Mechanics of Freedom, chapters 49-50

I am starting to post the translation of the fifth part, The Machinery of Freedom.

As usual, everything begins with a poetic epigraph. In it, Friedman ironizes Hobbes’ idea of a mythical state of nature, in which a war of all against all occurs, and only the state is capable of protecting little people from this primitive horror. As for me, I had to recall how sonnets are structured.

Chapter 49, The First Legal System. Friedman announces his new book about legal systems that differ greatly from ours. At the time, it was still being written; now it is finished, but I haven’t tackled its translation yet. He asserts that literally all (or almost all) current legal systems originate from the fairly simple-to-understand tradition of blood feud, and then demonstrates this with several examples.

Chapter 50, Anarcho-Capitalism: The Kindergarten Version. Here, Friedman points out how this original legal system, through some simple tweaking, turns into the basic model of law and order under ancap—which has about as much relation to real modern models of stateless law enforcement as Robinson Crusoe’s economy has to a real economy.

Next, I will briefly switch to the translation of Eric Mack. Very little has been collected for it so far, but I hope you will encourage me with your donations. Details are on the translation page.

And a small curiosity illustrating the popular opinion that ancaps are usually not strong in mathematics. As the work neared completion, I clearly saw that my statistics for translated chapters weren’t adding up; I recounted them, and it turned out there are slightly more chapters in total, and slightly fewer have been translated, than I had previously shown in the images. Everything flows…

Blockchain Registries, Continuation of the Discussion

Alexei Konashevich

Thank you for your comment. I bypassed the issues of the political arrangement of the system, and the presented concept is described in the language of the current system. But the architecture is much broader. I developed these protocols with fervent crypto-anarchists who saw the idea of a “filter as a jurisdiction” as their advantage. They are applied to self-organized communities, meaning that central governing bodies are not needed; delegative democracy can be abolished, for example, and direct e-voting can be implemented on the same blockchain.

One of the problems I pointed out is that it is mistaken to believe we can do without third parties. It’s just that right now the main third party is the state in the form of a registry holder. But the registry itself no longer needs to be “held.” Blockchain performs this function. All that remains is to replace registrar officials with a decentralized system of validators in various fields. But the most important thing is the resilience of this model to all kinds of oppression. In my scientific work, I describe how it is possible to resist a potential digital dictatorship.

At the blockchain level, a digital dictatorship will not be able to prevent anything. People can write anything into blockchains, whether it is legal or not—it doesn’t matter, it is simply a repository where all facts are recorded. As I explained, above the blockchains, we have a system of “filters,” meaning that what we consider legal goes into the general pool—into the current registry of property rights and civil status. But no one holds this database. Since the protocol is the same for everyone, anyone who wishes to look into the database (there may not be one general one, but many specialized ones: civil registry, land cadastre, etc.) downloads the bundle of blockchains and applies this protocol on top of them.

As long as we trust the authority, we use the protocol, apply it on top, and all of us, independently of each other, receive the same database locally on our PCs. Legitimatization occurs through the voluntary acceptance of the protocol. Elements of the protocol (smart laws and court decisions) are also recorded in the blockchain. But if the authority oversteps, this entire superstructure can be demolished, and the data in the blockchain will not be affected in any way (all facts, whether legal or not, are recorded there, including illegal decisions by officials and courts). And as a result of a reboot of power, a new image of justice and law can be applied to all those old records. If official Bob seized land from Alice, then after the overthrow of the authority, the new government simply wipes out the old database, creates new filters, and rescans the blockchains with the new filters. Under the new rules, Alice is restored to her rights by simply declaring the record of the seizure of the plot invalid.

Continuing the theme, here is a short video about CBDCs and central bank cryptocurrencies, which are not cryptocurrencies at all, but a complete lie.

https://youtu.be/bVFmpHaoBDA

Life with androids

Solution to the android husbandry problem by Artyom Seversky.

We are given a favorable but completely unfamiliar environment, as well as a company of androids—universal interfaces for transforming this environment. The working conditions of the android exclude its conversion into private property. And so, behold—Ancap-chan becomes a communist!

Features of Android Husbandry

A. Synergy. Non-linear growth of productivity resulting from an increase in the number of androids involved in a task; there is a significant positive economy of scale. Therefore, the constant privatization of androids one by one to serve families or individuals is inefficient.

B. Unsuitability for zero-sum games. Any attempt to requisition an android for tasks that do not benefit others is suppressed with incredible ease. Insisting that an android perform a strictly individual assignment is incredibly difficult. Therefore, the most advantageous evolutionarily stable strategy is to employ androids primarily for the benefit of the largest possible collectives.

C. Uncertainty of the future. According to the terms of the problem, the end date of the experiment is unknown. It is also unknown how complex the production of new androids will be. Therefore, one should proceed from the pessimistic assumption that the growth of the human population will occur faster than the growth of the android population for a considerable amount of time.

Now I will formulate the strategy.

  1. Our goal is the maximum prosperity of the community in the longest possible perspective.
  2. Until it is possible to ensure that the growth of the android population exceeds the increase in the number of people, we should reduce our dependence on androids by developing production chains that do not include androids.
  3. Priority is given to tasks that bring immediate benefit to the maximum number of community members. That is, instead of tasks like “bring me some tea,” preference is given to tasks like “construct a time-cost function for planting a tea plantation for the entire human community based on the number of androids involved in the task; now you three go and plant it.”
  4. Since androids are de facto slaves in public use, the social structure to be adapted as a self-governance mechanism should be one that implies the mass use of public slaves. For example, Lacedaemon, better known as Sparta. That is, decisions on the plans for using androids for public tasks are prepared by a “gerousia”—these do not necessarily have to be biological elders, but some elected body of experts in such optimization tasks. And the decisions are approved by the “apella,” that is, a general assembly.
  5. An obvious solution for the initial setup phase:
    5.1. Each family receives an android for family setup tasks during the daytime and has the right to use synergistic effects by cooperating with neighbors.
    5.2. A small surplus of androids (at the start there are slightly more than there are families) is immediately assigned to public tasks according to the scheme “gerousia outlines the plan, apella approves.”
    5.3. During the nighttime, all family androids must be sent to public works with instructions to return by morning.
  6. As the community grows and becomes more complex, the initial mechanism will inevitably be revised. Questions regarding revision should be raised after a change in the number of families, the end of the primary setup phase (everyone already has a house, a garden, and a sports ground, and androids gradually begin to be recruited for tasks like “scratch my heel”), at the moment of a predicted sharp change in the load on the android fund (start or end of major projects), or at the moment of a change in the number of androids (they begin to fail or, conversely, a production line is launched).
  7. The appearance of a group with radically different views than the majority on the disposal of androids should lead to a proposal to settle further away, taking androids with them proportional to the size of the group. Otherwise, the damage from management collisions will paralyze the plans of both the majority and the minority.

Well, am I a good communist?

The main mistake of ancaps

Bitarch’s Column

In her recent post, Ancap-chan wrote that she is not convinced by my arguments regarding the necessity of an absolute NAP. Unfortunately, such a misunderstanding of facts and inconsistency of positions is constantly encountered among many libertarians. Since Ancap-chan was not convinced by the real threat of a global catastrophe (the example with the virus), she should be convinced by a stronger threat in the understanding of any libertarian — the impossibility of realizing a free society (panarchy and ancap) without the adoption of an absolute NAP. Without it, ancap is indeed a utopia. Here is why:

1) The study by Jack Hirschleifer on the stability of anarchy, recognized in the scientific community, mentions, among other things, the scenario of the emergence of a “military hegemon” (which is nothing other than the appearance of a stationary bandit — the state) when the uniform balance of violence potential (BVP) in society is disrupted. And where a uniform BVP exists, coercion through physical violence is impossible by definition.

2) If someone in society can be forced through violence to pay compensation, then similarly, they can be forced to pay taxes — technically, there is no difference at all! And where there are taxes, welcome back to estatism! Mikhail Svetov understands this perfectly, which is why he repeats on every stream: we must get rid of bad tools, destroy the “One Ring” (which is nothing other than the ability to apply aggressive physical violence for one’s own benefit regardless of the goals — it is simply a tool, moral categories play no role here).

3) Everyone’s understanding of justice is different. For a member of the “Socialist” ECU, organizing a strike is a heroic act; for the “Classlib” ECU, it is a crime. Suppose a worker — a citizen of the “Classlib” ECU — organized a strike, the employer sued, and he was sentenced to pay an unaffordable compensation, which essentially means being sent into slavery. He asks the “Socialist” ECU for protection, and they agree. What are your actions?

(a) If you recognize the absolute NAP, then all is well — at most, businesses from the “Classlib” ECU will no longer deal with him.

(b) If you do not recognize it — you are a corpse yourself, even if you have nothing to do with this case. “Classlib” sends security forces to the defector, “Socialist” security forces counterattack, “Classlib” launches missiles at military targets and the main office of “Socialist,” and they respond using WMDs. You will be very lucky if it is only tactical nuclear weapons. But nuclear weapons are complex and expensive, so most likely, a global pandemic of a truly serious virus with 30-50% mortality breaks out, and the virus tests the immune system already inside your body.

4) Before the appearance of WMDs and the doctrine of deterrence (John von Neumann’s M.A.D.), such a conflict between ECUs (“protection agencies,” tribes, phratries) always led to the formation of the state familiar to us, with giant extensive borders like those of Russia. Although I dislike many of Robert Nozick’s arguments, he was right here. You don’t recognize the absolute NAP — welcome back to the state!

5) Suppose we admit that violence cannot be used against an ECU, but why can it be used against one person? And why not against 10? Where is the line?! In panarchy, the ability to create your own ECU and leave the jurisdiction of the previous one is the basis of the model’s existence; without this, panarchy is impossible. Just as in ancap, there is “individual sovereignty”: one person equals one state in the modern sense. And sovereign states, as we well know, do not use violence against each other, otherwise they are not sovereign at all.

6) The world of “John Wick” will not appeal to the majority of the population. Whatever you say, even to me, a moderate state like Sweden seems a more attractive option than living in such a hell under the mafia. For most people, even more so; accordingly, the attractiveness of such an “ancap” is zero!

7) Finally — the proof of history itself. Thus, the examples of ancap in the past loved by many libertarians — medieval Ireland and Iceland — did not end their journey because of some typical ancap problems that are constantly discussed (roads, courts). But for a banal reason — they were conquered. But this did not happen by chance and was quite expected. If these societies had been ideologically voluntarist, they would have purposefully fought against aggressive violence, created cultural works, methodologies, and technologies for this purpose, and most importantly — carried these values to the whole world. In that case, the English themselves would have expelled Cromwell from society at the first attempt to initiate aggressive violence in his youth, and Ireland would still be ancap today.

By the way, in some societies, women’s rights sometimes appeared spontaneously, but then disappeared when conquerors or a new cruel leader arrived. Globally, however, women’s rights became a new normality, a given for all, only in the 20th century after the directed activity of suffragettes. It is the same with ancap — for it to become a reality and not disappear in a second, directed activity to combat aggressive violence is needed; i.e., the absolute NAP must become the new normality of life.

Scylla and Charybdis of the discourse on nonviolence

Several articles by Bitarch on “absolute NAP” have already appeared in this channel, by which he understands a ban not only on aggressive violence, but also on delayed retribution or the enforcement of sentences. I am not yet convinced by his arguments, but I consider the topic itself important enough to continue introducing you to it.

Briefly, the idea is as follows. Technical progress increases the scale of violence available to humans and reduces the relative cost of violent impact. Tomorrow, any biology student could launch a pandemic like the current one, so we need a society where people have as few reasons as possible to threaten such things and as many moral constraints as possible that prevent them from even thinking about it. As one option for action, Bitarch considers a non-violent state. To provide a hypothetical Greta Thunberg with arguments, he published an article on the externalities of violence, where he lists how violence harms society. I will briefly go through the theses of this article and several others on similar topics.

1. Referring to Konrad Lorenz, it is stated that humans have no natural morality of non-aggression toward members of their own species embedded in their genes, since human natural weaponry is small. Therefore, one alternative to violent punishments for violent crimes could be voluntary genetic correction of behavior, if it can be developed.

Humans have almost no genetically determined patterns of behavior; there are only some inclinations, while all the specifics are set through social mechanisms. Thus, references to biological evolution serve more as illustrations than as a literal guide to action. Social evolution also exists; it is better to look for examples there.

2. Examples are given of how humanity introduced a ban on certain activities and successfully enforced it (the use of leaded gasoline, DDT, CFCs). It is pointed out that in the same way, humanity successfully enforces restrictions on morally unacceptable actions (for example, cruelty to animals, children, and prisoners). Therefore, a campaign of political pressure would also help in establishing the absolute NAP.

The state is always happy to ban something; the justification is not that important. For instance, the arguments for banning CFCs, which supposedly eat the ozone in the stratosphere, and DDT, which supposedly can cause cancer, mainly boiled down to so-called scientific consensus. The same applies to the arguments for banning carbon dioxide emissions, which are supposedly responsible for global warming, which supposedly poses a threat to humanity.

So, for political pressure on a global level, serious arguments are not even needed; one only needs to seize a spot on the agenda. To do this, climate change will have to be pushed aside, but first, its younger brothers like the Rothschilds, microchipping, and GMOs must be overcome. This is a solvable task, but the methods of such campaigns require more screaming than thinking, and that is personally difficult for me, despite the fact that I am screaming in my avatar.

3. Arguments are presented regarding the long-term negative consequences of high social tolerance for violence. At the very least, widespread violence becomes a factor hindering the economy—too large a share of resources goes toward ensuring security, including the security of transactions. Conversely, the long-term positive consequences of low tolerance for violence are shown. For example, in a recent note, a study is mentioned on how a culture of hugging and freedom of teenage sex leads to a decrease in hierarchy within society.

Now, arguments are a different matter; there is something to discuss here.

To summarize. Anyone wishing to ensure the success of non-violence ideas will have to pass between the Charybdis of the sleaziness of moral hysteria and the Scylla of the limited impact of scientific discussion. I would advise Bitarch to stick closer to Scylla, as Homer enjoined us, but here let everyone who sails the waters of public discourse choose their own path.

That leftist whirlpool over there is more dangerous

P.S. We, of course, did not agree with Bitarch on the content of the article. I reworked some takes, but not all. So, most likely, a continuation of the discussion awaits us.

Practical Anarchy, Stephan Molynieux. Chapters 1-3.

I have edited the first three previously posted chapters of Practical Anarchy by Stephan Molinari. However, these are only formally three chapters; in terms of meaning, it is first a foreword, then an introduction, and finally some boundary conditions. I suspect that Molinari must be a very skilled lover, given such an approach to foreplay.

The style of the book is very lively and emotional, but somewhat overloaded. I tried to make it readable enough, and I hope I succeeded.

In the foreword, the author apologizes to the reader for daring to publish the book in open access, and for having the audacity to assume that the reader, having paid zero money, will devote more than zero time to reading it.

From the introduction to the first part, dedicated to methodology, the reader finds out that they are actually dealing with the second book of a trilogy, and also receives a new portion of authorial apologies—this time for the fact that the book will most likely cause some “butthurt.”

In the chapter on limitations, the author explains that he does not intend to describe in detail what color robes judges will wear under ancap, and generally would prefer the book to be perceived as a textbook rather than a handbook. Let us immediately apply this knowledge to the previously published chapters on dispute resolution organizations and stateless prisons.

There is still work to do on the previously translated chapters, but the completion of the draft translation is still far off, and your financial support could encourage the process. All details are before the table of contents.

Tokenomics problems and contract jurisdictions

Regarding the conclusions about the unsuitability of blockchain for real estate registration, I partially agree. In its pure form—yes. I have been working on this issue at the University of Bologna for four years. Last year, when I visited Kyiv, I gave a presentation on how to apply blockchain as a real estate registry. So, if you are interested in learning more: theory, protocols, system architecture, regulation. I presented it quite simply in my presentation at the blockchain hub.

Alexey Konashevich

https://youtu.be/F9IYLtXrn78

Thank you, I watched the presentation with great interest. My concept of property rights registration was approached slightly from a different angle and sketched out in much broader strokes. Not being a programmer, I was answering not the question of “how,” but rather the question of “who would handle this without the state, why would they do it, and why would they do it well.”

Your presentation implicitly suggests that the state, as a monopoly territorial jurisdiction in the validation system for the transfer of property rights, is a resource-intensive atavism that does not increase system efficiency but complicates its optimization.

In order to formally describe the functioning system of decentralized legal mechanisms, you build “smart laws” on top of smart contracts—an additional abstraction that validates smart contracts, separating legal ones from illegal ones. Then you raise the question of who creates the smart laws and introduce a new abstraction, e-voting:

But in the world of decentralized ledgers, it doesn’t work that way. E-voting for a law is, essentially, its validation by a group of independent validators. What happens if a certain minority votes against a law in current legal reality? They are forced to obey the law passed by the majority. What happens under decentralized law? The minority has the opportunity to create a fork. Two alternative smart laws emerge, each describing its own set of permissible smart contracts, and different voluntary transactions can take place in different legal fields.

Essentially, these are the same good old contractual jurisdictions that I’ve already talked the audience’s ears off about here.

Arguments about the shortcomings of bitcoin. What do you think?

I feel that this article pointed them out as accurately as possible.

Anal Magician

The article was written on 17.03.18 shortly after the crash from historical highs. Let’s review the arguments from the perspective of the years passed.

1. So far, this is pure theory, not proven by practice

Bitcoin is believed in by adepts of ancap and AES, others don’t need it. For most, the state is fine, and anarchy is not fine.

True. There is no point in trying to persuade. They will come themselves when life forces them.

2. “Solvable problems” are made up

Blockchain is inconvenient as a real estate registry, etc.

True. The bottleneck is the mechanism for confirming the truth of the information stored in the blockchain. The maximum amount of information about the non-digital world that can be entrusted to a blockchain is a certification that an event took place no later than the addition of such-and-such a block to the blockchain. It’s like photographing a person with a newspaper to certify that they were alive at the time the newspaper was published—it’s possible, but it’s using a newspaper for something other than its intended purpose.

3. Irreversibility of transactions

Examples are given of handing over bitcoins under duress without the possibility of return.

With the same success, one could shake out a PIN code and cash out a bank card. Large sums in bitcoin are not hard to protect, for example, via multisig. It works no worse than additional confirmation of bank transactions. The problem is contrived, unlike the problem of blocking bank accounts.

4. Cryptocurrency payments: expensive and slow

Fast and cheap on-chain payments are a vanishing luxury, the infancy of the technology. Those wishing to stay in the game need to master second-layer protocols.

5. Unsuitability as a medium of exchange

The exchange rate is unstable.

Those for whom it is critical can use stablecoins, and convert small amounts into fiat immediately. There are plenty of tools.

6. Unsuitability as a means of long-term investment

The author is not talking about what one might think based on the headline, but about the fact that bitcoin’s capitalization is small, and if one invests a large sum, it will be impossible to withdraw it within a reasonable timeframe without crashing the rate. That is, it is about low liquidity, not long-term price trends.

True. With the current capitalization, medium capitals are entering bitcoin—large ones still cannot.

7. Blockchain as a noose for the economy

Deflation is harmful.

For hard money, this problem does not exist.

8. Blockchain democracy is worse than existing systems of separation of powers

A Belarusian explains to Russians that the state system of checks and balances works perfectly, while bitcoin’s mechanisms for ensuring decentralization are somehow dubious.

Incorrect. Bitcoin’s decentralization is stable because it is beneficial to everyone. Every participant has something at stake: funds invested in miners, in the bitcoins themselves, in maintaining a node, or in software development—an attempt at dishonest play leads to losing those funds. This is how the creators of bitcoin cash manipulated the price and suffered losses.

9. Inequality and market manipulation

There are whales in the crypto market who control serious amounts; they are capable of playing with prices.

I can offer my old posts on this as an answer: one, two, three.

10. Technology does not save from collusion

For various small cryptos, things like a 51% attack are relevant.

All the worse for small cryptos. Bitcoin has already passed the stage where it could be attacked for a reasonable amount of money.

What is the result?

Cryptocurrencies lost the first round; work on mistakes is necessary. The demand for crypto-anarchy ideas will fall; the “straight guys” choose centralized solutions.

From the height of the past two years, no loss is visible. Bubbles burst, the viable strengthened. Centralized solutions may be useful for small payments, but decentralized ones do not tolerate haste, and solid gentlemen prefer them.

The Origin of the State: Carneiro’s Ecological Hypothesis

In the series of essays on the state, Vladimir Zolotorev describes the origin of this institution from the perspective of a theory that differs slightly from the well-known stationary bandit theory, although it is certainly based on it. The difference lies in the point that stability is given to early state formations by the characteristics of the landscape: only where there is nowhere to run are the enslaved forced to stay put and submit to the conqueror.

This is the so-called ecological hypothesis, first formulated in the work of Robert L. Carneiro, a staff member of the American Museum of Natural History, A Theory of the Origin of the State, published in the journal Science in 1970. A Russian translation was made for the collection The Early State, Its Alternatives and Analogues, published in 2006. I have uploaded the collection to my website, and Carneiro’s specific article can be read from Bitarch on VK or where he dug it up.

I have reviewed it and confirmed that there are no serious discrepancies with our video about the stationary bandit, which is gratifying, as no patches will be necessary. Nevertheless, it is always pleasant to understand which sources the things you popularize are based on, and what additional examples can be used to illustrate your posts.

Robert L. Carneiro

Epitaph for TON

When I was asked a year ago whether TON had any prospects, I, as “smart Masha,” reasoned about the network effect and other technical and economic challenges the project needed to overcome to stand a chance—and generally demonstrated my skepticism. The reality turned out to be much simpler and more hopeless: the project was simply banned.

For this very reason, in a recent post about Bitcoin’s rise, I pointed out that Bitcoin’s dominance among cryptocurrencies seems to me to be the only viable scenario. Not because “helicopter money” flowed into Bitcoin, as Grigory Bazhenov tried to present my position, but specifically because Bitcoin is invulnerable to regulators. They can curb its penetration, they can pressure the exchange of Bitcoin for fiat—but they are unable to destroy it. Even if the NSA manages to find and imprison the real Nakamoto—what would that affect? At most, a heap of Bitcoins would be dumped onto the market, but the market would swallow them without choking. However, sanctions against Durov, Zuckerberg, or Buterin are indeed capable of seriously affecting the projects they lead. This link turned out to be the weakest. This is the Achilles’ heel of any potential “Bitcoin killer.”

Of course, all the software developed as part of Durov’s project is open source, and it has already been launched under the name free TON, but it lacks the very network effect that was the main bet and the killer feature of TON—Durov officially stated that he would not support such projects, which means the new free crypto has no hope of being integrated into Telegram.

But every cloud has a silver lining. It was precisely thanks to my review of TON’s capabilities that I became acquainted with Lightning—and I continue to recommend everyone use it. Over the past year, it has become much easier to use, and while the Lightning manual used to take up a separate page on my site, now it is a short paragraph on the donations page.

Durov created a great achievement—VK. It was taken away. He created an even greater one—Telegram. It took off, but it didn’t seem like enough to Pavel. He reached for the greatest of all, and it is not his fault that it didn’t work out. But what is truly bad is that now Durov will have to cover the losses at the expense of Telegram. I hope he has learned lessons from the VK case and will try not to ruin the project.