Oikonomics: a social life of money

Learning to question; a question of learning?

One of the little secret successes of the internet is Oxford University’s Continuing Education department. They put on a series of online courses on a wide range of subjects which on the basis on completing two philosophy courses (and just starting a new one on Political Philosophy) make some of the best use of the web as a collaborative, mind expanding medium that I have seen for some time.

The experience is driven by an open source software called ‘Moodle’ which handles the presentation of content and the forums for discussion. Each course is moderated by a post-grad (some web savvy, some finding their feet) and runs over 10 weeks – each week having a different lecture and discussion topics. Students are encouraged to follow a simple set of netiquette rules to make the forums flow and you can very quickly find yourself engaging in a stimulating discussion on the nature of mind with a Professor of physics in Brazil, a freelance writer from Greece and working mum in Canada.

It really does explode some of the myths of social media needing to be 'rich' - instead Conted supplies a simple and structured canvas which allows community to create itself rather than be 'strategized' to death.

My initial skepticism was quickly allayed when I found that people were genuinely interested in the open debate of ideas – and very quick to moderate any individual attempts to ‘wow’ the community with the philosophy lexicon they had just swallowed. I can genuinely say that each course has taught me a huge amount about a topic that had always interested me while studying Classics but I never got the time to really tackle with any degree of rigor. What has really struck me is the level to which that thought and debate has then filtered into my working life – not explicitly – but in small ways challenging some of my assumptions about the world and introducing new points of view and ways of asking questions about the world. A refreshing change from my previous experience of education and need to ‘produce’ answers at the end of your study. Only one teacher of mine ever encouraged the ability to question over the search for an answer – my classics teacher at school – now the internet is providing just such an education experience – long may it continue.

It is obviously a wild hope that any ‘financial education’ will promote such a questioning mindset over the ‘easy answers’ approach – it is very hard to measure the value of a question.

Living without money II

There seems to be a lot of interest in the idea of ‘living without money’, seemingly sparked off by the ITV journalist’s televised experiences over two weeks (as well as the well publicized twitter and "around the world in 80 trades" travel experiences.

I have also been living without money for a few days – exploring the lives of people for whom the idea of "money" is entirely defined by the benefits system in the UK. What transpired was that ‘money’ did not really exist for many of them as anything more than a means of subsistence; and as such a very precarious and potentially uncertain ontology created by the constant threat of re-assessment, claw back and the seemingly arbitrary decision making by ‘professionals’ who are empowered by the state to take control of vulnerable peoples’ lives.

While the middle class view (or Weberian spirit?) of money as a valuable commodity to be ‘stored’ and ‘invested’ for personal gain and consumption of goods for status, creation of meaning or more basic comfort and security reifies money as something with ‘objective’ value and existence – ‘solid money’ if you like – the view of those living beneath the ‘working classes’ (be it blue or white collar) is very different. Money in that context is essentially fluid and subjective – its value and purchasing power defined by a system of service valuation and distribution which operates not unlike a Soviet Supermarket.

Not surprisingly such individuals find it hard to envisage taking control of such ‘money’ for their own benefit and control of their own life when they have become institutionally dependent on the ‘charity’ of the state and reliant on its gift – a gift which as Mauss would describe is not given without obligation or even transfer of ownership (hence the ‘claw back’ mentality).

Of course, the middle class view (and the premise of ‘living without money’ – a bit like saying living without society or culture in my view) is equally in thrall of a different myth about money as a solid and tangible commodity with a defined ‘natural value’ rather the reality of the majority of its production in the creation of credit money and relations.

While bankers and the bank of England form an easy political protest target for allowing one form of money to defy gravity before crashing back to reality – it is not the only form of money production in our economy. The state now ‘produces’ many different forms of credit and money in its own right – be it shared ownership of property for key workers, subsidy of low income families, provision of social services – all of which contribute to effects of supply, demand, price and inflation in the ‘real economy’. This aggregate demand stimulus (and hindrance) goes much further than Keynes envisaged with his hole diggers and its effects on the value of our economy as a whole (and on the value of ‘money’ in our economy) seem to be remarkably undocumented and overlooked.

Weber and Schumpeter (and Keynes) sought to bring ‘money’ out of its state of neutrality and contextualize it within the social institutions of the economy, the reality of capitalism and the idea of the social state – each a response to what they perceived to be the ‘problems’ creating a successful economy and society. The failure of rational science and technology to tame money as a cultural thing suggests we need new approaches to understanding not just what money ‘is’ but what it could be. Rather than trying to live without money, surely we should allowing our next generation of entrepreneurs to invent new forms of money (with an intentionality that goes beyond reductive notions of profit and rational value)and reap the benefits of the entrepreneurial creative destruction of what went before?

Smaller banks or new forms of credit relations?

George Osborne is saying it, Mervyn King is thinking about it and lots of people have opinions on it, but is stopping banks from being ‘too big to bail’ really going to be a long term solution for the problems of the ways in which we produce credit and manage money in a state regulated free market economy?

RBS swallowed the daddy of bank swallowers – NatWest – Nationwide is swallowing mutuals – but many of these marriages were more about convenience and power than they were about transforming the banking market. Arguably the internet spawned a plethora of new little banks – egg, smile, IF – which were often subsidiaries of larger banks but with some degree of market autonomy – and did produce some improvements both in customer value for money and service but they were basically more efficient models of distribution of the same old same old products.

Zopa spawned more than 40 new forms of lending institutions and I imagine that the Grameen bank has its many followers too – what is interesting about them is that they use technology not to distribute credit more efficiently but to produce it in new ways – thus creating added value for the economy as a whole rather than concentrating power and capital in the hands of a few naturally egotistical (how else do you get to the top of a bank – I am not sure there are many ‘nice guys’ that make it up that slippery pole) individuals.

I am currently observing people who are grappling with the problem of direct payments and individual budgets to pay for their own care – the new generation of social enterprises which are springing up almost under the radar (and certainly hidden amidst the noise and gloom of recession). The problem is that we have lost our connection with money as a ‘productive’ thing – we only see it as something for ‘spending’ (with investment coming to mean the same thing as we jumped through the hoops created by ‘prudence’, ‘golden rules’ and economic cycle dates) rather than as something that can be used to generate a ‘return’ – be it economic, social or cultural. A whole generation is growing up with an education in money being something that ‘comes and goes’ so you had better spend it while you can – rather than something that can be used productively to achieve your goals and ideals. I grew up playing Monopoly, so I am quite used to the concept of quantitative easing and its inflationary effects in the end game, so to speak; generation Y are growing up with a stronger sense of the currency of minutes on their phone than the value of the money in their pockets.

Osborne may be right – we don’t need really big banks – but I am not sure that creating midget versions will create the forms of credit we need to unblock the ‘real economy’ and start the process of fixing what the Conservatives would call ‘the broken society’.

Material Value - certain money in an uncertain world

It has taken a while for the myriad conversations at the Digital Money Forum to start to bubble up some new thoughts about money. The idea that the usage of money (and specifically things like payment services) require social and cultural drivers (user drivers) not just economic efficiencies (supply side drivers) seemed to have some traction – not least because it was delivered by Olga Morawczynski's intriguing ethnography of M-Pesa in Kenya as well as more generally in my own musing and experiences of money in the UK, Europe and Russia.

The inherent tensions in the way we ‘make money’ as something tangible – instantiating it through our creation and use artifacts and technologies which allow it to be transmitted, exchanged, stored and valued for itself – versus the way credit money is particular is ‘made’ (from an reciprocal agreement – a social relation) – something ultimately intangible and requiring the creation of trust. I tried to use the analogy of the music industry to make the point that investment in the ‘tangible’ elements of the supply chain did not guarantee you being ‘valued’ in the long term but I am not sure I quite got my point across – and also about the threat that new forms of ‘value’ creation may have to the institutions who ‘manage’ money on our and our societies behalf.

Our own group exercise (playing e-payment monopoly) made me think of just how much meaning we attach to ‘paying’ for something in cash even when the cash itself it worthless. It was a very different social dynamic and meaning when the ‘money’ was transferred invisibly via a terminal from one player’s card to the next.

Thanks to the unflappable Dave Birch for organizing such a great event on money just as the Bank of England was being symbolically trashed by the anti-money hordes on Threadneedle street. The presentations can all be found here and Dave’s blog is the Digital Money Forum on my Blogroll.