The Economist April 16th 2022 Finance & economics 65“I
t’sveryattractivetothelibertarian
viewpoint if we can explain it prop
erly,” wrote Satoshi Nakamoto, the
pseudonymous creator of bitcoin, in an
email in 2008 to Hal Finney, a developer,
describing the appeal of the “ecash” he
planned to launch. The attraction
stemmed from bitcoin’s potential role as
a currency free from verification by
centralised third parties and from over
sight by governments. Bitcoin would
instead be verified cryptographically and
governed by its users.
Bitcoin doubtless appeals to those on
the right. At a conference in Miami on
April 7th Peter Thiel, the cofounder of
PayPal, a firm he once imagined as a
young libertarian could supplant the
world’s monetary system, waxed poetic
about bitcoin’s potential. He views the
technology as inherently political, say
ing in 2020 that “if ai[artificial intelli
gence] is communist, crypto is libertar
ian.” ai represents the advance of cen
tralised machines making topdown
decisions; crypto requires many individ
uals and computers making decisions
from the bottom up.
Mr Thiel is not alone in thinking there
is something inherently rightwing
about crypto. Marc Andreessen, co
founder of Andreessen Horowitz, a ven
turecapital firm, agrees with the charac
terisation. In 2021 he wrote that crypto
could represent a “rightwing tech” that
is both more decentralised and more
comfortable with entrepreneurialism
than the tech industry.
Mr Andreessen is most animated by
the opportunities stemming from “dis
tributed consensus”. Until now, he ar
gues, collaborative online effort either
adopted corporate norms from the real
world, or worked as opensource pro
jects, with no money involved. By comparison,cryptoallowsfor new kinds of
incentive systems, where participants can
be paid without a realworld company
needing to exist. Take Helium, a decentral
ised wireless network, for instance. It
encourages individuals to install “hot
spots” in their homes for use by nearby
internetconnected devices, by compen
sating them in hnt, a crypto token. The
more the hot spot is used, the more tokens
are paid out.
Such architecture is commonly called
“web3”, a nod to its potential to be the next
phase of the internet. Chris Dixon of An
dreessen describes the infrastructure as
making it possible for organisations to be
owned by tokenholders, who then vote
on governance matters. Modern tech firms
are incentivised to build mammoth plat
forms that show users as many ads as they
will bear. By contrast, developers and
users of a web3 application could earn
rewards for building and interacting with
the platform. In this world users would be
able to vote on how Facebook’s or Twitter’s
algorithms work. Crucially, they would
also gather up their share of the profits. At first glance, the idea that these
applications or projects can be built or
contributed to by anyone is the stuff of
freedomloving libertarian dreams. But
the way projects themselves are being
run has quite a lot in common with
leftwing ideas. Antonio García Martí
nez, a former manager at Facebook and
the author of “Chaos Monkeys”, a book
about Silicon Valley culture, says that
“you will never hear a venture capitalist
sound more like a communist than when
they are talking about web3.” Blockchain
based enterprise might not be quite what
Marx had in mind. But the model behind
it seems closer to the idea that the com
munity should own the means of pro
duction, distribution and exchange than
modern capitalism does.
There is a comedy to venture capital
ists talking like communitarian social
ists, notes Tomicah Tillemann of Haun
Ventures, a crypto fund. As a former
adviser to Joe Biden, he is no libertarian.
Still, a real shift is under way. Virtually
everyone agrees that the bigtech model
is flawed, he says. Mr Thiel and his ilk
loathe its deplatforming of rightwing
voices; the left takes aim at its concentra
tion of power and wealth. Messrs Thiel,
Andreessen and Tillemann all see crypto
as a serious threat to the status quo.
The truth may be that web3 is simply
nascent enough that people across the
political spectrum see in it whatever they
want. If crypto really does make it pos
sible for developers or users to build any
kind of economic system, then the appli
cations that flourish will be the ones that
work best. Perhaps those will be libertar
ian Utopias where the Satoshis of the
world retain their privacy. But they could
just as well be socialdemocratic meta
verses with automatic wealth taxes and
virtual, paternalistic officials. ButtonwoodSatoshialism
Does crypto represent a libertarian dream or a socialist Utopia?banks recruit and retain their staff. Many
have long tried to draw employees from a
more diverse pool. That task is now more
urgent, and goes beyond lines like race and
gender. Mr Pollner sees banks at all levels
recruiting from a much broader range of
universities than they used to—and, just as
important, trying to hire people with per
sonalities “different to the stereotype of
the average banker”. Retention efforts have
a darker side, too: an investment manager
at a London privateequity fund reports
having hired juniors from two separate
banks, only to have both receive letters
from their former employers suggesting
they might have to repay bonuses (in the
end, they did not).
The net result within investment bank
ing is likely to be a widening gap between
the largest and most profitable banks,
chiefly American ones, and “secondtier”
firms, including European banks. The lat
ter have long had to pay more, and take
greater risk, to compensate for not having
the prestige and huge domestic market of
the Wall Street giants. That has sometimes
had dire consequences: Credit Suisse and
Deutsche Bank have suffered such frequent losses from scandals and exposure
to dubious clients that they have become
the butt of industry jokes.
As secondtier banks struggle to muster
the financial firepower to recruit senior
talent, that problem will only worsen. The
fewer skilled staff they attract, the less
dealflow they capture, and the faster their
investment banks must shrink. In recent
years many European banks have been
forced to flee Wall Street, or close their rac
ier outfits altogether. More ofthemmay
become casualties of the talentwarraging
at the cutting edge of capitalism.n