In 2010, when Europe was going through austerity and lost the social contract it had upheld ever since the end of the Second World War, when UK university tuition fees were increased and during the hype of Occupy Wall Street, Slavoj Zizek made his most important discourse ever. He extolled the Leninist virtues of taking power amongst a large crowd of young, angry, left-wing kids who saw ahead of them a bleak future of economic recession with no political leadership. The Socialist Workers Party which had organised the festival, lost its credibility with a rape scandal and most of the young people who attended that 2010 debate, eventually, joined Ken Loach’s political movement which debated the way forward for the left. Then, they ended up joining the Labour Party, helped Jeremy Corbyn get elected and became Labour front-liners. It was obvious by then to the young left-wing idealists that the only possible way to change the world was to take power and power was transferred through the vote.
You had to be fucking crazy to buy Bitcoin at 100 Dollars. I had friends back then who were mining it in their bedrooms. It sounded like an experimental game by a bunch of highly-intelligent computer nerds who were building their own financial eco-system. Give me a break. I had too much interesting stuff to read back then to get remotely interested in an article describing a peer-to-peer financial eco-system which was being used to buy illegal stuff on the internet. Back then this kind of stuff was all over the place and we used peer-to-peer software to share our files and music with each other. There were so many experiments, so many new things coming up that Bitcoin was just one of the many. But then many things started happening. Young people were suddenly finding it difficult to buy homes. The cost of education was rising fast and many traditional industries were shedding jobs. Many of the new jobs that were being created seemed to be low-paid – the Gig Economy – they called it. Today, I read with astonishment stories of nurses and academics who have to do sex-work to get-by.
For me it was always obvious that traditional Keynesian economics did no longer make sense in today’s conditions, so I never really understood why economists kept harping about deflation. Does the correlation between employment figures and the rise of prices actually mean anything at all since the 1970s petro-crisis? Why do we keep deluding ourselves we are living in a deflationary world when the quality of life and purchasing power of young people is drastically less than their parents? Does it actually make sense to keep discussing traditional economic principles on inflation when your purchasing power is eaten away by housing and you can’t save for your retirement? I’m sorry, but the argument on the transfer of wealth from the boomers to the millennials does not provide any consolation. Boomers didn’t need their parents wealth to achieve a financially prosperous life.
Apparently, the only hope of the bureaucrats of Europe is China. The Chinese are supposedly going to buy so much stuff from us that we are going to pay off our debts. Economic recovery will surely ensue. Europe’s next UNESCO cultural heritage nominee is going to be a Louis Vuitton hand-bag (maybe they already did it, who knows?). But then, Bitcoin bottomed at around 3000 Dollars and then started climbing up. So, like the sheep, that I am, I read the white-paper only because many other people were taking it very seriously, and after reading the white-paper, I realised that Satoshi really had something going on there.
The Return of the Jedi
Trump in power. Bernie out of the game. Corbyn humiliated. Merkel as the aging complacent conservative who does deals with dictators while the European house is in shambles. Macron as the young-shining light of Europe? Maybe, but really nothing is changing. Except that our energy is getting slightly cleaner and a bit better. Ok. But other than that? How has your life changed for the better? What did the European leaders do for us? Much of this rhetoric can be applied elsewhere, especially the US. People would like to live better lives and see a better world for their children and no one is giving it to them. So, suddenly, people are finding ways to change the world by themselves outside the traditional spheres of power and Bitcoin is one of them. No, it is not going to solve the world’s problems, but it is and it has, transferred wealth from the rich to the poor. If you are not paying attention, then I’m sorry, but I am not going to bother to source the references and do the research for you. It’s too late and there has been too many drinks passing around to do that. Hedge funds are a dying breed and have been closing down while retail investors have been beating Wall Street ever since the pandemic begun. Now, central banks are fretting and getting worried that they are losing control of the financial system. They hate Bitcoin and don’t want young kids dictating stock valuations while they squeeze out hedge funds from their shorts.
They say that quantative easing creates bank reserves and doesn’t cause inflation nor does it affect market valuations. Sure. That’s why the stock market bubble is solely being pumped by the retail trader in one’s bedroom. I’m not so sure. Maybe the correlation between the money-supply and the stock-market does actually make sense and has some interesting significance to what’s going on in the economy. Our debt keeps growing, public expenditure keeps sky-rocketing and yet economic growth is subdued. These are not the consequences of the pandemic – we’ve been going through this ever since the financial crash of 2007 and if anything the pandemic has just exacerbated the cycle of stagnant economic growth.
With no political leadership to look up to, and nothing new in the economic horizon, Bitcoin just keeps making more sense. If we don’t have the opportunity to be involved in a political movement which actually aspires and aims to change the world, we have no choice but to change the world ourselves. We can start with the financial system itself which actually serves, as of today and first and foremost as a casino for those who already own assets ( and those who do, generally own lots of them). Bitcoin can serve as a decentralised financial system which can be rather difficult to control and transfer some of that wealth back to those who have no assets. Our parents had the opportunity to own interest on their savings through bonds. The advent of crypto-exchanges which provide lending services and interest payments against crypto-currency is a total game-changer in the world of finance. Theoretically, crypto-currency, is actually and really making banks obsolete. I really did not see this coming when Bitcoin was 100 Dollars. And neither did I see coming the young nerds defending their favourite companies by buying their stocks and squeezing out hedge funds’ shorts. If only the big book-publishing bosses (mostly, old and white men) stopped ingratiating with Amazon and took a dose of courage from the young kids today, we’d have a better book industry.
The long march in the mountains
Do you know how revolutions were made back then? Mao Tse-tung lived in the mountains and had to march armies through mountains and rivers. Lenin and the Bolsheviks lived for many years in shabby apartments in Europe, struggling to survive on donations while writing pamphlets of communist insurrection. Eventually they all had to fight or die. As of now, today, politics seems more civilised. People are becoming ever more aware of the power of the vote and when the vote fails alternatives are being sought. Usually, we are not very quick to realise about the historic changes we go through. It’s like when the city you live in is changing block by block and you only become aware of the change when the whole sky-line has become completely different from what it used to be.
I don’t think we live in a deflationary world and I don’t even think the word itself makes sense in the current economic context we live in. We live in a very rapidly-changing world, for good or for worse and many economic concepts of the past are no longer applicable. Bread and eggs aren’t getting cheaper either. Seriously. I’ll start believing I live in a deflationary environment when people buying stuff at the supermarket don’t actually need to check their exact quantities in fear of exceeding their budget for possibly defaulting on their credit card.
Let’s get this straight – no one ever said capitalism wasn’t productive. Back in the bleak days of the Victorian era, Marx was astonished at the riches that capitalism could produce only to be dismayed by how, despite these riches, most people lived in poverty and grueling conditions. The great change came after the Second-World War with the new social contract. Now, as we lose that contract, we are desperately looking for a new world and a new paradigm. It’s going to be a very long march.