No, a myriad of new silk roads will not rise up to replace the old one

The State’s war on Dark Net marketplaces will result in previously trusted marketplaces being replaced by riskier and less trustworthy ones. Honest people operating on a reasonable risk/reward calculation will increasingly abstain from using them. The likely consequence is that the confidence level of DarkNet c-to-b transactions will begin to resemble that of traditional c-to-b transactions, with the additional negative repercussions of being more riskier to the buyer than the traditional c-to-b model.

By now, I’m sure anyone reading this post is aware of the sentence handed down to Ross Ulbricht(aka,”Dread Pirate Roberts”). The purpose of this post is not to extend a commentary on the barbaric character of the sentence.¹ That will be for another time. Instead, I want to counter the conventional postscript that concludes virtually every postmortem of the drug war.

“Just another example of an irrational,failed drug war. Take one down, fifteen will rise up to take its place…”

Nope. Not the case. Particularly, in this instance.

First, we should accurately report the full sentence Ulbricht received. It was life imprisonment and a 185 million dollar fine. The State rolled up money laundering charges in the conviction, in no small part because the United States government now “recognizes” bitcoin as a legitimate medium of exchange.²The financial penalty of bitcoin money laundering appears to be the total transactional value that can be pieced together through a forensic analysis of the public blockchain.

Secondly, public court documents and testimony regarding the fed purchases of product from the original silk road marketplace indicate an abnormal level of reliability in a c-to-b(consumer to business, or, if you prefer, user to dealer) drug transaction. Documents indicate you had about a 95% level of confidence that you were actually getting what you thought you were buying. Trust me, that level of confidence is not the norm in traditional c-to-b drug transactions. That’s the real story. The “reduction in violence” argument is not. Frankly, if you made the argument, it is a good indication that your only knowledge of the drug trade comes from watching tv/movies and reading state media sources.

Unfortunately, the effect of barbaric sentencing and draconian money laundering penalties will serve to introduce quite a bit of fraud into Dark Net drug marketplaces. Yes, knock one down, and perhaps fifteen will rise up to take its place. But the level of confidence of a c-to-b transaction confidence will begin to approach the traditional level and indeed may even fall below what you can expect on “the street.” In addition, the confidence level of “dealing with a narc,” on either side of the ledger(consumer or supplier), begins to exceed what you can expect “on the street.” So while there will be replacements, they won’t be exactly the same version as the previous ones.

Frankly, anyone who engages in a repeated pattern of buying or selling on Dark Net sites can only expect to be busted. You may as well just send out an email to the pigs for all intent and purposes. This is opposed to the traditional model where only the dealer following a repeated pattern faces a probable certainty of being prosecuted.

Bitcoin has its uses, but in terms of buying contraband, you are better off sticking to the old-fashioned human p2p network of your reasonably trusted inner/outer circle.

Unfortunately, that conclusion doesn’t exactly make for a “failed war on drugs,” now does it?

¹ I’ve read many characterizations that described it as “tragic.” Its not tragic. Its barbaric.

² Another demonstration why the dipshit “libertarians” at George Mason University campaigning for a “bitcoin regulatory regime” are mortal enemies of libertarianism. The argument that a “regulatory regime” carves out a “legitimate space” in a space that would otherwise be treated wholly as “criminal” actually introduces a far more punitive criminal sanction regime.”Legitimacy” allows the feds to wield the weapon of “money laundering.” And the blockchain is not anonymous. It is only pseudo-anonymous. The crime of operating a website can now carry the financial penalty of any applicable transactional value of the duly recorded transactions in the public blockchain.

The Madisonian Trifecta

Michael Hayden claims the enterprise of US Government surveillance has attained the status of the Madisonian Trifecta. Hmmm, sounds like a bad Robert Ludlum novel, or perhaps it’s just another name for The Firm.

Political Science II

The Tor Project has issued a warning that the United States government may soon start seizing core nodes of the Tor Network under the pretext of investigating the “Sony Hack.”¹

Of course, Pravda, Inc disseminates the Sony breach as being the handiwork of the North Korean government. LOL. Even if we concede the claim for the sake of argument, there is the conspicuous omission of any argument why bad movies and George Clooney gossip fall under the purview of national security. Then again, the hallmark of a national security state is that “national security” is what the national security state says it is. This, of course, is classic doublethink.

It is worth pointing out that the FBI seizing Tor Direct Authority nodes seems suspiciously consistent with the FBI’s internal objective of an internet wiretap regime by whatever means necessary. Very convenient, but as discussed in the previous “political science” posts, quite predictable. Perhaps the illustrative point here is that political science reducible to “the conspiracy without the conspiracy”² not only makes for bad church, it also makes for bad Hollywood.

¹ Reading is more or less a useless skill if you can’t read between the lines

² “Conspiracy without the conspiracy” means conspiracy is the rational/scientific pattern…hence no subversion

The Rule of Law

Of course, anyone with a modicum of computer science/IT skill knew the the FBI hacked the Silk Road Box at the application layer to obtain its IP layer address. And anyone with a modicum of political science knowledge would have easily been able to predict that these methods–which are in stark violation of the heuristic operability of the internet–would be gerrymandered into permissible legal status. The science of the rule of law is its rational pattern…

A Picture is Worth a Thousand Arguments

Regarding the I,Spy argument I made back in 2012:

http://arstechnica.com/tech-policy/2014/05/photos-of-an-nsa-upgrade-factory-show-cisco-router-getting-implant/

Quod Erat Demonstrandum

By Its Own Admission…

Once again, the security organs themselves resolve questions of totalitarianism, agency and the like. Anthony de Jasay got it right.

The State is its own agency.

The State is its Own Agency

That the NSA has now commenced with overt pressure campaigns to countermand any legislative effort to curtail its vast surveillance enterprise cements an obvious liberal dilemma regarding the agency of the State. Make no mistake, totalitarian spying exemplifies an agency whose ends are in competition with the ends of its own citizens. This is a fatal violation of the liberal paradigm out in the open, staring you right in the face.

The germane question which moves to the fore of consideration hence pertains to the extent of government surveillance. Is it indeed totalitarian? If we were to constrain the scope of consideration strictly to the NSA itself, then the answer would probably be no. It’s modus operandi does not follow the traditional taxonomy of the textbook totalitarian spymaster. However, thanks to the documentation leaked by Edward Snowden, what we have now is confirmation of the cypherpunk dystopian model, which in a real sense, is much worse, for it portends a sustainable template of planetary social control. The NSA in and of itself is one thing. However, in the larger context of its coerced “strategic partnerships” with the top US internet & software companies–as means to facilitate/execute the data collection requirements–what we end up with is quite another: the equivalent of a libcap library on every one of your network devices persistently cataloging your “matrix” in the well-connected social graph, built and maintained under the “legal auspices” of a three-hop dragnet.

In light of the Snowden revelations, the NSA has embarked on the aforementioned pressure and information campaign to countermand the PR damage. Just yesterday, the NSA released two documents that purport to dispel the notion of it being an agency of totalitarian collection. Having just read them , I can say that the 1.6% statistic of “touched traffic” and 0.025% statistic of “reviewed traffic”, on a daily basis, are highly misleading. The first hoodwink is to point out that out of the exabyte daily traffic volume, roughly 60%-70% is ip video traffic¹, which shrinks our “basketball court” down to the size of a racquetball court. The second hoodwink is to infer the sampling follows a pattern of independent random trials–in the classic stats model, proving or disproving a hypothesis drawn from such a random sample–instead of what it actually is: the accumulation of a graph-based document store enabling a traversable, retrospective query system. The whole thing is just plain subterfuge.

By now, it should be apparent that I consider the cypherpunks to be the most relevant social scientists of our day. In no small part because they are at the forefront of the battle-lines of 21st century political economy. Assange, for one, has been singularly confirmed on a number of points. In particular, the US reaction of “Insider Threat” has to count as spectacular confirmation of his thesis of “conspiracy and networks.” The kernel of differentiated political and economic jurisdiction that always lurked beneath the rationale of wikileaks now seems obvious in light of what is required for secure and autonomous cloud computing platforms going forward². Assange’s contention that legal and regulatory entities were engaging in data-laundering–that is, ex post manufacturing legal reconstructions of “evidence” gathered from the NSA dragnet spying enterprise–has since been confirmed by Reuters with respect to two agencies: the DEA and the IRS.

In contrast, the “liberal” political and academic establishment are dinosaurs. No better example of this than this piece at “Bleeding Heart Libertarians,” The United States is not a Police State. The entire piece is a confirmation of my (quite prescient, as it turns out) old post, Free Market Fairness: A bridge to nowhere. Fernando Teson’s entire argument boils down to the position that truth should never stand in the way of mainstream recognition. Of course, as I pointed out in that earlier post, the “respectable libertarian formulation,” in the form of the chicago school, had held sway for thirty years in the domain of finance and “regulatory reform” leading to nothing but banking oligarchy and a permanent severance of political freedom from capitalism. As I pointed out at the end, all it would take would be a minority dissident faction to blow that entire thesis to smithereens and force the “bleeding hearts” to side with what everyone and their brother–outside of polite academic company–knew to be tyranny and oppression. I’m not surprised “Edward Snowden” doesn’t appear in any post on that site, outside one inclusion in an obscure link.

Frankly, the boogeyman of North Korea is tiresome as the singleton measuring stick of totalitarianism. For starters, the inquisitive person might ask just how long North Korea would last if not for China and the US directly and indirectly propping it up(which should trigger a deeper discussion of the taxonomy to begin with when considering States that prop up even worse monsters). However, the better question might be why the persistent singleton casting of 21st century totalitarianism in the mold of mid-20th century soviet model when that model–in terms of having any sphere of international influence–died out two decades ago?

In the recent book, “Cypherpunks: Freedom & The Future Of The Internet,” Andy Muller-Maguhn specifically outlines the stated intent of our 21st century spooks: the use of secrecy as a means to gain control of social processes. This presents a countervailing agency problem more along the lines of a “squishy totalitarianism,” but this is more than sufficient to eviscerate the liberal paradigm. In fact, it acquires a particular sinister aura because it appears quite apparent that most are quite comfortable persisting the liberal mythology within its confines. The industries of “social justice” and “the invisible hand of market social coordination” will continue to spit out oblivious drivel because after all, they are “industries.”

As I have noted on previous occasions, the planned order or surveillance introduces a potentially glaring incentive-incompatibility agency problem into market exchange. One that makes mincemeat of any position that uses the existence of markets as an immediate counterfactual to any claim of systems of social control. If we cast “spontaneous order” as a type of “social graph” and then analytically run it against the “planned order of surveillance” that exists to anatomize it, we obtain a “second-order dynamic” between the social graph and its surveillance that illuminates the distinction between laissez-faire and capitalism in a far greater clarity than the dinosaur methods of 20th century classical liberalism still mired in the roots of the socialist calculation debates.

Frankly, to avoid serious methodological error, one should start from the assumption of “the State as its own Agency.” Everything else flows from there…

¹ As I pointed out in this old post, Technology is not Freedom, ip video has its own extensive surveillance regime.

² Ideological preferences aside, the cloud, in any rent-seeking context, is where the internet goes because it is simply a much more efficient computing platform.

Desperately Rent Seeking Servitude

A recurring theme of this blog is that politics can be rationally modeled. This view leads one to dispense with the oft repeated exasperations regarding irrational policies. A prime example would be the drug war. No the drug war is not insane. Nor irrational. Instead we treat it as something that can be rationally predicted. In the context of social and political science this means we attempt to ascribe a consistent rational method or choice to agency action to derive predictable patterns of behavior. Rationality in this context does not mean “a” should be preferred to “b” or “b” preferred to “a.” That is, rationality is not assigned to preferences. Instead it is assigned to the pattern. So what would be irrational is a pattern that, say, gives us “a” > “b” AND “b” > “a.”

The application of Rational Choice to the patterns of politics and government is usually credited to the Chicago and Virginia schools associated with classical liberalism. Both schools apply the model of methodological individualism to political and state actors that is similar in treatment to actors in the economic arena. In this sense, Rational Choice gives us no such thing as the State itself. A minor hetereodoxy is Bryan Caplan’s “Rational Irrationality” that shifts the agency responsible for patterns of government to the individual voter. Caplan’s motivation in part was to explain the failure of the standard treatment to reliably produce a rational pattern. But to accept Caplan’s method would be equivalent to saying there is no such thing as the politician or the bureaucrat.

Frankly, Rational Choice would offer an unreliable model of government if not for the possibility of a third alternative. This alternative says, by golly, there is such a thing as the State. If we assume the State¹, then how then could we expect this thing to rationally behave(in the sense outlined above)? Anthony de Jasay should be credited as a pioneer in this third alternative. He gives a ready rational pattern of this thing, the State: a Firm that maximizes discretionary power.

It can’t be over-emphasized how much our third alternative is a radical departure from the standard treatment. We are dispensing with the methodological individualism of individual actors(like politicians, bureaucrats and lobbyists) usually assumed to be maximizing their own utility by a method entailing calculating the benefits against costs. Instead, the fundamental unit actor is The Firm. And our maximand quantity–the power to be used at one’s discretion–defies the usual neoclassical treatment of profit or Von Neumann utility.

If you are familiar with mathematical or computer science concepts, the third alternative more or less forces you to adopt an entirely different schema(meta constructs) to model(or make sense of) the patterns in the world. Hence, you avoid referring to such things as the banning of pressure cookers as irrational or stupid. No doubt, it would be stupid under the standard schema of neoclassical economics. But not under our alternative schema. Under this, it follows a rational and predictable pattern.

In de Jasay’s model, the discretionary power eventually dissipates into the “security of maintenance,” which means the use of power to simply stay in power. Writes de Jasay:

“Like the firm in the perfectly competitive industry that makes no profit, the state ultimately achieves only its own survival, and no one is satisfied by this relatively pointless result.”

I have dubbed this type of model by the shorthand name, “The Firm.” The extent of the departure of the political economy of The Firm from standard, neoclassical treatment requires an alternative vocabulary to adequately convey the schema at play. Things like “regulation” do not mean in The Firm what they mean in the neoclassical model. Public Choice concepts like “regulatory capture” are almost nonsensical when translated over to the model of The Firm. To see this, consider the neoclassical meaning of regulation: to internalize negative externalities so as to promote a regular functioning market. The public choice meaning of regulatory capture is to produce regulations that capture artificial rents by creating barriers of entry to competition. But the more appropos term when translating over to The Firm would be something like “docility,” which means something more along the lines of “yielding to submission.” Indeed, we can propose the following model translation:

regulation ————> docility
regulatory agencies —-> docility agencies
regulators ————> docilitators(we’re inventing a noun)

Under this language, the nonsensical nature of regulatory capture, translated to “docility capture,” becomes more readily apparent. It makes little sense. It seems to imply rent-seeking not as a power act but rather as an act of subservience. But nonetheless there is a rational pattern being hypothesized: any power accrued from rent-seeking docility rules will be dissipated via the “security of maintenance.” And there appears to be a bitter irony at play first noted by Orwell in his tract, “The Theory and Practice of Oligarchical Collectivism.” Oligarchical Collectivism produces a de facto peace. Following de Jasay, it may also produce a similar de facto end to the rent-seeking State.

Perhaps it would be instructive if we play a little language game with our model translation and apply it to this recent Reason article on Bitcoin authored by Jerry Brito, a senior fellow specializing in technology policy at Mercatus. Brito provides us with the classical rational choice defense for Bitcoin regulation. Ostensibly, he is treating the rationality of regulator in the standard way. This apparently leads him to formulate a dual struggle between an intransigent old guard of early adopters vs a dynamic new guard entrepreneurial class willing to bargain with regulators in order to launch a next gen Bitcoin application platform.

Writes Brito:

If the message wan’t clear enough, the Bitcoin Foundation—which helps organize Bitcoin’s development on the same model as the Linux Foundation—announced that it would be hiring a full time lawyer in Washington to represent the community’s interests. The thinking is that Bitcoin businesses and users are going to be regulated even if the protocol itself can’t be, so it’s time to engage the regulators and policy makers before they make any hasty moves.

This willingness to lobby and work with regulators, however, was not well received by many of the old guard. As one exasperated Foundation member tweeted, “I got into Bitcoin to improve this miserable planet and ESCAPE the iron grip of privileged moneyed interests, not JOIN THEM!”

But the fact is that Bitcoin is growing up. Its revolutionary potential is greater than most have yet understood. Entrepreneurs and venture capitalists are seeking to professionalize and legitimizing the network, and to do that regulators will have to understand and accept it.

It’s true that Bitcoin could continue to operate even if it was outlawed outright, but then it would only serve as an underworld currency, and its development would not doubt be hampered. The more subversive path may well be to let regulators create their rules for what at base is an uncontrollable system.

Translated into the model language of the Firm:

If the message wan’t clear enough, the Bitcoin Foundation—which originally organized Bitcoin’s development on the same model as the Linux Foundation—announced that it would now forego that model in favor of one predicated on hiring a full time lawyer in Washington to represent the Bitcoin Foundation’s interests. The thinking is that Bitcoin businesses and users are going to be docilely compliant even if the protocol itself can’t be, so it’s time to engage the docilitators before they make any hasty moves.

This willingness to be subservient to docilitators, however, was not well received by those who reject docile compliance. As one exasperated Foundation member tweeted, “I got into Bitcoin to improve this miserable planet and ESCAPE the iron grip of privileged moneyed interests, not JOIN THEM!”

But the fact is that Bitcoin needs to outgrow any revolutionary potential before it becomes widely understood. Thus Entrepreneurs and venture capitalists are seeking to create a professionally compliant network that can be easily understood and accepted by the docilitators.

It’s true that Bitcoin could continue to operate even if it was outlawed outright, but then it would only serve as an underworld currency, and its subservience would not doubt be hampered. The more subversive path, in contrast to the subservient one, may well be to let docilitators create their rules for what at base is an uncontrollable system.

Of course, the likes of Brito would read my translated version as satire. Fair enough. But I read his version as satire. The indisputable facts that even Brito would have to concede is that Bitcoin “regulation” has nothing at all to do with “regulation” and everything to do with compliance to an existing power authority. So what we have is a bargaining game between an open rent-seeking agency and an agency representing the maintenance and continuance of a power authority. But this type of bargaining is not actually in the standard rational choice/public choice literature. Remember, the standard treatment assume methodological individualism on the part of our regulators. There is no agency or agency representation of power on their end. Otherwise, we would be admitting the State or its agency thereof.

Interestingly, it would be well to point out that an agency like a “Bitcoin Community” is voided in the standard public choice literature, too. There are individual players, each competing for rents. Any coalition, at best, is temporary(straight from the bible of Public Choice, “The Calculus of Consent”). “Sticky” coalitions, to remain within the explanatory model of standard theory, can only persist by resorting to drastic inefficiencies/opaqueness in the rent-seeking technology(straight from the Encyclopedia of Public Choice)². But this thing with Bitcoin is far too transparent. Rent-seeking coalitions do not host open forums as an evangelist platform. For someone like Gordon Tullock, this would be the monkey wrench of all monkey wrenches.

So, to be clear, what I am pointing out is that Jerry Brito’s commentary at Reason regarding Bitcoin has no substantiating theory of political economy. It is purely a language game relying on buzz words to convey a rational argument. Words like “new guard,” “old guard,” “dynamic entrepreneurial class,” and “revolutionary application platform” don’t mean a damn thing in and of themselves. If pressed, Brito will almost certainly reduce his argument to something like it is rational to be subservient in order to have a legal market for a potentially revolutionary platform. But that’s just a premise begging for a rational method to justify the conclusion. And Brito has no method. Instead the very premise plays into de Jasay’s rational method of the State as a firm. The conclusion from this method is simply the maintenance and continuation of State power.

Finally, I would be remiss not to point out the pessimistic implications de Jasay’s method for the prospects of anarchism. Unlike classical liberalism, anarchism/libertarianism typically does not dispense with the agency of the State as some sort of fiction. However, the “standard class model” usually views the raison d’être of this agency as means to procurement of artificial rents. The State is the means and the “rents,” and the power resulting thereof, are the ends. So if we have a political economy, in this case a digital economy, where the marginal cost of digital goods approaches zero, the State is viewed as some inevitable dying order because its enforcement agency is doomed to obsolescence.

However, if we have a rational method that seems inclined toward the State as both means and ends, and our maximand quantity of this thing turns out to be simply discretionary power, then the thing that is supposed to kill it poses the possibility of being its eternal fountain of youth. The obvious weakness of “the internet as liberator” is that it is not a “decentralized network.” Rather it is a small network that follows a power law distribution. The very property that allows it to be a distribution channel approaching a zero marginal cost of digital goods³ also allows it to be a perpetual channel for social control. Rather than undermining the State, revolutionary ideas in digital economy, to the extent that a rational method entails them to rent seek subservience, is the very thing that persists the modern liberal state. Revolutionary opportunities follow a rent-seeking pattern that dissipate into a security of maintenance.

We should be reminded that in Orwell’s version of things, Big Brother wins. de Jasay’s rational method of political economy gives us the equally sorry prospect of the Entrepreneur as Emmanuel Goldstein.

¹ IMHO, the State as a Firm can actually be micro-economically derived by introducing frictional waste into rent-seeking.

² The industry of rent-seeking does not refer to the industry itself, that is, to the actual production of the widget or service, but rather to the industry of seeking special privileges for the production of the widget or service. So inefficient rent-seeking technology does not mean the production of the widget or service is deliberately made inefficient; rather, it means the process by which special privileges can be obtained is deliberately made inefficient. This then can explain the barrier of entry to others competing for the special privileges. Remember, the constraint or boundary condition of the Standard Theory is that outlays >= rents.

³ The efficiency of the internet is a product of a great deal of centralized coordination of standards(manufacturing and protocol) up and down the stack. It is not a spontaneous order. The more accurate description would be an efficient Hayekian Hybrid Constructivist Order as a sort of unintentional consequence of “planned competition.” The neoclassical consequence is a major unbalancing of the equation between marginal cost and marginal labor. Zero marginal cost should imply an end to wage labor. But it is an entirely unjustified assumption to think that the n degrees of standardized informal compliance, and in some cases, formal compliance, would persist if everyone became their own firm. If not, there goes your small network and with it, this zero marginal cost manufacturing base. If you think interoperability between windows and mac, or even different versions of windows is a drain of your modern life, you might want to rethink the degree of connectedness you would have if we had an unplanned shift that equilibrated marginal cost to the marginal product of labor. The point being made here is that you can’t assume the small network in anarchist pronouncements of technological triumphalism. If we are to assume the persistence of the small network, a more rational conclusion might be the expropriation of this “Hayekian Constructionist Order” for a more dystopian end than typically envisioned.

Julian Assange’s Call to Cryptographic Arms

Cryptome reviews Cypherpunks: Freedom and the Future of the Internet” here. The book essentially is a written compendium of an earlier RT Cyberpunk series that featured Assange, Jacob Appelbaum, Andy Müller-Maguhn and Jérémie Zimmermann, one that I had commented on previously.

The best insight from the book is that political economy is a sociological force, a shaper, if you will. And we now have a political economy rooted in totalitarian surveillance. Assange occupies the midpoint between the triumphalists and the pessimists, pivoting the tilt of the fulcrum around cryptography. There is an adoption of a more or less laissez-faire method of political economic analysis that approaches something that sees Capitalism not as the end-point fulfillment of human agency(wants and desires) but as contravening force against the very thing itself.

The introduction to the book, the “Call to Cryptographic Arms,” interestingly mirrors the concluding remarks of my previous post, “I,Spy.” The many writers who opine on the role of technology, internet and increasing freedom vis-a-vis the future of civilization are dead wrong. They are wrong because they are not challenging the status quo nor the enemy. As Assange writes: “No description of the world survives first contact with the enemy. And we have met the enemy.”

The cypherpunk perspective sheds immediate and crystal clear light on the current debates regarding capitalism and laissez-faire that are otherwise often obscured by conventional economic and political analytic frameworks(and I include conventional libertarian within these). Can there be just a “little bit of Statism” or is Capitalism a “good” first-order approximation to free human agency? Is the State merely an unfortunate nuisance that nonetheless can be routed around on our way to a technologically driven freer future? No. Assange pin-points the “ground zero” of our current condition: the merger of State and internet. The consequence reveals the ultimate stark divergence between free market and capitalism. Capitalism can rent-seek human agency itself as a threat.

Liberalism gives us the artificial state as a means of securing a human collective choice end, such as property(or primary goods in the more modern incantation), but the security of the thing results in the security apparatus viewing human ends as an existential threat to the security apparatus itself. This paradox is de Jasay’s rational choice incentive incompatibility problem staring you right in the face. Write’s Assange(essentially laying waste to classical liberalism):

First, recall that states are systems through which coercive force flows. Factions within a state may compete for support, leading to democratic surface phenomena, but the underpinnings of states are the systematic application, and avoidance, of violence. Land ownership, property, rents, dividends, taxation, court fines, censorship, copyrights and trademarks are all enforced by the threatened application of state violence.

Most of the time we are not even aware of how close to violence we are, because we all grant concessions to avoid it. Like sailors smelling the breeze, we rarely contemplate how our surface world is propped up from below by darkness.

In the new space of the internet what would be the mediator of coercive force?

Does it even make sense to ask this question? In this otherworldly space, this seemingly platonic realm of ideas and information flow, could there be a notion of coercive force? A force that could modify historical records, tap phones, separate people, transform complexity into rubble, and erect walls, like an occupying army?

The platonic nature of the internet, ideas and information flows, is debased by its physical origins. Its foundations are fiber optic cable lines stretching across the ocean floors, satellites spinning above our heads, computer servers housed in buildings in cities from New York to Nairobi. Like the soldier who slew Archimedes with a mere sword, so too could an armed militia take control of the peak development of Western civilization, our platonic realm.

The new world of the internet, abstracted from the old world of brute atoms, longed for independence. But states and their friends moved to control our new world — by controlling its physical underpinnings. The state, like an army around an oil well, or a customs agent extracting bribes at the border, would soon learn to leverage its control of physical space to gain control over our platonic realm. It would prevent the independence we had dreamed of, and then, squatting on fiber optic lines and around satellite ground stations, it would go on to mass intercept the information flow of our new world — it’s very essence even as every human, economic, and political relationship embraced it. The state would leech into the veins and arteries of our new societies, gobbling up every relationship expressed or communicated, every web page read, every message sent and every thought googled, and then store this knowledge, billions of interceptions a day, undreamed of power, in vast top secret warehouses, forever. It would go on to mine and mine again this treasure, the collective private intellectual output of humanity, with ever more sophisticated search and pattern finding algorithms, enriching the treasure and maximizing the power imbalance between interceptors and the world of interceptees. And then the state would reflect what it had learned back into the physical world, to start wars, to target drones, to manipulate UN committees and trade deals, and to do favors for its vast connected network of industries, insiders and cronies.

The traditional “property rights” of the liberal, democratic capitalist order are the means for a dystopian internet.

Unfortunately, cryptography is not a sufficient means to overcome the problem. Assange is correct that the laws of physics make encryption easy and decryption hard, but the mathematics of data analytics can circumvent this physical constraint. Data analytics is an exercise in graph analysis, not code cracking. Graph analysis is the process of revealing patterns in the data in order to construct graph objects, which are a collection of vertices and connecting edges. Regrettably, you cannot encrypt data patterns. And as we have learned this week, the US Government is massively engaged in graphical analysis of all internal data communications(which, of course, is what we said they were already doing). This is why, occasionally, we will read about the internal memos that leak out from whatever security agency acronym that those who are not sufficiently connected to the graph can rise to a level of suspicion. The robustness of the data analysis relies on a well-connected graph(the so-called diposition matrix is a special type of graph object that marks its nodes for termination). In this sense, the Cryptome reviewer’s advice to “protect yourself by keeping quiet, offline”(avoiding vanguard’s, however, would be good advice) may not be the best advice. The future of evasion is subterfuging the data pattern, which is why it will only be an available domain for the very few.

Cypherpunks: Freedom and the Future of the Internet would be a recommended prerequisite for reading or re-reading de Jasay’s classic “The State,” which, unfortunately proves to be much more relevant today than when it was originally published.

From WikiLeaks: How the Drug War Underlies The Firm

A Public Choice definition of “The Firm” is the agency that arises from the “incentive-incompatibility problem” of collective choice. This agency, however, is also an organ of political economy. The political economic construct of The Firm is what allows us to tie it to the classical concept of libertarian class theory(note: it is a mistake to try to relate the standard realm of public choice to the old French Laissez Faire model of political economy. To make this relation, you must more or less discard “methodological individualism” from the model of State actors. Hence, most, if not all, traditional public choice scholars will reject “The Firm” outright).

The positive model of “The Firm” allows us to make predictions. For one, the drug war will never peacefully end because the discretionary authority the drug war legitimizes is a core foundational component of The Firm. At best, any legalization efforts will simply result in a FDA, Bristol Myers Squibb, DEA triumvirate. In a real sense, the latter may actually provide the means for greater social control than outright illegality.

If the thing that “The Firm” maximizes is discretionary power or authority, then perhaps “The Matrix” is a better understood cultural descriptor than “The Firm.” However, the use of the term, “The Firm,” is illuminating because it reminds us that the agency in question is at its core a politically economic one. The Firm is the (protectionist) coordinated arena where the “competition” of capitalism takes place. It is the “market setter.”

As with “The Matrix,” it may be the case that the only way to fully understand “The Firm” is to see it for yourself. So below, I have posted a link from the recent WikiLeaks file dump. This is actually a publicly available document and not a secret one. But it is captured from the inner correspondence of the global intelligence firm, Stratfor.

International Narcotics Control Strategy Report: Money Laundering and Financial Crimes.

The introduction says it all: engineering an efficient international enforcement paradigm of anti-money laundering measures that starts with terrorism and drugs but under a “one-size-fits-all” vein can be effortlessly extended to any unauthorized monetary exchange. The table of contents provides the staggering breadth and scope of The Firm’s coordination.

To those that say “there is no firm,” I say positive science is useless if we do not believe what we see with our own eyes. To those who say “if you don’t like it, leave,” I say it is clear that there is no escaping the jurisdiction of The Firm.