Wendy McElroy: Crypto Anarchism and Civil Society – The Technology is the Revolution

The Satoshi Revolution: A Revolution of Rising Expectations
Section 5: Saving the World Through Anarchism
Chapter 11, Part 3
Crypto Anarchism and Civil Society. The Technology is the Revolution.
by Wendy McElroy

Not only is democracy mystical nonsense, it is also immoral. If one man has no right to impose his wishes on another, then ten million men have no right to impose their wishes on the one, since the initiation of force is wrong (and the assent of even the most overwhelming majority can never make it morally permissible). Opinions—even majority opinions—neither create truth nor alter facts. A lynch mob is democracy in action.

–Morris Tannehill, The Market for Liberty

The simplicity of anarchism is stunning: live and let live. Do not use force against those who also pursue their own lives.

Most people are anarchists in how they conduct daily life with family, associates, and strangers. Whether or not law enforcement is present, most people behave peacefully, and being violent never occurs to them. It is not a police presence that makes people wake their children for breakfast or greet their neighbors on the sidewalk. Legislation does not persuade them not to murder strangers. Civil society does. It manifests the natural harmony of interests between human beings as they interact and separate to pursue their own self-interests.

Violence is the greatest obstacle to the functioning of civil society, especially violence in the form of a state. Just as society consists of individuals cooperating to achieve their own goals, the state consists of individuals who use force for the same purpose; they want wealth and status without earning it. That’s the key difference between the two forms of social organization. With cooperation, both sides benefit from an exchange, or else it does not occur. With violence, one side benefits at the expense of the other; it is might versus the right of people to enjoy their own bodies and property.

In order to continue the flow of unearned benefits, a state must continue to use force or the threat thereof. A successful state does two things: it institutionalizes violence; and it mimics civil society by monopolizing valuable services that would otherwise exist commercially and competitively, such as the adjudication of disputes. The monopoly itself is an act of violence against competitors and so-called customers. The two maneuvers allow the state to embed and to legitimize its power. Individual consent is gradually replaced by state coercion, and the principles of civil society are slowly eroded.

Individuals are vulnerable to the institutionalized and well-organized violence of the state. This is a paradox. The state exists only because individuals produce wealth that it confiscates and regulates. How does the impotent state retain its control over the power of individuals? Why don’t people say “no”?

Part of the answer is the centralization of state violence that intimidates people into the mockery of ongoing cooperation that is called obedience. State violence is centralized into institutions that coordinate the control of society; that is, they control individual exchanges and whatever benefits result. By contrast, individuals are decentralized; most people go about their own business and sleep in their own beds at night. They band together in larger homogeneous groups only when there is an advantage to doing so, such as producing goods or enjoying community. Banding together—centralizing–against state violence means that the violence has become egregious enough for people to disrupt their own lives and risk injury in order to oppose it.

Modern technology is more than a game changer in this dynamic; it is a game reversal. Cryptocurrency epitomizes this. The state centralizes control of wealth through institutions, such as central banking, and a monopoly on the services they provide. Crypto decentralizes the locus of power down to the level of individuals; it gives them back control over their own exchanges. Remember: civil society is the cumulative exchanges of the individuals within it; the state is the cumulative use of force to control those exchanges. Technology returns individuals to the conditions of civil society without a need to relinquish its benefits or to fear violence from the state.

Decentralizing The Revolution

Civil society is empowered and state violence is rendered impotent by three revolutionary steps, each of which occurs due to a radical decentralization of power.

Encryption returns privacy to the individual. Strong cryptography is the antithesis of the massive data collection that states rush to establish. Centralized data allows the state to regulate every activity within a society; gradually, society and the state merge into one unit called the total state. But individuals who control their own data can control their own lives.

The impact of this decentralization is much more than economic. It does more than deprive the state of taxes and other forms of revenue. The technology is a political revolution in and of itself. Consider one example. Modern technology—from encryption to the blockchain to 3-D printers—obsoletes the geographical borders that define a state; namely, a state is the organization that claims a monopoly or jurisdiction of force over a given territory. Its jurisdiction is defended through harsh border policies and tariffs, as well as through military force, if necessary or opportune. But what happens when individuals can leap continents at will to conduct the daily business of exchanging information and wealth? What happens when they do so without permission and privately, simply by pressing a button? Borders become meaningless. How long before states follow suit?

The founding crypto anarchist, Timothy May, considered the boundary-breaking feature important enough to be the opening paragraph of his pivotal 1994 work “Crypto Anarchy and Virtual Communities.” May wrote, “The combination of strong, unbreakable public key cryptography and virtual network communities in cyberspace will produce interesting and profound changes in the nature of economic and social systems. Crypto anarchy is the cyberspatial realization of anarcho-capitalism, transcending national boundaries and freeing individuals to make the economic arrangements they wish to make consensually.”

Technology sidesteps trusted third parties. The state exerts control through monopoly institutions with which individuals must comply if they want to participate in what remains of civil society. The central banking system is an example. In partnership, the state and the banks create money and monetary policies that are enforced by draconian laws; some nations punish counterfeiting with death. The money monopoly offers the state more than economic benefits, such as taxation and inflation. The data collected by banks is a mainstay of social control in two ways. The information and detailed records of every financial transaction are shared with the state, which uses it for social control. Those who eschew the banking system, along with those who are denied access by the system itself, are shut out of important aspects of civil society and from “services” offered by the state; they become secondary citizens. This, too, is social control.

Again, peer-to-peer technology is a game changer here. It sidesteps the trusted third party problem by providing banking services without an intermediary. Individuals become self-bankers, who exchange wealth through their own wallets and an autonomous network. If sophisticated monetary exchanges are desired, then a self-banker can hold an amount in a decentralized and reputable exchange for as long as the transaction requires. Privacy is maintained, and control of specified wealth is temporarily relinquished in exchange for a benefit. This is as close as crypto comes to needing a trusted third party. And, ideally, the decentralized exchange is worthy of trust, in the same manner as a private lawyer who facilitates a contract.

Bypassing unwanted intermediaries was the intent behind the blockchain. Satoshi Nakamoto announced this feature in the first lines of his 2008 White Paper, “Bitcoin: A Peer-to-Peer Electronic Cash System.” Satoshi wrote, “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required…”

Freedom no longer requires consensus or groundswell support. This is a comparatively unacknowledged aspect of crypto’s revolutionary impact: the decentralization of revolution down to the individual level. In traditional revolutions, masses of people take to the street after being convinced of the need to rebel. A crypto revolution does not require the centralization of political awareness or resistance within crowds of people who become powerful enough to confront the state. Decentralized individuals can free themselves, one by one, even if they remain a small minority. The more individuals who choose digital exchanges and decentralizing technology, the greater the impact on society will be.

But crypto will never appeal to everyone. Nor should it. The diversity of human beings is too vital and productive to be reined in. The beauty of a radically decentralized revolution is that it succeeds on an individual level; it has no need for consensus rebellion in the streets or collective action at the ballot boxes. Just as crypto anarchy sidesteps trusted third parties, it also bypasses the traditional means by which individuals can achieve freedom.

Everyone can be a self-banker. Everyone can be a self-revolution.

A Mystery Is Solved

The vision of crypto anarchism makes sense of what must be a mystery to many observers: Why did the creators of crypto, the blockchain, and associated technology release their inventions for free? Why was highly-valuable technology thrown to the wind and dispersed like seeds? It was not because crypto anarchists didn’t realize the technology’s potential. Quite the opposite. They saw it clearly.

Crypto anarchists believe that enabling others to control their own lives is an unalloyed “good.” Each person’s peaceful freedom benefits that of everyone else. It creates the community and world in which the crypto anarchists wish to live. The crypto revolutionaries released the technology in the same manner and for the same reason that people teach others how to read. Literacy enriches both individuals and society as a whole. It is not possible for a cynic to explain why the the incredibly valuable phenom of crypto was given away for free. It is a trivial task for idealists.

The State’s Main Chance 

Violence. Violence is how the state maintains itself; it is also the main hope to defeat the threat of crypto freedom. To do so, the state needs to convince people that crypto is the violent factor. Then, the state must convince people that it is what stands between them and “anarchy,” in every bad sense of that word.

There is a grain of truth to the statist claim. All societies contain violence because it is an aspect of human nature. With crypto, the violence is overwhelmingly expressed through fraud and theft. “How can the damage of violence be reined in and rectified?” is always last question asked of peaceful anarchism. And, then, discussion is closed down. It is now time to consider how law enforcement and a court system could be provided by the free market.

[To be continued next week.]

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