American Anarchy, Chinese Control, International Intermediate

Here we give a bit more detail on a sci-fi scenario¹⁴⁰ in which the US descends into a chaotic Second American Civil War, the CCP responds with the opposite extreme of a total surveillance state that traps wealth in its digital yuan network, and the rest of the world - if we’re lucky - builds a stable alternative of opt-in startup societies that peacefully rejects these extremes.

To be clear, you don’t need to believe in this scenario to build startup societies and network states. But it’s a mental model for the future, which we present for the same reason that Ray Dalio put out a (somewhat euphemistic) model of how the US order could fall to an external competitor, and Peter Turchin put out a (less euphemistic) model of how the US could fall into internal disorder.

American Anarchy 

Prosperity, Tyranny, or Anarchy? 

The progressive vision is that the West is getting more free, equal, and prosperous.¹⁴¹ The dystopian vision is that we’re actually in the incipient stages of tyranny, whether that be fascist or woke respectively. What’s under-theorized is a third possibility: namely that, in the US at least, the inconclusive power struggle between Democrats and Republicans means America is headed for anarchy.

As the events of 2021 unfolded, it became clear that even with unified control of the federal government, the Democrats were no more effective than the Republicans had been with comparable power four years earlier. Neither faction proved capable of implementing the total top-down domination that some in their party advocated and many in the other party feared.

Meanwhile, the non-partisan state-capacity of the US as a whole continued to visibly decay. Squint past the pandemic’s half-ignored, TSA-like COVID regulations and you saw a half-ignored, TSA-like COVID regulator – namely, a failing state that people did half-ignore, and arguably had to half-ignore, because the USA itself was now the TSA, and the TSA, they knew, was safety theater.

Today, in the territory governed by this inept bureaucracy, we now see power outages, supply-chain shortages, rampant flooding, and uncontrolled fires. We see riots, arsons, shootings, stabbings, robberies, and murders. We see digital mobs that become physical mobs. We see a complete loss of trust in institutions from the state to the media. We see anti-capitalism and anti-rationalism. We see states breaking away from the US federal government, at home and abroad. And we see the End of Power, the Revolt of the Public, the defeat of the military, the inflation of the dollar, and - looming ahead - an American anarchy.

What’s coming isn’t fascism or communism, like the left-wing and right-wing pundits would have us believe, even though they don’t believe it themselves. What’s coming is the exact opposite of that, a world where the civilized concepts of freedom and equity are extrapolated to their decivilizational limit, where you ain’t the boss of me and we are all equal, where all hierarchy is illegitimate and with it all authority, where no one is in charge and everything is in chaos.

We can argue this may be preferable to the status quo, in the same way some think the chaotic Russia of the 1990s was on balance better than the authoritarian Soviet Union of the 1980s. We can argue it may be inevitable; as the Chinese proverb goes, “the empire, long divided, must unite; long united, must divide.” And we can argue that this transitional period of anarchy may be lamentable, but that it’s better than the other team being in charge, and that we can build a better order on the other side. Maybe so, and that’s what this book is about. But prior to any rebundling, I think we’re on track for quite the unbundling.

Maximalist vs Woke 

With that poetic introduction over, let’s get down to specifics. Rather than seeing an indefinite continuation of the postwar order, or the long Second Cold War between the US and China that many are preparing for, the US may be on track to descend into an American Anarchy, a chaotic Second American Civil War between the US Establishment and its people.

We foresee two main factions. The first will align around the US federal government, NYT/establishment media, wokeness, the dollar, and the Democrat party; they’ll say they’re fighting for “democracy” against “insurrectionists.” The second will align around state governments, decentralized media, maximalism, Bitcoin, and the Republican party; they’ll say they’re fighting for “freedom” against fiat “tyranny.” We can’t predict their names, but rather than Democrat Blue and Republican Red, let’s call them Wokes and Maximalists, or (more neutrally) Dollar Green and Bitcoin Orange.

Crucially, in this scenario, many non-whites will switch sides from Democrat Blue to Bitcoin Orange, because whether black, white, Latino, or Asian, everyone’s savings will be crushed by inflation. Many tech founders and independent writers will also go Orange; tools like Square Cash will facilitate mass exodus to Bitcoin, and newsletter writers will put out narratives that contest establishment media.

Conversely, many institutional loyalists will flip from Republican Red to Dollar Green, including the police, military, and neoconservatives, simply because they are in the final analysis the kind of team players and “natural conservatives” who would have fought for both Tsarist Russia and the Soviet Union. My country, right or wrong.

The role of centralized tech companies will be key. By default they’ll swing to the Dollar Green side, but many tech founders will lean Bitcoin Orange, so we could see centralized tech companies supporting both sides — with older and fully wokified firms like Google firmly on the Green side, and newer founder-controlled firms located in places like Miami and Texas trending Orange.

How America Builds Towards Conflict 

How could something as radical as a Second American Civil War happen? You could write a book on this, and several people have, but in lieu of that we’ll give a bullet pointed list. Before reviewing it, you might want to re-read Ray Dalio, Peter Turchin, and Strauss & Howe if you want more context, as we won’t be able to recapitulate every citation that informs this projection. Done? OK, here we go.

1. Political polarization is way up. All the graphs show this now. The US is not really a “nation state” any more, but a binational country comprised of two warring ethnic groups that disagree on fundamental moral premises. It is about “god, gays, and guns”, but it’s also also about censorship, surveillance, and inflation.

2. State capacity is way down. The competent America of mid-century, the left/right fusion that FDR put together, the America that combined a powerful centralized state with social conservatism, the America depicted in countless movies, the America that won World War Two and the Cold War — that country is over. This US government can’t build a bathroom in San Francisco, let alone a cost-effective fighter jet, destroyer, combat ship, or aircraft carrier.

3. Economic prosperity is declining. All the political infighting of the last decade happened during a period of relative prosperity, even if it was based on the artificial expedient of printing money. But now that we face potentially years of inflation and stagnation, unhappiness will increase. Already you’re seeing articles coming trying to acclimatize people to lower standards of living, to “eat bugs and live in a pod.” And Turchin’s cliodynamical graphs put numbers to these feelings.

4. Envy is increasing. This is normally phrased in terms of “inequality”, and that is indeed one way to look at it, but let’s rotate it by a few degrees and talk about envy. The return of great fortunes, the rise of social media, and the decline in religion has led to escalating envy. Every day, people can see others online who appear to be better off than they are, and who appear to be rising while they are falling. Whether that rise is real or not, whether it is due to the other person’s own efforts or not – it doesn’t really matter to the person who feels they aren’t getting ahead, who feels they are falling behind.

   Without a rising tide that lifts all boats, the “rational” act for some is to sink the other boats, to pull escaping crabs down into the bucket. Why? Because misery loves company, and because stopping someone from getting too far ahead means they can’t outcompete you for houses or mates. The only way out of this negative-sum trap is to build provably positive-sum systems and high-trust societies. But that’s exactly what the US establishment is not doing.¹⁴² It’s fomenting hatred on social media every day, and giving new reasons not to trust it — whether that be the insistent assurance that inflation is transitory or all the other episodes of official misinformation.

5. Foreign military defeat looms. Leaving aside your feelings about the pandemic, the military propaganda beforehand is worth reviewing. In 2018, the US Department of Defense put out press releases on its preparation for a pandemic, on its sophisticated vaccines…and then nothing happened. This was the first time many in the public had the opportunity to directly compare statements about “secret military programs” to the actual results, just as you might compare projections by corporate executives to the actual results. And the size of that gap was remarkable. It indicated that at least some of the US military was just words, and not real.

   I remarked on this in early 2021, months before the defeat in Afghanistan gave yet another example of the gap between US military rhetoric and reality, where Kabul wasn’t going to fall in a few days and then it did.

   As of this writing, we’re four months into the Russo-Ukrainian war of 2022. After an initial surge of attention, global interest in the conflict has dropped off a cliff. The New York Times and other establishment media outlets have now instructed the US administration to pursue peace, and various reports indicate that the Ukrainians are quickly plowing through ammunition stockpiles while the Russians are gaining ground with long-range artillery. To be clear, it’s not at all obvious what will happen - there’s fog of war with everything - but in the event of an outright Russian victory, defined as gaining territory they didn’t have prior to the war, that wouldn’t augur well for the US establishment.

6. US states are pulling away from the feds. There’s enormous coverage of US politics at the national level, because it attracts clicks from all over. But local politics doesn’t get the same attention. However, if you’ve been paying attention, there has been a multi-decadal trend wherein states have been pulling away from the federal government and each other on matters like guns, immigration, abortion, gambling, marijuana, and other matters. This is part of the Future is Our Past thesis: it’s reversing the de facto 10th Amendment repeal by FDR’s government, and more broadly is part of the gradual Western decentralization since the peak centralization of 1950.

7. Authority has lost respect. The old American left said something like “we all need to work for the common good” while the old right said something like “pay your dues and you’ll achieve the American dream.” The new left says “we are all equal” and the new right says “you ain’t the boss of me.” So, the old left/right combination supported self-sacrifice and a stable hierarchy¹⁴³, while the new one attacks all hierarchy as fundamentally illegitimate, as oppressive or tyrannical. This is reflected in the defacement and degradation of virtually every US institution over the last few decades, from the office of the presidency to the statues of American founders. George Washington and the US Capitol are no longer sacred.

8. National divorce is discussed. Secession is now officially part of the platform for Texas’ Republicans. And there have been an increasing number of pieces on the topic of “national divorce” from Democrats and Republicans alike, including NYMag (“No, We Can’t Get a National Divorce”), Stephen Marche (The Next Civil War), Barbara Walter (How Civil Wars Start), Michael Malice (“The Case for American Secession”), David Reaboi (“National Divorce Is Expensive, But It’s Worth Every Penny”), and the American Mind (“The Separation”).

9. Radicalized movements reject the status quo. There have been countless words written on wokeness, on how it’s a radical ideology that thinks of the US as intrinsically corrupt — as systemically x-ist for many values of x — and therefore doesn’t really seek to reform America so much as to capture the state to completely transform it. See Wesley Yang, Richard Hanania, Matthew Yglesias, John McWhorter, Bari Weiss, and many others for discussion of different aspects of this.

   The thing about wokeness is that it’s not just a superficial weed growing out of the topsoil. It has a root system, a theory of history and ethics that’s built on thousands of papers, on generations of academic humanists, on Foucault and Derrida and the like, on deconstruction and critical race theory and so on. I happen to think of it as a mostly evil doctrine, as sophisticated evil promoted in the name of good, but I recognize it has ideological content.

   The Republican party isn’t really capable of dealing with that. But Bitcoin Maximalism is. If you haven’t heard of it, you will. Bitcoin Maximalism is by far the most important ideology in the world that many people haven’t heard of - yet.

   There’s philosophical depth to Maximalism. It represents a root-and-branch rejection of the inflation that powers the US government and thus pays for everything. It fuses the worldview of Mises, Rothbard, Hayek, and Ron Paul with Bitcoin. It naturally aligns with the loss of trust in institutions, with the suspicious individual who (understandably!) no longer trusts the federal government or US institutions on anything. It’s not merely an edit to the state, it’s the end of the state. And it’s a push from an ideological direction the Wokes are ill-prepared for, because it’s an aracial ultra-libertarianism rather than the white nationalism that folks like Marche and Walter think will be their foe.

   If you want to understand Bitcoin Maximalism, read The Bitcoin Standard or the tweets from accounts at hive.one/bitcoin (not all are Maximalists). But be aware: just like wokes who reject “civility” on ideological grounds, maximalists have developed verbal justifications for being “toxic.”

   I disagree with the fundamental moral premise of Maximalism, which is that Bitcoin is the only coin and all other digital assets are sins.¹⁴⁴ I don’t believe in one coin anymore than I believe in one state or one god. But I understand the power that such a belief system has. Americans don’t believe in one god anymore, don’t believe in monotheism. So their choice is between one state and one coin, between ideological monostatism and mononumism.

   That is, to beat something like the US establishment in a civil conflict, you don’t just need bravery, you need a more powerful Schelling Point. That’s what Bitcoin is for the Maximalists: the one coin that’s the alternative to the one state. If and when the dollar collapses due to inflation, the orange coin becomes the new blue jeans, the global symbol of freedom and prosperity.

   (And what’s the alternative to that alternative? Many network states as alternative to one nation state, many coins as alternatives to the one coin, many beliefs as the alternative to one belief system. That’s the polystatist, polynumist, polytheist model we describe later on in the Recentralized Center.)

10. Bitcoin seizure could be the trigger event. All of this is a combustible mix, and there are many possible trigger events, but one that I see as particularly likely is a combination of (a) ruinous inflation followed by (b) a soaring BTC/USD price and then (c) the attempt by an insolvent federal government to seize Bitcoin from citizens.

    On the Bitcoin side, this isn’t a short-term price prediction or anything, and there are of course various possible failure modes¹⁴⁵ for BTC that could prevent Bitcoin from being the specific cryptocurrency that drives this scenario. Nevertheless, because the Bitcoin protocol has mostly been technologically fixed for a while, its partisans have focused to a much greater extent on political innovation – like getting it recognized as a sovereign currency. Add in the moral importance that Maximalists attach to Bitcoin, and its global name recognition, and BTC is likely to be the coin of contention.

    On the other side, the general concept of asset seizure isn’t really even very sci-fi given the overnight freezing of funds for Canadian truckers and 145M Russian nationals. The main difference is that cryptocurrency is built to be hard to freeze. A bankrupt state can and will try to seize funds held at centralized exchanges, but for those that have taken their funds off exchanges, the state will need to go house-to-house, and rubber hoses don’t scale.

    A US establishment attempt to seize Bitcoin in a time of high inflation would be like a repeat of FDR’s gold seizure (Executive Order 6102), except it’d be done during a time of declining state capacity rather than rising centralization.

    The reason something like this could be the trigger event is that neither side could easily back down: Wokes would have no power if their state went bankrupt, and Maximalists would have no money if they surrendered to the state.

    Thus, this seems like a relatively foreseeable event that could kick off the Second American Civil War — especially if the seizure bill is passed by the federal government and some states refuse to enforce it.

    How could that happen? A state-level refusal to enforce might just be part of the growing divergence between states from the federal government and each other, similar to the justification for sanctuary cities and the like. But if you wanted a statutory rationale, you could imagine a Constitutional Amendment proposed to ban Bitcoin seizure, something that would put the right to hold BTC on par with the right to free speech and the right to bear arms. Such an amendment could be ratified by many states in the run up to a possible seizure bill. Even if it didn’t pass nationally, any ratifying states would then cite their ratification to justify their refusal to enforce.

A War for Minds, Not Lands 

It’s a mistake to think a Second American Civil War would look anything like the first Civil War, or like World War 2 for that matter. It’d be nothing like the movies with huge movements of uniformed soldiers, tanks, and planes.

Instead it’ll just be a continuation and escalation of what we’ve seen over the last several years: a network-to-network war to control minds, rather than state-to-state war to control territory. A fusion of America’s domestic conflicts on social networks and its foreign conflicts in the Middle East.

The best way to visualize this is to look at the physical map of Union-vs-Confederate right before the Civil War, the physical map of Republican-vs-Democrat by county, and then the digital map of Republican-vs-Democrat in the same period.

In the first Civil War, ideology and geography strongly coincided. The victory condition for the North was obvious: invade the South. Conquer the territory to conquer the minds. They didn’t have to kill every last Confederate, they just had to show that resistance was futile to get the remaining Confederates to stop fighting.

In any second Civil War, ideology and geography would only weakly coincide. Look again at that map by county. Is one side really going to invade the other? Or vice versa? Is the US establishment going to seize corn fields or will its opponents move to capture big blocks of cities? Is either side going to use huge bombs on territories where they’d kill at least 30% of their own team? Could nuclear weapons be targeted enough to use as political tools to get the other side to concede?

No. Instead it’ll be a war for minds, not lands. And if we look at the map of digital space, suddenly much becomes clear. Here, the two sides are fully separated, as the Union and Confederacy were. And now we can see why there’s been such an emphasis on cancellation, deplatforming, silencing, and shunning…on making people say certain words and hoist certain symbols. Because making a person or a company post a particular hashtag indicates control of minds which is in turn control of digital territory.

All the discussion over the last few years around “free speech” doesn’t really engage the fundamental issue, which is that this is a time of information war, where the victory condition for one side is to invade the minds of the other side – because it cannot feasibly invade the territory.

To invade the minds of the other side, and to control the digital networks – because the tech companies that greenlight transactions, communications, and online behavior have in many ways become the de facto privatized governments of the Western world. The power to determine what people can and cannot do in the digital world belongs to the people who run these networks. And so controlling these networks, by controlling the minds of people who run them, is the key to maintaining control over the US in a digital time. That’s why there’s been such a push by the US establishment to wokify the big tech companies.

However, a network that can’t be controlled in this way, and that isn’t run by any one person – like Bitcoin – well, that’s a form of resistance. The set of web3 networks that are more decentralized¹⁴⁶ than centralized Silicon Valley tech companies, that are run by communities – those too are a form of resistance.

As such, if the first Civil War was the “War Between the States”, the second Civil War will be the “War Between the Networks.” The graphs we’ve shown relate to Red-vs-Blue, but add a tint of yellow to each group and rotate it a bit. Then you’ll get what we think is the likely future axis of conflict, which is Bitcoin-Orange-vs-Dollar-Green.

In areas where Greens control the state, they may use militarized police, tech company surveillance, deplatforming, denunciation in media, arrests, seizures, and the like. In those areas, Orange may respond with an insurgency campaign that looks like Northern Ireland or the Middle East. But in areas where Oranges control the state, and Greens are in the minority, these tactics could reverse. Think about the BLM riots, or Jan 6, or the doxxing of Supreme Court Justices by angry establishmentarians, or the various street fights between right and left, or the constant digital struggle that plays out online every day, and project out a future where those kind of network warfare tactics become daily occurrences. Like the portmanteau “lawfare”, think of this as “netwar.”

Maximalist vs Woke Rotates Left and Right 

The reason the terms “left” and “right” don’t exactly fit for the projected conflict of Orange vs Green is that in many respects the Bitcoin Orange would be the revolutionary class faction and the Dollar Greens would be the ruling class faction.¹⁴⁷

Basically, those who side with the US establishment in this scenario would be the same personality type as those who sided with the ancien regime during the French Revolution: they’d be fighting to preserve the past. Their message would be one of particularism, of American nationalism, of continued dollar supremacy.

By contrast, those who side with Bitcoin Maximalism would be a revolutionary personality fighting to overturn what they saw as tyranny. Their message would be one of universalism, of a system that puts everyone worldwide on the same playing field — and that doesn’t privilege America over the rest of the globe like the dollar does.

This will be an extremely uncomfortable position for the US establishment, because for the first time¹⁴⁸ in memory they’ll represent the technologically conservative faction, the less universalist side, the pre-modern side.

But you can already see the foreshadowing in terms of how legacy media inveighs against technology, how they hate the future, how they want to jam social media and the internet back into the garage, how they want to turn back the clock on all those things that have disrupted their political control.

Maximalism is thus a kind of leapfrogging. If Trump invoked a mythical past, and the US establishment represents an attempt to freeze the present in amber, the Bitcoin Maximalists are willing to drive the system towards an uncertain future. That’s why a fair number of conservative Republicans will side with Green, and why revolutionary Democrats will side with Orange. Bitcoin Maximalism is a movement that knows it can’t “Make America Great Again”, because that America no longer exists and perhaps never did, so it’s willing to take the entire fiat system down.

Orange is thus comfortable with a higher level of chaos than a suddenly conservative US establishment. It is ok with the uncertainty of crypto-anarchy over the certainty of inflationary tyranny. And it is not looking to mend the federal government, but to end it. Unlike the reformist Republican, Maximalism is playing to win. And so it might.

Who Wins? 

It’s extremely difficult to forecast what happens, but I do think that in the long run the Maximalists may win at least some territory in a Second American Civil War, because they’ll eventually outlast the money printing of the US establishment. The value proposition in the American regions that go Maximalist will be “freedom”, though others will perceive it as anarchy.

Why could Maximalists win a war of attrition? Every day the price of BTC/USD goes up is another victory in the Maximalist social war against the US establishment; every day it goes down is a temporary defeat. ¹⁴⁹ Because the US government can’t invade the rest of the world, and because other states won’t necessarily listen to it, it can’t easily seize Bitcoin globally. So long as the long-term price trend is up, which is not guaranteed, then Maximalists win.

That does lead to a related point: with an estimated 300M cryptocurrency holders worldwide at the time of writing, hundreds of millions of people who aren’t Maximalists already believe in Bitcoin. And it’s on track to be billions by 2030. So long as those holders don’t sell their Bitcoin, that’s a fundamentally new international support network of a kind that MAGA Republicans don’t have. That is, a man in Brazil doesn’t necessarily care about American Republicans vs Democrats — he’s not an American nationalist, and doesn’t have a dog in that fight — but he may well hold Bitcoin. And so long as he doesn’t sell BTC for dollars, he’s indirectly supporting Maximalists. Yet his foreign support comes in an intangible and ideological form that feels acceptable to the proud American Bitcoin Maximalist, as opposed to (say) the explicit support of a foreign military getting involved on US soil.

With that said, the US establishment could also win a war of attrition. Their starting advantages are immense: the universities, the media, the military, the intelligence agencies, most of the tech companies, and the federal government itself. The US establishment also has an elite global support base: all the people who sympathize with it around the world: the McKinsey types, the Ivy grads, the frequent flyer class, and the people who still think America is the country from the movies.¹⁵⁰ Even if the establishment can’t force foreign governments to seize BTC, they may try seizing Bitcoin for their own reasons, though other states will instead vector towards the direction of economic freedom.

Moreover, even if the US establishment does lose some territory, it will likely hang on to the Northeast and the West Coast. The value proposition in those regions that stick with the establishment will be “democracy”, though others will perceive it as fiat “tyranny”.

During all this, the pressure of conflict could force people to the ideological extremes. The closest movie archetypes for the Green and Orange sides could be a more oppressive version of Portlandia and a more functional version of Mad Max. Cartoonish caricatures come to life.

Wars Aren’t Romantic 

If it’s not abundantly clear, I take no sides here, and am not rooting for anarchy. I’d prefer a stable world where we could focus on mathematics and getting to Mars than the chaos that may soon ensue. And I have no illusions about how bad civil conflict can get; there are no unscathed winners in wars. Read David Hines for a good depiction of what political violence is actually like.

Political violence is like war, like violence in general: people have a fantasy about how it works. This is the fantasy of how violence works: you SMITE YOUR ENEMIES IN A GRAND AND GLORIOUS CLEANSING BECAUSE OF COURSE YOU’RE BETTER.

Grand and glorious smiting isn’t actually how violence works. I’ve worked a few places that have had serious political violence. And I’m not sure how to really describe it so people get it. This is a stupid comparison, but here: imagine that one day Godzilla walks through your town. The next day, he does it again. And he keeps doing it. Some days he steps on more people than others. That’s it. That’s all he does: trudging through your town, back and forth.

Your town’s not your town now; it’s The Godzilla Trudging Zone.

Point: civil conflict is not romantic, it’s not targeted, it’s not proportional. It’s insane. If you think the scenario of American Anarchy is a possibility, you probably want to get as far away from it as you can, regardless of your “sympathies” with either side.

And then you should help build a peaceful alternative to American Anarchy. But not the alternative that China will offer, which we’ll cover next.

Chinese Control 

Attempted Coup Leads to Total Control 

While in the West we may see American Anarchy, in the East we could see Chinese Control.

Before the US enters serious internal conflict, it could support some kind of China Coup — whether with words or with more than that — as written about by Roger Garside in the eponymous book China Coup, as hinted at by parties as different as George Soros and America’s JSOC, and as previously accomplished in many acknowledged regime changes and unacknowledged Color Revolutions around the world.

For reasons we’ll get into, I don’t think such a coup is likely to be successful. But the reaction to any coup attempt by the CCP could be the most intense crackdown on domestic opposition we’ve ever seen. It would be an AI-powered ripping up of Chinese society by the roots that puts every citizen under suspicion and makes it very difficult for Chinese nationals to leave with their property, to “runxue”. It may also be accompanied by deniable (or overt) Chinese retaliation against the US for attempting a coup, retaliation which could take the form of targeted shortages of key physical goods to exacerbate American inflation and supply chain woes.

If and when the coup is quashed, the CCP will then export their coup-defeating surveillance state to other countries. And their value proposition to the world will be Chinese Control — the complete opposite of American Anarchy.

China Blocks the Exits 

A specific prediction is that we’ll see a world where it becomes increasingly difficult for Chinese people to leave the country or get their property out of the digital yuan ecosystem without CCP permission. Take the existing hukou system of internal passports, the WeChat system of red/yellow/green travel restrictions based on health status, the aggressive COVID lockdowns, and the recent passport restrictions — then fuse them with a surveillance state that can track people globally, a WeChat superapp that can unperson them, and a digital yuan that can freeze their assets.

There are trends that point in the direction of digital and physical movement restriction already. Chinese passport issuance has already declined dramatically, down “95 per cent in the first quarter compared to before the pandemic.” Outbound travel is similarly down 95%, with 8.5 million people leaving China in 2021 relative to 154 million in 2019. China has also been using COVID quarantine codes to stop people from moving money or moving around. And Chinese capital controls, always strict, may get even more intense with the rollout of the digital yuan. So that makes exit hard.

Conversely, on the entrance side, while it will still be possible for approved Chinese citizens to travel to places like Iran or Russia that are effectively military allies, the countries where the Chinese state lacks a hard power presence will start turning down Chinese nationals due to espionage concerns. This has already been happening.

This combination of outbound restrictions imposed by their government and inbound restrictions from other governments will make life hard for the Chinese liberals and internationalists who disagree with the system, the “runxue” types. They won’t be able to politically dissent, but it’ll also be hard for them to leave the country with their property, as many will want to do. Such an act will be prevented or portrayed as a traitorous run-on-the-bank, particularly if the economy isn’t doing well. Think about how enthusiastic Putin has been about the “renationalization of the elites”, and how closely the CCP has been watching Western tactics during the Russo-Ukraine War. They recognize that any commercial linkage with the West is a point of vulnerability during a conflict. So it’s quite likely that CCP will increasingly make it difficult for people to exit physically or digitally.

The Path to Chinese Control 

What are the factors that lead us to this prediction, that CCP will emphasize the “loyalty” part of Hirschman’s triad and turn strongly against both voice and exit?

1. Shutting down opposition across the spectrum. This plot from MERICs is worth looking at, as it reminds us that the CCP is not solely against US-style “democratization”, but also against many different kinds of ideologies that differ from the party-state’s current line. Whether that opposition is Maoist (like Bo Xilai), democratic (like Hong Kong and Taiwan), Islamic (like the Uighurs), Christian (like the churches), technologist (like Jack Ma and other founders), or even ultra-nationalist, the CCP stands at the middle of an ideological circle and constantly monitors everyone for deviation.
2. Inculcating Chinese nationalism. Just as the US has gone through a Great Awokening since the 2013, Chinese society has been driven by Xuexi Qiangguo into a phase of ultra-nationalism. There is opposition to this internally, but it remains to be seen whether it actually flips the nationalism or simply moderates it.
3. Building a surveillance state. Much has been written on this, but the sheer scale of what has been built isn’t well understood. While it’s worth being aware of Gell-Mann amnesia, this is actually an area where US establishment media is closer to reality than it is domestically, in part because relative to the Chinese state it’s actually opposition media. See videos like this from DW and this.
4. Hooking it into AI. Read Kai-Fu Lee’s AI Superpowers and then read this, this, and this. Supplement it with Dan Wang’s letters, or this 2019 post from a Chinese intellectual published at Reading the Chinese Dream that is still able to question the deployment of all the surveillance.
5. Piloting the system during COVID. The green/yellow/red health codes rolled out on WeChat during the early days of COVID are used for travel restrictions - and have been repurposed to simply prevent people from traveling in a deniable way.
6. Cutting off digital and physical exit. Misbehavior in China can get you removed from WeChat, which is like unpersoning you given how many services it’s hooked into, public and private. More recently, China has repeatedly made it difficult to leave the country on the grounds that doing so would spread COVID: “Trips in or out of the country made by mainland citizens in 2021 plunged nearly 80% compared with the level in 2019, NIA data showed.”
7. Selling to other governments. Both China and the US have sold surveillance technology to the globe, but one difference is that China can execute better in the physical world - so smart cities built with Chinese technology have full-stack surveillance.
8. Justifying as anti-imperialism. The educational system and the big-screen movies like Battle of Lake Changjin and Wolf Warrior 2 position China as defending itself from Western imperialism. And this filters down to the small scale, like this video of an official defending Shanghai’s lockdown with the narrative that China will eventually have a war with the US, so citizens need to get in line for the lockdown.
9. Pointing to relative stability. The “Harmonious Society” narrative begun under Hu Jintao has been mentioned less in an international context by Xi Jinping, who has not exactly been pursuing harmony abroad. But it’s still a useful tool to justify social control – like NYT talks about censorship and social controls to preserve “democracy”, CCP talks about censorship to maintain “harmony.”
10. China Coup could be the trigger event. The US establishment has put out videos and articles that come close to calling for a coup in China. George Soros broadly hints at it in speeches like this. And folks like Roger Garside literally wrote a book on it.

An attempted coup, whether actually American-backed or simply accused of being such, could be the trigger event for rolling out a fearsome system of Chinese Control. AI would be turned on the population, and any even mildly Western-sympathic groups would be pattern-recognized and dug out by their roots. Nationalist mobs might participate, online or even in person. It could get very ugly.

The last part is important: Chinese Control would have significant popular support. The country is heavily nationalist now. It is possible the swing towards nationalism partially reverses — there are significant factions in China who do not like the current trend — but I think it’s too much to think that China is going to “go democratic.” America’s internal chaos means it is simply not an admirable model for much of the world anymore, and while some educated Chinese liberals may indeed want to runxue, there is momentum towards nationalism among much of China’s youth. I may be wrong about this, but putting it all on one person or even one party doesn’t feel right. The ideological current towards Chinese ultra-nationalism feels stronger than Xi the person, or even the CCP, and may outlast him in the event of a black swan.

Anyway, with the coup defeated, CCP would then sell a turnkey version of their coup-defeating surveillance state to other countries as a way to (a) stop any possible contagion of American anarchy, (b) control crime, (c) prevent increasingly mobile citizens from leaving with their funds to other countries, and (d) prevent unrest of any kind, legitimate or not. It would ensure that any leader currently in charge remains in charge, and would be picked by many governments for exactly that reason.

China Caveat 

There’s an important caveat to all this. Much Western coverage of China is unremittingly negative. And certainly the scenario described herein is not a particularly rosy one. But we need to temper that negativity with a dose of realism.

First, why are we even discussing China? Why aren’t we discussing Chad or Chile? Because China has on balance executed phenomenally well since 1978. After Deng Xiaoping’s reforms, the country really has risen to the workshop of the world, with an enormous trade surplus, a surfeit of hard currency, and dozens of huge new cities. It’s the #2 economy, the #2 military, and the #2 in tech unicorns. All of that happened from a standing start over the last 40-odd years, since Deng’s turnaround of China (called Boluan Fanzheng).

Conversely, over the last 30 or so years, the US establishment has squandered perhaps the greatest lead in human history, going from complete and uncontested dominance in 1991 to internal conflict and potentially implosion. Moreover, as noted in What about China, huh?, it’s not that the US establishment is more ethical than the CCP when it comes to civil liberties, it’s just less competent. After all, the US establishment also does warrantless surveillance via the NSA, unconstitutional search and seizure via the TSA, arbitrary confiscation of property via civil forfeiture, censorship of political keywords just like WeChat, and has pushed for disinformation agencies, civilian disarmament, digital censorship, and the like. The US establishment copied the CCP on lockdown, without ever really admitting it was doing so, and funded the lab that may have leaked the coronavirus. It’s also bombed and destabilized many countries around the world. And if we’re honest, over the last two decades, the US has killed and displaced far more people abroad than the CCP has.

That might be hard to hear for a Westerner, but what all of that means is that (a) the CCP does have some cred with many “neutral” countries, (b) it also has cred with huge swaths of its own population thanks in part to both nationalist propaganda and actual execution, (c) that relative cred will grow if America descends into anarchy, (d) the cred will make it easier for CCP to roll out more Chinese Control at home and abroad, and (e) the cred will actually attract some Chinese ancestry people back to China even as others want to leave.

Wait – that last point seems paradoxical. How could people want to come to Chinese Control if we’ve just spent all this time talking about so many want to leave?

Think about Microsoft. It’s a strong company. Most people in the world would be glad to get a job at Microsoft. But many of the very best would find it stifling, and would instead strike out on their own to join or found a tech company. There’s simultaneously a demand for some people to join Microsoft while others want to leave.

In the case of China, this is compounded by China’s evaporating soft power in regions where it doesn’t have hard power. The climate of suspicion towards Chinese nationals has ramped up dramatically in recent years, and it’s generally not flagged as “racism” by the establishment press. This could make a good number of Chinese ancestry people leave rather than be singled out in the event of a hot conflict.

So, that’s what could happen to China: significant inflows of Chinese ancestry people, along with some outflows (or blocked outflows) of elites.

And the Chinese Control scenario we’ve described, while dystopian to the ambitious and freedom-seeking, will likely be acceptable to many people who prize stability over all else and see scenes of flames and gunfire (whether representative or not) coming from American Anarchy. It won’t be trivial to beat the average standard of living that Chinese Control may be capable of delivering. It will appeal to many. And that brings us to the International Intermediate.

International Intermediate 

What’s the International Intermediate?

They’re just the people who don’t want their societies to descend into American Anarchy, but also want a better option than Chinese Control. That’s India and Israel, but also American centrists, Chinese liberals, global technologists, and people from other places that want to steer a different course from the US establishment, from crypto-anarchy, and from Chinese Control.

Why mention India and Israel so prominently? Call it a hunch, but those two groups are #1 and #2 in immigrant tech founders in the US. India is, separately, also #3 in tech unicorns after the US and China. At the state level India and Israel are now highly aligned, and at the individual level Indians and Israelis tend to be globally flexible and English-speaking.

So, insofar as there is a third technological pole outside the US and China, it will probably have significant Indo-Israeli character, with servers positioned in their respective territories, and deals inked across borders.

Of course, it will also have contributions from all around the world. It’s probably easier to say who the International Intermediate is not than who it is. It’s not the US establishment, or places heavily aligned with it. And it’s not China or heavily China-aligned regions like Russia and Iran. But it could include places like the Visegrad countries (anti-Russia but also skeptical of much in America), or South Korea (which elected a pro-Bitcoin head of state), or even Vietnam (now pulling away from China to side more with India).

Because it’s “everyone else”, by default this International Intermediate is just raw material – the 80% of the world that is not American or Chinese is just a formless mass without internal structure. Indeed, that’s what happened to the “Third World” during last century’s Cold War. The Non-Aligned countries weren’t just not aligned with the US or USSR, they weren’t aligned with each other.

This time, however, rather than being the Third World / non-aligned movement, a subset of the many billions of people in the International Intermediate can align around web3 to try to build alternatives to American Anarchy and Chinese Control. And that subset we call the Recentralized Center.