The delusions and contradictions of Hard-money crypto capitalism

Conveniently and commercially considered, «capitalism» is commonly defined and thereby misunderstood through the assortment of institutions and superficial public virtues most useful for propagandizing its actual «free-market» secular purpose, its ceremonial appeals to «personal responsibility», or whatever other civilized quirk the garden-gnome variety capitalist apologist spouts in order to morally conflate a monetary mechanism with an entire social order, even though none of these colloquial features defines capitalism with conceptual sufficiency and all existed in various contours long before modern capitalism acquired its corresponding economic psyche and comparatively recent institutional command. Respectively reduced, «capitalism» is and begins where accumulated money is committed to the acquisition of more money and the resulting profit is re-cycled under no greater governing purpose than the provision of recursive surplus.

Whether embodied in rapacious finance or the relatively «moderate» corporation, the decisive incongruence between contemporary capitalist doctrine and the disillusioned dissident’s imagined monetary remedies lies in the attempt to preserve capitalism’s indefinite command of wealth accumulation while replacing its elastic monetary field with a permanently restricted base asset, traditionally re-called as «money», thereby presenting as a cast and cure for misinterpreted ‘fiat corruption’, and an even less coherent version of the prevailing economical order, a new order that largely converts generalized monetary accumulation into a closed contest over proportional possession, systemically constraining passive participants through deflation and liquidation, but still one that eventually would necessitate and resuscitate the reminiscence of the same old credit elasticity hovering above its supposedly supreme foundation, simply to retain the veneer of any temporary operational monetary utility, any moral bickering well by the wayside.

The mass resentment generated by copious contemporary monetary failures has consequently become the promotional, generational engine of various appreciating assets whose price depends upon persuading slow and late entrants that the technical suppression of aggregate monetary expansion somehow has subdued capitalism’s acquisitive, individualistic purposes. In reality, it has merely confined that very purpose inside a progressively centralized struggle over assets incapable of expanding with the profit imperative imposed upon them while popularly touted as some kind of fundamental fix to all economical and proximate personal problems. When something sounds too good to be sound, be sure it’s a scam.

The rather rudimentary «capitalist» circuitry and predatory cycling of profit for the sake of compounding is what all secondary language and defeasible pseudo-reasoning eventually tries to obscure in order to pass off as a greater public good and sound «organizing principle», as «money» moves from a passive condition and enters the matrix of speculation and lending so that it may return as a larger quantity of itself. The products involved in the «capitalist» process may be useful, and their enterprises may employ people, plus the incentivized improvements of machinery may also produce practical immediate advancements in general, although none of these accidental and intermediary utilities changes nor vindicates the primary governing motive of the often rationalized «capitalist» resyme.

Stated conceptually consistent: The products of said «capitalism» become an instrument of monetary expansion, and the material economy is progressively re-purposed as a serviceable medium through which abstract claims increase upon even more abstract claims.

The Bourgeoisie

Werner Sombart approached the same pre-condition through the historical psychology in «The Bourgeois» (1913) and how its internally contradictory economic character was instrumental in establishing the capitalistic order. The industrious vigor was the acquisitive and expansive aspect, e.g. willing to expose accumulated wealth to «risk», while the «bourgeois» temperament was more preservative and calculative, usually adherent to contractual discipline and devoted to conservation. «Capitalism» emerged through the operational affiliation of these ostensibly contending dispositions, eventually producing a quasi-cultural stereotype capable of funnelling episodic enrichment into a more fashionable monetary mass-methodology and economic scheme.

The deeper point, echoed by Sombart, is that «capitalism» gradually ceased to require this wholesome-like person after finally having plucked his functional properties and implemented them inside the endemic enterprise of the economic theology, much analogous to how mechanical automation amplified the «capitalistic» thresholds while fundamentally disillusioning the Marxian worker even further.

What Marxist illiterates subsequently externalized as their grand «struggle» between «classes» and «capitalists» was more fundamentally the internal subordination of ‘humane’, moral labour to capitalism’s own operative contradiction, the permanently permeating urban squeeze between conservation and expansion, installed within the economic structure as a governing principle rather than arising from some contextless morality play between evil owners and ‘virtuous workers’. The original economic tension, the dreaded «differences» that generate opportunity and natural ambitious dynamism among individuals, remained productive only because capitalist institutions could continually widen the monetary and credit field within which preservation and expansion were made to operate together. Capitalism could thereby preserve accumulated value while releasing it into further enterprise, since the monetary field remained institutionally extensible and allowed the contradiction itself to reproduce as the continuous substrate of movement within the «free market».

Hard-failure contradictions

The contemporary sub-bourgeoisie, amidst the proliferating disillusionments and dim-witted economic delusions, deeply tainted by the duplicitous «information age» concerning viable alternatives to the prevailing monetary paradigm, has been gradually lured into the wholly hypothetical belief that «hard-money»(-)«capitalism» realistically could abolish monetary extensibility while preserving the capitalist synthesis historically dependent upon it. The «entrepreneurial spirit» remains indefinitely expansive, while the sub-bourgeoise, post-democratic demand for conservation and hard issuance is absolutized inside the monetary base and so rendered technically terminal.

This resembles Sombart’s contradictory but still historically «operative economic character» culturally superimposed into an unfeasible monetary constitution, where the herd of ‘capitalist participants’ is driven to fatten its holdings inside an aggregate asset object permanently prohibited from actually expanding, only for the weaker animals to be progressively fleeced through the deflationary discipline and liquidating transfers by which the fixed stock ‘redistributes’ itself upward with only residual droplets finding its level. As for society, the capitalist character has already been externalized into the economic position itself, which incentives and penalties convert potential individual appetite into a mechanized «impersonal prudence» that preserves the monetary base by shearing those least capable of surviving its seemingly cyclical booms and busts while the somewhat productive tension between preservation and expansion consequently loses the elastic monetary space that once allowed both impulses to coexist and degenerates into a centralized contest over proportional ownership of a limited money-like asset, most completely so in Bitcoin, whose absolute quantitative cap cannot be circumvented through the absurdly common rationalization that adding satoshi-zeroes as functional denominations to a fixed ledger somehow negates its numerous intrinsic deleterious design errors or actually creates more of the object being accumulated.

This hard and fundamentally flawed leap in primary purpose, and its unconscious lapse in ‘consistence‘, exposes the conceptual poverty of the ignorant «capitalist» who asserts that hard-money commodity monetarism combined with liberalism constitutes a purified economic foundation upon which the «real capitalism» may finally operate without pesky political corruption.

Relevant: The Consistence of an ethnoethos state

The first extended consequence of hard-money moral constraints corresponds to a compositional fallacy, which by way of additional logical naiveté and basic economic illiteracy has wedged itself well into many a monetary ideology. All «ideologies» are basically lacking in logic, hence also plagued by some degree of conceptual inconsistence, and as for the case in point: every actor may rationally seek larger profits but all while the participants in aggregate cannot possibly simultaneously increase their proportional claims and gains on an object whose actual quantity has been technically, as mentioned, terminated.

The general promise of perpetual growth and increase in net production does not particularly change these inherent power dynamics. A hard-money economy may manufacture more energy and practical abundances while the purchasing power of each monetary unit correspondingly rises, although net material expansion and the mission of hard-money remain categorically distinct orthodoxies, as well as distant in moral and motive, conferring the generalized capitalist objectives of continuously recursive credit supply in order to precipitate more profit. At any rate, in any system state, more goods may exist for everyone, but it is hard to actually convince anybody that a larger proportional possession of the fixed monetary base simultaneously would, which infers more than only allude to the conceptual conundrum at large in the case of such crossover, Bitcoin crypto-capitalism.

This quasi-contradictory process and prophecy accordingly acquires a decisively non-ergodic character in time, i.e. where theoretical, actual average returns and eventual productive recovery become increasingly irrelevant to the less fortunate participant, moreover, he is permanently monetarily disenfranchised before the assumed productive averages even begin to materialize, all while the richer holder survives failed investments and preserves their capital reserves; remaining present for the subsequent transfer of opportunities and ownership with next to no dastardly regulation in the way.

In the even harder-monied economy, bankruptcy and forced liquidation are not temporary deviations around some socially shared equilibrium, because the eliminated capitalist re-enters the recovery as debtor or dispossessed former owner, while the surviving holder acquires parts of what the losing position can no longer retain. Unyielding ‘equal percentage returns’ structurally preserve the volumetric hierarchy while increasing its absolute distance, progressively and secularly redistribute the supposedly decentralized monetary order upward to no particular avail for the people promptly at the bottom who the hard moral money presumably was made to liberate. This is the gist of the hidden hand inside the hard-money credit paradigm: Debt intensifies the same structural selection by systematically integrating how the effective monetary means bestow general profits.

Habitual capitalism predicates its expansion upon expected future profit, but as debt remains fixed in a hard-money economy with wages and productive assets falling against it, the debtor must relinquish more real output merely to obtain the same nominal amount required to break even and pay up. The implied «productive» deflation thereof rather rewards those already capable of withholding monetary means while they might ‘discipline’ others with a type of compulsory debt that automatically incurs through mere labour.

Evidently, as the creditor can wait and withhold their initiatives at choice, the hard-money debtors must correspondingly perform, harder, and the ‘fixed-money order’ gradually construes this heightened difference in ‘temporal-positional relativity’ into an actualizing ownership mechanism, more so than ever, while the designs premising ‘stores of value’ simultaneously produce a type of circulating contradiction where so-called «scarcity» is affirmed as economically noble because of its assumed appreciation and makes withholding more rational whenever the expected future interest of the «money» exceeds the less certain return available through viable investments.

This hard case categorically contrasts with «capitalism», which itself requires continual monetary replenishment and productive mass-consumption means over ends, whereas sidelined hard money supposedly functions as a perennial hedge, with greater the (opportunity) cost of placing it into the economy, the more desperately capitalist expansion requires liquidity, thus a more substantive compensatory credit structure is needed to purge the ‘rational’ rigidity. Because these systemic realities remain mysterious to most and are largely mythologized by path-dependent, downwardly mobile and conceptually perverse, disillusioned midwits, the hard-money capitalist consequently and unwittingly celebrates the monetary mentality most likely to obstruct the economic order he expects his golden scarcity to sustain.

Dialectical, ‘democratic’ capitalism partially suppressed this quasi-contradiction by predominantly transfusing the hard-money principle until the claims issued above the scarce base became more conceptually important than the commodity supposedly governing them. Even the most past glorified «gold standard» economies never circulated metal alone, but readily multiplied deposits and commercial credit far beyond available hard-money at its scale, and so the lauded gold-backed economy was never really such a compelling thing to begin with. The later financial crises were not simply due to credit contamination of an otherwise well-balanced hard-money based system, but to direct exposures of the many contradictions and financial conditions which it strenuously tried to politically sustain. Fiat currency is not an arbitrary ‘anti-capitalist’ corruption of a more natural and ‘moral’ hard-money order more than it is the corresponding monetary instrument of an actual capitalist system whose recursive profit imperative and dependence upon credit require an extensible form.

Fiat systems may universally distribute losses and inflate claims beyond their productive utility, yet at least these general politically preventable abuses leave the structural relation intact, which is that elastic, ‘soft money’ supplies the accommodation required by an economy organized around indefinite nominal accumulation.

The ignorant hard-money capitalist wants the benefits of both worlds while repudiating the source of the expansive force, professing productive credit without a coherent, expandable structure or societal security besides profits and increasing purchasing power.

The Neverland economy

Any real hard-money capitalism at substantial scale must re-cast a serviceable monetary structure and ‘liberally’ permit diversified actors to issue credit and claims beyond the scarce reserve retained as an equipotent symbol. When the first foolish misstep of the ‘moral’ atonement of material «money» is made and customarily established as such a redeemable «right», the regime must either discontinue its credit forms through reciprocal ways of mass liquidation, potentially uncivil and violent, and suspend its gratuitous commerce. The more viable alternative is to maintain trust and consolidate order by issuing whatever there is of guarantees to compulsory payments by convention or other feasible institutional realities that of such which likely would violate the monetary restriction that precipitated the downfall. The Catch-22 of it all is that any considerable financial credit accumulation and/or broadly «decentralized» ownership cannot reasonably endure or resolve innate conflicts on an approximately hard monetary logic, and much less so fruitfully engage and compete with ‘softer’ systems, because every available option either sustains de facto «capitalism» by necessitating credit above it, or would preserve the illusion of «decentralization» by way of some other dynamical, ideologically challenged re-distribution that arguably also would contradict the absolutized contractual order used to present «hard money» as a systemic panacea in the first place.

End-stage «capitalism», perhaps most aptly illustrated by the financial capture and abuse of cryptocurrencies through the Bitcoin bourgeoisie, provides the most complete contemporary rendition of this monetary contradiction.

Relevant: Breaking Bitcoin: Liquidity Traps, Speculative Frenzy, FIAT Entanglements

Bitcoin’s supposed (im)material, global, stateless and apolitical potential economy practically exists nowhere beyond minor scattered pockets and use-cases inflated into trivial excuses, and has resolved nothing at meaningful scale. Neither has it endured the veritable endemic pressures its illiterate followers already claim it has overcome, or eventually will. Every prospective failure remains safely suspended inside an imaginary culture of otherwise technically inept layers and monomaniacal fantasies expected eventually to reconcile monetary principles already inconsonant with the vastly misunderstood thesis and its internally ambiguous working definitions, continually self-refuted by various attempts at collective statements.

The senseless economical appeal of such disillusioned collectives can be epitomized in what I have termed the «enthusiasm-value substitution fallacy», according to which the value of a network consists in the net benefit produced for its users and how it is effectively inverted through the law of controversy, according to which appraised, naive passion and general appeal rise as real information and actual purpose declines, so that demonstrable utility and value are superseded by ideological excitation while public controversy and expanding participation are interpreted as proof that the missing utility must exist in some technologically repressed, free-market Messiah form.

Related: Definitions of «Value» demystified through Material and Relational Coherence

According to the fallacy as formulated, the less an asset proves and demonstrates its ‘actual value’, the more transient theory, stupid slogans and inadequate knowledge («study bitcoin») it requires, the more flimsy theory is needed to perpetuate its imagined significance, the more its followers mistake their own intellectual exertion and financial exposure for evidence of the object itself.

Bitcoin may certainly retain a narrow utility as a speculative asset and perhaps a specialized, fringe payment instrument with some censorship-resistant appeal to boot. But as a universal monetary asset conceptually naturally compatible with a prevailing finance «capitalist» civilization, a stratum that already has compromised its course, is nothing short of a scam and a convenient contrivance in order to push the price to dreamy millions and fleece the many sheeple for billions.

Because the bona fide business end of «capitalism» is to make money yield more money by excising profit, while hard money is fixed as an asset universally available to appreciate by simply persisting, the assignment of professed «freedom», and its corresponding politics, to a closed contest over proportional possession, where accumulation develops into elite redistribution, deflation into credit growth and «decentralization» describes little beyond the opening distribution before differential deferral sets in, constitutes a fundamentally misunderstood ideological cause blinded by even more short-sighted, intellectually infantile interests.