In 1999, the Chicago economist Milton Friedman predicted the rise of bitcoin as a currency.
Also read: Austrian School Economists were Bitcoiners, They Just Didn’t Know It Yet
He told an interviewer, “The Internet is going to be one of the major forces for reducing the role of government. The one thing that is missing, but will soon be developed, is a reliable e-cash: a method by which on the Internet you can transfer funds from an A to B without A knowing B or B knowing A. The way in which I can take a $20 and hand it over to you and there is no record of where it came from.”
Protecting Civil Liberties with Bitcoin
The civil liberty benefits of privacy and anonymity are clear. The less personal information a government has on an individual, the less effectively it can violate his or her rights. Imagine trying to arrest a woman for publishing a cartoon of Muhammad when her name and contact information are unknown. Imagine trying to draft her children to die in a foreign war when there are no school records to data mine. The power of privacy is the most discussed civil liberty advantage of cryptocurrencies.
But there are many others. They include: direct control of personal funds upon which such freedoms as travel depend; the ability to donate anonymously to controversial causes; the immediate transfer of funds to human rights victims; and, opportunity for betterment by those who cannot obtain bank accounts.
In fact, for some users, there is no feasible alternative if they wish to feed their families. Bitcoin Magazine explained, “Numerous immigrants send bitcoins instantly to their relatives overseas, thereby avoiding the 10-15% bank fees and the five day delays of bank wires. These immigrants purchase bitcoins as a commodity to reduce their transaction costs, just as someone might buy a cash register to reduce transaction costs. Actually, for immigrants who are unbanked, there may be no alternative means of transferring their money abroad.”
And, yet, cryptocurrencies are usually viewed as tools of economics rather than in terms of civil liberties or humanitarianism. The focus should expand.
Private currency used to be front and center in freedom politics. 19th century libertarians and many 20th century Austrian economists understood that free market money was as important to liberty as more traditional civil liberties like free speech. Some even considered the currencies to be more important. Benjamin Tucker – editor of Liberty (1881-1908) and the foremost individualist anarchist – believed it was vital to first destroy state monopolies, especially legal tender and monopoly banking.
Theories from the 19th century radicals sound antiquated to modern ears, but their insistence that private currency is essential to liberty should be taken seriously. Austrian economist Murray Rothbard did. He absorbed their radical attitudes while rejecting their economic errors.
Like Tucker, Rothbard embraced free market currencies as a path to human freedom. In his book, What Has Government Done to Our Money?, he argued:
“Can money be organized under the freedom principle? Can we have a free market in money as well as in other goods and services? What would be the shape of such a market? And what are the effects of various governmental controls? If we favor the free market in other directions, if we wish to eliminate government invasion of person and property, we have no more important task than to explore the ways and means of a free market in money.”
Rothbard performed another service for private currencies; he explained that civil liberties and economic freedom were two sides of the same coin. Civil liberties, such as freedom of religion, sprang from a person’s right to peacefully use his own body. They were expressions of his self-ownership — that is, the moral jurisdiction every human being possesses simply by being human. The same is true of economic freedoms. A person has the right to peacefully profit from his own labor, including the issuance and use of private money. Civil liberties and economic rights are points on a seamless continuum that rests on the same concept: private property in your own person.
The fusion was a dazzling insight.
What happened to the dazzle? In decades of debate on monetary theory and policy, it dimmed. Civil liberties were detached from economic ones, and the two were said to conflict. Opportunistic governments stepped in to protect the former while it policed the latter, to the detriment of both. Instead of rights resting on private property, they now depended on government largess.
Since the early Austrian days of F.A. Hayek, Ludwig von Mises and Rothbard, the freedom movement has largely ignored the importance of private currencies to liberty. Goldbugs push for precious metals, but usually as stores of value, and often with the goal of returning government issue to a gold standard.
Bitcoin changed that. It caused a renaissance in the appreciation of how powerful private money can be. The worth of private currencies is now an active brawl, with the word “sound” being flung as a fighting word.
In his book, The Theory of Money and Credit (1912), Mises claimed that sound money was a crucial part of classical liberalism because it restrained government and offered political autonomy to individuals. (By “sound,” Mises meant money that could not be rigged by a government.) He wrote:
“It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.”
The key question Bitcoin and kindred currencies have to answer is whether they are sound. With many unpredictable factors, only time will tell. But more than monetary theory hinges on the answer; civil liberties do, too.
Do you think Bitcoin should also be viewed in terms of civil liberties? Let us know in the comments section below!
Images courtesy of Crypto-Graphics, Pixabay.