Is the era of tech bros and techno-libertarianism over? Depending on how you look at it, tech poster boys Sam Bankman-Fried and Elon Musk either caused or could not contain body blows not only to their own companies but also to their entire industries. When those industries are currency and the new public town square, the cheerleading that private tech can supplant traditional government functions suddenly rings hollow.
After the FTX bankruptcy and Twitter verification system meltdown, where do you want to get your currency and trusted public information? Shady cryptocurrencies, where even the most legitimate collapses into bankruptcy when a competitor prompts an old school “bank run”? Social media platforms, where even the new “public town square” can be plunged into utter chaos when a new owner wants to make a quick buck?
Investors are likely rushing back to U.S. dollars and Treasury notes right now that had already started recovering on signs of softer inflation, while also looking for the Department of Justice, Securities and Exchange Commission (SEC) and other old guard government institutions to step in and clean things up.
I’m no Luddite. I started building Radio Shack kits in the 1970s, learned mainframe programming during the 1980s and have embraced every major innovation since then — save social media. The economics never made sense to me, until the disturbing big reveal that “you are the product,” and then who wants that? We’ve read premature obituaries for tech before. In truth, of course we’re not going back to some earlier stage of tech.
But techno-libertarianism – the gleeful sense that old school sovereign states are going the way of dinosaur, that tech bros, unbridled free markets and full tilt libertarianism will usher us in a utopia of freedom, choice and self-determination – may have just peaked. The problem is always that profits trump credibility while revenues and “performance” override infrastructure and stability. Businesses are in business, and no one should fault them for that. Profit is the goal of shareholders, and the modern business corporation is set up to maximize it, nods to ESG alternate metrics aside. Business, however, does not operate in a vacuum. It is enabled by level playing fields built on neutral infrastructure that all the players trust well enough.
Currency is a critical piece of business infrastructure. The SEC had dithered too long on regulating cryptocurrencies, and now the chickens have come home to roost. Billions of dollars are at stake. If FTX is crypto’s “Lehman moment,” then it may be too late for the SEC to do anything meaningful and it is time from Congress to step in. Should it do so, this may be the ultimate confrontation of the geo-political state and the techno-libertarian ideology that nimble decentralized tech can evade those “old world” entities.
Can governments tame crypto? It likely requires international cooperation through treaties to do so. But in a world of rising geo-political tensions and battle for tech leadership, can enough crucial world powers come together to succeed?
Trusted information sources are equally vital to business. The attacks on “mainstream media” bolstered the positioning of alternate information sources such as Twitter. Mainstream media is of course largely populated by for-profit businesses too. But from the early days of government regulation of radio and television, new information sources have been accountable to governments and not just investors. Can governments finally tame social media? We have to find out as it is untenable that it is carnival night in the new town square where we don’t know who is real and who is not, even among blue-chip businesses we rely on for critical medicines or politicians who lead the nation. Again, it will likely take not only congressional intervention but also international cooperation and treaties to re-establish regulation and secure infrastructure.
Perhaps it is the days of the tech bro that are numbered, and not those of old-line sovereign states. Some things endure (warts and all) because they have proven their long-term value. Bright shiny new objects sometimes dull in the bright sun and get tossed over for the next one. I have sympathies towards libertarianism and am no fan of regulation run amok. And yet, baseline infrastructure needed for strong property, contract, business and investment regimes cannot safely or dependably be delivered by an unregulated private sector itself.
After FTX’s and Twitter’s meltdowns, traditional governments can be the big winners: We need them to double down on providing crucial currency, information and regulatory infrastructure so business and the economy can thrive.
Sean M. O’Connor is a professor of law and executive director of the Center for Intellectual Property x Innovation Policy at the Antonin Scalia Law School at George Mason University. He is a visiting professor at Boston College Law School teaching contracts, corporations and securities regulation.