E Centralization, Blockchain And Decentralization

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A brief history of centralization

One important but mostly uncomplimentary history of man is recorded through his activities in war. Thousands of years ago large marauding bands of tribesmen descended on small communities or villages pillaging or killing its inhabitants. As centuries of time passed, small communities coalesced to become larger villages, some of which eventually expanded and grew to become city-states or petty kingdoms.          

In 480 B.C. Xerxes invaded Greek city-states, but after taking Athens had to retreat. As William McNeil, author of his magnificent book “The Rise of the West” states: “free men organized into city-states need fear no military danger from without”.  This early centralization of men and weapons protected cities from conquest at that time. The concept of certain centralization and its benefits became acknowledged and gained momentum over future centuries. In the seventeenth century, after the 30-year war, new legal principles for states and sovereignty were established in 1648. Under the new Westphalian system, states would exist with agreed-upon borders as each state’s sovereignty was recognized by others. This became another historical benchmark for increasing centralization.

Over the next several centuries, the so-called industrial revolution with its centralization of production and factories provided heretofore unforeseen job and income opportunities for the general populace, further rapidly accelerating the growth of cities and population movement from rural to urban areas.   Increased production and worker incomes spurred sales providing useful products to the masses, and profits creating a dramatic centralization of wealth and power for these owners of productive facilities. 

Worker savings continued to grow, but ravenous capitalism created an uneven distribution of its benefits. See: Capitalism Works, Ravenous Capitalism Doesn’t.

As the group of lower-earning laborers relative to the captains of industry came to resent their status, class distinctions and worker agitation and strife were soon to follow.  Karl Marx and his Marxist followers wanted a revolution through which the productive capacity of these capitalists would be taken from them and their factories operated by its revolutionary leaders for benefit of the proletariat.   

Corruption certainly started thousands of years ago, but as the “honey pot” of wealth grew within growing states, surely governing officials had increasing incentives to siphon some of this “excess wealth” for private purposes.  Because humans have been imperfect, and continue to be so today, any replacement of leadership by another group simply moves the imperfection to a new greedy group.   As a result, the leaders for new political movements such as socialism, Communism have only marginally improved the lives of its followers – from abject poverty to simple sustenance. Prior revolutions over the last two centuries and world wars have demonstrated that destruction and misery in their wake far exceed benefits to the proletariat. In other words, revolutions have largely benefited only the revolutionaries themselves who are elevated to positions of near-absolute power. 

This short recounting of history supports a thesis that when a man is in deadly danger or under bodily assault, men can follow a single, purposeful unity to collectivize or centralize in order to neutralize an enemy. As city-states, kingdoms, and countries grew larger, a surplus of goods and taxes created the need for an administrative class that distributes these goods for the benefit of the central state. As always throughout history when a man is not in deadly danger, or when the battle for those in power has been resolved, those participating in administration and governance benefit far more than the masses.

Arguments for Centralization

Centralization gains support when the targeted population receives some kind of benefit. Thus, dirt-poor people being centralized by a communist power structure is not too difficult to achieve, as the bar for improving the lives of poor people is not very high, and can be achieved by redistributing some of the wealth captured from more elite members of that society. However, when the whole populace is forced to fulfill some type of meaningless job, and there is no more collectivized wealth to distribute to those workers, a challenge to centralized rule will grow. When a centralized economy does not grow, the power of centralization diffuses. Similarly, when globalization fails to achieve growth and increase livelihood, its viability loses traction.      

Any time a common interest group can be created, it provides the opportunity for the centralization of money and power.  This is particularly true if a city, state, or national government can be recruited to pay for some of its program financing. Thus diverse groups such as a coalition for free trade, exclusion of slave-produced of products, use of solar or wind power, elimination of coal or nuclear power generation, ending carbon fuel usage, global warming issues, specific curricula in primary and secondary schools, loan programs for higher education, regulated or coerced use of specific drugs or vaccines in a virus epidemic, mass border crossings, immigration, etc., etc., etc., create groups of winners and losers – as determined substantially by small groups of agitators and financial support or influence from government politicians.  And so this is how private citizen issues become political.

It is quite natural for the small business owner to work hard in order to build his business. If that business grows to a certain size, this owner may seek acquisitions in order to further expand that business. Continued growth and acquisitions can bring that successful business to where it, over time, becomes an industry leader. This allows its management to set or influence industry policy, product pricing, and trade legislation. 

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and ...

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William K. 1 month ago Member's comment

This article is terribly disturbing, because it is so very real.

Now there still is a very serious problem with all crypto currencies, which is the computer part. Not so much that it can be stolen or hacked, but that it can be controlled and inhibited, and that it is horribly dependent on computer hardware. And it is just a matter of time before the administration of the new currency becomes as corrupted as the old currency. Wealth IS power and power always corrupts, and that never changes, not even in mythical Utopia.

Frank Underwood 1 month ago Member's comment

Very interesting, thanks for sharing.