Bitcoin is NOT democratic. Pt 1
It’s Meritocratic, and there is a Universe of difference.
As the concept of “democracy” regresses before our eyes, Bitcoin presents a new way of ordering society and incentivizing progress.
This article was originally published with Bitcoin Magazine on January 11, 2022:
[P]roponents of government intervention are trapped in a fatal contradiction: they assume that individuals are not competent to run their own affairs or to hire experts to advise them. And yet they also assume that these same individuals are equipped to vote for these same experts at the ballot box. We have seen that, on the contrary, while most people have a direct idea and a direct test of their own personal interests on the market, they cannot understand the complex chains of praxeological and philosophical reasoning necessary for a choice of rulers or political policies. Yet this political sphere of open demagogy is precisely the only one where the mass of individuals are deemed to be competent!
- Murray N. Rothbard: Man, Economy, and State with Power and Market
In this series, I shall draw inspiration from giants like Hans-Hermann Hoppe and Murray N. Rothbard, reinforced by the clown world simulation we’re living in, to challenge two misguided beliefs inside and outside of the Bitcoin “sphere”:
- That “democracy” is a good idea, and,
- That Bitcoin is in any way democratic.
Many generally smart and liberty-oriented people have come to the defence of “democracy,” over the years, and the arguments made by them can usually be distilled into one of two categories:
- “well I don’t mean that kind of democracy”, or ,
- “I’m referring to the idea of liberal democracy, and not what it’s become”.
#1 sounds a little like the classic socialist argument of “well if I was in charge, I would’ve done socialism better”.
Number one sounds a little like the classic socialist argument of “well if I was in charge, I would’ve done socialism better” (not to be confused with capitalism, because nobody has their own “form” of capitalism where “they” are in charge, for it is an organic process, that happens in all systems, i.e., capitalism equals taking scarce resources [time, energy, matter] and transforming them into something of higher order value).
The latter is the basis for a stronger argument, because the idea of the democratic republic has roots in the freedom movement and the liberation from the broken, corrupt monarchies that preceded it.
With that in mind, and despite how much truth there is in the latter, both arguments miss the underlying fraud that democracy represents as a model of public rule with no skin in the game. They are oblivious to the incentive makeup which can only lead society toward infantilization, dependency and high time preference wastage.
As such, this series will explore why democracy is a bad idea in general, why people should stop comparing Bitcoin to democracy, why in fact it is the farthest thing from a “democratic institution” and why the world it will give us will not look anything like the one-person, one-vote utopian dystopia we’re living in.
Once again, I hope I encourage both deeper thinking and a few rage quits along the way.
Problems with Democracy
Before we get into why Bitcoin is not democratic, we must first examine the core tenets of democracy and see if they are in any way compatible with Bitcoin.
In doing so, we will discover a whole host of logical inconsistencies that Bitcoin does not share.
What does this mean for how the world will operate on a Bitcoin standard?
I don’t know. I don’t have all the answers. This is something we as a species will figure out via an evolutionary, emergent process.
What I can do, at the very least, is point out where the answers will certainly not be found, and the elephant in the room today of course is dEmoCrAcy.
It’s been hailed as the holy grail of all modern governance, and the cure for every ailment that emerges from the disease that is democracy seems to be…..MOAR democracy.
We must break this cycle and open our eyes in order to understand and re-imagine what a world might look like on a meritocratic Bitcoin standard..
Let’s begin with one of the greatest confusions of the 20th century..
A ‘Representative Government’
The oxymoron for morons who believe in the illusion of representation. Here’s the reality…
In a democracy, you as the person being ‘represented’ have no option to not be represented. Whether you choose not to vote or participate and even if you have voted for the opposition, you will still wind up being represented by someone or some body that you did not consent to, based on ‘majority rule’.
The recent US election was a glaring example of this. Assuming the election was fair, and an accurate representation of the broad sentiment in the nation at the time (ie; a roughly 50/50 split), that means 150m people who do NOT want to be represented by an old, senile poltician than can barely string a sentence together, and 40m who actually went and voted the other way, now have to spend the next 4yrs represented by this guy and his regime?
To add insult to injury, this ‘representative body’ whom you neither voted nor vouched for has the explicit, legal right to expropriate half of your wealth directly through taxation, and devalue the balance of whatever is left through inflation.
Neither explicit nor implicit consent needed. Sounds almost like slavery right?
And what of those who you wanted and asked to represent you? What of your own capacity to represent yourself, and use your wealth in the way you see fit?
Irrelevant. The former are merely the illusion of an opposition, with no power to effect change, and even if they were, would only impose their will on a group who didn’t vouch for them.
The latter, which is the mark of a free human, is not even taken into consideration, despite the fact that there is likely nobody else on the planet who could possibly know how best to allocate your own resources.
The premise of democracy can therefore be summed up into one bit of circular logic:
You are too stupid to know what to do with your own resources, so you must elect a representative to do so, which implies you are somehow smart enough to know what this representative will do with not only yours, but everyone else’s resources.
In other words, there is no logic. And furthermore, because of the faux notion of representation, it creates an environment which incentivises not cooperative behaviour, but competition for becoming the ruler or representative.
Behavioural Decay
The long term effects of the democratic drug are deeply detrimental because they leave you, the individual, with two options:
- Become a serf, where you are stolen from without your consent, to support parasites and lemmings and pay for invisible causes against quixotic enemies for the rest of your life.
- Become a slave driver. Imposing the rules you see fit, such that you’re not a serf. You get to choose who the enemies are, and where the capital goes.
The calculus is pretty easy, and it’s no wonder otherwise capable (and morally flexible) people are sucked into this racket.
It’s akin to warfare. If someone is coming to kill you, your only option is to kill them first. Whether the war has anything to do with you or not. This is also why the terms ‘peace’ and ‘democracy’ have nothing to do with each other. If anything, this deranged form of governance has only brought on a constant state underlying psychological tension because everyone is a potential enemy (more on this in part 2 of the series).
The greatest politicians know exactly what they’re doing. They know the highest returns for the smallest amount of work, with the least amount of risk lie in one field; and its most pristine incarnation is the democratic state.
Democracy and the contractual void
This is one of the superpowers collectivist governments of all kinds possess, but is most aptly harnessed by the democratic apparatus due to its veil of ‘equality & representation’.
Imagine for a moment, operating with a counterpart who you must receive services from and who has the unilateral right to change the terms of the agreement and the price whenever he so wishes, and if you disagree with such a change, you will either be ignored or silenced.
Would you do it?
Only a masochist would agree to such a deal, right?
Unfortunately, that’s exactly the trap we’ve all walked into.
Democracies or ‘representative governments’ of any kind operate in a contractual void where their lack of skin in the game coupled with a monopoly on violence, decision making and use of stolen resources (taxes / inflation) gives them absolute power without consequence.
As such, they operate not as a service provider, but as an overlord.
Hoppe summarised the situation perfectly in the following passage:
If one wanted to summarize in one word the decisive difference and advantage of a competitive security industry as compared to the current statist practice, it would be this: contract. The state, as ultimate decision maker and judge, operates in a contractless legal vacuum. There exists no contract between the state and its citizens. It is not contractually fixed, what is actually owned by whom, and what, accordingly, is to be protected. It is not fixed, what service the state is to provide, what is to happen if the state fails in its duty, nor what the price is that the “customer” of such “service” must pay.
Rather, the state unilaterally fixes the rules of the game and can change them, per legislation, during the game. Obviously, such behavior is inconceivable for freely financed security providers. Just imagine a security provider, whether police, insurer, or arbitrator, whose offer consisted in something like this:
I will not contractually guarantee you anything. I will not tell you what specific things I will regard as your to-be-protected property, nor will I tell you what I oblige myself to do if, according to your opinion, I do not fulfill my service to you — but in any case, I reserve the right to unilaterally determine the price that you must pay me for such undefined service.
Any such security provider would immediately disappear from the market due to a complete lack of customers.
- Hans Herman Hoppe
This is once again something the best politicians know and use to their advantage. A contractual void coupled with a monopoly on violence and a monopoly on funding oneself, is the ultimate position of power. It’s the ultimate high ground (atop a tower of cards), and it must be intoxicating for those up there.
Which brings me to the next part…
The worst of the worst
In the reality of a world in which resources are randomly distributed and human beings are diverse in their character, there will always be those who choose to produce and collaborate to create wealth (the economic means) and those who simply covet another’s wealth (the political means).
Democracy’s crowning achievement is the simultaneous constraint of free market private enterprises (the economic means) and creation of a free market for entry into government (incentivises the political means)
In a democracy, everybody is permitted to openly express his or her desire for another’s property. What is innately regarded as immoral is, in a representative democracy, considered a legitimate sentiment on the basis of a majority vote. Everyone is given permission to openly covet everyone else’s property, and everyone may act on this desire, provided they either appeal to the majority or find entrance into government.
As a result, under democracy everyone becomes a threat of some sort, and there is never any real ‘peace’. Only peace on the surface, with a deep seated tension that someone with a greater subjective ‘need’ may one day lay claim to that which you have worked for, without your consent, but with the supposed ‘consent of the governed’.
“From each according to his ability, to each according to his needs”
Karl Marx
Under democratic conditions the immoral desire for another’s property is systematically strengthened. Every demand is legitimate if it is proclaimed publicly with enough fervour or appeal to subjective ‘need’.
And the worst part is that those members of society with little to no moral inhibition against taking another’s property, who are most talented in assembling majorities from a multitude of ‘needy minorities’, will tend to gain entrance in and rise to the top of government.
Mencken said it best:
They will all promise every man, woman and child in the country whatever he, she or it wants. They’ll all be roving the land looking for chances to make the rich poor, to remedy the irremediable, to succor the unsuccorable, to unscramble the unscrambleable, to dephlogisticate the undephlogisticable. They will all be curing warts by saying words over them, and paying off the national debt with money that no one will have to earn. When one of them demonstrates that twice two is five, another will prove that it is six, six and a half, ten, twenty.
Democracy virtually assures that only bad actors will rise to the top.
Leaders are not chosen based on their intellect, competence or productive capacity, but because of their power to impress and enchant the intellectually underprivileged.
This has and will always lead to…
A tragedy of the commons
As mentioned above, we live in a world where scarce resources are unevenly distributed, time is finite and there is only so much energy one can expend to make use of each. There are really only two methods to deal with this reality:
- Cooperate with other private property owners and enhance, through trade and specialisation, the possible access to these scarce resources with the limited time and energy you each have at your disposal.
- Acquire, co-opt, expropriate, steal and exploit as much as possible of the resources you can get access to, with complete abandon, at the detriment of anyone else’s access, use or capacity to utilise.
The former is more complex, whilst the latter is straightforward.
The former requires thinking of a higher order and the decentralised organisation and cooperation of private property owners who make decisions based on the information the market presents themselves with.
Franz Oppenheimer pointed out that there are two mutually-exclusive ways of acquiring wealth; one, the above way of production and exchange, he called the “economic means.” The other way is simpler in that it does not require productivity; it is the way of seizure of another’s goods or services by the use of force and violence. This is the method of one-sided confiscation, of theft of the property of others. This is the method which Oppenheimer termed “the political means” to wealth.
Murray Rothbard, Anatomy of the State
The latter rests on the brutish tendencies of central planners or demagogues to distribute by decree (often to themselves first), or the mindless, inefficient and ineffective use by sheeple whether directly or via representative proxy.
The former is a way to do, make and create more from less.
The latter is a tragedy of the commons which devours everything until there is nothing left for anyone to make use of.
One-man-one-vote combined with “free entry” into government democracy implies that every person and his personal property comes within reach of and is up for grabs by everyone else.
A “tragedy of the commons” is created. It can be expected that majorities of “have-nots” will relentlessly try to enrich themselves at the expense of minorities of “haves”.
Hans Herman Hoppe
To date, this tragedy has not been solved, and Democracy as an attempt has merely given us rule of and by the mindless masses.
Mob Rule
Whilst many self-proclaimed supporters of ‘liberal democracy’ will say that they do not believe in mob rule, reality says otherwise.
Democracy will always devolve into mob rule because of its basis on one-person, one-vote. The ‘mob’ will always outnumber the natural elite, and the tendency to acquire from another’s resources that you didn’t have to work for, because you “need” it is too great for the hordes of lemmings.
Why work for something when you can get it for free, thanks to a promise from the bureaucrat you voted for? You see no violence in it, because you’ve been brainwashed into believing “we’re all in this together”. You continue voting for the candidate that makes the most promises to give you things you want, oblivious to the cost the group who must carry that burden will pay.
You’re taught that this is fair and just, during your 12 years in an indoctrination camp, and when you see images like the one below, your visceral reaction is to call it extreme:
The reality is actually far harsher.
For the retarded, by the retarded
Because of the natural 80/20 distribution of productivity and competence, the morally superior and competent wind up being ruled and lauded over by the morally corrupt and incompetent.
Democracy thus rests on the foundation of a productive class of people with skin in the game, who effectively support those with no skin in the game, whether they’re overlords who ‘legislate’ the rules, or the serfs who are net recipients of that which has been pillaged by the care-taker-rule-makers.
Osho’s short but brutally hilarious take on Democracy sums up this entire institution perfectly:
No skin in the same
Systems where the skin of the players is not present in the game, will always break down, and in a social setting, devolve into madness.
If you make it possible to progress by exploiting another and make moral hazard not just possible, but profitable, you can be certain that it will happen.
Swapping out presidents or rulers doesn’t change the outcome. Democracy’s problems are inherent to its structure.
Don’t hate the player, hate the game.
The Parasite’s Paradise
In The Remnant series, I discussed 3 human archetypes:
- The Remnant
- The parasite
- The masses
Democracy is useful first and foremost for the parasite, because they can use the veil of popular ‘representation’ as a means by which to justify the expropriation and redistribution of wealth and resources from one group to another.
To the masses, it ‘sounds’ like a good idea because they get things for free, or receive benefits that they did not have to directly earn eg; welfare, healthcare.
Unbeknownst to them, these services actually come at a premium because they’re delivered by incompetent bureaucrats or non-market monopolies who operate in an economic void and thus have no incentive toward becoming more efficient or effective in delivering their service they’re meant to deliver.
In any case, the masses don’t care. They do not bear the cost (see skin in the game above). The cost is borne by another, ie; the real loser in this system. The productive, competent, functional, masterful and wise human. The Remnant.
To read more about The Remnant, I highly recommend Albert J Nock’s groundbreaking essay; Isaiah’s Job, and the 3-part series by yours truly on Bitcoin Magazine, starting here:
Bureaucracy & Democracy
Much like mould, parasites thrive in a particular environment. In a social and political sense, their ideal is a bureaucracy.
They exist by syphoning resources, wealth, nutrients, time and energy from the system without adding anything back in. They have no input. They are a leaky valve that only creates an energetic output.
As discussed in The Remnant Part 3, their goal is to build governance models that weaponise the masses through vagaries and platitudes, against the productive members (who are the only ones with anything worth stealing).
The larger, more cumbersome and inefficient the construct, the more lemmings are needed to run it, and thus the more its continued operation can be justified. This is the perfect set up for energy vampire who exist by virtue of moral hazard.
If one’s primary outcome is to steal, suck and leech, you want as many nooks and crannies to hide in, and as much legislative complexity as possible to obfuscate your actions.
We all know the biggest form of bureaucracy known to man is democracy and as a result, you will find that it is absolutely infested with parasites.
Democracy & Time Preference
Time preference is perhaps the most crucial measure of a civilisations propensity toward either:
- Farsightedness, progress and long term planning (low time preference)
- Short sightedness, consumption and instant gratification (high time preference)
Democracy is a system of rule that heightens time preferences for both individuals and groups because it incentivises collective, parasitic behaviour, whilst disincentivising individual, responsible behaviour.
It does so through institutions that remove individual agency, socialise bad decision making, erode private property rights, prioritise subjective need over objective competence, and ultimately distribute (waste) wealth instead of creating it.
All redistribution, regardless of the criterion on which it is based, involves ‘taking’ from the original owners and/or producers (the ‘havers’ of something) and “giving” to nonowners and nonproducers (the “nonhavers” of something). The incentive to be an original owner or producer of the thing in question is reduced, and the incentive to be a non-owner and non-producer is raised. Accordingly, as a result of subsidizing individuals because they are poor, there will be more poverty. By subsidizing people because they are unemployed, more unemployment will be created. et. al.
Hans Herman Hoppe
In other words, democracy, performs two key functions for the collective at the detriment of the individual:
- Wealth and income redistribution
- Subsidisation of poor behaviour / decisions / actions / calculations
Combined, the result, at the the micro and macro levels is more of the following:
- Coveting another’s property
- Appealing to a collective for decisions
- Politicking
- The development of committees and bureaucracies
- Erosion of wealth via poor, inefficient redistribution
- Mindless nihilism and consumption
- Moral hazard and the constant covering up of risks
- Affinity to a state, and irresponsibility to family and future wealth
- The tendency to socialise poor decisions onto society
- The desire to be a net ‘receiver’ of ‘benefits’
And less of:
- Individual productivity
- Responsibility for one’s own wealth, health and future
- Entrepreneurship & wealth creation
- The strength of and responsibility toward the family unit
- Consequence for bad actions and decisions
This is a cancer and will only lead its host to one place. Death.
There is no partial cancer, because left untreated, it will always grow and metastasize into something more sinister.
Voting
Finally…we come to the ultimate Rube-Goldberg machine. The only thing dumber than voting, is “voting on the blockchain”
Everyone, deep down, knows it doesn't work. They know it’s an illusion of choice. They know it’s broken, but they’re scared of the solution.
Want to fix voting?
Remove the democratic element.
For a system to be fair, the vote should be weighted to how much tax you pay. No tax? No vote.
In this way, you introduce skin back into the game.
This is fair because it means those who are contributing get to determine where the money actually goes.
If you want to get a say, you have to contribute. That’s how you drive progress. You introduce a real cost to decision making.
Now…whilst this may sound great in principle, in practice it’s not so easy.
Democracy worked for a short period, ie; when land owners were the only voters (local skin in the game) and a draw obligated one of them to be the governor.
But this broke down as populations scaled, because larger numbers make it impossible for everyone to have skin in the game. Also, taxation being theft makes it that much more complex.
So how do we solve for this?
It’s simple actually. Remove both voting and faux representatives altogether.
The only vote that matters is where you spend your money!
When you buy organic beef over fake ‘beyond meat’, you’re voting for real meat. When you buy an iPhone over a Samsung, you’re voting for the iPhone. Preferences (votes) are perfectly represented by where you choose to spend the product of your labour.
Wasting time grouping decision making and then attempting to socialise the cost of these collective decisions is beyond level 9000 stupidity.
It adds intermediate steps, wastes resources and forces anyone who did not vote for the group outcome, to pay for something they didn’t want!
What the hell are we doing????
Furthermore, we know markets scale because the most complex systems we have on the planet are global, interconnected markets and their supply chains. The very fact that I am writing on a keyboard, made of dirt and rocks and shit, that is sending electrical signals somewhere over cables, wires and an ephemeral network known as the internet so that you can read it is testament to the power of free markets.
Democracy didn’t give us this. Decentralised decision making by self-interested individuals operating toward ends they deem subjectively valuable is what made this happen.
It’s something to marvel at, and we shall explore it in part 2 of the series.
Voting is a Rube-Goldberg machine that does nothing but waste precious time, gives us the illusion of choice and grants snake-oil salesmen powers they should never have.
Its only solution is abolition.
The Core Tenets of Bitcoin
This section could take up an entire essay, and it kind of already did. You can read that here:
But to sum up Bitcoin’s core features:
- No Voting or “on-chain” governance (no proof of stake)
- Enforced by the individual (node)
- Meritocratic (proof of work)
- Fixed rules (no legislature)
- Must scale in layers (tradeoffs are realised and layers are related)
- Verifiability (I can quickly, cheaply and easily know and enforce the rules)
- Emergent, voluntary consensus (no overlords or representatives)
- Resistant to censorship of both minorities and majorities
- Immutability, as a function of cost (no way to change history)
- No monopoly on issuance (open entry, pay to play)
- Transparency (8 pages, 1 set of rules, open for everyone)
- Open & neutral (no minorities, majorities or group identity of any kind)
- Irreversible (there are consequences to both stupidity and bad luck. Losses cannot be socialised, no matter how many people ‘vote’)
- Private Property (perhaps the greatest incarnation of private property)
I’m sure I am missing some, but suffice it to say that these are all in a league incompatible with the core tenets of Democracy.
Some are harsh, some might even seem extreme, but they resemble reality and as I’ve said many times, if there is one thing that Bitcoin will do to change the world for the better, is that it will reintroduce economic consequence.
In Closing
Democracies are nothing but legal, public monopolies, run by popularity contest winners with no skin in the game. They appeal to and always devolve into rule by the mob, where morality and the consequences of stupidity are socialized, and often paid for by the more productive members of society.
The sales pitch sounds nicer than many of the ‘isms’ on the surface, but in reality it’s a much greater burden on society because it, a) has the capacity to last, and b) empowers the masses to think they’re somehow in charge, while they proceed to blindly obey their parasitic overlords.
“Monsters exist, but they are far too few in number to be truly dangerous. More dangerous are the common men, the functionaries ready to believe and to act without asking questions.”
- Primo Levi
Monarchies, as defended by Hoppe and Saifedean are at least run by hereditary title holders with some skin in the game. The result is that they fail or correct much faster when behaving like buffoons. I believe Bitcoin will usher in a new age of natural, competent elites, many of whom would be considered “royal” in the classical sense.
But that’s something we shall explore in part 2.
Democracy is in its final era. It has been a regression of sorts, and the reality is that democracy is the parasite which has benefited from the prosperity of free markets and continued to leech resources, capacity and energy alongside human flourishing.
Giving those who are less productive, less competent or more slavish the same voice as someone who adds more value, produces more and is of greater competence is not just counter-intuitive, but naturally abhorrent.
The ramifications of this morally repugnant, grand error are starting to be felt now via the clown world simulation we’re all watching.
From ‘we’re all in this together’, to ‘we are all one’, to ‘one person, one vote’ the siren call of Democracy has led the world directly down the darkest, bleakest of roads.
It’s only with a light as powerful as Bitcoin that we can find our way back and remove the leech that is sucking up all of the productive capacity of a human race who has the potential to flourish.
Bitcoin offers us a future very different to the present we’re living in, so please (a) stop conflating it with anything democratic, and (b) recognise that all your models are broken, including how you’ve thought about governance to date.
A Bitcoin Standard will look nothing like the democratic clown world of 2022.
See you in Part 2 where we’ll explore society’s decay through democracy and how Bitcoin can change that.
Thankyou for reading, and I sincerely hope you found value in trading your time for it. There will be loads more to come.
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By Aleks Svetski
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