Several weeks ago I attended The End of Nation-States, by technology executive and consultant Tomás Pueyo, - part of the Stanford Digital Economy Lab seminar series. In May of 2021, Pueyo launched Unchartered Territories, a newsletter he describes as aiming to explore the unchartered territories of a fast changing world “to know how we can prepare for them.”
His seminar discussed the role of information technologies in the rise of nation-states throughout history, and how information technologies are likely to lead to the end of nation-states in the coming decades. Let me summarize Pueyo’s key arguments based on his talk and two related newsletters.
The Rise of Nation-States
In Internet and Blockchain Will Kill Nation-States, published in August of 2021, Pueyo explained how the printing press led to the emergence of nation-states in the 16th century.
The feudal system was the basic structure of society between the 9th and 15th centuries in medieval Europe. Feudalism was based on the relationship between a landed-aristocracy, - e.g., kings, dukes, counts, - and the vassals under their protection who vowed them allegiance. Power in the feudal system was hyperlocal and widely distributed across different landowners. Communication was difficult across different localities, since they each generally spoke different dialects or altogether different languages.
The Catholic Church was the biggest power in medieval Europe. The root of its power was the Church's well organized hierarchy of priests, bishops, archbishops, cardinals, and the Pope, all of which were able to communicate with each other far better than everyone else, - aristocrats and vassals alike.
“The clergy was generally educated, wrote Pueyo. “They knew, among other things, the local vernacular, Latin, and could read. Since the commoners didn’t speak Latin anymore, they couldn’t read the Bible directly, so the clergy became gatekeepers of the relationship with God. The clergy also had exclusive access to handwritten books. They strengthened that with confessions, which gave them access to everybody’s secrets. They corresponded with each other at a European scale. With that, they knew what was happening anywhere and could help each other in a way nobody else could. They had a monopoly on most information and were connected like a vast pan-European network of nodes.”
"Over the centuries, dozens of movements protested the Church. Every time, the Catholic Church learned about them, and systematically crushed them. The result was always the same: the heretics and their writings were burned, and the Church remained almighty.”
Then came the printing press. Invented by Johannes Gutenberg around 1440. Printing presses were already producing over 20 million volumes throughout Western Europe in the early 1500s, and growing at least tenfold throughout the 16th century.
The printing press made the Protestant Reformation possible by undermining the central power of the Church: its information monopoly. In 1517 Martin Luther wrote the Ninety-five Theses, which challenged what he saw as the abuses of papal authority and the Catholic clergy, especially their widespread practice of selling Indulgences. The Theses were translated into German and other languages, and thanks to the printing press, they were broadly distributed across Europe. A few years later, the Bible was translated into German and other languages, and also widely printed and distributed throughout Europe.
“All of this caused the Church to lose its grip on power, and alternative sources of power to emerge,” wrote Pueyo. “The main one was Nation-States, whose emergence was also caused by the printing press. Books were published in the cities that had the most writers and potential readers, because that’s where you could get most books and where it was easiest to sell them.”
“Whereas earlier on people were either hyperlocal with their vernacular or European in scope with Latin as a lingua franca, now people exchanged ideas primarily with those who shared their emerging regional language. That created a common identity: same language, same ideas, more contact, same feeling of brotherhood. That eventually resulted in a national sentiment: people wanted to be ruled as a unit with those they felt were so similar to them. This was one of the main drivers of the nation-state.”
The End of Nation-States
Depending on how you count, there are now over 200 nation-states in the world, 193 of which are members of the United Nations.
In September of 2021 Pueyo published The End of Nation-States, where he argued that nation-states will become increasingly inconsequential over the next few decades, undermined by two powerful information technologies: the Internet and Blockchain.
In its initial phase in the 1990s, we saw the Internet as a force for individual empowerment, transforming many of our every-day activities, including the way we work, shop, learn, bank, listen to music, watch films and deal with government. People could now interact with each other, access information and transact online, bypassing traditional gatekeepers.
“But the Internet also has a centralization force,” noted Pueyo. “Many of the industries that had millions of companies around the world now concentrate that wealth and influence in just a handful.” The past decade has seen the rise of so-called global superstar companies. These companies use the vast amounts of data gathered from their customers to offer them products and services customized to their individual preferences. The more data a company has, the more customers it will able to attract and the more data it’s then able to gather. This creates network effects and economies of scale, leaving smaller companies without access to all that data at a major economic disadvantage.
“As these companies grow, they start treating nation-states not as masters, but as peers. … As a result, companies undermine nation-states in two ways: on one side, by making information available, they extract power from nation-state gatekeepers and local companies to empower individuals to become more independent. But they also keep some of that power for themselves, becoming new gatekeepers.”
The second major force undermining nation-states is blockchain.
The blockchain first came to light in 2008 as the architecture underpinning bitcoin, the best known and most widely held digital currency. The blockchain’s original vision was limited to enabling bitcoin users to transact directly with each other with no need for a bank or government agency to certify the validity of the transactions. But, like the Internet, electricity and other transformative technologies, blockchain has transcended its original objectives. Over the years, blockchains have developed a following of their own as distributed data base architectures with the ability to handle trust-less transactions of any kind among companies and individuals where no parties need to know nor trust each other for transactions to complete.
Blockchain has the potential to counter the centralizing force of both nation-states and large, global companies. Over time, blockchain-based applications could be used to share the critical data required to coordinate the self-organizing activities of large numbers of individuals and institutions in a secure and decentralized manner, as was the case with the Internet’s early objectives.
What are the alternatives to nation-states if they’re indeed doomed to fail?
The United Nations was formed after WWII to help maintain international peace and friendly relations among nations. The International Monetary Fund and the World Bank were also organized after WWII to help countries secure financial stability and economic growth. And the World Health Organization was established in 1948 to promote health and well-being and coordinate responses to health emergencies.
The scope of governance has always grown with the size of problems to be solved. Nation-states were never built for global action. “Supranational organizations rise to solve global problems, extracting sovereignty from nation-states along the way.” Climate change, immigration, global pandemics, and other existential 21st century problems can only be effectively addressed by supranational organizations, notes Pueyo.
In addition, nation-states, especially those with more developed economies, are being financially squeezed by two major trends:
The Demographic Ticking Bomb - which combines longer life expectancies with lower birth rates. In the 1980s, “developed countries like Japan, China, and the European Union had more than five workers to pay for her old-age benefits like healthcare and pensions. In Japan, every retiree only has two workers to support her. Europe will get there in 10 to 20 years. The US will follow soon after.”
International Tax Competition. Countries will continue to compete for corporate tax income by lowering the taxes paid by global companies. Similarly, countries will lower their taxes to individual in order to attract remote workers. As a result, nation-states will have a hard time increasing taxes on corporations and individuals to pay for rising government benefits.
“We know how this ends,” wrote Pueyo in conclusion. “The only question left is: what will replace nation-states?”
This is provocative and welcomed.
Perhaps a discussion group on this subject should be started at the library.
Jim
Posted by: James Drogan | March 13, 2022 at 08:17 AM
Three notes from Spain (from Europe) from a retired CS professor, in case it starts the debate:
1) The present time is defined pr the performance of three nationalisms: USA, China and Russia. This lack of nationalism puts the European Union in a weaker situation.
2) Mr. Pueyo does not consider the most serious problem facing the present generation, the climate crisis.
3) Talking about blockchain without considering its energy needs may be an incongruity.
I would love to see the debate possible.
Posted by: gregorio martin quetglas | March 13, 2022 at 11:52 AM
Great article, I particularly enjoyed the description of the Catholic Church’s power pre Gutenberg and how technology changed peoples thoughts and behaviours. The face off between Facebook and the Australian government last year shows the power of these global corporations that absorb huge amounts of personal information and use it to control what we are fed. Who knows where this is all heading. No one government has the power to control the mega corporations of today, so powerful and wide reaching have they become.
Posted by: Tim Dunn | March 18, 2022 at 08:30 AM