Bitgenstein’s Table, the Crypto Philosophy Podcast, ep. 2
On Bitgenstein’s Table, we consider 2,500 years of the wisest human thought in philosophy, psychology, sociology, history, and economics to make better decisions. Some episodes will focus on investment decisions, but most will focus on product decisions: what kind of world we want to build with decentralized technologies, in particular cryptocurrency.
The latest Tweets from Peter Keay (@bitgenstein). Director of Globalization @icoalert, host of Bitgenstein's Table…twitter.com
^ Follow to stay tuned for future episodes. ^
This episode is a thought experiment, with a few tales from history.
I’d love to see you extend the thought experiment with debate, doubt, or new ideas, here or on Twitter.
This podcast is made up of narrative and music, so I recommend you listen. But if you still prefer reading, here’s the episode:
The views expressed in this episode are my own, and not the views of ICO Alert or any other entity. Remember that none of this is specific financial advice. Don’t base your decisions on it. This podcast is informational and educational, and I hope it helps you learn and enjoy life.
Like with most things, people often come to cryptocurrency and see what they want to see.
They see the opportunity for transparency or the opportunity for privacy.
They see the opportunity for freedom or the opportunity for security.
They see the opportunity for libertarianism or the opportunity for social good on a mass scale.
It usually takes people a while to step beyond these categories and see that the revolution of decentralization is bigger than all of those. But we have to make that step. If we think about decentralization and cryptocurrency in the same categories we are used to always filtering our world into, our thinking will be incorrect.
One quick note for people new to cryptocurrencies. The blockchain revolution is one of decentralization. Most distributed ledger projects out there today create collectives — networks of people, companies, organizations across the world — and economically incentivize them to act honestly. In other words, when people participating in the projects work for their own good, they are also working for the good of the network.
Decentralized organizations sidestep corruption and dishonesty by making honesty worthwhile for every member. So when members participate, they do it for their own good and the good of the collective.
Now, we humans have tried to create collectives before. But without distributed ledger technology available to incentivize people to be honest, we had to resort to fear and force.
Co-op or Coop?
There’s a famous tale that you might have heard of Soviet dictator Joseph Stalin and a chicken. It’s a fable composed about Stalin — or maybe even composed by Stalin himself. Our first written evidence of it is a book by Russian Novelist Chinghiz Aitmatov.
In 1935, Stalin invited his trusted senior advisors and some media types to a meeting. There, he took a live chicken and gripped it tight, and with his other hand, he began to pluck out clumps of the chicken’s feathers. The bird squawked, of course, but Stalin continued tormenting it until it convulsed with agony. Eventually, the chicken was unfeathered completely.
Stalin then put the bird down by a small heap of grain and stood up. As the chicken began to peck from the heap of grain, Stalin put his hand into his pocket and pulled out another fistful of grain, holding it out. To the shock of those around, the chicken staggered weakly back to Stalin and started pecking the fresh grain right out of the very hand that moments ago had caused incomprehensible agony.
Stalin turned to the people and said, “People are like this chicken. Inflict unbearable pain on them, and then the moment you offer them what they need, they will follow you for bread.”
Regardless of whether the fairy tale is true or not, millions of souls were crushed by the Soviet collective project. I used to live in Ukraine — I’ve also lived in Russia — and the story of the Holodomor still brings tears to my eyes after years of hearing it retold. Holodomor was a famine inflicted on the people of Ukraine by raising production quotas. This left no food for the laborers themselves.
The Soviet government denied causing the Holodomor famine for decades, until 1987, when it was admitted by former Russian President Mikhail Gorbachev.
Between 3 and 8 million people died in the catastrophe. Precise numbers are impossible to obtain: unlike the wartime Germans, who kept meticulous records, large Soviet operations were not so well tracked. One of the methods we have used to make estimates is analyzing the reduction in elementary school enrollment.
In November 1932, Stalin sent thousands of troops and zealots to seal Ukraine’s border. No food in, no people out.
Anyone caught stealing grain was shot or exiled to Siberia.
People ate dogs, cats, mice, frogs, birds, leaves, grasses. Some dug up the dead. Parents sometimes even ate their own children.
All of this suffering was meant to crush the wealthy landowners and the Ukrainian spirit.
At the famous conference in Yalta, where that photograph was taken of Franklin Roosevelt, Stalin, and Winston Churchill all sitting on a bench deciding the fate of Europe after World War II, Churchill remarked to Stalin that the forced collectivization must have cost millions of lives. =
The British Prime Minister later reported that Stalin held up both hands and said, “10 million.”
Most of us likely identify Stalin as “bad,” and thus many more conservative or libertarian thinkers lump every socialist person and idea into the evil “Stalinist” category.
Well, what about Churchill? Churchill probably seems like the good guy in this story to most listeners.
Other listeners, however, remember the words of Churchill about poison gas warfare that were circulated during the recent crisis in Syria. To you, perhaps the Yalta conversation is between two evil people.
“I am strongly in favour of using poisoned gas against uncivilised tribes,” the secret memorandum said. Churchill proceeds to give his reasoning: “The objections of the India Office to the use of gas against natives are unreasonable. Gas is a more merciful weapon than [the] high explosive shell, and compels an enemy to accept a decision with less loss of life than any other agency of war.”
If you’re against Churchill for this reason, you should at least read the paragraphs he wrote just before the “damning” quotation. (And analyses like this one.)
If you’re for Churchill and against Stalin, you should investigate how Churchill possibly facilitated the starvation of 2–3 million Bengalis.
But no matter which side you fall on, despite the complexity of all these situations, you probably still shove Churchill into a “good guy” or “bad guy” category, even though life is more complicated than that.
On Churchill, or any person in history for that matter, you probably take one of two views. You likely hold that Churchill was:
- a hero of life and liberty, or
- a hypocritical pro-genocide racist.
You’re probably not going to put up a fight for any position in between the two. And I’ll admit that my view, which is irrelevant here, is probably just as lacking in nuance as yours is.
My point is that we try to force everything and everyone into extreme categories.
Categorization and Cognitive Bias
We humans take every new thing we encounter — technologies, celebrities, songs, social trends, companies — and we filter them into hard categories. It’s the way we understand the world.
Philosophers ranging from Plato to Kant have in various forms defended for centuries, that we put things we experience into categories. Categorization sits at the center of many psychological ideas, and it’s the driving force behind a large number of cognitive biases: those mostly reliable shortcuts in thinking that we humans all rely on.
I mentioned last week that we seek to find patterns and meaning in everything. This is related. We force things into categories. We pigeonhole. We stereotype.
In particular, when we turn our minds to broader society — to law, to politics, to economics — we polarize things. We categorize everything as capitalist or socialist, as pro-regulation or pro-liberty, as collectivist or individualist. In most English-speaking countries, we label every idea as “left” or “right,” “red” or “blue,” “conservative” or “progressive.”
The story I just told about Stalin has been used in anti-socialist materials time and time again: whenever there is something suggested that people perceive to be socialism, they drive it to the extreme. They put it in the same category.
Of course, tales of similar woe come up in more free-market systems — be they various colonies of the East India Company, and India to this day, or be they Oliver Twist tales of child laborers, stories of 10-year-old workers chained to factory steam engines to maximize production, and accounts of poor families taken advantage of by the rich and the law alike.
Oppression is not unique to socialism. We can find violent abuses of lower classes when capitalism is unchecked, too.
Note: Capitalism’s history and definition are both debated. I should say that when I talk about capitalism here, I mostly mean laissez-faire capitalism: The free market kind of capitalism common in today‘s world, though rarely in a pure form.
Economists will find this far too simplistic, but that’s OK. The main idea is that whatever your categories of capitalist and socialist, of conservative and progressive, of libertarian and liberal, of right and left, whatever categories we use to understand history and modern society — we can’t force cryptocurrency into them. And, no matter which categories we hold as good, unless we have aspirations to take over the world, we will find the coming decentralized economy appealing.
Collectives Sacrificed Individuals
Prior to decentralized technological systems, true collectives were impossible without individuals making significant sacrifices all the time. Sacrifices that they are willing to make for the good of smaller groups, sure, but not often the state.
Marxist experiments, such as the Soviet Union, elevated the collective at the expense of the individual. One of the problems is these systems are doomed to fail unless the majority of individuals are so devoted to the system that they are willing to sacrifice their liberty or their individuality to uphold that system.
In the Soviet experiment, the state tried to encourage this devotion with fear. We told the tale of Stalin’s chicken at the outset. Similar stories can be found in the communist revolutions of Mao Zedong, Pol Pot, and many others.
In all of these cases, the state believed that fear was necessary. At times, they believed brutality was necessary. This is because the incentives of the people and the incentives of the state were not aligned. They were contrary to one another.
They were aligned in some cases — both the Soviet state and the people benefitted from the expelling the German armies from Soviet territory. But in other cases, the people died by the millions in order to kick off new state collective programs. The Holodomor famine. The Great Leap Forward. Year Zero.
But fear ultimately didn’t work well in the Soviet Union.
Even with the influences of propaganda and terror in the Soviet collective, many people were just incentivized to work less and to ride the coattails of society as much as possible.
This is not the spirit of blockchain.
But before we talk about the spirit of blockchain, let’s talk about the spirit of socialism and of capitalism.
Both socialism and capitalism are driven to complain against abusive systems.
The common people were denied life, liberty, and property.
Eventually laissez-faire capitalists wanted people, individuals, not just the state or the king, to own property and to not have their rights violated by powerful oppressors. And as strange as this might sound, socialist writers originally wanted roughly the same things. Both groups saw oppression and both wanted to remedy it.
Yet both systems, through different paths, have led to oligarchy.
Domination by elites. The systems have, in a way, created new versions of the problems they had hoped to solve. Whether the new oppressors are bankers and corporate billionaires, or the Party.
It was the power of elitists, and the abuses of that power, causing financial collapse for profit in the end, that led Satoshi Nakamoto to create Bitcoin.
Of course, despite its anti-elitist start, Bitcoin could hardly be called socialist.
In capitalism, the means of value creation are owned by private individuals for profit. And that’s true of the decentralized economy we want to create.
In socialism, the means of value creation are ideally owned by the workers. And that’s also true of the decentralized economy we want to create.
The decentralized economy, properly constructed, will be both. It should not, like capitalist experiments, devolve into a tiny ring of invincible elites. And it should not, like socialist experiments, devolve into state control.
After all, ownership of the means of value creation by the state is certainly not the spirit of blockchain. Nor is ownership by a small circle of oligarchs, despite what some HODLers hope.
No, decentralized organizations enable, for the first time in history, the workers to directly own the means of value creation — for profit.
The means of value creation are not owned by the state as an “intermediary” (as with socialism), nor are they owned by private stakeholders as the elite (as with capitalism).
Decentralized autonomous organizations (DAOs) bridge the gap between state companies and private companies.
They are a whole new paradigm that unifies the advantages claimed by proponents of both of the old paradigms.
This is why there are hardcore anarcho-capitalists that I know that are completely dedicated to cryptocurrency, and there are socialists that I know that are completely dedicated to it. And I know people everywhere in between who love cryptocurrency.
These people don’t need to split up the decentralization movement into their old categories of thinking. Because it’s bigger than both.
The question “Is cryptocurrency capitalist or socialist?” is a false dilemma, meaning that it presents only two options, when there are more.
When I asked that question, it unfairly forced you to push this revolution into one of those camps.
But we cannot in our minds force the coming decentralized economy into the old categories, or it will not be a revolution. It will ultimately be more of the same.
And we don’t want more of the same.
We want to align incentives.
Under the old system — operating in most of the world today — stakeholders want to make their own money even at the workers’ and even at customers’ expense. The government often sees a need to step in with child labor laws, worker health laws, consumer protection laws, and so on, to prevent less compassionate stakeholders from taking too much advantage of workers and customers.
What about the workers? Under the old system, workers care little for the company’s ultimate value, and they care little for customers’ experience unless it directly affects their wages or their workload. Most workers want to do less work, make more money, or better, both!
And what about the customers? Under the old system, customers want the best experience and the best price — sometimes, even if it destroys the future of the company or hurts the workers.
But the new, decentralized economic model is designed to align these interests. It aligns the interests of the stakeholders, the workers, and the customers. All three, and some people now fit in two or three categories, want to see the value of the networks that they use grow.
All three want the network to be more valuable.
For the first time, we are exploring true collectives that do not sacrifice the individual.
The nature of decentralized organizations is continually evolving, and the examples we have in the world today will seem primitive in comparison to those on the horizon. But even now, decentralized networks are collectives that offer individuals not less freedom, but more.
Decentralized networks operate on incentive systems, and so each member is free to pursue “happiness” — that is, enrichment. This is capitalistic: Each individual works for his or her own financial gain. And it is socialistic: Each collective is set up to make sure the interests of the individual and the work of the individual are the interests of and for the benefit of the collective.
For the first time that I can see in history, we have a chance at balance encompassing both.
Not compromise. Not a balance between the two. Not a choice between the needs of the many and the needs of the few, or the one. But a balance including both.
Decentralized networks are an epic technological experiment in individualistic collectives.
They incentivize the individual to act freely for the good of the individual and the collective at once.
And for the first time in history, they bridge that gap without a maze of compromises.
This is social good without taking a huge cut from your paycheck.
This is free markets without crushing the poor with unjust monopolies — and also without crushing value creators with legal decrees from armchair regulators.
This is aligned incentives. This is neither of the old systems. And this is both.
When you align the incentives of the people both as individuals and as a group — of the stakeholders, of the workers, and of the customers — you satisfy the desires of both capitalists and socialists. Both individualists and collectivists.
Of course, this does leave some major questions. Probably more questions than answers at this point, if we’re honest.
Will individualist collectives ever happen, or are they just an impossible dream? Well, I’m hopeful, since this dream is shared by thousands of others, all pouring time and resources into it, and recruiting new people to the cause of these individualistic collectives every day.
But assuming this revolution succeeds, will we like the world it creates?
Will there be groups left behind?
What about the poor? What about those who for whatever reason have trouble creating value?
Cryptocurrency bulls sometimes hint at crypto citadels. Places where cryptocurrency adopters will live in protected enclaves while the masses live excluded in slums. Sadly, a few even talk about this world as if it’s what they want.
But others speak of smartphone-based, accessible mining and gently inflationary currency allowing anyone unbanked, unemployed, or unhomed to contribute to decentralized networks. To create value.
I’m sure there will be more ideas along these lines, but once again, blockchain solutions bridge the gap.
These ideas are similar to Universal Basic Income, but they also look like capitalism. They require participants to contribute to the network as nodes, yet they also enable virtually anyone to do that.
We’re on the cusp of enabling a wider range of people to become value creators than ever before.
After all, in the ideal blockchain world, and with the spread of Internet there is no major difference between a node run by a tech billionaire and a node run by a poor woman in South Asia or Somalia or Brazil.
Even on systems like Delegated Proof of Stake, which reward only a smaller number of nodes, the applications running on these systems allow contributors from anywhere to receive fair pay for providing services to the network, independent of their location or ethnicity or social status.
So while the exact answers remain unclear here, I doubt that a world running on decentralized systems will present less opportunity for the lower classes than the current world running on centralization.
Of course, if you read anything I write, you’ll find that I’m always wary of dystopian dangers. So here it comes:
None of this future is guaranteed.
Regulators, communities, financiers, and even programmers could still shift this promising future away from individualist collectives.
Decentralized collectives are a new non-polarized paradigm, and no one knows for sure what power grabs the polarized order of this world might make to import themselves into the coming decentralized civilization.
As Nick Spanos says — I’ve quoted this often recently — “If we don’t free ourselves with blockchain, they’re going to enslave us with blockchain.”
Blockchain could be an unhackable, unavoidable tool for surveillance and control.
It’s up to us as a movement to come together and make sure the future we build is a good one. One that’s both free and fair. One that’s both collectivist and individualist. It is up to us all, the new decentralized collectives of individuals, to ensure this revolution remains on track to a future of liberty and equity, of opportunity and prosperity for us all.
Thanks for reading.
Next time, I’ll have Ryan Dennis, Head of Content here at ICO Alert, as a guest. Ryan brings unique experience to the Table, and we’ll spend the time discussing value creation.
I hope you join us next week on Bitgenstein’s Table: the Crypto Philosophy Podcast.