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

"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]

"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)

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 [11]: 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. [12]

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 [13]

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