Can a new country, with no historical constraints, make governance skyrocket?
By Srivatsa Krishna
If there was one phenomenon common across almost all the 193 countries of the world, it is the growing disaffection with governments’ ability to deliver, as compared to citizens’ rising aspirations from them. Citizens around the globe ask, “If Amazon and Domino’s can deliver in a day or an hour, why can’t the government?” Or, “If private banks and lenders can give loans with a couple of clicks, why can’t the government streamline its own grant-making or subsidy delivery?”. (By the way, I have a whole database of some of the top private sector companies and banks, and their absurd bureaucratic processes, but we will save that for another day. Let us assume, for now, that at the median level, the private sector’s efficiency is far superior to the government’s efficiency.)
Ironically, almost concurrently, governments have been systematically defanged and incapacitated but are still expected to fix everything from potholes on the road to failing private banks or collapsing private airlines! These include areas where they simply do not have the tools to deliver nor the competence to even comprehend complex finance or technical issues sometimes, thus compounding existing problems.
There is certainly a case that centralised government organisations lack the wherewithal to cope with the pressures of the modern and technologically-different world, where scale can be achieved at a fraction of what it would have cost, say, even just 10 years ago. The internet and various associated emerging technologies allow population-scale communication and services at a fraction of the cost–in fact, close to zero-cost.
In such a world, centralised government organisations often fail not just because of leadership failures but simply due to the fact that they were not designed for this very different world of the present, and their utility had its expiry date with the industrial age. Emerging technologies, especially blockchain and crypto, make national borders, in many ways, superficial—when you look at a country as a state and not as a nation. This is a powerful, compelling argument, and lies at the heart of a powerful new book.
In a world where copyright often means the right to copy, Balaji Srinivasan is one of the foremost original thinkers, with a rockstar reputation not just in venture capital and crypto but also in applying himself to solving the world’s hardest problems.
In his brilliant new book, The Network State: Creating a New Country, his thesis is that if we can create new companies to deliver products and services cheaper, faster, and better than the existing old-generation companies, and new communities along thematic lines, and even new currencies, then why can’t we create a new country from scratch which is decentralised in its decision-making and solves citizens’ legitimate aspirations without having to worry about the burdens of history? While this may be possible, history is embedded in the individual and collective memories of people, and erasing behaviours based on such memories in this new country remains a challenge.
Balaji defines a network state (quite the mouthful) as “a social network with a moral innovation, a sense of national consciousness, a recognised founder, a capacity for collective action, an in-person level of stability, an integrated cryptocurrency, an archipelago of crowdfunded physical territories, a virtual capital, and an on-chain census that proves a large enough population income and real estate footprint to attain a measure of diplomatic recognition.”
More simply, what the book argues is that a bunch of like-minded people get together and start a country on a computer, connected via a social network, transacting via a cryptocurrency, and have their own norms for entry and exit.
This, of course, begs the question: Can, say, a Twitter controlled by shareholders, or even by its users, de-platform a democratically-elected head of state, even if they find something he says morally repugnant? Taking it further, if any community does a poll, and decides to do the same, is that legally valid and morally right? Much of the third world regions like Africa, parts of Latin America, and Asia, despite having better smartphone penetration than the first world, do not have people savvy enough to come together as the kind of community envisaged by the book, to act on fundamental existential questions such as clean water, a roof over their heads, and three square meals a day. They may vote, but how will they act against entrenched bureaucracies and political ‘special interests’?
How will the network state add value to their lives? The counterfactual is, even with the current state, which is failing them repeatedly, they are not able to make much headway, so why not try something new? Roblox, Guild, and Discord, among others, are new-age communities and networks, perhaps in the kindergarten of what Balaji envisages.
It is worth bearing in mind that, so far, no community, much less a state, has been created using tokens as incentives to join or punish deviants. That begs the question: Why would it happen for creating a new state? One of the world’s foremost economists, Mancur Olson, with whom I had the privilege of working, in his seminal tome, The Logic of Collective Action, brilliantly demonstrated the impossibility of bringing about collective action in large groups, the ubiquitous free-rider problem, and the vice-like grip of special interests. How the network state will solve this fundamental problem of economics and human behaviour is unclear.
The only question that remains to be answered, then, is that will a superstar, super-brilliant dollar-billionaire of Indian origin and US nationality, create the first network state and become its president or prime minister and solve a couple of “wicked problems” (problems which do not have any easy solution or, at best, only a corner solution)?
That will put Balaji in the running for many Nobel prizes at once, and who knows, he may even get to govern a physical, vanilla-standard country someday to use the best practices from the network state in the nation-state and deliver good governance! It is an absolutely magnificent masterpiece and magnum opus.
The author is an IAS officer. Views are personal. Twitter: @srivatsakrishna