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Utopia and technology

from David Ruccio

Forget Bitcoin. It’s the underlying technology, blockchain, that is generating the most excitement. Even utopia!

Bitcoin is a digital currency that was invented in 2009 by a person (or group) who called himself Satoshi Nakamoto. His stated goal was to create “a new electronic cash system” that was “completely decentralized with no server or central authority.” After cultivating the concept and technology, in 2011, Nakamoto turned over the source code and domains to others in the bitcoin community, and subsequently vanished.

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While Bitcoin (and other so-called cryptocurrencies, such as Ethereum, Ripple, and the other 1500 or so other such currencies) have generated a great deal of media attention (for their novelty, their ability to permit transactions beyond government surveillance and control, and their wild gyrations in price), it’s blockchain, the technology behind Bitcoin, that carries the utopian promise of remaking the economy and society.

At its most basic, blockchain provides a decentralized database, or “distributed digital ledger,” of transactions that everyone on the network can see. This network is essentially a chain of computers that must all approve an exchange before it can be verified and recorded.* The technology can work for almost every type of transaction involving exchange-value, including money, goods, and property. It can also serve as the basis for a variety of other functions, from distributed cloud storage and the recording of property titles to authenticated voting and decentralized social media platforms.

For some (such as Brendan Markey-Towler), blockchain technology makes it possible not only to envision, but to establish a viable pathway toward, a utopian alternative to contemporary society.

On the face of it a mundane and boring technology for bookkeeping, blockchain is actually revolutionary because it makes the anarchist utopia a more realisable dream than has ever before been possible. At the very least it provides the strongest challenge ever posed to the monopoly of the state over the promulgation, formation, keeping and verification of institutions and the public record. The purpose of this essay is to investigate the conditions under which this might occur, and the dynamics of a society organised using blockchain technologies.

According to Markey-Towler, blockchain can serve as the basis for organizing an anarchist utopia—”a society which is composed of groups formed entirely by mutual association and absent violence and coercion.” The idea is that the keeping of verifiable records via blockchain technology allows for the creation of a public record that is kept by everyone and updated by collective consent, which means there is no nexus of power (such as the state or monopoly corporations) that can be exercised to corrupt or use the public record as a tool of extortion.** Even more, the existence of blockchain technology makes it possible to exit from existing economic and social relations and to practice, if only in a selected domain, a different way of organizing economic and social transactions. Thus, it permits a “sort of competition” for adherents between the two systems—one organized in and by the state, the other via decentralized distributed ledgers—and creates the possibility for individuals to choose the set of institutions associated with the alternative, blockchain technology.

I have no interest here in exploring either the feasibility or desirability of such a blockchain utopia (although I have elsewhere, e.g., here and here). My focus for the moment is otherwise—on the fact that the claims about blockchain from the latest example of a long series of “technological utopianisms.”

Many will remember this 2012 iPhone commercial claiming the device is the most used camera in the world. Light piano music twinkles and images of people living their best lives flit past. It is utopic desire, crystallized: the ad says that the gadget will make us happy, and that, through its lens, we’ll all evolve into a better version of ourselves. Facebook (like other social media) promised to give “people the power to share and make the world more open and connected.” And there’s Uber, which pledges “to make transportation safer and more accessible, helping people order food quickly and affordably, reducing congestion in cities by getting more people into fewer cars, and creating opportunities for people to work on their own terms.”

Many will recognize these as pledges that technology will usher in the new utopian society. But, as Howard P. Segal reminds us,

few if any of the high-tech zealots of our own day have even considered the possibility that, far from being original, their crusades fit squarely within a rich Western tradition of technological utopianism. It is not likely that very many of them realize how old-fashioned they really are when celebrating technology’s prospects for transforming the nation and, in due course, the world.***

They are merely the latest in a long line—starting with the late-sixteenth- and early-seventeenth-century Pansophists (such as Tomasso Campanella, Johann Valentin Andreae, and Francis Bacon) through the utopian socialists of the early nineteenth century (especially Henri de Saint-Simon) through the numerous technological utopians of the late-nineteenth- and early-twentieth centuries (including Edward Bellamy, Henry Olerich, Edgar Chambliss)—of prophets of progress and the possibility of achieving utopia through the introduction and expansion of new technologies.

Technological utopianism, as I am using it here, refers to one or more of the following three claims:

  1. Technology is the means for creating a perfect society.
  2. The perfect society itself is modeled on technology.
  3. The perfect society is one that promotes the development of new, better technologies.

Clearly, Markey-Towler’s enthusiastic claims for blockchain technology meets the definition. So, as it turns out, does contemporary mainstream economics.

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Mainstream economists treat technological innovation as the sine qua non of economic and social progress—the key to economic growth and the achievement of global prosperity. It is introduced in the production function as y, the “recipe,” whereby capital (K) and labor (L) can be combined to produce output (Y). Thus, even without changes in the amount of capital and labor, output will be increased as new technologies are introduced. Thus, when they move from an individual firm’s production function to economy-wide economic growth, mainstream economists claim that the key is the increase in productivity due to technological change, which is generally referred to as the “Solow residual” (named after Nobel laureate Robert Solow).****

The mainstream argument is that the level of production and the rate of economic growth can be increased by the introduction of new technologies, which lead to higher levels of productivity. More goods and services are thus made available to satisfy human wants, thus solving the problem of scarcity.*****

Moreover, mainstream economists claim, an economic system based on free markets is the best way of encouraging the development and application of new technologies. At a microeconomic level, profit-maximizing firms have an incentive choose the best, more efficient technologies, for themselves and for the economy as a whole. And free international trade is the best way of increasing the pool of research and development experiments, from which the best technology is chosen. Thus, technology trade increases national income in each country and raises the total gains from trade.

Contemporary mainstream economics thus combines market utopianism with technological utopianism.

As I see it, the biggest problem with technological utopianism is that it takes politics out of the equation—whether in imagining solutions to economic and social problems or envisioning the role of technology in a radically different kind of economy and society. Technology thus becomes a substitute for politics. As Aleszu Bajak has recently explained with respect to finding a solution to climate change,

Relying on a technological fix that’s just over the horizon avoids the mountain moving required to wean ourselves off fossil fuels, bring hundreds of countries into agreement on how to limit and clean up emissions, and alter the consumption habits of an entire civilization. Those are systemic complexities ingrained in our economies and cultures. Propping up glaciers to limit sea level rise, sprinkling iron dust into the oceans to encourage plankton growth to absorb carbon, or spraying the skies to reflect the sun’s heat just seems simpler.

Much the same can be said of obscene inequalities in the distribution of income and wealth, the “diseases of despair” that now afflict a large portion of the U.S. population, or the prospect that new forms of automation will eliminate jobs and make workers redundant. In each case, a technological fix is promised—tax-rate changes for inequality, the expansion of healthcare insurance for increasing levels of addiction, a universal basic income for labor-substituting robots—when the problem itself is political, not technical.

And that means the solution has to be political—organizing people to criticize the existing set of institutions, in order to imagine and create new ways of organizing the economy and society. New technologies may even have a role to play in enabling people to see such a “virtual reality.”

Tackling problems as deeply ingrained as the ones humanity faces right now will require facing a question that technology alone cannot address: are we willing to band together to criticize and change the existing set of economic and social institutions?

 

*To carry out a transaction a party needs two things: a wallet (public key) and a private key. A wallet is a string of digits and letters, also called a public key. It is an address that appears each time a transaction is done. The private key is a string of random digits that should be kept in secret. When someone enables a transaction it is signed with a private key, which is only visible to a sender. Then a network of nodes carries that transaction making sure that it is valid. Once it confirms its validity the transaction is put into a block where, because it has been “hashed,” it is virtually impossible to change without being detected.

**Technically, blockchain fulfills three requirements: (a) it guarantees a certain degree of reciprocity and security with respect to exchange and property; (b) it is sufficiently easy to interact with and to keep records; and (c) it permits a certain degree of freedom to use one’s property, that is, it is secure from theft, corruption, and manipulation.

***Howard P. Segal, Technology and Utopia (American Historical Association, 2006), p. 66.

****Solow (1957) started with a neoclassical production function where Yt = At•F(Kt, Lt), where Yt is aggregate output in time period t, Kt is the stock of physical capital, Lt is the labor force and At represents productivity growth due to technology. Solow then estimated the variables for the U.S. economy for the period 1909-49, where output per labor hour approximately doubled. According to his estimates, about one-eighth of the increment in labor productivity could be attributed to increased capital per person hour, and the remaining seven-eighths to the residual.

*****This is one of the reasons why Robert Gordon’s work on the slowing-down of U.S. productivity growth has been met with such concern.

  1. Prof Dr James Beckman, Germany
    June 10, 2018 at 8:53 am

    Sadly perhaps, police agencies will be/are breaking into blockchain now because of drugs, weapons, people traffic, etc. Even if I only wanted to avoid paying all my taxes in some political jurisdiction, I really wouldn’t want to be associated with the other stuff. Here in Germany politicians routinely lose their jobs, at least, when kiddie porn is found on their computers. Think the anti-porn sleuthes won’t break into block chain for that as well?

  2. June 10, 2018 at 12:42 pm

    One should also separate the «speculative bubble» perspective, from the various possible technological possibilities for the use of the Blockchain technology. For instance, it will be very usefull in all kinds of «historical records», namely in real estate or personal health history…
    On the issue of «utopia», the whole polemics around «bitcoin» (et alia…) reminds me of the ideological clash between Marx and Proudhon.

  3. Helen Sakho
    June 10, 2018 at 1:36 pm

    David, I am just about to order an Uber in Africa to take me to the moon or to Mars, where new life has now definitely been confirmed by NASA (the greatest and mightiest technocrats) to exist. And I am afraid, I shall send no “selfies” to prove that I am “over the moon”! All I shall take with me is a bottle of water from the Atlas Mountains, which should keep me going to a few days away from it all. Perfect utopia, for a few days at least. Oh, and a selection of small pocket books. Animal Farm, The Prophet and Love, Pnin, a few printed pages of the Tablet, and a few other bits and pieces.

  4. June 10, 2018 at 5:48 pm

    Right now banks keep our payments ledgers as they are trusted third parties who do what bitcoin also does, but banks do more than that. Banks create new money by lending i.e. by extending credit. This second credit creation function doesn’t seem to be easy for bitcoin because credit creation requires the blessing of government. For example bank charters allow them to legally create credit and the loan documents are legally enforceable by law. Law is a political construct. If you don’t pay your mortgage a nasty gun toting man will legally come and throw you out and legally take your house. Few understand this combination of running our payment system combined with credit creation, contracts, and legal enforcement of credit agreements is how our current system works. Bitcoin is about a third of that in offering an alternative payment system. In that sense it’s another type of shadow bank, along with money market funds, non bank credit card companies, wire transfer companies, etc.

  5. Helen Sakho
    June 10, 2018 at 8:20 pm

    Potential Credit Unions turned into actual Western Unions. Nice and easy does it. Cash. Immediate transfer. Global.

    • Prof Dr James Beckman, Germany
      June 11, 2018 at 7:46 am

      Hi, Helen, I think for most humans indeed the point is to have the product delivered, money in this case. I am reminded of an old US fast food ad: A little old lady stands up in the audience & proclaims “Show me the meat”. We don’t need so much extraneous stuff, I think.

  6. June 15, 2018 at 5:02 pm

    Great piece, David, one of your best. It just so happens I came across this piece, which is directly relevant to you honing in on the power relationships which invariably influence how a new technology is deployed, and on whose behalf: https://spectrum.ieee.org/telecom/internet/wall-street-firms-to-move-trillions-to-blockchains-in-2018

    How did I get to this article? From trying to answer Dean Baker’s rosy picture of the current economy, and reading Yanis Varouvakis’ book “Global Minotaur,” which pointed out the role of credit default swaps in the 2008 mortgage derivative crisis, something I needed some reminding of – which triggered my memory of how uncritical Dean Baker is of the whole derivative universe – a neutral technology he as declared, not the cause of troubles.

    Bear with me. So I said, given my take on CDS’s I wondered, since they are, aside from their technical “majesty,” bets on what other investments, derivatives, sectors are going to fail, if they might not provide a clue by asking today in 2018, where their users are placing their negative wagers? That’s how I got to the fine article I linked to above.

    Oh, and by the way, this type of asking led me to new information, and forgive posters at this site if I missed previous addresses to this – the fact that in May of this year – and unmentioned by Dean Baker, Pope Francis himself issued a Bulletin denouncing the misuse of derivivatives and especially the negative hoping of CDSs bets…that I haven’t finished reading but the first 5-7 pages were good…

    By the way, the first article I linked to at Spectrum stated that there were hedge fund hopes that American student loans going bad would provide the new speculative bonanza for a new round of customized CDSs which only the big banks could create with their mathematicians, physicists and data magicians, but they declined to enter the dicey perception realm of betting against young students. Instead they were looking at customizing the block chain technology which underlies the whole alternative currency universe as David has rightly grasped.

    Happy exploring folks, I had a good time and thanks for the push Dean Baker.

    • Prof Dr James Beckman, Germany
      June 16, 2018 at 7:26 am

      Hi, gracchibros & Davud, I was helping to design chips when I was a teenager. Since indeed encryption is pretty good these days, some people have taken the opposite tack: show the identities of those who have dealt with possibly some still encrypted data on investments, say. The issue here is the PERSONAL & CORPORATE IDENTITIES of the included parties, we are told. But ask the people who have tracked Mr Trump if it is possible to find tangible identities. The answer is no due to legal nominees in off-shore mailboxes, & even in the State of Delaware. Here is Europe Swiss numbered bank accounts have given way to corporate & personal identities worldwide . Just find a country & sniff it out.

      • June 18, 2018 at 2:48 am

        Yes Dr. Beckman. .And what the author of the Spectrum article is driving at is a smaller case instance of how the still ongoing contest for the shape of the internet and open source code – free and universal – is at odds with the bending of this hoped for non-commercial commons by the private power of proprietary inventions…Google, Microsoft, Facebook…they may still use common language in some of their tools and public offerings, but it has been badly bent by the commercial urge…at least that’s where I am in my understanding.

        Utopia subverted – or never more than a pipe dream…like Keynes at Bretton Woods and his clearing system and bancor…Yanis Varouvakis insists that is the major problem in the world economy today: there is not enough universality – institutionalized – to redress the great trading imbalances which will lead to the next crisis. One can see the hopes for the alternative currency movements in this light…as striving for the missing commons, a Libertarian version at least, but what nations or institutions would it be rooted in?

      • Prof Dr James Beckman, Germany
        June 18, 2018 at 6:12 am

        Hi, gracchibros, of course I use the internet many hours a day for work & play, and I am not concerned about my information. (I am a boring but friendly prof for most, I expect.) It is the introduction of massive lies & the use of the internet to turn control electric power, for example, which concern me.
        All that cash flow from these firms go into massive incomes for millions around the world–massive by their local standards. Is that bad? The answer lies in our personal value systems. Do Hollywood people & athletes make too much? Do politicians make too much, considering all their perks? Again in the eye of the beholder.
        As for controlling the internet, I trust government not much more than competitive industries. Ah, but off to lecture, with my train a healthy half-hour walk away….

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