Monday, July 2, 2012

David Graeber and Geoffery Ingham - how they combine to challenge my thinking!

The idea that money is a social relation as described by Ingham points to the importance of exploring what Ingham has called the "nature of money" and its production. As a political economist I am deeply interested in what the creation of money means for the entire operation of a given political economy. Who controls its creation? What quantity is produced? Is it created by one centralized authority? By a multitude of entities? And, most importantly how do we construct the "money of account"? What political economic configurations enable the construction of a given "money of account" and how might that "money of account" come to be threatened, weakened or challenged?

With this in mind I am deeply curious about what the rise of new technology means for the future of money and how this might impact the nature of money and its production. Several anthropologists have made the claim that history has been marked by different periods of money - virtual verse commodity based money. These anthropologists, including David Graeber, claim that these different forms of money are tied in some way to different political economies/ social relations. If this claim is true then the period that humanity is entering into in which our experience - as everyday citizens - is increasingly mediated through forms of virtual money heralds a shift in the political economy.

The combination of these two claims - that money is a product of a specific set of social relations and is always the result of political compromise and that virtual money is associated with specific and in many cases non-capitalist social relations - can be combined to explore a unique set of developments in today's political economy.

The first is the rise of mobile technology and the associated rise of mobile banking (or e-money, m-payments, m-transfers and more) which are increasingly resulting in the virtualization of our monetary experiences. Though it is true that 98% of money is already virtual - meaning we only print and mint about 2% of our money supply - up until fairly recent, almost all day-to-day economic exchanges have been mediated in some way by cash (or checks) giving money a sense of realness and tangibility and real scarcity. The shift away from cash based transactions has been occuring in the developed world for the past couple decades with the rise of credit and debit cards (though in America upwards of 35% of all economic exchanges are still carried out using cash). While, in the developing world the change is much more rapid due to the rise of mobile technology which is leading to an almost instant virtualization of money (in some cases some people have only ever experienced money as a virtual thing).

The second important trend is the personalization of the idea of money creation. Increasingly, there are claims, efforts and philosophical arguments being made that state that individuals can and should make their own money. This is a unique claim one that, as far as my research has found, has not been made before. There have been claims that local communities or individual institutions (such as banks) can create their own money but never have individuals claimed that they, themselves, can create money.

The combination of these two historically specific developments deserves further exploration in light of the recent work of both Ingham and Greaber. The importance is emphasized by the ongoing crisis in our financial system and the need to understand the true nature of money - its production and the way in which this production impacts the political economic options and possibilities. 

All of this points to the very important question of how we produce money and the failings of most theory to fully understand the importance of the money of account (despite Keynes best effort to highlight its importance). The challenge is to break away from the historical mistake made in most theoretical explorations of money - that is the obsession with the "form" of money - and to rather fully understand the production of a viable 'unit of account". What political economic configurations are needed? Does a shift from commodity to virtual money have any significance?

The challenge in all of this is that, given my personal belief that the form of money is not of importance but rather the unit/money of account is the most critical and hardest to understand - why then does the virtualization of money have any real importance? My claim is that this virtualization of money is leading to new experiences of money that are raising deeper questions about the production of money - if money is not something that is naturally scarce (i.e because it is gold or silver or cows) then why is it scarce? Why are there not sufficient supplies of money? And, if there are not sufficient supplies of money, and money is not a unique object then why can't I just produce my  own money? Or why can't my community just produce its own money to meet its needs? 

All of these questions will result in deeper questions - questions that highlight the current systems of power, of class and more comprehensively of the existing social relations. These questions may yet lead to deeper revolutionary thoughts that may enable a disruption of the given political economy.

If, as I believe, these shifts are part of a pre-revolutionary change - the better we understand the political economy of money production as it relates to the questions of the social the better prepared we will be for developing viable alternatives which are more closely aligned with idea of economic democracy.