Alchemists among us, blockhainin'

 

When Marx overlays the transformations of money into commodity and commodity into money with the parodic language of alchemy, he is following a theme that goes back not only to Faust, but to the beginning of the theory of the political economy. About which, Carl Wennerlind has written an essay entitled “Credit-Money as the Philosopher’s Stone: Alchemy and the Coinage Problem in Seventeenth-Century England.” Wennerlind’s essay  proposes that the 17th century natural philosophers took the alchemical proposal of creating wealth out of nothingness – or base metal – quite seriously. And, vice versa, "when the Bank of England showed in 1694 how credit-money could function, there was a rapid falloff in the patronage of alchemists…”

Curious phrase, credit-money. We would now simply say money, since it wouldn’t occur to any possessor of same to assume that the material ot of which the money was made was equal in value to the money. You won’t get much for a strip of green paper that doesn’t have the magical symbols of U.S. power on it now, will you? Of course not.

“Credit-money… served as a means of payment and had the capacity to circulate widely. These paper notes were wholly or partially convertible into assets or income streams designated as security. As such, they could fully complete a transaction and serve as a store of value…” In the system of political thinking that held at the time, this was as miraculous as the transmutation of metals promised by the Philosopher’s stone – or so our author claims. It is for this reason that the two things – the bank and the alchemist – were held in the same field, as substitutes one for the other. Or rather, the bank, by the alchemical feat of creating value out of de facto currency, drove out the alchemists, who’d been patronized by the Stuarts. ‘This transition from alchemy to credit was swift and complete, perhaps nowhere more dramatically evidenced than in the Duke of Orleans’s dismissal of his court alchemists in favor of John Law’s land-backed paper currency.”

That last event has an aura, doesn’t it? The court alchemists are always trying to get back in. The latest species of them mechandize pseudo-currencies, which have cleverly named themselves “crypto-currency”. A crypto currency is a contradiction in terms – currency itself is the most obvious thing, and has to be in order to operate. A crypto-currency, on the other hand, props itself on the subliminal idea that all that obviousness is simply the surface of some conspiracy, against which the little guy – the little guy who spends a lot of time fantasizing about internet poker and such – has to protect himself.

Carl Wennerlind wrote about this phenomenon in another article for the Berfois, an online magazine so erudite that few people have heard of it. https://www.berfrois.com/2012/03/carl-wennerlind-credit-alchemy/ Which might be the reason that Sam Bankman-Fried was invited to the big NYT Dealbook summit instead of Carl Wennerlind. More’s the pity, for while SBF is an Adderall addled son of privilege whose business career is a xray of our current state of corruption, including the indulgent justice and regulatory system that seems deadest on giving him the tenderests of pats on the hand for defrauding thousands of customers of billions of dollars. Wennerlind could have spoken about a genuine topic: the perennial search for absolute unearned wealth. A sort of zero in the general economy of sacrifice.

Here's a quote from the Berfois article.

“Despite many reports of successful transmutations [of base metals into gold], efforts to find the lever that would give mankind control over the money stock failed to materialize. At this point, the same social reformers who had pursued alchemical transmutations switched their attention to the promotion of a generally circulating credit currency, authoring some of the first proposals for such a currency. The similarity between alchemy and credit was far from lost on them, with one person suggesting that a well-functioning bank is:

 

Capable of multiplying the stock of the Nation, for as much as concernes trading in Infinitum: In breife, it is the Elixir or Philosophers Stone.

Casualties of Credit [Wennerlind’s book] argues that there was indeed a link between alchemy and credit, but one that goes deeper than credit money replacing alchemy as the solution to the scarcity of money problem. I suggest that the new political economy that laid the foundation for the Financial Revolution was greatly influenced by the Scientific Revolution, which included alchemical, as well as, Baconian and probabilistic thinking.”

Winnerlind’s article turns on a history that is overlooked by the usual historians of economics. Though you will see beaucoup titles and phrases about the “magic of the market” and the “alchemy of finance”, these things are taken as Disney metaphors, with no roots in the actual beliefs of businessmen and bankers. Winnerlind’s history is a reminder that no, actual businessmen and bankers do search for philosopher’s stones, which, at this present moment, is dressed up as encrypted blockchain technology – something that is as real and as futile as alchemical torts and the search for transforming lead into gold. The seventeenth century writers had already discovered that money is metaphor  - “Materia Prima, because, though it serves actually to no use almost, it serves potentially to all uses.”

We are still there, guys.

 

All of which had to do with England’s problem in the Early Modern Era – a shortage of specie. The solution proposed by some members of the Hartlib circle – the most advanced philosophers in England, including Boyle and William Petty – was to fund experiments to turn tin into gold.