The Sovereign Individual
A summary
Welcome to the last Sunday of January 2022! 🙋♂️
In the prior issue on creator economy, I mentioned we’ll talk about the Information Age so here we go. I’m going to try and summarize my learnings from one of the best books I’ve read in the last couple of years - The Sovereign Individual (11/10 recommended).
This book was published in 1997 and made a series of predictions some of which didn’t turn out the way expected but the ones that did, give you a bang for the time invested reading. The fact that it gives its readers predictive power is a sufficient enough reason to read this.
The authors have anchored the theme of the book on 2 key ideas-
Violence-as-a-tool to establish a social hierarchy
Megapolitical factors
The basic thesis is that the internet is far more powerful than nation-states in the information age and will eventually disintegrate governments. The 2 key ideas hold true from the times of hunter-gatherers until now. Let’s dig in.
During times of hunter-gatherers, humans did not own resources hence they needed no protection from external sources. The only protection they needed was from the wild which led to the formation of tribes. This is a plausible explanation for why and how homo sapiens learned to communicate and coordinate in groups.
The next phase of transformation was led by the agricultural revolution. The stakes were high this time with a lot to lose. Violence, when deployed, led to the loss of land, food, material possessions, farm animals, and human lives too. Protection became expensive and led to the rise of feudal lords, priests, and kings. Taxation was introduced, not as a tool to nourish society but as a cost of protection. Religious institutions had a monopoly on truth and morality until the transition to the next phase.
Question: Is religion a path to spirituality or a rulebook to keep a group in line?
The rise of the industrial revolution led to economies of scale aka mass production. The printing press demolished the power of religious institutions so now anyone could publish their own version of the truth and circulate among the masses. They reacted by trying to ban books and presses but we all know how that went. The archaic methods of violence (namely suppression and extortion by organized groups of men) deployed by religious institutions failed compared to the new tools of warfare by nation-states. Artillery and vulnerable factories required consolidation of power and led to the formation of armies and centralization of power in the hands of nation-states. This gave them the monopoly on violence. This makes it in the natural interest of nation-states to engage in some sort of conflict or war to keep themselves relevant.
Here’s how to think of violence-as-a-tool deployed by governments-
Do people pay taxes because they want to or because they have to?
The internet is that tool that has brought about another phase of megapolitical transformation into the Information age. This is the best time to be alive for individuals and a chance to participate in the generational wealth transfer.
The iPhone was probably the biggest invention in the last 2 decades. Curse it for all your addictions but it was the single-most-important tool to put power in the hands of an individual. Information became a power for whoever possessed it.
Printing press + Distribution → Create on social + share
Physical violence → Online mobs
Human armies → Armies of Robots + Drones (yet to play out)
Heavy taxation → Tax Haven (Dubai is a great example)
Voting with ballot → Voting with your foot (a phrase coined by Balaji Srinivasan)
Governments will have a hard time regulating the internet and will gradually cede control as more and more individuals live major chunks of their lives digitally. When communities are formed online, your daily discussions, acts of violence, and eventually, your assets will go digital. Nation-states will have less to offer their citizens and will have to compete like corporations to keep their best ‘customers’ (you) within their jurisdictions. Sounds crazy, right? The book predicts citizenship will die a slow death.
Citizenship goes the way of Chivalry; towards abandonment
The great migration: Silicon Valley → Miami
Right now we’re in the phase where governments have centralized control over money and can print, manipulate, seize at their wish. The authors predicted the birth of crypto and we can see it unfolding right now. The last frontier in the name of finance held by institutions seems to be under attack. No wonder they want to ban it like the church wanted to ban the printing press.
The book ends by saying those who can think critically and solve problems will be well-paid individuals. Learning any specific skill will no longer be a guarantee of lifetime success as technology will evolve at a rapid pace. The key is in learning to learn.
P.S: The book failed to predict the rise of totalitarian China. It almost seemed like Chinese officials read it word-by-word and did the exact opposite.
P.P.S: Asian nations where incomes are on the rise and will likely be for the next few decades will see a slower breakdown of the nation-state compared to western countries.