The march of the sovereign individuals

Co-authored by James Dale Davidson, an American financier, and William Rees-Mogg, former editor of The Times, The Sovereign Individual forecasted a world of ceaseless technological advancement and libertarian freedom. Do the 2020s match up to their grand prophecies?
Pedestrians walk past clocks in the financial district of Canary Wharf, London.
Pedestrians walk past clocks in the financial district of Canary Wharf, London. Credit: Chris Ratcliffe/Bloomberg
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If only we could return to the visionary ambition of the Nineties. It was a decade of grand predictions, beginning with Francis Fukuyama’s The End of History and the Last Man (1992) and ending with Ray Kurzweil’s The Age of Spiritual Machines (1999), which predicted that by 2029 artificial intelligence would claim to be conscious.

One text managed to serve as both a prophesy of and a programme for the future. UK Labour Party communications director, Alastair Campbell called it ‘the most important book you’ve never heard of.’ Peter Thiel claims he read it just before starting PayPal in 1999, which went on to make him billions as the full possibilities of the information era were emerging.

The Sovereign Individual, published in 1997, begins with a quote from Tom Stoppard’s 1993 play Arcadia: ‘the future is disorder … it is the best possible time to be alive, when everything you thought you knew was wrong.’ Co-authored by James Dale Davidson, an American financier, and William Rees-Mogg, former editor of The Times, and published in the first year of Bill Clinton’s second term as US president and the beginning of UK prime minister Tony Blair’s, The Sovereign Individual did not attract much attention at first. In the two decades since however the work has garnered a cultish reputation, recently drawing the attention of Bitcoin entrepreneurs, pleased that cryptocurrency’s ‘multi-centric models of security’ and ‘distributed capabilities’ were being lauded long before the term ‘blockchain’ was even invented.

Dale Davidson and Rees-Mogg predicted the death of the welfare state, the breaking apart of the world order into hundreds of overlapping sovereignties, and a revolution in how work and warfare would be conducted with the assistance of ‘tools with a voice’ and ‘logic bombs.’ The centralised state, what the authors prefer to call ‘legalised parasitism,’ would crumble as the internet gave savvy entrepreneurs access to the high seas of cyberspace, its opportunities out of reach of both trade unions and the tax collector.

Davidson and Rees-Mogg got some things right. The world order has indeed fragmented, with automated drones and information warfare taking centre stage. Nationalism, the book claimed, would be ‘a major rallying theme of persons of low skill nostalgic for compulsion as the welfare state collapses’. Low and mid-skilled jobs would be sacrificed for high-tech high-performance jobs by globalised individuals, as described in Daniel Markovits’ The Meritocracy Trap in 2019. Low-tax city-states, like Hong Kong, would become international hotspots.

If it sounds anarchic, you’ll be unsurprised to find that the medieval period features strongly in this account. That world of contested territories, security by private retainers, and small-scale, artisanal production is indeed central to modern scholarship on how technology is transforming our world.

Yet the work is fascinating as much for its hubris as for its historical foresight. Some of its key claims were wide of the mark. By 2025, Davidson and Rees-Mogg wrote, ‘it will be evident that you cannot make a superstate work’. China, the United States and the European Union would be close to collapse or else reformed into ‘voluntary associations.’

Futurists get specific predictions wrong all the time, without undermining the broader story. But, like many books promising to tell fortunes, objectivity and ideology are not always easy to distinguish in The Sovereign Individual.

It is clear, for example, that Davidson and Rees-Mogg were die-hard Hayekians who believed in the spontaneous power of markets. For them, states were the sluggish artefacts of a bygone era. As information technology decentralised production, moving much of it offshore or into cyberspace, they could barely conceal their glee as government – like the Catholic Church during the Reformation – became obsolete. ‘Citizenship will go the way of chivalry’, they wrote. ‘All nation-states are on death watch’.

Yet if governments are supposed to be relics of the past, they have proven remarkably resilient. ‘The tendency toward the devolution of large systems is already powerful,’ the authors wrote, ‘because of the fallaway of scale economics and the rising costs of holding fragmented groups together.’ National identity may be fading. But is it so clear that information technology has reduced the reliance of companies and citizens on national – not to mention supra-national – governments? Indeed, if we turn to China’s relationship with Big Tech, or Australia’s new Covid passport system, we see technology and the state working in lockstep, not loggerheads.

Beneath the abstract political theory, too, lurked some contestable claims about human nature. Davidson and Rees-Mogg constantly appeal to ‘rational cost-benefit analysis’ only to find that national identity, chivalry and community are in the way at every turn. The search for the rational individual – he who sheds arcane fealties to take his place in the league of jet-setting entrepreneurs – leads to some surprisingly bone-headed observations on history. On fighting for one’s country, for example, they write:

Only under the most propitious circumstances …  would the rational person care to engage in a potentially lethal battle based upon short-term cost-benefit analysis. Perhaps homo economicus might fight on a sunny day, when the forces on his side are overwhelming…

It also leads to a technocratic, entrepreneurial view of the state. There is no discussion of government as anything other than daylight robbery of the most productive:

If you went into a store to buy furniture, and the salespeople took your money but then proceeded to ignore your requests and consult others about how to spend your money, you would be quite rightly upset … the fact that something very like this happens in dealings with government shows how little control its ‘customers’ actually have.

Rees-Mogg and Davidson’s flirtations with plutocracy are possible because the book sees the state as a protection racket and nothing more. Welfare, rights, and redistribution are parasitical on the most productive. The book presents various options for moving ‘beyond democracy,’ with its messy people-driven morality, including offering policy-makers themselves a ‘straight commission’ on their work in government based on ‘some objective measure of performance, such as growth of after-tax per capita income’. They don’t call it ‘the commercialisation of sovereignty’ for nothing.

Ultimately, though, the work remains compelling as a paean to techno-determinism. ‘Technological imperatives, not popular opinion, are the most important sources of change,’ they write. The supremacy of technology is their theory of history. The welfare state did not emerge out of compassion for the poor, but ‘as a logical consequence of the technology of industrialism.’ So, they argue, would technology eventually liberate us from politics.

The influence of The Sovereign Individual today is hard to estimate. Recently, a return to so-called ‘nativism’ in Britain offered an opportunity to put some of its ideas into practice. The European Research Group was a band of British MPs committed to leaving the European Union with or without a deal after the Referendum in 2016. They championed a vision of a ‘global Britain’ free of European Union regulations, taking better advantage of the world economy. ‘Singapore-on-Thames’ – a London emulating the hyper-efficient East Asian city-states – was one of their selling points. And one of the ERG’s members was Jacob Rees-Mogg, son of William. 

One of the ironies of the parallel, though, is that the British ‘Brexiteers’ realised that identity, community and belonging could not be confined to the dustbin of politics. The appeal to the nation-state was the core of their campaign.

Nevertheless, can we look at the way the world is now changing – with the rise of a global educated class, the faltering of international order, digital currencies, tax-havens and micro-states – and not see it as The Sovereign Individual imagined? As a manifesto for free-market globalisation and technological libertarianism, it is a tour-de-force. While it got many of the broad trends right, it could not fully separate what was likely to happen from what ­ought to happen. Yet in its boldness, The Sovereign Individual harks back to a unique era: when chaos was predicted with confidence. 

Oliver Rhodes

Oliver Rhodes is a member of the Engelsberg Ideas editorial team.

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