3 April 2018

A cashless society would be a less free society


It’s true that the Swedes have a pretty good and trustworthy government, but even there rumblings about quite how much power it should have are rising. The specific subject is money – who creates it, who monitors it and how these interact with both freedom and security? Don’t worry, this isn’t some diatribe about banks creating money, and that the government should do that to capture the seigniorage.

Rather, the Swedish central bank is muttering that if we’re all to use electronic money and payment systems, then it should be the one, public (for which read government-controlled), system. This fails rather on the ground of reliability, the basis of which is that there should always be multiple systems capable of performing the same task. But more than that, it fails on the grounds of basic freedom and liberty.

For what do we think would happen with just the one government-approved payment system? Those not approved of by government would not be able to access it. Perhaps paying for sex and illegal drugs isn’t one of the things we’d go to the barricades for, but it’s quite obviously – given the Nordic model concerning prostitution, for example – something that would be denied by such a centrally controlled system.

And much effort would be applied to having ever more disapproved-of transactions added to the verboeten list. Public Health England might want to add sweeties, soda pops and lunches over 600 calories, and someone would certainly try to ban cigarettes from the payment system, and so on. It would be a giant kick-me target pinned to the back of the payment system for every crank with a ban to promote.

Cash being both anonymous and untraceable means that we can be free, at least a little bit at liberty, from such prodnoses. We keep some space where we can do as we wish, not as we’re told we must. For that reason only we should want to preserve a cash-based payment system.

In any case, such a centralised system wouldn’t actually work – people being pretty keen on freedom. We would evade it.

Money itself and the cash version of it are useful things, no doubt about it. But what they really are at heart is simply an accounting system. Tallying up who owes what and who has a call upon the goods and or services of others. Trusted money allows such things as long-distance and impersonal commerce, to the great enrichment of us all.

But it is still just a tallying system and money isn’t the only such system that can or even does exist. That mutual obligation of whose round it is at the Dog and Duck isn’t tracked with cash nor money but, boy, is it rigidly enforced in a social manner. We have alternatives to money in order to track debts.

As we had before money was invented, and as we would do again if it were either abolished into a government-controlled ledger or restricted (in its anonymity) by the abolition of cash. As we did, in fact, when the state failed in producing cash to grease the economy.

British history has a number of occasions where the mint failed to provide coins, so private actors did, and their versions circulated quite happily. As indeed they do now, with Bristol pounds, Lets, air miles, and a plethora of private money systems out there. The only problem with all of these is that they are less efficient than money, and therefore they make us poorer.

All of which really should put the kibosh on the dreams of the centralisers and controllers. We don’t want to abolish cash on those grounds of preserving the space for our freedom and liberty. We most certainly don’t want to have electronic money governmentally controlled on those same grounds, given who will end up deciding who may use it – every prodnose with a ban to impose.

And it won’t work anyway, simply because money isn’t something that government either invented nor entirely controls. We would come up with private sector alternatives, just as we did before government got involved in the first place.

Nationalised electronic money won’t work, it will make us poorer and we don’t want it anyway. There’s not really an argument left in favour of it, is there?

Tim Worstall works at the Adam Smith Institute and Continental Telegraph.