On Economics: Is the World of Snow Crash our Future?

Photo by Steve Johnson on Unsplash

The book Snow Crash has been receiving lots of attention recently due to Facebook’s name change to Meta. The 1992 novel, written by Neal Stephenson, is a cyberpunk classic which introduced many new terms to our lexicon, such as avatar and metaverse. And while the book over achieves on its colorful presentation of a high tech, futuristic world, what particularly catches one’s attention is the hyper-privatized, free for all economic world depicted. While there were inklings of where things were going in 1992 when Stephenson’s book was released, he was visionary in how he saw things unfolding from a technology and socio-economic perspective. The world of Snow Crash is one where there is an imbalance between economic freedom and a robust state, one which can support the needs of those in need of help / protection. The extent of privatization, laissez faire economics and corporate influence is beyond where we are today and appears as a feudal Tomorrowland. One which is controlled by lords who have divided up the world for themselves and thrive at the expense of all others.

Could this be our future? And if so what if anything should be done about it? Much of what Stephenson envisioned has become reality. There are many examples of this, including: Burbclaves (eg, gated communities), franchulates (eg, city states, such as Singapore), private highways (eg, BOT infrastructure projects), private security forces (eg, Blackwater), private digital currencies (eg, crypto), and of course, the metaverse and avatars. While one may view these as positive or negative developments, they certainly represent significant change. One could also be tempted to view these as further data points in the multi-generational debate between left and right, the battle between those calling for more economic freedom and those that believe there needs to be heavier regulatory oversight, more social programs, greater support for those who are less fortunate or need protection. This bi-polar debate is enticing, but the reality is that there is a continuum of policy approaches and an almost infinite number of potential outcomes. That said, the economic world of Snow Crash is distinguished by its close approximation to a system of anarcho-capitalism. As there are no modern examples of such a system, the world of Snow Crash provides a picture of what such a system might look like in the real world, and what may be our future. Before I get into that, I would like to highlight that the world of Snow Crash provides for extraordinary economic freedom, which is a critical factor for technological development, which obviously exists in that world as well. One could go even further and posit the view that economic freedom and technological innovation have contributed to extraordinary economic growth and prosperity, at least for some.

Free societies tend to have open markets, competition, technological development, economic growth and prosperity

At a basic level, free societies typically have open markets and competition, which in turn leads to the development of exponential technologies, which provide people with extraordinary capabilities, economic growth, prosperity, and greater wellbeing. Of course, this is not always the case. There are some who believe that an autocratic state can more effectively plan and implement development plans without the messy problems associated with legislating and working through the bureaucracy of democratic institutions (eg, China). While I will not address that question here, there is an age-old debate whether free men make free markets, or free markets make free men.1 And while I will not get into that either, I believe the better view and historical data support the position that free markets, with private property rights and profit incentive lead to innovation, economic growth, and prosperity (although as above, who prospers and how much). Way back in the 18th century, Adam Smith made the case that prosperity is the result of a competitive market economy. In one of the most widely quoted parts of Smith’s best known work, The Wealth of Nations, he discussed how society as a whole benefits from the pursuit of self interest by individual actors.2 Smith would go on to extol the virtues of low taxes, low government spending, private property rights, etc, which Ricardo, Hayek, Friedman and others would later pick up and run with. But, while such freedom does produce what some might argue are unintended consequences (which I will discuss further below), there is little argument that economic freedom has produced great innovation, economic growth, and prosperity. It is not a coincidence that the modern era of (relatively) free societies has achieved just that. This period covers roughly the last 200 years, with landmark innovations such as machines with interchangeable parts (eg, Eli Whitney’s cotton gin), the steam engine, assembly line production (eg, Ford motor), radio, television, nuclear power, transistors, the microprocessor and cellular microscopy, just to name a few. The impact of innovation and rising prosperity on our general level of wellbeing as a society (eg, reduced prosperity, reduced child mortality, increased lifespans, etc) have been profound and I don’t believe there are many that would prefer a world without them.

Radically free markets and an explosion of innovation are very much evident in the world of Snow Crash. Normal everyday life, in certain ways, looks similar to today, but there are several major distinctions, such as the metaverse. Not only do individuals play in this metaverse, but in many cases work and carry out their day to day social and functional activities. Not quite Ready Player One, but something like that. We do not have this metaverse in the real world yet, but it’s growing increasingly clear that this is where we’re heading. There are many other great examples of technological innovations from Snow Crash, such as smart wheels and rat things. While some of these innovations might contribute to societal wellbeing more than others (or not at all), I generally view the world of technological innovation in Snow Crash a positive function of the relative economic freedoms that the characters and institutions enjoy (And I say this even after seeing the cute dancing Boston Dynamic dog firing a machine gun).

That’s the good news, or the positive side of the economic freedom coin. The other side of the coin is that a system like this, essentially anarcho-capitalism, leads to skewed distribution of wealth, excessive concentration of power, suboptimal resource allocation and unnecessary human suffering.

Anarcho-capitalism, the hollowing out of the state, and the decline of the common good

The economic world of Snow Crash is one which amounts to a system of anarcho-capitalism. According to Wikipedia, anarcho-capitalism is:

“a political philosophy and economic theory that advocates the elimination of centralized states in favor of a system of private property enforced by private agencies, free markets and the right-libertarian interpretation of self-ownership, which extends the concept to include control of private property as part of the self.” 3

While various economists have dabbled in anarcho-capitalism and similar ideas over time, the more formal model of anarcho-capitalism was developed during the 20th century, with the term most likely coined by Murray Rothbard (1926–1995). The theory goes that society will naturally self-regulate through contractual arrangements and civilize in what is described as a voluntary society. In such a system, everything, including security and other important civil service type functions, would be privatized. Rothbard’s philosophy was an amalgam of the Austrian school of economics, classic liberalism and various anarchists and mutualists. Interestingly, Rothbard saw the difference between free-market capitalism and state centered capitalism as the difference between “peaceful voluntary exchange” and a “collusive partnership” between business and government that “uses coercion to subvert the free market”. There are others, such as minarchists, who believe there is room for some state functions, but let’s stick with the basic model, as this is closest to the world of Snow Crash.

​​While I understand and agree with some (but not all) of what Rothbard put forward, I believe any system must be evaluated based on the balance it achieves between the freedom it affords its individuals and institutions, and its ability to facilitate equal opportunity and provide a safety net for those who have need for it as a result of circumstances and / or the system itself. A world which is the result of an anarcho-capitalist system, such as the world of Snow Crash, is one where the state has been so thoroughly hollowed out, that there is insufficient representation of those who lack resources and / or power. An anarcho-capitalist system assumes the market mechanism is the most efficient in all situations. This in turn assumes all aspects of a society are a function of supply and demand. It leaves out, or at least de-prioritizes, the needs of a significant portion of society, and thus the society as a whole. And while wealthy / powerful individuals and organizations do, sometimes, make efforts to help those in need, their primary mission is typically not to stand for and pursue the common good.There are clear differences in how much importance certain individuals / institutions place on striking this balance I refer to above. Ultimately this comes down to our values as a society. Obviously a hot topic that we’re having more than a little difficulty agreeing on. Sometimes it’s just a question of how we move forward as a society as opposed to what our goals are. But there are other scenarios, like in the world of Snow Crash, where there are many that believe the common good is not a high priority, if a priority at all. Why would someone believe that?

As stated above, a foundational principle of anarcho-capitalism is its stance against government. The thinking is that since the market is so effective in finding a point where supply and demand meet for a particular product, service, asset, etc, it must also be good for what are inherently government, or state, services. While this likely would be the case for certain parts of what the government does, and indeed there have been successful cases of privatization in the past, it does not apply to all of what government does. Government inefficiency and waste is a real thing and we must endeavour to eliminate it. But certain government functions, such as the power to back up its authority with the use of force, is unique. While there are protections in the US Constitution which provide for citizens to defend themself against a tyrannical state, a society where the market for force is just another commodity subject to supply and demand (eg, the world of Snow Crash) is not one where we can reasonably expect equality of opportunity, equal protection and equal justice. In addition, when a good or service is left to the market, it will, to varying degrees, only be available to those that can afford it (eg, higher education, quality healthcare). Some libertarians, particularly anarcho-capitalists, espouse the view that there should not be a monopoly on anything in a free society, including force (see The Market for Liberty, by Linda and Morris Tannehill). There are many different ways society can organize itself, but there are pretty clear distinctions between those that support a healthy, civilized, functioning state with clear rights and responsibilities, vs one that is something short of that, in many cases a murky, feudal society, where competing factions battle it out (physically if necessary) in the market and on the streets. But is it simply that anarcho-capitalists, and those of similar philosophies believe that liberty requires that the state not hold a monopoly on anything, including force? This raises the question of why anarcho-capitalists, or anyone, would believe that?

One explanation for why anarcho-capitalists are against government is that they feel alienated. The idea here, which dates back to the work of Marx and Hegel, is that man, as a product of industrial society, is alienated from the produce of his labor, from the state and indeed from his fellow men and women. While the degree of man’s alienation is subject to great debate, there are few that would argue the basic fact that alienation has been a byproduct of industrial society, especially with the advancing technology of machines. Marx is often associated with alienation, but he first came across the concept while studying Hegel. In fact, it was the alienation of man as a citizen in his relationship with the state that became the starting point of Marx’s philosophical, political, and social thought. Marx and Hegel had different ideas of about the source of the alienation, where Hegel thought it was an inevitable part of the human condition, and Marx thought that it was more directly related to the market system, with their being various forms of alienation depending on what man is alienated from and to what extent.4 In Mandel’s The Causes of Alienation he presents the “social contract theory” that man would forfeit certain rights to the state as the representative of collective interests.5 But Mandel highlights that Marx went on to say that the state only really cares for the interests of private property owners. Thus, by definition, those who do not possess private property, are alienated. But often the alienation is more basic in the industrial system in that man has become, to varying degrees, alienated from the produce of his labor and engaged in work that lacks self-expression. Man has become a cog in the machine. It may be therefore that an anarcho-capitalist system is one that results from too many actors in a system becoming alienated.

We could debate much about the economic world of Snow Crash, but one thing that seems abundantly clear is that many, if not all the main characters, are alienated from the state, and in many cases, from each other. Like the real world, this has led to increased polarization and the hollowing out of the state, which has further led to a splintering of society at a local level. In the world of Snow Crash, the government does not hold a monopoly on the use of force. In fact, there are so many private security / police / military forces within the different franchises, burbclaves, corporations and the Mafia, it would be difficult to even know clearly who one would be facing off with should a conflict arise. This breakdown of the state’s monopoly on the use of force, and skewed power distribution amongst different parts of society has been a major contributing factor to the inequities in the world of Snow Crash. These inequities manifest themselves in a multitude of ways, but their distinguishing features are more separation between nations (which exist in name only), people and institutions. In the real world, we must find a way to reconnect people, nations, and institutions. This will be difficult in a world where so much of the average person’s life is about competition for money and power. Difficult, but not impossible.

What does this all mean and why should we care?

Our governments in the real world have become increasingly ineffectual, disintegrating as a result of excessive influence by money, polarization and ambivalence. While the real world, at present, demonstrates some semblance of order, it seems we are well on our way towards the world of Snow Crash. Why should we care? Well, if we go back to the story, we find many examples of where this lack of order results in a less than optimal outcome in the well-being of individuals and society at large. For example, the President of the US is seemingly a party to media magnate and bad guy L Bob Rife’s efforts to inflict his scheme on the 99%, but is not ready, willing, or able to do anything about it. Some, like anarcho-capitalists, might argue that it is the lack of order (including regulation) that is needed to facilitate the extraordinary innovation and market mechanisms that result in more overall efficiency and a general rise in the well being of society. While there are certainly trade offs that need to be made to further the interests of society, we must be smart and compassionate, thinking and feeling, as we plan, manage and live. That said, it is clear that a world (economic or otherwise) where corporations or any private entity holds excessive power / influence over the masses, is not good for the overall well being of society.

Corporations and other private entities take the place of governments in Snow Crash, and not only are they not good at making decisions which will lead to the greater well being of mankind, but will make decisions which will ultimately destroy themselves as well. A quote from Stephenson’s Zodiac provides some sense of his views on the long term impact of a corporation’s actions:

“The big lie of American capitalism is that corporations work in their own best interests. In fact they’re constantly doing things that will eventually bring them to their knees.” 6

Of course, the economic world of Snow Crash is just one aspect of the greater world depicted. That greater world, which has become seemingly, irreparably divided, does not exist in a vacuum. It may be that the economic world is simply a reflection of that greater world, a byproduct of our collective values and choices. Some believe that the downfall of nations is inevitable and that it is linked to a collection of factors that unfold over time. See Ray Dalio’s latest book for a detailed analysis of this process.7 While I have no intention of disputing Dalio’s findings, which are very persuasive, I do believe that directly or indirectly, our circumstances are a function of our choices. And no matter how we got to now, we have more choices to make, every day in fact. The overarching message of Stephenson’s Snow Crash is that our dynamic, fantastic, unpredictable, insane world is worth saving and can be saved. There may not always be a Hiro to come along and save the day. Perhaps we are the ones we’ve been waiting for.

Notes:

1. Free Markets for Free Men. Milton Friedman. Chicago Booth Review. October 17, 1974. https://www.chicagobooth.edu/review/free-markets-free-men
2. An Inquiry into the Nature and Causes of the Wealth of Nations. Adam Smith. 1776. There is dispute among economists as to what Smith actually believed, the division of labor and the invisible hand, amongst others.
3. Wikipedia. Anarcho-capitalism. https://en.wikipedia.org/wiki/Anarcho-capitalism
4. Marx’s Theory of Alienation. Wikipedia. https://en.wikipedia.org/wiki/Marx%27s_theory_of_alienation
5. The Causes of Alienation. Ernest Mandel. 1970. https://www.marxists.org/archive/mandel/19xx/xx/alien.htm
6. Zodiac. Neal Stephenson. 1988.
7. Principles for Dealing with the Changing World Order: Why Nations Succeed or Fail. Ray Dalio. 2021.