<nettime> In Praise of Cash

[Brett Scott <brettscott@fastmail.com>]

I just published this big essay in Aeon Magazine, looking at the dark
sides of 'cashless society' (aka. the bank payments society):
https://aeon.co/essays/if-plastic-replaces-cash-much-that-is-good-will-be-lost.
This follows from an earlier essay I did called The War on Cash. The
battle to protect cash is one full of ambiguities - it feels somewhat
like trying to protect good ol' normal capitalism from a Minority Report
surveillance-capitalism. The full text is below


IN PRAISE OF CASH: BRETT SCOTT

I recently found myself facing a vending machine in a quiet corridor at
the Delft University of Technology in the Netherlands. I was due to
speak at a conference called ‘Reinvent Money’ but, suffering from jetlag
and exhaustion, I was on a search for Coca-Cola. The vending machine had
a small digital interface built by a Dutch company called Payter.
Printed on it was a sentence: ‘Contactless payment only.’ I touched down
my bank card, but rather than dispensing Coke, it beeped a message:
‘Card invalid.’ Not all cards are created equal, even if you can get one
– and not everyone can.


In the economist’s imagining of an idealised free market, rational
individuals enter into monetary-exchange contracts with each other for
their mutual benefit. One party – called the ‘buyer’ – passes money
tokens to another party – called the ‘seller’ – who in turn gives real
goods or services. So here I am, the tired individual rationally seeking
sugar. The market is before me, fizzy drinks stacked on a shelf,
presided over by a vending machine acting on behalf of the cola seller.
It’s an obedient mechanical apparatus that is supposed to abide by a
simple market contract: If you give money to my owner, I will give you a
Coke. So why won’t this goddamn machine enter into this contract with
me? This is market failure.


To understand this failure, we must first understand that we live with
two modes of money. ‘Cash’ is the name given to our system of physical
tokens that are manually passed on to complete transactions. This first
mode of money is public. We might call it ‘state money’. Indeed, we
experience cash like a public utility that is ‘just there’. Like other
public utilities, it might feel grungy and unsexy – with inefficiencies
and avenues for corruption – but it is in principle open-access. It can
be passed directly by the richest of society to the poorest of society,
or vice versa.


Alongside this, we have a separate system of digital fiat money, in
which our money tokens take the form of ‘data objects’ recorded on a
database by an authority – a bank – granted power to ‘keep score’ of
them for us. We refer to this as our bank account and, rather than
physically transporting this money, we ‘move’ it by sending messages to
our banks – for example, via mobile phones or the internet – asking them
to edit the data. Money ‘moves’ to your landlord if your two respective
banks can agree to edit your accounts, reducing your score and
increasing your landlord’s score.


This second mode of money is essentially private, running off an
infrastructure collectively controlled by profit-seeking commercial
banks and a host of private payment intermediaries – like Visa and
Mastercard – that work with them. The data inscriptions in your bank
account are not state money. Rather, your bank account records private
promises issued to you by your bank, promising you access to state money
should you wish. Having ‘£500’ in your Barclays account actually means
‘Barclays PLC promises you access to £500’. The ATM network is the main
way by which you convert these private bank promises – ‘deposits’ – into
the state cash that has been promised to you. The digital payments
system, on the other hand, is a way to transfer – or reassign – those
bank promises between ourselves.


This dual system allows us the option to use private digital bank money
when buying pizza at a restaurant, but we can always resort to public
state money drawn out of an ATM if the proprietor’s debit card system
crashes. This choice seems fair. At different times, we might find
either form more or less useful. As you read this, though, architects of
a ‘cashless society’ are working to remove the option of resorting to
state cash. They wish to completely privatise the movement of money
tokens, pushing banks and private-payments intermediaries between all
interactions of buyers and sellers.


The cashless society – which more accurately should be called the
bank-payments society – is often presented as an inevitability, an
outcome of ‘natural progress’. This claim is either naïve or
disingenuous. Any future cashless bank-payments society will be the
outcome of a deliberate war on cash waged by an alliance of three elite
groups with deep interests in seeing it emerge.


The first is the banking industry, which controls the core digital fiat
money system that our public system of cash currently competes with. It
irritates banks that people do indeed act upon their right to convert
their bank deposits into state money. It forces them to keep the ATM
network running. The cashless society, in their eyes, is a utopia where
money cannot leave – or even exist – outside the banking system, but can
only be transferred from bank to bank.


The second is the private payments industry – the likes of Mastercard –
that profits from running the infrastructure that services that bank
system, streamlining the process via which we transfer digital money
between bank accounts. They have self-serving reasons to push for the
removal of the cash option. Cash transactions are peer-to-peer,
requiring no intermediary, and are thus transactions that Visa cannot
skim a cut off.


The third – perhaps ironically – is the state, and quasi-state entities
such as central banks. They are united with the financial industry in
forcing everyone to buy into this privatised bank-payments society for
reasons of monitoring and control. The bank-money system forms a
panopticon that enables – in theory – all transactions to be recorded,
watched and analysed, good or bad. Furthermore, cash’s ‘offline’ nature
means it cannot be remotely altered or frozen. This hampers central
banks in implementing ‘innovative’ monetary policies, such as setting
negative interest rates that slowly edit away bank deposits in order to
coerce people into spending.


Governments don’t really mention that monetary policy agenda. It isn’t
catchy enough. Rather, the key weapons used by the alliance are more
classic shock-and-awe scare tactics. Cash is used by criminals! People
buy drugs with cash! It’s the black economy! It supports tax evasion!
The ability to present control as protection relies on constant calls to
imagine an external enemy, the terrorist or Mafiosi. These cries of
moral panic are set in contrast to the glossy smiling adverts about
digital payment. The emerging cashless society looms like a futuristic
sunrise, cleansing us of these dangerous filthy notes with rays of
hygienic, convenient, digital salvation.


Supporting this core alliance are auxiliary corps of establishment
academics, economists and futurists, living life in leafy suburbs,
flying business class to speak at technology conferences, attended to by
a wall of sycophantic media pundits and innovation journalists preaching
the gospel of cashlessness. The Curse of Cash (2016) by Kenneth Rogoff,
economics professor at Harvard, was longlisted for the Financial Times
and McKinsey Business Book of the Year award, undoubtedly accompanied by
invitations to financial industry-sponsored conference parties in
five-star hotel lobbies.


The psychological assault is working. The Netherlands – where I face my
vending machine – has become one key front in the war on cash. Here cash
is becoming viewed like an illegal alien on the run, increasingly
excluded from the formal economy, drawing dirty looks from shop
assistants. Signs say ‘Card only’. Who is Card? Card is a glamorous
socialite, welcomed into stores. Card is superior. Look at the bank
adverts showcasing their accessories for Card. Nobody is building
accessories for Cash.


The frontlines, though, are now creeping to poorer countries. India’s
recent so-called ‘demonetisation’ was a brutal overnight retraction of
rupee notes by the prime minister Narendra Modi to bring discipline to
the ‘black economy’. It was an exercise that necessitated choking the
poorest Indians, who depend on cash and who often lack access to bank
accounts. Originally cast in popular terms as an attempt to stem
corruption, the message was later ironically altered to cast
cashlessness as a way to create economic progress for India’s poor.


This message is given humanitarian credentials by the UN-based Better
Than Cash Alliance, which promotes ‘the shift from cash to digital
payments to reduce poverty and drive inclusive growth’, and which counts
Visa, Mastercard and Citi Foundation as key partners. The Modi action
was also preceded by the initiation of the Cashless Catalyst programme,
‘an alliance between the Government of India and USAID, to expand
digital payments in India’, backed by a panoply of digital payments
companies. These official alliances of states, corporations and public
academics are impressive. In India, well-heeled urban elites who
applauded Modi’s actions from the sidelines can safely point to Rogoff’s
Financial Times-nominated book of the year to justify it.


Rogoff, though, has appeared spooked, writing articles stating that he
was advocating removing cash only from advanced economies with advanced
banking systems. Oh damn. Highly influential and politically powerful
Harvard economist releases a global anti-cash book and is concerned when
poorer nations take him seriously?


The attempt to present the cashless bank-payments society as a benefit
to marginalised people is tenuous at best. If you’re a vulnerable
denizen of the informal economy, an off-the-grid hustler, or a
low-income precarious worker, banks and payments intermediaries have
little interest in prioritising you. The bank-payments society will not
process the activity that takes place in the peripheral cracks that form
the basis of your livelihood. Indeed, it is intended to shut down those
spaces. That might be characterised as ‘progress’, but equally we might
say you’re being firewalled out of the economy in an act of economic
cleansing. Under the guise of destroying the ‘shadow economy’, the
underclass, the unwatched, the eccentric and the untamed will be
coercively corralled into the hands of the state-corporate mainstream.


I have no special love of cash. I don’t really care for nostalgic
reveries on the beautiful aesthetics of the banknote, or its texture and
cultural importance within a market system, though I understand this is
important to many. I also don’t really care about the pedantic history
of cash, whether it was the Tang or Song dynasty in China who first
issued notes. What I care about is the unaccountable callousness of this
vending machine, the one that has just blocked me from engaging in free
trade.


Old vending machines didn’t do this. They had a little slot for coins,
one that allowed even a ragged beggar to convert his tiny income into
sustenance. Look closely at the machine. It’s actually two machines. The
Payter device fused into its body does not work for the cola seller. It
works for payments corporations. You see, the cola seller has one bank
account, but there are many people with many accounts at different banks
approaching the vending machine. Those banks need to identify which of
their account holders wishes to transfer how much money to which account
at which other bank. The device is there to deliver my card information
into the transmission lines of the card payments networks, where it will
be – in theory – routed to facilitate the transfer of money tokens from
my account into the seller’s account, for a small fee.


This is no longer a deal between me and the seller. I am now dealing
with a complex of unknown third parties, profit-seeking money-passers
who stand between us to act as facilitators of the money flow, but also
as potential gatekeepers. If a gatekeeper doesn’t want to do business
with me, I can’t do business with the seller. They have the ability to
jam, monitor or place conditions upon that glorious core ritual of
capitalism – the transfer of money for the transfer of goods. This
innocuous device exudes mechanical indifference, reporting only to
invisible bosses far away, running invisible algorithms in invisible
black boxes that don’t like me.


If we are going to refer to bank payments as ‘cashless’, we should then
refer to cash payments as ‘bankless’. Because that’s what cash is, and
right now it is the only thing standing between us and a completely
privatised money system.


As in the case of previous privatisations, we’ll hear suited TV pundits
arguing that if the digital payments companies don’t work for people
they will be outcompeted by better private systems. Yeah right. When did
you last see a credible competitor to the likes of Mastercard and Visa?
They preside over huge network systems, subject to intense network
effects. It’s in no shopkeeper’s interest to use a competitor to Visa
when it’s so utterly dominant already.


The most we can hope for, then, is a benign oligopoly of payments
corporations, heavily exposed to the geopolitical aspirations of the
states they reside within. The Chinese state encouraged the creation of
China UnionPay precisely because they don’t want US payment megacorps
installing themselves as gatekeepers into transactions made by Chinese
citizens.


When mounting a defence, there are always two options. You either block
an incoming attack, or you launch a strategic counterstrike, sometimes
summed up as ‘offence is the best defence’.


In the former strategy, you focus on pointing out that the arguments
against cash are either exaggerated, inaccurate or incomplete.
Exaggeration and inaccuracy are both present in anti-cash tirades, but
incompleteness is crucial. For example, let’s say we agree that
criminals prefer cash. Does that translate into ‘We should ban cash’?
Banning everything that criminals favoured would almost certainly lead
to a constrained, suffocating existence for everyone. Congratulations,
we ended crime, but only at the expense of ending privacy and free
creative space too. The end of crime comes accompanied by an overbearing
surveillance state, always standing next to you, reaching into your most
private moments, treating you like a small child that cannot be trusted.
Enjoy your life.


The second mode of defence-as-offence involves attacking the proposed
alternative. We point out that the new bank-payments society, firstly,
does not actually solve the old problems – crime just goes digital, and
your account gets hacked rather than your wallet stolen – and, even
worse, causes a whole range of new problems that were not explicitly
mentioned in Mastercard’s marketing material. Let me reveal the
fine-print written in invisible ink: Did we mention that in removing the
ability to transact with cash we can now see everything you do and can
also censor you? Cheer up, if you have nothing to hide, you have nothing
to fear!


Oh yes, I can use scare tactics too. I can point out that removing cash
takes us one step closer to potentially realising the most powerful and
automated state-corporate financial control complex the world has ever
seen. Very few people either seem to understand this, or care. Like a
slow-boiled frog, we don’t seem to notice the process of locking
ourselves into daily dependence on an alienating, unaccountable
infrastructure that makes us increasingly subservient to bureaucratic
processes we cannot see.


Maybe I need to turn up the shock-and-awe. Maybe I can drum up an

argument about how, in a cashless society, terrorists could target the
electrical grid to bring entire regional economies to a halt.


No. My main defence of cash will be simple and intuitive. As unsexy and
analogue as cash is, it is resilient. It is easy to use. It requires
little fancy infrastructure. It is not subject to arbitrary algorithmic
glitches from incompetent programmers. And, yes, it leaves no data trail
that will be used to project the aspirations and neuroses of faceless
technocrats and business analysts into my daily existence. It comes with
criminals, but hey, it’s good old friendly normal capitalism rather than
predictive Minority Report surveillance-capitalism. And ask yourself
this: do you really want to live in the latter society without the
ability to buy drugs? Believe me, you’ll need something to dull the
existential pain.


--
Brett Scott
🐦 @suitpossum


---
This email has been checked for viruses by Avast antivirus software.
https://www.avast.com/antivirus

#  distributed via <nettime>: no commercial use without permission
#  <nettime>  is a moderated mailing list for net criticism,
#  collaborative text filtering and cultural politics of the nets
#  more info: http://mx.kein.org/mailman/listinfo/nettime-l
#  archive: http://www.nettime.org contact: nettime@kein.org
#  @nettime_bot tweets mail w/ sender unless #ANON is in Subject: