Political ramifications of smart contracts

If P2P contracts head in the direction in which they appear to be doing, than a number of very odd political ramifications flow from them. The ability to create a tailored contract which is then arbitrated by a block chain or distributed network threatens to deterratorialise legal governance in some areas (with the extreme caveat being that this is based on current contexts which can, and will change, making this redundant,) but as to the question of sovereignty, the issues that have plagued it still remain obvious.

Regardless of what distributed network a person may use, their physical presence will remain within the domain of someone, or some organisation which is de facto sovereign over that specific area of land (or sea, or air.) While we can claim a piece of land is commons, It is really the case that in effect someone, or some organisation, does in fact own it, and has merely not expressed clear ownership over it. This leads to conflict and uncertainty. Ownership can to a large degree be defined as in this post when it refers to property that is. Time is of issue with property as well, but we will not head into the complexities of what property is here, suffice to say with land, those who can exert ultimate control over it own it.

So whereas person A may have a contract for service B via a distributed network, which if not fulfilled will trigger ramification X (for example a collection agency), the ability of the distributed network and the agency which enacts the ramification will ultimately be at the discretion of whoever owns the territory on which person A resides. Unless the owner of the territory is unable to resist the ability of the agency to enact the ramification, at which point the sovereignty of the territories owner is questionable (in reality the agency is therefore sovereign in my opinion.)

So we can see from this quick example that while services can become de-territorialised quite drastically as has occurred due to the internet (but even here, if states wanted to exert control, they could easily,) and threatens to become even more so due to distributed networks (subject to the same control,) the obvious ultimate question of sovereignty remains in relation to territorial ownership.

Anyone who believes that such organisations can become sovereign as, and of, themselves, misses that they first (as I have noted above) must operate in a territory that is owned by someone. Secondly, while it may be possible for parties to create their own contracts without government oversight, the limits of these contracts will be decided on societal norms basis which is an odd connection of the high tech and the standard bio-social connections of humans. Of course, a number of individuals could jump on a seastead, fill it with nukes, and operate a libertarian paradise based on distributed network contracts, but this would have a distinct Shaker vibe to it, it would also be exceptionally delusional.

All of the above becomes even more complicated when you take into account the current legal/ state framework especially if taken in the context of Carl Schmitt’s criticisms of liberal democracy and the question of the exception revealing the sovereign. The idea posited by Schmitt, and which was proven accurate by events, is that a constitution and legal system in the liberal democratic state is assumed to be sovereign and is assumed to be above the political; this is exposed as nonsense in the event of a non-normal occurrence which falls outside of the eventualities envisioned by the legal system; this is known as the exception. In the event of the exception, someone is needed who can make a judgement as to how to proceed without guidance from the legal framework, and it is they who have sovereignty.

With the advent of distributed networks is the exception criticism still applicable? I would argue yes. On the de-territorial aspect the distributed network legal contracts will be outside of the purview of the states oversight up to the point that the contract impinges on the physical existence of that state’s territory – until the states closes down all non state territories that can act as dark zones from which these operate (think of torrent sites operating on Somalian servers etc.) * So the Schmitt criticism remains. Someone owns the territory and is ultimately needed to make decisions on what falls outside of the rule of law, and so is de facto sovereign.

The current liberal democratic states are woefully unequipped for this coming environment. The entire  claim of popular sovereignty and refusal to clarify territorial ownership/ sovereignty will press on the relationship of the de-territorial and territorial spheres causing even greater conflict which will not stop until central power has become secure. The central power will win eventually, the only question is what hue it takes. Of course, this raises the eventuality of the owners of these territories engaging in distributed network contracts with the populations, raising the Whig fantasy of rule of law sovereignty. But I will merely refer the reader back to Schmitt and MM here. The sovereign still stands above these contracts.  If not, then the sovereign is not sovereign, and whoever makes the ultimate decision on the contract is. This is still the case in which the distributed network has an automated resolution to contracts. You have merely enacted a sovereign decision that has been made prior, which is not too different from the current status of constitutions.

Blockchain then, in my opinion will not be of assistance in some Whig fantasy, and any claim to the contrary is counter productive and indulgent of political and philosophical fantasy. A childish thing. On the other hand, blockchain could be of extreme assistance in reactionary governance by virtue of providing an infrastructure mechanism that cuts out the middle men of the civil service and legal systems. Imagine what the absolute monarchs could have achieved had they not had to rely on the intelligentsia and civil servants who ultimately overthrew them in the name of democracy and scientific governance?

* The question of states merely going after the infrastructure of the blockchains is studiously ignored by proponents, despite the precedence of US capturing of central companies (either by creating them (google) or just forcing them into co-operation (apple) or just plugging into the infrastructure physically to collect all data. The idea that states could not merely shut down the super computer mining, or enact draconian laws (such as taxation) on all miners is not hard to envision.