what if you can't identify them? Or what if it's it's unclear that there is a single single individual or a single organization that you can act through? That, to my mind, is such a big change to the political economy of the twentieth century that it is, it is genuinely revolutionary. And I don't I don't know how to deal with this, thing because I'm not a zero state libertarian at all. I'm I I I always want us to head in a libertarian direction, but I don't have this idea that there's going to be no state down the track. So so I think I think this raises just really, really hard problems that, that that for someone like Balaji and for someone like myself, I think are are worth thinking about.
So let's let's actually double click on that because I think that's, that, that you're putting the finger on a very interesting point, which is, my my impression is that, the reason I mean, I thanks for many reasons. But one of the reasons that, Balaji and, probably many other, libertarians that are interested in, declaring their own independence under the sovereignty, to escape from existing the existing jurisdiction of of existing states is because, it's not it's not enough in some way to, create new digital communities of kinship, allegiance, whatnot. If in the end, you're part of all those amazing, like, lightweight communities with their own reels and so forth, but at the same time, you're still bound to the jurisdiction of the state in which you reside or whether, as whatever hotel state you have provided allegiance to. And, and so in some way, it feels like one of the, I guess, justification that we want to create another state is because the only way to get away from the sovereignty of an existing state is to generate a new state with it with its own sovereignty so that you can somehow expose yourself away from the reals of the existing sovereign into the reals of a new sovereign, which ideally, if you if you if you if you properly design this, will be more aligned with you with your value or will be just more lightweight. And so if we want to remove reals it seems like, the only way, paradoxically, as a libertarian that wants to reduce the state, the only way to reduce the state is to create a new state, which has which has lower, amounts of, of rules and regulations. But what you're saying here and so I think to me, this seems to be, like, maybe, like, one, you know, one valid justification why someone that wants to escape from an existing hole will create a new state or will will try to create a new state. What you're saying, Christo, is interesting because what you're saying, if I understand correctly, is that, you're presenting the the use of blockchain technology as a way that somehow without the need of creating a new state with its own sovereignty, you can somehow, navigate in between those existing rules by creating something that the state does not fully recognize yet because, of course, the state can always amends its rules in order to cover those new entities. But at the moment, it's kind of like you're, you're going into, like, the finding the it's not necessarily the loophole, but finding the gaps, in existing regulation because they didn't they didn't account for those new technique those new systems. And so in some way, you can somehow escape from the reels that you want to escape from without necessarily having to generate this new sovereign entity that is another state.
Yeah. That's right. Because the the way I think about it is that, rather than rather than just sort of wholesale trying to create a new state that's perfect. We should think at the margin. We should think about what we are trying to get more of and what we are trying to reduce and think about those as individual things. So, for example, let's say that we have a very bad currency. Well, now we can effectively secede from our own state currency, at least keep our savings in it, perhaps, by adopting some other online Internet money of some description. And that that that's a that's a radical change by itself. Right? So until there's something like, 15%, I'm gonna say, in The US or Australia or whatever of, of people hold, crypto assets or have experimented with them, and it may well be higher. That's a hell of a lot of people who are now holding what is effectively a foreign currency rather than just their own national currency. That's a form of secession. That's a form of escape from the power of the state and a really important one. We can say the same thing about some of the privacy technologies as well using encryption and high quality encryption to stay outside the domain of state surveillance. Again, I'm not suggesting that we're doing regulatory avoidance here even. I'm not suggesting that we are breaking the rules. In fact, what we're doing is we are, as the libertarian movement would say, we are becoming ungovernable. We are starting to move into technologies that just aren't, susceptible to traditional models of state action and regulatory power. And that's that's an exciting world that I'm I'm I'm I'm keen to I'm I'm I'm not just keen to see. I'm keen to see built. And that's that's what's super cool about what we're doing right now. We're actually building the infrastructure for the liberties that I had, in my previous career, spent my life arguing with the state for.
And I just wanna make a little point, on on the terminology, because you say that you're, like, actually succeeding, through through those technologies. I'm not sure I'm like, I would like to, question this terminology because I'm not sure you can actually succeed as opposed to you you you're not succeeding from the jurisdiction, and the claim that the state will have to, you know, still pay the taxes if you're making profits from the from the cryptocurrency. And, so it's like, for me, you're adding an additional layer, while also recognizing and acknowledging that you are still nonetheless part of a particular system, which is the state system. But you, all of student, have a choice to, engage into different types of activities that are not, that are that are not under the monopoly of the state, those particular activities, while but but that's not seceding because because you're still bound to all the rules that the state in which you reside, oblige you to. But you you you also leverage an additional technology which itself is not bound. Like, the operation of the technology is not bound by the operation of the state. But whatever the state decides that you should do because of your interaction with this technology, you will still be we will be still bound bound by it.
Yeah. Look. I think seeding is the right word, though, but it's a seeding at the margin. And and, yes, I still have to pay income tax. I still have to pay capital gains tax. I can still be arrested, all all those sorts of things. But at the same time, there are many national currencies that exercise power through, seigniorage, through the inflating of their currency. And that's as much of an exercise of state power as as any other exercise of state power, including the imposition of taxation, the imposition of, laws that might send me to jail and those sorts of things. By choosing to leave my particular currency and I want to be clear the Australian currency is not that bad, relatively speaking but by choosing to not hold that, if I've got savings or what have you, I'm seceding at that very small margin. Same again by adopting chat program signal that is immune to state surveillance, unlike the other technologies that I had been using, maybe the post, maybe email, what have you, I am seceding from that particular capacity to surveil me. Now, again, it's the the word secession, of course, makes it sound like a really big sort of American civil war scale, thing. That's not what I'm or or or for well well, for libertarians, maybe more like seasteading. That's not what I'm suggesting is happening. I'm suggesting that secession well, you can secede at the margin, and you can claw back individual rights and individual freedoms, just by adopting and encouraging the development of these this suite of new technologies. I
my yeah. I guess I'm also, maybe skeptical of the use of the word secession or seceding, even at the margins. I feel that it kind of depends. If you're using cryptocurrency for investment, which is kind of or spec and speculation, I feel like that's majority of people, then they're not using it for money. So then you're not really like, when I think of secession, I think of, at the least, you're using it for kind of like the same or similar function. Which case but, I mean, it is interesting to think about I mean, you know, to me it's more like expressing dissatisfaction with the system more than necessarily seceding. Like, I think even if you are, I don't know, like, I think that that maybe a better example could even be just, like, using a local currency, like using a community currency or something like that, that you use, like, just within your town because you're using, like, the same function,
as, like, a Yeah. Yeah. It it could be, but, of course, the the use of, USDT, in the developing world Yeah. Suggests that people are seceding to the US dollar, because
Or they're dependent on it. I think it's another thing to consider.
Oh, so it each to their own. So So so quite possibly. Quite possibly. But, you you know, it's certainly, I have faith in, people who are making these decisions to use alternatives because it's definitely better for them at the margin or at least I I would expect it to be better for them at margin. And more importantly, I wouldn't presume to tell them otherwise.
Yeah. I think I think what's what's interesting in this is, like, you are by using decentralized, transnational blockchain technology, or just those type of technologies, you're you're leveraging an infrastructure, which itself, the infrastructure as such, is not bound as opposed to, if it was a public infrastructure or a private infrastructure that is operated by a particular operator that that resides in a particular country and therefore is subject to those laws. By using a a fully decentralized network, then you the network itself, then the system that you're lever that you're using is not itself bound to any form of regulatory, pressure. Well, pressures, yes, but regulatory, I guess, monopoly, while nonetheless recognizing that you as the user of this technology might be bound. Like, I think is a very interesting example. Right? Like, The US cannot, disrupt the smart contract of but they can criminalize any people interacting with it. So you're still bound by the inherent jurisdiction of the state, but you are emancipating yourself by relying on a technology which itself is very difficult to tamper with from a regulatory perspective.
Yeah. And and I think the one of the lessons that we've all learned, of course, through the evolution of these technologies is that there is no utopia here. Everything is bound by the the the the points of interface between the real economy and the crypto economy. Yes, it's impossible to stop an American citizen from using Tornado Cash, but there's no way that they're gonna get get their money out if they do so, and they might be arrested if they're KYC, all these sorts of things. There's there's no this is not a technology that and this is why I prefer to think about these things at the margin because we're not seceding, wholesale. We are clawing back rights, at the margin that, that in some cases we haven't had for even centuries.
Yeah. We've reached about an hour, so I just wanted to check-in. Is there anything else that you would like to cover, that we didn't get to touch on?
I think I I have one one little very short question for you, because I think I think I I I hear what you say about, the fact that the nation itself is a little bit connotated, for good or bad reasons, but, nonetheless, there is a connotation. The statehoodness, I think, is, pretty pretty beyond connotation, pretty, like, not not the right not the right word to use in this context. So so if it's not nationhood and if it's not statehood, is there something is there a particular word that we could you know, like, it's difficult to just invent a new world and, like, no one knows what we're talking about. The the power of network state is that it's talking of state and networks, and then you're like you put them together. You kind of figure out, okay. This is probably what we're talking about. And then you read the you read the book and you're like, maybe not. But, is there another another concept, that is neither nation nor state that you think will be more like, if we had to take one word and the one existing concept and kind of, like, qualify it with network or with another qualifier, what would be what would be the most, the most
close to to to this thing that we've been talking about?
Unfortunately, the correct answer is community, and I know that's not the most exciting. In the words, it is it is precise, and it does describe exactly what we want. What's nice about community is, of course, we've got very, deeply thought out relationship between nations and communities and, the Benedict Anderson argument that the nation is an imagined community. It's a community that we build up, sort of intersubjectively. But a network community is exactly what we're talking about. What I like about community is it doesn't bring on any extra, implications other than that it's something that you join voluntarily. They're extremely heterogeneous. There's lots of different communities that have different, different characteristics, and you can join more than one. In fact, you can join as many as you want. There's a clear relationship to the development of social capital when you join communities and when you're part of community, both formation and maintenance. So it's not that exciting a word, and the network community doesn't resonate, and it's probably already being used for a different context. Yes. But it's the correct word, unfortunately.
No. I I I agree that community is is the correct word, but maybe networked then is like, basically, the qualifier needs to also contrast with the word. So network state means, like, usually states are very, like, centric and not networked, so we qualify them with network. And in this case, like, if we choose the word community just as a as a thought thought exercise, then what is it that what is the qualifier that we would want to add to community? That means that we're distinguishing it from all the existing types of or the current types of network community, online community, digital community, etcetera. Like, what what is it that we're adding when we're adding this this capacity of coordination of, of, collective action that doesn't already exist? Or or are we actually just talking about things that are already here, you know, as opposed to bringing something new to the table?
Yeah. No. It's a it's a good question. Unfortunately, I'm not very good at naming things, but, what we're talking about is is is global first communities, digital global first communities. And and that, I think, captures, really, really the most interesting parts of of that future. The idea that you can have, it can be meaningless whether someone is in one country or another from the perspective of that interaction, from this perspective of the, coordination and the management of coordination, but also, and and empowered by those digital technologies. Again, I'm not very good at naming things, but but that, to my mind,
captures it. If if I can, I just looked up synonyms for community, and I think I I think fellowship could be an interesting one?
It's got a real Lord of the Rings vibe that way as well. That's that's nice. Join my fellowship.
I know that, Gunweil had said society. I see that as a synonym. There's brotherhood, camaraderie, fraternity. Those are a bit, like, maybe male centric too much, maybe. They're like brotherhood. I see comradeship. Maybe that's the gender neutral version.
This one might have some political implications, but, yeah. I think good ones in my opinion. But,
yeah, there are some synonyms. Maybe we need to go through and see if, see if any of them fit very well. Alright. Thanks so much, Chris, for coming on and being, being our libertarian guinea pig for this, for this year. Maybe to end it off, would you like to just share with people, where they can follow you on on social media and such?
Absolutely. I'm very easy to Google. I've got a website, chrisberg.org. I'm on Twitter at chrisberg. I'm on probably the other platforms as well. But but, please have a look. I've written up my version of the network state, which is actually about secession, at the margin, which we've been talking about in a book called The New Technologies of Freedom, with my colleagues Sinclair Davidson and Darcy Allen. So if you're interested, please check that out. It's published by the American Institute for Economic Research. Otherwise, hop on my website, and you'll see much more information about me than you ever care to know.
Alright. Well, thank you so much. And, yeah, have a good one. Thank you, Chris. Thank you.