Miss Albania 1996
"Money, as a form of media, is also a technology of memory," sociologist Lana Swartz notes in her book New Money. "It is a distributed, invisible record of human exchange." What is tracked there is the cumulative history of exploitation and dispossession; money is a technology for transferring the advantage that some have wrung from the domination of others forward to their heirs. Money remembers that suffering and assures that it can be revisited exponentially on successive generations. It is, as Marx argues, social relations congealed into a thing.
Blockchain-based cryptocurrencies are sometimes pitched as liberating money from history, allowing it to flow anonymously, free of state and institutional controls. But it maybe makes more sense to understand them as new and more indelible ways to remember distributional injustice and reproduce it without any interference in the form of taxes or civic responsibility. "The design of money is constitutive of the community in which that money circulates," Swartz writes. "A theory of money, then, is a techno-economic imaginary: a theory of the larger social order (or a challenge to it) and a way of materially enacting that theory ... Change the currency, change the world." What kind of community is bitcoin — which is premised on a full rejection of institutional trust — trying to create?
Several years ago I was at a dinner where one of the guests turned out to be a crypto shill. To show me how easy it was to transact with bitcoin, he goaded me into downloading an app and transferred to me the smallest amount of bitcoin one could send: 50 cents. Since then, that 50 cents has spiraled to be worth as much as $70, but whenever I open that app now, it is in the hopes of seeing it back at zero where it belongs.
No financial instrument that traverses from 50 cents to $70 will ever be useful as currency — I still have no idea how much bitcoin I actually own (it's some random-seeming fraction stored on an exchange I probably couldn't get it off of) because its value makes sense only in dollar terms. But bitcoin has proved extremely useful for fantasy purposes, grounding dreams of primitive accumulation for those who missed out on earlier rounds, as though there could be a capitalistic do-over in which the already rich don't simply get richer. Or perhaps the idea is to YOLO in the face of the world's intractable corruption.
The Albanian pyramid schemes of the 1990s make for an instructive comparison, as this recent essay at Dissent by Daniel Petrick — a review of Tales from Albarado: Ponzi Logics of Accumulation in Postsocialist Albania by Smoki Musaraj — details.
In 1995 the International Monetary Fund (IMF) declared Albania a “success story of free market reforms.” Meanwhile, local media was lauding the owners of the pyramid firms as trailblazers of homegrown capitalism. The firms’ monthly rate of return grew from around 6 percent to 44 percent—enough to more than double the principal in two months. By late 1996 roughly half the country had invested. A number of Ponzi schemes popped up across postcommunist Eastern Europe, but the scale of the Albanian pyramids was unprecedented. At the time of their collapse in January 1997, their nominal value amounted to $1.2 billion, equal to half the country’s GDP.
Up to the point of collapse, this seems like the world that crypto people dream of, where there is widespread celebration and adoption of their Ponzi schemes and even established economic institutions like the IMF acknowledge their necessary role in the global "free-market" order. The "informality" of the Albanian Ponzi schemes is akin to crypto's supposed independence from the established order of banking, which is offered as the rationale for cryptocurrency's ultimate value. It's beating the system! Post-communist Albania would be especially ideal as a model in that the population, having lived under a repressive dictatorship, had no practical understanding of how endemic fraud and grifting are to capitalism as usual, and no institutions or regulations existed to limit preying upon them. Inexperienced and/or unscrupulous politicians were likewise unable to do anything but embrace corruption and inflate the bubbles they could profit from but not control.
Especially telling are the ways the Albanian pyramid schemes tried to signal their credibility. "To ensure a lack of oversight, pyramid firms accumulated political and social legitimacy in familiar ways," Petrick writes. "They sponsored soccer teams and the 1996 Miss Albania pageant. They owned radio and television stations and were frequent newspaper advertisers. From their beginning, their status was ambiguous, obfuscated with official-seeming contracts of unclear legality. No meaningful financial regulation or monitoring interfered with them. They openly funded political campaigns and gave kickbacks to politicians."
That all sounds pretty familiar — just plug in Coinbase, NFTs, "smart contracts," Elon Musk, and Andrew Yang into the appropriate slots, and you get a picture of how the crypto world works at its own illusions of legitimacy. Musaraj describes the "historically specific register of entrepreneurship" that Ponzi operators facilitated in claiming, as one firm put it, to manifest a "contemporary tendency in the field of the application of technology." Cryptobabble is spoken in that same dialect.
Inevitably, the Albanian pyramid schemes collapsed, unleashing chaotic violence and displacement. Western commentators, Petrick notes, were quick to blame the supposed dupes rather than broader phenomena like the expropriation of nationalized property by elites and the rapacious policies of economic "shock therapy" imposed by the global economic community. But Albanian investors were not the childlike simpletons beguiled by shiny baubles and infantile greed that patronizing commentators would sometimes evoke. As Petrick explains, Musaraj points out that many of the pyramid schemes' victims "assumed the firms were fraudulent; they just thought they’d be able to pull their money out in time." In other words, they already understood the game. Despite being a losing proposition for society as a whole, the Ponzi schemes had nevertheless become the "techno-social imaginary," the logic of the social order. It would have seemed less rational not to invest in them.
Petrick suggests the post-pandemic world has a lot in common with post-communist Albania:
The pandemic effected a historic upward concentration of wealth in the United States at a time when tens of millions lost their jobs and hundreds of thousands succumbed to the virus. Total catastrophe was held off with eviction moratoriums, stimulus checks, and emergency unemployment payments. But we watched as death, layoffs, and the stock market all perversely skyrocketed in seeming unison. With college degrees and employment less and less certain to provide a life of financial security and common dignity, why not pour some Trumpbucks into a hive-mind pump-and-dump scheme facilitated by a loosely regulated stock trading app? Why not bet on a cryptocurrency of ambiguous legality? ... It might not work, but what if it does? What other options do we have?
Bitcoin is its own kind of contagion that seeks to sustain that chaos, a social order where it seems like desperate gambles are the new normal. We should all get vaccinated.