Wednesday, May 23, 2018

Are Cryptocurrency Schemes Really That Much Different Than the Currency Scheme Launched by the Father of Socialism?

The "Time Money" currency created by the father of socialism.

Robert J. Shiller with some interesting observations and history:
One must bear in mind that attempts to reinvent money have a long history...As the sociologist Viviana Zelizer points out in her book The Social Meaning of Money:..."everywhere we look people are constantly creating different kinds of money.” Many of these innovations generate real excitement, at least for a while...
New ideas for money seem to go with the territory of revolution, accompanied by a compelling, easily understood narrative. In 1827, Josiah Warner opened the “Cincinnati Time Store” that sold merchandise in units of hours of work, relying on “labor notes,” which resembled paper money. The new money was seen as a testament to the importance of working people, until he closed the store in 1830.
Two years later, Robert Owen, sometimes described as the father of socialism, attempted to
establish in London the National Equitable Labour Exchange, relying on labor notes, or “time money,” as currency. Here, too, using time instead of gold or silver as a standard of value enforced the notion of the primacy of labor. But, like Warner’s time store, Owen’s experiment failed.
Likewise, Karl Marx and Friedrich Engels proposed that the central Communist premise – “Abolition of private property” – would be accompanied by a “Communistic abolition of buying and selling.” Eliminating money, however, was impossible to do, and no Communist state ever did so. Instead, as the British Museum’s recent exhibit, “The Currency of Communism,” showed, they issued paper money with vivid symbols of the working class on it. They had to do something different with money.
During the Great Depression of the 1930s, a radical movement, called Technocracy, associated with Columbia University, proposed to replace the gold-backed dollar with a measure of energy, the erg. In their book The A B C of Technocracy, published under the pseudonym Frank Arkright, they advanced the idea that putting the economy “on an energy basis” would overcome the unemployment problem. The Technocracy fad proved to be short-lived, though, after top scientists debunked the idea’s technical pretensions.
But the effort to dress up a half-baked idea in advanced science didn’t stop there. Parallel with Technocracy, in 1932 the economist John Pease Norton, addressing the Econometric Society, proposed a dollar backed not by gold but by electricity. But while Norton’s electric dollar received substantial attention, he had no good reason for choosing electricity over other commodities to back the dollar. At a time when most households in advanced countries had only recently been electrified, and electric devices from radios to refrigerators had entered homes, electricity evoked images of the most glamorous high science. But, like Technocracy, the attempt to co-opt science backfired. Syndicated columnist Harry I. Phillips in 1933 saw in the electric dollar only fodder for comedy. “But it would be good fun getting an income tax blank and sending the government 300 volts,” he noted.
Now we have something new again: bitcoin and other cryptocurrencies...
Each of these monetary innovations has been coupled with a unique technological story. But, more fundamentally, all are connected with a deep yearning for some kind of revolution in society. The cryptocurrencies are a statement of faith in a new community of entrepreneurial cosmopolitans who hold themselves above national governments, which are viewed as the drivers of a long train of inequality and war.
And, as in the past, the public’s fascination with cryptocurrencies is tied to a sort of mystery, like the mystery of the value of money itself, consisting in the new money’s connection to advanced science. Practically no one, outside of computer science departments, can explain how cryptocurrencies work. That mystery creates an aura of exclusivity, gives the new money glamour, and fills devotees with revolutionary zeal. None of this is new, and, as with past monetary innovations, a compelling story may not be enough.


  1. If green pieces of paper can become global currency, I don’t see why a cryptocurrency couldn’t.

    1. The don't have a consumptive anchor, as dollars and gold do.

    2. @Lawnchair Economist

      What is the consumptive anchor of dollars?

  2. I have a new money called the kilobit coin that uses 1000 times the energy to create than the bit coin. Isn't that wonderful? Who wants to buy one? I am also currently working on a product called the Gigabit coin, but I need a few more solar panels. It will actually be cryogenically encrypted in a supercomputer using artificial intelligence and deep learning so it's even extra special. Info coming soon.

  3. "Are Cryptocurrency Schemes Really That Much Different Than the Currency Scheme Launched by the Father of Socialism?"

    Most of Marx's proposals needed men with guns to enforce them. Who is forcing you into Bitcoin, Wenzel? Doesn't lolbertarianism have something to do with non aggression?