Tag Archives: Foucault

The Legal Politics of Money

Digital currencies are a new form of economic organization that exist entirely outside of the reach of the State. This has far-reaching ramification not just for money and capitalism, but for the ideological super-structure of the world today. Forcing concepts like exchange and economics into a theorem where tangibility is no longer needed causes for an unraveling of the state power structure itself. Institutionalized violence is no longer prerequisite for the monetary and legal system to function.

The ideological structure of capitalism has embedded itself into the state via the legal system. The State then acts as a thug on behalf of capitalist by enforcing laws through means of legalized repression and violence. It is from this proof-of-violence concept that states are able to force people to accept the legitimacy of contracts, the law, and the value of fiat money at the point of a knife. If governments could not the violence of their legal systems to enforce the acceptance of fiat money, or the repayment of debt; the entire international monetary system would collapse overnight.

Sovereignty of Value and Legal Ideology

All contemporary forms of fiat money rely on the physical and legal enforcement of laws, and the monopolization of the payment systems in order to create exchange value. All state money systems operate on maxims of restrictions based in law, enforced with mystical propaganda in one hand, and a clenched fist of enforcement in the other. The propaganda that is used to convince people of the need for the State to control money is far more important than the laws that create that money, or the guns and violence that are used to enforce their value. It is only through the repressive apparatuses of the State, and the cooperation of their capitalist allies that allows for this system of fiat money to continue to hold value.

Legal restrictions create the nominal values of the currency bills from all states. It is the same for the EU’s Euro, the Chinese Yuan, or Malaysian Ringgit–the currencies have nominal, redeemable value for goods and services in those Nation-States (or unions), and not outside them.

The value of these national currencies are created explicitly from the monopolization of the payment systems, and the monopolization of the issuance of legal tender. The monopoly of money itself via legal tender, and the monopolization of the payment system by the banks working with the state, is how national currencies forces themselves into a means of value, unlike commodity-monies like gold, sliver, or bitcoin.

The value of fiat money is unnatural and is only create through legal force. The power to create fiat money exist solely in the legal realm. However, what forces them to have value is the violence in which the laws based around those nominal values function. There is no such law to make commodities into money; they are simply valued.  Mises surmises this in the appendix of “The Theory of Money and Credit,”

Ludwig von Mises

Ludwig von Mises

“Another acatallactic doctrine seeks to explain the value of money by the command of the state. According to this theory the value of money rests on the authority of the highest civil power, not on the estimation of commerce. The law commands, the subject obeys. This doctrine can in no way be fitted into a theory of exchange; for apparently it would have a meaning only if the state fixed the actual level of the money prices of all economic goods and services as by means of general price regulation. Since this cannot be asserted to be the case, the state theory of money is obliged to limit itself to the thesis that the state command establishes only the Geltung or validity of the money in nominal units, but not the validity of these nominal units in commerce. But this limitation amounts to abandonment of the attempt to explain the problem of money. By stressing the contrast between valor impositus and bonitas intrinseca, the canonists did indeed make it possible for scholastic sophistry to reconcile the Roman-canonist legal system with the facts of economic life. But at the same time they revealed the intrinsic futility of the doctrine of valor impositus; they demonstrated the impossibility of explaining the processes of the market with its assistance.”

This difference between valor impositus and bonitas intrinseca: the nominal value of units imposed by the state–such as the dollar or shekel–and that which holds real intrinsic value; such as the metals, minerals, or other storage of value.

The best example of how these two values act against one another would be a gold coin that has a lower face value than what the coin is worth on the open market–it is not the stamping of the metal that creates value, but the amount of gold that it is comprised of.

Mises spoke further of the historical difference between the nominal value of coins, and their weight as metal:

“Nevertheless, in defiance of all official regulations and prohibitions and fixing of prices and threats of punishment, commercial practice has always insisted that what has to be considered in valuing coins is not their face value but their value as metal. The value of a coin has always been determined, not by the image and superscription it bears nor by the proclamation of the mint and market authorities, but by its metal content. Not every kind of money has been accepted at sight, but only those kinds with a good reputation for weight and fineness. In loan contracts, repayment in specific kinds of money has been stipulated for, and in the case of a change in the coinage, fulfillment in terms of metal required. In spite of all fiscal influences, the opinion gradually gained general acceptance, even among the jurists, that it was the metal value—the bonitas intrinseca as they called it—that was to be considered when repaying money debts.” Part 1, Chapter 3

Today because of the structure of late capitalism, where the state monopolizes the currency, and the banks monopolize the exchange of currency, there is no way to demand repayment in anything other than more fiat. It is from the insidious brilliance of forcing all exchanges into legal structures with no alternative payment forms, that fiat money both creates its own value, and also becomes a legal power.

We can see that money today is not valued because of its bonitas intrinseca, but only its valor impositus. This means that the only way that the state can make its money hold value is through explicit legal means, which are reliant on repressive legal enforcement, and nothing else.  

Physical World Against Digital Laws

There is a glaring issue with this mode of money creation when we start to consider for a moment that the world that we live no longer is orchestrated by legal enforcement of the state, but digital communications.

There is no physical footing in this world, no place for the apparatus to establish itself.The repressive violence states use to enforce their laws simply cannot exist here.

If we return to Foucault in Truth and Power he provides us with more hints about the functions of the state and why ‘cutting off the king’s head’ has been impossible until recently:

Moderator: The King’s head still hasn’t been cut off, yet already people are trying to replace it by discipline, that vast system instituted’-in the seventeenth century comprising the functions of surveillance, normalization and control and, a little later, those of punishment, correction, education and so on. One wonders where this system comes from, why it emerges and what its use is. And today there is rather a tendency to attribute a subject to it, a great, molar, totalitarian subject, namely the modern State, constituted in the sixteenth and seventeenth centuries and bringing with it (according to the classical theories) the professional army, the police and the administrative bureaucracy.

Foucault: To pose the problem in terms of the State means to continue posing it in terms of sovereign and sovereignty, that is to say in terms of law. If one describes all these phenomena of power as dependent on the State apparatus, this means grasping them as essentially repressive: the Army as a power of death, police and justice as punitive instances, etc. I don’t want to say that the State isn’t important; what I want to say is that relations of power, and hence the analysis that must be made of them, necessarily extend beyond the limits of the State. In two senses: first of all because the State, for all the omnipotence of its apparatuses, is far from being able to occupy the whole field of actual power relations, and further because the State can only operate on the basis of other, already existing power relations. The State is superstructural in relation to a whole series of power networks, that invest the body, sexuality, the family, kinship, knowledge, technology and so forth. True, these networks stand in a conditioning-conditioned relationship to a kind of ‘meta-power’ which is structured essentially round a certain number of great prohibition functions; but this meta-power with its prohibitions can only take hold and secure its footing where it is rooted in a whole series of multiple and indefinite power relations that supply the necessary basis for the great negative forms of power. That, is just what I was trying to make apparent in my book [“The Order of Things” which was originally titled “Words and Things.”].

To cut off the king’s head we must venture into a realm where a footing for his power cannot be found. A realm where the physical violence, repression, and thus the capacity to physical enforce nationalistic laws cannot exist. The meta-power of the state and their various laws end where they do–in physical territory, in a physical world. There is no need to cut the heads off of false prophets whom we are immune to.

Digital sovereignty departs from the theology of law, and builds a new economic system that operates from a critical bias of math, instead of physical enforcement. These systems are based upon non-physical knowledge alone (knowledge of the private key), which means these systems are built solely around their mathematical soundness. The code upon which these currencies are written is their own sovereign valor impositus. The computer code itself is the legal-mathematical structure that enforces the rules of bitcoin, and other digital currencies–no State or third-party is needed.

Digital Sovereign and The Banishment of Physical Force

Digital currencies are the kernel of power that a new economic and legal superstructure will be built from. Power is no longer something that comes from the sword, but from the pen.

Violence cannot be an explicit tool of enforcement or appropriation in a nearly-anonymous, digital system like bitcoin or other digital currencies. Economic independence outside of the control of the state or the banks is now a real possibility. This severely underminds the power of the State, the banks, and state-capitalism in total. Digital currencies allow for a new frontier of economic freedom and independence, that is not achievable with the current monetary and legal systems. With bitcoin, people are free to choose who they conduct transactions with, without the permission of the state, banks, or the violence they use to enforce their laws.

When we start to critically assess the current money systems of the world, along with the ideological and mythical structures of sovereignty, law, and the state; we find that they quickly break down under scrutiny. We come to understand that the dominion of the ideologies over our lives is not based upon some holy, progressive knowledge that protects us and gives us salvation; rather, it is barbarism wrapped in blanket, upon blanket of lies, obfuscations, and deceptions.

We see that it is not magnanimity or justice that governs the actors of the State; but selfishness, greed, corruption, and cowardice. We come to see the world as Angelus Novus did, and the horrors of what is stacked in front of us and growing with each passing day. To make whole that which has been smashed is possible, but we must wake the dead in our quest for redemption. The gate is strait, and it is our duty to show others the liberation that can come with each passing second.

In the declaration of independence of cyberspace we declared our virtual selves immune to state sovereignty, even as we continue to consent to the subjugation of our bodies. In the mean while we have spread to every corner of the global to ensure that our thoughts cannot be arrested, and so that the crimes of the state and capitalism will be seen by all, for all of history to come.

We now have the means to reappropriate our sovereignty, our economic independence, and ultimately our political organizations and the State itself. This can and will be done to end the era of state-capitalism, and usher in a new era of global digital organization. We are creating a civilization of the Mind in Cyberspace, and using digital currencies to economically unite us is the first step towards this new world.

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Next: Bitcoin as a Commodity Money

Sovereign Violence and Legitimacy of Law

“Yes, [we will not find a solution to political problems in cryptography,] but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.”

–Satoshi Nakamoto

This is one of the few political comments that we are offered from Satoshi. This is a reference to Micheal Foucault’s interview on power and sovereignty found in Truth and Power:

The monarchy presented itself as a referee, a power capable of putting an end to war, violence and pillage and saying no to these struggles and private feuds. It made itself acceptable by allocating itself a juridical and negative function, albeit one whose limits it naturally began at once to overstep. Sovereign, law and prohibition formed a system of representation of power which was extended during the subsequent era by the theories of right: political theory has never ceased to be obsessed with the person of the sovereign. Such theories still continue today to busy themselves with the problem of sovereignty. What we need, however, is a political philosophy that isn’t erected around the problem of sovereignty, nor therefore around the problems of law and prohibition. We need to cut off the King’s head: in political theory that has still to be done.

Sovereignty, Legitimacy and How Violence Connects Them

The fundamental issue at hand is one of sovereignty–who has the supreme right of rule? Today, governments around the globe have anointed themselves with the supreme right to rule over almost every aspect of life. This is not because of their majesty or our consanguinity, but simply from their monopolization on violence, and the legal framework they use to justify it. There has been a long, and precipitous train of abuses that has created the world as it is today, and considerable injustice that has forced us to ask such questions.

We first must questions where this Right comes from. This Right is not only a historical residue impressed upon us from the evolution of society from feudalism, but also an ideological perspective that is reinforced incessantly throughout our lives. When we reduce this power down to how it operates on an individual and organizational levels, we can see beyond the garb of officialdom, legitimacy, and righteousness that it purports to be, for the crude, barbaric machine that it really is: violence organized under the banner of the state.

This action was legal for the police to carry out–no violence came to the officer for doing this.

Violence is the basis of power that governments use to project their legitimacy into the world. This is done through explicit means, such as police, military, prisons, laws, and regulations; but also through discreet means such as education, religion, bureaucracy, and especially elections. The discreet channels of what is seen as ‘correct’ or ‘legitimate’ is the most powerful form of controlling the conversations of ‘what is violence’ and who is entitled to it. This creates the context for which violence can be used, and thus justified. The utilization of violence to enforce the status quo (i.e. the law) is justified by the ideological discipline that demands authority to be respected, and obeyed for no reason other than that ‘authority should be respected, and obeyed’.

The fact that we are allowed to vote for one of two representatives that invariably represent the same corporate interest of the status quo, is part of the greater dialog that has us believe the legitimacy of such violence. We are told that we have ‘democratic power’ and that if we can just elect the right person (despite having no sort of electoral process for the police or army), that we will be able to solve our political woes. The truth of the matter is distinctly different.

There are people in this world that can initiate violence against others within explicit legal means with no form of recourse. We are subjects underneath the law and subject to it, and we have masters that are outside and above the law; which ironically calls itself the ‘law enforcement’.

It is the threat of this systematized violence in all capacities (legal, economic, personal) that governments base their power from. It is under this banner of legitimacy via legal violence that all governments have operated through all of history. That might shall make right, and as the official judicial decision, that is final. This is the legal bases of the laws of the state, and this is why they can command your death–because they have the power to do so.

Sadly, there simply has never been any other way to politically organize with the exception of sporadic, unsustainable revolutions that fold back into the same power structure that rely on violence. As revolutionary chaos grows, it harnesses the apparatuses of power for itself, and becomes the Specter of the State, legitimizing its own violence and corruption.

This is the theory of the sovereign–how political institutions create power over one another–it is done from the point of a sword, again, and again; through all of history.

This is the revolutionary struggle for sovereignty. As Foucault pointed out, so long as we are still grappling with this central issue in political theology of enshrining the power of life and violence one over another into a legal system, be it in the form of a senator, minister, police officer, judge or king; there will still be the problem of the great negative forms of power. Masters of all institutions seek to be good masters; but first and foremost, they seek to be masters. There is an alliance among the aristocrats that they all believe there is good reason for them to be masters over the world, and to hold power over all.

Sovereignty as we know it can only exist at the bequeathment from something or someone; or violently take from those same powers through revolution. Once entered into the subject of sovereignty, there is an immediate glaring flaw that a political body must offer sovereignty, or it must be taken by force. This force is what we seek to avoid in the first place, and what has locked humanity into a permanent struggle for power against and over itself–homos lupus homnium. For all of human history, this concept has battled between its two poles: one of accepting the sovereignty offered from another, or to fight that offering to take it for oneself. Violence and physical force are the tools used for the sovereign struggle to establish who is master, and who is slave.

Political History of Sovereignty

The most recent political revolutions of the late 16th century shifted the power by delegitimizing the divine right of kings, and enumerating that power into republican councils. Although there was resemblances of change within the structure of power, what really occurred was a shattering; a mutation of the system and a fracturing of power among many actors.  Sovereignty was stripped from kings, and that power was divided among the various ideological structures and repressive state apparatuses that make the modern state.

Screen Shot 2015-05-30 at 9.08.16 PMPower is no longer centralized within one body (The King), but is fractured into the government bureaucracy itself as a corporate body. Power, legality, legitimacy, sovereignty, the party as aristocracy, and state-sanctioned violence as a means to execute the law, are all part of this same political-government structure. However, these forces are no longer vested in the one body of the monarchy, but a new body of people outside the law itself. The decree of Divine Right that was once used to inflict the rule by Kings, is today being used to inflict the Rule of the State, but this time under the title of civil liberties.

Invariable, man finds himself under the bludgeon, chain, and whip, happy to oblige, for he no longer has one master, but many! And this time they are for the good of civil liberties! He fails to recognize that the defenders of civil liberties seek to protect their own rights first and foremost at the expense of his flesh.

Violence is the means that compliance with unjust laws are explicitly extorted upon the populous.  It is not the justice or majesty of contemporary legal systems that enforces the law; but ruthless, uncaring, violence. It is within the hidden manipulations of what is normal and appropriate that we also find apologists who demand to be ruled as a subjects, not people.

If people are to liberate themselves from such an insidious and total system of rule, it must be upon their own merits to help themselves. People must arm themselves with knowledge, and a willingness to think critically to create a new, and better world. Using the internet, bitcoin, and strong crypto we can create a better world, and establish new laws from within the internet to help save us from global environmental catastrophe that is coming.

Cryptography and Self-Legitimacy

Digital currencies retreats from the theology of sovereignty via violence through creating a new mode of sovereignty. Intangible and non-physical, this new form of power is created through a destituent form of power, one that withdraws and refuses to cooperate with any form of violence.

Legitimacy within cryptography is created from knowable and provably unbreakable secrets that can only exist the digital realm or mathematics. It cares not for what occurs in the physical world, but only that of which it can experience in the digital world: provable mathematics and the sacrament of the private key.

Legitimacy no longer comes from an authority within the current political or economic system, but creates its legitimacy through explicitly existing outside of any states control and the violence they enshrine. 

The concept of sovereign is flipped on its head. No longer does legitimacy need to come from state institutions that are empowered via violence, but through provable mathematical systems that are not part of the violence power structure. This creates a new economy system with No God, and No Masters.

No longer do we need to pay for the privilege of our freedom to exchange with one another, or be extorted by the Gods of Government, or their Masters of Capitalism.  Bitcoin re-invents money into what it once was, and was always suppose to be–a network of legal and economic exchange for all people everywhere.

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Next: The Legal Politics of Money