…and the Bitcoin Breakout

What we now call “The Cantillon Effect” was known far back as circa-1730, by at least one economist.  It hasn’t been taken very seriously in modern times, especially here in the fiat age.

Named after its author, Richard Cantillon, in his “Essay on Economic Theory” (“Essai sur la Nature du Commerce en Général”) — it is his only surviving work and was published posthumously in 1755, more than 20 years after he was murdered by a former cook whom he had dismissed from his household. The disgruntled ex-employee, returned by night, robbed his home, then set it ablaze, with Cantillon — and the rest of his manuscripts, within.

The Essay On Economic Theory had been previously circulated in pamphlet form, which is why copies survived to be published to the world, and lays bare the dirty secret behind all fiat monetary schemes:

In a nutshell, when money is created or added to an economy, the people who receive it first, benefit, but they do so to the detriment of everybody else.

The early recipients of new money were able to spend it on accumulating more of the productive assets that society had to offer. But this also increased the money supply, which diluted the purchasing power of everybody else’s existing money.

The wealthy got to invest new money.
Everybody else had to spend more of their existing money.

So, while the rich got richer, it made it more expensive for the poors to stay alive.

The elites invariably believe the system works great. From inside their bubble it certainly seems that way. But it is unsustainable over the long haul. As the dynamic iterates, it accelerates, and it increases wealth disparity. If there was a nice, meaty middle-class in the economic bell curve, it wouldn’t last for long as the productive assets increasingly get hoovered up by a rentier class using new money.

Eventually wealth inequality hits a breaking point, and when that happens, all existing social contracts – real or implied – break down.

The French Revolution may be the first example of the Cantillon Effect’s consequences, after Cantillon himself detailed its underlying dynamics.

The distortions introduced from currency debasement are far reaching and take a long time to play out. But the tempo intensifies toward a “quickening” as it enters the end game, much like compound interest and bankruptcy (“gradually, then suddenly”). The rich become more imperious, the poor more resentful and then, finally, after generations of silent theft and economic repression, something sets off a phase shift — and then it’s show trials and guillotines.

In France’s case, the monetary missteps that set it on a course to Bastille Day went at least as far back as Louis XIV, the great-great-grandfather of the Sun King who would be left holding the bag (and his head in a bucket) nearly a century later.

In Guy Rowlands “The Financial Decline of a Great Power: War, Influence and Money in Louis XIV’s France“, we are told of “dimunitions” which devalued the coin of the realm by decree, (nevermind that it was gold and silver backed)…

The government would typically prepare an augmentation by decreeing diminutions—or abatements’—of the coins in circulation, a decision that did not require coins to be restamped or re-created. This was not primarily so the king could pull in more coins through taxation (denominated in Livres),” as any such gain would be cancelled out: a diminution would in fact also force the king to compensate his fisco-financiers and bankers for losses on their contracts and on the coins they held at the time. ‘

 

The main reason was so there could be huge leaps upward in the value of the coins to the level decreed by the subsequent augmentation, thus bringing in more seigniorage to the king. The government also hoped that a diminution, generating fear of further diminutions, would flush coin out into circulation, particularly for lending to the fisco-financiers.

That is why diminutions were announced in advance, with weeks or even months before the new, lower values would come into effect. This gave people a window in which to lend out their assets. There were indeed often several diminutions in a row: prior to the 1693 augmentation, the values of the coins were diminished four times; and prior to the great recoinage of 1709, diminutions were announced in March and November 1708 and on 16 March 1709.

The state never brought the coin values back down to the level they bad been before the previous augmentation, and this was important to ensure the public did not think the bottom of the valuation had been reached.”

Does any of this sound familiar?

Cantillon on steroids: The Fiat Era & Stakeholder Capitalism

“Let them eat brioche” — Marie Antoinette, 1789

 

“You will eat bugs, own nothing, and live in a pod” — The World Economic Forum, every day.

With the fiat era, starting in 1971, new money was no longer limited by the supply of gold, or whatever else was backing a currency. You could print the stuff right out of thin air now – which meant that instead of ostensibly enriching all members of society, with its “targeted inflation” for expanding the money supply, it would just accelerate the rate at which the underclass was being impoverished (which for a long time could be papered over with “hedonic adjustments” when reporting on it).

The Global Financial Crisis in 2008, followed by over a decade of ZIRP, NIRP, and QEternity, overclocked that process, and then Covid hit, when it went literally parabolic:

On its own, this may look like just another hockey stick graph. Most people don’t make the connection on exactly how this manifests in the real world (especially central bankers).

There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
— John Maynard Keynes 

(Even fewer people realize that Keynes was a Marxist and his economic prescriptions, which form the basis of conventional economic theory to this day, would  lead to socialism. This was intentional. Especially once you understand what socialism really is.)

This graph is just real estate, and as of 2020. That was before COVID, before lockdowns, before small businesses got shut down by decree while big box stores and Amazon stayed open and the Fed bought their bonds.

Let’s look at a couple of inflection points:

The graph above is from Pew Research. In 1971, the start of the Fiat Era, middle income households earned the bulk of the income pie at 62%. Along comes Nixon, who closed the gold window (“temporarily”), and it’s all downhill from there. All kinds of wealth inequality drivers can trace their genesis to that event in 1971.

Then when the bankers blew themselves up (again) in 2008, the bailouts happen (again) and we hit another inflection point: the era of ZIRP, NIRP and QEternity hits, and this is exactly where upper income households crossover the middle income earners. Again, this graph stops short of the Covid Era, at which point all of these trends accelerated. 

Where does it leave things?

The bottom layers of the economic stratum are looking like a cross between Mad Max and a  Zombie Apocalypse. Even worse, is that thanks to plunging income mobility, the underclass is growing.  The middle class are falling into the poverty more often than ascending into wealth.

This Visual Capitalist chart looks at the number of people earning more than their parents by generational cohort. Remember, because of inflation everything is getting more expensive, but if each generation is earning less than their parents, they’re losing ground:

Unless you’re already wealthy – then everything is fine because your share of the pie is getting larger…

All Cantillon Schemes Require a Totalizing Ideology

As I mentioned recently in my article on how abandoning sound money perpetuates Forever Wars,

If there is a far-reaching, multi-generational global conspiracy – it is one that brainwashes the masses into trading their time, wealth and property for meaningless chits backed by nothing. Who needs global Communism?

In pre-Revolutionary France, it was By Divine Right. The king was chosen and appointed by God to govern the kingdom. This belief was used to justify the absolute power of the monarch and his authority over all aspects of French life. And the masses went along with it until the economics became so asymmetrical and unsustainable that the peasants revolted. They had no choice, the alternative was to starve to death.

Today’s totalizing ideology is a kind of euphemistically wrapped Technocratic Marxism. Klaus Schwab calls it “Stakeholder Capitalism”, George Gilder, perhaps more accurately, termed it Emergency Socialism in his latest book, Life After Capitalism.

It’s called “Stakeholder Capitalism”.
(…and you aren’t a stakeholder ) pic.twitter.com/pjyU37SL2o

— Mark Jeftovic, The ₿itcoin Capitalist (@StuntPope) July 27, 2023

Gilder only uses the phrase out once or twice in the book and never really expands on it.

Allow me.

Today’s Totalizing Ideology is that you, dear peasant, must ratchet your standard of living downwards. You will have to take up less space. You will have to consume less resources, you will have to pay more for everything and you must accept ever worsening living conditions because if you don’t, the world will end.

And nobody wants that, right?

In the meantime, your betters, the people who have it all under control and everything figured out, will continue to re-imagine your life, and the lives of your children, so that they can forestall the implosion of the global monetary system and finish hoovering up the remaining 5% of the global wealth that they don’t already own.

“The peasants have no bread”. “Then let them eat bugs”.

Scene at Versailles as elitists who think you should own nothing, go nowhere & eat their processed crickets prepared to feast at taxpayers’ expense.#vampireelite pic.twitter.com/zSeKw7KcqO

— Nick Griffin (@NickGriffinBU) September 22, 2023

Which brings us to… Bitcoin.

If only there were some mechanism that was not only immune from dilution via inflation, but could actually reverse the Cantillon Effect.

Sure, there is gold – the age old monetary metal. I like gold and have been invested in it for nearly 30 years.  Silver too. Everyone should have an allocation to gold and have some silver, including junk silver to have on-hand for sundries if (or when) your national currency collapses.

But Bitcoin, as distinct from other “cryptocurrencies”, is a very unique monetary asset, backed by energy, decentralized, hard-capped in supply, and largely impervious to capital controls in a way that is distinct from all other monetary assets.

If only there were some mechanism that was not only immune from dilution via inflation, but could actually reverse the Cantillon Effect.
Share on X

To top it all off, Bitcoin exhibits a reverse Cantillon effect. Because Bitcoin is deflationary, it is becoming more valuable.  It is increasing its purchasing power, as more wealth flows into the system and it does so for everybody hodling it. The difference between Bitcoin and Cantillonism is that  the purchasing power isn’t declining as the currency units flow outward from the central spigot. It’s increasing for all units, at the same time.

Most people can’t wrap their head around this. Even the aforementioned George Gilder, concludes that Bitcoin can’t become the new global monetary standard because it is deflationary. And he did it in the chapter of his book called “Bitcoin Capitalism”. Heartbreaking.

But history has shown deflationary currencies not only work, economies thrive under them (see again, Sound Money Makes For Short Wars) – and Detlev S Schlichter wrote an entire book on why that’s the case.

“A monetary system with a money commodity of essentially fixed supply will experience secular deflation. A growing economy, with an entirely inflexible money supply will exhibit a tendency for prices to decline on trend, and for money’s purchasing [power] to steadily increase.

 

But the key question now, is why should this be a problem? We have already seen that historically secular deflation was rather minor and that it certainly never appeared to present any economic difficulties. No correlation between deflation or recession or stagnation is evident under commodity money systems. [T]here are no reasons on conceptual grounds to consider deflation to be a problem”

If there is any disparity, between time and value with Bitcoin, then it’s front loaded. People get into Bitcoin at the price they deserve, but there’s nothing stopping anybody from getting in whenever they want. With the Cantillion Effect, you have no control over new money creation, but yet you still have to live with the declining purchasing power instigated by other people.

With Bitcoin, even if you enter later, you are still on the escalator up, having your sats gain in purchasing power as more capital moves onto a Bitcoin Standard.

We may not have to fire up the guillotines in order to exit this particular episode of Cantillonism, (although we may fire them up for other reasons).

As more people exit the fiat system, the only people left to for the elites to dilute will be the remaining serfs who will get stuck inside the coming CBDC system.

More on that in a future post…

My forthcoming ebook The CBDC Survival Guide will give you the tools and the knowledge to navigate coming era of Monetary Apartheid. Bombthrower subscribers will get it free when it drops, sign up today.

The Bitcoin Capitalist: For Today’s Sovereign Individual provides actionable intelligence on the macro forces shaping Late Stage Globalism and a tactical toolkit for growing your wealth as it plays out. Try it today here.

Follow me on Nostr, or Twitter.

When money is untethered from reality, you wind up in clown world.

Lately I’ve been drilling down on the difference between Proof-of-Work and Proof-of-Stake. Why does it matter?

I used to think it didn’t matter too much. My view toward the entire burgeoning asset class of crypto was “let a thousand flowers bloom”. I still think that way to some extent. If you want a proof-of-stake system for an application, a game or a project token, be my guest. It works in some circumstances.

But as a base layer for sound money, it’s an abomination. The reason why has been articulated in innumerable places, but it recent times it was George Gilder who really nailed it in The Scandal of Money: Why Wall Street Recovers but the Economy Never Does. The book unpacks the consequences of untethering money from solid anchors to reality:

“With no [hard] dollar anchor for long-term investment, financial horizons shrank and markets dissolved into trading over bets on bits….The collapse of productivity growth after 1972 must be deemed just another of the cascading effects of the destruction of money as a metric”.

He was talking about high time preferences, as do a lot of the Bitcoiners. What exactly the consequences of untethered money and shrinking “investment” horizons would mean when it became systemic,  saturating all avenues of traditional finance conventional economic thinking.

“[Where there are] no limits to the tempests of short-term trading and trafficking in a surf of meaningless money values.”

This expression of short term trading within meaningless monetary values found no greater expression than during the blow off top of The Everything Bubble that occurred under lockdowns, stimmies, SPACs, meme stocks, Davie Daytrader, and even crypto moonshots like LUNA and NFTs. Possibly the best phrase I’ve heard for it was Hidden Force’s Demetri Kofinas’ term, “financial nihilism”. 

That’s what you get when you untether money from any foundational anchor to the real world.

Hold that thought.

The decision (top down, non-consensus driven) to move to PoS on Ethereum’s part, to solve a largely non-existent energy consumption problem, got me thinking about this and researching it a lot more. 

Let’s start with the rationalization direct from Ethereum CEO Vitalik Buterin, 

“To summarize this in a more philosophical way, Proof-of-Work is based on the laws of physics, so you have to work with the world as it is. You have to work with electricity as it is, hardware as it is, what computers are.

Whereas because Proof-of-Stake is virtualized in this way, it’s really cool, you get to create a simulated universe that has its own laws of physics. And that just gives us protocol developers a lot more freedom to optimize the system to give us all of the security properties that we want. 

If we want the system to offer a certain security guarantee, that means we can modify the system in way that lets us achieve it.”

Buterin is making our point for us, without realizing he’s making our point for us. He is expressing the ultimate technocratic fantasy: the ability for managerial experts from on high to reorder reality according their own whims and priorities. Where models can be created on whiteboards and reality is expected to conform to these models. It never does, yet we live in a world where people who point out that the models are flawed are demonized while those who bear no consequences for being wrong, double down and are awarded Nobel Prizes.

But when whiteboard economics inevitably collides with reality – those pesky laws of physics – the models never hold up. Reality intervenes, and the modellers either double-down or create some new set of policy responses to “fix” the latest , self-induced, crisis.  

The economic and societal chaos we are in the early innings of experiencing today is a direct result of iterative cycles of “money” being detached from the laws of physics, a.k.a. reality.

This is why we can’t have nice things.

In order to regain a tether to reality, we need a monetary hard asset that can’t be arbitrarily modified by anybody, let alone a nation state, central banks, Klaus Schwab, PayPal, big tech in general, or a pyjama boy with a hard-on for virtual reality. 

It’s that anchor to reality, to the laws of physics, that make Proof-of-Work such a breakthrough innovation. At the risk of expending too much airtime on it here in the portfolio update, I will direct you to two episodes of The Investors’ Podcast network with Preston Pysh:

#1: BTC098: Proof of Stake (PoS) Versus Proof of Work (PoW) w/ Jason Lowery

It’s over two hours long and it takes Lowery a long time to lay the foundation for his case. Hang in there. Once he squares the circle you’ll get it. When I finished this episode it gave me absolute clarity on why this is such a fundamental issue and why Proof-of-Work is an unassailable and superior innovation vs. Proof-of-Stake in every way. At least it is when you want to create a base layer for sound money.

#2 BTC099: Michael Saylor’s Deep-Dive on Bitcoin Energy Misconceptions

Saylor extends the understanding in this interview, especially where it comes down to the difference between securities (Ethereum) and commodities (Bitcoin), and why this is such a big deal. The conversation then moves into why the anchor to physics is a feature, not a bug. 

The interview helps reconnect us to the reality that energy usage (or cost inputs) to build something useful are necessary, not evil. In Ethereum’s case, the impetus for the merge was to reduce its power consumption. Why?

In last month’s letter I did some back-of-the-napkin calculations showing that Ethereum’s total power consumption worldwide was about 2/3’s the total consumption of US electrical vehicle deployment. Why is it A Bad Thing when you use the energy to run an ostensibly distributed, universal Turing-complete super-computer under Proof-of-Work, but then it’s celebrated as a milestone when you use even more energy to run a bunch of EVs  – which end up being charged by coal and built with lithium and cobalt sourced from child labour?

95% coal, actually. Love this clip. “The elEctrIcitY cOmeS fRoM iNsIde tHe bUIldiNg!” https://t.co/hP2dgHn32e

— Mark Jeftovic, The C̶r̶y̶p̶t̶o̶ ₿itcoin Capitalist (@StuntPope) June 8, 2022

What makes each one so? Without looking at the energy consumption and benefits or drawbacks of comparable systems (i.e. the energy consumption of maintaining the petro-dollar empire), looking at an amount of energy consumption unto itself is meaningless.

Further, once you concede that any given activity’s energy consumption is within the purview of societal moderation or judgement, you just ceded authority over all energy consumption.

People seem to be clamouring for this, we’ll see how they like it when CBDCs finally show up with Personal Carbon Allowances baked right into their wallets.

Bitcoin is the most viable base layer today for re-attaching money to reality. It does that through Proof-of-Work, not in spite of it. We already know that total Bitcoin energy usage worldwide is less than tumble dryers, and that Bitcoin mining is incentivized to use waste, renewable and stranded power sources. It’s the tie between energy input and digital output that tethers the base layer to the laws of physics, which is out here in real world, where (everybody outside of the pod), spends their everyday existence.

Without that tether, we eventually wind up in a clown world where central bankers get Nobels for blowing up the financial system, where climate alarmists want to end oil on one hand yet advocate for nuclear warfare on the other.

Today’s post was an excerpt from The Crypto Capitalist mid-month portfolio review, our premium newsletter. To get the core investment thesis free, subscribe to the Bombthrower mailing list. Follow Mark E. Jeftovic on Gettr, Twitter or join the Telegram.

A few months ago I was on the Lite Show (Litecoin) podcast, we got to talking about Facebook’s forthcoming crypto currency, which hadn’t been named yet. I mused then that it would totally suck for the entire crypto-currency space to have come this far with Bitcoin, et al only to have Facebook swoop in and take all the marbles. (In marketing parlance this maneuver is called  “grabbing the microphone”)

Then Facebook announced their digital currency, it’s Libra, and it was met with immediate resistance. But the pushback, didn’t come from where one might expect it, from within the crypto community. There was plenty of commentary about it to be sure, but nobody from within the crypto space was saying that Libra had to be stopped.

No, the immediate pushback came from various tendrils of myriad states and government entities, including:

• Maxine Waters, immediately calling for Facebook to cease all work on Libra
• French Finance Minister Bruno Le Maire warning against Libra becoming a sovereign currency
• and most recently the G7 (at least recent when I last worked on this post), the G7 forming a task force to address the issues Libra raises, and urging the “highest possible level of regulation” on it,

This instant pushback against Libra seems even more intense than any initial government condemnations against Bitcoin itself when it started to gain traction over the initial ramp up. Perhaps there are good reasons for this, such as:

• In the rear-view mirror, it’s possible that governments now view giving Bitcoin some room to run was a mistake, and it opened a Pandora’s box (from their perspective) which would be unable to be contained, and
• Facebook provides an identifiable target – governments can actually pinpoint them and (for now) regulate or threaten to regulate them. They can’t target Satoshi Nakamoto or an open source repository of computer source code.

I mused in my dayjob’s #AxisOfEasy newsletter #102  that we seem to be arriving in a scenario depicted in the Mr Robot TV series, where the  crypto-currency Bitcoin and a private, corporate sponsored e-coin dual for supremacy in the aftermath of a hacker induced economic collapse (In the series, Libra’s role is depicted as the fictionalized “Evilcoin” with Bitcoin starring as itself. The economic collapse also turns out to be a Trojan horse operation launched by China).

The only thing missing from today’s reality, as I write this, is the economic collapse part, but with stock markets at all-time highs, and the Fed cutting rates again in this ostensibly great economy, clueful observers the world over sense that something is about to give. Tangentially the stealth bull in precious metals and resurgence of Bitcoin, even in the face of Libra, all point toward the idea that not all of these economic indicators can be right at the same time. That means at some point a disorderly readjustment may occur.

Welcome to a New World Order. We call it “Snow Crash”

Snow Crash was the Neal Stephenson near-future thriller set against a backdrop in which national governments found themselves set back on their heels, competing against privatized sovereignties across a wide spectrum ranging from a multi-national pizza conglomerate to the global Mafia.

Why didn’t Bitcoin tank when Libra was announced? If one is to accept the superficial premise that Facebook will indeed swoop in and capture the digital currency space after Bitcoin softened the ground for them, the announcement should have had a similar effect to when Amazon announced it was buying Whole Foods, and grocers everywhere tanked hard. That didn’t happen, why not?

By contrast, Bitcoin has more or less held steady since the announcement, after giving back some ground after an initial spike higher post-Libra. In any case, there was no instantaneous death crash compared to when Amazon entered the grocery space.

The reason, I think, is because Facebook’s Libra isn’t challenging Bitcoin. Facebook, perhaps without even being aware of it themselves, is doing the same thing Bitcoin and crypto-currencies did when they emerged out of a financial crisis spawned by central bank manipulation and a currency regime so rigged as to destroy all market signalling capabilities: it challenged the prevailing economic order, and that order is the scaffolding of the nation state as we know it.

In other words, these crypto and digital currencies are ushering in a new era of competitive economic sovereignty, and with it, the decline of the hegemony of nation states.

One of the best books I’ve ever read that anticipated this disruptive shift in the nature of sovereignty was “The Sovereign Individual” by James Dale Davidson and the late Lord William Rees-Mogg (father of Brexiteer Jacob Rees-Mogg, who was once reportedly on the short list to replace https://bombthrower.com/wp-content/uploads/2019/03/shutterstock_1030471843-e1551983495127-1.jpg Carney to head the BoE).

According to that book: Nation states arose by capturing escalating returns on violence and force. The transition into the gunpowder era ushered in the rise of nationhood, and increasing returns on violence, right up until the collapse of the Berlin Wall in 1989. The fall of Eastern block, they argue, was not an ultimate victory of the West over Communism, as Francis Fukuyama asserted in The End of History. Instead they posited it more as the death of a fraternal twin, that of nation statehood.

As the returns on violence decreased as can be witnessed by every military disaster the US has undertaken since WWII, the other twin is now sclerotic and withering. So what does have increasing returns now? It isn’t violence anymore. It’s information. The shift from one to the other means that the nature of the monetary system will also shift.

The old order monetary system was built on Bretton Woods – a global reserve currency backed by US military imperialism. That system is going away and everybody knows it.

Money does not issue forth from power, recall my prior citations of Stephen Zarlenga: who controls the money system, controls society. Power emanates from money. Nation states and central banks assumed they would retain control of the money system indefinitely. They assumed that they could continue to manipulate the money supply to further their own interests (Cantillon Effect driven benefits) and there was nothing anybody would ever be able to do about it.

But Revolution has a way of lobbing disruptive, explosive technologies from the periphery where nobody is expecting an asteroid to originate. Did the major music labels expect to be reinvented by Apple? Did the Hollywood studios expect to be elbowed aside by Netflix and Amazon? And did the nation states and central bankers think disruption would encroach and fundamentally transform all aspects of society but stop at the demarcation point of sovereignty and money? Why yes, yes they did.

I have said repeatedly – the incumbent system has overreached itself, and out of that necessity came Bitcoin and crypto-currencies. This was essentially the market re-asserting itself in the face of endless manipulation.

Money has evolved, and is now reinventing itself for the next ascendant wave of increasing returns: information. Next, sovereignty will reconfigure itself to adjust to the new format of money. This is the opening that Bitcoin opened up, and Facebook is the among the first to make a move into it. And that’s why ensconced governments are so up in arms about it. They recognize direct, real competition to their own authority and relevance. The nation state isn’t going away any time soon, but the rise of the platforms isn’t going to be stopped, either.

In the future, your digital single-sign-on credentials that you use to access various online platforms (or the one platform from which you derive your entire sustenance and livelihood) will be as important to you, perhaps eventually more so, than your government issued passport.

Governments want to regulate how the Age of the Platforms will rise, which is similar to how the Papacy once deigned to guide and arbitrate royal succession. But over time this will reverse and it will be the Platforms that increasingly set the terms for nation states. Given the accelerated pace things move at today, this process will not play out over centuries, the way the transition from feudalism to nation states did, but over decades, even years in some places.

Today nobody raises an eyebrow that the Swiss National Bank is Apple’s largest shareholder by printing francs and buying shares. What happens tomorrow, when Facebook issues some Libra, sells them for USD to pay their taxes? Or to settle one of the myriad fines levied, like Papal encyclicals of yesteryear, against these upstarts? My guess is governments will scream foul, “only we can print value ex nihilo!”.

But the reality is that anybody can create their own monetary instruments provided they can find a market to ascribe value to it. Money has always changed with the times and arisen privately, the states then adapt, co-opting whatever emerges as money at the earliest possible opportunity. Looking back on today that may be what Libra is to Bitcoin. The equivalent of a Federal Reserve of Digital Currencies (the Libra Founders Association looks hauntingly like a modern, cyber analog to the member banks of the Fed).

The Real Battle of the Future

One might think that this means the battle of our times will be between the falling (failing) nation states and the rising Platform challengers, but that’s not the way I see it. In many cases nationhood and platform will effectively merge, witness China, where tech giants like Google and IBM’s Open Power Foundation is helping the Chinese government build out their Sesame Credit total surveillance platform.

In other situations, platforms may prevail, if Facebook or some other technology upstart is successful in their machinations they may become more relevant than the State in many jurisdictions. They may effectively become the de facto state in some areas.

In both these cases the defining characteristic will be centralization and consolidation of power and authority.

Against this, will be the ascendency of decentralized, autonomous sovereignties based on crypto-currency models and the original ethos of Bitcoin. Where Western Capitalism vs Communism was the defining question of the now ending age of industrial nation states, the fraternal twins of the future may be that of platforms vs protocols. The former centralized, consolidated, authoritarian as anticipated by Fukuyama and fleshed out today in The New Digital Age, Google’s manifesto penned by Jared Cohen and Eric Schmidt:

We collaborated first as writers of a memo to Secretary of State Hillary Clinton about lessons learned in Iraq, and thereafter as friends. We share a worldview about the potential of technology platforms, and their inherent power, and this informs all of the work we do, both within Google and outside it. We believe that modern technology platforms such as Google, Facebook, Amazon and Apple, are even more powerful than most people realize, and our future world will be profoundly altered by their adoption and successfulness in societies everywherer.

and the latter decentralized and anarcho-capitalist, anticipated by The Sovereign Individual and realized more now in George Gilder’s Life after Google

However it plays out, it will all be very cyberpunk.