Summary of The Network State by Balaji Srinivasan

2.5 People of God, People of the State, People of the Network

People God, states, and networks deal with the struggle for power differently.

• God’s people pray
• State’s people write laws
• Network’s people write code

Once you understand where which group people are coming from, you understand the divisions that are happening in the world.

For example, among the democrats, you have libertarian-leaning and state-leaning. Democrats that do not yet identify as such will have to make a choice at some point. Will they support the network (Bitcoin), or the state (USD)?

In America, what matters most to know is that the control of the country has evolved to be out of the democratic institutions. You can’t vote out the editor of the NYT, the fact-checkers of Facebook, or the directors of state agencies. Most of them are from the authoritarian left.

On paper, they love democracy, but make sure that their personal fate does not depend on such a system (no one can vote them out).

The US hasn’t always been directed by newspapers. It really began after Watergate. The purpose of newspapers since then has been to have “an impact”, defined as a “political impact”.

Eg: starting a war, banning plastic straws, or getting a president fired.

While in Ch!n!, the state controls the news, in America, the news controls the state. Since the controlling organ differs in their purpose (building in Ch!n@, canceling in the US), you end up with two different societies.

The left-authoritarians are tools that their owner use to remove from the public eye whoever they don’t like.

On Ch!n@

Ch!n@ can do whatever it wants at home, but not abroad as it is constrained by the US military.

The US has the opposite. It has constraints at home (elections) but can do whatever it wants abroad.

As a result, Ch!n@ builds colonies in Africa while the US blows up the Middle East.

Make no mistakes, the US establishment is not more ethical than the CCP.

Both:

• Surveil
• Seize
• Confiscate
• Disinform
• Censor

The only difference with the Chinese is that they’re more competent at doing it.

During Soviet times, the US was extremely careful. When the USSR collapsed, the US military became a superpower, and much less careful. Instead of safeguarding peace, the US military went to spread chaos.

Does it mean we should regret the USSR?

No, and it’s a paradox.

While the USSR limited the US military, we’re still better off without the USSR. And while the US miliary is not a force for good, we’re still better off with it to limit the CCP’s army.

Is there a third route? Yes. Decentralized defense.

Stop outsourcing your own defense to bigger countries.

2.6 If the News Is Fake, Imagine History

The wealth of information from the Internet has changed our vision of the past and present. The prophecy of the “inevitable” victory of the US establishment (and its desirability) has been questioned.

We now believe the US-led order is about to collapse, or already has.

The role the US should play in the world is unknown because it doesn’t even know the role it should play at home.

While this was never a question in the past, both the left and right are wondering if they’re actually the good guys.

These questions (and the answers according to the political leanings) have broken the country in half.

And neither part wants anything to do with the other anymore.

But these don’t really matter. What matters is why people are asking these questions now, and not before.

And the answer is that the US establishment lost control of the narrative due to the distortion of the past and present by the Internet.

Distortion of the Present

If the news is fake, imagine history.

When you realize the establishment lies about the present, you begin to wonder if they also lied in the past.

Let’s take a few examples.

• That time the media helped the government stage the war in Iraq.
• The media’s report that Trump and Russia conspired to win the election, which disappeared after Mueller made his rapport saying it never happened.
• The NYT saying Clinton had a 91% chance to win the election.
• The CNN/Nick Sandmann affair.
• Inflation as “transitory”.
• Or the battle for Mosul in 2017.

All of this information has been distorted by the establishment in different ways.

1. Channel distortion: the news inflates what they want to talk about, and deflate (censor) what it doesn’t. It downplays inflation but overestimates the number of other social ills they want to focus on (eg: racism).
2. Narrative alignment: They talk only about the stories that support the narrative they want to push.
3. Power over truth: the numbers they cite to back up their claims are off by 1000%. It’s voluntary. They don’t provide truth, but power to get the public to do what they want.
4. Comparison to an aligned sensor: your bank account does not show you 2k then suddenly drops to 300. The media do.
5. Network rescue: the only reason why you know about the misinformation they spread is that the Network told you, and the media don’t (yet) control the network.

The Network is decentralizing our society since the 1950s, the year when the centralization peaked.

That means the establishment is losing its monopoly on the narrative. Americans would (finally) get the freedom of speech they were promised, so the power to influence vote would escape the hands of the establishment, and so the power to make laws (coerce) would as well.

This explains why they launched the Counter-Decentralization in 2013, with the techlash + the Great Awokening.

They attacked every single person that wasn’t on their side…and it worked. They wokified the GAFAM, and managed to deplatform all of their enemies.

Then in 2021, something changed. They lost support from the general population.

People suddenly realized that their present was being distorted. They began to investigate if that was the case for the past as well.

This couldn’t have happened in the pre-internet era due to the Gell-Mann Amnesia.

The Gell-Mann Amnesia refers to an effect where you read something in the newspaper about a topic you know about (say, economics), and you realize it’s full of mistakes.

You laugh it off, then read another section of the newspaper you know nothing about, and yet believe everything you read.

You forgot that the economics section was complete BS, so you don’t suspect that other sections are complete bs too.

When the Internet came, this was over. People that specialized in each section of the newspaper could come together and show how the whole thing was a lie.

For example:

• In 1958, Nasser (President of Egypt) laughed at the idea that women would be forced to wear a hijab. The Muslim world was much more secular back then, but who remembers it?
• Operation Paperclip was a rescue operation of the US for Nazis scientists. These scientists subsequently developed NASA.
• Germans and Americans funded the Russian revolution (Lenin and Trotsky) -> the Russian revolution wasn’t only Russian!
• Herbert Matthews, a New York Times correspondent, helped Castro win power in Cuba.
• Franklin Roosevelt recruited young men to sleep with gay seamen in order to entrap them.
• Harry Dexter White, the American architect of Bretton Woods, the IMF, and the World Bank, spied for the Soviets.
• JFK used the mafia to rig the election of 1960.

After the USSR collapsed, plenty of movies like The Matrix, Memento, The Truman Show, Fight Club,etc came out at that time, as if everyone was realizing they had been lied to this whole time.

While the Chinese moving to the US realized that M@0 was a myth, Americans moving to the Internet realized the US was an illusion.

The US establishment didn’t realize what the Internet meant for them. When they did, censorship began.

Consider that every gap in your knowledge has been filled by a movie.

• US army? -> Top Gun, Terminator, etc.
• Running a business? -> The Founder, the Wolf of Wall Street
• Who will save you from a virus? The CDC, as portrayed in Contagion.

Journalists, professors, and civil servants never are the bad guys in the movies. It’s always the entrepreneur, the banker, the boss, etc.

Conclusion: History has been completely distorted.

2.7 Fragmentation, Frontier, Fourth Turning, Future Is Our Past

Once we realized that there isn’t much difference between the US establishment and the USSR and that we can’t count on anyone to protect democracy…what do we do?

We need new stories, ones where we don’t depend on civil servants or the military to save us. We need stories where the US establishment is not at the center of the world.

There are four types of these stories.

The Fragmentation Thesis

The Sovereign Individual‘s thesis was that after tech progress enabled centralization which peaked in 1950, the tech of the future will enable decentralization.

The Frontier Thesis

The frontier thesis explains that the existence of the unknown is a motivation to move forward in order to discover it.

It’s the idea that in America, you could become independent if you wanted. You were free.

Charles Nordhoff in Communistic Societies of the United States explains that should this frontier ever be closed – should the government make it impossible for anyone to become independent -, it would be terrible.

He looks at the trade unions as a threat, because they encourage people to remain employees and demand ever better conditions, instead of emancipating themselves from their company and becoming independent.

The frontier closed in 1890 in the US. It became much more difficult to become a founder, to do anything in general.

Without the frontier, it all became zero sum.

Democracy, fascism, and communism fought until the frontier reopened in 1991 when business was allowed on the Internet.

The frontier almost closed again in the 2010s with centralization, wokification, and Xi-ification (in Ch!n@) but was kept open thanks to Bitcoin, web3, and the metaverse.

Right now, there are four ways to go explore behind the frontier.

• The land: where 7.9 billion people are.
• The Internet: where 5 billion people are.
• The sea: 2-3 million
• Space: 10 people, roughly.

The Internet frontier is clearly easier to push back

The Fourth Turning Thesis

This thesis, like Ray Dalio’s thesis, predicts significant social unrest in the coming decades in the US.

The Fourth Turning (by Neil Howe and William Strauss) explains that conflict erupts every 75 years, which is a human lifespan, more or less.

The Future Is Our Past Thesis

As the world centralized from the 19th century to 1950, we’re now going to decentralize it so it will become back to how it was in the 19th century.

There are events from the past that happen in the future, but with the opposite outcome.

Let’s cite a few examples.

• The western frontier closed in 1890 (understand: everything had been discovered). Today, the Internet frontier reopened.
• k0v!-D 19 today. Spanish flu back then.
• Tech billionaires today. Captains of industries back then.
• Crypto today. Private banking back then.
• Inflation and cultural conflict in America today. Inflation and cultural conflict in Germany back then.

Today, The New York Times sides with Ukraine to fight nationalist Russia; back then, The New York Times sided with communist Russia to starve out Ukraine.

So, what is the theory that unifies all this?

Tech favored centralization in the West from 1754 to 1947. Then tech favored decentralization.

In the East, it’s the opposite. It was highly fragmented by then, and it is highly centralized today.

We should further note that people complained about centralization and homogeneity during centralization the same way they complain about the lack of unity during decentralization.

The empire, long divided, must unite; long united, must divide.

2.8 Left is the New Right is the New Left

Can’t we just do tech and no politics? No.

Politics is about people who disagree with you.

A theory of left and right is necessary to create a new country.

Startup founders and political activists aren’t so different.

Tech and moral often go hand in hand. Eg: sanitation.

Tech and moral have split only recently because tech has come to threaten the establishment.

Startup societies could reunify tech and moral progress. By moral progress, we mean moral that inverts what people used to think as good.

Eg:

• Smoking was acceptable, now it’s bad.
• Alcohol was bad, now it’s acceptable.

Etc.

Moral progress isn’t straightforward.

While moral foundations are often right, any subsequent innovation will make the whole situation worse.

Most people want moral progress. They want to fight for something bigger than themselves. They want to know they’re the good guys.

Tech innovation drives moral innovation. Human nature does not change, so moral in this regard doesn’t either. But tech does, and new moral is needed to deal with it (the moral of data, for example).

Today, there are two types of revolutionaries: tech, and political. VCs seek to back the tech revolutionaries, while philanthropists seek to back the political ones.

The startup ecosystem is similar to the political ecosystem.

The specificity of the startup society is that it encompasses them both.

The structure of a startup, more democratic and more efficient, becomes a country, hence a political entity. There is both tech and moral innovation.

Let’s now discuss left and right.

There are four ways to discuss the left and the right.

1. They are value categories fixed in time.
2. The categories vary, and two people on the right don’t necessarily want the same thing.
3. The spatial theory of voting is like above, but quantifies the discrepancies.
4. The axis left/right rotates over time (defending the working man use to be on the left, now the left is pro-establishment, so it’s become a right issue).

That rotating axis theory is the correct theory.

It’s more about relative tribal positioning than absolute ideological positioning.

Two factions arise, fight each other. One wins, then breaks down into several factions who fight each other.

Eg:

• After the French revolution, they fought each other.
• After WW2, allied US and USSR fought each other.
• Etc

Left and right are more tactics than ideologies.

The left tactic is to delegitimize the existing order, argue it is unjust, and angle for redistributing the scarce resources.

The right tactic is to argue that the current order is fair, that the left is causing chaos, and that the ensuing conflict will destroy the scarce resources and not simply redistribute it.

Understand: groups use left tactics to get to power, and right tactics to keep it.

Groups fight when resources are scarce. When the frontier opens, the ones that disagree can just leave and establish their own countries.

This decreases pressure, hence conflict.

To conclude, the left and right:

• Can be quantified thanks to voting
• Are spread over an axis that rotates with time
• Are ancient and ineradicable concepts that fit each other like the yin and the yang
• Both fight for access to resources
• Always inverse the other group
• The frontier decreases conflict because it increases resources
• The left is revolutionary tactics while the right embodies ruling class tactics
• Groups use different tactics according to whether they have or are fighting for power.

Let’s have a look at the last point, the cycles.

The Left Cycle

From revolutionary to ruling class.

Eg:

• Christians VS Romans
• Protestants VS Catholics
• Soviets VS Tsarists
• Woke capitalists

All of them have both left and right concepts associated with them.

They used left tactics to reach power, and right tactics to justify their use once they get in power.

Eg: A manifesto leads to a revolution against one man -> the revolution succeeds -> the revolution is compromised and captured by someone like Stalin -> and the cycle starts again.

The Right Cycle

Strong men create good times, good times create weak men, weak men create hard times, and hard times create strong men.

The Libertarian Cycle

One guy leaves a big, bureaucratic company to found a small startup. He perseveres and it works.

The company grows and becomes somewhat stable.

Parasites enter at that moment. They want minimum effort for maximum pay.

The company becomes a slow behemoth, until one guy leaves to found his own small startup, and it starts all over again.

Conclusion

• The left start being left and end up being right.
• The right starts being right and ends up being left.
• The libertarian starts libertarian and ends up being a bureaucrat.

Together, these people foment a revolution that ends up a bureaucratic institutional decadent organization.

Yet, you need both the left and the right for your country. In a battle, the left programs the mind and gets people to take action. The right is the sword.

You can’t win without one of them.

Each size can infuse energy into the other.

The process of a non-ruling class becoming a ruling class is called flippening.

There were many of them throughout history.

The Proletarian Flippening

How does the working class flip from the left to the right in a century?

In the first half of the 20th century, everyone was defending “the working man”, from Orwell, to Stalin, to Hitler.

Using this as a narrative, Lenin, Trotsky, Stalin, M@0, Pol Pot, Castro, K!m !l-Sung, and more enslave the working man in the name of liberating him.

It all changed in the 1970s when unions negotiated enough to help the working man earn a decent salary.

Suddenly, as he gained access to a “nice life”, he became “bad”: white, racist, etc. He went from oppressed to oppressor, and the new oppressed were the new minorities: women, LGBT, etc.

But why? Why did the left turn against its former symbol of oppression?

When the USSR collapsed in 1991, the left went into an identity crisis. Ch!n@ had turned to capitalism and besides Cuba and North Korea, there was no one else.

So the decentralized left rose. It was some sort of fusion between the civil rights movements and deconstructionism (Foucault, Derrida), which is today called wokeness.

The wokes don’t have a leader, or a manifesto. They’re decentralized and don’t like to be named.

Communism was state-first, and tried to elevate the oppressed in the factory. The wokes are network-first and try to cancel the oppressor on the Internet.

The American Flippening

This highlights how the parties switched sides between 1865 and 1965. Republicans were on the left in the past, and now are on the right.

After the Civil War, the Republicans gained moral authority which they used to gain economic authority. They became rich, too rich, so they lost both the moral and economic authority so the Democrats, who were simply on the opposite side, took power.

Over time, the elite became overwhelmingly democrats (GAFAM, Harvard, NYT), and the proletariat moved to the Republicans. The Republicans are now the revolutionary party.

The Democrats lost power in 2015.

The Global Flippening

The third flippening is about the global reversal of the last 30 years, where the communist countries became ethnonationalists and the capitalist countries became ethnomasochists.

Countries that were on the economic left (Russia, Eastern Europe) moved to the cultural right (conservative) and countries that were on the economic right (France, UK, US) moved to the cultural left (wokeness).

The axis changed. It’s no longer about capitalism VS communism, but ethnonationalism (Russian or Han Chinese are superior) VS ethnomasochism (“white men are terrorists”).