The Tech Barons have a blueprint drawn in crayon. They have not thought any of this through.
A review of Balaji Srinivasan's book, The Network State.
Balaji Srinivasan’s 2022 book, The Network State is a blueprint of sorts. It is the wild fever-dream of Silicon Valley’s libertarian investor-class. It imagines a near future in which online communities use the blockchain to opt out of government and form their own competing “network states.”
It’s essentially just Galt’s Gulch, plus blockchain.
If you want to know what the Tech Barons are attempting to replace democracy with, then it is important to take Srinivasan seriously.
But Balaji is not a serious person. The book is manifestly ridiculous. It is a blueprint drawn in crayon. Balaji’s ideas are stunningly undercooked, offered with such conspiratorial self-certainty that you have to wonder whether anyone has bothered to ask him if he’s alright.
Imagine if Creed Bratton, from The Office, was a multibillionaire and he composed a manifesto, to which his even richer pals remarked “[Creed] has the highest rate of output per minute of good new ideas of anybody I’ve ever met.”
That’s the lesson I drew last week, while reading this pitiful excuse for a book (you can read the 135-post bluesky reaction thread here): The tech barons do have a blueprint. But they have not thought any of their plans through.
We ought to take them seriously; we ought to laugh in their faces.
Balaji’s concept of the network state is really quite simple.
(1) Start by launching an online community, organized around “One Commandment” or shared belief.
(2) Build a capacity for collective action and resource acquisition.
(3) Buy property, distributed across the globe, connected through the blockchain and Artificial/Virtual Reality.
(4) get “diplomatic recognition” from existing nation-states. Boom, congratulations, the future has arrived.
This is all delivered in painfully stilted startup-speak. To Balaji, governments are just like startups. Social movements are just like startups. There is a real “Boss Baby tweet” motif throughout the book. Srinivasan simply can’t think beyond his own proximate life experience.
He offers a few examples of potential network states. There could be a “Post-FDA society,” that engages in their own wild medical experiments (on themselves, if they’re feeling bold. But they could also sign up unwitting/desperate medical subjects through blockchain-based smart contracts), and a “Keto Kosher society” that is anti-carbohydrate, and a “Digital Sabbath society” that insists people ought to take internet detox breaks.
Now, if you are someone who read Ayn Rand and thought “yes, this explains the whole world! I am a maker, everyone else is a taker, and I should get to live in my own tax-free libertarian paradise while the rest of the world suffers for being denied the fruits of my genius,” then you will love this book.
For everyone else, every page of the book includes at least one passage that prompts this reaction:
Balaji figures his digital communities will compete (just like startups!), with the most promising ones winning over new adherents and proving the fitness of their ideas through demonstrated growth (also like startups!). And, through the magic of Web3, you could declare your apartment part of the “Post-FDA society,” and require blockchain-based identification credentials for anyone who wants to enter.
By his reasoning, any community with a shared, deeply-ingrained identity could grow and develop into a Network State. Red Sox Nation could be a Network State (Their one moral innovation/central organizing belief being “Yankees Suck!”) And, as more and more of the country comes to share this belief, who is to say that Red Sox Nation shouldn’t be its own government, diplomatically recognized and distinct from the United States government?
The basic problem here is that Balaji is remarkably incurious about what states actually do and what they are for.
If you add your apartment to the Keto Kosher/post-FDA/Yankees Suck! blockchain network, does the Network State pay for the plumbing and electric grid in that specific apartment? What about the fire department? Schools? Hospitals? Mail delivery?
(The simple question that Balaji never manages to answer is “Hey man, who is going to do the manual labor in these fully-formed network states? Who cleans your house and sells you groceries and delivers packages?” If he were to ever formulate a response, a good follow-up question would be “and, uh, do those people have rights?”)
States handle a mountain of boring-but-necessary stuff. That, ultimately, is what the administrative state is for. This is particularly true after four decades of neoliberalism, when every profitable activity has been carved out and handed over to corporations. The blueprint for building Network States is premised on pretending the boring-but-necessary stuff doesn't exist.
Having read the whole book, I am now convinced that this omission is not because Srinivasan has a secret plan that the public would object to. The omission, rather, is because Balaji just isn't bright enough to notice.
States also have to navigate across difference and dispute. This is another messy-and-unprofitable part of statecraft. Balaji’s pretend Network States sidestep this problem because "The people are spread around the world in clusters of varying size, but their hearts are in one place." This is meaningless pablum. It’s John Perry Barlow fan-fiction, written as though the Declaration of Independence of Cyberspace was more prophecy than poetry.
A network state is somewhere between a club and a cult. (But... with blockchain!) It's a group of likeminded people, forming their own community online, then claiming land offline and demanding diplomatic recognition. In practice, it's a formula for letting all the wealthy elites within your territorial borders opt out of paying taxes and obeying laws. And he expects governments will be just fine with this because… innovation.
Balaji really doesn't have the faintest idea what the difference is between citizenship and membership. There is a difference between a discord (or a DAO) and a state. States have a monopoly on legitimate use of force. States have responsibilities to the citizenry.
All of this is incredibly basic stuff. It is covered in a high school AP government course. Balaji doesn't wrestle with it at all. In a long passage that begins on page 205, he attempts to provide an authoritative explication of “what is a nation.” He does so by… quoting from the dictionary. Balaji Srinivasan is not serious people.
A big part of Srinivasan’s rhetorical style is what we might label "EPIC WINS." Every comment, every insight, is delivered like a show-stopper. He is arguing with imaginary idiots, constantly leaving them speechless in his mind.
And Balaji, as you may have surmised, is a Bitcoin fanatic and a tech accelerationist. The book is virtually impossible to understand unless you really, truly believe in the Gospel of Bitcoin.
Bitcoin didn’t just multiply in value, making him and his peers phenomenally wealthy despite legitimate use cases remaining decidedly TBD. In Balaji’s mind-palace, Bitcoin has ushered in entirely new social formations. Bitcoin, at various points in the book, is described as “the most rigorous form of history yet known to man,” and an equal competitor to nation-states and religious orders. Bitcoin’s encryption “makes state violence effectively impossible” and ensures a near-future “Pax Bitcoinica.”
Balaji doesn’t just think Bitcoin will, inevitably achieve his lofty ambitions of replacing fiat money and reconfiguring the global economy. He insists it already has.
[SIDE NOTE, because this annoys me so much: Bitcoin is an immutable distributed ledger. That is not the same as history. It’s a bit like equating your browser history with the history of the internet. The blockchain ledger only records the interactions that participants selected to make public at the time. An awful lot of the important context and social interaction won’t appear there.
Chapter 2 of the book (“History as trajectory”) is 125 pages long, despite Balaji having a completely blinkered view of what history is. He writes “If everything that happened gets faithfully recorded, history is then just the analysis of the log files." That is neither how history nor how blockchains work. The term for this type of argument is "not even wrong."
One of my favorite bits from 30 Rock features Padma Lakshmi pitching Jack on her idea for a sandwich bag. Jack, befuddled, says, "so it's a sandwich bag." And Lakshmi replies "No, Jack. It's a NEW thing that I invented."
When Balaji describes “microhistory,” he sounds like Padma Lakshmi. Except he isn’t doing a bit.]
On page 162, Balaji predicts the imminent arrival of a Second American Civil War. He imagines the triggering event will be when a bankrupt government attempts to seize people’s Bitcoin holdings. The next civil war will not be fought between Red States and Blue States, but between Green (fiat dollars) and Orange (bitcoin HODLers). Of all the scenarios that could result in a second Civil War, this is the MOST pretend of them all.
This is pathetic on a couple of levels.
First: Cryptocurrencies are speculative assets. At the systemwide level, it has no profit-generating uses. Cryptocurrencies are zero-sum games. (Technically negative-sum, since the exchanges charge fees.) For every winner, there is a loser.
I am not an economist. (But, mind you, neither is Balaji.) But I am pretty damn sure that the field of macroeconomics revolves around promoting positive-sum economic activity, wherein you spur overall economic growth, not just speculative extraction.
Balaji posits that the creation of new cryptocurrencies qualifies as “experimental macroeconomics.” Nope. Nopenopenope. Speculative gambling is not macroeconomics.
(And let me pause here to note that the bluesky thread is filled with screenshots of passages. I am, if anything, downplaying how batshit this book is.)
Second: since Bitcoin is a speculative asset with a fundamental value of zero, if the government seized peoples’ bitcoins en masse, its price would crater. Bitcoin is only a store of value if you can sell it to willing buyers.
This is akin to Ben Shapiro insisting, years ago, that if rising sea levels put beachfront property underwater, people would just “sell their houses and move.” Sell them to who, Bennyboy? Sell them to who?!?
The book was written in 2022, so it is delightfully dated in a few places. Balaji thinks the metaverse is inevitable and has basically already arrived. This is a load-bearing assumption for the Network State, because he expects the inhabitants of these online communities to spend most of their time interacting with each other through headsets. "The world has flipped to digital first: all nontrivial human-created events start in the cloud and then, if important, are “printed out” into the physical world."
From Balaji’s perspective, the pandemic moved everything online, and online everything will remain. “The digital transition happens in three phases: there’s the physical version, the intermediate form, and then the internet-native version… [such as the] transition from face-to-face meetings, to Zoom video (which is a scanner of faces), to natively digital VR meetings [or the transition] from physical cash to paypal to cryptocurrency.”
No one uses cryptocurrency to routinely buy and sell physical goods. And natively digital VR meetings have run into what we might call visceral non-adoption (Companies tried to force VR meetings on everyone, but they were terrible and no one wanted them.)
Balaji circa 2022 is convinced that the pandemic has ushered in a new era of work-from-home companies. Within two years, his entire social circle will be shouting “SILENCE, WORKER-PEONS! YOU MUST RETURN TO OFFICE SO WE MAY CONTROL YOU!" (He also figures that the pandemic disrupted education, and now everything will be zoom-school or VR-school. The reality is that pandemic-era online education was hot garbage that everyone experienced firsthand.)
In the final pages of the book (page 233 of 261), Balaji admits that his audacious scheme really only works in a world where “everything from money to messaging, doors to dwellings, farms to factories, flying drones to walking droids can be controlled from a single computer.” Balaji asserts that such a world “isn’t far off, and today there are few checks on the digital power of the tech companies that are bringing it into being.”
This is just entirely made-up. It’s science fiction, presented as nonfiction.
Balaji thinks we are living in a tripolar moment. It’s the NYT/woke capital versus the Chinese Communist Party versus the Bitcoin Bros.
The reality is that, after the book was published, U.S. regulators started saying things like “hey, TornadoCash/Binance/Coinbase, we have existing laws and you are obviously breaking them. We are going to need to have a conversation. And Balaji and his groupchat completely lost their minds about how unfair it all was.
You are not, in fact, a tripolar global power if regulators can shut you down by applying existing laws. You’re just obscenely wealthy, and surprised when that wealth fails to shield you from accountability.
The reason we have to take Balaji’s musings seriously at all is that they provide a window into what Elon Musk and the DOGEkiddies are trying to accomplish.
The tech barons think they should be allowed to opt out society. They do not know what the administrative state does. They do not care to find out. And they figure we could save a whole lot of money if we just turn the whole thing off.
Gil Duran has an excellent newsletter, The Nerd Reich, that covers all their activities.
They have tried to establish their own private tech-utopia cities. Multi-billionaires have invested millions into these schemes — which is either proof that they are serious or proof that they have such absurd wealth that they throw away millions on unserious larks (or, more likely, both).
They have spent hundreds of millions, bankrolling political candidates and trying to take over existing governments. At the national level, in the United States, it seems they have succeeded.
They have taken control of the U.S. financial system and begun to weaponize it (please read Henry Farrell’s latest, if you haven’t already).
Balaji provided the blueprint in 2022. His self-published diatribe was taken very seriously by very rich people who are entirely convinced of their own self-importance.
It would be a mistake to dismiss this out of hand. It is a serious threat.
But also, it is so very, very foolish.
Balaji Srinivasan is a clown. In March 2023, he bet a million dollars that the United States was on the brink of hyperinflation and the price of bitcoin would rise to $1 million within three months. He lost that million dollars, and then posted a video insisting that, on a deeper level, he was totally right, guuuuuys.
After that little episode, I wrote a post titled “Not enough people are making fun of Balaji Srinivasan right now.” It was true then, and it is still true today.
That’s the unavoidable contradiction: Putting a clown in charge of the global monetary system is serious. It’s dangerous. And we have to treat it seriously while also keeping in mind that this guy is a clown!
The Network State is the ranting of an unserious mind, disconnected from reality. It is bad science fiction, masquerading as bold nonfiction.
I cannot recommend reading the book. I wish I hadn’t. There are so many better ways to spend your time.
But the thing you should know about it is that it provides a blueprint-in-crayon for the government takeover that is currently under way.
The tech barons are enacting a plan. But they have not thought this plan through at all.
I am a technologist and believed for the longest time that the Valley elite had some insight that I lacked, some special brilliance that meant they understood things I did not and that their claims were therefore credible.
I no longer believe this.
The truth is that they are like the average students of an elite private university: Convinced of their own brilliance, entitled, and... not very good.
My fault was being so credulous that I took their incessant talking about their own genius at face value, when it was really just a huge warning sign.
We are now in a kind of cultural war of attrition. We have to engage this nonsense at some level as long as what the cryptolibertarians are doing is having real-world consequences.
So, sadly, somebody intelligent and informed and thoughtful has to read this stuff. I'm glad it did not have to be me and thank you for your sacrifice.
These guys make me so, so very tired.