Wednesday, December 24, 2014

On Demurrage and Money Burning

I've just abandoned a long and unwieldy blog post on Philip Goodchild's Theology of Money and a site that Philip pointed me to called Absolute Economics. It was supposed to be short and succinct but you know how it is with this money stuff. I wanted to see what effect (what I refer to as) 'Value Monism' has when it's at the core of an explanation of social and economic phenomena. I compared and contrasted Absolute Economics with Tim Johnson's work which is underscored by Pragmatism (which I guess you could describe as 'Value Pluralism'). From there (for all sorts of reasons I won't go into now) I got into Critical Realism and my head exploded making a nasty mess all over the screen. 

I was, perhaps, being a tad overambitious. I have quite a collection abandoned posts and essays now. All of them I intend to return to at some indistinct future point. But I probably I won't. There was however one little side path I took from my latest abandoned ramble that I must describe to you. As always, its never that simple. Its about demurrage and money burning - as you'll have gathered from the title - but it's focus is on thinking about them as Bataille's waste. And of course, I haven't read Bataille. The Accursed Share (a beautiful hardback edition [two books, three volumes]) is sitting patiently on my desk. I expect I'll be reading it mid-January. But it must be emanating it's wisdom already because I'm seeing waste everywhere. (Is it a common thing always to be surfing just ahead of your reading? Life would be so much easier if I was on the wave or slightly behind it).
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So anyway enough preamble. Demurrage and Money Burning. 

On the Absolute Economics site there is a guest post from Philip - Triangles of Debt. The post puts forward his ideas about debt and credit and concludes with a call for debt jubilees and a variation on demurrage;
"a tax on non-invested money (as opposed to a transactions tax, income tax, or property tax) would be the way to get economies moving again. Alongside this, however, the obligations of mutual debts cannot be allowed to be permanently appropriated by the few. It is necessary to build into the structure of debt as such a periodic discharge or default."
I'm just going to focus on the demurrage here. I've talked about debt jubilees before.

The theme of demurrage was already in my mind. I've recently caught up with the #OpenHere videos
which a was a conference in Dublin in November on money, payments systems and the like. 

Demurrage comes up 49mins into Nigel Dodd's video in the post-talk Q&A. That day's theme was flagged as 'CTRL ALT CURRENCY' - and demurrage is something of a buzzword in alt-currency circles. Freicoin - a child of bitcoin and Occupy - is the most well known example of an alt-currency with 'built-in' demurrage. Nigel points out that demurrage hasn't worked particularly well for traditional currency because it's so cumbersome to administer. The example he sites is the Stroud pound. Holders of Stroud notes had to buy stamps and fix them to their notes every six months, in order to maintain the note's value. Obviously digital currencies are much better placed to overcome these administrative problems. 

There's a bigger problem with demurrage though. 

You can map out a plan to 'get economies moving again' by taxing currency, or you can build that cost into the currency itself, and you can believe that its truly all for the greater good. But you still have to persuade people against finding ingenious ways to avoid demurrage. Imagine if a tax on holding currency was to be introduced how many investment shells would be created overnight? Imagine in a multi-currency world, what would people do faced with holding a digital currency that loses value? Oh, you don't need to imagine that last one. Just check out the Freicoin price. A bitcoin - which is all about being a secure store of value - gets you $322, a Freicoin gets you $0.002. 

That's not to say of course that demurrage might not indeed be for the greater good. You could, if you were disposed to do so, make a whole bunch of technical arguments about the economic effects of demurrage (wiki it or there's a post here on the bitcoin forum with a few links if you're interested). However, for reasons I'll expand on in a minute, I see money burning and demurrage as sharing an essential nature. Yes, essential. So, I'm not going to bother with the economic arguments about demurrage. And instead, I'm going to get down and dirty with the ontological and epistemological questions. 

[ Look. Between you and me, technical and economic arguments about demurrage are just flimflam anyway; there's no way to accurately predict the effect of demurrage, its just not the sort of thing you can know. Having said this, next year (2015) I will be co-opting all positive demurrage flimflam to make a polemic case - a manifesto - for the greater money burning good. When I do, you'll have to forget I ever said it was flimflam. Ok? ]

In the Utopia chapter of The Social Life of Money under the instructive subheading 'Rotting Money', Nigel Dodd explores some of the deep metaphysical and philosophical themes that underpin this apparently simply idea of demurrage (p.346-351). He concludes with; 
"...the idea of a form of money that decays contrasts with the depiction of money as sublimated filth that we explored in Chapter 4. The money that Brown refers to in relation to the money complex is unlikely to have been what Gesell calls rusting money. In terms that Nietzsche recognized in Zarathustra... ...money that rots and dies is money that lives. It is the antithesis of money that feeds off what Brown called the neurotic money complex, shaped as this is by the very refusal of death and decay. Quite possibly, rotting money is as close as to the notion of Dionysian money – in material form, at least – as we are likely to find." (p.351)
Money's Alive ! Well, in a way. The point Nigel's making is that the prospect of death is integral to any consideration of being alive. Therefore, if money is made to slowly die through demurrage, it lives more fully. Or, if you prefer, it lives more fully in our consciousness because it is expressing both aspects of its nature; the Apollonian (the sobriety of reason and logic) and the Dionysian (the drunkenness of instinct and chaos). And this is why its in contradiction to Brown's neurotic money complex. For Brown, full psychoanalytical consciousness - the realization of an unrepressed mind - excludes the possibility of money. Without a neurotic complex, money starves. 

[ My own conception of money is as an 'aspect of being'. In this way its not excluded from any imaginings of 'full psychoanalytical consciousness' or an unrepressed mind, but instead is a metaphysical underpinning to their possibility. ]
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I want to take a small leap forward from here though, and consider demurrage in terms of waste. 

[Remember - I haven't read Bataille. When I have, I'll come back to this post with a red pen and scribble exasperated comments in the margins.]

As I said, Nigel talks about demurrage under the general theme of Utopia, I think it could be equally considered under the theme of Waste (another outstanding chapter in the Social Life of Money). There is a very obvious connection between waste and anality, money and shit, so making a connection between Norman O Brown's ideas and George Bataille's doesn't seem unreasonable. Indeed, in the chapter Dionysus in 1990 from his last work Apocalypse And/Or Metamorphosis (1992) Norman O Brown calls Bataille a fellow traveler on the Dionysian path.

[Another reading confession - I haven't read Norman O Brown's later works yet so I don't know if his conception of money as neurotic complex changed, I'd guess not. I think he said that his early Marxism gave him a healthy disdain for money and money-making. Oh, and look. Imagine how excited I am as a Norman O Brown fan and money burner is to see that in Love's Body there's a chapter called Fire which deals with the idea 'That Nature is a Heraclitean Fire and of the comfort of the Resurrection' - I like to believe that Norman actually successfully escaped time and wrote that just for me.]

So, there are two themes I just want to draw out of my Brown/Bataille/MoneyBurning/Demurrage mix.

The first theme has to do with Bataille's point about it being impossible to understand waste outside of a sacred logic. If both money burning and demurrage can be regarded as waste, then what is immediately apparent, is that a sacred logic lends itself far better to one, than the other; a ritual of pure forgiveness* on the one hand, deflationary algorithms, currency stamping and economic flimflam on the other. The value of 'other ways' of understanding is something I don't focus enough on when I write my posts. Although I make the point pretty strongly in my about page - which I guess forms a sort manifesto for my blog. 

That 'sacred logic' also ties into Brown's wonderful claim about the development of money as being the metamorphosis of the sacred
"Simmel and Laum are confused by the illusion that modern money is secular, and hence they confuse the past by describing as 'secularization' a process which is rather only a metamorphosis of the sacred. Even Keynes perhaps shares this illusion, although he sees the real secularization of money as still lying in the future." 
(Norman O Brown Life Against Death (1959) p. 247-248)
If all the technical economic arguments for demurrage can be equally applied to money burning, then the difference surely comes in the sacred appreciation of the event of value waste. In burning money we perceive the waste far more acutely than we do in generalized demurrage. Money burning is a conscious choice rather than a sacrifice imposed on us either by the force of state, or by the 'moral' choice of a particular currency. With money burning we consciously choose to sacrifice - or waste - in a symbolic and excessive ritual of active nihilism. Inevitably, that has a profound meaning to us. And so our understanding of money - our consciousness of it - is enhanced. At the core of my issue with demurrage as expressed in the quote from Philip at the start of this post is that 'eco-money' or 'political' demurrage projects do not allow for the full Dionysian expression of consciousness. 

The second theme takes us back to the trouble I mentioned at the start of this post; value monism, dualism, non-dualism and all that. In a recent post I used the phrase 'total prestation of being' trying to make the point that there is no political vision that can achieve a new and meaningful understanding of money because the political is inherently partial. The phrase 'total prestation' comes from Marcel Mauss, he used it in relation to the gift. It's stuck with me. Total prestation of being is something that I encounter in a practical sense when I perform my money burning ritual. I have to put myself wholly in the moment with it. The more I can do this, the more meaningful the ritual. The most unsatisfactory burnings I've done have been those where I've been trying take a picture of the burning note, or otherwise removing myself from the ritual. 

Obviously, this relates back to us fully expressing our Dionysian (and Apollonian) consciousness but it points to something else too. It points to the idea that understanding Oneness requires a non-dual approach (or at least, it requires us to be aware of the duality of our perception). Brown says that Baitalle had a strong influence on his reformulation of 'the difference between Freudian dualism and the Dionysian or Heraclitean principle of the unity of opposites'. I think this is a hugely important aspect of Brown's thought. In Life Against Death he characterized this as the difference between instinctual dualism and instinctual dialectics (I've tried and failed to write about it before). 

So in the original post - the one from which this one grew - I got into Roy Bhaskar's ideas about metaReality and comparing them to Goodchild's theological conceptions and the whole notion of value monism generally. I can't recount it here now for fear my head might explode again, but I tried to trace out linkages in two different intellectual groups (this refers to a grouping in my mind - I'm not suggesting that these folks met regularly for coffee and biscuits). The first group was Philip Goodchild, Indradeep Ghosh, Joshua Ramey (the Absolute Economics guys) and Charles Eisenstein. And the second group was Roy Bhaskar, Tony Lawson and David Graeber. And I tried to see what distinctions there were between the two groups in the way they thought about money and value, and what effect that had on the picture of the world they created. 

[ I've often wondered why I don't see Tony Lawson's work cropping up in David Graeber's. When I reviewed Debt I criticized David for not tackling Hayek. Lawson's 1999 book Economics and Reality does precisely that whilst drawing explicitly on the work of Roy Bhaskar. If you're unfamiliar with Tony Lawson's work, this 20 minute video is an excellent starting point. ]

[ Very sadly for us all, Roy Bhaskar recently passed away (here is an obituary by David Graeber). His last videocast is here where he talks about metaReality. If you watch from 47mins Roy's last words are on Love. Love he says 'is the binding force of the universe', 'Love can love Love into ever widening circles'. I first came across Roy's work in that Tony Lawson book about 15 years ago. Obviously since then his ideas have popped up in David Graeber's work, and this renewed my interest. Earlier this year I spotted on Roy's website that he ran an open seminar during term time. I intended to go, but of course, work got in the way, Re-reading his website now I see Roy wrote 'a devastating critique' of Richard Rorty in 1991 - so I guess I wasn't too far of the mark in contrasting the Pragmatism underlying Tim Johnson's work with the non-duality underlying Bhaskar's & Goodchild's. (I found this site a valuable resource on Pragmatism and Richard Rorty. The author, Matt Kundert, came to Rorty by way of Pirsig so I think it appeals to me on that basis. This is an interesting post on on the possibility or otherwise of moral action in the absence of a underlying sense of absolute value) ]
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Very briefly.

Its also possible to contrast demurrage and money burning in terms of freedom and equality too. Money burning embraces freedom. The ritual is a conscious choice on the part of the currency holder. It also embraces equality. This is because the amount to be burned must be 'on the edge of painful'. So in this way money burning is also akin to Simmel's ideal type of price variation - the 'price' of money burning varies in proportion to the individual's capacity for burning/ability to pay.

As I said earlier, demurrage is not a free choice in the way that money burning is. I would also say that it differs too as an expression of an ideal of equality.

[ I would refer here to Nigel Dodd's work on Simmel and the idea of conceptual perfection where Nigel draws from both Simmel's work on money and on society. But this post is already stupidly long. ]
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One final bit of Bataille. I really haven't done any sort of justice to the Absolute Economics site and the fuel they've given to my Bataille fire. So let me just give you a couple of quotes that draw on the idea of 'sacred logic' and offer up something else too - an idea I find very appealing - that the game of capitalism is most understood by those who play it at the extremes, i.e. the very rich and the very poor. 

One of Bataille’s most salient points was that because surpluses of wealth (what he called “the accursed share”) cannot, by definition, be productively (that is to say, reproductively) used, it is impossible to understand surpluses outside of a “sacred” logic, a cultural logic that entails that what defines us as people is not what we do in the face of scarcity but how we manage our excess, “gloriously or catastrophically,” as he put it. This becomes most evident at the “extremes” of social life, at the level of both extreme poverty and extreme wealth."
And the idea is expanded up here in From Fraud to Play: Or, At Least What Full Communism Cannot Mean
One of the dirtiest (open) secrets about our addiction to capitalism, at nearly any human and ecological cost imaginable, is that it presents itself as a tremendously powerful, attractive, and intricate game, making even the pain involved (no pain, no gain) attractive to us. It is a game played most purely, as Bataille was perhaps the first to see clearly, by the extremely poor and the extremely rich—that is, by those who give everything they have, placing everything on the line, every day, whether for a lottery ticket or for high-risk debt swaps. Bataille shows very efficiently how important it is to insist upon the identity of the desperately poor and extravagantly wealthy, precisely from this point of view, rather than imagine that what human subjectivity needs or wants is some kind of middling or average viability or “sustainable lifestyle.” Bataille saw that even in less extreme forms than lotteries and foreign currency arbitrage, any exchange, any transaction, is a game in which one is playing not only to gain wealth and/or power, but to see, at any given moment, what it is possible to get away with, how far one can negotiate, and to test the limits of possibility, as such. To play for ultimate stakes.
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Oh yeah. One very last, very final thing. And probably the most important point to make about demurrage and money burning. In practical terms at least.

Money burning is cool. Demurrage is boring.

That's all folks. Have a exuberant and wasteful Christmas!
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* 'A ritual of pure forgiveness' is how I see my money burning ritual. Check out the about page, my Horse Hospital Post, or my recent Cowley Cub talk.

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