I was on holiday in the 1970s, on the Ring of Kerry, when
the recently graduated husband of my friend from earlier days, shocked me into
thinking differently about my bank account, then happily in credit despite its
low value. I was reminded of this, on Monday 18th May, at the UCD
workshop on Gaming Money.
‘I threatened to move my loan to another bank,’ he said. Far
from feeling himself at the mercy of his bank because of the significant loan
he had had to take out to equip his dental surgery he realised that the
interest he would be paying on the loan for a long time to come made him a
valuable customer. It was the first time I realised that my careful ‘staying in
the black’ strategy was only that and not necessarily the best one. Credit is
valuable. A credit history can be valuable too, if you want to take out loans
in future. Banks sell loans to us and to each other and in the process create
more money. Contrary to what is often thought to be the case, most money
nowadays is created by commercial banks rather than Central banks.
The ‘nice’ history frequently taught in College courses on
Economics describing the humble beginnings of money as token object used as
substitutes to barter, is only one way of looking at the money story. Another
begins, by seeing money as credit – debt. As money becomes increasingly complex
exploring the stories and histories that best describe how it works may be the
most realistic way to understand it.
How is money, money? No longer backed by gold (Nixon fully
and finally removed it from the Gold Standard in 1971), with only a fraction of
the value of credit given, or ‘money’, backed by reserves of savings it is no
longer accurate – if it really ever was – to think about money as a thing. All
of this was the starting point for ‘rules of currencies, and how they are and
could be twisted by digital currencies’. The Workshop was part of the UCD
Centre for Innovation Technology and Organisation’s
(CITO) research on coding value. The invited speaker, Professor Ole Bjerg from
the Copenhagen Business School, explored the question, ‘How is Bitcoin Money?
He finds the question ‘How is money?’ more effective than ‘What is money?’.
Bitcoin is growing in significance. It is the best known of
digital currencies using block-chain coding – a kind of linked computer coding
that is considered to be particularly secure. The European Union takes it
seriously enough to have brought out a report last year advising Central Banks
as to important considerations to bear in mind when considering it.
Author of Making Money, Bjerg employs a model from Lacanian Analysis
to propose three overlapping circles one of which he calls ‘Real’, placing
within it an image of a house - but it could either, arguably, be a block of
gold bullion. The second one he labels, ‘Symbolic’ and places within it a
hundred euro note. That note, or any such, is backed by Nation States and has
‘sovereign power behind it.’ In the third circle, titled ‘Imaginative’ he puts
a Visa card. In this circle money is
credit. ‘The banks owe us a lot of money and that is what we use as money’.
These overlapping circles give the fuller picture of how money is.
Professor Donncha Kavanagh – at UCD, proposes a further
circle he labels ‘Shambolic’ to include
‘excess’ – the value added by leveraged derivatives and more. Kavanagh
considers stories and mythologies useful aids to better understand business:
his paper, with Majella O’Leary (2004), considers heroic leadership styles
within business organisations in the light of Irish Legends -The Tain and Chu
Chulainn. Think of the myths about alchemy, the
eternal search to turn base metal into gold – powerfully symbolic in our
collective imagination.
Bjorg points out that Bitcoin, although
it can’t be held in the hand, has similar characteristics to gold in that its
story includes ‘mining’. Would be miners have to spend considerable time
on a computer bank on which they have to rent time on very expensive powerful
computers, or pool resources with lots of other miners if they want to get
themselves Bitcoins. Most will, instead buy them from those who have already
done this.
A member of the audience high-lighted the significance of
this difference: the distributed power is in the hands of the miners - and much
is made of this de-centralised, democratised, non-State power (‘Symbolic circle’above) backing the digital
currency - and not with the majority of holders of Bitcoin who are more likely
to have bought or exchanged the ‘coins’.
The second guest speaker was Nigel Dodd, who talked about
‘Origins and Utopias of Monies’. He is a sociology professor from the London
School of Economics who has made the sociology of money the focus of a long
career. He talked about local currencies, such as the Brixton pound in England:
they definitely add value to local economies; it is best argued that they add
resilience to the greater picture by being currencies within the framework of
other currencies.
The workshop suggests that so far the most valuable aspect
of digital and other forms of currency may be the way they force and assist us
to think further about what and how money is.
