Philosophy Weekend: Can We Reinvent Our Money System?

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There have been big headlines this week about an Internet phenomenon called Bitcoin. Bitcoin is an open source peer-to-peer virtual money system, unsupported by any government or bank or underground vault stacked with gold bars. It works on the basis of simplicity and transparency, and is backed only by the fact of its own existence. The surprising news about Bitcoin is that people are using it and it works: the peer-to-peer system manages to provide complete transactions without any of the presumed requirements for a currency platform.

Bitcoin is an experiment, obviously, in applied economics, created by ambitious techies. The existence of an extra-governmental open source currency system suggests a new way to define our relationship with governments. In this sense, it's an extraordinarily exciting idea, and certainly an idea with a big future. Does the open communication of the Internet age offer us a new capability to rethink the role, shape and substance of money in our lives?

This is an appealing idea for an age in which economics often seems like an evil science, rife with hidden hazards, drenched in corruption, besotted by noisy and near-hysterical political debate. The clean simplicity of an alternative digital currency system seems to present the eventual possibility of a global financial system reboot. The idea should catch the attention of both conservative libertarians concerned with the power of central government and progressive liberals concerned with economic justice and corporate/Wall Street corruption -- and to anybody, really, who isn't happy with the questionable economic systems and practices (remember 2008, anyone?) that still define the status quo today.

The media coverage of Bitcoin, unfortunately, has been inane. As Bitcoin experiences its first blush of fame -- it is expanding greatly as we speak -- it is being confronted by a gigantic barrage of negative media coverage, based mainly on the fact that a few people seem to have made instant profits by trading on Bitcoin, while others have lost their investment or may lose it soon, and by the ridiculous fact that the Winkelvii are involved. As if any of this mattered.

By evaluating Bitcoin as a get-rich-quick scheme (which it was never meant to be), the media can dismiss the experiment with a laugh and avoid the responsibility to take it seriously. (This is a familiar pattern in the tech field, since this was how major media outlets treated the entire Internet/World Wide Web communications revolution during the first dot-com era: they hyped it as a get-rich-quick scheme, then damned it when it failed to deliver on those terms.)

I am ignoring the inane media coverage and following Bitcoin with great interest, because I have long wished for more public experimentation with alternative economic systems. Why is there so little public awareness of the possibility of alternative economics? We live in an era of (hopefully) positive change, but our culture freaks out at the very thought of changing the basic principles of our economic structure. Hell, we're suddenly managing to accept gay marriage, which is great -- and yet the topic of alternative economics is still absolutely taboo. Our thinking about money is stuck in the dark ages.

I like Bitcoin as an experiment, though I'm actually not sure that this particular approach to alternative economics encompasses my own ideas about how we can improve our money system. As I've described in previous articles, I wish for a simpler, more elemental, even more primitive money system. Bitcoin makes money even more virtual, but this is the opposite of the change I have dreamed of: I've wished we could make money more physical. The picture at the top of the page shows the famous Rai stone currency used by the citizens of Yap (Wa'ab) Island in Micronesia. What I like about the idea of gigantic, heavy money is that it emphasizes the idea that money does not necessarily help us -- having money is a burden, and we should all be careful how much burden we take on.

Well, this concept reflects my own personal ideas about money, and may not become widely popular. I don't think we'll be trading Rai stones around anytime soon, and the Bitcoin experiment probably has a better chance of providing some fresh ideas about the basic structures that should underlie our economic system. What do you think about alternative economic systems, and what do you think we should do to reinvent the role of money in our world?

This article is part of the series Philosophy Weekend. The next post in the series is Philosophy Weekend: Denial of Death. The previous post in the series is Philosophy Weekend: What is the Meaning of Scientology?.
13 Responses to "Philosophy Weekend: Can We Reinvent Our Money System?"

by Mike Covey on

This type of cutting-edge solution-oriented thinking is what makes Litkicks (and Levi Asher) so uniquely valuable to our planet. (Thank God I can say how I feel, and not have to disagree alla time.)(Get's old being the sour grape.)

by Jim on

I like this idea (and alternative currency experiments in general) but I know very little about anything technical. How is this different from PayPal?

by ds on

Off-topic, Levi do you have any thoughts on the editorial transition over at the NYTBR?

by Levi Asher on

Good question, Jim. I see Bitcoin and Paypal as very similar, and i have seen them described as "competitors". Technically, the big difference is that Bitcoin is peer to peer, while Paypal is centered around a server operation. This makes Bitcoin less capable of central oversight than Paypal. Another big difference is that Paypal transactions use traditional government-backed currency which Bitcoin eschews. In both these ways, Bitcoin seems to go further than Paypal on the spectrum of Internet-based payment systems.

But they do seem to exist on the same spectrum, and it should be remembered that Paypal also represented a revolutionary step forward when it was created, and was also seen as controversial at first.

by Levi Asher on

Hi ds -- yes in fact I have several thoughts about the change at the New York Times Book Review and will share them soon!

by Michael.Norris on

I like the idea of barter. I have bartered my services in exchange for office space, as an example. In France, there are whole groups of people who work on a barter type basis, using the internet as a way to hook up with like-minded people to exchange one need for another. Of course, the problem is that everyone has to be reliable - if I provide a service and you don't reciprocate with an agreed on service or good, the system breaks down. But, if you use an internet-based rating system where the bad actors get flagged, the system can be enforced.

I also like the economic theories of Georgescu-Roegen, who points out that economic activity is ruled by the second law of thermodynamics - when I use a resource, the result is entropy, which in the economic realm translates into pollution, excess carbon dioxide, and global warming. He was largely ridiculed in his time because his answer was to basically get off of the continuous growth model, and use less stuff - scale back to save the planet. Bill Gates hopes for an "energy miracle", but barring this, we may have to take Georgescu-Roegen's theories seriously, because we can see now that he was right. The more stored energy we consume, the more we degrade the earth and its ability to sustain our current lifestyle.

The constant growth model is so embedded, though, that I think it will take a major disaster to bring change. Change would also require the cooperation of the whole global economy, which is what seems to prevent any serious attempts to address climate change.

by TKG on

Paypal is based on US money.

This is a ponzi scheme where the people who started it own all the gold by fiat.

Levi, it also entails everything you've been a public proponent against vis a vis finance and regulation, etc...

by Levi Asher on

TKG, I feel your comment must be based exactly on the shoddy, superficial news sound bites I'm warning against. A Ponzi scheme? These are scare words, based on nothing. Bitcoin is a serious experiment and it deserves better treatment than you're giving it.

by mtmynd1 on

I'm sorry to admit that I am ignorant on this BitCoin deal and just as ignorant about the economic theories of Georgescu-Roegen, but I am aware that our current economic system is in dire straits and desperately is in need of some workable overhaul.

The way I've viewed it for the past few years is comparing our economics to that of the game of Monopoly. The money is now in the hands of the winner(s) and the rest of us are scratching our heads wondering why in the heck are we continuing to play... so the winners can continue expanding their wealth? It's a ridiculous situation and the game as we know it is over.

We must create a system that fits the 21st Century, as the old game was well-suited for the 20th Century and those winners will not surrender their winnings simply because that game is the only game they know.

The problem is who knows what to replace the system with? Is not economics simply a value system that creates a false idea on who is valuable and who is not? There is no thing in the world that is worth money other than hu'man labor that turns things into products and necessities for our civilization. But the labor has been devalued by those who control the purse strings of societies and we, the people, allow it simply because we don't have any alternative.

That is why I need to learn more about either of these systems mentioned here. Not just for kicks but for the necessity we all have for an alternative for this new century.

by Levi Asher on

Well said, mtmynd. I agree with you, and i think your Monopoly comparison holds true.

And, just to make sure I'm clear: I am not saying Bitcoin is the answer. I'm only saying that Bitcoin is significant in helping us realize that there may be an answer.

by TKG on

The "mining" allows the creators to have the most amount of currency. 

I found the article from Technollama to be the most clear and coherent description of bit coin and my comment is based on understanding mainly from that. 

http://www.technollama.co.uk/we-need-decentralized-cryptocurrencies-we-j...

Is this article among those you refer to negatively?

by Levi Asher on

TKG, this turns out to be a well written and informed article -- after the lede. But, yes, the first few paragraphs, which are written in a screaming tone and are filled with words like "crash" and "bonkers", shows exactly the problem I'm talking about. Bitcoin is an experiment. Experiments are allowed to "crash". This author needs to calm down and we all need to give experiments like Bitcoin some room to breathe.

by JOHNNY RAY on

As all experiments, the first ones in usually are the ones who make all of the money, but this does lend itself to copycats that can adjust and make it better. This reminds me of building the better mouse trap. Or the saying that the early bird gets the worm, but the second mouse gets the cheese.

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