The Earth is very large and we … live in a small part of it about the sea, like ants or frogs around a pond.Plato, Phaedo
Most pre-modern states were monarchic units ruled by Kings, tyrants, and aspiring gods. These centralized political bodies expanded to form empires. They were not decentralized, centered on their citizens, or, in any sense, free states.
In stark contrast, stands Hellas. Greece remained decentralized, in two key senses: political power was dispersed throughout the region and the city-states were oriented towards their citizens. The Greek states were many – decentralized and relatively democratic. From about 800 BC to 350 BC, the Hellenes rejected imperial invaders, external and internal. Athens, Thebes, Sparta, and Syracuse tried their hands at forming Greek empires and Persia attempted to bring Greece within its domain but all were unsuccessful. During this period, the Greek states, as far as we know, never had a ruler attain godhood.
This is remarkable given the natural tendency to centralize at scale. There’s a Hobbesian pull to dominate one’s neighbors, city, and the surrounding region.
The Greeks illustrated this pull, but remained separate and coordinating units. Yet they were relatively wealthy. Indeed, by some estimates, Athens was as wealthy as successful European states in the 18th century. This wealth wasn’t stored in a central state but instead flowed throughout the entire region.
This brings out important questions – what’s behind the success of decentralized and citizen-centered states? And can this same force drive the success of decentralized internet today?
Wealth in Antiquity
The typical premodern state was full of relatively prosperous elites and subsistence farmers. The middle class, if there was one, was tiny and politically powerless.
Greece stands as a counter-example to this pattern. The Greek states were fantastically wealthy for their time. The city-states of Hellas did not isolate their wealth to God-like emperors, but let it flow around enough to sustain an active and politically powerful middle class.
Despite this, it was common for Greeks to compare themselves unfavorably to their Persian neighbors. Herodotus has a deposed Spartan king quip “Hellas has always had poverty as its companion” to the king Xerxes. This may have been true when comparing Xerxes to any individual Greek. But the typical Greek citizen was relatively affluent, in comparison with the typical Persian or resident of other ancient states.
We don’t have direct evidence of the economies of antiquity. Instead, we must estimate using proxies. Greek houses grew from 800 BC to 300 BC. They remained larger than their neighbors. Likewise, their population grew – at a much faster rate than the rate of demographic change in the Roman Empire. Using population growth and increase in consumption, Ian Morris estimated an annual growth rate of 0.6 – 0.9%. Compare that with Holland’s growth rate of 0.5% from 1580 to 1820. Not only did the Greek states have more economic growth, but the typical person could also have commanded higher wages. Other proxies include the rise of coined money in circulation, an increase of recorded names, growth in recorded jobs, evidence of an import economy, and the apparent rise of household goods.
Josiah Ober summarizes the case for wealthy Hellas as follows: the Greek economy grew, the population increased and became denser, and there was a substantial middle class living above subsistence.
Perhaps most convincing of all is the amount of cultural success in states like Athens. Intellectual activity requires some amount of affluence and leisure. The explosion of genius in Athens could only have happened in states that are relatively well off.
Can web3 produce the same amount of wealth? Could it be more successful?
The Meaning of Decentralization
In order to answer that question, we need to determine what drove Greek wealth.
Of course, the number of explanations could, and do, fill a healthy library.
Here are three primary causes one should find in that library: regional decentralization, citizen-centeredness, and war. Behind Hellas’s economic success are its political ecology, innovations, and forcing function of conflict.
There is no doubt it is not the entire story, reality is exceptionally detailed and complex. That limitation noted, there are good reasons to believe these three factors are among the most important.
The first ingredient is regional decentralization. Here, the relevant sort of decentralization here is political. A region is politically decentralized when it includes numerous political actors with power and influence, though no one actor dominates the others. The Greek region fits this bill – it wasn’t until Macedonia and Rome that it was under sole rule. As a region, there was no single dominant political power. Instead, there were thousands of city-states whose power waxed and waned.
Premodern political bodies were caught in the dilemma of coordinate or conquer. The default of the premodern world was to conquer.
Conquering at scale transforms the city-state into premodern empire. And so we see the rise of premodern empires in Egypt and Persia. With centralized units, states could maintain peace, punish free riders, and force organization. Indeed, as Hobbes showed, sacrificing freedom to a third party can be rational. One cannot entirely blame the Caesarian elites who preferred a rex in all but name to the republicans who wished to return to an earlier era. The principate brought peace. Caesarian elites made the same calculations that elites have made for years: with centralization comes the chance to attain the center of power – and even if one can’t make it there, the political authority can bring stability.
Greece was granted no such stability. Perhaps because of the stickiness of Greek culture, the same culture that stuck to its later conquerors, or because of the geography of Hellas – attempts to conquer Greece were less successful. Instead, Hellas was composed of a mix of trading and warring city-states for hundreds of years.
Without a central body to dictate how to coordinate. The Greeks needed to invent new forms of politics. And so they did, from federated leagues to diplomacy to theater.
The second ingredient is citizen-centeredness. Not only were the Greeks decentralized as a people, but the city-states of the regions themselves were focused on their citizens. One way to put this, a way I’ve already put this, is that they were more democratic. This is broadly correct, though there are plenty of tyrants to serve as counter-examples. See Dionysius I of Syracuse or the 30 Tyrants. Moreover, not every state was as democratic as the pinnacle that Athens attained. But relative to their neighbors and many other premodern states, Greek city-states were likely more citizen-centered. Most cities practiced something closer to aristocracy and oligarchy – not monarchy and dictatorship. Even anti-democratic Sparta created a political environment centered around the equality of the citizens. In these cities, no single person or small group of people dominated the others. Instead, political and economic power was dispersed in a more egalitarian matter.
With decentralization and relative democracy, Greeks were able to trade, invent, and think their way to prosperity.
One can understand the Greek states as a form of protocapitalism. Political and economic information spread throughout Hellas. Lycurgus and Solon were not merely models for the Spartans and Athenians. With distinct cultural norms and relative democracy, Greeks were able to apply what they learned. Decentralization results in specialization. And so Sparta became hyper-specialized in warfare, outsourcing their agricultural needs to helots and relying on non-helots for additional military support. Syracuse specialized as a trade location. Athens took on the same role but also exported painted pottery, olive oil, and wine. Athens also exported its politics – though few cities experimented with the same radical democratic norms, many moved in the Athenian direction.
The citizen-centered nature of their organization promoted egalitarianism. This, in turn, prevented centralized authorities from hoarding wealth and pushing their subjects into subsistence farmers.
Now for the third factor – war. Though Greece may have leaned closer to the pillar of coordination than conquering, that didn’t stop the countless attempts, many successful, of city-states invading, exploiting, or sliding into war with another. The Greeks were, after all, warrior societies. The elites and middle class made war their business. There were two primary effects of this. One relates directly to decentralization. Constant war bred military innovation. This resulted in robust city states – resistant to external and internal conquerors. Second, Greek mercenaries became an economic asset. Dejected elites could turn to foreigners for payment.
Notably, war can hinder progress. And it may have been better, from a purely economic standpoint, for the states to not engage in war at all.
The general picture then is one of reinforcing patterns. Decentralization required coordination of the Hellenes. This resulted in a spread of goods, information, and economic specialization. The citizen-centered nature of the city-states allowed specialization to occur. The resulting trade, not merely of goods, but information across Hellas fed its economic success. War served as a selection pressure for the city-states, forcing military innovation, which in turn strengthened decentralization.
The Rise of Web3
Can Web3 take advantage of the same forces as Greek growth? Of course, it’s minted success for individuals and companies. But can it become an engine of significant progress, as Hellas was in its time?
We arguably have two key ingredients present: decentralization and ownership.
The kind of decentralization that matters here is political. Hellas was decentralized because there was no central political authority, instead, there was a plurality of city-states.
Decentralization is thrown around to mean many things in the crypto space – most of the meanings are not relevant here. Consider the following. There’s not a single point of failure. Transactions occur peer to peer instead of occurring on a centralized authority. The data model of common crypto networks is completely centralized. There is no monopolistic winner in the crypto market.
What matters here is the fact that the web3 ecosystem as a whole is decentralized. There is no dominant player. Instead, there is a forest of projects, tokens, and companies. Of course, economic success follows a power law in crypto – some projects wield more influence. This mirrors the thousands of city-states. Amongst the poleis reside the superpolies of Athens, Thebes, and Sparta, but these emerge amongst an array of hundreds of states. Like Hellas and unlike fiat, crypto has resisted monopolistic centralization.
Additionally, many organizations are relatively owner-centered. DAOs allow individuals to play a crucial role in the trajectory of a network. Forks are made – and those involved possess financial stakes and decision-making power. DAOs can be governed in many ways, but those that don’t grant a significant amount of ownership or benefits to its members will be short-lived. So, not only do tenets of web3 own their data – they also take part in shaping the organizations and projects they are a part of.
From this abstract level, the ecology of web3 mirrors that of the Greek city-states – there are thousands of competing projects, each exemplifying more ownership or citizen-centeredness than rival organizations (companies and nation-states). Both contain feedback loops from decentralization and ownership.
Of course, there are differences between ancient Greece and the crypto world – and it’s not clear that ownership or this level of decentralization differentiates web3 from web2.
Web3 is emerging in a distinct economy. The Greek world was protocapitalist. The modern age is a patchwork of capitalism and state intervention. Though the economy may be decentralized, politics is much more centralized. Economic units operate in multiple states and countries.
Despite this, like the forces pushing for centralization in the premodern state, web2 centralizes its core products. Social media platforms become more valuable as they have more users. Their users live with censorship and the lack of customization because the most interesting people are on these platforms. Web3 social media companies are being built, but that product is structured towards centralization. People want to go where the interesting people are, one wins by getting them to join your platform.
This force will be difficult for web3 to resist.
Plausibly, it may be addressed by the promise of privacy and exit. Crypto offers an infrastructure to communicate directly with peers, without intermediaries. If the ecosystem is strong enough, an individual could move the vast majority of their social communication and economic transactions to web3 – fragmenting the current web2 ecosystem. At scale, this offers the chance of a new political reality. Currently, exit to web3 is most feasible for relatively affluent individuals. But, with technological growth and cultural momentum, there are signs that the same power is moving to communities and cities. The power of exit via uncensorable transactions truly differentiates crypto, unlike references to decentralization and ownership. It’s after exit occurs, that the tools aligning incentives and federating an ecosystem matter.
If we find ourselves in that federated world, then web3 could serve as an enabler to a new age of efflorescence.
Yet, there is another key difference: the stakes. The functioning of Greek city-states was a matter of life and death. Around 415 BC, Athenians debated whether to invade Syracuse. They decided to – the venture was a disaster. Those they sent off did not return. That’s a different level of skin in the game than today’s modern financial system provides. When the Athenian state reformed decades later, citizens created measures to prevent making the same mistake again. This is just one historical case. Hellas was in a state of near-constant war.
Web3 projects are in competition. But it is not the same kind of competitive and destructive competitions that helped fuel the Greek city-states. In the contemporary world, the most plausible way the stakes could be raised is if the states begin to censor more transactions – and move towards authoritarianism. Crypto may not be able to survive a rising authoritarian state, but that’s still to be seen in the west.
If All Else Fails
Despite my skepticism, there is one place where web3 can contribute to civilizational progress due to its decentralized ecology and relative freedom – experimentation.
As I’ve argued, the Greek’s ability to experiment and apply their learnings – within and across states, explains a significant amount of their success. This, of course, required the ability to experiment. That’s where web3 can contribute.
Web3 could enable this. Consider the promise of stablecoins and projects like Terra. Consider the promise and use of crypto in emerging economies. And bring to mind the countless variations of bureaucracies that can be brought into existence and trialed by DAOs. There are serious concerns about the success of such projects, yet even low chances of success render them worthwhile.
After all, if these projects work the lessons can be ported over to other ecosystems. To other projects in web3, of course, but also to the ordinary world. Like Greek states copying military tactics from each other, we will experiment, fail, and apply what works.