Libra-the Rise of the Internet Rivals of Nation-States
I started to listen to Zuckerberg’s recent congressional testimony while potting my succulents. I completely abandoned my plant-potting project a few minutes after I got into the testimony. I have never expected a congressional hearing to be so entertaining. There were a lot of soap opera style of shouting and yelling while Zuckerberg sat tight trying very hard to stay calm. Most of the questions were not about Libra, but other issues Facebook has been exposed to, such as fake political campaign advertisement, Russian interference and facilitation of discriminatory housing practice. At one point, a congressman yelled at Zuckerberg, “Facebook is now a nation! You need to take more responsibilities!” Later, another congressman shouted, “You don’t have the right to mint coins. This is a right given to the government by the US Constitution!”
Power to mint, to tax and to police has historically been the territories of nation-states only. In recent decades, there have been concerns over multinational conglomerates starting to act like nation-states: they employ and police a large number of people globally, their business touches upon multiple areas of an economy and the revenues of those corporations can dwarf small to medium nations. Facebook is taking such concerns to a whole new level. Facebook is beyond nations; it is a United Nations with a billion of users with all different citizenships. People buy and sell commodities on Facebook: it is a large economy on its own. People read and share news on Facebook: it is a pubic printing press. People are regulated by Facebook and could be kicked out of Facebook: it has its own policing power. To some extent Facebook is more powerful than a nation: it knows who your family members are, who you hang out with, where you have been, what you have done, your darkest secrets and deepest sorrows, as long as you are willing to share. It probably knows you more than you do with the assistance of big data. A peak into an individual’s state of mind is a power that any nation-state would dream of. Now Facebook wants to unite a group of similarly situated companies to issue a global stable coin backed by a basket of currencies that can be easily distributed among its billion users across different countries. Libra Project is demonstrating to all nation-states what an Internet company is capable of and how such company or a group of them can be more like nation-states by venturing into an arena that has traditionally belonged to nation-states only, with the help of blockchain.
Blockchain goes beyond allowing for issuance of money by private companies. It may also allow individuals to interact with companies more like how they interact with nation-states. With blockchain, individuals can be made both participants and beneficiaries of the economy it creates for a corporation, either through buying and selling goods and services, sharing information, generating content or contributing data. Users will be similar to citizens: they will be regulated by the economy it participates and at the same time it will also be able to leave to support economy run by another corporation if it disagrees with what happens within the one they support now. Competitions among different corporations could be a force to push corporations to police themselves to live up to the standards of its users, just like how voting works in real life at nation-state level.
Nation-states have been actively using different tools to hold on to their power. Anti-trust rules are a powerful tool nation-states have used repeatedly to keep multinational corporations from growing too powerful. Nation-states have also been trying to build a stronger connection between virtual world and real world to maintain their power over Internet activities. Some countries, such as Estonia, have started the process of digitalizing identities. It is not hard to imagine that one day this digital identity would allow us to bind our virtual accounts with our true identity, if we choose so or are forced to, so we can delete or automatically assign our virtual accounts and contents upon death. We may not need password at all in the future if digital identities are enabled globally. Governments, such as China, have banned various decentralized digital coins to disallow assets from being transferred into a form that governments cannot easily seized. Governments have also started to look into issuance of their own digital currency to remain competitive in a future where most financial transactions may be built on blockchain. A combination of laws and technology may enable nation-states to keep multinational Internet companies at bay for now.
I don’t know if Zuckerberg has ever envisioned all this when he wrote “I am CEO, Bitch” on his business card at the early stage of Facebook. I wonder if he ever regrets announcing Libra prematurely, which has alerted nation-states around the world. Watching the congressional hearing was like watching a mother looking in horror at her baby who has grown into a threat to the mother’s own existence. Corporations are no longer just citizens of a country. Nation-states that have existed for such a long time in history have finally faced their rivals. The history may remember the controversies around Libra as the first global scale clash between nation-states and their possible replacement. Nation-states definitely have an upper hand for now as they have been writing the rules and they are actively playing the catch-up game with the same technologies Internet companies have come up with. It is hard to predict how this power struggle will play out eventually and when the tipping point may come, if it comes at all. How we organize our lives around nation-states have remained very much the same throughout centuries. We do not seem to have a guiding philosophy as to how we live our lives when the line between nation-state and corporations becomes blurry and when the world becomes more decentralized. I have not fully appreciated the disruptive power of Internet until I saw this congressional hearing. I am not sure if anarchy or polyarchy would be a better word to describe the future, but I do feel that we are entering into a new political era, an era calling for new political philosophy, an era marked by power struggles between corporations and nation-states and probably an era with more active roles for international organizations to play. Pandora’s box has been opened and there is no way to turn the course of heading into a world where decentralization is the driving force.
Published at Mon, 28 Oct 2019 00:47:18 +0000
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