The City-State World
1/ An important variable -- perhaps the most important variable -- in thinking about global institutional orders is the cities versus empires variable.
2/ How humans distribute themselves in space is central to everything. Everything else: patterns of individualism and community, political-economic orders, technological change, and culture, follows from that.
3/ On a world map, nation-states are large patches defined by boundaries. Their shape and size defines their identity. Nation-state orders aspire to carve up 100% of Earth's surface area into mutually exclusive and exhaustive territorial claims.
4/ City-states though, are dots. Their locations and connections define their identity. In terms of surface area occupied, they are barely on earth, as a percentage. They tend to form networks that span the world in non-exclusive ways rather than "occupy" it.
5/ An imperial polity is one where much of the power is concentrated in the most powerful nation states, generally in proportion to territory under direct or indirect control.
6/ This proportion is nonlinear. An empire with 2x the territory, other things being equal, will have much more than 2x the power. Empires therefore have a tendency to grow, become unwieldy, close off borders, grow sclerotic, and fall apart.
7/ A city-state polity is one where much of the power is concentrated in the most powerful cities, whether they are nominally independent or not. Being asymmetrically smaller they adapt and survive differently from empires.
8/ The definition of a city is fuzzy of course, and legal sovereign status is neither necessary, nor sufficient to make a city a city state. The key to making a city a de facto city state is political and economic power of a certain sort.
9/ Nation-states aspire to sovereignty: ideally they seek to be self-sufficient and independent, with self-determined destinies, fates decoupled from the fates of neighbors. They lean isolationalist, expansionist, and sedentary.
10/ City-states aspire to free interdependency rather than sovereignty, a role as a key player in a shared story rather than the only story that matters. Isolationism is death for a city, as is immobility of its population. They don't seek to "expand" per se.
11/ A good proxy for the power of a city and the degree to which it is a de facto city state is the size of its airport and the proportion of air traffic it handles that is international and long-route.
12/ Seattle, where I live has among the fastest growing airports, with much of the traffic growth being international, connecting the US to Asia. True city states like Singapore have only international flights.
13/ The power of city states, unlike that of nation states, tends to be a function of location. Singapore is defined by the Straits of Malacca. Venice was defined by the Adriatic Sea.
14/ The wealth of empires is the wealth contained in a diffuse, extensive form within the territories controlled by them. The wealth of city states is a function of economic flows through them. It is network capital.
15/ In engineering terms, you could say that empires are based on leveraged control of stocks, while city states are based on leveraged control of flows.
16/ To "good honest, country/small-town folk" creating the wealth of low-tech empires throughout history, cities have always seemed like dens of corruption, vice, excess, and decadent elites who only consume parasitically.
17/ The logic of empire is the logic of mercantilism: the idea that all wealth derives from land via relatively simple technology, and that cities are merely consumption centers for surpluses, adding little of real, necessary value.
18/ If that were true, however, cities would not keep recovering from barbarian sackings, great fires, plagues, and other disasters. They would not periodically shape the fates of territories far bigger than themselves.
19/ The logic of city-state polities is the logic Schumpterian creative destruction: the idea that all wealth derives from innovation-driven change in the technological sophistication with which the world's resources are used.
20/ The higher the technological level in a civilization, and the higher the automation level, the more the city-state view of wealth and value is the correct one, and the more wrong the imperial-mercantile one gets.
21/ In an agrarian condition based on pure labor and no innovation or advanced technology, cities are indeed centers of pure consumption and the source of oppression and exploitation.
22/ In an advanced technological condition on the other hand, with much of work of production being automated, it is in fact humans living outside urban cores who slowly turn into pure consumers.
23/ The finer points and numbers are arguable. We could debate the subtleties of agricultural subsidies and welfare programs, but in broad strokes. In a high-tech society, city people produce, hinterland people consume.
25/ How does this unintuitive condition come about over the longer arc of history? The answer has to do with the social life of knowledge: how it forms, persists, and grows in value through curation and addition.
26/ Empires extract wealth from tangible resources: land, labor, capital. They must use perimeter-based security to protect large resource bases and immobilize the human parts of it. A big ratio of area to boundary makes for a cheaply defended state.
27/ It is no accident that major city state polities such as the Greek civilization, the cities of the Italian Renaissance, and the Hanseatic League all emerged where borders were wiggly and inefficient, bounding small areas.
28/ The only form of wealth that can be densely and safely generated and stored in cities is knowledge. Especially knowledge in people's heads. The mobility of people and social graphs allows the knowledge to have secure exit routes.
29/ Cities being historically easy to besiege militarily and cut off from resources, find security in access to mobility. Cities are secure to the extent people have many high-bandwidth secure exit pathways to safety.
30/ So it is no accident that cities have usually formed at the hubs of all sorts of networks: people, materials, knowledge, communitcations. The more flow hubs that coincide at a city, the more powerful it is.
31/ City states extract wealth from knowledge: something that requires control of flows of resources, and constant change in those flows, but not control of the resources themselves.
32/ Trade is the prototypical function of city-states: buying low/selling high, exploiting a price differential, is a prototypical example of "knowledge" that flows along with resources. Cities naturally "seek alpha".
33/ This knowledge lives in the heads of people doing knowledge work. The more densely networked they are, the better. Historically, this has meant cities.
34/ In an imperial polity, if you capture enemy territory and destroy its productive potential (by burning crops and salting the earth for instance), you destroy the empire itself. Freeing serfs or slaves also destroys empires.
35/ In a city-state polity, you can lay siege to a city, invade it, and take control of it, but unless you achieve some sort of mind control, or kill anyone who tries to leave, you cannot touch the wealth.
36/ If the people who store the knowledge of a city individually and collectively (in social graphs) leave as refugees, the knowledge leaves and lives with them.
37/ Remarkably small groups of refugees from cities like Vienna and Budapest have historically managed to take a great deal of knowledge capital with them. Unlike financial capital flight, knowledge capital flight is generally a healthy thing for the world.
38/ To destroy the network capital of a true city, in the form of living social knowledge, you must capture and destroy people. This is perhaps why cities have also historically been associated with psychological freedom whatever their political system.
39/ Knowledge is teachable and easily copied and spread. This is why attacks on the physical forms of knowledge capital, such as the World Trade Center towers do less damage to city-state polities than attackers hope for.
40/ One possible reason the fortunes of city-state polities seem to wax and wane with those of imperial polities is that knowledge in a global economy behaves like an energy flow.
41/ It exists as potential energy in thriving cities, and as kinetic energy in the flows of deployed technology. When knowledge production happens much faster than deployment, city states gain power like charging batteries.
42/ When the energy flows out into the world too rapidly, it drives destabilization and disruption everywhere else. This leads to their own increasing political power.
43/ The dynamic is similar to, but much healthier than, the way higher volatility in stock prices leads to greater power for investors who know how to take advantage of it, like hedge funds.
44/ Unlike pure investors, who can only redistribute resources more efficiently (a kind of mercantilism on the artificial territory of financial capital) cities expand the knowledge capital base through innovation.
45/ Once you understand this function and source of power, it is easy to understand why tiny but elite university towns can have greater 'city state' type power than large, non-innovative agri-commodity hub cities.
46/ We are perhaps entering such an era now, where pent-up undeployed "potential energy" of knowledge is driving rapid creative disruption.
47/ While the larger drama is about the decline of imperial orders, the more important story is the rise of a city-state polity.
48/ The visible heroes are the rulers of imperial orders in decline (whether they are actual monarchies or nominally more democratic forms doesn't matter). Great Events swirl around the Putins. Trumps, Xi Jinpengs, and Modis of the world.
49/ The heroes of city-state orders: great traders, innovators, explorers and societal hackers, are not quite as larger-than-life, but I find their stories a great deal more interesting.
50/ Many things are different about this emerging city-state polity compared to historical examples. There are MORE cities for one, containing half the world's population.
51/ Their intedependencies span larger distances, their relationships with their hinterlands is based on vast industrial scale resource movements.
52/ Knowledge is no longer tied to people's heads. AIs are nearly as good as stores of "living" knowledge. It is unclear what this means for meatbag data stores that need to run away when concentration camps loom.
53/ Language is getting disrupted, and along with it all the traditional forms of cultural capital, based on language, that cities historically stored. The consequences of this too are unclear.
54/ Within cities, there now exist strong, reactionary old guards who cargo-cult ancient ideas about the power of cities, and miss how modern cities actually shape and direct power globally. They bring a misguided land-based mercantilist logic to the power of cities.
55/ There are new reasons to like cities, such as energy efficiency and greenness. But old reasons are weakening. It is not clear whether, with the Internet, knowledge need be as strongly tied to cities.
56/ I do not claim to know the precise future of the emerging city-state polity, or whether it will successfully beat back the death throes of empire. I don't know whether software eating cities leaves cities in recognizable form.
57/ Yet, looking at life in cities I've lived in/visited: Seattle, Washington DC, Singapore, Ithaca, Ann Arbor, Austin, Mumbai, Las Vegas, Dubai, Zurich, I am struck by a sense of deep resilience to them.
58/ There is something about cities that makes them tougher, more resilient, and generally longer lived than all the empires that temporarily tower over them.
59/ So for the coming decades, in whatever form makes sense to you, I suggest investing in cities with your time and energy (money is less important), but with a globalist sensibility in the entire global city-state polity rather than a cargo-cult one focusing on a single city.
60/ In contrast to many who presume to analyze the zeitgeist, I think the "democratic recession" is in fact the rise of extraordinarily powerful city state polities in disguise. That's the glass-half-full side of the story.
61/ Whether or not cities are democratic in formal ways doesn't matter too much because in a social sense, the essence of cities is interdependent freedom, knowledge capital, and mobility.
62/ Individual cities may be vulnerable to the modern "sieges" by surrounding imperial orders, but the network of de facto city states around the world, with their varied governance systems and rich interconnectivity, is not.
63/ The security of city state polities is not individual, but interdependent and collective. Dependent not on high walls defending against besieging armies, but many secure pathways among all cities that keep knowledge safe, circulating and growing.
64/ Make no mistake: times will be as tough for cities as for rust belts in the hinterland or human-labor towns that are getting replaced by automation.
65/ The difference is that the urban world represents a generative human life force that can grow in unexpected and interesting ways. The future of Homo Sapiens is to be found in the spirit of cities, whether or not specific cities themselves live or die.
Apologies for any typos, and for the later-than-usual send. I am writing this in India on an iPad.
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