Summary of The Sovereign Individual – Mastering the Transition to the Information Age by James Dale Davidson and Lord William Rees-Mogg: This book explores the greatest economic and political transition of all time: the shift from an industrial to an information-based society. The authors herald the end of the nation-state and the advent of individual sovereignty.
By James Dale Davidson and Lord William Rees-Mogg, 1997, 448 pages.
Review and Summary of The Sovereign Individual by James Dale Davidson and Lord William Rees-Mogg
Chapter 1 – The Transition of the Year 2000 | The 4th Stage of Human Society
1.1 – The information revolution: the fourth stage of human society
In their book from 1997 (keep this year in mind as you read this review, as the book becomes even more impressive), authors James Dale Davidson and Lord William Rees-Mogg are keen to demonstrate that we are coming to the end of the modern era of Western nation-states.
The 3 stages of humanity (before a radical and rapid revolution)
According to the authors of The Sovereign Individual, we are at the dawn of a radical revolution. It will be faster and more profound than those that have come before.
James Dale Davidson and Lord William Rees-Mogg look back at the three essential stages humanity has gone through so far:
- First stage ⇒ a society based on hunting and gathering.
- Second stage ⇒ a society that is based on agriculture.
- Third stage ⇒ an industrial society.
These stages represent distinct phases in the evolution of humanity and in the control of violence.
The information revolution will be the fourth step
According to James Dale Davidson and Lord William Rees-Mogg, the existing potential of the nation-state as we know it is eroding by the day. Witness the decline in moral values and the rise in corruption among the leaders of Western governments. This situation heralds a major change in today’s society: a genuine revolution.
The authors wrote The Sovereign Individual with the aim to shed light on the changes we are about to experience. This will enable us to take full advantage of the new opportunities that lie ahead. In their view, this revolution will not only alter the entire configuration of the current global economy but will also take place much more rapidly than previous transitions.
The change will be universal, immediate and will create a clean break with the past.
1.2 – The rise of the sovereign individual
Note: if you’re interested in the subject of the Internet’s disruption of nation-states, check out my blog Disruptive Horizons for a deep dive on the subject. A good place to start is the article “10 Principles of History for predicting the future“
From now on, technical and economic innovations will no longer be restricted to a small part of the world. This new society promises that those with the ability to educate and motivate themselves will be able to achieve their goals and succeed, regardless of age, ethnicity, or gender. Success is now within reach for all those wishing to get ahead.
The authors develop four main points here. They explain that, in this new information age:
- Ideas will be a means of enrichment. Merit, wherever it may be, will be rewarded as never before. Physical capital will no longer be a barrier to new wealth. Bright, ambitious people will thrive, a true reflection of individual sovereignty.
- Individual autonomy and equal opportunity will dominate. This means that from now on, people will be responsible for their actions and their lives. Governments will no longer be able to impose certain constraints at the risk of losing their best and brightest.
- The virtual reality of information technology will expand the realm of human desires, making almost anything imaginable seem real.
In short, the digital transition will weaken governments and liberate the individual, who will capitalize on individual sovereignty (fewer constraints, greater private control over resources, etc.).
1.3 – The end of nations
States weakened by new technologies
The process by which the nation-state has developed over the last five centuries will be reversed by the new technology of the information age: as we have seen, the state will emerge weakened. The state will have to deal with autonomous individuals with the same diplomacy it uses in its relations with other governments. In order to stem the tide of technological growth, it will use secret and sometimes violent means to prevent the spread of such technologies.
“Governments will violate human rights, censor the free flow of information, sabotage useful technologies, and worse.”
Three predictions that show the loss of power of Nations
The authors of The Sovereign Individual make three important predictions:
- New technologies will bring about a complete revolution: they will change our tools, reshape our morals, alter our perceptions, render our laws obsolete, and upset the way we work. Our work will no longer consist, for example, in holding a “job” but in carrying out a “task” (they thus anticipate very well, more than a decade before this term became fashionable, the “Uberization” of the economy).
- Much of the world’s trade will migrate into the new realm of cyberspace, where governments will have no power to act. In this cyberspace, the threats of physical violence that have always formed the basis of politics will disappear. Everyone will find themselves on an equal footing.
- Cyberspace will be a definitively offshore jurisdiction open to all. According to the authors:
“Cyberspace is the ultimate offshore jurisdiction. An economy with no taxes. Bermuda in the sky with diamonds. When this greatest tax haven of them all is fully open business, all funds will essentially be offshore funds at the discretion of their owner. This will have cascading consequences. The state has grown used to treating its taxpayers as a farmer treats his cows, keeping them in a field to be milked. Soon, the cows will have wings.”
Totalitarian state measures in the face of the dangers of technology and cybercurrencies
The authors explain that, initially, the state will take desperate measures to “tether its runaway herd,” to restrict access to liberating technologies. However, if this works, it will only work for a while. Eventually, the state will be unable to cope. Even if it increases its tax revenues, it won’t be able to keep up with its spending.
In the information age, the emergence of cybercurrencies will enable individuals to free themselves from the monopoly held by states. Faced with this newfound monetary independence, where anyone can conduct their own monetary policy, Western governments will seek to suppress the cybereconomy by totalitarian means.
“Their importance for controlling the world’s wealth will be transcended by mathematical algorithms that have no physical existence. In the new millennium, cybermoney controlled by private markets will supersede fiat money issued by governments … Lacking their accustomed scope to tax and inflate, governments, even in traditionally civil countries, will turn nasty. As income tax becomes uncollectible, older and more arbitrary methods of exaction will resurface.“
1.4 – Hostile reactions on both sides
While for some, these new technologies represent the advantage of liberation and autonomy, for others they represent a real threat.
This is the case for the “average talents” in today’s rich countries, and those who benefit from the income distributed by governments. Indeed, the latter will tend to be suspicious of this new configuration, this new freedom, and of those who advocate individual sovereignty. This negative reaction stems from what the authors call “moral anachronism,” i.e., “the application of moral restrictions drawn from one stage of economic life to the circumstances of another.”
In short, all new advances lead to a change in moral values. However:
“Just as a farming society could not live by the moral rules of a migratory Eskimo band, so the Information Society cannot satisfy moral imperatives that emerged to facilitate the success of a militant twentieth-century industrial state.”
Nor will the Information Society necessarily be welcomed by those who stand to benefit from it. In all likelihood, they too will have their doubts and scorn for innovations that undermine the nation-state because radical change is always frightening for human beings. It has always been so. And this transition, faster than our moral and economic capacities, will bring with it radical reactions:
“You can expect to see a proud and indignant Revolution, notwithstanding its great promise to liberate the future.”
1.5 – Sovereignty through markets: the individual will no longer be a “citizen,” but a “customer”
The “denationalization” of the individual ⇒ privatization of services and individual autonomy
For the authors, the radical restructuring of the nature of sovereignty and the death of politics will cause the privatization of almost all services currently controlled by governments. Indeed, James Dale Davidson and Lord William Rees-Mogg believe in the imminent arrival of individual economic sovereignty, i.e., sovereignty through markets.
Individuals will gain enormous autonomy, while nation-states will go bankrupt and see their authority greatly eroded:
“The power they retain is the power to obliterate, not to command.“
In the same way that nationalized railways and mines were rapidly privatized around the world, we will witness the “denationalization” of the individual, who will no longer be a citizen, but a customer.
The commercialization of sovereignty and the affirmation of cyber-communities
The commercialization of sovereignty will bring profound changes to what it means to be a citizen of a nation-state.
Citizens will be able to offer their services from anywhere, thanks to increased bandwidth. They will no longer be mere taxpayers, but first and foremost individual sovereigns and customers for governments.
To illustrate their point, the authors cite the recognition of virtual sovereignty in the Iridium global cellular network. Indeed, to enable calls to be routed to subscribers all over the planet, Iridium had to be recognized as a virtual country, and therefore as a virtual sovereignty, by the global community.
If this bandwidth continues to grow – and this is what the authors foresaw for the coming years when they wrote their book in 1997 – it should technically include a virtual community with its own laws: the metaverse (note again the authors’ astonishing foresight on this subject). When this happens, the new cybercommunities will be rich and competent, capable of asserting themselves through communication capabilities and large-scale information warfare.
The fragmentation of sovereignty and the decline of national identity
In the nation-state system, borders between territories are fixed and clear. In the information age, these physical borders will become blurred once again, and sovereignty will fragment. New entities will emerge, able to control wealth and military power without controlling any fixed territory. These entities will be organized on principles unrelated to nationality (as was the case with certain religious guilds in the Middle Ages, such as the Knights Hospitaller: of all ethnic origins, their members derived no authority from national identity).
Associations of merchants and wealthy individuals with semi-sovereign powers (similar to the Hanseatic League confederation of merchants in the Middle Ages) will resurface. These “merchant republics of cyberspace” will offer protection and help enforce contracts.
The end of social democracy and a new look at the world
According to James Dale Davidson and Lord William Rees-Mogg, “the illusions of social democracy that once delighted and motivated the most gifted minds” have become anachronistic today. That’s why the authors advise us to look at the world differently, from the outside. Then, to reanalyze all those things we’ve probably taken for granted and come to a new understanding. For the authors, this approach is crucial because, they argue:
“If you fail to transcend conventional thinking at a time when conventional thinking is losing touch with reality, then you will be more likely to fall prey to an epidemic of disorientation that lies ahead. Disorientation breeds mistakes that could threaten your business, your investments, and your way of life.”
1.6 – The authors’ predictions in their two previous books
To conclude the first chapter of their book The Sovereign Individual, the authors refer to their previous books: Blood in the Streets published in 1987 and The Great Reckoning published in 1991.
In both books, James Dale Davidson and Lord William Rees-Mogg recall having explained that:
- The most important causes of change were subtle and, in their view, related to climate, topography, microbes, and technology.
- Violence was a crucial variable at the heart of their theory of megapolitics.
The authors then list the predictions made in their two previous books, in 1987 and 1991. Though greeted with hostility, and often mocked or dismissed as nonsense, most of these predictions were confirmed.
The predictions that came true
According to the authors, these are:
- The decline of American dominance, bringing with it widespread economic instability and a major stock market crash.
- The collapse of communism and the death of the Soviet Union, leading to a future of increasing civil disorder, hyperinflation, and falling living standards in Russia and the Soviet republics.
- Global disarmament.
- The collapse of the Japanese stock market.
- The collapse of real estate markets.
- Falling average wages, redefined income redistribution conditions, reduced social benefits.
- The replacement of Marxism by militant Islam as the main ideology of confrontation with the West.
- An upsurge in terrorism and widespread criminal violence.
Predictions that haven’t (yet?) come true
The authors point out that other predictions have not come true, or at least not yet. Mind you, these are things that had not happened by the time the authors wrote the last edition of their book in 1997, not by the time I write this summary, namely:
- The collapse of the command-and-control system in the former Soviet Union, resulting in the spread of nuclear weapons into the hands of mini-states, terrorists, and criminal gangs.
- The corruption of certain political systems with drug money.
The authors point out that predicting the future has always been a bold and daring undertaking, rightly provoking skepticism. For them, however, it is first and foremost an exercise in thinking. Their deductions may turn out to be way off the mark. The fact remains that they are committed to providing us with “a sober, detached analysis of issues that could prove of great importance” to us. These are not enigmatic prophecies, but their own points of view, which they feel obliged to share.
1.7 – Concerns about computer data
The authors end this first chapter of The Sovereign Individual by discussing the corruption of computer data: in the information age, it will be possible to wreak havoc by sabotaging the data of essential systems on which the functioning of society depends. For example, instead of shooting down an aircraft, a military adversary could safely corrupt data crucial to its operation.
The authors conclude this first chapter by emphasizing that to understand how the world works, we need to be aware that human society obeys the mathematics of natural processes, and that human society, like other complex systems in nature, is characterized by cycles and discontinuities. This means that certain features of history tend to repeat themselves and that the most important changes, when they do occur, may be abrupt rather than progressive. And it is partly because they have analyzed these cycles that the authors are convinced that the year 2000 “will be an inflection point between the Old World and a New World to come.“
Chapter 2 – Megapolitical Transformations in Historic Perspective
2.1 – The decline of the modern world according to The Sovereign Individual
When they wrote their book, James Dale Davidson and Lord William Rees-Mogg explained that they were witnessing the decline of the modern age, which began with the fall of the Berlin Wall and the end of the Soviet empire. Today, the fourth stage, referred to as the “post-modern,” “cyber-economy” or “information age” mentioned in the first chapter, is, in fact, very fast approaching:
“The nation-state has a future numbered in years and days, and no longer in centuries and decades.”
The taboo of forecasts
The difficulty in accepting certain forecasts lies in the fact that a system, whether strong or weak, will not accept having its rules replaced. The closer a system comes to an end, the more reluctant people will be to adhere to its laws. This is why organizations discourage or minimize any analysis that anticipates its demise. And it’s why the great transitions in history are rarely identified or are only identified in retrospect, decades, and sometimes even centuries after they have occurred. The authors mention the fall of Rome at length as an example: history shows that the powers that be denied that Rome had fallen for many decades. So, even after the end of its existence, the Roman Empire continued to exist through the stories presented to the public.
Learning to look beyond the perceptible
The only way to understand or see the potential end of a system is to understand it for yourself. This requires looking beyond the obvious, not limiting oneself to only what is perceptible. In this respect, history remains and will always remain the ultimate teacher.
The fundamental causes of change are not conscious
James Dale Davidson and Lord William Rees-Mogg discuss how many specialists’ thoughts and analyses of the future and society are, in their view, flawed and superficial.
They go on to explain why, contrary to common belief, the fundamental causes of change are not conscious. Transitions are rarely motivated by human desires – in other words, by people being fed up with a way of life and wanting to change. Indeed, no prehistoric man ever said: “I’m tired of living in prehistoric times, I’d prefer the life of a peasant in a farming village.” It’s the opposite process that happens. It is change that brings about general disorientation and new needs within individuals:
“If their views do change abruptly, it probably indicates that they have been confronted by some departure from familiar conditions: an invasion, a plague, a sudden climatic shift, or a technological revolution that alters their livelihoods or their ability to defend themselves.”
2.2 – Life without a vision of the future
As we have seen, if we fail to perceive the great transitions in history; it’s partly because we don’t want to see them. Our ancestors’ lack of knowledge also explains why their view of the future was wrong.
Learning from the past
The big advantage that today’s society has over the past is knowledge. Science and mathematics have helped us to understand nature and its causes and effects. The development of politics, information technology, and economics has enabled us to grasp the workings of complex; dynamic systems and human actions (such as the logic of violence).
The authors emphasize that, based on analyses of the past, we can now anticipate the degree of impact of changes. Because with knowledge, it’s easy to predict certain behaviors. We may not be able to predict an atomic explosion; an act of terrorism, an asteroid strike, a sudden volcanic eruption; or the emergence of a new disease, but we can draw conclusions from what is already known. For example, if you drop a $500 bill on the street, chances are someone will pick it up and take it for themselves. More generally, knowing how people react to costs and rewards is, among other things, an essential part of forecasting.
The characteristics of megapolitical transitions
The authors analyze many of thecharacteristics common to all megapolitical transitions. Here are 7 summarized points that the authors highlight for understanding the information revolution:
- Changes in the megapolitical foundations of power always occur well in advance of the actual revolution.
- Revenues generally decline when a major transition begins.
- During this period, having a different vision is often considered taboo, as people are almost always blind to the changes.
- Major revolutions are often accompanied by a cultural revolution, which can lead to conflict between those who hold the old values and those who hold the new ones.
- Major transitions are unpopular because they challenge established moral imperatives.
- Corruption, moral decline, and inefficiency seem to be important characteristics of the final stages of a system.
- Probably because of technological growth, each transition in history has left less time for adaptation than the previous one.
As history accelerates, it becomes much more worthwhile today to forecast the implications of transitions; as they will have repercussions over a much shorter horizon: the space of a single lifetime.
2.3 – The 4 megapolitical factors that precipitate revolutions in the use of violence
The notion of megapolitics helps us to better understand some of history’s major events (the trajectory of governments, wars, patterns of economic prosperity and decline, etc.). This is why, for James Dale Davidson and Lord William Rees-Mogg; it is essential to understand the factors that lead revolutions to employ violence.
These variables can be grouped into 4 categories:
- Topography.
- Climate.
- Microbes.
- Technology (the most impactful category).
The authors of The Sovereign Individual illustrate these four factors with numerous examples from the past.
Chapter 3 – East of Eden | The Agricultural Revolution and the Sophistication of Violence
The authors highlight how the advent of agriculture, around 9,000 BC, ushered in a new era for mankind. With it came civilization.
3.1 – Changes at the root of violence
The agricultural revolution was the first great economic and social revolution. It transformed the logic of violence: wherever agriculture took root, violence became an important feature of social life.
James Dale Davidson and Lord William Rees-Mogg first explain at length how primitive society functioned before agriculture. This is to better understand how the advent of agriculture created a radically different dynamic to that involved in foraging.
In primitive society (hunting and gathering), access to resources was common (no ownership); fewer tools were needed, there was no point in saving since there was nothing to buy; and working beyond the bare minimum had a negative impact (excesses actually reduced the chances of finding food). Agricultural society was at the origin of major changes: diet, organization of economic life, cultivation processes; storage of resources, domestication of animals, immobilization of land; sedentariness and regrouping of populations, competition and control of land, and so on.
3.2 – Private property and the rise of inequality
The transition to a sedentary agricultural society also brought with it the emergence of:
- Private property: an individual working on his land for a whole season doesn’t let someone else take his crops.
- The notion of inequality: it became possible to steal something from others that we didn’t have.
In this sense, the agricultural revolution increased coercion and gave rise to the emergence of violence: plundering, raids, wars, and so on.
In the second part of this chapter of The Sovereign Individual; the authors continue their detailed and well-documented explanation of how the context of this revolution contributed increasingly to a major upsurge in violence.
Chapter 4 – The Last Days of Politics | Parallel Between the Senile Decline of the Holy Mother Church and the Nanny State
In the fourth chapter of The Sovereign Individual, James Dale Davidson and Lord William Rees-Mogg show that the information revolution risks bringing about the death of politics, just as it did with the Church centuries ago.
In fact, at the end of the 15th century, the population was very disdainful of the Church; which was seen as corrupt and amoral. This disdain is an indicator: technological advances tend to change moral standards; and generate a certain contempt for old institutions, which tend to perpetuate them.
4.1 – Secular reform
The need for reform was accelerated by the realization that politicians and members of the Church were doing unnecessary things. Prior to this, the Church had helped the economy recover from anarchy. It proved as indispensable as the nation-state in our time. However, just as the Church was subsequently replaced because it had become an obstacle to growth and productivity; the authors assume that the nation-state will be replaced by new forms of sovereignty.
4.2 – A parallel between chivalry and citizenship
Several ideas are developed. The authors:
- Evoke the similarities between knights who swore oaths, sometimes foolishly, and citizens willing to accept taxes in return for citizenship.
- Explain why chivalry and citizenship both have in common killing people and risking death.
- Think that, just as we today find flogging or deprivation in the past ridiculous, it is highly likely that, in the future, people will find our modern behavior ridiculous.
4.3 – The birth of the industrial age
Industry emerged with the advent of gunpowder weapons and the printing press.
The Church’s loss of power due to the printing press
The printing press, which enabled mass production and thus dissemination of information at a lower cost than in the past; opened the door to new intellectual horizons. With the advent of the printing press, knowledge was available to all and diminished the power of the Church; which had a monopoly on God’s words. It even created space for heretics, which the Church tried to censor. The effect, however, was the opposite. Feudal ties and the relationship with the church were changed by books that told the stories of these ‘nouveau riche’ who had made it from nothing.
Finally, the mass production of books put an end to the Church’s monopoly on the written word; greatly reducing its power.
A parallel with today
For James Dale Davidson and Lord William Rees-Mogg, the information revolution will destroy the monopoly of the nation-state just as the gunpowder and printing revolution destroyed that of the Church. Today, as in the past, the productive are the ones who bear the growing burden of income redistribution.
Like the Church, the nation-state has a monopoly on regulation and does not use it to improve productivity. It uses it primarily to generate revenue. This is what has led to the public’s contempt for the Church, the bureaucracy, and today’s politicians, who waste public money.
4.4 – Church hypocrisy
As the years went by, the public became aware of the hypocrisy of the Church, even though it was sacred. The corrupt state of the Church at the end of the 15th century; and the increase in taxes and indulgences to replenish its coffers; slowly brought about its end, with a reduction in its impact.
The end of the 15th century was a time of confusion, disillusionment, pessimism, and despair, just as it is today.
Chapter 5 – The Life and Death of the Nation-State: Democracy and Nationalism as Resource Strategies in the Age of Violence
5.1 – The rubble of history
James Dale Davidson and Lord William Rees-Mogg begin the fifth chapter of The Sovereign Individual by discussing the fall of the Berlin Wall in 1989, which they describe as being highly symbolic of:
- The era of the nation-state: these walls were built to maintain monopoly and extract wealth from citizens.
- The death of communism, for the world system as a whole: the triumph of the state as a vehicle for organizing violence was not an ideology willed by society but made possible by the logic of violence.
The authors then highlight two points:
- Gunpowder and weapons made it easier for states to expand, leading to greater use of violence. Only large governments with a command of resources could compete on the battlefield.
- The megapolitical revolution that killed communism risks destroying the democratic welfare state as we knew it in the 20th century.
5.2 – Governance in economic rather than political terms
The authors refer here to the work of economic historian Frederic Lane. Lane studied the possibility of a government conceived in economic rather than political terms. From this point of view, there would be three groups of people for whom governments are designed:
Owners
It’s rare these days, but it still happens that a single person heads a government. This is often a hereditary ruler who owns the country (e.g., the sultan of Brunei or the sheik of Dubai, who run their country much like a business). The aim of government owners is to maximize profits and reduce costs. In this way, they free up resources for investments that stimulate growth. Even if these resources were spent for conspicuous consumption, they would help create and nurture new markets instead of being wasted on inefficient “protection.”
Employees
Employee-led government policy favors increased employment; opposes its reduction, and resists lower taxes (to which they contribute less than contractors) and lower costs. On the other hand, they rarely tend to lower government costs, or the prices charged to customers.
Customers
Customer-run governments have existed in the past, as in medieval Venice. The Venetian government was controlled by a group of merchants seeking protection. These merchants were clients of a protection service provided by the government (they paid the government for this service). However, they did not seek to enjoy control over the monopoly of violence. Other examples include limited-franchise democracies and republics, most notably the American Republic in its founding period, where only those who paid were allowed to vote. These governments will tend to reduce operating costs and taxes as much as possible.
5.3 – Voters as customers
James Dale Davidson and Lord William Rees-Mogg end this chapter by suggesting we imagine a scenario: what if, as a customer, we went into a store to buy some furniture, for example, and the salesmen took our money, then ignored our request and consulted others about how we spent our money? We’d be (rightly) upset. “You wouldn’t think it normal or justifiable if the employees of the store argued that you really didn’t deserve the furniture, and that it should be shipped instead to someone whom they found more worthy.”
Well, this scenario is similar to what happens in our dealings with governments. Where we, like a customer, should find it outrageous not to get satisfaction, where customers can force suppliers to be efficient, voters, however, are unable to prevail. Why not? Because of the coercive power of governments. Those who pay for protection against violence are not in a position to deny resources to the sovereign. By refusing, they expose themselves to the violence of an aggressive group.
Lastly, the authors discuss other scenarios, before returning briefly to the reasons for the success of the democratic nation-state over the last two centuries.
Chapter 6 – The Megapolitics of the Information Age | The Triumph of Efficiency over Power
In this sixth chapter of The Sovereign Individual, the authors explain that technology has profoundly altered the logic of violence, extortion, and protection. For example, unions and strikes will be, for the authors, anachronisms in the information age.
6.1 – Violence, extortion, and protection can no longer be exercised as before
James Dale Davidson and Lord William Rees-Mogg develop three core ideas to show that in the information age, violence, extortion, and protection can no longer be exercised as they once were.
Changing the balance between protection and extortion
Information technologies will make asset protection easier and extortion more difficult. They will make it possible to create assets beyond the reach of many forms of coercion.
Productive exploitation of system complexity
The development of microprocessors and algorithms will be the source of major advances in calculation and mathematics. These advances will lead us to a better understanding of systems, which are becoming increasingly complex in every respect. The configuration of economies and societies will be turned upside down. Sovereign individuals will be able to exploit the complexity of systems productively.
The emergence of new, more agile, and virtual forms of enterprise
Microtechnologies open up new possibilities, such as the creation of smaller, more agile companies (“more footloose“). In the information age, the authors predict that:
“Many deals in services or products with negligible resources, these businesses could be conducted almost anywhere on the planet. They are not trapped at a specific location, like a mine or a port.“
These companies will therefore be less likely to be taxed by unions or politicians.
Virtual companies will grow. They will also be less vulnerable to violence, as they will now be able to domicile themselves in any jurisdiction. This will enable them to adapt to the market and flee in the event of extortion attempts.
6.2 – Deciphering the logic of violence and extortion
The authors of The Sovereign Individual go on to describe the evolution of violence and extortion through the technological developments of the 20th century. In particular, they look back at the exploitation of capitalists by workers, organized extortion in the workplace, and the phases of the logic of violence.
Lastly, James Dale Davidson and Lord William Rees-Mogg highlight three other novelties of the information age that bode well for fundamental changes in the logic of violence:
- It will now be possible to investigate and even retaliate against those who perpetrate violence.
- Information technologies will enable the creation and protection of assets that escape the territorial monopoly of all governments over violence.
- Looting will be facilitated by the diminished power and instability of certain governments (weakened local monopoly on coercion).
Chapter 7 – Transcending Locality | The Emergence of the Cybereconomy
7.1 – The tyranny of location
On a social level
Many people refer to cyberspace as the “information superhighway,” in reference to traditional highways. Defining this cybereconomy as a highway shows just how much we need to attach ourselves to a particular place as if we can’t escape the sedentary lifestyle we’ve long been enslaved to as the norm.
On an economic level
Physical difficulties in communicating and getting around, compounded by limited language skills, have so far narrowed our horizons. We were obliged to stay in one locality, resulting in narrow markets. High costs were maintained by low competition. Specialized skills were in short supply.
On a political level
The famous 1980s slogan “think globally but act locally” shows how much the logic of politics was geared towards the advantages of local production. As soon as borders were crossed, the possibility of local control over violence faded. This explains why there has never been global governance.
Today, however, the cybereconomy enables us to transcend locality!
Note: if you’re interested in the subject of the Internet’s disruption of nation-states, check out my blog Disruptive Horizons for a deep dive on the subject. A good place to start is the article “10 Principles of History for predicting the future“
7.2 – Cyberspace transcends locality
A new, territory-free social space for economic and intellectual freedom
The arrival of the cybereconomy is revolutionizing the world’s economic organization. Simply because with it, it becomes possible for a company to set up anywhere, to use resources from anywhere to produce a product that can be sold anywhere.
As a result:
“Cyberspace transcends locality. It involves nothing less than the instantaneous sharing of data everywhere and nowhere at once. The emerging information economy is based in the interconnections linking and relinking millions of users of millions of computers. Its essence lies in the new possibilities that arise from these connections. As John Perry Barlow put it, ‘What the Net offers is the promise of a new social space, global and anti-sovereign, within which anyone, anywhere can express to the rest of humanity whatever he or she believes without fear.’ There is in these new media a foreshadowing of the intellectual and economic liberty that might undo all the authoritarian powers on earth.”
Infinite, non-terrestrial economic possibilities
Whenever elites have been threatened, they have tended to downplay the impact of the e-economy, describing it only as a possible means of improving communication. Yet the new technology creates infinite, non-terrestrial possibilities for economic activity. It leads us to “think globally and act globally.” In the age of information technology, income potential will be completely disconnected from geographic location.
7.3 – The 3-step evolution of the cybereconomy according to The Sovereign Individual
The authors describe the evolution of the cybereconomy in 3 stages (again, note the visionary words of the authors, which date back to 1997):
- First stage ⇒ the use of the Internet as a simple information tool.
- Second stage ⇒ the use of the Internet for online commerce, which, at this stage, will remain subject to income tax.
- Third stage ⇒ the creation of a genuine “cybercommerce” space where revenues will go directly into a cyberbank.
This outline of the stages of the information revolution is just a rough sketch of what could be the most profound economic transformation of all time.
7.4 – Cyberspace and globalization, according to The Sovereign Individual, written in 1997
In the new information age described in The Sovereign Individual in 1997, some existing advantages will become obsolete, while new ones will emerge.
The predictions made by James Dale Davidson and Lord William Rees-Mogg over 20 years ago were as follows.
- Changes in communication
- Lower communication costs: it will be possible to do business from anywhere, without any difficulty.
- Convergent communication: all known means of communication, such as TV, computer, or telephone, will soon have comparable features, making their differences less and less noticeable. The authors cite the example of the computer, which will enable us to communicate via the Internet (like a telephone) and watch films (like a television). Or our TV, which we can talk to or communicate data to (like a telephone or computer). All these devices will be interactive.
- Wireless Internet: in this new information age, the Internet will be free of cables, allowing us to use it wherever we want without excessive constraints. The resulting technical problems, such as battery life and bandwidth, will be addressed and solutions found.
- Providers without borders: the expansion of computing power will enable better compression technologies to accelerate the flow of data. Providers will then be able to debit users’ accounts loaded onto personal computers simply and quickly.
- Personalization of a virtual space: we’ll be able to select our media, choose our programs according to our interests and instructions, make customized purchases, etc.
Thanks to the Internet, certain things that were previously impossible because of borders and language will be accessible to all.
Information technologies will enable people anywhere in the world to interact, do business, or access services, even in a field as delicate as surgery.
- Access to knowledge: attending a course at Oxford, visiting the Louvre in 3D, will now be possible.
- Cyber-visits to the doctor: we’ll be able to consult an e-doctor, in other words, a digital system with an encyclopedic knowledge of existing diseases, symptoms, and antidotes. This digital doctor will have access to our medical history in encrypted form, enabling him or her to make an accurate diagnosis.
- The birth of cybersurgery: surgeons will be able to use less invasive probes with micro-incisions. These technological advances will make it possible to perform operations that were previously impossible. The requirement that surgeon and patient be in the same room will no longer apply. Cybersurgery raises the question of the future of hospitals and doctors. It will also involve e-lawyers.
- Emergency consultation: a patient requiring emergency surgery will be able to call on digital assistants to choose the best surgeon based on their success rates in similar cases.
7.5 – From government monopoly to competition
The authors assert that no government will be able to monopolize this cybereconomy.
What’s more, information technologies will provide less costly protection of financial assets than governments.
Governments have become accustomed to imposing their protection services at whatever price they wish, despite their poor quality and unaffordability. This new economic dynamic will no longer allow governments to impose monopoly prices.
7.6 – Cybercurrency
James Dale Davidson and Lord William Rees-Mogg predict that, with the creation of e-commerce, “cybermoney” will emerge in cyberspace.
Foreshadowing the emergence of cryptocurrencies in 1997; the authors predict that this new form of currency, made up of encrypted sequences guaranteeing anonymity; will play a key role in the global economy. Cybercurrencies will enable larger transactions and investments.
In The Sovereign Individual, it is declared that this denationalized cybercurrency will have several major consequences.
The eradication of inflation
“Surely the most momentous consequence of the new digital money will be the end of inflation and the deleverage of the financial system.”
Sovereign individuals will be able to trade across borders without tolerating the practice of inflation by governments. Using the new monetary system will probably involve a transaction cost; but this will be lower than the annual inflationary penalty imposed by nation-states. What’s more, prices are likely to fall as monopolies decline and competition intensifies on the global market.
Leverage in banking systems
“The emergence of digital money will not only defeat inflation once and for all; it will also contract leverage in the banking systems of the world.”
People all over the world will be able to transfer funds directly via the Internet. No government will have the power to regulate. Governments will gradually lose much of their indirect ability to requisition resources.
Fiscal crisis and higher interest rates
The authors of The Sovereign Individual warn us to expect a major fiscal crisis. Why? Because, on the one hand, governments will be faced with a sharp drop in tax revenues and the virtual elimination of leverage in the monetary system. On the other hand, they will still have unfunded liabilities and social spending expectations inherited from the industrial era. The economic consequence of this transitional crisis is likely to include a one-off spike in real interest rates.
Competition from monetary monopolies
Governments will face serious competition from their money monopolies. They will be seeking to undervalue paying cybercurrencies by tightening credit and offering savers higher returns in domestic currency. Other strategies will be implemented by different governments.
In concluding this seventh chapter, James Dale Davidson and Lord William Rees-Mogg point out that, for the first time in history, megapolitical conditions will enable the most gifted investors and entrepreneurs, rather than specialists in violence, to control capital.
The cybereconomy will rapidly become the new norm, and it will develop at much higher growth rates than the conventional economy dominated by nation-states.
Chapter 8 – The End of Egalitarian Economics | The Revolution in Earnings Capacity in a World Without Jobs
The Sovereign Individual describes the information age as more than just the explosive growth of computer use. Above all, it entails a revolution in lifestyles, institutions, and the distribution of resources.
Geographical location will now have less impact, and those who have used the constraint of such an advantage to redistribute their income are destined to lose their power.
8.1 – Changes in the distribution of income, status, and capacity
The authors take a long look at the work of German anthropologist Otto Ammon; who examined the relationship between the distribution of capabilities, income, and status.
Continuing their argument, the authors then predict two major changes to come in the information age:
- Fewer people will do more work: the skills needed in the Factory Age will differ from those required in the Information Age. The sovereign individuals of the information economy will be the masters of specialized skills such as entrepreneurship and investment. From then on, the wealthiest will earn more and do much of the world’s work, far more than in the past.
- Most people will benefit from the death of politics: regions that have been unable to enjoy the benefits of industrialism will benefit from free markets and will now be able to see their incomes rise. The end of violence will allow individuals to become truly mobile. Those who have lived in restrictive jurisdictions that led to poverty are the ones who stand to gain the most.
8.2 – Changes in the logic of corporate organization
The eighth chapter of The Sovereign Individual outlines the expected changes in corporate organization:
- The sophistication of IT equipment will change production methods towards greater quality (speed, speed, etc.). Control and coordination processes for complex activities will be largely automated, resulting in lower costs. All of this will reduce economies of scale and dissolve large organizations, making them less relevant.
- The global competition offered by the information age will increase the resources of talented people, wherever they may be. This will leave people with opportunities for positive evolution in the cybereconomy. Individuals capable of creating significant economic value will be able to keep this added value for themselves. Companies will be able to subcontract with these people rather than offer them a position within their company. This dynamic will create a more level playing field. The notion of talent will be paramount.
Activities will be developed around “projects.”
- As a result, most of the company’s previously “in-house” functions will be outsourced to independent contractors. Work will be more “tasks” or “piecework” rather than positions within organizations. The artificial boundaries between professions and jobs themselves will become anachronistic. Physical, “permanent” companies will eventually dissolve, to be replaced by virtual ones.
- Wealth generated by the private sector, which until now has been requisitioned by the nation-state, will instead be retained by those who earn it. As a result, increasing amounts of wealth will end up in the hands of the world’s most skilled entrepreneurs and venture capitalists.
- In the information age, only cities that offer a true quality of life will be viable. Low-cost, low-tax jurisdictions will become the destination of choice for domicile and wealth creation. Lower information costs will make it much easier to compare the characteristics of products that were previously difficult to analyze (such as insurance, for example), and thus detect local price anomalies.
Chapter 9 – Nationalism, Reaction, and the New Luddites
For James Dale Davidson and Lord William Rees-Mogg, the megapolitical changes brought about by the advent of information technology bring with them radical institutional change.
Privatization and increased global competition for individual sovereignty will mean a revolution in our understanding of the world.
9.1 – The great transformation
The authors summarize the profound transformations that will take place in the information age:
- Microprocessing will lead to considerable changes in economic organization (see previous chapters).
- Organizations that operate within rather than across geographical boundaries will decline. Fewer resources will be wasted on lobbying.
- Widespread secession movements will emerge in many parts of the world.
- The status and power of traditional elites will decline in importance, as will respect for the symbols and beliefs that justify the nation-state. We can then expect a violent nationalist reaction from those who will lose their status, income, and power (suspicion and opposition to globalization and the penetration of local economies, hostility to immigration, grassroots hatred of the information elite, the rich, and the well-educated, complaints about capital flight and the disappearance of jobs, recourse to wars and acts of “ethnic cleansing”…). These nationalist reactions will peak in the first decades of the millennium, then fade in the face of the emergence of a new identity and the effectiveness of fragmented sovereignties (which will prove far better than the “massed power of the nation-state”).
- The escape of sovereign individuals from the power of the state (without the state being able to do anything about it) will trigger attacks on new technologies and all those who use them. Most of these attacks will come from people with average skills.
- As soon as there is a budget crisis (and there will be, given the quantity of medical and pension benefits to come), a nation-state will eventually collapse.
9.2 – Towards a collapse of nationalism, despite resistance
The authors draw a parallel here with the Renaissance: like today’s nation-state, the Church was in a dominant position back then. Few Europeans of the Renaissance era would have doubted the supremacy of the Church. Yet the Church began its decline with the technological revolution of the 1490s.
Similarly, the authors believe that by the end of the first quarter-century, millions of people will have withdrawn their allegiance to the nation-state to assert their own sovereignty and right to choose a form of governance. And this, even as people continue to think of the nation as their “home” and as a “kind of family.”
According to James Dale Davidson and Lord William Rees-Mogg, the idea that individuals should be part of an “invented” community called a “nation” will then eventually be seen as eccentric and unreasonable.
The authors then do a deep dive into nationalism and all the questions inherent in the subject (culture, linguistics, kinship, identity, genetics, epigenetics, sociobiology, altruism, etc.).
9.3 – Escaping the nation-state
The flight of the elites
For the authors, anyone wishing to seize the “liberating potential” of the cybereconomy should begin to make a place for themselves in several jurisdictions other than that of the country in which they reside.
Even if the nation-state still retains a strong hold on the notion of the home group, the authors are convinced that it won’t be long before many individuals realize the opportunities of individual sovereignty. In fact, supporters of the nation-state have already begun to complain about the detachment of “cognitive elites.”
Among the critics, the authors cite sociologist and historian Christopher Lasch. The latter fully agrees that it is in the interest of the highly qualified to flee the nation-state. For if we analyze the costs and benefits lucidly, we realize that, for them, citizenship is obsolete. For them, injecting money into private investment is far more profitable than paying for a national social security program or income taxes. Even so, Christopher Lasch deplores this attitude. He considers it a “betrayal” to “transcend the tyranny of place” and “abandon the unenlightened.”
Yet, despite the attacks, James Dale Davidson and Lord William Rees-Mogg assure us: the sovereign individuals of the future will take advantage of the economic opportunities of the transition that critics take offense at, by moving to the most profitable jurisdictions. And although contrary to the logic of nationalism, their choice will motivate other individuals to do the same. Ultimately, to seize new opportunities, everyone will end up, as has always been the case in the history of Western civilization, modifying their way of life, their production techniques, and even their place of residence.
The “denationalization of the individual”
Citizenship will become less attractive as new institutions emerge with choices of services that only states currently offer. However, this will be a slow, step-by-step process.
Even if the era of the nation-state is over in their eyes, James Dale Davidson and Lord William Rees-Mogg cannot claim that the appeal of nationalism will abate immediately. This sense of belonging, which we feel, for example, during family Christmas celebrations or when our national team wins a sporting event, is a powerful feeling that will be difficult to suppress. In fact, this desire to belong to a group, materialized by numerous symbols (nationality, flag, anthem, etc.), will remain anchored in the imagination of the majority of adults.
The losers of the information age
“As the nation-state is challenged and begins to wobble, it will no longer be able to fulfill the promises of material benefits that are central to popular support. The de facto bargain struck at the time of the French Revolution will lapse. The state will no longer be capable of guaranteeing its citizens low-cost or free schooling, much less medical care, unemployment insurance, and pensions in exchange for otherwise poorly paid military service.”
Therefore, the biggest losers of the information age will be tax consumers. That is, those who have no savings, who have deposited a large portion of their income in a national political jurisdiction, and who rely on the government to cover their medical care and retirement benefits. The latter will pay the price of lower tax revenues and suffer a de facto decline in their standard of living.
Chapter 10 – The Twilight of Democracy
The authors start off this chapter by drawing a link between democracy and communism. According to them, although completely disparate, these two systems have one thing in common: democracy will suffer the same fate as communism: it will disappear. This is due to the dispersion of resources in the cybereconomy, beyond the reach of politics. The death of democracy will bring with it the end of its most representative form, the Congress or Parliament.
10.1 – The emergence of new institutions and forms of governance
In the cybereconomy, voting for representatives according to their location will become obsolete. Instantaneous, worldwide communication will enable us to do business with anyone, regardless of geographical boundaries. Society will become mobile.
New forms of governance will follow:
- Instead of electing politicians whose logic is to optimize votes rather than analyze problems in a coherent way, it will be possible to choose a leader on the basis of his or her results and leadership skills, and sanction him or her for lack of results.
- The new system will leave individuals free to choose.
“Instead of collective choice within the constrained setting of mass production, mass consumption, mass education, mass media, mass entertainment, and all the rest, information technology will facilitate genuine, consumer choice of customized sovereignty services.”
This configuration will lead to a more entrepreneurial government, in which the expression of our opinions will be facilitated.
- The governments of the future can be built “à la carte” according to customer needs.
- Citizens will be able to control governments, and thus limit the drift and problems associated with mismanagement by sanctioning its immediate withdrawal.
10.2 – Opponents of individual sovereignty
As with every change, James Dale Davidson and Lord William Rees-Mogg suspect the arrival of fervent believers in democracy, who will point the finger at the coming failures of this new, more competitive, and less supportive information age. Just as the Greeks believed that laws were divine, the believers in democracy will argue against the viability of the system.
Opponents will not only complain about the loss of jobs generated by these new technologies. They will fight for revenues to be pooled for the benefit of the community, because citizens in nation-states represent profitable assets, not customers to be satisfied, as would be the case in individual sovereignty. Opponents will also deplore the fact that the information age allows people to place their resources beyond the reach of political constraint. In this sense, it negates democracy.
The Information Age, on the other hand, will focus on entrepreneurship, where customers will have a choice. Unemployed independent entrepreneurs with sustainable businesses will pay wages based on talent and skill. And in so doing, they will gently absorb current policies. The apologists for coercion will eventually resent the dwindling of public goods.
Chapter 11 – Morality and Crime in the “Natural Economy” of the Information Age
11.1 – A period of decadence
In the final chapter of The Sovereign Individual, James Dale Davidson and Lord William Rees-Mogg discuss the period of intense corruption and decadence that the era of the modern nation-state will experience at the moment of its downfall.
This end-of-an-era context is ripe for abuse. Not only will individuals be able to combine public objectives with criminal ends, but it will also be increasingly difficult to discern truth from falsehood in information derived from new technologies. According to the authors, this new era brings with it new forms of aggression. We are rapidly heading towards information warfare.
11.2 – Reflections on the morality and ethics of the transition from the industrial to the information age
Strong societies as we know them rest on very solid moral foundations. The successful development of certain countries lies in their ethics, which encourage the economic virtues of self-reliance, hard work, family and social responsibility, thrift, and honesty. It therefore goes without saying that cultures with a strong moral framework will tend to be more successful.
James Dale Davidson and Lord William Rees-Mogg conclude their book The Sovereign Individual with a long and detailed reflection on the moral and ethical issues involved in the transition from an industrial to an information age.
Conclusion to The Sovereign Individual by James Dale Davidson and Lord William Rees-Mogg
The digital transformation accurately described more than 25 years ago in this astonishing, forward-looking book
Already known for their international bestseller The Great Reckoning, published in 1991, authors and investors James Dale Davidson and Lord William Rees-Mogg offer, with The Sovereign Individual, a fascinating and incredibly insightful work.
Based on a unique combination of historical events and analysis, the authors describe one of the greatest economic and political transitions in centuries: the transition from an industrial society, based on the concept of the nation-state, to an information society, driven by new technologies.
This digital transition, which the authors call “the fourth stage of human society,” will be one of the most significant in history. In their view, it will liberate individuals as never before. It will irrevocably weaken the power of governments to capitalize on individual sovereignty.
The last version of The Sovereign Individual, published in 1997, anticipates this break with incredible accuracy.
Predictions that turned out to be right
The authors’ visionary talent must be recognized, given the number of predictions that proved correct. Here are the 8 most glaring in my opinion:
1. The emergence of the cybereconomy
In 1997, the authors predicted that new technologies would revolutionize the way we work, our tools, and our perceptions, reshape morality, and render our laws obsolete. Today, we know that the authors’ analysis proved to be very accurate.
With the democratization of the Internet, and even more so with the arrival of artificial intelligence, virtual reality, and augmented reality in our daily lives, we are well and truly at the heart of the cybereconomy. And the imminent arrival of virtual worlds is likely to be another milestone in the digitization of society.
James Dale Davidson and Lord William Rees-Mogg were already anticipating the third millennium when they spoke of a virtual reality and community with its own laws. The creation of the metaverse and the rise of Web 3.0 bear witness to their visionary statements.
2. The communications earthquake
The means of communication have exploded since the end of the second millennium, just as the authors predicted at the time. In terms of both equipment and communications networks.
Some of the advances predicted by James Dale Davidson and Lord William Rees-Mogg have already come to fruition: wireless internet and the acceleration of data flows (such as 5G), the personalization of virtual spaces (creation of websites, e-commerce, personalized accounts with avatars, etc.) have been around for a number of years.
The reduction in costs also predicted by the authors has turned out to be as incredible as imagined: today, we can communicate with people on the other side of the planet at lower cost, or even free of charge, thanks to smartphones, social networks, emailing, interactive applications, and so on.
Last but not least, the advanced and convergent functionalities of communications equipment mentioned by the authors are now part of our daily lives. The Internet of Things (IoT), for example, enables interconnections between the Internet and objects, places, or environments. Today’s communications all rely heavily on connectivity and immersivity.
3. The arrival of cybercurrencies
More than 20 years ago, the authors were already talking about the impact of decentralized cybercurrencies on the global economy. They had already predicted the impact of these cybercurrencies on the traditional banking system and on the power of states. The phenomenal boom in cryptocurrencies suggests that they will very soon be a common means of payment, and represent a significant currency in the global economy. More and more major players are investing in cryptocurrencies, forcing governments to position themselves quickly or risk being overtaken.
Finally, James Dale Davidson and Lord William Rees-Mogg indicated that cybercurrencies would be made up of encrypted sequences guaranteeing anonymity and enabling the most significant transactions to be carried out. This description is in every way similar to blockchain technology, which enables information to be stored and transmitted transparently, securely, and without a central control body.
4. The migration of global trade into cyberspace
In 1997, the authors predicted the migration of large-scale trade into cyberspace, without governments having any real power to act. The rise of cybercommerce began several years ago and exploded during the Covid-19 health crisis of 2020. The pandemic’s period of worldwide confinement seems to have been a tipping point in the change of our habits. Since then, the exponential curve of online activity has continued to accelerate, with no one able to stop it…
We should also mention the democratization of online transactions, via user-friendly systems, payment platforms, and online banks, which have greatly contributed to the globalization of commerce. Today, products can be bought anywhere in the world with just one click!
As the authors had anticipated, this also explains why free markets have grown considerably in recent years.
5. The development of virtual and agile companies
James Dale Davidson and Lord William Rees-Mogg predicted that traditional businesses would pivot towards greater agility. They emphasized a major change: companies would “transcend locality” and free themselves from what the authors call the “tyranny of place.” Once again, the authors were right: opportunities to create virtual businesses made it possible to work from anywhere, to relocate companies. This has given rise to new business models such as drop-shipping.
The emergence of start-ups shows how new businesses have understood the importance of adapting to market trends and digital requirements. Web entrepreneurship, now within everyone’s reach, is largely responsible for the explosion in self-employment (as an infopreneur in particular) and freelancing, foreseen by James Dale Davidson and Lord William Rees-Mogg. As the authors point out, because they can be domiciled anywhere and adapt fully to the market, these new forms of enterprise are, indeed, less likely to be taxed and less vulnerable to violence.
Even more traditional companies have changed the way they work by integrating new technologies: data storage and sharing on the cloud, intranets, remote communications, task automation… Here again, the Covid-19 crisis of 2020 was a pivotal year in this sense. It has changed working habits and opened up new possibilities that should develop even further in the future: telecommuting, videoconferencing, etc.
6. The rise of the sovereign individual
Back in 1997, the authors developed at least three ideas along these lines:
Governments, they argued, would be led to maintain diplomatic relations with major entrepreneurs in the same way as they do with countries.
This idea is borne out by the fact that today, outside the confines of any political organization, these business leaders are becoming major players on the world’s diplomatic stage. Take Elon Musk, who, with his companies SpaceX and Tesla, is playing a crucial role in the global future of aerospace, finance and the energy transition, and is even taking a stand in certain armed conflicts (deciding, for example, to activate the Starlink satellite Internet service at the start of the war in Ukraine). This is also true of Mark Zuckerberg, who owns the world’s largest social network (Meta). This information giant has become a powerful player in the world’s political affairs, not least because he can ban anyone from his networks (Facebook, WhatsApp, Instagram) at any time, and because he possesses vast amounts of data on the world and its markets.
Global competition and outsourcing would, according to the authors, weaken the traditional elites of the nation-state.
Indeed, with the privatization of many sectors of activity that had previously belonged solely to the state, citizens were increasingly seen as customers to be satisfied. And as the authors predicted, by making their own choices, individuals become more autonomous and responsible. For this reason, more and more people and businesses are turning to private players rather than the dwindling public services.
Moreover, the increasing use of outsourcing is in line with the predictions of James Dale Davidson and Lord William Rees-Mogg. More and more companies are using the services offered by freelancers or consultants hired or paid for a very specific mission or project. Similarly, several years ago we saw the emergence of new job titles such as “project manager” or “project coordinator.” The notions of “talent” and “rewarded merit” are gaining in importance in the corporate world, whereas they remain secondary in the public sector.
It is interesting to refer here to Titus Gebel’s book Free Private Cities, which also develops this idea of replacing the nation-state with new concepts of free cities as “public service providers.” The book mentions a number of still marginal but very serious initiatives already underway in various parts of the world on this subject:
7. A large-scale information war
The authors warned us of a large-scale information war. Online media and social networks are often a vehicle for propaganda and the site of a full-fledged information war (as seen in the analyses linked to the Covid-19 pandemic, recent global armed conflicts, the rise of ideologies, and other planetary issues). While it is now possible to access knowledge very easily, the Internet has also become a powerful tool for disseminating information of all kinds and for manipulation.
8. Hostile reactions
The authors also warned of critical and hostile reactions to those who would seek to flee nation-states to seize economic opportunities. These reactions are already perceptible. As stated in The Sovereign Individual, sovereign individuals in search of a new freedom and seeking to escape the power of the state (without the state being able to do anything about it) are often attacked for their “betrayal” of the national community.
9. A weakening of the all-powerful nation-state, and an explosion in its costs and indebtedness
For the authors, representative democracy was to be replaced by a democracy of choice in the cybermarket. The trend is real. Global competition and the privatization of services are precursors, but the authors went further. They predicted that nation-states would experience a fiscal crisis that would signal the beginning of their decline.
It’s not a stretch to assert right now that the State will not be in a position to cope with pension and healthcare expenditure in therelatively near future (the healthcare system is already falling apart at the seams), as can be seen by extrapolating these curves showing the percentage of GDP in several major countries devoted to social spending:
The debt-to-GDP ratio of OECD countries:
As you can see, the average debt of the most industrialized countries is 95% of GDP; which is enormous: this World Bank study shows that; for every percentage of debt above 77% of GDP, economic growth is slowed by 0.017%.
We are therefore witnessing an explosion in healthcare and pension costs; with falling tax rates and a (colossal) increase in countries’ debts; debts which have grown even larger as a result of COVID.
Predictions that have not come true (but may soon)
1. A tax-free economy
Because it frees us from locality, the cybereconomy offers more and more possibilities. Not least of these is the possibility of freeing ourselves from certain tax regulations. While individuals and companies can now domicile themselves wherever taxation is most advantageous and choose to pay for private services such as health coverage or education, most of the world is still a long way from a tax-free economy. The trend is there, and we’ve seen GAFAM and other major web companies engage in aggressive tax optimization right from the start of their international expansion.
What’s more, corporate tax rates have been falling in many countries since 2000:
However, the death of social democracy and the cyberspace of offshore jurisdictions predicted by James Dale Davidson and Lord William Rees-Mogg are not yet a reality.
2. The decline of national identity and the collapse of nationalism
As the authors predicted in the first decades of the third millennium; we seem to be witnessing a resurgence of nationalism or patriotism in certain parts of the world. This phenomenon is probably part of a reaction to the fear of losing status and income from redistribution. However, the authors speak of a second phase, which is likely to lead to a decline in this nationalism; and in the respect accorded to the symbols and beliefs that justify the nation-state. It’s hard to say, but to date, there are few signs that this phase has actually begun.
3. The creation of cyberspace trading republics
Lastly, the authors speak of the creation of cyberspace merchant republics. Such entities without a fixed territory do not yet seem to exist. However, they could very well emerge with the advent of metaverses.
Becoming a sovereign individual in the information age: a highly topical issue
The book The Sovereign Individual by James Dale Davidson and Lord William Rees-Mogg has never been more topical. In it, the authors talk about the end of the nation-state; at a time when many citizens already consider the political system archaic and politicians useless. With its detailed and thought-provoking arguments on the mechanisms that will erode the power of the State, The Sovereign Individual, published in 1997, remains highly relevant.
It takes a certain amount of courage to tackle this hard-to-access book. However, upon completion, your effort will be rewarded by the rare and exceptional accuracy of analysis that this work provides.
Strong points:
- The authors’ visionary, highly detailed analyses.
- Informative and insightful writing with well-researched and expounded theories based on societal, economic, philosophical, and historical elements.
- A book that offers a comprehensive reading grid on the future and evolution of humanity.
Weak points:
- The technical and complicated subject matter makes this a difficult read.
- The book was not published in French.
- The book is very dense, with repetitions.
My rating : 
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The Handy Guide to The Sovereign Individual by James Dale Davidson and Lord William Rees-Mogg
The four essential stages humanity has gone through so far:
- A society based on hunting and gathering
- A society based on agriculture
- An industrial society
- The information revolution
Frequently Asked Questions (FAQs) concerning The Sovereign Individual by James Dale Davidson and Lord William Rees-Mogg
1. How has The Sovereign Individual been received by the public?
Published on August 26, 1999 by Touchstone Editions, The Sovereign Individual has been well received by the public and is an indispensable reference on political and economic transition.
2. What has been the book’s impact?
The Sovereign Individual traces the major political and economic transitions that have impacted the world from its inception to the present day and has made ordinary people aware of the evolution of humanity and its technological, economic, and political advances.
3. Who is the target audienceof The Sovereign Individual?
Whether you’re a scientist, politician, economist, industrialist, or entrepreneur, this book is for you.
4. What do the authors consider to be the greatest advantage of today’s society over the past?
The major advantage that today’s society has over the past is knowledge. Science and mathematics have helped us to understand nature and its causes and effects.
5. What are the 4 megapolitical factors that precipitate revolutions in the use of violence according to James Dale Davidson and Lord William Rees-Mogg?
- Topography
- Climate
- Microbes
- Technology
Changes in communication versus the qualitative advances to come, thanks to virtual reality
| Changes in communication | Qualitative advances to come, thanks to virtual reality |
| Lower communication costs | Access to knowledge |
| Convergent communication | Cyber visits to the doctor’s office |
| Wireless internet with borderless providers | The birth of cybersurgery |
| Personalization of a virtual space | Emergency consultation |
Who is James Dale Davidson?
James Dale Davidson is an American private investor and investment writer. Davidson was the founder and former head of the National Taxpayers Union. On his website, Davidson claims to be a “famous economist” despite the fact that he has no university degree in economics and has not published in any peer-reviewed journal. Davidson has promoted conspiracy theories in his books and his monthly newsletter, Strategic Investment, claiming to link the Clinton administration to the death of Vince Foster, deputy White House counsel, a death that has been ruled a suicide by five official or government inquiries. With Lord William Rees-Mogg, he co-wrote the book The Sovereign Individual; in which they trace the great political and economic transitions that have impacted the world from its inception to the present day.
Who is Lord William Rees-Mogg?
A British national, William Rees-Mogg was born on July 14, 1928. A journalist and editor by trade, he was publisher of The Times between 1967 and 1981. He was also Vice-Chairman of the British Broadcasting Corporation and father of politician Jacob Rees-Mogg. Author of numerous books, he co-authored with James Dale Davidson the book The Sovereign Individual; which is considered a major influence in political philosophy.