I originally delivered the following as a lecture for Crypto, Culture, and Society, which has published this article as well (here). Sara Campbell and I adapted the lecture into the piece below.
“We are all Keynesians now.”
— Milton Friedman, 1965
“In one sense, we are all Keynesians now; in another, nobody is any longer a Keynesian.”
— Milton Friedman, 1966
There’s a lot of reasons it’s perverse to say that web3 has made us all Marxists, but perhaps none moreso than the fact that web3 OGs really hate Karl Marx.
Take, for example, Nick Szabo: scholar, cryptographic guru, and proto-bitcoin inventor, occasionally rumored to be Satoshi, who has bemoaned Marxism for fomenting closed societies. Or to quote Szabo himself, “how fucking pathological can a diseased brain become?”
Likewise, take Ameen Soleimani, creator of Moloch DAO, RAI, and SpankChain—truly one of the most innovative and influential minds in the space—who has gone on record not only agreeing with Szabo, but arguing that “America has been invaded by the Marxist mind-virus” by KGB psyops. “When poor people are told what they want to hear—that they are equal to rich people,” writes Soleimani, “the seed of social unrest is planted.”
But it’s not just right-wing crypto figures who think web3 is fundamentally, well, unmarxist; crypto’s hyper-marketization means many leftists understand crypto as an accelerated form of capitalism as well. “There are respects in which cryptoeconomics also resembles an opposite of the commons: the enclosure,” Nathan Schenider wrote recently, as “what was once held in common become subdivided into ownable, tradable assets.” For Schneider, this hyperfinancialization takes “things previously difficult or impossible to buy or sell, from cryptographic computing power to real estate in digital games,” and gives them value by making them artificially scarce. It privatizes what could have been freely available to all.
Meanwhile, Cory Doctorow, arguably the most important technologist of the left, has accused DeFi of being “Shadow Banking 2.0,” creating massive risk for the economy while enriching the 1%. “I don't care how distributed the banks are if all the money is owned by the same number of billionaires,” he writes. (Indeed, about .01% of bitcoin owners represent 27% of wealth.)
So how blue are the cryptopills that would have us thinking web3 could possibly be Marxist? How could we even arrive at that conclusion?
Well, let me try to answer first by way of example, or rather, another overarching question: could communism be… DAOs?
Back in October, I ran an experiment to retweet three passages of Marx’s German Ideology by replacing the word “communism” with “DAO.” You can judge for yourself how well it worked.
Here’s the original: “The communists do not oppose egoism to selflessness or selflessness to egoism… they are very well aware that egoism, just as much as selflessness, is a necessary form of the self-assertion of individuals… Throughout history, the "general interest" is created by individuals who are defined as "private persons."”
Note the tension here: the collective only operates as well as it fulfills the self-interested needs and desires of its individual members without ever costing them their sovereignty.
And that tension is a recurring one.
The original: “The real intellectual wealth of the individual depends entirely on the wealth of his real connections. Only then will the separate individuals be liberated from the various national and local barriers… All-round dependence will be transformed by this communist revolution into the control and conscious mastery of these powers, which have till now governed men as powers completely alien to them.”
Again, note the paradoxical emphasis on individual sovereignty as the basis for collective liberation.
That paradox is the point, too, of one final Marxist tweet.
The original: “The modern state, the rule of the bourgeoisie, is based on freedom of labour. Freedom of Labor is free competition of the workers among themselves. [By contrast,] free activity for the Communists is the creative manifestation of life arising from the free development of all abilities of the whole person.”
Once again, we sense the same tension. True collective freedom means liberation of the individual to do as they please and are able.
But note, more broadly, that there is a tension at all—that is, that “Marxism” is not quite so reducible to pat solutions or huff-and-puff sloganeering, nevermind the horrors of 20th century state socialism. For when we understand Marxism not as doctrine but dialectics, a series of tensions and paradoxes, we can understand one of its main points of value: that it’s a framework for questions that may not have any answer at all.
So for the purpose of this piece, we’ll cover three questions posed by Marx, all encompassing the tension between individual sovereignty and collective collaboration that underlie the three main categories of web3 right now: NFTs, DeFi, and DAOs.
Question #1: Do Workers Own the Means of Production? Or is Ownership Abolished?(aka NFTs)
It’s so obvious a question that it’s challenging to answer: in his writings, does Marx advocate for the abolishment of property and ownership generally? Or does he advocate for the redistribution of ownership to the proletariat — that is, so they can own the means of production?
The question even runs through a document as doctrinaire as “The Communist Manifesto,” which toggles tortuously between wanting to eradicate property and wanting to hand it over to workers. “The distinguishing feature of Communism is not the abolition of property generally,” Marx and Engels write in The Communist Manifesto, only to add a few lines later, “in this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.”
This tension haunts the text. Marx and Engels try to paper over it by explaining at various points that communism is just the abolition of private property (not property generally, not to worry union rank-and-filers!), and that the real point is dispossessing the bourgeoisie of their ill-gotten gains. Yet they have no great answer for whether they would destroy workers’ property except to answer, defensively, that it’s a moot point given that history has done exactly that: “the development of industry has to a great extent already destroyed it, and is still destroying it daily.”
This is, clearly, a rhetorical sidestep to avoid the question of worker ownership—because for all “The Communist Manifesto”’s cavalcades of anti-property posturing, we can see Marx’s paradox. For workers to own the means of production means getting rid of ownership as we know it. “With the abolition of the basis of private property,” he writes in The German Ideology, “men get exchange, production, the mode of their mutual relation, under their own control again.”
The contrary, Marx writes, is a system where “trade rules the whole world through the relation of supply and demand – a relation which allots fortune and misfortune to men, sets up empires and overthrows empires, causes nations to rise and to disappear.” Only Marx would fear the tyranny not of kings, but of… supply and demand. Supply and demand is, in other words, a tyranny of misvaluing the things that matter most to us, whether that’s food or love. NFT critics will recognize the sentiment here: supply and demand assigns values to items not according to what they *mean* to us but rather simply for their scarcity in the market. Web3-native, it seems, Marx is not.
And yet. What happens when workers control the means of production?
Marx and Engels limn utopia:
“As soon as the distribution of labour comes into being, each man has a particular, exclusive sphere of activity, which is forced upon him. He is a hunter, a fisherman, a herdsman, or a critical critic, and must remain so if he does not want to lose his means of livelihood; while in communist society, where each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.”
— Marx & Engels, The German Ideology
The most important means of production is not a factory, it turns out. It’s *time*—and more importantly, our own sense of self that comes from having free time at all. These are what gain us our sovereignty to live the lives we want to lead, to act as hunters, fishers, herdsmen, and critics, without ever being hunters, fishers, herdsmen, and critics, defining ourselves by the role we play in profit creation.
But notice again that there’s a tension here about the role of the individual and collective—if we’re all doing whatever we want, how is society collectively running? Who is working on the sewers and taking out the trash? Perhaps these are unnecessary if we live in small sustainable communes; Marx only hints that “society regulates the general production.”
But who is this society?
Rather than try to answer that question directly, I wonder if we can reframe it in more familiar terms. For we might argue that this tension—whether to abolish ownership or enable workers to own the means of production—actually reflects a deeper one. Should we aspire to sovereignty as individuals to own our own identity, or in today’s terms, our data and reputation? Or would we each be better off if we relinquished this sovereignty as selfish so that we could better support the collective needs of each other and society?
Actually, we can boil down these questions even more to a profound tension at the heart of web3:
Do we want ownership over the products of our labor, or do we want them to be open-source for anyone to use?
One way to understand this tension is to understand the creator economy over the past decade. Step back, and we can see the creator economy as a kind of progenitor of web3 culture, not only as a product of permissionless, user-generated content (TikTok, Twitter) but of a general move towards a freelance economy and the valorization of the solopreneur, that single individual who works on whatever they like and gets paid for their own work.
That might sound as though the creator economy has shifted us culturally towards a belief that artists should own the means of production: what is a TikToker if not a Hollywood celebrity who owns the means of production? what are hype houses if not proto-DAOs? But then we remember that the creator economy is actually the product of making work for free to prioritize engagement at scale over the monetization of “100 True Fans.”
Step back farther, and we can see that the creator economy is really the culmination of the failures of the gig economy that’s gained dominance over 40 years with the promise of worker sovereignty and a reality of worker isolation. Initially, freelancing was an attractive proposition for corporations to pay as they needed—or rather, to pay as little as they needed, as David Harvey pointed out in The Condition of Postmodernity: “Employers have taken advantage of weakened union power and the pools of surplus labourers to push for much more flexible work regimes and labour contracts.” The irony is that the creator economy has also proven to be the undoing of those traditional corporations as the hierarchies of the corporate ladder have vanished before a new ideology of working for yourself.
But in a world where 35% of American workers are gig workers, this promise of being a fisherman, hunter, and critic as we please has also meant an abandonment of structures for steady compensation and support for liability as freelancers have fewer safety nets and less recourse to worker rights than ever — because they’re on their own.
Likewise, the creator economy has promised us a Marx-like vision of anyone successfully becoming an artist, but only by operating through platforms that extract excessive profit from the workers who make them successful. What’s true for Uber drivers is true for TikTokers. This, we might say, has been the cost of freelancers being open-source: their work is used freely by anyone, while the platforms they operate through have remained siloed and deeply monetized.
Put another way: freelancers got the open-source, but platforms got the ownership.
So what’s the answer? Web3 is, arguably, a response to the polarized failures of the corporate ladder and the economy, of siloed companies on one side and open-market freelancing on the other. And this is where we return to Marx. Because the promise of independent sovereignty to hunt and fish as we please will only work if there is, indeed, a “society” to “regulate the general production” as well. We can only own our work if we’re also willing to give it up to collective benefit to provide for each other.
DAOs, clearly, are one answer here that we’ll return to in a bit—a kind of consensual-state-as-company that lets us earn fully for our work while sharing it permissionlessly and abolishing individual ownership over it.
But the simpler model is an NFT.
On the one hand, NFTs represent creators finally getting paid directly for their work. On the other hand, this ownership is clearly a social construct over an infinitely replicable jpeg that is very much open source.
In other words, NFTs give us one vision of what it can mean for creators to own the means of production (their art) and capture the full value that they produce, even while the work itself is not private property at all but open to all.
NFTs abolish ownership to enable it for creators—for workers.
Question #2: Is Liquid Capital the Illness or the Cure?(aka DeFi)
The question of ownership is a much larger one than just assets. It’s also a question of whether we should own our own money away from the power of centralized institutions like banks and even governments that have used it to fund everything from subprime mortgages to war. Or does that open the way for what we might call roller coaster sovereignty—that is, massive financial abuse, money-laundering, hacks, con artists, and extreme volatility without government regulation?
In other words, are we our own best financial custodians?
More technically, what we’re asking is whether liquid capital is at the heart of capitalism’s contradictions—or actually the solution to capitalism’s deepest problems? This liquid capital is what Marx in the Grundrisse calls “circulating capital,” that is, capital which can easily be liquified as cash and just as easily converted into goods. Such liquid capital, Marx writes, “is indifferent to every specific form, and can shed or adopt any one of them as equivalent incarnations.” In other words, like a kind of ghost assuming the form of the goods it possesses, liquid capital can take on any shape, and isn’t constrained to a use case or even a specific territory.
For contrast, let’s isolate some key qualities of *fixed* capital, which can’t be liquified, to see why liquidity might help solve some of the major challenges of capitalism.
Fixed capital:
Infrastructure (machinery, factories, airports)
Generally single-purpose (valued by use)
Requires massive upfront costs from loans
Requires extensive investment to build and keep overstocked
Absorbs surplus value (companies charging more for goods than what they cost to make)
Notice how fixed capital is at the heart of some the most predatory aspects of capitalism historically: overcharging for work, underpaying workers, and continually servicing exorbitant loans for money that doesn’t yet exist but will require the economy to produce more and more money with more and more production in order to meet rates of interest.
Liquid capital, on the other hand, doesn’t have these issues.
Liquid capital:
Not bounded geographically
Can be used to represent any item or good
Can take on any use
Completely mobile, liquid capital doesn’t face the friction and costs of time and place such as decay, overstocking, and upfront costs that demand huge amounts of money that must be returned at a premium later.
And so, when we define liquid capital this way, we might think of it as something else: digital money.
Digital money:
Not bounded geographically
Can be used to represent any item or good
Can take on any use
In other words, could digital money, or cryptocurrency, be the solution to the physical world of scarcity?
Not so fast. There’s also an argument that this “pure capital,” this capital untethered from the real-world or actual use, is valuable because it’s what facilitates the systems of loans, surplus value, overstocking, and all the rest. As David Harvey writes about liquid capital in A Companion to Marx’s Capital, it “emerges when money is put into circulation in order to get more money.” Its purpose is breeding more capital, keeping us tethered to a world where we constantly have to work below wage to produce more value to service loans for money that doesn’t yet exist.
So what happens when totally liquid capital that knows no barriers of time, space, government regulation, or TradFi rails can be deployed instantaneously anywhere in the world however anyone wants? Does operating online enable an economy in which liquid capital doesn’t need to service fixed capital for the first time ever? Or as NFT critics have claimed, does it mean we need to recreate the scarcity dynamics underpinning supply and demand economics in order for digital items to have value?
To put it another way, are we creating shadow banking 2.0 with all the perils of unregulated criminality, or are we creating Occupy Wall Street 2.0?
Recently, Hilary J. Allen has made a quite compelling case that an economy of liquid currency results in capitalism on steroids. Endless liquidity means overleveraging is easier than ever, and to make things even more financially perilous, there’s no federal bank to prop up cascading margin calls that can result. If every transformative technology has experienced massive financial bubbles that brought down the economy when expectations outpaced innovation, we can only speculate just how truly horrific a crash would be when the next technology itself enables massive, unregulated lending.
But there’s a counterargument.
For we can also say that liquid capital enables financial sovereignty since we no longer need intermediaries benefitting from our money. Financial sovereignty, it turns out, applies to anyone who’s ever kept their money in a bank just as well as it does to workers. To return to the labor paradigm, we might imagine that just as workers get paid far below the value they provide to factories, we depositors get paid far below the value we provide to banks historically—despite also having to pay governments to bail them out.
DeFi is predicated on the fact that we no longer have to pay banks for their failures without getting paid for their successes. Because now, we can serve the function of lenders ourselves. In a traditional banking paradigm, you would deposit $1 in a bank that the bank would loan out to someone else, so that you and the other lender would each have $1, with the bank effectively earning off your money by generating $2 in the economy while making you an unwitting, un-consensual, and unearning lender to someone else. (I’m simplifying, but this is the principle of money multipliers and bank runs.) That’s simply not possible in DeFi, where you can either provide liquidity yourself to markets or, if you like, deposit $1 and get a synthetic token representing its worth. Now there’s $2 in the economy as well, but one is fully collateralized, and the other belongs to you.
This is what we mean when we say DeFi is backed. While it’s clear we’re heading towards a future of undercollateralized loans and crypto generating loans for fixed capital in the physical world, financial sovereignty has given us volatility because it’s enabled us to be our own lenders and market makers—as well as losers in the absence of a state.
Which begs the question: perhaps we should create money out of thin air to stabilize economic systems?
And that leads us to our final section, on DAOs.
Question #3: Do investments let us live the lives we want? Or do they force us to live in constant debt to the future lives we want?
To invest with any expectation of return is to put money in the world and hope more comes out—which raises the question, from where? What is it that generates that new value?
Exploitation of the poor and expropriation of the land are two answers, and while Marx’s legacy is often intertwined with the former, his major focus throughout much of Das Kapital is on a third: debt. Debt is, for Marx, fictional capital: an obligation for future money that doesn’t officially exist but that debt itself wills into being. To give an example I gave last year in “Ray Dalio, Marxist,” if I loan my friend $5 and they write me an IOU, I can now potentially use that IOU as collateral or even currency with other friends—so that $10 now exists in place of $5, and even more if we count interest.
We might expect Marx to decry the whole system of capitalist enterprise as a charade built on IOUs that would collapse the economy were they ever to be serviced. But in fact, Marx makes a crucial distinction here: for Marx, investments in companies—stocks—represent real capital, precisely because they are not IOUs that can “exist twice” as loans and currencies.
The stocks of railways, mines, navigation companies, and the like, represent actual capital, namely, the capital invested and functioning in such enterprises, or the amount of money advanced by the stockholders for the purpose of being used as capital in such enterprises. This does not preclude the possibility that these may represent pure swindle. But this capital does not exist twice, once as the capital-value of titles of ownership (stocks) on the one hand and on the other hand as the actual capital invested, or to be invested, in those enterprises.
— Marx, Das Kapital, III.29
Note the difference between debts and investments. With debt, your $5 loan will always be worth $5 (plus interest), so your IOU can easily become currency or collateral. With investments, however, your $5 can’t be treated as $5 whenever you like: it will only be worth whatever the market deems it’s worth, which can go up or down over time. In other words, investment is different from debt because it doesn’t guarantee you a return of any kind that would require the money to exist twice, first as a quantity to be repaid (the IOU) and second as a quantity being used or lended out (the loan itself).
Even more importantly, investments are not what Marx calls “illusory capital” because they are not “interest-bearing capital,” which Marx defines as nothing more than “an accumulation of claims on production, an accumulation of the market-price.” For the perfect embodiment of such “illusory capital,” Marx points us to state bonds: because bonds require a repayment at interest that they can’t actually be used to generate themselves, they’re effectively creating money out of thin air. (For anyone who associates Marx with specter of 20th century state socialism or believes that he at any point advocates for an all-powerful government to regulate enterprise, the shade he throws at states here should set us straight.)
However, there’s a slight catch in public markets that becomes a bigger catch in private markets. Because where does the valuation of that stock come from? Well, it comes from the expected future returns of a company that we hope will do well.
So we are effectively making money out of thin air. If I invest $2M in your company at a $20M valuation, my $2M is real capital, but the other $18M was just created out of nowhere as a mythical entity we hope will earn its value due to future monetization. These valuations are, like debt, claims on future production.
That catch doesn’t matter for Marx because there has never traditionally been a way to tap into these claims or use them as capital: as long as the IOU can’t be traded as its own currency, the money doesn’t exist twice.
But in DAOs, it suddenly does — because now we’ve replaced stocks with tokens that we can use to trade, buy, or invest (assuming the SEC lets us).
But there’s another, even bigger point at play — DAOs let *anyone* anywhere create tokens that are essentially claims on future value, and raise capital from whomever they like. Now anybody can have the benefits of illusory capital without the downside of actually having to pay it back with interest.
We can start to see the risks that DAOs represent to financial systems. Many of these investments will not return their valuation, while the democratization of finance without proper education offers massive opportunities for fraudulent or even failed projects to take advantage of investors who can’t diligence them.
But even so, by letting us create our *own* currency, DAOs can also help us tap into innovation and investment for our projects in ways that never could happen before web3. Owning your work is one thing. Being able to fund the kind of work you want to do is another — and it’s what enables genuine workers collectives to control funding and dissolve the barriers of labor and capital. Because now you can imagine DAOs “investing” in each other by swapping tokens under agreement to support one another’s projects. In place of a traditional investment ecosystem with capital on one side (investors) and labor on the other (founders), DAO-to-DAO token-swaps mean each side represents both.
DAOs, in other words, embody all the tensions we’ve discussed above: between workers having sovereignty and giving it up to a collective, between liquid capital enabling financial self-empowerment and driving us towards a world in which we live in the illusion of only seeing future investment and returns, between the real capital of investing in a project we create and the illusory capital of using that money to fund future value. If there are no clear answers to these paradoxes, these questions, there is at least the optionality of multiple choices.
And it’s that optionality that seems peculiarly, well, Marxist. In an era of massive hyperfinancialization and billion-dollar venture funds, this is perhaps the real point of DAOs, the real reason that in the shadows of corporations and the gig economy, even the VCs all talk like Marxists now: web3’s great aim is not just to let builders take financial sovereignty over what they’re building, but to give everyone the optionality to build according to their own desires.
Special thanks to Li Jin and to Bhaumik Patel and Tom White for notes and edits.
I want to read this article and take the time it deserves. But I think it is brave to even entertain such thoughts, especially just at the moment.
sharp.