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<nettime> Â1984: does a cashless economy make for a surveillan
Brett Scott on Sun, 4 Oct 2015 20:25:18 +0200 (CEST)


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<nettime> Â1984: does a cashless economy make for a surveillan


   Dear Nettime,
   Much discussion around surveillance has focused on areas like social
   media (NSA spying on Facebook etc.), but I still think there is too
   little focus on electronic payments surveillance. Here is a short piece
   I published in the Guardian
   (http://www.theguardian.com/sustainable-business/2015/sep/30/1984-do
   es-a-cashless-economy-make-for-a-surveillance-state) that discusses the
   growing trend to push a narrative of 'cashless society'. I discuss some
   negative implications of this, plus some alternative possibilities...
   £1984: does a cashless economy make for a surveillance state? Brett
   Scott
   If you type "money" into a Google image search, you get pictures of
   metal coins and paper notes. People fixate upon this physical currency,
   but while we still use such transferable tokens for many small
   transactions, large ones are inevitably electronic. When Rolls-Royce
   acquires metal to produce jet engines, it doesn't hand over a bundle of
   pound notes. It makes an electronic transfer from its bank account to
   the metal dealer's account.
   Increasingly, though, we use electronic transfer in small-scale
   transactions too. Rather than handing over physical tokens, you might
   tap a contactless payment terminal at the supermarket. This sends a
   message via an electronic communication system - the Visa or Mastercard
   system, for example - that instructs two banks to edit account
   databases that keep score of the buyer and seller's money. The money
   "moves" owing to third-party payment intermediaries changing your
   records in their data-centre hard drives.
   The technology that enables this is becoming ubiquitous, and with it
   comes the possibility to do away with coins and notes altogether.
   Electronic micro-transactions can replace 10p coins. London bus drivers
   have stopped accepting cash. They will accept your contactless card
   though. This is the emergent "cashless society".
   While the payments industry heralds this as a great leap forward out of
   the grimy world of physical cash and into the clean, electronic
   crispness of efficient, near-instantaneous electronic transactions,
   this glosses over the politics of a cashless society.
   Surveillance state
   Coins and notes are a flexible and anonymous medium for quick small
   transactions that don't involve an intermediary. In a world where all
   transactions are electronic, though, the only means of paying is via a
   bank account, meaning anyone without a bank account cannot buy
   anything. If you are a refugee with no permanent address and bank
   account, good luck.
   This increases the power of private banks relative to individuals. We
   will require banks even for buying a bottle of milk.
   With this comes the spectre of bank surveillance, where every
   transaction you ever partake in is authorised and recorded by a
   privately run commercial bank, giving it a transaction-by-transaction
   history of your entire commercial life. If such a bank does not like an
   enterprise - such as Wikileaks -it can just freeze it out.
   Some might argue that this should not matter if you have nothing to
   hide. The same argument, though, might be used to install a government
   or corporate surveillance camera in your living room. The desire not to
   be watched does not mean you have something to hide - just that you
   like to be alone. So it is with money. Sometimes we like to feel like
   our transactions belong to us alone.
   Power or mass panic?
   Micro-surveillance aside, massive payment intermediaries such as
   Mastercard and Visa could conceivably build a bird's-eye view of every
   transaction in an economy, a big data economic macro-surveillance
   system. If they can secure access to such data, government
   statisticians might welcome this. It will give policymakers a much
   better picture of the state of economic activity, allowing economic
   policy to be fine tuned in real time.
   There is another - hidden - agenda though. If the only means of holding
   money is in the form of electronic bank deposits, a central bank can do
   something it cannot do with cash. It can set negative interest rates to
   erode people's money in times of recession, making it costly to hoard
   it, and thereby theoretically stimulating economic activity. Bank of
   England chief economist Andy Haldane recently said as much.
   A tricky conundrum emerges. Cash is, in fact, the only direct way we
   can hold government money. This is why people convert their commercial
   bank deposits into cash when they lose confidence in a bank, causing a
   bank run. In a world with no access to cash, bank runs would look very
   different. If you cannot get government money from the ATM, you can
   only transfer commercial bank money from one bank to another. If the
   entire banking system looks shaky, this could cause mass panic.
   Bitcoins and other alternatives
   These make people concerned. One reason to value cryptocurrencies such
   as Bitcoin is that they are the only way to do electronic transactions
   without commercial banks acting as intermediaries. In a future cashless
   society they could provide a counterpower to the hegemony of banks and
   card companies.
   A cashless society is not a moneyless society. It will, however, change
   our mental image of money. It will erode the archaic idea that money is
   a "thing" and replace it with the realisation that it's a scoring
   system - a credit system recording obligations between people.
   Such an idea repulses some economic reactionaries, who yearn for a
   return to the hard reassuring physicality of gold. Realising that money
   is merely an accounting system between people brings with it a
   potential for seeing money as unreal. But it also opens up the
   possibility for interesting moneyless alternatives to emerge.
   One possibility is the rise of moneyless economic matching engines. The
   ancient age of barter may largely be a myth, but there could be a
   future age of high-tech barter. Imagine a construction company that
   needs supplies from a cement company, that needs gas from an energy
   company that needs construction work done. Algorithmic systems might
   match their needs without recourse to monetary exchange.
   Such a system would be moneyless but would still depend on explicitly
   measuring value, to come to agreements on fair exchange. However,
   others might imagine the rise of a gift economy in which people do not
   keep score at all, but manage communal abundance through open sharing.
   It is a vision that veers into the realm of new age utopianism, but we
   are used to this practice already between family and friends . It is
   not beyond possibility to scale it up.
   Whether we end up with a global financial surveillance state or a
   liberating infrastructure of democratic exchange, really depends on who
   gets involved and how hard they fight.

   --
   Brett Scott /  {AT} suitpossum / 079 8243 7769 / LinkedIn / Blog
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