Three Scenarios for a Turbo-Charged Crypto-Future

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* Article: ‘Ron Paul Maoism’: Why and how are ‘propertarian’ libertarians carrying out Karl Marx’s program of societal transformation ? Bonus: Three scenarios for a ‘crypto’ based turbo-charged ‘translocal’ future. Michel Bauwens, December 2023.

URL = https://4thgenerationcivilization.substack.com/p/ron-paul-maoism-why-and-how-are-propertarian

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Michel Bauwens:

Let’s start with my interpretation of Karl Marx’s theory of the advent of the socialist and communist societal forms. I stress that we are here delving in Marx himself, and not with his later interpreters, such as Lenin.

Marx saw capitalism as an extremely dynamic social form, but which created the social force that would transform it, and he saw this as a phased process. First was the transformation process itself, i.e. the ‘revolution’, but bear in mind that for a long time, he believed this would have been a democratic process and that the worker’s parties would obtain electoral victories (this is documented in Hal Draper’s four-volume biography). This victory would have installed a socialist society. Socialism was defined in a very specific way: as a society where exchange would become fair. In other words, the commodity form would persist, but labor would receive a fair wage, and the surplus would serve for societal, and not private purposes. As Marx would have put it, the ‘law of value’ would still be in effect, i.e. the market, though not ‘capitalism’. Various forms of property would also persist as would the state, as the state functions as arbiter for social conflicts. But, and this is important: the state would gradually wither away, as the self-governed civil society would develop more and more ‘functional equivalents’ to the bureaucratic state form.

It is only in the third phase, what he called ‘communism’ proper, that the law of value would die out. Indeed, as he predicted material abundance, the need for exchange would wither away, and everyone would contribute according to their will, and everyone would use according to their need. In this phase, the state would have ceased to exist. Now obviously, Marx got a lot wrong, his predictions did not materialize, and the ‘revolutions’ which took place and created ‘really existing socialism’, were entirely state centric, some would even say, a form of ‘state capitalism’.

Now let’s focus on what actually happened under ‘really existing cognitive capitalism’.

The developments have been quite remarkable:

First of all, there is the development of the open source and free software movement, which has to be seen as a ‘really existing communism existing within capitalism’. Open source systems are open ‘holoptical’ and transparent ecosystems of production of ‘immaterial’ assets’ (software, knowledge, design), in which contributors are free to contribute or not, thereby creating a collective resource, which can in turn be used freely, including by market forces. So it follows the technical rules of communism, but entirely surrounded by the capitalist society, for which it has paradoxically become an absolute necessity. All the big ‘netarchical’ firms, i.e. cloud capital, could not exist without free software as its basis. Whereas historical capitalism was commons-enclosing, the new cloud capitalism is commons-exploiting. It has moved from exploiting commodified labor, to directly profiting, through rent extraction, from human cooperation.

In some respects, the crypto phase of development of the immaterial economy could be seen as a regression, towards socialism that is. The problem of open source was indeed that it relied on free labour, i.e. students, unemployed, employees of the state and businesses, that did open source ‘on the side’, and constituted at least 25% of the free software producing workforce, as for example documented in Linux. The problem was that the market-interfacing part of the production was able to earn a living, while the non-market interfacing producers were often not paid. All of the people can volunteer some of the time, some of the people can volunteer all of the time, but not all the people can volunteer all of the time. This in a nutshell, was the problem of ‘social reproduction’ for commons-based peer production in its open source format. Crypto has solved this by creating a very successful market interface, creating commodity currencies and tokens which can fully profit from the future-speculating value activities of capitalism, and not only reserving a substantial part of this revenue to pay developers, but has created on top of this created a ‘public goods’ funding mechanism as well. Crypto can now very efficiently fund its own common infrastructure. Let me remind the readers that the crypto world is very community oriented, systematically creates commons, and is funding them, while at the same time, being a functioning part of the capitalist system as it exists today.

However, crypto does not represent your grandfather’s or grandmother’s capitalism but a very new type of capitalism: networked-based capitalism! The old capitalism was based on separate firms, hiring workers, and producing commodities. The new networked-based crypto capitalism is based on contributory dynamics in an open network.

Think of the history of exchange mechanisms as existing first, in hunter-gathering based societies, on gifting and commoning; then, in the ‘civilizational phase’ (i.e. division of labor, classes, writing, cities, agrarian, industrial and cognitive respectively), as based on markets and states. Both state and market institutions are closed entities, and they compete with each other. And this is where accounting comes in. The first ledgers, found in Sumer and regulating the ins and outs of resources in the temples, were the basis of the state form, and ‘taxation’; then with Lucio Pacioli in the 15th cy, the double entry book accounting creates the accounting technology for emerging capitalism (capitalism precedes it but only becomes dominant over other forms starting in this period). Accounting reflects ‘how we see the world’ and how we allocate resources, i.e. ‘Who gets what’. States are not responsible for what is outside of them, and neither are firms, their accounting does not show impact and contribution! These are ‘narcissistic’ accounting forms.

Networked accounting, as it developed first in open source and then in crypto, is fundamentally different. Remember, in a crypto economy, anyone can come in and out of the open ecosystem, all the impacts and interactions are fully visible. But whereas open source succeeded in the mutual coordination of work effort, crypto has created the mutual coordination of payment for that work. But crypto is now in the process of linking these global accounting frameworks to material production. Mattereum for example, allows the linking of any material object to the blockchain, and then creates massive forms of fractional, i.e. distributed ownership. But already today, the accounting systems developed by the open source and crypto worlds, allow for ‘contributory accounting’, i.e. non-market facing work that is useful for the whole network and not just for individual participants; flow accounting, which allows to see how any transaction fits with the whole network; and thermo-dynamic accounting. In one of these accounting systems, R-E-A (resources, events, actions), there is no longer ‘double entry’, i.e.. The very hallmark of capitalist accounting has disappeared! These are therefore, new forms of post-capitalist accounting. The creation of the blockchain, a universal ledger, is the birth of the creation of a global mutual coordination economy that can be fully thermo-dynamically informed, and creates ‘context-based sustainability’, allowing every participating agent to adjust his actions to the common availability of resources.

The paradox is that this system, that is a hybrid combination of hyper-capitalism, socialism, AND communism, unified by a network logic, has been largely developed by developers who are libertarian in orientation, and often ‘propertarians’, i.e. having an absolute trust in private property and the market. But this should not surprise us, and was anticipated by Hegel, when he talked about the ‘cunning of reason’ which implies that the outcomes of historical processes may not align with immediate intentions or conscious awareness. The socialist movement was a particular expression of a particular time, of an industrial ‘working class’ that worked in great numbers in big centralized factories, and at the time, when coordination and transaction costs dictated that only big centralized public institutions like states, were able to coordinate massive action at scale. But this is no longer the case: the current developer class, the coders of crypto, are much more like the crafts workers of the 19th century, who also had a concept, not of centralized and nationalized property under the command of the state, but of distributed property. Their ideology was that of the ‘cooperative commonwealth’ and was expressed in powerful social movements, which existed well into the 1930s, such as ‘Social Credit’, Guild Socialism’, Distributism’. These were paradoxically, pro-market forces, although they at the same time, combated ‘big capital’, and sometimes, the ‘big state’. At that time, they were defeated by the Soviet model of central state planning, by the welfare state model of socially managed capitalism, and by the fascist corporate-state hybridization. But today, in the advanced sectors of capitalism, the workers are now again, craft workers, but, if they own their means of production, i.e. computers, they do not control their means of valuation. And I would suggest, this is the best way to interpret crypto: as the collective project of a producing class that is creating the very infrastructure they need to escape the power of both Big Capital and Big State. But, and this is the cunning of reason, while they are doing this for themselves, they are, at the same time, constructing the very infrastructure of a post-capitalist economy of mutual coordination. I stress, as the word ‘post’ would indicate, that this does not necessarily entail a disappearance of either capitalism and the market, but rather, the embedding of the latter, into an ecological and social network paradigm.

This time, in contrast with their 19th cy forebears, their societal project, while using the mechanisms of the markets and capitalism for their own ends, at the same time, do not rely on the state, but on the self-infrastructuring of the network. To use the language used in the beginning of this article: they are creating ‘functional equivalences’ so that the need for state functions, gradually ‘withers away’. At the same time, internally, they are developing their commons, and anti-oligarchic protocols for governance, which put the community of contributors at center stage and make sure the ‘democracy of contributions’ is as strong, if not stronger, than the democracy of the dollar. Rather than being a mere mechanism of accumulation for the very rich, they are creating a flow of capital for the commons, whereas, this was the limitation of open source, very often, free software created a flow of value of the commons towards capital.

So let’s speculate somewhat on future scenarios, on where this collective effort at infrastructuring may lead us.

Scenario 1: For-profit network states

Many readers here will be familiar with the first scenario, that of Network States, as expressed by Balaji Srivanasan, or softer expressions of the same dream. In this scenario, the wealth created by crypto is mutualized in projects to acquire islands of local sovereignty. This strategy entails creating virtual communities that construct their own mutually recognized sovereignty, while at the same time, negotiating with ‘really-existing’ ‘territorial sovereigns’, to obtain the creation of relatively free ‘crypto-territories’, like Prospera in Honduras. These are very explicitly libertarian-propertarian projects, where the city is a for-profit entity and the citizens are shareholders. Many of these projects are in advanced stages of preparation and I have no doubt that we will see some of them coming into existence in the next decade already. This model is of interest to poorer nation-states which can thereby attract significant investments.

Scenario 2: Localized ReGen Projects

The second scenario hails from the more ecologically conscious parts of the crypto movement, and they use crypto to help create local projects that regenerate local nature and production environments. They may create translocal ‘protocol cooperatives’ that sustain the common translocal infrastructures that they collectively need to thrive locally. These projects though, it seems to me, strive for exclusively local sovereignty, of a more ‘bioregional’ variety.

Scenario 3: Cyber-physical Sovereigns

This is the scenario I am most interested in, and that is, for the moment, ‘in preparation’, by quite serious actors. In this model, alliances of Regen projects created a mutual infrastructure of formal ‘social sovereignty’. So think of several regenerative projects at a local, or non-local scale, that combine their forces in a unified proto-sovereign structure, not based on a single territory, but on a combination of both distributed physical projects and distributed online coordination of work and funding. But by explicitly declaring some form of sovereignty, and backing it up, say by some form of mutually agreed common taxation, they are able to produce ‘bonds’ for financing, and guarantee some form of fair return for investors. In other words, in this scenario, the existing world of geographical nation-states would be enriched by a second layer of non-geographical sovereigns. It combines elements of scenario 1 and 2, and so differs from scenario 1 by its regenerative focus, but differs from scenario 2 by its explicit ambition to achieve sovereign financing.