The relationship between the nation state and its citizens is a complex one, bound up in a dance of responsibilities and loyalties. In the aftermath of the Arab Spring and the unrest across Europe, in which we have seen the nation state exposed as putting its allegiance to international capital above its responsibilities to its citizens and its citizens responding by reacting against the state and declaring their allegiances elsewhere, perhaps it is now time to consider where our economic allegiences should lie
These alternative allegiences varied from the international anti-capitalist struggle – a tradition which crosses all borders; the national liberation movements which seek a new nation state built on different principles – such as in the case of Scotland, the Basque Country, Catalonia and Kurdistan; into faith orientated reactions to a state which has lost legitimacy – particularly found in inter-revolutionary Egypt and elements of the Syrian resistance, …and even into the hyper-national fascist and quasi-fascist rise of the Right Sector in the Ukraine, Golden Dawn in Greece, Jobbik in Hungary and EDL/UKIP in the UK.
International capital is of course denominated in government currency. We have been bought by the bankers. It took a long time to reach the shores of Western Europe – for it has always been more brutal “over there”. From the staggering debt repayments that were demanded in the 80s from struggling African economies trying to repair their societies from the post-colonial looters that worked arm in arm with their former masters to the Asian Crisis and the Argentina in the 90, finally in 2008 the masters of the universe turned into headless chickens as the full extent of their cocaine fuelled indulgence came home to roost.
- Enron and its multi-billion pound theft;
- Nationwide and its gambling;
- RBS and its tales of trysts and trusts;
- Anderson and the coverups;
- HSBC and the drug dealing.
Our most respected and most respectable – the bedrock of Western stability and superiority were exposed for the fraudulent, sordid, reckless, deceitful set of theives.
Yet other than in the case of Iceland, the primary reaction was to give them our money: thousands of billions of our money; thousands of billions of future labour that the nation state pledged to extract, and the process of sooking resources and labour from national entities to multinational capitalism was given yet another boost. For this is where multinational capitalism and the national capitalists diverge. Each wish to maximise wealth, however national capitalists desire that the heaviest enforcement of extraction is elsewhere, as the enforcement of exploitation is risky. Imperialism may be the highest form of capitalism, but it is at the same time the most base. Both imperial and national capitalists mortgage our future labour – obtaining promises to extract and selling them to the banks.
Such is the banking system. The whole principle of ursury – railed against by religion for centuries has become our new bible. We promise away our future labour individually to the nice man at the bank with the ever so easy repayment terms on the loan, while governments promise away our collective future labour in the form of sovereign debt.
Cryptocurrency will change this.
Each time a country is freed, we say, it is a defeat for the world imperialist system, but we must agree that real liberation or breaking away from the imperialist system is not achieved by the mere act of proclaiming independence or winning an armed victory in a revolution. Freedom is achieved when imperialist economic domination over a people is brought to an end.
Che Guavara, Afro-Asian Conference
Nation states are, in essence, geographical entities. Nominally at least, it is the people who live, work and pay taxes to a nation who are then subject to its laws – in particular its financial laws, modes, cultures and norms. Capital controls and investment regulations also seek to regulate the amount of wealth that can be physically and notionally brought into or taken out of the country.
At least one of the defining principles of a nation state is control over currency – either control over an independent currency; an agreement to use another nation’s currency or a currency union with other nation states. More powerful countries are able to enforce the use of this currency through their domain, while weaker countries with weaker currencies can often see a dual currency starting to operate, where notionally one currency is favoured, however another “harder” currency, such as the Euro or the Dollar is widely used for business dealings.
Although the Euro and the Dollar are far more stable currencies than many, they are still at risk of economic shocks and speculatory phenomenon – these economic shocks are related not to the currency per se, but to the political entity behind the currency – the EU and United States respectively. Where the (supra-)nation is seen to be politically weak, the currency will also weaken.
Bitcoin on the other hand, as a decentralised medium of trade has no national entity supporting it – it is supported purely by those who see the value in its usage for trade – for although a great deal of the wealth which has been sunk into bitcoin is for investment or speculatory purposes, it is in anticipation of its widespread adoption in trade which is driving that investment.
The recent populatity of bitcoin coupled with the increasing difficulty of mining has led to the development of “alt-coins”, new cryptos based along the same lines as bitcoin. There are hundreds of these, however the most interesting subgroup of them are the “National Cryptocurrencies”. There are three major ones.
Mazacoin has been developed by the Lakota Nation to encourage internal trade within the Nation and stimulate the economy, where the unemployment rate hovers at 75% and the average income is approximately $6000. Payu Harris who developed the coin did so explicitly within the context of tribal sovereignity, noting that ““To be a truly independent state you have to have your own issued currency.”
Auroracoin was developed for Iceland, with any resident of the country offered 30 auroracoins for signing up to the scheme. Iceland went bankrupt during the ’08 financial crisis and although now substantially recovered, the experience plays heavily on the collective memory. The creator, Odinsson, describes himself as a ‘patriot’ and considers aurora coin a way of undermining a “flawed financial system, controlled by an elite that made astronomical bets… at the expense of the people“.
Scotcoin is of particular interest because it is being developed during this period of struggle for self-determination. It emerged at the time when the use of the pound was a hot topic within the debate. The founder Derek Nisbet states that the purpose is to “Create, a thriving digital economy in Scotland, where the Scottish people are offered an alternative medium of exchange”
In all three cases there is an element where there is a feeling that traditional currencies oppress the desires of the people of the identified nation. In Lakota, the colonial imposition of the US; in Iceland, the ’08 financial crisis and the suffering of the Icelandic people in the aftermath; in Scotland, the control that the UK government has over our revenues. In each case there is an identified national disadvantage to the use of traditional currencies.
Cryptocurrency and Internationalism
International cryptocurrencies, such as bitcoin, although still concentrated in the West, have the greatest potential in the Global South. Colonialism drove wedges through ethnic groups, which are split among different nation state. Inter-group trading is characterised by expensive conversion charges to national currencies, often through the medium of a Western currency such as the Dollar or Euro. Trading through the medium of bitcoin allows traders to avoid both the expense and inconvenience of currency conversion, as well as opportunities to circumvent capital controls and export taxes, without having to resort to bribery.
Many migrants in Western economies send remittences back to the Global South. The charges on such unbanked transactions, through financial institutions such as Western Union and Moneygram, are very high, and the requirement to provide identification can be a barrier. Bitcoin remittences allow money to be sent instantly and directly at minimal cost, meaning that more is sent directly back rather than being creamed off through charges by Western alternative financial institutions.
The international nature of bitcoin, makes international trade far easier, particularly for digital goods and services, including facilitating trade between the West and the Global South, the minimal requirement for banking infrastructure – a barrier to international trade in many developing economies lowers the entry barriers.
Implications for the Nation State
The implications for the nation state in the rise of cryptocurrencies are immense. As I explained in a previous post on taxation, the paradigms on which a nation generates revenue are fundamentally undermined in the shift to a cryptocurrency. As the national currency “leaks” into crypto, fewer taxable exchanges are conducted, and consequently the very strength of the currency itself, as a measure of how well the political entity underwriting it can extract both current and crucially future labour power from its citizens and citizens over which it can effect (neo-)imperial control, influencing its ability to borrow on the international markets.
Privatisation drives, particularly of key elements of state infrastructure such as the justice system, health, education and transport encourage a corporate takeover of critical elements of people’s needs. The state’s role becomes an arbritrar between the corporations and the citizens. The US penal system is probably the best developed example of this, where the prison industrial complex allows state authority to be invoked to imprison citizens at an eye watering rate, who are then forced to labour to provide revinue for the penal corporations. Yet even within “softer” state provision in areas such as health, the fines levied for not signing up to Obamacare forces people to engage with for-profit provision. The creeping privatisation of the justice system and the NHS in rUK sees the same thing happening here.
These corporations are financed through debt. Borrowing money from banks, they repay from the profits that they manage to extract from their enterprises, and maximising that profit is key. Lobbying thus becomes an essential part of the business model – ensuring an economic and fiscal environment which is most favourable to the maximum extraction of profit. Thus governments inevitably find themselves under pressure from well-financed and organised entities with specific aims and the ability to shape popular consciousness through their links with media corporations.
Dark Nationalism versus Internationalist Enlightenment
Cryptocurrency is coming, although the secondary services are patchy, uptake is still weak and people do not as yet have sufficient skills with digital security to make it a viable current medium for everyday trade, it is nevertheless traded in practically every country in the globe, has a far flatter global distribution than government backed currency and its economic fundamentals are sound. Crypto is here to stay; yet as I’ve explained it undermines many of the fundamental paradigms of the nation state and the assumptions we hold dear.
Together, a state and its currency constitute, under capitalism, the means to manage the general interest of capital, transcending the particular interests of competing segments of capital. The current dogma that imagines a capitalist system managed by the “market,.. is based on neither any serious understanding of the history of real capitalism nor any “scientific” theory capable of demonstrating that management by the market produces … any such equilibrium..
Samir Amin, Managing the Euro, Mission Impossible
In the West, we practice currency imperialism, that is to say we dominate organisations such as the IMF and World Bank and a whole heap of other acronyms, who force countries to devalue their currencies and reduce consumption to increase sales of their valuable natural resources to the developed world, this lowers the value of their labor and commodities, and raises the relative value of manufactured products from the developed world. We do this both because we can, the West controls the printing of all major world trading currencies, and because we “must”, the West is unsustainable without the enormous subsidies that the Global South provide us with.
Bitcoin allows countries to escape this currency imperialism, by bypassing Western currencies, the question is what Western governments may do in response when they see their financial and political power disappearing.
One potential response is “Dark Nationalism“, as the flow of resources from the Global South dries up, the sense of Western Entitlement brought about by centuries of colonialism may well explode explode into vengeful rage, it was after all the economic collapse with led to the rise of Hitler, and a rising global south taking advantage of lean efficient infrastructure over the bloated, exploitative system of the West may be ripe pickings for dangerous politicians to rouse a scared populace, who now see how much their comfort was based on the exploitation of others, and are afraid to lose it.
The other is “Internationalist Enlightenment“, to recognise that cyrpto is coming (perhaps not immediately, but soon enough) and to start to make plans for its integration into our society. Practical elements like supporting and funding research into crypto technologies, educating people about how to use bitcoin safely and securely, tax reliefs on mining rigs and the encouragement of international trade in bitcoin are just some of the ways that an existing government can support the transition to more equitable trading medium, which cannot be manipulated by either nation states nor the corporations pulling their strings.
I want Scottish Independence, not because I am a nationalist – I’m not and I never have been. I want Scottish independence because I’m an internationalist, and I want to destroy the UK State and build something less exploitative in its place. Similarly I’m not excited about the rise of bitcoin for the rapid libertarian ideals of “free money” that seems to dominate much of the discussion around it, I’m excited about it, because it offers an alternative to the current corrupt, exploitative and imperialist system under which we live. Neither Independence not Bitcoin can establish a global utopia, but both destroy key barriers to global justice and world peace: the UK state and the global banking system.