Newsletter #12: Money Is Inherently Political, with Stefan Eich

By Mack Penner 

For the truest believers, cryptocurrency promises utopia. Following Bitcoin founder Satoshi Nakamoto, their central claim is that decentralized currency beyond the control of states and banks promises a utopian economic life beyond politics. This is, of course, entirely false — and not just in the sense that crypto actually functions as yet another instrument for financial speculation. 

The anti-political utopian claims made on behalf of cryptocurrency, political theorist Stefan Eich argues, are rhetorical cover for what is ultimately just a recent episode in a long history of ideological battles over money, which is always political. 

Listen to The Dig’s interview with Stefan Eich here. 

Contemporary debates over crypto can be traced back, at least, to the breakdown of the Bretton Woods system in the early 1970s. Bretton Woods was a system of international monetary arrangements and financial regulations that included stringent capital controls and “fixed but flexible” exchange rates where currencies were pegged to the dollar and the dollar was tied to gold. This system effectively ceased to function in 1971 and formally ended in 1973 as a result of the inflation crisis. To tame that crisis,  Federal Reserve chair Paul Volcker jacked interest rates sky high — a shift that, among other things, helped break the power of American unions and usher in decades’ worth of skyrocketing inequality. The “moderate” fiscal policy ushered in by Volcker lasted until the 2008 financial crisis. Within weeks of the crash, Nakamoto published the initial proposal for Bitcoin. 

Between the end of Bretton Woods and 2008, intense political battles over money played out. As a precursor to crypto, Eich focuses on the proposals of neoliberal paragon Friedrich Hayek for a “denationalized” private money that would liberate money markets from the influence of states. The monetary policies that emerged after Bretton Woods, influenced by thinkers like Hayek, clearly worked in the interests of wealthy capitalist states at the forefront of neoliberalism; structural adjustment programs imposed on poorer countries by the International Monetary Fund, which made loans conditional upon their implementing neoliberal policies, proved devastating.

Leftists today should recognize the interests that are served by schemes for anti-political money, to effectively counter them. In rejecting cryptocurrency, we have an opportunity to confront the deeply unjust post-Bretton Woods order — and build a left politics of democratic money. 

 

Eich’s interview is the second in a two-part series on cryptocurrency. Listen to the first episode in the series, with Edward Ongweso, Jr. and Jacob Silverman, here. 

The book chapter on which Eich’s interview is based can be read here. The collection it appears in, Regulating Blockchain, is published by sponsor Oxford University Press. Eich’s book, The Currency of Politics, will be out in 2022. 

Historian Tim Barker’s interview on inflation is excellent accompanying listening, as are past interviews with Adom Getachew (whose book Worldmaking After Empire comes up in Eich’s interview) and Quinn Slobodian. Also mentioned in the interview is Greta Krippner’s Capitalizing on Crisis, the best book out there on the relationship between the crises of the 1970s and the rise of financialization.

For an expansive resource on all things crypto, check out the Crypto Syllabus. For a brief primer on the myriad problems with crypto-politics, read this entry in Adam Tooze’s Chartbook. Finally, in the spirit of knowing the enemy, Friedrich Hayek’s is available from (shudder) the Mises Institute.