Bitcoin is the new meme machine – Bitcoin Magazine
This is an opinion editorial by Logan Chipkin, a freelance writer interested in Bitcoin, economics, physics, philosophy and history.
Money doesn’t make the world go round. Ideas do.
In “The Fiat Standard,” economist Dr. Saifedean Ammous explains how our devolution from a hard money standard to a fiat standard has caused distortions in virtually every basic sector of the modern world: education, nutrition, energy, science and medicine, for to name a few.
As Ammous writes:
“…[Fiat] breaks the connection between work and reward. Instead of the market offering individuals rewards for their work as valued by the others they serve, fiat money makes monetary rewards highly dependent on political obedience and connections. Instead of learning to be productive, fiat teaches you to play politics. Instead of work being rewarded based on productivity, it is rewarded based on artificial status games.”
But fiat is more detrimental to progress than Ammous’ devastating explanation suggests. What people choose to do, what problems they choose to tackle and what solutions they aim to create are based on their ideas.
Some ideas evolve by surviving criticism: in science, these are theories that pass rigorous testing and debate. In the market, these are the ideas behind products that bring profit. In culture, they are patterns of behavior that survive moral, aesthetic and political criticism. After physicist David Deutsch, we can call ideas that spread by surviving criticism rational memes.
For civilization to progress, we usually need to create as much wealth as possible, as quickly as possible. To solve world hunger, we need the wealth required to build mass production systems for food. To become an interplanetary species, we need the wealth required to develop cost-effective transportation systems as well as the technology required to survive and thrive on other planets. And so on.
The more our culture is dominated by rational memes, the better able we are to create wealth. The more we are able to discard ideas that fail to survive criticism, the more our actions will be based on ideas that are consistent with reality.
Some ideas unfortunately spread past suppress criticism, rather than surviving it. And this is where a fiat standard rears its ugly head.
Consider how diversity, equity and inclusion (DEI) mandates are spreading. DEI advocates intimidate dissenters into silence, all too ready to demonize their opponents as “racist” and “sexist.” Across universities, corporate America, and the media, fear of ostracism and vilification has a chilling effect on those who disagree with DEI prescriptions. THEY therefore rarely have to answer for themselves. Rather, it rages forward, neutralizing all possible criticism in its path.
Market feedback is also a form of criticism. On a hard money standard, DEI-run companies and universities would compete with meritocracy-run alternatives. Market competition has a way of ruthlessly weeding out waste and failure. Spending capital on quasi-religious sessions and hiring practices that satisfy diversity quotas are costly mistakes. On a hard monetary standard, such companies would quickly lose out to companies whose sole agenda was to produce what consumers most want at the lowest possible price.
But we don’t live in a world of hard money. The fiat standard allows DEI, a collection of ideas that don’t help companies to offer better products, to thrive. In a fiat currency regime, governments and their central banks can create money out of thin air to subsidize corporations, universities, and non-profit organizations with DEI mandates. Thus the inherent advantage of institutions that are not ideological capture is lost. Neither open discussion nor market feedback are as effective in extinguishing DEI as they would be under a hard money regime.
Environmental, social and governance (ESG) mandates follow a similar logic to their DEI counterpart. Organizations complying with ESG mandates must satisfy a list of criteria that are often at odds with their ability to satisfy the market. They spend precious time and resources ensuring that they are sufficiently environmentally friendly and boast a workforce that is diverse in a sense that is meaningless. Deviants from the ESG movement are not engaged in, but slandered as “climate deniers” or “selfish”.
Governments and international organizations such as the International Monetary Fund will often only finance projects that are consistent with ESG mandates. Thus, companies will comply with these costly restrictions to access the fiat faucet.
Without this criminally simple fiat money, ESG-compliant companies would be forced to compete with companies whose sole drive is to best satisfy the market. Consumer choice would serve as a critique of ESG, which would in turn wither away in the presence of leaner, more efficient competitors.
DEI and ESG are examples of what Deutsch calls anti-rational memes: ideas spread by inhibiting criticism. Unlike rational memes, anti-rational memes create it more difficult to create wealth, since they prevent the emergence and propagation of new ideas.
It is important for Bitcoiners (and hard money advocates more generally) to admit that there are no guarantees. Anti-rational memes like DEI and ESG can survive as we evolve towards a Bitcoin standard. But without access to fiat money, they will be far less able to suppress criticism (either rhetorical arguments or market feedback). Generally:
A fiat standard lowers the cost of spreading anti-rational memes and lowers the return on spreading rational memesand;
A hard money standard (Bitcoin) increases the cost of spreading anti-rational memes and increases the return of spreading rational memes.
Ammous is right that a fiat regime drives institutions to appease politicians rather than solve the problems they were originally designed to solve. But, as I suggested earlier, the harmful effects of a fiat regime run deeper than that: they give anti-rational memes a shot in the arm, of which Ammous’ examples are only a subset.
To be sure, there are other error-correcting mechanisms in society, which is why we’ve been able to make progress despite the tentacles of fiat creeping into more and more corners of civilization. Moreover, the costs of spreading anti-rational memes have not fallen zero ever since fiat replaced gold. Rather, costs have fallen relative to what it would be under a hard monetary standard. The opposite is true for rational memes: their returns have not fallen to zero, but rather are lower than they would be under an honest money regime.
Bitcoiners are right when they say that Bitcoin will lower our collective time preference, create a more honest culture and strengthen property rights. But a more fundamental consequence of hyperbitcoinization is the subsequent change in the processes through which ideas spread. Fiat makes the suppression of criticism cheap, and therefore hinders progress. A hard money standard aligns the best ideas in society with the greatest opportunities for profit (either monetary or psychic).
A Bitcoin world is one where the arena of ideas is again egalitarian, where an idea cannot survive by relying on subsidies and scare tactics, but only on merit. Anti-rational memes will suffer, rational memes will thrive, and we will experience the most open society that history has ever seen.
This is a guest post by Logan Chipkin. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
