This is a part of the Bitcoin Infinity Academy course on Knut Svanholm's book Bitcoin: Independence Reimagined. For more information, check out our Geyser page!
Cooperation and Coercion#
“Workers of the world, unite!” Marx and Engels commanded in the Communist Manifesto. “You have nothing to lose but your chains!” The idea was to get the workers of all nations to cooperate in order to overthrow the Bourgeoisie and revolutionize the world. Turns out they had quite a lot to lose and that they didn’t necessarily lose their chains in the process, either.
Involuntary cooperation is not an effective economic process. It steals time and effort from those involved. When a person is disallowed to pursue his own goals, he is also stripped of the will to cooperate with others to reach these goals and realize his dreams. A person has but two tools at his disposal to gain the cooperation of others: one is speech, and the other is violence. Money is the linguistic tool he uses to express how much he values the other person’s efforts. It’s an intersubjective agreement that works because both parties believe it to be true. They believe it to be true because they believe that the money exchanged will hold its inter-subjective value long enough for the receiving party to exchange it for another good or service. When the money used is inflationary and therefore expected to lose value over time, people are incentivized to use it earlier rather than later. In other words, it makes people think that having a high time preference is something to strive for. Keynesian economic theory, which endorses inflation, makes people believe that fast, unconsidered transactions are what drive an economy forward rather than slow, thoughtful ones. Governments love these theories since they keep citizens indebted and submissive.
Austrian economic theory (or reality), on the other hand, teaches us that in order for a civilization to thrive long term, its population needs to be able to make informed investment decisions long term because this process is the very foundation of civilization. The voluntary cooperation of two or more humans is the civilized way of doing things, hence the very word civilization. In this sense, the private sector is much more publicly owned than the so-called public one, which is basically made up of redistributed stolen goods. Public spending is like a game of poker without bets. When a person has nothing to lose from bad decision-making, bad decisions will be made. When a person is held accountable for his or her actions (when that person has skin in the game), he will make more rational decisions and fewer irrational ones. This is not to say that every private investment is sensible; it is just that having something to lose is a key underlying requisite for sound decision-making.
Taxation, and even more so inflation, are inter-subjective fantasies with such worldwide acceptance that it’s hard to imagine a world without them. However, neither one of them is rooted in voluntary cooperation. In order for a government or a ruler to impose taxes or inflation on its subjects, it needs to coerce them into submission first. This cannot be done without a threat of brute force backing the legitimacy of proposed policies, a fact easily forgotten as taxes and inflation exist practically everywhere on the planet. There are, however, other ways of financing large cooperative ventures, they just haven’t been tried at nationwide scales yet. Crowdfunding, for instance. The Internet has given us a plethora of financing tools that have the potential to change everything.
Bitcoin is a difficult concept to wrap your head around because it requires you to question and re-think so many things that you’ve mistaken for absolute truths all your life. Democracy, for instance. We’ve all been told in school that democracy is the best way there is to run a country because it revolves around the will of the people. The schools themselves are completely authoritarian and run in a top-down fashion, though — institutions that all democratic countries force their young citizens to spend at least nine years of their lives in. We find a governing body at the very top that decides on the curriculum and ranking of establishments. On one level underneath, we find an unelected bureaucrat (the principal or headmaster) who, in turn, governs the next layer of authoritarian rule and law-upholders (the teachers) who are in charge of controlling the serfs. A poor mass of sorry kids who are force-fed nationalistic and biased information across all subjects (even including math, sometimes) and punished if ever found challenging the order. No questions in class, just sit down, shut up and do your work.
We can vote for this or that politician, but we can’t vote ourselves out of democracy itself. It’s not voluntary. Democracy is marketed as the only legitimate way of governing a country. In almost every school, it’s compared to nothing but the systems of power that preceded it, namely feudalism, religious rule, plain old dictatorship, or despotism. These systems often involved some form of hereditary rulership. When democracy came along, people felt empowered since they had a say in the decisions made, but the coercion didn’t disappear. Taxes didn’t go away, and the right to print money certainly wasn’t given to the people. In the early stages of the democratic process, whereupon many of the big companies that entire nations rely on for their prosperity today were founded, taxes were generally low, and there weren’t that many institutions in place. For example, in my own country of birth, Sweden, taxes were below 20 percent between 1850 and 1950. During this period, income per capita in the country increased eightfold. The average age of a big Swedish company is 94 years, which means that most of them were founded during this era. In 2004, when Swedish taxes had more than tripled, and social security programs had been in place in the country since at least the seventies, sixteen percent of the government’s budget went to sickness benefits for Sweden’s objectively rather healthy population. A large public sector requires a lot of administration, and administration spawns bureaucracy. Institutions and bureaucrats, once given a right to exist, soon become experts at defending their own necessity no matter how absurd their initial supposed function may be.
In the long run, the coercive methods of big government and large corporations become very expensive to maintain. To keep up with the rising costs of keeping the ducks in line, we get phenomena such as negative interest rates, bank bailouts, and quantitative easing. There is a limit to how much a government can earn from taxation, as shown by the Laffer Curve, but not all governments are aware of this, and few see their economic downfall coming before they’re already in an unsustainable position. No matter how bad these behemoths become at their jobs it is always the little guy that will have to pay for the whole charade. Bitcoin fixes this for you by refusing to take part in any of it.
We’re all coerced into some behaviors. All of us live in a certain jurisdiction with its own unique set of laws and regulations. Of course, many of these laws, if not most of them, are designed to protect us from violent coercion in one way or another. However, the very notion of a law book governing our actions alters how we interact with each other in many subtle ways. If a person knows about a law and its repercussions, he is unlikely to break it intentionally, even if the supposed “crime” is victimless and hurts no one. If he has a lot to gain from breaking the law and believes that he can do so without too much risk, he will break it, but only if his personal sense of morals permits him to do so. Because of these relatively high thresholds to a person’s decision-making processes that the existence of a law infers, most people just try to live their lives as if they agree with every policy and law their government chooses to impose on them.
About the Bitcoin Infinity Academy#
The Bitcoin Infinity Academy is an educational project built around Knut Svanholm’s books about Bitcoin and Austrian Economics. Each week, a whole chapter from one of the books is released for free on Nostr, accompanied by a video in which Knut and Luke de Wolf discuss that chapter’s ideas. You can join the discussions by signing up for one of the courses on our Geyser page. Signed books, monthly calls, and lots of other benefits are also available.
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