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Demonetization – replacing transactions with social relations

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[On the Economics and the Commons Conference I gave a short input on the topic of demonetization. The following text was written afterwards and generously edited by David Bollier.]

The question of how we deal with and act within the given monetary environment is crucial for the commons movement, since the monetary logic and the commons logic are opposites. Contrary to the claims of mainstream economics, money is not neutral or simply an informational means for mediating transactions. Thus, replacing currencies with alternative currencies of different designs basically does not change the underlying monetary logic. It amounts to changing the tools while keeping the workshop.

The core element of the monetary logic is equivalent exchange and a codified set of social power relationships. It demands that »you get something only if you give something back.« This underlying logic creates relationships of guilt and subordination, as anthropologist David Graeber has convincingly shown in his history of credit over the course of human history.

The demonetization approach aims at reducing the necessity of using money both within our own commons relations and with respect to the outside »normal« market logic. It aims at strengthening social relationships instead of improving transactions, as Silke Helfrich has put it. While transactions always enforce direct reciprocities that link giving with taking, commons is about commoning – a more open, flexible system for freely determining the rules of interaction and distribution of the wealth we produce.

It is a fallacy to assume that designing an alternative currency is a form of commoning (or commoneering) because it only changes the tools, not the workshop. The social operations inscribed in the tools remain the same: performing transactions. Thus alienation is inherent in both conventional currencies as well as in alternative or complementary ones. If we want to gain self-determination we have to break with money, and if we want to break with money we have to break with direct, reciprocal exchange.

On the operational level demonetization requires that projects be carefully designed. As a general guideline projects should strive to decouple the inner social process of commoning from the the logic of transactions with “outsiders.” This means, for instance, that commoners should not resort to selling commons products on the market in order to finance a project, because it invariably means that the project must adopt market requirements to successfully sell its products. Products become commodities, and commodities must subordinate themselves to market rules and demands. Adapting to market rules gradually corrupts our own needs-driven activities. It may be a subtle process, but the more we are »successful« in the market, the more we have to postpone our own needs and wishes. An alien logic creeps into our daily activities within the commons.

Through the careful design of our projects, however, we could separate the inner (commons) logic from the outer (market) logic as much as possible. Then the “output” of our commoning can be distributed in strict conformity with our own needs-based agreements. Developing and adhering to our own rules based on our own definitions of fairness might undermine transactional rules of equivalence (“you can take only an equivalent amount to what you give”). But this “imbalance” does not matter because equivalence need only be guaranteed at the level of the whole project, not at the individual level within each single »transaction« (which is no longer a transaction then). In other words, indirect reciprocity is sufficient for assuring fairness and stability of provisioning.

How can this be organized? Assuming that a project requires some amount of monetary flow to keep it running, those revenues should not be allowed to affect the results of the projects. Such sources could be foundations, donations, crowdfunding, bidding or the like. Results could then be distributed within the commons or outside of them. A role model for this type of “decoupling the inner from the outer” market logic is Wikipedia.

Another model is a symbiotic cooperation between commons and private firms. The firm, for instance, could pay activists and innovators to do what it wants because the outcome can be directly or indirectly used by the firm to make profits. This type of financing the commons has been used to finance the development of the Linux kernel, where most of the kernel hackers are paid in a way one might call a »unconditional guaranteed income«. Obviously, this scenario may entail explicit or implicit expectations for commoners to follow the interests of the money-giver in one way or another. However, there are no black-and-white rules for determining this; most real world examples have shades of grey. It is therefore even more important for such projects to have clear criteria and social norms to prevent monetary logic from creeping into projects and influencing or corrupting our commoning activities.

Kategorien: Commons, English, Theorie

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17. Juni 2013, 06:59 Uhr   12 Kommentare

1 Andreas Bangemann (17.06.2013, 09:00 Uhr)

If a kind of “gift-culture”  is the desirable future , not reciprocal but one which is driven by a kind of wise blindness,   it could be helpful to think about the steps which have to be gone coming back from this future to the present.I couldn’t understand the strenous opposition to scenarios which could bring us to the wishfull future.On one side the article shows clearly that is impossible to overleap the money driven thinking in the present age without facing tradeoffs. On the other side the article shows a kind of obstinacy against ideas which could help to achieve the objectives. For example complementary currencies with a “commons” design. Why not a transition period with complementary currencies designed with the requirement to be commons like all the good commons which already exists? 

2 Stefan Meretz (18.06.2013, 14:48 Uhr)

@Andreas: There is an inherent problem in alternative money, which I wanted to address and which is structurally the same as for the socialist countries (r.i.p.) in the past: to strengthen the aspect (state/money) you want to get rid off. The is no good state as there is no good money, because they have their objective functions. At the same time we have to deal with both.

3 Andreas Bangemann (18.06.2013, 22:26 Uhr)

Thank you for your statement @Stefan:An interesting point of view. I am working now for 20 years in NGO’s which are looking for ways to come out of the destructive money-system we have. If such efforts will not suceed I am sure a  social and ecological desaster will come. I always was sure – and so it is still –  that a money system which prefers the function of transaction and diminish the storage function radically will be good for the people, but won’t for the structure of a state subsidizing the rich, the mighty and their political stuff. Why there are no political movements in the establishment flirting with suchlike ideas and theories? The fact that politicians all over the world are thinking about something like a Tobin tax, make it evident, that such ideas aren’t dangerous for the existing structures. So why? Tobin tax doesn’t change anything to the immense redistribution of wealth from the poor to the rich. It is the attempt to fetch back a very small part  of the haul from the robber instead of thinking about the prevention of the thievery. If you can’t except this, because you think the problem is money in general, it is okay. But please do not impute strenghtening the status quo to the people who work for local currencies. So far I can judge their acitivities I only see people who want to help building a future with more humanity, more fairness and a ecology in better order.

4 Stefan Meretz (20.06.2013, 10:12 Uhr)

@Andreas: I impute striving for »a future with more humanity, more fairness and a ecology in better order« »to the people who work for local currencies«. I fully understand and share the aims driving the people. What I only want to do is raising warnings about the means (modified money) by clearly understanding what commons are about: They are about social relations and not transactions. So strenghening transactions (and the logic of equivalent exchange behind it) does not really help us, on the contrary, it implants the destructive logics of exclusion in the commons. That’s my point.

For me it was really interesting, that at the ECC people from the south immediately understand the demonetization approach. They said to me, that they don’t have (much) money anyway, and if they start to eagerly go for money (in what form ever), they will destroy their communities.

But nevertheless, people will go for alternative currencies. What the demonetize approach can offer to them are criteria to analyze their problems — and in practice there are a lot of problems — as not simply technical ones, but as conceptual ones. However, I know that overcoming a quasi-religious thing even in thinking is hard since it makes the world go round.

5 Hans-Gert Gräbe (21.06.2013, 07:45 Uhr)

The roots and mechanisms of all that are very clearly explained in David Grabers famous book. Its really worth looking at his historically underpinned arguments for a better understanding what’s going on today.

6 P2P Foundation's blog » Blog Archive » The Demonetization Agenda – replacing transactions with social relations (03.09.2013, 09:29 Uhr)

[…] Republished from Stefan Meretz: […]

7 Marc Gauvin (07.11.2013, 11:13 Uhr)

Stefan,

The general problem with currency discussions is that both sides assume a standard definition of money that makes no logical sense when scrutinised.  Then each side assumes that the mutually unidentified underlying irrationality is somehow the product of opposing proposals.  This leads to massive inconclusive discussions that are ultimately decided by opinion rather than by objective logic.  

Now and in regards to your claim that any currency = alienation, I think it does not hold for the case of a correct and rational definition of money that is made available to everyone under equal circumstances to formally express relative value.  In this regard, I ask you to consider the following to start:

http://bibocurrency.com/index.php/downloads/14-english-root/105-passive-bibo-currency-distinguishing-claims

Essentially and irrespective of what is believed, logically money can only have the function of a measure of value which precludes it being a commodity.   You might say that any explicit formal expression of the value of goods and/or services is alienating, but would not an non explicit non standard and informal expression be just or more? 

Note that the Passive BIBO Standard is designed in such a way that no one can have a monopoly on the expression of value and units are not considered value i.e. they are never inputs to transactions only outputs.   Such a proposal apart from basing itself on objective rational grounds (stability of sampled LTI systems and the logic of measure) as opposed to irrational dogma as is the case with the current conventional notion of money,  does bring the benefit of a standard value measure as a tool to the commons.

Also, I think that alienation is not specific to expressing relative value but rather it is the product of ego and becomes an endemic problem precisely when the ability to express value is monopolised or irrational.   I think that any rational tool in the hands of the commons at large empowers the commons  to rationally counter ego, don’t you think?

Finally and this is what most worries me,   alienation due to group think is the real problem.   Once a group is formed and gains power for whatever reason and followers become habitual rather than rational and critical then dogma ensues and we are back to square one, aren’t we?

It is for this reason that objective logic and math as a common reference for arbitration is so fundamental.   In this light,  how do you propose to create a commons based governance without standard and inert measures of value that are expressly anchored in open source logic and math?  Note that logic will alienate those that don’t abide by it or wish to circumvent it. In fact and by the measure of the general lack of reasoned discourse on most issues,  complexity of such interchanges and the subjective impulses underlying them, it would seem and until such time as a minimum logical acumen becomes culturally common place, right reasoning itself would seem to alienate a vast majority of the commons. But we don’t know how true this is until we free ourselves from the madness of “The Money PSYOP”

http://www.bibocurrency.com/index.php/money-psyop

8 Christian Siefkes (12.11.2013, 11:16 Uhr)

@Marc

When we criticize money, we don’t just criticize specific “implementation details” that could be fixed by using currencies with other properties. The problem runs deeper than that. Most essentially, money (any money) necessarily brings people in antagonistic positions, it forces them to compete against others and to try to out-negotiate others. See, for example, my discussion piece Why I Still Doubt, esp. the section “Prices, Values, and the Market.”

Using a currency that is “passive” or “BIBO” (whatever that means) won’t change that. So no, it doesn’t help.

9 Demonetization – replacing transactions w... (01.12.2013, 06:38 Uhr)

[…] The question of how we deal with and act within the given monetary environment is crucial for the commons movement, since the monetary logic and the commons logic are opposites. Contrary to the claims of mainstream economics, money is not neutral or simply an informational means for mediating transactions. Thus, replacing currencies with alternative currencies of different designs basically does not change the underlying monetary logic. It amounts to changing the tools while keeping the workshop.  […]

10 Marc Gauvin (15.02.2014, 13:38 Uhr)

Christian wrote:”Using a currency that is “passive” or “BIBO” (whatever that means) won’t change that. So no, it doesn’t help.”

If as you clearly admit above,  you don’t know what Passive and BIBO mean,  then by your very own admission you cannot know if it helps or not.  We all have to be careful with what we say and learn to respect others, the greatest problem is everyone trying to monopolise discussion by forcing upon others their subjective opinion rather than using common objective standards such as observable natural phenomenon and/or the laws of logic.

11 Christian Siefkes (16.02.2014, 20:27 Uhr)

@Marc: You could have shown respect by addressing my statement that “any money necessarily brings people in antagonistic positions, it forces them to compete against others,” but you chose to ignore it. If you think that your “BIBO currency” gets rids of such antagonisms and of competition, I would be interested in learning how. If that’s indeed the case, I would also be interested in learning why you think it makes sense to call it a “currency,” since currencies are usually associated with markets and hence competition.

12 Marc Gauvin (21.02.2014, 15:00 Uhr)

No Christian, I responded to the statement you made with no disrespect whatsoever.  Your statement:

”Using a currency that is “passive” or “BIBO” (whatever that means) won’t change that. So no, it doesn’t help.”

On the one hand admits you don’t know what Passive BIBO means and then proceeds to claim it is not helpful.  I think that bringing that contradiction to light is fair game.  My first post which you discarded in the above manner did discuss your point.

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