Towards Money as a Common: the Digital-Coin Rule for a Free Society
The issue around the nature of money is critical in present economic times. We are in a situation whereby the incapacity to re-define how we deal with money could resolve in an a severe damage to society as we commonly refer to it: contrary to what happens with information systems, there are no backups with money systems. Since the Internet revolution – and also as parts of national communities – we are almost unconsciously as well as coercively using national currencies.
“Of the many ways of organizing banking, the worst is the one we have today”.
- Mervin King, Oct 25th 2010.
We either agree to pay with or are obliged to acquire something, which is not – by law – our own property:it is a fact that the legal owner of our money is the banking system: central banks, commercial banks and international banking institutions such as the IMF, the World Bank and the Bank for International Settlements are the legal entities literally in charge on economic and juridical levels. Indeed, as the recent draft of the European Stability Mechanism shows, such organs of society enjoy discretion, inviolability, immunity and almost total unaccountability to independent auditing authorities for each and every operation that they engage in.
What’s more, in the current bank-debt system where conventional national currencies flow, we find ourselves to be in a slightly uncomfortable juridical situation: we are citizens using exclusively national currency for the clearing of debts and the payment of taxes. Therefore, it can be of help to seek solutions by borrowing a pattern from monetary theory, viz. the Neo-Chartalist approach in money systems design:
We are locked into a one-dimensional monetary and fiscal system, where “That Which is Necessary to pay Taxes”, or TWINTOPT is issued, administered and enforced top-down (Wray, 1998).
As a consequence of the 2008 meltdown nation states are systematically increasing their public debts and, in order to do so, they ask new loans to central banks, the latter pretending some form of collateral for risk aversion purposes. The interesting part is that under current law, i.e. Maritime Admiralty Law, citizens are used as collateral: every time there is an increase in government indebtedness, taxpayers are obliged by law to agree to clear such expense through fiscal and monetary policies. For instance, the US have now some 14 trillion dollars of debt and each American citizen roughly bears 30 thousand dollars to pay back, and it is going to get worse and worse as quantitative easing practices are probably on schedule at the FOMC. Such rationale holds in every nation where central banking and the monopoly of a single type of currency are the normal monetary regimes, with Europe in pole position.
Since we are migrating toward a cashless society, to develop a cartography of the territory where monetary theory and policy and law cross with technology is of fundamental importance, if we are to avoid non-democratic and hyper-centralized regulation of the monetary system switching to the cyberspace.
The thesis about the Digital-Coin Rule for a Free Society takes the pace from philosophy of economics and technology both applied to draw the lines of the juridical innovation via a bottom-up direct vote by the population of a P2P G/Local multi-currency system. In such monetary network, different types of currency would constitute different lines of credit apt to relieve our and future generations from the burden of a staggering volume of debt, because the government would accept a diverse ecology of currencies in payment of taxes. With the political instrument of vote by referendum citizens will decide how to earn money and what types of currency to use in payment of taxes.
By a democratic deliberation, it is possible to have back the property of money and to reform the license of money creation while ending the age of ever-growing debt. Currencies designed for environmental purposes, social purpose currencies, B2B currencies, just to mention some non-conventional currencies already designed and in operation worldwide, will have legal tender power, i.e. they will be used in parallel with conventional money in payment of taxes .
Thereby, central banking, commercial banking and the financial system would lose strategic monopolistic power while society will experience a P2P G/Local decentralized monetary system: from a new inflation-proof global reserve currency (preferably an asset-backed one, e.g. the TERRA), through re-designed national currencies and an increase in commercial credit circuits for the business sector, to community and complementary currencies for protecting local economies from external economic perturbations. In such scenario, ‘peers‘ will be macro-economic regions, nations, businesses (from SMEs to big businesses), and individual persons, respectively.
All the peers belonging to a tier of the multi-currency system will operate in a P2P network where transactions will be transparent in a similar fashion with respect to how the Bitcoin’s Blockchain works. In turn, a horizontal and a-centered framework will take the place of the vertical centralized one enforced today by current laws. This will open the possibility to institute an automated social, juridical and economic cyberspace where transaction fees will be drastically reduced since the role of third parties for clearing operations will be decreased for transaction costs issues and efficiency reasons: even in this case Bitcoin is an exemplary pattern to implement for money systems designs.
Finally, citizens will control their money more effectively than today and will be far less dependent from the competitive and exclusive marketplace in that they will not be anymore a mere form of collateral recorded on ledgers. By contrast,
we will be free to cooperate in a system akin to Karl Polanyi’s gift economy where money will be a public good, or better, a common.