'Karl Marx would see bitcoin as a revolutionary tool to upend capitalism'

Watch: Karl Marx, bitcoin and capitalism: the Crypto Mile Episode 7

What would Karl Marx think about crypto?

Yahoo Finance's The Crypto Mile speaks to leading Marxist academic, Professor Richard D Wolff, about the blockchain's potential to democratise the workplace and lead to less work and more leisure unless it is "subordinated by the present capitalist economic structure".

In episode seven of The Crypto Mile Professor Wolff discussed how Marx would see bitcoin (USD-BTC) and blockchain technology as a revolutionary tool to upend capitalism.

"When it comes to crypto, Marx would say it is a distraction, but it also carries the seed of something beyond the mind-numbing condition that capitalism has brought us," Professor Wolff told Yahoo Finance.

"Bitcoin could be part of a revolutionary agenda.

"But it would have to be struggled for, because there are powerful forces that want it to be nothing of the sort, and would want it to be another servant of the same system."

Professor Wolff described the latest rush to own crypto-assets as "correlating with record sales of lottery tickets".

Read more: Crypto: What is Ethereum's Soulbound token?

He said the economic atmosphere in the US leaves the impression on the American people that the US economy is out of control.

"The US economy is lurching around from one catastrophe to another and sending a very powerful message to people that if there is anything you can cling to, do it."

The economist described the volatility of the 'crypto-casino' as becoming more alluring to US citizens.

"A very large portion of the interest in crypto has been driven by the notion that you can quickly achieve life-changing wealth," he said.

But he described another aspect of blockchain technology, one that has the potential to see a great breakthrough in how society works.

"The blockchain could provide a breakthrough that could achieve a real radical reorganisation of how we spend our time, with much less time spent doing work and more on leisure."

However, he cautioned that this is something "that people have been promised many times before."

The Karl Marx sculpture in Chemnitz, Germany
The Karl Marx sculpture in Chemnitz, Germany. Photo: Hannibal Hanschke/Reuters (Hannibal Hanschke / Reuters)

He explained that how cryptocurrency will evolve, and the role it will play in society will be mostly shaped by the dynamics of capitalism, its critique and opposition.

"The advent of blockchain technology and Decentralisatised Autonomous Organisation (DAOs) could be a way to achieve a genuine democratic control over the means of production."

However, Professor Wolff said that any attempts to change the status quo will face a real challenge from those that govern the economic system, and they will decide in what form cryptocurrency is brought into the production process along with its decentralised allocations.

"My guess is that blockchain technology will be subordinated and the parts that fit that capitalist structure will be kept, but the parts that challenge, such as those in the interests in leisure and less work, will be discarded."

He gave some context to the present working conditions, particularly in the US.

"We do more hours of paid work per person in this country today than in any other time of our history.

"I am convinced that our descendants will be looking back in horror at years and years of technical possibility that we never took advantage of, but instead we upheld the profit system of capitalism."

He observed that the crypto industry is not getting the attention it deserves from the academic community.

"The vast majority of economists in the United States pay little or no attention to the surrounding issues in the cryptocurrency sector, and tend to follow government officials and particularly the big banks in dismissing crypto, down valuing it, and marginalising it."

He added: "There are very big and basic interests that are strong in the US population that crypto speaks to, but they are not given the kind of attention from academia that I believe it deserves."

Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst
Richard D Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst (Democracy at Work)

The ideology of crypto

Cryptocurrency has its roots in libertarian free-market ideals, with its genesis being the distrust of government and central banking after the bailout of institutional finance after the 2008 sub-prime crash.

Satoshi Nakamoto, the mysterious founder of bitcoin, even encoded into the first block 'the Genesis Block' of the bitcoin blockchain a message articulating the reasons behind its invention.

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The Genesis Block's encoded message read: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."

The cryptocurrency ecosystem, that began with Satoshi Nakamoto's invention of bitcoin, has witnessed a Cambrian explosion of variations, some being idealistic in origin, most being unapologetically commercial enterprises.

The blockchain promises to abolish centralised bureaucracies that tend towards inefficiency and corruption, which is what Marxist regimes specialise in.

However, in the grim thralls of the Victorian era industrial revolution, Marx considered a future where new technologies would arise that could imitate every type of human work, whether that be mental or physical.

An idealistic future where government would fade away and unfettered, fully automated production processes would satisfy the needs of all.

This chimes with the grand ideals of crypto communities, from the decentralisation developments of the Ethereum Foundation (ETH-USD) to the privacy and individuality of bitcoin maximalists.

Marx's posthumously published 'Fragment on Machines' was written in 19th Century Britain, amid the large-scale replacement of workers by industrial machines. The study has parallels with the advent of blockchain technology, which promises to automate away centralised administrators, and the Internet of Things which has the potential to automate away workers who produce goods and services.

As Ethereum co-founder Vitalik Buterin's said: "Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the centre. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly."

From left: Kimbal Musk, Nadezhda Tolokonnikova, and Alex Zhang speak about 'Move Over NFTs, Here Come the DAOs' during the 2022 SXSW Conference and Festivals at Austin Convention Center on 14 March 14, in Texas. Photo: Chris Saucedo/Getty for SXSW
From left: Kimbal Musk, Nadezhda Tolokonnikova, and Alex Zhang speak about 'Move Over NFTs, Here Come the DAOs' during the 2022 SXSW Conference and Festivals at Austin Convention Center on 14 March 14, in Texas. Photo: Chris Saucedo/Getty for SXSW (Chris Saucedo via Getty Images)

DAOs as a way to organise workplace

One of the ways the blockchain could reorganise the workplace is through Decentralised Autonomous Organisations, or DAOs.

Yahoo Finance asked Professor Wolff his view on DAOs, and he said he was "grateful that there are people in the crypto community that are thinking about ways to free the workplace up and achieve a democratic control, I am appreciative of these DAOs".

But he had a word of caution for any that were becoming too optimistic, stating that "DAOs would face pressure to subordinate to the existing employee/employer capitalist structure".

"My fear is that the parts that challenge the existing structure, that strive for more democracy and more leisure time, will have to face the adversary of the capitalist structure."

Last year crypto influencer Li Jin asked the crypto-community how society can harness the power of collective action to ensure labour’s voice is represented.

The VC co-founder of Variant Fund, said that this would need to be achieved in a way that avoids the pitfalls of the past, where "centralised structures can lead to a perversion of values".

She tweeted that DAOs, decentralised autonomous organisations, "represent the next step forward in the labour movement".

A DAO is marked by its ability to operate with high levels of efficiency, by utilising the automation of administration provided by the blockchain.

They also function without the need for a centralised location, they are native to the online world, and many participants contribute anonymously.

DAOs may have the potential to become crypto's answer to the traditional corporation or to be a worker's cooperative, it all depends on how their governance tokens (like a traditional share) are dispensed.

They could create the foundations of non-hierarchical work-places, where an enterprise develops based upon collective decision-making, this is achieved via non-transferable governance tokens.

Read more: The flippening? Ether overtakes bitcoin in options market for first-time

But, if governance tokens, which act like shares, can be transferable then aggressive takeovers can happen just as easily as in the traditional corporate world, with one individual netting over 51% of the tokens, and becoming a defacto CEO.

In her Twitter (TWTR) thread Jin added: "New developments in decentralised coordination hold promise for a renewed pro-labour movement.

"DAOs—internet communities with shared ownership—can function akin to unions, representing the collective interest of their members to drive beneficial policies and mechanisms."

Watch: What are NFTs?

Late-stage capitalism 'a crisis of work-related loneliness'

Professor Wolff said that the freeing up of labour is not happening at the present time. Focussing on the situation in America, he said "we have a crisis in the US of work-related loneliness".

"People have no sense of connection with anyone else, the overwhelming majority of the work we do is not necessary and has no meaning.

"But the notion that we can break from that is very hard to achieve.

"The employers make the decisions and the mass of people have been trained to think of that as somehow normal, natural and necessary."

However, if DAOs create more democratic workplaces, where everyone involved is economically incentivised and given equal decision-making powers, will we see more productive, creative and happier ways to work, or will they be smothered by 'death by committee'?

Also, if the advances in machine learning create a globally connected Internet of Things will the automation of production processes give more leisure time to workers, or lead to mass unemployment?

According to Professor Wolff, the degree to which blockchain technology and IOT will be utilised for the good of all will be dependent upon the outcome of the struggle between the owners of capital and the majority wage labourers who drive our taxis, produce our semi-conductors, mine the coltan for our mobile phones, and write our news stories.

Watch: The Crypto Mile episode 6: Ethereum insider reveals consequences of 'the merge'