Mises: The Original Toxic Maximalist

Do not give in to shitcoins, but proceed ever more boldly against them.

Ludwig von Mises (1881–1973)

The social function of economic science consists precisely in developing sound economic theories and in exploding the fallacies of vicious reasoning. In the pursuit of this task the economist incurs the deadly enmity of all mountebanks and charlatans whose shortcuts to an earthly paradise he debunks. The less these quacks are able to advance plausible objections to an economist’s argument, the more furiously do they insult him.

— Ludwig von Mises, “The Why of Human Action”

The most “toxic” thing about a bitcoin maximalist is the steadfast willingness to say “no.” Having studied monetary theory and history, and having experienced unforgiving market forces, the bitcoiner maintains an understanding of the realities of monetary competition, a recognition of the mission-critical nature of decentralized systems engineering, a focus on solving the most important monetary problems, and a strict avoidance of the inevitable distractions, opportunity costs, and ethical qualms of launching and promoting altcoin projects.

Some criticisms are about impolite rhetorical flourishes that are viewed as an impediment to helping win over new bitcoiners. If this were true, an opportunity would exist within the division of labor for higher quality bitcoin education, which I believe bitcoiners would love to see fulfilled, especially by the critic who has a more apparent recognition of the existing shortcomings. However, no matter how polite bitcoiners are about their views, certain would-be entrepreneurs and influencers will always be at odds with a passionate demographic that is simply not interested—and vocal about their disinterest. The most “toxic” bitcoiners are often the ones who only recognized the wisdom of bitcoiners once they had been burned by shitcoins and wish to express their newly found disinterest in no uncertain terms.

So what is a bitcoiner to do? My recommendation is to commit oneself to the truth and the promotion of the truth, and judge the effectiveness of rhetoric on its long term influence rather than short term popularity.

In this regard, bitcoiners should take inspiration from the original toxic maximalist: Ludwig von Mises. The eminent economist had an unwavering commitment to truth, free markets, and sound money, and he was unafraid to say what needed to be said, even when it did not win him friends. In the long run, he became one of the most influential economists and thinkers of the 20th century, and his work helped forge the path for bitcoin.

Mises the Monetary Maximalist

One of the chief criticisms of bitcoin maximalists is that they claim the world will converge on bitcoin, and there is generally no use for any other currency. This is treated as a normative statement. In reality, bitcoiners are making a positive descriptive statement about how monetary competition works.

In The Theory of Money and Credit, published in 1912, Mises wrote:

Thus the requirements of the market have gradually led to the selection of certain commodities as common media of exchange. The group of commodities from which these were drawn was originally large, and differed from country to country; but it has more and more contracted. Whenever a direct exchange seemed out of the question, each of the parties to a transaction would naturally endeavor to exchange his superfluous commodities, not merely for more marketable commodities in general, but for the most marketable commodities; and among these again he would naturally prefer whichever particular commodity was the most marketable of all. The greater the marketability of the goods first acquired in indirect exchange, the greater would be the prospect of being able to reach the ultimate objective without further maneuvering. Thus there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money.

According to Mises, actors increasingly choose the most marketable good to act as a medium of exchange, and the natural course of the market is towards unification under a single monetary good. This is monetary maximalism, plain and simple.

Where Mises differs from bitcoiners is merely in the strength of claims he is willing to make about the actual empirical choices economic actors will make. Mises points out that both gold and silver have been monetized in many places, likely for their similar qualities, and that it is beyond the scope of the theory of money to state whether gold or silver is ultimately more marketable. Even so, he says:

For it is quite certain that even if a motive had not been provided by the unequal marketability of the goods used as media of exchange, unification would still have seemed a desirable aim for monetary policy. The simultaneous use of several kinds of money involves so many disadvantages and so complicates the technique of exchange that the endeavor to unify the monetary system would certainly have been made in any case.

The natural pace towards a single monetary good is so strong that he believes moves would still be made to unify monetary systems even if two goods were exactly equally marketable. Earlier, he also notes:

It would not be possible for the final verdict to be pronounced until all the chief parts of the inhabited earth formed a single commercial area, for not until then would it be impossible for other nations with different monetary systems to join in and modify the international organization.

Any new trade relationship opens up the opportunity to introduce a brand new monetary good that had not been previously used. If its qualities could maintain a higher level of marketability, it is possible that the entire international monetary order could reorganize around it, because of its natural superiority at handling the functions of money.

In The Bitcoin Standard, Saifedean Ammous gives ample arguments as to why gold was a superior monetary asset to silver, despite Mises being unwilling or uninterested to argue this point, and further, why bitcoin is yet an even more superior monetary asset. While Mises did not live long enough to see bitcoin’s introduction to the global economy, his economic theory explains exactly why bitcoin would grow in value and why it is plausible for the entire international monetary order to rebase itself on a bitcoin standard. He also gives the theoretical framework to understand why altcoins cannot beat out bitcoin by features alone. They must offer superior marketability over space, time, and scale, in order to offer a significant enough advantage over bitcoin. As described endlessly elsewhere, this has simply not been achieved, and only bitcoin offers a highly decentralized, auditable, and credibly scarce digital monetary good.

Mises the Market Maximalist

Monetary theory is not the only place where a reader can sense a sort of “maximalism” in Mises’s thought. The entire corpus of his work effectively amounts to an unabashed market maximalism that refuses to cede ground to any socialist or interventionist argument, through rigorous economic theory and analysis.

A great example of his defense of the free market is in a lecture given in 1950 called, “The Middle of the Road Leads to Socialism.” In this lecture, Mises attacks interventionists, who claim to favor a “middle-of-the-road” policy between the two extremes of capitalism and socialism. By making strategic interventions, the state can prevent the excesses of both systems.

Mises, however, views capitalism and socialism as diametrically opposed and irreconcilable systems of organization, rather than a spectrum of wealth distribution:

The conflict of the two principles is irreconcilable and does not allow for any compromise. Control is indivisible. Either the consumers’ demand as manifested on the market decides for what purposes and how the factors of production should be employed, or the government takes care of these matters. There is nothing that could mitigate the opposition between these two contradictory principles. They preclude each other. Interventionism is not a golden mean between capitalism and socialism. It is the design of a third system of society’s economic organization and must be appreciated as such.

This third system, though, is in effect just a longer march to socialism by means of paying false lip service to private property and free market enterprise. Any intervention that does take place must be followed by more interventions. The fixing of one price here requires the fixing of another price there, and so on down the whole supply chain. By the end, interventionism takes a stranglehold on the entire “market” economy.

Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps. It is as such different from the endeavors of the communists to bring about socialism at one stroke. The difference does not refer to the ultimate end of the political movement; it refers mainly to the tactics to be resorted to for the attainment of an end that both groups are aiming at.

Despite this, even most supposed advocates of a free market system are actually steeped in interventionist ideologies and modes of thinking, and their strategies are always doomed to failure and compromise.

The impact of this state of affairs is that practically very little is done to preserve the system of private enterprise. There are only middle-of-the-roaders who think they have been successful when they have delayed for some time an especially ruinous measure. They are always in retreat. They put up today with measures which only ten or twenty years ago they would have considered as undiscussable. They will in a few years acquiesce in other measures which they today consider as simply out of the question. What can prevent the coming of totalitarian socialism is only a thorough change in ideologies.

What we need is neither anti-socialism nor anti-communism but an open positive endorsement of that system to which we owe all the wealth that distinguishes our age from the comparatively straitened conditions of ages gone by.

Mises pulls no punches in his exhortation of interventionist policies, and there are plentiful lessons bitcoiners can draw from this.

First, the bitcoin network is not merely a different way to transfer value than some existing centralized solution, a sort of PayPal 2.0. It is a structurally different approach to the entire double spending problem. “Blockchain, not bitcoin” is a canard because it removes the very essence of what makes bitcoin unique (decentralization, independent auditability, etc.), while claiming to use “the underlying technology,” much in the same way a national socialist or fascist regime might take state control of production, while claiming to be pro-private property. If you want the benefits of the market, you have to actually have a market, and if you want the benefits of bitcoin, you need to actually use bitcoin.

Additionally, decentralization should be treated as effectively binary. Either a system is decentralized, or it is doomed to centralize, sometimes one hard fork at a time. Bitcoin maximalists have been routinely called toxic for their resolute commitment to certain network parameters, even if they seem arbitrary or trivial. An entire blocksize war was fought over a 1mb block size limit. The number seemed arbitrary, and the fix seemed trivial, but bitcoiners refused to budge. Why? An increased block size would increase the costs of running a full node, necessary for independent validation and decentralization. A hard fork would set a damning precedent and threaten any future claims of backwards compatibility needed for credibility of the monetary policy and ability for nodes to trustlessly sync with the network. Block capacity did increase, but only because SegWit, which had benefits well beyond merely improving scaling, could be activated via a soft fork, such that new costs were not imposed on those who did not want them.

On the other hand, other projects do not accept that bitcoin’s trade-offs are not actually arbitrary. They offer Turing-complete smart contracts, or faster block times, or bigger blocks, or all sorts of other “features.” The features are not produced with the same extremely conservative commitment to security as bitcoin and often threaten the ability to run a full node at all. Only in bitcoin do people care about actually running the numbers. Over time, if the projects maintain themselves at all, they lose all semblance of credible decentralization. Ethereum, once touting unstoppable applications and that “code is law,” experienced the DAO hack, and after adopting proof-of-stake (itself inherently centralizing), it has succumbed to various degrees of OFAC-censorship.

Bitcoin accepts none of this. It bends its rules for no one. Bitcoiners also understand that if the rules were bent, the system would no longer be bitcoin at all. Mises helps us understand that a middle-of-the-road policy leads to shitcoining. A currency is either bitcoin, or doomed to be a shitcoin.

Mises the Toxic Maximalist

In 1947, the inaugural meeting of the Mont Pèlerin Society was held in Switzerland. This meeting of the minds brought together many of the most influential proponents of free markets and classical liberalism, from Ludwig von Mises to F. A. Hayek to Milton Friedman and many others, to discuss how to combat the rising tide of totalitarianism and its economic ideologies through the promotion of free markets and private property. One would imagine Mises fitting right in the discussions at hand. However, as Milton Friedman recounted:

The story I remember best happened at the initial Mont Pèlerin meeting when [Mises] got up and said, “You’re all a bunch of socialists.” We were discussing the distribution of income, and whether you should have progressive income taxes. Some of the people there were expressing the view that there could be a justification for it.

Another occasion which is equally telling: Fritz Machlup was a student of Mises’s, one of his most faithful disciples. At one of the Mont Pèlerin meetings, Machlup gave a talk in which I think he questioned the idea of a gold standard; he came out in favor of floating exchange rates. Mises was so mad he wouldn’t speak to Machlup for three years. Some people had to come around and bring them together again. It’s hard to understand; you can get some understanding of it by taking into account how people like Mises were persecuted in their lives.

As discussed above, three years later Mises gave a lecture effectively explaining why they were indeed all a bunch of socialists. To accept government intervention on the distribution of income is to already have lost the plot to socialism, given enough time. Mises was simply unwilling to concede frame to the socialist fallacies he had so meticulously skewered throughout his intellectual career. Jörg Guido Hülsmann notes in Mises: The Last Knight of Liberalism that, “while Mises was able to hold socialists in high esteem, the incident showed that he had little patience with socialists parading as liberals.”

But Mises's toxic behavior was not without its fruits. According to Hülsmann:

The exchange between Mises and his neo-liberal opponents set the tone in the Mont Pèlerin Society for years to come…. Although the libertarians around Mises were a small minority, it was they who had the financial backing of the main American sponsors such as the Volker Fund, without which the Society would quickly have died out in those early years. As long as Mises took an active part in the meetings, therefore, it was impossible to move on to discussing the technical details of an approved government interventionism. Laissez-faire had made a comeback. It was not the majority opinion, but it was a debatable and debated political option—too much for some initial members such as Maurice Allais, who soon left the Society for precisely this reason.

By being toxic, Mises was able to help set the tone for a truly laissez-faire Mont Pèlerin Society that could live up to their stated purpose, and they proceeded to elect F. A. Hayek as their president. He was unafraid to speak plainly, but vociferously, even to people presumably on his “own team.” Ludwig von Mises was a man who took his ideas seriously, and the truth even more seriously.

In his Memoirs, Mises writes of his time in the Austrian Chamber of Commerce in the 1910s and 1920s:

I was sometimes accused of representing my viewpoint in a manner too abrupt and intransigent. It was also claimed that I could have accomplished more had I displayed a greater willingness to compromise…. The criticism was unwarranted; I could only be effective if I could present things as they appeared to me. When I look back at my work with the Handelskammer today, my only regret is my willingness to compromise, and not my intransigence.

During this time, his advice helped stall hyperinflation in Austria, and dampened its effects relative to the Weimar Republic.

Bitcoiners have been plagued with endless “crypto” and shitcoin scammers wishing to ride the coattails of bitcoin’s innovative technology and economic success. Bitcoiners are told they are all on the same team. To the public eye, they are. The result is a duped public being sold centralized pump-and-dump schemes and rugpulls, monkey jpegs, and Rube Goldberg machines built on buzzwords, with the idea that they are in the same league as the greatest monetary technology ever created. “Crypto” rides on bitcoin’s success, and bitcoin’s publicity falls with “crypto’s” failures. Yet, for bitcoiners to speak out about the differences and to reject these projects they find uninteresting, if not outright despicable, is viewed as toxic. Bitcoiners are not harmed by this, as they get to continue stacking and building, but the people who must live under fiat regimes suffer as they are unable to be shown a path to freedom and prosperity.

Beyond putting individuals’ money at risk, openness to shitcoins can encourage changes to the network that degrade decentralization. If there is support for a shitcoin based on a feature, why should the feature not exist in bitcoin? If there is indeed a tendency toward a single currency, promoting an alternative cryptocurrency is itself an attack on bitcoin’s own potential. Economics and engineering face unforgiving consequences. An incorrect series of moves can lead to absolute devastation. Bitcoiners accept this with utmost seriousness and pull no punches stating these consequences. However, to do so is to reject entire entrepreneurial ventures and call into question their entire revenue stream. To do so is toxic.

Bitcoiners should always have the courage to channel Mises and tell anyone they must, “you are all a bunch of shitcoiners.”

Mises’s Rising Star

Despite being born to a noble family and holding distinguished positions in Austria, when Mises emigrated to the United States to flee the Nazis, he was left with few opportunities. He was a “visiting professor” at New York University until his retirement, basically working out of a closet and mostly teaching through his now famous informal seminars attended by Murray Rothbard and others. He required the support of various philanthropic funds. On top of this, the field of economics, like all social sciences, had succumbed to scientism and technocracy, such that Mises’s rigorous logical deductive methods were viewed as old fashioned compared to mathematical formulas and statistical models. The gold standard was swept away in favor of a fiat regime, and by the time Mises died, the US dollar had no connection to precious metals or real savings at all, leaving monetary policy solely at the whims of political discretion.

There was every reason for Ludwig von Mises to be completely forgotten. However, his students, such as Murray Rothbard, kept the Austrian school alive. In 1982, the Ludwig von Mises Institute was founded by Rothbard and Lew Rockwell, and funded by Dr. Ron Paul (each of whom have had their share of critics calling them “toxic”). Dr. Paul himself became a legendary promoter of the ideas set forth by Mises and others, both on the floor of Congress and in presidential campaigns. In the latter, Dr. Paul made the economic destruction brought upon by the Federal Reserve a core part of his platform and for the first time in decades a major topic for political debate, changing the discourse forever thereafter.

It is no wonder, then, that many people who were first to become enthralled by bitcoin were devoted students of Mises and that his ideas have only continued to flourish more as bitcoin has grown. His rigorous elucidation of the truths of economic law, based on subjectivism, marginalism and methodological individualism, gave people the framework to understand how bitcoin exemplifies the monetary policies that lead to peace, prosperity, and liberty. Rather than becoming irrelevant, Mises has become more relevant than ever. As Ron Paul has noted, “We’re all Austrians now.”

Conclusion

Toxicity is in the eyes of the beholder, or the bagholder. Economic science, like any pursuit of truth, is not a popularity contest, and the truth will always be opposed by those whose business and status depends on the propagation of fallacies and falsities.

Ludwig von Mises stood firmly beside his thorough analyses of economics and classical liberalism and was unafraid to defend what he believed to be true, even at the expense of prestige and popularity. Today, he stands far and above almost any other 20th century social scientist.

I have spoken elsewhere about memes and rhetoric, and there is much to debate about particular strategies and their effectiveness. But above all, any strategy must put truth at its center. Truth is timeless, such that relevance is not restricted to short term popularity. Having done so, an accusation of “toxicity” is either an invitation for improvement, or a badge of honor for standing for truth in the face of adversity. As Ludwig von Mises’s motto stated: tu ne cede malis, sed contra audentior ito. Do not give in to evil, but proceed ever more boldly against it.

---

If you enjoyed this article, please consider supporting the publication by becoming a paid subscriber or donating sats.