When The Bit-Economy Is Born, Old Arguments Will Become Irrelevant

Art by: Jing Jin

“The hackers are going to help us find ways to have a more humanized system of commerce.” Steven Levy – 1995

“The biggest threat to capitalism is capitalists.” – Unknown, often credited to George Soros.

I have a confession. I am not like the majority of you. The mainstream media tells me that Bitcoiners are libertarian. But in conversations at conventions and elsewhere, I see that many, and granted this is completely circumstantial, are adopting their for the realities the future may bring us. Pre-Bitcoin, I considered myself a freedom-loving progressive. I am generally in favor of state rights, so long as the state doesn't infringe on fundamental human rights (like Jim Crowe laws). I am a non-interventionist bordering on an isolationist, at least militarily, when it comes to foreign policy. I believe in the second amendment, I admit some loopholes should be closed, but I don't particularly care if someone wants to buy a ten round magazine either. I think states should be able to legalize pot, I guess that falls under both progressive and libertarian. I think in most cases the government should get out of the way.

But at the same time, there have been instances where they were needed. I like the minimum wage. I like workplace safety. I know the history of the Gilded Age and feel the 1 % would be more than happy to drag us right back there. I also think healthcare works far better when it isn't “Pay-to-Live”. I'm sorry, reality shouldn't be like an Arcade where you have to keep pumping in quarters to extend your life. America's current system (Affordable Care Act included) is horrible.

The point is, I'm not exactly a card carrying member of the progressive movement, but I'm certainly not a libertarian. The question I keep finding myself asking, does it even matter anymore?

Regardless of it source and your thoughts on the liberal billionaire, that quote is something that has stuck with me over the years, and it seems to apply now more than ever. Capitalism isn't at threat of falling due to the virtues of Marxism or the devotion of his hardcore followers, its biggest threat is the lack of moral conviction held by those that keep the capitalist system churning. If society at large ever moves away from capitalism, it won't be because communism sounds really nice, it will be because capitalists forced the hand of the laborers.

That still seems unlikely to happen anytime soon, not because Capitalists have grown hearts like real life versions of the Grinch, but because communism has failed so miserably in modern society. Proponents may argue that Stalinism, Maoism and every other modern form of “communism” is a poor substitute for the real thing and they may even have a point, but as Hall of Fame NFL coach Bill Parcells famously said, “You are what your record says you are.”

Still, even the majority of Bitcoin users, generally conservative economically, agree that the bankers, the elite and the gatekeepers are the biggest impediments to economic justice (however they imagine that is) and one of the biggest selling points of Bitcoin is that we can cut them out.

Capitalism's record looks impressive, it is responsible for wealth creation on a scale never previously seen in human history and in a head to head battle against communism, capitalism came out decisively on top. But, its triumphs only seem great when compared to the other systems that we have to compare it to. Yes, clearly capitalism is preferable to modern versions of communism, and yes it is clearly preferable to the old systems of slavery and serfdom, but that doesn't mean it hasn't had its downsides.

The unsustainable nature of capitalism's infinite growth model has led to the creation of shortcuts that have negatively affected the two essential oils that grease the capitalist machine: Its currency and its workers.

There are a limited number of materials in the world, in theory, there should be a limited amount of money in the world as well. So it is impossible, with a sane currency, for every company to be growing at all times, as is their goal. Only in a world gone mad would US $1 billion in profits be considered bad news, simply because US $1 billion was also made the year before.

Yet, that is the reality of publicly traded companies. To be considered a success, they have to continually not only beat out their previous performance, but also the predictions of Wall Street wiseguys. It is like betting on a game where the house gets to update the point spread until the last play. You can only win on a last second Hail Mary play, and how often do those come due?

In order for continually expanding profits to exist, the system needs two things: more money and cheaper production. The advance of technology has made production cheaper, but distribution has been uneven and centralized. Furthermore, instead of the advantages being put towards improving the lives of the laborers, it has been pointed at increasing profits of the already rich. But that hasn't been enough, so more 0s have been added to the end of debt ledgers to artificially pump up what is supposed to be a finite currency.

Which really only creates debt. To keep the system that has made them unimaginably rich going, capitalists have been pouring debt into one end, while squeezing dollars out of the laborers on the other. That can not go on forever. Debts need to be paid, and hungry people don't stay hungry for long.

They have managed to use that system to artificially create more wealth in America, but it is being concentrated in the hands of the few

A quick note for the John Galt lovers out there: You may argue that the west’s current system is not true capitalism, and is more akin or mercantilism-capitalism hybrid, or “crony capitalism”. You would be correct, just as the communist proponents are when they say the same thing about Stalinism. I would refer you again to the Bill Parcells quote, you are what your record says you are. Additionally, something close to laissez faire economics was tried near the end of the 18th century, its reality was not bright for the workers who lived during it, and no amount of Ayn Rand novels will change that.

For bitcoin to be a success, it doesn't need Paypal adoption or approval from Bank of America or a thousand new bitcoin ATMs or a million new merchants. Those things might help, they may speed things up, but for bitcoin to succeed, it only needs to outlast the fiat currencies it is competing against. On that front, it has nearly every advantage imaginable.

 For Bitcoin to be successful, it doesn't have to be the best currency, it doesn't have to beat the dollar, it just has to beat the lower currencies.

Andreas Antonopoulos had a point on the Joe Rogan Experience podcast (and, I'm sure, elsewhere). It was that for Bitcoin to be successful, it doesn't have to be the best currency, it doesn't have to beat the dollar, it just has to beat the lower currencies. There is huge population of unbanked in the third world and I'm not breaking any news by telling you that there is huge potential for bitcoin in the space.

So what will the world look like when that inevitable happens? What happens when a population realizes that not only can the blockchain give them a better currency, it can give them a more transparent and responsive government and  a more fair economy?

What happens, is that the old arguments of Capitalism versus Communism die out. Suddenly, the age old argument becomes an argument from an older age. As we move into the blockchain future, new governmental systems will arise that are far superior to both systems. Something that provides both the individual freedom of the most laissez faire economy while creating such an excess of wealth that basic needs are taken care of for every citizen.

How the blockchain can combine these two seemingly incompatible world views will be something that requires a bunch of tinkering. First, it should be noted that contrary to popular belief, there is at least one successful instance of Communism in history. The ancient Inca.

The communism of the ancient Incas is well documented but often ignored. In 1932, in his essay Communism of the Incas A. Hyatt Verrill looked at the ancient Incas for clues about what it could tell us about the then-new Soviet Union. He called the ancient Inca society “[T]he most extreme Communist government the world has ever known.” Yet, he also pointed out that, as far as providing for its citizens' needs, it was one of the most successful systems in its time.

The Incas had food stores throughout its empire that were continually replenished. Entire towns were devoted to the production of individual goods: sandals, weapons or whatever the locale specialized in. The goods were then traded with other towns at fairs. No one was made to starve and the spirit of the society embodied the old communist rally cry “From each according to his ability, to each according to his need.”

The Incas had food stores throughout its empire that were continually replenished

So, where did they succeed where the Soviet Union and so many others failed? In order to keep the system running, strict laws were enacted, slothfulness, it seems, was also one of the Inca's deadly sins. The punishments handed out seem draconian to our modern sensibilities (although, the Soviet Union's were worse). Individual freedom hardly existed in the Inca communist society, with Verrill stating that choice was confined to matters of love and that is about it.

But, the society they built grew out of the harsh and cold reality that was the ancient world. We, in comparison, live in a technological wonderland. The future that we are entering, and we won't completely enter until everyone reading this is either old or dead, will be a similar technological leap compared to the world that existed pre-internet, less than a generation ago.

I'm not saying we should adopt the Inca's economy. It worked in an ancient world in a mostly agricultural society. The point is, that not every instance of human kind sharing with each other has resulted in the Soviet Union.

So, how would such a society provide the same kind of social safety net provided by the Incas without the draconian system of laws that they used to enforce it?

It will take greater minds than mine to come up with real, workable solutions. A government and economy isn't made over night. There is no telling how blockchain technologies will have evolved by then and what they will be capable of. There are, however, a few assumptions that can and should be made about how an ideal blockchain government should work. They will likely use a cryptographically verifiable voting system. Decisions are likely to be made in a more direct democracy fashion, with technology making it infinitely easier to have each citizen's voice heard.

The strictest Libertarians will argue that any taxation is theft, and that freedom comes not from the ability to pursue activities other than staying alive, but from the isolation of living free from what they would assert are the chains of society.

Would it make any difference if those chains were as light as a feather and the resulting safety net as strong as steel? For some it would not, and those kind of ideologues will never budge on having any government, blockchain powered or not. Similar sentiments can be applied to communist ideologues who insist that everyone must have the same wealth as everyone else, regardless of their effort or value.

For the rest of us, the great reasonable middle, it will be a long road figuring out which level of social services and taxes are reasonable. The same can be said today, but the truth is, that decision has never rested with us. We have always elected leaders, who then pass laws and appoint Justices that apply their favored flavor of the law. We are more than a few degrees of separation from a true democracy and some would argue, considering the influence of money, even a functional republic. But that can change with these technologies.

The first thing people realize is that in a blockchain run world, we would have a direct vote on these sort of things. More importantly, unless global warming or a similar catastrophe spoils things, how we value work, even what we even consider to be work, will change substantially.

What is important to remember is that this change won't come only because of Bitcoin. Other emergent technologies can and will have an affect on what our governments and economies will look like. The ever accelerating march of automation will eventually eliminate the vast majority of labor intensive jobs. Production will be so cheap there will be no reason, saving for greed, to charge unreasonable amounts for the basic essentials.

Image from: Inequality.org

It will hardly matter if people resist giving things like food and shelter away. With no jobs available, there will be a tremendous drag on the economy unless we find a way to prop up the lower class. But, again, that will be far cheaper than it is now. Decentralized production will continue and accelerate as 3D printers become more affordable and powerful. Giant 4k resolution Projection screens will cover entire walls and, along with virtual reality, help ease the need for windows in apartments, providing more living space. Genetic engineering, architecture and automation will increase the food supply.

The point is, Bitcoin is a large piece of the puzzle, but it is still only a piece. If you are looking at it in a vacuum, as if the internet of things, decentralized manufacturing, robotics and virtual reality aren't also going to evolve at a similar pace, then you are looking at shadows cast on the wall in a cave.

For thousands of years, humanity depended on slaves. Then, as enlightenment slowly found its way into society, that old system faded away (at least on the surface). But, we will soon have our slaves back, robotic slaves that will slowly replace us in the workplace. That economic reality needs to be accounted for and blockchain technologies are the best way to do it.

Colored coins could be linked to certain types of items. There could be a “foodstamp” coin, a “medical expenses” coin and a “shelter” coin, to help reduce fraud, but it may not even be that necessary in a reality with near costless production and a frictionless economy.

Without the upward buying pressure created when the middle and lower classes have money to spend, the current capitalist system of unlimited growth is no longer possible. Not everyone is built for an intellectual, highly specialized job that takes eight years of college to get an entry level position in. Letting them starve or freeze simply because they were born in the wrong moment of human history would be amoral and would likely result in a blow back that the rich, with all their robots and gated communities will still be unable to hold back.

Much better for society would be to give them the leisure time they need to reach their intellectual or spiritual potential. Every human mind has something special about it, something that it can contribute to the human race. It would be far more beneficial for our society if we allowed them to grow and evolve those skills. Then they can contribute in their own way, through art or philosophy or contribute in a growing virtual reality economy.

My entire life people have been talking about how busy we are as a population. Even in the 90s, I would hear adults complain about how faxes and emails made it so if felt like they never left the office. But today's worker exists on a completely new level. Smartphones have filled the last remaining gaps, and there is very little time in this society to simply stop and think. Even when work isn't pressing, there is always more entertainment to occupy one's mind. Wearables like the iWatch and Google Glass are attempting to fill gaps aren't even there. Every second of our time is occupied and few people still enjoy being left alone with their thoughts.

In an ideal world, that would be something that can be monetized. People could be rewarded in some way for taking time away from their technology and entertainment to engage in the first leisure activity human kind participated in, which also happens to be the leisure activity that served as the seedling to nearly all human accomplishment: day dreaming.

In the future, with basic needs taken care of and endless information and entertainment only a click away, perhaps philosophy can become an industry.

When survival is no longer a challenge, leisure becomes competitive. But there is no reason for the bottom class to starve while the upper class lives in unimaginable wealth. As we begin to develop the financial system that will run the future, it is important to work on mass adoption, but it would benefit us to keep an eye towards the future and how we, the early adopters, are going to shape it. Lets stop arguing over what Bitcoin should be in the extremely fleeting present and start working together on new systems without the biases of the old world clouding our vision. It is time to start fresh.

I'm not a socialist, I'm not a libertarian, I'm a bitcoinist. I'm betting you are too. We don't know what that means yet. We are set to be the creators of a new economic world, let's leave our old biases behind.