Please listen to this really great conversation: ECSA on Transcending Hayek and his Digital Disciples

Introductory Contextual Quotes about the Crypto Economy

"Is cryptoeconomy just a refinement and acceleration of a capitalist economy or can it create new economic space? It could be either or, indeed both. The platforms that utilize blockchain and cryptographic technologies can be placed at the service of protocols that are essentially capitalist — designed around private property, self interest and profit calculus — or protocols that are conceived more co-operatively and commons-oriented — designed around shared networks and risking together. The technology permits both capitalist and social versions to be designed centrally or in a distributed way."

- Dick Bryan and Akseli Virtanen [1]

"What makes cryptocurrencies so powerful is that we can use them to express different social and economic agendas and to measure things differently; to implement different incentives and record their effects. Economy opens as a design question. This is the precondition for building different social and economic agendas and de-naturalising the rule of private and individual measures of social contribution, materialising in concepts like ‘profit’ and ‘efficiency’."

- Dick Bryan and Akseli Virtanen [2]

Quotes

1.

"Current attempts to develop new kinds of cryptocurrencies must be judged, valued and rethought on the basis of this simple question as posed by Andrea Fumagalli: Is the currency created not limited solely to being a means of exchange, but can it also affect the entire cycle of money creation – from finance to exchange? Does it allow speculation and hoarding, or does it promote investment in post-capitalist projects and facilitate freedom from exploitation, autonomy of organization etc.?"

- Tiziana Terranova [3]

2.

"Blockchain is inconceivable without commodification – its very architecture rests on economic incentives coordinating independent actors, and its raison d’etre is the dis-intermediation of digital asset transfer. But their unique features not only allow blockchains to dis-intermediate and reorganize existing markets, but also to create new markets under previously unfavorable conditions. They thus constitute a crucial element in looming processes of formal subsumption, pushing the frontiers of capitalism ever further into the sphere of social relations previously unattainable to commodification. What’s more, through incentive systems rewarding specific interactions and punishing others, these technologies open the door for what Marx referred to as real subsumption – the systematic restructuration of commodified relations along the needs of capitalist profit maximization – of hitherto not or only formally subsumed social spheres."

- Felix Fritsch [4]

3.

"There are good reasons to worry about entrusting the basis of social institutions entirely to economic nudges, with or without cryptography. Long before crypto, political theorists have warned of the corrosive effects that economic forces can have on democracy. In The Human Condition, Hannah Arendt argued for a conservative view of politics: that political life must be separate from economic pressures, so that it can focus on the common good rather than anyone’s personal interests. More recently, from the left, Wendy Brown has criticized the “neoliberal” urge to replace politics with business. When the market takes over roles like providing health care and setting environmental standards from democratic governments, the very nature of these issues changes. We forget that we are all citizens, she argues, and instead focus only on the economic side of ourselves; we forget about values like justice and fairness, seeing only the costs and benefits."

- Nathan Schneider [5]

Neither Bitcoin nor Blockchain will liberate us from an exploitative society, but they may be useful in post-capitalism

1.

"To think that Bitcoin can solve the problem of money, or the problem of the state, is to misunderstand what money is or what states do. Every exploitative socio-economic system is predicated on what the minority running it can make the rest do for them (who does what to whom, as Lenin famously put it). Money and the state are epiphenomena of this system. To believe that you can fix money, or that you can fix the state, is to demonstrate a devastating innocence regarding the larger exploitative system with which they are integrated. No smart contract can, for example, subvert the labour contracts that underpin society’s layered patterns of exploitation. No NFT can change an art world where art is a commodity within a universe of commodified people and things. No central bank can serve the interests of the people so long as it is independent of the demos. Yes, blockchain will be useful in societies liberated from the patterned extractive power of the few. However, blockchain will not liberate us. Indeed, any digital service, currency, or good that is built on it within the present system will simply reproduce the present system’s legitimacy."

- Yanis Varoufakis [6]

2.

"Assets, by themselves, are neither feudalist nor capitalist. Whether we are talking about gold, cucumbers, or Bitcoin, assets are assets – end of story. What makes an asset feudal or capitalist or socialist is the manner in which it interacts with a society’s social relations of production, the pattern of property rights it shores up, etc. My point, when referring to Bitcoin’s early adopters as a crypto-aristocracy, as crypto-lords, was that, when an asset like Bitcoin (whose exchange value is built on engineered scarcity) is embedded in any oligarchic exploitative system (capitalism, kleptocracy, techno-feudalism, etc.), it acquires the basic character of the (pre-capitalist) feudal order: a small minority are empowered to collect rents in proportion to the chunks of the asset that they began with. To recap, Bitcoin is neither feudalist nor capitalist per se. It is simply oligarchic".

- Yanis Varoufakis [7]

From a DAO to a DPO, i.e. a Distributed_Programmable_Organization

"The Distributed Autonomous Organization evolves toward the Distributed Programmable Organization. Post-blockchain architectures are already emerging that have even more flexible, lower-cost, rhizomatic architectures operating on the peer-to-peer model. These make it possible to design alternative models embodying an ethos of sustainable economic and social cooperation that is integrally built into the systems architecture at all levels.

These developments open new possibilities for collective projects to invent their own self-sustaining creative economies, operating not in competition with each other but in a shared, open-source environment based on notions of the “common”."

- SenseLab [8]

Encoding the neoliberal subject (methodological individualism)

"What kinds of subjectivity do we want to algorithmically inscribe into our systems? Blockchain start-ups begin from the assumption that there is no trust and no community, only individual economic agents acting in self-interest. Fair enough, you might think, it’s precisely the fact that projects like Ethereum engineer confidence and provide economic incentives for contribution that may distinguish it from other services like Freenet. But it also proceeds from a perspective that already presumes a neoliberal subject and an economic mode of governance in the face of social and/or political problems. ‘How do we manage and incentivise individual competitive economic agents?’ In doing so, it not only codes for that subject, we might argue that it also reproduces that subject."

- Rachel O'Dwyer [9]

The circular logic of crypto decentralization

"The crypto industry has long depended on circular logic. In short, things must be decentralised because governments otherwise might censor them. Thus, the problem is “the man” and the solution to all problems is more decentralization. The greatest enemy is, thus, the man with the biggest and longest stick, usually the US (e.g. early ethereum folks ended up helping N. Korea to evade sanctions [10]. This first logic problem is intrinsic to the field of cryptoeconomics which, by default, accepts no extrinsic data. That is say, a cryptoeconomics system (for example, a bunch of robots that live by consuming bioelectricity) can be optimally successful by growing as large as possible (i.e. by consuming all of the biomass of the planet). What allow this system to succeed and grow is, thusly, defined as the good of this system. If there is an externality (i.e. the loss of all human and animal life) it will never be accounted for. At no point in the last decade since the term was first introduced has anyone successful introduced any “oracle” that would temper these systems or allow or any external sense of “good.” In short, Milton Friedman’s wet dream has come true, and is being played out around us. Formal economic and private money systems dominate, and there is no law that can contain them. Despite obvious problems in this logic, there is an even deeper flaw. Most decentralisation is fake. No one knows how much, because there is no one you can trust in the web3 to provide accurate information. The classic example from the NFT space is wash trading. It is trivially easy to create 100 account that all belong to you and trade a $69M object amongst them to make it look like there are millions of dollars of volume and, correspondingly, that the value of the jpeg approaches $100M. Naturally, folks not “in the know” will assume that this is a real sale and pile into the new digital gold rush. The classic crypto refrain is, of course, “we know it is a scam but it is good for decentralisation.” In short, decentralisation has become a self-referential religious belief which feeds on itself. The same refrain is consistently used for exchanges, the number of nodes supposedly supporting layer 1 blockchains, and the backing of stable coins. In short, we have created a near utopia for everyone who loves printing money and to join their cartel you must espouse their belief system. The question is, are these systems simply “amoral” (that is, do they exist in a moral vacuum, helpfully provided by postmodernity) or are they “immoral,” do they actually encourage some kind of vice? Moreover, even if one does not accept an extrinsic moral law (i.e. the canon of the catholic church) might one accept that living by tulip cash might create some dangerous instability or unhealthy behaviour? Additionally, one must ask, if a system has been designed to be uncensorable, is there any party that could censor these systems should they require some redirection?"

- Joel Dietz (IDW, April 2022)

Vinay Gupta on the Four Waves of the Crypto Economic Revolution

"Getting crypto built into the web browsers and into the infrastructure of the Internet was the first stage, and the thing that enabled ecommerce. It was probably the single largest transformation that we’ve ever seen in terms of mass consumer adoption of cryptography. Cryptography built into Web browsers is the thing that created multiple trillions of dollars of value in the form of the entire ecommerce ecosystem, and then the Web 2.0 ecosystem that survives on advertising largely driven by ecommerce. All of that was cryptography; prior to the building of the crypto into the Web browsers there was no ecommerce, there were no credit card transactions online, there was really nothing but documents. So, we’ve already gone through one almost industrial revolution in real-world asset trading driven by crypto. The second huge transformation was the creation of SIM cards. SIM cards and bank cards that have chip and PIN and all the rest of these kinds of things were the first real large-scale adoption of hardware cryptography, that was when we started having cryptographic algorithms embedded in chips, which gave you a completely new kind of security. Then, the next turning point, the third, is the Bitcoin whitepaper. ... Finally, in the fourth step, Ethereum made it possible to run decentralised applications on the blockchain, making NFTs and DeFi possible. "

- Vinay Gupta [11]

Beyond the False Dichotomy of Markets vs States

"While the hunt for liquidity and profit is a significant driver in crypto, the community and technology are not fundamentally based in this vibe — rather it is an offshoot of more systemic geo-economic dynamics. At its most innovative, crypto represents transformative possibilities for distributed, privacy respecting communication and coordination. The real prize is not crypto’s potential as decentralized private money (to the extent private money will exist, it will most likely be monopolized by large telecommunication entities) but that it suggests a new infrastructure of communication and an expert class devoted to its development. If one lives with privilege in a society, the concern with surveillance of that communication is perhaps less pronounced. But for much of the world and much of history, a healthy anti-authoritarianism wary of surveillance is a friend of freedom, progress and well-being. Framing crypto as a money fight requiring legacy arrangements to step in and take over is too big brother, too neoliberal.

On the non-left, colleagues are often ‘anti-centralisation’ and anti-regulation. They forget that there is always already background institutional rules (markets aren’t ‘natural’) and that centralisation isn’t a fact, but a characterisation in that you can always describe something as decen/centr depending on whether zoom in or out (much like ‘time’ being long or short), and even if we could approximate it. Nor does decentralisation result in transcending hierarchy. To fragment authority and set practices means you need standardisation to achieve efficiencies, and standardisation means over time cutting down on innovation and usually being captured by concentrated power or at least its logic. In other words, it doesn’t avoid the problem, it just shifts the terrain a bit. Out with the old boss, in with the same-ish boss.

The point here, is that whatever position one has, the point is we should consider shifting away from tired debates championing ‘the markets’ or ‘the state’ since these are largely metaphysical/rhetorical terms that can be flipped around endlessly and captured politically. To speak of a state as a fixed entity is to ignore its messy porous boundaries, replete with public-private arrangements, acrimonious stakeholder interests and warring administrative processes across local, regional and global terrains. To speak of a market as if existing outside politics is to pretend that its arrangements reflect legal regimes (e.g., contracts, property) formalising polity/political decisions — changing a background law can change a business model that can shift cultural behaviors and market reasoning. And often, the struggles seem to be less about actual politics or analytical clarity, and more people getting caught up in some sort of culture war with based on stylistic/rhetorical/experiential comfort zones."

- John Haskell [12]

Investment/Plutocracy vs Democracy

"If we have democracy, capital attraction, and treasury utilization efficiency, we have the trilemma of DAO governance.

1) Once we maintain democracy and treasury efficiency (considering the community as a parameter for what would be effective), we lose capital;

2) If we maintain the efficiency of treasury utilization and want large values ​​inside the DAO, we lose in democracy;

3) And if we want democracy and capital attraction, we lose treasury utilization efficiency, since democratic decisions can lead to slower processes and mutual concessions, which can impact resource allocation efficiency."

- Danimim [13]

Key Resources

Key Articles

• Intro: The Blockchain Economy: A beginner’s guide to institutional cryptoeconomics

• Foundations of Cryptoeconomic Systems. By Shermin Voshmgir and Michael Zargham. WU Vienna, Working Paper Series 1/20 [14]: very important to understand what problems CE is trying to solve, what it makes possible as successor economics, and on what scientific disciplines it is based.

• Limitations of Cryptoeconomic Governance Mechanisms. By Nathan Schneider.

• Coops Based on Cryptonetworks. Jesse Walden: "we believe that cryptonetworks — what we call “community owned and operated networks” — could unlock a new paradigm for continued cooperation, while still sustaining strong network effects".

• Jeff Emmett on the Commons Stack project: Towards an ‘Ostrom Compliant’ Cyber-Physical Commons + Aligning Cryptocurrency Incentives To Finance Positive Externalities

• Most Cryptoeconomics Do Not Challenge Neoclassical Premises + Potential of Cryptotokens as Innovative Units of Account

* IMPORTANT: Why Bitcoin would be a economic disaster as world standard: Yanis Varoufakis on Bitcoin's Economic Fallacy of Composition

See also:

• Please read this very good overview of Metacurrency / Holochain and Economic Space Agency projects: The state of the art of co-designing digital ledger technologies for commons and common good. By Dan Diojdescu. [15]

Please read: Will Ruddick of Grassroots Economics on the Characteristics of a Fair and Decentralized Currency System

• Davidson, S., De Filippi, P., & Potts, J. (2016). Disrupting governance: The new institutional economics

of distributed ledger technology. SSRN Working Paper https://dx.doi.org/10.2139/ssrn.2811995

• Davidson, S., de Filippi, P. and Potts, J. (2018) ‘Blockchains and the economic institutions of

capitalism’, Journal of Institutional Economics. Cambridge University Press, 14(4), pp. 639–658. https://doi.org/10.1017/S1744137417000200

• Davidson, S., De Filippi, P., & Potts, J. (2016). Economics of blockchain. Available at SSRN 2744751.

https://dx.doi.org/10.2139/ssrn.2744751

ECSA

• Redesigning Markets Through Different Distributed Network Protocols‎ : "Transcending Hayek and his digital disciples: the market, prices and profits as protocols"

• The Influence of Hayek on the Crypto Economy

Key Books

• Protocols for Cryptoeconomic Networks. the Economic Space Agency's White paper. By Dick Bryan and Akseli Virtanen.

• Radical Markets

Key Podcasts

• ECSA on Transcending Hayek and his Digital Disciples [16]

ECSA is probably the most sophisticated project to come out of the peer to peer commons movement.