Oikonomics: a social life of money

100 objects

Frustratingly the ability to add your own objects to the BBC/British Museum's new initiative - history of the world in 100 objects seems to be broken.

My suggestion was for the HTML tag - created by Tim Berners Lee in 1991-2.  For me it heralded the beginning of the virtual object - a new reality to challenge the limitations of meaning and exchange through physical objects and immediate social interactions. Even the word 'object' means something very different on the internet, but it performs fundamentally the same purpose - the creation and exchange of knowledge and meaning between individuals.

However, it seems that 'the computer says, NO!' is the answer to my suggestion.

When did futurists get so pessimistic?

Reading a good little PR article for Visa’s contactless payment system - with some pithy and relevant comment from the man who knows about such things – Dave Birch – I was then surprised to read the accompanying opinion piece from a ‘futurist’ which essentially laid out a rather pessimistic and conservative agenda for a world where money is largely transacted in 0’s and 1’s. When did futurology become negative? Certainly at the beginning of the Noughties, we were starting to see the effects of pessimism on adoption of new services and the inherent value of ‘newness’ amongst respondents; essentially this is the first family producing generation who believe their children will be worse off than them perhaps since the enlightenment. It now seems that even futurologists, whose businesses are built on the idea of ‘progress’ and ‘trends’ have been infected by this largely Daily Mail /Express sponsored perspective (you know the score, everything will affect house prices eventually).

To address the concerns of the commentary article which focused on the lack of contact of ‘contactless-ness’ and the perceived security issues around digital money, while it is the case that removing cash from certain transactions does remove some sensitivities to the total ‘cost’ of a good or service, this is usually observed when individuals are buying lots of items simultaneously (such as in a supermarket) rather than "pricing" a single item (and perhaps a greater effect is created by the small point type used by supermarkets for all prices that are not ‘reduced’). However, contactless payment is targeting much more the small change transactions of daily life for which ‘cash’ is not necessarily the most convenient, secure or readily available solution (especially as the inflation affecting such transactions leaps ahead of the average basket). I don’t usually carry out £8 worth of coins so I can park at a station car park for example and the card machines don’t appear terribly reliable as they require so much ‘interaction’. So perhaps on second thoughts such ‘small transactions’ are not so small – and this is an opportunity for public services to carry on their price hikes on the quiet.

On the security issue, it is interesting how quickly ‘theft’ becomes about the person (i.e. their ID) rather than the money. If someone steals your cash, you have to prove you had it in the first place and it is difficult to replace – but at least the perpetrator has no interest in you personally. In a digital theft, it is the ID of the victim which is picked (and with it access to their money) and this is something which makes digital money (theft at least) so much more personal. The money can be replaced relatively easily as there was proof of its existence (ironically the virtual 0’s and 1’s have a more "real" ontological status than solid cash) but what has been stolen is something far more valuable.

One final thought to leave with you on the subject of contactless payment migrating to the mobile phone. Such a shift is going to require quite a culture change at the mobile phone operators themselves as they become liable for the ‘security’ of devices which have access to quite so much of value. My wife’s recent experience of having her phone stolen and used overnight (before it could be reported as stolen) to ring some premium rate number in Algeria (costing a 4 figure sum) suggests that they have a long way to go before allowing such liabilities onto their own books.

Perhaps I am getting the pessimist bug too – must be the chaos of 1 inch of snow hammering local house prices.

Hummus and Money

Pragmatist beat me too it with the historical account of Thomas Barker’s meet up on Wednesday for open finance.

I am not sure if I answered the advertised question – i.e. why is banking like the music industry of the nineties? – but we did have a thought provoking debate about the meaning of money in contemporary UK culture nevertheless – specifically around people who are (in my view) ‘living without money’ in what one recent research respondent called ‘the waiting room of life’.

Pragmatist is also right to focus on the two things which banks (and the music industry) don’t get or don’t want to get about our relationship with money. We don’t exchange (or share) money solely like rational economic beings and importantly neither do we aspire to be such. This is the disconnect of the Neo-liberal economic project (if such exists) – I don’t want to be an actor directed by my rational judgment, to paraphrase Life of Brian – I want to be an individual (or something meaningful in a cultural sense at least). Trying to convince me to act or be otherwise will generate counter intuitive and counterproductive responses which are designed to subvert the perceived lack of control over my own destiny (which this ironically liberal inspired philosophy requires). Rational decisions don’t make you free – just free to choose from what I am given. Discuss.

Secondly ‘financial services’ is a construct of the old model of consumer culture – the one based on material value of goods produced by willing consumers who seek a Whiggish form of utility, social progress and personal development. The problem with this model is its inherent contradictions (which Marx correctly identified would create its own self destructive tendency) but that is not too say that the death of the consumer means the end of consumption as we know it. Money can be created in the image of whatever normative values your wish for as a society as can the desire to consume. Money and consumpton are merely the means to an end - they are an Obama style 'blank canvas' upon which we can project our own values.

The shift I was trying to communicate was from what a product does to what it creates. Moving to this alternative value equation creates the opportunity for new business models and entrepreneurial activity which challenge the status quo with a new avant garde of money.

It is interesting that the most common google search that brings someone to a site discussing money is ‘Living without money’. There are forms of money it is possible to live without but to do away with the concept of money completely is to misunderstand its potential for the creation of new social and cultural value to fill the hole created by the financial crunch.

Kids say the funniest things - impact of the "teen scribbler" on the square mile

Morgan Stanley have ‘shocked’ the city with their ‘teenage scribbling’ about teenagers’ use of social media written by an actual real live teenager. Frankly, I am not sure whether to laugh or cry at the collective ‘dad at a disco’ reaction to what appears (in its published summary form) to be a series of sweeping statements which are a) not that difficult to believe if you have teenage children and b) get right to the heart of why markets find it really hard to predict anything useful about consumer usage of technology…

As someone who is still glowing when his T-shirt was denoted as a ‘cool’ by the teenage shop assistant in Jack Wills (the result of my daughter cunningly maneuvering my wallet into its vicinity last Saturday) I feel qualified to express a certain beggared belief that this report will form the basis of a whole series of Chinese whispers about ‘teens’ (that famously homogenous demographic!) do in their bedrooms.

It is important to emphasize that this post is not a critique of the teenage scribbler himself but a wider comment on the impact his so-called “scribbles” seem to have had on the collective consciousness of the square mile (and journalists both within and beyond!).

The Times wrote a short profile which painted a picture of a slightly reticent young man who is obviously bit non-plussed by all the attention he is getting (and has more important things to do than talk to dead media – at least according to his report!).  The narrative of his report was admirably reflective and lacking first person narrative for a 15 year old and certainly beats the usual ‘what did you do today?’ conversations that it is possible to squeeze out of your average teen, but it can hardly be called ‘ground breaking’ in what it tell us.  It also seemed to be lacking in explanation being a series of ‘factual’ statements based on thinking about conversations with his peers in the playground. But is the City really only focused in finding out the latest ‘what is’ rather than trying to ascertain the underlying ‘why’ which might actually inform investment decisions?

So while not wanting to detract from the obviously articulate (apart from one typo!) efforts of a 15 year old – his confident tone suggests he will go far in any career where a fair degree of ‘front’ is called for – it does at least provide some demonstration about how the time and perception lag between the ‘culture’ of the City and everyday life create distorted perceptions of the role and value of ‘new’ technologies.

Zopa - originality is creatively forgetting your sources...

Zopa had a good write up in the Times on Saturday.  Alongside the news that it stands out for offering solid returns in the current turmoil is news that the Treasury are taking an interest in its model to help with the problem of the blocked drain that is our credit market.

I have often put forward the view that Zopa is much more than a clever business idea – it works because it challenges the orthodox view of what money is (and fits with the way we use money in everyday life not abstract market models).  Working through Geoffrey Ingham’s book, “The Nature of Money”, I was struck by a thought experiment carried out at the start of the last century where Wicksell, an orthodox economist who envisaged a thought experiment where you had two markets – one based on a pure cash economy the other a ‘pure credit economy’.

The commodity theory of money which underpins the orthodox economic way of thinking was unable to cope with a pure credit economy (which is a very prescient description of zopa) even as a logical possibility – a very familiar response to the original conception of the zopa concept.

In Wicksell’s thought experiment the borrowers and lenders bartered to produce what he called a “natural rate” of interest.  This reflected the supply and demand for loans in the real economy.  This has implications for the orthodox views of monetarism and the manipulation of ‘money rates’ of interest vs. the natural rate determined by the demand for capital in the real economy.  Not least of which is the idea that ‘fixing’ the system will solve the long term problems of credit supply (and how it is distributed to individuals and businesses).

Arguably treating credit like a [consumer] commodity created tensions and contradictions in our society which eventually produced ‘money rates’ of interest (and costs of borrowing) which bore little relation to any market defined rate (one based on need / supply /demand etc).   In Athens the ‘natural rate’ of interest was 12% - with small variations for individual deals – a rate that stayed the same for 500 years through boom, bust, war and peace.  Confusing or blurring the distinction between cash money and credit money sits at the heart of the rupture in our banking system.

An addendum link on the zopa blog - it seems that the idea of the 'pure cash economy' may also fail under logical scrutiny! 

Reformation 2.0

A post by SDJ at the Pragmatist and the first of many obituaries of the ‘selfish rational individual’ appearing in the Times today prompted a thought on what is needed to start the process of reform. I must admit that I am with Mark Twain on the ability of commentators to call ‘time of death’ with any degree of accuracy – everything from brands in the nineties, cinema, paper in the office etc have been killed off prematurely by those seeking to score a point or two on a competing ideology.

For me that is what this current crisis represents – the end of just one particular competition between ideas, not the end of any ‘reality’. It is a rupture of a dominant ideology, a survivor of a world where our path through this confusing and contradictory place we live in was a choice between ‘the market/individual’ (and our role as rational economic agents seeking our own self interested ‘utility’) and ‘the social’ (where the state provides the capital and means of production for our greater good / happiness). The gap between this successful ideological world and the realities of the myths and speculation that sustained their ‘reality’ – I particularly like the fact that RBS are selling a corporate jet which they initially denied owning during the boom years. While that rupture of ideas is having very real effects on our financial well being it doesn’t mean that we aren’t trying to solve the same problems and resolve the same contradictions in our everyday life.

The example of branding is relevant here. Creating a brand soon makes you realize that the academic division of individual and social is not something which makes sense in the lives of people making decisions and living their life. Individuals can be social minded, societies can be individually empowering without the need for a creation of some new superstructure or institution to make it so.  If we relegate such ideologies to being merely part of the buzz and conversation of the cultural landscape – whereby the underlying reality of a given situation is not in question but the interpretation of that reality - then we can move on from the current debate, and in doing so establish some new insights rather than just replacing one set of discredited ideas with another set (which ironically are being dusted off from their own implosion in 1989).

Reformation 2.0 is a world where the ‘religion’ of economics no longer seeks to impose a rationalist orthodoxy on my comings and goings in the market. Instead I am able to create ‘markets’ that operate on different principles and assumptions. As I have said before, the biggest barrier to creating zopa (and why banks initially didn’t believe it would work) is that represents a heterodoxy to the ‘truth’ about markets.

Likewise, society should no longer seen as competing with ‘the market’ for our attention and energy, nor should it be able to sit and comment on it from some moral high ground – this crisis is a social as well as an economic failure. What is needed for this ‘reformation’ is the translation of ‘economics’ and ‘sociology’ into a form which anyone can use and interpret for their own ends – moving away from the technocratic manifestations of empirical economists and evidence based policy making which has characterized much of the last 2-3 decades of development of the market and the state. Perhaps the internet represents just such an opportunity, giving the tools (although not always without an underlying ideology) for the creation of economically viable communities and communal (or ‘moral’?) markets. 

For me the relevant perspective for the propagation of 'green shoots' is that of an ecologist - how far that analogy can go I am not sure but it sure beats tinkering with the money supply.

A social life of Money at the Digital Money Forum (31st March - 1st April 2009)

My first public presentation of some of the findings from this year spent deep hanging out in the social life of money will be at the Digital Money Forum. Dave Birch, from Consult Hyperion (whose blog brings together an invaluable point of view for anyone keeping up with the usage and technology of money) runs the show and offered the chance to be interviewed as part of his podcast series.

Conducting ethnographic research can be a solitary experience at times, so it was great to be on the other side of the microphone for a change and be made to think hard about my own point of view. The podcast link is here on the Digital Money Blog - listening to it I realise that Dave has perfected the art of the 'nice but tough' line of questioning based on his own deep knowledge of the subject. Next step is to go back and polish some of the rough diamond insights that are beginning to emerge from the confusing and contradictory world of money in everyday life.

Thanks to Dave for the opportunity to reach a wider audience with the social life perspective - and watch this space for more updates.

The spirit of the barn - BarCampBank London 2 - 14th Feb

HP has its garage, zopa had its barn, specifically Richard Duvall's "New Barn" where proto-zopaites (we didn't know that is what would become of it all) would meet for coffee, organic cookies and conversation (or ping pong/pool if we ran out of ideas...).

The spirit of the barn was open conversation so I was pleased to see that an ex-zopaite - Thomas Barker was running something with the same spirit.

BarCampBank is holding its second session on 14th Feb  - basically an all day workshop of technologists, innovators and industry insiders discussing the impact of emerging technologies on the financial space.

More info and the wiki for the event can be found at http://barcamp.org/BarCampBankLondon2

 

Registration takes place on eventbrite: http://bcblondon2.eventbrite.com/

progressive eco-nomics

The Economist reports on the latest addition to the burgeoning world of online collective action – Carrot Mobs. The difference here is that the mobs are no longer envisaged as providing a collective stick to beat ‘nasty’ corporations with – but rather providing a carrot to ‘ethical’ companies (in this case environmentally sustainable energy companies). By forming collective ‘buying groups’ the aim is to present brands with a ready-made market for their goods.

It highlights how these groups are looking for more than just new ‘choices’ – they are looking for an authenticity of approach which is currently out of the reach of many mainstream organizational cultures. However, the implications of this kind of progressive collective action go far wider than putting up some solar panels in trendy areas of San Francisco.

Given the current ‘stick’ mobs cropping up around the UK with their reactionary messages it is easy to see collective action in the context of its historical ‘class war’ paradigm of social protest. However, it was interesting that the attempts of the BNP to influence this group were roundly rejected. Perhaps this proto-revolutionaries would do well to get out of the cold and get on the internet if they want to influence the buying decisions of companies who are looking for skilled workers in the UK? I am not sure how the narrow political interests of Unions (with their official capital ‘U’), with their conventional institutional responses (such as ‘talks about talks’) can really serve their long term individual prospects.

The re-engagement of the ‘political’ and ‘economy’ (via Anatole Kaletsky) represents an opportunity to evolve new economies of interest rather to retreat to previous social institutions – namely to find new ways of creating political economy which take into account the advancement of individual empowerment through communications technology which offer the opportunity of social networks evolving beyond the current limited ‘lifestyle’ paradigm and starting to acquire greater market and political power.

Neural fingerprints - the scientific roots of individuality

Finally, the ‘neuro’ debate has been allowed to go beyond the ‘big brother’ / zombies/ brain in the vat simplicity demanded by the journalistic interview (mainly due to an impressive collective resistance by two scientists on the Today programme this morning). Despite the best efforts of my toddler to impose her own subjectivity onto proceedings ("what do you mean I am not the centre of the world for 20 seconds!?") the gist of the argument was that of ‘neural fingerprints’ – and the implication that, as demonstrated so brilliantly in the crowd scene of life of Brian, ‘We are all individuals’.

If I am prepared to allow my brain to be fully scanned then, the theory is that it should be possible to predict my response to situations, based on a genome style analysis of my particular chemistry and wiring – such as my response to perceptions of fear or the communication of ‘sell’ / ‘buy’ messages by others. The step forward is that it moves us on from the overly reductive 'behaviourist' perspectives and allows the individual to exist beyond a purely subjective ontology.

The implication for the current situation (perhaps as a throwaway line by one of the interviewees) was to remind us that efficient markets require independent thought and decisions, i.e. we need to stop behaving like ants sniffing the wind to see what to do but instead become rational thinkers. The interviewee seemed to think that the current generation were past saving (i.e. they are already too 'programmed' to follow signals like a herd), but that would go counter to many of the trends that can be observed concerning individuals and their use of money - particularly on the internet.

It is the privilege of doing ethnographic research that you get about as close as you can get to experiencing the decision making (and attendant cultural world view) of an individual, in the actual act of decision making. In spite of the need ultimately to generalize, this has always been the touchstone of ethnography’s ability to change a perspective on a particular problem or issue. It is good to know that what has always been intuitively ‘true’ – that we are not reducible to a set of behaviours (I am not a ‘Clubcard’) but instead need to be looked at as ontologically unique ‘things’ whose nature and social life contribute to both an individual and collective set of meanings called ‘culture’ is also being asserted by the world of science.

Vive la difference!