Summary of The Network State by Balaji Srinivasan

2.9 The One Commandment

As we said, you need a moral premise at the core of your society or people won’t join you.

You don’t need ten commandments; one is enough. Choose one principle that you know is true (historically and scientifically) and that other countries have missed.

As a country founder, you are not introducing new tech. You’re introducing new morals.

The Parallel Society

The parallel society is like a startup society that has room to become really big.

Here are a few examples.

• Digital Network Unions: Pure digital, no physical location needed.
  • The Cancel-Proof Society: you show how cancellation is a moral failure and create a new society cancellation-free. Doesn’t have to be big, just a bunch of people in a Discord is enough. When someone is canceled, the entire network comes to defend that person.
• Physical Network Archipelago: digital + physical footprint needed
  • Keto Kosher: show how sugar has led to an obesity crisis that costs trillions and that keto diets lead to better health, hence less cost on the medical system. Crowdfund to buy some apartments, gyms, even small towns, and villages. Ban sugar-heavy and processed foods at the “border”.
  • Digital Sabbath: Built on the premise that “being constantly connected is bad”. This society helps you disconnect when you can’t do it yourself. Internet could be cut off from 21h00 to 9h00, some buildings could have no wifi at all, etc.
• Recognized Network States
  • Your Body, Your Choice: the post-FDA Society: the absolute right for anyone to buy or sell any medical product without third-party interference. You need to be diplomatically recognized and find a sanctuary city or country that will give you these rights.

Why not More than One Commandment?

More than that would be too many and too complex. Less than that would be not enough.

---

Chapter 3 The Tripolar Moment

3.1 NYT, CCP, BTC

The world of today is becoming tripolar.

Everyone will have to navigate between these groups.

3.2 The Dated and the Timeless

It’s possible that each of these poles fails, but it’s nonetheless important to discuss them because it’s better to have a bad plan (and idea) than none at all.

3.3 A Bipolar America and a Tripolar Triangle

In 1990, the world was unipolar. In 2020, the US is bipolar, and the world is tripolar.

3.4 Moral Power, Martial Power, Money Power

In the 20th century, the moral power was the USSR, the money power was the US, and the martial power was the Nazis. These powers were states.

Today, the moral power is the NYT, the money power is BTC, and the martial power is the CCP. These powers are networks.

NYT: The Moral Network

The NYT holds governments into account and considers itself above all else. Their articles aren’t factual, but moral. In the same way the USSR stole and destroyed lives “for the greater good”, the NYT cancels “for democracy”.

CCP: The Martial Network

Why is the CCP a network? While it controls the state, it isn’t the state.

The CCP has 95 million members.

To apply, you need to send a letter explaining:

• Why you are applying
• Why you believe in the party
• Why your application could be rejected

Then you need to write essays on Marxism, politics, and eight people have to vouch for you.

Then you must take courses, pass an exam, and go through a one-year probationary period.

Why would people do this? Think of them as the NYT’s subscribers. The CCP’s members are Ch!n@’s NPCs.

The CCP is a martial power since X! J!np!nG took power.

BTC: The Money Network

BTC is an obvious money network, but it’s also becoming a media network that will eventually take over the NYT as companies and creators are building their own media.

3.5 Submission, Sympathy, Sovereignty

The poles legitimize themselves differently.

• CCP:” submit to me, I am more powerful”. Only works in Ch!n@.
• NYT: you are an oppressor, so you must sympathize and bow your head to your victims.
• BTC: you must empower yourself and become independent from the centralization. Complete opposite of NYT and CCP.

3.6 Conflicts and Alliances

Poles fight each other, make alliances against one another, but also have internal divisions with small groups that oppose the main line.

• NYT: the non-woke democratic voters
• CCP: the capitalist that preferred when Ch!n@ was freer and militarily weaker.
• BTC: the non-maximalists that hold BTC

What about the countries that identify as neither of these? They will be pressured to join the NYT or the CCP. If they don’t want to, they’ll naturally join BTC.

---

Chapter 4: Decentralization, Recentralization

4.1 The Possible Futures

There isn’t “one future”, but a lot of “possible futures” because we have the power to build it.

The previous two chapters were about constraints that limit the possibilities for the future. Now, we have a canvas to work into.

It’s likely that a recentralized center of network states emerge in the future, but it’s difficult to predict due to four variables.

1. Volatility: volatility has increased due to the Internet (social media is social volatility and crypto, economic volatility).
2. Reflexivity: feedback loop between participants’ understanding of a situation and the situation in which they participate.
3. Competing curves: there are many competing solutions to solve one problem – the network state may not be it.
4. Predictability: you can make physical predictions (the trajectory of a projectile) or financial ones, but that’s about it.

Conclusion: history is a story, and the analysis of the present may already be too old as history already moved on.

All models are wrong, but that doesn’t mean they’re not useful.

What we can expect in the future is that the three poles will collide and fight each other while network states rise out of this mess.

These network states are the fourth pole that escapes wokeness, CCP totalitarianism, and complete anarchism from BTC maximalists.

Let’s call this pole the International Intermediate. It includes everyone that wants to escape both wokeness and the CCP.

How do you get them all together? By innovating: build something better.

That’s the recentralized center.

4.2 Sociopolitical Axes

To understand the new world, we need new lenses.

International Indians

India itself is much more modern and well-functioning than is commonly thought. The economy is developing fast and the number of unicorns is increasing quickly.

The diaspora is made of 5 million Indians in AUKUSCAN countries and they do fairly well.

India is a new player that will have to be taken into account.

Transhumanism Versus Anarcho-Primitivism

The former thinks tech is good. The latter thinks it’s bad and wants to go back to living in tribes. Both have right and left versions.

Left transhumanists like the World Economic Forum make changes to the human body that the right anarcho-primitivist thinks of as awful.

The right transhumanists do the same thing and horrify the left anarcho-primitivist.

The Identity Stack

Everyone is patriotic about at least one thing.

Can be their country, city, values, cryptocurrencies, etc.

They take it personally when you criticize these things which are a part of their primary identity.

If you want your startup country to succeed, it will have to become someone’s primary identity.

4.3 Technoeconomic Axes

The Internet increases variance because it connects a bunch of people and things together that should never have been connected. So, things inevitably happen. They can be good (research projects), or bad (Twitter mobs).

That means the Internet creates more upside and downside in everything.

Technologists focus on the upside. The establishment focuses on the downside.

Overall, two projects are worth noting: social media and crypto.

• SM increases social volatility by enabling you to go viral or get canceled (large gain or loss of social capital).
• Cryptocurrencies increase financial volatility: you can earn 1000X or lose it all.

This compares to the USSR’s glasnot (free speech reform) and perestroika (free markets). These reforms increased the volatility in the USSR and broke it. Likewise, the Internet will break the US establishment.

Few institutions born before the Internet will survive it because the Internet is putting too much digital pressure on them.

The digital is now primary – and the physical, secondary.

Now it’s not just about remote work, but remote life.

All the sectors that had resisted the Internet became digital almost overnight with the lockdowns.

Think about it.

1. Much value creation is already digital. If you spend your time behind a screen, you work in the information economy.
2. More value creation is becoming digital.
3. Almost all spending is digital: eg: books, music, movies, SaaS, etc.
4. Many actions are “printed out”: we mean by that that the service is digital and the result, physical. Eg: Uber, WeWork, Airbnb, etc.
5. These “printing” actions can be automated.

-> all value is digital as everything, nowadays, starts on a computer.

And yet, productivity is low!

With our current tech capabilities, we should be much more productive than we used to be. Yet, we build skyscrapers slower now than in the past.

So, where has all of the productivity gone?

Few theories.

1. The Great Distraction: if one task took one hour in the past, it now takes 30 minutes but then we spend 30 additional minutes on Facebook.
2. The Great Dissipation: productivity gains have been dissipated on things like compliance, filling up paperwork, etc.
3. The Great Divergence: only a few can really be productive.
4. The Great Dilemma: the law and culture suddenly require a deep study of everything before building instead of just building it.
5. The Great Dumbness: productivity is there, but we keep on making dumb decisions and can’t harness it. Eg: Ch!n@ builds a train station in nine hours.
6. The Great Delay: While it goes faster to email than to mail, humans still need to read their inbox…the productivity will come, but only when everything is automated.

4.4 Foreseeable Futures

The AR glasses are likely to happen in the future.

If you think about how much of your life is spent, looking at a screen, whether it’s a laptop or a phone or a watch, >50% of your waking hours is already spent in the matrix.

Glasses would free you from being on your computer while increasing your opportunity to be online.

4.5 American Anarchy, Chinese Control, International Intermediate

Here we explore three different scenarios.

The US

The struggle Democrats VS Republicans will eventually set the US for a second civil war.

The former will align around the NYT and the federal government to “fight insurgents and safeguard democracy”.

The latter will align with the state governments, BTC, and will fight “for freedom”.

Why would there be a war?

1. Polarization is up.
2. State capacity is down.
3. Economic prosperity is declining.
4. Envy is increasing, mainly due to social media.
5. Foreign military defeat looms: the Ukrainians will lose their war against Russia.
6. US states are pulling away from the federal government.
7. Authority has lost respect. This is due to the end of hierarchies.
8. The split of the country is discussed.
9. A radicalized movement seeks the state to transform it, they reject the status quo. While the Republicans aren’t capable to deal with wokeness (wokeness is old, has thousands of papers written, and several generations of academics), Bitcoin Maximalism can. Bitcoin Maximalism is extreme, aracial libertarianism that seeks emancipation from the US government, something the wokes are not prepared for.
10. Bitcoin seizure could be the trigger event for a civil war. In the case the state goes bankrupt, it could seize Bitcoin. The Maximalists would have to fight the (woke) state, and the wokes would have to fight the maximalists.

Ch!n@

There may be a coup in Ch!n@. That coup will unlikely be successful, but its mere attempt would mean that Ch!n@ would lock up the country and exercise total control.

The tech Ch!n@ would need to develop for their surveillance program could then be exported to the world which would adopt Ch!n€s€ control practices.

This is digital money that can be frozen, health passports that can prevent you from moving at will, etc.

What are the elements that indicate this scenario?

1. Shutting down opposition across the spectrum: the CCP isn’t against democracy; it’s against everything that isn’t the CCP: M@0ism, technology (J@ck M@), democracy (Hong-Kong), Islam (U!ghur$), etc.
2. Pushing Ch!n€s€ nationalism
3. Building a surveillance state
4. Using AI to surveil better
5. They’ve tested their systems during the virus
6. Shutting down exits: since everything works with tech, everything can be controlled.
7. Selling to other states: Ch!n@ builds smart cities, an all-in-one surveillance solution.
8. Using anti-imperialism (westernism) to justify its measures
9. Using “harmony” to justify control
10. A coup in Ch!n@ could be the trigger event.

The only difference is that the population could actually support more control as they have become much more nationalist now.

International Intermediate

The II is everyone that neither likes woke America nor anti-democratic CCP.

We call them the Recentralized Center.

4.6 Victory Conditions and Surprise Endings

Let’s now take a look at how the different scenarios highlighted above could end.

First, with victories.

• The US establishment wins against American anarchy: the West has always won through all of its hardships. No reason it won’t win again.
• The CCP wins: it becomes an autonomous autocracy closed to the rest of the world. Their tech enables them to replace workers with robots directed by an algorithm, some sort of resource software for countries. Standards of living rise and they become the richest and most prosperous nation in the world with the establishment of “luxury communism”.

Now, surprise endings.

• The CCP and US establishment work together to stop BTC: that would be like when the US and the USSR voted together to condemn Iraq in 1991.
• BTC ends human wars, but not robot wars: a state that cannot seize money cannot start wars. So states build robots to fight for them instead, since robots don’t get paid.

4.7 Towards a Recentralized Center

Recentralization means a new system, like the old one, but with new people and new tech.

Eg: our institutions are failing. We don’t need no institutions, but new ones.

That’s the network state.

---

Chapter 5 From Nation States to Network State

5.1 Why Now?

Let’s define a nation-state, and how history made it happen.

5.2 On Nation States

A nation-state is a geographic region of the world ruled by a group of humans we call a government.

A bunch of countries together make up a nation-state system.

Broadly, eight rules define that system.

1. A country is a territory defined by borders mutually agreed upon by all countries.
2. A country must have a state that controls (or at least seeks to control) the legitimate use of force within its territory, and a population of citizens.
3. Every spot on the earth’s landmass must be occupied by a country.
4. Every person on the planet must be a citizen of at least one country.
5. On paper, all countries have the same legal standing— (Luxembourg VS India) —even if they are politically and economically highly unequal.
6. Consent of the people within each country is preferred, but not required. Tyranny or de facto anarchy does not warrant the loss of country’s status.
7. Under some circumstances, one or more countries may invade or occupy another country, but not eliminate its countryhood or redraw its borders.
8. The currently existing set of countries and the borders between them should be left in place whenever possible (secession isn’t welcome).

We can make several assumptions about this system:

• Physical first. Geography is the most important thing.
• Composition. While they’re normally composed of “one people”, some nation-states are multinational empires (India), while others are stateless nations (Catalonia).
• No terra incognita. All the land of the planet is fully known, and cannot be further divided.
• No terra nullius. There is no unclaimed land (except for a few exceptions).
• Top-down division of land: the land is divided by borders.
• One state per citizen: People are typically citizens of just one state. The primary method of citizenship is still by birth.
• Legitimacy from physical control and electoral choice: a nation-state’s legitimacy comes from:
  • Control of its territory.
  • The nation supports the state.
  • Reflects the will of the people and gives the individual rights.
• Centralized administration: laws are written and enforced.
• Domestic monopoly of violence: laws are enforced with violence until the citizens comply.
• International sovereignty via the military.
• Diplomatic recognition via bilateral and multilateral fora (UN, etc): a lack of recognition weakens states.
• Treaties manage cooperation and constraint
• Pax Americana: The US safeguards the international order.

The six essential parts of the state

1. Borders
2. Population
3. Central government
4. International sovereignty
5. Diplomatic recognition
6. Domestic monopoly on violence

A nation-state is made out of a nation, and a state.

1. Nation: a people with shared ancestry.
2. State: the organizational structure that governs the people.

This explains why micronations never succeeded. They set up territory before creating a people. A nation is normally first the will of a people, then second, to establish itself on sovereign territory.

The opposite is the Roman Empire, which was a state, but with many nations.

5.3 On Network States

Network states are based on different assumptions than nation-states.

You don’t start with the geography, but with the community assembled around a One Commandment.

Startup society -> network union -> network archipelago -> network state.

Let’s dive into each component of the network state.

• A social network: a nation of a network state forms online, on one social network. Admission is selective and people can lose their “citizenship”. People don’t join for money, but for values.
• A moral innovation: it’s the reason why the nation exists at first.
• A sense of national consciousness
• A recognized founder
• A capacity for collective action
• An in-person level of civility: without civility, there is no trust.
• An integrated cryptocurrency: for sovereignty, independence, and defense.
• An archipelago of crowdfunded physical territories: assemble territory as you go, like offices, houses, shops, etc.
• A consensual government limited by a social smart contract: the law comes after the people, because the people must agree on the law.
• A virtual capital: in the beginning, can be a Discord server. In the end, likely be a VR place where citizens can gather.
• An on-chain census that proves a large enough population, income, and real estate footprint
• Attain a measure of diplomatic recognition: if you don’t have it, you can be invaded by other states, you won’t be able to buy what you need, etc. Basically, you don’t exist.

The Network State System

Once one network state will arise, many others will follow. They will make a network state system.

Here are its assumptions:

• Digital first
• Composition. A network state is composed of a national network (the equivalent of the nation) and a governance network (the analog of the state).
• Terra incognita returns: some networks may decide to be incognito to protect themselves.
• Terra nullius returns: some unclaimed land (like URL, for example) always exists.
• Bottom-up migration of people: People choose to be part of a network state, they are not forced to.
• N networks per citizen: citizens can be members of several states.
• Legitimacy from physical migration and digital choice
• Decentralized administration
• Domestic monopoly of root access: the governance can control almost everything within the state, but the citizens can exit it if they abuse it.
• International sovereignty via cryptography: new way of defending sovereignty, and very hard to hack.
• Digital diplomatic recognition: when a citizen exits a state for another, he brings his private keys that give him access to his goods stored on blockchains recognized and shared by different network states.
• Chains manage cooperation and constraint: public blockchains are the equivalent of international law.
• Pax Bitcoinica: Bitcoin rises over all governments as it gives everyone an exit that isn’t controlled by anyone.

The Network State as a Term

• The network is the nation: the online community is the nation.
• The network is the territory: when VR becomes mature, the network state will have its own land in the metaverse.
• The network is the state: the network creates its own laws as smart contracts on-chain.
• The Network is the Leviathan

What does a Network State look like on a Map?

On a physical map, a network state looks like an archipelago.

Members crowdfund territory and real estate that they link digitally with AR.

In digital space, a network state looks like a densely connected subgraph of a large social network.

• While physical states have latitude and longitude, digital states have many more dimensionalities.
• Digital states are flexible and can plug into one another.
• Digital states are much faster at anything.
• It’s difficult to create more lands, but it’s easy to create more digital land.
• The state is invisible

While the nation-state is based on a deterministic physical division of land into states, the network state is based on probabilistic digital division of people into subnetworks.

Founding a network state is like founding a unicorn.

You don’t say you found one: you say you found a startup. Similarly here, founding a network state means first founding a startup society.

The following excerpt is from the book

The path to the network state is:

1. Network union. A wholly digital entity, organized in a social tree structure, that
   engages in collective action on behalf of its members. The collective action is key
   for building organizational muscle.
2. Network archipelago. A network union that begins acquiring and networking
   properties in the physical world. The physical interaction is key for building
   trust.
3. Network state. A network archipelago that gains diplomatic recognition from at
   least one legacy state. The diplomatic recognition is key for attaining sovereignty.

How does a Network State Expand and Contract?

• Demographically
• Geographically
• Digitally
• Economically
• Ideologically
• Technologically

Critic

We are the 9th of September, as I am writing this.

In hindsight, most predictions made by Balaji appear ridiculous today, as I had originally predicted.

I’ll discuss a few points below.

Web3

The reason why so many VCs poured so much money into everything-web-3 is that Web3 monetizes most of what’s free today. In the web3 internet, you pay for every click.

When you rise in life by accumulating monetary or social capital (or both), you get a better view of the world but you also forget what it is like at the bottom.

This can be compared to reaching the last floor of a skyscraper. You see far away, but you have no idea what it’s like to be on the ground floor.

Web3 is a rich people thing. 90% of the world population owns 25% of what there is to own. Web3 isn’t happening for them any time soon.

The idea of a “BTC party” because of the failing USD appears as ridiculous. People don’t want something they can’t control, and BTC, out of everything else, is an asset that any party, be a state, or a terrorist organization, can easily control, simply by acquiring most of the mining capacities, which Ch!n@ was dangerously close to do at some point.

Something will replace USD, this is the cycle of life. But it definitely won’t be decentralized.

And it definitely won’t be BTC.

Wokeness

Wokeness isn’t serious, and it has never been.

If you search for “mention of the word “racist” in US newspapers since 2000″, you’ll see that it jumped in 2012.

Why?

As the internet rose, the viewership of traditional news decreased. They had to do something to gain attention back, so they went full-woke.

And it worked. Until it didn’t.

Wokeness monopolizes emotions, but it’s not something people enjoy because it’s pure hatred.

We’re not meant to hate.

As I am writing this, virtually all media companies that wokified their products are losing money. CNN is firing everyone, Disney has its MCU failing, etc.

What does that mean? That companies are ideologically agnostic. They don’t believe in anything except earning money. If wokeness is what they need to earn, then so be it, let’s go woke. If wokeness is losing money, then they won’t hesitate to backtrack.

This is what’s happening at the moment. Wokeness has never been, and will never be a serious ideology.

It was a marketing strategy. Few understood this.

Balaji tended to forget that wokeness mainly exists in the Anglo-Saxon world. It doesn’t really exist in other languages.

And everyone hates it anyway.

The US, once again, looked at itself as if it was the world. Forgetting that it’s just a tiny part of it.

We also need to highlight the hypocrisy of the author.

Balaji is an Indian that left India to live in the US, that got educated in the US, that got rich in the US, yet talks about the US as a decadent hell-hole while praising India as the best country in the world.

Seems logic.

Conclusion

The world is not going to be divided between the Web3 and the woke people.

In a way, these movements are really similar to each other: they’re ideological, fueled by emotions, believe they’re the center of the world, and think they will save the planet.

Looks more like a cult than anything else to me.

The world will, as it has always been, be divided between the free and the unfree.

Ch!n@ is getting closer to Russ!@, while Europe and the US are fighting together to support freedom in Ukraine.

These are the blocks. The Middle East will remain neutral, playing on both sides, and the blocks will fight for the resources in Africa and Latin America.

Voila.

The world will be divided between the West and its values, against everything that isn’t.

BTC will remain a Ponzi scheme. And wokeness will go back to the hell-hole it came from.

Did you enjoy the summary? Get the book here!