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[liberationtech] Bitcoin and The Public Function of Money

Dmytri Kleiner dk at
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 ways.

> 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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