Truth Be Told: Propaganda from Агитпроп (Agitprop) to Койнбейс (Koyinbeys) (Part 5)

From the historical roots of Agitprop to modern stablecoin challenges: Explore the intersection of Marxist theory, blockchain, and economic freedom in this critical analysis of Coinbase's rhetoric.

Brian Armstrong, the CEO of Coinbase, January 2025:

“We must embrace economic freedom, and vote Marxist leaders out of office. Civilizational progress depends on it.”

In 1920, the Department of Agitation and Propaganda was established by the Central Committee of the Soviet Communist Party. It became widely known as Agitprop (Агитпроп). By this time, Karl Marx had been dead for over 30 years. It seems unlikely to me that Marx would have supported the idea of deliberately misinforming the public to promote an ideology.

A hundred years later, it seems Coinbase is running a modern-day Koyinbeys Agitprop, and this fact, along with the negative consequences activities like this could entail, concerns us all. I am a big fan of freedom of speech, so here is my digital truth in response to what Brian Armstrong had to say: Techno-Marx!

The Theories of Karl Marx

Marx’s critique of capitalism was grounded in what he saw as a truthful, scientific analysis of history and society. He considered himself a scientist of society, seeking to uncover the "laws of motion" of capitalism through rigorous analysis—irrespective of whether his interpretations or theories are now discredited in many parts (for instance, his labor theory of value), though not all. Marx made the prediction that the rate of profit would fall over time. Economic theory has a similar idea, although based on a different concept, called the Zero-Profit Condition, which describes the long-run equilibrium in models of perfect competition. It has roots in the foundational works of classical and neoclassical economists. The formal articulation of the Zero-Profit Condition is often linked to Alfred Marshall (1890), a leading neoclassical economist, who explored equilibrium in markets in his book Principles of Economics. Marx’s interpretation was that this tendency would ultimately end capitalism, while the common view now is that innovation creates new markets, generating new profit opportunities. Schumpeter’s notion of "creative destruction," for example, illustrates how innovation can reinvigorate markets and create cycles of growth, challenging Marx’s view of capitalism’s inevitable decline.

What is important to recognize is that Marx’s critique is rooted in a dialectical analysis of capitalism, while neoclassical economics operates on fundamentally different assumptions about markets and human behavior. Marx was concerned with disproving German Idealism, a philosophical concept spearheaded by Hegel, who believed in a hidden mind at work in the universe. Instead, Marx argued that material conditions define human society and its development.

Hegel's concept of Napoleon as the "world spirit" underscores his belief in history as a rational process, where monumental figures act as agents of progress—even if that progress comes through conflict or upheaval. These individuals might be destructive, but their actions were ultimately seen as part of a broader, inevitable march toward freedom and self-realization. However, this framework, when distorted, provided justification for ideologies like those of the Third Reich, which claimed a historical mandate for their actions. While this superficially resembles Hegelian logic, it strips away Hegel’s focus on freedom and reason, replacing it with a deterministic and violent ideology. Both Hegel and Marx, however, aligned on the desired state: freedom. This shows that when ideas are stripped of their context, they can become dangerous weapons.

Marx’s works, especially Das Kapital, are dense and meticulous, reflecting his belief in the power of truth and reasoned argument. While he was deeply committed to revolutionary change, his methods leaned on exposing and explaining truths about class relations, exploitation, and alienation. He argued for the necessity of revolution to dismantle the capitalist system. While he believed the end goal justified radical action, this was primarily about material action (e.g., strikes, revolts), not intellectual dishonesty.

However, it is difficult to be certain, as many of his best-known works were unpublished during his lifetime. Did he intend to publish everything he wrote, or did he change his mind? It’s impossible to know for sure.

At the heart of Marx’s work was the concept of alienation, which he understood as a distinct social ill—a separation between a subject and an object that inherently belong together. Marx believed that human beings have an intrinsic need for free, conscious, and creative work as a means of self-realization. His critique of what is now called Manchester capitalism focused on how the dehumanizing conditions of industrial labor alienated workers from their humanity. In his view, repetitive, monotonous work under exploitative social standards stripped individuals of their creativity and agency.

Decades later, Taylorism, or scientific management, led to critiques similar to those Marx raised about Manchester capitalism. Popular during the 1910s and largely obsolete by the 1930s, Taylorism structured work into small, repetitive tasks designed to maximize efficiency. Like the industrial labor conditions of Marx’s era, Taylorism was criticized for being dehumanizing and failing to provide variety or opportunities for creativity for workers. Interestingly, many modern ideas about career progression, teamwork, and the importance of meaningful work align closely with how Marx might have approached these issues.

Lenin, interpreting Marx's vision of communism, famously wrote that the state would eventually "wither away" as it became unnecessary in a society where all workers collectively governed themselves, making formal state structures redundant and obsolete. That’s should align with Armstrong’s ideal.

This highlights that our judgement of a political or ideological idea is situational or context specific.

The Theories of Brian Armstrong

Brian Armstrong, the CEO of Coinbase, published a blog article titled “Economic freedom creates prosperity for all” on 17 January 2025. He states:

“The world is waking up to the dangers of Marxism and socialism, seeing that it harms the people it claims to protect the most, and has never worked in practice.”

He argues that economic freedom leads to “increased happiness, higher literacy rates, better treatment of the environment” and references a link to the World Bank website listing all its economic indicators from A-Z, which doesn’t include happiness. He also cites a 2021 survey from Pew Research Center, which discusses public perceptions of democracy, dissatisfaction with political systems, and how economic performance and pessimism influence these attitudes. However, the survey does not explicitly link economic freedom to happiness, literacy, or environmental outcomes, and more recent surveys are available.

This study, in fact, points to higher satisfaction in socially balanced economies. Countries like Sweden, France, and Germany, which emphasize social balance and equality, report lower dissatisfaction with their political systems. The data highlights that dissatisfaction is not strictly tied to economic freedom as defined by minimal government intervention. Instead, systems designed for social equity and balance seem to foster greater political stability and satisfaction. I am not saying whether that is or is not my opinion; this is what the Pew Research data shows.

The most recent Pew survey, from February 2024, has the headline: “Representative Democracy Remains a Popular Ideal, but People Around the World Are Critical of How It’s Working: Many say their country would be better off if more women, people from poor backgrounds, and young adults held elective office.”

Additionally, Armstrong references the WEF's Global Competitiveness Report 2020, which focuses on resilience, recovery priorities, and transformation of economic systems, but it does not explicitly link economic freedom to the outcomes he describes.

Statements like these can distort public understanding, especially when they’re tied to broader political or ideological agendas. They can also create skepticism about legitimate research organizations, like Pew, whose work deserves a more careful interpretation.

He states that the majority of economies around the world are considered mostly unfree or even repressed, referencing the Heritage Foundation's Index of Economic Freedom, which operates within a clearly conservative ideological framework, as indicated by its language and framing (quoting from the same research: “To defeat our progressive elites, we must defend the efficiency of free markets.”). The Index views "economic freedom" as synonymous with small government and low public spending. For example, the U.S. is rated "less free" due to rising debt and government spending, despite its high levels of personal and market freedoms compared to most countries. Singapore, ranked first in economic freedom, also ranks very poorly on judicial effectiveness.

“Where did this recent rise in socialism come from? Why does this experiment keep getting tried? There seems to be something in human nature that is drawn to socialism, where each generation needs to learn the lesson the hard way. For some it comes from a genuine desire to help others, without realizing these policies hurt the people they claim to help. For others, they are preying on ignorant people to gain power, or it stems from some deeper hatred of themselves or humanity.”

This kind of language fosters division rather than dialogue. It shuts down constructive debate by characterizing socialism and its proponents as inherently harmful or deceitful. By invoking "deeper hatred of themselves or humanity," the statement veers into the realm of emotional manipulation, implying moral inferiority rather than engaging in the issues at hand.

“World leaders and policymakers: it’s time to embrace crypto + techno-optimism to accelerate economic freedom and human progress. [..] We must embrace economic freedom, and vote Marxist leaders out of office. Civilizational progress depends on it.”

Brian Armstrong has a few examples for this civilisational progress:

1. “Stablecoins are on track to be crypto’s next killer app.” or “Crypto [transactions] are instant, cheap, and without imposed limits [..]”

2. “Crypto is enabling secure and enforceable property rights by replacing courts or middlemen with code and cryptographic security [..] For example, Georgia is placing land records on the blockchain.”

Let’s start with the second one.

Freedom in the Republic of Georgia

“In April 2016, The Bitfury Group announced that it signed an agreement with NAPR to pilot the first Blockchain land-titling registry in the Republic of Georgia. The Bitfury Group and NAPR successfully implemented a custom-designed Blockchain system that is now integrated into the digital records system of NAPR. This private, permissioned Blockchain is anchored to the Bitcoin Blockchain through a distributed digital timestamping service. Distributed digital timestamping allows NAPR to verify and sign a document containing a citizen’s essential information and proof of ownership of property.“

Bitfury enables organizations, like the Republic of Georgia, to anchor data on the Bitcoin blockchain using Exonum, an open-source framework for building private, permissioned blockchains. Periodically (e.g., daily or weekly), the system collects hashes of recent transactions from the permissioned blockchain. These hashes are bundled and embedded into the Bitcoin blockchain using a transaction's OP_RETURN field.

The blockchain serves as a secure ledger, but the initial input and verification of data require human intervention. Courts and administrative bodies remain essential for resolving disputes, interpreting laws, and managing exceptions that cannot be addressed solely by code. While blockchain ensures that recorded data is tamper-resistant, it does not make ownership inherently immutable as Armstrong claims. Ownership can still change due to sales, inheritance, or legal disputes. The blockchain records these changes transparently, but the decisions leading to changes in ownership involve legal processes and human judgment.

Georgia had two opaque land registries, and officials could misappropriate assets by manipulating records. This corruption eroded trust in the system.

Blockchain introduced a tamper-evident, verifiable record. Citizens could trust the system because the data was anchored to a neutral, decentralized network (Bitcoin).

However, blockchain addressed only one component of the system: data integrity. Other processes—like dispute resolution, verifying ownership, and ensuring lawful transfers—still require human intervention, courts, and legal frameworks.

This highlights that blockchain’s benefit is situational or context specific. It’s not a universal replacement but a tool for addressing specific weaknesses, such as corruption, lack of transparency, or inefficiency in record-keeping.

Stablecoins: Efficiency with Limitations

Stablecoins are often celebrated for their potential to revolutionize financial transactions. Proponents argue that they reduce costs and increase speed, particularly for cross-border transfers. For example, transferring USD Coin (USDC) to Vietnam might cost as little as one cent. However, this narrative ignores a critical limitation: foreign exchange (FX) conversion.

In real-world transactions, many currencies do not trade directly. Instead, conversions often involve a two-step process: local currency to USD and then USD back to local currency. This reliance on liquidity and volatility management is not a technological issue—it’s a market one. Stablecoins solve for part of the equation by facilitating USD-denominated transfers but leave the local currency conversion process and associated costs untouched. For instance, someone receiving USDC in Vietnam still needs to convert it into Vietnamese Dong (VND) to use it locally, which introduces additional fees and complexities.

Moreover, stablecoins can bypass certain regulatory obligations, such as anti-money laundering (AML) compliance. If the local converter of stablecoins does not enforce AML regulations, the system risks creating loopholes that undermine global efforts to combat financial crimes, such as terrorism financing, drug trafficking, and sanctions evasion.

AML: Necessary but Risk-Averse

AML regulations exist for a reason: to prevent financial systems from being exploited for illegal activities. These rules aim to protect society from terrorism, drug cartels, and other criminal networks. However, their implementation often creates unintended consequences. The penalties for failing AML compliance—both civil and criminal—are so punitive that they have instilled a culture of extreme risk aversion in traditional banking. When in doubt, banks often "kick them out," cutting off individuals or businesses to avoid any regulatory liability.

This "de-risking" approach disproportionately affects the most vulnerable populations, such as those in developing economies or small businesses without robust compliance systems. While AML is essential, its effectiveness should be evaluated through an economic lens: marginal benefit versus marginal cost. Are we overproducing AML to the point where the societal costs outweigh the benefits? As the saying goes, 'the dose makes the poison'—too much of a good thing can become harmful. AML regulations, while vital, can become counterproductive when their societal costs outweigh their benefits.

This question is vital for policymakers to address, as current systems often optimize for political incentives rather than balanced outcomes. Yet, political inertia and the lack of immediate rewards for reforming such systems make it difficult to find this balance.

Decentralization and Subsidiarity

The European Union’s principle of subsidiarity offers an intriguing parallel to decentralization in the crypto world. Subsidiarity states that decisions should be made at the most localized level capable of effectively addressing the issue. Similarly, decentralization advocates argue that governance and control should reside with the individuals or communities most directly affected. In both politics and business, centralization often becomes a one-way process, making it difficult to decentralize once power has been consolidated.

This phenomenon—where centralization becomes a one-way process—is a serious problem. Once systems become reliant on centralized structures, reversing them requires significant effort and legitimacy, which is often difficult to rebuild. While subsidiarity seeks to empower localized governance within a broader framework, crypto’s deterrent value lies in its ability to bypass centralized systems entirely. However, this bypass does not address enforcement or legitimacy in real-world contexts, leaving unresolved gaps.

Decentralization can empower individuals but also risks fragmentation is perhaps a simple but accurate way of looking at it.

The Role of Institutions and Legitimacy

However, institutions—whether centralized or decentralized—only function based on legitimacy. History shows us that when legitimacy erodes and institutions fail to reform, the entire system can collapse. The Roman Empire, for example, struggled to adapt its institutions to the pressures of economic stagnation, military overreach, and shifting demographics. The resulting loss of trust in governance systems hastened its decline. Similarly, the European Union faced a legitimacy crisis during the eurozone debt crisis, leading Italy to form a technocratic government. While this approach temporarily allowed for decisive action, it didn’t fully restore public trust or resolve the underlying structural issues.

The lesson is clear: the collapse of institutions does not automatically lead to greater freedom. Instead, it often results in instability, which can pave the way for authoritarianism or chaos. Crypto, as a tool, can act as a safeguard against institutional failure, but it is not a substitute for legitimate, functioning systems of governance. True freedom requires not just the absence of oppression but the presence of reliable and trustworthy institutions.

China is Not Marxist

Armstrong characterized the Chinese government as Marxist. However, modern-day China is far from Marxist in the way Marx originally envisioned. While Marx is revered in China as a symbolic and historic figure, the implementation of Chinese communism has diverged significantly from Marx’s theories. Chinese communism is deeply rooted in the country’s unique historical, cultural, and political contexts, and it has evolved into a hybrid model that combines strict political control with market-driven economic practices.

Marx envisioned a revolutionary proletarian governance leading to a stateless, classless society. In contrast, China maintains centralized political control under the Communist Party, emphasizing stability and national unity above all else. This is a pragmatic adaptation to the challenges of governing a country as vast and diverse as China. While Marx criticized private property and capitalism, China has embraced elements of market economics, including private enterprise and foreign investment, to fuel its rapid development.

Interestingly, this centralization has, in some cases, allowed China to act more dynamically than many free-market economies. For instance, the government has been able to enforce significant infrastructure projects and modernize the country at an unprecedented pace—projects that would take decades to approve and execute in free economies due to legal processes, environmental regulations, and the need to compensate affected populations.

China’s model is not Marxist in its essence; it is a unique system of state capitalism that blends authoritarian governance with selective market liberalization. Armstrong’s characterization oversimplifies a far more complex reality, ignoring the distinct ways China has adapted Marxist principles to serve its own national priorities.

China’s model underscores the risks of oversimplifying governance systems or assigning them labels that don’t reflect their unique complexities.

Responsibility and Reflection

Brian Armstrong’s rhetoric about “economic freedom” and “civilizational progress” ignores these complexities. While crypto has undeniable merits, oversimplifying its potential as a replacement for institutions is irresponsible. History teaches us that when institutions collapse due to a loss of legitimacy, the consequences are rarely greater freedom. Instead, they often lead to instability and authoritarianism. By failing to acknowledge the consequences of systemic breakdown, such narratives risk undermining the very progress they claim to champion. As individuals and institutions, we have a responsibility to ensure that the tools we create and the systems we promote serve humanity in a balanced and sustainable way.

According to the German Propaganda Archive of the former Eastern German government, the strength of agitation lies in its ‘truthfulness’. Agitation leads to action, mobilizing people. Armstrong's rhetoric relies on oversimplifications and ideological framing rather than nuanced, truthful engagement. It aligns more with propaganda than agitation it seems. Propaganda often prioritizes persuasion and loyalty to a narrative over fostering informed, critical action. Interestingly though is that the Politburo thought you needed a bit of truth.

Why This Matters To Me

I started this blog because I enjoy the intellectual challenge of finding and pointing out gaps in logic or method in the arguments we encounter. I’m lucky enough to be in a position where I can share my views freely, without needing to follow corporate press policies or agendas.

I recognize, though, that no source—including my own writing—can ever be free of bias or error. But that’s part of the process: by reflecting on these ideas, we can learn from past mistakes and find better ways to navigate complex issues. We can’t predict outcomes perfectly but thoughtful debate and analysis at least improve our odds of success making decisions under uncertainty.

Take the fall of the Roman Empire, for example. Historians have debated whether internal instability or external threats were the main cause, but it’s likely a mix of both. The Germanic tribes, often displaced by economic pressures, became a threat partly because they weren’t integrated into the Roman system, even though they were also employed as mercenaries. The lesson? Without understanding problems as multifaceted and interconnected, we risk repeating the same mistakes.

The same applies today, as we debate centralization versus decentralization in systems like blockchain or governance models. These questions aren’t new—they echo through history, from the Roman Empire to modern debates about the European Union’s subsidiarity principle. What sets us apart isn’t always our principles even if it may seem so at a superficial level. What matters though is how critical thinking can help to unlock cooperation, promote prosperity, and human dignity.

Some may say my critiques can come across as nitpicking, but my motivation is simple: to foster better decision-making. That’s why I write. Writing helps me to think and if my commentary can benefit someone to think differently or approach a problem with more clarity, then it’s worth the effort. And I learn a bit from feedback I receive.