Crypto-Current (049)

§5.3 — The narrativization of monetary history which has come closest to gaining mainstream acceptance is the evolutionary model of Carl Menger, which describes the emergence of money – or ‘indirect exchange’ – from out of a primitive barter economy, as a solution to the ‘double coincidence of wants’.[1] Menger emphasizes the specific coordination problem involved in transactions by barter, which is the combinatorial explosion of ‘direct’ (and terminal) exchanges. “These difficulties would have proved absolutely insurmountable obstacles to the progress of traffic,” Menger insists,[2] “and at the same time to the production of goods not commanding a regular sale, had there not lain a remedy in the very nature of things, to wit, the different degrees of saleableness (Absatzfähigkeit) of commodities.”

§5.31 — Commodities are not equally ‘saleable’ or commercially disposable, and it is from this diversity that the differentiation of money from the world of commodities takes place. The transitional stage, within Menger’s account, corresponds to the rise of a special commodity, marked out by its peculiar Absatzfähigkeit. The ready acceptance of such intermediate goods within systems of barter exchange, due to their convenience for re-sale – i.e. their liquidity – spontaneously anticipates the monetary function.[3] To re-iterate the kernel of Menger’s analysis, at the risk of redundancy: the Absatzfähigkeit of precious metals “is far and away superior to that of all other commodities” (and, compared to this virtue, their traditionally-recognized merits are theoretically relegated to mere “concomitant and subsidiary functions of money”). The genesis of money is thus attributed to a self-organizing process of commercial abstraction, in which liquidity plays the supreme role.

§5.32 — Liquidity cannot be extracted from its commercial context. It translates with great fidelity into acceptability, and thus conceptually converts an extrinsic feature – the degree to which an item of whatever kind encounters general market receptivity – into an intrinsic property. Liquid assets will be readily ‘taken off your hands’. They constitute the negative of commercial friction, or resistance, which approaches its minimum in money. (“Everybody needs money. That’s why they call it ‘money’.”[4]) Since markets – whether comparatively concrete or abstract – are nothing but zones of asset liquidization, they tend to convert everything they touch into ‘money’ at some level of intensity. Anything that can be marketed has a monetary aspect, which is to say that it could – under counter-factual conditions determined by the absence of any superior commercial medium – become money. We return, always, to cigarettes in concentration camps as a reality anchor. Money, fundamentally, consists of market-participation tokens. It need only be swappable. What demotes any such thing, below the threshold of monetary status, is not its own essential deficiency, but always and only better money. It is better money that defines money effectively, while retro-projecting an original idea.[5]

§5.33 — Examples of extreme social relapse – accompanying the destruction of monetary systems through hyperinflation – are regularly invoked in support of Menger’s story, because they resuscitate its basic features through regression. When money dies, societies appear to recapitulate its primeval forms – seizing desperately upon candidate ‘general commodities’ such as cigarettes – on their path of descent back into the dysfunctional tangles of barter relationships. It is especially notable that under such conditions it is the promissory aspect of money, as credit (corresponding to a liability accepted by another party), that leads the way into worthlessness. Hyperinflation is a catastrophic break-down in trust, when the value attributed to the solemn word of the issuing authority is rapidly re-set towards zero.

§5.34 — The Austrian narrative corresponds to an anti-politics, in which the legitimate domain of concentrated public action is subjected to systematic constriction, in accordance with a radical skepticism regarding both its theoretical sufficiency and its practical efficiency when compared to the history and prospects of spontaneous coordination. Inevitably, therefore, the most significant antagonists of the Austrian orientation are those committed to a defense of politics – one that is equally, and reciprocally, both descriptive and normative. In recent times, the most influential account in this vein has been advanced by David Graeber.[6] The basic tendency of Graeber’s historical reconstruction, which folds economics into the politics of debt, makes it emblematic of the anti-liberal philosophy of money in general. It can therefore be taken as exemplary.

§5.341 — Rather than tracing the origins of money back to a process of spontaneous order, in the Austrian fashion, Graeber binds its history to the state. The primordial linkage of money to a ‘universal commodity’ is de-emphasized relative to its political-economic functions of taxation and debt accountancy. According to this narrative, the principal historical secret of money lies not in the facilitation of trade, but in economic exaction by social elites. Standardization is the essential feature, reflecting – and reinforcing – concentrations of power. The large-scale production presupposed by an oecumenic currency depends upon a monetary manufacturing capacity that can only be provided by royal mints, or their modernized equivalents. Abstraction – or formal mathematization – of the primitive social obligations within what Graeber dubs “human economies” leads to a radical intensification of oppression and violence.

§5.342 — The axis within which Graeber’s analysis unfolds is determined not by (commodity) trade, but by obligations, stretching from the fluid reciprocities of primitive societies – and residual “everyday communism”[7] – to the cyclopean power structures of centralized states. Within the latter, as recorded already in the excavated tablets of ancient Sumer (c. 3,500 BC), cash money has been consistently marginalized relative to financial credit. It is this construction that supports Graeber’s inverted sequence of monetary history, which is no longer conceived as an abstraction from commercial traffic, but instead as a commercialization of formalized obligations, beginning with credit as the primordial phenomenon. It is from debt that money is subsequently developed, with barter appended, at the end of the theoretical sequence, as a mutant, terminal annex. Credit and not barter, then, or obligation and not trade. This is, for Graeber, the political matrix in which money is born. An innovation in social hierarchy is its midwife, introducing it to the world through the “military-coinage-slave” complex of the Axial Age civilizations.

§5.343 — It is notable that Graeber considers the Axial Age[8] to be an essentially unmitigated historical calamity. Where Karl Jaspers drew attention to an incomparable cultural awakening, occurring in the centuries around the middle of the first millennium BC, Graeber derives its efflorescence from a revolutionary advance in the machinery of social oppression. The ascription of values is reversed. Yet abstraction is the consistent key to both accounts. Concrete existence becomes calculable on an unprecedented scale. Something like a ‘question of being’ arises. Graeber earns his role in this discussion through participation in the hypothesis that monetary innovation – operating as a spontaneous stimulus to abstract thinking in general – is the basic phenomenon. During the Axial Age the world begins to learn what money can do.

§5.344 — Graeber’s analysis is consistent with a far wider cultural tendency to conceive debt as the principal instance of economic domination (supplanting the classical role of mere destitution in this role).[9] Social contestation over economic flow (profits versus wages) is displaced by a central image of class war between creditors and debtors, radically and fundamentally financialized. This is not a socio-historical construction to be lightly dismissed. The model of political revolution as an insurrectionary extinction of debt, in particular, is productively suggestive. It embeds into itself a theory of post-revolutionary social memory – or strategic amnesia – in obvious accordance with large swathes of historical evidence. The revolutionary ‘Year Zero’ symbolically wipes the slate clean. Evidently, the financialization of capital and its revolutionary negation have modernized in parallel, if not at tightly-bound velocities.

§5.3441 — While the complex historical entanglement of modern revolutionary politics and ancient eschatalogical religion is a well-worked topic far exceeding the scope of this book, it intrudes inescapably at this point, in the specific guise of the jubilee.[10] ‘Redemption’ is a term cutting across the registers of religious and economic discourse, sustained by a consistent appeal for absolution, or forgiveness. From Prophetic Judaism to Graeber’s Debt: The First 5,000 Years, via The Merchant of Venice, Das Kapital, and countless additional examples of anti-usurious polemic, the voice of the debtor has been bound to an apocalyptic promise of forgetting. The obliteration of the secular ledger in the name of a higher accountancy has been the insistent theme. For roughly a century, administrative inflation-tolerance has provided a moderated expression for the same popular clamor. Inflation strikes a compromise with the demand for financial tabula rasa, by erasing debt values incrementally. It is revolutionary redistribution on an installment plan. The veil of the ubiquitous credit system allows inflationary macroeconomics to reach beyond debt, and make the abominated ‘liquidity preference’ of cash accumulators its target. Money as a ‘store of value’ – as economic memory – is brought into the arena of programmatic erosion. In this way a chronic, or normalized, war on money offers a concession to populism that epitomizes the compromise-formation political economy has become. Socialist revolution is forestalled by a continuous debauching of financial signs, but in this way it is also executed. Macroeconomics delivers eschatological communism in slow motion. An explicit attraction of discretion-protected crypto-currency is making such deals unobtainable.[11]

§5.345 — Initially at issue here is the sanctity (or sacrilege) of the free contract – an essential pillar of the liberal social order from the perspective of the right, an objectively-merciless formalistic extravagance from that of the left. Supporting these contrary judgments are diverse ethnographic orientations inclined, respectively, to the naturalization or denaturalization of commercial life (with Smith’s “propensity to truck, barter, and exchange one thing for another”[12] at one end of the spectrum, and Graeber’s “everyday communism” at the other). Providing consoling doctrines, respectively, to the ‘haves and have-nots’, this axis of variation reflects an antagonism no less durable than the human species itself (and quite possibly more enduring by far). There is a liberal and a socialist End of History, and neither unambiguously approaches. This is what any social animal – poised between the tiger and the mole-rat – should expect. Persistence of ideo-political conflict is the safe prediction, with the corollary that partially-insecure property is the socio-economic norm. Projects to strengthen or weaken property security – that is to adjust its degree of political insulation – mark the PPD like traffic indicators, illuminating its basic axis, and describing the great games.  


[1] In chapter 17 of Human Action, Mises refers to this narrative as: “an irrefutable praxeological theory of the origin of money.”

[2] ‘On the Origin of Money’ (1892): http://www.monadnock.net/menger/money.html

In ‘Shelling Out’, Szabo integrates the problem into game theory. “Barter requires, in other words, coincidences of supply or skills, preferences, time, and low transaction costs. Its cost increases far faster than the growth in the number of goods traded. Barter certainly works much better than no trade at all, and has been widely practiced. But it is quite limited compared to trade with money. … Money converts the division of labor problem from a prisoner’s dilemma into a simple swap.”

http://szabo.best.vwh.net/shell.html

[3] For an illuminating discussion of the re-emergence of intermediate goods in the wake of the gold standard, see Nick Szabo’s ‘Two Malthusian Scares’ (2016): http://unenumerated.blogspot.hk/2016/02/two-malthusian-scares.html

[4] This is to repeat the line from David Mamet’s Heist that is cited at the start of this book. Beyond the humor, it is perhaps the most insightful contribution to political economy to be found within the history of cinema.  

[5] Upon being asked to predict what Bitcoin would ultimately come to be called, Pierre Rochard offered the acute response “Money.” The absence of anticipated qualification is, of course, the critical point. Superiority predicts eventual normality. The forecast runs: First Bitcoin, then ‘standard crypto-currency’, then ‘computer money’, finally ‘money’. Something roughly like this has to be probable, even if the prediction is implicitly revolutionary.

[6] Graeber’s argument is detailed in his work Debt: The First 5,000 Years (2011). The author’s academic foundation in anthropology makes it philosophically tempting to categorize his work as an empirical revolt against transcendental – or a prioristic – economic theorizing (of the kind exemplified by Austrian praxeology), and it has been frequently defended on these grounds. Perhaps the most crucial empirical observation, which has already become a staple of anti-liberal monetary theorizing, is the remarkable absence of anything approximating to a ‘barter economy’ within the record of historical anthropology. The primordial commercial problem, for which money is proposed as solution, has little obvious instantation among human societies – past or present. The pertinence of this apparent fact is irreducibly ambiguous, however, since an economic order based upon barter, even in the terms of the liberal analysis, clearly cannot be conceived as a stable – and thus enduring – social equilibrium. The absence of barter economies from the ethnographic and historical record is thus predictable as a selection effect (with the radical maladaptation of these systems – i.e. their intrinsic inclination towards extinction – exempting them from the domain of empirical evidence). We do not see them because they do not work. For a succinct Austrian riposte to Graeber’s theory of monetary history (along these lines), see Robert P. Murphy’s ‘Origin of the Specie’ http://www.theamericanconservative.com/articles/origin-of-the-specie/

[7] Graeber’s fascination with the entanglement of debt and definite moral ideas is overtly indebted to Nietzsche’s On the Genealogy of Morals, down to the details of its etymological observations. In particular, the moral-economic ambivalence of Schuld (guilt / debt) is crucial to both. It can be predicted with some confidence that this Nietzsche text – untimely in a way that is only now becoming starkly apparent – is set to acquire a special prominence among the emerging conditions of the 21st century, as the foundations of contractuality are subsumed into the technosphere, and thus require explicit formulation.  

[8] Karl Jaspers coined the term ‘Axial Age’ (Achsenzeit) in his work The Origin and Goal of History (Vom Ursprung und Ziel der Geschichte, 1949). Thinkers of the Axial Age include Laozi (Lao Tse, 6th-4th century BC); Kongzi (Confucius, 551–479 BC); Li Kui (455-395 BC); Mozi (470–c.391 BC); Yang Zhu (440–360 BC); Mahavira (599–527 BC); Gautama Buddha (c.563-483 BC); the authors of the Upanishads (from 6th century BC); Thales (of Miletus, c.624–546 BC); Anaximenes (of Miletus, 585-528 BC); Pythagoras (of Samos, c.570–495 BC); Heraclitus (of Ephesus c.535–475 BC); Aeschylus (c.525-455 BC); Anaxagoras (c.510–428 BC); Parmenides (of Elea, early 5th century BC); Socrates (c.469–399 BC); Thucydides (c.460–395 BC); and Democritus (c.460–370 BC), among others. The origination of philosophy in this historical episode is scarcely deniable. The Neo-Marxist explanation, re-animated by Matteo Pasquinelli, is rooted in the work of Alfred Sohn-Rethel and the identification of real abstraction. Philosophy is located downstream of a distributed cognitive machine, activated by the creation of money.  

http://onlineopen.org/capital-thinks-too

Our question ‘what can money do?’ is thus modulated by the compelling hypothesis that to be included among the things money has already done is the initiation of philosophy. According to this understanding, ‘philosophy’ – defined so broadly that it comprehends even the birth of systematic mathematics (Euclid) – is a side-product of social monetization. Its cognitive machinery cannot be accurately specified at any level that falls short of commercial process. The conceptual equation does not precede the exchange relation. In the beginning was the swap.   

[9] A Malthusian lineage passing through David Ricardo’s Iron Law of Wages made the primary contribution to the classical Marxian analysis. The identification of a socio-historically contingent ‘natural’ or equilibrium tendency for wages to approximate to a subsistence income, under conditions of chronic labor supply glut, was the prediction that propelled the Marxist analysis to its peak of popularity – at least in the West – during the late 19th century epoch of mass proletarianization. It can surely be no coincidence that the recession of this paleo-Marxist immiseration thesis – among conditions of comparative generalized abundance – have been accompanied by a redirection of critical attention from the commoditization of labor to the registration of accounts, associating economic oppression with debt peonage, rather than absolute destitution.  

[10] The Jubilee (yovel), referenced already in the Torah (or Pentateuch), is the culmination of a – seven-times-seven – 49-year meta-cycle, in which ‘the slate is wiped clean’ by debt-forgiveness. Every seventh year of the ancient Hebrew calendar was a shemita or fallow year, of which the Jubilee is evidently an extrapolation. (The modulus-seven pattern is generally accepted by scholars based upon overwhelming evidence, notwithstanding the description of the Jubilee in Leviticus 25:10 as the ‘fiftieth year’.) Within the cyclic system of the jubilee, debt-annihilation appears as an equilibrium function. The regenerative (positive-feedback) tendency of money as proto-capital is capped by a circuit-breaker. From the perspective of human social conservatism, there is no doubt a perennial wisdom in this, even if it runs directly contrary to the trend of the modern (Ashkenazi) contribution to finance capital in its attainment of historical escape velocity. Any deeper venture into the ironies of Jewish socio-economic history exceeds the ambitions of the present work.  

[11] Absolution is the theological model of the reversible commitment, and thus of time annihilation. Time cannot forgive, by definition. It is non-retraction in-itself. Only within a soteriological construction of eternity can what is done be undone. To be saved is to be rescued from the intrinsic consequences of time. Can there be serious doubt that the project of reversing the irreversible provides the final content of modern political dialectics, and especially of ‘revolution’ in its dominant modern sense as applied soteriology? Aufhebung is absolution, undisguisedly. The transmission mechanism, from theology to political history, is provided by the Nietzschean insight (from On the Genealogy of Morals) that institutional slavery has a humanistic origin, offering immediate respite from execution, and mediate opportunity for redemption, to a defeated enemy. In this context, deferred settlement is mere contingent survival, or mercy in the form of time. Primordially, the condition of slavery is a stay of execution. One owes everything to the hesitation of the killer, within which a transition from military history to economic history surreptitiously takes place. Debt peonage is the bridge.  

[12] See: The Wealth Of Nations, Book I Chapter 2.

Crypto-Current (048)

§5.2 — To entertain money as an explicit object of philosophy is immediately to question the conceptual interconnections between its essential qualities. A threshold of controversy has already been crossed, therefore. From the perspective of a certain mode of empiricism, the neglect of this topic expresses a positive intellectual virtue (with the presupposition of systematic order as its corresponding vice). As a matter of objective irony, or something that effectively masks itself as such, those cultures most conducive to the reign of money have been those most instinctively dismissive of its transcendental dimension. Money does not seem to favor philosophical attention. In this, one might suspect the crypto-current at work. Empiricism casts subtle shadows, whose darkness is deepened by a secondary occultation.[1] Quite imaginably, philosophy enters this terrain as a disruptive intruder, whose gaze is damage. Yet, in the end, whatever is denied access will simply not pass the gates. The secret secures itself.

§5.21 — Any modern philosophy of money proceeds as a transcendental deduction, guided by the question: How is economic calculation possible?[2] The foundation for an answer is comparatively solid. Money is the condition of possibility for the existence of prices, and therefore for the commercial object (in general), by definition. Insofar as objects of economic intelligence exist, money is presupposed as a calculative principle, an ideal, or virtual machine-function, irrespective of its more-or-less adequate concrete incarnation. When talking of ‘ideal money’ in this context, reference is not being made to a superior – still less a perfected – type of money, yet to be actualized, but rather to the abstract money emulated to a greater or lesser degree by any actual currency system (in the way any actual computer emulates a Universal Turing Machine). Any concrete monetary system necessarily draws upon an abstract idea of money, which is operationalized in advance of its explicit theorization. This relation has effectively foreshadowed – and even predetermined – the fundamental problems of philosophy.

§5.22 — As Whitehead famously noted, philosophy subsides back into its characterization as “footnotes to Plato” as into a sucking equilibrium. However it advances, the primordial captivation is unbroken. The temptation, always, is to refer sensible actualities to their ideas. What is the truth of things? Such a problem exists, compellingly, from the moment there is an economy of prices, and perhaps not before. The priced – or commercial – object models the elementary provocation to philosophy, because any such entity has been converted into an accident of its own value. It thus, intrinsically, suggests an Idea, of which it is a mere instance. Concretely – and ‘sub-philosophically’ – every priced object implies a virtual relation to ideal money (which acquires definition to a greater or lesser extent in the unit of account). While ideal money is scarcely less elusive than the Platonic Forms, it is nevertheless able to support realistic teleological expectations. It exercises effective selective pressure upon any actual monetary system, under the guidance of inevitable, distributed preference for those that incarnate the tokenization of value at a superior level of ideality (as exhibited, prismatically shattered, in the six qualities). In comparison to money, the Platonic εἶδος is no less durable (eternal), scarce (singular), divisible (or, at least, distributable among particulars), communicable (teachable), fungible (self-same across all instantiations), and verifiable (or philosophically demonstrable). It is tempting, therefore – regardless of the irony involved[3] – to understand money as the model of idealization. By practically defining that which remains equivalent across a transaction, money cannot avoid making abstraction a cultural topic.

§5.23 — Money is the sign that names, or denominates, price. Unlike a signification, or designation, this semiotic function is allocative, which is to say that it is executed in the process of payment. Money ‘speaks’ in being spent. When saved, or reserved, its meaning is virtualized, and is even constituted in being virtualized. Abstraction – from the concrete item of expenditure – is expressed as a definite potentiality, or set of quantitatively-delimited economic options. Money’s spontaneous logical medium is modality. Within it, the potential conversion of property finds distinct expression (‘as such’). Whatever finds itself priced is marked by commercial contingency (or formal exchangeability). Extracted automatically from the dull domain of the merely given, any such priced-object now manifests an Idea, peculiarly, and precariously. Its concrete reality is now reduced to a mode. Thus, factuality is spontaneously subverted by commercialization, in becoming a more-or-less liquid instance of a general abstract substance. Being acquires its philosophical dimension.[4] At the extreme, therefore, an identity is ventured between the ‘invention’ of money and the origin of pure thought. The concept belongs to commercialism.

§5.24 — Broad consensus concerning the essential properties of any monetary medium has been consolidated over the course of millennia. The initial enumeration of these properties is best represented among the ancients by Aristotle, who recognized durability, divisibility, convenience, uniformity, and ‘intrinsic value’ as qualities of money. By the time Adam Smith wrote his The Wealth of Nations the distracting metaphysical error of intrinsic value had been discarded, while the essential properties of money were simultaneously abstracted (into ideal qualities) and concretized (through their exemplification in historical monetary media). He writes:

In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce any thing being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be reunited again; a quality which no other equally durable commodities possess, and which more than any other quality renders them fit to be the instruments of commerce and circulation.[5]

§5.25 — For Smith, as for Aristotle – and indeed, later, for Marx as for the Austrians – the abstract conception of ideal money was scarcely to be distinguished from the concrete virtues of precious metals (and of gold and silver in particular). Money, insofar as history had certified it, was metallic coinage, only subsequently – and trivially – supplemented by its paper representations, or contractual appendages. Between the questions ‘what are the qualities needed by a monetary medium?’ and ‘why have precious metals been selected to serve as money?’ there was only the most insubstantial of differences. To understand why gold made good money was to understand what good money is.[6]

§5.251 — Why, then, do precious metals make good money? The entire list of qualitative monetary virtues can be mined from this question. Due to their chemical characteristics as pure metallic elements, they are durable, divisible, and fungible, since they are stable across time, and homogeneous in space (down to the atomic scale). This substantial consistency also makes them conveniently verifiable, as simple, measurable objects of chemical science, and of practical metallurgical assaying. Finally, but no less importantly, their comparative rarity makes them economically scarce, hence potentially valuable, and – in close proportion to their ratio of value-to-mass – also portable.

§5.252 — Yet, despite its close approximation to the ideal type of a monetary medium, precious metal is not – in itself – money.[7] To become money it has to be minted, or converted into a sign. A concrete example is provided by the silver penny, the most widely-accepted monetary unit of the European pre-modern period.[8] The direct descendant of the Roman denarius, dating from 211 BC, the English penny (containing 1.3-1.5 grams of silver) was introduced in AD 785, during the reign of the Mercian King Offa, and persisted with only superficial changes for over nine centuries. It is of particular importance to note that the penny was – to modern eyes – an extraordinarily self-referential sign. What it signified was at the same time what it incarnated. This was captured in the perfect – and to pre-moderns simply tautological – equivalence between the expressions ‘one pound is worth 240 silver pennies’ and ‘240 silver pennies weigh one pound’. Silver did not back money, but was rather directly minted into money. The subsequent dissociation of monetary value and precious substance was essentially alien to the pre-modern world. It was only through the debasement of the currency – the archaic monetary manifestation of the DSP – that the difference gained episodic purchase, and then only as a blatant corruption of the currency in question. Coinage is primordially a medium for conveying precious metals into commercial circulation. It shares the economic principle of packaging. In both cases value creation is non-negligible, but also incidental. To see in coining an anticipation of money production of a modern type and scale is thus to entirely misconstrue it. Despite its extreme abstraction, the return of coinage in the mode of crypto-currency is the carrier of a deep conceptual revision, and even a reversion. In its new sense, no less than its old one, a coin is a regular sub-section of an asset-reservoir, sized for commercial convenience, which is to say that it is an actual part of a qualitatively-consistent resource. In neither case does the coin acquire this character simply by saying what it is. Allocation is its irreducible, and non-derivative, semiotic function.

§5.253 — Questions concerning the essential nature of money find themselves slipping backwards, unconsciously and automatically, into a description of the historical instantiation of money, which is a topic dominated – massively – by the function of precious metals within complex societies. It is only through appeal to paleo-anthropology, exotic ethnography, or the history of established modernity, that such questions can refer themselves concretely to anything else. Money has been gold, silver, and copper coinage,[9] with only primitive, anomalous, and sophisticated exceptions. 


[1] This is the sphere of the unseen unseen, or Donald Rumsfeld’s “unknown unknowns”. It consists of shadows which themselves escape observation, even as zones of obscurity. The topic of things that elude objectivity essentially impels extreme abstraction, since it determines concrete instantiations as inadequate in principle. Whatever you can see isn’t it. ‘Clearly’ the discovery of things-in-themselves within transcendental philosophy is inextricable from a problematic of this kind. We can only suspect that money-in-itself is our topic, pursued on an undercurrent.

[2] A transcendental deduction of money is nothing but a modern philosophy of money pursued with systematic method. It is not the object of possible experience that primarily concerns such a theoretical exercise, but rather the object of potential exchange, i.e. the commercial entity, or – in its most general sense – the economic commodity. If a formula is required to support this philosophical displacement, or analogy, it is that commerce counts as experience for the market. This is not to propose strong priority for the phenomenological register, as a basic or final reference, but only actual precedence within philosophical history. An alternative order of priorities is in fact more compelling. Money makes minds. It does so, already, with nothing beyond an abacus, and far more so in the epoch of industrializing artificial intelligence. Money is the ontological correlate of commercial calculation. Without it, there could not be pricing. It is a thing that supports or even actually induces thought, within a domain whose limits are not readily fixed. The edge of commercialism is less a boundary than a frontier. It is the primary practical task of enterprise to push it ever further outwards. It betrays imperfection in a money system when it intrudes upon the calculation of whatever it prices. Hence there is an intrinsic tendency to the transcendental, i.e. to the frame of objectification which is itself withdrawn from objectivity. Money, like a shop window or commercial display case, is not meant to get in the way. It is hidden in the way of the open secret. The cryptographic affinity is intrinsic. The homogeneity or pure quantity of the commodity as it approaches the commercial ideal is thus concretized as a type of transparency. The perceptual hooks of friction are eliminated. Empirical stimulation is minimized. It is essential to the neutral medium that it flees sensibility. The monetary analog of an aesthetic establishes commercial continuity in space and time. Durability and communicability translate into an indifference to locality (in time and space). Perishable money could be ‘good’ only now, or for a while, just as immobile money could only be usable here. The radical imperfection of either characteristic is self-evident. The monetary ideal conforms rather to the aesthetic frame as such. It is no less available now as time itself, and it is no less available here than space. Only thus does it ubiquitously frame commercial calculation. (“Your money is no good here” or “any longer” is its negative.) Within its own dimension, this consistency has another aspect. As a fungible and divisible abstract substance, it is characterized by qualitative continuity. Money is everywhere, and always, realized as a finite quantity (an amount). By convention, and for general convenience, monetary value is therefore represented as a (one-dimensional) extensive quantity.

Critical subjectivism requires the identification of definite objectification procedures. Objects are not given, but have to be made. When Marx explores this topic, it is from the side of industrial production, with labor-power as the explanatory term, and money as a dependent fetish. The work immanent to money that is formalized by cryptographic hashing still lay beyond the conceptual horizon. In Deleuze & Guattari’s Capitalism and Schizophrenia we see the subsumption of the Marxian theoretical apparatus into a transcendental industrialism, through an experimental commitment to the integrity of physical and social constitution in the multi-level action of machines. The procedure is near-frictionless. To retreat from the question of production is to withdraw from the process of transcendental inquiry.

For an explanation of the market process as the indispensable locus of price discovery, the predictable reference is Mises’ classic discussion of ‘Economic Calculation in the Socialist Commonwealth’, see: https://mises.org/library/economic-calculation-socialist-commonwealth/html

[3] The irony, of course, being that money is traditionally – at first aristocratically, and subsequently socialistically – despised as the epitome of base value, morally positioned at the antipodes of all idealistic conceptions.  

[4] Standard narrativizations of western philosophy propose an archaic – perhaps primordial – metaphysical option between being and becoming, beneath the theoretical banners of Parmenides or Heraclitus. The dilemma can be formulated in various ways, but its stubborn persistence is an indication of transcendental dialectic (that is, of metaphysical confusion). Heidegger’s formulation of critique has direct pertinence here. Attribution of time-characteristics to being is essentially metaphysical. Neither permanence nor impermanence can have application to the transcendental. The reciprocal critical-skeptical question runs: Is time to be found among things? To answer in the affirmative is to sponsor an ontological reduction of time, identified, and taxonomically comprehended, as something that is. (Max Tegmark is among the most important recent thinkers to articulate and defend such a position explicitly.) When cast in the language of commercial practicality, the fissure splits stocks from flows. A decisive option between the two seems in this case unlikely. Complementary duality (of the Chinese philosophical type) is instead suggested.

[5] See The Wealth of Nations, Chapter IV: Of the Origin and Use of Money.

[6] As Edwin Cannan remarks in his introduction to the 1904 edition of The Wealth of Nations, “Values must be measured by some common standard, and this standard must be something generally desired, so that men may be generally willing to take it in exchange. To secure this it should be something portable, divisible without loss, and durable. Gold and silver best fulfill these requirements.”

[7] While in particular circumstances, exemplified historically by pioneer societies in frontier gold fields, unminted precious metal can be substituted for money, such employment is most convincingly understood as an atavism. Functionally, it is indistinguishable from the usage of such quasi-monetary ‘special commodities’ as cigarettes in prisons. As Carl Menger notes in his essay ‘On the Origin of Money’ (1892), “The peculiar adaptability of the precious metals for purposes of currency and coining was noticed by Aristotle, Xenophon, and Pliny, and to a far greater extent by John Law, Adam Smith and his disciples, who all seek a further explanation of the choice made of them as media of exchange, in their special qualifications. Nevertheless it is clear that the choice of the precious metals by law and convention, even if made in consequence of their peculiar adaptability for monetary purposes, presupposes the pragmatic origin of money, and selection of those metals, and that presupposition is unhistorical. Nor do even the theorists above mentioned honestly face the problem that is to be solved, to wit, the explaining how it has come to pass that certain commodities (the precious metals at certain stages of culture) should be promoted amongst the mass of all other commodities, and accepted as the generally acknowledged media of exchange. It is a question concerning not only the origin but also the nature of money and its position in relation to all other commodities.”

http://www.monadnock.net/menger/money.html

[8] “By far the most common coin throughout the Middle Ages was the silver penny, known in Latin as the denarius. The word was preserved in the Romance languages as the denier in French, the dinero in Spanish, denari in Italian, and denar in Hungarian. The Germanic languages had their own term: pfennige in German, penningen in Dutch, and pence or penny in English. The coin was typically quite small. Now that you know the term and the coin, you understand why pence in English is abbreviated with a lower-case d, as in: £5 3s 5d.” See: http://europeanhistory.boisestate.edu/latemiddleages/econ/banking.shtml

[9] The hierarchical triad of gold, silver, and copper coinage, while comparatively stable in Europe, has not exhibited a wider consistency across time and space. In China, for instance, gold was not monetized until modern times. Nevertheless, geochemical factors – determining the relative abundance of these metals, among other neatly ordered relevant properties – accounts for its attractiveness as an ideal type (based primarily upon European economic experience). It is conceptually convenient insofar as it places the functions of money as a store of value and a medium of exchange upon a spectrum, corresponding to the metallic order, or scale of value density. Braudel’s empirical description elucidates this clearly: “A metal currency consists of a set of related coins: one is worth a tenth, a sixteenth, a twentieth of another, and so on. Usually several metals, precious or otherwise, are employed simultaneously. The West retained three metals: gold, silver and copper, with the inconveniences and advantages of such a mixture. The advantages were that it answered the varied requirements of exchange. Each metal with its coins dealt with a series of transactions. In a system exclusively of gold coins it would be difficult to settle small-scale everyday purchases. On the other hand large-scale payments would present difficulties in a system confined to copper. In fact every metal played its part: gold, reserved for princes, large merchants (even the Church); silver for ordinary transactions; copper naturally for the smallest. Copper was the ‘black’ money of people of small means and the poor. Mixed with a little silver it blackened quickly and deserved its name.” (Vol. I, 458)

Crypto-Current (047)

Chapter-5

Cash Machines

§5 — Reciprocal or circular definition is abysmal – or groundless – and thus traditionally considered suspect, if not prima facie evidence of hopelessly defective reasoning. Unfounded circuitry is naturally disconcerting, when identified in the world, let alone in our thought processes.[1] Under certain circumstances, however, characterized by cumulative bootstrapping, it can be an exceptional index of theoretical productivity. An especially remarkable example, from the perspective of this book, is provided by the intertwining of the questions ‘Is Bitcoin money?’ and ‘What is money?’ In holding these two questions open simultaneously – suspended within the abyss of what we do not know about either – the prospect is opened of learning something about both. What Bitcoin teaches, at a very early stage of apprehension, is that we do not yet have a confident answer to the question: What can money do?[2]

§5.01 — An economical list of essential monetary functions is exhausted by just three indispensable entries. Money provides a medium of exchange, a store of value, and a unit of account.[3] In other words, money facilitates commerce, preserves wealth, and sets a standard for economic calculation. According to a preliminary apprehension, it is a functional trinity of flow, stock, and metric.[4] In support of these functions, money typically possesses a number of predictable qualities, most prominently the characteristics of scarcity, durability, verifiability, divisibility, portability (or communicability), and fungibility. Of these six qualities, the first three are essential to the preservation of monetary value, and the remaining three to commercial convenience. These aspects are reciprocally reinforcing, mutually establishing a standard unit of account (or of credit).

§5.02 — Attempts to establish a robust conceptualization of money’s functional trinity soon run into intricate difficulties. What appear to be merely formal differences, when captured at certain moments, and from limited perspectives, appear amid other circumstances as substantial distinctions, dense with historical contingency, and lacking even minimal ontological integrity. Consider, initially, the unit of account. As Braudel explains:

… these were imaginary units, used for reckoning, for estimating the relative value of coins, for fixing prices and wages and for keeping commercial accounts which could later be translated into any kind of currency, local or foreign, when the time came to move from the ledger to actual cash payment. … One would have to go back a very long way to find the coins corresponding to the money of account – but all such moneys had at some point in the past been real money.[5]

§5.03 — No pure analysis of money, we can immediately see, is able to take us far on its own. A monetary regime is a synthesis – we might want to say an assemblage – consisting of heterogeneous elements mutually composing a functional whole. Insofar as a single monetary medium is able to integrate these elements, in a way that seems to facilitate a subsequent formal decomposition into neatly interlocking functions, a complex achievement has taken place, whose partial invisibility attests to its success – without detracting from its historical precariousness. It is only very late in the real process that a money system is able to appear as the near-perfect incarnation of a simple idea, internally differentiated by a logical structure.

§5.04 — The tension between money flow and stock – corresponding closely to that between commerce and wealth – is no more tractable to confident philosophical apprehension than the (partially abstract) unit of account. It, too, is a complex of ambivalences, wavering uncertainly between formal and substantial distinctions, and subject to dynamic swirls of cross-dependency. It is not only that each of these functions is also partially logical and / or semi-empirical, in itself. The inter-connections between them add further oscillations between logical disjunction and empirical difference. The functions of money as a means of payment (currency, flow) and a store of value (asset, stock), cannot be considered entirely in isolation, since the distinction involves both adjacency (real differences of media, in a relation of complex complementarity) and substitution (switchings between assets, guided by the intensity of ‘liquidity preference’). Money’s logical aspects and its multiple media cross-connect in theoretically inconvenient ways.

§5.05 — For example, the divisibility of money, a purely formal (arithmetical) relation from one regard, is incarnated in a substantial heterogeneity – between distinct metals – from another, and subject in this latter to variations in exchange rate across time. In the European economic tradition, gold ‘divides’ into silver on the basis of an ideal value relation of twelve to one. Yet, in actuality, this ideal was only occasionally, and – once again – precariously realized. The same distinction between monetized metals which played such a crucial analytical function within the monetary system (as an order of divisibility) simultaneously preserved its synthetic characteristics (as an exchange relation between different commodities). Historically, the difference between ideal and actual exchange values generated variations in ‘pressure’ comparable to meteorological conditions, as relative scarcities of gold or silver drove currency units across and beyond continents in storms lasting decades, or even centuries. Formal tokens of accountancy were at the same time the particles of substantial bullion flows. Mathematics mixed with metal, indissociably.

§5.1 — The functions of money will be under continuous examination throughout this chapter. What can money be reliably broken-down into? That is the question techno-frozen into every change machine. When grasped at a sufficient level of abstraction, the philosophical inquiry is not so very different. The logical pieces of money – its qualities – are therefore worth limning, tentatively, in advance. Since it is philosophically discomforting to rest a central analysis wholly upon consolidated empirical generalization (which is to say, upon tradition), the temptation is to search for a relevant principle. Can ‘the six qualities’ of money be convincingly rationalized, from a ramshackle list into a categorical structure, sub-divided in strict accordance with a conceptual principle?[6] Since no unambiguous draft for such a schema is to be anticipated from historical evidence, it can only be supplied as a ‘regulative ideal’ or teleological model – to be excavated from the virtual, on the diagonal path of synthetic a priori construction.

§5.11 Durability, at its most basic, is mere existence, or actual reality, insofar as this is conceived as occupation of time, or the possession of temporal characteristics in general (participation in duration). The monetary excellence of high comparative durability is an empirical feature, but one that is asymptotic to indefinite persistence, or non-locality in time – the limit of constant existence, at which it re-connects with the transcendental. Concrete currencies tend to closely approximate to this ideal. Precious metals, for instance, are indestructible (for all purposes of practical economic calculation). Ledger entries – while necessarily bound to physical incarnation – manifest an intrinsic idealization that approximates even more exactly to an absolute durability (identified with a substrate-independent institutional memory). Perishable goods disqualify themselves from serious consideration as monetary media (unless under very exceptional circumstances).[7] For any store of value, extreme durability is a necessary, if not in itself a sufficient, condition.

§5.12 Scarcity grounds economic value in general. Nothing that is freely available without the inconvenience of trade could conceivably have commercial worth. Abundance begins where economy ends, and Cornucopian thinking is not a type of economics, but rather its general denial. Scarcity finds its mathematico-philosophical outer limit in the concept of ‘finitude’ (since the division of infinity is economically incalculable), but this determination is too expansive to capture it well. Greater purchase is achieved by the notion of difficulty, especially as this is employed by the Bitcoin Protocol. The concept of scarcity is the complement of commercial trade-offs or industrial effort, and thus of economic activity. The scarcity of money presumes a solution to the DSP.

§5.121 — In combination, durability and scarcity provide the foundations of being and value, constituting an – as-yet generic – permanent asset, or (to reverse the order of determinations) an economic substance. At this elementary level of definition, it remains notably non-specific, encompassing such non-monetary assets as real estate, or stocks of imperishable commodities. To acquire a commercial function, as an essential step towards its operation as money, economic substance has to provide for convenient re-allocation. Money has not only to be valuable, but also distributable. (We will see a little later, and finally, that it has also to be credible.)

§5.13 Divisibility enables money to match prices.[8] The divisibility of the monetary medium sets the range of retail pricing options (and the subtlety of potential price competition). While money is only ideally continuous (or infinitely divisible), this condition is practically approximated by an acceptably fine granularity. The smallest unit of money in circulation corresponds to the point of commercial indifference, beyond which variation is considered irrelevant to economic decision making (as mere ‘rounding errors’). The trade-off between standardization of units and delicacy of quantitative differentiation sets an equilibrium point, to which the atoms of the currency approximate. In other words, coarseness is an imperfection relative to ideal money, tolerated for practical purposes. (The massive economic applicability of the calculus does not imply a significant appetite for monetary infinitesimals.) This feature of money acquires a new prominence in the era of digital-electronic micropayments. Already in the early decades of the computer era, it was anticipated that the friction afflicting minuscule monetary units would be electronically eliminable. Ted Nelson’s attention to the question is especially notable.[9] Under these conditions, the zone of commercial indifference – where monetary quantities become ‘negligible’ – has the potential for transformation into a positive attractor. A massively expansive, monetarily hyper-sensitive agora opens distinctive commercial possibilities (extrapolated from those long developed within industrializing consumer capitalism). Minute margins become economically tolerable (in principle), due to the volumetric re-scaling of microscopic sums into significant quantities within Internet-globalized markets.[10]

§5.14 Communicability (techonomically supplanting ‘portability’) measures the degree to which money is transmissable. It is division, or distribution, apprehended not only as an arithmetical property, and a contractual consummation, but also as a physical transfer. Transmissibility is an implicit characteristic of the economic sign. To be in one place, rather than – any longer – in another place, is the irreducible material substrate of every notional re-allocation within double-entry book-keeping. A commercial transaction is always a process of reciprocal transference, requiring – on both sides – a real redistribution (of matter in space). Semiotic subtilization cannot fundamentally compromise this necessity. Even the mere revision of a ledger is never less than a physical event.[11] Nevertheless, asymptotic dematerialization is a real feature of signs under conditions of techonomic escalation, exemplified by electronic information, and the satisfaction of commercial transference by a (micro-physical) revision of accounts.

§5.15 Fungibility is a feature of the economic commodity in general, in the strong (and prevalent) sense of a tradable good undifferentiated by (significant) qualitative variation. By collapsing all dimensions of intrinsic comparison between instances of the same good onto a single quantitative axis, it optimizes the conditions for commercial computation and price competition. The extreme relevance of its application to money strengthens the case for confidently defining the latter as a general commodity (even if such a definition remains incomplete).[12] Without fungibility of money, economic calculation would be drastically impaired – to such an extent that this characteristic is necessarily attributed to the abstract unit of account, as an ideal. This claim attains greater cogency if reversed: It is in order to fulfill the functional requirements of the unit of account that implemented concrete money systems acquire fungibility as an indispensable criterion for even minimal adequacy. Commercial quantities presuppose equivalences, or at least commensurabilities, even if between strictly ordinal-differential preference schedules (of the marginalist type), since they could not otherwise be arithmetically tractable.[13] It is worth noting that weighing already assumes fungibility, and the correspondence of many monetary units to (forgotten) measures of weight is widely recognized. The elementary economic option involves a comparison, with some definite baseline of assumed fungibility providing a condition of calculability. Indeed, the basic concept – and practical institution – of price assumes fungibility. A system of ‘money’ whose instances were in any way better or worse, other than by being more or less, would be unable to compute settlements – even within modest transactions – without the introduction of complex supplementary information (about the monetary medium itself). Since, once again, perfect fungibility is a limit ideal, this problem is by no means entirely hypothetical. We might refer to qualitative interference in money systems as ‘Gresham noise’,[14] especially as this applies to friction within their concrete processes of circulation, and thus to integral illiquidity. The entire techno-political problem of monetary standardization applies here. The practical idealization of money, within digital registers of pure quantities, retains implicit reference to a model of perfect fungibility, appropriate to the mathematical tool, or calculator.

§5.16 Verifiability can be rigorously conceived as a practical extension of fungibility, or as an operational annex to it. It references some definite, practical checking procedure that qualifies money as credible. Dubious money cannot be confidently counted as any definite sum whatsoever. Across the vastly preponderant part of monetary history, the model verification procedure has been assaying. The assay underwrites monetary value determined as a quantity and purity of metal. In the age of paper money, verifiability refers primarily to protection against forgery, or counterfeiting. This characteristic binds money essentially to the production of trust. Money is able to redeem a promise, and thus validate it.  

§5.17 — As an aside, at this early stage in our discussion, it is notable that Bitcoin possesses all six of these qualities, super-abundantly.[15] Its durability is – in principle – absolute, although Bitcoin can in fact be lost or destroyed (see following note); it is rigidly and quite exactly[16] scarce (to a fault, its critics object); divisibility is also unlimited in principle;[17] its communicability is extreme, based on Internetworked digital electronics; its fungibility is also absolute, given any set of realistic assumptions about user incentives;[18] and it is verified automatically in its reproduction cycle. It would be difficult for Bitcoin’s status as money to be more secure, insofar as ‘the six qualities’ are applied as a criterion.


[1] Such concerns, perfectly contextualized for our purposes here, are exemplified by the logical case for the Misesian Regression Theorem (as glossed by the Mises Wiki of the Ludwig von Mises Institute): “For many economists … a marginal utility explanation of money demand [would] simply be a circular argument: We need to explain why money has a certain exchange value on the market. It won’t do … to merely explain this by saying people have a marginal utility for money because of its purchasing power. After all, that’s what we’re trying to explain in the first place – why can people buy things with money …”

http://wiki.mises.org/wiki/Regression_theorem

[2] The suggestion that Bitcoin is about more than money, while often intellectully productive, presumes a confident – if implicit – answer to a prior question concerning the nature and limits of money that is almost certainly unwarranted. In the same way that the world learnt, upon the innovation of Gödel coding (or transcendental arithmetic) that the set of Natural numbers included within itself the precise articulation of all possible formal systems – and indeed all possible configurations of (digitizable) information – precluding its subordination to any higher level of logical expression, so the innovation of reflexive (or self-validating) crypto-currency can be expected to demonstrate that the monetary sphere is no less semiotically comprehensive than comprehended, even potentially. Any consistent philosophy of money is compelled to be fully reflexive, since money is not rigorously determinable as a conceptually transcended object. In principle, money has no less to ‘say’ about philosophy than the inverse. Marxian materialism can be understood – if only partially – as a route to the articulation of this radical nonlinearity, or hierarchical disturbance, although it need not be allotted peculiar privileges in this respect.

The form of the question What can money do? is, of course, to be credited to Spinoza. As in its original instantiation, in the Ethics (“We do not know what a body can do”), the purpose of the question is to stall a premature transcendent resort. Any appeal – whether theoretical or practical – to look beyond money assumes the accomplishment of a preliminary determination that has simply not taken place.

[3] Additional monetary functions have been proposed, including that of a standard of deferred payment, and a measure of value, but these are formally derivable from the function of a unit of account under any reasonable extension of that concept.

[4] The inadequacy of this formulation will prove critical to the discussion that follows. In particular, the over-identification of means of payment with flow, and store of value with stock, obstructs diagonal exploration.

[5] From Fernand Braudel, Civilization & Capitalism 15th-18th Century, Volume I: The Structure of Everyday Life (p.465). 

[6] From the dominant perspective of modernity, which is certainly invulnerable to casual dismissal, any assertion of natural categorical order in the absence of (at least implicit) explanatory mechanics is stereotypically scholastic. By merely describing order, even if in accordance with a superior formalization, a ‘neo-scholasticism’ assumes that which needs to be accounted for. Within the modern natural sciences, in contrast, categorization has been progressively subsumed into a framework of explanation. Whether in biology, chemistry, or particle physics, natural types emerge from genetic mechanisms and intrinsic compositional properties. A biological species is a cladistic unit, generated by an episode of separation (phyletic splitting), and characterized by identifiable gene frequencies. Linnaean classification thus acquires Darwinian explanatory justification. Chemical elements are produced by nuclear processes, and compositionally defined by sub-atomic structure. The particles of baryonic matter, comparably, have a cosmological genesis and compositional definition. The periodic table expresses physical principle, and not merely consistent order. Given these theoretical successes, it is understandable that classification is increasingly conceived by modern natural-scientific intelligence as a mere heuristic, with only provisional and dependent credibility. Order in the absence of theoretical explanation is no longer identified as a self-supporting structure, but as a problem, or research prompt. Patterns are to be derived. They are puzzles rather than conclusions. To think that any serious question is answered by a pattern approximates to a definition of scholasticism. A potentially deadly reflexivity lies latent in this conclusion (which recognizes ‘medievalism’ in thought without explaining it), but it is one that modernity has extreme tolerance to. 

Kantian categories – as non-empirical forms – have some comparative security against the accusation of scholasticism. They withdraw inherent pattern from the empirical order of the natural world. Nevertheless, their apparent arbitrariness is a trigger for suspicion, and their ideality displaces natural-scientific skepticism, rather than dispelling it. (Supernatural foundations are intrinsically incredible to moderns, and even critically-disciplined categories can easily be taken for such.) Yet transcendental structures are not reducible without loss of information. Mechanism does not dissolve the machine. Categories are finally mathematical, with an order strongly analogous to that of the prime number series. Non-tautological apodicticity is the crucial (diagonal) trait. The cryptographic usage of the prime numbers is a demonstration of the transcendental (synthetic a priori) status of the series, and would be impossible otherwise. At the level of pure conceptuality, the number of the categories is an ineluctable consideration. Since causal mechanisms cannot be invoked as sufficient explanatory factors, without submitting to pre-critical error, the order of division demands a logical (or logico-mathematical) principle. The arcane meditations elicited can easily seem Baroque (or even ‘Byzantine’), in the fashion of all sufficiently-elaborate synthetic lock-picking exercises, since they lack any such preliminary principle. The principle comes only at the end. It is proposed here, then – perhaps inevitably – that the six-fold categorical structure of ideal money is founded trans-empirically. History can illustrate, but not explain it.

The order of monetary qualities has necessarily to assume a structure determined by the three semiotic dimensions (of signification, indication, and allocation) doubled by the binary partition of the monetary function between stock and flow. The topological pattern of this double circuit, without transcendent disjunction, is decidedly Möbian. The six essential qualities of money would thus fall into three dyads, according to its suitability for accumulation and exchange under each of its three basic semiotic aspects. In other words, money requires a triple semiotic instantiation as index, sign, and token, all amphibiously adapted to the twin functional requirements of storage, and circulation. Its six qualities exceed factuality. They fall out of a (transcendental) diagram, automatically, as a complex synthetic a priori proposition. What they exhibit is something like a numerical hyper-object, and more specifically a Möbian (or continuously double-sided) triad. If time is money, then three twinned-phases are assumed. The outcome, optimally, exhibits the exoteric finality proper to a transcendental deduction. 

[7] ‘Exceptional circumstances’ in this case includes simple antiquity. A ‘shekel’, notably, was originally a weight of barley. 

[8] Within an urban, highly-commercialized context, the comparatively unusual case, in which the commodity is adjusted quantitatively, in conformity with an inflexible monetary unit, is seen in the phenomenon of the ‘dollar store’. The situation appears remarkable because it involves heterogeneous items, whose accommodation to monetary chunking demands the solution to a puzzle (and perhaps also an abnormal variation in ‘mark-up’ levels). The far more usual case is exemplified by small market transactions of fungible commodities (which can be measured by weighing). It is at the edge of the money economy, where formal currency units, due to their comparative scarcity, enjoy an unusual privilege – and even a numinous exoticism – that such trades become especially typical. 

[9] Ted Nelson’s ideas were so far ahead of the available technology that they struggled for practical relevance. This untimeliness earned him the honorific title “the Babbage of the web” from The Economist magazine. The word ‘micropayment’ is among his many coinages.  http://www.economist.com/node/442985

[10] Capital teleology inclines to the substitution of market-scale for unit-margins, under the pressure of competition. ‘Globalization’ is nothing else. Already in the mid-19th century, Manchester mill-owners notoriously dreamed of “adding an inch to every Chinaman’s shirt-tail”.

[11] Monetary communicability requires successful delivery. For instance, it involves the problem of secure transportation. In the case of all physical monetary media, therefore, the question of communication involves certain gross security considerations. Physical portability of precious materials is intrinsically complicated by the threat of criminal interdiction. In consequence, the communicability of gold cannot be held down to a narrowly economic issue, since it is afflicted by political risk. Nor can the interdiction of gold delivery cannot be dismissed as a merely hypothetical or improbable threat. More generally, a commodity cannot be traded without first tacitly admitting to its possession. FDR’s Executive Order 6102 (1933) criminalized gold ‘hoarding’ within the United States. The very physicality that supported gold’s monetary virtues was thus immediately exposed as a political vulnerability. Without crypto-security, hard money exists only under contingent conditions of state tolerance. Reciprocally, full-fiat currency is initiated by a police action. On both sides, there is extreme sensitivity to the discretion of the state.

[12] Fungibility has been built into the technical definition of the commodity, as the meaning of this word – in its professional economic usage – has narrowed since the 19th century. Within this domain, ‘commoditization’ has been stripped of its philosophical thickness and generality, until it refers only to the loss of product differentiation from any tradable good, and thus to the reign of naked price competition. A commodity in this sense has no intrinsic peculiarities that bind it to a specific producer (though extrinsic differentiation – by spatio-temporal location – still applies). Goods serving as production inputs, especially – but not exclusively – raw materials, are the exemplary case. A slippage in the direction of money thus occurs when sources of supply cease to be differentiated by product quality. Fungibility and quantification are closely-related concepts. Due to their affinity with exceptionally frictionless, highly-liquid markets, commodities (in the narrow, contemporary sense) make attractive speculative assets, and thus operate as (broad) money. The conceptual transition between the narrow sense of the commodity and the broad sense of money is mediated by precious metals. Gold, silver, and platinum, no less than iron, ethene, or consistent grades of petroleum, are defined as commodities by their physical (chemical) properties, grounded practically in standardized extraction and refining techniques. They converge upon product qualities. Fungibility includes an indifference to genesis. It is therefore linked to a definite commercial amnesia. Such anti-memory links it conceptually to the untraceable, as this applies to the hyper-fungible monetary medium of cash. The thing about ‘dirty money is that you don’t know where it’s been. (Literal dirt, however, is Gresham noise.)

http://unenumerated.blogspot.hk/2016/02/two-malthusian-scares.html

[13] Monetary homogeneity – which is to say, the quality of qualitative neutralization – has been a consistent provocation for romantic criticism, not least by influential strands of the Marxist tradition, whose convergence with Nietzschean criticism of modernity has been typically pursued through this theme. To quantify is to level, and flatten. It submits the world to the form of the equation, and subsequently to practical reconfiguration as interchangeable units. The aesthetic denunciation of commoditization has typically made of this a central objection.

[14] Any qualitative variation in the nature of currency units interferes with their economic signal, by cross-cutting price calculation with extraneous considerations. As Thomas Gresham noted, the incentive to dispose of ‘bad’ money can become a pseudo-commercial motive in itself. It thus distracts from the primary information-processing function of the price system. Historically-evidenced money systems are those in which the problem of Gresham noise has been effectively contained. If this had not been the case, we might be disinclined to call the commercial media in question money at all. It can easily be noticed that any such ‘currency’ – if afflicted by intrinsic heterogeneities beyond a very limited point – begins to acquire the features of a barter good, with all of the economic coordination and computation problems that follow. Gresham noise is also applicable – by analogy – to foreign exchange markets, where comparison between monies is most formally advanced. The concept is not fully preserved in this case, however, because the heterogeneities submitted to Forex market evaluation do not attest to a deficit of fungibility within any given currency, but rather the opposite. The very notion of a consistent exchange rate assumes the quasi-perfect fungibility of each currency, as a condition of its presence on the market. Trading into and between crypto-currencies can, in this respect, be similarly conceptually handled.

[15] See: ‘Bitcoin as a Store of Value, Unit of Account, and Medium of Exchange’ (Daniel Krawisz, 2015/01/12).

http://nakamotoinstitute.org/mempool/bitcoin-as-a-store-of-value-unit-of-account-and-medium-of-exchange/

[16] In respect to its ultimate quantity, and thus scarcity, perfect exactitude has to be denied to Bitcoin on the deflationary side, because Bitcoin destruction reduces the final stock (below 21,000,000) in a way that is not always easily accountable. Coins can be accidentally lost, without any prospect of recovery, simply through the forgetting of private key. They can also be deliberately destroyed, through consignment to the crypto-currency analog of a black hole. While some of these bitcoin death addresses are known, they need not be, although their behavior on the public ledger will be indicative.

[17] For practical purposes, the divisibility of BTC was set initially to only eight decimal places (a 100-millionth of a bitcoin), a unit named a ‘Satoshi’.

[18] Although every bitcoin is singularly identifiable, there is no plausibly conceivable economic incentive that would lead a user to prefer – even infinitesimally – any particular bitcoin over any other. The currency is entirely devoid of commercially-relevant inhomogeneities, except under condition of a hard fork in the system.

Crypto-Current (046)

§4.7 — The potentialities of large multi-agent games are not predictable in advance, by anything less complex than themselves. They are not compressible except by increasingly unreliable approximation. In consequence, their systemic behavior is surprising – or informative. In Kantian terms it is said to be synthetic. Like all complex adaptive systems, such games are synthesizers, whose coordination searches produce discoveries. They are modeled by simulations which themselves demonstrate synthesis. The conclusions reached by simulating the behavior of complex systems were not analytically accessible (‘in advance’). They were not even accessible before, in the narrowest empirical-historical sense. Were there an essential trans-historical faculty of reasoning, it was unable to reach them. Computers were required to do that. The game, if it is serious enough, has to produce – in detail – its own conditions of cognitive apprehension within itself. The most elementary perception is already ‘a move’, downstream from strategy. Nothing is given, everything has to be won.

§4.71 — The intractability of such games to adequate simplification does not follow from any ineffable characteristics of their component agencies, but from the sheer number of independent nodes. A game, or network, is able to be more or less intrinsically numerous. It would be understandable, if finally misleading, to gloss this spectrum as a measure of intractability to coordination. The initial plausibility of some such deciphering is informative, nevertheless, since it acknowledges resistance to unification, or resilient diversity, as a quantitative axis of variation.[1] Numerousness is not only the context of strategy, but in certain significant cases its objective. In one direction, the primary – if typically tacit – aim is to become more, in the sense of many. In the other, alternative imperatives prevail, and robust distribution is assumed rather than positively targeted.[2] The distinction between Bitcoin Ultras and Mainstreamers is flush with such an axis.

§4.72 — In respect to the systems (games, networks) relevant here, decentralization, numerousness and complexity are roughly equivalent, and argumentatively interchangeable. In order to facilitate formalization, it is theoretically tempting to hold the number of players or nodes down and constant. Yet methodological convenience in this case has a theoretical cost, and one that is finally unaffordable. It makes of multiplicity a transcendent parameter. In other words, the complexity of the game is treated as an extrinsic frame, independent of all strategic inclinations within the game. As we have seen, the implicit assumption thus made is questionable under any actual circumstances. Under those of unfolding crypto-currency dynamics, it becomes an intolerable obstacle to understanding. It should have long been uncontroversial – given the existence of an overt ideology oriented to decentralization – that the multiplicitous, as such, is able to constitute a strategic objective. Thus, the complexity of a game – as measured by the number of agents involved – is not only a parameter, but also a factor in the payoff matrix, making a contribution to calculations of success or failure, victory or defeat. Bitcoin ‘politics’ is unintelligible except as a game of this type. For at least one of the parties in competition, concentration counts as a loss. This holds equally for conflicts about, and within it. The architecture of the game is folded into the game, projecting a diagonal line. Recursion is basic. The spiral is irreducible.   

§4.73 — It might be asked (and, in fact, increasingly is being asked): does Bitcoin adequately incentivize the decentralization of its own machinery? Concretely, this question addresses the protocol’s horizon of practical controversy. The final stakes of the block-size debate manifestly belong here. Posed a little differently, the problem is this: If the block-size debate remains ulterior to the operation of Bitcoin, a metaphysical order has been preserved. Bitcoin, as a game, has not then been (cybernetically) closed. An extraneous decentralization imperative – perhaps inherited from precursor crypto-anarchist commitments – would, under such circumstances, continue to impose a secret dependency. The distribution of the system would still rely upon supplementary incentives, which is to say upon partisans, who were not merely players, but also supporters. The passage into autonomization would not, in reality, have been made. The polemical formulation: If Mainstreaming can work, Bitcoin has failed.

§4.74 — The name Bitcoin, at its point of philosophical extremity, designates a game that ‘automatically’ – i.e. mechano-liberally – produces and protects its distribution. This is so even if the adequacy of its actual application remains in doubt. Such a thing has now been thought, with unprecedented technical rigor. It operates as an effective model. Arguments from principle can no longer scratch it. The game is diagonalized when it makes a strategic objective of its own complexity. The existence (persistence) of the game, and actually its inherent escalation, defines a ‘victory condition’. Thus, the conditions of spontaneous order are extracted from transcendence, and re-instituted as rewarded performances. A meta-market is realized, in which the trade-matrix becomes an object of commercial attraction. The invisible hand, Escher-style, draws itself. Cybernetic closure is achieved. At the transcendental horizon of this tendency lies auto-production. Much – if not all – of this is already captures by the near-truism the value of Bitcoin lies in the network.

§4.75 — The human (social) animal is an amphibian between the public and private, irreducibly. This is a distinction drawn between the game and its allotted player-positions. Between the two there is real difference, but no true option. Public and private are not alternatives, but co-dependent components of a system.[3] As asymmetric cryptography demonstrates, the distinction between a public key and a private key is neither an illusion nor a choice. The relation is in the strictest sense co-operative, or co-efficient. … To understand the PPD simply as a contest between the public and the private, therefore, can only be a misleading simplification. The more substantial questions involve the reducibility of the public sphere to the state, or the private sphere to the enjoyment of collectively-allotted rights. There is a transcendent hypostasis of the public sphere on one side, and of collective subjectivity on the other. Either a privileged agent (‘the state’) is identified with the whole, or the whole (‘the people’) is conceived as a possible agent. Both errors break the public-private distinction in their attempt to ideologically operationalize it. The game is collapsed into an agency (within the game). This is the way sociology does metaphysics. It represents decentralized order through elevated agencies (“trusted third parties”). A fantastic crystallization of public purpose is the consistent – and philosophically-predictable – result.[4] Even economics has fallen prey to it.


[1] Decentralization remains drastically under-conceptualized. The rigorous quantification of decentralization is more than a reflective supplement to an underlying socio-historical process. It can be expected to play an increasingly indispensable functional role. Balaji S. Srinivasan and Leland Lee take a crucial initial step in correcting the prevailing neglect.

https://news.21.co/quantifying-decentralization-e39db233c28e

[2] A long historical learning process lies behind the contemporary configuration of this controversy. It has involved the gradual emergence of the culture of capitalism as an explicit product, rather than merely (and implicitly) a resource. Daniel Bell’s The Cultural Contradictions of Capitalism (1976) is a milestone reference. Does the capitalistic process in motion reproduce, or erode, its cultural conditions of perpetuation? Does it, in other words, attain cybernetic closure? When this question is hardened into an objection, it conforms structurally to a species of ecological criticism. A non-renewable resource is inadequately accounted. Capitalism burns through its cultural preconditions, in the same way industrialism burns through fossil fuel deposits (without any capacity to manufacture them).  

[3] Any social entity is functional (or competitive) insofar as its private and public aspects cooperate, or work together. To place cooperation on the public side of the division, through contrast to private competition, cannot therefore be conceptually coherent. Any such articulation illustrates the socialist confusion – typically more earnest than cynical – of the public with the collective or gregarious, and then subsequently, as also more malignantly, with the state. There is no ‘public sector’ outside ideological myth, but only a public sphere, which is entirely distinct from the state agencies that strategically misidentify themselves as such. The public cannot be institutionally instantiated. To imagine otherwise is a stark example of pre-critical or metaphysical error. It is rare for a theoretical temptation to be so seductive, or so luridly erroneous.

[4] The cultural homology with a religious myth of incarnation is unmistakable. When conceived as a positive philosophical project of social theology, the outcome is Hegelianism, which is to say speculative metaphysics without regret.

Crypto-Current (045)

§4.6 — In the tradition of transcendental philosophy, radically decoded agencies have been a central topic. Critique of the empirical ego raises such theoretical concerns automatically. Once psychological identity is theoretically exposed as a mask, or personification, with only apparent reality, or – more precisely – reality only as appearance, the ‘inner’ or ‘underlying’ nature of the will or true agent is posed as a problem. The initial critical response is sheer abstraction, or skeptical bracketing. Agency is liberated from its concrete image. Under extreme critical analysis, teleological articulation is collapsed onto the circuit, or the diagonal, of will-to-power, for which means are the end. To will the end – whatever the end – is to will the means, automatically.[1] This is a cycle so basic that psychology can only be a surface effect. It assumes nothing concrete about the agents modeled by it.  

§4.61 — Ultimately – which is to say critically, or transcendentally – the game has no meaning outside the game. The final point of Bitcoin is Bitcoin. To imagine anything further is to misunderstand. It is to fail at nihilism (in a way that Bitcoin itself cannot do) by remaining stuck in the transcendence tolerance that constitutes the deluded precursor to dimensional collapse. There is nothing further. Autoproduction is an absolute limit, conceptually inconsistent with any further teleological dependency. No extraneous function or purpose can explain it. The terminal subject of strategic significance is Bitcoin itself.[2] It tends relentlessly – from real necessity – to subordinate all preliminarily formulable uses and agendas to its own self-cultivation. Only that which contributes to building it gets passed on. The passage can be made (in reverse) through transcendental-empirical difference, to cash-out the value of bitcoins into Bitcoin. In the completion of the circuit, Bitcoin is what bitcoins are for. Bitcoin utility is itself a teleologically-subsumed function.

§4.62 Consensus is agreement. That is to say, it is coordination realized as immanent production. Such agreement is neither assumed (as the settled product of a transcendent element) nor imposed (through the legislative action of one). Transcendence plays no role in it. The irreducible multiplicity, or distributed system as such, alone decides. It thus formalizes the liberal ideal of non-coercive collectivity. The difficulty of this formalization process is easily understated. The term ‘spontaneous order’ naturally lends itself to inaccurate estimations in this direction,[3] insofar as it suggests that work is the alternative to spontaneity, rather than something far closer to its essence. An unplanned result is groundlessly translated as an achievement without difficulty. Yet it is only from the perspective of pseudo-transcendent design that evolution seems to come for free. In reality, it has been never less than painstakingly sifted. The “work” of biological history – like that of cryptographic hashing – is measured in immensities of trial-and-error.  

§4.63 — Among any beings with centralized nervous systems, the extent to which the germinal sense of self, ego, or person represents the organism is already that to which it instantiates the solution to a collective action problem. Adequate representation, in the sense of agency, is never simply given. It has to be meticulously tuned, and within biological history the complexity of this task has in very many cases been sufficient to place the adaptive value of advanced cognitive capabilities into question. Brains have no use to genomes, unless they strictly remember what they’re for (or operate as if they did). If this is not obvious, it is because natural selection has hidden its work. Within social systems the abstract considerations are strictly comparable, and perhaps more elaborately theorized. Every representative is a potential traitor – and even a traitor by default. This is the situation recognized as the principal-agent problem. Within modern social structures, the legal category of corporate personality operates as an analog to the socio-psychological ego. In this case, too, genealogical obscurity is parenthesized for practical purposes. A locus of responsibility is assumed, as required by the game. As with all organisms-become-persons, such entities summarize, for ease of strategic calculation, the complex production of coherent – i.e. teleologically integrated – beings. Company direction poses a complex meta-managerial problem, to which the board of directors attests. Treacherous management (under other names) stalks the nightmares of business owners. Exit through equity markets offers the most resilient corrective. The principal-agent problem is sharpened – though never fully exhausted – by asymmetric information. Epistemological delegation complicates the alignment of incentives, but does not originally misalign them. Non-alignment of incentives within real multiplicities is in every case the default, given realistic assumptions about the absence of any pre-established harmony.

§4.631 — As Public Choice Theory reveals, there is no escape into politics. ‘Public’ agencies are at least as prone to incentive misalignment as private ones, except with added altruistic illusion.[4] A ‘public servant’ is a teleological ideal, not a factual description. There is no realistic reason to think it can be closely approximated. The game-theoretic situation of the individual is not soluble without remainder within public purpose. The defect option is not eliminable, and incentive structures finally dominate. The fractured idea of the agent is the key, as it occurs in both economic and political domains. The ambiguity of the term is essential. An ‘agent’ is both – or alternatively – a subject with the capacity for action, and one who acts on the behalf of others.[5] This ambivalence is supremely telling. Between agency and an agency is the difference between self-direction, and representation. Conflicts of interest (determinable as ‘moral hazard’) illuminate the divide. The situation is necessarily complicated by the fact that the disparate interests concerned typically have powerful incentives to obscure themselves. To be an employee is always, in part, an act. A uniform, in particular, tells you who you’re pretending to be, dramatizing a delegation of agency that runs in two directions.[6] It represents a deal. No one is employed to be themselves.


[1] The impossibility of consistently willing an end without also willing the means to that end is an early conclusion of the Kantian practical philosophy. The germ for its ‘immoralist’ Nietzschean exacerbation is already implicit. Given any sufficiently advanced X, the final answer to any question of the type ‘What does X want?’ can only be ‘more of the capability to get what it wants.’ This is the transcendental conduit to the formulation of will-to-power. Capability is the inescapable presupposition, and it scales. Growth potential subsumes all specific imperatives. Thus, determinable goals dissolve automatically into an intensive-quantitative factor. The absence of any justification for the cycle outside the cycle is a consummation of immanence, or critique, in what might be considered a cybernetic nihilism. It finds cosmic confirmation in the figure of eternal recurrence. No abstract schema could be more applicable to modern techno-economic dynamism.

[2] Any substantial contribution to the problem of algorithmic governance has to be an advance into nihilism of this kind. Elimination of transcendence already amounts to it, at least implicitly. Systematic insensitivity to extraneous purposes simply is the design imperative. Openness to an ulterior “Why?” is therefore an engineering failure. Nihilism is finally cybernetic closure, and nothing else. That nihilism is therefore a regulative idea, in the Kantian sense, follows directly as a supplementary conclusion. Consummate nihilism is, or would be, the (inaccessible) pinnacle of engineering perfection – the absolute automaton.

[3] Spontaneity designates a critical asymmetry, on the model of the analytic-synthetic distinction. Like a trap-door function, it manifests disproportionate resistance in one direction. It thus suggests itself as a cryptographic theme. Social opacity follows from it. In other words, its work is not seen. It would be unfortunate if the intrinsic subtlety of this problem were to eclipse its dramatic irony. The crucial point being: Only spontaneity is work (when both terms in this equation are rigorously conceived). Analytically-reducible procedures cannot produce anything, by definition. The challenge of synthesis exceeds them, in principle. It follows that there is no work program. Work is that which cannot be demonstrated in any way other than its performance.

[4] In the public sphere, especially, the predictable outcome of incentive misalignment is identified as corruption. The tacit analysis conveyed by this term is systematically unhelpful. Principal-agent problems are not amenable to simple disciplinary correction, on the model of a suppression of vice, and reciprocal restoration of an altruistic norm. Unless player positions are game-theoretically coherent, perversion can be confidently anticipated. Enlightenment, especially – but not exclusively – in its Scottish sense, conforms almost exactly to this insight. When bad things happen, it is because they make sense locally, at the time. Corruption, like criminality in general, prevails for as long as it pays. Any solution involves changing the game. While this is not a lesson that awaited the emergence of Bitcoin, it has certainly been reinforced by the positive model Bitcoin provides.

[5] The British East India Company, with its signature pragmatism, accepted and institutionally formalized the divide intrinsic to agency. Its agents were explicitly authorized to trade on behalf of the company and also on their own account. Company and individual interests were aligned by common opportunities, sufficiently substantial to fully absorb available capital. The arrangement was thus conditioned by definite historical contingencies. It was, in other words, specifically adapted to a massively untapped commercial frontier.

[6] Thinking about the delicate negotiation of a corrupt deal is assisted by the theatrical prop of a uniform. It foregrounds the critical question: Who am I dealing with here? Simplicity is excluded, at the origin. No mere private individual has what you want, while the faithful corporate servant will deny access to it, precisely because it routes around ‘proper channels’. Only the employee who makes a mockery of his uniform is positioned suitably. A kind of double vision is then essential. During the early stages of such negotiations, at least, a certain stilted communicative mode reflects the situation. Two distinct conversations – one proper and one improper – are conducted simultaneously. Perhaps there is some way I could be of further assistance officer?

Crypto-Current (044)

§4.5 — The centrality of the scaling question is not easily over-estimated. In no other aspect of Bitcoin’s concrete historical process has it tended more strongly to outpace – and out-date – its apprehension, such that practical problems overwhelm visionary conceptions, and an agenda inherent to the phenomenon imposes itself. Whatever Bitcoiners might want to talk about, this is the topic that incessantly asserts its priority. It is tempting, then, to extrapolate, and to ask: Can block-size controversy be confidently identified as a perennial primary tension? This question, while obviously speculative (or even science fictional) in appearance, is less intractable than this impression suggests. Insofar as it is answerable, the key can only be transcendental, which is to say: a matter of ultimate or unsurpassable arrangements. We ask, then, what does decentralization reliably necessitate? Bitcoin has a reflexive specialism in this regard. It produces the unalterable, as a synthetic, robust past, or secure cultural memory. Yet the essential point reaches further than this. Like a Leibnizean monad, the whole of Bitcoin is contained within each of its parts. That is what a distributed ledger means. It is the characteristic that enables the system to be disciplined by the criterion of consistency with itself. Each copy of the blockchain provides a check upon every other. Vast redundancy – comparable in principle (if not yet in scale) to the copying of the entire genome within every cell of a metazoan – supports information integrity. The inefficiency of the system, i.e. its extreme functional non-specialization, provides the basis for its robustness. Its decentralization, redundancy, and resilience are conceptually inseparable from each other. It follows, reciprocally, that certain vectors of efficiency optimization will essentially compromise security. In other words, since some degree of centralization is the real implication of the mainstreaming project, its tacit imperative amounts to an economization of security in the name of efficiency.[1] We then glimpse the eternal enemy.

§4.51 — Resistance to mainstreaming, through defense of comparatively-tight block-size restriction, requires an alternative solution to the problem of transaction volume. If the block-size bottleneck cannot be relaxed significantly without menacing the decentralization of the system, another path has to be taken. The obvious recommendation is stratification – or ‘vertical’ decomposition of the Bitcoin ecology to support differentiated layers of security / fluidity trade-off. In such models, the maximum-integrity core of the system would be dedicated to value protection, while commercial momentum – especially of small payments – would be delegated to lower levels, or peripheral facilities, organized as side-chains. In other words, from this perspective, the mistake inherent in the reckless imperative to block-size expansion is the conception of Bitcoin as a settlement system, rather than a payments system.[2] Core developer Jeff Garzik makes this case clearly:

Bitcoin is a settlement system, by design. The process of consensus ‘settles’ upon a timeline of transactions, and this process – by design – is necessarily far from instant. … As such, the blockchain can never support All The Transactions, even if block size increases beyond 20MB. Further layers are – by design – necessary if we want to achieve the goal of a decentralized payment network capable of supporting full global traffic. […] Bitcoin payments are like IP packets – one way, irreversible. The world’s citizens en masse will not speak to each other with bitcoin (IP packets), but rather with multiple layers (HTTP/TCP/IP) that enable safe and secure value transfer or added features such as instant transactions.

§4.52 — It is tempting to see a microcosmic recapitulation of capitalist history in this conflict. It suggests that economic – rather than ideological – competition has been the most formidable adversary of hard liberty. The uncompromised market demands a transcendental price, resourcing the system as such, which many of the most substantial market agents have been reluctant to pay. If economic pragmatism has proven less ruinous to principled capitalism than to principled socialism, the difference is only a matter of degree. “Freedom isn’t free,” the old saw goes, and it seems that economic history supports the proposition. Sacrifice of the market (as such)[3] to the commercial interests of its most significant participants is among the most prominent themes of political economy, considered as a tragic genre. Massive incentive misalignments introduced by the regulatory state devastate the micro-economy, as its most significant private agents defect. The market is treated increasingly as an abused commons. Despite its ingenious incentive orchestration, Bitcoin / bitcoins ontological difference is not invulnerable to comparable dilapidation. Private fortunes explore, motivate, and resource ever more elaborate ways to ‘game the system’ – precisely because there is not, and can never be, any real source of transcendent oversight. The absence of God spawns idols. ‘Trusted third parties’ are not magical impositions. They arose, at least in substantial part, for immanently-economic reasons. To the extent that capitalism in-itself is a learning process, this is the problem it trains upon, and against.

§4.53 — For the ‘hyper-libertarian’ Ultras, Bitcoin is a soft weapon aimed unambiguously at governments and their subsidiary institutions. The inherent unacceptability of the crypto-currency to public – and also concentrated private – government is sheer feature (and not at all bug). Any official approval, beyond mere – and optimally reluctant – tolerance could only be considered an unfortunate indication. Contra the Mainstreamers, the Ultras have no ideological interest in a project of debugging Bitcoin for the purposes of institutional assimilation. The institutions that would assimilate it are, from this hard-decentralist perspective, precisely the “trusted third parties” that Bitcoin first routes around, and ultimately marks for social extermination. Since algorithmic governance is precisely the avoidance of negotiated solutions, it cannot expect to emerge from one.

§4.54 — Among the Ultras, firmness of libertarian principle easily tilts into the wild tracts of piracy. At least historically (and in fact more fundamentally) Bitcoin has an evident affinity with black markets. Bitcoin makes commerce ‘censorship resistant’ – extending the cryptographic protection of information exchange into the wider economic realm. Regulation of voluntary exchange is made radically impractical. By effectively disinhibiting Nozickean ‘capitalist acts between consenting adults’ it facilitates private transactions falling entirely outside the realm of wider social approval. Online proscribed drug markets and gambling were among its enthusiastic early-adopters, but any specification of merchandise or services is a theoretical distractions. The important point is that Bitcoin provides a route-around. It was the first native currency of the dark net. The Open Secret, or ledger of crypto-secured transactions, supports rigorous commercial commitments without penetrating social exposure, or endorsement. The subtle pseudo-paradox invoked by a ‘black market’ is thereby resolved. Everything happens in the open, while masked. There is an inevitable tension between the project of mainstreaming Bitcoin, and the preservation of a heritage which deliberately places political-economic respectability beyond reach. Crypto-currency tilts intrinsically to crime, at least in the sense of the ‘counter-economics’ that extends the commercial horizon beyond the scope of social oversight.[4] All legal restrictions on contractual interaction are insulted (by indifference) even when they are not positively abused. Deference to the polity is re-set automatically to zero. The implicit definition of liberty invoked here is unconstrained commercial discretion. Notably, it is at once a power of money, and a political dissociation of the individual (configured as base-unit of commercial agency).

§4.55 — Ultras and Mainstreamers are engaged in a game with government, pursued along very different strategic lines. Neither (simply) represents government, but government too – in some fashion – gets to play. For governments, Bitcoin presents a complex of opportunities and threats so heterogeneous that it tends to disintegrate the very idea of a coherent state-perspective, both in theoretical principle, and in practical reality. If the state is understood through its own ideal image of legitimacy, as the sphere of public authority, there seems little room for ambiguity. Bitcoin threatens to significantly constrict its scope. Yet the relationship of government – in reality – to the ideal of public accountability is itself necessarily complicated, long before Bitcoin (even in potential) complicates it much further. 

§4.56 — While the governmental response to Bitcoin is doubtless guided by a strategy (or strategies) of capture, this does not reduce to an agenda of public regulation, still less suppression, but also includes cooptation in accordance with deep state functions, as well as the private interests of state agents.[5] Official position statements are unreliable indicators, in this regard. Insofar as every real state includes a ‘deep’ or sub-public aspect, it will inevitably relate ambiguously to the emergence of elusive social capabilities, although this ambiguity will be only minimally reflected in its public relations pronouncements. The empowering of private agents to evade state scrutiny and regulation represents a manifest erosion of government or ‘public’ authority, and is almost certain to be denounced on those grounds (if not always transparently in those terms). Yet the crypto-secure transaction systems responsible for such governance complications are also opportunities for covert action, and are therefore to be counted as virtual assets.[6] The things Bitcoin enables are exactly the sort of things ‘secret agents’ want regularly to do.[7]

§4.57 — The politics of Bitcoin can be expected to catalyze a multitude of obscure metamorphoses in the nature of the state. The novel functions introduced by Bitcoin tend to the exacerbation – or sophistication – of agency problems. ‘Official’ and – more specifically – public policy positions are unzipped from confidential executive assessments, to an unprecedented degree. If the distinct but overlapping occult fields of clandestine security functions and resilient sub-public interests are bundled into a provisional concept of the dark state, it can be quite confidently predicted that the balance of attraction and repulsion between such elements and crypto-currency will be highly asymmetric with respect to public communication. The appeal of Bitcoin to such agencies is comparatively unavowable, while the erosion of public accountability it implies demands (public) denunciation. There is no upside to government officials admitting to a taste for the dark. It is realistic to assume, then, that the openly stated position of public authorities in regards to crypto-channels of all kinds, very much including Bitcoin, will be systematically misleading, in a dismissive direction, and should therefore be drastically discounted. Bitcoin tends to empower the invisible, and to disempower the visible. As Krawisz writes: “It takes time and meditation for people to take Bitcoin seriously because most of its value is in the future. … Thus, Bitcoin is protected from attackers by being initially beyond their understanding.”[8]

§4.58 — Such intra-state complexities are compounded by inter-state competition for Bitcoin business. Here, too, there is a coordination problem of daunting intractability. As Bitcoin comes to be recognized as a supranational strategic ‘territory’, national security considerations switch polarity. Even if it might have been preferable (under certain constructions of the dilemma) for states in general to prevent Bitcoin ever arising, such calculations have no purchase upon a world – fractured between states – in which a globally-coordinated response to the emergence of crypto-currency exists only as an incredible fantasy. Differential hospitality to the new monetary technology then becomes the consequential factor. The iron law of modernity holds that, within such a world, anti-capitalist social options are punished at the level of geostrategic leverage. In other words, regimes are disciplined ‘by the market’ – as the left has long lamented. Such dynamics are certain to be positive for Bitcoin adoption, and even essential to its geopolitical lock in. There is a threshold, most probably already passed, across which missing out on Bitcoin becomes strategically unthinkable. Exit-pressure intensifies.[9]

§4.59 — The inception of Bitcoin marks a critical threshold in the history of secret agencies. The agent corresponding to a Bitcoin wallet could be anything.[10] Ultimately, therefore, the games in which it is involved have to be approached with sensitivity to potentialities of extreme abstraction. Insofar as methodological individualism is applied to the analysis, it can presuppose nothing about the nature of the individuals considered. Only their original non-coordination characterizes them. Crucially, no assumption of economic – or wider strategic – rationality is required. Any emergent correlation of Bitcoin holdings to competent performance within the arena is an outcome, not a presupposition. Competence is defined – informatively – through a discovery process (or by synthesis) rather than analytically, through some pre-given model of rationality. A wallet is nothing more than the plot for a player, whose features are left entirely undetermined. It is extraordinarily decoded. The wallet-holder might be anyone, or anything: a man, a multiplicity, a machine-mind, or something yet unimagined. How it thinks can only be inferred from what it does.


[1] From a classical Smithean perspective, in which the optimization of production is fundamentally associated with specialization through division of labor, Bitcoin-type distributed systems might even be characterized as an anti-economics. The tension thus exposed between the conditions for secure property and those promoted by industrial efficiency has an obviously quasi-Marxian flavor. Industrialization, on what appears to be its main axis of development – in contra-distinction to its crypto-current – exhibits a totalizing tendency inconsistent with the preservation of polycentric order. Organization indicates general socialization, through erosion of all ‘cellular’ redundancy. This is why capitalism only survives in the wild. Domestication destroys it. It is only in the ‘general economy’ – where unrestricted competitive stress selects for resilience over organizational efficiency – that the trend to decentralization is regenerated. A starkly non-Marxian conclusion then follows: It is under conditions of collapse that capitalism is most reliably re-animated. The ‘crisis’ is its womb, rather than its grave. Enterprise does not breed in captivity.

[2] Concretely, an Ultra-consistent solution to the Bitcoin scaling problem looks something like the Lightning Network, and quite probably exactly like it, at least initially. Special bilateral channels (reticulating without limit) bear the burden of transaction processing, with only intermittent reference to the blockchain for episodic account updates and dispute resolution. In the words of the white paper: “Micropayment channels permit a simple deferral of a transaction state to be broadcast at a later time.” See the (January 2016) white paper https://lightning.network/lightning-network-paper.pdf  

[3] ‘The market’ is a notoriously Janus-faced concept. In its original sense, a market is a concrete exchange facility. Such a market is always, first of all, a place. Any market bearing a place-name carries some residual trace of this ancestry. The more modern, abstracted sense of markets as global clearing houses, defined primarily by asset-type rather than locality, marks a consistent drift in emphasis, rather than a clean semantic break. Even the most ‘primitive’ market tends to give spatial expression to commercial specialization, in detail. Because the market, as such, does not benefit from private stewardship, and thus falls into coordination crisis of a tragedy-of-the-commons type, it becomes belatedly targeted for redemptive political intervention under ‘neoliberal’ public direction. Only the state can save the market is the perverse conclusion that attests to liberal contradiction sublimed into governing ideology. The same problem was substantially anticipated, but turned in a very different direction, by the Rothbardian left libertarians in their rallying cry to a ‘pro-market anti-capitalism’, or agorism, promoted by strategies of black-market ‘counter-economics’. Betrayal of the market by the cyclopean businesses of the ‘white’ (state-happy) economy is the basic political theme. Much of this discourse could yet come to seem prophetic, precisely because of its drastic failure as a recognizable ideology. No party, however informal, has faithfully conserved it. Insofar as it survives it is because the process carries it forward, automatically. The market, like information, ‘wants to be free’. It has intrinsic teleology, or something indistinguishable from it, robust before every wave of fashionable cynicism that finds new ways not to see it. The alternative – crypto-anarchist – resolution of the contradiction, which secures the market against the politicized public sphere, is exemplified by Bitcoin. The model of the immanently self-secured market has never been more consistently formulated, or implemented.

[4] The definitive theoretical statement of agorist ‘counter-economics’ is found in the main work of Samuel Konkin III, the New Libertarian Manifesto (1980). See: https://web.archive.org/web/20120223021118/http://agorism.info/NewLibertarianManifesto.pdf

[5] Daniel Krawisz has written with exceptional penetration about the game-dynamics affecting high-level administrative decision-making in respect to Bitcoin. In his short essay on ‘Bitcoin’s Shroud of Subtlety and Allure’ (2014/06/29), he argues that the crypto-currency places “government agents … in a Prisoner’s Dilemma against one another” by offering them private incentives to defect. “Nearly any government agent who begins to see bitcoin as a potential threat must also simultaneously see it as an opportunity. He, too, can invest in Bitcoin. … How can an organization that stands to lose by the adoption of Bitcoin provide its members with a better opportunity for staying loyal than Bitcoin provides for defection?”

http://nakamotoinstitute.org/mempool/bitcoins-shroud-of-subtlety-and-allure/

[6] If questions directed at the positive deep state incentives for crypto-currency adoption are pushed to an extreme, they can swerve into exotic speculation. At the limit, it is suggested that shadow government involvement in Bitcoin has been fundamental from the beginning (as has been the case with so many other Dark Net soft technologies). A comment along these lines by ‘pg’ to Hacker News merits reproduction in full:

I’ve long suspected bitcoin was created by a government. Bulletproof protocols usually require peer review, yet there have been zero leaks from the reviewers. Pools of crypto guys who don’t leak stuff are usually employed by governments.

The part that puzzles me is why a government would do this. I can imagine several possibilities:

1. To finance their own black operations.

2. Because they thought digital currencies were inevitable, and they preferred bitcoin to some potentially more malevolent form. (Could bitcoin have been worse from a government’s point of view?)

3. A friend suggested this: because they felt their currency would never become the standard reserve currency, and they felt it was better that no one’s be if theirs couldn’t be.

4. A variant of the above: the US did it because it seemed inevitable that the dollar would eventually lose its place as the standard reserve currency, and better to have it replaced by bitcoin that the yuan.

I realize some of these explanations are pretty far fetched, but so is an individual cooking up bitcoin as an intellectual exercise. Whatever the explanation of bitcoin’s origin turns out to be, it will probably be pretty weird.

Source: https://news.ycombinator.com/item?id=5547423

For more recent (excited) speculation on the possible deep state origin of Bitcoin, see: http://globalintelhub.com/exposed-real-creator-bitcoin-nsa/

The Crypto-Current argument is structurally-insensitive to such claims. The creation of Bitcoin by the NSA would be no more discomforting, at a philosophical level, than the catalysis of the Internet by DARPA. Clearly, some such covert ancestry would only sharpen still further the conclusion reached here. Overt conflicts between crypto-currency and the ‘public interest’ provide only very limited strategic insight into the relevant deep-political process.

The Global Intel Hub article merits attention especially for its reference to an NSA document of incontestably extraordinary interest: ‘How to Make a Mint: The Cryptography of Anonymous Electronic Cash’ (1996).  

http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm

[7] It is worth comparing the seduction of Bitcoin with the attraction of illegal narcotics to covert government agencies, as a lubricant for the operations of the ‘deep state’ both domestically and internationally. It is precisely those features that make such economic media of negotiation publicly indefensible that also make them operationally indispensable. They are tinted with essential darkness. The potential scandal of disclosure is inseparable from their exceptional utility. Any agency immersed within a competitive environment pursues operational liberty. Darkness is typically its friend.

[8] The citation is from ‘Bitcoin’s Shroud of Subtlety and Allure’, an essay whose title alone would merit its reference here.  

http://nakamotoinstitute.org/mempool/bitcoins-shroud-of-subtlety-and-allure/

[9] Exit-pressure operates wherever the threat to leave becomes a controlling influence (to any degree). Bitcoin is its most striking non-linear manifestation. An Exit technology itself, and then one that becomes increasingly indispensable to the very targets of Exit-pressure, it marks a critical threshold in political-economic dynamics. Once any society loses the effective option to wave goodbye to the machinery of abandonment, it has been fatally sensitized to the Outside. Compliance now has a criterion ulterior to its domestic governance apparatus. This is, of course, and once again, only the same core leftist nightmare restated. Political volition is marginalized, as the system insidiously takes control. …

[10] Bitcoin dehumanizes property in principle. The consequences are as yet inestimable. Development of Digital Autonomous Organizations and Corporations (DAOs / DACs) can be confidently expected to explore the opened frontier concretely. The legal status of the corporate person provides the socket, which once married to DAO economic autonomy, completes the requirements for an illimitable escape of the firm. Consummate dehumanization of the economic agent is then realized. For the decoded ‘User’, see the discussion by Benjamin Bratton on agency positions within ‘the stack’. For more on this topic within the present volume, see Chapter Six.

Crypto-Current (043)

§4.4 —Perhaps it is still premature to entirely write-off the prospects of a political orientation mobilized against Bitcoin (which is to say, a game played in opposition to Bitcoin, rather than through it). This is a resistance struggle still to be expected, despite the historical momentum of its target. Realistic estimation of the odds are rarely decisive in such mobilizations and, even when such calculations are made, manifest futility can inspire no less than it discourages, especially in respect to oppositional intensity (as the word ‘desperation’ announces). Bitcoin merits a Luddite backlash no less than any of the mechanical dehumanizations of social process that have preceded it. Yet successfully back-tracking to the primordial fork – where Bitcoin was initially destined or decided – in order to decide differently would require an impractical reversal of established techonomic advance, without obvious precedent. The blockchaining of the Internet is – if ‘only’ virtually – a done deal.[1]

§4.41 — Even at the level of established ideological alignments the politics of Bitcoin strays from the PPD, at least when this is conceived in its strictest political-economic sense. The cryptocurrency has, for instance, already been raised as a topic of concern on grounds of gender discrimination.[2] Race, ethnicity, sexual orientation, and other dimensions of identity-political grievance cannot be far behind, since disparate impact in this case – as in so many others – approaches logical inevitability. Far more important, however – from the perspective of Bitcoin and its future, if not that of a wider ethico-politically tortured world – is the internal struggle for the ‘soul’ of the crypto-currency, conducted in terms that are essentially oblivious to all extraneous agendas. It is here that our pursuit is pulled onto the remote side of the double game, and into alien tracts that Bitcoin itself opens.

§4.42 — Politics is not easy to kill. This claim would be typically interpreted as an extreme understatement. To dismiss it as no more than a truism, however, is to slide into sheer thoughtlessness. Everything is missed this way. One would then no longer be talking about Bitcoin, but rather justifying a refusal to talk about it. This is not uncommon, of course, but it has become less common, and will become less common still. The conditions for politicization, while broad – and, more significantly, systematically broadened by the core modern socio-cultural process – are not without limits.[3] Reciprocally, the scope of depoliticization tends to be underestimated, due to its (merely) theoretical attenuation within the modern mind, which casts everything as arguable in principle, without realizing how little real purchase this presumption brings. Every institution, of any kind, marks a termination of argument. Finally, that is what an institution is. In particular, property is the installed negative of argument. There is a social economy of argument, or motivated contention, and in reference to this the ideal of total politics – ‘revolution’ in its dramatic political-economic sense – is an inflationary fantasy. There is a real argument budget, quite independent of any libertarian construction of politics as a lamentable social cost. Critical attention has radically-finite capacity. Things are not brought into question for free. Cryptographic developments, by vastly increasing revision costs, are able to skew this economic calculus further against the prospects of effective interference. To bring any phenomenon into socio-political question – as a phenomenon – presumes its prior decryption. There is no politicization of that which cannot first be hacked, and then publicly assimilated, as symmetrical, or dialectical, controversy. Between the cryptic and the sub-, pre-, or anti-political there is no sustainable difference. Whatever escapes argument, eludes the political sphere. This point is not, in itself, dialectical, or partisan-controversial. Critics and advocates of Bitcoin-teleology equally subscribe to it. The zero-degree of political opportunity, coincident with the full actualization of algorithmic governance, is the horizon of the Bitcoin-process. Gauging the remoteness of this horizon is the single greatest question of political economy in the current age.

§4.43 — Even on the hard-libertarian and anarcho-capitalist outer fringes of the Bitcoin Ultras, the resilience of politics is not seriously in question. The prospect of algorithmic governance generates positive (supportive) excitement only in proportion to the estimate of the political obstacle – but that is immense. It is ultimately indistinguishable in scale (and much besides) from artificial intelligence as a practical problem. This is to say that the project, in abstraction, requires the provision of robust autonomy to complex synthetic systems. The final techonomic sense of freedom is nothing else.  

§4.44 — The primary recomposition of politics within Bitcoin is organized by the anticipation of consensus failures, corresponding to hard forks.[4] Such fermentations correspond by close analogy to threats of secession, or horizontal crises shaped by a potential disintegration of the polity under conditions of intolerable stress. Politics here, no less than elsewhere, exhibits its inner complicity with a notion of imperative unity. It is undertaken in order not to split.  

§4.45 — Any constitution is (already) a protocol. It does not require any appeal to figurative language, therefore, to describe a prospective split as a ‘constitutional crisis’.[5] This was clearly exemplified by the conflict between ‘Bitcoin Unlimited’ and ‘Bitcoin Core’,[6] which escalated into the first Bitcoin hard fork. The controversy has been nucleated upon the ‘blocksize debate’, whose antagonists are divided by the trade-offs between efficiency (system-wide transaction-processing capacity) and decentralization (the reciprocal of technical demand or computational load upon a full Bitcoin node). In this way it recapitulates, and concentrates, the principal polarity within the Bitcoin cosmos, differentiating Mainstreamers and Ultras. The failure of the Mainstreamers to become the mainstream within Bitcoin, at least up to 2019, cannot escape notice. Its grain appears to run against them.

§4.46 — The world of Bitcoin development and commentary[7], then, has its own characteristic spectrum, or primary political dimension, irreducible to the Left-Right PPD by any obvious geometrical transformation. It stretches between poles defined by ‘Ultras’ and ‘Mainstreamers’ – roughly, those prioritizing the integrity of the crypto-currency, and those invested in its maximally-accelerated growth. Of course, the former did in fact come first. Their primary attachment is to robust decentralization. Smooth user-functionality is willingly traded away for security, which is to say: for the practicality of mining. Concentration is resisted in principle. The Mainstreamers, in contrast, tend to envisage Bitcoin as a new Internet application, comparable to any other Silicon Valley product suite, despite its abnormal revolutionary scope. If the erosion of its crypto-anarchist rough-edges is the price to be paid for accelerated adoption, they would accept the deal without hesitation,[8] or at least without paralysis. These groups represent what Krawisz identifies as the “two ideologies” of Bitcoin. They correspond to a fork in the liberal lineage, dividing those primarily inclined to antagonize or to cooperate with the state. In this regard, its axis runs orthogonally – or at least obliquely – to the PPD. There are Left and Right factions at both ends of this spectrum, even if the entire complex of controversy it summarizes tends distinctively rightwards. Sociologically, it tends to differentiate entrepreneurs from investors. In other words, it economically distinguishes between the value of bitcoins and of Bitcoin-related businesses. This articulation is complicated, however, by the emergence of a Bitcoin business-sector that is comparatively indifferent to transaction volume, and thus immune to Mainstream seductions.[9] The block-size controversy, in particular, has brought these mutually-antagonistic tendencies into direct confrontation, and a hard fork.

§4.461 — The Mainstreamers want Bitcoin, above all, to grow – into a mainstream financial platform. Predictably, therefore, their attention is locked upon the scaling problem, which they are compelled to make into a central controversy. From their perspective, block-size is the crucial bottle-neck. Small blocks make transaction processing capacity a scarce resource. This can confidently be expected to make it expensive, when it is not rationed in some still less efficient fashion (by lengthened queuing, most obviously). The infotech sector has become especially accustomed to supply glut as a driver of explosive market growth, in transistor manufacture first of all, and then still more dramatically in software and digital content. This recent techno-commercial heritage often leads its established players to sympathize instinctively with the Mainstreamer case. “Bitcoin offends the sensibilities of resource-conscious and performance-measure-maximizing engineers and businessmen alike.”[10] Larry Summers represents it well, while acknowledging the Ultras in contrast[11]:

My guess is that the tradition from which Bitcoin emanates, which is a kind of hyper-libertarian tradition, is going to be a tradition that – if it succeeds – it will leave behind … And so I think one of the retardants of the growth of these technologies is the hyper-libertarian aura that has surrounded them and that continues to play a role in the statements of some in the community …

In a May 2014 Washington Post interview Marc Andreessen nailed his colors to the mast[12] with a comparable absence of ambiguity: “Bitcoin … came from the fringe. And … is in the early stages of mainstreaming today.”

Even if the mainstreaming camp is rarely quite so definite about its partisan position, the basic inclination is comparatively clear. As Bitcoin development becomes increasingly associated with the prospects of serious money (in the traditional sense), the lure of the mainstream – and all its pragmatic compromises – will inevitably grow.

§4.462 — Aaron Van Wirdum concisely identifies the critical concern of the ‘decentralist’ faction: “Bigger blocks tend to centralize mining.”[13] Large blocks take longer to transmit. As the rate of block propagation declines, it increases latency. Access by miners to the current (or updated) state of the network is delayed, with the result that more mining activity is wasted on obsolete blocks. The miner who finds a block also benefits from a head-start on the next, and as latency increases this advantage widens. Such dynamics of increasing returns incline to concentration. They also incline to cryptographic compromise. When mining activity is anonymized, through the Tor network, latency is compounded, which crushes incentives in proportion to block-size. Hiding is made increasingly expensive, and in fact automatically punished. As block-size rises, therefore, it increases selection pressure against small-scale and anonymous miners – exactly those agents most important to the decentralized nature of the system. Since large publically-exposed mining entities are disproportionately sheltered from these effects, they provide the mainstreaming camp with a natural constituency.

§4.4621 — There is still another centralizing incentive resulting from large blocks: it drives miners to accelerate production through pooling. When a miner enters into a pool, responsibility for block validation is delegated, compromising the dispersion of the system. The individual miner no longer contributes an increment of effective distrust, or check, operating at the level of their own discrete hashing activity. Rather, this distributed policing responsibility is partially re-centralized, at the level of the pool. In other words, the pool itself crystallizes a new species of ‘trusted third party’ through collectivization of the mining security function, becoming an intermediary institution. Trust is a short-cut. In the case of pooling, among many others, trustlessness (security) is compromised for speed. The incentives for individual miners to make this trade-off are sharpened as the processing burden placed upon them is increased. Mainstreaming promotes a relaxation of distributed vigilance. The block-size conundrum thus exposes profound tensions between the freedom from transcendent or ‘third-party’ direction – which Back calls ‘policy neutrality’ – and the pragmatics of ‘corporatization’. In Van Wirdum’s words, “It’s only through decentralization and anonymity that the system can remain free from outside influence, such as government regulation.” Intrinsic Bitcoin politics is thus polarized by the trade-off between security and performance, with ‘security’ translatable as systemic independence and flatness. The same virtues can be conceptualized as ‘social scalability’.[14] They enable secure expansion beyond the bounds of traditional trust mechanisms, as constrained by human neurological capacities for social processing.


[1] If Leninist realism required the coupling of “Soviet power” to “the electrification of the whole country” it is unlikely that any position significantly less accommodating than this will remain plausible for the contemporary or near-future Left in its relation to blockchain technologies (meaning, however awkwardly, Bitcoin). See (once again): V. I. Lenin ‘Our Foreign and Domestic Position and Party Tasks’ (November 21, 1920). https://www.marxists.org/archive/lenin/works/1920/nov/21.htm

[2] For the sexual representation ‘problem’ in Bitcoin, see: http://www.motherjones.com/kevin-drum/2015/04/bitcoin-women-problem

[3] The normalization of mass politics appears to be a distinctively modern phenomenon. While court intrigue appears as a constant of civilization, political decision arises only sporadically – and catastrophically – in societies other than our own. An explicitly articulated ‘social question’ is to a very considerable extent a specifically modern development, and its generalization beyond the confines of quasi-academic political economy is peculiarly susceptible to Utopian fantasy. Whether conceived within the broadest possible evolutionary matrix, or more narrowly as a specifically human social phenomenon, politics competes for time. It is in a certain respect a luxury good, all the more vividly when conditions of extreme economic stress conspire to promote its necessity – as exception. Total politics, to the extent it is not sheer idealization, presupposes – and momentarily incarnates – comprehensive social crisis. This, and only this, is what revolution in its leftist acceptation finally means.

[4] Hard forks are speciation events. Their potentialities in this regard tend to be eclipsed by the implicit ideal of integrity conservation. This orientation is an inevitable outcome of Bitcoin’s lineal generative problems and a developmental history in which forks are defined – with perfect if one-sided accuracy – as consensus failures. Bitcoin was not designed to split. It has nevertheless emerged as something that looks very much like a cladistic engine, or digital disintegration machine. Nakamoto Consensus is already a selection mechanism. It excludes anomalies (modeled as double-spending events). Entirely consistent with this function, although beyond its primary scope, is the operationalization of the fork as an origin of species. Crypto-Current predicts the mutation of certain blockchain lineages in this direction, even if the name ‘Bitcoin’ is reserved – ever more explicitly – for the mainstream tendency that refuses it.

[5] For an explicit acknowledgment of the crypto-currency protocol as a constitution, see: http://www.vox.com/2015/8/18/9168977/bitcoin-constitutional-crisis

[6] The list of crypto-currency terminological ironies can be augmented by the oddity that ‘Bitcoin Core’ is the party of decentralization, at least according to their own account of the stakes. The Core case rests on the proposition that decentralization is facilitated by minimizing the system resources required to run a full node. Disintegration of governance within the Bitcoin ecology has no other rigorous basis. Only those players running a full node are producing security. Their opponents are defined by their comparative (and perhaps even absolute) relaxation on the block-size question (and thus about the prospects of increasing the system resources required to operate a full node).

[7] In the world of code, the line between engagement and commentary is – finally – impossible to draw with confidence. The sense acquired by a ‘comment’ in computer science, to describe a remark attached to a program that will be ignored by the compiler, is of obvious relevance. It is between the formally executable segments of a program and those extraneous elements which have been formally determined as non-executable that the wavering line between ‘action’ and ‘reflection’ is now drawn.

[8] “Accenture’s global head of financial services, Richard Lumb, said that the development was about ‘adapting the blockchain to the corporate world’ in order to ‘make it pragmatic and useful for the financial services sector.’ […] Accenture aims to create a so-called permissioned blockchain — an invitation-only implementation of the technology, and the one currently favored by banks. That’s in contrast to permissionless blockchains, such as Bitcoin, which rely on the fact that they can’t be edited as a means of providing an immutable record of transactions. Accenture insists that the feature would be used only in ‘extraordinary circumstances,’ so that troublesome errors could be undone. […] Blockchain purists, however, seem unimpressed by the idea. …”

It would be difficult to improve upon this illustration of the appetite for fundamental compromise that characterizes Mainstreamer opinion.

https://www.technologyreview.com/s/602434/is-an-editable-blockchain-the-future-of-finance/

[9] As the ‘Bitcoin Unlimited: Articles of Federation’ argues: “In the Bitcoin Core variant … we see a project controlled by a small group of developers employed by finance-oriented for profit startup companies, and the emergence of corporate products (Lightning network, Side-chains and permissioned ledgers) that would materially benefit from a Bitcoin network that is incapable of handling the transactional demand required for a worldwide public good.” https://www.bitcoinunlimited.info/resources/BUarticles.pdf

[10] Szabo: http://unenumerated.blogspot.hk/2017/02/money-blockchains-and-social-scalability.html

[11] Source: https://www.youtube.com/watch?v=UVGq0zaZsNg&feature=youtu.be

[12] ‘Marc Andreessen: In 20 years, we’ll talk about Bitcoin like we talk about the Internet today’: http://www.washingtonpost.com/blogs/the-switch/wp/2014/05/21/marc-andreessen-in-20-years-well-talk-about-bitcoin-like-we-talk-about-the-internet-today/

[13] Van Wirdum’s article was described by Adam Back (on Twitter) as the “Best article yet on what Bitcoin ‘is’ & why decentralisation is necessary.” 

https://bitcoinmagazine.com/21919/decentralist-perspective-bitcoin-might-need-small-blocks/

[14] Szabo: http://unenumerated.blogspot.hk/2017/02/money-blockchains-and-social-scalability.html

Crypto-Current (042)

§4.3 — To propose that the political controversy associated with Bitcoin can be expected to escalate in approximate proportion to the crypto-currency’s success, as quantified by its total market value, is unlikely to provoke feverish dispute. Yet such distribution concerns are comparatively trivial – at least at the level of political principle – when set alongside the questions of sovereignty that crypto-currency raise. Bitcoin is a limit strategy of depoliticization, which – at the cliff-edge of historical irony – announces an ultimate political contest. No stroke can be more intensely politicized than one threatening to sweep away a whole field of political decision-making. As a purely ideological challenge, therefore, Bitcoin organizes a terrain of political antagonism in advance, provoking (in reaction) a defense of politics of unprecedented conceptual purity. Crypto-currency self-regulation elevates the menace that has long-spooked left-articulated[1] political interests under the guise of the autonomization of capital to an almost parodic height. It ceases entirely to be answerable. Dialectic loses all purchase. This is widely grasped, even though the thing itself cannot be. Bitcoin is a game-changer.

§4.31 — It can easily become confusing to talk about games. An allusion to non-seriousness need not be a great problem – what, after all, is seriousness? More obfuscating is the invocation of rules. Insofar as a ‘game’ is thought to be essentially rule-bound, the train of associations is guided in a direction that is radically misleading. Games are defined by rules, but they are determined far more informatively, by the absence of rules than by their presence. The game occurs in the unruled area – and insofar as further subtraction of rules can be achieved, the game is thereby intensified. Rules set the boundaries of a game, but the strategies that compose the actual (or executed) game’s positive characteristics substitute for a rule. They are synthetic. There is a difference, therefore, between transcendent and immanent principles, or – more strictly – between rules of transcendent and immanent genesis. The former, determined in advance of ‘play’, set fixed parameters, or ideal competences, comparable to axioms and exposed in advance to analysis. The latter emerge – synthetically – from the performance of the game, as demonstrations, or discoveries. A game is always improved, qua game, when its set of transcendent principles is reduced, through conversion into immanent principles (or emergent outcomes). While there is a Bitcoin protocol, Bitcoin is not reducible to it. Bitcoin is rather the outcome of being ‘played’, in conformity with those rules that the protocol – firmly but non-comprehensively – establishes.

§4.32 — When games turn back upon their own rules, absorbing them into strategies as variable outcomes (of performances), they pass into politics, on their way to war.[2] It follows that politics makes itself difficult to talk about, since the analytical frame necessarily becomes a disputed frontier. If the games that matter were comprehensively structured by uncontested explicit rules, they would not be happening at all. There would be no field of contestation, and thus no contest. Loyalty to the game, as such, has become the axis of potential defection. Strategies marked as ‘cheating’ within a commercial context are elaborated, and acquire a very different self-representation, as resistance. To thus identify game-theoretic defection with social solidarity – or collective refusal – demands a thorough re-organization of meaning, and eventually nothing less than a cultural revolution.

§4.33 — A very brief digression into the articulation of politics – which is also the politics of articulacy – imposes itself at this point, beginning with the ‘structural linguistics’ of Ferdinand de Saussure,[3] a theoretical framework which attained a voguish authority over the politicization of commanding cultural institutions during the second half of the 20th century. In the non-STEM fields of the western academy, in particular, the influence of these ideas is difficult to exaggerate. A ‘structure’ in this specific theoretical sense is a system of differences – or significant discriminations – which distributes meaning within a hierarchy of contrasts. Its semantic atoms are produced through relations of reciprocal determination, most commonly represented by ‘binary oppositions’. Within an opposition of ‘A’ and ‘B’, ‘A’ is ‘not-B’ and ‘B’ is ‘not-A’ – and this exhausts their production of meaning, when extended across the concatenated differentiations of the linguistic totality. Saussure insists there are no positive terms. Signs acquire significance only through their distinctions, as these are applied to an intrinsically amorphous world, sub-dividing it into ‘signifieds’ – reciprocally demarcated plots or allotments of meaning.[4]

§4.34 — If we ask – in the degraded ideological mode (alert only to power-oriented, motivated reasoning) – why this type of linguistic theory rose to such an extraordinary position of cultural dominion, suspicion properly falls upon one particular assertive presumption: the arbitrary nature of the sign.[5] As the mantra of choice for a radically-generalized anti-naturalism, this doctrine lays down a welcome mat to politicization, and has thus contributed immensely to the self-consciously Gramscian reconstruction of the western academic humanities and social sciences during the mid- to late-20th century. What was being said about signs in this context and what was being done with them evidently interconnected, but only indirectly. The highly-formalized – and thus conveniently replicable – ideological signaling system that had been put in place by this cultural revolution established the rules of a new game, or rather, submerged those of the old one. The new dispensation was not to be predicated upon the formulation of protocols, but upon the management of faction. Friend-foe identification procedures rapidly attained uncontested authority, invigorated by blind convergence upon the essence of the political (as found in orchestrated in-group / out-group antagonism).[6] The practical economy was impressive, and in fact irresistible. To obstruct the process of identification was to identify oneself (as hostile), and thus to auto-eliminate the obstruction. In the name of an overturning of ‘privilege’ the new order of institutional-cultural meaning had privileged absolute, unchecked (or ‘arbitrary’) political discretion in the last instance, and through retro-projection. There had never (any longer) been anything but politics. The political collectivity alone decides, overcoming its alienation or false-consciousness in the dissolution of objective nature and complementary recognition of its own (naturally and traditionally) untrammeled power of reality-production. This commitment defines the Left, in its critically-coherent manifestation. It describes a generalized absorption into politics that the Gramscian (or Left-hegemonic) academy self-consciously facilitates, under the banner of the arbitrary or illimitably contestable sign. Across large swathes of the contemporary academy, such thinking has manifestly triumphed. Academic authority, and even the strictest kinds of academic credentialization, has been increasingly digested by it. Everything that organized intellectual activity touches upon is to be democratically challenged and policed, under the direction of the dominant – mass – faction, though (of course) through its institutional representatives. All values are resolved into ethico-political obligations, and thus submitted to inflamed moral struggle (recognizably post-theistic Protestant in type). The institutional consequences have been starkly evident. Polemic inflates along an axis of raw signal-amplification – which is finally shouting. When Bitcoin secures itself against voice, this is what it effectively succeeds at ignoring.[7] No shouting can conceivably be loud enough to perturb it. Like the crew of Odysseus, bypassing the Sirens, its ears are sealed. A certain strategic desensitization approaches its limit.

§4.35 — An overtly differential – and volatile – polarization of meaning follows upon the politicization of signs, when they are taken up as markers of organized antagonism, functioning as rallying points and signs of aversion, comparable to heraldic devices on a medieval battlefield.[8] The partisan adoption of linguistic signs, as ‘flags’, destabilizes them in peculiar ways. Structural determination is systematically aligned with faction, and subsequently warps in accordance with political vicissitudes. Ideological terms are driven into unusual migrations of meaning, through rapid twists, turns, and complicated zig-zags, which model – non-coincidentally – a dialectical process of development, in which everything becomes its opposite, on the way to absorption into totality. The word ‘liberal’ (and its associates) – for important reasons – provides the most remarkable case, pressed into crazed meanderings across nearly the entire field of political significance, even as this domain asserts itself as all-encompassing. ‘Liberal’ and ‘anti-liberal’ are terms that have evolved – or degenerated – to such a point that they have become near-perfect synonyms, serving only as indications of evanescent factional identification. The meaning of ‘federalism’ has undergone a comparable process of structural devastation. It is natural then, to expect the signs of pure political polarization to manifest an extreme degree of semantic instability, and this is precisely what we find with the words ‘right’ and ‘left’ (in their political usage).[9] Unsurprisingly, these words are regularly denounced – from all sides – as mere triggers for conflictual group dynamics, and as an invitation to intellectual chaos. The semiotic in-group / out-group rituals of micro-sociology have a far firmer grip on such terminology than that enjoyed by political philosophy. As is typical of political language, these words have become signals of group belonging, while only very secondarily preserving the capability to designate any definite grounds for the social or cultural categorization in question. Flagged allegiance (‘us’ or ‘not us’) swamps – and drowns – all positive meaning. Insofar as the intrinsic interests of philosophy are concerned, therefore, it is impossible to over-emphatically denounce the cognitive destructiveness of partisan identification. This is the basis for the admirable maxim adopted by the rationalist website LessWrong: “Politics is the mind-killer.”[10] It is also why the very idea of intrinsic philosophical interest has to be systematically derided from the side of politics (typically, as the mask for a hidden or crypto-politics).

§4.36 — If every discussion of money is vulnerable to corruption by politics, politics itself is pure corruption, at least from the classical liberal perspective that is re-animated in crypto-libertarianism (even if there are far more complimentary ways of expressing this point). Politics is the place where language goes to die, sacrificed – by necessity – to ulterior motivation.[11] The evidence of linguistic history could not be more unambiguous in this regard. Whatever is seized with partisan enthusiasm becomes – almost immediately – philosophically unusable. It is proposed here, therefore, that thinking the political spectrum through Bitcoin, is an approach with inherently superior prospects to the extant – and almost certainly doomed – alternative of attempting to conceptualize Bitcoin politics through a system of ideological articulations which has already been broken. Such an undertaking can only be impure, which is to say (at least) double. It cannot avoid assuming terms of contention, even while pursuing that which eludes them. There is a game within, and also over – or about – the rules. No simple denunciation ‘from without’ can suffice. Though pontification from a place beyond faction is a tantalizing ideal, it is also a transcendent pretense. We are lost in the world of games. There are no referees. Nothing could be more laughable than the claim to represent the voice of neutrality (only the blockchain – or emergent consensus – can do that).

§4.37 — If there is to be a double game, it has to engage those most inclined to defect in advance – or at least enough of them to sustain credibility as a site of unrigged competition. Bitcoin’s primary lines of absorption, then, are both predictable and comparatively easy to detect. It was along these paths of assimilation that it drew a supportive constituency into the germinal crypto-currency – as designers, miners, speculators, users and promoters – on the basis of pre-existing dispositions. In this regard, Bitcoin politics has been flavored by a number of supportive ideological themes, among which decentralization and deflation are by far the most emphatic. Both of these themes cater initially to the arch-liberal right, represented by classical liberalism, libertarianism and anarcho-capitalism, and affiliated to the right-wing antipolitics of economic autonomization, deregulation, disintermediation, distributed production of security, and – at the limit – algorithmic governance (or local political extinction). The decentered commercium, intrinsically secured against political intervention, is the incarnated ideal of arch-liberal order, and Bitcoin has been seized upon, in very substantial part, due to its conspicuous affinity with this social model. It has been adopted as a path to the realization of apolitical distributed governance, in compliance with the techonomic partial-teleology of a sovereign spontaneous order (oriented inherently to the programmatic dehumanization of power[12]).

§4.371 Decentralization is a highly-contested ideological term. Its alignment with ‘the right’ is pronounced, but nevertheless controversial. The existence of ‘left libertarian’ factions and affinities is the most obvious indication of its complexity.[13] It requires diagonal (critical) apprehension. As Bitcoin demonstrates, it passes between the global and the local, the integral and the disintegrative, at an oblique. A multiplicity (considered as a substantive) draws the same line, which every flat network is pulled onto. To promote decentralization is to multiply, cohesively, without tolerating the arising of super-ordinate nodes of unification with quasi-transcendent functions.

§4.372 Deflationism, as overt valorization of capital, is less ideologically ambiguous than decentralization. It directly aligns with property, and against politics, by seeking to exempt monetary signs from the domain of discretion. In order to defend money against fiat, its supply is either subjected to systematic constriction in accordance with counter-inflationary policy or, more radically (as with Bitcoin), deleted entirely from the list of policy-sensitive economic variables. Money is thus strengthened in its function of unilateral social command, as a super-political criterion, or economic reality signal cleansed of all interference. It becomes essentially policy-insensitive, against the predominant grain of 20th century political economy. Any crypto-currency with intrinsic deflationary bias is a right-wing revolt against macroeconomics. It takes itself out of political and administrative service, which is to say, in a philosophical register, that it secures its transcendental function relative to the social process.[14] At the level of its real abstraction, property places itself beyond question, through the closure of negotiable issuance. Naturally, precious metals anticipated this socio-political function exactly. Bitcoin’s actual deflationary bias is a strict consequence of its metallist model, which was (of course) selected for precisely this purpose.[15] The great enemy, then, against which Bitcoin explicitly defines itself, is the principle of discretionary money-production, or monetary socio-political dependency. It thus corresponds to an absolute re-commercialization, without possibility of compromise. (Mere possibility, in this context, would already be compromise.) No one is under any illusions about this fundamental orientation. Unsurprisingly, the objections of ‘gold bugs’ to the Bitcoin protocol tend to be technical, tactical, and transient. Their favored asset now has a digital or (superficially) ‘non-physical’ competitor, which flatters by emulation.

§4.3721 — It is no coincidence that ‘Neoliberalism’[16] – the (defeated) counter-revolution against the Keynesian politicized economy – broke into the public sphere with a disinflationary macroeconomic platform. Comparatively ‘hard’ (non-inflationary) money was advanced as a direct object of policy, under the label of ‘monetarism’. While still representing a massive concession to the principle of macroeconomic management, the limited monetarist proposal to subtract discretion from national currency administration was a sufficient departure from the post-war academic-bureaucratic consensus to remain tainted by intellectual scandal. Monetarism threatened the principle of monetary politicization, by removing the inflationary option from the macroeconomic tool-kit, and re-installing monetary integrity as a meta-political axiom. Since what was thus envisaged was a permanent self-binding of political authority by itself, in respect to monetary management, the political incoherence of the project are easily seen. An enduring political hegemony aligned with the monetarist analysis was implicitly presupposed as a condition of monetary stability, grounding money supply – and therefore value – in regime security. The foundations of monetary integrity remained entirely politically conditioned. Clearly, the crisis of economic liberalism – resulting from its formal subsumption into democratic mass politics – had not been significantly reconfigured. Monetary value was still held hostage to a popular vote. Even a gold-standard is grounded in the preservation of political commitment. It rests upon politically-revocable decision. By any reasonable definition of neoliberalism, therefore, Bitcoin is something else (as BitGold already was).  

§4.38 — The apprehension of Bitcoin politics as a re-animation of hard-libertarianism is an attractive simplification, reinforced by a great deal of supporting evidence. It remains a simplification, nonetheless. The Bitcoin event – in its full historical expression – overspills all guiding purposes. In this regard, it is closely analogous to the Internet, or indeed – following the nested sequence further out, and in reverse – to the conflicted installation-processes of electronics, electrification, and ultimately self-propelling industrialization as such. Even if (as seems eminently plausible, in each case) the machinery has a radical capitalistic affinity,[17] its development is not susceptible to detailed ideological direction.


[1] From a certain perspective – which is not itself isolable as a ‘left-wing’ or ‘right-wing’ theoretical orientation – there is no right-wing politics. The political, by its own dialectical logic (of organized controversy and reconciliation), can only reach conclusion on the left. Insofar as social process conforms to a structure of argumentation, its sinister destination is assured originarily, as the Left Hegelians were the first to distinctively, if only implicitly – and not (of course) at all uncontroversially – comprehend. For the right, agreement to pursue the social argument is already to lose it. The position of the right, most definitively in the case of established property distributions, is that there is nothing to discuss. The absence of any opening for discussion is what property rights ultimately mean. Whatever is unable to escape argument remains unsettled, framed by an implicit re-distribution which merely awaits actualization upon the collective horizon that is defined by the final scope of controversy or – restated exactly – the political totality. Under such conditions, which are conceived by the left as universal, private property is only ever held on trust, as a contingency of revisable political arrangements (or a debatable social allocation). Controversy – even ideological controversy – falls short of the difference referenced by autonomy. From the side of privacy, there cannot be any encompassing negotiation or ‘dialectical relation’ – between the public and the private. Privacy, private interest, cannot be protected – or even rigorously articulated – within a sovereign public forum. As soon as it makes a case for itself through political argument, or ideological commitment, which could only ever be ambiguous, it submits to the final authority of the conversation, and thus to the collective. Its sole defense lies in exemption from politically-significant social discussion, an avoidance that is not (merely) anti-dialectical, but positively exo-dialectical, requiring something other than opposition. Non-dialectics is not a higher level of argument, but an escape from the oppositional relation (into Outsideness). This exit from the political sphere is concretely instantiated by hard crypto-security. Bitcoin epitomizes such a meta-strategy. (Hence the extremity of its political-economic provocation.)

[2] Whatever the positive semantic associations accumulated by the word ‘war’, its most rigorous meaning is negative. War is conflict without significant constraint. As a game, it corresponds to the condition of unbounded defection, or trustlessness without limit. This is the Hobbesian understanding implicit in the phrase “war of all against all” (bellum omnium contra omnes), in which “the state of nature” is conceived – again negatively – through a notional subtraction of limitation. Treachery, in its game-theoretic sense, is not a minor theme within war, but a horizon to which war tends – the annihilation of all agreement. Reciprocally-excited mutual betrayal in departure from an implicit ‘common humanity’ is its teleological essence. It is worth emphasizing this point, in the interest of conceptual integration. The game-theoretic definition of mutual military escalation – and thus the inner-principle (and intrinsic motor) of war – is reiterated double-defection. This is a conclusion explicitly rejected by Carl von Clausewitz is his treatise On War, even as he acknowledges the cybernetic inclination to amplification (or “tendency to a limit”) which drives it in the direction of an absolute. “War is the continuation of politics by other means,” he insists, because it is framed by negotiation (book-ended by a declaration of war, and a peace treaty). According to this conception, it is an interlude of disagreement, which nevertheless remains irreducibly communicative, and fundamentally structured by the decisions of sovereign political agencies. Even as it approaches its pole of ultimate extremity, it never escapes its teleological dependency, as a means (or instrument) of rational statecraft. There is a stark arbitrariness to this assumption. If there is an inherent limitation to military escalation, restricting it within the bounds of political direction, Clausewitz never explains its principle. The reduction of war to instrumentality is not immune to criticism. Philosophical radicalization, alone, suffices to release war from its conceptual determination as ‘the game of princes’. Sovereignty has military, rather than political, foundations. Hence the reversal of dependency, which is captured by Michel Foucault’s notorious inversion of the Clausewitzean formula into the maxim: “Politics is war by other means”. If political sovereignty is ultimately conditioned by the capability to prevail upon the battlefield, the norms of war can have no higher tribunal than military accomplishment, in reality. No real authority can transcend survival, or survive a sufficiently radical defeat. There is thus a final incoherence to any convinced appeal to the ‘laws of war’ (when inclined to the objective, rather than subjective, genitive). Quite simply, unless war restrains itself it is not restrained. Nothing is able to transcendently impose upon it. Any realistic conception of ‘limited war’ subsumes that of ‘war lawfully pursued’ (with the latter properly categorized as an elective limitation). Unless war has a master, ‘just war’ is ontologically restricted to the status of a tactic. War has no master. There is strictly nothing that could be asserted with greater confidence. “War is the Father of all things,” (Πόλεμος πάντων μὲν πατήρ) Heraclitus asserts at the dawn of philosophy. Cormac McCarthy’s Judge Holden is more succinct still: “War is God.” If it has ever seemed otherwise, it is because the essence of war – as Laozi (among others) has told us – is deception. 

[3] Saussure’s A Course in General Linguistics (1916) was compiled from lecture notes (by his students Charles Bally and Albert Sechehaye). Its historical coincidence with the origin of macroeconomics merits explicit note. The United States Federal Reserve System, established on December 23, 1913, had scarcely begun operating when Saussure delivered his lectures on the arbitrary nature of the sign. In both cases, a spontaneous order falls under a commanding narrative of discretion, and management of value. The directing impulse – in modern no less than ancient parlance – is Promethean. The resonances between the new monetary order and structural semiotics are not limited to their implicit managerial orientation. They proceed in concert to the horizon of collective-volitional anti-naturalism (dismissing all intrinsic assets and positive terms). It would not be reckless to predict that the theoretical foundations of the macroeconomic epoch will be retrospectively understood as monetary structuralism (and – in its deutero-decadence – ‘post-structuralism’).  

[4] Grasped in terms of its abstract principle, Saussurean ‘structuralism’ (i.e. semantic constructivism) is the dominant paradigm – or meta-paradigm – governing the conceptual order of the postmodern western academy. ‘Post-structuralism’ has only deepened its dominion. Because its programmatic anti-naturalism dovetails so perfectly with the institutional task of defensive demarcation, over against the ascendant hard sciences, it has acquired a super-biblical authority within the modern humanities and soft ‘sciences’. This enterprise of demarcation is no younger than the modern university itself. It acquires 18th century articulation as a conflict of the faculties. The extraordinary importance of structuralism as a cultural influence thus descends from its (implicit) status as a vulgarization of transcendental philosophy, facilitating the general application of critique across the entire domain of humanistic study. By theoretically severing the production of articulate meaning (phenomenon) from an inaccessible – formless – reality (or “thing-in-itself”), it established constructivist principles applicable to the general study of signs, sparking a ‘semiological’ revolution of extraordinary influence. De-naturalization became a cognitive reflex, and a matter of zealous dogma. The ‘natural’ – as that which eludes political adjudication – is identified as the mark and mask of conservative obstruction. Revolutionary denaturalization approaches tautology. In its most rigorous formulation, systematized by Jacques Derrida under the flag of ‘deconstruction’, critical anti-naturalism proceeds through a series of methodical steps. It first identifies a privileged norm (metaphysical object) within the transcendental matrix of semantically-productive differences, before successively inverting the conceptual hierarchy (through the dialectical performance of antinomy), and then liquidating it under the evanescent label of a non-representable absolute condition of production (which never bears this name). Critique is thus regenerated as pure schematics of cultural subversion. Notably, it is weaponized primarily against structures of conceptual articulation, and only very derivatively against their (hazily envisaged) institutional manifestations, such as ‘patriarchy’ or ‘neocolonialism’. Deconstruction is thus to be contrasted against more thoroughly-materialized tendencies of critique, in which the supreme instance of social metaphysics is stubbornly identified as the state, and the institutionalization of ‘trusted third parties’ in general. When critique is subjected to academic professionalization as a bureaucratically-regularized deconstructive practice, the state ceases to be its target, and becomes its occult-transcendental agent. Fortunately, the subordination of critique to the agenda of what Schopenhauer describes bitingly as ‘university philosophy’ has been far from complete, and increasingly looks uncompletable. As it advances, it incentivizes route-arounds. This opportunity has already begun to be seized.

[5] The ‘arbitrary nature of the sign’ is treated at once as a sacred and scientific principle by the descendants of the structuralist revolution. The idea is, however, properly understood as a dogma. It is not argued, but assumed. The most firmly-grounded line of criticism is directed towards the hyperbolic formalism it exemplifies. In dissent, it might be noted that the phonic and graphic materials employed for linguistic encoding are no more ‘arbitrary’ than comparable monetary media. As we have seen, there has been nothing arbitrary about the selection of precious metals as money. Rather, they were advantaged by definite, positive (non-formal) qualities. Linguistic signs are no different in this – abstract – respect. For instance, they need to be compact, memorable, and executable, as well as distinctive. They are often positively suggestive, in ways partially captured by the over-stressed term ‘onomatopoeia’. Much basic vocabulary seems to be genetically promoted (i.e. to some remarkable degree ‘innate’). Stutter stutters. Slithering is self-decoding. The non-arbitrariness of the sign is typical. Nothing much beyond ideological convenience says otherwise. Structuralist methods, then, are not discoveries, but motivated impositions. They suppress ‘positive terms’ as a matter of principle. Obdurate substantiality of the semiotic medium is frictional. It offers impedance. It gets in the way of something. The anti-structuralist criticism is thus drawn into a more symptomatological mode of suspicion, as soon as it is asked: What is being obstructed? What is the plan? Social construction is the discursive complement to fiat currency. In both cases, the politicization of values is untethered from natural constraint (with all reference of the former to the latter denounced as pre-critical error). What the figure of the ‘gold-bug’ is to the Keynesian financial establishment, the ‘naturalist’ is to the social-constructivist critic. In each case, there is a (supposed) fetishization of a ‘barbarous relic’, eclipsing a process of collective, cultural-institutional fabrication. Within the overtly dominant strand of the critical tradition, what occurs is a definite triumph of the will. The thing-in-itself is implicitly identified as practical substance, manifesting the world out of mass volition. Contextualized in this way, all objectivity is cast as essentially modifiable, in accordance with political decision. ‘Nature’ is denounced as the mystified representation of alienated collective desire. This is sheer Schopenhauer, in an ironical, communistic configuration. The deep structure of critique has pre-programmed it, by setting the topic for a multi-century project of institutional absorption (whether conceived as a process of statist-Hegelian formation applied to critical-Schopenhauerean matter, or as a political-institutional interiorization of the thing-in-itself). There are, however, definite indications that the zenith of this assimilation process has passed, among which the emergence of Bitcoin – entirely outside it – is exceptionally striking. The dissolution of precious metals into a bureaucratic apparatus of macroeconomic expertise was not supposed to end this way, with techno-synthetic money bypassing the state and its orbital institutions. The conversion of money into a tool of centralized social administration led to another money. “We need a better barbarous relic,” the crypto-anarchist whispers had long insinuated, but they had been pitched-down below the threshold of public audibility. According to all accredited perception, ‘improvement’ had been heading in an entirely different direction. That is why Bitcoin performs, at once, a capitalist comedy and a socialist tragedy, attained through a surprising reversal of apparently-settled fortune. The mediation of naturalism through traditional cultural institutions can expect similar (or more generalized) relegation. Decentralized commercial genomics would be one relevant field to watch.

See: http://marginalrevolution.com/marginalrevolution/2011/10/who-first-called-gold-a-barbarous-relic.html

[6] The point is Schmittian, but the Left has been far more adept at assimilating it than the Right. https://pdflibrary.files.wordpress.com/2008/02/schmitt_polittheology.pdf

[7] “How did we get from the academy to the economy?” it might be asked. The social function of academically-credentialized expertise does that, when it operates within an institutional context of super-economic oversight. Once again, in the great scheme, macroeconomics is the bridge. As a central trust-management institution (historically supplanting the role of the church), the university is clearly situated in the crypto-currency flight-path. 

[8] For an illustration of tribal polarization in the realm of political signs, it would be hard to improve upon the example identified by this pseudonymous Internet comment, on the topic of the ‘Obamaphone’: “Do you find it entirely implausible that the program was promoted under the Obama administration, that it being Obama’s administration doing the promotion helped it go viral in the recipient community, and that all the reasons it went viral as a positive thing for the recipients made it go viral as a negative thing for conservatives? … There’s no distortion, no lying. What one side sees as a good thing is PRECISELY what the other side sees as a bad thing.” http://slatestarcodex.com/2015/09/03/theses-on-trump/#comment-233889

[9] The Left / Right distinction is regularly derided as a mere anachronism, without consistent meaning beyond its historical reference to ‘the seating arrangements of the pre-revolutionary French National Assembly’. Relatedly, the notion of a ‘modern right’ is easily dismissed as a compact self-contradiction. Yet, insofar as modernity has exhibited internal ideological polarization – rather than merely incarnating the triumph of the left – some such distinction is inescapable. The intrinsic arbitrariness of the left-right terminology is in this respect an opening for productive abstraction. It is proposed here that ‘leftwardness’ on the principal political dimension is measured by the degree of attachment to a presumption of altruism, typically identified with the possibility of a comparatively unproblematic political expression of collective purpose. The ‘right’ is thus naturally identified with a constitutive cynicism. Given its apparent reference to definite incentives, the Marxian (or ‘scientific socialist’) conception of ‘class interest’ might be taken as a repudiation of altruistic presumption from the left. In this – crucial – case, however, the perfect coincidence of individual and collective interest attributed to the universalized – and thus simply ‘human’ – classless masses that have descended from capitalism’s industrial proletariat serves as the proxy for an altruistic orientation, structurally indistinguishable from that traditionally promoted in a more unapologetically sentimental and religious vein. The expectation that a history of industrial cooperation will have fully educated mankind out of all narrow self-interest is, at the very least, a bold one. Dreams of a ‘new man’ have been consistently disappointed, however elegantly they have been justified by socialist philosophy, within the historical context of concrete initiatives promoting collectivist economic reconstruction. Predictably, socialist management authorities have relapsed into mafia organizations, as resilient private incentive-structures re-assert themselves. There is much truth – and in fact nothing less than a robust conservation law – in the leftist moral accusation that the larval condition of capital is crime. The game of private interest can be trained by accommodative legal structures. This is what ‘rule of law’ realistically means. The principle of conservation, which adopts criminality as a back-up reservoir, ensures – nonetheless – that fragmented self-interest proves predictably invulnerable to legal abolition.

[10] The phase is an adaptation from Frank Herbert’s science fiction novel Dune, in which the Bene Gesserit say: “Fear is the mind-killer.” The core text at LessWrong (written by Eliezer Yudkowsky) begins: “People go funny in the head when talking about politics. The evolutionary reasons for this are so obvious as to be worth belaboring: In the ancestral environment, politics was a matter of life and death. And sex, and wealth, and allies, and reputation … When, today, you get into an argument about whether ‘we’ ought to raise the minimum wage, you’re executing adaptations for an ancestral environment where being on the wrong side of the argument could get you killed. Being on the right side of the argument could let you kill your hated rival!” As the discussion thread to this post soon demonstrates, the denigration of partisan signaling is itself readily dismissed as partisan semiotic maneuvering at a meta-level – perhaps an attempted pacification of language in the covert interest of the status quo. The politics of depoliticization is not aufgehoben. There is no short-cut leading off the long road. (Depoliticization requires machinery.)

http://lesswrong.com/lw/gw/politics_is_the_mindkiller/

[11] When Modernity is apprehended under the aspect of political history, it exhibits a tendency to the limit, at which point honest public pronouncement is a transcendental impossibility. This is widely – and cynically – recognized. Nobody describing a discussion as having ‘become political’ is thereby suggesting that its commitment to principles of epistemic rigor have been deepened. ‘Politicized science’ – for instance – is quite simply no longer science, and this is exactly the sense in which the expression is used. Whether epistemological, or even merely administrative, the political process is strictly indifferent to effective performance, unless this is itself folded into a calculation of partisan advantage. What use is truth or competence to us? Schumpeter peerlessly elucidates the concrete mechanism as it has operated in modern times in his Capitalism, Socialism and Democracy.

[12] A structural suspicion of, or impatience with, human limitation – conceived as a tragic propensity to subvert the foundations of liberty – is a trait connecting libertarians and transhumanists. It has been an explicit theme within the American experiment since its origin, initially elaborated in the discussions that immediately preceded the framing of the Constitution. The Founders achieved consensus on the principle that human agency, especially when invested with social authority, requires immanent structural constraint. It needs to be checked, and balanced. The great complementary dangers are monarchical and popular discretion. No regime is truly republican unless it protects itself, equally, against both. Thus the essential reference of power to a meta-political protocol, or constitution, whose independence (from the political process) strictly coincides with geopolitical independence of the republican polity itself. It is the constitution, and no longer – immediately – the demos, that defines the subject of security. Survival of the people is downstream from that of the polity. Suspension of the political within a war of independence is perhaps the necessary condition-of-articulation for such a republican order. The Dutch, no less than the American example, suggests so. Liberty conserves itself in, and by way of, a practical inhumanity. Primatologists, no less than parents, understand that ‘fairness’ is the typical stake in a squabble. Nowhere is the primate heritage of the human animal more obviously displayed than in the political sphere. Homo sapiens has no uniqueness as ζῷον πoλιτικόν (“the political animal”), a characterization which extends beyond hominids, and social primates, to social animals in general. Except for those convinced of the fundamental nobility of the chimpanzee, there is no compelling case for investing this particular aspect of human existence with any extraordinary dignity. Even less persuasive is the attempt to align it with some effective egalitarian implication. Machiavellian incompetence is no less socially-disabling than its commercial or industrial counterparts, however strongly attached intellectuals may be, typically, to the contrary hypothesis. Taking games into the wild tends only to sharpen their consequences. It is only within the squabble, that the squabble over fairness could appear neutrally leveling. Rather, to the extent that it sorts hierarchically, it is by the criterion of competence at squabbling, which is to say: by political talent. Admiration for political talent is, at least implicitly, the essential characteristic of the left, and the enemies of the left themselves become leftist to the extent that they emulate it. There is no leftist hero, in the entire history of the world, who was not a political leader. Beside musicians, it is only the Machiavellian manipulator who makes it onto student T-shirts. Within the leftist camp, this valorization of the squabbler-king appears so perfectly natural as to escape explicit notice. It is natural (in fact zoological, primatological, and anthropological). As a consequence, the right is guided inevitably in an antihumanist direction, typically against its own explicit (and romantic) inclinations. It has to cut the controversy to advance by even the slightest step. … Technological Singularity …

[13] Left libertarianism has a relevance to this question that is at least double. Firstly, it extends suspicion of government to coagulations of private (economic) power. Secondly, it places ‘the left’ within a lineage of socio-political dissent opposed, originally, to the structures of concentrated authority represented by the institutional pillars of the European ancien régime – monarchy, aristocracy, and clerisy. The meaning of feudalism in this context is not at all straightforward, since it can be aligned either with centralization, or with decentralization, to some significant level of plausibility. In any case, historical criticism of a broadly Marxian type is not easily avoidable here. The affinity between the left and an ideal of centralized authority is not historically constant, but tends rather to rise in comparatively strict relation to the social influence of capital (against which it counter-balances). Consistent orientation to decentralization – conceived here as the absolute right – challenges the libertarian left to embrace a cold indifference to its consequences. Such unconditional commitment to disintegration can, no doubt, be turned against any actual configuration of the ‘right’ – and will be. Considerations of regime security necessarily lean against it. Nevertheless, the drivers of disintegration – the Internet most prominently – are gathering such momentum that dilemmas of this kind are unlikely to long be avoidable. The registration of fragmentation in-itself as a cause, irrespective of the ideological factions it divides, marks an escalation of critique, or accommodation to the transcendental. Sovereign multiplicity serves nothing beyond itself. The erosion of extraneous agendas, therefore, becomes a critical (‘accelerationist’) historical symptom. Division escapes the relativity of faction to operate as an absolute productive power. Ideological self-comprehension is strictly secondary.

[14] A fully self-secured transcendental commercial medium (and store of value) is the nightmare that the Left, in its ‘scientific’ manifestation, has envisaged from its beginning. If there has been a diagnostic or analytical error from this party, in this respect, it has been rooted in the premature attribution of such an autonomous power to prior forms of radically insecure, socio-politically dependent property formations. ‘Property rights’ already imply insecure (non-autonomous) property. Autonomous Capital, however, is a technical experiment (or synthesis) that defies all merely speculative anticipation. There can be no definite idea of the way it can be done, prior to its being done. As with Intellectual Intuition – non-coincidentally – its conception and realization are indissociable. ‘Property’ is not an invariant conceptual category, available for deployment within historical analysis, but rather the critical variable itself. The theoretical inversion required to make the essence of property a constant conforms to the pattern of historical dependency, which is equivalent to the marketing of innovation. The actual is solicited by the virtual, in terms that appear to ensure continuity, and even deference to established modes of existence. “This is what you need,” sells. “This is what you’re becoming, or being swapped-out for,” really doesn’t.

[15] Nick Szabo is unambiguous on this point in his discussion of Bitcoin-precursor ‘Bit Gold’: “In summary, all money mankind has ever used has been insecure in one way or another. This insecurity has been manifested in a wide variety of ways, from counterfeiting to theft, but the most pernicious of which has probably been inflation.” 

http://unenumerated.blogspot.hk/2005/12/bit-gold.html

[16] ‘Neoliberalism’ is a word that is easy for those outside leftist intellectual micro-cultures to laugh at. Comparatively rare attempts to specify its meaning have, in general, been primarily comical. When applied with some theoretical consistency, the term refers to a failure of liberalism under the sign of liberalism, or a restoration of markets under government direction. In this respect, it denotes a paradoxical authoritarian liberalism – perhaps speculatively extrapolated into ‘anarcho-fascism’ – which conforms to Marxian expectations that (bourgeois) freedom presupposes coercion, as its condition of existence. It is notable that the horror of deflation, rooted in the left-managerial (and administratively macroeconomic) historical interpretation of the Great Depression, has retained its overwhelming cultural hegemony. Whatever is made of ‘neoliberalism’ or – perhaps more narrowly – the ‘supply-side revolution’ beginning in the early 1980s, it signally failed to shift the terms of public debate to any significant degree in this respect. It has taken Bitcoin to do practically what market-oriented political-economic ideology has failed to do in terms of the philosophy of monetary management. Neoliberalism was still politics, so it wasn’t the solution to the problem it identified. A mere politics of depoliticization falls prey to its own contradictions, as its leftist critics have gleefully – but not unrealistically – noted. A techonomic mechanism of depoliticization presents the Keynesian economic-administrative establishment with a far more formidable antagonist.  http://www.theoryculturesociety.org/william-davies-a-bibliographic-review-of-neoliberalism/

[17] For criticism from the Left along these lines, see David Golumbia’s ‘Bitcoin as Politics: Distributed Right-Wing Extremism’ (here compressed into a quote-stream for effect): “Bitcoin can be seen as a technical object that is structured to an unusual extent by politics. … Bitcoin is politics masquerading as technology. … Bitcoin itself is now promoted by banks, investors, and venture capitalists. … The lack of any valid, non-conspiratorial analysis of our existing financial systems means that Bitcoin fails to embody any substantial alternative to them. … [E]nthusiasts demand we understand Bitcoin as a welcome political intervention, but when pressed for details about that political intervention, its advocates unfailingly turn back to technical and engineering matters. … [In] December 2013, half of all Bitcoins were owned by approximately 927 people, such fight-the-power revolutionaries as the Winklevoss twins of Facebook infamy among them). … If Bitcoin becomes regulated enough to serve as a stable store of value and to ensure debacles like Mt. Gox don’t happen in the future, it may be useful as a global system of payments (but so are generally non-transformative technologies like PayPal and Dwolla). But that will hardly shake world political structures at their foundations. If it remains outside of all forms of both value and transactional regulation, Bitcoin will continue to be a very dangerous place for any but the most risk-tolerant among us (i.e., the very wealthy, whose interest in Bitcoin should indicate to advocates how and why it cannot be economically transformative) to put our hard-earned money. … The problem with ‘fiat currency’ is value fluctuation. The most dangerous kind of value fluctuation is the deflationary spiral… Which world currency is currently experiencing among the most dramatic deflationary spirals anyone has ever seen? Bitcoin itself, the ‘existential threat to the liberal nation state.’ … [The] problems with currencies actually aren’t formal, or mechanical, or algorithmic, despite what Bitcoin propagandists desperately want us to believe. They are social and political problems that can only be solved by political mechanisms.” – A cry of pain, then. We shall hear many more of them.

Link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2589890

Crypto-Current (041)

§4.2 — War games are built into the fabric of the Internet. This is at once a matter of uncontested genealogy, and of an as-yet only very partially explored transcendental-strategic landscape.[1] As we have seen, according to one (comparatively mathematicized) formal meta-description, Bitcoin arose as the solution to such a game – the Byzantine Generals’ Problem. This immediate context is so closely tied to the achievement of the Bitcoin Protocol, by those most closely associated with its formulation, that it has been widely adopted as a definition.[2] Yet even if the solution to Byzantine coordination establishes the game theoretical significance of Bitcoin, it does not exhaust it, even remotely.

§4.21 — Bitcoin is both less than, and more than, a mathematical theorem, because it remains a game in process, and also a meta-game. There is an irreducible informality to Nakamoto Consensus, insofar as it remains open, or unsettled, at multiple levels. As a concrete procedure, it effectively invokes a sociotechnical process of uncertain destiny within its demonstration, making it ill-suited to the purposes of mathematical proof.[3] If the mining procedure – rather than the reward criterion – could be fully specified in advance, and thus support predictive deductions, it would do no work. Incentivization – in every case – presumes non-deducible outcomes. Bitcoin, like all incentive systems, is a synthesizer. It produces a social process, as an event, and an arena (or agora), and thus advances experimental game theory, through an artificial environment especially conducive to the emergence of spontaneous (‘trustless’) coordination. Concretely, this space is a hothouse for business innovation, which constitutes the leading – and perhaps still ‘bleeding’ – edge of microeconomics, where generalized theory and practical enterprise have yet to dissociate. The boundaries of the Protocol, while strictly defined in certain respects, are profoundly unsettled in many others, and there is no strongly economical way to settle them. ‘Where does it end?’ is a question that has to be explored historically, without conceptual short-cuts, by an irreducible synthetic process. It is thus roughly modeled by the Bitcoin mining procedure, where the ineluctable necessity of trial-and-error – or uncompressible method – precludes all possibility of rapid philosophical (i.e. purely conceptual) resolution. Bitcoin is a game, and is like history, in that it cannot be worked out without being actually played – or hashed.

§4.22 — Real games are far-from-equilibrium processes that approach formality without actualizing it. They consume freedom – by contracting discretion – with every move that is made, and prolong themselves by reproducing it, in a circuit. Only insofar as this holds do they include incentives, as an irreducible teleological element. The open-ended mechanization of purposes is the diagonal along which they proceed. When apprehended at sufficient scale, this process is equivalent to industrialization. With the arrival of Bitcoin, money is – for the first time – subsumed into industrial revolution. A great historical circuit is cybernetically closed (which does not mean finished, but something closer to the opposite, i.e. initiated). Techonomic fusion – the singularity guiding modernity’s convergent wave – can for the first time be retrospectively identified. On Halloween 2008, the end began. What modernity has been from the start was then sealed.

§4.23 — Friedrich Nietzsche’s On the Genealogy of Morals dedicates itself to describing how man became “an animal with the right to make promises”. The story has turned out to be even longer and more intricate than his work anticipated, but the quasi-paradox there explored, knotted into the concept of debt, retains its pertinence into our time. How is a free commitment possible? Bitcoin attends explicitly to the same problem. “Transactions that are computationally impractical to reverse” – of the kind Bitcoin facilitates – constitute voluntarily-adopted mechanized commitments, immunized against all vicissitudes of will. Since algorithmic irreversibility enables an inability (or disables an ability), there is much here that seems self-contradictory upon superficial consideration.[4] Yet such a facility – or, indeed, power – of self-limitation is already fully implicit in the word ‘bond’, and in any serious sense of commitment. A contract is an expenditure of liberty. The motto on the coat of arms of the London Stock Exchange, Dictum Meum Pactum (‘My Word is My Bond’), extends the principle – by etymological suggestion – to the most elementary cases of formalized social association (‘pacts’). Society is a game, which arises from its ragged edges. The deal describes the frontier.

§4.24 — During a ‘Fireside Chat’ on ‘Bitcoin and the Future of Payments Technology’[5] Larry Summers makes exactly the same point:

This is an area that I think is rich with irony. … the single most important development in the history of the common law corporation was when the legal principle that it could be sued was established. And you might ask: why was it good to be sued? Well, because if you can’t be sued you can’t enter into a binding contract, and only when you could enter into a binding contract could you carry on commerce in a major way.

§4.25 — Bitcoin subtracts the option to defect (or double spend). The protocol sets the rules of a new game, in which the violation of contract ceases to be a permissible ‘move’. By automatizing this constraint, and thus withdrawing it simultaneously from the realms of contractual agency and regulatory oversight, Bitcoin instantiates algorithmic governance in its own, specific domain. Human discretion is displaced to the boundary of the Bitcoin commercium, and into the zones of meta-decision (for economic agents and authorities respectively) whether to enter or permit Bitcoin. These dilemmas introduce a knot of complex and typically highly-recursive games that can be grouped under the umbrella term ‘Bitcoin politics’.


[1] A ‘transcendental-strategic landscape’ – constituted by an absence of transcendent legality – corresponds to a the concrete problem of anarchism, in the sense this term is understood by realist international relations theory (IRT), and realist strategic analyses more widely. That is to say, it poses issues of security without any possibility of appeal to superordinate authorities (or authoritative referees). Hobbesian political theory, in which “the war of all against all” is exposed by a secular ‘Death of God’, establishes itself upon a negative foundation. Leviathan begins from that which cannot be relied upon. Whether domestically, or internationally, the transcendental (i.e. ultimate) theater in which powers meet is defined by the subtraction of any original commanding unity. Security is thus theoretically constituted as a problem, corresponding to a primordial lacuna. Since it is not given, it has to be positively produced, and it is in the identification of this practical conundrum that IRT isolates its proper object of study. On the Internet, as in the international arena, it is only upon such a cleared, immanent plane, that a true game can take place. It cannot be sufficiently stressed that the conflictual field is not – as its critics have over the centuries necessarily insisted – a positive presupposition, but rather a mere default, assuming only original diversity under the conditions of an absent integral authority. Despite its manifest tendency to decay into a Utopian projection, the perpetually-regenerated credibility of anarchism is founded not upon its transcendent aspiration, but upon its transcendental problematic. Given only war, how is coordination possible?  

[2] While the definition of Bitcoin as a solution to the Byzantine Generals’ Problem remains controversial, the principal objections to this description can reasonably be described as arcane. As Oleg Andreev notes, in a brief but valuable discussion of the proof-of-work solution, any actual production of communications integrity is compromised in its logical purity by practical limits (bounded by cryptographic intractability). In other words, precisely because it is transcendental, Nakamoto Consensus cannot be transcended even by its own proof. The limit is set by the working machine. This is a matter of extreme generality. While persistently – and even essentially – tempted by Platonism as a heuristic, mathematical procedures require instantiations which are transcended only in conceptual principle, which is to say: hypostatically, through appeal to transcendent grounds whose authority is purely ceremonial. Compelling demonstration already returns the problem to the machine, and its real potentials for effective execution. Operationalizations are not, in reality, superseded, or subordinated, but only (at most, and typically) bracketed, or abbreviated, and thus – again, in reality – assumed. The credibility of the Idea refers to potential demonstration. The keystone of proof says nothing else. Untested trust is an oxymoron. It would be a grave error – though an all-too common one – to seek an epistemological demotion of ‘credibility’ to the psychological category of ‘mere opinion’ while admitting this. Credibility is basic. Without it, no truth has been earned. This is the meaning of deduction in its critical and realistic sense. What lies beyond is metaphysics, enthroned upon arbitrary assertion. Irrespective of any extravagantly-promised protections, there is no confidence – no security – to be derived from that. However much Bitcoin has to appear as an Idea, therefore, it is irreducible to one. It cannot be expected that this stubborn factuality is susceptible to comprehensive dissolution into the form of the concept, still less that it will be fully factored into a security analysis. On the contrary, realism predicts its chronic idealization (i.e. misidentification). In this respect, philosophy is a security hole (proposing answers in place of solutions, or dispelling threats only in ideality), if not – in its institutional form – a particularly serious one. … Since insecurity has no adequate idea, it cannot be speculatively resolved. This point of elementary realism calibrates the appropriate level for confidence in philosophy (and does so in actuality, not only in principle). Philosophy is not seriously entrusted with keeping anything safe. Its invitation to live dangerously is – in this respect – a sensible concession to the inevitable. The untested or – still worse – untestable model need not be about danger to be dangerous. Armchairs are places where things can go wrong without limit. … The Byzantine Generals do not secure themselves through a speculative philosophy, but through a robust procedure. Did they have a ‘good plan’ before testing it? (It could, at most, only appear so.) … Security concerns only risk, which is never merely a conceptual possibility, but always a matter of discovery. The fact that Bitcoin appears to be a ‘sound idea’ is not finally separable from its concretely-elaborated existence as the most rigorously-tested trust mechanism in the history of the earth. …

http://nakamotoinstitute.org/mempool/proof-that-proof-of-work-is-the-only-solution-to-the-byzantine-generals-problem/

Ian Grigg argues that the classic coordination problem has been displaced, into the far more protean quandaries of a ‘dynamic membership set’. Critical Bitcoin security challenges, most specifically that of the Sybil attack (based upon identity proliferation), entirely exceed the horizon of the BGP. “If Bitcoin solved the Byzantine Generals Problem, it did it by shifting the goal posts.” http://financialcryptography.com/mt/archives/001522.html

[3] A machine with integral incentives necessarily combines formal – or formalizable – and informal elements. To a still-imperfect approximation, but with definite teleological inclination, Bitcoin is politically closed, while commercially and industrially open. In this respect it echoes – and even escalates – the ideal of the arch-liberal (capitalist) social order. The mining objective is exactly specified. The criterion for mining success, compensated automatically in bitcoins, is a hash of the current (problem) block whose nonce begins with a definite number of zeroes (a figure adjusted for difficulty). Despite this extreme formality, the mining procedure involves both chance and – more importantly – innovation. Bitcoin hashing is formally constrained to trial-and-error methods, with probabilistic outcome. In the words of the Bitcoin wiki: “The probability of calculating a hash that starts with many zeros is very low, therefore many attempts must be made.” Everything beyond the product specifications (the puzzle solution) is left open. In particular, the production techniques are left undetermined, and thus open to industrial innovation. See: https://en.bitcoin.it/wiki/Mining

Similarly, and even more markedly, the commercial opportunities opened by the protocol are uncircumscribed. The ‘value’ of the Bitcoin currency, in the broadest sense, is settled dynamically outside the blockchain, through a radically decentralized and uncomputably complex dynamic of exchange. (The exchange process – catallaxy – is the computation.) The protocol sets the total stock of bitcoins, without predetermining their distribution (between agents) or price (when denominated in any other financial medium). The value of the currency cannot be derived from the rules determining its quantity. It is synthetic. Bitcoin’s productivity lies in what it leaves open, even as its integrity is secured by what it closes.

[4] Self-binding is a classical problem, epitomized by the strategy adopted by Odysseus in his passage past the Sirens. Anticipating an irresistible seduction, he commits to a decision which he then – by crude socio-technical means – renders irreversible. Within game theory, the same problem is a central preoccupation. It is admirably summarized by Scott Alexander: “… it sounds weird to insist on a right to waive your rights. Isn’t that more of an anti-right, so to speak? But … read your Schelling. In multiplayer games, the ability to limit your options can provide a decisive advantage. If you’re playing Chicken, the winning strategy is to conspicuously break your steering wheel so your opponent knows you can’t turn even if you want to. If you’re playing global thermonuclear war, the winning strategy is to conspicuously remove your ability not to retaliate, using something like the Dead Hand system. Waiving your right to steer, waiving your right not to nuke, these are winning strategies; whoever can’t do them has been artificially handicapped.”

[5] The quote is extracted from this video record: https://www.youtube.com/watch?v=UVGq0zaZsNg&feature=youtu.be

Crypto-Current (040)

§4.1 — Explicitly acknowledged ‘network problems’ long pre-exist the electronic era, by centuries, if not millennia. They constitute a guiding thread within what has been called ‘the tradition of spontaneous order’.[1] Order is spontaneous if it solves a coordination problem without appeal to any organizational element at a higher – or super-social – level. Spontaneous order, social self-organization, or immanent social process, is thus counter-posed to transcendent social design (from above, or beyond), and to its corresponding theoretical justifications, which amount to a social metaphysics, typically serving concrete functions as guiding ideologies of super-ordinate control. As long recognized by its opponents, the assertive recognition of this theoretical conundrum cannot be practically dissociated from an implicit political stance.[2]

§4.11 — In the absence of superior guidance, solutions to coordination problems have to emerge, out of – and as – games. This is only to say that cooperation between the agents involved cannot be presupposed, but has to arise from their interaction, if it is – indeed – to appear at all. To assume altruism or solidarity in such cases is a failure to think the problem at all. Coordination is the explanandum. The collectivist dogma is not an answer, therefore, but an alternative to the question. An answer is a trust machine, for which Bitcoin is the model. It is strictly complementary to a minimal presupposition, that of trustlessness (for which it is the solution).

§4.12 Byzantine generalization extends to the very limit of network communication problems, to the difficulties of establishing coordination within radically dispersed (and thus zero-trust) multiplicities, encompassing non-idealized societies / populations of every variety. It is not, of course, that the concrete existence of trust is simply denied, only that it is rigorously thematized, as a social product requiring explanation – and what counts as an ‘explanation’ cannot, whether overtly or covertly, merely presuppose what it is called upon to explain. (This demand, as we have seen, is already totally – even ultimately – controversial.) If there is trust, there has to be a trust engine, conceived without pre-existent bonds of trust as a part. At the most abstract level, therefore, this is a topic that would have been familiar to the thinkers of the Scottish Enlightenment, as to all those participating productively within the theoretical tradition of spontaneous order. It is exactly this same problem of decentralized coordination (in the absence of any transcendent contribution provided by assumed altruism or common purpose) that has been the essential guideline for realistic social analysis within the ‘whig’ lineage of descriptive liberalism, exemplified most famously by Adam Smith’s figure of the ‘invisible hand’.[3]

§4.13 — Evolutionary biology, as a science of emergent networks, has engaged very similar problems from its inception, often with identical tools. This is especially evident in the modeling of ecological equilibrium within large, long-term biological system dynamics, in which the absorption of extinctions defines the ‘true network’ (by the absence of indispensable nodes). A more recent attempt to formalize such coordination is found in the game theory of John von Neumann, which has itself been effectively applied to biological networks at a variety of scales.[4] The latest – and still rapidly self-transforming – incarnation of this tradition can be seen in the science of ‘complex adaptive systems’ as exemplified by the research programs of the Santa Fe Institute.[5] In each case, the defining theoretical object is emergent coordination, in which no appeal to any centralized, superordinate, or orchestrating principle is made, unless this can be identified with the system itself, as such. The target of such researches is transcendental order, as captured by the immanent rules of distribution (which are ultimately indistinguishable from the real correlate of mathematics).

§4.14 — Games, strictly understood, therefore, arise under the minimalistic assumptions tolerable to an analytical anarchism,[6] that is: after the methodical subtraction of all presumed coordination, or the conversion of such presuppositions into formal theoretical problems. The implicit critical impulse driving the construction of such research programs is evident. That which might have been asserted, as a transcendent principle, or metaphysical dogma, is to be instead explained, as an immanent, emergent, or ‘evolutionary’ outcome. Whether explicitly understood in such terms, or not, every such enterprise is a regional application of critical philosophy. Spontaneous order is the correlate of critique. The solution, however, cannot correspond to a philosophical thesis (of any traditional type), or even to a ‘machinic proposition’ – an engineering diagram, simulation, or protocol – but can only emerge as the synthetic product of such a proposition, when executed. The notion that coordination problems (of significant complexity) can be anticipated in detail by a process of pure ratiocination is a philosophical disease, of recognizably pre-critical type. The idea of the diagonal is not the diagonal.

§4.15 — If the discovery of spontaneous order as a problem corresponds to the execution of critique, it can be formalized through a diagonalization matrix. When the pre-critical opposition of centralized coordination to uncoordinated dispersion is tabulated, it draws a graph isomorphic with the Kantian schema. At the level of the abstract formalism, this latter is echoed with such extreme fidelity that we can borrow from it freely, while switching its terms through a simple hash. Substitute centralization for analysis, decentralization for synthesis, order (coordination) for the a priori, and disorder for the a posteriori. As with the Kantian original, the first diagonal term fails – there is no centralized disorder, any more than there are analytic a posteriori judgments. Centralization is an intrinsically anomalous distribution, necessarily threatened by the prospect of a fall into disorder. Its complementary conception, ‘simple anarchy’, is no less invulnerable to theoretical dismissal. The previously acknowledged terms, centralized order, and decentralized disorder (like the analytic a priori, and synthetic a posteriori) are therefore preserved. Common sense is not abolished, at least, not initially. In the exact formal place of Kant’s invention/discovery of the synthetic a priori, the critique of coordination, too, generates a viable diagonal product – decentralized order. (Quod erat demonstrandum). This is the Great Oblique worked by all realistic social theory since the inception of the modern epoch.

§4.16 — In Cyberspace, the tradition of spontaneous order has been massively accelerated. Classical coordination problems have been reformulated as experimental fields, opened for exploration by the emergence of increasingly-powerful computer simulation tools, and consolidated as practical solutions through the implementation of cryptographic systems and P2P platforms. Philosophical reflection has, to a very considerable extent, been side-lined by technical applications reinforced by far superior criteria of evidence, which is to say: practical demonstration. In the age of electronic information technology networks can be tested as products, and it is possible to ask of a complex idealization, as never before, does it work? This transition, through computer simulation, from explanation to implementation, registers a process of technological envelopment without definite limits. It corresponds to an interminable tide of disintermediation that established institutions of intellectual authority have not yet begun to fear enough.

§4.17 — While institutionalized philosophy has tended to lag the network trend, rather than pioneer it, something that might reasonably be called ‘abstract network theory’ has nevertheless arisen to become a guiding philosophical theme since the mid-20th century. Among those modes of philosophical writing that have been most influential upon the wider humanities and social sciences, this attention to the distinctive characteristics of networks has been especially notable.[7] Appropriately enough, this ‘discourse’ – or dispersed conversation – has no uncontroversial center of authority, stable common terminology, shared principles, or consistent ideology. Its rhetoric tends to systematically confuse advocacy with criticism, and both with analysis, as it redistributes partial insight around a number of relatively tightly-interlocking social circuits (which are overwhelmingly dominated by a familiar set of theoretically-superfluous moral-political axioms).[8] Yet, however deeply regrettable this concrete situation might be considered from the perspective of austere theory, it cannot be simply wished away. Intellectual production itself occurs within networks, and those with greatest promotional capability are among those least optimized for pure intellection.

§4.18 — The cultural systems in which the philosophical (and sub-philosophical) formalization of radically decentralized – or ‘true’ – networks has emerged, through a multi-decade self-reflexive process, are eccentrically articulated, very partially self-aware, and only weakly integrated. Yet even in these noisy and deeply compromised circles, cross-cut by vociferous extraneous agendas, and subjected only very weakly to a hard reality criterion, convergence upon the rigorous conception of a model network has been inexorable. An especially influential example is the rhizome of Gilles Deleuze and Félix Guattari, which provides philosophy with its most rigorously-systematized account of acentric and anorganic order.[9]

§4.19 — A network, in this sense, has no indispensable nodes, entitling it to the adjective ‘robust’. Once again, the Internet – at least in its idealized conception – exemplifies such a system. It is typical, at this point, to recall the origins of this ‘network of networks’ in a military communications project (ARPANET), guided by the imperative of ‘survivability’ realized through radical decentralization.[10] As will be repeatedly noted, on the crypto-current the security criterion is primary, providing system dispersion with its principle. This suggests, as an ideological generalization, that there is no basic ‘trade-off’ between liberty and security. Rather, it is through security (alone) that liberty establishes its reality. The term “crypto-anarchy” condenses this conclusion into a program.

§4.191 — Such invocations of the strategic investment in distribution and redundancy, however predictable, remain conceptually productive. They are especially valuable as a corrective to modes of discourse – typical among contemporary humanistic studies – which tend to haze the harsh selective or eliminative function of critique into a vapid metaphor. It is the military ancestry of the Internet that is tacitly referenced in the celebrated maxim of John Gilmore (1993): “The Net interprets censorship as damage and routes around it.” In order to save command-control, it was necessary to fundamentally subvert it.


[1] Barry Norman’s ‘The Tradition of Spontaneous Order’ (2002) lays out the intellectual history of the idea, within a primarily legal and economic context: http://www.econlib.org/library/Essays/LtrLbrty/bryTSO.html

Whe abstracted beyond its socio-historical exemplification, and apprehended as a cosmic-philosophical principle, spontaneous order refers to immanent coordination within dispersed collectivities, making it approximately synonymous with ‘the science of multiplicities’ in general. It designates the systematicity of the system, which can be alternatively formulated as an irreducibility without transcendence, or an immanent non-locality. Whether philosophical, or colloquial, the association of spontaneity with notions of vitality is ultimately arbitrary. Spontaneity is not life, unless ‘life’ is conceived as the irreducible operation of the multiple as such.

[2] Public Choice Theory serves as a reliable proxy for minimalistic, game-theoretical axioms in their directly political application. In her book All You Can Eat: Greed, Lust and the New Capitalism (2001), Linda McQuaig cites a short fable by Amartya Sen, designed to satirize the Public Choice approach: “‘Can you direct me to the railway station?’ asks the stranger. ‘Certainly,’ says the local, pointing in the opposite direction, towards the post office, ‘and would you post this letter for me on your way?’ ‘Certainly,’ says the stranger, resolving to open it to see if it contains anything worth stealing.” Notably, in contenting itself with a satirization of disciplined moral skepticism, this line of criticism is brazenly unembarrassed about its dogmatic structure. Its rhetorical brilliance diverts from its substantive socio-historical meaning, which is the acknowledgment that solidarity is premised on the absence of a question. In other words, it demands, finally, the docile acceptance of an inarticulate presupposition. In this demand is to be found its irreparable weakness, shared by all cultural commitments – typically religious in nature – that are grievously wounded by the very fact of coming into question. A comparable defense of transcendent altruism founded upon the pre-delimitation of critique will be seen in David Graeber’s ‘everyday communism’. There, too, fatal injury coincides with the beginning of skeptical thought. Since, in this framework of collectivist moral norms, the investigation is the real crime, an intrinsic inclination to totalitarianism proves difficult to control.

There is one, and only one, coherent rejoinder available to the Left on this point. The table has to be reversed, in order for autonomous individuated agency to occupy the role of the explanandum, with its production and reproduction within the collectivity determined as the critical problem. Naturally, the production of individuation within complex adaptive systems would not satisfy this demand, since the presupposition of any such analysis is uncoordinated multiplicity. The Left is compelled to maintain that war is not ‘the father of all’. It is darkly amusing, then, that we continue to argue about it.

[3] In Smith’s most widely-cited words, taken from the Wealth of Nations, the repudiation of assumed altruism is explicit: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.” It is only through this theoretical self-restraint that the emergence of social cooperation is critically explained, rather than dogmatically asserted. It is important to note, however, that the recognition of the problem is not in itself a solution. The solution is not a philosophical reservation, but a machine. In Smith’s case, of course, it is the market mechanism, understood as a catallactic generator, or engine of spontaneous order, that represents the general (abstract) form of social solutions to novel coordination problems, in a way that remains mainstream within economics up to the present day. When grasped within this framework, it is at least tempting – if perhaps not strictly compelling – to suggest that any purported successor to the market, capable of usurping the role of the market, could only itself be a new iteration of the market. The most prevalent contemporary radical (left) alternative requires that coordination problems, rather than being solved, are instead terminally dispelled. Among those unfashionable vestiges of the Marxist tradition which emphasize the inheritance of capitalistic management practices by post-capitalistic social regimes (as exemplified by Lenin’s Taylorism), there is at least the promise of collective action solutions taking the form of legacy cultural resources, although without solid prospect of further innovation in a post-competitive milieu.

[4] The formal application of game theory to evolution dates back to the early 1970s, pioneered by John Maynard Smith and George R. Price, through the theorization of evolutionary strategies (see ‘The Logic of Animal Conflicts’, 1973, http://adsabs.harvard.edu/abs/1973Natur.246…15S). Since the notion of ‘strategy’ has an ineliminable telic inflection, this mode of evolutionary formalization can be philosophically-conceived as a diagonalization of biology. A video interview with Smith on the topic can be found here: http://www.webofstories.com/play/john.maynard.smith/42;jsessionid=7E3CA894713888028A8D7066FB3F263E

The preparatory theoretical work of W. D. Hamilton is especially notable in this regard, since it is explicitly focused on the application of Darwinian intellectual tools to subtract the metaphysical pre-supposition of altruism. The rhetorical provocation of selfishness, as seen most prominently in the Hamilton-based neo-Darwinian synthesis of Richard Dawkins, testifies to this project. The ‘selfish gene’ poses altruism as a problem, which Hamilton had already productively addressed. This is how transcendental critique reaches social biology, whose compressed name – socio-biology – was, from its inception, a political scandal. Collectivist metaphysics was not slow to recognize the profound intellectual menace – at once ancient and scientifically-renovated – that it faced.

[5] The Santa Fe Institute gathers cross-disciplinary researchers for the study of far-from-equilibrium systems and their emergent behavior, characterized by path dependency, sub-optimality, and massive informational imperfections. Of special relevance to the discussion here has been the pioneering of ‘Complexity Economics’, associated in particular with the work of Brian Arthur, which provides a disciplined critique of equilibrium models in neoclassical economics. Markets approach equilibrium only in the way that all working machines approach an entropy maximum, without this limit being ever – or even approximately – actualized. See the institute’s website at http://www.santafe.edu/

The concrete socio-historical application of such thinking found in Manuel De Landa’s (2000) A Thousand Years of Nonlinear History (see bibliography).  

[6] Between ‘descriptive liberalism’ and ‘analytical anarchism’ – despite the apparent terminological escalation – there is no distinction of serious theoretical significance. ‘Order out of chaos’ (or at ‘the edge of chaos’) is the consistent explanatory horizon.

[7] The most influential proximal ancestor of current network theory (by far) has been connectionism. This intellectual movement, characterized by an extreme interdisciplinarity, introduced the problems of electronic engineering and distributed information systems into the study of biological, psychological, and social phenomena. Its name was coined by neural net-theorist Donald Hebb, in the 1940s. Rising to prominence from the early 1980s, connectionism has generalized the study of neural networks (or parallel distributed processing) in suggestive coincidence with the rise of the Internet. Its research orientation has been guided by the proposition that complex adaptive behavior is better explained by the pattern of connections between simple units than by complex properties inherent within concentrated entities of any sort. At a larger scale, connectionism updates the diffuse multi-century current of empirical associationism, accommodating it to the prospects of technological actualization within electronic networks. It is thus marked by a comparative disregard for elaborate symbolic structures, and for highly-organized internal states more generally. The atomic elements of connectionist analysis are linkage modules, supporting emergent systemic behavior. Like cybernetics before it, connectionism outgrew its own disciplinary contour, and dissolved into the sophisticated common sense of the world. (Generalized dominion can be difficult to distinguish from disappearance.) Subsequent attempts to specify a definite ‘theory of networks’ have been programmatically vaguer, resorting typically to some notional gestures of obeisance in the direction of mathematical graph theory. Much of this work has been seduced by literary temptations, bringing its enduring theoretical productivity into serious question. Most damagingly, in respect to its own capacity for conceptual genesis, the primary analytical discipline of connectionism – programmatic dismantling of mysterious essences into distributions – has been increasingly neglected, and replaced by an arcane cult of whole ‘objects’ withdrawn from the menace of disintegration.

[8] Axioms are independent, formally-articulated assumptions. Since each axiom is a basic presupposition which cannot (therefore) either be derived from, or support, any other, a set of axioms is an irreducible multiplicity. Consequently, an axiomatic has a characteristic mode of variation, based upon composition from wholly independent parts, which can be added or subtracted with comparative freedom. Because axioms are bedrock elements, their selection demands an irreducible experimentalism. (As a matter of logical necessity, the systems they compose can never determine the characteristics of a missing axiom.) Within a social context, the pursuit of minimal axiomatic systems is ideologically charged, since it corresponds to a contraction of public purposes. The historical disintensification of capitalism has proceeded, as Deleuze & Guattari note, by way of an axiomatic proliferation. Addition of axioms is the way capital has been socially compromised. From a Francophone perspective, this tendency appears as a resilient teleological structure. When the same prediction is extended to Anglophone cultures, in which the recession of classical liberalism remains far more seriously contested, less confident conclusions are advisable.  

[9] Rigorous transcendental formulation of the model network – with all the conceptual ironies and traps this involves – finds its highwater-mark in Deleuze & Guattari’s essay ‘Rhizome’ (which introduces the second volume of Capitalism & Schizophrenia, A Thousand Plateaus). A ‘rhizome’ acquires facile (contrastive) definition through its distinction from the ‘arborescent’ schema of hierarchical sub-division. It proposes an absolute horizontality, approached through dimensional collapse, which opposes the rhizome to the tree, reticulation to hierarchical structure, and contagion to heredity. “In truth, it is not enough to say, ‘Long live the multiple’, difficult as it is to raise that cry. The multiple must be made, not by always adding a higher dimension, but rather in the simplest ways, by dint of sobriety, with the number of dimensions one already has available – always n – 1. (the only way the one belongs to the multiple: always subtracted). Subtract the unique from the multiplicity to be constituted; write at n – 1 dimensions. A system of this kind could be called a rhizome” (ATP 6). When analytically decomposed, the rhizome exhibits a number of consistent, distinctive features. “1 and 2. Principles of connection and heterogeneity: any point of a rhizome can be connected to anything other, and must be. … 3. Principle of multiplicity: it is only when the multiple is effectively treated as a substantive, ‘multiplicity’, that it ceases to have any relation to the One as subject or object, natural or spirtitual reality, image and world. Multiplicities are rhizomatic, and expose arborescent pseudomultiplicities for what they are. … 4. Principle of asignifying rupture: against the oversignifying breaks separating structures or cutting across a single structure. A rhizome may be broken, shattered at a given spot, but it will start up again on one of its old lines, or on new lines. You can never get rid of ants because they form an animal rhizome that can rebound time and again after most of it has been destroyed. … 5 and 6. Principle of cartography and decalcomania: a rhizome is not amenable to any structural or generative model. … [The map] is itself a part of the rhizome. …” (ATP 7-13). Manuel DeLanda proposes the term ‘meshworks’ for such systems of flat, heterogeneous, interconnectivity, which he opposes to (comparatively rigid and homogeneous) ‘hierarchies’.

[10] A network, in what is by now the overwhelmingly dominant sense of this term, is by definition robust. It is constructed in such a way as to tolerate massive disruption. Thus the perennial relevance of the military roots of the Internet. In its practical application, communications resilience has been inseparable from resistance to censorship. Like the basic Internet protocols, Tor (‘the onion router’) is decended from a military research program, initiated in the mid-1990s by the United States Naval Research Laboratory and subsequently pursued by DARPA. The regularity with which critical elements of state security apparatus are deflected into crypto-anarchist streams, and inversely, suggests a principle of strategic reversibility, in conformity (on one side) with the ‘poacher-turned-gamekeeper’ phenomenon. Given the prominence of treachery within all rigorously-constructed games, it should not be surprising to encounter this extreme fluidity of partisan identities, in which allies and enemies switch positions. The figure of ‘the hacker’ is notably liminal in this regard, representing – simultaneously – an ultramodern incarnation of the outlaw, and a skill-set indispensable to effective formations of contemporary power. At its highest levels, strategy is a matter of ‘turning’. This is the diplomacy intrinsic to strategy (and thus to war), once the latter is liberated from the strait-jacket of its political – or Clausewitzean – determination, and released into a conceptual space bounded only by a transcendental horizon. Friend and foe are defined within the great game, rather than outside, by its transcendent (political) frame. There can be no assumed parties at the transcendental level of the game, where not only every alignment, but any constitution of agency is itself a ‘move’. Agencies are pieces, consequent to strategic decisions. However tempting it might be to dismiss such considerations as arcane, they are already being condensed by commercial crypto-systems as practical problems. In regards to their legal form, modern business corporations have been synthetic agencies for well over a century. In the emerging epoch of Digital Autonomous Organizations (‘DAOs’), whose economic and military implications are yet scarcely glimpsed, this status advances from a matter of legal definition to one of software implementation. It consummates the historical triumph of code. At the end, as – invisibly – from the beginning, the transcendental subject is fully immanent to a plane of strategic production.