Posts tagged ‘money’

Reaction and revolution

by David Birch

[Dave Birch] On 27 June 1693, the French Admiral Tourville’s combined Brest and Toulon squadrons ambushed the Smyrna convoy (a fleet of between 200–400 English and allied merchant vessels travelling under escort to the Mediterranean) as it rounded Cape St Vincent. The English and their allies lost nearly a hundred ships with a value of some 30 million livres, the equivalent of total French military spending on the Navy, tens of billions of euros in today’s money. The City of London judged it the worst financial disaster since the Great Fire, 27 years previously, and the financial sector was thrown into turmoil. The responses to this crisis resonate to this day. On the one hand, the government leapt into action and charged a committee to look into the problem of maintaining English sea trade routes in times of war. In 1696, William III set up a body of eight paid Commissioners “for promoting the trade of our Kingdom and for inspecting and improving our plantations in America and elsewhere”. This body was “The Lords Commissioners of Trade and Foreign Plantations” , commonly known as the Board of Trade, which did not constitute a part of the long standing Privy Council “Committee of Privy Council for Trade and Foreign Plantations”‘ , but was set up as a separate body, because that’s how governments do things. Incidentally, the “The Lords Commissioners of Trade and Foreign Plantations” existed until 1970, when it became part of the Department of Trade and Industry (DTI). In contrast, the private sector formed the Bank of England and the bank issued paper money.

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Super powers

by David Birch

[Dave Birch] A superpower is bogged down in a distant guerrilla war. The superpower must resupply its army, victorious for a generation, thousands of miles away from home and it’s become a very costly endeavour indeed. Support for the war at home is tentative, and is dividing both the people and the political leadership. The guerrillas are supported by the superpower’s greatest enemy, a nation that is providing both financial and military assistance. The war drags on and the casualties mount. Generals are disgraced. The rebels continue to gain momentum, even though they are occasionally beaten. Afghanistan? No. Vietnam? No, this is historian Kenneth Davis’ marvelous description of British North America in 1782.

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designed money futures

by Nik Baerten

It might be considered old news in these twittery times, yet somehow it rises to foreground in today’s economic climate with a sense of lasting freshness and value. Students at the RCA’s Design Interactions department led by Anthony Dunne, carried out a fascinating design research project in collaboration with Intel’s People & Practices Research Group entitled ’the future of money’. They explored new types of value and value interaction from a variety of perspectives, which led to some pretty thoughtprovoking and even poetic future views .


Imagine sensing how much e-money you’re spending. Or imagine a world in which interpersonal relationships and human interaction time are the new value-basis, orenergy is currency. What if the favour bank would be our main way of exchanging products and services, hence value? Think about new relationships to money,virtual piggy banksethics/ethical trading, a liquid economy, live tissue for value, listening to your good and bad side as purchase advisors, gesture-based payment or counting rituals (ab), 1 bankcard per personal value, consciousness enhancingmoney tracesmiser pathologies in an e-money world, new controlling behaviors,complementary responsible-behaviour-currenciesmitigation management,identities as currency, new e-money rituals, a national fiscal health service, physical money as a luxury product, future money paradoxesdomestic economycountry-company mergers …

How to make money with free software…

by Giovanni Innella

read the whole story from the original source here

Mind your language

by David Birch

[Dave Birch] We might often think about the impact of digital money on the economy and business, and indeed society, but what about it’s impact on our language. Here’s an example. I’m going to have to stop using the time-worn vernacular “as bent as a nine-bob note”. Up until decimalisation in 1973, the British shilling of twelve pennies was known as the “bob”. Hence the ten shilling note was the ten bob note. For some odd reason, and I really can’t remember why, I never saw the replacement 5p piece as a bob, nor have I ever referred to a 10p piece as two bob, but for a long time I called a 50p piece a “ten bob piece” (in fact I can distinctly remember once asking my younger brother for ten bob and being genuinely surprised when he had no idea what I was talking about). So ten bob was a sizable amount of coin of the realm whereas nine bob meant something that was clearly fraudulent (as in “the Enron P&L statement was as bent as nine bob note”). But there was in fact at least one nine bob note: the Irish “Newports Bank” issued a nine shilling note in 1799, and a specimen was sold at auction in the U.K. for three thousand euros. So what is to be our post-cash alternative: as bent as a… what? As bent as a card with a magnetic stripe on it… no, wait… as bent as an IBAN with an invalid check digit… as bent as an SDA clone with an invalid digital signature… they don’t seem to have the ring to them, do they?

Our children will surely miss the rich language of cash once it evaporates into cyberspace. No more greenbacks or dimes, no more fivers or farthings. No appropriate slang term has yet arisen to mean — specifically — electronic cash. We need to put our thinking caps on: what is the 21st century addition to beans, bread, bucks, cabbage, chips, dough, lucre, loot, mazuma, moolah, wad or spondoolicks that will make its way into the thesaurus? I’ve always liked wonga, so I was thinking “vonga” (constructed from virtual + wonga) or perhaps “wenga” (I don’t know why, I just like the “e” in there). I also think it would be nice to have new verb to indicate payment by reputation transfer (”to rep” doesn’t seem good enough) but that’s a personal whim.

Or perhaps our children will keep the language of cash, dissociated from the technology. Thus, to draw on a commonly-used example, when I ask my kids “can you dial grandma for me” while I’m driving they know what the verb “to dial” means despite the fact that neither of them have ever seen, much less used, a telephone dial. Soon, the etymology of the verb will be opaque, and kids will come across it only in games of Trivial Pursuit. It’s just like the way many of us talk about making a buck many times a day without having the slightest idea what the origin of “buck” is.

Creating money is easy. The hard part is getting it accepted.” — Economist Hyam Minsky (1986).
[posted with ecto]

KashKlash, my thoughts

by Michele Visciola

Michele Visciola is a partner of Experientia, but is contributing these ideas as his personal contribution to the project.

I have some thoughts that I want to share with you after having read yours:

I believe that we will never get rid of money. Be realistic! Forget about virtual currency. We will keep living in the physical world in 2015. So let’s be real. A world with no currency would simply mean that we are regressing to a post-future era. A world without a reliable currency would mean the end of the history for all humanity. That has already been forecast several times; however, luckily enough, we are still debating about the future and I hope that in 2015 we will still be here armed with the willingness and desire to understand how to best deal with current challenges. Further, I also believe that we can easily imagine a world with one unique currency valid for everybody; but that would also imply an unrealistic scenario: a world where differences (such as origin, genre, class, education) have disappeared for ever and people can – e.g. - have the same opportunities everywhere, regardless of local economies. I am not a pessimistic guy, however I feel that achievements like this are out of reach for the next several decades.

I also believe that the main challenges we have to deal with today are dependent on two main tenets which are deep-rooted in our culture: first of all, our faith in limitless growth and, second, the regulations that allow the accumulation of unlimited resources in the hands of few, with no care for our general wellbeing. In western-like economies, we generally consume resources up to 9 times our capability to produce goods and new resources within the same timeframe. In fact, we consume vast amounts of energy to produce our goods and we throw things away even before the end of the normal life cycle they were designed for. We look at the future with no parsimony. We envisage an expanded future. We imagine our future to always contain more and more. To make that possible the legislators need to deregulate access to resources, and often completely obscure any reference to reality and to the wisdom of the past.

[This graphic is built through service and property of IBM.]

I very much like the idea that we as individuals act under the pressure of three kinds of forces: the social, the political and the financial. However, we need to be aware that at this precise moment the social and political forces are subordinate to financial power and its forces. I believe that this is mainly because financial power has been able to embody and enact the 2 tenets I was referring to above. It has done so with perseverance and persistency. Financial power has shown no limit in its fantasy and has been able to literally invent unlimited wealth, even if only virtual. These virtual riches are in the hands of few, their creators, and can literally destroy any social or political resistance to counteract or simply control them. What is worse, they can completely obfuscate any reference to the production of goods and services and further put at risk the reality of many innocent savers and other citizens.

We do not suffer a clash of currencies; indeed we are suffering a clash of risk cultures (Ulrich Beck – Conditio Humana). The creators of virtual wealth do not have the same risk culture that is at the basis of individual behavior. In fact, we as individuals are limited; our rationality is bounded, our actions are contextual and therefore restricted by the boundaries of the social and physical contexts. We make our decisions trying to reduce the amount of possible bad consequences. We do not behave to maximize our potential gains. Our behavior is fit only when it shows a clear understanding of the constraints of the situations we live in. We are normally able to assess the possible outcomes of our decisions and also determine to what extent we want to act riskily. In a virtual financial world there are no more physical (goods), nor social (rules) constraints. As a consequence, the related culture of risk will easily consider any perceived limitation as a barrier to the immediate profit of the few manipulators of huge flows of virtual cash.

So let me jump to the conclusions of my few observations: I feel that there is an urgency to reduce the power of financial forces. Will that be possible by making the manipulation of values through digital currencies more transparent? For instance, is there any opportunity to reduce the mediator role of financial institutions? How can digital currency improve the perception of artificial richness and make it vanish as soon as one institution or few individuals accumulate more than is physically conceivable?

I also believe that we need to put our faith in the limitless growth of our resources and values under serious scrutiny. How might digital currency limit the greed of the homo economicus? Is there something that we can imagine as a future scenario in which social pressure and forces get financial power into the right perspective? How can the creation of commons incrementally expand the number of people who can have access to produced values? What are the new services that might consistently increase our capability to improve our wealth without destroying values?


by Bruce Sterling

by Bruce Sterling

If the grip of conventional cash loosens, we can expect  some suppressed patterns of human behavior to re-emerge.

First and foremost, Western feudal society. Feudal society created the original, money-based, Western capitalism. Feudal traces are still clearly visible on the Western cultural landscape. For instance: modern women, selling sex-work for cash money, are still actively subjected to an old-school feudal shame and honor-standard. In the past, much larger areas of human activity were actively money-repellent.













There were long centuries where the landed aristocratic nobility actively avoided the money economy, and despised all its minions. In an honor-bound aristocratic society, money was considered shameful. The use of monetary advantage was dishonorable and weak.

Some of this was due to highborn family connections and blue blood – a sharp distinction between the people you were willing to acknowledge and breed with (”our kind of people”) and the people you didn’

t want to know at all (serfs, merchants, the computer illiterate, etc). In any functional aristocracy, marriages are always strictly arranged. People, and especially women, become a non-monetary trade-good.

Who do you marry — where do you go for “dates”? Do you hire some matchmaking service (mercenaries) or go mate-shopping on a social network? Who owns this ultimate means of human production?

The core value of a feudal society was military command. The great lord had the ability to rouse his feudal retainers and get them to loyally die on a battlefield. This meant grandeur and honor. Cash was not a major issue.

The warrior ethos still despises mercenaries today — although mercenaries are now known as “private militia companies,” and do pretty well behind the battle lines. There still seems to be something grotesque and contemptible about warfare for a fistful of dollars. Sex and war, you can’t bank on them. Why?

Feudal aristocrats were always committed to the land and its inhabitants — aristocrats were named after their domains, commonly. He’s the “Prince of Wales,” he’s not the “Prince of Rolls Royce.” In feudalism, major actors in the money-economy were considered to be conniving, cosmopolitan flyweights, upstarts here today and gone tomorrow — an annoyance, something like day-traders.

What design intervention would make people with money seem like an annoyance – people grimy, unstable, grasping and declasse’, more trouble than they were worth? They are forbidden to come to the front door. They have to knock at the sordid “tradesman’s entrance.”

Aristocrats were famous for running up huge bills and not paying them. Was this a passive resistance? What is today’s equivalent? There must be many.

I’d suggest that we see a distinct nostalgia for feudalism springing up in digital war-games such as WORLD OF WARCRAFT. Warcraft has an economy, but “gold farmers” in Warcraft are actively despised. Players who buy their way into Warcraft — by snitching expensive game-goods on eBay, or by paying Chinese drudges to “level them up” — these people are distrusted by other players.

Why? Because they lack battlefield craft. They just don’t know how the game is played and how it’s properly done. They lack the game’s complex social background and its intricate codes of acculturation. They are parvenus. They’re not gentlemen.

Big infusions of cash will not help Warcraft players pursue their Warcraft goals. Players are much better off socially ingratiating themselves with feudal “guilds.” Warcraft guild leaders spend most of their time and energy diligently rallying subordinates to show up for Warcraft action, and persuading them to risk their virtual lives and armor in the fields of Warcraft combat.

People pay real money to play Warcraft. They stay within Warcraft because of cumulative social pressure. Pressure from their guild overlords, from their own social-climbing aspirations, and from their colleagues.

There is no massively multiplayer online role-playing game called “World of MerchantCraft.” Why is this?

Conceivably, people could play in some post-feudal, exciting milieu of Renaissance bankers, buying wool in Flanders in exchange for Italian garlic. They could overthrow the backward feudal character of Warcraft, in much the way the Medici bankers ate away at Europe’s blue-blood establishment.

But this MONOPOLY style of capitalist gameplay has never had any big multiplayer hit online. What accounts for this?

Similarly, nobody plays WORLD OF WARCOMMUNISM. There’s plenty of room online for an exciting game where the players seize the means of production, establish the dictatorship of the proletariat, divide the military and the factories into Soviets, liquidate the Whites, then form a Politburo and publish Five Year Plans. Plus, exciting purges and gulags!

Why is simulated Communism missing from the Internet? Open-source peer-production is flourishing. Where is the digital Communism? Why is there no Communist eBay?

There are millions, even billions of people who are keenly familiar with Communism. Many were career Communist apparatchiks, and they have computers and cellphones now. Why do virtual worlds and economies lack any Communism? There isn’t even a multiplayer Communist fantasy game.

Theocracy. The Roman Catholic Church is often justly called “the first multinational.”  The Church uses money — it has its own banks — but it is never a money-centric organization. One never hears about members of the College of Cardinals or the Vatican Curia comparing their stock holdings or their personal fortunes.

The Pope is not the richest guy in all Christendom. However, he is the Pope.

Why does the time-tested organizational structure of the Church lack any online parallel? There are technology zealots called “evangelists” — but they never receive the tender care and feeding that actual evangelists can count on. Where are the digital equivalent of sisterhoods, brotherhoods, the monasteries and convents, the confessions, penances and forgiveness, the vows of poverty and obedience? Where is the ethic of service and salvation?

There is an interesting principle — I believe it’s from the Jesuits — concerning advertising. These evangelists were forbidden to preach (or to advertise). Instead, they had to earnestly engage in public good works. Then — and ONLY then — if someone came and asked them, “Why are you doing these fine things?” — THEN they were allowed to preach. Only then they were allowed to explain the Good News of salvation.

I’m thinking that this has a visible parallel with an effective micro-lending bank.

Imagine a sophisticated, historically-aware social-software bank that does not directly seek profit or loan opportunities. Instead, what it seeks is commitment and some visible results in the community. This approach is wise, patient and deliberate: it’s an entry-barrier.

This “bank” does not advertise or trumpet its services. “What have you done to DESERVE the right to talk about our kind of resources?” “Yes, you are one of us now — but you are not allowed to TELL ANYONE until you have done something to compel their admiration and respect.”

Maybe Gandhi. Gandhi’s financial backers used to say, “It costs us a lot to keep him in poverty.” Maybe Gandhi was quite right when he said, “We must become the digital bank we want to see.”

Actually, Gandhi never said that. And if he saw “Hello Money” in India right now, he would fall right over.


Some other social enterprises one might usefully think about.

The Knights Templars. They loaned money to kings, and were fantastically rich, but their emblem was two poor knights sharing a horse.

Islamic hawala systems. They are very old. They are digitizing now and they mostly run on personal reputations. The police hate them.

Offshore money laundries. One may not admire them, but they are highly-evolved and it is stupid to pretend that they don’t exist.

Botnets. If you don’t confront the “dark side of the force,” you don’t know what the force really is.

Academia. It’s “publish or perish,” but the contributor whose papers are the “most frequently cited” gets enough resources to support a thriving horde of graduate students. It’s not his own personal wealth that is central. Not at all. The survival of his graduate students makes him the dean of his field.

Literary reputation. All the major players here are dead. Does Shakespeare care how many books he’s selling right now? Does Moliere sweat blood about the digital rights management over his performances?

Hoboes. Tramps do not pay each other. They do leave informational chalk marks that allow other tramps to beg as successfully as they themselves begged.

Gypsies. Why do these ancient global meanderers look and act so much like they did when they first arrived in Byzantine Anatolia in the 1100s? Cellphone “wandering” is very like a Gypsy practice. What kind of deliberate social engineering would it take to make a group of cellphone users behave like general Gypsies? Clearly there would be some festivals (tech conferences), folk music (ringtones), folk markets (electronic markets), soothsaying (blogging), magic (technology), small-scale handicrafts (programming, web-design, user-experience, etc), fortune-telling (venture-capital, market forecasting, etc).

The unborn. What would they not blame us for?

The Days of Capitalism are Numbered

by Giorgio Ruffolo

by Giorgio Ruffolo (original title: A che serve la moneta?, in “Il capitalismo ha i secoli contati “, © Einaudi 2008, ISBN 8806188275 - translated by Katherine Margaret Clifton)

What is money for?

God and gold often make their appearance in literature. In Faust by Gounod Mephistopheles sings: «God of gold and lord of the world». According to a legend dating from the time of the Sumerians and the Babylonians, gold is dug from the bowels of the Earth on behalf of the gods that inhabit a remote planet and who serve themselves of human slaves to extract gold from the mines. Slaves who never see the sun, living dead. But a mutinous few gave gold to men, just as Prometheus gave them fire, and for this they were exterminated. Men have extracted from gold its dust, gifted with magic powers. In the Old Testament, which draws on all the legends of that time, it is known as manna.
But the gods of the mysterious planet have maintained a relationship of command with some of the miners and they make use of them for mysterious operations intended to sustain their dominion over men.
In effect, gold is not a solitary god. Other metals have from time to time challenged its supremacy: silver above all; as have many other objects (both material and immaterial) to which the role of money has been attributed. However, gold is not only money. And money is not only gold. So what is it?

From the king of Lydia to date, money is the meeting point between market and State
The question of what exactly money is has been discussed for centuries and not always in a very clear manner. Gilles de Muisis, abbot of Tournai in the fourteenth century, considered it «a murky thing». «They», he said of coins, «grow and diminish in value and you never know what to do. When you expect to gain you find it is the contrary». Even today many, amongst whom the unfortunate debtors of the sub prime, are of the same opinion. In the sixth century B.C., the king of Lydia, Croesus, coined money, giving it its classic shape. Yet before and after him, money has assumed a variety of shapes: shells, dog’s teeth, leather and fabrics, salt, cocoa, tea, tobacco, axes and knives. And even, as in Indochina, bulky gongs and discs of metal (perhaps to discourage misers).
One thing is certain; money has always been very important in the history of mankind. It can be considered the central element of the economy. Central, because it constitutes the meeting point of two great subjects of the economy: the market and the State. Money is inconceivable without one or the other.

We don’t know why the Greeks and Romans gave Hera, or Juno if you wish, the nickname of ‘moneres’. «Solitary»? «Admonisher»? The Romans dedicated a temple on the Campidoglio to her. Zeus-Jupiter on the other hand, to punish her for some misdemeanour, hung her between the sky and the earth, tied to a cable (of gold, naturally) from which the devious goddess managed to free herself. Between the sky and the earth: a metaphor springs to mind, between State and Market, which certainly never occurred to Zeus.
Yet that would be a fine metaphor for money. Often hung from a gold cable (think of the famous gold standard) but always tempted to free itself; born of the combined efforts of the Market and the State. Time and again one prevails over the other in governing it.

And then banks came…

In recent history, for example, the role of the States in governing the world’s currencies was decisive in the years following the Bretton Woods agreement, immediately after the war. Then in the seventies and eighties, it was the market, through the banks, that assumed a growing role in governing currencies, above all thanks to the liberalisation of the movement of capital. Governing, to some extent, because, belying the predictions of the great economist Milton Friedman, who had announced a period of tranquil self-regulation of the money and stock  markets, during the nineteen-eighties and nineties they became unstable and reckless as never before, a situation that has continued into the beginning of our century.

In recent times financial institutions (banks and all the other financial «intermediaries» sprang up like mushrooms. And thanks to the proliferation of their offers (such as the now famous derivates) and the volume of the transactions they create (about ten times the world gross product), money travels over the surface of the Earth at incredible speeds, never mind Juno!

During the last and most recent upset, that of the so-called sub prime (mortgages granted too lightly to an excessively gullible clientele) the repercussions of the enormous power exercised by the banks in managing currency: not gold coins, which have been out of circulation for some time, nor even the gongs and discs of metal; or the paper money – invented by the Chinese and reinvented by the Scottish in the eighteenth century – but telephonic and electronic money.

The mechanisms through which the banks have vastly extended the area of credit (Polyani would have said that they have marketized space and time) are technically fascinating, especially if explained impeccably by economists as eminent as Luigi Spaventa: in particular, with regard to the spread of risks and its twofold consequence of effectively protecting the individual but at the same time disseminating the risk throughout the system: rather like the gold dust, the legendary manna, which the Old Testament tells us was so useful the Jewish people, while at the same time exterminating their enemies (in our case it is a question of the banks and their clients).

Keynes, the Europe and the serendipity of money

The fact is that this most recent crisis has raised more than one doubt about the possibility of losing control of the money system; and the paradox due to which the Central Banks, created to guarantee the stability of the system, are forced to intervene with massive injections of cash to avoid the consequences of its instability. It has also re-presented the problem of the relationship between «gold» and politics, with which we opened this prattle, that we will continue in an even more lunatic manner, recalling a heretical proposal that should fundamentally resolve the problem of excessive recklessness of the banks… by eliminating the banks. The proposal derives from a provocation by a German business man in the nineteen-thirties, Silvio Gesell - quoted with interest by Keynes - who proposes, in order to eliminate the unproductive waste of financial accumulation, applying a negative interest to credits, with the payment of an annual duty that gradually reduced the value. The proposal was relaunched, ten years ago by the so-called Bromsgrove Group, or group of Money Reformers led by James Gibb Stuart, in a more complex form that involved the entire money and tax policy. In a few words, rather than gathering revenue with taxes or borrowing, the government should create money to directly finance public investments or individual consumption: money distributed in Keynesian style and saddled with negative interest in the Gesell manner, which would then be immediately spent in consumption and investments exorcising an inflationistic excess in demand thanks to an immediate increase in the offer and a depressive defect of demand thanks to the absence of saving. Before laughing at the idea, just ponder it for a moment, as the eccentric James suggests in an imaginary discussion in the manner of Swift, whose works are not recommended to bankers with high blood pressure.

However, it will not be necessary to make an attempt on their arteries – which are somewhat fatigued at present – there are less bizarre ways of re-establishing some form of control over finance that threatens to lose its way. For example, the reconstruction of some sort of international order of the Bretton Woods type, perhaps taking up and updating the ideas that, at the time, Keynes was forced to abandon. Not to adopt a single world currency, as he suggested – the bancor – but to jointly organise a balanced system regulated by stable relationships between the world currencies: today the dollar and the euro, tomorrow, who knows?

Certainly, in Europe it would take a European government capable of dealing with a strong currency, strengthened by a European macroeconomic policy a weak economy (the opposite of what America does). The euro was born of serendipity. The mythical king of Serendippo was famous because seeking one thing, he found another much more important. The euro was to be a strong franc, nothing more; instead, it has become an international currency, with headquarters in Frankfurt. The euro can be much more than a currency, the first step in the construction of a European power with a strong vocation for rebalancing the global disorder. We could then avoid, as happens at present, an important part of our riches, both real and potential, disappearing to a remote planet where the unfathomable gods of finance preside over our destinies.