Freedom Without Democracy?
How Silicon Valley’s Exit Fantasies Are Rewriting the Meaning of Liberty
By Apirate Monk
I. Miami, 2022: A Provocation
The lights dimmed and the crowd at the Miami Beach Convention Center surged forward as if a headliner had taken the stage. Cryptocurrency hype videos looped on LED screens; the air smelled of energy drinks and cigar smoke. When Peter Thiel strode to the lectern at the 2022 Bitcoin Conference, he didn’t talk about block times or new protocols. He talked about enemies. Warren Buffett, he said, was “enemy number one,” a “sociopathic grandpa.” BlackRock’s Larry Fink and JPMorgan’s Jamie Dimon were gatekeepers of a decaying order. The future, he told the faithful, belonged to those willing to route around them.
The applause rolled like surf. Some cheered because they knew exactly what Thiel meant. Others cheered because they sensed a taboo had been broken; heresies feel thrilling inside a room primed for revolution. Outside, Miami’s humidity pressed down—a reminder that the real world of courts, regulators, and voters still existed beyond the air-conditioned fantasy. Inside, a billionaire was giving voice to a worldview that had been gestating in the Valley for decades: democracy, once presumed the guarantor of liberty, had become its enemy. Thiel had written the line years earlier, with characteristic bluntness: “I no longer believe that freedom and democracy are compatible.” Cato Unbound
II. The Genealogy of Exit
Thiel’s provocation didn’t materialize out of nowhere. It echoed a longer intellectual project—libertarianism’s fixation on exit. In his classic 1970 framework, Albert Hirschman argued that people respond to failing institutions in three ways: exit (leave), voice (speak/organize), or loyalty (stay). Democracy assumes voice. Techno-libertarianism idolizes exit. (Hirschman’s triad remains the cleanest lens on our moment, even if the battles have migrated from factory floors to server farms.)
The literature of exit can read like prophecy. In 1997, James Dale Davidson and William Rees-Mogg published The Sovereign Individual, predicting a borderless aristocracy of “cognitive elites” who would operate in the same physical space as ordinary citizens but in a separate realm politically—shielded by encryption, mobile capital, and jurisdictional arbitrage. The book became a cult classic in Silicon Valley. Its most-circulated passages describe the new “sovereign” enjoying a kind of digital diplomatic immunity from the woes binding everyone else. The Guardian
Two decades later, Balaji Srinivasan, a crypto evangelist and former Coinbase CTO, reframed the vision as the network state: cloud-first communities bound by smart contracts and moral consensus, eventually acquiring land and seeking diplomatic recognition as quasi-sovereign polities. The project was explicit about exit: build a society online first; then “materialize” it on the ground. The Network State+1
Historian Quinn Slobodian argues that the actually successful version of exit has been more prosaic: carve outs within states, not exodus from them. By 2019, UNCTAD counted nearly 5,400 special economic zones across 147 economies—jurisdictions where taxes are low, unions are weak, and laws are rewritten to keep investors comfortable. The effect is not independence but enclosure: islands of exception stitched into democratic polities. Democracy Now!
III. The Birth of Cyber-Libertarianism
If exit supplied the strategy, the 1990s supplied the aesthetic. At Wired magazine—neon palettes, cyber-acid optimism—hackers were liberators and bureaucrats the ballast of a dying world. The founding editor, Louis Rossetto, had long-standing libertarian instincts that fused with Bay Area counterculture to produce a potent catechism: markets are creative; governments are slow; code will route around decay. In the rosier tellings, the world’s poor weren’t have-nots; they were have-laters who would catch up once the state stopped getting in the way. (It was an ideology in which political struggle was not the engine of progress, but a detour from it.)
Yet the myth contained a paradox. The internet was midwifed by public dollars and public universities; its backbone ran through national labs and long-regulated carriers. Still, the culture that blossomed in its early commercial phase cast itself as a rebellion against the public. When PayPal chased a stateless currency, Thiel framed it as an effort to “undermine the monopoly of governments.” When Palantir built tools for intelligence agencies and police, its rhetoric was the language of private problem-solving rather than public accountability. The Valley’s narrative of liberation relied on infrastructures it professed to transcend.
IV. Democracy as “Legacy Code”
By the 2010s, a new metaphor solidified: democracy as legacy code—brittle, slow, hard to refactor. Legislatures can’t ship weekly. Courts don’t run A/B tests. Voters “fork” once every few years, and the change log is messy. Compared with a founder’s dashboard, democratic time can feel medieval.
Thiel gave that intuition its starkest articulation. If freedom means freedom from interference—tax, labor law, antitrust—then majoritarian government is a bug, not a feature. Isaiah Berlin’s famous distinction clarifies the stakes: positive liberty (self-rule) says you are free when you help write the rules you’ll live under; negative liberty (non-interference) says you are free when others leave you alone. In the sovereign-individual discourse popular in the Valley, only the latter counts. The demos isn’t a partner in freedom; it’s the constraint that must be engineered around. Cato Unbound
Political theorist Wendy Brown calls this inversion “the economization of the political.” When every civic claim—taxation, redistribution, environmental constraint—is redescribed as an unjust taking from value-creators, democracy becomes, in effect, theft. “If we give up on democracy,” she warned in 2022, “we give up on the aspiration of ruling ourselves.” Dissent Magazine
V. The Lords of Digital Feudalism
The strangest twist is that exit did not produce competitive utopias. It produced fiefdoms. Classical capitalism gets narrated as firms seeking profit by competing in open markets. The post-2010 digital economy often looks different: platforms collecting rents by controlling chokepoints—app stores, ad exchanges, operating systems, social graphs, logistics rails.
Yanis Varoufakis argues this marks a systemic break. “Take the Apple Store,” he told Wired. “You are producing an app; Apple can withhold 30 percent of your profits.… That’s a rent.… It’s a cloud fiefdom.” The point is not that we “went back” to medievalism, he adds, but that we have moved forward to a new system with feudal characteristics—dominated by cloud capital and platform sovereignty. New Statesman
Sellers on Amazon do not meet buyers in an open bazaar; they operate inside Amazon’s private jurisdiction, subject to opaque rule changes, fees, and banishment without due process. Facebook governs speech for billions through a Terms of Service drafted by a corporation rather than a constitution drafted by citizens. “The moment you enter Amazon.com,” Varoufakis has argued elsewhere, “you’ve exited capitalism”—because you have crossed from a market (where no single actor sets the rules) into a domain where one actor does. (The metaphor is imperfect, but the power asymmetry is not.)
Cory Doctorow has given the platform life-cycle a memorable label: enshittification. First a platform is generous to users to fuel growth; then it is generous to business customers (advertisers, sellers) to fuel revenue; finally it extracts value from both to enrich the company and its shareholders. “It’s not a moral failing,” he told On the Media. “It’s the structural outcome of monopoly plus surveillance.” WNYC Studios
In that light, the techno-libertarian promise of exit hardens into enclosure. The open commons of the early web gets fenced, tolled, and patrolled. The “freedom to leave” becomes the freedom to be left out—off the app store, down-ranked in the feed, priced out of the ad market. The lords still rule; they simply rule in code.
VI. Resistance: Voice Returns
Democracy, however, is stubborn. In Washington, Lina Khan’s rise to chair the Federal Trade Commission signaled the first serious attempt in a generation to reinterpret antitrust for platform power. Her landmark 2017 article, “Amazon’s Antitrust Paradox,” argued that market structure—not just short-term prices—matters for freedom. As chair, she’s tested that thesis in court, challenging mergers and business practices that entrench gatekeepers. Whatever the outcomes, the point is unmistakable: the public retains a claim on the rails of digital life. Project Syndicate
Brussels moved even faster. The European Union’s Digital Markets Act designates “gatekeepers” and imposes obligations: no self-preferencing, interoperability mandates, and ceilings on dark patterns and lock-ins. The DMA can be criticized for overreach or under-reach depending on one’s priors, but the political message matters: where exit erodes the demos through carve-outs and private constitutions, the DMA tries to stitch sovereignty back together at the platform layer. WIRED
Even within tech culture, dissent has thickened. Doctorow’s recent work calls for breaking chokepoints so artists and workers can negotiate on fairer terms. Open-source maintainers have pushed back against platform shifts that extract without reciprocating. Warehouse and delivery workers—whose bodies bear the weight of “one-click”—have organized for basic protections. Indie developers have demanded alternatives to thirty-percent app-store taxes. None of this is anti-technology. It is anti-aristocracy.
Slobodian captures the fault line crisply: “Libertarians imagine freedom in exit. Democrats imagine freedom in voice. The contest is whether digital modernity will be governed by collective self-rule, or by private fiefdoms with their own constitutions.” (In other words: rule of law or rule of platform.) Democracy Now!
VII. Stakes: Freedom Reimagined
The Thiel thesis is clarifying precisely because it is wrong enough to be useful. Freedom and democracy are incompatible only if you define freedom as the unconstrained action of the already powerful. But that is not how most people live freedom. For most of us, freedom is the capacity to shape the rules that shape our lives: to bargain collectively, to contest surveillance, to prevent enclosure of the spaces where we speak, work, and build.
Hirschman’s vocabulary helps here, too. Exit is a vital escape hatch when institutions are abusive or sclerotic; we need it. But voice—the slow, annoying, essential work of arguing, persuading, and voting—creates the conditions under which exit doesn’t just mean moving from one fief to another. The irony of the sovereign-individual fantasy is that the sovereign individual relies on public things: ports, courts, roads, the grid, the spectrum, and the upstream science that makes downstream fortunes possible. Even the most swaggering founder depends on public education systems to train engineers, public health systems to keep workforces alive, and public guarantees when private risk fails.
The most honest part of the techno-libertarian story is the frustration with democratic sclerosis. Legislatures are indeed slow. Agencies are captured. Elections can be ugly. But the cure for bad democracy is not private government. It is better democracy—better voice, more accountable code, rules that keep rails open and chokepoints few. That looks boring next to a Miami keynote. It is also the only thing that has ever kept lords in check.
VIII. Coda: No Real Exit
Walk outside any cloud campus and you will find the public world that makes the private possible: fiber laid in public rights-of-way; data centers fed by public grids; engineers educated in public schools; trucks on public roads, shepherded by public cops, headed to public ports. The platforms sit atop a palimpsest of shared investment. There is no clean break, only a choice about who writes the top-layer rules.
Thiel’s line was a dare. Take it. Assume for a moment he is right that freedom and democracy are incompatible. Then insist on a different definition of freedom: not the insulation of lords, but the self-rule of equals. The fork in front of us is not exit versus voice. It is fealty versus citizenship. And the bell, as John Donne understood, tolls for all of us.
Notes & Sources
Peter Thiel’s Bitcoin 2022 remarks (including “sociopathic grandpa”) reported contemporaneously.
Thiel’s 2009 essay (“I no longer believe that freedom and democracy are compatible”) in Cato Unbound. Cato Unbound
Hirschman’s “exit/voice/loyalty” framework discussed widely; contemporary summary used here.
The Sovereign Individual (1997) predicting a borderless “cognitive elite.” The Guardian
Balaji Srinivasan’s The Network State (official site and PDF). The Network State+1
Special Economic Zones (SEZs) count from UNCTAD’s World Investment Report 2019. Democracy Now!
Wendy Brown interview on democracy and self-rule (Dissent, 2022); also Undoing the Demos for deeper context. Dissent Magazineéft
Varoufakis on “cloud fiefdoms” and platform rents (Wired interview; overview). New Statesman
Doctorow explaining “enshittification” (On the Media series; additional analysis). WNYC Studios+1
EU Digital Markets Act (official page) and analysis of the ban on self-preferencing. WIRED
Lina Khan’s “Amazon’s Antitrust Paradox” (Yale L.J.). Project Syndicate
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