My new book “Bitcoin Nation” was published on the 15th anniversary of the Bitcoin Whitepaper, October 31, 2023. You can read it below, one chapter per week. Or buy it here:
“Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government, except for all those other forms that have been tried from time to time.” — Winston Churchill
Modern democracy is a better form of government, compared to most historical forms of government. Still, most sane people will admit that it has many flaws.
Unfortunately, most people deny the possibility of fundamental improvement. It is, in my opinion, deplorable that most Western countries have enshrined a version of representative democracy into their constitutions without any mechanism to improve it over time and incorporate new technologies.
Most constitutions in place today were created before the internet, some even before electricity was widely used. If one looks at how much everything in our society has changed in the past 200 years, how can one conclude that we cannot organize our society better?
The question of how to better organise a nation has plagued me for many years. And while I offered several suggestions in my previous works, on how to better our governance, today, I do not stand behind these ideas anymore.
Not because I believe that they wouldn’t be an improvement, but rather because I doubt that any enshrined solution is a viable one.
What is needed is a form of governance that continuously improves over time, not another cast in stone system like the current one.
The difficult question is:
How to achieve continuous improvement?
A process to do so is known in other fields. It is called the market. In the free market, products and services adapt to the needs and zeitgeist of each era and usually get better over time.
What we will thus try to accomplish in this chapter is an investigation on how a nation’s governance could be subjected to free market processes.
In the first step, we will flip the question at hand on its head:
Why is national governance not subject to market forces today?
The answer to this question will surprise many socialists:
To a certain extent, they are.
If I am unhappy with the state services my home country provides, I can leave and apply for citizenship elsewhere.
There are several big showstoppers to doing so, which inhibit the market forces to a point where they are barely visible.
The first one is the fact that, unlike your internet provider, you cannot switch your sovereign without moving. Since most people, like me, are deeply rooted in their birthplace, moving is not an option.
The second obstacle is immigration and emigration policies. For many nationalities, it’s next to impossible to move to another country of their choosing. And even if you are lucky to have a passport that opens you many doors, the wealth taxes inflicted if you leave can be devastating.
To put it in a nutshell:
States have a territorial monopoly on violence. And this monopoly all but blocks free market choice of nationality from occurring.
For most contemporary people, this answer is where they stop their investigation. Since a state is defined by this monopoly, and we obviously need states, too bad, nothing can be done, move on.
One group of thinkers has gone further, however. Namely, the Libertarians, most famously Austrian Economist Murray Rothbard.
He envisioned a society where only market forces and natural law rule. Unfortunately, his and most other libertarian thinkers failed to put up a practical plan on how to get there. Rather, they wanted to enshrine a libertarian society the same way representative democracy is enshrined today. To make matters worse for the libertarians, their ideas have been usurped by Ronald Reagan in the US and under the name neoliberalism by Margaret Thatcher in the UK. Under the free market flag, they implemented cronyism via their policies. They did this to such an extent that it tainted the words “libertarianism” and “liberalism” so heavily that in most people’s minds they mean almost the opposite of what Rothbard or Mises meant with these words.
From my perspective, the original libertarians had many good ideas, but made one fatal mistake, which, if corrected, may make their dreams a reality.
For a society where governance is subject to the free market, you don’t need to first abolish the state, nor create a new territorial form of governance. The only outcome this would have is a mob rule, which to end states were invented in the first place.
The real way to get there, in my mind, is that the territorial monopoly of the state must be broken inside the current system and that the rest will follow automatically.
How to achieve this?
My proposal is simple:
Allow people to choose their state services provider, like their internet provider. Why should your nationality be any more tied to the place you live at than your internet service?
At first glance, this thought might seem ridiculous to you, please hear me out. Not so long ago, in my home country, Germany, phone and internet services were monopolized by government run companies. This was justified by the fact that it supposedly is not economically viable to have more than one infrastructure in place, and thus the state needs to provide it. After the monopoly was broken, however, it turned out that not only can having more than one telecom infrastructure be economically viable, but the existing infrastructure can be rented out to newcomers in the market. Today, the ownership of the telephone wires to my house does not limit my choice of providers.
Why should it be different for the state?