Friedrich Hayek: prophet of cryptocurrency? Part 2
The philosophy and (future) politics and economics of bitcoin
(Below is Part 2 of a blog post written in 2021. You can find Part 1 here).
Web 3.0 and the politics of markets
Web 3.0 may not end up just impacting the state. It has important implications for philosophical debates about states and markets, and for how the relationship between what is desirable and what is feasible may help us resolve them.
Contrary to their egalitarian liberal and socialist friends, pro-market classical liberals and right-libertarians have perhaps been a little less reluctant to condemn corporate power as vociferously as they could, lest doing so commit them to rejecting market liberty itself. Thus, even if they have accepted that corporations can err, and indeed as the film Erin Brokovich showed, can err egregiously, they also saw no acceptable alternative, if the only one available were concentrating that power in the hands of the state. Indeed, if the problem were power - of which corporate power is just one example - then endorsing the state as the market’s “fixer upper” would not address the problem, but make it worse. Cognisant of this, free marketeers have argued that even if capitalism is problematic in this respect, the competition that it permits is nevertheless a better way to address the problem. Provided there are no legal barriers to entry on the part of competitors, there is little to fear from Twitter, Google, and Facebook, at least over the long term.
To egalitarians, of course, the marketeers’ response has always been a philosophical and ethical cop-out. If it is accepted that in permitting inequalities of economic and social power capitalism perpetuates them, then regardless of whether the state is the only alternative, markets should be ruled out on principle. But it transpires that the conceptual contours of the debate about market power have rested far more on what is feasible than philosophers have perhaps been willing to accept, for the prospect of post-Hayekian decentralisation “all the way down” opens the way for an alternative means of opposing at least some forms of corporate power that, far from requiring opposition to market liberty, requires its endorsement. In effect, this is an extension of the “leave it to competition” response above that, to the disappointment of egalitarians, concedes the point about power. However, it is an extension with a new twist. Not only must corporations compete with one another, and in so doing curb their worst excesses over the long run. Web 3.0 shows how the very notion of centralised corporate governance, the social and economic power that it bestows and, indeed, the very idea of the corporation itself, can also be made subject to market competition.
How much power should corporations have? There’s now a market for that.
Evolution and the curious exception of politics
Of course, regardless of what the state should or should not do is respect of the crypto space, there is always the question of whether, in fact, it would ever want to do it. As Hayek pointed out, we may ask why governments would be willing to assume their regulatory rôle in the case of cryptocurrency, if the consequence is a ceding of control over a monetary system which they and their central bank proxies have in some cases controlled for centuries? It appears, then, that despite all the excitement and froth, Hayek’s charge of unrealistic utopianism may be proven correct in the case of cryptocurrency.
Whilst its rise may have been sly and roundabout, government will see to it that cryptocurrency will not be unstoppable.
Yet, even if the state does have final say over the shape of the monetary future,