In 1992, Timothy May released The Crypto-Anarchist Manifesto, calcifying for the first time the sentiments of a growing movement of coders concerned with privacy and anonymity in the age of big government. He began that manifesto with these words: “A specter is haunting the modern world, the specter of crypto anarchy,” a tongue-in-cheek mimicry of Karl Marx’s Communist Manifesto: “A specter is haunting Europe, the specter of communism.”

May was not a Marxist. His political ideology, however, did have something in common with Marxism: a distrust of, and desire to abolish, the established political regimes. This ideology, which can be called antistatism, has always been a cornerstone of the crypto-anarchist or “cypherpunk” movement. Since the inception of the movement, another ideology has crept into the movement: anticapitalism. This growing strain of anticapitalism within cypherpunk culture has caused confusion for both those on the inside and the outside. What exactly do cypherpunks stand for, and what do they stand against?

Capitalist Roots

It’s hard to answer definitively, partly because crypto-anarchy has always been a loosely organized movement. Using May’s personal beliefs as a reference point, the movement – at least as it was conceived – is pro-capitalist. May was a disciple of Ayn Rand and trenchant advocate for Randian individualism and free markets. As journalist Jamie Bartlett writes in his book The Dark Net:

In the early days, crypto was a libertarian dream—a way to spark a revolution. The cypherpunks were hard-nosed Ayn Rand libertarians, mainly concerned about individual liberty. Today, the issue of privacy and anonymity online has become a major preoccupation for people across the political spectrum. “Politically, the cypherpunks are all over the place now,” says May, a little mournfully. The majority of cypherpunks working on ways to evade state detection are not free-market warriors or convinced Randians like Tim May. Smári is a thoughtful anarchist, someone who supports the abolition of the state like May, but believes that humans, when left alone by powerful interests, will tend to cooperate and create flourishing societies, not isolated retreats. And unlike May, people like Smári worry about welfare, minority rights, and other progressive causes…and see crypto as a mathematically guaranteed way of rebalancing democracy towards ordinary folk.

As a result of this shift toward more democratic and collectivist causes, cypherpunks have increasingly found common ground with groups such as Occupy Wall Street and Anonymous. Both groups are expressly anticapitalist, and this has led to even free-market cypherpunks such as WikiLeaks founder Julian Assange showing up at these groups’ anticapitalist protests to express solidarity.

The Egalitarian Mindset

For now, let’s set aside the question “are cypherpunks anticapitalist?” and consider instead the question “should cypherpunks be anticapitalist?”

Well, what is anticapitalism? If capitalism is an economic system in which the means of production are privately owned for the intention of private profit (capital), then anticapitalism must be a system in which the means of production are publically owned for the intention of equally distributed profit, and thus total economic equality. This is the definition of socialism, and it’s based on the moral philosophy of egalitarianism – the belief that total equality of wealth and social status is the only just form of social organization.

Echoes of this egalitarian mindset can be found throughout the cypherpunk and hacktivist communities. Writing in Ephemera Journal, Ruud and Femke Kaulingfreks of Utrecht University characterize the Anonymous movement as relying on “swarm intelligence”:

It is the combined efforts of the interchangeable elements of the swarm, which produce a common intelligence, able of great achievements. The same auto-organizing power, without a classical hierarchical structure, is applied by the Occupy movement, which presents itself as ‘the 99 %’. Swarm intelligence relies on non-identity. Occupy draws its convincing power exactly from the fact that it represents the majority of interchangeable people, living under shared conditions, and having common demands. It is the multitude from which no-one stands out. Anonymity is of huge importance in creating a non-identity, and therefore a non-individualisation, which can be used as a strategy to counter-attack mechanisms of discipline, and hierarchical organization based on control. … Supporters of Occupy and Anonymous, by wearing the [Guy Fawkes] mask, directly oppose this marketing ideology. The commodity then is transformed into its opposite: those who buy the V for Vendetta mask and identify with Occupy and Anonymous, are actually proud of not identifying themselves. In this sense, anonymity runs counter to ubiquitous consumption and presents a powerful political weapon against the capitalist ideology of the free, individual consumer.

Defying Human Nature

But if a totally non-hierarchical organization of society is the goal of the egalitarian anticapitalist, then who will ensure all members of society adhere to this structure and enforce punishments on those who don’t? Who, to begin with, will lead organized efforts to dismantle the capitalist system and establish an egalitarian one? Won’t these leaders and enforcers necessarily demand a higher status? George Brown, writing in Socialism Today, encounters this very problem:

The differences between Anonymous’ ideology and reality are made clear in the ‘marblecake’ controversy. During the 2008 anti-Scientology protests, decisions were nominally made on public internet relay chat (IRC) channels. However, the main channel became too full of messages to effectively coordinate anything and the real organising was done by a small clique operating in another channel, called marblecake. This was specifically developed as a secret channel.

Even Brown, a socialist, concludes that the anticapitalist ideals of egalitarianism and non-hierarchy run counter to human nature:

The marblecake incident highlights the limits of Anonymous’ claims to be a leaderless movement. Leadership is an organic part of any movement and cannot be willed out of existence – to try and do so merely results in the leadership taking informal, undemocratic and unaccountable forms.

This is the fatal flaw of socialism. It claims that an interim government must be established following a revolutionary period before the egalitarian utopia can be achieved, and yet those leaders of the interim government never relinquish their temporary power. George Orwell illustrated this keenly in his 1945 novel Animal Farm (“All animals are equal, but some animals are more equal than others”). We’ve seen this phenomenon play out repeatedly over the last century, leading to the popular adage that socialism is “good in theory but bad in practice.” In fact, if something is consistently bad in practice, it is probably bad in theory, too. Quoting the economist Murray Rothbard:

if an ethical goal violates the nature of man and/or the universe and, therefore, cannot work in practice, then it is a bad ideal and should be dismissed as a goal. If the goal itself violates the nature of man, then it is also a poor idea to work in the direction of that goal.

The Alternative: Capitalism as the Enemy of the State

Where some cypherpunks have got it wrong is in conflating both capitalism and the state into one, indistinguishable bogeyman they call “the establishment.” They fail to see that capitalism and the state are, in fact, fundamentally at odds with one another since they espouse radically different approaches to social organization. The statist uses coercive and monopolist force (taxation, regulation, and monetary inflation via central banking) to increase his power, status, and wealth at the expense of “ordinary folk.” The capitalist, meanwhile, must meet the needs of consumers in order to increase his power, status, and wealth, and all of these things can be removed the moment consumers stop voluntarily purchasing his goods and services. Statism is a top-down, artificial hierarchy that requires central planning, data collection, and surveillance to achieve its ends. Capitalism is a bottom-up, natural hierarchy that is highly decentralized. In an anarcho-capitalist society, it is perfectly legal to take efforts to encrypt or otherwise protect your personal data. Under government rule, any attempt to keep your information out of the government’s hands increases your chances of having coercive action taken against you, and companies that store your personal information can be forced by the government to relinquish that information against their will.

I can only conclude that the anticapitalist or “anarcho-communist” ideal of egalitarianism is, in reality, anti-freedom, anti-individual, undemocratic, economically stratifying, and above all, pro-state. If my conclusion is correct, then cypherpunks would do well to embrace the very opposite of this: anarcho-capitalism and the moral principles of natural law and self-ownership.