Yanis Varoufakis on the Potential Progressive Role of Bitcoin in a Post-Capitalist Economy
Discussion
The Blockchain Socialist:
““I shall argue that Bitcoin is not fit for purpose under capitalism, or as a vehicle toward transcending capitalism, but something like Bitcoin will characterise monetary systems in a future world free of private banks and share markets.”
He then gives two propositions in which he expands in the essay to support his view.
- PROPOSITION 1: BITCOIN LACKS THE SHOCK ABSORBERS NECESSARY TO PREVENT CAPITALIST CRISES FROM DOING UNTOLD DAMAGE TO THE WORKING CLASS
- PROPOSITION 2: UNDER CAPITALISM, BITCOIN’S DOMINANCE WILL NOT DEMOCRATISE ECONOMIC LIFE – OR GIVE SOCIALISM A CHANCE
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Although Yanis uses largely imagined scenarios for his justifications, his logic is sound from a historical perspective. Bitcoin currently does not have any built-in counter mechanism during economic stress besides users pushing miners to make changes to the protocol. This would likely lead to depressions and does nothing against the unequal distribution of wealth unless there was a large movement to change the protocol, but this is not so different from traditional systems.
Removing central banks also does not guarantee a future filled with more socialism as there was a time when central banks did not exist yet we had the same inequalities and injustices through the different actors which benefit from capitalism. A monetary commons alone, whether bitcoin or otherwise does not necessarily change the perverse incentive structures within capitalism, i.e., constant growth and profit-seeking.
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“Having said all this, a monetary commons (that may very well rely on something like the blockchain underpinning Bitcoin) will, I have no doubt, be an essential aspect of a democratised economy; of socialism.”