The Network State: How to Start a Country, by Balaji Srinivasan (self-published, 474 pp., $9.99)

Israel started with a pamphlet. In 1896, the Viennese journalist and playwright Theodor Herzl published Der Judenstaat—in English, The Jewish State—in which he proposed the formation of the state of Israel. This new nation-state would protect Jews who were in despair from unremitting anti-Semitism, but who, rather than sticking around to fight persecution, had instead decided it was time to leave. Rather than hope for better days, Herzl urged European Jews to depart to a new nation of their own.

For centuries, European intellectuals had obsessed over what they called “The Jewish Question.” Wherever Jews lived in Europe, anti-Semitism limited their prospects and inflicted hardships. Debates raged across the continent over whether Jews should be sent to another country or assimilated.

Herzl’s pamphlet didn’t convince many that this new state was possible or even desirable, but about a year later, he organized the first Zionist Congress, gathering the supporters of his quixotic movement. All 208 of them. Eighteen centuries of abuse without much reform had been enough, he thought. Only a new state could serve as a refuge for the Jewish nation. Half a century after the Zionist Congress first met, Israel was born. Founded in 1948, that sovereign state arrived too late to stop the worst, though it is now a prosperous country of 9 million.

Today, conventional wisdom says that the creation of a new state is either ridiculous or impossible. No cause or community, the consensus holds, has a moral case for such an outlandish idea. But a new book by Balaji Srinivasan, The Network State, argues that a frontier is reopening and that, due to advances in technology, we are about to see the number of new sovereign entities multiply. Srinivasan, of course, is not without his detractors. But as with Herzl’s pamphlet, The Network State is a provocation, an assault, an outcry, a handbook, and a gospel that cannot be ignored.

The book’s main argument is that cryptographic governance will allow voluntary associations to thrive and blossom into politically significant entities. Blockchains, such as the governance protocols underlying Bitcoin and Ethereum, can serve as real social contracts among members of a group, a tribe, and—one day—a nation. Whereas liberal political theorists of the past imagined a hypothetical social contract agreed upon by people in an imaginary state of nature—recall the fundamental axioms of Hobbes, Locke, Rousseau, and the Harvard philosopher John Rawls—Srinivasan instead shows how we no longer need to resort to fantastic thought experiments in deciding what we owe one another. Through a blockchain and “smart social contracts,” a credible commitment to the provision of public goods can be agreed upon by all, enshrined in code, and adjudicated by a consensus protocol. Various associations will bloom as cryptographic governance allows for new systems of fraud-proof voting, property-tax agreements, and experimental forms of ownership over common resources. In time, Srinivasan speculates, these networked associations will gain enough clout to win recognition from sovereign states. It will help that their digital assets will be safe from seizure. Then, last of all, what was once an online community united in a common purpose will materialize in the physical world as an archipelago of enclaves with a modicum of political self-determination. Society in the cloud first; a network state last; in Bit Zion we trust.

New cities, new communities, a successor to the nation-state: Why would anyone want to become part of this movement? The Network State is not primarily addressed to the public at large, nor even to Americans, but mainly to “all those people from the middle of nowhere, passed over by the establishment, with crazy-but-correct ideas, who could do great things if only given the opportunity.” Srinivasan mentions the Runxue Chinese (a group of liberal-leaning Chinese who wish to flee the Communist mainland), the Indian diaspora, Nigerian technologists, refugees from Hong Kong, and Argentinians mugged by inflation. Indeed, most of Srinivasan’s online following—over 650,000 on Twitter alone—resides in the developing world. Perhaps in the last century, many of these highly skilled immigrants would have come to the United States to start companies. But now they can’t—not without paying large sums to navigate a byzantine immigration system that few are lucky enough to find their way through. And even so, as Srinivasan warns at length for a full third of the book, perhaps they should not want to come. The United States, he believes, is on its way to ending not with a bang, but a printer.

Srinivasan argues that the current geopolitical chessboard provokes a three-headed dilemma for the believers of freedom and progress: either reform the Chinese Communist Party, turn around an America in precipitous decline, or start something new. Of these three options, the last appears to have the best chance, which is why he believes that scattered groups of people across the globe will begin to coalesce into new communities based on moral purpose and mutual loyalty.

I suspect that, of all the assumptions he makes in the book, Srinivasan will receive the most pushback on his forecasts relating to China and the United States. Is America in fact heading toward a second civil war? Its major institutions—from the media to its bureaucracies to its universities—have become ineffective Animal Farms, full of pontificating pigs. America has clearly regressed from the peak of its former capacities. To make one by no means extraordinary comparison, the Golden Gate Bridge was built in the 1930s, in about four years. Now it takes the local transportation authority 20 years to open a bathroom in one of San Francisco’s subway stations.

Or consider America’s foreign policy. Over the last 22 years, to the tune of $4 trillion and the deaths of thousands of civilians, America has left half a dozen countries in ruin thanks to the foreign policy establishment’s misadventures, under both Democratic and Republican leadership. To top it off, America’s balance sheet is tarted up: hardly anyone pays attention to the $112 trillion in future unfunded liabilities. The Federal Reserve currently has $9 trillion worth of debt on its books and is struggling to control inflation, which blew past 8 percent for the first time in 40 years. The United States is fighting to maintain any sense of cohesion under the current conditions of unforgiving stress and adversity. Membership in various loyalty groups—families, institutions, the nation—is up for debate. It is hard to argue against Srinivasan’s conclusion that America appears incapable of protecting and promoting freedom and progress.

To reverse the coin, China appears to have successfully quashed opposition to the Communist Party, barred all exits from the mainland, and built an all-seeing surveillance state that uses artificial intelligence to detect even the mildest Western sympathies. True, China may be facing a demographic crisis and a debt crisis, and most of its economic growth to date has been catchup growth. Like other Communist states, it may lack the creativity to make new discoveries beyond the frontiers of our current knowledge. All the same, Srinivasan argues, if the Washington Consensus is failing, the Beijing Consensus terrifies. It follows that Door Number Three, to the network state archipelago, is beginning to look even more appealing.

Srinivasan belongs to a new generation of intellectuals, including Peter Thiel and Reid Hoffman, who may have ascended to the top of the ivory tower in the past but have instead decided to make their fortunes in the real world. Srinivasan has four degrees from Stanford and an award from MIT. He has published papers on microbial and clinical genomics and has taught bioinformatics at Stanford. Most recently, he was a general partner at the venture capital firm Andreessen Horowitz and chief technology officer of the cryptocurrency exchange Coinbase. He is also, I must disclose, a friend.

In the last few years, I have seen Srinivasan making predictions like a knife thrower at a circus: pinpoint accuracy along with moves to the left and right that make the crowd burst into laughter. Perhaps most famously, in January 2020, he sounded the alarm about the severity of Covid-19 and even predicted the advent of “border closures, nationalism, social isolation, preppers, remote work, face masks, and distrust in governments.” As a prize for his foresight, the online news site Recode accused Srinivasan and other investors on February 13, 2020, of being unjustifiably terrified of Covid-19. Despite his accomplishments (though I suspect also because of them), the mainstream media and left-wing academics have spread lies about Srinivasan and have dragged him through the mud. In his poorly researched book, Adventure Capitalism: A History of Libertarian Exit, from the Era of Decolonization to the Digital Age, Raymond B. Craib, a history professor at Cornell University, erroneously attributes quotes to Srinivasan that he never said (sourced from a New York Times story that was never corrected). To crown his amateur-hour performance, Craib misspells Srinivasan’s name three times.

Such a decline in the quality of academics does not surprise Srinivasan. It’s part and parcel of a civilization that has given up on the North Star of truth. In one of the book’s more pragmatic sections, Srinivasan advises new communities to build their foundations on one moral commandment. Slyly, he never states what his own would be. If I had to guess, given his admiration for Bitcoin’s truth-affirming consensus protocol, I would say it is this: to convince truth seekers that they are living in exile and subject to efforts of assimilation into a society that refuses to see the world as it really is. “If the news is fake,” Srinivasan writes, “imagine history.”

To be sure, the strength of the book’s argument rests on a set of assumptions that may change through some miracle. America may reconstitute itself. China may collapse. Bitcoin is not yet a strong inflation hedge. Nevertheless, a number of cryptographic governance projects are already underway. Afropolitan is building an online network of African artists, writers, investors, and other creators. The stirrings of an Armenian network state have begun. More concretely, a company called Culdesac is building a car-free community in Tempe, Arizona; Mwiya Musokotwane, a Zambian entrepreneur, has struck ground on a new city in Zambia to attract talent; an Internet group with the funky name “W3st” is pulling together a solarpunk collective. New communities like these may still flourish, with or without America’s decline.

My one quibble with this outstanding book has nothing to do with its content, as provocative as that is. It’s with its form. I must admit I’m a bit old-fashioned. Srinivasan self-published his book on Amazon—but technologist that he is, he has rejected the static nature of traditional books by publishing it mainly as a book app at his website The version of the book I printed out on paper, and then read, may not be the book you read tomorrow. He plans to update the book as criticisms come in, amend its facts and figures in light of world events, and continue to elaborate its key themes and claims as inspiration strikes. The book may very well double in length over the next year. Moreover, the version of The Network State that I read was abridged on paper, in a sense. Many of Srinivasan’s arguments are supported by hyperlinks to Internet media: videos, memes, and online essays by other digital thinkers. On the printed page, these links are worthless, so I had no option but to read on without watching the video or even knowing what essay he linked to. Like software, the book may improve with each new version, but my memory resists digital books. I forget what I can’t hold in my hands or see on a shelf. But Srinivasan may not care to shape his book for old-timers like me. It’s the generation to come, largely outside of America, that will launch a country from their phones, anyway. As Herzl wrote in Der Judenstaat: “Old prisoners do not willingly leave their cell.”

Photo: jamesteohart/iStock


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