Network States, A Renegade History

From Panarchy to Programmable Social Orders

Note to the reader: this piece is not necessarily written with logical cohesion. There are asides, digressions, and random, albeit beautiful, Satori moments. Still, I hope you enjoy reading as much as I enjoyed writing; this is the renegade history of an idea whose time has come.

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”Ideas are bulletproof.”

~V for Vendetta

The idea of a “network state” has a rich history. Most people know it originated in the cryptocurrency sector through the work of technologist Balaji Srinivasan. That is partially true. It is accurate and vital to say that Srinivasan coined the term and brought it to the mainstream, but the seed of the idea was germinated in the late 1800s. It only resurfaced recently. It emerged as a technology product envisioned by crypto-anarchists and then refined by Srinivasan.

The network state idea appeared first within the obscure panarchy movement in the late 1800s. Even early on, people believed alternative governance models could and should exist to provide security, defense, and governance options. These thinkers realized there was no one-size-fits-all solution for managing and maintaining the social order. Instead, they wanted to empower people by putting governance on the open market, subject to the dictates of choice, supply, and demand.

In this vision, network states are a form of meta-political activism combining philosophy, economics, and technology. Hence, a network state is a smorgasbord of progressive notions congealed into a dream of a new society. It is the pinnacle of a fascinating lineage of activist work to lessen the influence of corrupt, violent, and inept governments. It is a passion project that began well before its technological impetus, which contains a poetic array of ideas that eventually coalesced.

This article will describe and define the most prescient ideas around the network state. It will explore panarchy in detail, including analyzing how it could function and work. Then, it will dissect the history of and precursors to the network state, including crypto-anarchist Timothy May’s paper that first clarified the idea technologically. Finally, it will look toward the future and understand the “programmatic network state” as it spreads across our deeply interconnected world.

Let’s start by laying a foundation and consider some definitions.

Anarchism, Crypto-Anarchism,
Network States

A network state contains ideas aligned with anarchist philosophy — specifically crypto-anarchism.

Some people hear the word “anarchist” and imagine a mohawk-wearing punk rocker sporting black leotards tossing a Molotov cocktail into their grandmother’s window! 

That image of “chaos” and ”mayhem” is inaccurate, and erroneous connotations like that poison the well. “Anarchist” actually means “without rulers.” It comes from the Greek anarkhia. The prefix An means ”without,” and the suffix arkhos means ”ruler.” In other words, an anarchist does not want to be compelled to live a certain way or obey someone calling themselves king or master. In ”A Voice Crying in the Wilderness,” Edward Abbey succinctly expressed the insight of anarchism:

“Anarchism is founded on the observation that since few men are wise enough to rule themselves, even fewer are wise enough to rule others.”

This fact of “few men being wise enough” to rule anyone is why crypto-anarchists and hackers devised the network state concept. But before grappling with that idea, we must understand the phrase “crypto-anarchism.” 

A crypto-anarchist uses computer code and technology to build applications that protect privacy, economic freedom, and political liberty. They strive to use technology to liberate humankind and ensure that governments do not use similar technologies as instruments of oppression.

Crypto-anarchism is, therefore, about undermining overreach from nation-states through technological interference or disruption. For more information on the history of crypto-anarchists and their battle against the state, read Stephen Levy’s book, “Crypto: How the Code Rebels Beat the Government Saving Privacy in the Digital Age.”

With this clarity, we can now describe the “network state.” This is Srinivasan’s succinct definition:

“A network state is a theoretical community of users — called ‘subscriber citizens’ — connected via the internet, who accumulate enough capital, territory, or political clout to achieve recognition as a state. These subscriber citizens, therefore, ‘subscribe’ to their set of rules and guidelines by choice or contract rather than compulsion.“

A network state can theoretically be recognized if it exists alongside other states, but that is not a prerequisite. Geographical constraints or political boundaries do not limit their formation. One critical understanding of network states is that they do not have to be coercive or mandatory, unlike nation-states. They can and should be voluntary. The historical root of the network state was philosophical and political, with no technological ingredient. That original idea is called “panarchy.”

But what is panarchy, where did it come from, and how did it eventually become the idea of network states?  

De Puydt’s Panarchy

In 1860, Paul-Emile de Puydt wrote the seminal yet obscure paper “Panarchy.” In it, he makes the earliest known formalized argument for having competing governments or nations operating in overlapping, competitive jurisdictions. He refers to this overlapping political arrangement as a laissez-faire, laissez-passer. It is French for “let things take their course” and “let people pass,” respectively. The idea is that people can live in the same territory or jurisdiction and choose from a directory of governments, which he calls the “Bureau of Political Membership.”

De Puydt elaborates on the idea in the paper: 

“My panacea, if you will allow this term, is simply free competition in the business of government. Everyone has the right to look after his own welfare as he sees it and to obtain security under his own conditions. On the other hand, this means progress through contest between governments forced to compete for followers. True worldwide liberty is that which is not forced upon anyone, being to each just what he wants of it; it neither suppresses nor deceives, and is always subject to a right of appeal. To bring about such a liberty, there would be no need to give up either national traditions or family ties, no need to learn to think in a new language, no need at all to cross rivers or seas, carrying the bones of one's ancestors.”

To his point, all panarchic governments or “states” will overlap within a coterminous space — and “citizens” within that space can opt into a distinct governance service by paying a fee and accepting its rules. De Puydt envisioned a situation where governments would compete like any company on the market. They would list their “citizens” like a company lists shareholders. For the time, the idea was novel. But given the historical context, it is no wonder someone as prescient as de Puydt imagined the concept’s revolutionary potential.  

He imagined it precisely when the so-called “ancien régime” or “old order” fell into disrepute and crumbled. Democratic republics started to displace the rigid monarchies of the ancient world as coups erupted, beginning in the 17th century and coming to fruition in the late 19th century. De Puydt was living at the peak of this revolutionary epoch. It was a time when the foundations for theories involving competing nation-states and the so-called “social economy” emerged. 

But what is the “social economy”? 

Spontaneous Order
and Panarchy Thesis 

In panarchy, the “social economy” means societies can and will develop guidelines and rules spontaneously — or what the Austrian economists called “spontaneous order.” So long as the market operates without interruptions, a customer or marketplace will subjectively determine its needs and wants. 

This “subjectivity of value” allows markets to emerge at scale, and the ensuing activity would generate competing governance services. This formulation is what we can call the Panarchy Thesis. It is the argument that governing services are no different than other market services and can be offered within a given territory by various providers. However, although this idea has historical significance, the panarchy thesis as a technical marvel would not pick up momentum until a century later. 

In the late 20th century, John Zube revived the idea via “The Gospel of Panarchy,” a short piece he wrote in 1986. Then, in 1999, scholar Aviezer Tucker wrote the essay “The Best States Beyond the Territorial Fallacy.” He followed this with an anthologized treatment in 2015 called “Panarchy: Political Theories of Non-Territorial States.”

Before these writings, other sporadic works existed, but it was not until the modern day that their significance blossomed. It came in the shape of technology, crypto-anarchy, and the idea of making panarchy a reality by applying blockchain solutions to the problem of nation-state monopolies. The first known vision of panarchy as a technological solution appeared in 1992.

Transcending Nations: Crypto Libertaria and Virtual States

Creating a network state to increase freedom and reduce physical coercion has been a crypto-anarchist talking point since May discussed a version of these ideas in his article “Libertaria in Cyberspace.” He said:

“This is the most compelling advantage of 'Crypto Libertaria': an arbitrarily large number of separate 'nations' can simultaneously exist. This allows for rapid experimentation, self-selection, and evolution. If folks get tired of some virtual community, they can leave. The cryptographic aspects mean their membership in some community is unknown to others (vis-a-vis the physical or outside world, i.e., their 'true names') and physical coercion is reduced.” 

In his 1999 book Virtual States, cypherpunk Jerry Everard also explored these ideas through the lens of Foucauldian philosophy and discourse formation. His discourse analysis focused on the interrelationship between objects and statements describing the state. He acknowledged that the state exists as a monopoly on violence over its subjects. In other words, the state enjoys a power imbalance between itself and the citizenry.

Everard formulated the idea of disaggregating various elements of the nation-state while considering what voluntarily procured “virtual states” in a market environment would look like. He suggests that virtual states based in cyberspace will take over the “goods and services economy” (as in the panarchic vision) of the state apparatus. In the final consideration, he did not believe the state would face an extinction-level event, only that its power would be diminished in some areas but strengthened in others.

In the 1999 book The Sovereign Individual: Mastering the Transition to the Information Age, authors James Dale Davidson and Lord William Rees-Mogg accurately predict the coming of network states, albeit without naming them per se. They suggest we will transcend the idea of nation-states altogether, and this change will be ushered in by the “Information Age.”

They reflect on the idea of March Law, a legal precedent in the Middle Ages that allowed for the functioning of multiple overlapping jurisdictions. In their view, March Law returns to a more greatly disintermediated and decentralized world, leading to overlapping digital governance models. The book's “transcending nationality” section posits a future where no single nationalities exist. Instead, a heterogeneous mix of peoples and networks intermingle and choose their national identities and governance services. 

Fast forward another two decades, and these earlier “utopic visions” of the network state find a more complete and practical articulation.    

Network State Invented

Technologist, angel investor, and former Coinbase CTO Balaji Srinivasan fully fleshed out the idea. He is mainly responsible for coining the term in his 2022 book, “The Network State: How to Start Your Own Country.” The book details how a non-territorial affiliation of like-minded individuals could enact a covenant to share, build, and distribute power as a network state. Srinivasan articulated a complex definition of the idea: 

“A network state is 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 civility, an integrated cryptocurrency, a consensual government limited by a social smart contract, 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.”

The “moral innovation” piece of Srinivasan’s crypto-anarchist articulation underlies the goal of a network state. His motivation is to align ideologies more cohesively, disrupt political infighting, and institute a more accessible human future. Throughout the book, he expresses the problems with traditional nation-states and emphasizes their territorial, coercive nature. In the section on Nation States, he says, “(State) refers to the entity that governs these people, that commands the police and the military, and that holds the monopoly of violence over the geographic area that the nation inhabits.”

Srinivasan argues for a modern variation of Frederick Jackson Turner's Frontier Thesis. He makes the case that frontiers throughout history have been open, uncontested territories allowing exploration, experimentation, and settlement. In his modern take on the thesis, cyberspace represents the crypto-anarchist new frontier for social creativity and growth. It is only through these new frontiers, he claims, that people can secure greater sovereignty and build saner, more voluntary governance mechanisms.

The Frontier Thesis is reminiscent of John Perry Barlow's famous “A Declaration of the Independence of Cyberspace,” where he eschews the domination of nation-states by comparing cyberspace to a frontier inhabited by the “virus” of freedom.

The Programmatic Social Order

Barlow’s “virus of freedom” will likely spread continuously as the idea of the network state expands. The concept of panarchy took over a century to transform into the “network state.” However, it does not appear clear to the pioneers of the network state that “panarchy” was its obvious predecessor. Timothy May never mentioned panarchy in his work. Balaji alluded to panarchy in his book but never explored or examined the shared characteristics of both ideas. 

Regardless, the two ideas denote that we are on the verge of using technology — specifically blockchain and cryptography to create panarchy. The crypto-anarchists might yet realize de Puydt’s philosophical vision as the technological implementation of the network state, where people can choose their governance services without removing their “dressing gown or slippers.” He said:

“It is simply a matter of declaration before one's local political commission, for one to move from republic to monarchy, from representative government to autocracy, from oligarchy to democracy, or even to Mr Proudhon's anarchy - without even the necessity of removing one's dressing gown or slippers.”

In the final analysis, we arrive at a fully programmable, freely chosen social order — anarchy combined with network states. This governance model responds to market incentives in real-time and at scale. Subscriber citizens select their state and the rules they follow. These states can be programmed or reprogrammed with different rules or “laws” to react to dynamic environments and interact with other overlapping networks. In other words, governance becomes a programmable convenience on the market. Selecting a government would be as easy as choosing a grocery store or pharmacy to patronize without leaving town. 

Conclusion: The Network School

This meta-political technology is the most flexible governance offering because it allows people with divergent viewpoints to disagree and still get along. As many panarchist theorists rightly observed, selective governance foils the need for bloody revolutions and dangerous revolts. It is simultaneously the most anarchic and non-anarchic solution to the problem of power centralization and government overreach. It provides options without forcing people into a particular political box or creating a climate of rabid divisiveness. It is the activist’s wildest dream made into reality.

Recently, Srinivasan opened the first The Network School in Malaysia, proving that this scheme for a better future is not limited to the minds of madmen, idealists, or dreamers. Instead, it is here for real. Only time will tell how it will evolve in the future.