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— Book Review —
THE SOVEREIGN INDIVIDUAL
The Impact of the Information Age
by James R. Elwood
This book review appeared in the March 1997 issue of the Freedom Network News under the title: "Galt's Gulch in Cyberspace."
Many libertarians have drawn inspiration from Ayn Rand's epic novel Atlas Shrugged, published in 1957. The main character, John Galt, rebels against the corrupt socialist order and determines to "stop the motor of the world". He sees that it is the honest, productive people who are sacrificing themselves for the benefit of the political looters and an unappreciative public. Galt moves around the country like a ghost and persuades the most productive people, especially industrialists, to stop providing "the sanction of the victim", so they drop out and disappear. The novel graphically chronicles the disintegration and ultimate collapse of the economy from the mounting predations of a bankrupt government and the inability of the remaining people – bereft of skills, reason and morality – to keep anything running.
Meanwhile, the producers have hidden in "Galt's Gulch", an enclave set in a remote valley in the Rocky Mountains. The enclave is hidden from the outside world thanks to a ray screen that projects the image of an inpenetrable mountaintop over the valley. They practice a pure market economy, living and creating for their own enjoyment, trading value for value, and respecting each other's lives and property. Many of the Gulch inhabitants indulge their creativity by practicing livelihoods quite different from those they pursued in the world at large.
The novel ends with the world having ground to a halt, with the way made clear for the producers to come back and rebuild the world - presumably on their own terms.
Rand was thrilled by the impressive technology of the Industrial Age and extolled the human ingenuity and rational thought that was necessary to create powerful machines and organize great enterprises such as railroads, steel mills and automobile factories.
Yet it is the technology of the personal computer and the Internet, with its phenomenal ability to empower the individual and unleash his creative energy, that may bring about a real Galt's Gulch. Ironically, it is the destruction of Rand's beloved Industrial Age by the Information Age that promises to fulfill her dream.
Geo-Political Shakeup
The dynamics of how this all may happen is the subject of the new book, The Sovereign Individual, by James Dale Davidson and Lord William Rees-Mogg. They are co-editors of the Strategic Investment newsletter, and specialize in a reasonably libertarian analysis of "geo-politics". Through SI and their two previous books Blood in the Streets (early 1987) and The Great Reckoning (1991, revised 1993), they have amassed an impressive track record of forecasting trends and events. Blood in the Streets successfully forecast the 1987 stock market drop, the fall of the Berlin Wall, the breakup of the Soviet Union, the Japanese real estate and stock market crash of 1989, the savings and loan crisis in the US, and the structural economics behind the squeeze on blue-collar incomes.
The Great Reckoning focuses on the tumultuous changes of the 1990's. It explained why Russia would come to resemble a chaotic Latin American banana republic with hyperinflation, rampant corruption and crime; and how the breakdown of the old Soviet military command structure would increase the risk of nuclear proliferation. The book also predicted the Yugoslav civil war, the collapse of African states such as Somalia, the rise of Islamic fundamentalism and its hostility to the West, the growing fiscal crisis of the Western welfare states and the resultant downsizing of governments and slashing of benefits (just beginning), the rise of domestic terrorism in the US, and the threat of large-scale violence in America's inner cities due to rise of a large criminal culture among the underclass – aided and abetted by the welfare state. We got an early taste of the latter in 1992 with the Rodney King riots. The book's prediction of a major deflationary depression hasn't panned out yet, but the dynamics the authors described to support their contention very much exist.
The Rise And Decline Of The Church
– And Now The State
The Sovereign Individual picks up at the year 2000, discussing "millennial madness", and moving on to describe the rise of the Information Revolution and its "cyber-economy". The authors describe how it will be as far-reaching in its impact on society as the Industrial Revolution, but that this time it will happen within a lifetime instead of centuries, and for the first time, on a global scale. It will signal the death or complete restructuring of many familiar large-scale institutions including, to our great joy, governments.
One of the strongest points about the work of Davidson and Rees-Mogg is that they are able to present historical patterns and explain their relevance to the dynamics of change in the world of today and the near future. They deal with mega-politics or more specifically, with "the returns to violence" to analyze the rise and fall of institutions.
The authors point out that the development of the armored knight on horseback in the 10th century overwhelmed the ability of the impoverished farmers to defend their villages. The early knights looted and murdered with impunity (one chapter subhead calls them "Hell's Angels on Horseback") – a malevolent equivalent of modern motorcycle gangs.
Into the vacuum stepped the Church, the one institution that operated throughout Europe and that could exert moral influence. They helped establish the feudal system, dispensing jurisdiction over local territories to the knights in exchange for peace. The new "nobles" could gather enough wealth from the serfs to build castles and hire men to defend them and the serfs of the manor from marauders. The Church helped develop chivalry as a system to bind the nobles and lesser knights by oaths of allegiance and fidelity. The Church dominated the legal system, regulated businesses, improved agricultural techniques, and performed public works projects. Although far from a libertarian system, it was less coercive than the marauding gangs of the late Dark Ages or the centralized governments that came later. A key influence on institutions during the Middle Ages was that thanks to castles and the local nature of jurisdictions, the scale of warfare was small and defensive strategies dominated.
Over the years, however, the Church, which had performed such useful functions during the 11th and 12th centuries in helping rescue Europe from the Dark Ages, itself became bloated and corrupt. By the 15th century, the Church had become severely counter-productive. Religious holidays, monastic orders, and other Church rituals and structures multiplied, placing enormous demand on the population to sustain them. The Church used its canon law and regulations to exact funds from the merchants. Desperate for funds, popes began to sell licenses for prostitution and take a cut of the earnings. St. Paul's Basilica was partially financed by this means! From top to bottom, church officials flaunted corrupt behaviors. Popes sported mistresses and illegitimate children, and engaged in orgies, lavish feasts, and intrigues, including contract murder, reminiscent of the rich elites of the late Roman Empire.
Formal religion dominated daily life in the 15th Century. People became contemptuous of the corrupt priests and bloated Church in the same manner that people today are becoming disdainful of saturation politics, of corrupt politicians and bloated government bureaucracies.
The Impact of Technology On Institutions
According to the "returns to violence" theory, Davidson and Rees-Mogg consider the inventions of gunpowder weapons and the printing press to be the two key elements in the destruction of the structures of the Middle Ages. The rising merchant class allied with monarchs and provided them with the wealth to recruit large armies and build the firearms and cannons that blew down armored knights and castle walls. The power shift enabled kings to expand their control over large territories. The proportionate expansion of the scale of the economy increased the wealth of the merchants, a trend which was accelerated by the discovery of the New World and the technological improvements in ships and navigation which enabled the massive expansion of world trade. This set the stage for the rise of industrial production, which multiplied wealth and enhanced the ability of national governments to amass power both against other nations and internal dissidents.
Meanwhile, the printing press destroyed the Church's monopoly on learning and information dissemination. Inexpensive new books enabled the spread of literacy – beginning with the merchant class. The ideas of the classical writers, coupled with attacks on the church and the heretical books on the new science, were widely available, and subverted the dogma of the declining Church. Millions of people deserted the Catholic Church, forming the leaner, meaner Protestant faiths and chapels. The Church reacted viciously with its inquisitions and religious wars, but to no avail. The old Church was eventually forced to clean up its act, downsize its structures, and modernize its doctrine to avoid extinction.
The Dying Nation-State
Today, the nation-state has run the same course as the medieval Church, becoming corrupt, bloated and a drag on society. New weapons technologies are reducing the returns on violence. An inexpensive Stinger missile can bring down a multi-million dollar jet aircraft. The sprawling centralized systems of government and other industrial-age entities are increasingly vulnerable to terrorist attack using compact explosives, or even chemical, biological or mini-nuclear weapons. Very small groups or even individuals can wreak havoc if they wish. The sledgehammer approach of large industrial-age military forces is becoming obsolete. The authors also point out that pure information warfare within computer systems using "logic bombs" will be a part of future conflict, and they point out that Bill Gates and Microsoft Corporation, if they needed to, have far more computing resources for such action than most governments.
It is the computer revolution that provides the promise of a real-world Galt's Gulch. Still in its infancy, the cybereconomy will allow the successful practitioners of computer technology to escape the regular economy and the predations of governments. Widely available strong encryption tools like Pretty Good Privacy (PGP) are already allowing ordinary users to make it impossible for government to monitor their communications or decipher the contents of their hard drives or storage disks.
The Information Revolution will also bring us the death of politics as we know it. Participants in the cyber-economy will operate in the anarchic environment of the Internet, choosing who they will deal with, how and when. The authors think that the morality of the marketplace will dominate the Internet, and that private clubs with their own security procedures will arise to prevent theft by cybercriminals. Politicians will become increasingly irrelevant, as people bypass them and form new voluntary local institutions and virtual communities on the Internet.
The death blow to the nation-state will be digital cash, which has just become available. E-cash or even e-metal, using encrypted verifiable signals will allow individuals to make their transactions in secret on the Internet, and will destroy the ability of governments to exact wealth through the hidden tax of monetary inflation. Using financial institutions domiciled in tax havens, and using anonymous remailers, cybernauts will be able to largely avoid taxes and inflation, and thus amass wealth at a vastly accelerated rate.
Governments will starve. Their ability to exact large sums from the rich for transfer payments will disappear. If they are to survive, they will be forced to radically downsize, and treat their citizens like customers instead of livestock. And since their ability to police large territories will also decline due to weapons technology, there will be enormous pressures to break up nations into much smaller jurisdictions. The provision of protection will become a business service, and much more personalized, especially for the rich cyber-entrepreuners.
All will not be sweetness and light. Governments, like the Church before them, will not go without a fight. The authors predict that they will resort to large increases in consumption taxes, will greatly increase property seizures under civil-asset forfeiture laws, and in worst cases will kidnap rich people for ransom and launch attacks on known tax havens. They will have the support of the many people who will be falling behind in the Information Age – so expect a rise in populism and even neo-Luddite attacks on individuals and companies who are identified with the cybereconomy. The Sovereign Individual warns that these threats are most likely in the advanced industrial and welfare states of North America and Western Europe, and actually counsels successful people to get out now and move to places with strong free-market economies like Argentina and New Zealand.
Whither The Libertarian Movement
It is an interesting future (as the Chinese curse would say) that we face. Based on the track record and methodology of Davidson and Rees-Mogg, the coming times will bring much joy, but also great challenges to libertarians.
If this scenario is likely, what does it mean for libertarian strategy, and specifically for ISIL?
First, it means that libertarians need to emphasize the moral component of libertarianism. Certainly it is important to present practical arguments and public-policy solutions to prove to people that we are interested in their welfare. But if we are to recruit and keep people who will defend liberty through thick and thin, then we need to show them how government always operates on coercion, why coercion is wrong, and why liberty is right.
I believe that it is important for libertarians to continue to try to get our "liberty works and liberty is right" message out to as many people as possible, but to expect that we will recruit the masses into a libertarian political movement any time soon is a delusion. The resources required for success in a mass democracy are prohibitive for challengers. The ham-handed exclusion of third-party candidates from the 1996 presidential debates was a clear signal by the established parties that they will not allow competition within their system.
I think that this was a momentous event that will have repercussions for years to come. Millions of people who recognize these implications are far more likely to reject conventional political action and shift to other forms of resistance, including escaping into the cybereconomy or the regular underground economy, than they would have been before the freezeout.
Unfortunately, the majority of people are ill-equipped to handle rapid, fundamental change in society – the sort of change that the Information Age is bringing. They will cry for government to protect them from the changes. We already see the rise of ugly populism in America and Europe, with cash-strapped blue-collar workers lashing out at immigrants and supporting trade restrictions. As long as they think that government can help them at all, they will be hostile to libertarians, and bitterly envious of those who have engaged in "the secession of the successful".
But there are more libertarians out there who are now supporting movement organizations, so there are some possibilities for recruitment. The main purpose of recruiting more of the people who do understand and love liberty will be to enlarge the libertarian community for mutual support and protection.
ISIL In The Information Age
ISIL has important roles to play in this transformation. Our networking structure and international membership is ideally suited for the Information Age. ISIL has a Website, and many of our members are active on the Internet in both politics and business. We have connections throughout the libertarian movement and have a reputation as gentlemen. Our international conferences are acclaimed throughout the movement. ISIL already has a large, popular non-partisan educational pamphlet series that is ideal for local campus and community groups (it has also been circulated extensively on the Internet).
Obviously, ISIL needs to become bigger and better to do much more. Here are some growth lines and activities that I see as priorities that will benefit our members and make ISIL a prominent organization for good around the world in the near future:
Expansion of pamphlet series: We are developing new pamphlets that will focus on delegitimizing the state, discuss the morality of liberty, and present workable alternatives to government. There will be more on
regulations and other fundamental legal and individual rights issues. Let us know what topics you could use for your outreach activities. We will certainly consider submissions.
Personal resources: The times ahead could be rocky, so it is important for each of us in ISIL to work to protect our lives and property against government and other looters, and to take advantage of the opportunities
of the Information Age. We are certainly not specialists in privacy and investments, but we have some good book titles in these areas, and are looking to greatly expand this area of our book service.
Community organizing: Libertarians have had some success at the local level in electing officials and fighting taxes, bond measures and oppressive zoning laws. We will expand our offerings on local organizing and setting
up alternative local institutions, which will become more popular as governments run out of money.
Constitutional reforms: Trying to get Congress to adopt sensible reforms is probably as useful, to quote Thomas Paine, "as administering medicine to the dead," but smaller jurisdictions and private associations may be receptive to libertarian constitutional systems and public-policy proposals, on which Frances Kendall, Leon Louw, Michael van Notten, and Bernard Siegan, and certainly the Cato Institute and Reason Foundation crowds, have done a lot of the early spadework.
PRIVATE DIPLOMACY
Private diplomacy: The multiplication of jurisdictions, both geographic and virtual, will create a lot of need for conflict resolution. Frances and Leon have been nominated for the Nobel Peace Prize for their decentralist peace plans for South Africa. ISIL has proposed similar solutions for Yugoslavia and the Middle East. This aspect of ISIL could become a significant part of our potential to be "a United Nations without the nations."
Business networking: This has started on a small scale between members, including book publishing projects. It has great potential as ISIL grows and more members get on the Internet.
Ayn Rand's dream when she wrote about Galt's Gulch just might come true. It's sure worth a try. Libertarians in general and ISIL in particular can have a big role in bringing it into reality in the new cybereconomy. The Sovereign Individual book will help show you the way.
THE SOVEREIGN INDIVIDUAL: How to Survive and Prosper during the Collapse of the Welfare State, by James Dale Davidson and
Lord William Rees-Mogg. . . . A superb book on how the Information Age will transform the world and our lives, mostly in favor of freedom, but with caveats.
THE GREAT RECKONING: Protect Yourself in the Coming Depression (second edition), by James Dale Davidson & Lord
William Rees-Mogg . . . Describes the dynamics behind major events of the 1990's. Most of the predictions in this book have come true, and there is good reason
that the others will too, especially the forecast for a major stock market crash and deflationary depression. Personally, I strongly recommend that you get both
books, but read this one first to lay the foundation for the topics discussed in the "Sovereign Individual". Also the advice section of this book is superior to
the one in the "Sovereign Individual", especially for those of us of modest means.
ATLAS SHRUGGED, by Ayn Rand
This powerful novel will give you a philosophical and moral backbone for the
challenges ahead. When you read about John Galt and life in the Gulch, you will truly understand the promise of the cybereconomy.
James R. Elwood is executive vice-president of ISIL.
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