Networked Functional Sovereignty
Description
Jonathan Hollis:
"Functional sovereignty scales beyond local groups via communication and coordination technologies. Bauwens describes the role that cooperative irrigation networks played in the development of the earliest Sumerian cities.[21] Ostrom has documented the ways that societies continue to use bottom-up systems of functional local and networked sovereignty to manage irrigation commons.[22] Similarly, each of the four major periods of Western civilization (Ancient, Classical, Medieval, and Modern) began with new communication and coordination technologies that allowed humans to form decentralized governance structures and evolve new types of networked cities.[23]
Now, two more communication and coordination technologies are creating a new opportunity to scale collective action via networked functional sovereignty: the internet and blockchains. These technologies are particularly effective because they are scale-independent—they can be used by groups of any size with members located anywhere in the world with minimal overhead costs. As a result, the internet and blockchains increase the capacity for functional sovereignty of both large and small groups, locally and globally.
The internet solves the cold start problem of finding other people to coordinate with. Social content can serve as a ‘bat signal’ that attracts others with an aligned vision to collaborate, share resources, learn from each other, and even colocate locally. Widespread satellite internet and mobile networks have brought the internet to extremely rural areas, enabling places with high functional sovereignty to more easily attract like-minded participants and bootstrap local economies with remote work.
Blockchains allow for a significant expansion of networked functional sovereignty. They can provide an immutable shared record of identity, a capture resistant method of self-governance without intermediaries, and the ability to create new forms of money—all with security guarantees that can’t be overcome by existing nation states.
Fundamentally, blockchains have the core purpose of keeping track of the current state of balances, transactions, and executable code. For example, “the Ethereum protocol itself exists solely for the purpose of keeping the continuous, uninterrupted, and immutable operation of this special state machine.”[24] In a typical computer, the state is managed by a Central Processing Unit (CPU). What makes blockchains ‘special state machines’ is that they are managed by a decentralized network. In other words: blockchains are, in a technical sense, ‘network states’.
If you’re Seeing Like a State[25], you can view this sort of immutable ledger of people and their records as the core way to create the legibility that enables an administrative sovereign entity. In this sense, blockchain states and nation states share a deep similarity. A nation state is only functional insofar as it has an accurate record of its citizens and how much money they are making. Without the first, the nation state doesn’t know who it let in, and without the second it can’t charge taxes to fund itself. Because these records are so crucial to a nation states’ existence, maintaining the state of the records becomes the existential responsibility of the nation state.
Blockchains also provide a new capture resistant trust model for self-governance.[26] They are the only way for large or physically decentralized groups to directly execute collective action over shared resources without any trusted intermediaries. The ability to pool resources and govern them onchain is a fundamental breakthrough in human coordination because it allows any group with an arbitrary number of agents located anywhere to practice functional sovereignty.
Blockchains can also serve as an international sovereign store of value, which makes them a compelling global reserve currency. Several states are already using bitcoin as legal tender[27] and the United States holds over $8 billion in bitcoin.[28] In this sense, bitcoin has already achieved a form of recognized sovereignty. It didn’t ask for diplomatic recognition, it just grew until nation states acquired it. Since the creation of bitcoin, countless other tokens have attempted to create self-sovereign forms of money.
Creating self-sovereign forms of shared identity, governance, and money rely on the fact that blockchains can provide a security guarantee that can’t be controlled by nation states, without needing to rely on a monopoly on violence. When nation states talk about national security, what they mean is that their sovereignty is protected by a fleet of aircraft carriers. When blockchains talk about security guarantees, they mean their sovereignty is protected by a proof of work or consensus mechanism too computationally difficult and expensive for even modern nation states to overcome.
When you put together better infrastructure for creating local functional sovereignty with the self-sovereign coordination tools enabled by the internet and blockchains, you get a rapidly improving tech stack for building new network sovereignties.[29] You can get together with others and bootstrap decentralized systems for energy, food, water, housing, education, entertainment, child care, and anything else your community needs. You can attract others who share your values, live within your own shared context, and collectively share resources without intermediaries. You can hold economic resources virtually with nation-state-proof protections against confiscation, and you can stitch together a network of other places who also share your values in case you need to physically exit.
In sum, the tools now exist to operate with a degree of functional sovereignty that leads to the question: “At what point are national governments rendered mostly irrelevant compared to the norms and rules of the groups of which we are voluntary members?”[30] In a world of global trade and nuclear weapons, we will probably always need a thin layer of traditional Leviathans to keep the peace. But the expansion of sovereignty in the 21st century won’t come primarily from asking the Leviathans for a seat at the table. New network sovereigns will earn their legitimacy through the effective practice of collective action."
Discussion
How To Obtain It ? Through Earned Legitimacy ?
Jonathan Hollis:
"There are three paths to sovereignty: demand it through force, negotiate for it diplomatically, or earn it by creating legitimacy. Attempting to use force to obtain territorial sovereignty is morally questionable and practically impossible without significant military resources, which are usually constrained to existing states. Negotiating for forms of sovereignty diplomatically is increasingly possible (Buterin’s four concepts of network sovereignty outline some of the most compelling cases) but is not accessible to most people. In this essay, I have argued for a third path, functional sovereignty, which eschews top-down violence and diplomacy in favor of bottom-up collective action that can be practiced by anyone anywhere.
The practice of collective action creates value and reinforces norms, which earns the scarcest resource: legitimacy.[31] This is not the traditional sovereign legitimacy of brute force, but an earned legitimacy of continuity, fairness, process, performance, participation, attention, function, and value creation. It is not the sovereignty of a Leviathan, but a reclaiming of popular sovereignty by the people.
While the federal government of the United States has ossified into a Leviathan, the democratic ideals of America are fundamentally rooted in the legitimacy of popular sovereignty.[32] In democratic republics of the American tradition, ultimate sovereignty is held by the people: “the rulers are the servants, and the people their superiors & sovereigns.”[33] Because of these roots, and because the ideals of American democracy have been exported to many other modern nation states, a reclaiming of earned legitimacy via collective action has the potential to grow from the bottom up into a powerful force of sovereignty.
There’s a nagging question that some people believe to be a sort of trump card against this line of reasoning: “What happens when the government shows up with guns?” I have largely ignored this question because I believe it to be a fanciful fantasy of those overly steeped in Hobbesian ideology. New network sovereignties are not fundamentally antithetical to nation states—they operate in parallel to existing systems and don’t necessarily lead to armed conflict. Using the analogy of blockchains, new network sovereignties can become Layer 2s that still rely on Layer 1 nation states for basic international diplomatic and military services.[34] Historically, various forms of suzerainty[35] have created these kinds of relationships.
At first, new network sovereignties will have so few people in a given jurisdiction as to be illegible to the state—a type of security through obscurity. This is especially true if they operate using privacy-preserving tools for communication and coordination. At the local level, they will be viewed positively to the extent that they create public goods for participants and adjacent community members. Most of the collective autonomy people want does not significantly conflict with the desires of the state in the first place, and this type of autonomy won’t attract significant opposition as long as it continues to provide local value.
New network sovereignties will grow most effectively in jurisdictions where principles of autonomy and functional sovereignty are upheld by culture and law. For instance, countries[36] sub-national states[37] and special economic zones[38] with a high freedom index are most likely to be the substrate for the strongest hubs of new network sovereignties. This naturally leads to the biggest, most legible hubs of new network sovereignties forming in places where they have the least potential conflict with their jurisdictions.
As these hubs grow and become more legible, they become a political force of earned legitimacy in their home jurisdictions. They can also provide examples of effective functional sovereignty and a credible exit option for people in less free jurisdictions. Effective alternative examples and a credible threat of exit (physically and virtually) create the space for voice—and, as a result, greater potential for loyalty—in jurisdictions that are more hostile to the practice of functional sovereignty.[39]
Sovereignty is a spectrum, and people can form together and push their position on the spectrum. Collective action that creates valuable public goods will find a path towards greater earned legitimacy and recognition along the spectrum of sovereignty in relation to existing power structures. In existing liberal democracies, this may manifest within the existing power structures: the formation of new municipalities, local elections, and courts siding with the constitutional legitimacy of functional sovereignty. In cases where autocratic power remains strong, new network sovereignties can grow outside of existing power structures through privacy preserving network tools, the practice of de facto parallel governance, acts of collective action and nonviolence, and exit to other jurisdictions. In cases where existing state capacity is declining, functional sovereignty can simply grow to fill the vacuum.
The tools for building local capacity and global coordination are in our hands. If we can use them to grow valuable relevance to people’s day-to-day lives, parallel systems of self-governance can earn legitimacy. This earned legitimacy builds the foundation for the practice of functional sovereignty. Through this practice, we can grow more resilient bottom-up systems for human flourishing."