Rethinking The Network State

I read Balaji Srinivasan's new book The Network State recently, and came away from it thinking that it was an impractical, though interesting, argument. Arnold Kling captured much of my objection to the book, so I will quote him at length here.

[The book] struck me as fictional, in that it does not address the issue of how people can extricate themselves from existing states in order to join a Network State. Suppose that my house is located in Silver Spring, Maryland, in the United States, and I wish to join Balaji-land. How do I get out of pay taxes to my county, state, and the U.S. Treasury? Which regulations of my local jurisdiction am I able to jettison?

I do not think my neighbors will be content to let me say that because my home is in Balaji-land, I do not have to pay taxes to help pay for the playground that my children use, the roads that I drive on, and other local amenities. I do not think that they will want to exempt me from laws forbidding commercial establishments in residential areas, or laws pertaining to drug or alcohol sales.

Such matters have to be negotiated with each legacy government in order for people to switch over to a network state. Otherwise, if all of one's obligations to the territory in which one resides remain in place, a network state is nothing more than an add-on set of norms and rules. It is an international club or affinity group or corporate loyalty programs. However eloquent TNS may be at describing how networks states could be feasible if human social arrangements were starting from scratch, it is silent on what I see as important issues pertaining to getting from here to there.

The rest of the review is well worth reading, and overall it's a fairly positive review of Balaji's book. And yet, this criticism is correct: there is no prescription in the book which explains how to get from the current state to the new state.

There are two rebuttals to this point, which are worth consideration. First, the book is a living document:

[U]nlike the typical book that's frozen in time, think of the as a dynamic bookapp that gets continuously updated. You can see the latest version online, or you can follow the instructions at thenetworkstate.com/kindle.gif to get the latest version on your Kindle.

This means that Balaji may well address how to get to a network state from our present state with future revisions to the book.

Second, and perhaps more importantly, Balaji is starting to address some of the practical issues with getting to a Network State:

You can read his thread on Twitter to see the entire context of his thought. However, I responded to him:

And this, I think is key. In order to get to a place where a Network State is viable, you have to bootstrap your way there. You can't suddenly decide one day "I am a member of a network state!" To Arnold Kling's very perceptive point: this simply doesn't work, and any claim that it would work is an entirely fictional one.

But Balaji seems to be proposing something somewhat different. Again, here's another response of mine:

The problem with all of this is that DAOs and NFTs are a mess right now. DAOs have real problems scaling their operations. NFTs are commonly associated with digital art, but in principle there is no reason that an NFT can't serve as a ticket into a given community. But if DAOs can fix their scaling and operational issues (admittedly a big 'if'!) then perhaps we can start to see a way forward.

So let's assume that scaling DAOs is technically possible, and that operational issues will be resolved with time. The basic idea with DAOs and a Network State seems to be this: assume a collection of DAOs enters into a loose affiliation with each other, in which the respective DAOs work in concert to advance interests common to all DAOs that are members of the confederation.

One such commonly shared interest could be to get traditional political states to recognize this Network State. You could imagine a confederation of 20 DAOs, each with a 100,000 members, arguing on behalf of their two million members. Two million people agitating for a new state isn't a lot of people relative to most extant states' population. But it's a start.

This still requires us to do a lot of handwaving. We have to believe that:

1. scaling problems with DAOs are solvable,
2. a group of loosely affiliated DAOs can act in concert with each other rather than in competition with each other,
3. a confederation of loosely connected DAOs could acquire sufficient numbers of members such that traditional political states have to take seriously the prospect of recognizing a new Network State.

There are likely other necessary conditions, which have to be met, that I am not thinking of here. That's a lot of assumptions and hand-waving! It may well never happen. But the germ of the idea is there, and dismissing it out of hand seems counterproductive.