Is the Metaverse Drifting into Anarcho-Capitalism?

Setting a course

Last week I finished Jaron Lanier’s book, Dawn of the New Everything.¹ I came away with two thoughts: 1.) that there is a sort of platonic, cosmic beauty in the pronunciation of his first name (mine is the same), and 2.) that early and ostensibly minor decisions made in the development of important technology can totally alter the world decades down the line. Lanier has been at the forefront of computer science and technology since the 1980s, and he lays out a few examples in his book of how small choices made in that era had an outsized impact on the way that things are now.

Jaron Lanier. Image by JD Lasica — https://www.flickr.com/photos/jdlasica/4843374960/, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=86543782

The first example was a decision made in the infancy of email. At one point, it was debated if “postage” would be necessary. The amount required would be vanishingly small — less than a cent — but it would act as a deterrent to mass mailings, and it would provide a layer of traceability. Ultimately, the decision was made to keep email free, primarily on the basis that even the smallest amount of postage could limit access for some of the world’s poorest people. It was a reasonable objection and may have been the right call, but it has had some negative repercussions. It probably made things easier for anonymous scammers, and it certainly resulted in spam. Imagine the opposite route had been taken instead. We could have found ourselves living in a timeline without “junk” folders and minimal fraud being perpetuated through email.

Similarly, imagine if hyperlinks worked in both directions such that one could always trace incoming traffic back to its source. This was actually the way Ted Nelson envisioned them. He was the person who coined the term “hypertext” back in 1963. When Tim Berners-Lee’s World Wide Web standard found broad adoption in the early 1990s, it cemented for perpetuity the use of one-way links instead. Like the decision made regarding emails, this apparently small design choice has had broad ramifications. While it’s more difficult to set up, “two-way linking would preserve context. It’s a small, simple change in how online information should be stored that couldn’t have vaster implications for culture and the economy.”² This is because Nelson’s design would have also included micropayments to reimburse people when others used their content. Instead, we have an Internet that’s faster to develop for, but without attribution, responsibility, or credit.³

Many of us in the Metaverse and Web3 communities have the same sense that Lanier and the others must have had around 1990. We know that what we’re involved in is going to be impactful — possibly even the set of technologies that define our era. If this is the case, the choices we make now, however small they may seem, can result in enormous differences as the years compound their effects. It’s like steering a battleship. You can only turn it a few degrees left or right at any given time, but over the span of thousands of miles of open water, that small course change brings you to a different place entirely. This makes it especially important to assess where we’re headed now. Years hence, it may not be possible to correct course if we find our destination isn’t a desirable one.

When I look at the direction we’re pointed in now, and I mentally draw a dotted line forward, I see us arriving in waters that could justly be described as “anarcho-capitalist.” That may not be a familiar term to everyone, though. Wikipedia defines it as “a political philosophy that advocates for the elimination of centralized states in favor of a system of private properties enforced by private agencies, free markets, and the right-libertarian interpretation of self-ownership, which extends the control of private property as part of the self.”⁴

“When I look at the direction we’re pointed in now, and I mentally draw a dotted line forward, I see us arriving in waters that could justly be described as “anarcho-capitalist.”

It’s an awkward definition, but it’s thorough. Let’s break it down into its constituent parts and talk about the extent to which it describes the Metaverse as it’s coming together now. If I’m right, and this is the sort of environment we’re building, it’ll be worth considering the implications of it and whether or not this is truly what we want from our new online era.

“The Anarcho-Capitalist Flag”. Image by user “Rocket000” (https://commons.wikimedia.org/w/index.php?curid=1446470)

Part 1: “A political philosophy that advocates for the elimination of centralized states…”

Most certainly, the ethos that permeates Web3 is one of opposition to centralization. It’s been that way from the start, the result of the “cypherpunk movement” from which Bitcoin and the rest of Web3 descends.⁵ Some categorized themselves as anarchists or libertarians, but the cypherpunks advocated broadly for things like privacy, digital freedom, and redistributing the powers of large and influential organizations — most especially the state. But, they went beyond writing and philosophizing, and actually developed technologies that enacted their vision. Cypherpunks and their progeny brought us BitTorrent, advances in cryptography, distributed ledgers, WikiLeaks, and more. A direct line can be drawn from their work to smart contracts and DAOs — systems that allow people today to ensure that they are governed by transparent rules and not by the whims of other, more powerful people.

Nick Szabo is a notable “cypherpunk” and the inventor of smart contracts. Image from Golden.com’s wiki.

But this tendency has taken Web3 past even the traditional anarcho-capitalist position. The norm in the Metaverse is not just to decentralize state power, but to decentralize any organization in its domain. In a sense, we have rendered this part of the definition beyond accurate, as the Metaverse community is not just “advocating for the elimination of centralized states,” but perhaps moving towards the elimination of centralization itself.

Part 2: “…in favor of a system of private property enforced by private agencies, free markets…”

The Metaverse is composed mostly of private property. In fact, nothing is owned publicly, but there are aspects in each world that one might consider as belonging to “the commons.” These would be things that are accessible to anyone, but without being possessions of the state.⁶ In the context of a metaverse, these might be things like roads, central areas, hubs between worlds, spawn points, and more. These represent a divergence from pure anarcho-capitalism, though. Most anarcho-capitalists reject the commons entirely, believing that essentially everything should be owned privately.

As for who “enforces” Metaverse property systems, that’s a tough one to address. I suppose the best answer might be the computer code. It certainly sets the limits of what’s possible, but it doesn’t actually police or adjudicate problems in the Metaverse. There’s basically nobody to do that. Some platforms do enforce their own terms of service, but their options for response are very limited. In practice, conduct goes mostly unchecked by authority, and the market is about as free as it gets, in that it’s both unregulated and anonymous. Still, it’s hard to say the market has any “enforcement” power as described in Wikipedia’s definition. It’s a close match once again, but it’s not perfect.

Part 3: “…and the right-libertarian interpretation of self-ownership, which extends the control of private property as part of the self.”

Within “right-libertarianism,” a political philosophy with close relations to anarcho-capitalism, the concept of property is modified such that property is conceived of as an extension of the self.⁷ This is nowhere more true than in the Metaverse. After all, your identity within the Metaverse is often the same thing as your collection of digital possessions — your wallet. The things you owned are attached to your virtual identity, and in a sense, contained within you.

“[Y]our identity within the Metaverse is often the same thing as your collection of digital possessions — your wallet. The things you owned are attached to your virtual identity, and in a sense, contained within you.”

Moreover, your “physical presence” — your very manifestation of self —can also be commoditized. An avatar can be bought, sold, and traded in a way your physical body never could be. Self-ownership here is unique in human history, in that you can trade your Metaverse body in the same way that you might sell a car or buy a hat, which is pretty fascinating. With regard to this particular stretch of the definition, we can see that there has never existed an environment in which this holds truer than in the Metaverse.

Conclusions

As we break down this definition and compare it to how Web3 is coming together, the shape being revealed is not exactly the same as anarcho-capitalism, but I believe it’s close enough. I’m comfortable saying we are indeed headed there. You can decide for yourself whether the definition matches enough for you to categorize it that way as well, but as I see it, this particular Venn diagram is very nearly a single circle.

It’s also important to understand the implications of heading in this direction. So, I’ll try to line up some of the good and the bad of anarcho-capitalism and argue that ultimately, some balance is needed here.

Implications

Capitalism. Whatever you like or hate about it is effectively amplified under anarcho-capitalism. Think of it as a free market system with bare minimum intervention. The guard rails, as I think we all know instinctively, are already off anyway. There is practically zero regulation of Web3 at the moment, and we see that play out in the daily chaos of ups and downs, rugs and reveals. Honestly, any capitalist system is going to be subject to boom-and-bust cycles, but without oversight and control, these become even more volatile. The growth periods can make millionaires in months, and the slumps can devastate accounts in days.

But it’s a tradeoff. The capacity that digital currency has to flow into profitable spaces is unprecedented. It moves more quickly than ever, and this efficiency has helped create growth unlike any ever before seen. In the last several years, crypto and NFTs have outpaced practically every other investment on Earth. On a subjective level, the innovation in this space feels impossible to keep up with. You can spend your entire day on Twitter and still miss out on a lot. Web3 inspires us, it motivates us, and it awes us when the next new idea hits. There’s really nothing else quite like it, and we owe much of this growth to the agile and free environment in which it has been developed.

And, the market provides!… usually. By refusing regulation and centralized control, we’re really placing a lot of faith in the market to deliver for us and to create positive outcomes. The only gods ruling this domain are the profit motive and the programming code. But, I say that ironically. Within libertarian circles, there’s a real tendency to deify the market. They speak of it as if it can do no wrong, it’s all powerful, and it always comes through. This, to me, is silly. Nothing is perfect. No people certainly are, and no market made up of them will be either.

When an NFT project succeeds, the growth can be unbelievable. Chart by Insidebitcoins.com (https://insidebitcoins.com/buy-cryptocurrency/buy-nft/bored-ape-yacht-club)

Ask yourself, for example, if the market can really provide us with safety in this space? It’s worth thinking about. There’s definitely no indication that, when left to their own devices, people will behave themselves in anonymous, online contexts. We tend to think of such bad actors in terms of “trolls” harassing people for a thrill, or perhaps the occasional fraudster tricking someone out of their cash. But, this ignores the more organized and higher-level offenders: people like monopolists or cartels of coordinating businesses. Ironically, when we try to create a truly and completely “free” space, we can end up empowering those who would assume control if given the chance. “Laissez-faire” in these spaces is asking for trouble.

Libertarianism and even its extreme, anarcho-capitalism, have a certain appeal to it. I probably have to concede that. It’s even more tempting in reaction to the Web2 environment of corporate-controlled “platforms” that we’re currently emerging from. These have extracted value from creators and pulled data from users at a truly global scale. Their power and influence is at least a little disturbing to anyone paying attention. People want to believe that a new sort of democratized and fairer system is finally possible — and what’s more — it really is.

But mature people know not to expect utopia. Serious people understand that the market isn’t God. It’s not some inerrant and amorphous being with the common good in mind. It’s just a system of distribution, with benefits and disadvantages just like any other. We need some maturity of perspective here, and we must take extra care with the choices we make at this stage in Web3’s development. Small adjustments can eventually become sweeping changes, as seen by Jaron Lanier’s stories of the early Internet. We may not be able to decide individually how things will be, but together we do determine the online culture in which everything develops. By simply seeking the common good and trying to act with wisdom, we few million people currently occupying this space can build a better future for the billions on their way.

If you enjoyed this article, please consider following me here on Medium! I also moderate a community on Discord called STRAB0 in which people discuss issues surrounding virtual worlds. STRAB0 includes bloggers, industry leaders, metaverse devs, and others. Find out more at www.strab0.com.

1 — https://www.amazon.com/Dawn-New-Everything-Encounters-Reality/dp/1627794093/ref=tmm_hrd_swatch_0?_encoding=UTF8&qid=1649974369&sr=8-2

2 — Jaron Lanier, Who Owns the Future, New York: Simon & Schuster, 2013. p. 227.

3 — http://theguardian.com/technology/2013/mar/17/jaron-lanier-digital-pioneer-rebel

4 — https://en.wikipedia.org/wiki/Anarcho-capitalism

5 — https://www.cs.princeton.edu/~arvindn/publications/crypto-dream-part1.pdf

6 — https://iasc-commons.org/commons-types/

7 — https://en.wikipedia.org/wiki/Right-libertarianism

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