Center for a Stateless Society
A Left Market Anarchist Think Tank & Media Center
The Natural Right of Cryptographic Governance

In the wake of the recent terrorist attacks in Paris and around the U.S., sentiment among the governing class is turning powerfully against encryption.

Reuters reports an impending “crackdown” on Bitcoin in the EU. Other reports suggest France could inhibit Tor and free wi-fi at will. U.S. officials have taken the opportunity to go on the offensive against any form of encryption, with Senator Dianne Feinstein arguing encryption “ought to be able to be pierced.”

At the heart of the state’s fears is the loss of control it faces. In encryption, human beings have a tool to ensure security and privacy that is resistant to the escalation of force. Even after governments have taken out a warrant against someone, that person still has the ability to keep his information secret, subject to negotiation between himself and the state.

But officials correctly point out that child pornographers, drug dealers and terrorists can use encryption as a tool to keep vital information away from law enforcement. Its reliability and agnosticism, they claim, makes encryption a threat to public safety.

That creates a moral and philosophical dilemma for users and advocates of cryptographic technologies. We have an incredible tool at our disposal, but with the equal potential for legitimate use and abuse. Do we have the right to encrypt information regardless of government interests?

To answer this question, common law and statutory law are insufficient. With the improvements that blockchain technology could bring to the human condition, this is a deeper question with significant implications. The proper use of a disruptive technology that transcends borders should be considered outside of the normal philosophical channels when its existence is an affront to long-established political authority. Natural law and the fundamentals of the “social contract” provide better answers and a clearer direction.

The Surveillance State is Absolute

Rapid changes in information technology over the last two decades have created a banquet of easily acquired information about virtually everyone in the world. The world’s reliance on the internet has made normally private information incredibly easy to acquire. It has also made the existing social contract argument for government authority obsolete.

By the old nation-state system, a nation makes laws and protects rights within a certain geographical boundary. Those outside the boundary are neither subject to its jurisdiction, nor its protections.

But most international threats are now coming from non-state actors. The world has long since stabilized at the state level, but terrorist networks are waging peer-to-peer warfare, circumventing states in most cases by taking their political grievances directly to their citizens.

To combat this “denationalized” threat, states have exploited loopholes between these various “social contracts” that exist between states and their citizens. States may make some effort to respect the legal rights of their own citizens within their own borders; but rights do not tend to carry over to citizens of other countries. The Five Eyes Alliance is one glaring example, where states are widely believed to spy on each other’s citizens and share information so that each may circumvent their own domestic spying restrictions.

This trend is compounded by a lack of accountability. Control is difficult to enforce legislatively with widespread public apathy, and finding standing in court can be likewise impossible without information from behind the veil. The global surveillance state is expanding its reach beyond any practical restraint by legislatures, evolving into a highly fluid, rapidly adaptable information siphon. In that sense, it is becoming as “denationalized” as the threat it is trying to fight. As one NSA official succinctly put it: “It’s becoming a cliché that a permanent state of change is the new standard. It is the world we live in — navigating through continuous whitewater … lucky for us.”

Meanwhile the security state has used its powers to commit financial espionage, intimidate journalists and whistleblowers, and circumvent restrictions on information gathering for crimes unrelated to terrorism. According to cybersecurity expert Chris Soghoian, they continue to “prioritize their own foreign intelligence goals over the security of the Internet”, deliberately inserting exploits into vital security systems.

In light of this conflict of interests between the surveillance state and the citizen, the onus falls on the latter to protect his own privacy.

To break this down into a simple epistemology:

Political violence (war) is being denationalized.

The means of fighting political violence are being denationalized.

Since individual rights are at risk in war, the defense of rights should also be denationalized wherever possible.

States will not protect the privacy of foreign nationals because it would defeat the purpose of their job. They will continue to spy domestically because it’s easy to get away with. There aren’t enough Edward Snowdens out there to stop them. Their global reach leaves virtually no person’s privacy untouched. But this new paradigm isn’t just a reason to protect one’s own privacy. It invalidates the social contract and renders the prohibition of networked cryptographic alternatives morally impermissible.

The “Social Contract” Reconsidered

Since the decline of the “divine right of kings” doctrine, social contract theory has dominated the reasoning behind the coercion of the state. Its logic (like that of the “divine right” theory) has always been circular, but amenable to most people as a post-hoc rationale for their general approval of the role of the state in human affairs. For that reason, a careful reevaluation of the theory is necessary.

John Locke claimed in his Second Treatise on Government (1689) that the contract was the price of civilization: prehistoric humans, possessing natural rights of life, liberty and property sacrificed those rights to the state in order to create early civilization, reaping in turn the stability, security and prosperity that large societies make possible. Natural rights can then only be taken away legitimately by the state upon conviction of a crime through a rigorous process of law. As long as the state abides by the rules set by the contract and receives the continued support of the governed, so the argument goes, individuals have no right to subvert it to pursue their own interests.

But the growth of global information systems has created some new problems for the social contract.

The first problem is the collapse of reciprocity: According to Locke, the social contract necessitates the state and the citizen exercise mutual obligation toward each other, the state to protect rights, and the citizen to maintain the legitimacy of the state through voting, paying taxes and abiding by its rules. But with a networked surveillance apparatus not controlled by any single nation state acting in secret, the ballot box is unlikely to be of much help. This “deep state” exists outside of the contract: it is its own entity and routinely violates privacy rights as a matter of course

The second, and more important issue is one of consent. If individuals don’t want any part of this, do they have any recourse or are they bound to the terms of the contract? Locke acknowledged that individuals cannot be perpetually bound to any government, “every man being… naturally free, and nothing being able to put him into subjection to any earthly power but only his own consent.” Consent, he argued, could be tacit, but it was nonetheless vital. Non-consent could be expressed by abandoning the system and creating a new one. “Since the government has a direct jurisdiction only over the land”, Locke claimed, individuals are free to “begin a new one, in vacuis locis, in any part of the world, they can find free and unpossessed.”

There were also little “loopholes” in the contract created by the difficulty in determining consent. Locke noted that “EVERY MAN HATH A RIGHT TO… BE EXECUTIONER OF THE LAW OF NATURE” (caps all his) because “if by the law of nature every man hath not a power to punish offences against it … I see not how the magistrates of any community can punish an alien of another country; since, in reference to him, they can have no more power than what every man naturally may have over another.”

This is a key point. The Father of Classical Liberalism claimed that because social contracts did not reciprocate across national boundaries, any individual could morally punish a transgression against his own rights by a foreigner. This could of course easily translate to the peaceful defense of one’s privacy against some foreign government’s spying capabilities. Locke’s acknowledgement shows the weakness of the social contract argument when applied across national borders. It also shows the intellectual bind Locke found himself in in order to affirm that the contract requires consent to be valid.

Privacy and the Open Source Revolution

As I have argued previously, privacy should be considered a natural right if it can be considered a right at all. Individuals retain the right to use air-tight encryption as a defensive tool to protect their privacy against the failure of their legal and political systems. But if individuals are retaining their “state of nature” right to defend themselves against state dysfunction, they must create a new kind of “state” with multiple functions in order to defend those capabilities.

For example, the right to exchange value must necessarily accompany the right to procure a resource, or opponents could render that right functionally irrelevant. Open source encryption software is free and easy to come by for now. That could change if states make it illegal, requiring a risk premium for developers and high costs for consumers.

To counter this possibility and deter prohibition, a robust cryptocurrency trade would be necessary to keep people free in the event the state shut down people’s bank accounts or credit cards, as was the case when the U.S. government pressured credit companies to shut down Wikileaks’ finances. This means that denationalized cryptocurrencies like Bitcoin and Dash are an integral tool to preserve individual rights.

As former CIA officer and open-source advocate Robert David Steele noted, to function properly, open source systems must develop in tandem. “The open source ecology is made up of a wide range of opens — open farm technology, open source software, open hardware, open networks, open money, open small business technology, open patents – to name just a few. The key point is that they must all develop together, otherwise the existing system will isolate them into ineffectiveness.”

Cryptocurrency transactions, run through a trustless mixing system are virtually untraceable. We’re not just talking about private emails anymore, but the right to create a new, transparent, resilient framework of alternative institutions as the old ones succumb to their own opacity.

But cryptography may not just tear down the social contract in the negative sense — it could also rebuild it in a way that better defends individual rights.

The Social Contract and Land Rights

The natural rights were enumerated by Locke as life (the right to defend one’s person against physical threats), liberty (the right to act freely without interference from arbitrary authority) and estate (the right to retain property mixed with one’s labor). Property in particular is one space that is being redefined by technology, leaving open the possibility that the nation-state could be disintermediated from its traditional role of definer and defender of property rights.

Locke argued that in prehistory, the very first “social contracts” were formed when individuals ceded their land to governments in exchange for protection. All subsequent owners of that property, he claimed, enjoyed the protection of the state, and were thus bound to perpetuate its authority. The logic is circular, to put it mildly, but worth noting: he makes it clear that the Social Contract is justified because there was no practical alternative to define and protect land rights.

Governments were defined by the land they protected. Within their borders was a single “final arbiter” with a monopoly on violence to keep order. Many would argue this model provided stability and security for populations around the world and enabled the growth of economies of scale for centuries.

But if property rights can be established and defended without the state, dependence on government institutions could be broken. A major pillar of the old social contract could be replaced.

Securing property rights is a pillar of the new cryptographic governance. Projects like Factom are attempting to show the blockchain can be a substitute for government agencies in the developing world, functioning as the final word on property ownership without risk of corruption or alteration.

Similarly, other projects are being developed for reputation verification, and still more are revolutionizing how we think of notary and legal systems. Connectivity experiments like Bitnation are seeking to show these ideas can be converged and exercised together, functioning as a sort of alternative governance system enforced through cryptographic protocols and consensus.

With non-state record keeping a reality, enforcement mechanisms can be created. But their quality won’t be determined by their geographic origin. They could be competitive, transparent, overlapping systems available globally.

These technologies are still in their infancy. But theoretically, the capabilities are there. As the use of the blockchain and other cryptographic systems grows, they become more secure and reliable. Due to the malleability of the technology, they could also evolve greater and more useful capabilities over time.

What Does This All Mean?

As the NSA likes to point out, we live in a rapidly changing world. The legacy social contract is inadequate to protect individuals in an increasingly fluid global information system. The rapid development of technological capabilities that few in any legislature in the world understand are leaving the sluggish legislative process in the dust. Individuals cannot morally be compelled to sacrifice their own right of secure communication of ideas or private exchange of value without submission to a global security state they cannot control. The globalization of information necessitates individuals learn to employ open source, cryptographic systems to define their own social contracts in peaceful terms.

Since private, secure monetary transactions cannot be taxed except with the consent of the participants, this denationalization could expand the shadow economy over time. Advocates of cryptography can probably expect a backlash, including bans and even jail time in some parts of the world.

Ultimately, this experiment will likely prove that consent in democratic societies has always been manufactured. Locke twisted himself into knots trying to shoehorn the notion of consent into his Social Contract, an exercise largely abandoned by John Rawls and other modern theorists. But the new cryptographic governance introduces the possibility of real consent in governance for the first time. This could ultimately exonerate John Locke’s contributions to political thought.

There is a palpable inevitability to all this. Even major publications like the New York Times and The Atlantic have hypothesized the obsolescence of the nation state. The United States National Intelligence Council envisioned that in just 15 years a “nonstate world” could exist in which “governments had given up on real reforms and had subcontracted many responsibilities to outside parties, which then set up enclaves operating under their own laws.” Nonstate systems will likely develop increasing leverage to compete with legacy nation states. The New York Times acknowledged the scenario describes “much of how global society already operates.”

The real question is how difficult this transition will be. Most states around the world abhor any loss of authority and are likely to prohibit any capability they consider a threat. Bitcoin and other cryptographic technologies have been in their sights. In doing so, they drop any pretense of moral authority and act merely as animals in Locke’s “state of nature,” fighting more for self-preservation that the protection of natural rights. For the first time in history, a real social contract is a possibility within reach. We’d do well not to squander it.

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