Lesson 56: [SERIES] Satoshi Revolution – Do not “defeat” the state, “surpass” the state!

Satoshi Revolution: The Revolution of Hope
Section 5: Saving the World through Anarchism
Chapter 11, Part 7: Don’t “defeat” the state, let’s “surpass” the state!
Author: Wendy McElroy

“Benjamin Tucker, the anarchist individualist of the 19th century, called anarchism the“ contract society ”. Contracts can represent any transaction, from rental to prostitution, from insurance policies to drug sales. Contracts don’t have to be legal or illegal, just consent. Just as cryptocurrencies bypass central banks and decentralize economic control to individuals, smart contracts have the potential to bypass most of the legal system and fall back on everyone’s laws. As with cryptocurrencies, however, contracts do not require a trusted third party. “

– Wendy McElroy, quote from “How Blockchain Delivers ‘Private Justice'”

Last week in the How Blockchain Delivers ‘Private Justice’ section. The article examined a key argument against the possibility of free or private law. In short, for justice to be practiced, content and administration of justice must be universally accepted, and this acceptance is based on what is considered to be a legitimate system. Legitimacy is based on consensus, on the judgment of most of the participants, not on personal decisions. This means that the administration of justice must be centralized and homogenized by an authority that prefers consensus, because such an authority would also favor compliance, if not respect for society. The previous motive requires the state. When there is neither compliance nor respect, the judicial system dictates compliance through the institutionalized force of law enforcement.

Similarities of Crypto and Justice

Pro-fiat and anti-crypto are similar. In order to work, a currency needs to be widely accepted, and this only happens if the public deems it legal. Consensus is essential. The logic here is: A currency must be issued by an agency that prefers public support and can dictate compliance in the form of an acceptance. If the “consensus currency” is not used voluntarily or if it is subject to competition, its use can be enforced by institutionalizing forces, such as legal tender laws. That, in turn, is what the state demands.

This reasoning does not apply to currencies; it does not apply to justice. Crypto has proven that individual consent combined with a governance tool – blockchain – can create a currency that others will accept. The coin only needs user consent, not broad consensus, and blockchain compliance is an automatic affair.

However, the consensus argument for both money and justice is invalid. It is deeply dishonest. For one thing, it’s a contradiction in terms. When the authority and acceptance of a “service” depends on violence, the service is considered illegal; it is widely rejected.

The work also contains a trick or a concept. One of them is how consent and consent are presented. Consent is equated with legality. That sounds reasonable, because on a personal level it is. Consent and legitimacy are cause and effect when it comes to a person’s willingness to exchange; marriage becomes legal by saying “yes” (I agree). But the legitimacy debate will take a big turn once it reaches consensus. At this point, legitimacy is no longer based on individual consent, but on a collective agreement in which individual consent is democratized; the majority will win. Individuals will lose. As politician PJ O’Rourke put it: “The consensus is bipartisan. It’s the scariest phrase in Washington. A bipartisan consensus is like my doctor and attorney agree with my wife that I need help. “

Consensus argument based on geography. Since communities are defined geographically, it is assumed that there must be geographically uniform laws, and these are often determined by some sort of “majority rule”. Election results are binding on politicians – those who are empowered by consensus to have passed laws that apply to everyone, regardless of whether the individual agrees or not.

What if geography does not define a community and its institutions? Crypto has answered this question in at least one area: currency. Currency is no longer limited to fiat issued by jurisdictions, it flows through physical “nodes” known as banks. Crypto decentralizes the currency and ignores the state geography. The key to law and justice is like the key to money: eliminating trusted third parties by decentralizing control over individuals.

Private justice

Justice happens when people get what they deserve. Liberal or private law contains the necessary rules for this.

Perhaps the most convincing theorist in private law is the liberal Randy Barnett, who teaches legal and contract theory at Georgetown University. In his book The Structure of Freedom, Barnett argues that justice and law enforcement should be privately administered, with inefficiencies being addressed through the free market; An example of the latter in cryptocurrency is the advent of decentralized exchanges to solve conversion problems. Barnett argues that private law is the solution to the negative impact that acquired rights and powers inevitably have on the judiciary.

Private law is much simpler than modern models. Barnett writes, “Every dollar spent punishing a drug user or dealer is a dollar that cannot be used to obtain compensation from a robber. Every hour spent investigating a drug user or dealer is an hour that could be used to find a missing child. Any trial held to prosecute a drug user or dealer is court time that could be used to prosecute a rapist. And as eminent author Murray Rothbard wrote, “It is not a matter of law to make someone good or honorable or virtuous, pure or righteous.” Laws should only make people more inclusive.

Private law requires two things: voluntary interaction and an enforcement tool. Here, too, voluntary interaction is contractual and not limited to economic exchange. There is no aspect of human contact where consent – whether tacit, oral or written – cannot be regulated.

A major theoretical obstacle that private law has encountered is the instrument of enforcement. It invites the involvement of a trusted third party. The third in private law would be a free market, which would presumably be restricted by motives such as maintaining a good reputation. But any legal model that relies on trusted third parties is prone to corruption, incompetence, and other risk factors. The more dependent it is, the more vulnerable it is to attack.

Satoshi Nakamoto’s talent can be seen in removing the problem of trustworthy third parties from economic exchanges, but the potential of the blockchain goes further. It has far-reaching effects on contract law.

Some of the effects of blockchain on contract law

A transaction on the blockchain is a simple peer-to-peer contract that remembers terms and conditions for those involved and is viewed as valid by the surrounding community through transparency. It’s a voluntary exchange. The blockchain is also an enforcement tool that controls the terms of enforcement, such as: B. the irrevocability, embodied, to which both parties have agreed; Their consent is expressed in their willingness to use blockchain. The blockchain thus embodies both requirements of libertarian law; it facilitates voluntary interaction and serves as an enforcement tool.

When laws are reduced to contracts and their enforcement, the code literally becomes law. That sounds easy because it demonstrates the simplicity of private law.

But the peer-to-peer transactions and one-off exchanges powered by blockchain have limited value to companies that require complexities like ongoing leases. This is where smart contracts (which were discussed in the previous section) come in. Self-executing contracts allow individuals to escape the limitations of blockchain by setting their own additional terms for exchange and enforcement, including standard terms. Smart contracts are at an early stage of development, but their sociopolitical implications are clear. They decentralize law to the individual level by personalizing the terms of the contract and eliminating the need for a third party enforcement tool.

This legal model has no geography, which it does without a perceived need for consensus. Blockchain breaks boundaries because it aligns contracts with any jurisdiction in the world. The effects of this are great.

If every transaction defines and enforces its own version of the law, and if justice means everyone gets what they deserve, then everyone can code their own version of what is right, and many “visions” of possible justice and self-enforcement …