Crypto Beyond Capitalism: Part 3

Civilization’s Centralization of Value Symbols

This is the third installment of a long form essay — or short book — outlining my macro perspective on how the emerging crypto ecosystem fits within the greater context of biological, cultural, and economic evolution. I intend to publish each installment weekly, over a period of 3–4 weeks. Afterward, I’ll release the content in its entirety, with additional notes and research materials, in e-book form.

If you haven’t already read the first and second installments in this series, you should read them before continuing with this article, as each installment builds upon earlier concepts.

Even though from a strictly physical viewpoint accelerations in city building are the result of intensifications in the flow of energy, the actual form that a given town takes is determined by human decision making. A similar distinction between centralized and decentralized decision making must be made with respect to the social institutions that determine how energy flows through a city — that is, with respect to the city’s “distribution systems”.

— Manuel De Landa, A Thousand Years of Nonlinear History

Around 10,000 years ago, in ancient Mesopotamia, humans used their expanded cognitive freedoms to bend nature itself to the will of the collective human organism. It’s unclear how many generations of starving humans painstakingly experimented with methods of planting, breeding, and harvesting crops before we reached the level of predictability required for early civilizations to emerge, but the entirety of modern history stands as a testament to our eventual success. Quite suddenly, large-scale civilizations literally cropped up out of nowhere. I say literally because our domestication of plants — and the attendant development of agri-culture — drove the rapid development of sedentary cities near fertile agri-cultural land.

Once again, as these socio-economic centers of gravity concentrated increasing numbers of people and intensified their energy flows, the structures and systems in which individuals lived exploded in complexity. And once again the tools we’d invented to maintain communal coherence at smaller-scales were no longer capable of balancing the necessary orchestration and stabilization of this rapidly scaling world. Under the weight of hierarchical structures that dwarfed those of their ancestors, humanity’s coherence mechanisms began to buckle.

The growing scale of hierarchical organization — characteristic of early agricultural civilizations — required more than interpersonal or tribal efficiencies to resist the entropy nipping at its heels. With chaos constantly trying to pull these evolving structures into disarray, we’d be fools to think most early attempts at maintaining their stability escaped collapse. Rather, collapse and failure were relatively common; we have the archaeological (and mythological) records to show for it. That’s how humans tend to learn; the suffering that flows from chaos and collapse is a harsh, albeit ever-present, mentor to the survivors. In order to avoid the hellish experience of collapse, our newly inflated hierarchies required novel methods of maintaining social coherence within the city-dwelling paradigm. Without introducing unnecessary complication, such systems had to scale apace the exploding diversity and frequency of city-sustaining interpersonal interactions. Anything that destabilized the flow of information — threatening collapse — likely began to feel extraneous. We once again increased the level of abstraction and standardization required to maintain social coherence, and sacrificed context-specific detail in return for efficiency and predictability.

No longer was there room for ambiguity — for interpersonal or social context — if it meant not having enough grain to feed those whose psychological and behavioral predictability rested upon a full belly. As many rulers of large-scale hierarchical societies have discovered, starving people tend to make daily operations downright maddening, and not infrequently fatal. But privation is just one of many factors capable of rapidly destabilizing a system as complex as a city. For these reasons, early civilizations began to standardize accounting methods using newly invented tools. In fact, the earliest unearthed examples of writing serve precisely that function; they’re accounting records of grain stores and attendant transactions.

From a historical perspective, one might wonder why such quotidian records were the first information humans decided to write down. After all, ancient civilizations possessed deeply-rooted religious traditions, and told stories of their cultural heritage in both oral and pictographic form. Why not first enshrine those in writing, as did later civilizations? But that’s not the right question. That’s the type of question asked by a mind so familiar with writing as to be blind to its role, and is akin to the first question a fish might ask, having just discovered water. But when re-framed as the continuation of humanity’s externalization and abstraction of its own social coherence engine, as a response to exploding complexity, it seems only natural that these pieces of information would be the first to achieve immortality. Personally, I like to think of these coherence engines as humanity’s increasingly capable social flywheels. They store the energy of our coherent cultural inertia and keep our complex societies from falling off the existential tightrope as we navigate all manner of perturbations — both environmental and self-induced. Our externalized symbols of value coherently bind us as we grow increasingly free to explore the world as individuals.

Thus, the evolution of civilization demanded that we sacrifice our cherished context-sensitive specificity upon the altar of stability. Centralized authorities responsible for stable growth eventually issued standardized tokens — intended to homogenize symbols of value across all members of a society — made of substances approximating universal value by way of their scarcity. And what happened to that diverse set of previously cherished values? We began the long process of forgetting specific values in order to scale our overall coherence. The manufacture, distribution, and ultimate backing of these tokens, and therefore our value systems, now rested with the central authority of a given religious paradigm or body politic. We began to forget our decentralized Pantheon of Value as coinage emerged to stand above all others as the One True God of Value.

This universal pattern asserted itself under multiple guises. As alluded, the contemporaneous emergence of coinage and monotheism was no mere coincidence. The same threats of instability and chaos that drove humanity to externalize and abstract its symbols of economic value also drove a parallel process of increased religious externalization and abstraction. But instead of externalizing and abstracting over functional symbols of value, the process of religious abstraction consolidated the idiosyncratic gods of smaller groups into more broadly palatable forms. It sanded down their many incongruous edges, or diluted their more extreme flavors, so to speak. As small-scale societies accreted around gravitational city-attractors, or were overtaken by the increasingly capable military forces of city-states, the fractal contours of their subjective spiritual realities melded into more universally palatable religious symbols and abstractions in the name of stability and coherence.

Humanity’s fundamental tendency toward conflict, given incommensurate world views, is as close to a behavioral constant as it gets. When groups represent their unique metaphysical realities using often irreconcilable abstractions — more commonly known as gods — any initial friction often widens into a deep schism between their shared psychological realities. This schism prevents coherence within the collective meta-organism, which itself attempts to discover a stable pattern of interplay between groups. As we explored earlier, tensions accumulate around these schisms. Such tensions often decrease social coherence and interpersonal trust over time, and frequently devolve into chaos and violence.

Point being: it’s no less difficult to maintain disparate systems of value representation than it is to maintain disparate systems of belief. Incongruent systems — whether monetary, metaphysical, or linguistic — impose costs throughout the system. Imagine for a moment being tasked with the maintenance of two separate systems of monetary value in a Mesopotamian society. Consider the frustration of redundancy in a world where writing amounted to etching symbols into wet clay, and was painstakingly slow compared to modern handwriting, much less typing. Retaining multiple monetary systems meant constant translation and calculation between divergent viewpoints regarding the utility of a given item or service (using the nascent and error-prone process of transliteration). It meant additional dispute resolution mechanisms. It meant physically storing, transporting, and securing more physical tokens to accomplish the same task. These sources of friction increased transaction, enforcement, and coordination costs, and skewed incentives toward centralized order and simplicity.

Those operating from a central perspective of authority tend to perceive such costs, absent immediate benefits, as undesirable. This simple heuristic likely guided the management of Mesopotamia, even if those in question lacked the modern economic vocabulary to articulate its rationale. After all, rulers tasked with stabilizing growth didn’t have to provide abstract explanations, as their budding cities remained small enough for denizens to experience the consequences of failure first hand. Systems break down visibly — often violently — when the weight of complexity exceeds their carrying capacity, and most are willing to trade a substantial degree of individual autonomy in return for stability. Thus, despite the fact that individuals may benefit from retaining their unique points of view, the increased costs made such diversity intolerable from the perspective of centralized authority figures concerned primarily, per Machiavelli, with the stability of the civic organism. And as anyone who opposes the dictates of central authorities will attest, those tasked with maintaining stability will go to great lengths to preclude the emergence of alternative value systems. Just ask Ross Ulbricht.

And so, for the past 10,000 years we’ve lived inside an increasingly centralized paradigm. We’ve sacrificed a great deal of individual potential, across millennia, to the God of Centralized Stability_._ In today’s parlance, we frequently categorize this tradeoff — this sacrifice — as oppression. But that characterization should concern us, as the subjective apprehension of stability as oppression by a growing proportion of citizens living within otherwise highly developed, mostly peaceful, and extremely prosperous civilizations indicates that we’re rapidly approaching the limits of stable growth within the centralized paradigm. We’ve reached a point at which humanity must once again use our capacity for abstraction and innovation to build a more capable, yet still collectively coherent, vessel into which we may pour the elixir of our species’ creative potential.

Values Lost, But Not Forgotten

If this all sounds a bit pessimistic, it’s only because I want to underscore and define precisely what we’ve sacrificed to maintain relatively stable, structured growth within our preeminently centralized paradigm. But by the same token, I’m no utopian. I acknowledge and am grateful for the infinitude of benefits I derive through sheer luck of birth at the tail end of this process. Without these historically centralized systems of human innovation, I wouldn’t be writing — and you wouldn’t be reading — these words. We wouldn’t have the privilege of contemplating today’s global issues, let alone the challenge of solving them.

Without these binding, often oppressive structures, we’d have never invented the printing press nor conceived of running water, much less the computer or the Internet. Nature’s funny like that. Systems swing toward centralization due to the limitations of decentralization, then back toward decentralization by way of centralization’s own limitations. But the problems we face along the way don’t necessarily imply a broken system. Rather, they indicate that the current paradigm has run its course, and that a great reservoir of human potential lies untapped by extant structures, ready to fuel the next reversal. That reservoir contains the collective utility of all human value we’ve abstracted away — in the name of efficiency and stability — across millennia. It’s filled with the edge-shavings of unique perspectives and previously un-scalable human behaviors, and it’s beginning to overflow the historically-constructed dam of centralized authority. I believe that the crypto community represents a global pilgrimage to the penstock of this reservoir. Sensing its immense potential, millions are attempting to tap into this latent potential using new paradigms of decentralized human value representation, storage, negotiation, and exchange. To extend the metaphor, the crypto community is experimenting with a new category of behavioral generators capable of converting the untapped reservoir of long-tail human values into viable economic energy flows.

In order to more clearly visualize the contours of this pilgrimage and place it within context, let’s zoom out and recap what we’ve learned about the evolution of value representation thus far:

• The money we use today is a highly abstracted representation of the underlying behavioral values held by a society. Money codifies morality. It furthermore sits at the terminus of an evolutionary process that has distilled concrete human behaviors into increasingly homogenous and abstract tokens of value.
• Initially, small groups of humans began encoding behavioral information coupled to the daily activities and values of the members of a community. They externalized their mental representations using technologies durable enough to extend the lifespan and fidelity of information across distances and timespans that transcend the capacity of unassisted human communication, memory, health, and lifespan.
• These externalized encodings of specific values — behavioral patterns — enabled us to play a novel set of economic games with one another across time and space, and we used these new games to organize our societies such that we maximized for both social stability and individual creativity, in balance.
• This balance optimized the flow of information (i.e. innovation) and catalyzed the discovery of new technologies of intensification — namely agriculture. Human social groups then experienced explosive growth. This scaling process exerted adaptive pressures upon the systems previously used to encode, externalize, and track value over time.
• Adaptation to these new pressures came in the form unprecedented levels of hierarchical social organization. We compensated for the internal complexity of these massive hierarchies by rationalizing, formalizing, and homogenizing the tools previously used to maintain stability and coherence within earlier tribal hierarchies.
• Within the growing hierarchies of complex civilizations, the incentive landscape favored efficiency and stability over differentiation and the maximal inclusion of information. This was because — from the centralized perspective of those in positions of authority — the proximate costs of differentiation within a pre-technological world outweighed their potential benefits.
• We satisfied these constraints by encoding a lowest common denominator of value into standardized tokens. Money was born, and the management of moral value as signaled behaviorally was delegated to slower-moving and increasingly centralized civic institutions.

In the story’s condensed form, a pattern emerges. Let’s call it a Cycle of Coherent Intensification, in which:

• Increasing complexity exerts adaptive pressures in the form of instability and chaos, experienced broadly as atypically stressful uncertainty and increasingly frequent decoherence throughout the system.
• Agents within the system — in this case humans — respond by creating abstractions capable of cohering the increasingly destabilizing complexity.
• These newfound capabilities open the door to a higher plateau of coherent complexity. Yet after stabilization, those same new capabilities increasingly spark the creation of novel complexity, beginning the cycle anew.

Rinse and repeat. When it works, it’s a virtuous upward spiral toward heaven on Earth. When it fails, our societies quickly descend into chaotic hellscapes capable of turning the civilizational clock back by millennia. But what differentiates between spirals that move toward heaven and those that descend into hell? As I’ve mentioned more than a few times throughout this essay, I believe that the direction of this feedback cycle hinges upon our ability to retain collective coherence across phases of the cycle, while continuously increasing individual autonomy. If a society attains collective agency without an attendant increase in individual autonomy, the system won’t develop within itself the capacity to respond sufficiently to the complexity of the following cycle’s decoherence events, and will regress to a previous plateau of stability. Conversely, if individual autonomy is pursued at the expense of collective agency, chaotic decoherence increasingly obviates the value of increased autonomy, and again the system regresses.

Today we stand at the pinnacle of civilization’s pendular swing toward centralization, and have presciently (albeit perhaps subconsciously) spent the last half-century building infrastructure to help us navigate the inertial shift back toward a more decentralized, coherent world. The Internet; the World Wide Web; mesh networks; micro-satellites; cryptocurrencies. These new tools hold the potential to help us first establish, and then retain, an exponentially more capable — and ethical — species-wide collective coherence as we begin our swing toward a paradigm of decentralized growth, organization, and delegation of authority. But while I remain hopeful, it’s increasingly clear that our technological development has outpaced our psychological, social, economic, and political capacity to responsibly handle the consequences of our technological prowess. And though we’ve never been more connected, it also seems we’re becoming increasingly disintegrated and dangerously incoherent as a result of our accelerating techno-cultural growth and differentiation. With the amount of destructive capacity we’ve developed and spread across the globe, we simply cannot afford the types of catastrophic decoherence events we saw in the 20th century. And yet, under the auspices of the status quo, we seem increasingly likely to trigger a Black Swan event of apocalyptic magnitude.

This necessary transformation will only begin in earnest after updating our systems of value representation, storage, and transaction. That is the grand narrative of cryptocurrency, despite the oft-myopic criticisms of those who fail to see it. We’re upgrading the coherence engine that holds our global society together while freeing individuals to explore new creative territories. Presently centralized tokens of value — currencies and the institutions who manage them — struggle to maintain coherence in the face of exponentially surging tides of complexity. While these systems have provided immense value to date, they’ve also become disconnected from long-tail behavioral realities, overly abstracted, and susceptible to corruption. Similar to prior historical inflection points, we’ve begun to feel intolerable levels of friction in the system. This tectonic grinding eventually surfaces as globally synchronous recessions, increasingly intractable ideological polarization, and surging resistance to further global integration.

As our centralized systems of representation struggle to encapsulate and accommodate an increasingly diverse set of human values, a rift emerges. The forces released by this subterranean rift create cracks in the foundation of trust itself. As those cracks spread, interpersonal trust, cross-cultural trust, and institutional trust all begin to crumble. Those whose values aren’t represented eventually rebel. They turn against the idea of money itself. They begin to question the systems of governance enforcing its legitimacy. They reject the otherwise humane tenets of the Capitalistic paradigm. And those who feel the seismic impacts of this rift have a point. After all, everything must evolve, and nothing escapes entropy. While the institutions and systems undergirding our civilization were ahead of their time 250 years ago, they’re now in dire need of structural reform.

We’ve compounded and accelerated these issues in digital space, where we increasingly retreat from or attack those whose values differ from our own. Worse yet, given the online landscape of monetary incentives, the Internet as we know it lacks the sewing kit necessary to stitch our social fabric back together. Its most prominent enterprises actually profit from tearing that delicately woven fabric apart, despite the fact that its eventual unravelling would also mean their own demise. Facebook, Twitter, and Google can’t and won’t solve this issue. Our present governments cannot solve it. That’s because — regardless of intent — these actors remain limited by roots planted firmly within paradigms of centrality. The internal logic and incentives of their structural inertia precludes necessary growth in the same manner severe addiction surreptitiously precludes its host from achieving sobriety.

Hence we require novel solutions for representing and re-integrating the human values we’ve spent millennia abstracting away. Doing so requires decentralized, trustworthy, and values-aware networks; the increasingly fragile, oft-corrupt, and centrally-enforced systems of value within which we exist today simply won’t hold up to 21st century levels of complexity. The first wave of such systems to emerge — cryptocurrencies and cryptoeconomic primitives — are tools we can use to first re-establish, and then to maintain the necessary balance between collective coherence and individual autonomy. Much like earlier paradigm shifts of value representation, these new tools open a gateway to a world of untapped potential, and will allow us to address the growing list of problems threatening to pull our world back down into chaos. It’s to the justification of this claim we’ll turn next week.

Continue to Part IV: The Primary Dimensions of Sacrifice

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