View Full Version : The Internet and the Global Power Shift

Tuesday, May 31st, 2005, 04:09 AM
Power has always had a foundation - and in the past it was land. Those with the land had the power. They had a name for those who were landless - serfs. And it was their lot in life to work for the landowners - in return for a measly pittance. With the arrival of the industrial revolution the power base extended to capital - and people moved off the land and into the industrial cities. And for a while these two foundations of power found their expression is the process of global colonisation - of which the British Empire was the most successful example.

The power base is shifting again - to those who have information, and more accurately, control of information. This is where the personal computer and the internet come in - they are both technological tools that have shifted the balance of power. Previously, land could only be held by the few. Previously, capital could only be accumulated by the few. The few had the power. The internet distributes “information” power to the many. This power shift - away from land and capital - is undermining the prime repository of such entrenched power - the nation state.

The nation state has it origins in the power base represented by land and capital and its ability to defend its territory and possessions. The larger the territory, the more to defend, and the more power required. In modern times this has lead to the rise of “superpowers” - large territories, with large populations - with even greater national economic interests to protect. This protection has been afforded by force of arms - giving rise to super military powers.

It is interesting that commentators such as William Rees-Mogg and James Dale Davidson, authors of the path-breaking book “The Sovereign Individual” have pinpointed the first collapse of a global superpower as the turning point in history and focal point for this power shift. This was, of course, the collapse of the Berlin Wall - an epochal event which took everyone by surprise. Here was a country - a major superpower - that simply disintegrated one day. It did so in the virtual blink of an eye. The geopolitical face of the earth changed forever - a power shift for all to see.

The USA is the world’s last super power - both economically and militarily. And as such, it is being put under incredible pressure. Not only is it seen as the economic engine of the world - but increasingly, as the world’s military policeman as well. And what is its military power based on? Weaponry of course - and sophisticated weaponry at that. The question is - is it sophisticated enough for the era we are moving into? Just as the internet is providing for the rapid, and universal dissemination of information, it is also creating a new type of weapon. The modern economy’s main point of vulnerability is no longer the land it stands on - but its information systems. In other words, the computerised infrastructure of any major nation is vulnerable to cyber attack - not by conventional weapons, but by new warriors known as “crackers”. I say crackers to distinguish between their function and that of programmers, who are known as “hackers”. Crackers are hackers with attitude!

Crackers have the knowledge to break into secure computer systems and bring an economy to its knees - and the motivation to do it. The weapons in this new type of war are no longer ships, planes, tanks, standing armies and smart bombs - but simply a powerful personal computer - and perhaps a laptop at that - in the hands of a very clever individual, who needs no more than the power between his ears to enable him to declare “war”. This has shifted the balance of power. This new breed of information warrior can now target a government agency and bring it to its knees - if they wish. And this can be done by a couple of spotty teenagers - in the face of an enormous military-industrial complex. It’s David and Goliath all over again!

Just as the personal computer and the internet are dispersing the power inherent in information, so to is the same technology undermining the traditional means of defence. In the past, providing such a defence was something that cost billions of dollars for military hardware - and now it is being superseded in effectiveness by technology that can be purchased for a couple of thousand dollars. Such is the significance of the power shift that is underway.

America’s decline is just part of the decline of all nation-states. The military power that holds a nation state together is losing its potency - in the face of new technologies in the hands of the computer cracker. But it’s not just that. [The loyalty to the nation-state] is also being undermined by the internet. People online are forging communities of interest that are increasingly seen as more important than so-called national ties.People, drawn together by business interests, philosophical interests - and a myriad of other interests - are crossing national boundaries at an unprecedented rate.

Even corporations will attract more allegiance than the state. People will be drawn by a community of interest rather than nationality. Hackers have more in common with other hackers; Libertarians have more in common with other libertarians, people into genealogy have more in common with others of like mind. And this is a monumental change. The internet is creating voluntary communities - those which people choose to belong to. This is revolutionary.

The global power shift now underway - is not only a shift away from the nation state, but a shift from the collective to the individual. A shift from the sovereign state - to the sovereign individual. The internet is a form of global anarchy or organised chaos - inhabited by individuals. And I mean anarchy as it is defined - the absence of government, the absence of external controls. It has created its own rules and is a chaotic system that creates its own equilibrium. It pushes the boundaries beyond those of the nation state. It allows people to deal with each other in a transnational manner, which opens up not only possibilities, but minds. It empowers the individual. It is in effect the world’s first successful anarchic community - a society without rulers, without kings - and without government. It is a society of the self-governing.

The business dynamic of profit seeking, which underpins the growth of the internet, is global in nature and is undermining the fundamental foundation of the nation state - taxation. Without taxation the nation state is gone. For decades now, this need to finance the militaryindustrial complex has been assured by the effortless way that governments have been able to financially fleece their citizens - through the pay-as-you-earn system. This is where the employer automatically deducts the tax before handing the money over to the employee. A cleverer system has never been devised, for it both assures the government coffers remain full - while leaving the victim unaware of his personal financial loss!

For this system of taxation to work you need a population that is primarily “employed” (as opposed to self-employed). And this is now changing - due to the same forces unleashed by the computer and the internet, more and more people either work for themselves, or work on contract - thereby retaining their full income, until the government asks for it at the end of the year. And it is these people who realise the gross injustice of having to hand over 50% of their income to a bunch of incompetents. It is also these same people who are becoming aware of ways to remove the taxman’s hand from their pockets.

The internet enables individuals to do business outside their tax jurisdictions - and they can create systems to ensure that such business transactions are kept private. Payment for goods and services can be received offshore - and banked offshore - away from the prying eyes of the taxman. This is the cash economy on a global scale - what politicians love to refer to as the “black market”. The free market more likely!

Already we are witnessing a beleaguered retaliation from nation states, where they are increasingly talking about such things as - tax harmonisation (stamping out tax competition); money laundering (moving your own money around in a way designed not to attract the taxman’s attention); and propaganda campaigns against the offshore world etc. Of course, this only encourages counter-retaliation from those affected - by the creation of tools to thwart such plans.

In the end you need to ask yourself the question - when it comes to the internet, and the people on it - are bureaucrats ultimately smarter and more motivated than the individuals they depend on by way of taxation? I don’t think they are - and now the information technology Pandora is out of the box - I don’t think the bureaucrats and politicians are going to be able to squeeze it back in.

Escaping high tax jurisdictions via the internet

The internet makes “travel” easy. It makes shopping easy. It also commercialises sovereignty -allowing individual people to shop around for the best jurisdictions from which to do business. Think of the internet as the world’s largest shopping mall for financial services. At one time, opening an offshore bank account would probably have meant travelling to the country concerned and walking into the bank in person. Now, you can apply over the internet, have the documentation delivered - get your account open, and even (in many cases) manage your offshore account right there online.

And the sharper offshore banks are finally getting a sniff of the huge opportunity out there. As an avid surfer, I can report that hardly a month goes by without some new bank going online - or upgrading its services to target the internet market. One such bank, “FSharp” - brainchild of the Bank of Ireland, is aggressively promoting its offshore services. Smaller, but even more aggressive banks are appearing with increassing frequency. I guess banks are looking for profits like anyone else, and now that they can find customers across national borders - many of them are doing just that. If you’re in business, you can now open up your “global” storefront and offer goods and services to the whole world. You can accept credit card payments - and have these funds magically whisked away to your offshore business account. Let’s look at the steps for achieving this.

So you want to start business on the internet. What do you need? For starters you need to set up an International Business Corporation in a suitable offshore jurisdiction. The ideal place for this will be somewhere where they won’t poke their nose into your business, where you won’t have to fill out endless forms - and in particular, where you won’t have to pay any tax. Once you’ve done that, you’ll want to open a corporate bank account.

Next step is to find an internet service provider (ISP), then you need to get some webpages created - to display your goods or services in a professional manner. Now you’re ready to open shop. You have the goods or services, you have an offshore business structure - and an offshore account to put the money in. One more thing, you’ll need to accept credit card sales - and have them processed offshore and banked accordingly.

There are a couple of ways you can do this - depending upon whether you actually live in the USA or somewhere else. One of the quickest ways is to use the services of an offshore processor, who acts like an agent of yours, clears the card transactions and wires the funds to your nominated account. This type of service costs a little more than a traditional merchant account - around 5% - 10% of each transaction, depending upon dollar volume - but it can have you up and running in short order. And their discount rate is substantially less than your domestic tax rate!

However you do it, what you need to remember is that by doing business outside your own home country, you have the opportunity to retain such profits offshore. Naturally, there a many ways to structure your business entity so as to achieve your goal while exploiting loopholes in particular tax laws - and to this end you need to consult with offshore professionals.

The privatisation of money

It’s true to say that there have been two pillars of state control - the money system and the education system. The mind-corrupting influence of state education is a complete topic in itself - so we’ll confine ourselves to the money system. Money has always been issued by the “sovereign” - whether the king or the modern state. In years past, before the credit creation process got up steam, this power was limited by the fact that money was either an actual commodity or it was linked to an actual commodity - either gold or silver. (Although other commodities have also served as money at one time or other - like salt or tobacco)

Before the financial demands of sophisticated trade, simple coins of gold or silver were more than adequate to facilitate commerce (except that most kings couldn’t control their desire to shave the coins - and thereby debase the currency). However, it wasn’t long before carting around metal money became overly cumbersome - and the goldsmiths started issuing negotiable receipts. This is how paper money was born. And it didn’t take the goldsmiths long to figure out that they could issue “loans” in the form of gold receipts - for gold they didn’t possess. They figured that not everyone would want their gold at the same time - so were able to devise a ratio system of gold on deposit that could support gold receipts in excess of gold on deposit.

This was the beginning of the fractional reserve system - that magical process whereby a banker is able to create money out of nothing - and earn interest on it. However, at the beginning such fractional reserve money had one redeeming feature - it was still backed by gold. If you held a gold receipt, you could walk into the goldsmith and exchange it for actual gold. And later, with the development of banks, you could still walk in and exchange paper money for real gold. These were private banks issuing their own money.

An interesting and successful example of private, free banking was in Scotland, between 1793 and 1845. Each bank issued its own notes (promissory notes redeemable for gold). The system worked, because banks had to honour their promises. If a bank ran out of reserves, its owners (shareholders) had to pay the depositors out of their own pockets. Now, there's a sound idea! There was no such thing as deposit insurance, or government central banks. A bank was a business, and they had to win customer confidence by providing a stable, redeemable currency. Such was the success of Scottish private banking, that many commentators have stated that the country's prosperity during that period was partly due to its banking structure.

An interesting fact highlights this success. In 1841, total losses to Scottish depositors over the preceding 48 years were estimated at around 32,000 pounds. Whereas public losses in London alone were twice that amount in just one year! Why the discrepancy? The English already had a Central Bank - and their downside risk was 24 times greater that their Scottish counterparts. Of course, all that is history - and it was only a matter of time before governments took over the issuance of bank notes. This didn’t show up as a major step backwards until government central banks went off the gold standard - making their banknotes, in last resort, worth only the paper they were printed on.

Ending the gold standard ended the built-in controls against debasement of the currency. These days, you can walk into a bank and exchange your dollar - but you’ll only get another identical dollar (or some other country’s dollar) in return. It’s called fiat money - or legal tender money, money that the government declares is legal for settling debts. And fiat money has been a major tool of government control.

The breach between money and a real commodity like gold or silver has been a boon for the politician keen to promise the moon - in return for votes. And it’s true to say that the whole experiment with the “welfare” state has been made possible only by outrageous abuse of the money system - where new money has been created to fund such programmes. Today, we sit atop a mountain of fractional reserve-created fiat money - a mountain of debt created by spendthrift politicians who have bought votes with money either created, inflated or stolen from the hapless productive citizens. We also sit poised for a radical shift in the nature of money - a shift which is destined to undermine the centralised power of governments everywhere - the arrival of private, encrypted digital cash.

The key word here is “cash”. You’ve heard the term, “cash is king”. And so it is. You know that if you do a cash transaction - there is no doubt about the outcome (unless you’ve been handed counterfeit notes). Cash has another wonderful benefit - no one can trace it. If you go down to the weekend markets and sell a few things - you have cash in your pocket. You also have financial privacy. Unlike the use of cheques, credit cards, or ATM money cards - which leave a paper trail of your financial habits and transactions, cash is wonderfully anonymous. You earn some - you spend some. The cash changes hands - but doesn’t remember whose hands it has been in. And governments hate it.

Their version of the perfect society is when we do all our financial dealings exclusively from our bank accounts - whether by cheque or card. That way, they can keep an eye on what we’re earning and what we’re spending. And, of course, what we owe in tax. Politicians are eager for the arrival of the cashless society, in order to wipe out private cash transactions - but it won’t happen until there is an equally private alternative to hard cash - private digital cash. And the way things could possibly go, I think the politicians will wish for good old fashioned cash to come back!

There are two phases to this monetary revolution. One is the creation of secure, encrypted forms of digital cash - and the other is the fact that much of this “money” will no longer originate with the government. It will be privately issued. Let’s look at both these monetary revolutions separately. There have been many new developments in “internet” money - like PayPal, Webmoney etc - and all of these offer useful features - enabling people to transfer funds to others easily and quickly - and also transfer funds to various debit cards.

However, even though these are a smart alternative to cash - ultimately you have to load the system from existing money in your bank - official, fiat money - just like now. An even more interesting development is the potential for truly private money - money that does not originate with the government. Like I said before, this is not a completely new idea really, as banks started out as the issuers of their own private bank notes. However, in the modern statist world it does seem revolutionary. The difference now is that the potential forms of private money will be a lot different than simply going back to the situation where banks issued their own notes. So, what forms could this new private money take?

One such private exchange system is e-gold (http://forums.skadi.net/redirector.php?url=http%3A%2F%2Fwww.egol d.com). Here is a secure transaction system that will hold your funds in actual metal - gold, silver, platinum or palladium. If you fund the account with $5,000, then it is instantly converted into ounces/grams of gold (or your metal of choice) - and is 100% backed by physical insured gold - which you can take delivery of, should you wish to do so. You can now do private business with other e-gold (http://forums.skadi.net/redirector.php?url=http%3A%2F%2Fwww.egol d.com) account holders. The more people who have an e-gold (http://forums.skadi.net/redirector.php?url=http%3A%2F%2Fwww.egol d.com) account, the more valuable the service becomes.

On one level, this is simply a sophisticated barter system - but it is more than that, as your money is actual gold - and you can transact in and out of the system. For example, as a business person I can accept payment for my services (and do) in e-gold (http://forums.skadi.net/redirector.php?url=http%3A%2F%2Fwww.egol d.com). I can accrue a considerable balance. If I need some of it in dollars, to spend outside the e-gold (http://forums.skadi.net/redirector.php?url=http%3A%2F%2Fwww.egol d.com) system, then I can easily organise what is called an “outexchange” which converts the required amount of e-gold (http://forums.skadi.net/redirector.php?url=http%3A%2F%2Fwww.egol d.com) into one of the major currencies - and mails either me, or a specified third party, a cheque. It’s a great system.

Since the advent of e-gold, many other similar service providers have come on the scene. Two established services worth mentioning are Goldmoney and E-Bullion. Another new service is Pecunix. The potential for differing forms of private money is staggering. Consider another form with which you are probably familiar - airpoints. Airpoints are a form of currency - that can be spent on air travel. You only need to do two things to make it a fully functional private money. Firstly, make the airpoints transferable so they can be granted to a nominated third party. Secondly, make them negotiable for other products and services - so you can spend them on things other
than just flying. None of this is impossible - and perhaps it’s only a matter of time before airlines cotton on to what they have in hand.

In fact, any credit reward system introduced by a company can easily become a private money system. All that is needed is for the company to negotiate with other companies to get them to accept such credits. Consider another alternative. What if American Express launched its own credit system called perhaps “Express Cash”. You could either earn this cash by using the card (like bonus points), or you could even convert your fiat money for this “cash”. Amex could pay you commissions in this “cash” for introducing new members - and very soon you could have a healthy balance of Amex’s own private money - all spendable in the usual way using the card. The internet is the ideal medium for a truly global digital cash system. In fact, the internet demands a global payment system - something to simplify doing business on the net. At present, the US dollar functions as a defacto global currency - but the search is on for a viable alternative. The possibilities are endless - and they all have one thing in common, they create a medium of exchange that is outside of any one government money system. And because it is outside, it is also potentially untraceable - particularly when combined with the security measures of encryption.

All of these developments - private money, encrypted offshore banking and computerised barter move financial transactions off the government radar screen and cause a severe threat to the tax base. And the tax base, as previously stated, is the foundation of the nation state.

However, don’t expect governments to take this lying down! They will wake up to the threat, and they will start some form of rear guard action. But they will have their work cut out - the pace of change is something I believe bureaucracies will be hard put to keep up with. At the very best, they can only compete at this level if they have the expertise available - and for my money, I believe the very best cyber-brains are OUTSIDE of government.

Certainly the philosophical ideas of most hackers are inimical to the ideas of statists and bureaucrats. The internet could thwart all their delusional one world government plans. The internet - the world’s largest future economy. The internet creates its own dynamic imperatives - global commerce, global money, breaking down of international barriers, increased interaction between people of various countries - all driven by that wonderful thing called the profit motive. All talk of “nations” in this context is redundant. Those who talk about national economies are already talking the language of the past. It has usually been considered that China would be the world’s greatest economy of the future - but this is based on old thinking. Nation states still try to define themselves as “incorporated” - as business entities, but this bond (nationality) is weakening.

As secure systems come into being - trade and commerce will grow exponentially on the web. National economies will give way to the global economy - the global internet economy. The internet is also a grand equaliser - and therefore creates the greatest opportunity for the greatest number of people. It allows anyone with an idea and motivation to set up a store front and do business with the world. This makes it an unstoppable force.

Just to give you a couple of examples I’m personally aware of: “Arts and Letters” is a literary website originally created by an American - Dennis Dutton - who’s a philosophy professor at Canterbury University in Christchurch New Zealand. He lovingly created this website in his spare time - and was spectacularly successful in drawing what is termed “traffic” - visitors in other words. So successful in fact, that a US company purchased the website for $1.2 million - thereby proving how one person with a good idea can produce something of enormous value - and retire early!

Another example: a guy in Auckland, New Zealand, wrote some software called “Ghost” which allowed easy and fast copying of software over a network. He worked from home - and began selling his software product over the internet on his own behalf. Before long Symantec, the US software company, took an interest and offered him over $3 million for his product. From zero to millionaire - with nothing more than a good idea, knowledge - and the internet.

Then there is the classic case of those two teenagers who wrote the game “Doom”. Instead of selling the rights to a software company - for a tiny royalty, they gave away the first few levels of the game via the internet. Once they had their gamers hooked, they simply emailed them with the offer of the remaining levels - at a price of course. They became millionaires literally over night.

This “equalisation” of opportunity will pay the greatest dividends where such opportunities are severely limited now - like the poor nations of the world. Life for a talented individual in such a country can be a nightmare of lost dreams. But now, with the internet, such a person can create a global business from his or her bedroom. In fact, the internet allows individuals to prosper, regardless of race, gender or age. This power of equalisation of opportunity will force out all uncompetitive business - especially entrenched, bureaucratic, government-dependent ones. In fact, it will force out government as we know it. Governments of the future have two options. They can either get wise and create user-friendly environments for their citizens (to tempt them to stay there) - with low taxes and high standards of service and security, or they can fight the trend and clamp down - creating an ever more coercive social environment - and lose out in the end . But the truth is, they’ll either have to adapt to the new reality in order to survive - or go down in history as the dinosaurs of the modern age.

For millennia mankind has been subject to those with a lust for power and control. And such power seekers have always found their way up the political success ladder - in the hope of taking control of a specific piece of the earth’s crust - a nation state. And now, for the first time in history, we are seeing the breakdown of the very systems that facilitate both the powerluster’s aspirations - and the blindness of their victims. The internet is definitely a subversive tool - subversive of those in authority. And as a result, it is creating a revolutionary counter-culture and acting as a magnet for freedom lovers. Even more significantly, it is attracting the very brightest of minds - minds quite capable of circumventing the collectivist inertia of the status quo. The sort of minds that can create brilliant “escape routes” for freedom seekers everywhere. In the end it comes down to free minds outwitting imprisoned minds.

It is my opinion that as politicians and bureaucrats create more laws and obstacles as a rear guard action to the breakdown of the nation state, then freedom warriors with technical know how will find ways of overcoming them. The modern computer programmer/hacker has far more potent tools than the man from the government - and he has a fresh, anti-authoritarian attitude to go with it.

My reason for optimism is based on the type of people programmers/hackers are. They are individualists and libertarian in their thinking. They are extremely suspicious of government. And they are very intelligent - with a grasp of cybersystems that dwarfs the mindset of the average civil servant. We are entering a battlefield worthy of being called “Armegeddon” - but I believe we have the high tech tools and minds on our side. We may not win every battle - but with the internet at our disposal, we have every chance of winning the war.


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Dr. Solar Wolff
Tuesday, May 31st, 2005, 05:57 AM
All valid points. Does anyone at Skadi have an internet business?

Wednesday, June 29th, 2005, 06:46 AM
[...]The following excerpt is from "The Sovereign Individual (https://www.amazon.com/Sovereign-Individual-Mastering-Transition-Information/dp/0684832720/)", an extraordinarily well researched and believable book on "Mastering The Transition To The Information Age"; looking into the future of business and government.

The theme of this book is the new revolution of power which is liberating individuals at the expense of the 20th-century nation-state. Innovations that alter the logic of violence in unprecedented ways are transforming the boundaries in which the future must lie. If our deductions are correct, you stand at the threshold of the most sweeping revolution in history.

Faster than all but a few now imagine, microprocessing will subvert and destroy the nation-state, creating new forms of social organisation in the process. This will be far from an easy transition.

The challenge it will pose will be all the greater because it will happen with incredible speed compared with anything we've seen in the past. Through all of human history from its earliest beginnings until now, there have been only three basic stages of economic life:
(1) hunting and gathering societies;
(2) agricultural societies, and;
(3) industrial societies.

Now, looming over the horizon, is something entirely new, the fourth stage of social organisation: information societies.

Each of the previous stages of society has corresponded with distinctly different phases in the evolution and control of violence. As we explain in detail, information societies promise to dramatically reduce the returns to violence, partly because they transcend locality.

The virtual reality of cyber-space, what novelist William Gibson characterised as "consensual hallucination," will be as far beyond the reach of [government] bullies as imagination can take it. In the new millennium, the advantage of controlling violence on a large scale will be far lower than at any time since the French Revolution.

This will have profound consequences. One of these will be rising crime. When the payoff for organising violence at a large scale tumbles, the payoff for violence at a smaller scale is likely to jump. Violence will become more randomised and local. Organised crime will grow in scope. We explain why.

Another logical implication of falling returns to violence is the eclipse of politics, which is the stage for crime on the largest scale.

There is much evidence that adherence to the civic myths of the 20th-century nation-state is rapidly eroding. The death of Communism is merely the most striking example. As we explore in detail, the collapse of morality and growing corruption amongst leaders of Western governments are not random developments. They are evidence that the potential of the nation-state is exhausted.

This is a situation with striking parallels in the past. Whenever technological change has divorced the old forms from the new moving forces of the economy, moral standards shift, and people begin to treat those in command of the old institutions with growing disdain. This widespread revulsion often comes into evidence well before people develop a new coherent ideology of change.

So it was in the late 15th century, when the medieval Church was the predominant institution of feudalism. Notwithstanding popular belief in "the sacredness of the sacerdotal office", both the higher and lower ranks of the clergy were held in utter contempt - not unlike the popular attitude toward politicians and bureaucrats today.

We believe that much can be learned by analogy between the situation at the end of the 15th century, when life had become thoroughly saturated by organised religion, and the situation today, when the world has become saturated by politics.

The costs of supporting institutionalised religion at the end of the 15th century had reached a historic extreme, much as the costs of supporting government have reached a senile extreme today.

We know what happened to organised religion in the wake of the Gunpowder Revolution. Technological developments created strong incentives to downsize religious institutions and lower their costs. A similar technological revolution is destined to downsize radically the nation state early in the new millennium.

The Information Revolution

As the breakdown of large systems accelerates, systematic compulsion will recede as a factor shaping economic life and the distribution of income. Efficiency will become more important than the dictates of power in the organisation of social institutions.

This means that provinces, even cities, that can effectively uphold property rights and provide for the administration of justice, whilst consuming few resources, will become viable sovereignties in the Information Age, as they generally have not been during the last five centuries.

An entirely new realm of economic activity that is not hostage to [government or] physical violence will emerge in cyber-space. The most obvious benefits will flow to the "cognitive elite" who will increasingly operate outside political boundaries. They are already equally at home in Frankfurt, London, New Your, Buenos Aires, Los Angeles, Tokyo and Hong Kong.

Incomes will become more unequal within jurisdictions and more equal between them.

The Sovereign Individual explores the social and financial consequences of this revolutionary change. Our desire is to help you take advantages of the new age and avoid being destroyed by its impact. If only half of what we expect to see happens, you face change of a magnitude with few precedents in history.

The transformation of the new millennium will not only revolutionise the character of the world economy, it will do so more rapidly than any previous phase change.

Unlike the Agricultural Revolution, the Information Revolution will not take millennia to do its work. Unlike the Industrial Revolution, its impact will not be spread over centuries. The Information Revolution will happen within a lifetime.

What is more, it will happen almost everywhere at once. Technical and economic innovations will no longer be confined to small portions of the globe. The transformation will be all but universal. And it will involve a break with the past so profound that it will almost bring to life the magical domain of the gods as imagined by the early agricultural peoples like the ancient Greeks.

To a greater degree than most would now be willing to concede, it will prove difficult or impossible to preserve many contemporary institutions in the new millennium. When information societies take shape they will be as different from industrial societies as the Greece of Aeschylus was from the world of the cave dwellers.

Prometheus Unbound: The Rise of the Sovereign Individual

The coming revolution is both good news and bad. The good news is that the Information revolution will liberate individuals as never before. For the first time, those who can educate and motivate themselves will be almost entirely free to invent their own work and realise the full benefits of their own productivity.

Genius will be unleashed, freed from both the oppression of government and from the drags of racial and ethnic prejudice. In the Information Society, no-one who is truly able will be detained by the ill-formed opinions of others.

It will not matter what most people on earth think of your race, your looks, your age, your sexual proclivities or the way you wear your hair. In the cyber-economy they will never see you. The ugly, the fat, the old, the disabled will vie with the young and beautiful on equal terms in utter colour-blind anonymity on the new frontiers of cyber-space.

Ideas Become Wealth

Merit, wherever it arises, will be rewarded as never before. In an environment where the greatest source of wealth will be the ideas you have in your head, rather than physical capital alone, anyone who thinks clearly will potentially be rich.

The Information Age will be the age of upward mobility. It will afford far more equal opportunity for the billions of humans in parts of the world that never shared fully in the prosperity of the industrial society. The brightest, most successful and ambitious of these will emerge as truly Sovereign Individuals.

At first, only a handful will achieve full financial sovereignty. But this does not negate the advantages of financial independence. The fact that not everyone attains an equally vast fortune does not mean that it is futile or meaningless to become rich. There are 25,000 millionaires for every billionaire, that does not make you poor.

Equally, in the future, one of the milestones by which you can measure your financial success will be not just how many zeros you can add to your net worth, but whether you can structure your affairs in a way that enables you to realise full autonomy and independence. The more clever you are, the less propulsion you will require to achieve financial escape velocity.

Persons of even quite modest financial means will soar as the gravitational pull of politics on the global economy weakens. Unprecedented financial independence will be a reachable goal in your lifetime or that of your children.

At the highest plateau of productivity, these Sovereign Individuals will compete and interact on terms that echo the relations amongst the gods in Greek myth. The elusive MountOlympus of this new millennium will be in cyber-space - a realm without physical existence that will nevertheless develop what promises to be the world's largest economy by the second decade of the millennium.

The cyber-economy, rather than China, could well be the greatest economic phenomenon of the next 30 years. [The cyber-economy does not simply refer to the carrying out of business in cyber-space, although that is a vital component, but the relocation of ownership all financial assets to a combination of a physical offshore base and cyber-space and the expatriation of individuals from high tax, high regulatory jurisdictions to low-tax, low regulatory ones. This is explained in far greater depth in later chapters of the book.]

The good news is that politicians will no longer be able to dominate, suppress and regulate the greater part of this new realm than the legislators of the ancient Greek city-states could have trimmed the beard of Zeus. That is good news for the rich. And even better news for the not so rich. The obstacles and burdens that politics imposes are more obstacles to becoming rich than to being rich.

The benefits of declining returns to violence and devolving jurisdictions will create scope for every energetic and ambitious person to benefit from the death of politics. Even the consumers of government services will benefit as entrepreneurs extend the benefits of competition. Heretofore, competition between jurisdictions has usually meant competition by means of violence to enforce the rule of a predominant group.

Consequently, much of the ingenuity of interjurisdictional competition was channelled into military endeavour. But the advent of the cyber-economy will bring competition on new terms to provision of sovereignty services.

A proliferation of jurisdictions will mean proliferating experimentation in new ways of enforcing contracts and otherwise securing the safety of persons and property. The liberation of a large part of the global economy from political control will oblige whatever remains of government as we have known it to operate on more nearly market terms.

Governments will ultimately have little choice but to treat populations in territories they serve more like customers, and less in the way that organised criminals treat the victims of a shakedown racket.

Widespread adoption of public key encryption technologies will soon allow many economic activities to be initiated or completed wherever you please and in total security, be it in New York, London, up a mountain in Switzerland, by a pool in Thailand or on the beach in Bermuda. The choice will be yours.

To a degree that has never before been possible, individuals will be able to determine where to domicile themselves and their economic activities and how much tax they prefer to pay. Many transactions in The Information Age will not need to be domiciled in any territorial sovereignty at all.

Beyond Politics - What mythology describes as the province of the gods will become a viable option for the individual - a life outside the reach of kings and councils [and the tax man]. First in scores, then in hundreds, and ultimately in their millions, individuals will escape the shackles of politics. As they do, they will transform the character of governments, shrinking the realm of compulsion and widening the scope of private control over resources.

Genius And Nemesis

For anyone who loves human aspiration and success, the Information Age will provide a bounty. That is surely the best news in many generations. But it is bad news as well. The new organisation of society implied by the triumph of individual autonomy and the true equalisation of opportunity based on merit will lead to very great rewards for merit and great individual autonomy.

This will leave individuals far more responsible for themselves than they have been accustomed to being during the industrial period. It will also precipitate transition crises, including a possibly severe economic depression that will reduce the unearned advantage in living standards that has been enjoyed by residents of advanced industrial societies throughout the last century.

As we write, the top 15 percent of the world's population have an average per-capita income of $21,000 annually. The remaining 85 percent of the world have an average income of just $1,000. That huge, hoarded advantage from the past is bound to dissipate under the new conditions of the Information Age.

As it does, the capacity of nation-states to redistribute income on a large scale will collapse. Information technology facilitates dramatically increased competition between jurisdictions.

When technology is mobile and transactions occur in cyber-space, as they increasingly will do, governments will no longer be able to charge more for their services than they are worth to the people who pay for them. Anyone with a portable computer and an internet link will be able to conduct almost any information business from anywhere, and that includes almost the whole of the world's multi-trillion-dollar financial transactions.

This means that you will no longer be obliged to live in a high tax jurisdiction in order to earn a high income. In the [near] future, when most wealth can be earned anywhere, and even spent anywhere, governments that attempt to charge too much [or place too many bureaucratic or other restrictions on individuals or businesses] as the price of domicile will merely drive away their best customers. If our reasoning is correct, and we believe it is, the nation-state as we know it will not endure in anything like its present form.

The End of Nations

Changes that diminish the power of predominant institutions are both unsettling and dangerous. Just as monarchs, lords, popes and potentates fought ruthlessly to preserve their accustomed privileges in the early stages of the modern period, so today's governments will employ violence, often of a covert and arbitrary kind, in an attempt to hold back the clock.

Weakened by the challenge from technology, the state will treat increasingly autonomous individuals, its former citizens, with the same ruthlessness and diplomacy it has heretofore displayed in its dealings with other governments. The advent of this new stage in history was punctuated with a bang on August 20th, 1998, when the United States fired about $200 million worth of Tomahawk BGM-109 sea-launched cruise missiles at targets allegedly associated with the exiled Saudi millionaire and terrorist, Osama bin Laden.

Bin Laden became the first person in history to have his satellite phone targeted for attack by cruise missiles. Simultaneously the United States destroyed a pharmaceutical plant in Khartoum, Sudan, in bin Laden's honour. [Whatever the rights and wrongs] the emergence of bin Laden as the enemy in chief of the United States reflects a momentous change in the nature of warfare.

A single individual, albeit one with hundreds of millions of dollars, is now depicted as a plausible threat to the greatest military power of the Industrial Age. In statements reminiscent of propaganda employed during the Cold War about the Soviet Union, the United States president and his national security aides portrayed bin Laden, a private individual, as a transnational terrorist and leading enemy of the United States. [This was written prior to the events of 9/11 and subsequently, when bin Laden's status as a major terrorist threat was confirmed. It was also those same neo-conservative groups within the U.S.A. who laid the seeds for what many now perceive as the biggest threat to much of the Western world.]

We believe that as the modern nation-state decomposes, latter-day barbarians will increasingly come to exercise power behind the scenes Groups like the Russian Mafia, which already picks the bones of the former Soviet Union, other ethnic criminal gangs, nomenclaturas (entrenched elites that ruled former state-run economies), drug lords and renegade covert government agencies will be a law unto themselves. They already are.

Far more than is widely understood, the modern barbarians have already infiltrated the forms of the nation-state without greatly changing its appearance. They are micro-parasites feeding on a dying system. As violent and unscrupulous as a state at war, these groups employ the techniques of the state at a smaller scale. Their growing influence and power are just part of the downsizing of politics.

Microprocessing reduces the size that groups must attain in order to be effective in the use and control of violence. As this technological revolution unfolds, predatory violence will be organised more and more outside of central control. Efforts to contain violence will also devolve in ways that depend more on efficiency than magnitude of power.

History in Reverse

The process by which the nation-state grew over the last five centuries will be put into reverse by the logic of the Information Age. Local centres of power will reassert themselves as the state devolves into fragmented, overlapping sovereignties. The growing power of organised crime is merely one reflection of this tendency.

Multinational companies are already subcontracting out all but essential work. Some conglomerates, such as AT&T, Unisys and ITT have split themselves into several firms in order to function more profitably. The nation-state will devolve like an unwieldy conglomerate, but probably not before it is forced to do so by financial crisis [like dramatically reduced taxation income caused by expatriating wealthy individuals and businesses].

Not only is the power in the world changing, but the work of the world is changing as well. This means that the way business operates will inevitably change. The 'virtual corporation' is evidence of a sweeping transformation in the nature of the firm, facilitated by the drop in information and transaction costs.

We explore the implications of the Information Revolution for dissolving corporations and doing away with the "good job". In the Information Age, a "job" will be a task to do, not a position you "have".

Microprocessing has created entirely new horizons of economic activity that transcend territorial boundaries. This transcendence of frontiers and territories is perhaps the most revolutionary development since Adam and Eve struggled out of paradise under the sentence of their Maker. "In the sweat of thy face shall thou eat bread". As technology revolutionises the tools we use, it also antiquates our laws, reshapes our morals and alters our perceptions. This book explains how.

Microprocessing and rapidly improving communications already make it possible for the individual to choose where to work from. Transactions on the internet can be encrypted and will soon be impossible for tax collectors to capture. Tax-free money already compounds far faster offshore than onshore funds still subject to the high tax burden imposed by the present-day nation-state.

Not far into this millennium, much of the world's commerce will migrate into the new realm of cyber-space, a region where governments will have no more dominion than they exercise over the bottom of the sea or the outer planets. In cyber-space, the threats of physical violence that have been the alpha to omega of politics since time immemorial will vanish. In cyber-space, the meek and the mighty will meet on equal terms. Cyber-space is the ultimate offshore jurisdiction. An economy with no taxes. Bermuda in the sky with diamonds.

When this greatest tax haven of them all is fully open for business, all funds will essentially be offshore funds at the discretion of their owner. This will have cascading consequences. The state has grown used to treating its taxpayers as a farmer treats his cows, keeping them in a field to be milked. Soon, the cows will have wings.

The Revenge of Nations

Like an angry farmer, the state will no doubt at first take desperate measures to tether and hobble its escaping herd. It will employ covert and even violent means to restrict access to liberating technologies. Such expedients will however only work temporarily, if at all. The modern nation-state, with all its pretensions, will [eventually] starve to death as its tax revenues decline.

When the state eventually finds itself unable to meet its committed expenditure by raising tax revenues even further, it will resort to other, more desperate, measures. Among them is printing money. Governments have grown used to enjoying a monopoly over currency that they could depreciate at will.

This arbitrary inflation has been a prominent feature of the monetary policy of all twentieth century states. Even the best national currency of the post-war period, the German mark, lost 71 percent of its value from January 1st, 1949, through to the end of June 1995. In this same period, the US dollar lost 84 percent of its value.

This inflation had the same effect as a tax on all who hold the currency. As we explore later, inflation as revenue option will be largely foreclosed by the emergence of cyber-money [digital gold-based currencies like e-gold and GoldMoney. Gold has maintained its buying power irrespective of inflation for many decades and is an ideal value-base for such new currencies.].

New technologies will allow the holders of wealth to bypass national monopolies that have issued and regulated money in the modern period. Indeed, the credit crises that swept through Asia, Russia and other emerging economies during 1997 and 1998 attest to the fact that national currencies and credit ratings are anachronisms inimical to the smooth operation of the global economy.

It is precisely the fact that the demands of sovereignty require all transactions within a jurisdiction to be denominated in a national currency that creates the vulnerability to mistakes by central bankers and attacks by speculators which precipitated deflationary crises in one jurisdiction after another.

In the Information Age, individuals will be able to use cyber-currencies and thus declare their monetary independence. When individuals can conduct their own monetary policies over the internet it will matter less or not at all that the state continues to control the industrial-era printing presses. Their importance for controlling the world's wealth will be transcended by mathematical algorithms that have no physical existence.

In this new millennium, cyber-money, controlled by private markets will supersede fiat money issued by governments. Only the poor will be the victims of inflation and ensuing collapses into deflation that are consequences of the artificial leverage which fiat currency injects into the economy.

Lacking their accustomed scope to tax and inflate, governments, even in traditionally civil countries, will turn nasty. As income tax becomes uncollectible, older and more arbitrary methods of exaction will resurface. The ultimate form of withholding tax - de facto or even overt hostage taking - will be introduced by governments desperate enough to prevent wealth from escaping beyond their reach.

Unlucky individuals will find themselves singled out and held to ransom in an almost medieval fashion. Businesses that offer services that facilitate the realisation of autonomy in individuals will be subject to infiltration, sabotage and disruption. Arbitrary forfeiture of property, already commonplace in the United States, where it occurs five thousand times a week , will become even more pervasive.

Governments will violate human rights, censor the free flow of information, sabotage useful technologies and worse. For the same reasons that the late, departed Soviet Union tried in vain to suppress access to personal computers and Xerox machines, Western governments will seek to suppress the cyber-economy by totalitarian means. They will not succeed.

Return of the Luddites

Such methods may prove popular amongst some population segments. The good news about individual liberation and autonomy will seem to be bad news to many who are frightened by the transition crises and do not expect to be winners in the new configuration of society.

The apparent popularity of the draconian capital controls imposed in 1998 by Malaysian Prime Minister Mahathir Mohamad in the wake of the Asian market meltdown testifies to the residual enthusiasm among [the ignorant or ill-informed] many for the old fashioned closed economy dominated by the nation-state.

This nostalgia for the past will be fed by the resentments inflamed by the inevitable transition crisis. The greatest resentment is likely to be centred among those of middle talent in currently rich countries. They particularly may come to feel that information technology poses a threat to their way of life.

The beneficiaries of organised compulsion, including millionaires receiving income redistributed by governments [government contractors etc], may resent the new freedom realised by Sovereign Individuals. Their upset will illustrate the truism that "where you stand is determined by where you sit".

The very character of human society suggests that there is bound to be a misguided moral dimension to the coming Luddite reaction. Think of it as a bald desire fitted with a moral toupee. We explore the moral and moralistic dimensions of the transition crisis. Self-interested grasping of a conscious kind has far less power to motivate actions than does self-righteous fury.

While adherence to the civic myths of the 20th century is rapidly falling away, they are not without their true believers. Many humans are belongers, who place an importance on being members of a group. The same need to identify that motivates fans of organised sports makes partisans of nations.

Everyone who came of age in the twentieth century has been inculcated in the duties and obligations of the twentieth century citizen. The residual moral imperatives from industrial society will stimulate at least some neo-Luddite attacks on information technologies.

In this sense, the violence to come will be at least partially an expression of what we call "moral anachronism", the application of moral strictures drawn from one stage of economic life to the circumstances of another. Every stage of society requires its own moral rules to help individuals overcome incentive traps peculiar to the choices they face in that particular way of life.

Just as a farming society could not live by the moral rules of a migratory Eskimo band, so the Information Society cannot satisfy moral imperatives that emerged to facilitate the success of a militant twentieth century industrial state. We explain why.

In the next few years, moral anachronism will be in evidence at the core countries of the West in much the way that it has been witnessed at the periphery over the past five centuries. Western colonists and military expeditions stimulated such crises when they encountered indigenous hunting and gathering bands, as well as people whose societies were still organised for farming.

The introduction of new technologies into anachronistic settings caused confusion and moral crises. The success of Christian missionaries in converting millions of indigenous people can be laid in large measure to the local crises caused by the sudden introduction of new power arrangements from the outside.

Such encounters recurred over and over, from the sixteenth century through the early decades of the twentieth century. We expect similar clashes fairly early in the twenty-first century as Information Societies supplant those organised along industrial lines.

The Nostalgia for Compulsion

[...] With the speed of change outracing the moral and economic capacity of many in living generations to adapt, you can expect to see a fierce and indignant resistance to the Information Revolution, notwithstanding its great promise to liberate the future.

You must understand and prepare for such unpleasantness. A series of transition crises lies ahead. Deflationary tribulations, such as the Asian contagion that swept through the Far East to Russia and other emerging economies in 1997 and 1998, will erupt sporadically as the dated national and international institutions left over from the Industrial Era prove inadequate to the challenges of the new, dispersed, transnational economy.

The new information and communication technologies are more subversive of the modern state than any political threat to its predominance since Columbus sailed. This is important because those in power have seldom reacted peacefully to developments that undermine their authority. They are not likely to now.

The clash between the new and the old will shape the early years of this millennium. We expect it to be a time of great danger and great reward, and a time of much diminished civility in some realms and unprecedented scope in others.

Increasingly autonomous Sovereign Individuals and bankrupt desperate governments will confront one another across a new divide. We expect to see a radical restructuring of the nature of sovereignty and the virtual death of traditional politics before the transition is over.

Instead of state domination and control of resources, you are destined to see the privatisation of almost all services governments now provide. For inescapable reasons we explore in this book, information technologies will destroy the capacity of the state to charge more for its services than they are worth to you and other people who pay for them.

All nation-states face bankruptcy and the rapid erosion of their authority. Mighty as they are, the power they retain is the power to obliterate, not to command.

Their intercontinental missiles and aircraft carriers are already artefacts, as imposing and ultimately as useless as the last warhorse of feudalism.

Information technology makes possible a dramatic extension of markets by altering the way that assets are created and protected.

This is revolutionary. Indeed, it promises to be more revolutionary for industrial society than the advent of gunpowder proved to be for feudal agriculture. The transformation of the new millennium implies commercialisation of sovereignty and the death of politics, no less than guns implied the death of oath-based feudalism.

Citizenship will go the way of chivalry.

We believe that the age of individual economic sovereignty is coming [in fact it has now already begun]. Just as steel mills, telephone companies, mines and railways that were once 'nationalised' have been privatised throughout the world, you will soon see the ultimate form of privatisation - the sweeping denationalisation of the individual [as governments increasingly tax and invade both personal and financial privacy, people will increasingly vote with their feet].

The Sovereign Individual of this new millennium will no longer be an asset of the state, a de facto item on the treasury's balance sheet, a tethered cow ready to be milked. During this century, [increasingly] denationalised citizens will no longer be citizens as we know them, but customers.

Bandwidth Triumphs Borders

The commercialisation of sovereignty will make terms and conditions of citizenship in the nation-state as dated as chivalric oaths seemed after the collapse of feudalism. Instead of relating to a powerful state as citizens to be taxed, the Sovereign Individuals of the twenty-first century will be customers of governments operating from a "new logical space". The will bargain for whatever minimal government [and government services] they need and pay for it according to contract.

The governments of the Information Age will be organised along different principles than those which the world has come to expect over the past several centuries. Some jurisdictions and sovereignty services will be formed through 'assortive matching', a system by which affinities, including commercial affinities, are the basis upon which virtual jurisdictions earn allegiance.

In rare cases, the new sovereignties may be modern day equivalents of medieval organisations, like the 900-year old Sovereign Military Hospitaller Order of St. John of Jerusalem, of Rhodes and of Malta. More commonly known as the Knights of Malta, the order is an affinity group for rich Catholics, with 10,000 current members and an annual income of several billions. The Knights of Malta issues its own passports, stamps and money, and carries on full diplomatic relations with seventy countries.

It is a short step logically from a [form of] virtual sovereignty of telephone subscribers to sovereignty for more coherent communities on the internet. Bandwidth, or the information carrying capacity of a communications medium, has been expanding faster than computational capacity multiplied after the invention of transistors. If this trend to greater bandwidth continues, as we believe likely [as has happened], it is only a matter of a few years, soon after the turn of the millennium, until bandwidth becomes sufficiently capacious to make technically possible the "metaverse", the alternative cyber-space world imagined by the science fiction novelist Neal Stephenson.

Stephenson's "metaverse" is a dense virtual community with its own laws. We believe it inevitable that, as the cyber-economy becomes richer [and cyber or digital currency becomes far more widespread], its participants will seek and obtain exemption from at least some of the anachronistic laws of nation-states.

The new cyber-communities will be at least as wealthy and competent in advancing their interests as the Knights of Malta. Indeed, they will be more capable of asserting themselves because of far reaching communications and information warfare capabilities. We explore still other models of fragmented sovereignty in which small groups can effectively lease the sovereignty of weak nation-states, and operate their own economic havens much as freeports and free trade zones are licensed to do today.

A new moral vocabulary will be required to describe the relations of Sovereign Individuals with one another and with what remains of government. We suspect that as the terms of these new relations come into focus, they will offend many people who came of age as citizens of twentieth century nation-states.

The end of nations and the "denationalisation of the individual" will deflate some warmly held notions, such as 'equal protection under the law', that presuppose power relations that are soon to be obsolete.

As virtual communities gain coherence, they will insist that their members be held accountable to their own laws, rather than those of the former nation-states in which they happen to reside. Multiple systems of law will again coexist over the same geographic area, just as they did in ancient and medieval times.

Just as the attempts to preserve the power of knights in armour were doomed to fail in the face of gunpowder weapons, so the modern notions of nationalism and citizenship are destined to be short-circuited by microtechnology. Indeed, they will eventually become comic in much the same way that the sacred principles of fifteenth century feudalism fell to ridicule in the sixteenth century.

The cherished civic notions of the twentieth century will be comic anachronisms to as yet unborn generations after the transformation of the new millennium. The Don Quixote of the twenty-first century will not be a knight-errant struggling to revive the glories of feudalism but a bureaucrat in a brown suit, a tax collector yearning for a citizen to audit.

Reviving Laws of the March

We seldom think of governments as competitive entities, except in the broadest sense, so the modern intuition about the range and possibilities of sovereignty has atrophied.

In the past, when the power equation made it much more difficult for groups to assert a stable monopoly of coercion, power was frequently fragmented, jurisdictions overlapped, and entities of many different kinds exercised one or more of the attributes of sovereignty.

Not infrequently, the nominal overlord actually enjoyed scant power on the ground. Governments weaker than the nation-states are now faced with sustained competition in their ability to impose a monopoly of coercion over a local territory. This competition gave rise to adaptations in controlling violence and that will soon be new again.

When the reach of lords and kings was weak, and claims of one or more groups overlapped at a frontier, it frequently happened that neither could decisively dominate the other. In the Middle Ages, there were numerous frontier or "march" regions where sovereignties blended together. These violent frontiers persisted for decades or even centuries in the border areas of Europe.

There were marches between areas of Celtic and English control in Ireland; between Wales and England, Scotland and England, Italy and France, Germany and the Slav frontiers of Central Europe, and between the Christian kingdoms of Spain and the Islamic kingdom of Granada.

Such march areas developed distinct institutional and legal forms of a kind that we are likely to see again during this millennium. Because of the competitive position of the two authorities, residents of march regions seldom paid tax.

What is more, they usually had a choice in deciding whose laws they were to obey, a choice that was exercised through such legal concepts as "avowal" and "constraint" that have now all but vanished. We expect such concepts to become a prominent feature of the law of Information Societies.

Transcending Nationality

Before the nation-state, it was difficult to enumerate precisely the number of sovereignties that existed in the world because they overlapped in complex ways and varied forms of organisation exercised power. They will do so again.

The dividing lines between territories tended to become clearly demarcated and fixed as borders in the nation-state system. They will become hazy again in the Information Age. In this new millennium, sovereignty will be fragmented once more. New entities will emerge exercising some but not all of the characteristics we have come to associate with governments.

Some of these new entities, like the Knights Templar and other military orders in the Middle Ages, may control considerable wealth and military power without controlling any fixed territory. They will be organised on principles that bear no relation to nationality at all.

Members and leaders of religious corporations that exercised sovereign authority in parts of Europe in the Middle Ages in no sense derived their authority from national identity. They were of all ethnic backgrounds and professed to owe their allegiance to God, and not to any affinities that members of a nationality are supposed to share in common.

Merchant Republics of Cyber-space

You will also see the re-emergence of associations of merchants and wealthy individuals with semi-sovereign powers, like the Hanse (confederation of merchants) in the Middle Ages. The Hanse that operated in the French and Flemish fairs grew to encompass the merchants of sixty cities.

The "Hanseatic League" as it is redundantly known in English (the literal translation is 'Leaguely League'), was a member of the Germanic merchant guilds that provided protection to members and negotiated trade treaties. It came to exercise semi-sovereign powers in a number of Northern European and Baltic cities. Such entities will re-emerge in place of the dying nation-state in this new millennium, providing protection and helping to enforce contracts in an unsafe world.

In short, the future is likely to confound the expectations of those who have absorbed the civic myths of twentieth century industrial society. Among them are the grand illusions of social democracy that once thrilled and motivated the most gifted minds.

They presuppose that societies evolve in the way that governments wish them to - preferably in response to opinion polls and scrupulously counted votes. This was never as true as it seemed fifty years ago. Now it is an anachronism, as much an artefact of industrialism as a rusting smokestack.

The civic myths reflect not only a mindset that sees society's problems as susceptible to engineering solutions; they also reflect a false confidence that resources and individuals will remain as vulnerable to political compulsion in the future as they have been in the twentieth century.

We doubt it. Market forces, not political majorities, will compel societies to reconfigure themselves in ways that public opinion will neither comprehend nor welcome. As they do, the naive view that history is what people wish it to be will prove wildly misleading.

It will therefore be crucial that you see the world anew. That means looking in from the outside in order to reanalyse much of that you have probably taken for granted. For this will enable you to come to a new understanding. If you fail to transcend traditional thinking at a time when conventional thinking is losing touch with reality, then you will be more likely to fall prey to an epidemic of disorientation that lies ahead.

"The Sovereign Individual" is the most insightful book on "Future History", i.e. attempted prediction of the near future, that I have seen. It describes how the advent of cyber-space will undermine the power of our current nation-states, and how wealthy people, possibly including large parts of the upper-middle class, will shun the tax-happy nation-states and live "off-shore", i.e. in any jurisdiction that suits them, typically small countries such as can be found in the Caribbean. By the same token, a lot of businesses will move their head offices and many of its other functions based on cost/benefit, where cost of labour and taxation will be major factors, although not the only ones. An increasing number of activities can truly be performed without physical presence, as the world's work becomes increasingly intellectual. My own example of an early adaptor of this method would be Science Fiction author Arthur C. Clarke, who lives and writes tax-free in Sri Lanka.

Fundamentally, this trend to the "off-shore" will capitalise on an emerging free market in sovereignty, i.e. the provision of government services such as defence, police and court system. The likely result of this market will be that large scale support of unprofitable activities, such as massive transfer payments to nominally or factually poor people, will become increasingly rare, as those governments that focus on protection will be able to offer a lower price. Thus, businesses and wealthy individuals will simply settle in jurisdictions that have minimal or nonexistent welfare systems.

Another of the major predictions is that as business becomes globalised, wages will tend to equalise between countries, but become less equal between individuals and between types of work. A computer programmer in Estonia will earn wages not very different from one in the City of London (if not, any new hiring will be in Estonia, and they will send their product instantly to London), whereas both may well earn vastly more than any assembly-line worker in Luton or Narva.

The authors predict that the nation-states, in particular those in the industrialised West, i.e. the USA and Western Europe, will undergo severe disruptions, probably including civil unrest, panicked attempts at taxation of anything that moves (and in particular of anything that does not), governments holding as hostages wealthy individuals, and so on (cf. "The Economist", 1997-May-30, cover story "The Vanishing Taxpayer", published AFTER "The Sovereign Individual").

The thing most worth noting is that while the authors show only thinly concealed glee at the non-producers getting cut off from transfer payments and government salaries, several authors with different world views make very similar predictions, although with jeers rather than cheers. Examples are Eugene Luttwak ("Turbo-Capitalism", critical but admitting that the alternatives are often worse); Lester Thurow ("The Future of Capitalism", mostly critical); and William Greider ("One World, Ready or Not", mainly critical). With such a consensus on substance, i.e. actual predictions, I would have to conclude that they are probably right, and I observe that "The Sovereign Individual" makes the strongest and most clear-cut case.

Source: [I]Extract from “The Sovereign Individual (https://www.amazon.com/Sovereign-Individual-Mastering-Transition-Information/dp/0684832720/)” (1997) by James Dale Davidson and Lord William Rees-Mogg

Friday, March 31st, 2006, 09:39 AM
The New Frontier

All of you reading this are in the vanguard - the first wave of troops in the world's next major battle arena. You are on the internet. You are one of the "early adopters", adopting new technologies and new ideas ahead of the majority. Your thinking is being changed and your world view is being radically altered. You may not know this - but it is happening all the same. In the "old" world politics rules. The politics of envy. The politics of power for power's sake. The politics of right and left; Republican and Democrat; Conservative and Labour. The politics of the old world. The world of dinosaurs.

But the internet represents a "new" world. A self-organising world without government - a world that poses a real threat to the old world. In this new world, people do as they please. They organise themselves (without being told what to do); they police themselves - to maintain the order required for things to work; they read what they like; they form opinions outside those proscribed by the mainstream media; they say what they like; they trade; they exchange goods, services and ideas - without bureaucratic interference. They live a life outside of imposed, involuntary government.

This is a radical concept, and hardly anyone realises it. The internet is a tool for sure, but it is much more than that. It is a completely new way of doing things. A new of organising things and a new way of dealing with each other - without the dead hand of the state. That's why the conventional media is obsessed with linking the internet (in the old world's public mind) to such things as pornography, violence, bomb making, death cults, drug trafficking and money laundering. They want to discredit it. They want to portray the internet as something dangerous - rather than liberating.

To them, the internet represents anarchy. And that is true, for anarchy means "no government". It doesn't necessarily mean lawlessness - although that is how it is always defined. Anarchy is anathema to the status quo. That's why you always hear about anarchists "throwing bombs" and causing mayhem. But the media dare not talk about how well anarchy works on the net - how much gets done without the force of compulsory government behind it. This anarchy on the internet is a major threat to the old world. Just think back a few years - to before the Berlin Wall came down. Back then, in the days of the Cold War, information was something that governments had tight control over. Most countries had nationalised media services (like TV and even newspapers). The totalitarian ones (the Soviet Union, China etc.), had sealed borders as far as information and news was concerned.

The internet has abolished such controls. Information is in free flow - and the powers-that-be don't like it. Yes, the Chinese government is bending over backwards to control the flow of information. But even they know they cannot abolish the internet - but hope to control the content instead. They will fail. They are already failing. There are multitudes of ways to bypass the clumsy censorship attempts of the Chinese Communist Party. Even learning English achieves this! Sure, some of the information on the net is maybe worse than useless - thereby putting more responsibility on the reader to assess its truth or falsehood. But this is a good thing, not a bad thing. People should bear that responsibility, for if they do not, who will?

What is happening on the internet has never happened before. We are seeing the birth of a completely new world-view, a new culture. We are seeing the true globalization of the planet - not according to "one-world-government" views, or the "New World Order", but according to the self-interested actions of millions of independent human beings - all going about their business, and creating a revolution while they are at it. This is what's so remarkable. It is not a PLAN. It is not a conspiracy. It's chaos in practice.

If Adam Smith, the great Scots economist and moral philosopher, was alive today he'd recognise the internet as the optimum example of his much quoted "invisible hand". In his book, "The Wealth of Nations", Smith claimed that within the system of capitalism, an individual acting for his own good tends also to promote the good of his community. In other words, when people are given free reign to further their own interests and ambitions, there is the unintended consequence of this also benefiting everybody else. The truth of this claim is proven each time you take a look at the real world. Take Bill Gates, for example. In his pursuit of his own dream and passion he revolutionised personal computing on a grand scale. He delivered new tools to the masses in such a way that for a couple of hundred dollars, people were able to vastly improve their productivity.

Take Steve Jobs of Apple fame. Not only did Apple's original Macintosh operating system become the inspiration for Windows, but Jobs has made a "second coming" with the huge success of the iPod. This little box is delivering previously unheard of musical benefits to millions of people world wide. One man's dream can turn to everyone's advantage. That's the invisible hand. And the internet is now the prime driver and showcase for the validity of this theory. In previous essays I have said how the money system and education are the two areas of public life that need to be wrenched from state control - as they represent power levers that allow for all sorts of abuses and manipulations. Prior to the internet it was almost impossible to conceive of any realistic challenge to government monopolies in these two areas. But with the net, both education and the money system itself could be radically overhauled.

Of course, this hasn't happened yet, but there are clues and signs of the potential for this. Just take the ongoing growth in e-currency systems. Now, while e-gold is still limited in its use because of the need to convert to fiat money, imagine how rapidly it would grow if more and more people decided to treat gold as money - and if shops and merchants accepted it. Same goes for education. With the capacity and capability of the net growing year by year, and with the new faster download technologies gaining broader acceptance, it's easy to see how "distance learning" could be taken to a whole new level. Just imagine signing on for some educational course or other, to be delivered by internet - using live and recorded lectures and lessons. There really is no limit to what could be achieved using this medium.

But the really interesting thing is how this possibility opens up the whole education market to the FREE market in so many innovative ways. And more importantly, it allows new ways of education to gain traction, and to compete head-on with the old, tired state systems that abound. Another major battle arena will be in the area of privacy - the right to keep your personal and financial affairs private. For the first time in history, technology is making it possible for the ordinary person to outwit the government, to use the latest technology to enhance his own life - on his own terms. It appears that George Orwell ("1984") may have been wrong, when he envisaged a future world where technology gave governments the absolute power they craved - and allowed them to completely enslave the masses.

Instead, it appears technology is providing the necessary tools of liberation. But the powers-that-be will not give up their position easily. There will be a real battle. They do not want you to be free. They do not want you to keep your affairs private. They do not want you to get to a point of view where you see THEIR function as not only unnecessary, but downright dangerous. The "old" world is right now up to its old tricks, with "wars and the rumours of wars" - the oldest tactic of diversion ever known. We have the war in Iraq. We have the threatened war with Iran. We even have rumblings of future conflict with China. And, of course, we have that most ridiculous war of all, the war against "terrorism".

This has to be the biggest hoax of the 21st century, a war against an idea, a tactic. A war against nobody in particular. A perfect war with no possible end. And what's really interesting is that the opposition to such wars is coming from the internet world. The free world. The mainstream media have become irrelevant - with their ongoing state-encouraged propaganda and mindless outpourings of car accident data, trivia and sensationalism. Just ask yourself, do you really expect to learn what's really happening by turning on your TV, or buying the daily paper? Of course not. That's not where the real information action is. It's on the net.

Whether you realise it or not - YOU are part of this drama. You are caught up in history's writing. Get smart. Be part of the solution. Move now to protect yourself and prepare yourself morally, intellectually and practically. We live in perhaps the most exciting period in human history. It's the end of an age - the death throes of the nation state. But it's the beginning of something much better - the shift to a new way of social organisation. A way which will encompass a recognition of the rights and power of each individual. You see, contrary to popular wisdom, it's individual people who matter, not those trussed up, pompous idiots who call themselves our leaders. Welcome to the emerging world of the self-governing, autonomous human being - the Sovereign Individual.

Source: http://sovereignlife.com/kickstart.html (http://forums.skadi.net/redirector.php?url=http%3A%2F%2Fsovereig nlife.com%2Fkickstart.html)