GIOVANNI BIRINDELLI, 7.9.2019
(Traduzione italiana qui: link)
In a recent article on The Wall Street Journal, Gerard Baker gives an effective (though a bit banal) picture of the decline of Italian society and economy, which is seen as the tip of the sword of the decline of Western civilization. This decline is depicted in stark contrast with the beauty that can still be found in that country (and specifically in Tuscany, where I live and where the author went on holiday and was inspired to write his article).
If we see the decline (Italian and, more in general, of the Western civilization) as a mountain of rubbish that the statist system (and especially the democratic one) necessarily makes ever bigger in the long run, then we can see bitcoin, at least in part, as a technology that allows to produce (totally clean) energy from this rubbish. In other words, the same decline (the same growing mountain of rubbish) can have different implications (and therefore be a resource or its opposite) according to whether such technology has been invented or not. Baker’s article, however, while discussing decline does not take into consideration this aspect of the problem. And in my opinion it doesn’t do it because it does not take into consideration the scientifically relevant causes of the decline, namely:
- the distortion of the abstract idea of law: from non-arbitrary limit to anyone’s coercive power, to instrument of arbitrary coercive power by some over others;
- the distortion of the concept of money: from an asset which has been spontaneously selected by the free market process because (among other things) it is scarce, to pieces of paper (or their digital equivalents) which have been coercively imposed by a particular criminal organization because they are infinitely abundant;
- and other distorsions (regarding the concept of equality before the law; the concept of economic value; etc.).
While not discussing the scientifically relevant causes of decline, Baker seems to see political instability as one of its causes.
Now, in the case of a business (where there is a unitary hierarchy of ends), a managerial instability must necessarily lead to the decline of this business. However, in the case of a society as a whole (where, unless it is coercively imposed, given the subjectivity of value and the differences among individuals, there cannot be a unitary hierarchy of ends), the situation is the opposite. In this case, a managerial (i.e. political) instability does not produce decline (even though it is usually not enough to stop it). In fact, the above-mentioned scientific causes of decline materialize precisely in the management of society, that is in the coercive obstruction of the spontaneous market process. In other words, these scientific causes materialize in the impediment of the use of the peripheral knowledge which is dispersed among different individuals and which cannot be available to any “directing mind” or central authority. However, without this particular kind of individual, dispersed knowledge, there cannot be prices that have a relation to economic value (starting from the price of time preferences: the free-market interest rate). Only these prices, because they have a relation to economic value in any time and place, carry the information that is necessary to use in a constructive economic process (structural growth). Prices which are the result of politics rather than free market (i.e. which are arbitrarily distorted) cannot carry any information regarding value and therefore can produce only a destructive economic process (decline).
In conclusion, because the scientific causes of the decline materialize in the management of society (i.e. in politics), political instability cannot produce the decline but, even though it cannot stop it, it is an obstacle to it.
In a society treated as if it was a big business, a managerial (i.e. political) stability would foster an extremely efficient “button room”. The more efficient this room, the higher the risk that a new Hitler obtaining power (or a new socialist majority: whether right-wing or left-wing is utterly irrelevant) can do what he wishes with the lowest effort and the maximum control.