Authoritarianism and Blockchain
OP-ED: How Blockchain Can Bring Hope to the Oppressed
Democratic prominence over the post-cold war international system is beginning to subside. The world is experiencing a shift in the balance of power, and with it, a challenge to the status quo. The rise in power and influence of authoritarian governments presents us with a familiar challenge but, significantly, one which might now be tackled without the usual reliance on political or military intervention: in their place, blockchain technology?
It is worth noting that, running in parallel to the growing prominence of authoritarian governments, we should also consider the subtle erosion of confidence in democracy as a successful model for societal governance. The 2019 Freedom in the World report shows that globalisation has both profited the wealthy and accommodated the success of newly industrialised economies, notably China and India. However, the benefits have been scarcely felt in long-established industrialised democracies, with an increase in foreign competition and technological change resulting in the loss of previously stable jobs for low and medium-skilled workers. Accordingly, the report concluded that the emergent loss of confidence in democracy has been subsequently exploited by typically anti-liberal populist movements, seeking to undermine the liberal institutions designed to ‘protect minorities and prevent the monopolisation of power’.
At this point, you may be asking yourself the question: ‘what does all this have to do with blockchain technology?’. Well, in order to answer this question it is worth familiarising ourselves with the increasing role of authoritarian capitalism in the modern world. If we take authoritarian capitalism to be the product of the ‘monopolisation of power’, as discussed in the ‘Freedom in the World’ report, we can see that democratic capitalism is at risk of collapsing. The rise of authoritarian capitalism can be largely attributed to the denigration of equal opportunity to compete in the marketplace. Here, third parties are allowed to efficiently operate in a way that exacerbates the binary between the core and the periphery, consequently encroaching on the economic freedom of those using the market. As such, if we can find a robust way of establishing low-friction transnational markets, in which competition is pure and independent of third party participation, then we gain the potential to resuscitate democratic capitalism and bring the oppressed closer to emancipation.
According to the latest Freedom in the World report (2019), as little as 39% of the global population are classified as ‘free’, down from 44.1 % in 2018 and 46.1% in 2008, and, whilst the contribution of economic freedom alone to these figures is unclear, we can say that it is at least a contributing factor in the deprivation of other notions of freedom. This is broadly because the governing salience that economic factors command in determining the satisfaction of other facets of human rights, renders economic freedom as an authoritative characteristic in adhering to human rights standards.
These human rights standards are set by the United Nations and, with the exception of Palestine and the Vatican City, the remainder of the globe share a collective responsibility, as members of this body, to abide by international law in respecting, protecting and fulfilling human rights. These rights represent the fundamental freedoms and basic rights inherent to all human beings — rights that authoritarian regimes threaten to compromise.
Exploring these concepts through a number of case studies should help elucidate just how, and indeed why, human rights can be affected by authoritarian governments and what impact this has on the human rights of their citizens. These case studies will equip us with a more profound knowledge of the international system’s framework, providing the context necessary to make an accurate assessment of blockchain’s potential to offer global economic emancipation.
China
China’s extraordinary rise to prominence on the global stage can be attributed to significant economic success following the restructuring of their markets in 1978. Such was the success of these reforms, that China now find themselves the second largest economy in the world, posing a significant threat to US hegemony. That being said, this economic success must be considered within the wider context of the country’s wider development, as the aggregation of Chinese fortune has failed to permeate through to the lower classes of society, typically found more in rural regions, which has contributed to widespread economic disparity. Accordingly, the Fraser Institute’s Human Freedom Index 2018 ranks China 108th out of the 162 countries assessed on ‘economic freedom’. So, how is it that China finds itself as the world’s second largest economy yet failing to address its crisis of poverty?
The answer lies in a system that trusts third party participation without obligated transparency, which, in the case of China, often manifests itself in the corruption of officials. The South China Morning Post cites numerous examples of officials exploiting local and rural populations, often through the embezzlement of funds explicitly allocated to tackle poverty. This corruption, facilitated by the current economic model, means that the Chinese oligarchy can continue to exist and as long as this is the case, it is difficult to argue that the Chinese population will experience true economic emancipation.
China’s authoritarian-style government means that restrictions aren’t simply limited to the economy, and in fact play a more profound role in the lives of its citizens. Referring back to the Fraser Institute’s Human Freedom Index 2018, we can see that China ranks 141st out of the countries assessed on ‘personal freedom’. This can perhaps be attributed to a seemingly symbiotic relationship between politics and economics with both profoundly influencing one another. This complicated relationship is exacerbated by the contradiction between its communist government and its decision to operate in a capitalist market; an amalgamation that permits the omnipotence of a puppeteer central government that consciously seeks to undermine the civil liberties outlined by the UN.
The effects of this authoritarian stranglehold have become particularly pertinent in recent months as China’s relationship with Hong Kong is thrown into question. Officially operating as a Special Administrative Region, Hong Kong is entitled to its own governing and economic systems until the Basic Law expires in 2047. As such, Hong Kong employs a more liberal democratic system of governance that allows them to compete on the world stage. Unhampered by communist surveillance and control, residents of Hong Kong enjoy far superior levels of human freedom with the Human Freedom Index 2018 placing them highest in the world for economic freedom and 32nd out of 162 for personal freedom.
With the judicial independence and civil liberties of its citizens contested, under a bill proposed in June this year which could see certain criminal suspects extradited to mainland China, the people of Hong Kong have taken to the streets in protests that have become increasingly violent. In all this chaos, ATMs in the city are running perilously low on cash as people seek to withdraw large quantities of cash under the fear that Chief Executive Carrie Lam will freeze government assets and accede to demands from Beijing.
The issue at the heart of this controversy is the Chinese threat to Hong Kongese autonomy, with protestors refusing to use, and indeed trust, centralised digital cash. In this way, we can begin to see how bitcoin and blockchain technology can offer a great utility to the citizens of Hong Kong. The reduction in the outright reliance upon fiat currency has the potential to give citizens more control over their finances, whilst alleviating the shackles of authoritarian governments who seek to suppress their citizens and undermine their freedoms. In this way, a competitively decentralised system offers a more secure failsafe that can protect against harsh capital controls and hyperinflation, encouraging healthy competition on a trusted and transparent network.
‘Bitcoin has performed a very important role in helping people in distressed situations around the world: getting around governments (institutions, really) that want to control you, starve you, and hurt you.’
— Steve Forbes, 6th October 2019
For China in particular, this technology can help mitigate strict state censorship whilst opening up a global market for anyone with an internet connection to transact freely both internally and externally. This will allow people to hold the state accountable for their actions without the fear of being denied their economic, and in turn, human freedom should they wish to.
Indeed, just recently we have heard more about China’s plans to build a Digital Currency Payments System (DCEP) that would seek to sate some of these demands. Whether or not such a system is able to match the potential offering of a global, public blockchain, however, is something that remains to be seen.
The United Kingdom
Transparency is a core principle of blockchain technology that has never been more sought-after, and, perhaps, especially so in the UK given the torrid political climate currently surrounding Brexit. Without a written constitution, the UK government lacks a formal check on politicians who attempt to abuse their power. This is of course an indefinitely pertinent issue that in light of the recent prorogation of parliament, demands an urgent reassessment of how we tackle misgovernment, as political power is particularly vulnerable to exploitation during times of crisis.
In 2017, the then Minister for the Constitution talked of the importance of transparency across central and local government with the opening up of data allowing for greater accountability:
‘Such online transparency is crucial accountability for delivering the best value for money, to cutting waste and inefficiency, and to ensuring every pound of taxpayers’ money is spent in the best possible way.’
— The Minister for the Constitution, 14th December 2017
As we have already seen in the case of China, a written constitution does not necessarily guarantee a more transparent and secure system of governance yet, what is does provide is some form of accountability. The anachronistic nature of today’s government leaves a certain level of ambiguity in the delegation of power and authority when placed in modern society.
With that in mind, it is no surprise that the voices calling for the codification of the democratic principles in the UK is growing. This would allow for the implementation of a progressive constitution premised on the context of today’s society rather than accommodating the abuse of archaic laws and principles: aptly demonstrated by Boris Johnson and the unlawful prorogation of parliament
Surely, then, we can reasonably conclude that transparency and accountability are essential cornerstones in a more democratically trustworthy and progressive society, and that the transparency of the blockchain can help facilitate these aims.
