Difference between revisions of "Embedding the Governance of Money in Traditional Communal Institutions"
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* Article: A Route to Commons-Based Democratic Monies? Embedding the Governance of Money in Traditional Communal Institutions. By Ester Barinaga. Front. Blockchain, 27 November 2020 | 
"The financial crisis of 2008 resulted, among other, on a popular awareness that the monetary system was not working for the interest of the many. The blockchain technology that was launched soon after offered monetary activists and entrepreneurs a tool to re-imagine, re-claim and re-organize money along a vague ideal of a commons paradigm. A wave of monetary experimentation ensued that took a most concrete form in two entrepreneurial spaces: crypto-currencies with global ambitions and local currencies based on communal democracy. Seemingly distinct on the outset, both strands share a determination to develop a monetary system that serves the many. This has led participants on both sides to reach out toward each other. The article looks at one such attempt: the Sarafu community crypto-currencies in Kenya. These currencies are embedding the creation of money in traditional community savings groups. Using Eleanor Ostrom’s framework and building on interview and ethnographic material, the article identifies the economic logic of mutualization proper of the savings groups as one that transforms private assets (one’s savings) into a financial commons for the group. To build on this logic, the Sarafu model in-the-making is embedding the production and governance of the new community cryptocurrencies in these saving groups. In that doing, Sarafu has the potential to advance a new architecture of money. However, findings suggest that the standardization and automation of the new monetary rules through smart contracts impose neoliberal ideas that slipped into the code, risking the erosion of the very communal decision-making processes that made savings groups interesting anchors of a money commons in the first place."
Conclusion: Democratic or Despotic Money?
"The monetary awakening induced by the financial collapse of 2008 resulted in increasingly loud calls for a money that serves the interests of the many and that is subject to the continuous revisions and active negotiations of slow, but inclusive, democratic processes (Mellor, 2016). Calls for monetary democracy got an empowering tool with the launch of bitcoin in 2009 (Swartz, 2017). Bitcoin’s underlying technology—the blockchain—and the technological developments that followed—such as smart contracts that automate the application of rules—gave these calls a cheap, yet potentially powerful instrument to realize their dreams. The possibility to design, and implement, a commons-based money was intoxicating and a number of grassroots and crypto-entrepreneurs started experimenting with various forms of money, playing with the rules determining the creation, distribution, and use of these new monies15. Sometimes driven by anarchist ideals, other times driven by a community ethos, these monetary experiments share the urge to re-claim money. How can the power to govern money be handed over to the people? The article looks at one such experiment, the Sarafu community cryptocurrencies being developed in Kenya, and considers its particular answer to that question: Chamas—a traditional institution governing communal economic and social life in many countries around the world—and its logic of mutualization and circulation can be the pillars of a decentralized monetary system for networked community economies.
The article analyzes the implementation of that answer, with a special focus on examining the locus of governance and decision-making in the Sarafu monetary system. To do this, the article’s first analytical move—and its first contribution—is to conceive money itself as a commons and to build on Ostrom’s distinction between resource units and resource system in common-pool resources. The distinction allows us to unfold the question on the governance of the money commons into two questions: (1) who gets to decide the rules governing the flow of monetary units? and (2) who gets to decide the rules governing the monetary system?
Operationalized through the dual analytical question, Ostrom’s distinction helped observe that in the Sarafu design of money chamas are certainly given a pivotal role in decisions concerning the flow of monetary units, yet they are sidestepped in regards the design of the monetary system. Anchoring the governance of the flow of money in the chamas is relatively direct and easy to implement; they simply have to run with Sarafu as they already do with the national money. In regards governance of the monetary system, however, the mutualizing logic of the chamas lost its ground to a systemic solution based on the logic of the market. The neoliberal ideals of the homo economicus, the self-regulating price mechanism, and the orthodox notion of money as representation of hard value slipped into the code. Monetary designs, that is, are not without ideological valences (Goodhart, 1998; Crotty, 2013; Desan, 2014). Now encroached into the code, those ideological composites are forced onto all communities implementing the Sarafu monetary model, with visible performative effects. The article’s second contribution is thus to the anthropology of money. Ethnographic observation suggested the introduction of homo economicus ideals through the monetary technology fostered new speculative profit-maximizing behaviors among community members.
The third and last contribution of this article is to highlight the contradiction between the democratic ideals common among many activist crypto-entrepreneurs (see Swartz, 2017) and the practical needs of coding a digital infrastructure. The need to code the governance rules of the monetary system previous to its implementation moves the center of decision-making from the chama onto the crypto-entrepreneur. Such erosion of community-based decision-making has to do with the entrepreneur’s global ambitions. Building a “public infrastructure” that “anyone in the world can use” necessarily requires finding a standardized solution that enables communities to trade among them. A common monetary language is needed, if you want, one that calculates the prices of currencies—the exchange rates—on the same parameters of value. In the engineering world of code, standardized rules translate into algorithms programmed ex-ante (Rozas et al., 2018), before communities are even given the opportunity to articulate their priorities and idiosyncrasies. And so, governing money with algorithmic formulas deprives the chama of the power to govern important aspects of the money they use. While the crypto promise of autopilot money governance—through algorithms and smart contracts—is alluring, it detracts money of the flexibility needed to adapt it to local social and economic changing circumstances. Governance through despotic algorithms may increase the efficiency of currency markets and may speed the scaling up of the new system. But this may be at the cost of eroding communal democracy and eliminating an entire mode of thinking about social coordination (on this, see also Morozov, 2019).
The story told in this article is, as it were, a contemporary version of “putting old wine into new bottles.” It is not enough to adopt ingenious and innovative blockchain technology. It is neither enough to involve communal institutions into making certain decisions. Above all, we need to move away from an orthodox, damaging and long-challenged, yet dominant science of economics that understands money as neutral, sees money’s value in the hard thing it represents, conceives humans as selfish profit-maximizers, and worships the self-regulating price mechanism. If we are serious about building democratic monies, we urgently need a “new meme for money” (Wray, 2012). In the spirit of Eleanor Ostrom, this article is written from the belief that communities hold the key to such a re-framing of money. Chamas do indeed show us an economic logic that is far from the texts taught in traditional university courses in economics. They show that there are economic rationalities that balance financial, social and communal concerns. They show us that individuals are conditional cooperators (Ostrom, 2000) and that communal democracy can be a stable ground for decision-making processes. Reaching out to chamas is, certainly, the most provocative innovation of the Sarafu money. Yet, in discussing the governance of money, the locus of monetary decision-making, we need to go beyond simple translations of those community institutions and seriously consider what active role chamas could play in both determining the flow of monetary units and, most importantly, in deciding the particular constitution of the monetary system. Ostrom’s unit-system distinction may come handy here as it can help us identify different levels of monetary coordination. In so doing, Ostrom’s conceptual tools can help us better design institutions for the democratic governance of these new money commons." (https://www.frontiersin.org/articles/10.3389/fbloc.2020.575851/full)