Throughout history, the concept of the state has been in flux. Power has been centralized and decentralized, often in an oscillating manner. Borders have been redrawn, micronations and start-up cities created. World powers and monopolies have risen and fallen, all to be replaced by more dynamic and enterprising powers.

Considering this notion of the world as an ongoing process, which sometimes finds periods of stasis but is primarily governed by a law of change, can be a disorienting experience. And for the past couple of decades, as our technological capabilities have expanded, many have been trying to hold onto an old operating model. Yet the physical world is no longer the only place in which laws are written and wars are fought. The digital world is in the ascendancy, creating new connected communities that transcend the confines of geography. It has the potential to be a hegemonic authority that could rival nation-states. And as Balaji Srinivasan and Parag Khanna wrote in Foreign Policy recently, this era of “great protocol politics”—shaped by the internet and decentralized technologies such as cryptocurrency—means that we are “transitioning from an age of geopolitics to one of techno-politics.”

Countries wanting to remain competitive must fundamentally rethink the theory of the state in the 21st century. As things stand, the institutions we created from the Industrial Revolution onward have proved robust, organizing government around hierarchical and rigid structures. This system ushered in great prosperity for many around the world, but as most have felt during the pandemic, durability has turned into inertia, and these sclerotic and overly bureaucratic systems can no longer meet the challenges of the modern economy. To the contrary, in a reimagined nation-state, code is law, and governments embrace technology to meet new challenges. Also, individuals have far more autonomy and freedom than ever before, as personalized healthcare and other services allow them greater control over their own futures.

Technology vs. Traditional Structures

Achieving this new type of state requires reversing the creep of recent decades, when parts of the regulatory state have iteratively compounded, adding on layer after layer to minimize risk and maintain an overly centralized semblance of control. Policy solutions are often overly focused on managing scarcity and adding to the number and complexity of institutions. Because technology has driven down the cost of goods and information, removing frictions, creating new forms of abundance and allowing greater power and freedom to the individual, these older types of governance models are an ill fit today.

As a result, most nations have failed to keep pace with the technological revolution happening around them, often acting as barriers to, rather than platforms for, progress. The more protective elements of government also either misdiagnose or willfully misrepresent the nature of the technological revolution so that the tech policy debate is dominated by Big Tech regulation, squeezing out all the other opportunities to discuss tradeoffs among scale, quality and cost.

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