Szabo’s “smart contract” idea is an attempt to supplant contract; to fix the system from within.

Szabo should know the odds are against him, even if he doesn’t act like it.

Please take a moment to recall Machiavelli’s guidance for crypto theorists:

It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them.

And here’s what’s fascinating in this instance.

When the new order of things that the innovator is proposing is … new law (which is what “smart contract” is), the innovator must make sure the new law is unimpeachable.

The innovator has to be ready to argue three things:

1. The new law is on the side of the old law
   (e.g., conceptual interoperability; institutional compatibility; or if short of compatibility, then at minimum, lack of even the merest appearance of conflict between the new law and the old law).
2. The burden is on the innovator to show those who are doing well under the old conditions will do orders-of-magnitude better under the new conditions
   . That’s obsequiousness, yes, but it gives higher likelihood of success than outright declaration of war or usurpation of power.
3. For maximum likelihood of success, the innovator must show that the new order of things together with the old order of things will make everyone better off, not just the innovator & those who’ve profited under the old regime.

Szabo’s vision of “smart contract” does not satisfy any of these three criteria, let alone all three. Why not? Because Szabo doesn’t eat salad (e.g., because he censors critique).

15. Szabo’s View of Contract is Flawed

How can you tell that Szabo’s “smart contract” was meant to be a clever Trojan horse attack on the old regime — ? Because he decided to train his mental faculties first and foremost on contract — the foundation of today’s capitalist governance systems — without clarifying his position on law.

Szabo knows the “contract” is a legal form; he knows that enforceability is the main defining feature of a contract; he knows that under the super-majority global view, enforceability cannot be done without third parties.

Nonetheless, he wants to change how third party enforcement works by convincing people that third party enforcement is unnecessary.

Szabo’s main position is that two or more parties can “self-enforce” a contract without the need for a third party enforcement mechanism. But “self-enforcement” is an oxymoron.

In order to maintain this position, Szabo must now argue that a “smart contract” is NOT a legal form. That’s a losing argument.

Further, the determination of the legal-alegal-illegal status of a given instrument is largely outside the parties’ control. Where parties do have a lot of control is in contract disputes, where they’re free to adopt any range of legal-alegal-illegal postures to advance their particular aims.

Szabo knows all this because this is Contract Law 101, and yet he has managed to pin himself into a very difficult corner.

1. Szabo knows this position is wrong — “smart contracts” may be legal forms (e.g., when third parties with enforcement authority anywhere in the world say a given “smart contract” is a legal form).
2. Not only that, Szabo needs “smart contracts” to be legal in order for them to be valuable (“enforceable = legal = legally enforceable,” the words ‘enforceable’ and ‘legal’ are synonymous in contract law).
3. Wondering whether a ‘smart contract’ is legally enforceable is the whole point. It’s “100% of the law,” going back to Szabo’s fractional imaginaries of “9/10ths” & “99/100ths.” Nobody cares about “smart contracts” that are not enforceable. And en-force-ment = legal en-force-ment. There is no other kind.

Szabo knows all this, but won’t back down. Which is why bringing him down to Earth will be so hard, but ultimately so important for the broader crypto enterprise.

What Szabo’s doing is using a legal form to pursue anti-legal policies (not illegal, but anti-legal, as in against the status quo), while convincing his legion followers that “smart contracts” are strictly alegal creatures.

It’s a foxy move, but ultimately, a losing argument.

Crypto would be much better served by continuing to do its thing, focusing more on material hyperutility propositions, and eliminating CryptoLegalese as much as possible.

Exhibit A for this recommendation? The very fact that this article has to be written, and the very fact that we now have a Crypto Law Review.

The only people who benefit from Legalese (crypto or otherwise), are lawyers. Less Legalese = more resources for vital development work.

It’s really that simple.

16. Crypto-Hobbesian-Discourse = Bad

Bigger picture, Szabo’s rejection of critique affirms a simplistic Hobbesian crypto-intellectual climate where binary lawgics and opinions become epistemic truisms based on fiat + path dependence + time. That’s a recipe for disaster.

This level of conceptual disarray allows incumbents to easily apply age-old divide-and-conquer, slice-and-dice, define-and-tax governance strategies & tactics — to crypto.