Bitcoin and Georgist economics

Stirred by the latest controversy over who might have gotten it all started, stirred too by some of the tweets in my feed in recent days, I've been wondering what Henry George might think about bitcoins. I'm not a Georgist, but I have long regarded his point of view with fascination, and I discussed his theory of credit in particular in one passage of my book on the economic crisis of 2007-08.

The theory of interest can give us some basis for extrapolating to what HG might think and say about cryptocurrencies were he around today to learn of them.

In his classic work, PROGRESS AND POVERTY (1879), George proposed a thought experiment thus, "[I]f wealth consisted but of the inert matter of the universe, and production of working up this inert matter into different shapes [then] interest would be but the robbery of industry, and could not long exist."

So: did he in fact see interest as theft? No, because the premise of that thought experiment is invalid. Some wealth is inherently fruitful, like a growing tree that will someday be harvested as timber, or a vat of a yet unfermented grape juice. Inert matter, such as planks of wood and the planes that carpenters employ upon it, becomes part of production because they are parts of the same "circle of exchange" with fruitful forms of wealth.

In the end, then, it is the fecundity of nature that secures the legitimacy of interest.

Applying these ideas, it is natural to infer that there is a natural interest rate, the rate that corresponds to this fecundity, and that central bank or governmental action that secures either a higher or a lower rate than fecundity warrants is either dysfunction or blatant theft.

So ... perhaps George might have been persuaded that Bitcoin is a valuable experiment in allowing people to discover and re-attach themselves to that natural rate of interest, independent of those banks and bankers.

Just a thought, in the spirit of some "geolibertarian" friends of days gone by.

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge. We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a maj...

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Jamesian Philosophy Refreshed

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