Some days bring me past a news stand which almost invariably has nothing of interest to me. Oh, sure, there are newspapers with war, rumours of war, celebrity gossip, rumours of persons who may become celebrities gossiping about whether D list is sufficiently distant from actual celebrity to be considered ignominy, and endless sports scores - the masses do love their bread and circuses. Today, though, today there was the Nation.
Seriously, just like that, a little tiny "the" a big capitalised Nation and a period, as if to say the Nation, period, the whole nation, and a final stop. Being anti-authoritarian, pro-decentralization, and individualist in my anarchism, I generally don't reach for the periodical of nationalism, imperialism, and state socialism, as I perceive the Nation to be. Today, though, the gigantic B with two vertical hashmarks and the headline "The Bitcoin Fantasy: Are digital currencies the future of money?" by Doug Henwood got my attention.
Henwood has done a credible job of looking into Bitcoin. He gets the current market value of all bitcoins in circulation at $5 billion. He has a few zany ideas about inflation not existing, possibly because he doesn't have a solid understanding of "the US dollar" which he admits he does not define "succinctly" in his essay. He has some healthy scepticism of the idea of market surveys defining the demographics of a user community of crypto enthusiasts who value their privacy, and he does a really good job of going over the major uses of money. In addition to Bitcoin, he notes that there are other "crypto currencies" and that digital money has been getting a lot of attention from investors and enthusiasts.
Then he asks a question. It is a really good question, so I'll quote it directly, and set it off just a bit so it is easy to see on the page:
"Apart from anonymity, though, it remains difficult to see what problem Bitcoin solves for people with left-wing politics."
There. That is a truly excellent question, from Doug Henwood, 19 May 2014 issue of The Nation. So I've made it noticeable.
One answer is: it could prevent some wars.
Now, to be really effective at anonymity, I think bitcoins should be used within a sensible interface, a layer of indirection, such as SilentVault. But, if you imagine a really state-less money, then you ought to immediately understand what it is good for.
You see, wars were not easy to wage back in the days from roughly the peace of Westphalia (say AD 1648) to the days of Napoleon. The American Revolutionary war of 1775 to 1781, which became a war involving the empires of France, Britain, Spain, the Republic of Holland, and a few provinces of India, was financed on the American side with inflationary fiat currency. The inflation was so high that, by 1787, several rebellions were brewing in the new country, the saying "not worth a continental" referring to the currency of the Continental Congress was widespread, and a counter-revolution by the ruling class of that day formed a new constitution.
The French Revolution was funded with paper assignats and mandats. Although Napoleon went back to gold and silver coins, and raised the money he needed to invade Russia by selling Louisiana territory to the USA for a few million in gold bullion, the British went to the paper pound. In order to put the army of Wellington on the field at Waterloo, the British had to have inflationary fiat money.
The American civil war was extremely deadly and destructive, in part because both sides used inflationary paper money - the Confederates pretending that they would redeem their paper for silver two years after a peace treaty that never came; the Union issuing Greenbacks that were tied to nothing but the "full faith and credit of the United States," a matter that was in some doubt after First Manassas (Bull Run) and before Antietam and Gettysburg. There almost certainly would not have been a million and thirty thousand dead and wounded American soldiers and an undocumented but certainly large number of dead civilians were it not for inflationary fiat paper money.
Both the First and Second World Wars were funded with inflationary fiat paper money by various combatants. You can look it up. You'll find that inflation was also persistent in Germany and Austria after the first war, in ways that led to the second. The Vietnam war, or at least that part of it fought by the United States, nearly bankrupted the country in the process of slaughtering right around 7 million people in Southeast Asia. So, Nixon took the country off the gold standard in 1971, something that Henwood mentions, but doesn't relate to events of the day. With the endless supply of fiat inflationary money that Nixon could now access, he was able to win re-election, pay off the Watergate burglars, start the cover-up, steal documents from the office of a prominent psychologist, continue the illegal bombing of Cambodia, sell out the Chinese generals who wanted to overthrow mass-murderer Mao Zedong, send the national guard to Kent State to slaughter some students, spy upon every major left-wing group in the country, and in his spare time, send a few more astronauts to the surface of the Moon. Nixon used so much inflationary money that he imposed wage and price controls to attempt to control the inflation that he caused.
Every war since 1971 has been financed by every side with fiat inflationary money. Now, I'm not sure if people with left-wing politics are still against war. There was a time when they were, but with Clinton rampaging in Somalia, Kosovo, and Obama rampaging (even surging) in Afghanistan and keeping a very large embassy and a huge number of "contractors" at war in Iraq, while finding time to prosecute drone strikes in Yemen, and send military "advisers" into Libya and other places, I don't actually know whether "left-wing" means "anti-war."
But I am reminded of a song. "War. What is it good for? Absolutely nothin' ...."
If you understand that every major war in the last two hundred years, and every single war in the last 43, has been financed by national governments with inflationary fiat money, you understand why, as Henwood notes in his article, governments are so determined to have monopoly control over the issue power of money. And you'll understand that alternative money may reduce the ability of the state to tax people, to create new money without taxes, or to borrow money. A weaker state may be forced to focus on what people with left-wing politics claim to care about: keeping people safe, providing for their general welfare, and funding hospitals, schools, food banks, and courts capable of enforcing laws against discrimination.
In a future era where there are no states strong enough to do even those things for people, people may have to take care of one another on their own, which has always been a part of the anarchist tradition of mutual aid. Now, a person with left-wing politics is sure to lament a weakened state that cannot engage in charitable works on behalf of everyone. But would you be willing to trade, eventually, the entire state and all its powers to do things for people if you could end forever its tendency to do things to people, like kill them in their homes, mosques, and churches, slaughter their children with napalm, and deform and deface the planet with nuclear bombs, chemical, and biological weapons?
Despite endless propaganda to the contrary, the wars among nation states are started by nation states, not by anarchists, not even by anarchists who chose assassination as their way of going out in style. The wars among nation states killed, in the 20th Century alone, some 100 million persons. Another 150 million persons were killed by states engaged in genocide and mass murder. The future importance of crypto-currencies in reducing or preventing wars should not be underestimated.
In a book popular among crypto-anarchists about twenty years ago, a very elderly survivor of a Japanese labour camp asks a young American what he plans to do with a new digital currency. The American, a descendant of survivors of the Holocaust replies, "Make sure that another Holocaust is impossible." You might not like libertarians, Doug Henwood, but you might enjoy Neal Stephenson's book The Cryptonomicon.
Whether bitcoins are money, as some believe, or not, as Henwood seems to think, they are a part of the near future. If they lead to robust systems of exchange and value storage, cryptographically secure currency systems are going to change the relationship of people to the state. Given the racism, sexism, and extreme violence of the state in the 20th Century, worldwide, there ought to be something in a future with crypto-currencies for everyone.