Bitcoin and ether are currently not currency. The term “crypto” has become an umbrella term that covers a lot of very different things. There are classical cryptocurrencies like bitcoin; the broader blockchain-based applications and tokens that you might not think of as cryptocurrencies but operate in a similar technological space; and what has come to be known as “stablecoins.”

Despite the fact that the first one is usually called cryptocurrency, I don’t think of that as currency. Blockchain-based apps and tokens aren’t currency either. Stablecoins probably come closest to functioning as a currency, but they also drop some of the characteristics. When you hear people talking about cryptocurrencies, sometimes they refer to quite different things. Those three categories really capture the bulk.

Usually when people think of currency, they think of the material embodiment of money, the physical tokens. That can’t possibly be the case for bitcoin, because there is no physical token that changes hands. So “currency” refers to the money of account that is being used to pay for things as a unit of account, medium of exchange, and store of value. In that sense, bitcoin actually looks more like what monetary economists would call money or money of account rather than currency as the physical cash part of currency.

That is how economists have looked at money and currency, and that is how they would recognize these two terms. But there is actually work — by those of us thinking about money from the perspective of political theory rather than economics — who are trying to rethink what these categories could mean.

I am interested in the kind of money of account that we use — “we” as some kind of collective that has to be defined in order to settle questions of collective value, monetary rule, and so on. That moves us away from the physical side of currency and probably looks a lot more like what an economist might call money of account.

Things have changed a lot. Ten years ago when cryptocurrencies like bitcoin first appeared, it wasn’t entirely obvious that they would become a speculative asset. The piece from which you quote was written two or three years ago. I wrote it over 2018 and the first half of 2019, and I thought at that point, it was becoming clear that it functioned primarily as a speculative asset. Nonetheless, a lot of the legitimizing tactics were continuously drawing on an older image of currency.

If you go back to the very beginning of bitcoin and the cryptocurrencies that emerged during the financial crisis 2008 and 2009, they presented themselves as the money of the future and as currencies, not as speculative assets. If you look at all their self-presentation — from the original white paper to all the bitcoin fan groups that popped up, the bitcoin investors that emerged and the other kind of cryptocurrencies that popped up — all of them emphasized that this was a big thing because this would be the money of the future.

Now, that has changed completely. If you look at crypto ads on TV and the ways investors are talking about crypto, very few of them actually genuinely think that it will be the money of the future. It is an asset that has gone up around five or six thousand percent in the last five or six years, so you can see why they are interested in it as an asset. It is a really weird asset, because it’s entirely uncorrelated with any other economic activity. That is what is driving the current boom, and we’re left with the remnant, the shell, the label “cryptocurrency.”

There are still some out there of the belief that this will shape the money of the future, but I think the primary function of it currently is a regulatory one. The way in which this gap between the outward appearance, the name cryptocurrency, and the actual speculative activity that’s happening plays out is that it protects you against some of the fiercest forms of securities regulations that are out there.

Currencies are regulated in an entirely different manner than financial securities. It took years to even have cryptocurrencies on the radar of the IRS [Internal Revenue Service], in terms of the kind of market behavior that’s tolerated or banned and the taxes you would have to pay. We’re still very far removed from the kind of regulations that apply for any other kind of financial security or the pump-and-dump schemes that are widespread in crypto. All these people would be in jail if they tried to do this with any other kind of security, but they are able to do this because the currency label actually protects them from some of the really tough securities regulations that are out there.

The story of the last year is that regulators have woken up to this and know that if you strip away the label, this looks like a financial asset. It behaves like a financial asset. It’s advertised as a financial asset. So it probably should be treated by regulatory authorities as a financial asset.

That’s even more pronounced when you look at what’s happening in China, what’s happening in the Eurozone, and what’s happening in India most recently, but it’s also on the radar of the SEC [Securities and Exchange Commission] more than it was a couple of years ago.

This begins with the ideological facade. When you look at the white paper behind bitcoin or the early adopters behind some of the more dominant cryptocurrencies, you find the firm belief that this is not just an interesting cryptographic puzzle or project. Rather, this is a bite of the future — you’re dealing with a new technology, or at least a new use of an existing technology that will fundamentally reshape all forms of economic exchange because it will provide a new form of money for the future.

That was absolutely central for the way this took off, particularly in the context of the financial crisis. The initial bitcoin came out in winter 2008 in the wake of massive bank bailouts. It’s the same context that produces Occupy on the Left. It’s fueled by distrust in both the existing banking system, which includes the existing state and central banking system that was deeply involved and enmeshed with the banking system.

It’s against that background that a new view and completely open-ended vista of the future of money opened up. It was portraying itself as a radical break with that existing monetary system in which banks and central banks had a crucial role to play. Instead, we got this idea of a decentralized form of money that is leaving behind all old forms of trust — trust in the bank, bank regulator, central bank, or political system. None of that will be needed anymore because, in that future that it promises, money will be decentralized and beyond trust.

What provides the thrust or the catalyst for this future is the idea that you’re operating on the back of a radical new technology that suddenly makes that future possible and inevitable. The article was written a few years ago, and most of that turned out to be on target, because it has become abundantly clear that technology is not at all wedded to this specific social political vision, but can be used for radically divergent political projects.

It goes back to the gap between the ideological cover that provided a lot of fuel for the project in the initial years and the way it has played out since that. It was extremely important initially to portray this technology as new and to portray the project as deeply tied to that technology. It was the idea that somehow, once this is out in the world, you can’t undo it and it comes with all these very specific social and political implications. As a result, there’s no point in somehow holding it back or regulating it, because it would be akin to undoing the discovery of the neutron.

Now, when you take a very different look at technology — much more from the perspective of science and technology studies — and realize that the technology itself is a canvas on which we could project different visions. It still is embedded in structures of power, and you can make predictions of which scenario is more or less likely to play out, but that has nothing to do with a deterministic drive inherent to the technology. It has more to do with the social, economic, and political space in which that technology is deployed and unfolds.

Central banks would likely respond by taking on their own blockchain-based, digital money projects — not by embracing decentralization, but by issuing what’s now called central bank digital currencies. Some of them already exist. Barbados has one out already. Canada, Sweden, and a lot of other countries are very close to launching theirs. So, you can see how this same technology can produce a very different political vision.

The idea of an inevitable technological change was deeply tied to the idea that this new form of money would be not just beyond trust, but beyond politics. That was absolutely crucial. That claim was tied to the claim that certain technological change was inevitable.

When I first started to get interested in this, I helped organize two conferences where we invited lawyers, social theorists, political theorists, and computer scientists. The first thing the computer scientist told us was, “This is an old technology that has been around since the 1980s. We just thought it had no uses. It’s very interesting to see it applied in this manner, but this is not at all a new technology, nor is it a technology that inevitably has to be deployed in this way.”

They could think of lots of other uses already. That kind of knowledge, which actually existed among computer scientists, couldn’t be part of the outward appearance which had to commit to this inevitable technological thrust into the future, because the vision and claim of a money beyond politics was tied to that technological determinism.

I would not say that money was depoliticized before the 1970s, quite in the same way it was depoliticized during the ’90s and 2000s. It had a settled political status that could easily be taken for granted. As such, it might fairly be described as having a depoliticized appearance. But to anyone involved, it was obviously a political construct.

The Bretton Woods settlement emerged out of World War II — the famous monetary conference in Bretton Woods, New Hampshire in 1944, with John Maynard Keynes on the one hand and Harry Dexter White on the other hand, who was the US representative negotiating and producing a postwar monetary order. That monetary order is absolutely political. It was one of the most difficult international conferences concerning the postwar order, because it brought up all these questions of domestic finance and economies, international finance, international relations, and welfare politics.

No. Keynes loses out in the Bretton Woods negotiations. He brings a couple of influential blueprints to the table, but I would argue that in most significant respects, he basically loses out against the US blueprint. In his proposal, there was no role for gold, though he was happy to entertain it for nostalgic reasons or aesthetic reasons. He could understand how lesser minds could kind of be preoccupied with this.

His proposal also did not have the dollar as the global reserve currency. Instead, it had a new international reserve currency unit. He went through a phase in which everyday he tried to come up with a new name and asked readers for new names. There are some great proposals out there for names like “orb” or “dolphin.” In the end, he settled on “bancor,” which was meant to be a pun on the gold of banks in French, despite the fact that there’s no gold in his proposal. It was a bit of a Keynesian joke. But, he loses out.

Instead what emerges is a deeply political construct that reflects the new hegemonic role of the United States after World War II. It insists on the US dollar as the pivotal reserve currency of the entire Bretton Woods bloc. It ties the dollar to gold, which at that point to a significant extent is lying in the bowels of the New York Fed and Fort Knox. It’s moved from Europe to the United States. It ties all of the existing participating currencies to the US dollar.

That’s obviously a deeply political construct, but for someone living through the ’50s and ’60s, you could have been struck or not struck by the way in which monetary policy, both internationally and domestically, was fairly absent. Central banks didn’t have the same political dominance and centrality as they have for us today again since the financial crisis.

The Bretton Woods Conference was not accompanied by a series of subsequent international conferences over crises. It was a very short-lived system, not least because of the shortcomings it had and the ways in which it refused to incorporate Keynes’ original blueprint. But, by and large, it managed to avoid crises for much of the 1950s and ’60s.

When the crises did appear, it had some tools available to initially contain them. So that meant that a political theorist like John Rawls could talk about money and the dollar without having to think of it as an open political question. It seemed settled to outsiders. Rather than calling it depoliticized in the way in which we might want to think about the depoliticization of the 1980s and ’90s, it seemed more like a settled political status that could be taken for granted.

The crisis of the Bretton Woods system predates stagflation. Again, this goes back to fundamental design flaws that characterized it from the very beginning. It took until 1958 for Bretton Woods to become operational in the first place. Keynes, who passed away in 1946, almost hoped it would never become operational. But, when it does become operational, it very quickly becomes obvious that there are some fundamental tensions concerning not least the dual role of the US dollar, which simultaneously has to serve as the currency for one country and the global reserve currency. It exposes the US government and the Federal Reserve to conflictual mandates about how to navigate that space.

That becomes more pressing and obvious over the course of the 1960s. As there are the first bouts of inflation and the Vietnam War begins to absorb more and more resources, these fundamental contradictions become harder and harder to ignore. There was an attempt in the late ’60s to introduce a belated, very weak sibling of Keynes’ bancor into that existing system in the form of Special Drawing Rights (SDRs), but they really failed to tackle it in a meaningful manner. They’re much too small. It was very hard to improve that system from within at that point.

This slowly came to a head until 1971 when Nixon, who had his eyes on reelection, essentially refused to continue to play the hegemonic game of navigating these conflicting mandates with an eye toward the world economy of the Bretton Woods system and says, “Enough of this perceived sacrifice on our part for a monetary system that doesn’t seem to be working and that doesn’t seem to be of interest. We’re just going to cut through this entire Gordian Knot and liberate our economic policies.”

The idea was to replace the image of American hegemonic sacrifice with a new sketch of ebullience and dominance on the international scene. Nixon’s treasury secretary at the time famously quipped that “the dollar might be our currency, but it’s your problem.” Who he’s talking to is European allies and others who were completely surprised by Nixon’s decision in August 1971 to close the gold window and thereby essentially unravel the Bretton Woods system.

We’re a couple of years later now, so we’ve moved onto 1974. This is quoting from Hayek’s famous speech at the Stockholm Nobel Academy, where he receives the 1974 Nobel Memorial Prize. So, we’re now in the context of sustained inflation, which is really quite an unprecedented peacetime experience. You have to go back quite a long way to find anything that remotely looks like the kind of inflationary shock of the 1970s. Moreover, it’s associated with unemployment and what comes to be known as “stagflation,” rather than a kind of inflationary boom. It’s in that context that Hayek steps in and radicalizes both his previous rhetoric and his previous position.

What’s important to recognize is that Hayek actually changed his mind during the mid-1970s moment. Throughout the 1950s and early ’60s, he had previously made grudging peace with the postwar political settlement. He was clearly not a fan of it, but he thought there was no way around the role of central banks in a modern monetary economy. As much as he might have had a nostalgic idea of the gold standard and think that Keynes was wrong in A Treatise on Money in 1930, or as much as he disagreed with Keynes in the 1930s subsequently, somehow Hayek made his peace a little bit too much and accepted, at least for the moment, the postwar settlement.

That changed in the 1970s when he gradually became radicalized, by essentially arguing that the position he had put forward concerning the role of the market as a supremely efficient way of information gathering was something that did not only not require a central bank to function, but a central bank operated by a state was an impediment to that vision. That was quite a substantial U-turn to his own position not that long beforehand. By the 1970s, in the face of inflation, Hayek began to argue that you should extend the same logic that he has developed for all other markets to the regulator of the market itself — namely, money.

We should talk about whether it was ever actually meant as an earnest proposal or if it was an ideological vanguard move on Hayek’s part. The idea was essentially to transplant your faith in the ability of competition to produce efficient, stable results to money itself. The work that Hayek does in the years after the Nobel Prize gives him an enormous boost in prestige. He was pretty irrelevant at the beginning of 1974, but by 1975 he was a global celebrity on the back of that Nobel Prize.

So he began to sketch proposals for how the market could come to the rescue of the existing, central bank–led, fiat money system. That exists primarily — as he articulates in a pamphlet he publishes with a London libertarian think tank in 1976 on the nationalization of money — in having competing private currencies and allowing the market and the competition between these private currencies to produce the stability that we, including Hayek himself, previously thought we needed a central bank to ensure.

Like in the market itself, it is competition here that is meant to produce stability and value. Hayek’s idea seems to be that somehow a bank issuing its own private currency but then overextending it would somehow be punished by the market. It would either go out of business or its notes would trade at a discount, so competition would come to the surface.

The first observation that’s worth making is how widely open the monetary imagination was at that point. We’ve moved into a world of fiat money, a world in which it is the promise, credibility, and tax revenue of the state that guarantees money — no amount of gold at Fort Knox. It’s instead politics essentially that steps in here. And, we are in a moment of inflation on top of that. You witness an extraordinarily productive, deeply conflictual struggle over that monetary imagination.

Hayek’s contribution is only one among many on the libertarian right, and we can find very different alternative conceptions of what the future of money should look like and what the politics of money should look like when we turn to the Left. Myrdal is a helpful narrative device because he shared the 1974 Nobel Prize with Hayek, which was itself an act of compromise on the part of the committee.

You can sketch a connection from Myrdal to efforts on the part of the Global South to redesign the global trading system and the global commodities exchange system as the NEIO did, to demand on the part of the Global South a restructuring of the global monetary constitution and a return to the drawing board after the Bretton Woods collapsed and we were living in the ruins of Bretton Woods, and to make good on the promises that were either never fulfilled or which emerged in the meantime.

During the Bretton Woods Conference, most member states of the United Nations in the 1970s did not yet exist because of decolonization. There is an attempt to go back and have another Bretton Woods–style conference with all the recently decolonized countries actually sitting at the table. There were also calls to convene a United Nations General Assembly that would focus on the global monetary constitution, and there were attempts to think through the politics of welfare and inflation on that global scale. That’s the place where Myrdal fits in as someone who was similarly interested in the crisis of the national welfare state that had provided the background for the 1950s and 1960s.

Unlike Hayek, who wanted to undo this perceived Keynesian nationalist welfare project, Myrdal was much more interested in extending it to the global realm and of having a more global conception of welfare. That goes hand in hand with a redesigning of the monetary constitution, which has to be global and include the G77 this time. Myrdal was actively participating in these conversations. He was part of the attempts of the G77, both before and after the NEIO, to rethink through the monetary dimension of this broader crisis.

The crucial moment that informs thinking about global economic reform after the news of the NEIO is in 1974, exactly the same time as Hayek and Myrdal both gave their speeches in Stockholm. What has happened since then is that the perception of the crisis — in the way that the NEIO was much more rooted in conversations going back to those of the ’50s and ’60s about fair commodities, trade, and balance of trade questions — merges gradually toward an awareness of the pressing monetary crisis that affects both the Global North and the Global South.

What’s so interesting here is that this might actually constitute a unique opportunity that is quite different from the NEIO because the NEIO is essentially a distributional struggle. It is so interesting for us to look at because we encounter debates over global distribution and struggles over the terms of trade.

But these were quite explicitly the kind of struggles that produced winners and losers. There was a clear sense of the Global North, having benefited illegitimately from certain beneficial, neocolonial terms of trade, undoing those and clearly redistributing some of the gains of trade. That was, on the one hand, attractive, but it also quickly came to be seen as a major obstacle preventing the NEIO from taking off. The Global North, particularly the United States, reacted with vicious animosity, because it had a lot to lose.

In the second half of the 1970s, global monetary reform emerged, at least in the minds of the G77, as a topic that might not be a zero-sum struggle but which would positively affect both the North and the South. They were able to actually come up with a functioning global monetary constitution once more — something that could replace both Bretton Woods and, even more so, the non-system that had taken over. After the collapse of Bretton Woods, there was a vision that was actively propagated by the G77 of a global monetary reform that would leave everyone better off. It was not so much a simple distributional struggle, but rather a win-win of tackling runaway inflation.

The Global South arguably had more to gain from that, given how much more devastating the inflation was, but it was nonetheless not the act of sacrifice on the part of the Global North that was imagined, either. The emphasis on shared benefits rather than sacrifice became a really important slogan in the second half of 1970s concerning monetary questions.

Two observations are important here. The first one is that it feels a little misleading when we talk about the collapse of Bretton Woods. What collapses is the overarching system that ties the dollar to gold and formally ties other currencies to the dollar. But there are a lot of other aspects that do not go, such as the IMF and the World Bank. That is actually quite peculiar. They are these weird zombies of the Bretton Woods era that during the 1970s were looking for new roles to fulfill, because the framework in which they had initially been embedded and the political obligations that were a part of the Bretton Woods had disappeared.

Despite its imperfections, it was a political system where you could address grievances and where certain obligations were specified. Once that was all gone, it also liberated individual member countries of the IMF to act in ways that would have been incompatible with the Bretton Woods system.

So you see a moment here of the IMF trying to redefine itself and individual member countries, not least the United States, trying to find a new path of financial hegemony in the ruins of Bretton Woods. The IMF structural adjustment programs and conditional lending first emerged as an attempt to exercise new forms of discipline in an informal system that was no longer characterized by formal political institutions, but instead by increasingly mobile capital and extensive lending into the developing countries. Most of that was still conducted in the dollar. Despite the fact that the US dollar was no longer formally the reserve currency of the world economy, most of the lending that happened in the 1970s and into the early 1980s was in dollars.

What we witnessed first was excitement on the part of recently decolonized countries because, in some way, something they had long been promised was now happening — actual investment flowing from the North into the South. That was exciting, particularly for governments who were trying to finance themselves or trying to come up with new forms of financial independence. But, much of that was denominated to dollars, and it was not entirely clear at the beginning what political repercussions that would have.

It would become extremely significant because it meant that these countries were very, very vulnerable to movements in the exchange rates. So, the currencies were no longer tied to one another but were freely floating, which is again something that very few people would have foreseen. Once these currencies were free floating but debt was denominated in a different currency, you were very vulnerable to what’s called a currency mismatch, where your assets and liabilities are in different currencies and you could end up with enormous debt obligations that you are struggling to service out of your domestic currency.

It also drew in the IMF as an agent of lending enforcement and debtor enforcement on the part of these countries that had so seemingly generously extended investment in the 1970s and 1980s. As things go sour, you see the IMF emerging as an entity that is trying to establish itself in order to manage this new world of international lending in a world of freely floating exchange rates and debt, which is oddly still denominated in dollars despite the fact that the dollar is no longer the official reserve currency of the world economy.

From the perspective of Julius Nyerere or Michael Manley — from the perspective of Tanzania and Jamaica, two of the first countries to get a taste of the structural adjustment program — it really felt a lot like the kind of neocolonial practices that they were worried about. It came with draconian measures that tried to implement discipline and essentially take control of domestic budgets and households, some of the most politically touchy subjects there are in statecraft. It’s clearly an agent on behalf of the creditors in the North.

Furthermore — and this really came to the fore in the late 1970s in a series of conferences in both Kingston, Jamaica and Arusha, Tanzania — they were perfectly aware of the deeply politicizing rhetoric that the IMF was operating under at that point. The IMF was claiming to simply be interested in domestic adjustment and was sidestepping questions about the global political economy and the messy nonsystem that had emerged. It was claiming to simply be implementing best practices and sound economic management, when in fact there was a lot of lack of discipline outside the Global North. There was a lot of discretion on the part of agents who claimed to have no such discretion, so that it immediately became a political battle over language and ideology.

Again, what was the political role of the IMF in these early structural adjustment programs, and how do we get beyond the depoliticizing facade that was put up?

It is important to see these two ends of the political spectrum of monetary imagination together as part of a struggle over the future of money over the course of the 1970s. They happened in parallel. We know that by 1979 or 1980, Hayek was the one on the lecture circuit, proposing and spreading his idea of the denationalization of money. Simultaneously, you saw Nyerere and Manley coming together in Arusha and putting forward a very different political vision.

It’s important to distinguish the Arusha Declaration that you referred to from the more famous Arusha Declaration of 1967, in which Nyerere established principles of African socialism. This is in the same town but in 1980. It is sometimes referred to as the Official Declaration and sometimes the Arusha Initiative. I don’t know whether Myrdal had a hand in this, but the proceedings are published in a Swedish journal called Development Dialogue.

Compared to Hayek, the most interesting thing is first to acknowledge how much they share in their assessment. Both actually acknowledged that money in the 1970s was a deeply political phenomenon and that there was an entitlement between the various entities that issued and managed money and the core political interests of various states. Hayek draws from this the conclusion that we need to take money out of the hands of government and we need to denationalize it.

That is where we get this vision of competing private currencies. He put forward a political vision of removing governmental discretion from the issuance of money. Now, Nyerere and Manley and the participants of the Arusha Initiative shared the first part of the analysis — namely, that it is obvious that what was going on there was politics. When the IMF arrives and demands structural adjustment, it is a nonpolitical, technical process, but really it is a part of the global politics of money, which hangs together with questions of credit and debt relationships between the Global North and South and of inflation that are hanging over the 1970s. Anyone who denies that is clearly not acting in earnest.

Exactly, but you don’t think that it’s a lack of politics. It is the lack of democratic ability to influence the politics that smack you in the face and that you’re pushing back against. It is not the idea that a natural entity is confronting you. You’re perfectly aware that it is global politics and a politically structured system of how investment flows, which creditors are being protected, and how the IMF, just based on voting rights, is able to go after some countries but not others. You’re perfectly aware that it is politics that you’re confronting. The problem is that it is shaped by a small group of countries in the Global North with very predictable interests, and you are at the losing end of that.

The solution that is brought forward during the Arusha Initiative is not to, in some sort of Hayekian fantasy, escape that politics, but instead to democratize and globalize that politics. That is how the Arusha Initiative links to the idea of a kind of new Bretton Woods Conference on the floor of the UN General Assembly, which has all these recently decolonized countries as equal member states where they could actually engage in a good-faith conversation about what a more democratic global monetary system could look like. They were involved in an attempt to change the politics that dominate the global political system.

What they encounter is a denial of that politics from an agent in the form of the IMF, which claims to not be political and not be involved in any of these political struggles and tensions that shaped the post–Bretton Woods era and their era. Nyerere is the most innovative in that regard. He straightforwardly leaks internal IMF documents that show the kind of political deliberations that took place within the IMF about which options to take, what kind of choices to make, and how to frame it in a depoliticized manner. That was actually leaked by Nyerere several times during these negotiations, to the real outrage and frustration of the IMF. This was also a part of unveiling your negotiating partner and revealing the bad faith of the entity you’re negotiating with over structural adjustment programs.

It takes quite a while for this picture to emerge. It is a really messy experimental process on the part of many of the agents involved, not least Paul Volcker at the Fed, but also some of the intellectuals who were actually trying to position themselves and respond to this rapidly changing situation, wherein the Fed was hiking interest rates dramatically over the course of 1981 and 1982. They were moving into a world of increasingly freely flowing capital. There was an overall financialization going on.

There’s no one with a blueprint to win the day and implement it. My writing is very much shaped by Quinn’s work and work by Greta Krippner, who wrote a fantastic book called Capitalizing on Crisis, articulating the experimental responses that, in some way, produced some of the more neoliberal aspects of financialization through politicians abrogating certain responsibilities and through actors like the Federal Reserve under Volcker coming up with various tactics to insulate themselves against democratic political pressure.

To bring it back to neoliberalism, it’s really interesting that you see a split emerging between folks like Milton Friedman and Hayek. Friedman seems to fit your account of what’s going on here much more. Friedman is actually very happy with the Federal Reserve stepping in through various forms of monetarism or other tools — some of them quite deceptive and manipulative — as long as they are able to use the state in order to reintroduce market discipline. He believed that the problem was that the 1970s were shaped by bad monetary policy, and what we needed now was good monetary policy. Friedman was essentially comfortable with experimental use of the state and the Federal Reserve’s power to bring down inflation and reintroduce economic discipline.

Hayek was much more interesting in the 1980s. I looked through some more documents of his that are in his papers at the Hoover Institution at Stanford University, his correspondence from the 1980s, and a couple of speeches he gave. The first thing you notice is that from 1981 onward, maybe already in 1980, he is very frank in describing his proposal for the denationalization of money as hopelessly utopian. He is perfectly aware that this will never be politically possible. In fact, there is a speech he gives to a group of Visa card executives in Athens, Greece in 1981 where he opens by describing the proposal as essentially a bitter joke grown out of frustration and a certain kind of radicalization that he should just toss out.

But he also does not fall back on the previous position he held that all we need is simply better monetary policy. He claims that monetary policy has never done anything good, so there is no need for monetary policy. It is not a question of good or bad monetary policy. We have to get rid of monetary policy. At the same time, he now considers the denationalization of money as impossible politically.

What he does instead, from ’81 to ’85 or ’86, is update his ideas on competing currencies by adapting them to that rapidly changing reality. The proposal that he provides the Visa executives — and this is a speech he gave several times in the 1980s to various groups of banking executives in London who listened — is essentially a system of competing units of accounts in the form of bank overdrafts.

So, the state can prohibit you from printing your own money and, in that sense, the state will never give up that prerogative. If you tried to issue your own bank notes, good luck — that’s probably not going to be possible. But the state can’t control what exactly a bank does in the accounts that it operates. Just as banks are able to essentially create credit and benefit from the privatization of that ultimate public prerogative, Hayek thinks they should be able to create accounts but denominated not in dollars or pounds, but essentially in new currency units.

He tells you that fees are what prevent you from opening the accounts not denominated in existing currencies but in your own currency. He dismisses this idea and he comes up with a fix to it, and he asks for input. He claims that he already has an idea for how this should be branded, but it would be millions of dollars worth — he can’t tell them what the name would be because he has been advised by intellectual property rights lawyers to protect it.

He is cooking up this scheme of how to hold on to the promise of the denationalization of money, no longer in the form of actual banks printing their own money but rather using some of the tools of financialization, using some of the proliferating credit card companies that he’s lecturing to, and using some of the tools that banks are using already in the 1980s.

Again, I’m drawing here on Greta Krippner’s book, which is fantastic in this regard. I don’t want to be misread as making a causal claim that one is a kind of coordinated response to the other. Instead, this is in the context of really messy experimental politics. One insight that does emerge is that the deregulation of finance seems to be a solvent politically that, at the very least, postpones and potentially partially displaces certain, really troubling distributional conflicts that seem to have characterized the 1970s.

The 1970s were shaped by worries about an overburdened political system that struggled to adjudicate between conflicting distributional claims. Financial markets, in particular deregulation and the opening tap of credit, seemed to buy at least some room to maneuver out of this. On the one hand, you get what is seen as efficiency gains of greater freedom, capital mobility, greater ease of financial institutions to produce various financial products, and so on. This goes under the rubric of liquidity and efficiency improvements.

But they seem, from a more political perspective, to also feed back into politics by responding to the real experience of stagnant wage growth. The political system had come to rely on economic growth and an expectation of improvement during the 1950s and ’60s. Then, it ran into a crisis because stagflation revealed that process to be disrupted. In that context, access to cheap credit came to be seen for a while, and this extended quite a bit to the ’90s, as a way to navigate that particular impulse of financialized capitalism. It was thought that greater access to credit would provide some work-arounds, at least temporarily, around lagging and stagnant wage growth.

Yes. The Great Moderation is usually thought of as a macroeconomic phenomenon, or a system of inflation targeted by independent central banks that conquered the problem of inflation. On that basis, they are thought of as having developed a macroeconomic tool kit for how to smooth out business cycles and for how to stabilize the economy. That is all part of the picture.

But what is also absolutely crucial is what happens on the capital mobility front and what happens on the credit front. First, this was underwritten by an unprecedented removal of obstacles to international capital mobility. In the 1970s, capital mobility was essentially a very marginal phenomenon. Bretton Woods placed stringent capital controls. In the 1970s, the United States, Germany, and partially Japan were interested in capital mobility, but a large number of countries — obviously in the Global South, but also in Europe, France most notably — were strongly opposed to capital mobility.

That has changed entirely by the late 1980s. By this time and in the early ’90s with the Maastricht Treaty, capital mobility is one of the freedoms written into the European Constitution. So, we are living in a completely different world now, one in which capital mobility is seen as an integral part of the picture of the Great Moderation — the efficient allocation of capital and its ability to flow.

Domestically, that partially means that if you look toward the benefits of the Great Moderation on your wages alone, you might be missing out on other benefits that are meant to accrue to you though this greater access to cheap credit. Yes, your wage might not have improved as much as it did, say, during the 1960s, but on the other hand, look at the mortgages you can now get and the financial products you can now buy as an investor. This is all part of the broadening of finance into parts of society that were not part of the equation beforehand.

Absolutely. This is actually a nice hook back to the crypto conversation. The other thing is, this sometimes happened under the idea of democratizing access to credit. But, in the US context most notably, you get a kind of potted history of how you move from redlining and an explicit inability of African-American households to access credit of any form — which is a really important part of the story of the racial wealth gap in the United States — to a much more questionable historical claim that somehow the financialization and access to credit that we have witnessed since the ’80s and ’90s is meant to overcome that, as recompense for the previous exclusion.

The idea of the “democratization of finance,” to use that term that’s floating around here, is to move from exclusion to inclusion. So households that were previously excluded, either based on straightforward discrimination or because of credit scores or other forms of exclusion, are now explicitly included in this realm of credit creation. As a result, this is something that the Democratic Party also embraces. You can see how that is a narrative that would work well, electorally speaking.

You see the narrative again today in the crypto realm, where part of the slogans that accompany the sales pitch of crypto and the sales pitch of new investment opportunities is to democratize finance. This is the kind of Robinhood phenomenon where somehow anyone can be a day trader, anyone can buy these assets, and anyone can own some crypto. Someone who is excluded is now included and we should celebrate this as the democratization of finance.

Now, what that story obviously neglects is that we are talking about the realm of credit and capital. Credit and capital do not operate on the basis of equal inclusion. Instead, to be included means very little if the kind of credit you have access to is inferior to the access of credit that others have.

It’s almost hard to imagine now given the impact of the financial crisis and given the monetary measures during COVID over the last year. Going into the financial crisis, most models by economists — the kind of models used in order to make really important macroeconomic decisions, as well as the models used by financial institutions to model various scenarios — essentially did not include money or did not include banks. Banks, insofar as they appeared, were purely financial intermediaries rather than entities of credit creation. There was very little modeling of the much more complicated role of money in the money market.

Exactly. That neutralization of money within economics was actually mirrored by and compounded a large neutralization of money in the public consciousness. This was a part of the narrative of the Great Moderation in which money had been artificially, illegitimately politicized during the 1970s. The independence of inflation targeting central banks was precisely to make sure that politics was kept at a distance from money.

That picture of money actually kind of connects the models and the broader neutralization of money in the public imagination because money was seen as the neutral, technical medium that somehow was best kept away from politics and did not have any politics itself. It was totally removed from questions of power. This was the image that really was quite dominant going into the crisis.

Again, this is something that is so crucial to the way we look at central banks now. It is a weird two-step. The first moment is simply the realization of the enormous power that central bankers do have — the amount of discretion that exists among the books on the financial crisis. You find this recounted in numerous episodes.

One of them is, for example, Ben Bernanke being pressed on TV after the bailout of AIG, the insurance giant, of where exactly that money had come from: Was it taxpayer money? Who in Congress authorized him writing that check? And he just has this odd moment on TV in which he says something like, “We don’t print money. We use the computer. We just add zeros.”

That is something that is shocking initially to the general public, which has been told to live in a regime of austerity and economic discipline and that there is no alternative context of neoliberalism. Everyone has to tighten their belts. We all need to balance our budgets. Don’t overspend, just as the government shouldn’t overspend.

But that was the narrative: There is no alternative. There is no discretion. Instead, it turns out, Ben Bernanke can just add zeros on a computer. And it is true: the central bank, unlike any other entity, can just simply create money printing zeros.

What makes the Crisis a crisis is that the Fed needs to step in as not just the lender of last resort, but as the provider of liquidity of last resort. Ultimately, the state is able to do that at any point in time, unlike the banks, which are operating in a slightly more complicated context.

That’s the sense which is all the more true today than it was in 2009 — that central bankers really do engage in discretionary choices, that they can choose to do one thing or another, most obviously in the context of bailouts but even in the context of inflation targeting an interest rate–setting regime. That is again something that might seem obvious today, but it took a couple of years for the public to appreciate this and for central bankers to come on board with it.

Even up to this point, the Fed is squeamish around the idea that they’re doing anything political, despite the fact that they are coming up with new policy regimes that patently changes who exactly is affected by various decisions. It becomes increasingly harder to deny that you are engaged in a purely neutral, nondestructive, technocratic activity. That becomes a fiction that cannot be sustained anymore.

It is not just something that is announced alongside the launch of bitcoin. Given the way blockchain works and given that this is embedded in the genesis block of Bitcoin, it is actually a part of every single bitcoin transaction. It is part of the Bitcoin blockchain. So at the very beginning, if you actually trace through the Bitcoin blockchain, there is a headline from the London Times about the Chancellor of the Exchequer bailing out banks — that is the kind of rallying cry under which initially the trustless currency that promises us a new future of money beyond politics and beyond banks is announced.

It is crucial to perceive that promise of an independence from trust in the context of the collapse of trust — the financial crisis and the collapse of political trust in the democratic institutions that responded through bailouts.

That is the biggest difference to highlight. It is very tempting to draw a direct line from Hayek to crypto. It is very tempting to see him as timidly lurking behind this or to detect in the promises of crypto a realization of the denationalization of money. The biggest difference here is the role of banks. Banks are the heroes in both Hayek’s original 1976 pamphlet and then his subsequent attempts to make this actually practicable. It’s literally to banks that he was announcing his latest sketches and proposals. These are the people who are meant to come to our rescue.

That changed completely by 2008. By that time, Nakamoto, or the group of people who called themselves Nakamoto, came together and understood that the banking system is not separate from the state. That is something that scholars of money, in particular legal theorists and legal historians of money, have taught us extensively over the last ten years — that it’s really a mistake to think of banks as simply private corporations.

Instead, they are much more like franchisees of a kind of public prerogative. They are operating in a very tightly regulated space in which they are allowed to distribute essentially public goods or credit through private means, but also tied through various obligations in doing so. They are intimately backed by the Federal Reserve, the central bank. They are part of a certain kind of state-owned bank nexus.

In some way, bitcoin correctly diagnoses this. It is futile to play the banks against the state even outside of times of crisis. The two are actually deeply connected to one another.

I just finished a book on the political theory of money where I tried to grapple with this a little bit. It is mostly a genealogy of stepping back and understanding exactly where our conceptions of money come from — where the stuff that we see and don’t see when we look at money comes from. But ultimately the question that emerges from this is a question concerning the democratization of money.

One of the most fundamental things to take on board in order to begin to think about the democratization of money is to realize how misleading it is to talk about the depoliticization or re-politicization of money, even in the way in which we’ve been thinking of different decades as reflecting the politicization or depoliticization of money. Ultimately, what that implicitly assumes is that money is something that can be re- or depoliticized.

I am firmly convinced that is actually a mistaken starting point. Instead, money is always political.

So what is being depoliticized here? It is not money itself. It is the appearance of money that is being depoliticized or, in other words, very often what we mean by the depoliticization of money is its de-democratization.

When we talk about the 1980s as a period of the depoliticization of money, we should correct that in two ways. First, to talk about the politics of depoliticization, we need to study the ways in which thinking within the Fed, not least by Paul Volcker, has been deeply political in order to create a new appearance of money that seems to be beyond politics when it has really been deeply political all the way through.

Secondly, that precedes by precisely removing money not from politics, but from democracy. Once we consider that, it becomes a lot easier and straightforward to begin to pose the question of what it could mean to inquire into more democratic forms of money.

It is absolutely not easy. It is probably one of the hardest questions we can ask today, but it is a really important question. We have got to go there.

For me, what it means is to move away from simply talking about re-politicization or depoliticization and to begin to analyze both the actual decision-making structures within central banks and the monetary system that includes private actors or seemingly private actors and the central bank as we have it right now. This would entail beginning to think about where credit creation actually takes place, who has the right to create money right now, and on what basis?

These would be starting points that I would propose to begin to think about the democratization of money — to think of central banks as institutions that we can actually democratize — without putting forward a specific blueprint. There are lots of interesting proposals out there about what a more democratic central bank could look like, such as having representatives of labor on relevant committees rather than just representatives of capital. You can consider different decision-making structures and even think about central banks as being based on entirely different legislative chambers that are more democratic.

All of that is better than misleadingly reducing the re-politicization of central banks to simply tethering central banks to Congress, which in itself is an institution that is probably lacking democratic legitimacy. Instead, we can actually think about democratic central banks in a number of interesting ways that go beyond simply locking them back into the existing political system.

Secondly, we have got to talk about who was able to provide credit — whether we need to complement private credit creation or private credit provision through more public credit creation and whether we need to rethink the kinds of power relationships that currently allow banks to extend credit without any meaningful obligations. That is the other conversation we could have: to really rethink the entire monetary system on more democratic terms rather than simply through the lens of liquidity.