What is the end goal here? Democracy is public ownership of governance. It's slow and inefficient and political but it is a rejection of dominance and that's the price you pay for collectivism. Obviously wherever power is to be had people will game the system and nowhere is this more obvious than the United States' idiotic binary two-party system but these two systems are transparent grasps at dominance. Is the end goal no longer self-actualization for all? Do people simply like being under someone's thumb or is the temptation that we could be the thumb too tempting?
Collectivism is part of the problem. I'm not saying that it can't have benefits or be wielded in a benign fashion, especially when applied at the small scale and to tackle specific problems, like innate power asymmetries between workers and large corporate interests. The problem is that collectivism of the sort advocated by Rousseau's General Will always (or very often) gives rise to specific power interests claiming to represent the General Will. Robespierre, Pol Pot, Lenin, Mao and Chávez all claimed to support the General Will.
And that's the problem in extremis. The default state is one in which an insular class emerges in government and culture which believes the voters are too uninformed to know their own interests. I could talk about the actual brain differences found in high ingroup individuals and how the cosmopolitan superordinate class is just plain wrong about very high levels of non-selective migration, but instead I will focus on the neoliberal dismissal of the fact that close to 80% of Americans want more manufacturing.
To the finance sector, and most vanilla economists, imports are a net gain for an economy, whilst exports are a net loss. This is complete departure from the evidence of history. Given it's position in Europe, maritime access to trade routes and resources Germany should have been poor, very similar to Poland in terms of GDP. But it wasn't. Why? Because it was able to engage in rapid industrialisation and become a powerhouse, an export surplus economy by the end of the 19th century, outcompeting the UK mainland by a factor or four or five in terms of industrial output by the 1890s.
The whole problem is invisible earnings. Both the finance sector and economists love the export of services. The problem is that despite the fact that these types of niche services can be incredibly high value, if we're being very, very generous only 8% of the workforce will ever be cognitively capable of participating in this high value enterprise and for three quarters of this group the value add is going to be marginal at best, amounting to little more than customer servicing.
There are other problems. Invisible earnings are less subject to tax, with a good estimate being something along the lines of 50-65% of tax paid, relative to other sectors, and the 85-90% paid for other parts of the finance sector. It can work if you're a tax haven state, and can attract in highly cognitive high value individuals so that they can comprise an insane percentage of your workforce (perhaps as high as 30%), but it's not a feasible option if you're a larger nation state. In nation states, invisible earnings are a recipe for higher taxes and governments become increasingly reliant upon other sources of tax to fund their spending.
The final problem is the Finance Curse. William Shaxson wrote a book about it published in 2018. Basically, an over-reliance on finance as a sector, and the service sector more generally, can lead to a problem very similar to the Dutch Disease. The evidence from history is quite compelling. The over-financialization of the British Empire, probably led to its decline and fall more than any other factor, with the possible exception of WWII.
When it comes to manufacturing the American people are right and the neoliberals are wrong, as are the likes of Curtis Yarvin. Whilst there are plenty of good arguments for heterodox economics at the international level, with countries specialising in specific goods and services, politicians and technocrats would do well to remember that within a nation there needs to be a balance between sectors, because labour market dynamics are pretty inelastic. This was the basic flaw of neoliberalism, although any economy will possess a degree of elasticity in terms of educating people upwards, only a relatively small percentage of the population can benefit from this dynamic. To argue otherwise is blank slatism. The only countries which recognised the dangers of an over-reliance on the service sector for employment were South Korea and Singapore, and the economic results speak for themselves.
Anyway in answer to your question, I would argue that the end goal should be something along the lines of network states operating within national borders to accomplish common goods for the broader population. It's an extension of fifty experiments argument and it's iterative. As much as possible, power should be devolved down towards the community level, with the network states operating like a market, providing market-based solutions for community led empowerment through the creation of economic opportunities.
There is a huge underutilised potential for discovering human potential. Beyond the fact that psychometric testing is now incredibly cheap and able to match people to ideal employment opportunities, skilled operators in the top 10% are 2-3x more productive than their counterparts, and that's with a degree of selection through free enterprise. Some people make great construction workers, if exposed to the right works culture while they are still young enough to change. The German system of technical education should probably play a role. Nations fail and fall because large segments of the workforce begin to fall through the cracks which become increasingly structural in nature over time, or are we still going to maintain the fiction that stable family formation can exist in communities with male unemployment rates around 80%? East Germany still lags behind West Germany, because the East German state placed less emphasis on 'traditional' families- and it's been 35 years!
Companies like Amazon and Google could play a major role. Small cities like Norwich in the UK could serve as templates for how to turn other cities into thriving centres of culture, leisure and entertainment, rather than hubs for employment, and increasingly obsolescent glass and concrete offices. One of the key observations is anchoring- creating natural thoroughfares between sites people like to visit.
Network states shouldn't become exclusionary gated communities. In an ideal world they would provide virtual support for other, less fortunate communities desperate for ways to generate revenue and prosperity, with an emphasis on choice architecture from which community leaders can select from a suite of potential labour opportunity and utilisation options. Ultimately, it's self-interest. Do you want to live in a world in which ordinary people thrive and your children are mostly safe, or do you want to live in a world which we seem to be unwittingly summoning into being at a breakneck pace?
It did! I'm excited to get that released, by the way. It should have been out by now but went on vacation before I could get it posted. Soon though!! I may have to edit this piece and add link to our convo...
I remember the predecessor to network states: seasteading. Patri Friedman's thing. That actually had a cool highly visual "vision" that didn't come off like a complicated patchwork of entrepreneurial partnerships.
In any case it raises an interesting question: Is exclusion, or exile, more coercive and monstrous than direct hands-on coercion? (Are the Amish more horrible than the US government?)
I love the idea of seasteading but I’ve always felt like it’s doomed for practical reasons. The smallest endeavor requires so much money, effort, and engineering. At least network states just require crypto, blockchain, and the internet (things that exit)…and enough people to believe in it…
Fascinating breakdown, Peter, though I can’t help feeling both options are just management theory in cosplay. Network States promise opt-in utopia but run on quiet exclusion. CEO-states offer “competence” via benevolent autocracy, i.e. monarchy with KPIs. It’s less a clash of visions than two flavours of tech-bro feudalism. I’ll take messy democracy over any system that treats humans like user metrics with a flag.
Yeah I basically agree with that assessment. "Two flavours of tech-bro feudalism" is a great way to put it! In a pinch, I could defend network states as being a project worth exploring, since it seems like something that will inevitably be tried. But Yarvin's CEO-government idea definitely feels like "management theory in cosplay," as you put it. I get a kick out of Yarvin and think he injects useful re-framings into the narrative, but I don't think he does a good job selling his CEO idea. At a certain level, he would be more convincing if he just stuck to arguing that we need more leaders specifically like FDR and Lee Kuan Yew, and left it at that.
*Starbase
https://www.nakedcapitalism.com/2025/06/freedom-cities-and-our-tech-overlords-visions-for-the-future.html
What is the end goal here? Democracy is public ownership of governance. It's slow and inefficient and political but it is a rejection of dominance and that's the price you pay for collectivism. Obviously wherever power is to be had people will game the system and nowhere is this more obvious than the United States' idiotic binary two-party system but these two systems are transparent grasps at dominance. Is the end goal no longer self-actualization for all? Do people simply like being under someone's thumb or is the temptation that we could be the thumb too tempting?
Collectivism is part of the problem. I'm not saying that it can't have benefits or be wielded in a benign fashion, especially when applied at the small scale and to tackle specific problems, like innate power asymmetries between workers and large corporate interests. The problem is that collectivism of the sort advocated by Rousseau's General Will always (or very often) gives rise to specific power interests claiming to represent the General Will. Robespierre, Pol Pot, Lenin, Mao and Chávez all claimed to support the General Will.
And that's the problem in extremis. The default state is one in which an insular class emerges in government and culture which believes the voters are too uninformed to know their own interests. I could talk about the actual brain differences found in high ingroup individuals and how the cosmopolitan superordinate class is just plain wrong about very high levels of non-selective migration, but instead I will focus on the neoliberal dismissal of the fact that close to 80% of Americans want more manufacturing.
To the finance sector, and most vanilla economists, imports are a net gain for an economy, whilst exports are a net loss. This is complete departure from the evidence of history. Given it's position in Europe, maritime access to trade routes and resources Germany should have been poor, very similar to Poland in terms of GDP. But it wasn't. Why? Because it was able to engage in rapid industrialisation and become a powerhouse, an export surplus economy by the end of the 19th century, outcompeting the UK mainland by a factor or four or five in terms of industrial output by the 1890s.
The whole problem is invisible earnings. Both the finance sector and economists love the export of services. The problem is that despite the fact that these types of niche services can be incredibly high value, if we're being very, very generous only 8% of the workforce will ever be cognitively capable of participating in this high value enterprise and for three quarters of this group the value add is going to be marginal at best, amounting to little more than customer servicing.
There are other problems. Invisible earnings are less subject to tax, with a good estimate being something along the lines of 50-65% of tax paid, relative to other sectors, and the 85-90% paid for other parts of the finance sector. It can work if you're a tax haven state, and can attract in highly cognitive high value individuals so that they can comprise an insane percentage of your workforce (perhaps as high as 30%), but it's not a feasible option if you're a larger nation state. In nation states, invisible earnings are a recipe for higher taxes and governments become increasingly reliant upon other sources of tax to fund their spending.
The final problem is the Finance Curse. William Shaxson wrote a book about it published in 2018. Basically, an over-reliance on finance as a sector, and the service sector more generally, can lead to a problem very similar to the Dutch Disease. The evidence from history is quite compelling. The over-financialization of the British Empire, probably led to its decline and fall more than any other factor, with the possible exception of WWII.
When it comes to manufacturing the American people are right and the neoliberals are wrong, as are the likes of Curtis Yarvin. Whilst there are plenty of good arguments for heterodox economics at the international level, with countries specialising in specific goods and services, politicians and technocrats would do well to remember that within a nation there needs to be a balance between sectors, because labour market dynamics are pretty inelastic. This was the basic flaw of neoliberalism, although any economy will possess a degree of elasticity in terms of educating people upwards, only a relatively small percentage of the population can benefit from this dynamic. To argue otherwise is blank slatism. The only countries which recognised the dangers of an over-reliance on the service sector for employment were South Korea and Singapore, and the economic results speak for themselves.
Anyway in answer to your question, I would argue that the end goal should be something along the lines of network states operating within national borders to accomplish common goods for the broader population. It's an extension of fifty experiments argument and it's iterative. As much as possible, power should be devolved down towards the community level, with the network states operating like a market, providing market-based solutions for community led empowerment through the creation of economic opportunities.
There is a huge underutilised potential for discovering human potential. Beyond the fact that psychometric testing is now incredibly cheap and able to match people to ideal employment opportunities, skilled operators in the top 10% are 2-3x more productive than their counterparts, and that's with a degree of selection through free enterprise. Some people make great construction workers, if exposed to the right works culture while they are still young enough to change. The German system of technical education should probably play a role. Nations fail and fall because large segments of the workforce begin to fall through the cracks which become increasingly structural in nature over time, or are we still going to maintain the fiction that stable family formation can exist in communities with male unemployment rates around 80%? East Germany still lags behind West Germany, because the East German state placed less emphasis on 'traditional' families- and it's been 35 years!
Companies like Amazon and Google could play a major role. Small cities like Norwich in the UK could serve as templates for how to turn other cities into thriving centres of culture, leisure and entertainment, rather than hubs for employment, and increasingly obsolescent glass and concrete offices. One of the key observations is anchoring- creating natural thoroughfares between sites people like to visit.
Network states shouldn't become exclusionary gated communities. In an ideal world they would provide virtual support for other, less fortunate communities desperate for ways to generate revenue and prosperity, with an emphasis on choice architecture from which community leaders can select from a suite of potential labour opportunity and utilisation options. Ultimately, it's self-interest. Do you want to live in a world in which ordinary people thrive and your children are mostly safe, or do you want to live in a world which we seem to be unwittingly summoning into being at a breakneck pace?
The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.
Glad our conversation inspired this post. :)
It did! I'm excited to get that released, by the way. It should have been out by now but went on vacation before I could get it posted. Soon though!! I may have to edit this piece and add link to our convo...
I remember the predecessor to network states: seasteading. Patri Friedman's thing. That actually had a cool highly visual "vision" that didn't come off like a complicated patchwork of entrepreneurial partnerships.
In any case it raises an interesting question: Is exclusion, or exile, more coercive and monstrous than direct hands-on coercion? (Are the Amish more horrible than the US government?)
I love the idea of seasteading but I’ve always felt like it’s doomed for practical reasons. The smallest endeavor requires so much money, effort, and engineering. At least network states just require crypto, blockchain, and the internet (things that exit)…and enough people to believe in it…
Fascinating breakdown, Peter, though I can’t help feeling both options are just management theory in cosplay. Network States promise opt-in utopia but run on quiet exclusion. CEO-states offer “competence” via benevolent autocracy, i.e. monarchy with KPIs. It’s less a clash of visions than two flavours of tech-bro feudalism. I’ll take messy democracy over any system that treats humans like user metrics with a flag.
Yeah I basically agree with that assessment. "Two flavours of tech-bro feudalism" is a great way to put it! In a pinch, I could defend network states as being a project worth exploring, since it seems like something that will inevitably be tried. But Yarvin's CEO-government idea definitely feels like "management theory in cosplay," as you put it. I get a kick out of Yarvin and think he injects useful re-framings into the narrative, but I don't think he does a good job selling his CEO idea. At a certain level, he would be more convincing if he just stuck to arguing that we need more leaders specifically like FDR and Lee Kuan Yew, and left it at that.
I have made a relatively quick sketch of an alternative here - https://theunreasonableape.substack.com/p/the-renewal-protocol?r=2o1p7o
That's a surprisingly juicy question and one I hadn't thought to ask. Want to talk about it for a podcast?
Would love to!