Jurisdictional Competition

Jurisdictional competition, in Davidson and Rees-Mogg’s The Sovereign Individual, is the prediction that once wealth and talent can move freely between territories, governments must compete for residents the way firms compete for customers. As the authors put it, governments “will have little choice but to treat populations in territories they serve more like customers, and less in the way that organized criminals treat the victims of a shakedown racket.”

From Subjects to Customers

The argument is the political consequence of the cybereconomy. When the most valuable wealth is informational and can be earned and held anywhere, governments “that attempt to charge too much as the price of domicile will merely drive away their best customers.” Tax becomes a price, residence becomes a purchase, and citizens, in the book’s phrase, “will no longer be citizens as we know them, but customers.” The authors expect a “proliferation of jurisdictions” and “sovereignty services” competing on market terms, with “proliferating experimentation in new ways of enforcing contracts and otherwise securing the safety of persons and property” — a market in protection and law adjacent to market anarchism and private security.

Lane’s Three Modes of Control

To explain why this matters, Davidson and Rees-Mogg borrow economic historian Frederic Lane’s analysis of government as “an economic unit that sells protection.” Lane distinguished three ways the protection-selling enterprise can be controlled, each with different incentives:

• Proprietors — a hereditary owner (a medieval lord, the Sultan of Brunei) who runs the territory to maximize profit. Proprietors cut costs but keep the price (tax) as high as their monopoly allows.
• Employees — bureaucracies and political classes that run government for their own benefit. They favor maximizing size and employment, resist cost-cutting, and tend toward chronic deficits.
• Customers — those who actually pay for protection and control the government, as in the medieval merchant republics like Venice, the ancient democracies, or the early American republic’s limited franchise. “Where customers rule, governments are lean and generally unobtrusive, with low operating costs, minimal employment, and low taxes.”

The book argues the industrial nation-state, with universal-franchise mass democracy, is largely employee-controlled — which explains its bias toward growth, deficits, and high taxes (the dynamic the wiki tracks under public choice). Jurisdictional competition is the mechanism that forces a shift toward customer control: mobile megapolitical conditions let the payers exit, and exit disciplines the price.

Relation to the Wiki

This is the mirror image of citizenship and state bargaining: Tilly describes how rulers, needing taxes and manpower for war, bargained rights into existence and bound subjects into citizens; Davidson and Rees-Mogg describe the reverse current, in which falling returns to violence and mobile wealth unwind that bargain and turn citizens back into customers. It also extends the protection-pricing logic of Tilly’s protection rackets — both treat the state as a protection seller, but the Sovereign Individual thesis asks what happens to the racket when the victims can finally shop elsewhere.

Limits

Confidence is low. The customer/exit dynamic is real and visible at the margins (tax-competitive small states, “golden visa” and residency-by-investment markets, corporate domicile shopping), but the book’s strong prediction — that jurisdictional competition would force most governments into lean, low-tax customer service within a generation — has not broadly materialized. States have coordinated against tax competition, expanded extraterritorial reach (citizenship-based taxation, information-sharing, exit taxes), and retained large fiscal capacity. Treat this as a directional tendency the book overstated, not a law.

See Also

• The Sovereign Individual - source book; Chapter 5 develops Lane’s three modes of control
• The Cybereconomy - the mobile-wealth condition that makes exit possible
• Megapolitics - the violence-cost theory underlying the shift in control
• Citizenship and State Bargaining - Tilly’s account of the bargain this thesis predicts will unwind
• Tilly on Protection Rackets - the state as protection seller, priced by the cost of violence
• Market Anarchism and Private Law - competitive provision of law and protection the “sovereignty services” forecast approaches
• Private Security and Insurance - market protection adjacent to the book’s proliferating jurisdictions
• Public Choice and Rational Ignorance - incentive analysis matching Lane’s “employee-controlled” government
• Organized Crime and State Capacity - Why suppressing organized crime is structurally easier in a small, centralized polity than in a large, federal one — concentrated criminal interests out-organize diffuse populations
• The Offense–Defense Balance of Technology - Every technology tilts power toward attack or defense by changing the cost of predation versus protection — and state formation and dissolution track the shifts. Gunpowder built the state
• Seasteading and Network States - Two proposals for building new polities that compete with the nation-state: floating ocean settlements (seasteading) and internet communities that crowdfund territory and seek recognition (network
• Tor - The volunteer-run onion-routing overlay: the cypherpunk mix lineage reborn for real-time traffic, and the internet’s principal anonymity and censorship-resistance infrastructure.

Sources

• The Sovereign Individual (Full Text Aggregate) - Chapter 1 (“treat populations … more like customers”), Chapter 5 (“The Life and Death of the Nation-State,” Lane’s proprietors/employees/customers typology), and the “sovereignty services” passages