There is such a thing as peer money

In a recent contribution to Keimform, Christian Siefkes reiterates that talking about peer money is a contradiction in terms.

I want to line up the arguments that show the inter-relatedness of open money efforts with the general thrust to a peer to peer based society.

As a reminder, peer to peer dynamics are for us the free aggregation of individuals in order to create common value that will be universally available. It is that latter aspect, that equates it very specifically with one of Alan Page Fiske’s four human inter-relationships, i.e. “communal shareholding”, which can be equated with non-reciprocal (sometimes called generalized exchange by other anthropologists) exchange.

Clearly, the use of money is not equated with this dynamic and it is a mistake to equate market aggregation with peer to peer aggregration. In a market, ‘peers’ to not contribute to common value, but exchange ‘equivalent’ value for their self-interest, and there is no common object to their exchange.

This would be a pretty obvious remark, but is that all there is to it?
The answer is no, and there are important aspects of monetary transformation that are related to the peer to peer agenda.

The most important thing to remember is that the peer to peer dynamic requires free or very easy access to means of production, and that this mostly works for the production of non-rival immaterial goods, but that the production of physical goods, even if the designs can be open and free, need cost recovery mechanisms.

A very important point is that there is no historical precedent of one type of intersubjective relationship or value creation mode, to be the only one in existence. One is usually dominant, exercises a strong influence over the others, but can never be a total monopoly.
So the choice for a pluralist economy with p2p processes at the core, is not just a wise decision and ethical choice, but also an objective necessity. Forms of reciprocal and equivalent exchange, specifically markets, are very likely to continue to exist, though in a diminished capacity.

This means we cannot evacuate the necessity to reform modes of exchange, and to divorce markets, from their embeddedness in the infinite growth machine that is capitalism.

So we have two choices here:

– Either we remain passive, wait for peer production to take its natural course, and ignore every other aspect of the social order, leaving the capitalist money system intact, as some in for example the Oekonux community are suggesting

– Or we take an active and integrative position regarding social change, which requires us to think not just about letting peer production naturally evolve, but requires nurturing ‘peer-informed’ changes in every mode of human transaction.

It is in this context that we can see how monetary transformation is not only related to the peer to peer transformation, but an essential ingredient of it. It is in this context that we can indeed speak of ‘peer money’.


The first relation is this: peer production is about the social production of value, directly through social relations. Money is traditionally seen either as the prerogative of the nation state, or is the result of private debt-creation by the banking system, as is now the case. The peer production of money would then naturally concern the ability of civil society to also create its own money systems.

The second relation is this. For peer to peer self aggregation to occur, we need distributed infrastructures. Only if the individuals have control over their own means of production, can they freely self-aggregate. That we can do peer production of knowledge, software and designs is because knowledge workers have access to computers and a socialized internetwork. If we had distributed machinery, more distributed access to capital, more self-aggregation could occur.

The third relation is this. Peer to peer is about non-rival goods that can be reproduced at marginal cost and abundantly.

The more we can engineer abundance, the more this can happen. But classic capitalist money is about engineering scarcity, as are capitalist markets generally. Monetary transformation is aimed at creating sufficient money supplies, accessible by all.

The fourth relation is that peer production recognizes real abundance and real scarcity; there is no perverse mechanism in peer production that drives for the infinite growth in production.

While it is true that capitalism is by itself such a false abundance and false scarcity creating machine, and that mere money tinkering cannot change that, the specific way current money is designed enhances these factors. Interest and usury, creating compound interest, make a steady-state economy impossible, since the extra money that needs to be paid back, can only come from others, and in a steady-state economy, it would impoverish others to the point of destruction, making growth a necessity for the current system.

Interest also promotes accumulation and gives extra power to those accumulating as it becomes interesting to hoard money and lend it out. Fractional-reserve banking creates extra layers of fictional money that wreaks havoc on any real productive economy.

Because it is scarcity-engineered, it renders impossible productive activity by those lacking it, reinforcing ever more the inequality of the system, condemning the moneyless multitudes to poverty and misery. So monetary reform and transformation, and the creation of distributed open and social money with different design rules, become a necessity, not a luxury or a side show.

Like regulation and the welfare system, a well-designed socially produced open money system protects workers and communities against the worst excesses of the system, keeping accumulation in check. A circulation charge (demurrage) would further discourage unequal accumulation and fictional finance. Designing for monetary sufficiency, i.e. allowing money to be created by productive activity itself, either through recognized activity, through mutual credit, or backed by energy creation, allows it to flow wherever it is needed.

Since even peer production needs a cost recovery mechanism for the production of material goods, well-designed open money becomes a necessity for autonomous production.

So the conclusion is that distributed money, let’s dare call it ‘peer money’ with the necessary caveats, is an essential part of the integrated and integrative strategy for social change, which requires distributed communication systems, distributed manufacturing, and distributed energy.

Peer production in the immaterial sphere, needs peer-informed allocation (partner state mechanisms), needs thriving gift economies and reciprocity systems, resource-based economic systems, but also markets for exchanging certain scarce goods, that can rely on adapted and plural money systems.

What is the alternative?

One is dreaming about an imagined utopia, like Christian Siefkes proposes. While a worthy thought experiment, which could possibly work ‘in theory’, it has no current application whatsoever, and it is hard to see a road from here to there.

There is also no precedent in history for such utopias to be realized, except in small communities.

The other is to wait for the natural evolution of peer production, and to leave all other mechanisms intact. This seems in effect what Oekonux people like Stefan Merten and Stefan Meretz propose. But worse still, not only would they leave the capitalist logic of money intact, but they actually vigorously oppose any change. They have made a pet activity out of demeaning monetary activists by using language such as ‘money trickery’ and other such terms. Out of a sense of misplaced purity, ‘all exchange is bad’, out of a confusion of markets, exchange, and capitalism, out of a refusal to see the differentiation of various field of activity (and their relatively autonomous logics, even within an overall capitalist structure) , such as money and finance? Out of a refusal to see that money like all systems, has a design, which influences certain behavior and action, while promoting other types, they become supporters of the worst abuses of the contemporary financial system.

It really boggles the mind.

The positive strategy for action is therefore to sustain the emergence and the expansion of peer production in every way we can, by looking at the real practices and applications of peer producing communities and social movements, analyzing successful patterns and inter-relating them. The positive alternative is to assist the development of distributed infrastructures in every field, and not to artificially exclude monetary transformation and the distributed social production of money.

We can’t move to a new society without also tackling the mode of exchange.

11 Comments There is such a thing as peer money

  1. AvatarMartin

    Interest also promotes accumulation and gives extra power to those accumulating as it becomes interesting to hoard money and lend it out. Fractional-reserve banking creates extra layers of fictional money that wreaks havoc on any real productive economy.

    That’s a myth, albeit an old and widespread one. In capitalism, “productive economy” and “money systems” belong closely together and cannot exist without another. That the first is “real”, earth-bound and good, the second “fictional”, virtual and dangerous, is a classical mechanism of purification and projection: The negative aspects of capitalism (i.e. crashes) are projected into the bad “money sphere” (and associated with it were traditionally the Jews, which were is this way made culpable for the bad sides of capitalism). In this way, one could maintain one’s picture of the “real productive sphere” – the producers of goods, the little firms one knew and liked, the courageous entrepreneurs one admired, the small retailer around the corner, all of whom one couldn’t conceive to be responsible for the bad sides of capitalism – as good, healthy and essentially unrelated with the sickening aspects of capitalism, like unemployment, crisis, economic hardship, senseless destruction of value, basic needs not being met …

    But it’s not like that, as Marx pointed out again and again (and demonstrated in great detail in “Capital”), both spheres cannot exist without another and recreate each other permanently. If you have capitalism (private production moderated via exchange) as dominant form of production in a society, you get modern capitalist money with its characteristic properties. This money won’t go away and won’t change its properties unless capitalism vanishes.

    A circulation charge (demurrage) would further discourage unequal accumulation and fictional finance. Designing for monetary sufficiency, i.e. allowing money to be created by productive activity itself, either through recognized activity, through mutual credit, or backed by energy creation, allows it to flow wherever it is needed.

    A circulation charge would only make money more expensive, block investments and make the capitalist economy even less effective than it is. All these checking and controlling measures were tried and it was realized by economists (in the 70ies) that, if you have a market economy, regulating it makes it less effective, produces unemployment and inflation. So even if we use the crisis today to regulate and tax again, these regulation and taxation mechanisms will be even more short-lived than those of the past. Either we have capialism, than we have to live with its consequences. Or we have something else (i.e. peer-production), than we don’t have money at all, because “money” is simply the “general equivalent”, the general measure for exchange value (see Marx, Capital, Bd.1, Ch. 1, section 3 ).

    We have to see that money is a function of exchange and all its properties stem from that. If we try to make something else out of money, it will only reconvert to what it intrinsically is.

  2. AvatarMichel Bauwens

    I think your approach is a very dangerous one, since it would imply that nothing really could be done in the interests of the majority of the people. It’s either changing everything, or failing that, changing nothing at all, since any and all regulation would only ‘block capitalism’. In reality, capitalist economies can take many forms, according to cultural sensitivies, and according to political and social struggles and their attendant reforms. Yours is an absolutist vision, which only results in passivity. On the contrary, taxation and regulation have shown results, even though sometimes they fail and they always have unforeseen consequences. Finally, attempts to tax/regulate etc.. are always embedded in political and social realities, you can never look at them in isolation.

    I also note another dangerous implication in your first paragraph, which is actually very perverse, since you seem to suggest that any attempt to improve or change society is actually antisemitic in nature (I wouldn’t have noticed it, but for the fact that some people in Oekonux use this argument again and again to discredit their opponents, a very sad and destructive practice, so I’m assuming you are coming from that stable?).

    Putting market, exchange, finance, money, finance in a black bag called capitalism and putting a sticker on it, ‘do not touch’, is a really disastrous formula for political and social action.

    On the contrary, being open to the vision that capitalism can be moderated/changed tranformed through taxation/regulation, and that money is a design issue opens many avenues for positive social action.

  3. AvatarMartin

    Okay, maybe I expressed myself a little harshly. I don’t think that taxation is generally bad or cannot make capitalism a little better (i.e. if the money is used for social projects), but I think that it doesn’t change the basic characteristics of capitalism. And money, as “general equivalent” in exchange-based societies, will not lose its central properties without capitalism vanishing. For exmaple, it will always be scarce, because that’s a consequence of exchange-based value, not of money in itself.

    I certainly didn’t say that your argument was antisemitic, I just pointed to the fact that making the dichotomic distinction “real productive sphere = good”, “fictional money sphere = bad” historically played a role in the growth of antisemitism. Certainly you don’t mean it this way, but all the same, it’s a dangerous distinction to make, and it’s also not correct, because the two belong closely together. Corporations need credit and thrive on it, money going freely around the world is not bad – INSIDE capitalism, it works better than having a lot of restrictions. And no, I’m neither from Oekonux “stable” nor “absolutist”, only someone who speaks his thoughts freely.

    On the contrary, being open to the vision that capitalism can be moderated/changed tranformed through taxation/regulation, and that money is a design issue opens many avenues for positive social action.

    Personally, I’m for going away from capitalism to peer production as dominant mode of production. That’s not to say that capitalism cannot take different forms (on the surface), but in my view, it is a system with a certain logic which cannot be basically changed. For example, if social measures are introduced, a minimum wage defined etc., the inherent laws of capitalism make it necessary that these are under constant pressure to be removed again. And they often are, i.e. since the 1980s a lot of social measures which were the result of long fights were removed very quickly and with little resistance, the argument being “they destroy jobs”. But jobs are necessarily scarce in capitalism (see again Marx, Capital I) and competition is always forcing the capitalists to lower wages. These basic tendencies make every social improvement of capitalism a fragile and often short-lived one. Wouldn’t you agree that since the 1990s, as socialism vanished as competition, capitalism converts back to what it was in the 19th century?

  4. AvatarMichel Bauwens

    Hi Martin,

    thanks for the precisions.

    We’ll have to agree to disagree. Of course, a changed capitalism remains a capitalism, but I do believe there are relative autonomous spheres, such as money and finance, and that it remains valuable to work on them as long as they are unavoidable realities. This being said, advocates of alternative currencies see it not necessarily as a measure to change the system at a macro level, but to protect local communities against dislocation, and it has historically played that role. I understand your preference for peer production, which I share, but how can you achieve a society or economy in which it is the core mode of being, while not also tackling the whole social environment, which includes modes of exchanges, gift economy logics and the like. You need to have an integrative strategy that sustains the further emergence of peer production within the existing reality, before a wished for phase transition can occur. Surely, you cannot sensible advocate a ‘wait and see’ attitude, waiting for the natural growth of peer production, oblivious of everything else that surrounds it.

    I believe that in this context, it makes sense to tackle all other infrastructures, and to distribute them if possible, since that augments the chances of self-aggregation according to different logics than the dominant one, and that the capacity to mobilize resources can be greatly enhanced by different types of exchange.

    That to me, is what this debate is about.

    Nobody trying to achieve more sensible exchange mechanisms is saying that means capitalism is necessarily ‘good’. (though some may find it acceptable, reformable, etc …). This being said, I find it entirely legitimate that some social forces want to maintain the freedom to exchange, say ‘fair traders’, or ‘social enterpreneurs’ or ‘cooperative banks’.


  5. AvatarMartin

    Just as you, I’m strongly against a ‘wait and see’-attitude and for doing everything possible to get into peer production! So our disagreements are not so wide, after all. I only think that, taking Marx’ analysis seriously, one should be prepared for money having properties which cannot be redesigned at will. I’m not against trying it, though. But if it doesn’t work out, one should look to a sphere completely beyond money …

    Cheers, keep on your important work,

  6. AvatarMichel Bauwens

    Thanks Martin. Whatever we think about it, there seems to be a strong social movement underway attempting to redesign currency. I think in the context of a developing pluralist economy, centered around peer production, that this will be a useful open experiment. I agree that the jury is still out on that score, and that it is as important to concurrently work on going beyond exchange as much as is possible. Since we can witness the growth of post-monerary sharing and production at the same time, I do not think these movements are necessarily contradictory.


  7. Pingback: P2P Foundation » Blog Archive » Peer Money as the Solution for Sudden System Stock

  8. Avatarernie yacub

    you might want to follow the community way project, particularly the submission for acknowledgment (sfa) process being used within the open money development group – this is a say-do-say agreement by which a group of autonomous agents collaborate to create something of value (barn raising) and are compensated accordingly using peer review and acceptance for payment.

  9. Pingback: P2P Foundation » Blog Archive » Peer Money

  10. AvatarTom Crowl

    @Josef Davies-Coates…

    Thanks for links… very clear and well-laid out presentations.

    The trick is finding mechanisms for moving from debt-based present system to new formulations in ways that are politically and culturally feasible. While some sort of ‘all-at-once’ shift may be theoretically possible it’s not likely short of a complete collapse first… which could, and would likely produce some unpleasant side-effects… and quite possibly an ugly Authoritarianism.

    I believe the Commons-dedicated Account* (and resultant network)… which can grow naturally because of benefits entirely separate from currency creation… and can operate along-side of current ‘debt-based’ money so long as it exists…

    Can eventually become a core structure for facilitating new modes of currency and credit.

    *A Self-supporting , Commons-owned neutral network of accounts for both political and charitable monetary contribution… which for fundamental reasons of scale must allow a viable micro-transaction (think x-box points for action in the Commons). The resultant network catalyzes additional functionality for co-ordination of other social energy** utilization. (If desired, It’s also the most neutral and ultimately politically viable method for the public finance of elections.)

    Technology & The Decision Landscape

    **social energy: individual and collective decisions operating within the limits of available resources and natural law which (quite literally) result in the product you see as a civilization. A decision here is defined as an idea + an action. Decisions can be motivated by any number of factors. Technologies result from previous decisions thus becoming available resources. And decision here is defined broadly… everything from “Let’s build a pyramid for the pharoah!” to “I’ve got a headache I think I’ll lie down.”

    All we see that is a civilization can be most fundamentally defined as a product of decisions: ideas + actions.

    Political and economic systems are ‘decision technologies’…

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