Crypto-Current (058)

§5.8 — Whether history ‘in general’ is anything other than the history of money remains an open question. Certainly, the distinction between ‘history’ and ‘pre-history’ seems to have been decided by monetary innovation. The earliest digital recordings are accounts.[1] In the beginning was the registry. If this distribution of emphasis seems unbalanced, the fact that – in our own time – a distributed ledger manifests primarily as a monetary innovation tends, nevertheless, to vindicate it. Commentary in the “Bitcoin is about much more than money” vein, while copious, also comes later.[2] The monetary model sets the matrix.

§5.81 — A bitcoin, or part of a bitcoin, is a number of numbers, or several. In this it reproduces an abstract structure that is essential to the nature of money, in any of its variants, although realized at very different degrees of formalization. The semiotic complexity of money is expressed by a multiplicity of numerical dimensions. (Money not only quantifies, it quantifies multiplicitously.) Even prior to the introduction of allocation as a topic, monetary numbers divide by signification and designation. They function arithmetically as counting numbers and indexically as registry numbers (indices). The distinction is illustrated by the coexistence of a denomination number and a serial number on every bank note. The final term in the semiotic triad – the allocative number – corresponds to a tallying of bank notes, for instance – most concretely – through their bundling into ‘bricks’. These dimensions are primeval. Yuval Noah Hariri writes (in Sapiens: A Brief History of Humankind, p.182): “The first coins in history were struck around 640 BC by King Alyattes of Lydia, in western Anatolia. These coins had a standardized weight of gold or silver, and were imprinted with an identification mark. The mark testified to two things. First, it indicated how much precious metal the coin contained. Second, it identified the authority that issued the coin and that guaranteed its contents.” The coin bears an index of composition and a sign of credentials. The third semiotic dimension is added in a counting house, and introduces – from the beginning – the ledger.

§5.82 — Every commercial transaction involves a conversion into numbers. There is no primordial difference between monetary circulation and digitization, recognized as the historical process. In its narrower, electronic sense, however, the digitization of money does not date back very far. The first electronic money precedes Bitcoin by no more than half a century. Precursors are retrospectively identifiable, including charge coins, charge cards, ‘charga-plates’, and air travel cards. Western Union began issuing charge cards to frequent customers as early as 1921, but the runaway electronic ‘derealization’ of money is a far more recent phenomenon.[3] The first credit card[4] – accessing a bank account by means of a plastic identification document – was the BankAmericard, launched in September 1958 (and renamed ‘Visa’ in 1977). It took another eight years for the system to be extended beyond the United States (to Britain, with the ‘Barclaycard’, in 1966). The spread of electronic banking outside the English-speaking world was far slower still. Widespread adoption of the new monetary medium in Continental Europe, for instance, did not take place until the final decade of the 20th century. Most of the world skipped this stage of monetary evolution altogether.

§5.821 Electronic monetary transfers – as required by credit cards – are not yet an online payment system. The former involves electronic settlement, but not yet digital cash.[5] Electronic bank credit operates exclusively between trusted parties. The cash-like aspect of the transaction takes place offline, between the cardholder and the goods or services provider. Even here, some basic characteristics of cash are sacrificed, most notably anonymity. It is ‘cash’ in this reduced sense that is translated online by the first consumer-level digital money services, exemplified by PayPal.[6]

§5.83 — It was not the personal computer that set the frame for the next stage of money’s technological evolution, but the mobile phone. Within this new epoch of consumer electronics, ‘personalization’ is intensified, through heightened communicative-orientation and the massive distribution of computational capability.[7] It is easy to miss the full complexity of the mobile phone as a technological nexus. Not only does it serve as a telecommunications and Internet-access device, but also as a scanner, and a personal identity hub. In combination, these features enable convenient, efficient, and passably secure monetary transactions. The serendipitous contribution of an in-built camera to the mobile phone’s function as a monetary platform is especially worthy of note. A facile photographic shot closes the transaction. The era of the bar-code thus passes into that of the QR-code.

§5.831 — The age of mobile payments dates back only to 2007. In that year, Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania respectively, released their M-Pesa mobile-phone based finance application, developed by Vodafone. ‘M-Pesa’ abbreviates ‘mobile money’ in hybrid tech-jargon and Swahili. The application was designed to support elementary banking services on wireless telecommunications, in drastically under-banked societies. It enabled monetary exchanges between users, with the additional capability to facilitate microfinance credit. Anybody with identity certification (such as a national ID card or passport) could use M-Pesa to deposit, withdraw, or transfer money through their mobile device. Its rate of adoption exceeded all expectation, resulting on social, cultural, and commercial success on a now already legendary scale. From its take-off point in East Africa, the service was subsequently expanded into Afghanistan, South Africa, and India, reaching Eastern Europe in 2014. It has been in China, however, that the new fusion of money and telecommunications has developed most explosively. China’s mobile payment market has been opened by its Internet giants Alibaba and Tencent. Up to late 2015, Alipay dominated, accounting for over two-thirds of mobile purchases by value. Tencent’s competitor system, based upon its WeChat[8] social media application, consolidated its position through a highly-successful marketing campaign themed by digital emulation of traditional ‘red-envelope’ monetary gifts. By the first quarter of 2017, Alipay and WeChat between them were servicing 94% of the country’s mobile payment market. Chinese late-mover advantage has enabled the country to leap-frog plastic, transitioning directly from paper to wireless. By early 2017, US online payments amounted to scarcely 2% of the Chinese figure (which had reached the equivalent of US$8 trillion).

§5.84 — The story of electronic money is not exhaustively subsumed into that of banking. In has various quite separate lineages, of greater and lesser independence. One of the most important of these passes through online multi-user environments and games. The fictional quality of in-game monetary systems has shielded them from regulatory scrutiny, to a degree that cannot easily be philosophically defended. They thus open a zone of special interest in regards to the ontology of money.[9] What is the relation of ‘real’ money to simulated money? Virtual currencies, such as the Linden Dollars (L$) of Second Life, made this question ineluctable. If online ‘pretend’ currencies had an exchange value denominated in offline ‘real’ currencies – as they soon did – how solid could any ontological discrimination between the two be? It began to dawn upon commentators that a new age of private currency issuance had been surreptitiously initiated. It is perhaps a matter of mere historical contingency that far more consequential developments have not yet been catalyzed in this zone. There are few obvious limits to what might have come.

§5.841 — The industrialization of virtual currency production in the crypto-epoch was partially anticipated by the phenomenon of ‘gold farming’ in the world of MMORPGs (or Massively Multiplayer Online Role-Playing Games). Many of the most popular MMORPGs permit trading in items of in-game value. For instance, a special weapon acquired at the cost of much (in-game) effort and peril, and therefore scarce enough to be precious, might be surrendered by one avatar to another in exchange for an out-of-game payment between their respective players. Such arrangements called out for economic rationalization, through specialization, concentration, and Internet-enabled geographical labor arbitrage. China’s business renaissance during the reform-and-opening period coincided with the emergence of this opportunity, and its new entrepreneurs moved nimbly to take advantage. Tedious game play was quickly transformed into commoditized labor, as cheap, capable, Chinese youngsters were organized by upstart businesses to undertake grueling virtual activities. Such ‘gold farms’ thus functioned as exchanges. Through them, game currencies could be laundered into ‘real’ money. A Möbian economic circulation now crossed seamlessly between the virtual and the actual.

[1] See Denise Schmandt-Bessera, The Earliest Precursor of Writing (1977 / 06): “Evidently a system of accounting that made use of tokens was widely used not only at Nuzi and Susa but throughout western Asia from as long ago as the ninth millennium BC to as recently as the second millennium.”

[2] Morgen E. Peck writes: “… money is only the first, and perhaps the most boring, application enabled by Bitcoin technology.”

[3] Conceived as a popular cultural theme, the guideline to the plastic phase of money was invisibility. In this respect it evidences a teleological model, defining an axis of progress. Monetary improvement is sublimation, or dematerialization. In accordance with classical precedent, finality is identified with the pure idea, beyond all contamination by, or compromise with, particular substance. As previously noted, something more than a convergence with mathematical Platonism is at work here. The history of money – whether actual or fantastic – does not draw upon idealism as an extrinsic inspiration. Rather, it idealizes practically, and even preemptively. Elimination of friction – as implicit and later explicit goal – serves as a convenient proxy for the monetary ideal. Keynesian derision of the “barbarous relic” – the primitive lump sum – is once again the critical reference. Progress – conceived implicitly as financial dematerialization – is projected into space as a ripple pattern. Differential adoption rates and patterns of diffusion mark out stages of development, organized by a definite telos (distinguishing advanced from primitive money). According to this schema, at the end of money, the transaction coincides exactly with its Idea. The medium is then nothing. If the notion of a direct private relation without frictional mediation carries certain historic-religious associations, these are probably not coincidental.

[4] The term ‘credit card’ seems to have first been employed by Edward Bellamy, in his utopian-socialist novel Looking Backward (1887). 

[5] Marc Andreessen says of Bitcoin, in a Washington Post interview (May 21, 2014): “…if we had had this technology 20 years ago, we would’ve built it into the browser. […] E-commerce would’ve gotten built on top of this, instead of getting built on top of the credit card network. We knew we were missing this; we just didn’t know what it was. There is no reason on earth for anybody to be on the Internet today to be typing in a credit card number to buy something. It’s insane …”

[6] PayPal was created from the merger of Confinity (founded in December 1998 by Ken Howery, Max Levchin, Luke Nosek, and Peter Thiel) with (founded in March 1999 by Elon Musk). The new company was established in March 2000, acquiring its name the following year. PayPal went public in February 2002, in an IPO that generated over $61 million. The company was sold to eBay in July of the same year for $1.5 billion. (The resulting Musk and Thiel fortunes have been among the most nourishing seed-beds of 21st century capitalism.) The extreme synergy between eBay’s online market-making business and PayPal’s secure digital payment service propelled its initial growth, first in the US, then through eBay’s international business, and finally beyond eBay. PayPal was spun-off from eBay in July 2015, following the firm recommendation of hedge fund manager Carl Icahn. It began to accept bitcoin in September 2014, announcing partnerships with Coinbase, BitPay, and GoCoin. While PayPal has been rewarded by the market for its pioneering role in facilitating financial transactions over electronic networks, its limitations are severe, and in the age of cryptocurrency increasingly obvious. Its users are entirely unprotected from the company’s radical discretion, and receive no exit benefits from the service in respect to the national-financial regime in which they operate. Essentially, PayPal adds a new ‘trusted third party’ to the financial ecology, and one of minimal autonomy. Nothing very much has been disrupted by it.

[7] The resonance between mobile consumer technology and portability as an essential monetary quality cannot be coincidental to the emergence of mobile currency. A desktop wallet is patently inconvenient. By its abstract nature, money is destined to eventual convergence with the communicative situation in general, which it tends to haunt as an accessible semiotic dimension. Wherever speech can occur, the potential for contractual execution will finally follow. Only in this way is Homo economicus completed. At the confluence of these currents lies the inevitable formula: Money is speech. It not only assumes, in the Anglosphere cultural context, informal and formal constitutional protection in the cynical culmination of liberalism. The claim extends further – into identity with the claim as such. Money – the pure power of acquisition – seizes for itself the mantle of realizable logos. The conceptual fusion of the smart contract is reversible. Transactions can be augmented by machine intelligence because intelligence is inherently transactional. Minds and market-places tend to convergence.

[8] The scale of WeChat (微信, Wēixìn) can be hard for those outside China to appreciate. With over a billion regular users, the application is truly ubiquitous. WeChat messaging accounts for over a third of the country’s (massive) mobile phone usage.

[9] Given the striking philosophical importance of (ludic) virtual currencies, the social under-development of the problem is remarkable. An obvious exit ramp from the Macro financial regime has been almost entirely ignored.

Crypto-Current (057)

§5.7 —Nick Szabo begins his (2005) proposal for ‘Bit gold’[1] with the remark: “A long time ago I hit upon the idea of bit gold. The problem, in a nutshell, is that our money currently depends on trust in a third party for its value. …” Even monetized precious metals, he notes, have involved trusted third parties in their validation. Worse still “you can’t pay online with metal. Thus, it would be very nice if there were a protocol whereby unforgeably costly bits could be created online with minimal dependence on trusted third parties, and then securely stored, transferred, and assayed with similar minimal trust. Bit gold.” Bit gold in this respect is indistinguishable from Bitcoin.

§5.71 — There is something at work here that the psychoanalytically-inclined might gloss as a return of the repressed. Since the triumph of paper over metal has been the central public narrative of 20th Century monetary history, the effect is unsettling – even uncanny. The metallic model was supposed to have been left behind. More specifically, the populations of ‘sophisticated’ or macroeconomically-managed and thus at least partially post-capitalist societies were supposed to have been educated out of it, automatically. Nothing more distinctly signals economic primitivism among such peoples than metalized wealth. Explicit lessons had seemed unnecessary, therefore. A return of gold from the economic margins looked no more likely than a restoration of Germanic Paganism.[2]

§5.72 — Among the attractions of abstract metal, none exceeds its inherited, intrinsic, adamantine resistance to discretion. Formalized negatively, with maximum concision, Alchemy is impossible.[3] Gold has no greater virtue than this. It precludes magic, as silver repels werewolves.[4] The replication of this characteristic within a digital simulation is Bitcoin’s most basic achievement. It has realized homeopathic gold. Not a molecule of the original substance remains, yet the solution still delivers the cure. Fully-abstract gold has been modernity’s obscure goal from the beginning. ‘Invisible’ credit money was its defective preliminary draft. Bitcoin, it turns out, is the true Philosopher’s Stone.

§5.73 — Since Bitcoin has no central mint, it cannot generate revenue in a way strictly equivalent to seigniorage. It does, however, permit of a close analog. Early-stage miners of Bitcoin (or any related cryptocurrency) are able to accumulate substantial holdings with comparative ease, perhaps amounting to a significant proportion of the total (ultimate) stock. Similarly, early speculative investors can afford to take a commanding position in the currency during the early stages of introduction, when its price remains comparatively – and even, one might speculatively predict, absurdly – low. Of course, the introduction of speculative hazard into this analysis is already the pre-emption of a capitalistic justification. Once Bitcoin’s prospects begin to be taken seriously, these early intimations of moral-political discomfort translate into acute concerns about the profound inequality of bitcoin distribution,[5] pitched upwards into vociferous fervor in direct proportion to the extent that such spiky stock holdings could now actually mean something. Yet even for the super-rich – defined narrowly for these purposes as those with personal assets exceeding the value of the entire bitcoin supply at present prices – optimizing a financial position in the crypto-currency at this early stage in its history involves a complex game. Since any attempt to monopolize the entire stock of coins would suppress the value of BTC as a circulatory medium, it would be predictably self-defeating. The value of any currency has necessarily to be a more or less direct function of its social diffusion.[6] There can be little doubt that such calculations are in fact taking place, and their outcome – even, roughly, their ‘equilibrium’ – is among the crucial determinations of the bitcoin price. Currency monopolization – understood as ownership, rather than issuance, of the entire monetary stock – is an inherently paradoxical project.

§5.74 — It is easy to deride the notion of monetary ‘backing’ for its naivety (or in a more contemporary idiom ‘pwnedness’). The idea has become a popular icon of duped thought. Its application to Bitcoin has therefore to be considered among the very weakest of criticisms, notable more as a symptom than an argument. There is – of course – nothing at all ‘behind’ (or ‘backing’) Bitcoin beyond the implemented Bitcoin protocol itself. This is not a unique feature. It merely makes Bitcoin post-classical (‘modern’) money. It is not being unbacked that makes it modern. Nothing was ever ‘backed’ beside deposit receipts. It is the relevance of a question of backing that carries the marker of modernity. Modernity in money is ecological coexistence with residual promises to pay. Naivety and cynicism are co-produced by it. Since the abolition of the gold standard, monetary ‘backing’ has been solely political. It rests upon the credibility of an issuing authority, which in turn rests upon more fundamental public perceptions of the durability, competence, and constrained malignancy of a regime.

§5.741 — The phased process of demetallization might appear to tell a story of cumulative monetary degeneration. Yet it would be a mistake to interpret this process as a dissolution of secure foundations. There is no type of money – however metallic – that can lay claim to an absolutely inherent value, extricable from a speculative assessment of its acceptability.[7] The desirability of a monetary medium cannot finally be grounded in its substantial properties, but only in the dynamic assessment of these properties, occurring within a market context. Its value is solely ‘based’ upon the system of scarcity it creates, insofar as this is latched onto by network effects. In consequence, money is essentially prone to ontological crisis – when it is discovered to be nothing in itself. Bitcoin accelerates the advance of monetary theory into cybernetic fundamentalism. It’s turtles – or, more precisely, feedback dynamics – all the way down. By philosophical analogy, the metallist theory of money corresponds to a pre-critical epoch, and the fiat era to an idealist efflorescence of elaborate, exhaustively constuctionist anti-realism. Cryptocurrency initiates a double-sided (transcendental realist) correction. Monetary value finds no ground outside the circuit, but the circuit is ontologically autonomous.

§5.742 — Currency[8] is money apprehended as a means of payment, flowing through transactions as a circulatory medium. Its principal virtue – liquidity – is a measure of how readily it is accepted in exchange for goods and services. ‘Acceptability’ is thus roughly synonymous with commercial value. Yet, when the acceptability of any currency is analyzed, it is found to depend primarily – if not exactly ‘originally’ – upon how widely it is accepted. However tempting it may be to dismiss such a nakedly circular definition as an absurdity, the formulation is deliberate, and informative. The acceptability of money is irreducibly self-referential. Money is acceptable in any particular case only because it is acceptable in general, while generality is a cumulative product of particularity, and nothing besides. The nonlinearity is essential, rather than accidental, and cannot be resolved into anything more fundamental. This is evidently a problem of the ‘chicken-and-egg’ type, characteristic of positive feedback dynamics. Thus, as previously noted (perhaps obsessively), the virtuous circle of liquidity translates, without remainder, into a display of network effects. The utility of a network, to each individual user, grows superlinearly with the number of users. With currency, as with all systems that generate positive returns to scale, ‘nothing succeeds like success’, and there is ultimately nothing to success besides. There is no basis of value to be excavated beyond or beneath its own self-reinforcement. The supreme, self-grounding virtue of acceptability is thus practically revealed. Conceptually, acceptability is integrative, since the functions of money as a store of value and as a unit of account can be gathered under it (distinguished only formally, rather than substantially). We enter the cybernetic abyss, without transcendent ground. The succinct account of this dynamic provided by Koen Swinkels cannot easily be improved upon:

Ultimately the only thing that matters in people’s decision to use bitcoins as a medium of exchange is their expectation that enough other people will accept it as payment in the future. That alone is enough basis for people to buy bitcoins now and to invest in the bitcoin infrastructure now. […] The circularity involved in the argument is unmistakable but unavoidable and, according to the bitcoin enthusiasts, unproblematic. That’s just the thing about a good that is used as money or is expected to be used as money in the future: people value the good because they think that enough other people will value it. The circularity is just the network effect in action.[9]

§5.75 — Since Bitcoin advocacy is indissociable from claims about the quality of money, it is propelled into a collision with Gresham’s Law, as popularly – and quite adequately – summarized by the maxim bad money drives out good. Gresham-effects can be easily recognized in modern life. Given two cash notes, one pristine, the other crumpled, stained, and taped together, which would one expect the holder to be inclined to part with first? In an earlier monetary era, characterized by widespread coin-clipping – rather than germ-saturated paper – the economic significance of such decisions was more substantial. As exemplified by such examples, the most intuitively compelling application of Gresham’s Law is to physical cash. The classic archaic case concerns two coins of identical nominal value, but differentially clipped. The negative comparative appeal of the ‘short’ coin – which any holder wants as soon as possible to be rid of – accelerates its currency. A ‘pass-the-parcel’ dynamo is envisaged. Implicit within this model is the proposition that the disposal, rather than acceptance, of currency is the primary driver of its circulation. There is a crucial irony – which we will return to in its other guises – that the spontaneously-concerted attempt to shed bad money looks indistinguishable from an illustration of good money, especially when hoarding is conceived as an anti-social economic vice. Money is most stimulative when it is least wanted.[10] Yet this assumption requires a peculiar inversion. Since even minimal acceptability is non-mandatory under ordinary economic conditions, we can be confident that it is in fact the ‘good’ coin that propels the circulation of the ‘bad’ one, by sustaining the standard of value which the inferior instance parasitizes. The tacit calculation involved in every acceptance of a bad coin includes the question as to whether it still suffices to pass as a acceptable money.  

[1] See:  

Among the comments, there is much of interest to be found. Sampled glancingly:  

“…you might want to check out It’s a decentralized, P2P, cryptocurrency based on a proof of work algorithm.”  

“Congrats on inventing BitCoin …”

“Thanks for laying the foundation for bitcoin Nick …”

“One day, people will look upon this post as the actual genesis moment of Bitcoin.”

[2] It would be tempting at this point to make a topic of progressive complacency, but in the present context it would be a digression too far. It need only be said that extravagant conclusions can easily be drawn from the realistic apprehension of ratchets. That there is no way back says much less about the resilience of the new order than is commonly supposed.

[3] Much could no doubt be made of the fact that Isaac Newton was both an alchemist and the Warden of the Royal Mint. It is surely unnecessary, nonetheless, to insist that we see here something other than a simple contradiction. The poacher-turned-gamekeeper phenomenon is surely an important part of the story. Having paid serious attention to the possibilities of magical money-creation, Newton was well-placed to understand how the enemies of hard money think.

[4] Thus gold is hated among magicians. The antagonism is explicit. In the Macro era, the gold market offers an audience reaction to financial conjuration. It measures negative applause. “Jim Grant … describes the price of gold as the reciprocal of the credibility of central banks …”


[5] In a (January 2014) article, Joe Weisenthal cites Citigroup currency analyst Steven Englander on the inequality of Bitcoin holdings. He attributes a Gini coefficient of 0.88 to its distribution. This significantly exceeds any wealth disparity ever measured within nation states. Despite this, Englander suggests the figure is probably an under-estimate.

[6] A fully-monopolized monetary stock would correspond to a multiplication by zero. In Libidinal Economy, Jean-François Lyotard applies exactly this formula to the classical mercantilist valorization of unbounded bullion accumulation, which is thus exposed as a political-economic death drive. Comprehensive possession of a commercial medium is self-extinguishing. A powerful trading position does not extrapolate to absolute concentration. In monetary matters, there can be no completion of advantage. This ‘paradox of wealth’ is further accentuated in the case of Bitcoin, since adoption in this case has to be coaxed, under conditions never less than difficult, and – at least potentially – openly hostile.

[7] To quote Michael Goldstein (@Bitstein, from a tweet 2015/01/13): “I rarely see skepticism of Bitcoin that is not more generally just skepticism of money.”

[8] A currency (from Middle English: curraunt, “in circulation”, from Latin: currens, -entis) is money circulating as a medium of exchange.

[9] See:

[10] Gresham’s Law identifies the attractiveness of a monetary medium as a source of commercial friction. Monetary quality, under the most straightforward construction of the argument, poses an intrinsic obstacle to spending. Money is thus already modeled, implicitly, as ideally repulsive. In this regard, Keynesian Macro appears as a higher Greshamism. Good and bad switch places. Or rather, the good money people would prefer to keep is denounced as an evil temptation to ‘cash preference’. It is the bad money, intrinsically motivating its own disposal, which now counts as ‘good’. A slave revolt in monetary theory has then taken place.

Crypto-Current (056)

§5.66 — Liquidity is valuable, uncontroversially.[1] It has a price. This is to say, reciprocally, that illiquid assets trade at a discount. Financial systems therefore automatically assimilate the concept of liquidity to that of risk, which configures illiquidity as negative investment quality. The essential – and innovative – macroeconomic contention is that liquidity preference, beyond a certain threshold, becomes excessive, malignant, and self-contradictory. Rather than returning to equilibrium, it feeds positively upon itself. Generalized investment aversion drains the pool of liquid assets, on a spiral into depression. Spending, then, is a social obligation, whose collective importance justifies suppression of private discretion. In this way, macroeconomics provides a specific model for the tragedy of economic liberty. This is its most profound counter-modernist theme. It is an argument translatable without remainder into the language of contradiction. On such lines, macroeconomics can be configured as an elaborated sub-plot within the critique of political economy initiated by Marxian historical materialism.

§5.661 — When configured in terms of mass social psychology, the thirst for liquidity expresses distrust, or negative confidence. Conceived economically, it is disinvestment. Conceived politically, it is dissent. Only liberalism, of the old type, would dissuade a regime from seeking to suppress it, and Macro – which is always Macro in power – means that liberalism is dead. The point can be made more strongly. Macro is the death of liberalism, in power.  

§5.662 — All earnest pretension to ‘counter-cyclical policy’ notwithstanding, the systematic asymmetry is manifest. Politics tends to soft money. Governments – especially democratic governments – do not pass marshmallow tests. “In the long run we are all dead,” Keynes famously quipped, and in doing so the voice of the state – now channeled by macroeconomics – was immediately audible. Delayed gratification was being explicitly re-modeled as a bourgeois vice. Created to ‘manage’ long-wave capitalist down-turns, and then to economic contractions of even minimal severity – its interventions scaled down by an order or magnitude to the pulse rate of (roughly) five-year business cycles – Macro tends to configure itself as the correction to capitalism in general. Globalization is deflationary, because it operates to control prices, through arbitrage. Technological efficiencies are an even stronger driver, in the same direction. The relation of macroeconomic stimulation to the capitalistic mechanization and globalization of production can therefore be understood as compensatory. Macro tacitly legitimates itself as an antidote to deep deflationary dynamics inherent to the modern economy. It is designed to make money soft.

§5.663 — While it requires a portrait of Macro – as a consummate regime – to see where we are, the picture takes us away from money, rather than toward it. Crypto-currency is the negative of all this.[2] It shorts political economy in general. The broad contours of a Micro Counter-Revolution are for the first time definitely indicated. Macro is essentially oriented against saving. In striking contrast, Bitcoin invents the ‘hodler’ who disdains short-term market interventions.[3] This is nothing less than the synthesis of a new bourgeois mentality or its substitute. A fierce re-animation of prudence accompanies the cryptic Micro insurrection. It understands, this time around, that it has dedicated enemies, true opponents, and not merely feckless villains indifferent to its virtues. Since Keynes, incontinence has been a cause, and then – almost immediately afterwards – a regime. All capacities for prudential self-protection outside state guarantees have been targeted explicitly for destruction. This is the framework within which money has been increasingly understood. Everyone should know, by now, what happens to ‘hoarders’ under socialism. Macro is only very slightly more subtle. Stigmatized liquidity preference is legible enough. The cultural importance of the intrinsic Bitcoin ideology follows from this. To ‘hodl’ is to hoard defiantly, in explicit recognition of the socio-political game being played. It is to save, not merely for the future, but for an impending revolution in the order of time. The value of Bitcoin, in this critical regard, is that of an option for liquidity preference that cannot be politically neutralized. It is the anti- New Deal. In other words, it is the Old Deal, but this time capable of protecting itself. No one is any longer relied upon to keep it. It keeps itself. That’s what algorithmic governance means.

§5.664 — As money has ‘evolved’ the axis of inflation-deflation became ever more strongly determining. Money’s dimension of variance through depreciation or appreciation is the carrier of its macroeconomic control function. As a good tool, it keeps the potential distractions of ulterior features to itself. Value is the message it is trained to focus upon. Also ever more, it seems ever thus. Yet ‘inflation’ is only superficially a trans-historical economic category. Over the past half millennium three distinct – if over-lapping – phases are identifiable. These can be related to the very different dynamics of monetary asset (bullion) glut, excessive (private) credit creation, and national macroeconomic relaxation. In each case there is an expansion of supply, which becomes inflationary when it results in a comparative abundance of money (relative to the general level of economic production). Such formal equivalence, however, offers little concrete guidance to the specific working of each monetary regime. Insofar as fractional reserve and then central banking can be seen to obey pre-existing economic laws, the insight is overwhelmingly retrospective. Neither innovation was discoverable through such compliance. On the pattern of the synthetic a priori, their necessity was found late. This – alone – can also be expected from what comes next.

§5.665 — Crypto-currencies initiate a new phase in the history of inflation. Bitcoin, crucially, structurally forecloses inflationary processes of the three dominant antecedent types. Its absolute abundance is rigidly constrained, fractional reserve multiplication is invalidated (as ‘double spending’), and absolute ‘policy neutrality’ excludes macroeconomic laxity.[4] There is no tried-and-tested method of doing inflation with Bitcoin. This is not, however, to reach the end of the question. In the era of crypto-currency, appreciation-depreciation becomes ecological. It occurs between coins. Monetary pluralization, rather than monetary expansion, becomes the leading phenomenon.[5] After Macro, the deflationary dynamic reverts to a properly capitalistic – which is say Darwinian – distributed mechanism.

[1] Alfred Marshall’s variable k defines aggregate liquidity through the ratio of broad money to economic output. While the formula acquires a certain rigor through its approximation to sheer tautology, both of its productive terms are notably elusive. Neither ‘money’ nor ‘output’ can be realistically conceived as simple, elementary, unambiguously measurable, or categorically delimited. Each is as plausibly captured by the processing of the other through k as by some supposedly primary factual apprehension. Macro, of course, fully – or at least very substantially – understands this. It takes perverse institutional (i.e. guild) pride in the inadequacy of its foundations, when inspected from the inside.

[2] The realization that Bitcoin is an implicit threat to the entire edifice of the reigning macroeconomic order had been refracted, by end-2017, into Internet clickbait. “Dutch national newspaper urges people to sell all their Bitcoins as it undermines the government, could destabilise the economy and reduces the power of central banks.”

[3] To hodl is to hoard bitcoins, based on the presumption that they are radically undervalued relative to the eventual near-equilibrium level when they have come to denominate the principal terrestrial money system. The term seems to have been coined in late 2013, with the word freezing a comic misspelling. (“Hold on for Dear Life” is a subsequent humorous acronymic.) See:

[4] Pierre Rochard describes Bitcoin’s “non-discretionary monetary policy” as “asymptotic money supply targeting (AMST)”.  

[5] It should perhaps be noted that within the world of crypto commentary, this thesis is highly controversial.

Crypto-Current (055)

§5.65 — When conceived theoretically – or targeted administratively – as a macroeconomic aggregate, the ‘quantity of money’ turns out to be an extraordinarily elusive object. Two sources of complexity are especially notable. Firstly, the effective quantity of money is a twin-factor product, comparable to physical momentum, of monetary mass multiplied by velocity (the macroeconomic ‘multiplier’).  Secondly, the nature of money is inherently multiple, and intensive. This is formally recognized by the systematically differentiated – and nested – monetary definitions (M0, M1, M2, M3 … Mn …MΩ) employed by economists and financial professional.[1] Any asset of non-zero liquidity is money to some degree of intensity. (Monetary intensity is approximated by the reciprocal of the index.) Between the speeds and types of money there is only illusory orthogonality, or theoretical decomposition of the diagonal.

§5.651 — The most consequential area of controversy within the macroeconomic era – with intellectual roots that can be pursued back to the 16th century – concerns the relation of the velocity of money to its quantity. According to Irving Fisher’s formula MV = PQ, when the quantity of money and goods (‘M’ and ‘Q’) is held constant, the price level (‘P’) becomes a function of monetary velocity (‘V’). Potentially, and as a matter of historical fact, an entire technoscience of monetary management follows. Any authority that is attributed with responsibility for the money supply is compelled to concern itself with liquidity. Tightening-loosening defines the control axis.

§5.652 — Given the extreme complications of technical monetary analysis, it is not unrealistic to describe macroeconomics as the monetary neo-baroque. Its elaborations are implicitly unlimited. To present its convolutions as ultimately manageable requires a more-or-less cynical public relations exercise. It cannot be admitted – for reasons of trust-preservation – that the final overseers of the financial world do not have, and cannot have, any definite idea what money is. MΩ has no calculable determination. Far more importantly, at the other extreme, M0 is an advanced edge, and not a settled reality. It designates the intensive frontier of cash, commercial liquidity, or what money can do, as it has yet been historically encountered. In other words, it is problematic rather than theorematic, experimental rather than conceptual. Mx deranges all the formulas. We haven’t seen anything yet. Crypto-currency is showing us that.  §5.653 — To refer to a neo-baroque is to invoke a decadent paradigm, in something like the Kuhnian sense.[2] Ptolemaic cosmology is the unsurpassable model. Crucially, it is indefinitely expandable. As it decays, epicycles accumulate, but never to a point of intrinsic lethality. There is no such point. The fundamental error is wholly retrospective. It would be no less mistaken to imagine the monetary neo-baroque dying from its own exploding complexity. Macro need only add epicycles. Nothing impedes such a development. Computers and professional hyper-specialization even facilitate it. Simplicity is for gold-bugs, and other primitives. If Macro’s hypertrophic theoretical complexity appears increasingly magical – so much the better. Magic, as we have repeatedly seen, is functional. What matters to Macro – as institution, meta-institution, or regime – is primarily the credible illusion of understanding. That is where its authority lies. Macroeconomics must only pretend to a theoretical competence that is practically unobtainable. In this it epitomizes the socio-cultural status of expertise in progressive modernity, if not something far more general. Clerical authority has always rested on a pretention to mastery of that which is a mystery even to itself. Nothing new is to be expected there. Innovation arrives from outside.

[1] Precise definitions of the monetary phases have not been internationally standardized. The principle, however, is uncontroversial. Money is defined as a series of nested categories, proceeding from the narrowest to the broadest types (with the latter enveloping the former). Monetary ‘narrowness’ closely tracks liquidity. The extreme of narrow money, M0, is cash. Broader phases of money include bank credits, of incrementally rising maturity, and other comparatively viscous financial assets. Typically (but with some national variance), M0 is strict cash, M1 encompasses M0 and cash-like equivalents, M2 adds current accounts, M3 adds longer-term bank deposits and similar financial assets, while M4 (and higher) extends to monetizable assets and investments on longer time-horizons. Broader phases are more inclusive, more complex, more diverse, and of lower mean liquidity. They therefore exemplify, most obviously, the Monetary Neo-Baroque. A tempting error would be to construe the monetary phases as ascending from the intuitively accessible into lofty technical obscurities. … Cash is cryptic. …

[2] Thomas Kuhn outlined his catastrophic model of scientific history in The Structure of Scientific Revolutions (1962). He argues that empirical research is necessarily dominated by a conceptual framework which is comparatively resilient in respect to factual disconfirmation. When expressed at this level of generality, this is not a conclusion unique to Kuhn. It is one way that Kant’s Copernican Revolution is expressed through the philosophy of science. Data is never unframed.

Crypto-Current (054)

§5.6 — Once extracted from a domestic competitive environment, through establishment of a state monopoly of currency issuance, money supply is exempted from commercial spontaneity and becomes a macroeconomic problem. This is to say that it acquires the status of an overseen aggregate. Money is no longer conceived primarily as a kind, or as a distribution, but as a whole. It is envisaged in entirety.

§5.61 — It might be asked whether the term ‘macroeconomics’ has anything reasonably described as a common usage. The word is intrinsically extraordinary. It implies a very specific structure of professionalization, and credentialized expertise. In its maximally-reified sense – as it is employed here – it also has a designation that might escape familiarity, and certainly seeks to. Macroeconomics is not merely an intellectual domain, or its corresponding social object, but a regime.[1] Positive institutions are essential to it. These cross, consistently, between the realms of academic research and social administration. The theoretical procedures under consideration here are essentially managerial, shaped originally by policy orientation. The model macroeconomic thought-experiment takes the form: What if the government did X? Thesis and recommendation are one. Macro never speaks, then, without a side-address – at least – to the state. Power is endogenous to it. The ambiguity between Macro the thing and macroeconomics as a research domain naturally – and strategically – elicits confusion. Macro is a singular catastrophe in the technical sense, which is to say a systemic phase transition, but also – from certain inherently fragmentary and now systematically marginalized perspectives – an actual socio-historical disaster. The clue to Macro, so telling as to pass almost for a synonym, is oversight. It is lodged in that part of the social organism tasked with supervision of the whole.

§5.611 — Between the whole and its parts lies something more than a difference in scale. In no case does one simply scale-up to totality. The whole appears only to oversight (or is made to seem so). It is thus tempting to conceive macroeconomics as a structure of visibility.[2] Its essence is defined by what is called to appear before it. Any tribunal is like this. The economy is to be brought before Macro for inspection, judgment, and correction. Macro, then, is a massive, complex, pseudo-transcendent operation in the name of the whole, conducted upon the axis of trust, or confidence. It is the metaphysics proper to the economic realm. In the alien language of German idealist philosophy it might be characterized as central banking for-itself. In this respect, among others, it could not be anything other than the mainstream magical tradition.  

§5.62 — On the singular path actually taken by the world, money is recomposed as a Macro aggregate, the money supply. Under retrospective consideration, some such thing has long existed. In the same way, volcanoes erupted with a bang before anything with ears could hear them. But it is only in this way that Macro aggregates pre-existed the managerial structures which formulate them. The model of money as debt has limits, and thus provokes critique. Neither precious metals nor crypto-currencies can be assimilated to it. Positive monetary assets (collectibles) are its unthinkable outside.

§5.63 — According to the quantity theory of money, money supply determines the general price level. The economic consensus on this point is so broad it approaches recognition of a tautology.[3] After all, it would be strange indeed if money – the model object for economic estimation – were to be exempt from elementary principles of supply and demand. Although meeting a reception in popular culture appropriate to a tendentious claim, Milton Friedman’s succinct maxim that “Inflation is always and everywhere a monetary phenomenon” is in actuality almost entirely uncontroversial. The fundamental idea is one that even the Antichrist of today’s hard-money advocates, John Maynard Keynes,[4] subscribed to – without serious hesitation. Any instance of economic value is a registration of scarcity, and the value of money is only a special case of this general rule. It is, of course, in recognition of this utterly pedestrian claim that scarcity is included in any list of the essential properties required by a monetary medium. In the extreme case, glut destroys economic value. It is therefore understandable that the tendency among economists has been to negotiate the terms of this formula’s application, rather than to challenge it at a fundamental level. Submerged – very slightly – beneath the macroeconomic argument lies the real topic, which is institutional discretion in respect to money-supply management, and therefore the politics of trust. To what extent should controlled monetary debasement be available as an option to the regime?

§5.64 — The central Keynesian argument, as formulated in his The General Theory of Employment, Interest and Money (1936), has surely to be included among the most influential in history. Its unique virtue, from the perspective of the modern nation state, was to provide a rationalization for currency debasement. No previous political power had ever been blessed with such a thing. A Roman Emperor adulterating the coinage harbored no illusion about the essential corruption of the undertaking. It was nakedly a swindle, whose advantages overrode reservation. Now, however, there was for the first time an articulate justification for what was essentially the same procedure. Macro grounds its legitimacy in the proposition that programmatic monetary devaluation can, under certain circumstances, have positive aggregate economic effects, by contributing to the mobilization of unemployed resources stranded in social ‘liquidity traps’. This trade-off between inflation and unemployment – formalized in the Phillips Curve – has insinuated itself deeply into macroeconomic intuition, surviving even the complete collapse of its supportive empirical regularities during the ‘stagflationary’ 1970s.[5] It relates the inflation rate to an ideal socio-political equilibrium point, and therefore defines a managerial responsibility. Money is now indexed to a thermostat. It can be too hot (‘loose’) or cold (‘tight’). The regulatory imperative thus codified transcends any specific empirical hypothesis. The hypothesis is adjustable, and even radically replaceable. The new power, once installed, is far more resistant to retraction. Once the case for a campaign against ‘cash preference’ has been entrenched at the level of mass psychology, its theoretical foundations become dispensable. The communist and fascist anti-bourgeois tide of the 1930s found its principal Anglo-American expression in Keynesian macroeconomics. Here, too, ‘hoarding’ was denounced as a crime against the collective.[6] Implicit socialization of all economic resources was made rigorously axiomatic. There is nothing so fragile as a mere theory, here, then. Rather, there is the maturation of a socio-political program. The theory flexibly rationalizes a regime.

§5.641 — At the greatest scale of historical analysis, Macro is characterized by the way it places itself beyond the bourgeois definition of civilization. Among modernity’s ascendant prudential classes, high time-preference (or low impulse-control) served as distinctive markers of barbarism. Civilization thus acquired a measure, corresponding to a time-horizon. Industrial civilization was based upon psychological tolerance for efficient indirect methods. Roundabout production had secured its ethic. Macro breaks with all of this. Imprudence is now re-valorized on Keynesian grounds as pro-social stimulation. To spend is glorious. Anti-bourgeois cultural politics and administrative economic doctrine become one.

[1] Is Macro a regime, or does it decompose (diachronically) into regimes? The question might be inelegantly re-phrased: Would this vocabulary not better be reserved for a compendium of macroeconomic regimes (plural), in the sense that, for instance, Mark Blyth uses the term (to distinguish, in particular, social democratic and neoliberal eras)? The significance of the transition at the center of Blyth’s analysis is beyond all serious controversy. Yet, upon examination, the problem tends to self-liquidation. Social democracy underwent neoliberal transformation at the point when its stagflationary crisis became politically unsustainable. Unelected central bankers could do what democratic politicians could not (save the system, through ‘sado-monetarism’ – to use UK Labor Party Chancellor of the Exchequer Dennis Healey’s apt expression). The break, nevertheless, occurred within Macro. Regime continuity was its presupposition. Between social democracy and neoliberalism there is nominal independence, but dynamic complicity. The latter corrects the former, and makes no sense outside this context. It was a reaction, of near-mechanical predictability. Macro encompasses the oscillation.

[2] James C. Scott’s Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed undertakes a celebrated critique of ‘high modernism’ conceived as a system of visibility. Its mode of analysis thus bears comparison with Foucault, in applying philosophical criticism of the construction of objects to the social field. Such analysis, predictably, has distinctively anarchistic slant.

[3] The ‘quantity theory of money’ (i.e. of inflation) can be traced back to Nicolaus Copernicus. Subsequent proponents have included Jean Bodin, David Hume, and John Stuart Mill, among very many others. Its insistence should not be surprising. The principle of scarcity – that for any commodity abundance is inversely related to price – is a candidate for the most basic of all economic intuitions. It is unlikely that any market agent has ever seriously doubted it. Milton Friedman writes in The Counter-Revolution in Monetary Theory (1970): “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.”  

[4] While Keynes’ reputation as the arch-inflationist among serious economic authorities is amply justified by his influence, it is less easy to square – consistently – with the letter of his text. His early writings are especially notable in this regard. Perhaps no one has ever understood the ruinous effects of inflation better. As he remarks: “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. […] Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” – The Economic Consequences of the Peace (1919), Chapter VI, pp. 235-236.

[5] If the highly-contested term ‘neoliberalism’ is determined with primary attention to its historical limits, it coincides with a naïve confidence in the mortality of Keynesianism. The empirical commitment upon which it assumed Keynesianism would perish is easily sketched. According to the Keynesian Macro consensus, as it prevailed up until the late 1970s, the most fundamental relationship between inflation and unemployment was conceived as negative, or compensatory. It thus supported trade-offs. In the post-war Western order, an entire structure of socio-political negotiation had been erected upon this foundation. Dynamic tension between the quality of money and the quantity of employment opportunity became an arena – and even a proxy – for class struggle. Money was publicly degraded in the cause of social peace. The breakdown of this theoretical relationship was signaled by a stagflationary trend. Stagflation is an important word in the history of recent political-economic regimes, because it announces a cybernetic inversion. Under stagflationary conditions, unemployment and inflation advance together, without prospect of cross-substitution. They exhibit positive, rather than negative, cybernetic linkage. Between this acknowledgement and neoliberalism in its compact historical sense, there is no difference. Monetarism and Rational Expectations were the critical counter-thrusts to the prevailing Keynesian consensus. Monetarism challenged the Keynesian contention that the responsibilities of financial authorities and central banks ever extended to anything beyond conservative monetary management, oriented to price stability alone. The rational expectations analysis of thinkers such as Edmund Phelps and Robert Lucas argued that inflationary policy orientation would eventually be fully discounted, as populations factored it into their economic calculations. It worked then only in the short-term, as a confidence trick does until recognized. This period of efficacious money magic does not last long. As confidence tricks go, inflation is remarkable for its crudity. Macro, then, could not help but train its own marks to neutralize it. It was the epistemological differential between policy agents and targets that did all the work. Once the recipients of central bank scrip understood what was being done to them, it was all over. An epoch was closed. Yet the peculiar resilience of Macro to empirical contradiction is no less an intrinsic characteristic. Prolonged failure to grasp this has had far-reaching socio-political consequences. The ‘neoliberal’ epoch – to use the term now in a more relaxed acceptation as favored on the Left – has proven strangely inept at carrying through a cultural revolution against economic orthodoxy. Its brief ‘monetarist’ heyday succeeded only in reinforcing the dependency of market-positive and disinflationary social outcomes on the democratic-political cycle, by consolidating their formulation as policy options. The effects of this have been predictably perverse. Those firmly market-based (‘Austrian’) perspectives that had opposed the rising macroeconomic regime from the point of its emergence remained entirely marginalized, excepting only a few impressionistic, decontextualized fragments, filtered through Hayek. It is tempting to conclude that the institutional requirements of academic and administrative economic authority dictated a state-managerialist doctrine in respect to money, immune to all empirical or theoretical contravention. There is here a matter of comparatively simple political right – that of oversight – masked as a complex scientific proposition. Once monetary value is based on the potential to extinguish tax liabilities, it is implicitly defined as an obligation to the state. Absolute subordination of civil society is then conceptually fundamental. It is not ‘Keynesian theory’, narrowly conceived, that stands in principled opposition to the autonomous determination of property and its corresponding monetary order, therefore, but rather the Macro regime as such. Radical naivety in this regard was constitutive of the late-20th Century ‘Neoliberal’ moment, and finally fatal to it. Macro is essentially illiberal. It cannot in any serious way be reformed. The only way past Macro is around it.   

[6] The systematic macroeconomic conflation of the prudential and the anti-social is an innovation of great consequence. It prepares for the partial displacement of the Principle Political Dimension into the ‘culture wars’ of the late 20th century. Mere continence had now been reconfigured as an anti-social disorder. More specifically, extended private time-horizons had been made an explicit target of political denunciation. Marshmallow-test winners were the new Kulaks. Their capacity to defer gratification had been theoretically-reconstructed as social aggression, expressed concretely as a denial of employment opportunities to the people. Macro’s cultural rebellion against impulse-control had begun. A campaign against saving (i.e. private capital accumulation) could now be conducted in the name of sexual liberation. Keynes’ Bloomsbury sexuality is a crucial reference in this respect. See, in particular, Hoppe:

Crypto-Current (053)

§5.59 — As financial modernity advances, ‘printing’ becomes an increasingly unreliable metaphor for money creation, even as paper continues to support its metaphors. The engine of currency production is no longer any kind of minting or printing, but (fractional-reserve) credit. At the limit, the formula of the Macro epoch is an equation of money and debt. Its foundations are as old as Modernity, but no older. Mere centuries sufficed for it to fabricate the illusion of something more archaic, or even eternal.

§5.591 — Political economy is an apparent identity, but a real synthesis. It requires a coupling mechanism. Concretely, the crucial communication medium has been the bond market.[1] Given a fixed coupon, the effective interest rate will vary as the reciprocal of the bond price. The yield on government paper thus articulates a ‘market verdict’ on the political regime. It expresses something far more valuable than ideological affection, namely pragmatic confidence. The question addressed is only: Will this work? While stated confidence in government is communicated through a variety of professional channels, media, and electoral processes, revealed confidence is expressed through secondary markets in public debt. The bond market has provided such automatic commentary since the beginning of the modern period (already operating in the city states of Renaissance Italy), and can even – again concretely – be identified as an essential or defining component of modern political-economic governance. Capitalism might – quite sensibly – be taken to mean precisely this, at least up to the point currently reached. Political regimes make themselves an object of economic investment, inviting private wealth-holders to ‘go long’ government. Because this mechanism enables – to some effective degree – private markets in public policy, it provides the Macro regime with its most important feedback control. We meet Janus again (as with every social regime). Political-economy is only Janus’ modern name. The ambivalence is the engine. A hinged singularity produces effects of pseudo-universality on its public face, and intelligible incentives on its private face. Continuous temptation to resolution, in one or other direction, adds camouflage as a supplement. There’s a simple story you want to tell, which is how it hides.

§5.592 — Money has fully absorbed the ambivalence of political-economy. This has made it cryptic, quite beside it becoming cryptographic. It invites misapprehension. Of course, it is no secret that, historically, the promissory value of paper money has been very specifically tied to the prospect of redemption in precious metal. It is in fact almost, though not quite, the precise opposite of a secret – an anti-secret. With the consolidation of Macro, this has matured into a type of tolerated hypocrisy, and something like an inside joke. A concession to tradition is made where it appears most harmless. Much more is happening here, though, than a joke. The persistence of this image of value advances metallic durability into an abstracted dimension. Whenever money is momentarily jolted from its constitutive – cash-like – amnesia, it grates upon metal memory. Sheer semiotic inertia would suffice to ensure this, in the absence of any additional considerations. The Mises Regression Theorem acknowledges the same track-marks. Despite the appearance of anachronism, at no stage has this concrete definition of monetary obligation been formally updated. It has merely been repudiated. The commitment is restated without being maintained. This preserves it as a dramatic violation. To describe it as ritualistic sovereign transgression is not an excessive stretch. The repudiation of metallic obligation has been politically spectacular. Overt contempt for a nominally enduring formal constraint was itself sold as a viable – and indeed overwhelmingly dominant – socio-political position. The mass psychology of the New Deal remains entirely unintelligible until this is understood. The abuse was the attraction. In this way, as in so many others, the New Deal was classically fascist. When unleashed executive power is the selling-point, there is no inclination to conceal the broken leash. It takes the trampling of old constraints to legitimate a Caesar, and it takes a Caesar to master popularity. Only hopeless naivety would recognize FDR as anything else.  

§5.593 — Ever since the gold standard was ended, the principal support for monetary value has been the state guarantee of its acceptance for the extinction of tax obligations.[2] By denominating their exactions in the national currency, and thus authoritatively defining their medium of internal revenue, governments are able to support a very substantial demand-floor for their own paper (whether currency notes or bonds). Within this arrangement, socialist and nationalist themes are merged, without significant remainder on either side. Government market-making of this kind – in which the state operates as a customer – fulfills an important mercantilist function. In most modern societies it has a wide domain of application, extending typically across business sectors more-or-less plausibly classed as ‘strategic’. Nowhere beyond the monetary sphere, however, is such a mercantilist program comparably cloaked by the purity of administrative fiat. The barrier posed to the adoption and spread of alternative currencies by the normalization of state-centric monetary nationalism vanishes beyond the horizon of public perception. It is only on the global periphery – among economies that are to some considerable extent ‘dollarized’ – that the nation state’s monetary power remains naturally conspicuous (and thus susceptible to refusal).

§5.594 — The spontaneous cosmopolitanism of the precious metal coin exposes – through contrast – the historical peculiarity of ‘globalization’ in the age of monetary nationalism. Metal maintains an exteriority in relation to the minting regime. Its value indexes a substance outside political dependency.[3] Government paper, in contra-distinction, requires additional institutional support. The decentralized verification process of the assay is not available, or relevant. What matters for verification now is only the authenticity of the statement, whose negative is forgery, or counterfeiting. The currency unit is irreducibly invested in its regime of issuance. Thus, forex operations become an institutional subspecies of international relations. Acceptance of a currency now implies substantive – rather than merely formal – political recognition. There can only be foreign exchange once the right to make promises has been granted to all relevant regimes.

[1] By productive irony, the primary meaning of the bond market is a secondary market in government paper. Efficient feedback is the result of a substantial step removal from participation. There is no direct engagement with the government here at all. Rather, there is something like detached commentary, but with every intellectual commitment put to the test, through bets. Neither citizen involvement, nor journalistic opinion, then, but an index of political-economic judgment supported by real incentives, and characterized by unprecedented objectivity. It is retreat from the public sphere – in both its practical and epistemological aspects – that allows for its neutral evaluation.

[2] Paul Krugman unexceptionably remarks: “Money is a pretty amazing thing. Why does a piece of green paper with a dead president on it have value? Ultimately, it’s because other people believe it has value, and [it] circulates. However, there is an anchor for dollar bills which is not gold. It is the fact that you can use it to pay taxes.”

See: Thomas Piketty, Paul Krugman and Joseph Stiglitz: The Genius of Economics

[3] The world’s first international currency of modern times, the Spanish Real de a Ocho or ‘Piece of Eight’ (Peso de Ocho), was a silver coin that monetized the precious metal acquisitions of the New World. Its value was invulnerable to hypothetical collapse – or even comprehensive annihilation – of the Spanish empire. The regime risk borne by those holding it was zero. Reciprocally, it involves minimal regime complicity. The Spanish empire was not being in any serious way automatically endorsed by those holding or trading in its currency. Hence classical mercantilism sought to deny foreign access to the national currency, with ‘losses’ of treasure analogized to bleeding. Since geopolitical legitimacy cannot be propagated through metal, no regime incentives exist to promote its diffusion.

Crypto-Current (052)

§5.58 — Central banking did not begin with the Bank of England, in exactly the same way that terrestrial capitalism did not originate among the Anglophone Powers. This is to say that a comparable ‘usurpation of destiny’ – in the full ambivalence of the term – is evident in both cases. Fate was settled on an English path, which took work.[1] An obscure opportunity for supra-national influence was captured, and became self-consolidating, through convergence. Which is to say: the occasion for financial elaboration found its strongest expression on the supra-national line. It was, from the beginning, world-historical.[2] In the final analysis, it has happened to peoples more than from them. Teleological instrumentalization of the English-speaking peoples, as agents of global process, has been no less basic than their adoption of new financial technologies. The two developments have been one. Central banking has been nationally functional to the exact extent it has been internationally competitive, and thus globally compelling. It won wars that mattered, first for the Dutch, then for the English. By the time the United States inherited managerial responsibility for the world order, its principles of financial sovereignty had been firmly set in place. The task of managing the national debt was, as a matter of concrete practicality, a military logistics function. It assured war-fighting capability at the highest level of strategic abstraction. Whatever was needed was made affordable. The consequences were consistently dramatic. Because the states that quickly took the lead in central banking were – not at all by coincidence – the successful vehicles of a supra-national (or global-revolutionary) undertaking, nothing like a simple nationalization of money was ever actually happening. Rather, the production of international reserve currency was becoming reflexive, and institutionally self-aware. This does not make monetary nationalism a mere illusion. The organizational level of the nation state did in fact become increasingly dominant, and all the more so when international adventure was at stake. It did not, however, control its own context. The supra-national process preceded, exceeded, and catalyzed all national developments, because the battlefield was the arena of selection. The history of central-banking is bound far more tightly to the production of world-money than happenstance could account for. The global revolutionary mission was primordial (i.e. essential, or intrinsic). In contra-distinction to the financial myth, sound domestic money management did not simply come first.

§5.581 — The Bank of England was incorporated by the 1694 Bank of England Act. However much centralized monopolization of bank note issuance now looks like the basic destiny of the institution, it was only very gradually established, over the course of more than two centuries of subsequent legislation.[3] It was not, therefore, a guiding project (in anything other than an obscure teleological sense). Monetary nationalism was only a slowly emerging outcome. It was fiscal nationalism that provided the primary imperative. Twin agendas were originarily complicit, directed at once to domestic financial stabilization and to state revenue-raising with a definite outward, geopolitical orientation. The incorporation of the Bank, then, marked a further step in the integration of modern banking with sovereign political power.

§5.582 — The much later US central banking Federal Reserve System is far more arcane than the Bank of England. It dates back only to the final days of 1913, as a creature of the Federal Reserve Act, through which Congress announced an American public (i.e. national) monetary policy. The institutional origin of the Federal Reserve is explicitly inseparable from a post-liberal ideology of money, which conceives it as an administrative tool, to be placed in the service of national economic objectives (the macroeconomic suite of full-employment, stable prices, and moderate interest rates).[4] The British experience had been educational, in this regard. Money had been re-minted as an imperial project, with twin global and domestic faces. Where the Pound Sterling had found itself elevated by fortune to the status of imperial scrip, the US Dollar now ventured onto the same path of geopolitical fatality with greater self-consciousness. The relation to war economy was effectively deepened. By the early 20th century it was obvious to all observers that the primary Anglophone world power could have no (merely) national interests that were not immediately matters of global geostrategic and ideological competition. The US Dollar could only be an architectural pillar of world order. To trust it was direct psychological investment in a planetary destiny.[5]  

§5.583 — Under conditions epitomized within the era of matured central banking, but by no means restricted to it, monetary value reduces ultimately to a political substrate, where confidence is maintained by evidence of effective power. This registers a critical inversion. The capacity to protect property begins to ‘appear’ – i.e. to trade – as its essence. Recognition of the ‘protection racket’ as a mode of criminal enterprise closely coincides with this development in time. Investors – including even mere holders of currency – have been re-sensitized to regime risk, which sub-divides into two broad (but intricately inter-articulated) categories. Firstly, the 20th Century has dramatically featured sheer expropriation, of the nationalist-communist type. In response, assets of any kind now feature some degree of Marxist discount. They are priced with a measure of definite regard to their vulnerability to government seizure, or ‘revolutionary redistribution’, which automatically increases yields in the most hazardous cases. The antithesis is practically assimilated. Secondly, and more subtly, political authority has been increasingly formalized as an asset class. No longer merely devoted to the protection of property, whether to a greater or lesser extent, it has itself become an object of comparatively direct financial investment. Government bonds offer a share in imperium. They securitize regime resilience and demographic purchase, or geopolitical capability.[6] Under conditions of global stress, most conspicuously, the lender of last resort transitions into a debtor of last resort, and thus a savings facility, socializing deferred private consumption through the medium of public financial obligations. The Federal Reserve Note is nothing less than a wager upon the future of America, its central government, and – most specifically – its taxation power. By extension, the exceptional global acceptance of the US dollar is an investment in American world order. All these relations are analytically reversible. Geopolitical crisis implies currency crisis, or – still further – potentially follows from one. The coin has two sides, and can be easily flipped. ‘Derealization’ into pure credit only accentuates money’s ambivalence. As it is incrementally demetallized, money takes the form of a promise, whose credibility is founded upon the public image of state power, as fully-expressed within both domestic and international contexts. Under such circumstances – especially when a global hegemon is in the spotlight – the stakes of a ‘monetary revolution’ are not easily over-estimated. Nor are its positive implications readily anticipated. The nature of money has long ceased to be separable from the order of the world.[7]  

[1] Within six years of the 1688 ‘Glorious Revolution’ and the installation of the Orange monarchy, the Bank of England was born. It is difficult, therefore, to miss seeing a transnational socio-historical project at its root. Many nations undoubtedly find a way to frame their fate exceptionally, within the terms of a mission exceeding common geopolitical interest. A country is thus conceived as a vehicle for something other than its people. The Glorious Revolution illuminates the English version of this. Protestantism and – more profoundly – capitalism is the cargo. Neal Stephenson’s ‘Baroque Cycle’ of historical novels captures the process in its cultural essentials. National independence, holy war, and unprecedented financial technology composed an original compact system. Catholic ‘conspiracy theory’ in this regard is not unwarranted. The hostile perspective of an E. Michael Jones brings out the contours of this new thing more sharply than its liberal defenders can. It was built so that schismatic theology might prevail in global conflict. With all due diligence to the hazards of unfettered teleological apprehension, it remains near-irresistible to ask: What was the Bank of England designed to finance? Nothing less than a planetary revolution could count as an adequate answer. The Dutch Revolt or Eighty Years’ War (1568-1648) had set the template. Advanced financial infrastructure offered near-miraculous strategic geopolitical advantage. The defeat of the Spanish Empire in the Dutch independence struggle meant that the culture of modernistic schism, or autonomizing capital, would not be stopped. No future foe would present comparable challenges, whether estimated in terms of the apparent balance of forces, or even the clarity of ideological decision. Globalization in the ‘neo-liberal’ sense was henceforth implicit, dominating the historical horizon of the world. All of its subsequent contestants would be compelled to articulate their resistance within a framework fundamentally shaped by the liberation of Capital, and benchmarked to it.  

[2] There is no doubt a Globalist Idea and most probably several. The Oecumenon tilts towards one. (One is never less than simply compelling.) It would be precipitous, nevertheless, to assume that the supra-national points unambiguously towards global unity. Delocalization and globalism are synonymous only under strained dialectical assumptions. It takes more than an entire planet to complete the logical sense of a globe. Comprehensive globality has no possible empirical instantiation. Proselytizing religion is its natural territory, and it evokes concreteness only to mock it. From the perspective of oecumenical globalism, the empirical process necessarily underperforms at oversight. It is, critically, excessive in its singularity. Ethnic peculiarity, in particular, inflects it. There is no side-road back to the universal, even through a conception of ethnic peculiarity in general. Capital escapes exactly once. It therefore shrugs-off generic characterization. Concretely, within modernity, ‘supra-national’ has meant predominantly Anglophone. In addition, the requirement for expertise at delocalization almost sufficed in itself to ensure significant Jewish involvement, which the Protestant revolution notably facilitated. In can therefore be insisted, on grounds exceeding firm analogy, that globalization is not a project, in precisely the same sense that there is not an International Jewish Conspiracy. Which is to say that there is in both of these cases really something – and even the same thing – manifested as a structure of fate, though without commanding deliberation. The conspiratorial interpretation is encouraged (and simultaneously misled) by the fact there are not here simply two different things. Ayn Rand’s widely-derided identity assertion (“A = A”) finds productive application on this point. Capital – as historical fatality – is what it is and nothing more.

[3] The first Bank of England notes were issued in 1694, the year of the bank’s founding. Initially, they functioned as bank checks, written for arbitrary sums. Their denominations were not standardized until 1745. Large notes predominated. The smallest note issued by the Bank was £20 until 1759, worth £3,300 in 2017. Innovation tracked the cycles of the war economy. The first £10 note was issued during the Seven Years’ War, the first £5 note during the war with revolutionary France (in 1793), followed quickly by temporary £2 and £1 notes before the end of that same conflict, and the century. These early notes were units of government debt, but not circulating currency. It was not until 1855 that they became payable to the bearer, and thus freely exchangeable. In keeping with their new function as currency, the notes became entirely machine-printed in the same year. Previously, of course, standardized national currency production was the exclusive responsibility of the Royal Mint, as it had been since AD 886. Monetary transition into the fiat regime has been tracked by the rise of the Bank of England, and reciprocal marginalization of the Royal Mint (which continues to manufacture UK coinage to the present day, although now out of intrinsically near-worthless base metals). Issuance monopoly came slowly. Even the smallest banks were permitted to issue their own bank notes prior to the Bank of England Acts of 1708 and 1709. Currency issuance was actually liberalized by the 1826 Country Bankers Act, extending the right to print money to joint stock banks (meeting certain criteria of size, and distance from London). It was only with the 1844 Bank Charter Act that monotonic progression towards Bank of England currency monopolization was set unambiguously in motion, with removal of note-issuing rights from England’s last private note issuer (Fox, Fowler and Company of Somerset) following its acquisition by Lloyds Bank. The process was not fully completed until 1921. The comparatively rapid demotion of the UK from the geopolitical responsibilities of recent centuries took place over a small number of subsequent decades. Partial convergence with a broader European trend to currency integration was an indicator. The pound was only decimalized in 1971, following the entry of the UK into the European Common Market (predecessor to the European Union).

[4] The US central banking Federal Reserve System came into being on December 23, 1913, with the enactment of the Federal Reserve Act. The brief of the new institution, quite explicitly, was to subject financial market psychology to centralized governance. Specifically, it was designed to suppress panic. The most immediate reference was the 1907 Banker’s Panic or ‘Knickerbocker Crisis’ (named after the Knickerbocker Trust Company whose collapse triggered the nationwide financial catastrophe). In keeping with the modern formula, bank-runs had been the primary driver of cascading insolvency. Under American institutional conditions, there was no circuit-breaker in the process. This was the conclusion of an investigative commission into the panic, established and chaired by Senator Nelson W. Aldrich in 1908, which identified the country’s lack of a central bank as the root cause of the crisis. The Aldrich Commission proposals led directly to the creation of the Federal Reserve System. The new institutional structure, named with misleading simplicity as the Federal Reserve (or just ‘the Fed’), was characterized by Byzantine complexity. Its Board of Governors has seven members, appointed by the US President (subject to Senate confirmation) for 14-year terms. In order to maximize administrative continuity, and manifest independence, one member is appointed every two years (in a 14-year cycle). In addition, there are twelve regional federal reserve banks (FRBs). The entire Board is supplemented by five presidents from the regional FRBs to compose the (twelve-member) Federal Open Market Committee (FOMC). In recognition of its status as the nation’s financial capital, the New York City FRB is privileged with a permanent position on the FOMC. It is the FOMC that wields primary executive power within the system, practically directing national monetary policy. Finally, the (private) banking industry is provided with formal consultative representation within the system, through the twelve-member Federal Advisory Council. In respect solely to the occult social status of the Federal Reserve, the most appropriate comparison might be to The City of London (as an institution). William Gibson makes this private crypto-governance (whose medium is the open secret) a theme of his time-travel novel, The Peripheral.

[5] In God we Trust, the official motto of the United States of America since 1956, began to appear on the country’s paper currency in the following year. It had already been struck onto coins for almost a century (beginning in the Civil War year of 1864). Over the course of three centuries, the implicit commitment underlying the monetary credibility of the world’s principal English-speaking power had escalated from (the 17th century) Protestantism will survive to (the 20th century) Anglophone global capitalism will prevail. The difference is primarily cosmetic. Those oblivious to the core identity of Protestantism and Capitalism understand neither, or the fact each is the occult aspect of the other. Schism and automation are the guiding threads. The Great Seal of the United States, with its twin mottos Annuit Cœptis (‘our undertaking is favored’) and Novus ordo seclorum (‘New order of the ages’), has decorated Federal Reserve notes since 1935. The intensity of Federal Reserve conspiracy-theorizing has not, of course, been harmed by this.

[6] As Niall Ferguson remarks in The Ascent of Money (p.102), while describing the economic consequences of the First World War: “Those who had bought war bonds had invested in a promise of victory …” Insolvency then follows from an erroneous interpretation of destiny. At work here is an economic domestication of geopolitical risk. If any single index captures bourgeois nationalism, it is this. Private savings are explicitly invested in a national-collective undertaking. No less notable is the dynamic of self-reinforcement, accentuated by survival bias. One thus sees in the bond market political economy being synthesized in real time.

[7] At the world-scale of the economic hazard transitions into transcendental risk, where the stake is nothing less than the system in its entirety. The whole cannot be hedged. Wild bets on, or against, the future of capitalism stretch the competence of markets to their outer limits.

Crypto-Current (051)

§5.5 — Conceptual conversion of A-money into C-money has been an automatic outcome of modern financial history. It can formally, but only artificially, be disentangled from the development of banking procedures and institutions. The credit (or reputation) of the financial institution supplants the positive asset value of money, as it replaces the monetary commodity with authorized notes. This financial reconstruction of exchange introduces an element of non-simultaneity. A moment of indebtedness is inserted into the synchronous swap, a period – however fleeting and notional – in which payment is owed. Even a simple purchase can be formally elaborated in this fashion. Payment need only be preceded by a ghostly double – a liability – arising in the non-instantaneous space of commercial reciprocity. A pseudo-consecutive schema insinuates credit into exchange. It is only on the basis of a systematic social hallucination of a decidedly metaphysical type, however, that it can be considered always, necessarily, to have been there.

§5.51 — Credit money, then, presupposes a suppression of simultaneity. We are returned to generalized spacetime, although now on the other side. If arithmetic is the formalization of time, in accordance with the Kantian understanding, simultaneity translates to zero. It is the temporal determination of space (or the pure form of non-separation in time). Events occur simultaneously when no time separates them. Under such circumstances, the credit relation is impossible. The critique of monetary financialization is thus bound to the philosophical – and even, by strong analogy, cosmo-physical – problem of simultaneity. If the very notion of the same time, in its global application, is judged irredeemably delusory, then the financial model of transaction is vindicated, as a universal truth. Relativity and fundamentalist credit finance share a metaphysics, in which the absolute occurrence of instantaneous transactions is de-realized, and subordinated in principle to qualification, or mediation. “Simultaneity is a convention,” Poincaré insisted. The subsequent relativistic revolution in physics has trained readers to invest this statement with a maximum of intrinsic skepticism, as if it amounted to the claim that simultaneity could not – in principle – ever be actually realized, unless as a standing social illusion.[1] The inversion is then total. Since it is the function of (positive) money to restore simultaneity, the very possibility of any such non-credit currency is in this way dismissed. Hard money contradicts generalized financial relativity, and that has become our common sense. A return of hard money, as anything beyond a relic, can only be manifested as an alien invasion.  

§5.52 — Transcendental aesthetic is exhausted by the blockchain. In restoring absolute time (pure succession), Bitcoin recovers simultaneity at the same time. The term blockchain already tacitly says as much. The block is a chunked unit of simultaneity, just as the chain is an order of succession. Each is reciprocally determined by the other, despite their real difference. Critically, a block is validated as a whole, at once. It contains no internal temporal articulation. Each block is all space, in the temporal sense, or non-decomposable duration. It is a true moment, or a ‘now’, even when sedimented (chained) into the past. Transactional simultaneity is thus realized. As we have seen, this is the negative of financialization, and its actual condition of impossibility. The credit relation has no reality on the blockchain, even though all of its associated signs can be recomposed there.[2]

§5.53 — Profound historical tendencies ensure that this point will be misunderstood, even as it stubbornly – and with at least equal necessity – re-asserts itself. Bitcoins are not credits. Furthermore, and still more controversially, none of the items of economically-significant information embedded within the blockchain are, or could be, credits, unless from a perspective, which is also to say an apparatus, that transcends the blockchain. The temporality of the ‘block’ ensures this. Nothing unsettled survives the automatic editing process. Only positive signs persist.

§5.531 — Consider a simple safety deposit box. It physically and institutionally protects anything placed inside it. ‘Intrinsically’ precious items (collectibles) are the neatest examples – gold or silver coins, jewels, antiques, or works of art. As with the blockchain, however, complex semiotic objects – such as contracts of any kind – can also be safely deposited. The critical question now arises. Does this mean that such a secure storage facility protects promises to pay?

§5.532 — The answer is not entirely straightforward, since it depends upon the obscure undercurrent of the question. What does it mean to keep a promise? If all that is required is to remember it, then safety deposit boxes can certainly help – and the blockchain vastly more so. If it is further required that the promise be fulfilled, or settled, what is demanded is the time-sensitive elimination of a discretionary factor. In keeping a promise, a tacit betrayal option is cancelled. This is not something a secure deposit, or blockchain, can maintain, because neither is able to hold such an option open.[3] Potential defection (‘default’) does not require risk-pricing in such an environment, because it cannot occur. Whatever risks there may be to Bitcoin transactions, this is not among them. On the blockchain, no difference between a ‘deposit’ and an ‘account balance’ can exist. Credit risk is necessarily zero. There are no negative balances, but only positive holdings, recorded as a history of mining events and transactions. Anything running on a blockchain inherits this characteristic. Smart contracts, for instance, insofar as they are fully-immanent to the blockchain, cannot be credit instruments. They are, instead, hard commitments. The future is effectively pulled forward, and metalized as destiny. (This is a point to be more adequately engaged shortly.)

§5.54 — When attempting to grasp what, through Bitcoin, money ceases to be, the relationship between credit money and fiat currency merits particular attention. This relation is certainly not simply analytical, despite the intimate historical connection between monetary financialization and politicization.[4] Over the course of recent centuries, the problem of trust – as dramatized by episodic banking crises – has functioned as a relay. As previously noted,[5] the spontaneous evolution of paper money (from warehouse receipts) profoundly exacerbates the double spending problem. Considered as the most economically intimate field of media development, it subsumes forgery into printing, on a path that leads to electronic digitization. Within the modern history of money, however, this semiotic main-current is a side-stream. Deliberate fraudulence, involving cynical fake-money production, has not been the principal trust problem generated by financialization. Credit creation, through fractional reserve banking, has been vastly more consequential as an engine of trust catastrophe, precisely because it separates the question of trust from suspicion of criminality, and thus from the sphere of traditional law-enforcement mechanisms. A banking crisis is not – unless contingently, or under the aspect of polemical extravagance – a crime. More generally, those socio-cultural forces disposed to consider inflationism in all of its aspects as essentially criminal have been so thoroughly defeated that their objections have lost all engagement with effective mechanisms of legal enforcement.[6]

§5.55 — To recapitulate the discussion from Chapter Three (§3.06), when fractional reserve banking turns bad, it is exhibited as a double – and in fact multiple – lending problem. Any bank deposit can be loaned out multiple times, with the proportions of potential bank credit to assumed liability decided by the reserve ratio. (A reserve ratio set to cover 10% of loans outstanding permits a ten-fold credit multiplication effect, prior to inter-bank lending.) Under conditions of general financial confidence, this facility is welcomed as a business opportunity for banking institutions, as a quantitative relaxation of credit restrictions for borrowers, and as a general adrenalization of the wider economy through increased liquidity. Historically, the resulting incentive structure brought banks, borrowers, and governments into alignment, in the direction of financialization (or compressed reserve ratios). The attractions of money creation are so self-evident they obliterate the counter-factual case.[7] How could the financial alchemy of fractional reserve lending, with its seemingly magical multiplication of profits, borrowing opportunities, and commercial stimulation, conceivably have been resisted? And once it had ceased to be resisted, what could possibly have gone wrong?

§5.56 — On the opposite side of the ledger, multiplication of credit money through fractional reserves was balanced by the unplanned invention of a new type of credit risk. Local default was now potentially amplified to the level of the global bank run. The credit multiplier, when toppled into reverse, became an engine of financial catastrophe. Quantity has a quality all its own.[8] Systematic banking crisis posed an existential threat to political regimes.[9] The risk involved, therefore, tended – as a matter of sheer magnitude – to escape narrow economic categories. Confidence sets out on its long journey into becoming an explicitly-recognized macroeconomic variable. At a certain threshold, sheer aggregation of private actions transitions into a public event. Banking crisis comes as close to capturing the fulcrum of political-economic interchange as any conceptually-isolable event can. The deep tendency of modernity to encapsulate the empirical plays out into economic institutions.

§5.57 — Political recognition that a banking crisis cannot be permitted to happen finds its institutional manifestation in a central bank.[10] A central bank is the authoritative model of a trusted financial institution. Trust conservation is its principle responsibility. In one direction, it guarantees the credibility of government paper. In the other, as ‘lender of last resort’[11] and provider of deposit insurance it delegates trust to subsidiary banks, in exchange for submission to regulatory oversight. The buck stops here, metaphorically applied to the desk of America’s Commander-in-Chief, is more appropriately conceived as a functional definition of the central bank. While embedded, in principle, within administrative and judicial hierarchies supporting super-ordinate authorities, in practice the central bank’s concentration of competence (and information) immunizes it against further transcendence. It is, in effect, a final court of appeal, or last ditch. In the sphere of economic trust, which is also that of modern economic virtual catastrophes, anything the central bank cannot stop, cannot and will not be stopped. The peculiar status of the central banker appears, to skeptical observers, near-Messianic. This is an impression that reaches far beyond trivial coincidence. In the end, which it incarnates, financial trust – ‘confidence’ – is the central bank’s sole specialism. All of its functions converge upon this, as upon a compact telos. Implicitly, savers trust their local bank because they trust the central bank, and they trust the central bank despite their distrust of the national government. Notably, it is a structural component of modern political ecology that governments expect their national central banks to be trusted more than they are trusted themselves. They in fact come to depend upon this, as the first convincing modern substitute for divine sanction. Government deference to the central bank serves as a credogenic ritual. Through the pseudo-transcendence of the central bank, administrative politics is able to gesticulate beyond itself, to a superior source of credibility. Practical metaphysics is thereby exemplified.

§5.571 — Central banks do not (of course) monopolize the status of the trusted third party, but they provide its most concentrated and perhaps also most self-conscious example. The function of transcendence in socio-economic systems has no superior illustration. The central bank is a part of the financial process that is at the same time deemed above and outside the process. Integral to its identity and operation is the presumption that it transcends the constraints and incentives generally characterizing the financial sphere. Central bank profitability, for instance, is remarkably discreet. The public profile of the institution is incompatible with a commanding drive to make money. Something like radical altruism is tacitly insinuated, as if in pre-emptive repudiation of Public Choice cynicism. Reciprocally, resource limitations on central bank discretion are strategically de-emphasized. While not positively pretending to infinitude, or an unlimited capability for monetary intervention, some rough functional facsimile of such is not strenuously discouraged. Because the central bank is effectively a final institution, those wastes of potential financial catastrophe lying beyond its scope can only be populated by dragons, and are therefore rendered in certain respects unthinkable. The end of the world is re-articulated. There is a theatrical and ceremonial dimension to all of this, which has not gone unnoticed, or unmentioned.[12] Central bankers are – in the strictest possible sense – modern magicians.

§5.572 — Every central bank is an amphibian, or a Janus-faced being. Operational pseudo-transcendence requires this. The central bank mediates between the public and private aspects of the economy – and even defines the distinction between the two – drawing upon the institutional axiom that aggregate confidence in private commerce is a legitimate, and inevitable, target of public policy concern. Trust, in its distributed economic manifestation, is taken as the object of a mass social technology. The great macroeconomic conception occurs, pre-programming much of what then follows. The critical point is the recognition that money issuance is a policy tool, precisely insofar as it is a channel of public communications. It is no longer that money merely bears a message, in the manner of a minted coin adorned with various politically significant inscriptions. A Federal Reserve note still carries such signs, but their seriousness is entirely eroded. Money-making, as such, is now the message. Aggregate liquidity management is no sooner adopted as an administrative responsibility than it flattens upon its own public enunciations. Signal and substance are one. A teleological transition occurs here, that might easily be missed. ‘Public’ (i.e. state) revenue maximization, an obvious goal from at least one perspective, yet one that has been evidently instrumental in regards to the obscure practicalities of historical installation, is absorbed into a more complex structure of purposes. It becomes the opportunity for a public demonstration – for publicity. Hence the distinctive emphasis placed upon the central bank statement, an address not only about, but to the market, spectacularly totalized from above. This is already to say that irrespective of its intentions, or self-comprehension, the central bank inherits responsibilities that are strictly magical.[13] Vivid ‘materialization’ of the impossible – i.e. of free risk relief – is its central obligation. It is not only illusionism that is at work here, then, but medicine, or therapy, in accordance with the archaic role of the witch-doctor. The public utterances of the central bank are a mass psychological talking cure, but inverted from an exercise of attention into an incantation, and thus a spell, or placebo. We hear in these words the technical ideal of the confidence trick, in its super-legal and pseudo-metaphysical configuration. Practical efficacy is tacit. Like credit money itself, the truth of the central bank statement is created – ab nihilo – in being believed. The reality is ideally exhausted by the phenomenon. It is what it is thought to be, and no more. Confidence, in the end, has no ulterior derivation. It is miraculous.[14] Half a millennium of demystification has led to this, clearing the stage for business-suited new magicians. The performance is underway. A tranquillized collective economic sphere is to be conjured into existence. As it entered its advanced maturity, The Great Moderation named it well. The Great Moderator – Mighty Macro – is a more valuable name still, for the One at the End who Looks Both Ways to Make Peace. That’s the Magician-God in the Bitcoin cross-hairs.

§5.573 — On the empirical plane, a trusted third party functions as an intermediary between a pair of agents. It is the mutual relation to a common intermediary that formally determines the agents concerned as peers. Virtual lines of evasion (route-arounds) cross the plane, linking the mediated agents in innumerable alternative ways. When plotted upon this flat expanse, the trusted third party appears as an interception – something like a successful hunt, an act of capture, or captivation. On the plane, every overseer is exposed as avoidable, if not in actuality avoided. There is always another way. Excessive impositions prove repulsive. Every moment of mediation has therefore to strike a bargain. No hint of the universal is found here. It is not upon the plane, but upon the pseudo-distinct, pseudo-orthogonal, and pseudo-metaphysical axis transecting it that the exorbitant authority of the overseer is ‘for the first time’ expressed. The horizon of supervision extends into the infinite. If not explicit in its claims to omniscience, omnipotence, and omnibenevolence, it makes no effort to dispel such theological encrustations. An implicit invocation of God-like powers follows from the conspicuous assumption of God-like responsibilities. In wherever the buck stops we trust. The aura of infinitude is essential. No limit can be drawn. Whatever lay beyond the outer boundary of central banking power would be the lair of crisis, by definition. A formal delimitation of the supreme third-party powers is indistinguishable from a program for financial catastrophe.[15] Agreeing not to go there closely coincides with the new social contract, drafted in the 1930s. Critique of authority henceforth meant Great Depression. To the titles of Macro can then be added: The Unscrutinized Scrutinizer. That which sees all should not be excessively challenged by inspection.[16] This is how asymmetry has been put to public work. Apparently exempted from immanence, the overseer is fed by the impression of exceptional rules, and sublime incentives. It seems to hover above the fray, as if released from mere empirical difference into a superior milieu. Amphibious by essence, it is at once an efficient, individualized, economic agent among others and simultaneously nothing at all of the kind. The effect works best when no one looks too closely.  

[1] A ‘standing social illusion’ or “consensual hallucination” – to draw upon William Gibson’s anticipatory description of Cyberspace – can, under certain very definite circumstances, attain robust virtual reality in the epoch of the Internet. It can, in other words, be effectively installed. Any residual associations with mere mass delusion, of a kind vulnerable to destructive reality testing, then become systematically misleading, as the index of a misapplied empiricism. The protocol is not an error awaiting correction, but rather a structure of transcendental subjectivity. Its relation to objects is not representational, but productive. The fatal emergence of time as synthetic being, in particular, manifests the techno-historical restoration of transcendental philosophy. The order of things has to be produced. In this vein it has to be argued that the artificiality of time is – finally – time’s most time-like quality. Its nature is to be unnatural, at least in the sense that it eludes all prospect of objectification. Only thus does it secure itself against the geometrical reduction that would collapse it into space. Of course, if not obviously, nature itself does this first. To repeat what can never be repeated sufficiently, Φύσις κρύπτεσθαι φιλεῖ (“Nature inclines to crypto.”).

[2] The blockchain is thus something like an anti-structure, occupied only by positive terms.

[3] If double spending were a practical option which as a matter of discretion was not executed, then a promise would have been kept. In this case, a credit relation would have been supported. In respect to Bitcoin the example is, of course, entirely counter-factual, and actually logically unconstructible. A double spending tolerant ledger could not be a blockchain, by elementary definition. As Pierre Rochard notes in his short essay on ‘The Bitcoin Central Bank’s Perfect Monetary Policy’, Bitcoin precludes the re-emergence of fractional reserve banking within its medium by automatically necessitating “full reserves for all accounts”. The protocol interprets any process of money multiplication as double spending, and edits it out of the economy. Because bitcoin are not credits, “money is not destroyed when bank debts are repaid”. The ‘money supply’ – in the Bitcoin epoch – is constituted by a reservoir of positive abstract assets. Rochard predicts that “The Bitcoin Central Bank [i.e. the decentralized Bitcoin Network] will be the longest lasting institution of its kind thanks to the anti-fragile independent monetary policy it has set in stone.”

[4] Conceived in Marxian terms, this history seems to tell of the death of the liberal economic order through its own excesses. Such a narrative is very far from straightforwardly misconceived. The very idea of a liberal regime suggests extreme paradox, precisely because it corresponds to an exemplary coordination problem. The overall order presupposes a suppression of defection which it is itself seemingly unable to guarantee. The ‘itself’ here – as in all cases of spontaneous order – is the crux of the conundrum. The system of competition itself, or as such, has no obvious allies. Many, if not all, of Marx’s classic capital contradictions are rooted in this dilemma (and thus describe a variety of fundamental liberal coordination problems, socio-historically expressed at varying degrees of elaboration). ‘The market’ – to thus name society’s most fundamental spontaneous institution – is susceptible to the ravages of an agent-principal problem without comparison. The attempt to operationalize the state as the relevant agent in this situation, tasked with responsibility for managing general commercial conditions, broadly coincides with the tragedy of modernity, as distilled into ‘neoliberalism’. Public Choice theory arose as its more-or-less explicit rejoinder.

[5] See §3.06.

[6] There is no one who can be sued for the destruction of the US Dollar (by more than 95% of its value) over the course of the 20th Century, for instance. Still more extreme – hyperinflationary – depredations enjoy sovereign immunity against legal redress. To decry this situation as itself manifestly criminal is merely to court intensified marginalization. Such has been the libertarian road.

[7] The armchair mode of estimation is, of course, wholly pedagogical, or dramatic, and insofar as it suggests harmonious concordance of contemporary financial norms with timeless human intuition, it is positively misleading. From the perspective of trans-historical anthropology, the only natural money is metallic. It was necessary for bank-money to build a new financial ‘common sense’ for itself. The success of this project has been so remarkable that it is has eclipsed acknowledgment of its radical historical contingency. It nevertheless has to be recalled that the adoption of this monetary regime has been late and rare (even singular). … The reconfiguration of money through institutional credit creation found its concrete historical ratchet not in the parlors of policy deliberation, but on the battlefield. In other words, it effectively financed the geopolitical occasions for its own entrenchment. To a considerable extent, British military history since the beginning of the 18th Century has been its testing ground (a claim that is smoothly extendable back to the independence struggle of the Dutch Republic from the end of the 16th Century). By providing the logistical sinews for the rise of Anglophone global power, modern credit finance created the real conditions for its teleological self-validation. It organized payment for the world order in which it would be at home. The circuit of auto-production, in all its groundlessness, is evident at every scale. We return, then, to the process of nihilism and its machinery. Occidental religious crisis and modern economic history are aspects of one thing. The erosion of transcendent foundation provides the time gradient of both.  

[8] According to Wikiquote, the common attribution of this phrase to Josef Stalin is unreliable. If we still hear an echo of the materialist dialectic within it, the allusion is not altogether confining.

[9] The contribution of John Law’s Mississippi Bubble to the collapse of Europe’s Ancien Régime has to count as the supreme example of inverse political risk (i.e. risk to a political order from economic calamity).

[10] The lucid administrative identification of systematic financial hazard as an object coincides with the exact moment at which classical liberalism dies in principle. Such identification cannot be made without a corresponding delimitation of private commercial prudence, within boundaries too constrictive for the persistence of an autonomous economic sphere. The independent economy cannot be trusted. It requires a trust supplement, incarnated in some para-political institution. Trust is recognized as the highest economic ‘commanding height’ and nationalized. This is, unmistakably, a process of domestication. The state (and its parastatals) no longer solicits trust, but rather claims to produce, manage, and dispense it. This provides one thread for the argument, formalized most rigorously by Murray Rothbard, that central banking is essentially incompatible with a libertarian social order. The usurpation of trust is a centralization of contractual confidence, and a conversion into an implicitly political relation. The Statist Left, in its analysis of monetary property as politics, merely discovers the Easter egg that central banking hides. The super-abundance of the central bank’s de facto power relative to its de jure authority is a predictable staple of conspiracy theorizing. The United States Federal Reserve System is an especially target-rich environment in this respect. It is an institution that might have been designed for the stimulation of occultism. The pursuit of public purposes through private institutions reliably does this. At the most basic level of analysis, the Fed is simply not well hidden. It cannot but show its work. The deliberate conversion of distributed commercial-industrial capability into concentrated national power happens comparatively recently, and in public. It is almost impossible to miss the Siren call of the imperial project, which cements the problem of trust into geopolitics. As a pseudo-transcendental being, the central bank simulates the intrinsic obscurity that is the signature of the thing-in-itself. Supposedly located beyond the ravages of crime and politics, it invokes a higher realm. Between an object of reverence, and one of paranoid anxiety, the distinction is slight. The dominating, common element is a strategic impression of abnormality. The central banker, properly understood, is a figure more at home in horror fiction than social history.

[11] The formula ‘lender of last resort’ was originally minted (in 1797) to define the financial-institutional role of the Bank of England. Its first appearance is found in Sir Francis Baring’s Observations on the Establishment of the Bank of England, published that year. Its wide circulation, however, owes more to the later usage by The Economist editor Walter Bagehot, in his book Lombard Street (1873), which explicitly ties the therapeutic power of the general guarantor to its currency issuance authority. Some non-trivial measure of Victorian economic-moral continence can be seen in Bagehot’s insistence that the exceptional relief from risk offered by the central bank should be tightly bound to explicit penalties (just as the preservation of incentives within the poor relief system required an overt punitive element). Strategic laxity requires a compensatory super-addition of discipline. This is not an equation post-Victorian society has been able to sustain. Varieties of relief disorder become, instead, the normal condition. The asymmetric “Greenspan put” – which protects investors against losses without any reciprocal constraint upon gains – exemplifies the syndrome. 

[12] Alan Greenspan provides an especially dramatic example of central banking as public performance. No one has more clearly articulated the explicit duty of the central bank to make its decisions ineffable. As he famously remarked: “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.” Ironically, the critical invocation of abstraction is entirely undisguised. It is not confidence in anything particular that the central bank is properly concerned with, but rather pure confidence, as manifested in monetary intensity, or liquidity. Concrete policy presentation is thus conceived as a new species of idolatry, to be jealously avoided. When John McCain later joked that in the event of Greenspan’s death he would prop up his corpse in dark glasses and hope that nobody noticed, the same magic theater was being referenced. Between the appearance of financial authority and its reality lies no difference that matters. Trust is practically aligned with the paradox of a supernatural phenomenon – of the ‘phenomenon’ in its colloquial rather than philosophical sense. One sees only that what one sees could not possibly be enough. A ‘leap of faith’ is therefore modeled, from the other side. To be catapulted into credence is the desired effect. That is the entire point of the show, and everyone knows it. The audience is to be healed of its skepticism, in something like the Reformed Christianity revivalist style. Belief is the essence. Expressed within the suitable Protestant idiom, financial salvation is earned by faith alone. That Macro has come to sound like a Stephen King plot is only by shallow estimation a coincidence.  

[13] The systematic taxonomy of magical effects remains an under-developed and controversial subject. No general consensus exists as to whether a full categorization is possible, still less is there any agreement as to its final architecture. The most disciplined attempts to complete such a project, however, tend to concur on the prominence of production and vanishing as elementary magical effects. Creation (ex nihilo) and annihilation are the theo-cosmic archetypes. Stage magic dramatizes ontological modality. Monetary conjuration complies neatly with this scheme. In the era of financialization, credit expansion and contraction attest to an absolute process of money production, ‘backed’ by nothing beyond itself. At the limit, money demonstrates radical insubordination relative to the question of being. With all material constraint on minting lifted, monetary production submits only to magical will. In this context, Bitcoin looks like a spell cast during a magical war. Its restriction upon money creation is characterized by unprecedented severity, from one regard. From another, however, the entire crypto-currency is an ex nihilo creation, bringing a virtual BTC 21,000,000 into existence spontaneously, out of nothing. Money creation switches phase. It is no longer amplification, but sheer innovation. Reciprocally, an updated model for monetary annihilation can be expected, no longer based on credit contraction, but rather on crypto-currency extinction events. Proliferation and culling of new currencies begins to increasingly regulate the money supply. Cryptic sorcery contests financial magic.  

[14] It is the sacred calling of skepticism to doubt the existence of things whose reality inheres in nothing beyond their being believed – but not to the point of dogmatism.

[15] “Only a god could save us,” Heidegger remarked in a 1966 Der Spiegel interview. The mature world credit-financial order was not the primary context for these words, but it might aptly have been. An overseer who is definitely less than a god is nothing. Where deity is slow to unambiguously manifest, ceremonial magic is required to make up the difference.

[16] Is not the illusion of vision among our most consistent themes here? The Federal Reserve Note includes the picture of an eye. It is not meant even to be noticed. To feel oneself perceived suffices for childish comfort. Claims to see rarely tolerate close examination. Intense scrutiny ruins the effect. This is now what we are seeing.

Crypto-Current (050)

§5.35 — Without seeking to wholly efface the novelty of Graeber’s construction – still less its remarkable pertinence to our contemporary political-economic concerns – it is important to note the extent to which its theoretical stance is prefigured in crucial respects by the German Historical School of economics,[1] and thus, in turn, anticipated in considerable detail by the Austrian thinkers. Menger, in particular, defines his enterprise in explicit contra-distinction to those who place the State at the origin of the monetary phenomenon, which he conceives as the dominant economic error of his time. Since a functional unit of account already presupposes a prior settlement of the value question, through a process of price discovery, Menger confidently maintains that:

It is not impossible for media of exchange, serving as they do the commonweal in the most emphatic sense of the word, to be instituted also by way of legislation, like other social institutions. But this is neither the only, nor the primary mode in which money has taken its origin. … Putting aside assumptions which are historically unsound, we can only come fully to understand the origin of money by learning to view the establishment of the social procedure, with which we are dealing, as the spontaneous outcome, the unpremeditated resultant, of particular, individual efforts of the members of a society, who have little by little worked their way to a discrimination of the different degrees of saleableness in commodities.[2]

§5.36 — Despite their strategic mismatch, or ideological divergence, the motivated narratives of Menger and Graeber nevertheless converge upon a precise conception of the stakes in theoretical play. For both, there is an application of historical story-telling to a liberal theory of money, seen as essentially bound to the status of precious metal coins. That Menger writes in defense of this theory, and Graeber in opposition to it, does not affect the invariable associative core in the least. Both agree entirely about what it is that the valorization or denigration of money – as minted metal – means. Far too much socio-historical ballast underlies this construction of the controversy to allow for its casual dismissal.

§5.4 — The controversy is significantly deepened by a third narrativization of monetary history, outlined in Nick Szabo’s remarkable essay ‘Shelling Out’.[3] Szabo extends the investigation into the origin of money far back into prehistory, where it hazes out into evolutionary time. The essay takes as its initial clue a peculiar pattern of linguistic interference between money and marine molluscs, as evidenced in the “shelling out” of the title, and in the persistent colloquial naming of dollars as “clams”.[4] The source of this association is found in the ‘wampum’ shell-money of the native tribes encountered by mid-17th century New England colonists, which provided the settlers with their first “liquid medium of exchange” and subsequently their first legal tender (from the period 1637-1661). The opportunistic shell currency of the New England colonists finds numerous ethnographic echoes up to present times, and dating back into the deep Paleolithic, 75,000 years ago. Szabo categorizes such shell currencies among ‘collectibles’, noting that such types of ‘proto-money’ or ‘primitive money’ were “the first secure forms of embodied value very different from concrete utility”. Recognizably, they were a response to the problem of ‘value measurement’ (with no profound distinction required between ‘goods’ and ‘obligations’[5]) facilitating the crucial innovation of delayed reciprocity. Systematized exchange serves as a proxy for resource storage. “Like fat itself,” he writes, “collectibles can provide insurance against food shortages.” The hook they offer to consolidation through natural selective is therefore considerable.

§5.41 — Compared to Homo neanderthalenis, Homo sapiens was Homo economicus. This was a species that carved out a competitive advantage for itself relative to other hominids of similar – or even superior – individual intelligence through the partial commercialization of its environment. A distinctive genetic endowment, expressed through attachment to collectibles, enabled spontaneously-coordinated social action to arise with unprecedented sophistication. By providing – for the first time – effective incentives for activities oriented to regular exchange, collectibles normalized trading as a quasi-continuous, characteristic human behavior. Social existence acquired a commercial dimension, with corresponding stimulus to cognitive advancement beyond the horizon of immediate utility. 

§5.42 — Time was not only the medium of change, as this was accumulated through adaptive genetic modification of hominid species, but also its driver, or prompt. More specifically, modern man’s prehistoric ancestors were compelled to adapt to the concrete irregularity of time.[6] Seasonal variation compels rudimentary specialization. Outside tropical latitudes, it was simply impossible for primitive man to engage in a consistent pattern of activities across time. Food sources were not constant – or even continuously available – throughout the annual cycle. Winter, in particular, set its own challenging demands, which could be met only by running down food stocks (provisions). Hunting large herbivores accentuated these conditions of episodic glut, and the corresponding need to organize time. The template for division of labor and trade was therefore already laid by climatic adaptation, prior to any significant extension across space, and into elaborate social specialization. Economic incentives had necessarily to be scaled beyond immediate needs. (Much space for differential anthropology is opened here.)

§5.43 — At the level of maximum abstraction, money – already in its most primitive instantiation – enables the commercial disintegration of time. This is captured at the level of hominid ethology by the facilitation of delayed reciprocity. (It is only through pedantry that ‘reciprocal altruism’ can be significantly differentiated from ‘trade’, abstractly conceived.) Monetized trade tolerates de-synchronization. Accumulation of collectibles within a circuit of exchange is equivalent to a transactional non-simultaneity – complementary to a primitive ‘borrowing’ of the specific good in question[7]– which allows for the commercial exploitation (arbitrage) of variation in time-preference over an asset. To repeat the critical point: Money – already in its most primitive inception – formalizes time-disintegrated reciprocal altruism, by providing the condition for its simultaneity. The receipt of money now substitutes for the persistence of a debt.

§5.44 — Szabo’s analysis returned money to the comparatively neglected semiotic function of collection, or allocation, within which value exchange (circulation) and storage (accumulation) find a common root. Collected signs are irreducible to signifiers and indices. Their value is not soluble within semantics. The economic category of scarcity is essential to them. It is only in collection that the ‘economy’ of signs ceases to be a metaphor. Collectible value tokens cannot be loaded from a dictionary. They have to be economically acquired.

§5.45 — It might easily seem, under conditions obscured by the creditization and politicization of money, that collectibles are – from the moment of their inception – a prototypical mode of saving (and therefore – by iron reciprocity – of debt). It cannot be sufficiently emphasized that this path of interpretation is profoundly erroneous. This is a point that merits explicit comment precisely on account of its elusiveness, which reflects structural factors of great historical consequence. Money, whether in Menger’s sense, or in Szabo’s – and even in Graeber’s, once allowance is made for his historical inversion of the credit-money relationship – extinguishes debt. Any monetary transaction substitutes for the persistence of a liability. Acceptance of primordial or non-credit money, whether in the form of a ‘collectible’ or (more specifically) of a precious metal coin, is the alternative to persistence of a credit position. In such cases, receipt of money erases an obligation, rather than confirming, memorizing, or reproducing one. Historically, at least, ‘paper’ or credit money is the anomaly. It is only in this case that monetary assets correspond to another party’s debt, that is, to a preserved obligation. Monetary exchange does not intrinsically involve a credit-debt structure, prior to its financialization. It appears to imply such a structure only when the reality of money as a (comparatively abstract) positive asset has been dissolved, until it appears as no more than a surface effect, or epiphenomenon, of its registration within the ledgers of a banking system. Debt is the conceptually and institutionally convenient interpretation of a more obscure social phenomenon. Market acceptance of money is systematically reconstructed into the recognition of an obligation, as if it exhibited dependence upon an implicit contract. The conceptual imperative at work here is gregarious. Its orientation is to socialization.[8] The tendency is to obliterate all trace of an asset that isn’t already a recording of debt. Liquidity is reconfigured as an entitlement.

§5.46 — Employment of a single word – ‘money’ – for these very different types of valuables lends itself to systematic theoretical disorder. The depth of this confusion is indicated by the fact that not only ‘money’, but also ‘assets’, and even ‘cash’ have been progressively assimilated to the concept of credit[9], in accordance with a general financialization of economic categories that has been consolidated – at an accelerating pace – over recent centuries. Since the concept of money tends to accommodate itself to the dominant pattern of actual monetary usage, it has increasingly been identified with a positive financial balance in a bank account, recorded in the bank’s ledger (where it is registered as an institutional liability), and even – beyond this – with the notion of a credit limit determining spending power. Money has come to seem increasingly like something banks do, through trusted record-keeping fundamentally. On this track it tends to become the name for a complex of banking services.  

§5.47 — In order to control these semantic instabilities, it is worth provisionally introducing – in lieu of enduring technical terminology – a distinction between A-money and C-money.[10] ‘A-money’ is a positive asset, or collectible, uncorrelated to a liability. In the case of Bitcoin, it consists of DSP-proof (or non-duplicitous) ledger entries. The value of A-money is not in any strong sense ‘intrinsic’ but depends – as all commercial value does – on market receptivity. It varies, therefore, between zero and some arbitrary magnitude, when denominated in any other medium whatsoever. This variance, however, has no element of credit risk (or sensitivity to default). No one is under an obligation to redeem A-money for anything. Like any other collectible, it has value in anticipation of market acceptance, and not on the ‘basis’ of any promise made by an issuing authority. It is a commodity, in the broad sense. Redemption is intrinsic (or immanent) to it.

§5.48 — C-money, in drastic contrast, is credit (corresponding to the obligation of another party). It has no value at all separable from the credit quality of the individual or – far more typically – institution that has registered its issuance as a liability. If a depositary accepts A-money for safe-keeping, and thus ‘on loan’, the signed receipts it provides to guarantee restoration of the funds in question are already germinal C-money. This was, as a matter of historical fact, the transactional mechanism that catalyzed modern monetary transformation, from precious metal coinage, to promissory notes, and eventually to credit accounts. The value of C-money is based upon institutional guarantees. Trust is a mathematical coefficient of its value. Trustlessness is therefore essentially intolerable to it. At trust degree-0 C-money necessarily becomes worthless. In each such case, as a matter of historical factuality, an episode of hyper-inflation would then have consummated itself. This is how (C-)money dies.[11]  

§5.49 — Evidently, Bitcoin is a variety of A-money, and not a C-money (or credit) system. Its currency units do not index obligations. They are positive abstract assets. As Szabo insightfully concludes, Bitcoin is a system of digital collectibles. While it is certainly possible to be owed bitcoins (like any other asset), in owning bitcoins one is not thereby owed anything further. The application of the credit relation to bitcoins has necessarily to draw upon institutional resources extraneous to the Bitcoin protocol itself. Crypto-currencies perfectly simulate precious metals in this respect. No promise is inherently attached to them. They can be the substance of wagers, but they are not bets on the word of another agent.

[1] The German historical school of economics was essentially characterized by its aversion to universal mathematical-equilibrium models, of the English classical and neoclassical type. Empirical peculiarity, as carried by the details of social history, was promoted against highly-generalized cross-cultural constructions. In this respect, it was a recognizable descendent of the German Romantic tradition. Its most prominent representatives included Wilhelm Roscher (1817-1894), Bruno Hildebrand (1812-1878), and Karl Knies (1821-1898). The distinctive characteristic of this school is its consistent attempt to delimit classical models within a more complex socio-historical matrix. When translated into the Anglophone world, the principal concerns of the German historical school are perhaps best represented by the New Institutional Economics, developed from the work of Ronald Coase, most notably by Douglass North. Yet here one sees a fundamental distinction in methodical orientation, indicative of broader cultural difference. Among the Coaseans, the principle of intelligibility for an economically-significant institution remains grounded in commercial coordination. Transactional economy explains the existence of an institution (and first of all, the firm). The market process is abstracted, rather than theoretically subordinated. Historical institutions that appear super-economic under German inspection are configured instead as meta-economic by the later Anglophone analysis, which generalizes microeconomics beyond its neoclassical frame.

[2] Accessible online at:

[3] The intensity of Szabo’s involvement in the crypto-current would make his contribution to the general theory of money singularly pertinent, even were its theoretical quality less outstanding. See: ‘Shelling Out – The Origins of Money’ (2002)

[4] Notably, the association between shells and commerce has been promoted by the name of Royal Dutch Shell (familiar to Americans through its subsidiary the Shell Oil Company). The ‘Shell’ Transport and Trading Company (quote marks were included in the title), founded in 1897, was the British side of a merger (in 1907) with the Royal Dutch Petroleum Company that created the international oil giant which still exists today. The pre-merger ‘Shell’ did indeed derive its name from traded sea shells, although this was the main business line of a predecessor company, whose identity was adopted, rather than a continuing commercial specialism. Sadly, shell-trading in the Dutch East Indies does not seem to have been central to the emerging global oil industry.  

[5] Given the biological centrality of food sharing among social animals, it is peculiar that the difference between the recognition of an obligation and the receipt of a commodity could ever be considered of primordial importance. The distinction becomes discernible only through formalization, which corresponds to economic engagement with strangers (marking the phase-transition from anthropology to sociology). When precipitated from the dense fabric of tacit reciprocities, trade accelerates settlement. The game-theoretic structure is comparable to a collapse into non-reiterating interactions, with associated attenuation of reputational structures. Under such circumstances, the importance of compact, instantly-completable, or fully-executable transactions is elevated. Anything left unfinished is potentially lost. Money, in its positive sense (as collectible), thus emerges as an anti-memory. The subsequent elaboration of formal credit systems only emphasizes this fact, insofar as unsettled obligations are priced as risk, and thus exposed in their definite disutility. Graeber’s emphasis upon ‘everyday communism’ is especially unhelpful within this deep context, insofar as it merely assumes the solution to a collective action problem – presenting it as an irreducible ethnographic fact. Parochial inattention to the complexities of trade is promoted as a positive ethical achievement. The question posed by evolutionary biology, which is no different to that of realistic social analysis, is subjected to blank dismissal. Given the considerable (positive sum) advantages of sharing, and the evident coordination problem obstructing it, how is reciprocal altruism actually possible? Markets, concretely, answer this question. Insofar as it can be obliterated in theory, they too can be. This only demonstrates how far theory can depart from realistic application, without losing – and perhaps even enhancing – its function as political rhetoric.  

[6] The transcendental-philosophical problem of time production is approached here as a topic of evolutionary anthropology. Time is distinguished from the present moment through contextualization of present conditions within a larger time-frame. In this way, the cognitive integration of time is the exact complement of its commercial disintegration. For a-synchronous transactions to meet a criterion of reciprocity, they require a mechanism that supports – or effectively substitutes for – deferred settlement. This is a notion comparable to the ‘time-binding’ explored in Alfred Korzybski’s general semantics. The human capability for deterritorialization or comparative environmental independence in space is both echoed and advanced by a capacity for expansive time colonization, with proto-money operating as a cognitive condenser. An inheritable token with the potential to support future acquisitions explodes economic immediacy, in both directions. Its value is inseparable from a time-integration function, which can equally be conceived as a tolerance for time-disintegration, or de-synchronization. It is the virtual suture, permitting the opening of a time-rift. The sheared edges connect only through it. Money lets time-consciousness fall apart. When regressed to the level of the collectible, ‘money’ designates a critical threshold in evolutionary psychology. It is money – even more than ‘the tool’ – that differentiates man from alternative hominid lineages. Homo economicus, then, is at once a modern telic construction, and an archaic cladistic marker. The monetarization of social obligations has consequences that are not restricted to the time-horizon of the psychological individual. Money facilitates the accumulation of inheritable wealth, enabling inter-generational resource transfers, in accordance with incentives strongly predicted by any biorealist account of kin altruism. It thus opens the conceptual space for transferable non-consumption goods, distinct from either territory or perishables. ‘Wealth’ becomes dynastically assignable, thus achieving a comparative independence from primitive power (or immediate dominance).

[7] The theoretically erroneous translation of this flexible exchange into a credit relation will concern us presently.

[8] One highly-influential dynamic model of value socialization – yet to reach its apogee of cultural influence – is found in the work of René Girard. The basic theoretical matrix is laid-out in his (1972) book Violence and the Sacred. It is a notable merit of Girard’s work that rather than merely assuming the social diffusion of values, the process is at least partially explained, albeit through the employment of various relatively cumbersome (or metaphysically-saturated) axioms. In particular – and understandably – theory of mind is presumed solved, and operative as an engine of gregariousness. Girard’s guiding proposal is that desire is mimetic, which is to say social and antagonistic. Its template is always the desire of the other. Concupiscence is originally envious. I’m having what he’s having. Libidinal privacy is thereby rendered inconceivable, with human desire being collectivized ab initio, on a basis essentially incommensurable with the instincts of a solitary animal. It follows that the more anything is wanted, the more it is wanted. Desire spreads through the social body like a contagion. The extreme reflexivity of any system that can be modeled this way makes it explosively excitable, with a tendency towards some crescendo of violence (or ‘sacrificial event’), through which explosively accumulated mimetic tension is discharged. In recent years, the translation of Girard’s model into a more colloquial economic register has been undertaken by Peter Thiel. Mimetic desire is identified with economic competition.  

[9] ‘Credit’ and ‘credentials’ are roughly the same word. Both of its branches pass into English (via Middle French) from the Old Italian credito, vernacular modernization of the Latin creditum, meaning something entrusted, a loan, from the neuter of creditus, past participle of credere to believe, entrust, source also of creed and credence. Credit and trust are indissociable conceptions. It is not only that etymological sense continues to operate within contemporary ordinary usage. Under the current techno-cultural pressure of monetary sophistication, it is undergoing re-activation. Money cannot be technically understood, it turns out, without the concept of trust undergoing complementary rigorization. Economic convulsion corresponds to a crisis of belief.   

According to the dominant (if tacit) teleological scheme, monetary evolution advances along a path of credit elaboration. It trends therefore to financial domination by sophisticated derivatives (‘contingent claims’) composed of options, forwards, and swaps. The sequence of tradable financial products commercializes risk at ever higher levels of distillation. It advances from positive assets, to liabilities, to formalized trading options under specifically-contracted time and price conditions. Credit therefore strongly aligns with financial teleology. It is in an important respect owed the future. The trouble Bitcoin introduces to this structure of meta-debt cannot, therefore, be anything other than considerable.

[10] The term ‘C-money’ has been selected to avoid confusion with Wei Dai’s ‘b-money’ concept (whose importance to the genesis of Bitcoin is beyond controversy). Simple alphabetical order has otherwise been adhered to. Any apparent resonance between the ‘A-’ and ‘C-’ of these provisional terms and the distinction between ‘asset-’ and ‘credit-money’ is purely serendipitous. 

[11] The reference is to Adam Fergusson’s classic study of Weimar-era hyper-inflation:

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):

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.”

[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):

[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’

[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.

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.