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There’s two reasons why this newsletter is called Altered States of Monetary Consciousness. The first is straightforward. I’m interested in helping us to think differently about money. The second is deeper. Money is the nervous system of the global economy, and - like any nervous system - it’s a core contributor to any emergent ‘consciousness’ that develops in and around that system. So, if you feel that maybe the global economy is like a numb, delusional and paranoid wreck walking towards oblivion, it makes sense to consider how we might alter the state of its nervous system.

When you look at something bad in our economy - such as the mass dumping of plastics into our oceans - you face a question as to where that badness emerges from. Activists might imagine that the source is the corporate sector, with its corrupt or callous executives. From another angle, however, corporations are just conduits for the financial sector. After all, most corporations are owned by large investment managers like BlackRock and Fidelity that are acting on behalf of players like pension funds and insurance funds. Those players, however, will always claim they’re acting on behalf of their beneficiaries, which may be you or me. Put simply, the financial sector claims to exploit the world on behalf of us, making us the source of the problems we revile.

The reality, as always, is much more complex and murky. The first thing to come to terms with is the fact that the monetary wiring of our global economy is one that separates us all from our actions. At scale, monetary systems reduce our relationships to each other, and to our ecologies, to numerical ratios. When a monetary vortex is your primary means of survival, it becomes as if you’re tied into a nervous system that has dulled out its pain receptors and can only ‘feel’ one type of thing - profit. We’re plugged into a systemic entity that might coordinate our action, but its inability to sense anything except monetary gain means it steers us in a very particular direction.

Some people claim that this state of disassociation - in which we’re guided solely by monetary incentives - leads us to utopia, while others claim it leads us to destruction. Either way, the fund managers and corporates will say they have no choice: if they don’t act towards maximizing monetary profit, they’ll be outcompeted and destroyed by the market. So, if you ever hang out in mainstream finance circles (like I do), you’ll notice that most analysts suffer from a bad case of ‘capitalist realism’. This is a term, coined by the late Mark Fisher, that refers to the state of mind in which it’s literally inconceivable to imagine any mode of action that doesn’t involve optimising for profit and growth.

This means, when faced with the myriad problems of the planet, most mainstream analysts will never allow their minds to consider a deep level recoding of our system. Rather, they’ll default to some altered variant of their existing principles. They’ll imagine that ecological degradation can be resolved with ‘sustainable growth’, and that inequality can be solved by ‘inclusive growth’. In essence, they tacitly acknowledge that we live in a system that’s numb to anything except profit, so rather than expecting our system to feel ‘pain’ at the pollution of the oceans, a sustainable growth proponent will seek to make it pleasurably profitable for our system to create a solution. Make it profitable to protect the oceans, or to fight climate change, or to combat inequality.

To people like me, that looks a helluva lot like a shallow form of wishful thinking. This is why we allow our hearts and minds to consider deeper forms of systemic change. This leads to the question of whether altering the monetary system - and it’s core institutions - might be a good vector for doing that.

It’s a controversial question, and there’s no obvious answer. Marxists, for example, have long had a bias towards imagining that the problems in our system lie in the relations of production (who owns what and who controls what in the vast interdependent economy we’re all plugged into). They’re not always particularly interested in the monetary system that holds those relations together, and through which the profit of those relations gets realized. Generations of monetary reformers, by contrast, often ignore relations of production and ownership, and believe the problem lies in the monetary system itself.

If we were using a biological metaphor, we might say that the former imagines the problem to reside in the relations between the organs and cells of the economy, while the latter imagines it in the nervous system. In reality, this binary is false. You cannot separate out the logic of the monetary system from the economy around it, any more than you can pull out your own nervous system and observe its logic detached from your body. This is something you always have to bear in mind if you ever dare to mess with the monetary system. So, let’s dare to do that.

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Altering the monetary nervous system

I have a long history of taking part in alternative monetary experiments. I’ve worked on small local currencies like the Brixton Pound, have participated in community ‘time-banks’, and was an early member of the Bitcoin community. Now I’m active in the new-wave of mutual credit currencies (see Zero is the Future of Money).

Over the years I’ve encountered all sorts of people - from retired engineers, to bushy-tailed students and cocky entrepreneurs - who’ve told me that they’ve figured out the ‘perfect’ money system to replace our current one. That’s always a red flag, because money cannot be designed with a-priori principles derived from the cosmos, and it’s not supposed to be ‘perfect’. Money might be our economic nervous system, but it has co-evolved with everything around it, and - like your own nervous system - it’s not strictly ‘replaceable’ by one that’s designed better. To replace it you’d actually have to re-grow our entire economic organism, and that might end up looking very different to the world you have around you right now. Anybody that’s imagining a wholesale replacement of one monetary system for another, and is not expecting the body to die in the process, is… well... delusional.

So, if you’re ever designing an alternative monetary system, you cannot start from the assumption that it will exist in isolation from our existing one. Rather, you’re going to have to try graft it in as a sub-system, and maybe - if you’re really good at doing this - it might start to blend in and shift, ever so slightly, the economy around it. It’s like grafting a partial new nervous system into an existing body and seeing the muscles move a little in response.

Bitcoin is a fascinating and problematic example in this regard. Its most hardcore proponents - like Max Keiser below - often imagine it as a ‘perfect’ system in isolation from our standard system:

In reality, almost everyone perceives Bitcoin as something you buy and sell for dollars, rather than something you strictly use as money. In a sense, it’s almost completely absorbed - or ‘grafted’ - into the our normal system and cannot be analysed outside of that context. It may offer us new possibilities (see section 2 below) but it remains highly questionable whether it has truly altered any deep element of our economy.

That said, I always try to be supportive of people who attempt to build alternatives. It’s exciting to broaden one’s mind beyond our existing monetary universe, and to expand it into a multi-verse, or moneyverse. In my Unboxing Alternative Currency series, I do deep dives into different attempts people make at doing that, from local voucher systems to crypto-tokens and game currencies. When categorising these, we can split them according to:

1. Purpose: What the goal of the alternative is

2. Paradigm: The broad set of principles that are applied to achieve this

3. Parameters: The more specific variables that can be tinkered with to fine-tune it

4. Participants: Who the users and issuers are

So, in the spirit of helping any aspiring money hackers, let’s take a trip through each of these. Think of this as a choose-your-own adventure, where each decision leads to a new set of decisions.

Decision 1) What’s the purpose of your alternative?

People who build or support alternative currencies inevitably have a justification for why they do it. Normally it’s got something to do with liberating humanity, rebuilding communities, restoring spiritual balance, promoting economic development, regenerating our natural world or protecting us from some evil.

Of course, the vision for a better world that makes sense to one may not make sense to another. That’s because people differ in what they imagine the problems of the world to be, what they perceive to be source of these problems, what they imagine as a desirable alternative situation, how they imagine we’d get there, and how all of this relates to their own emotional world and attempts to survive in the existing economy.

Needless to say, you’ll have to choose an outward-facing message to the world about what you’re seeking to achieve. Here’s some possibilities:

• Bypassing existing institutions and distributing power differently: if you believe that our system centralizes too much power in an oligopoly of banks, corporations and states, you may want to devolve power away from them. In general this political project goes under the name of ‘decentralization’, but there are different versions of the term. In crypto-currency circles, ‘decentralization’ tends to mean ‘creating a planetary-scale system controlled by nobody’. An older meaning of ‘decentralization’, though, is ‘breaking down one large centrally-controlled infrastructure into many smaller locally-controlled ones’. This latter promotion of localism is common in many older alternative currency systems

• Promoting community: A localist project like the Brixton Pound may seek to strengthen a deprived community in a single neighbourhood of a city, but not all ‘communities’ are local. For example, many crypto libertarians are currently very excited about the concept of the ‘network state’, imagining transnational communities that align on values, rather than geography, using a common crypto-currency

• Promoting (counter-cyclical) resilience: Not all alternative currencies seek to replace one system with another. Mutual credit systems like Sardex, for example, seek to create a complementary addition to our existing system, and one that provides a safety-net that can kick in during times of crisis. In more political terms, these systems create counterpower to our existing ones, seeking to balance them out

• Privacy and ‘censorship resistance’: Standard digital money systems are controlled by banks and corporations, and extract huge amounts of data while enabling the ledger-keepers that run them to block and censor people. A major goal in some alternative systems - such as Monero and Zcash - is to create privacy-preserving currency that cannot be blocked

• Targeting particular groups or products: Money is normally experienced as all-purpose: it’s theoretically supposed to be usable by anyone to buy anything from anyone. Some alternative currency designs, however, aim to be ‘limited purpose’, allowing only some people to get certain things from other specific people. For example, the 2020 Tenino Wooden Dollar aimed to allow qualifying welfare recipients to get a limited range of goods from specific stores in a specific town during pandemic times

• Modulating, accelerating, decelerating, releasing or constraining ‘free markets’: Crypto libertarians tend to imagine that ‘free markets’ exist in nature, but that they are distorted or blocked by some ‘unnatural’ abomination of nation state politics and fiat money. In this context, they imagine that their tokens will ‘release’ the power of capitalism by bypassing restrictions on free markets or providing some new means to trade. A person who builds a local currency, or a peer-to-peer rippling credit system, by contrast, may be seeking to do the opposite: they may want to constrain the alienation, isolation and exploitation unleashed by global markets

• To mediate the human economy and the spirit world: I realise this is a pretty obscure thing to say, but much pre-capitalist ‘money’ (such as shell money) is actually a system of fetish objects designed to mediate power relations between people, the living and the dead, and the natural (spirit) world. This is something that our normal capitalist money systems - with their reductive focus on the movement of commodified goods - really struggle to do.

It’s also important to remember that the people who design or take part in alternative currencies are human beings that will always harbour hidden private goals. The two most important ones to acknowledge are:

• To give purpose and community: Many people who get involved in alternative currencies do so because it gives them something exciting to do and friends to do it with, regardless of whether their actions have any actual use for the rest of the world. Taking part can be performative, like volunteering for a theatre play where you get to act out a fantasy. This may sound cynical, but for many people this is something they need. Crypto-token communities, for example, are full of folks posturing about something that they’re doing ‘out there’ in the world, when in reality they’re mostly just talking on Reddit forums and discussing trading strategies, activities that give them a sense of community. Alternative systems - like alternative lifestyles - help to give people who are seeking a sense of purpose some (often illusory) sense that they’re doing something important within an economy that often doesn’t care about your purpose

• To make an income: Everyone has to survive in the economy, even if they claim to be building a different one, so being a builder of alternative systems is actually a kind of profession. Our dominant economy creates various markets to support this niche role: there’s a market for messages of hope and change, and a market for collectible monetary novelties, and a market for speculative assets, all of which can be tapped by the prospective alternative currency designer to secure their livelihood. If you’re designing a small local currency this is never going to be lucrative, because you can only tap the first two markets. In the case of mega crypto-currencies, however, the founders can get grotesquely wealthy by selling tokens into speculative asset markets for dollars (albeit they will market those tokens with reference to the other ‘purposes’ above)

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Decision 2) What paradigm will you use?

Once you’ve come to terms with what your (true) purpose is, you face the question of what rough paradigm of alternative currency you might use to achieve it. Your choice will be influenced by whether you have a commodity or credit orientation to money (for a detailed exploration of this, see 5D Money, and for a lighter introduction see Money through the eyes of Mowgli). You’ll also need to think about what ‘grafting’ method you’ll use to interface your new currency with our existing system. Here are some options.

Paradigm 1: Voucher and ‘plug-in’ systems

One the the quickest ways to bootstrap an alternative currency is to just plug it directly into our existing monetary system by ‘backing’ it with a national currency. The grafting method here is tried and tested: the alternative currency issuer gets a bank account where they hold Layer 2 bank-issued money (see The Casino-Chip Society), which is partially tethered into Layer 1 central bank money. They then issue ‘Layer 3’ vouchers on top of that, either in digital or physical form.

There are literally tens of thousands of plug-in systems like this, but they vary in scale, branding and use. Here are some examples:

• Mega-scale systems like PayPal, and the decentralized equivalents that we call ‘stablecoins’ (see How to build an origami stablecoin)

• Company vouchers that ring-fence the use of a broad national currency into a particular store. In digital form these sometimes get called ‘virtual currencies’, which are just digital vouchers for a national currency rebranded with a company name (e.g. Amazon Coin)

• Local voucher-based currencies (like the Brixton Pound), which are systems that ring-fence the use of a national currency into a collection of stores found in a particular region, city or neighbourhood

• A stronger version of all this is to create your own bank that plugs into the central banking system - like the WIR Bank in Switzerland - and to then use that institution to issue a variant of the national currency

Paradigm 2: Paying-by-promise in the credit commons

We all have the ability to issue promises to each other. If you formalize that process by creating rules for their issuance, and systems to track them, you can actually create a monetary system. This concept of ‘paying by promise’ with IOUs is the foundation for a whole family of alternative ‘credit currencies’, such as mutual credit systems, time-banks, local exchange trading schemes (LETS) and new-wave rippling mesh credit systems. My piece Zero is the Future of Money lays out a framework for thinking about this style of alternative currency.

These are some of the hardest systems to build, but they can also be the most profound, because they’re true attempts to grow semi-autonomous monetary ‘nervous systems’. Unlike the voucher systems above, which just plug into a national currency, these systems are much trickier to graft into people’s lives. Systems like Sardex in Sardinia, for example, operate independently of the mainstream Euro system, but try to partially blend in by importing Euro pricing into their system.

Paradigm 3: Countertradeable (crypto) collectibles

It’s common to hear crypto-token promoters claim they’re going to outcompete the fiat money system, but in reality, systems like Bitcoin are not in direct competition with mainstream currency. Rather, they are limited supply digital collectibles that are sold into normal asset markets, where they will compete with other assets - like shares or artwork - to get bought with normal currency. This allows them to get a speculative dollar price, which in turn furnishes them with a new property, which is the ability to be ‘countertraded’.

Countertrade is the process by which you pay for one thing with something else’s resale price. So, rather than handing over $1000 for a surfboard, you hand over something (or numerous things) that can be resold for $1000. You can pretty much do countertrade with any object in the world, but some are far more countertradeable than others. It just so happens that digital crypto-tokens have very high countertradeability. Furthermore, the fact that these collectibles come branded with monetary imagery means it’s quite easy to engage in the illusion that you can ‘pay’ for things with them, when in reality you’ll pay with their dollar resale price. This is why, if you’re sitting in El Salvador - where Bitcoin is legal tender - a restaurant owner will never tell you what the ‘Bitcoin price’ of your meal will be at the outset, because it fluctuates thousands of times over the course of your meal as the countertrade ratio constantly shifts due to changes in the token’s global dollar price.

This isn’t necessarily a critique, because creating a countertradable collectible is actually quite a savvy way of grafting a new token into our existing monetary system. Nobody can claim that Bitcoin hasn’t been successful, and that it doesn’t create new pathways to trade, even if its exchangeability constantly fluctuates in direct response to its dollar price. That said, while countertradability can be a successful method for getting your token to ride on top of the existing system, inducing it tends to require a marketing strategy that denies it’s taking place. Most crypto-token promoters have to engage in an elaborate masquerade in which they pretend to compete with the very thing their tokens are priced in. This is partly why the scene is so rife with cognitive dissonance, but hey, it kinda works sometimes.

Paradigm 4: Cere-money

There’s a particular bigotry in Western culture in which pre-capitalist ‘money’ - like wampum beads - is seen as crude and primitive. I don’t share this view, because I come from an anthropology background, and I’m deeply influenced by critical anthropologists like David Graeber (see The Anthropologist in an Economist World). Anthropologists are often annoyed with how economists take ceremonial money systems, like the rai stones of Yap, and place them on the bottom of a ladder that leads in a chain of evolution up to modern digital money. In reality, many of these ‘cere-money’ systems still exist to this day, operate on very different principles to normal money, and can do things that mainstream money can’t do.

Here’s the very short version of the story: modern money is associated with the ascendency of capitalist market economies, which tend to be associated with a fixation on commodities detached from humans. Pre-capitalist ‘human economies’, by contrast, tend to carry far less of this ‘commodity fetishism’, in that people recognise that economic value lies in people, not things. Human economies like this are associated with ‘social currencies’, ceremonial objects that act to mediate human relations, unblock tensions, facilitate unions and placate or activate the spirit world.

If you’re interested in those latter things, you might consider creating your own cere-money system. Many of these tend to operate with a ‘syncretic’ logic nowadays, with one part that exists in a parallel reality to normal money, and another part that’s integrated via countertrade dynamics (see section above). If you want an example of this, check out my profile of modern Tabu shell money of Papua New Guinea.

Paradigm 5: ‘UBI’ currencies

A ‘universal basic income’ (UBI) is a welfare system in which normal currency is sucked out of circulation through taxation and then blasted back out to everyone in equal amounts. There are various reasons why you might want to do this, and various political takes on it, but - since the crypto boom - there’s also been a whole range of people interested in ‘UBI currencies’: alternative currencies that claim to embed some kind of UBI into their operations.

I write ‘UBI currencies’ in quotes for two reasons. Firstly, for something to be an ‘income’, it first has to actually operate as money, and many so-called UBI currencies don’t. Secondly, it’s questionable whether ‘UBI currencies’ count as a category in themselves, because often these projects are just people experimenting with a distribution model for tokens, rather than asking what those tokens are and whether they’ll actually operate as a meaningful income to people.

A classic example of this is Worldcoin, which uses biometric eye recognition to identify people as unique, so that those people can be granted their ‘basic income’ in the form of a dubious token. Worldcoin was founded by OpenAI founder Sam Altman. People like Altman are scared of rendering everyone unemployed through the automation tech they’re pioneering, so they’re keen to experiment with pushing out tokens that might keep markets alive as people are deprived of incomes from work. Other systems, like GoodDollar, collect donations, invest those in ‘DeFi’ markets, and then redistribute the proceeds to people who sign up. Systems like Duniter use Einstein’s theory of relativity applied to money, in order to work out a theoretical daily distribution of tokens for everyone on the system.

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Decision 3) What parameters will you tinker with?

Once you know your purpose and paradigm, you can start to fine-tune it. I’m only going to touch on some of the different elements here, because this is where a lot of the technicalities come in, and I’ll have to expand on those in future pieces. Here are some specific questions you want to start asking.

• Precisely what are your alternative currency tokens?

• What activates your token?

• What form are they released in?

• If the unit is digital, how will it be tracked and who controls the database?

• Are the units all-purpose, or limited-purpose?

• What’s your ‘monetary policy’?

Let’s go into each of these in turn.

Precisely what are your alternative currency tokens?

There’s more to creating a currency than just releasing numbered tokens. You really need to know what exactly your tokens are, so you can build a strategy for how you will ‘activate’ them into a monetary system. I go into detail on some classic token types in my piece the Six Tokens, but here are a few options:

• Blank tokens: these are the most primitive type of token you can release. In physical form this is just a blank object, but in digital form they’re just written-out numbers (or more specifically, numerical nouns - see I, Token). Many old-school crypto-currencies are just blank tokens, but in crypto-land energy may be required before you can write them into existence

• Badges: these are objects handed out in recognition that you did something. They generally make for kinda crap monetary systems, but many people do try use them as the basis for a currency. The original version of Eco coin, for example, was just a badge handed out to people who did positive environmental actions, albeit the newer version is incorporating elements of access tokens (see below)

• Access tokens, vouchers and IOUs: all of these are objects that explicitly give their holder the right to access something beyond the token. They tend to go hand-in-hand with the voucher and IOU systems discussed in section 2 above, but it’s worth noting that normal money uses an inverse version of these as its raw material (for example, state money gives you access to freedom from tax obligations)

• Ritualistic objects: if you’re interested in creating a cere-money system, you’re going to have to charge-up some objects with cultural power. This is an ancient art-form, and you’ll probably need to delve into the anthropological archives to uncover it

What activates your token?

All token types need to be activated to have any power in the world. People have various takes on how this is supposed to work. Here are some possibilities:

• Guaranteeing redeemability: All access tokens, vouchers and IOUs primarily work through an issuer guaranteeing to redeem them for something. In the case of mainstream money systems, these guarantees are legally-enforced

• Claiming the token has ‘intrinsic value’: people with a commodity orientation to money will tend to claim that a money unit has (or should have) some kind of ‘self-apparent’ value that resides in the token, such that everyone will naturally see that it’s valuable and want to trade it. It’s a dubious theory, and it almost never applies to alternative currency

• Seeking to induce ‘fictitious’ value: a common variant of the commodity orientation to money is to imagine that a unit without ‘intrinsic value’ can be turned into a fictitious substance of value through some act of communal belief. This is the source of statements like ‘money is what we say it is’ or ‘money is money if we believe it is’. You’ll often encounter this in crypto communities, where the designers claim that an otherwise blank token will be given value by the fact that people use it or believe in it. In the case of cere-money systems, there actually is some validity to this belief, but it’s a pretty weak theory outside of that context

• Creating speculative hype to induce monetary price and countertradability: most crypto tokens actually rely on people perceiving them as speculative objects to be traded on a fiat market, because it’s the resultant monetary price that will in turn induce countertradability in them (see above), which is actually what activates their power to command goods from people in the economy

• Locking the token into a state of network interdependence: libertarians often imagine that mainstream money is backed by ‘government coercion’, but that’s only the most visible form of coercion in our system. In a situation of true large-scale interdependence, your very survival depends on getting access to the labour of others, and if money is the only way to do that, it’s your interdependence that will ‘coerce’ you towards using the units. This ‘network coercion’ is actually very difficult to induce in an alternative currency system, because by default the alternative currency isn’t going to be the basis of your survival, but it’s one thing to aim for

I go deeper into a lot of this in my 5D Money series, but it’s important to realise that there isn’t necessarily a single means via which tokens get activated. Indeed, money has different logics that intersect on different planes.

What form are the units released in?

Once you know what you tokens are, and how you plan to activate them into a money-like system, you face a choice of what form to release them in. The major choice is physical versus digital. There are affordances to physical that differ from all forms of digital (which is one reason why I spend a lot of time defending the mainstream physical cash system), but you could also offer a combination of forms.

If the unit is digital, how will it be tracked & who controls the database?

Digital units always rely on a database to track who holds them, but you face a question on how you’d like to implement that database. Will it be a traditional centralized database, under the control of an administrator, or will it be a decentralized one held in play by a network of distributed nodes? The latter is the primary innovation of the crypto world. Bitcoin, for example, is a decentralized system for moving blank tokens around, which is what enables them to become countertradable collectibles. Sardex, by contrast, is a small but centralized digital system for keeping track of IOUs issued by a local network of SMEs.

Are the units all-purpose and range, or limited-purpose and range?

Theoretically, money acts to reduce everything to one thing: thousands of diverse objects stemming from tens of thousands of diverse people’s labour are all rendered in a common form - a price tag - theoretically enabling anyone to hand over money units to get anything from anyone else. Some alternative currencies - like Bitcoin - seek to replicate this ‘all purpose’ quality, but others will seek to put limits on the use and range of the currency. Any attempt to limit people’s spending comes with politics, but here are the main parameters to mess with:

• Geographic range: most mainstream currencies have geographic limits, because they co-exist with nation states. This means they have to use elaborate international payment structures to co-ordinate ‘hops’ across national boundaries. Systems like the Euro attempt to transcend national boundaries, but many local currencies attempt to reduce the scale of a national currency down to a city or neighbourhood level. Tinkering with the scale of your system, and how it interfaces with larger-scale systems, is a major element of alternative currency design. The basic rule of thumb is this: the larger the scale of your system, the more stuff will be available within it, but the more alienated each user will be, as the scale of the system dwarfs them (and may disguise exploitation). The smaller the scale of your system, the less stuff there will be within it, but the more connection each user may experience with the others. Put differently, large-scale systems ‘dissolve’ communities into large formless bodies of people who just see themselves as floating ‘consumers’, while small-scale systems connect people into more holistic closely-knit meshes

• Redeemability limits: a local currency tinkers with geographic range by limiting the redeemability of the unit to some local area, but you can also introduce redeemability conditions to a currency in order to promote particular products over others, or block particular products. This kind of conditionality - which in the digital realm gets called ‘programmability’ - can have paternalistic overtones, but it might be employed, for example, by an intentional community who wants a ‘green currency’ that can only be used for organic products

• Time limits: just like certain coupons and vouchers have a time-limit after which they expire, an alternative currency can have time limits that seek to encourage circulation. Historical systems like the Wörgl stamp scrip system in Austria used in-built ‘demurrage’ to erode the unit over time, in order to speed up its circulation during the Great Depression. The resultant ‘Miracle of Wörgl’ has even been turned into a feature film, which you can watch on YouTube.

Finally, what’s your ‘monetary policy’?

When you hear monetary policy wonks speaking, they’re not normally discussing all the stuff above. They don’t care about tinkering with the nature of monetary tokens, or shifting their redeemability, but they do care about altering the supply of units, the speed of their circulation, and their ‘value’ (aka. power).

In Zero is the Future of Money, I noted that there are at least four different zones of dynamism in our mainstream monetary system:

1. The increases (issuance) and decreases (redemption) in the (3-layered) money supply

2. The increases or decreases in the velocity with which transfers between money users take place

3. The surges (booms) or contractions (busts) in the underlying production in the economy

4. The increases and decreases in the power of the monetary units to command people to produce things or give you stuff (commonly called ‘deflation’ and ‘inflation’)

Even in a small alternative currency system you have to be aware of these dynamics. One of the classic problems in a small-scale time-bank, for example, is that there are frequent ‘recessions’ where people who have accumulated positive credits hoard them and thereby prevent others who want to have their labour employed from being able to work. Figuring out your ‘monetary policy’ in this situation is a very intriguing challenge.

In fact, all the systems we’ve covered above have different scopes to mess with the token supply, circulation speed and power. Some systems, like algorithmic stablecoins, have elaborate mechanisms to peg their units to the power of major national currencies, which means they end up importing much of their monetary policy from those systems. A system like Bitcoin, by contrast, has a robotic production process for its tokens, so the ‘issuance’ part of the equation is hard-coded, which severely limits any attempts to have a dynamic ‘monetary policy’. This doesn’t actually matter for Bitcoin, because it’s not strictly intended to be a pure money system: as mentioned, regardless of the rhetoric that surrounds it, it actually operates as a countradable collectible, and to do that it needs its tokens to be perceived as limited edition digital medallions, rather than the dynamic money that would appear on a price tag stuck to those medallions.

Decision 4) Who are your participants, and what are their roles?

Our normal monetary system has a set range of participants. On the one hand there are issuers - like central banks, treasuries, commercial banks, PayPal etc - but some of them might contract manufacturers like mints and banknote companies to produce the physical version of their tokens that they will later issue out. Then there are users, like us, who are on the receiving end of that issuance.

Your desired participants could be really diverse or really specific. Maybe you want to create a regional currency to connect together rugged ranchers with urban hippies who want organic meats. Perhaps you want a cere-money system to help war veterans release grief, guilt and trauma. Perhaps you want a speculative crypto-token that you can sell to raise dollars to build an anarcho-capitalist seasteading community, while claiming that the tokens will later give the holders access to an ocean-based economy.

Regardless of who you want to be involved, it’s important from the outset to give your participants clear and non-contradictory roles. To do this you need to be clear on the difference between manufacturing a token, issuing it as an issuer, and receiving it as a user. For example, a printing company may manufacture a voucher for a luxury eco-village spa, but it’s the spa that will take that and issue it to its customers, who will experience themselves as users of that voucher.

To be an issuer of currency is like being the issuer of a promise: it initially emanates away from you, rather than coming towards you. I’ve seen crypto UBI systems like Duniter, for example, claims that its participants collectively ‘issue’ their own currency, when in reality the participants are just granted units manufactured by a digital protocol, and their only role is to then transfer those units between themselves. Systems like Bitcoin also have no true issuers in the traditional sense of the word: rather, they have miners that essentially manufacture the tokens, after which they can transfer them, or keep them. In a mutual credit system, though, you do get true issuance, and it happens when people go below zero in the system.

Don’t know which path to take? Try a randomizer

I go deeper into all of these paths in my Unboxing Alternative Currency and 5D Money series, but I hope this has given you a taster of some possibilities. I’d love it if let me know in the comments what choose-your-own-adventure path you’d take.

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If you’re struggling to know which route to go down, it can be fun to randomize it. Assign numbers to the various options for the various decisions above, and then go to Random.org to generate numbers to guide you in your decisions.

Maybe you’ll end up with something potentially doable, like a localist IOU system with physical access tokens with redeemability and time limits. Maybe you’ll get something unhinged, like a UBI currency based on ritualistic objects powered by speculative asset markets. You’re probably not going to solve the mass pollution of our oceans with either of those, but no matter what path you go down, keep in mind the big picture: money is the nervous system of the global economy, and unless you’re under the impression that our system is an exemplar of balance and transcendence, there’s no harm in attempting to alter its consciousness.

If you’ve found this useful, please give it a like, leave a comment, and consider upgrading to a paid subscription. Cheers! Brett

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If you’ve had your political-economic awakening in the era of crypto-tokens, there’s a chance you may believe that faux-commodity tokens like Bitcoin are the first and only challenge to the monetary system. That, however, is like thinking Keto is the first and only alternative diet. Bitcoin promoters have spent years presenting it as being the antithesis to our normal monetary system, but in this piece I’m going to show you how to broaden your horizons beyond both of these paradigms. To do this we must blend thesis (1) and antithesis (-1) into a synthesis (0). I’ll start with a summary of our standard system and some of the problems within it, after which I’ll explore its supposed nemesis, and conclude by zeroing in on a synthesis.

1) Thesis

The dynamic (quasi)centralization of mainstream money

The world’s monetary system is underpinned by nation state institutions (central banks and treasuries), whose money forms the substrate upon which commercial banks issue out a second - and much larger - layer of ‘digital casino chips’ that we also call money, and that in turn form the substrate upon which various other players like PayPal issue out a third layer of money (to understand this in more depth, check out the Casino-Chip Society). There’s actually a fourth layer, but let’s keep it simple for now.

One way to visualise this is to think of state institutions - and the money they issue - as forming a centre of gravity for the other two layers (which you might imagine as being in orbit around this centre), anchoring them but not controlling them. This means state institutions only influence, rather than determine, the overall money supply. There are a large number of players that collectively preside over the expansion and contraction of the dynamic monetary web that we’re all enmeshed within.

There are two big features of this system we can focus on. Firstly, it’s hierarchical, with powerful state institutions anchoring powerful banking institutions that allow a whole range of third-tier players to plug into them, some of which are dodgier than others. We could say that it’s ‘centralized’, in the sense that an oligopoly of players oversee it and - to some extent - control it.

Secondly, it’s dynamic, rather than static, and its dynamism is also pretty unpredictable, rather than predictable. It pulsates, expanding and contracting constantly, and often at the same time, with expansions in some areas being neutralized by contractions in others. Every day money is being created and destroyed, and this is happening in all three layers.

To understand this without freaking out, you have to have a basic grasp of credit money, and the easiest way to understand credit money is to first focus on the much simpler example of a promise. We all have experience giving promises, so you should know that a promise only becomes a promise when you issue it to someone. This could be the point that it leaves your lips, or when you write it down and hand it to the person. In this sense, it’s ‘created from nothing’ through the act of issuing it. So, imagine I write out “I promise you a massage” and hand it to someone. If they hand it back to me the following day, and say “I’m ready for my massage”, they’re redeeming the promise, after which it’s taken out of circulation. In other words, if someone hands you back a promise you’ve issued, it gets retired or destroyed.

Money issuers in Layer 1, 2 and 3 are not handing out massage vouchers, but they are issuing out different forms of IOUs (legal promises). I’m not going to focus on the nature of these IOUs in this piece, but - like any type of promise - they are created when they are issued, and destroyed when they are handed back. This is why our money supply is dynamic. The nature of the dynamism at each layer, however, differs:

1. Layer 1 money: Central banks and treasuries create new money when the government is spending, and destroy it when people, for example, pay taxes

2. Layer 2 money: Commercial banks issue out new ‘digital casino chips’ when people deposit cash (Layer 1 money), but also when they’re giving out loans, and destroy those chips when people ask for cash back, or when loans get repaid (to learn more, see An Emotional Guide to ‘Fractional Reserve Banking’)

3. Layer 3 money: Players like PayPal create new units when someone transfers Layer 2 money to them, and destroy those units when the person asks for that back into their bank account

We can also identify three separate styles of action that can happen in each layer

1. Issuance: the money issuer issues money (often in exchange for something)

2. Transfer: the money users pass the issued money between themselves (often in exchange for something)

3. Redemption: a money user passes the money back to the issuer (often in exchange for something, or to get free of some obligation), thereby destroying the money

Many of us will have experienced different versions of all of these. Getting a bank loan is an example of being on the receiving end of Layer 2 Issuance, while getting a government grant is an example of being a beneficiary of Layer 1 Issuance. Handing cash to a shopkeeper is Layer 1 Transfer, while making a contactless payment for a train ticket is Layer 2 Transfer. Paying taxes is Layer 1 Redemption, while repaying a loan, or getting cash out of the ATM are examples of Layer 2 Redemption (this isn’t always immediately apparent, but going to an ATM is the act of redeeming your bank-issued digital casino chips for cash, and - similarly - repaying a bank loan is the act of returning chips to the bank).

These different layers of money, and the different styles of actions within them, are deeply embedded into our everyday lives. In fact, we might think of ourselves as being Layer 0. We are beings on a planet surrounded by ecological systems that we use for our survival, and we’re all interdependent, but we manage our interdependence through the monetary system, the dynamism of which has a complex multi-directional relationship to the level of production and consumption in our Layer 0 existence. Sometimes it’s easy to find work (production) and to get people to take what you’ve produced (consumption), and at other times it’s not, and much of what’s called ‘monetary policy’ is about trying to manipulate all that via the money system.

It helps to be able to visualise it in 3D, so here’s an imaginative exercise. Imagine the money system as being a kind of nervous system embedded in the underlying economy, and then imagine grabbing it and pulling it upwards to reveal the hierarchy of players: at the apex are state central banks, with commercial banks below that, and third-tier players plugged into them, and all of them locked into the broader financial sector, which is locked into the corporate sector, and then all of us below. Here’s a very rough stylised sketch I did to convey the basic idea…

From here we can point to four conceptually separate, but related, forms of dynamism in the system:

1. The increases (issuance) and decreases (redemption) in the (3-layered) money supply

2. The increases or decreases in the velocity with which transfers between money users take place

3. The surges (booms) or contractions (busts) in the underlying production in the economy

4. The increases and decreases in the power of the monetary units to command people to produce things or give you stuff (commonly called ‘deflation’ and ‘inflation’)

Trying to predict the behaviour of this collective entity, and the interrelated forms of dynamism that accompany it, is a dark (pseudo) science, but we’re all part of it, and we feel it even if we struggle to see the whole structure and its processes. There are many problems with the money system, but here are a few basic things we can say about it:

1. There are better and worse versions of it: people often generically talk about ‘fiat money’, but our monetary system is actually a hybrid hydra and there are better and worse versions of it. For example, the version without physical cash (‘cashless society’) is definitely worse than the version of it with cash. I spend a lot of my time defending cash, because it’s crucial for maintaining a balance of power between Layer 1 and 2 money, and for preventing a more dystopian version of the system from emerging

2. Bank power is as important as state power: banks can issue out huge numbers of digital casino chips to parts of the economy they wish to mobilise, and to pull those away from parts of the economy they want to shut down. This means they have a lot of power to decide what (and who) lives and dies in the economy, and they’re far more likely to choose wealthy property developers than a poor project in a poor neighbourhood. The banking sector (and the mega institutional investment industry that owns their shares) is often in complex alliances with states and the broader financial and corporate sector, and also presides (alongside lawyers and accounting firms) over a massive system of offshore finance obfuscation used by corporations, mafia and oligarchs

3. Inflation politics: Looking at all the layers at once, we see there’s an ongoing dance with inflation, by which we mean the power of the monetary units to command real things from real people in the underlying economy, and that’s always in a dance with employment (the people in Layer 0 trying to find a way to survive by slotting themselves into a niche within the interdependent structure). In very crude terms, conservative monetary policy ‘hawks’ generally like to keep a bunch of people unemployed to try keep inflation low, whereas others often want to counter that

4. Geopolitics: We live in a transnational economy, but the transnational money system is a patchwork of national sub-systems stitched together, and often that stitching takes place via the US dollar system, which gets a lot of power from this ‘reserve currency’ status (and a meta battle with China is emerging in this regard). The geopolitics increasingly also involves digital payments data: as former Ecuadorian central banker Andrés Arauz points out, giants like Visa and MasterCard are based in the Global North, and their increasing control of the payments systems of people in the Global South gives US agencies a whole lot of power to pry into their lives

I could go on listing more problems (such as the fact that the money system is largely built to interface with and accelerate the soul-eating expansion of financialised corporate capitalism), but needless to say there are a whole lot of different people who have different gripes about the system and the power held by the oligopoly of players within it. But what kind of alternative do you propose when faced with this amorphous beast?

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-1) Antithesis

The rigid decentralization of crypto-commodity fetishists

Let’s talk about Bitcoin.

Hmm… actually, no. Let’s not rush into it. Before I start talking about crypto-tokens, I want to take a step back, and to talk about a mindset that precedes them, which is useful to understand.

If I was to issue you with a written promise for a massage, you’d have a strong understanding of its double-sided nature. It might be a single object, but it references two sides: Side 1 is me and Side 2 is you. I issued the promise to you. If any one of those sides is removed, it ceases to exist as a promise.

To put it in more technical language, a promise has both an asset and a liability side. The asset you hold - the promise - is from my perspective a liability: it’s something I owe you (if you turn that phrase into an acronym, you get IOU). If you were able to transfer this promise to someone else - for example, your brother - they’d take ownership of that asset, while my liability remains constant. I now owe your brother a massage.

Imagine a far-out scenario in which this promise gets passed around so much that the holders forget who issued it, and - moreover - come to see it not as a promise for a thing, but as the very thing that it promises. So, rather than seeing it as a massage voucher, they begin to see it as a kind of congealed abstract embodiment of a massage.

Something like this often happens in large-scale credit money systems. All the money units we pass between ourselves are liabilities issued out by states and banks (and various other third-tier players), but we often fixate on the asset side, and are very prone to generating crude mythologies of money as an object disassociated from an issuer. In this ‘asset only’ imagination of money, we picture it as a kind of abstract congealed incarnation of generic ‘value’, viewing it metaphorically like a commodity or a substance. This is the commodity orientation to money: it’s a way of thinking about money as if it were a commodity with use in itself.

There are various reasons for why this happens. One is that our money system is so huge and immersive that it’s very easy to go through life without seeing what’s happening in the background and to have no knowledge of the issuers. You simply learn as a child that the units have a mysterious power to command people. Another reason is that, unlike a massage voucher, the nature of the different promises in the different layers of our monetary system are obscure and hard to understand (and, moreover, are often framed in confusing circular terms). To go deeper into some of this mindset, check out my piece Money through the Eyes of Mowgli, where I argue that the existential experience of being in a large-scale capitalist system naturally leads your mind to generate crude commodity mythology around money by default, providing a folkloric way to describe its power over random strangers on the street. This is also hard-baked into the mainstream Economics discipline, which is built upon a commodity mythology of money (the core of which is the myth of barter: see How to Write a Flintstones History of Money).

Needless to say, many people end up with a commodity orientation to money, which, as mentioned, is actually a metaphorical way of thinking about money as if it were - or should be - a commodity. This, however, leads to a new problem: if you have that subconscious baseline viewpoint, but nevertheless come to have an awareness that modern money isn’t actually a commodity, it creates a cognitive dissonance that must force you down one of two paths:

• Path 1: Modify your concept of what a commodity is to calm the cognitive dissonance: Many people are aware that money isn’t literally a commodity, but nevertheless must find ways to describe it as if it were, and so default to thinking about it as a kind of mysterious ‘fictitious commodity’. The most common way to do this is to claim that we all just collectively decided - through an act of imagination or belief - to imbue it with value. It’s a bit like Peter Pan’s view of flying: money will fly as long as we all keep believing

• Path 2: See it as an imposter or fake commodity: I’ve given talks on global finance for over a decade, and I’ve lost count of the times when someone in the audience rants about how the real problem with finance is that money is ‘backed by nothing’, and that there’s no gold in the central bank’s vault, and that the system is therefore a giant Ponzi scheme made up of farcical units that are pretending to be a commodity, with some deceitful power that tries to force you to use them, or to deceive you into believing they are valuable

The latter position is a more angst-ridden response to the cognitive dissonance, with the person going around trying to sow moral panic about money somehow being ‘not real’. This position also tends to come along with (or perhaps generates) a reactionary idea of what money should be. For the universe to not be a topsy-turvy deceitful place, the fake money must be replaced by a money that is ‘created from something’ so that it has ‘real value’, and must not controlled by a corrupt authority.

Normally, this generates in the modern mind an imagination of gold. Most people have little understanding of how gold actually operated in the past, but simply assume that it somehow was a natural money system, perhaps imagining medieval fairs with people plonking little gold coins in exchange for chickens. I mean, pretty much all medieval-themed video games and modern fantasy shows like The Witcher have people searching for gold ‘coin’.

‘Goldbugs’ are people that channel the most politicised version of this belief, casting gold as the perfect ‘natural’ money, and contrasting it to the unnatural abomination of fiat money ‘created from nothing’. Gold certainly is created from something. Well, it was created by star explosions, and distributed in rock strata, and gold fetishists believe that uncovering this geology offers a better monetary policy than humans institutions do (provided we ignore the centuries of imperial slavery to obtain it, the 16th century conquistadores sent off to massacre indigenous South Americans to get it, and my home country of South Africa, where a fascist police state coerced poor workers to mine it well into the 1980s, so that goldbugs across the world could obtain the famed Krugerrand).

Despite its bloody history, gold is rigged up in the conservative imagination like a disapproving puritanical god that you can invoke as a protection against the depraved fiat system. Most interesting, however, is that its most important modern function is symbolic rather than practical. Very few people - including monetary conservatives - actually want gold to be money, but it serves an important function as an abstract Platonic Ideal to be emulated rather than used. The idea is to keep using the normal fiat system, but to constrain the minds of those who use it, such that they imagine it to be like a commodity with hard limits. Monetary conservatives have fought long and hard on numerous fronts to tie the fiat system up in commodity-centric mythology, law and language, and have succeeded, because many people do use commodity metaphors for money and often do believe that it’s inherently constrained (incidentally, this is something the MMT movement has slowly tried to deprogram, causing consternation among people on both the political right and left, who’ve got used to fighting each other within the bounds of the commodity framing).

So, with this background context in mind, let’s now move on to Bitcoin.

I’m going to assume you have a basic knowledge of what Bitcoin is (or at least, what it claims to be), and to focus in on its political message. Bitcoin gave new energy and direction to people who previously could only hark back to an imagined golden era of ‘real’ commodity money. Rather than bleating on about medieval Witcher fairs, it allowed the vision to be repackaged in a modern digital form, and also added some more radical elements that could disorientate and excite a lot of people across the political spectrum. Given that most people are unschooled in the political dynamics of money, and given that most have a commodity orientation pre-programmed into them, Bitcoin was well-positioned to seem like a miraculous, cutting-edge and practical cure to the evils of our current system.

To promote it, Bitcoin evangelists reduce the multi-layered and multi-playered modern monetary system into the single term ‘fiat’, and set it in binary opposition to Bitcoin, which is presented as the antithesis to its two key features: remember that the fiat system is, firstly, underpinned by a (quasi) centralized oligopoly, which, secondly, presides over an unpredictable money supply that’s ‘created from nothing’ and which expands and contracts. To be the binary opposite, you must have a system that’s not controlled by a centralized oligopoly, with units that are ‘created from something’, and which has a predictable supply that lasts forever, rather than expanding and contracting.

The most radical part of the Bitcoin equation is the attack on centralization, but ‘decentralization’ in crypto-speak has a very particular meaning. In the pre-crypto era, ‘decentralization’ used to mean breaking up a large centrally-controlled system into many smaller locally-controlled systems (like a bunch of city states declaring independence from a nation state, or a small town trying to partially detach itself from the national economy by encouraging localist economic projects). In the Bitcoin world, by contrast, ‘decentralization’ basically means replacing one large system governed by people with another large system not governed by people. ‘Decentralized’ means ‘a large automated infrastructure controlled by nobody’, although if you want to put a more romantic human spin on it you can say its ‘run by everyone, but controlled by no-one’.

The second part of the Bitcoin equation is a lot more overtly conservative. It’s an attack on the entire concept of an expandable-contractable supply of units. The system has a fixed supply of tokens that must (sort-of) be ‘produced’. I say ‘sort of’, because really they are written-into-existence, but the person - or, rather, computer rig - doing that must first exert a very large amount of energy. It’s a bit like having to pierce through a forcefield around a database before you can write something onto it, or having to climb Mount Everest before you can write out the number ‘50’ on its summit. This energy expenditure creates the illusion of ‘extracting’ Bitcoin tokens out of some kind of cyber-ore with a pre-programmed hard limit of how much ‘coin’ can be mined (the initial design is somewhat like the digital equivalent of the star explosions that arbitrarily decided how much gold crashed into the earth). In less metaphorical terms, the shared protocol that brings Bitcoin to life simply won’t allow participants in the system to write new units into existence after the arbitrary number of 21 million units is hit.

While credit money systems have that inherent dynamism that comes from the constant fluctuations of Issuance, Transfer, and Redemption, the Bitcoin system isn’t very dynamic at all. There really isn’t a true Issuance process: rather, the system has a machinic formula for spitting out ‘asset only’ tokens that have no liability side, which means there’s also no Redemption process. The most dynamic part of the system lies in Transfer: the units can be transferred around, but there’s no leeway to push more out or pull more in if there are changes in the level of ‘Layer 0’ production going on in the economy. In other words, there’s no such thing as discretionary Bitcoin ‘monetary policy’. That, of course, is part of the whole point, but it means the system is incredibly rigid, and - despite the rhetoric of fairness - also has some pretty horrendous problems with inequality. There’s a lot of dark fuckery that goes on in the fiat system, but it certainly expands with our population, whereas a disproportionate amount of the Bitcoin supply arbitrarily lies in the hands of a few thousand random early adopters. Consider the fact that there are almost 8 billion people on the earth right now - not including future generations - and yet the 21 million possible Bitcoin units were being given out in 50 token chunks to people who happened to be around in 2009 with the expertise, capital, equipment and peer groups to exploit it.

To justify the massively unequal initial distribution, many Bitcoin proponents rely upon dubious ideological positions (like claiming that the early users are being rewarded for being bold risk-takers) and semantic trickery, noting that there’s no problem in running short on units because a bitcoin can be split into smaller increments like Satoshis. It’s somewhat like noting that a tonne of gold can be split into 1,000,000 grams, without asking who owns the tonne of gold. So, one day the big holders of Bitcoin (people like Michael Saylor and Elon Musk) will be old, and future generations will have to wrest small fragments of Satoshis out of their wrinkled hands, a process that would presumably give those ‘whales’ an ability to extract huge amounts of labour from them in return. Given that most of these big holders basically did very little labour to get the original distribution, this is extremely problematic.

Even the decentralization claim starts to look a lot more dodgy when you notice that the style of decentralization promoted in traditional crypto-token systems is also designed to make the systems (theoretically) unchangeable. There was - at least initially - a rejection of human governance processes, which were seen as being corrupt, but that required the crypto-token movement to have an alternative account of how change could ever take place. This in turn was supplied by a libertarian concept of a market in pre-programmed systems (if I was being tongue-in-cheek, I might call it a ‘market in pre-programmed star explosions’). In much free-market ideology, the political act of voicing your concerns (‘voice’) is held in lower esteem that simply exiting a system you don’t like (‘exit’) and buying into another system, or starting your own system (this latter viewpoint is especially strong among people immersed in startup culture). For example, if you complain about Google screwing the world, some will tell you to stop whining and just go start your own search engine, as if each person had ten years, billions in capital, cutting-edge expertise, and massive market power to dislodge something that’s become unavoidable entrenched infrastructure in our society. This mindset was transferred to Bitcoin: rather than offering a governance process for changing it, you were told that if you don’t like it you could just fork off and start a different one. It superficially sounds appealing - and certainly lots of people made windfall profits by cloning the system and pushing out new tokens to be sold - but it’s politically vacuous, ineffective and unsatisfactory.

I could go into all the other problems of the Bitcoin system, like the incredibly energy-inefficient mode by which it’s produced, but by far the biggest issue is that it simply fails as money. Fiat money can run circles around Bitcoin because of its flexibility and dynamism, which means - like gold - Bitcoin tokens have simply become another commodity priced in fiat money on a fiat money market. This is why many people have become rich in dollars by speculating on crypto-tokens.

Furthermore, all the supposedly money-like elements of Bitcoin (for example, the fact that it can be exchanged for goods) can be easily explained with the concept of countertrade, which is something I bang on a lot about. Basically, the tokens have a primary and a secondary life. In their primary life, they are collectible objects that get a monetary price on the dollar market through speculation. That monetary price in turn gives them a secondary life as a countertrade object. Countertrade is the act of using something’s monetary price as a guide to deciding how much of it to exchange for something else that has a monetary price. You can in fact do countertrade with any object in a monetary market - including bread loaves, headphones, and sheets of plastic wrap - but normally it’s a clunky process. What’s unique about limited edition crypto-tokens like Bitcoin is that they are highly countertradeable because they are digital and easily transferable. Sending bitcoins to someone superficially feels like a ‘payment’, especially because the tokens have monetary imagery pasted all over them, but when you hand bitcoin over for a surf lesson at Bitcoin Beach in El Salvador, you’re actually paying with the token’s US dollar resale price.

This is a horrifying thought to many Bitcoiners, who prefer to remain in a state of denial about that, but - once you get Zen about it - it becomes obvious that Bitcoin doesn’t compete with the mainstream system, but rather rides on top of it. Unfortunately, in order to market this countertradeable collectible, all the promoters have to big it up as a kind of US dollar competitor, and in the process trojan horse a lot of conservative monetary ideology into the minds of idealistic teenagers (which I view as a pretty bad case of collateral damage).

I don’t critique Bitcoin with malice. In fact, there’s an innocence in many parts of the crypto scene, with a longing for predictability in an unpredictable world. But it’s this very dogmatic insistence on a rigid system in a dynamic world that’s the problem. The standard monetary system doesn’t run away from Bitcoin. Rather it rushes towards it to engulf it, seeing it as just another thing to be traded. Bitcoin’s attempt to emulate a commodity is precisely why it’s so easy to co-opt. You don’t fight a giant saltwater shark by sending a small freshwater crocodile into the ocean after it.

Perhaps that’s an unfair metaphor. From one angle, Bitcoin’s co-optability is part of its strength. In getting swallowed by standard capitalism, Bitcoin has managed to fuse itself into the system, and as it gets metabolised it comes to offer some interesting new routes to exchange via digital countertrade. That’s a type of success, but it’s far from the vision of replacing the monetary system.

Because the general public defaults towards having a commodity orientation to money, they are susceptible to believing straw man accounts of the actual monetary system, and this gives space to opportunists to offer straw man alternatives. Many big influencers in the Bitcoin - and broader crypto - scene have taken on this role, and have (arguably) channeled talent and public attention away from truly positive currency innovation, and into a largely counterproductive mosh-pit of speculation. These influencers now have large amounts of money and reputation that depend on them perpetuating the various forms of contradictory double-think that plague their systems, and a priesthood of crypto intellectuals have been enrolled to patch up the dissonance. They make almost theological arguments to try show why dollar-priced tokens are a competitor to the dollar, or why once it reaches a certain monetary price Bitcoin will somehow transform into being the monetary system, or why really it’s the dollar that’s priced in Bitcoin, not vice versa (the monetary equivalent of arguing that it’s actually the tornado that flies around the kite).

Many of these issues are also not unique to Bitcoin. They plague the crypto-token sector more generally, so let’s get real: there’s a lot of lovely and bright people here wasting energy and time following dead-end visions of money. This is why it’s imperative to find positive new ways to channel it.

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0) Synthesis

The dynamic decentralization of the credit commons

If the original crypto-token culture sought to attack two components of mainstream fiat, a synthesis might be achieved by attacking only one. What if we kept the dynamism of credit money, but combined it with a (modified) version of crypto decentralization? The mainstream system pulsates, expanding and contracting, but has a stacked hierarchy of players. You can imagine them on a vertical plane rising above us, but what if we were to pull that down to earth, flatten it, and aim for a pulsating system without the hierarchy?

To do this requires a new imaginative leap. One of the hardest things for most people to grasp is that we only experience the Asset Side of Money, and really only think of that side in terms of Transfer. We’re money users, rather than money issuers, and we mostly just transfer money units that were created by big institutions somewhere far away. We never experience ourselves creating money by pushing it out through Issuance, or destroying it by pulling it back in through Redemption. Most of us have never taken a peek behind the curtain to see the Liability Side of Money, and even fewer have experienced what’s it’s like to be active on that side.

In fact, some of the only people that have direct experience of that come from a small yet ancient tradition of alternative currency that pre-dates crypto by a very long time, and which also comes from a much older tradition of decentralization. Remember that ‘decentralization’ originally meant breaking a large distantly-controlled system into many smaller locally-controlled systems. This ethos is core to many anarchist, localist, and mutualist groups that have historically believed in peoples’ ability to locally self-organise in the peripheries, in the shadows of the towering central institutions of mainstream capitalism. It’s from this tradition that mutual credit systems, and their cousins - timebanks and LETS (local exchange trading schemes) - emerge.

Mutual credit is a simple, yet profound, alternative money system. Here’s how it works. You get a group of people together, set up a database between them, and allow them (or empower them) to pay each other by promise. ‘Paying by promise’ means one person can get something real from another person by promising to give them something real later. Essentially, they issue an IOU. When they do this, it’s recorded on the database, which keeps track of who has issued promises, and who has accumulated them. Everyone starts on zero, and if you issue a promise to someone to get something real, you go below zero, while the other goes above zero, their positive credits mirroring your negative credits. That’s an Issuance process, but the person with the positive credits can come back to claim stuff from you, which is a Redemption process that can take you both back to zero. To make it more sophisticated, you can allow Transfer, so that the IOUs can be moved around between the members, allowing people to accumulate IOUs that weren’t originally issued to them. Finally, you can set limits on how many promises people can issue, to prevent, for example, a person issuing a tonne of IOUs to get a tonne of stuff before running away.

If you’ve ever gone below zero on one of these systems, you’re one of the few people in this world to have experienced the process of being a money issuer. In a mutual credit system, money isn’t something that comes from a mysterious source far away, and it’s not something you must try grab and hoard like a squirrel grabbing an acorn. No, money emanates from you at the point at which you dare to issue a promise that will push you onto its liability side. You’ll also experience the process of destroying it, as someone with a positive balance comes back to demand something from you. Both sides are always in a dance with the zero line, fluctuating from the positive to the negative as they move in and out of obligation to each other by getting real things from each other.

There are two big things we can say about traditional mutual credit systems (and their relatives). Firstly, they tend to remain small. They are set up against the backdrop of the much more powerful fiat system, and they tend to only succeed when they find ways to interface with that system, or to not directly compete with it. This is why people often refer to these as ‘complementary currency’ systems. Many are run by volunteer groups who easily become burned out, or who see their work as a part-time community project rather than a full-time political mission. Some, like Sardex in Sardinia, have at times reached impressive scale, but many systems of self-issued and locally circulating credits (often denominated in all manner of idiosyncratic units) have stagnated or faded away. Some, like Eli Gothill’s Punkmoney system for issuing IOUs on Twitter, were designed to be short-term experiments. Needless to say, there’s been perennial attempts to link these systems into federations where they can get strength in numbers: see, for example, the Community Exchange System of former South African political prisoner and escapee Tim Jenkin (played by Daniel Radcliffe in the film Escape from Pretoria).

Secondly, from an intellectual perspective, the people who get involved in these systems tend to build a much stronger understanding of how the actual monetary system works. This is because small-scale mutual credit systems are built from similar principles - or primitives - to large-scale credit money systems. They also tend to imprint the highly unorthodox, yet incredibly useful, credit orientation to money into the minds of their users. A credit orientation to money is a mental model that sees money not as a commodity (either real or fictitious), but rather as an active accounting system powered by IOUs that bind people together into inescapable interdependent meshes.

As I discussed in Money Through the Eyes of Mowgli, the commodity orientation to money requires you to believe that people need to be induced into trade by dangling something of value in front of them. Credit thinking, by contrast, recognises that people are tied into non-optional interdependent networks, within which they’ll often have to ‘go negative’ to get access to the goods they need to survive before they can produce anything. Picture your lungs telling your heart that before it can oxygenate the blood required by the heart’s tissues, it needs energy delivered to its tissues via a pump of the heart. At a systemic level, there’s no fundamental separation between these interdependent parts in your body, and there’s no need for one part to ‘convince’ the other to help through some kind of incentive system. You can choose to imagine that your lungs and heart are ‘trading’ with each other, but it’s actually an inescapable form of cooperation. Once you start to see whole economies like this, it lowers the need to generate commodity mythologies about money.

Crucially, credit thinking leads to a vision of money as being a kind of nervous system, rather than a circulatory system, and the key primordial nervous impulse being sent along that system - to create its grooves - is the act of ‘paying by promise’. In our modern system, the issuance of these impulses is completely dominated by mega institutions, but there’s nothing to say that alternative versions of the same principle can’t be achieved, especially with the advent of new distributed technology architectures.

One subtle yet crucial nuance to internalise is that a credit orientation to money is a way of thinking about money, rather than a specific prescription or specification for its exact form. In general, what we call ‘credit money’ is an IOU that’s either printed onto physical objects or written down in ledgers, but credit money principles can actually be hidden in the background of many supposed cases of ‘commodity money’.

Indeed, while most people use a commodity orientation to think about credit money systems like fiat, you can also do the opposite and apply a credit orientation to think about a commodity system like gold. Once you do that, the history of money comes alive. This is because commodity thinking leads you to imagine a world of inert objects moved by independent people, whereas credit thinking requires you to imagine the world as an elaborate mesh of people keeping accounts of webs of promises, relations and obligations, sometimes using fetishised commodity forms like the Rai stones on the island of Yap.

This is where our synthesis really starts to take off. Older pre-crypto alternative currency movements carry with them a much deeper understanding of money, and also carry the seeds of powerful new currency designs, but they’re often too polite. They don’t design systems that encourage speculation, and as a result have had their voices drowned out by the noise of crypto maximalists who pump out pseudo-commodity tokens like machine gun bullets. The crypto clamour, though, has drawn in many very talented and idealistic people, and there’s a big opportunity to redirect their latent creative energy and technical prowess towards new hybrids. What if the best of crypto could be fused with the best of credit thinking? What if crypto could shed its rigid monetary theory, and what if mutual credit systems could shed their small-scale backwater feeling?

At the intersection of thesis and antithesis lies something very important, but by default this synthesis remains fuzzy because it needs to be worked out. Here’s a general direction of travel though. Imagine a ‘credit commons’ (a term coined by mutual credit pioneer Thomas Greco, and developed further by protocol designer Matthew Slater), a world in which horizontal networks of people-powered credit money link together to present a dynamic counterbalance to hierarchical credit money. In contrast to standard crypto, which is historically restricted to rigid transfers of rigid tokens with metallic imagery, these ‘paying by promise’ systems require us to move seamlessly between the positions of money issuer, money redeemer and money transferrer. They strive to be far more organic and embedded in actual communities, morphing in resonance with the underlying people who use them. New forms like rippling credit (or mesh credit) allow IOUs to ripple like dominoes through networks of people, perhaps even hopping great distances through six degrees of separation.

A growing community of innovators is starting to gather together under a vision of forming not only a credit commons, but to build what Informal Systems CEO Ethan Buchman likes to call ‘CoFi’ - collaborative finance. If you’d like a peek into some examples of the new groups that embody this ethos, check out ReSource, Trustlines, Sikoba, Circles, Mutual Credit Services and Grassroots Economics. I plan to go into depth on these and other projects in future episodes of my Unboxing Alternative Currency series for paid subscribers, but if you want to meet people working on this stuff, I also recommend a visit to the Commons Hub. Their events are a lot of fun.

Let’s close with two final considerations.

Unfreezing Decentralization

The original style of decentralization in crypto is purposefully designed to ‘freeze’ the systems in place. Rather than having human governance processes, they rely upon various technologies and methodologies (like game theory and crypto-economics) to dis-incentivise bad actors from coordinating. They aim for large-scale digital systems that default to a pre-programmed set of rules that theoretically protect the average user, but often do so at the expense of any kind of dynamism or political voice for that user. Sometimes they try to freeze into place elaborate automated methods to artificially replicate dynamism and voice, and that’s an authentically interesting technical challenge for engineers, but it gets a whole lot more interesting when that mentality gets combined with - or offset by - an in-depth appreciation and focus on real human communities at a local scale (who really don’t operate like algorithms). One of the biggest cultural tasks is to bring the wealth of community-focused knowledge possessed by mutual credit practitioners into the crypto sector, whilst finding a positive outlet for the technical prowess of the techies: if done right, we might end up with more dynamic forms of liquid decentralization, with local systems riding on global architectures, using combinations of different governance systems for different scales of decisions.

Learning to love zero, and below

Commodity thinking imagines money as positive units of some ‘substance of value’, but credit thinking recognises that the substance of value in an economy is other people, and that holding a claim on those people is only a reality if they have something to give. Your positive unit is an asset to you, but to other people it represents a claim upon them. Your 1 is their -1, and, on average, a healthy state of interdependence seeks to always fluctuate around 0.

This is a highly stylised account, but one of the most profound things that emerges from this is the realisation that if your system only consists of a bunch of ‘asset only’ tokens with positive numbers - e.g. 21 million units of Bitcoin - there isn’t actually 21 million units of money in the system. Rather, what you’ve attempted to do is to rename 0 - the state of interdependent equilibrium - with a positive number.

Here’s a simpler example: If you have a 1000 interdependent people and you give them all 1000 units to start with, it’s pretty much the same as giving them nothing. Money is only created when one of them enters into a state of obligation to another: when 0 is transformed into -1 and 1. If you’ve simply renamed the starting point as ‘1000’, then it’s only when one person goes to 999 and another goes to 1001 that 1 unit of money has been created.

That takes a while for most people to get their heads around, but the point is this: the original crypto systems suffer from the fact that they were built to push out tokens with positive numbers, without any liability side. That may superficially make them look like money (after all, most of us normally only see the positive number side of money), but if you take a systemic viewpoint and imagine a scenario where traditional crypto-tokens actually became a money system (rather than countertradable collectibles), our economy would have to organically rebase the asset-only tokens to give them a liability side. This is an example of using a credit orientation to think about a supposed commodity money.

The big challenge for building authentically interesting alternative money is this. Because most of us are so used to associating money with positive numbers, we remain on the ‘receiving end’ of money. It’s only when we learn to love zero, and below, that we take that step towards claiming the issuing end.

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When I do unboxings of crypto-token systems, however, I face a unique challenge, because the founders often believe that the external packaging and marketing of their systems (the ‘box’, as it were) is crucial for turning the token system inside the box into a reality.

Indeed, if you ignore the external packaging of many crypto projects, you are often left with something that feels very empty. Imagine encountering Bitcoin tokens without first reading the name ‘Bitcoin’, or without seeing the imagery of coins or the logo, or without hearing the clamour of a community claiming that they were X, Y or Z. What would you encounter? Well, you’d just see a system for reassigning a limited amount of numbers between addresses (see I, Token for more on this).

This is not unique to Bitcoin. A significant number of crypto-token systems can be described as ‘a system for reassigning limited supply numbers between addresses’. Over the years crypto systems have got more complex, especially with the addition of smart contracts (programmes that can be hosted and triggered on the system), but often you find yourself holding blank tokens (a category I discuss in my Six Tokens piece), which in the digital realm are really just numerical nouns (see I, Token). Essentially you hold limited-edition numbers and call them ‘tokens’, but it’s hard to feel anything for them unless they are wrapped in a narrative and branded with colours, logos and ideas.

If I find a hunting knife, the mere act of playing with it will show me what it can do. It doesn’t need an external narrative, and it’s not going to stop doing what it does if a community doesn’t believe in its sharpness. Crypto-token projects, by contrast, often proceed under the assumption that their tokens need to be powered by some communal narrative, which is why they often compete as much on story as they do on technology. Some projects present aggressive or warlike visions, with token-holders encouraged to gouge each other to fight for a very limited supply of tokens, while others come packaged with a peaceful vision of striving for a better world. Regardless of the version, they all hope that the story will be picked up by a community who will project it into the tokens.

This tendency to believe that the ‘box’ around the tokens will contribute to their reality cannot be separated from the fact that many crypto projects have a commodity orientation to money, in which money is equated to a ‘substance of value’. They often imagine that a unit of digital money is a Positive Object (see The Five Dualisms of Money) that can be turned into a fictitious substance of value (see Money Through the Eyes of Mowgli) through a process of communal enchantment.

These attempts to wrap a story around blank crypto-tokens now occur all along the political spectrum. Faircoin, for example, was originally just a blank token wrapped in radical anti-capitalist branding, and I’ve visited left-wing communes where people try to use it in the belief that they can will it into a state of moneyness.

But beyond the question of whether it is even possible to use these blank tokens as the basis for a monetary system, there lies a dark side. Often they are sold to people for actual money (dollars, euros, pounds etc.) by the founders or managers of the project, who normally justify this by saying they will use the money to build out an infrastructure that will subsequently assist in turning the blank tokens into the money they are supposed to be. I really encourage you to read my last piece (The one concept crypto promoters are afraid to understand) to dive deeper into this.

But while the founders of many crypto projects all sell branded tokens to the public, the story they tell affects the amount of scrutiny they receive. In the case of aggressively libertarian crypto projects, everyone distrusts everyone, and this can create a type of discipline for the founders, who are constantly on the verge of being called scammers. In the case of utopian-tinged crypto projects, however, supporters are rallied under a banner of cooperation and community, and the hope they hold in their hearts for a better world can make them less critical towards the founders, allowing the latter far more leeway. Even if the token-holders are confused as to how the project will unfold, and what the tokens are, they hold on to good faith.

This is what I see when I watch the people taking part in SEEDS meetings.

I began to notice SEEDS over the last year because many of my hippy friends started mentioning it to me. I visited the SEEDS website and very quickly saw that they were selling a token (called SEEDS) to spiritually-inclined people who feel a sense of despair towards standard corporate capitalism, and who wish for a more ‘conscious’ society. SEEDS was marketing itself as a regenerative cryptocurrency that would help to stop environmental exploitation while supporting a ‘regenerative renaissance’. Glancing through the website I was told that the token was money and that the platform would also fund regenerative projects. I could immediately sense category errors, and I decided to unbox it. As I write this, SEEDS is still going strong, but is going through changes, so this Unboxing may have to be updated in due course. I’m going to start by looking at the ideological backdrop of the project, before going through the technicalities. Finally, I will discuss its problems, many of which apply to other crypto-token projects too.

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I begin this Unboxing with a few disclaimers. I took on the task of uncovering an obscure French monetary experiment called Duniter, and it ended up being exhausting! I found the project very challenging, and sank a large amount of energy into doing it. The piece that follows should be considered my first attempt at describing Duniter, and it may be too…

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In the last piece (Learning to see Money in 3D) I summarised the two dominant orientations in monetary thinking, but I also noted that these are two poles from which hybrid imaginations can spring. I decided to slot this Monopoly Money Unboxing into our Unboxing Schedule, because it’s a great example of a hybrid currency form that straddles a range of i…

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In the last Subscriber comment thread I asked for suggestions for projects you’d like to see ‘unboxed’ (please leave further suggestions if you haven’t yet!). Marvin suggested GoodDollar, which claims to be a ‘global UBI on the blockchain’, so I decided to start with that project because I’ve seen it pop up quite a lot recently. To be upfront, I’ve harb…

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Normally my Dispatches from the Frontiers of Modern Money (DFMM) pieces are for paying subscribers, but I wish to gift this episode to everyone, in tribute to David Graeber, who was featured in my last piece (The Anthropologist in an Economist World).

I mentioned that I’d like my conversations with David to metaphorically continue by continuing to politicise the past, present and future of money. That’s why I’m going to take on the topic of the resurgence of ‘shell money’ in Papua New Guinea (long a favourite location for anthropologists) in the context of Covid-19. It’s a story I first became aware of on the 21st August, when the Guardian ran a piece called “The return of shell money: PNG revives old ways after Covid's blow to economy”.

In the piece below I cover a load of topics, including commodity vs. credit money, ceremonial money systems ('cere-money'), fetishism and commodity fetishism, colonialism and the emergence of syncretic money systems, and countertrade, all of which lead to the present day story. Hope you enjoy!

In DFMM No.1 (Wooden Promises for Digital Money), I analysed recent stories about the Tenino ‘wooden dollar’ and noted how the media (and the public more generally) often fixates upon money tokens rather than the system that activates them. Two takeaway points were:

1. A money token is nothing without a money system that activates it

2. Our attention - and the visual imagery of money - neverthless is often focused on staring at the token as if it were some kind of autonomous force in itself

Thus, when I saw this story on ‘shell money’ I wanted to dive in. Surely, I predicted, the media would fixate upon the shells, and ignore the system that ‘activates’ their power in a particular context. For the average reader it’s a novelty story that probably generates a feeling of incredulity that you can just wonder around a beach and ‘find money’ by picking up shells.

To grapple with shell money, however, requires dropping all assumptions. The shells aren’t the money, and the ‘money’ doesn’t do what you think it does.

Ceremonial ‘commodity money’ (or ‘cere-money’)

‘Shell money’ tokens - also called Tabu by the Tolai people who use them - are not actually shells. They are shells carefully and arduously manufactured into long strings of shells, a process governed by very strict production rules to produce set denominations (see this video for footage of the production).

At first glance, this places ‘shell money’ into the broad paradigm of ‘commodity money’ - money that is apparently given its power by the physical body of its token. People who are enthusiastic about commodity money often wish to believe that the body of the token is what matters most (or that it should matter the most) - and that it is ‘self-apparent’ when the body is valuable (so-called goldbugs are an example of this mentality).

Even beyond such enthusiasts, many people have a loose commodity orientation when thinking about money, simply because physical tokens are the most visible element of any money system.

For example, the Tenino ‘wooden money’ I discussed in DFMM No.1 is a form of ‘scrip’, or a voucher system, which is a legally-backed form of limited-purpose credit money. In credit money systems, the token material (and token production process) takes a conceptual back seat to the legal structure within which the token circulates, and the Tenino voucher could hypothetically also be printed on paper, card, rubber, leather, ceramic tile or pretty much anything. Nevertheless, photo-journalists and TV reporters are constantly distracted by the wooden ‘commodity’ body, sometimes even presenting it as a kind of commodity money.

There are three basic hallmarks for loosely distinguishing the commodity money imagination from the credit money imagination:

1. Commodity money is imagined to be ‘money from something’ (it is produced through labour), while credit money is ‘money from nothing’ (it is redeemable accounting records of promises, which can be printed on anything)

2. Commodity money only increases (once it is made it is out there for good, until it disintegrates or gets lost), while credit money expands and contracts (it gets issued and redeemed)

3. Commodity money is ‘one-sided’ (it is imagined to be a self-contained object in the world), while credit money is ‘two-sided’ (we might hold it, but it only has power insofar as there is an issuer on the other side)

So what is ‘shell money’? Well, it is a token conjured into being from natural materials. In the case of Tolai Tabu, the ‘body’ of the token is actually a kind of ornament (the token is only a token when the shells are manufactured into strings of shells), and - unlike a voucher, which is retired when it is returned to its issuer - they remain in circulation ‘for all time’ (perpetually). They are somewhat like artistic creations that are slowly produced, and then left to circulate amongst collectors.

By all appearances, then, Tabu are a ‘commodity money’, but here’s where the language politics kick in.

In the imagination of someone who has been immersed in a large-scale capitalist economy, ‘money’ has a particular connotation. It is imagined to be general-purpose: money tokens give you access to all the other things, and are primarily transferred in private settings to obtain a huge range of goods and services. Furthermore, there are historically various taboos on what it can be spent on. For example, if you insulted your mother-in-law, handing her $20 in compensation is not going to heal that social wound. It will probably make it a lot worse.

Tabu ‘shell money’ (and many similar things like Wampum) on the other hand, is - historically at least - limited purpose, and historically was used publically at elaborate events and rituals to ‘pay’ for existential things that normal money simply cannot buy. This includes ‘paying’ for ‘bride-price’ at weddings, compensating for injury and insult, commissioning cult members to raise spirits, paying tribute to invisible forces, and hosting elaborate memorial ceremonies to display power and status.

Not only is the production of Tabu ritualistic, but the ‘exchange’ is too. There are set ‘prices’ (not set by supply and demand) for specific things - for example, a bride ‘costs’ 4 Mars, which are bound wheels of many strings of shells - and the exchanges are more like performances with almost comical affectations of exchange, with people feigning outrage and making jokes, as if to reject the offer (see 2:14 below).

Fetishistic tokens activated by cultural forcefields

In the traditional ‘commodity money’ imagination found within capitalist societies, it is imagined that the token value is ‘self-apparent’ due to the material the token is made from (or - failing that - from some almost mystical property generated by its ‘scarcity’). But, the power of these shell strings is not self-apparent to any random stranger. Indeed, colonial officials used to see these as ‘primitive’ money, as if the tribal people were like silly children imagining that shells were valuable.

But this inability to recognise the power of the shell pendants is because they only have power within a particular cultural field. An Australian officer saw a string of shells as a mere tricket, but within the Tolai cultural field these objects have deep political power, and are even seen as a political agents, or ‘power tokens’.

When I use the term ‘cultural field’, I mean it literally, like a forcefield. We are all social creatures, and all of us frequently experience that feeling in social settings where you sense that you are part of a collective that extends beyond yourself. Indeed, your individual perceptions and judgements seem connected to some looming ‘entity’.

Imagine a simple line from a novel, like ‘a heavy silence descended on the room as he ate before the others. Looking up, he sensed he’d done something wrong’.

That ‘sense’ is generated by the social forcefield. (As an aside, in occult circles this is referred to this as an ‘egregore’, a looming feeling generated by the interconnections between individuals in a group that can be personified into a being.) These ‘fields’ exist around us all the time - because, as discussed in my tribute to David Graeber, we are never just individuals. We are normally enmeshed in many of these fields - some large, and some small. They can even be generated between just two people (many couples have private languages and symbols they only use around each other).

Crucially, these fields have the power to ‘activate’ objects into ‘more than just objects’. Imagine, for example, a couple picked up a piece of driftwood on a beach where they fell in love. Now they keep it as a sentimental token imbued with deep meaning. Imagine then that a friend, house-sitting their house while they are away, decides to burn it to make a barbeque. Upon returning they are outraged. The friends says ‘come on, it was just some wood, I’ll get you more from the forest’.

This obviously doesn’t cut it. It wasn’t ‘just a piece of wood’. Within their private social field, it was a material embodiment of their relationship. The friend, who is not part of that field, can’t see that. To him, it is just wood.

Now imagine the social field generated by a much larger collective of people. It’s in this setting that the anthropological concept of ‘fetish objects’ emerges. Webs of human relationships are often tense and amorphous - we barely even understand ourselves, never mind the complex and subtle power dynamics with others, so it’s very common for people to take these vague semi-visible dynamics and focus them into objects that are concrete and easy to see. This then enables you to manipulate the objects as a way to concretely and visibly negotiate the invisible relationships.

We have fetish objects all around us, and some of them span public and private settings. Consider, for example, a wedding ring. In reality it’s just a piece of metal, but within certain cultural fields it is publically recognised that it’s not just a piece of metal. It is - supposedly - a physical embodiment of a relationship between two people - complex and changing - manifested in an object, simple and unchanging. This public understanding permeates into a private one. Upon a divorce, the bearer might go to the ocean and ritualistically hurl the object into the sea, metaphorically giving up the relationship.

With this in mind, we can begin to look deeper at Tabu. It is very risky to see them as being ‘basically the same’ as normal money tokens (or, even worse, ‘a crude version of our money’). Rather, they are fetishistic power tokens used for fundamental rituals, and are activated by a cultural field within which they are used to negotiate considerable tensions. A cultural field is not a legal system - and many of our modern money tokens are activated by legal systems - but these fields are powerful enough to make it unthinkable to treat these shell pendants as ‘mere commercial money’.

I will go into the ambiguities of the use of Tabu - because they have seeped into commercial settings - but the biggest amounts of tabu are used for all sorts of things that ‘money cannot buy’. For example, in this video they are used for the reconciliation of Japan and East New Britain (the region of PNG that was occupied by the Japanese). At point 5:20 in the video, the announcer says 'Japan, we forgive you' as Japanese delegates hand shell strings out in a gesture of ‘repaying’ some kind of existential debt that doesn’t really have a price. The complex history of Japanese invaders is being ‘resolved’ as if it were a quantifiable exchange of some sort, when everyone knows that it is not.

Similarly, at Tolai marriages, the groom’s family is not literally 'buying’ a bride on a market’. Rather, they are ritualistically acknowledging the loss of labour the wedding brings to her family by offering a performative ‘exchange’. An alternative would have been for the family to, for example, collectively perform 10,000 pushups while the community watched.

Indeed, part of the fetishisation process is dependent upon the ritualistic and non-utilitarian labour involved in producing the cere-money tokens. Rather than spending a day weaving nets for fishing, a person exerts intense concentration stringing shells together. These shell strings will come to be seen as being brought to life, and thereby ‘containing’, some kind of ritualistic exertion, and this act is required before the shell tokens can be ‘activated’. Put simply, if a company mass produced shells and automated the process of stringing them, the cultural field would not recognise those as valid.

Now, some readers may be thinking ‘Isn’t this a little bit like Bitcoin?’ After all, in Bitcoin, digital objects - tokens - are ‘produced’ through a process that requires large amounts of ‘pointless’ energy to be expended. Bitcoin, however, is explicitly intended to create a type of capitalist commodity money for ordinary market exchange, and the 'labour' is completely impersonal, abstract and automated. By contrast, Tabu requires highly personal, non-automated labour to create a limited-purpose power token for negotiating human relatioships. It’s not like any old person can just string shells together and then buy Coca Cola.

As discussed in the last episode, a voucher is often limited purpose and can be used to reign in the geographical scope of normal money, or the products available for it. The limits of a voucher, however, are defined by its issuer, who guarantees to give you those things if you present the voucher to them. Tabu ‘cere-money’ is also limited purpose, but these limits are defined by the cultural field. Individual families make the tokens, but it is the community that activates them, and which will ensure their acceptability for very specific spiritual and political services.

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The grey zones of cere-money

Cultural fields, though, are not without internal tensions or contradictions. One of the most detailed accounts of Tabu I’ve read comes from the anthropologist Richard Frank Salisbury, who worked in PNG in the 50s and 60s. Salisbury explicitly explores the ambiguous nature of the tokens, and how there is a zone of ‘convertibility’ from sacred power token to non-sacred commercial object for everyday commerce.

At the time he was observing, a small percentage of the Tabu was in fact being used as an everyday ‘commodity currency’, with standard prices for goods-to-Tabu. The largest amounts, however, were being used for ‘buying’ or commissioning dances, songs, spirit-raisings, and memorial ceremonies. The latter in particular are characterised by extensive competitive gifting, with political upstarts throwing Tabu around as a kind of ‘dick-swinging’ exercise.

Salisbury is more ‘economisty’ than some anthropologists: he suggests there are ‘rate-of-return’ type calculations going on in these ceremonies, in which powerful ‘big men’ spend a lot and get a lot, acting like conduits via which people pool resources. Furthermore, he describes 'companies' formed by pooling shell-tokens, along with a coordinator that manages them, and who can end up capturing the surplus.

He is, however, a lot less ‘economisty’ than most economists, painting a picture of a strange and complex mix of 'economic' and 'non-economic' logics, with Tabu-as-Political-Power-Token seaguing into Tabu-as-Economic-Commerce-Token. The blending of logics creates grey zones: for example, only a small fraction circulates for day-to-day commerce, with most of it being held in large bundles that - by convention - can only be broken open at non-commercial events. Furthemore, when people die, their unbroken tabu wheels are broken open and distributed equally to every clan member who comes to the funeral, forming a natural redistribution mechanism.

As much as I love Anthropology, however, it also has a dark history of being associated with colonial power. A modern anthropologist would explicitly try to parse out the degree to which cultural fields are warped by colonial forces, whereas older anthropologists had a tendency to speak of cultures as unchanging. Thus, the account by Salisbury above doesn’t analyse whether the increased commercial logics in Tabu had been induced by the presence of colonial capitalist systems, or whether they were ‘always there’.

Colonialism, syncretic money and token possession

Cultural fields are not static, and this is especially the case when they comes into contact with powerful external networks. Think of cultural fields as being somewhat like magnetic fields. If there is just one, you get drawn to its centre, but if a more powerful external one turns up, it can dilute and co-opt the weaker one, especially if it’s an imperial military force.

This happened extensively during colonial times, where powerful nation states walked into much smaller and more fragmented societies, and set about dismantling or dissolving their internal coherence, in order to absorb them - in a subordinated position - into a larger network. Think about it as two cultural fields - or networks - colliding. The more powerful one can warp, or even break, the internal structure of the weaker one.

At the very least, what often ends up happening is the creation of interstitial zones of overlap - or syncretism. Syncretic religions are extremely common in the aftermath of colonialism, creating situations in which - for example - animist beliefs get practiced alongside Christianity. This is explicitly the case with Papua New Guinea, where local Christian pastors participate in ceremonies where Tabu is used to invoke cult spirits that are definitely not found in the Bible.

PNG has a long history of colonialism, starting in 1828 when the Dutch claimed it, followed by the Germans, English and Australians, until it finally got independence in 1975. This man lays it out pretty succinctly.

The arrival of anthropologists coincides with the colonial period, and this is where all our original accounts of shell money come from. But this means the anthropological literature - which has had an ongoing debate about the use of shell tokens for ‘high’ ritualistic purposes and ‘low’ everyday commerce - cannot be separated from the political context which was creating extensive changes in PNG life.

For example, at the time Salisbury was writing, colonialism had been in full swing for over a century, and the local PNG economy had changed to a ‘syncretic’ blend of traditional subsistence farming and cash cropping. There was extensive syncretic religion, and, a syncretic dual token system, with the traditional cere-money shell tokens existing alongside a much newer national money (which at that time was the Australian dollar) - used to access foreign manufactured goods. Also, there was now an official fixed ‘exchange rate’ between the Tabu and Australian currency.

The economics discipline has left us with a legacy of depolitising money, describing it through the flat and vague ‘functions of money’ paradigm, in which money is also assumed to simply spontaneously emerge out of ‘natural’ human exchange and barter. The reality of capitalist money - as colonised people have experienced - is that it is anything but spontaneous. It arrives with imperialistic nation states and gets forced into your society.

Indeed, the introduction of capitalist money is a core feature of all colonisation processes. In my country of South Africa, demanding taxation in state money was one way to ‘proletarianize’ the population, forcing them into markets to find the token required to meet the taxation obligation (this observation lies at the core of even progressive monetary movements like MMT today).

General purpose money in the capitalist sense thrives when people have been thrown off their land and are forced into wage labour, but in many pre-capitalist communities people historically had basic subsistence. They were not - initially at least - precarious wage labourers trying to use their meagre general-purpose credits from the coal mine to buy tea from merchants importing from distant lands.

This is why colonisation processes either have to pull at the cultural field from the outside, or - alternatively - seek to corrupt it from within. The first thing any good colonist does is look through their own tinted cultural lens for things that vaguely approximates behaviours they are used to. In this context, ritualistic fetish-like exchange which involves passing cere-money tokens around gets seens as ‘primitive monetary exchange’. If you are an official from a colonial nation, this offers you a route to co-opt the cere-money token like a trojan horse. It’s already embedded in the cultural field, so you start treating it as capitalist money - for taxation, for example - as a way to pull on the threads of the society from the inside. This, for example, is exactly what happened with Wampum beads in North America.

This is done in conjunction with the creation of official ‘bonding’ points between the two discrete token networks. Think of this as where two membranes meet. The official ‘exchange rate’ between Tabu and the colonial currency is an attempt to create a bridge between the two networks, and this opens a portal from the outside world of the colonial power into the inner one of the colonised. From here, the internal logics of the token get all disorientated, and a limited purpose form of cere-money can be parasited upon - or ‘possessed’ by - a militaristic all-purpose money. This is used as a mechanism via which those systems creep into previously clan-based societies to dissolve and rearrange economic relationships.

For example, Salisbury arrived at a time when ‘cash cropping’ was present. This is not organic. ‘Cash cropping’ is a euphamism that accompanies colonialism, referring to small-scale farmers who will sell for a pittance to colonial traders who will resell the goods for major profits on international markets. It is how you turn an autonomous island nation into a subservient commodity-producing vassal of a much broader international system. And this is what the normal money system in PNG was originally for. The Bank of Papua New Guinea was originally part of the Reserve Bank of Australia, and is nowadays connected into vast international money networks.

Modern Bonding

We’re getting closer to understanding the Guardian article, but we need a few more pieces of the puzzle.

In recent decades, as transnational globalisation has kicked in, the inter-network boundary between Tabu and ordinary money - already warped and blurred - has got even more grey, as new forms of inter-network ‘bonding’ emerge. For example, Tabu are accepted for modern taxation (see here for numerous examples), and other official payments associated with the state, such as school fees and local fines.

A second form of bonding emerges from the fact that the raw material for the tokens - the shells - increasingly are bought from the Solomon Islands, which means the raw material for the tokens gets a money price.

A third form of bonding is through tourist markets. For example, the World Bank has been encouraging women to treat shell money as tourist objects to be sold for normal money. This creates an explicit external market for the tokens (somewhat similar to the collectors market for novely vouchers we discussed in the last episode). More than pulling on the internal cultural field, this literally pulls the tokens out of that field and into the vast realm of the global capitalist market, appearing as an image on Amazon to be sold in return for general purpose money, which in turn will be used to buy imported tinned goods produced from afar (and which promote diabetes and other issues, which in turn requires money to get medical help).

In this context, Tabu begins to live an explicit double life, one as a kind of subservient object sold for ‘normal’ money, and another as a proud token embedded in a community trying to hold onto some sense of unique place in the world. In other words, the token has much the same status as colonised people do. By day it does dances for tourists in the capitalist market, but on the weekends it has a place just for itself, with it’s own language and zone of power, as it were.

And this small zone of power is protected. The Tolai people try to only allow the membrane between their token network and the outside world to work one way: while there are increasingly stories of people ‘selling their Tabu for money’ to buy stuff at shops, ordinary capitalist money is not used in the ritualistic settings that Tabu is used for. The spirits will not rise when dollars are thrown at them.

Thus, despite the blending, and despite the cognitive dissonance that accompanies the blending, in their essence the two systems remain - conceptually at least - separate. The limited purpose cere-money tokens activated by a cultural field are not the same as the general purpose fiat tokens that operate within a government-bank legal field.

The present day story: Counter-trading cere-money

So, finally we arrive to the Guardian article about the ‘resurgence’ of shell money in PNG during Covid-19. With our background knowledge, the story becomes clearer. Over the years the ‘syncretic’ dual money system has evolved, with limited-purpose cere-money eking out a life in the shadow of normal general-purpose money. But, as a result of Covid-19 transport disruptions, there is now a breakdown in the distribution system of national physical fiat money tokens (cash). Central banks and banks run an elaborate system for getting cash to ATMs and retailers and back again, and when that system breaks down there can be cash shortages in particular areas.

This means, proletarianized, formerly colonised people that are partially integrated into global capitalist markets suddenly have reduced access to the general-purpose fiat money tokens that connect them into those markets. This means that locally, the cere-money token - which has been increasingly taking on a mentality of a dollar-priced commodity - is stepping in to take on a ‘ordinary money’ role even more. It is however, more complex than this.

The article notes that people initially turned to subsistence:

Personal gardens were quickly depleted quickly, prompting residents to “go walkabout” within their village boundaries in search of a friendly exchange.

The article also notes that 'barter was revived'. As soon as you see lines like this, know that you are in dubious territory. In de-politicised accounts of money, barter is always assumed to be the origin of money (hence the term ‘revived’), and, furthermore, is assumed to have operated much like capitalist exchange does. What is always missed out is that historically barter only really occurred on the boundaries between groups, in situations where trust was low. Subsistence mixed with reciprocity is a much more important mode of distribution internal to groups, where trust and interdependence is higher.

Nevertheless, barter becomes far more likely after money is introduced, because money creates the distance between people that in turn induces barter in situations where the money is suddenly removed. To put this another way, capitalist money is a disassociative, or dissolving agent, which loosens the tight communal bonds that hold pre-capitalist societies together. This is in contrast to the original experience of non-capitalist cere-money, which is a bonding agent. Thus, it is only when communal bonds are loosened, and people have become accustomed to normal monetary exchange, that ‘barter’ temporarily emerges to fill the vacuum when the normal money system breaks down.

It’s in this context that the Guardian article then talks about the revival of Tabu, but implies that it is object with a commodity-like 'value'. This places the article in broad alignment with ‘commodity money’ thinking, in which monetary exchange is basically assumed to be an elaborate form of barter.

"Vanessa Mulas, a resident of Kuradui village, says those who were able to circumvent the cancellation of public buses brought back store goods and exchanged them with neighbours for tabu."

What the article doesn’t talk about, though, is all the dynamics I went through earlier, and in particular the fact that the over the years Tabu have been ‘colonised’ by a much stronger monetary network, such that the tokens are now commoditised as an object sold for money. This means that what is actually occuring here is a form of countertrade.

Yes, countertrade. This is a major concept I will keep returning to in this series.

Countertrade is the situation in which a ‘barter-like’ transaction appears to be occuring, when in reality what is actually occuring is two superimposed fiat money transactions (incidentally, this is what Alfred Mitchell-Innes used to blow up some of Adam Smith’s bogus accounts of ‘commodity money’). In the global capitalist market, there is - nowadays - a fiat currency price for Tabu, and a fiat currency price for, say, rice. You then compare those two prices to create an exchange ratio for Tabu-to-rice. (As an aside, fiat countertrade is also how Bitcoin pricing works).

From my perspective, what is most likely going on here is fiat currency countertrade, with people using the body of an old cere-money token that has been ‘bonded’ to fiat currency to countertrade for goods.

The biggest subtlety we have to deal with, however, is to reconcile the fact that - according to people like Salisbury - there already was some internal commercial logic within the cere-money tokens in the pre-globalisation world, which in time must have been warped by the post-globalisation world. The soul of the token is in flux, like a tidal estuary that has one coherent but diverse upriver life that then mixes with a chaotic ocean that comes in and out. Sometimes it is itself. Sometimes it is inhabited by an external system.

Despite this ambiguity, the Tabu cere-money/money/countertrade-object is undoubtedly local, and its use - like the Tenino Wooden Dollar - does signal a more general return to localism. This is a resurging theme in the age of Covid. In the case of PNG, the country is historically very fragmented, with colonial powers, and then development agencies like the World Bank trying to integrate and homogenise the people into bigger global economic networks. Big currency systems induce that, but now that integration is proving risky, creating a new impetus to create smaller networks that split off from bigger ones in order to localise. Insofar as they occur, returns to localisation, reciprocity, communal work and subsistence are a reversal of the dissolution, expansion and specialisation impulse that accompany mainstream money and the mass goods that accompany it.

End the ideological abuse of cere-money

One final theme I will bring up is the symbolic abuse of cere-money by entrepreneurs and economists who wish to assert that it operates by the same principles as any money. Many dubious 'history of money' accounts start by talking about various cere-money forms and then placing them in a ‘chain of progress’ leading up to modern money, as if they were basically the same thing.

For example, I’ve seen the Bank of England speak about state central bank money alongside images of cowrie shells in their ‘What is money’ page. I’ve also seen Bitcoin entrepreneurs try to argue that the Bitcoin system is akin to the Rai stones of the Island of Yap. I wish they would back off, because you cannot understand things like cowrie shell money and Rai stones until you reverse - temporarily at least - the Pandora’s box of capitalist money thinking that has been opened in our minds.

This returns us finally to David Graeber. Our conventional accounts of money often disguise deep politics. The desire to present shell tokens as being ‘basically the same’ as modern money, and operating on the same principles, is nothing else but a subliminal attempt to deny the vast power of a historically unique system of nation states, private banks, and vast depersonalised markets within which exploitation can be hidden very effectively, and explained away with pseudo-scientific models.

In closing, while the Tabu might nowadays have a day job being used to buy tinned sardines, they moonlight as a portal into a pre-capitalist spirit world we will never see.

A few weeks ago I got sent a news story about the 'Tenino Wooden Dollar'. News outlets were picking it up as a heartwarming novelty story about a small town issuing its own currency - printed on thin pieces of wood - in response to hardship caused by the Covid crisis. They sent reporters to investigate it, but their reports often missed out all the most…

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