Michel Bauwens on the Importance of Peer Money
Dutch translation: Over het belang van “peer-geld”
"In a recent contribution to Keimform, Christian Siefkes reiterates that talking about peer money is a contradiction in terms.
I want to line up the arguments that show the inter-relatedness of open money efforts with the general thrust to a peer to peer based society.
As a reminder, peer to peer dynamics are for us the free aggregation of individuals in order to create common value that will be universally available. It is that latter aspect, that equates it very specifically with one of Alan Page Fiske’s four human inter-relationships, i.e. “communal shareholding”, which can be equated with non-reciprocal (sometimes called generalized exchange by other anthropologists) exchange.
Clearly, the use of money is not equated with this dynamic and it is a mistake to equate market aggregation with peer to peer aggregration. In a market, ‘peers’ to not contribute to common value, but exchange ‘equivalent’ value for their self-interest, and there is no common object to their exchange.
This would be a pretty obvious remark, but is that all there is to it? The answer is no, and there are important aspects of monetary transformation that are related to the peer to peer agenda.
The most important thing to remember is that the peer to peer dynamic requires free or very easy access to means of production, and that this mostly works for the production of non-rival immaterial goods, but that the production of physical goods, even if the designs can be open and free, need cost recovery mechanisms.
A very important point is that there is no historical precedent of one type of intersubjective relationship or value creation mode, to be the only one in existence. One is usually dominant, exercises a strong influence over the others, but can never be a total monopoly. So the choice for a pluralist economy with p2p processes at the core, is not just a wise decision and ethical choice, but also an objective necessity. Forms of reciprocal and equivalent exchange, specifically markets, are very likely to continue to exist, though in a diminished capacity.
This means we cannot evacuate the necessity to reform modes of exchange, and to divorce markets, from their embeddedness in the infinite growth machine that is capitalism.
So we have two choices here:
- Either we remain passive, wait for peer production to take its natural course, and ignore every other aspect of the social order, leaving the capitalist money system intact, as some in for example the Oekonux community are suggesting
- Or we take an active and integrative position regarding social change, which requires us to think not just about letting peer production naturally evolve, but requires nurturing ‘peer-informed’ changes in every mode of human transaction.
It is in this context that we can see how monetary transformation is not only related to the peer to peer transformation, but an essential ingredient of it. It is in this context that we can indeed speak of ‘peer money’.
The first relation is this: peer production is about the social production of value, directly through social relations. Money is traditionally seen either as the prerogative of the nation state, or is the result of private debt-creation by the banking system, as is now the case. The peer production of money would then naturally concern the ability of civil society to also create its own money systems.
The second relation is this. For peer to peer self aggregation to occur, we need distributed infrastructures. Only if the individuals have control over their own means of production, can they freely self-aggregate. That we can do peer production of knowledge, software and designs is because knowledge workers have access to computers and a socialized internetwork. If we had distributed machinery, more distributed access to capital, more self-aggregation could occur.
The third relation is this. Peer to peer is about non-rival goods that can be reproduced at marginal cost and abundantly.
The more we can engineer abundance, the more this can happen. But classic capitalist money is about engineering scarcity, as are capitalist markets generally. Monetary transformation is aimed at creating sufficient money supplies, accessible by all.
The fourth relation is that peer production recognizes real abundance and real scarcity; there is no perverse mechanism in peer production that drives for the infinite growth in production.
While it is true that capitalism is by itself such a false abundance and false scarcity creating machine, and that mere money tinkering cannot change that, the specific way current money is designed enhances these factors. Interest and usury, creating compound interest, make a steady-state economy impossible, since the extra money that needs to be paid back, can only come from others, and in a steady-state economy, it would impoverish others to the point of destruction, making growth a necessity for the current system.
Interest also promotes accumulation and gives extra power to those accumulating as it becomes interesting to hoard money and lend it out. Fractional-reserve banking creates extra layers of fictional money that wreaks havoc on any real productive economy.
Because it is scarcity-engineered, it renders impossible productive activity by those lacking it, reinforcing ever more the inequality of the system, condemning the moneyless multitudes to poverty and misery. So monetary reform and transformation, and the creation of distributed open and social money with different design rules, become a necessity, not a luxury or a side show.
Like regulation and the welfare system, a well-designed socially produced open money system protects workers and communities against the worst excesses of the system, keeping accumulation in check. A circulation charge (demurrage) would further discourage unequal accumulation and fictional finance. Designing for monetary sufficiency, i.e. allowing money to be created by productive activity itself, either through recognized activity, through mutual credit, or backed by energy creation, allows it to flow wherever it is needed.
Since even peer production needs a cost recovery mechanism for the production of material goods, well-designed open money becomes a necessity for autonomous production.
So the conclusion is that distributed money, let’s dare call it ‘peer money’ with the necessary caveats, is an essential part of the integrated and integrative strategy for social change, which requires distributed communication systems, distributed manufacturing, and distributed energy.
Peer production in the immaterial sphere, needs peer-informed allocation (partner state mechanisms), needs thriving gift economies and reciprocity systems, resource-based economic systems, but also markets for exchanging certain scarce goods, that can rely on adapted and plural money systems.
What is the alternative?
One is dreaming about an imagined utopia, like Christian Siefkes proposes. While a worthy thought experiment, which could possibly work ‘in theory’, it has no current application whatsoever, and it is hard to see a road from here to there.
There is also no precedent in history for such utopias to be realized, except in small communities.
The other is to wait for the natural evolution of peer production, and to leave all other mechanisms intact. This seems in effect what Oekonux people like Stefan Merten and Stefan Meretz propose. But worse still, not only would they leave the capitalist logic of money intact, but they actually vigorously oppose any change. They have made a pet activity out of demeaning monetary activists by using language such as ‘money trickery’ and other such terms. Out of a sense of misplaced purity, ‘all exchange is bad’, out of a confusion of markets, exchange, and capitalism, out of a refusal to see the differentiation of various field of activity (and their relatively autonomous logics, even within an overall capitalist structure) , such as money and finance? Out of a refusal to see that money like all systems, has a design, which influences certain behavior and action, while promoting other types, they become supporters of the worst abuses of the contemporary financial system.
It really boggles the mind.
The positive strategy for action is therefore to sustain the emergence and the expansion of peer production in every way we can, by looking at the real practices and applications of peer producing communities and social movements, analyzing successful patterns and inter-relating them. The positive alternative is to assist the development of distributed infrastructures in every field, and not to artificially exclude monetary transformation and the distributed social production of money.
We can’t move to a new society without also tackling the mode of exchange."