Home > Uncategorized > Cashlessness poses a challenge to democracy itself.

Cashlessness poses a challenge to democracy itself.

The Indian experience suggests that the obsession with digital transactions
as a marker of social and material progress may be misplaced and even
counterproductive. Indeed, policy attempts to push a rapid transition to
cashlessness may be both infeasible and regressive. Cashlessness relies on
very substantial development of infrastructure, universal access to banking,
and strong and reliable internet connectivity — and while it provides
convenience, it also can lead to greater monitoring and cyber-insecurity.
Even in favourable conditions, it should essentially be a choice rather than
an imposition for most small transactions, and the shift must be based on
people preferring digital payments for their convenience rather than being
driven by the physical absence of cash. There is a deeper issue here: forcing
people to go cashless by reducing the currency in circulation amounts to an
infringement of their civil liberties even as it transfers incomes to financial
The specific form of financialization exhibited in the enforced push to
e-transactions is therefore an extreme example of a coercive strategy that
purports to provide convenience and formalization, but actually increases
inequality. It assists the generation of profits for financial companies by
adding another layer of costs to systems of payment. In doing so, it not only
makes those involved in such transactions poorer to that extent; it also renders
them more vulnerable to all-encompassing monitoring and surveillance, as
well as data and identity theft. This particular form of surplus extraction by
finance therefore also poses a challenge to democracy itself.

C.P. Chandrasekhar and Jayati Ghosh

  1. February 2, 2018 at 4:13 pm

    Thank you for this commonsense ! I totally agree ! Civil liberties in democratic societies will be jeopardized . In my ” The Idiocy of Things ” I proposed to extend the English law of Habeas Corpus ( 1215 ), to now include an” Information Habeas Corpus ” since we humans not only own our bodies , but also our heads, brains and the information we create ! Also see my ” Money Is Not Wealth : Cryptos v. Fiats ! ” both downloadable at http://www.ethicalmarkets.com

  2. February 2, 2018 at 9:34 pm

    I think it is important to disentangle several issues here, notably the difference between debit and credit concepts of money, between banker (or state) owned monetary systems and personal (or project) credit, and the logical status of cash and interest in these different systems.

    Looked at logically in relation to a bank account, cash is not a specific trade transaction for the purpose of buying something specific. Rather, it is a variable which can be spent on whatever one likes, which only becomes specific after it has been spent, at which time an automated system (either on-line or based on traders paying in and accounting for receipts) can replace records of cash withdrawal with details from the trader concerning what it has been spent on.

    Although it is created merely by banks authorising loans, the current legal convention is that money has real value equal to its face value and is the property of the bank, which therefore has something it can rent out at interest. However, the user gets nothing in return until he spends this nominal credit, so that in truth it is the trader, not the bank, which is giving goods “on tick”, and the trader’s own credit is not restored until his takings are paid in.

    In this system, if one separates payment for transactions from long term interest payments, it can be seen that the payment is in monetary units but the interest is in logarithmic units, increasing in numeric value with their position in the repayment series like the successive digits in an arabic number format: ‘1’ meaning one at the right hand end and perhaps ‘1 thousand’ at the left. And this for no service other than authorising a credit in someone’s bank account and the disservice of claiming that this had debited their own account!

    If the legal convention were realigned with reality, then the unspent loan becomes a mere credit limit and the debt is to traders throughout society who actually supply goods, these in turn being indebted to those who supplied them and their businesses: ultimately producers. The repayment of this real debt could only be in terms of an economy jointly reproducing the goods it had consumed. Rather than a credit card borrowing money at interest from international banks like Visa and Mastercard, the credit card debt would simply be what had been spent, and any interest charge would logically amount to a fine by the economy that increased the debt on record, i.e. as needing to be repaid by work when that was necessary.

    This is of course no more than an outline of an architecture for the nominally cashless credit card society I have been proposing. There is no question of it being obsessively cashless. The accounts of credit expenditure being our own, they could be administered locally by people who know us, just as they used to be. Indeed there would be no difficulty in people and businesses having multiple accounts for local, regional, national and international production and trading. It would be up to them, however, not the government, to balance their books at whatever level they traded in, and for employers, with their own credit and no wages to pay, to make jobs attractive and worth doing in exchange for debt write-down, rewards taking the form of credit for work already particularly well done.

    • February 5, 2018 at 8:54 pm

      Hey Dave :)

      A question re: your proposal… As I understand your idea, community bodies (not banks) would issue credit (not money) against the “surplus” they are storing (?) for the sake of the entire community. I have a conceptualization of this surplus as consisting of actual physical items that producers have produced in excess of their current consumption needs, but I realize that you can’t possibly be proposing that.

      So I then imagine that this surplus consists of some kind of money equivalent that “savers” can hold in some kind of personal account (that they would withdraw whenever they want?).

      To pull off a transition from our money based economy to a credit trading economy, I’m guessing that perhaps what you have in mind is people would start to deposit any “money” they’ve accumulated in these ‘clearing house’ entities as society transitions from a money based economy to a credit trading economy?

      And then these “surplus storehouse” entities would thereafter only issue credit, which would eventually take the place of money?

      Is that approximately correct, Dave?

      What am I missing?

      • February 5, 2018 at 10:08 pm

        A nearer understanding of what you are calling the surplus is what is “in the pipeline” between producer and consumer. Ships and warehouses and shops are full of it.

        I am talking concepts here, not measurables, for in principle one does not need to know how big the surplus is, only what has been used, so producers can refill the shops. (Getting new and stopping production of unwanted goods is a separate issue that I have dealt with but can’t detail here).

        All consumers would have access to what they needed via a credit card account, but the debt created by using it would not incur interest, nor be written off unless they were doing what was needed of them at that stage in their lives, eg growing their abilities as students and, as adults, looking after themselves and earning their keep by doing their share of what needed doing (and/or something worth doing, like research or art): not none but less of this being expected in sickness and old age.

        Thus in principle the transition from a fraudulent monetary economy would be gradual, as the idle rich bought what they needed but didn’t have their personal debts written off until they died or became commensurate with their produce. Their “money in the bank” would become what it is: worthless IOU’s if thought of it as things, but a credit limit if thought of as a budget. All the banks would do is what they usefully do now: process and advise on our accounts; but locally, by people in a position to understand the context of the facts.

        So no, James, you were not even approximately correct.

      • February 6, 2018 at 1:23 am

        So no, James, you were not even approximately correct.

        Thanks for clarifying, Dave. It’s good to be able to narrow down some of my misunderstandings of your overall vision.

        One of the things I’ve assumed—perhaps wrongly—is that in this new world, if I’m a low-skilled individual who has nothing but my time and basic skills to sell to an employer, she will “pay me” for my services by transferring a certain amount of ‘credit’ from her account to mine.

        So one possibility is that—if I am adequately compensated for my work—I may never need to ask for credit from the credit extension authorities (assuming I rent my home and save up credits for big-ticket purchases).

        Now if the “Surplus” (your concept) exists within the supply chain, then I’m not sure I understand how it is that these consumables find their way (figuratively?) into the “warehouse/silo” (the metaphor you’ve been using) that is the credit issuing entity.

        Since this credit authority would not actually be storing anything for the use of the community, you must then be speaking of storing digital representations of the real product that is to be found in the supply chain?

        Hmm… I think that perhaps again I am misunderstanding something…

      • February 6, 2018 at 4:46 am

        Sure. Perhaps you are deliberately misunderstanding?

        If you can buy all you need on your credit card you don’t need an employer, but you are expected to do what work one can where work is needed. The discipline required for this is just different from that imposed by an employer, being based on cooperation rather than coercion, and not amount of work but on doing the right thing at the right time. These days machines do most of the production, so what an “employer” (think project leader) is personally giving you on credit is her [sic] services helping you see what needs doing when. The shop-keeper is the end of the service line distributing what the machines have produced. In my reinterpretation of the facts the warehouse isn’t “the credit issuing entity” (i.e. an authority having the right to supply or not), it is simply a convenient parking point in the distribution process.

      • February 6, 2018 at 10:24 am

        Dave, your proposal has much in common with Sapiens’ way of life as a forager. A way of life Sapiens followed for almost 2 million years. A way of life supported both by genetic evolution and cultural adaptation. In other words, the way of life most “normal” for Sapiens. Which makes human culture for last 5,000 years “abnormal.”

        I wonder, do you have any notion about how we might go about making the changes you suggest? Obviously, sociopaths like Trump, etc. would have to be restrained. Evidence seems to indicate that Sapiens foragers practiced ritual killing to deal with sociopaths and other group members who failed the group.

      • February 6, 2018 at 3:09 pm

        Perhaps you are deliberately misunderstanding?

        Quite a bizarre insinuation, Dave…Deliberately misunderstanding…what does that even mean?

      • February 6, 2018 at 3:53 pm

        The discipline required for this is just different from that imposed by an employer, being based on cooperation rather than coercion…

        I wonder…how we might go about making the changes you suggest?

        I submit that one development in particular would change the perceptions and values of employers in the way Dave is imagining: a decision by governments to create and indefinitely maintain a chronic labour shortage.

        In such an environment, there would always be more jobs available than there are people to fill them. Employers would be forced to compete with other firms and with the government for the scarce labor they need to produce the things they want to produce.

        “My way or the highway” would gradually fade away as employers would have no choice but to look for ways to entice people to continue to work for them, relying less on gruff demands and more on a generally solicitous approach to managing their employees.

        Employers would have no choice but to offer better compensation packages in order to retain their current staff, and/or entice qualified individuals to leave their current employers and join them.

        The balance of ‘power’ would be reversed.

        Notice that it would be the marketplace that would be bringing about these desirable changes for the working class. I contend that it is not the marketplace, per se, which is the problem for working people, but only markets when they are not “tweaked” by governments to optimize the well-being of those on the bottom half of the economic ladder.

      • February 6, 2018 at 4:03 pm

        Your ritual sacrifice sounds tempting, but under government my recommendation is to pick one’s time and go to the top with a clear plan when there is both a crisis and a thoughtful, open-minded incumbent. The plan would have to include “know thyself” (making physiological personality theory a key element in school curriculae) and abolishing bureaucratic authority by recognising laws as codes of normal conduct (requiring – so allowing – abnormal conduct to be justified). The Emperor Constantine becoming Christian after having his mother pray for him suggests ladies working on their men might have a role to play. It is worth helping charismatic leaders like Nigel Farage to see sense, since they can evidently be very influential.

        The forager’s way of life depends on dominant personalities. Compare Chief Seattle’s tribe’s care for nature with what happened on Easter Island. Isolated groups (including elites) can forget what others have learned, so I don’t see the battle between good and evil ending any time soon.

      • February 6, 2018 at 4:41 pm

        Apologies: James snook in while I was answering Ken.

        “Perhaps you are deliberately misunderstanding?”

        There are of course “none so deaf as thos who don’t want to hear”, but actually, I was giving James the beneffit of the doubt and wondering if he was cleverly appearing obtuse in hope of further developing the argument.

        James contended “that it is not the marketplace, per se, which is the problem for working people, but only markets when they are not “tweaked” by governments to optimize the well-being of those on the bottom half of the economic ladder.”

        Of course I appreciate “sticking-plasters”, but their problem is that the next government in will in all likelihood have the policy of leaving nature to do its best (or worst). But I’ve said the root problem is not the government: it is a deeper mixture of personality clashes and dishonest money. In my paper I quote Lord Stamp, sometime director of the Bank of England:

        “”The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in iniquity and born in sin. Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit”.

      • Rob Reno
        February 6, 2018 at 6:55 pm

        “Quite a bizarre insinuation, Dave…Deliberately misunderstanding…what does that even mean?”

        You are supposed to assume you already have a can opener James :-)

      • Rob Reno
        February 7, 2018 at 4:46 am

        There are of course “none so deaf as thos who don’t want to hear”, but actually, I was giving James the beneffit of the doubt and wondering if he was cleverly appearing obtuse in hope of further developing the argument.

        First your resort to childish ad hominem accusing James of deliberately misunderstand when his questions were legitimate ones (pragmatics count or ideals are useless), and then you make the ignorant comment above. Perhaps, like Aristotle, you have forgotten to include humility as one of the eleven moral virtues which your comments seem to be lacking.

      • February 7, 2018 at 12:12 pm

        So I was joking and James didn’t see the joke. Neither have you, Rob, even when I had explained it. From the inside, I feel humiliated by my inability to communicate decades of expertise now seen intuitively to a majority which (like my wife) sees only what is in front of them: “what it says on the label”. What may look like lack of humility is actually my commitment to pursuing the truth anyway, despite such humiliation.

      • February 7, 2018 at 12:24 pm

        Rob, thanks for your “can opener” link. Any reminder of Kenneth Boulding is worth having.

      • Rob Reno
        February 7, 2018 at 3:31 pm

        So I was joking and James didn’t see the joke. Neither have you, Rob, even when I had explained it. From the inside, I feel humiliated by my inability to communicate decades of expertise now seen intuitively to a majority which (like my wife) sees only what is in front of them: “what it says on the label”. What may look like lack of humility is actually my commitment to pursuing the truth anyway, despite such humiliation.

        I understand. It is sometimes hard to convey tongue-in-cheek humor online. The idea of an economy not based solely on the profit motive is something I would be interested in understanding. Hard to imagine here in the US given the fool in BOTUS today.

  3. February 4, 2018 at 4:58 am

    Everywhere we look people are constantly creating different kinds of money. Consider some of the remarkably various ways in which people identify, classify, organize, use, segregate, manufacture, design, store, and even decorate monies as they deal with multiple social relations. There’s dirty money, laundered money, earned and unearned money, charity money, wife’s money, children’s money, etc. There’s also a long list of invented monies — food stamps for the poor, supermarket coupons for the ordinary consumer, prison scrip for inmates, therapeutic tokens for the mentally ill, military currency for soldiers, chips for gamblers, lunch tickets for institutional canteens, gift certificates for celebrations. This contradicts one of the most powerful ideologies of our time that money is a single, interchangeable, impersonal instrument-the very essence of our rationalizing modern civilization. Money’s “colorlessness,” as Georg Simmel saw it at the turn of the twentieth century, repainted the modern world into an “evenly flat and gray tone.” All meaningful nuances were stamped out by the new quantitative logic that asked only “how much,” but not “what and how.” Money, according to this ideology also destroys, inevitably replacing personal bonds with calculative instrumental ties, corrupting cultural meanings with materialist concerns. Indeed, from Karl Marx to Jurgen Habermas, from Georg Simmel to Robert Bellah, observers of commercialization in Western countries have thought they saw devastating consequences of money’s irresistible spread: the inexorable homogenization and flattening of social ties. Conservatives have deplored the moral decay brought by prosperity while radicals have condemned capitalism’s dehumanization, but both have seen the swelling cash nexus as the source of evil.

    But as demonstrated by the furor over digitalization of money, money is not colorless, impersonal, rationalizing. In fact, money can and does carry all the love, hate, fear, greed, etc. of human social relationships. Money’s quantification can take on many varied forms to serve many purposes. It is this conflict between the portrayal of money as flat and gray quantification by the economic and political elites and its actual uses by these same elites. It’s the old magician’s trick – look at the gray and featureless money (money’s just money) while we take away your livelihoods, freedom, and independence with our special purpose digital money. The robbed aren’t even aware they’ve been fleeced.

  4. Craig
    February 6, 2018 at 7:36 pm

    If you implemented a guaranteed relatively abundant universal dividend (approximately half of a middle class level of income) and a 50% discount at the point of retail sale….who would care whether money was paper and coin or digital and electronic? The end of poverty and relative economic and monetary freedom….is the end of poverty and relative economic and monetary freedom.

  5. February 8, 2018 at 1:08 pm

    If someone sells their energy to some other and in turn gets paid by tokens that can be exchanged to refill energy and to buy other things, then the tokens in possession of an individual or a body is the surplus energy lent to others. However, the tokens are produced and distributed by a central body which is an act of common good to the society. Therefore, the central body has the right to recover the cost of doing this service. I believe that nobody would object to this transaction cost. Fixing this cost of transaction is debatable for the same tokens can be used for hundreds of transactions. Hence, the cost ought to be distributed equally. The same logic can be applied to currency or plastic card.

    A practical problem is coercing a person to use plastic card when they want to buy a candy for 1c. This is an absurdity.Therefore, the use of physical tokens cannot be stopped. Every person is entitled to possess certain physical tokens for ease of doing certain small transactions.

    Another problem is trespassing into privacy of individuals. Why should one reveal one’s consumption pattern of the tokens legally secured? Naturally, no one should bother about a person’s consumption of legally secured tokens. However, if the tokens are not legally secured then the central body has the right to question such illegal transactions.

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