Regulatory State
Contextual Quote
"The rise of a web of regulations governing the terms under which business can operate, and often conferring on enterprises regulated protection from competitors: the classic example is the way planning regulations in effect confer local monopolies or duopolies on supermarkets established in particular local communities."
"(http://manchestercapitalism.blogspot.com/2014/02/introducing-foundational-economy.html)
Discussion
Blockchain as a Challenge to the Regulatory State
Toby Shorin, Sam Hart, Laura Lotti:
"Software may be eating the world, but it’s a world already consumed by law. Through law, humans become legal persons with rights, “nature” is defined and protected, and order is sought across land and sea. Pervasive and plastic, law is the essential institutional technology of the modern nation state. While the nature of law is still an object of scholarly debate, its chief feature is clearly the regulation of behavior. The law imposes standards of conduct that uphold communal values and protect liberties. Likewise, the law enforces sanctions that deter or punish acts of harm.
The law of the state is not the only force that regulates the res publica. In his landmark 1998 article, Lawrence Lessig discussed how a total of four forces—law, markets, social norms, and the architecture of the built environment—govern daily life. Norms dictate what is socially admissible; markets regulate economic exchange through the mechanisms of price; while architecture acts to delimit space and orient flows of people and information. Finally, the law regulates behavior through the instruments of institutional privilege and enforcement. Together these forces determine the space of the possible, given the material, social, and economic circumstances. “We the people” are just “pathetic dots” subject to these four regulatory powers.
Of the four forces at play, law occupies the supreme position within the state. Lessig strove to show how law bends the other regulatory forces to its will, regulating through them. For instance, the law regulates via markets when Japan institutes high taxes on foreign rice imports, ensuring Japanese consumers eat domestically-grown rice. Having lived through a global pandemic, we are all familiar with the public health campaigns that created social standards around mask-wearing and vaccination: the law’s regulation via norms. And insofar as technologies constitute a part of our digital “built environment,” the law attempts to regulate them as well.
However the power to regulate through other forces often becomes the power to regulate all. Take the Digital Millennial Copyright Act (DMCA) for example, which made it illegal to access content locked by Digital Rights Management, reinforcing the grey market for digital piracy. While the DMCA was a controversial and ultimately failed policy, it reveals the law’s expansionary tendency. The law is inclined to grow to the size of its container, regulating new technologies and social phenomena as they arise, even if lawmakers have not fully understood their significance.
The architects of social contract theory—among them Grotius, Locke, and Rousseau—could not have anticipated a modern regime in which the law seeps into all corners of life. But the law’s predominance is an inevitability. The law does not merely punish and constrain; it may also empower and provide assurance. Through the law, minority rights can be protected and conflicts between parties can be adjudicated. And although the moral arc of the law does not always bend toward justice, the law nonetheless provides a base layer of perceived neutrality, including clear pathways for citizens to update the rules of the game. If the state, as Max Weber claimed, is a human community that successfully maintains a monopoly on the legitimate use of violence, the rule of law is the tool that the state uses to achieve that end.
Lessig himself is wary of his own ideas’ implications:
- The regulation of this school is totalizing. It is the effort to make culture serve power, a “colonization of the lifeworld.” Every space is subject to a wide range of control; the potential to control every space is the aim.
But today the state’s sovereignty is being challenged. While this process started long before crypto, blockchains escalate this struggle to an entirely new level. Indeed, the regulatory complex composed of state, federal reserve, and “too-big-to-fail” banks is precisely what cryptocurrencies undermine. But in order to understand just how blockchains introduce a new type of regulatory regime, we need to turn to their fundamental novelty: censorship resistance."
More at: Censorship-Resistant Immutability.