[liberationtech] Bitcoin and The Public Function of Money

Dmytri Kleiner dk at telekommunisten.net
Sun Nov 4 07:12:37 PST 2012

On 04.11.2012 00:53, StealthMonger wrote:

>    Bitcoin prevents inflation and helps tax evation [sic] (the system
>    itself is hard to regulate) [3]

Bitcoin is not unique at being useful for tax evasion, in fact it's not  
even popular among large scale tax evaders, who have better means. In any 
case, the majority of producers will not be evading taxes, especially 
significant producers.

We can not eliminate the State-based tax system by evading it, only by  
replacing the socially necessary functions it performs with  
actually-existing non-state forms, an unwillingness to understand and come 
to terms with this is what makes so many revolutionaries, ancaps  
especially, continue to be baffled by the continued existence of the  
State, or even actively support a "night-watchman state" with the State  
reduced to being nothing more that a brutal enforcer of property rights,  
since deep down they must realized that private property itself is a  
social construction, and worry that in a truly free society their property 
privileged would surely vanish.

One of the main components of the delusion that tax evasion is somehow a 
threat to the State is the false belief that States require taxation to 
spend. States do not spend taxes, rather they simply spend money into  
existence. Taxes are used to manage demand, and sometimes to create  
incentives, their primary function is to manage prices. Tax obligations  
also create the base demand for government money or securities. This has  
been the case even before fiat money, see for instance the history of  
split tally sticks in the UK.

>> Under US law, for example, Barter in Bitcoins is just as taxable as  
>> ...
> States describe their pronouncements as "law" in an effort make them
> respectable.

Once again, you are unwilling to distinguish between form and function.  
laws are agreements among people, and as such, are socially necessary,  
States make laws that enforce the interests of the ruling class, because  
the State is the instrument of the ruling class.

>> Many Bitcoin users I know are kind and thoughtful people and all of
>> the developers I know are.
> Are you suggesting that there is something unkind or thoughtless about
> promoting a free market?

It's not a suggestion, it's a fact. The "free market" is a psychopathic  
ideology, there is zero doubt about this, except among cultists. As Robert 
Shiller argued, the efficient market hypothesis is "one of the most 
remarkable errors in the history of economic thought."

Humans are not utility maximizing, dis-utility minimizing "hedonistic  
calculators" (to use Veblen's term), the behavioral assumptions of market 
fundamentalism are well know to be untenable. Also well know is the fact 
that there is such a thing as "market power," that results from inequality 
of distribution and advantage among market participants. Market mechanisms 
do not protect against misallocation of productive resources, and certainly 
do not guarantee justice.

Markets have a place in society, they allow social production on a larger 
scale than gift or communal economies, but they are not some sort of ideal, 
and can only exist when supported and managed by social institutions that 
are not "markets."

Particularly markets that use money, because transactions that are based on 
a commodity-money-commodity circuit effective money supply is affected by 
economic cycles and sectoral balances, and thus needs to be actively 
adjusted to prevent crisis and glut. This is well studied and understood in 
monetary economics, and not even your fellow cultists like David Friedman 
would not deny it, for instance, in a 2002 article for The Los Angeles 
Times, Friedman wrote "Until U.S. economic growth is more balanced and its 
emerging public finance challenge more manageable, it's likely that our 
economic prospects will fail to fire investors' and consumers' enthusiasm. 
An expanding public sector may be necessary at a time of global terrorism."

To get beyond authoritarian, centralized State forms, we need to develop 
alternatives. We can only develop alternatives by recognizing that the 
current forms came to exist and continue to exist because, no matter how 
badly, they do perform socially necessary functions, and thus any new forms 
can only come to exist when they can perform these functions in better 

> Resource starvation?  Anonymous markets have thrived throughout
> history, and probably before.

Do you care to inform us of any period of history where markets thrived  
while not supported and managed by non-market social institutions?


Dmytri Kleiner
Venture Communist
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