Against Money Relativism

While diversity and experimentation has its value, we live in a time when we can no longer afford to be distracted solely by peripheral currencies that have marginal impact on the global economy as a whole. A central emphasis must be placed on making qualitative judgments about which monetary systems are most appropriate in the context of solving our most pressing problems. The more the alternative currency community as a whole is able to coalesce and integrate new ideas and collectively focus their energy like a laser beam on the challenge of transcending national fiat currencies, the more powerful and lasting impact it will have.

Jordan MacLeod thinks the time of play is over for alternative currencies:

I define monetary relativism as the belief that all forms of currency are equally valid or appropriate; and that no monetary design can be deemed better than another. As a consequence of this belief, the notion emerges that money can be arbitrarily created at the whims of an individual or group, that anyone and everyone should have the right to create money according to their personal desires and impulses.

As we have seen above, the problem with this position is that it ignores the context of economic, social and environmental life conditions and the impact of currency design on our ability to address what we deem the most critical and relevant challenges of our times.

I would suggest that monetary relativism emerges as a consequence of reacting against national fiat currencies, which are inherently monopolistic, arbitrary and concentrated forms of power that are also widely recognized, at least in the alternative currency movement, as imperfect (if not fatally flawed) for solving the challenges we face. Yet, rather than firmly state that only specific and more conscious monetary tools can address the complexity of global life conditions, monetary relativists react against this reality by stating that everyone should be able to produce the kinds of currencies that they see fit.

This position, unfortunately, does not lead to liberation and the good life, but rather to economic anarchy and the dominance of ego in social affairs. Why? Because it abdicates the responsibility for, and denies the possibility of, making value judgements about money and the context of life conditions on our planet.”

As an example of monetary relativism, Jordan takes to task a statement by Stan Stalnaker, the founder of Hub Culture and its digitized social currency, Ven.

“Hub Culture is a brilliant social enterprise and the Ven is a solid example of how complementary currencies are performing important functions where traditional, national currencies are not. Stalnaker rightly compared the emergence of new digital currencies as part of a process where money is shifting its qualities, comparable in its nature to a shift from stone to pebbles and now to sand. What he essentially means by that is money is becoming increasingly accessible, liquid and decentralized. It’s increasingly including more people into an integrated economy in new and innovative ways. Sand can seep into the cracks that stones cannot. His conclusion, however, of where this sand-like currency was taking us almost jolted me out of my seat:

“So we think at some point there will be millions of different currencies, essentially everyone will have their own virtual, personalized currency, and we’ll trade on some sort of, you know, NASDAQ for personal currencies.”

Here, Stalnaker makes a significant error in understanding how money really works. He is literally missing the beach for the sand, the forest for the trees, the ocean for the raindrop. Why? Because he is reducing currency to the idiosyncratic whims of personal taste, and thus overlooks the critical importance of a currency’s relationship to, and appropriateness within, the context in which it operates. It also misses how a single currency creates its own interconnected ecosystem, an ecosystem with unique and distinct properties, that could only possibly function when several people come together to co-create a shared vision of reality.

Currencies are inherently social and cultural creations. Ironically, Ven is a perfect example of the redundancy and pointlessness of individualized, personalized currencies.”

5 Comments Against Money Relativism

  1. Jordan Macleod

    I guess it depends what you mean by play. As an attitude, playfulness is a gift. Our future economy will be collectively based far more on play and enjoyment than it is today.

    But if “play” comes at the expense of ignoring the critical paradigmatic problems, then it’s a problem.. Because we’ll still be at the mercy of an unconscious monetary system.

    The more the community is able to focus and collaborate like a laser beam on the CENTRAL systemic problems such as exponential growth, I believe there are profound opportunities for enormous breakthroughs, general consensus and grounded solutions. That, in my opinion, is not at all the end, but rather the beginning of play for this community. That’s where things get really interesting.

  2. Alton

    This is a valid argument by Jordan MacLeod that the open money movement should take note of. It will be nice to have a plethora of currencies to utilize but it will be important for these currencies to have the global environmental and life conditions in the picture or else we will be playing money games while ecosystems continue to fall apart.

  3. Stan Stalnaker

    Just to respond to the point about the idea of individualized currency – the point here maybe was not very clear — the point is that a Singular market powers the market trades of these “millions” of personalized currencies. I see this as an eventual single, digitized market, that will process and calculate the value of trades and individual currencies in real time, whether national, corporate group or individual. The reality is that *anything* can be a currency – from tulips to T-shirts, to in our case, Ven, or Jordan Dollars. The emergence of a global, digital trading system that prices these individualized currencies will effectively put all this on an even playing field, where the market participants determine individualized currency values on a basis of aggregate supply and demand. I personally believe the value of these currencies will be determined by size of network and value of reputation – similar metrics that drive nationalized currency pricing today. Money is just information. As information expands to digitize finance, there will be no obstacle to individualized currencies, because they will all be inter related on a broader global market.

    i also recommend having a look at this essay for Harvard Business Review on Rethinking Growth, which takes some of these ideas about sustainability into account:

  4. H Luce

    Money is useful because it represents a commonly agreed upon means for accomplishing economic exchanges and is reasonably portable and secure. Individualized “currencies” aren’t money, because for each individual you have to assess the risk of whether the real assets backing up that “currency” really exist. This is what happened during the late 1800s in the US when most paper currency was issued by private banks. The bank represented by issuing notes that it had a certain amount of gold or silver in its possession which the holder of that note could redeem on demand by presenting the note. Banks tended to hypothecate notes – print more notes than it actually had gold or silver to back up. Things went along just fine until more holders of notes redeemed their notes than the bank had assets to pay on those notes, then the bank collapsed, and the remaining notes became worthless. Interestingly, this seems to be going on now:

    On top of which, the market on which these “individualized currencies” are traded, because of the sheer impossibility of knowing credit risk for each individual absent a central credit rating authority – which can itself be subverted and manipulated, a la Standard and Poors, for political and financial ends – can be rigged, just as the FOREX market has been shown to be rigged:

    So I think that there needs to be a commonly-agreed upon standard for what money is – and what it *isn’t* and to set out criteria to achieve this, criteria which might include: being relatively immune to speculation, the originator of the money not holding sufficient amounts of the money to move a market in the monetary unit, the monetary unit holding a constant value against a set of tangible commodities in commercial use, and so on. Individualized currencies obviously won’t be able to measure up.

  5. John Rogers

    Diversity and experimentation has value because that is where innovation and the future are born. And yes, at some point, the ‘playing’ phase stops as the child grows up and matures into a social being that knows when to play and when to be serious and accept common rules and standards. Individuals have to recognise there IS such a thing as society and that requires common governance.

    Also don’t forget that billions of ordinary people rely on these faulty national fiat currencies to get through their day and eat. So not all bad. Until the alternatives are mature enough to fulfill the current function of national fiat-issued currency as primary exchange mechanism, they better stop whingeing and do it better.

    All this noise about digital currencies like Ven and Bitcoin – they are interesting experiments and something may yet come of them when they get to grips with relevance to the man and woman in the street and standards of governance. Until then, they are no better than central banks and may be worse. Much more potential IMHO lies in geographically bounded currencies serving whole regions in a strong partnership between local citizens, business, voluntary sector and local government with equal representation in decision making about the regional currency, its goals and management.

    I have tried my best to summarise this worldwide movement of local currencies in my two books:
    “Local Money – What Difference Does It Make?”
    and “People Money – the Promise of Regional Currencies”, co-authored with Margrit Kennedy and Bernard Lietaer:

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