“To Understand The Monetary System, People Need To Grasp The Idea Of Interconnectedness.”

Brett Scott is an author and the creator of ‘Altered States of Monetary Consciousness', exploring emergent forms of finance, alternative currencies and economic activism.

Economics
Brett Scott is an author, journalist and financial hacker exploring the intersections between money systems, finance and digital technology. 

Brett is the author of The Heretic’s Guide to Global Finance: Hacking the Future of Money. He recently launched Altered States of Monetary Consciousness, a YouTube channel covering the global monetary system, alternative currency projects, economic activism, tech politics and cryptocurrency.

This interview took place in a period of rapid sense-making as the COVID-19 crisis unfolded and it became clear that our communities and governments were under huge pressure to adapt. In this context, Tarn Rodgers Johns spoke with Brett about the implications of the virus on our global financial system, the fusion of big-tech with digital payment methods and why we should all be concerned about a ‘cashless society’.
The more long-term the economic argument becomes, the harder it is to imagine.
Tarn: Obviously a lot of people are very panicked right now when it comes to the economy and we’re seeing several countries slipping into a recession. Is this the right time to be talking about systemic change when it comes to finance systems?

Brett: On one hand it’s an opportunity to reassess everything, on the other it entails a massive breakdown which makes everything more unstable and uncertain. Right now many people just want to get the system to get back on track to where it was, especially those who are precarious. At some point there will be an interesting moment where enough normality has returned that people can say OK that economic seizure was very scary, we don’t want that to happen - why did that happen? That’s when we can start to ask questions about resiliency and systemic change, like why do we rely on huge global supply chains? 

Tarn: So now that we have ‘paused’ for a while are we seeing the opportunity for things like UBI to become mainstream ideas? Even The Financial Times has been publishing articles about it - although mostly in the short term.

Brett: One of the things coming out of this is that the mainstream seems to be dropping the free market narrative, as people are becoming very aware of how precarious the system actually is and realising how the state actually underpins markets.

“Monetary systems are basically like giant meshes, so if you want people to reorientate how they think about money, they have to stop thinking about it as an object and start thinking about it as a network system."

When it comes to short term vs long term, this is something that climate activists consistently come up against. For example we know that in the long-term using coal is not sustainable, but in the short-term people’s jobs and livelihoods rely on it. The short-term is what’s real for most people, which is why we’re seeing newspapers like the FT talking about UBI as a short-term measure during coronavirus. The more long-term the economic argument becomes, the harder it is to imagine.

One of the things I’m writing about in my book is that rearranging an economic system is extremely difficult because you need to be able to pause. If you do manage to do that - as we’ve seen - the system starts to fall apart and everyone panics. If you manage to push pause without everything falling apart, you still need to be able to understand the system that’s paused. What is this giant structure, how does it work? Once you’ve understood that, you then need to come to a consensus about what to change about this giant, interconnected structure. If you can come to that consensus, can you then coordinate to change it? That’s the challenge of an economic change programme. 

Right now some of the problems are quite clear. Most people can quite tangibly understand something like “we’re in a lockdown so maybe we need more local food networks”, or “maybe we need aid from the Government for people that can’t go to work”. Right now what we’re seeing is the state stepping in to restart the system - rather than rethink it - so what happens when the system cranks up, do we just go back to normal and start participating in the rat race again? 
During COVID we’ve seen many more places stop accepting cash and the implications of this go way beyond hygiene.
Tarn: The thing is for a long time the status-quo has carried with it some kind of moral high ground. It’s seen as good to work hard, earn a living, pay your taxes, pay your rent or mortgage. Collectively speaking these things are indicators of moral worthiness, so people might not ask more fundamental questions like “why am I working my whole life to pay into a system which actually doesn't have the structures in place to support me if I get sick, or become unemployed?" So what should we be focusing on now?

Brett: I do think practically right now it’s best to focus on local, community actions, like the mutual aid networks. In terms of how this crisis could change the way people think about the economic system, the first one - as I said - is a diminishing of the free market narrative. One thing people have recognised during this crisis is the fragility of supply chains, it’s the first time in many, many years that people have started to consider where their food comes from. So this could lead to a reassessment of globalisation, or at least the global nature of supply chains, which opens up the opportunity for localist economy movements, local food supply networks. 

One thing I am concerned about is how big tech is getting a thumbs up from this. Digital giants like Amazon and Facebook are providing the digital infrastructure of the world right now. They are the ‘heroes’ because they are able to build and implement new tools very quickly. They have oligopoly power and employ all the best engineers.

I’ve got a new book coming out on the war on cash. The war on cash has been going on for decades but right now, especially, people are talking about cash being dirty and racing into the arms of the digital giants. The thing is, this is a false solution. Humans are dirty! The physical world is dirty, kissing is dirty. We are biological beings, that’s the point. 

“It’s a well-recognised phenomena that during a crisis, people will rush to ATMs to withdraw cash."

So in this ‘new normal’ the big tech companies will be able to position themselves as heroes, because they are saving everyone from actually having to interact with each other in real life. It’s an attack on physicality and this notion of human contact, for the purpose of increasing monopoly power. 

Tarn: People are becoming aware of their biological enmeshed-ness only now that it becomes potentially deadly. So this ‘attack on physicality’ you mentioned - is this what you’re writing about in your book in relation to the cash economy?

Brett: In order to understand the monetary system, people need to grasp the idea of interconnectedness. Monetary systems are basically like giant meshes, so if you want people to reorientate how they think about money, they have to stop thinking about it as an object and start thinking about it as a network system. 

In the context of COVID, interconnected networked concepts are suddenly a lot more viscerally understandable, because there is the realisation that you’re not actually an isolated individual. Rather than detachedly buying something from the supermarket, you’re thinking about networked supply chains and all the people that touched and interacted with your food before it arrived there. 


When it comes to cash, during COVID we’ve seen many more places stop accepting cash and the implications of this go way beyond hygiene. Cash has been systematically discredited for decades. The reason this is worrying is that it means we’re becoming increasingly enmeshed in a system that is vulnerable and profit-driven. It also disempowers us because rather than expressing our interdependence with each other horizontally, passing cash from hand to hand, every single transaction is mediated by a huge corporate power. 

Tarn: There’s almost something emotional about cash. It feels - safer?

Brett: It’s a well-recognised phenomena that during a crisis, people will rush to ATMs to withdraw cash - which is issued by the state and held offline - because they intuitively sense that there is something more autonomous about the cash system. When you go to an ATM you are converting private money issued by the private banking sector, into public money issued by the state. That’s what an ATM withdrawal is - you’re essentially exiting the private banking system and entering the public money system. So when ATMs and physical banks close, the exits out of the system are essentially being blocked. It’s like going into a casino and exchanging cash for chips that can only be used in their internal system. When you go back to the cashier and try to redeem your chips, they say no. Then you can’t leave. That’s what’s happening with the cashless society. It’s essentially encompassing us all into an internal banking system that we are not able to leave. 
The banking sector and the digital tech sector both specialise in information systems, so they have a natural synergy.
The big story of the last decade is the fusion of the banking sector with the digital technology sector. You can’t digitalise the oil industry, whereas the banking sector and the digital tech sector both specialise in information systems, so they have a natural synergy. This is why we’ve seen tech companies like Amazon and Uber start their own financial services, where it’s getting banks to interlock with it. They gobble up all the data and create huge AI systems, which I think we have reason to be concerned about. 

Tarn: Why should we be concerned about this fusion?

“Amazon actively lobbies against cash in the US because as soon as you allow people to mediate something themselves it breaks the automation process."

Brett: So there's some other entity - the banking system - that keeps control of money and acts on everyone’s behalf and says “ok you want to do something interdependent with that other person there? We will stand between you and allow you to express your interdependence, but it will also be dependent on us.” It's a very different power dynamic to the one that exists with cash. Amazon actively lobbies against cash in the US because as soon as you allow people to mediate something themselves it breaks the automation process. They would rather work with other automated entities than human biological agents.

Tarn: But actually there is the argument that if this system works then it is amazingly efficient and convenient sometimes.

Brett: In some ways, if you’re on the right side of it - it’s fine. If you're a friendly liberal universalist you’ll be like “it’s wonderful we have all these interlocking global systems which help everybody, and Google has pledged to be good to the world etc”. But the Steve Bannons of the world, this right wing reaction against globalisation, they use this because they say that the liberal elite is controlling the world. It’s a twisted version of the intuition that we have about these giant systems that can seemingly take things from you and stop things getting to you, and they are all hugely centralised. 

Funnily enough, a lot of my work gets co-opted - I found myself on a conspiracy video recently made by a Christian fundamentalist group about how the war on cash is being engineered to create a one world government. The intuition that there’s a problem with this huge corporate centralisation goes beyond left wing culture into a lot of the scaremongering edges of right-wing culture.

So the intuition becomes ideological, which means parts of the population de-facto write it off without seeing that ok maybe there’s something to this

There’s also the impact on the soul. The impact on your sense of being. Culturally, cash is very important to people. If you go to an Indian wedding they’ll stick cash on people’s clothes, or at a Sufi music concert people will throw coins at the performers. It’s got a different feel than remotely initiating a request to a bank to transfer money to a different account. You have to ask permission to make that transaction, and this means that the digital banking system has control of the entire financial system and acts on everyone’s behalf. It says,“ok you want to do something interdependent with that other person there? We will stand between you and allow you to express your interdependence, but it will also be dependent on us.” For a lot of people this grates against their sense of personal autonomy.

Tarn: The thought I keep coming back to is what you said about the system being very fragile. So we’re enmeshed into a huge complex system which is maybe OK - if it works - but actually as we’re seeing right now, could crash around us at any point.

Brett: I’m not saying that there aren’t legitimate reasons for large interlocked global corporate systems, but it’s about how to maintain a balance in the system to keep the power of the banking sector in check. From a resilience perspective it’s about applying permaculture principles to this man made system. You want numerous things that can counteract each other in order to prevent excessive concentration, or monocultures.

Tarn: It’s interesting you should mention permaculture because when you described this meshwork that’s what it made me think of. This system's perspective, where if you have a system that has unbalanced power centres then it’s fragile.

Last question: what about this perspective that the finance system is simply a collective belief system which we have the power to change?
Money will carry on working whether you believe in it or not because there are legal systems and network effects that underpin it.
Brett: I often hear this argument in many circles - New Economy circles, Crypto circles - this idea that monetary systems and financial systems are built on collective belief systems and they only exist because everyone believes in them. To some extent it’s true, but money will carry on working whether you believe in it or not because there are legal systems and network effects that underpin it. I could stand up and say “hey everyone this is a construct!” but it will be meaningless because the network is so strong that any individual doesn’t have the power to break it. If you don’t use it then you’ll be excluded from accessing the things you need for your survival.

Tarn: I understand what you’re saying, that it’s quite a futile argument because the construction is so big now that it’s not going to change just because I decide not to believe in it anymore like it’s my invisible friend or something. However, the point of that argument, I guess, is the shift in thinking that happens when you acknowledge that it’s a manmade system, which gives you a sense that it can be changed and it’s not inevitable like a natural ecosystem. Like the fact that there’s centralised power, that’s not inevitably like a rainforest ecosystem. We can redistribute that power.

Brett: I often react badly to the notion that money is merely a belief system and I guess it’s because I think it underplays the power of the financial system. It’s a hard structure in that sense, even if its constituent parts are citizens agreeing to abide by laws and be stuck in entanglements with each other, and global supply chains. But yes, I totally agree that it’s not a natural system like the weather - in that sense I agree with this notion of a human created system.

Tarn: That’s a good counterpoint. Thanks for speaking with me.

Brett: You too.


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Words by Tarn Rodgers Johns
Tarn is the lead editor of Emerge. Raised in the UK and based in Berlin, she is driven by curiosity and an incessant but largely unsatisfied desire to get to the bottom of everything. She is interested in psychology, human creativity and the changing world around us.

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