The 2007-2008 financial crisis revealed serious fissures in the global financial system. Between housing foreclosures and the failure of large banks, few people seemed to escape its effects. Some people approached this crisis as an opportunity, hoping that it would trigger a serious public conversation about the shape of finance and its effects on human beings in the world today.
Indeed, the wave of occupy movements that followed the crisis appeared to herald this conversation. But despite the fact that even Alan Greenspan admitted that he got it wrong, a truly widespread public discourse never appeared.
There are, however, many spaces in which conversations about our financial system are indeed taking place. Academics, activists, financiers, artists, and others have invested time and energy into critiquing the financial system and exploring possible alternatives.
MoneyLab: Coining Alternatives is an attempt to bring all of these people together. An initiative of the Institute of Network Cultures (INC), MoneyLab is not your ordinary academic conference, nor are its sessions necessarily generating the kinds of perspectives you might expect from an event whose title includes the word "alternatives." Viewpoints are broad and diverse, making discussions intensely interesting.
Day one of the event began with a panel called "monetization of everything." Geert Lovink opened the panel on behalf of the INC, paying homage to the lab's predecessors, especially David Chaum, who founded Digicash in 1990 and forming a cryptographic research group in the Netherlands. Lovink told us that the purpose of MoneyLab is to reflect on the general situation and look at concrete alternative revenue models.
Saskia Sassen gave the first paper. She began by arguing that finance is not about money. Instead, she said, finance is a capability. When you look at various financial products, such as derivatives and GDP, it becomes clear that this money never really exists. To try to understand finance in terms of money misses the point.
From what I interpreted, examining finance in terms of power may also fail to capture the whole picture. Financial institutions and central banks hold a monopoly over money creation, but Sassen argues that finance has lost the ability to govern itself. Does this mean that nobody is really in control? How do we engage with such a system?
Stefan Heidenreich and Ralph Heidenreich, the creative German brothers, were next up. They argued that money 'alternatives' such as Bitcoin are not really alternatives at all, because they work exactly the same way as ordinary money–that is, as tokens of exchange that the Bank of England has admitted to be forms of debt. Moreover, alternative currencies might be developed with rebellious intent, but they generally remain subordinate to fiat money and incorporated within its logics. Here's their talk.
Stefan and Rolph are trying to break this money model by developing an entirely different system in which a matching algorithm assigns value to things being exchanged based on a wide range of factors. The idea is to overcome the "monetization of everything"–reducing everything to a single price–instead valuing things in multiple dimensions.
Last but not least, we had Bill Maurer with a fascinating talk about the plumbing of transactions infrastructures. These days, there are so many experiments with payments that it's like a "wild west" out there. But are they alternatives? To what, and for whom?
To explore this question, Maurer delved into the history of wildcat banking in the United States and the ultimately-successful efforts of the US Federal Reserve to contain it. Declaring himself a "Fedofile," Maurer argued that the Fed's achievement was not only to contain banking, but also to develop a "rail" along which transactions could happen across borders.
Today, in the world of private infrastructures for value transfer, we have new networks, the internet, and also the mobile carriers. These are building new rails or building portals into existing rails. These initiatives aren't entirely novel, as they reproduce the way that money works as a "decentralized ledger." But who controls that ledger?
Here, we return to Sassen’s inference that along with power and control (such as through monetary policy) comes a level of chaos. Greenspan didn’t know what was happening with the proliferation of derivatives. Did he understand the effects of monetary policy? Maurer argues that the Fed are indeed well-versed in digital currency innovations. But what does that mean for us?
I was left with the feeling that we need to analytically differentiate the players in finance, their powers, and their interactions. We have investment bankers inventing financial products, states with fiscal policy, reserve banks with monetary policy, companies looking for ways to tap into money flows, and ordinary people experimenting with ways to move beyond them all.
All these players have their own vested interests. To explore how alternatives can be coined, it's not enough to simply pit the common people against the machine. We need to understand all the elements and the economic, social, and personal incentives that drive them. Like the Heidenreich brothers' model of valuation, we need a multidimensional understanding.