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Merchant Republics of Cyberspace

In their book Sovereign Individual: Mastering the Transition To the Information Age, authors James Davidson and Lord William Rees-Mogg predict the inevitable rise of merchant republics in cyberspace, functioning largely beyond the control or taxing powers of nation-states. A few years ago, this might have seemed loopy; today it seems almost inevitable. (Note: Second in a series.)

In the Middle Ages, when the reach of kings and laws sometimes grew weak, no single group could regulate or dominate another, or regulate commerce and collect taxes. Throughout Europe, there were frontier or "march" regions where sovereignties blended -- Celtic and English, Christian and Muslim. These sometimes violent borders persisted for centuries; despite continuing conflicts, they often served as spawning grounds for commerce and trade.

These regions developed distinct institutional and legal forms, the type of cultural evolution we're likely to see again soon in a different type of march region -- cyberspace -- according to Davidson and Rees-Mogg.

Their idea is that cyberspace will generate free zones apart from traditional government laws on speech or other control, policing or taxation. Like the residents of the march regions, residents and businesspeople in these new cyber-zones will go largely untaxed, because taxes will be almost impossible to tabulate and collect. Their freedom to speak and act freely and gather information would be unprecedented, and their sense of individual sovereignty enormous.

The authors make the provocative argument that cyberspace will transcend nationality. "Before the nation-state, it was difficult to enumerate precisely the number of sovereignties that existed in the world because they overlapped in complex ways and many varied forms of organization exercised power." In the information age, they claim, the same will be true. Sovereignty will become increasingly fragmented, with new entities emerging which will exhibit some but not all the characteristics we've come to associate with nation-stages.

Like the Knights Templar of the Middle Ages, these new cyber-republics will organize around principles that bear ltitle relation to nationality, at least geographic nationality.

"Market forces, not political majorities, will compel societies to reconfigure themselves in ways that public opinion will neither comprehend nor welcome," Davidson and Rees-Mogg maintain. "It will therefore be crucial that you see the world anew. If you fail to transcend conventional thinking at a time when conventional thinking is losing touch with reality, then you will be more likely to fall prey to an epidemic of disorientation that lies ahead."

Many of us (including myself, I think) aren't quite ready to write off the nation-state, still the most powerful and coherent entity on earth. But the disorientation Rees-Mogg and Davidson warn of is already obvious. Note the mad scrambling of businesses in publishing and entertainment, and other institutions like education and politics, to respond to the Internet, often lashing out in legal desperation or moral outrage at the rise of the new digital culture.

"Disorientation" is the perfect term for the way that groups as different as the U.S. Congress and most journailsts respond to cyberspace. Lawyers and doctors and advertising pros are scrambling to contend with the open-model distribution of once-proprietary information.

It's also a credible idea that some of the traditional functions of the nation-state -- raising armies to protect against attack -- seem increasingly dubious. Most wars were started by nationalists seeking political or economic expansion. But if cultural and influence and economic power is increasingly tied to cyberspace, and the ballooning business moving onto the Net and the Web, the rationale for most wars would evaporate. So would the idea of physical defense, one of the mainstays of the nation-state.

So the idea of merchant republics in cyberspace doesn't seem particularly far-fetched. A number of corporations -- Microsoft, AOL/Time-Warner, Disney, Intel -- are already larger and more prosperous than many countries. They will soon be as powerful as some, if they aren't already. So it doesn't seem much of a stretch to imagine companies or their components declaring themselve merchants of a new and virtual realm. Microsoft could buy an island somewhere and declare the company independent (something that's probably already occurred to Bill Gates, for whom secession might seem the logical next step if the courts continue to rule against him).

Smaller entrepeneurs could use encryption and other security tools to simply put their cyber-operations beyond the reach of governments. There's no real international law governing the global implications of the Net and the Web. Even if there were, a number of countries would surely be found to ignore any new conventions.

These kinds of republics wouldn't need traditional police forces or defense industries or tax-collection mechanisms. Just as the Net has no means of policing speech, such republics could defy regulation, especially if they became numerous.

In fact, many corners of the Net already offer virtual equivalents of the "march" state, entities that fall between the cracks of regulation and control. Wander around AIM or ICQ for awhile and you'll find thousands. We're in one now.

A couple of years ago, merchant republics in cyberspace might have seemed a wacky, even utopian, prediction. No more.

Watch for Part Three, The Return of the Luddites. this book is available at Fatbrain.

8 of 133 comments (clear)

  1. Wacky, you bet! by rw2 · · Score: 3
    A couple of years ago, merchant republics in cyberspace might have seemed a wacky, even utopian, prediction. No more.

    Unfortunately for the goals of some, it is wacky. Even the one place in world with a prayer of pulling something like that off, Sealand, is in trecherous waters.

    The cyber revolution will change government as much as the industrial one did. Which, while significant, isn't revolutionary.

  2. Guns tend to trump T1's by revscat · · Score: 3

    I don't care how fast a connection you have, what length key you have, or how distributed your organization is. There will come a time and place where you, a living breathing human bein', will be subject to somebody putting a gun in your face. Cyber-nations would be more feasable if we had "Ghost in the Shell" type legally-recognized spirits floating around on the Internet. But since I don't see that happening any time soon, I am extremely pessimistic as to the predicitons made above.

    That, and the fact that the authors seem to focus on economic interests being the primary motivators of these "cyber-states". Fuck that. I'm tired of being a consumer. I'm a CITIZEN, goddammit. I read, I think, and I like to vote. I buy shit sometimes, but that is not the focus of my being and I resent being considered otherwise, no matter how efficacious it is for marketing-types and Alan Greenspan to classify me thusly.

  3. wars by wishus · · Score: 3
    But if cultural and influence and economic power is increasingly tied to cyberspace, and the ballooning business moving onto the Net and the Web, the rationale for most wars would evaporate. So would the idea of physical defense, one of the mainstays of the nation-state.

    What exactly is the rationale for most wars?

    I don't think physical defense will ever be obselete. There will always be people who want what you've got - and there are some things that can't be digitally reproduced. Food, for example. If me and some friends want your food, we will come take it. Then we will put up our own defenses to thwart you when you come to take it back. Then you will devise defenses of your own, so next time someone tries to take your stuff, you will thwart them. Then they will develop defenses...

    Until there is digital reproduction of food, water, medicine, shelter.. there will always be potential for war.

    wishus

    Vote for freedom!
    ---

  4. Sovereign Individuals are already here by pelle · · Score: 3

    There is a lot of work being done by various mainly opensource groups already on technology for Sovereign Individuals.
    Check out my own project Neudist.org for example, where we are trying to create an online replacement for Legal Entities. Others such as WebFunds and E-Gold are creating Gold backed digital currencies a'la Cryptonomicon (They were actually doing it before Cryptonomicon). FreeNet is creating an uncensurable infrastructure and HavenCo are doing Offshore web hosting.
    I'm sure I've forgotten quite a few, but these are the technologies that will enable or inspire the Sovereign Individuals. I loved the book, but the writers are very much involved with the really high end of the market, and when it comes down to it would probably feel a bit left behind by all this free software creating real Sovereign Individuals.
    -Pelle

  5. Inevitable? by DustyHodges · · Score: 3

    Of course this is inevitable... In fact, I can see this becoming the next marketing boon for small, 3rd world nation... Take a starving country in Africa, and tell them that if they have completely non-restrictive internet laws, they will cease being poor. Say that you can sell anything you want online, and allow for this small little country to see money beyond it's wildest dreams, which is still going to be nothing but a drop in the bucket for most large businesses. I can see it being a possibility that, in the future, alot of small countries in Latin America and Africa could make up for alot of their economic stife by allowing rich European and American corporations to have free reign.

  6. interesting, didn't I read this in... by rootrot · · Score: 3

    Snowcrash, Neuromancer and many others over the last decade or so. I think we are seeing the foundations of virtual-scape presented in books like snowcrash, et al...this idea of commerce centers (evolving), gated communities (evolving and here, e.g. aol>,and the arguable anarchy between these stable realms.

    Personally, I think the writing is on the wall for net governance as we know it. The reality is that the net is *global*...that the laws that the US or any other sovereign state attempts to impliment only holds substantive force in the country of origin, treaties notwithstanding.

    Either there needs to be a global government with actual enforcement powers (I'll just hold my breath and wait for that one)...or there will eventually be some sort of global internet "treaty" wherein all signatories agree to abide by certain agreed upon terms etc. Again...I'm just going to hold my breath... Even if the later comes into being, there will always be those who refuse to sign...or sign and violate (the whole issue of enforcability is an entirely seperate and monumental issue).

    I think we are seeing the birth of a form of virtual company town...where you can be...and buy...and play...in exchange for various amounts of freedom. What is your comfort level...are you very timid and want relative safty, live in aolville (but we will be watching over you quite closely, but you don't mind that do you *gentle smile*).....or do you want no structure whatsoever, it's yours..but who do (or can) you trust then.

    It's an amazing applied sociological experiment we are watching evolve. I look forward to witnessing it...and making a living integrating it into others lives...

    rootrot

  7. Two entities will go to war. One will win. by Crash+Culligan · · Score: 4

    So it'll go in this case too: either the Net will tear down the Borders, or the Borders will tear down the Net.

    (This is a first post for me, by the way. Not on the topic, but for myself. Consequently, it's gotten a bit stream-of-consciousnessy on me, so moderate gently, please?)

    Individual nations' governments are the biggest threat, but only in the way that Hannibal's elephants were -- large, slow-moving, ponderous creatures which didn't know better than to go where you told them. They usually only attack at the orders of someone else, be it people outraged by some form of expression (the Germans against racism, Americans against pornography, the French against any advertising that written in any language other than French) out of some diluted loyalty, and a desire to stay in power. Then there's nations like China which actively seek to strangle it; even elephants get enraged sometimes.

    The Borders' best way to win is to pursue. As someone pointed out, the complete freedom to transmit whatever information you want anywhere in the world doesn't do you a whole lot of good if a team of [insert nationality] marines lands on your deep-sea-ISP and opens fire indiscriminately. And when that offshore server station is doing little things to honk off the 168+ nations of the world, don't be surprised to find Maori with grenades floating in the North Atlantic looking for yourownprivateidaho.org.

    The Net's best way to win is to persevere: to continue on in the face of the pressures and adversities. According to the dictum, the Net views censorship as damage and acts to route around it. "Damage" in this case means that occasionally those enraged Albanians will take out a netbarge or two, but the net's work will continue.

    A Net victory wouldn't destroy the borders, but with the people dealing with each other as equals and sharing information as peers, all those borders would become next to meaningless.

    The other question is, "What are you doing with the Net?"

    If you're talking about pushing goods around the world, the balance tips greatly in favor of the Borders. Someone has to produce the item in question, pick it up, ship, and drop it off at its destination. Physical entities are easy to stop at border crossings, and governments will call those couriers 'smugglers' if the item is contraband (a fancy term meaning "you can't possibly pay what we'd want to let this in here, so we're just not going to allow it"), and act to stop it. At that point, some of the world's more significant governments will join the fray, like Canada.

    If the thing being traded is information or services, though, the Net has the strong advantage. Governments have proven particularly inept at grasping ideas, much less stopping them. The honest flow of information across the Net will necessitate it being kept open, despite any legal discomforts (or attempted illegal stoppages by certain governments who shall remain nameless).

    Side-thought, and caveat: The 'Web Application' qualifies as a service, rather than a good. If most companies are going to go to web apps, then sooner or later 'illegal' or 'hack' web apps will crop up, and could be brought to bear to push information through tightly locked borders. tribalfloodnetwork.com, anyone...? It could spell a quick and decisive victory for the Net if the right information is pushed through, but if not, it WILL mean the two combatants will be fighting instead to the death.

    Many people like to dream that the Net is an integral part of humanity's future (at least until Internet2 comes along). I look at UseNet and think "Gawds, I hope not."

    (Remember what I said about 'stream-of-consciousnessiness'? Sorry about that...)

    --
    You cannot truly appreciate Dilbert until you read it in the original Klingon.
  8. The Knights Templar are an apt comparison by BrentN · · Score: 4
    The book certainly does sound interesting, but Katz's imagery about the Knights Templar brings to mind a less savory aspect of their existence as well: their final fate.

    For those who aren't familiar with the details, most of the Knights Templar were executed (burned at the stake) for "heresy." The charges were brought against them by the French king, who had heard rumors that the Knights were hoarding vast wealth. The king, in order to get his hands on the Templar treasure, conspired with groups of noblemen who were jealous of the Templars worldly power to destroy the order.

    The amazing parallel here is to the internet in modern times. The internet contains vast wealth, which the greedy governments of modern times wish to acquire. Just as the king had help in the Templar's time, governments today have willing conspirators in the form of the companies who stand to lose the most from the internet.

    The Golden Age of the Internet is over: the kings and their co-conspirators have decided to either control the wealth - or destroy it. The actions against MP3.com, Napster, and DeCSS are all symptoms of the growing movement to make the internet just another method of extracting wealth from the masses. In the United States, our elected representatives are fighting amongst themselves over how to tax the Internet properly. If sales taxes on the internet become unpopular, then they will simply levy a "telecommunications tax" on the service providers. Once it was obvious that the wealth was there in cyberspace, these institutions became the internet's worst enemy.

    This is not a hopeless battle, though. The Industrial Revolution destroyed the power of the aristocracy in Britain by creating wealth that was not tied to large tracts of land. It did not, however, do so overnight. The decline of that institution can be measured from the mid-18th century up until the twilight of the 19th century. Much in the same way, I believe the Information Revolution was the death knell of government as we know it today, and its willing conspirators.

    These institutions must evolve or be replaced, and they will. It is only a matter of time. What is important is that the replacements for them be what we dream about, not what we fear most. The hallmark of the Information Age is the burgeoning empowerment of the individual. It is this property that the modern governments and corporations in America and Europe fear most, and are trying the hardest to limit.

    This is because these institutions require complacency and uniformity to exist. Consider: if all people liked the same music, finding artists to record popular music would be easier, discovering the next John Grisham or Tom Clancy would be simpler, and the products created by these people would be easier to market, and would sell more copies. This is why the large media companies focus on expanding markets by telling us what is "cool." They simply do not have the agility to deal with more that two or three different markets. This is leading to an explosion in small niche providers: the small record labels and presses. These people are doing much better in the Internet Age.

    Can we make a difference? Certainly. Spend some time researching where your entertainment budget goes. Use the internet to find bands or authors or artists that are good, but not "signed" with a label or a publisher. Reward talent with money. If you are politically inclined, write. Write your newspaper, your representatives, and the executives of companies to praise moves you agree with and to condemn those you don't. Pick an issue for which you are passionate and promote it. And most importantly, if you don't feel like being such an activist, the email those who do with two lines or so of encouragement. It helps.