So what will the future look like? I personally keep coming back to commercially viable, economically sound, patchwork city-states run by CEO-kings, and my guess is that they will only grow in size to the extent they can be adequately defended and funded.
I don’t believe this looks anything like modern democracy, medieval feudal states or any other incarnation of the state – it will be something new. There will be little room for error, arbitrary hierarchies or bureaucracies, and on a Bitcoin standard there are no bailouts.
Operators will by definition have skin in the game, in stark contrast to anything that’s come before, especially present day democracies.
Returns On Violence
“Now, labor being in itself a pain, and man being naturally inclined to avoid pain, it follows, and history proves it, that wherever plunder is less burdensome than labor, it prevails; and neither religion nor morality can, in this case, prevent it from prevailing.
“When does plunder cease, then? When it becomes more burdensome and more dangerous than labor.” — Frédéric Bastiat, “The Law,” 1850
The cost of defense and the cost of offense (potential for damage inflicted) is a calculus that runs in the subconscious mind of every living, territorial being.
This idea of “returns on violence” was popularized in the 1997 book by James Dale Davidson and Lord William Rees-Mogg, which if you’re a reader of mine, you’re surely familiar with: “The Sovereign Individual” analyzed history through the lens of “returns on violence”, and postulated that the rise of the “digital realm” alongside mathematically sound (cryptographic) means of private property and wealth preservation would mean that the locus of control and decision making in the postmodern era would swing back into the realm of the individual – the “sovereign individual” in fact.
This poignant, far-sighted book is a must-read because it was able to forecast not only the mega-political changes we’re seeing in society today but also the most important aspect of it all; the creation and adoption of something like Bitcoin.
Perhaps the only critique of the book (other than the Y2K alarmism in the beginning) is that more emphasis could’ve been placed on the significance of a digital bearer instrument as money. But this would be harsh, for hindsight is 20/20, and such foresight on the part of the authors is likely unmatched.
Bitcoin, once again, changes everything. On a long enough timescale, the calculus of all living, territorial beings will make trends toward cooperation over coercion. Bitcoin is the answer to Bastiat’s question of “when shall plunder cease?”
Yes – the risk of having your home, farm, food, business and physical property confiscated will always exist, but being in a position where your money can perish with you changes the possibility of profitability on the part of the aggressor. Furthermore, because of Bitcoin’s digital nature, it’s impossible for an aggressor to know how much you do have and accurately measure the potential cost of attacking you.
I know this all sounds sci-fi, and of course, during the transition, it won’t be like this for most bitcoin holders. What I am talking about is the long-term trend. I have no idea when, or how this plays out, but specific factors point to what.
Borders
How will borders, welfare and immigration work?
Once again, these are problems that will be solved by the market, and by the operators of said territories. I believe there will be a diverse approach and an opportunity to learn from internal and external experimentation.
My feeling is that we will have a blend of “reputation” and “webs of trust” as a replacement for nation-state passports, probably alongside some sort of either multisig bitcoin deposit functioning as a “security deposit” or maybe a signed message proving you have control of a certain amount of bitcoin before you can enter.
I believe state welfare will over time be completely eradicated, and replaced with more functional, efficient and effective private philanthropy.
I believe that families, communities and tribes will once again don the responsibility to care for disadvantaged people, and will do so with a higher degree of care, insight and love than any ridiculous, poorly funded, no-skin-in-the-game state institute could ever do.
With the removal of welfare will come the desire for immigrants because to provide services, territory operates will require workers. And with multiple territory providers, we’ll have more competition for workers and we will likely even see transferability of skills and experience across these jurisdictions as leagues and alliances form.
The pointless discrimination based on race and nationality will also dissolve because territory operators will see you as a customer, and not as a foreign alien looking to leech off the state.
So many things change as the world comes to terms with the specter of Bitcoin’s economic gravity, consequence and reality.
Risk And Skin In The Game
Inequality is normal to a degree but is exacerbated when skin in the game is systematically removed and corruption runs rampant.
That’s why Bitcoin is so powerful.
As an incorruptible money, Bitcoin has changed the game.
Metrics can also always be gamed when economics is subject to politics. A politician can load the system with debt to “improve growth and GDP,” and let his successor deal with the delayed results. He can make deals with the central bank to bail him and his friends out of bad decisions and he can unilaterally increase taxes “because we’re all this together.”
The problem, as we’ve discussed ad nauseum, is the fact that no politician (or very few) suffer the consequences of their decisions. In fact, very often the worse the character, the greater their theft or payout in the end.
When you can jump off a cliff and somebody else dies in your stead, you will have no reservations about continually jumping off a cliff without a parachute. You live in Super Mario Land where the game just restarts.
Unfortunately for the rest of us, because we live in the real world, we must bear the burden and foot the bill for our representative’s stupidity, and incessant parachute-less cliff diving.
This removal of risk and skin in the game is a bit of a historical anomaly also. In prior epochs, we had guillotines, daggers, poisons, lords, nobles, generals and greater concentration of power, where corruption often led to usurpation or removal from the throne.
In this sense, monarchies are far superior to democracies, and I believe the essence of this idea (personal accountability) will once again emerge on a Bitcoin standard. We will explore this in the next and (for now) final installment of this series.
For now, in the spirit of much of this essay, I would like to close out with one final quote from Bastiat. I echo this stance, and believe that on a Bitcoin standard the reality of this assertion will one day come true. The future private property owners (or soon-to-come territory operators) will have to contend with the reality of footing the bill for their own experimentation.
Mistakes will surely be made, collateral damage will surely occur, but what’s most important is that the trend will tend toward improvement or correction. It’s only in this way that the human race can progress and evolve.
“You must observe that I am not contending against their right to invent social combinations, to propagate them, to recommend them, and to try them upon themselves, at their own expense and risk; but I do dispute their right to impose them upon us through the medium of the law, that is, by force and by public taxes.” — Frédéric Bastiat, “The Law,” 1850
Thank you once again, and I will see you for the fourth and final installment of “Bitcoin is Not Democratic.”
This is a guest post by Aleks Svetski, Author The UnCommunist Manifesto, The Bitcoin Times and Host of anchor.fm/WakeUpPod. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
