The tech titans of Silicon Valley are often compared to the robber barons of the Gilded Age. An apt comparison to be sure. But in assessing Facebook’s recent move to coin its own digital currency it may be helpful to look back a bit further in time.
The East India Company — the joint-stock company that subjugated the Indian subcontinent and laid the groundwork for the British Empire — also, incidentally, minted its own coins.
Queen Elizabeth I granted the East India Company a charter in 1600 to exploit the South Asian trading opportunities that had opened up following the defeat of the Spanish Armada in 1588. Over the next nearly three centuries the company grew to mammoth proportions, dominating world trade from an office in London.
To facilitate its expansion into the subcontinent the East India Company minted its own copper, tin, silver, and gold coins. The EIC’s coinage, minted first in Mumbai, helped the company sidestep local resistance to European money.
More importantly, the East India Company’s coins cemented it as an institution, enabling the London firm to tighten its grip on its growing dominions and its governors to pillage vast riches.
Today, a new monopoly has decided to mint its own money.
Facebook is spearheading a digital currency called Libra, which its founders describe as a “low-volatility cryptocurrency that will have the ability to serve as an efficient medium of exchange for billions of people around the world.”
The Libra Association which in addition to Facebook includes about two dozen companies so far — Mastercard, PayPal, Uber, Andreessen Horowitz, to name a few — aims to create a global digital currency using the Libra Blockchain, a cryptographically authenticated database that stores a ledger of how many Libra coins people have.
According to the Association, the Libra Blockchain “will be decentralized, consisting of a collection of validators” — the companies that bought in to and belong to the Association — “that work together to process transactions and maintain the state of the blockchain.”
Just as the East India Company’s coins helped it to “disrupt” global trade, Facebook and its co-sponsors hope Libra coins will disrupt global finance. Libra’s website promises a stable, efficient, frictionless currency governed by corporations rather than states: “Reinvent money. Transform the global economy. So people everywhere can live better lives.”
It might seem uncharitable to draw comparisons between Facebook and the East India Company. After all, in its heyday the EIC was run by an “unstable sociopath” (Robert Clive); it was directly responsible for a famine that killed ten million people; and it raised a huge private corporate army to pursue bloody territorial conquests.
Sure, there was that time that Facebook didn’t seem to care that its software was fueling a massacre in Myanmar. But obviously Facebook’s misdeeds don’t compare to the crimes committed by the EIC.
Unlike the East India Company, which coined its own money to expand its reach and power, Facebook promises that the crypto-coins it’s minting are designed to democratize finance.
Libra’s founders say the new digital currency will provide much needed financial services to the unbanked, lower barriers to entry for startups, and facilitate new types of business models. “Moving money around the world should be as easy and cheap as sending a text message. No matter where you live, what you do, or how much you earn.”
However, it must be said that the East India Company didn’t start out with a plan to brutalize and impoverish millions of people. The EIC’s initial proposal was significantly less ambitious — “to venture in the pretended voyage to the East Indies (the which it may please the Lord to prosper), and the sums that they will adventure.”
But the English company was given a long leash to achieve these modest aims. This unchecked power transformed it from a handful of adventurers looking to make their mark and make some money to a corporate monstrosity, steamrolling everything and everyone in its path.
Today’s tech titans enjoy a similar unchecked power to transform the world in their own image. Libra is a perfect example of this.
Facebook has been allowed to vacuum up, store indefinitely, and profit from the personal data of billions of people. It is now channeling the proceeds of this appropriation toward the creation of a new institution, potentially outside the reach of governments, to capture the next horizon in the digital frontier.
Libra proponents claim that their ultimate goal is to create a “permissionless” structure in which control over their proposed cryptocurrency will be decentralized among individual “validators” all over the world. But for now, if the Libra currency project is approved in its current form, the new crypto-coins will be validated, guaranteed, and governed by a handful of private multinational corporations.
This corporate-controlled structure is necessary, we’re told, only until trust in the currency is established. But given the enormous computing power required for blockchain validation at a global scale with billions of users and many times that number of transactions, it’s hard to see how large and small validators will ever operate on an equal playing field.
What’s much more likely to happen, given the vast profit-making potential of Libra, (and the mendacious track record of Facebook) is that the currency will remain under corporate control indefinitely.
After all, the remittance industry alone — a place where a digital currency could make inroads given the steep fees charged by companies like Western Union — is enormous and highly lucrative. According to the World Bank, officially recorded remittances going from wealthy countries to low- and middle-income countries reached $529 billion in 2018 — a nearly 10 percent jump from the previous year. Facebook’s proposed digital wallet (Calibra) tacked onto its social media platform could capture a massive chunk of this global network of transfers, reaping windfall gains.
Facebook’s move into minting its own currency is about more than just finding new avenues for profit-making, however.
As David Golumbia argues, the politics of cryptocurrencies like bitcoin, ethereum, and now Libra, is rooted in cyber-libertarianism — a worldview that is deeply skeptical of the right of representative governments to create and enforce laws that rein in the proclivities of corporations and elites.
Libra is a perfect expression of the worldview, fulfilling the cyber-libertarian fantasy of using technology to create pathways and ecosystems where corporations rule unhindered by government oversight and regulations.
This worldview is not just nurtured by rank-and-file cypherpunks — it’s shared by the leading lights of Silicon Valley.
Katherine Losse, in her memoir of working at Facebook in its early days, recalls an encounter in which Mark Zuckerberg asked Losse to write a blog post on the theme of “companies over countries.” When Losse asked for clarification Zuckerberg replied, “it means that the best thing to do now, if you want to change the world, is to start a company. It’s the best model for getting things done and bringing your vision to the world.”
So far, the vision of Facebook and its Silicon Valley ilk has been defined by a single-minded drive for power and profits, to quantify and commodify everyday life.
Giving these companies the power to mint their own money, so they can further cement their monopoly over the infrastructure of modern social, economic, and political life is, quite frankly, frightening.
The legacy of the horrors perpetuated by the East India Company are still being felt today. We would do well to take note. Instead of permitting the tech titans to amass ever more power, now is the time to stop them in their tracks.