Book Review: The Sovereign Individual

Recently my cousin sent me this book, and I am glad he did. It’s quite a remarkable work. It’s an important work. But before I dive in, I want to point out a few things that show up in the book but I won’t be discussing:

  • Y2K
  • Bill Clinton
  • The shilling for the authors’ companies

These things are there, they are come across as anachronistic, and it would be easy to get hung up on them. I won’t. Note that from here on out all quotes are from the book.

Chivalry, Democracy, and the Paradox of Morality

Wherever farming took root, violence emerged as a more important feature of social life. Hierarchies adept at manipulating or controlling violence came to dominate society.

The first interesting thing about Sovereign Individuals is that it frames history in terms of technology, productivity, and violence. During the late middle ages, the system of feudalism emerged as a model for aggregating power. In this model, a form of social morality known as chivalry emerged. One key element of chivalry was a system of personal oaths that bound one warlord (and his serfs) to fight on behalf of another.

The book compares chivalry to patriotism:

Chivalry and citizenship both led people to kill and risk death. Only demanding and exaggerated values that are strongly reinforced by leading institutions can serve that function.

This statement provides a glimpse of how the book approaches the nation state (including democratic states) that emerged in the industrial age. A state is a system for aggregating power. States, including democratic ones, thrive not because they are morally superior, but because they are better able at marshalling violence. And they do that by exploiting the farmers and leading people to “kill and risk death.”

Although I should point out that in a sense modern states are morally superior to feudal states. That is because the systems that get people to “kill and risk death” are moral ones. In a way, moral systems are like organisms engaged in a Darwinian struggle. Moral systems that can get more people to die for them succeed, while that that can’t die out.

This leads to the somewhat Nietzschean conclusion that our moral systems are, almost by definition, oppressive. It was true of chivalry, and it is true of the moral system du jour, democracy.

The idea that democracy is successful because it is an exploitative mind virus is a primary thread of the book, but it is not the main point. I believe the main point is that the emergence of new technology will undermine the effectiveness of democracy, and in general, the nation state. But before we get to that, I want to go off on a little tangent.

Moral Exploitation

The idea that moral systems are oppressive is pretty important, so I want to linger a little bit. Consider the following quote:

A great part of the cultural energy of poor faming societies has always been devoted to suppressing experimentation.

Basically, Sovereign Individuals tells us that democracy is widespread because it is better at exploiting individuals. But Democracy doesn’t work by demanding a lot from the few, but by demanding a little bit from the many.

Imagine we plot different types of societies on a graph with two axes: the scale of the society and the degree of oppressiveness. You might get something like this (my own model, quickly produced):

In some sense, small scale societies are much more oppressive than large scale societies because they compete by being more demanding of individuals, whereas large scale societies compete by incorporating more people under their umbrella. Of course, democracies are absolutely capable of becoming oppressive. In fact, the authors imply that modern democracies are getting more and more corrupt as they become captured by their clients (i.e., bureaucrats and the recipients of welfare).

All societies are limited in size by their communication technology. The famous Dunbar limit was calculated based on the idea that human societies could become bigger than primate societies because language was a more effective coordination technology than animal communication. But our brain’s capacity for language didn’t enable unlimited cooperation, so for a long time community size was limited by our brain capacity.

Eventually, new cultural technologies emerged to optimize community coordination given the limitations of our biology, Thus, and in some sense, culture is essentially oppressive. Eventually, small, communal societies achieve maximum sustainable exploitation of individual effort (e.g., by forcing everyone to share meat they obtain from hunting equally).

The moral codes of larger societies (like chivalry and democracy) might be effective at aggregating the efforts of the many, but they are not as efficient (i.e., in terms of motivation on a per capita basis) as tribal systems of family loyalty. In the industrial age, the ability of nation-states to collect resources from the masses vastly outweighed any decrease in the amount extracted from each individual. And, in the case of democracy, it enabled the accumulation of great individual wealth that the nation could draw from.

The Fall of Democracy

Whether we glorify it as the source of human freedom, or demonize it as just another form at exploitation, the survival of democracy depends on it’s ability to collect resources from the people. And the central point of this book is that new technology in the information age (especially cryptography) will change the balance of power.

The technology of the Information Age makes it possible to create assets that are outside the reach of many forms of coercion.

Basically, Bitcoin is going to make the world more free because it will make it harder for the government to take your money (note however, that it was originally published in 1997, more than 10 years before the emergence of bitcoin).

But it isn’t just about bitcoin (i.e., stocks of wealth). Perhaps even more important are the flows of wealth (i.e., income).

As the bandwidth evolution unfolds, it will draw people more and more into the borderless virtual world of online communities and cybercommerce.

So, people will start to work from home, and then they won’t be tied to a particular place, which will make it harder for governments to tax them. Governments that react to this by offering a good value in terms of protection will thrive, and those who keep trying to raise taxes will eventually collapse.

The authors argue that small micro-states will emerge to cater to those with enough wealth to justify escaping exploitative nation states. I tend to agree, but for a reason that isn’t really spelled out that well in the book.

Basically, the revenue of a large country depends more on internal tax rates than on attracting (or losing) a few sovereign individuals. If you live in a country of 100 million people, you have to attract a lot of billionaires to make up for the lost revenue of cutting taxes. And making specific carve outs for individuals isn’t very popular in a democracy (although it happens all the time at the local level when cities compete to attract corporate investment).

Of course, the authors realize that nation states aren’t going to go down without a fight. In fact, they predict the emergence of significant neo-Luddite opposition to the emerging class of sovereign individuals. In fact, they predict that opposition to those who want to “vote with their feet” will generate pretty broad based support:

Most of those who harbor an ardent political agenda, whether nationalist, environmentalist, or socialist, will rally to defend the wobbling nation-state.

That’s quite a coalition. I should note that the authors do not come across as politically neutral. They are conservative, and so they sometimes imply that a lot of the resistance will come from the left. But nationalism, especially, is more of a right-wing phenomenon at the moment. At the end of the day, opposition to sovereign individuals will probably be pretty strong on both the right (because, nationalism) and the left (because they depend on the ability of the state to tax rich people).

Morality in the Information Age

There are a few places in this book that really seem out of place and the last chapter is one of them. Ostensibly, the purpose of the last chapter is to talk about some implications of new information technology:

As this technological revolution unfolds, predatory violence will be organized more and more outside of central control.

But to me it seemed like the real purpose of the chapter was to emphasize that while they don’t like democracy, the authors are really big fans for morality. Specifically, they are in favor of “economic virtues”:

Countries and groups that achieve successful development do so partly because they have an ethic that encourages the economic virtues of self-reliance, hard work, family, and social responsibility, high savings, and honesty.

But wait, have we forgotten so soon that the virtue of “social responsibility” is really just a cultural adaptation that enables us to be exploited by the state? And they aren’t done! Despite all the very-optimistic sounding talk about how new technology will enable people to escape the grasp of greedy nations:

Like most elites, the cognitive elite tend to be a bit above themselves, are rather arrogant, and think they can set their own standards. They are alienated from society as a result…A godless, rootless, and rich elite is unlikely to be happy, or to be loved.

I am reminded that there are two authors of this book (James Dale Davidson and Lord William Rees-Mogg), and I’m a bit curious whether one of them is somewhat more excited about the emergence of a new stateless world elite.

Although they have quite a bit to say about why a moral foundation for society is important, they don’t have a lot to say about how you create a moral society. Instead, their closing advice is, rather interestingly, not to become a computer programmer (because the industry changes too fast, and you might become obsolete).

To be honest, the last chapter left me feeling like I was missing something. Like the authors introduced an important piece of the puzzle (morality) right at the end, but didn’t really give us much of a clue as to how it fit into the rest of the story.

They did give a brief, hand-wavy kind of argument that the new technology will result in a more market oriented society, and markets naturally lead to the development of the aforementioned “economic virtues”. I don’t really buy it.

America has an amazing history of both freedom and civic virtue, but we slowly losing both. Competitive pressures will cause some nations to become more streamlined and offer a better value proposition, but economic pressures don’t necessarily form strong communities. For example, Amazon is a streamlined corporate entity that has evolved under intense competitive pressure, but I don’t see it as a source of civic virtue.

I do have hope for humanity, but for me this book is mainly about predicting the passing of a once-great society, and in particular, my own nation. They predict our nation will fall because it will become harder to capture taxes from the most productive members of society, and we won’t be able to adapt. I find that I agree with them.

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Patent Attorney, Crypto Enthusiast, Father of two daughters

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Redbeard

Redbeard

Patent Attorney, Crypto Enthusiast, Father of two daughters

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