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.