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Re: [ox-en] There is no such thing like "peer money"

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Thank you Stefan, for initiating this important debate.

I'll participate under the caveat that I'm no expert in economics.

On Mon, Jun 30, 2008 at 3:57 PM, Stefan Merten <smerten> wrote:

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Hi list!

Sorry for being so quiet but - as usual - the conference preparation
eats up a lot of my free time / energy.

The following is something I promised Michel to do. It has been
triggered by the use of the term "peer money" which I think is a
contradiction in terms. This is an attempt to give reasons why I think
that money and peer production are generally in contradiction.

Having said that I should also say that they can walk together for
some time but according to germ form theory that is no contradiction
to the contradiction thesis. But one should keep in mind that to use
money for peer production projects is always a twisted approach
because of that contradiction.

The approach below is based on comparing features of money and peer
production. In that it is also a contribution to further define peer

* Structural force vs. volunteering

 Money is a structural force used to force your will onto others.
 This is exactly what we call buying - though it doesn't sound so
 nice. If you would not need to force others to do something (for
 you) you don't need to pay them.

 Compared to direct force like violence money is a structural force
 because it is indirect. As such it needs a societal framework to be
 effective at all: Payment makes no sense unless the payee can buy
 something himself.

I would argue that there are a wide variety of degrees of coercion and that
some forms of coercion may be arrived at through legimate consensus.

What I mean is the following: if I first expropriate farmers so they can't
make a living, then of course they are forced to work for me, because,
otherwise they starve. But if we both have a guaranteed income, and we are
fairly equal, then money can be the basis of a voluntary exchange. I can
exchange, but don't have to. So what I'm saying here is that we need to
distinguish 'money as such', from its particular instantiation in a specific
capitalist economy.

 Peer production on the other hand is largely based on volunteering.
 Volunteering, however, is the exact opposite of being forced to do
 something. Someone volunteers for a task because it is own wish to
 do something. In fact the volunteering is a central feature of

* Scarcity vs. ampleness

 Money is based on scarcity. In fact in a way it encodes scarcity as
 a societal concept to a so-called real abstraction. In fact money
 which is not scarce in some way simply makes no sense. If I am
 allowed to create arbitrary amounts of money at every time why
 should I require the money of others at all?

There is a difference between scarce and sufficient money as a concept,  as
I agree that 'abundant' money may be a contradiction in terms.

Today, if I have no money, I cannot do anything, so we have regions in the
worlds with armies of unemployed but able-bodied people. Thus, we  can
imagine, as traditional societies did, that money is created by labour
itself. The very act of  work, if accepted by somebody else, creates the
money. In such a system, you would not have to wait to have money, before
being able to mobilize resources and energy.

I.e. "Sufficient: because based on mutual credit, i.e. there's never a lack
of money since it is created upon the needs/wants streaming."

This is a quote from Keith Hart's book, *Reading Money in an Unequal World.
New York and London: Texere, 2001,

"Money is the problem, but it is also the solution. *We have to find ways of
organising markets as equal exchange and that means detaching the forms of
money from the capitalist institutions which currently define them. I
believe that, instead of taking money to be something scarce beyond our
control, we could begin to make it ourselves as a means of accounting for
those exchanges whose outcomes we wish to calculate*. Money would then
become multiple sources of personal credit, building on the technology which
has already given us plastic cards. The key to repersonalisation of the
economy is cheap information. Money was previously impersonal because
objects exchanged at distance needed to be detached from the parties
involved. Now growing amounts of information can be attached to transactions
involving people anywhere in the world. This provides the opportunity for us
to make circuits of exchange employing money forms which reflect our
individuality, so that money may be more meaningful to each of us as a means
of participating in the multiple associations we choose to enter. All of
this stands in stark contrast to state-made money in the 20th century, where
citizens belonged to one national economy whose currency was monopolised by
a political class claiming the authority of representation to manage its
volume, price and allocation." ( )

 Peer production on the other hand is based on ampleness of the
 product. All examples we found so far for peer production are based
 on ampleness (which is simpler to have in the digital world). In
 fact ampleness of the product is the typical goal of peer production

* Force needed to keep vs. built-in sustainability

 I said that money encodes scarcity as a general principle of
 society. However, money being an abstraction is not scarce by itself
 - everybody can print more dollars. Thus scarcity must be enforced
 by some external means. Typically this is done by the state. In
 effect each money system needs a forceful super-structure to keep it

This is indeed crucial, who is going to the enforcing.

Today, private banks create the money, barely regulated by central banks.
98% of the supply is no longer available for production. This creates the
paradoxical situation that we have a *financial system which is overabundant
for those who don't need it, and scarce in those parts of the world really
needing it*.

I agree that peer money is a contradiction in terms if we have in mind pure
'non-reciprocal' peer production as it applies to immaterial production.
But, peers can also loosely be used when we talk about reciprocity - gift
economy based systems, and in addition, when the production is done not by
the market or the state, but by civil society itself.

Therefore, peer money can be used in that context, as long as we know what
we mean. Money can be produced by private players, can be regulated by
public players (both are true now), can be produced by the state itself (as
used to be the case), but there is clearly a third alternative: the direct
production of monetary value by civil society itself.

This is what is happening now, marginally, but could be extented in the
future, in case of a global crisis of the capitalist system. Money would be
produced by self-regulated (self-coercing) communities, which may have a
system of exchange amongst each other.

I'm not arguing that such local/virtual currencies are sufficient by
themselves, but they could be an element of a global monetary reform away
from capitalist money.

Here's the vision of Bernard Lietaer, which consists of four tiers:

According to Lietaer in his influential *The Future of Money*, there is a
four-tiered monetary system for the future. People and businesses will
routinely and comfortably deal in this multiple currency system, just as we
today use all kinds of value cards, air miles, vouchers, credit and debit
cards and virtual currencies in the course of our lives.

1) TIER ONE: Global

The first tier of this monetary structure would be a "global reference
currency" that is not linked to nation states as such. This currency, which
is what the Terra is supposed to evolve into, is there to provide a steady
reliable type of money that can be used for international trade. The Terra
will be based on internationally traded items like gold, copper, and wheat.
It appears that Lietaer believes this kind of new world currency could morph
into being from various corporate scrips used in cashless trade between
businesses today.

(currently existing similar currencies are growing by 15% a year, 3 times
the rate of the commercial dollar)


A second tier in this monetary structure would be, for example, certain
multinational currencies utilized by what would be deemed as geopolitically
close countries. This could include, say, the NAFTA dollar, the Euro, and an
ASEAN (the 10-member Association of Southeast Asian Nations) currency.


On the third level, we have some remaining national currencies which run
within or outside the multinational currency regions. But this time,
individual states no longer have the monopoly in issuance of currency.

 At the fourth level, we have CCs/new money as has been discussed. To
Lietaer, these CCs could have an expanded role and greater influence, as
they may be widely used and exchanged through community internet clearing

It is worth knowing how the Terra might function,

"The Terra is a CC that would be issued by a nation's central bank. As
outlined by Lietaer in his seminal "A 'Green' Convertible Currency", what we
will have is a "commodity-based currency, [for ] a … New Currency backed by
a basket of from three to a dozen different commodities for which there are
existing international commodity markets. For instance, 100 New Currency
could be worth 0.05 ounces of gold, plus 3 ounces of silver, plus 15 pounds
of copper, plus 1 barrel of oil, plus 5 pounds of wool."

 This CC/new money is therefore backed by the valuation of the commodities
in the basket at the value of the national currency of the society it
originates from. So in the US the value of the basket, in terms of USD, will
determine the exchange rate between those trading in USD for the Terra in

Once again, we need to understand that the Terra works in tandem with the
national currency and is not a new money that supplants everything else in
its wake. As the *Terra TRC (**Trade Reference Currency) **White Paper* by
Takashi Kiuchi, Chairman of The Future 500, states:

"The Terra is designed as a complementary currency operating in parallel
with national currencies. Therefore, everything that exists today as
monetary and financial products or practices continues to exist. The Terra
mechanism is only one additional option available for those international
economic actors who voluntarily choose to use it."

Stefan will understand that the terra is designed to be sufficient, i.e. not
scarce neither abundant, and to have a objective standard.

* Exchange value orientation vs. use value orientation

 Money based production is based on a orientation on exchange value:
 You produce because you want to exchange your product for money. The
 product itself does not matter to you and it is totally sufficient
 to produce relative quality and relative use.

 In peer production projects on the other hand the very reason of a
 project is producing use value. Why should a peer production exist
 at all otherwise?

I agree, but the new forms of money are designed for material production and
to reward work. Now peer production is sustained by capitalist money and
economic practices, but that is clearly unsustainable. As long as we do not
have a fully abundant society which does not require a solution for
scarce/rival goods, we need an alternative sustainable structure for peer
production to operate in. This is what such a monetary reform is intended to

* Alienation vs. Selbstentfaltung

 While money is based on alienation from things and humans peer
 production is based on Selbstentfaltung of humans - which is the
 opposite of alienation.

* Immorality included vs. no immorality

 Money as an alienated principle can be used to to immoral things -
 like waging wars. This is something we all know and bemoan more
 often than not.

 Peer production on the other hand is based on volunteering and
 nobody volunteers for goals which s/he finds immoral.

What I find immoral may not coincide with someone else, but the peer
production of terrorism is clearly incompatible with my survival. Therefore,
it is incorrect to put money as totally alienated, and peer production as
purely unalienated, as there are many hybrid possibilities.

Monetary transformation is intended to have less alienated money,


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