Thoughts in Between

by Matt Clifford

TiB 206: Sanctions, semiconductors and the past, present and future of sovereignty

Welcome new readers! Thoughts in Between is a newsletter (mainly) about how technology is changing politics, culture and society and how we might do it better.

It goes out every Tuesday to thousands of entrepreneurs, investors, policy makers, politicians and others. It’s free.

Forwarded this email? Subscribe here. Enjoy this email? Forward it to a friend.

Welcome to technological nationalism, v1.0

Ben Thompson has a really superb piece on Tech and War, which is a must read. He describes how the sanctions arrayed against Russia show the extraordinary capabilities of Western states and corporations acting in concert (in the case of the latter, both as compelled by law and, interestingly, voluntarily). They also underline why decentralised, or at least non-Western, services will be increasingly attractive to many global customers, as Thompson argued in his Internet 3.0 essay last year (see TiB 148). It's an extremely rich piece, but two points jump out that are particularly worth amplifying.

First, the current situation represents a v1.0 of scenarios we've discussed before with respect to the future geopolitics of AI (see e.g. TiB 154197). This is useful, as "AI nationalism" may sound like a far-off sci-fi future. The idea of nation states needing to choose an "AI umbrella" - perhaps America's, perhaps China's - sounds, well, weird. But Ukraine shows that we’re already close. Historically, when we've talked about states having "independent technological capabilities", we've been talking about big, physical things like nuclear weapons. But Russia is now forced to ask things like, do we need an independent capability in... Enterprise Resource Planning software?! We're not far from a world where every significant company relies on large machine learning models that run on cloud supercomputing clusters. Can you still run them if Amazon and Google cut you off? Welcome to AI Nationalism!

Second, I suspect we will look back on this period as one where radical norms about government and corporate power were forged - and it should give us pause. Putin is quite clearly an aggressor of extraordinary recklessness and cruelty. I would be delighted if he were forced into a humiliating defeat. But, as I said a couple of weeks ago, perhaps the most important idea in liberal democracy is, to quote the great political theorist @punk6529 (welcome to 2022!) is "The way to judge an idea is not if your team in power should do it". There are no easy answers, but the speed with which calls for ever greater escalation have become a shibboleth for being one of the "goodies" is troubling. Time to re-read some 1914 history. What's happening in Ukraine is a true horror (don't look away), but even worse ones are possible.

Triple cooked chips

In the same piece, Thompson discusses another favourite TiB topic: the geopolitics of the semiconductor industry (see TiB 158115134). The US faces a strategic choice on its technology policy with respect to China. As we've noted before, the US has used its control of the semiconductor supply chain to prevent China from accessing the technology needed to manufacture the most advanced chips (see TiB 174 on ASML). This is both a constraint on China's technological development and, as we discussed in TiB 161, perhaps increases the expected cost of any invasion of Taiwan. Now Putin has reportedly asked China for military equipment to support the war in Ukraine. Is the semiconductor supply chain a lever the US can pull to influence Chinese policy at a moment of high stakes?

As Thompson notes, there is a real tension between the US's short-, medium- and long-term goals. In the short run, relaxing restrictions on Chinese semiconductor companies might nudge China away from actively aiding Russia today (though surely there is a much bigger picture for China to consider, as this excellent piece shows). Any relaxation does, however, strengthen China's medium-term technological (and military) capabilities. But in the long run, the tighter the US's grip on the semiconductor supply chain, the greater the incentive for China to develop completely independent capabilities and render this element of US strategy impotent (though, of course, as we discussed in TiB 185, this is China's goal in any case).

In thinking these things through, it's worth revisiting Adam Tooze's excellent essay from last year, "The New Age of American Power", which we discussed in TiB 182. Tooze argues that the core thesis of US grand strategy today is that it can its use technological dominance to "decouple" geopolitical power from GDP - a metric on which the US is doomed to fall behind over the long run, barring some big changes. If that's right, it seems unlikely that America would be willing to offer loosening of restrictions as a carrot for short-term cooperation on Russia. More likely, if anything, is the threat of tightening sanctions if China intervenes too openly on Russia's side. One to watch.

Lessons about the future, from the East India Company

We talked about the East India Company (EIC) back in TiB 176. It’s a fascinating, and often horrifying, story in its own right. But also, in an era of growing anxiety about the power of our biggest companies, it's a useful case study in the exercise of private sovereignty - even if, as I've argued before, it has little in common with Facebook, Google, et al. As I said then, the best book on the subject is The Anarchy by William Dalrymple or, if you prefer audio, this podcast is a good starting point. If you're interested in this topic, I highly recommend this new paper (and tweet summary) by Swati Srivastava on the EIC's role in the emergence of the modern concept of sovereignty.

There are lots of big ideas in the paper, but there are three that seem particularly relevant to modern concerns. The first is "war awakens sovereigns". Srivastava argues that war "entangles" entities in peacemaking, which forces them to make sovereign-like decisions about how to settle new and contested claims; that is, the's EIC's claims to sovereignty emerged once it became embroiled in war. Reading this and Ben Thompson's piece on Ukraine (see above) in quick succession makes contemporary parallels tempting: how will the private actors involved in sanctioning Russia think about normalising relations, if at all, when the war is over? Some of them will likely have discovered (or had reinforced) that they have great geopolitical power. It's worth pondering.

Second, Srivastava notes that the modern idea of unitary sovereignty within a given territory is not inevitable. Early in the EIC's history, sovereignty was more typically "divisible, nonhierarchical [and] layered". Might we return to this? My own view is that states will remain dominant, but this is perhaps the strongest historical precedent for arguments like Parag Khanna and Balaji Srinivasan's (see TiB 195) that we're heading for an era of decentralised "Great Protocol Politics". Third, and relatedly, this article reminds us that sovereignty is at least in part technologically determined. Why did England tolerate EIC sovereignty for a time? Primarily because it was the most effective way to delegate power in a world where the journey from Europe to Asia took five months. We're in the early days of multiple technologies - from private space travel to crypto - that are "sovereignty-adjacent". The history of the concept suggests we should be humble in predicting its future.

Quick links

  1. High stakes (1). Fascinating write up of an Obama-era war game of a Russian invasion of the Baltics.
  2. "Sort by poison". What happens when you ask a drug discovery algorithm to optimise for damaging outcomes?
  3. Eureka? DeepMind applies its models to restoring ancient texts.
  4. Uncommoditised. Exceptionally good podcast episode on investing in the physical economy. Recorded before the Ukraine invasion, but a remarkably prescient and relevant.
  5. Insignificant. Why do we use p<0.05 as a cut off for statistical significance? Amazing story, apparently true.

How you can help

Thanks for reading all the way to the end. If you got this far, you probably enjoyed it, so I'd love you share it with a friend or two. And follow me on Twitter.

If you have comments, questions or suggestions, feel free to hit reply.

Until next week,

Matt Clifford

PS: Lots of newsletters get stuck in Gmail’s Promotions tab. If you find it in there, please help train the algorithm by dragging it to Primary. It makes a big difference.