Ch 3. What's wrong with money? | The Gift Economy, Anarchism and Strategies for Change

Terry Leahy 2023

In the last two chapters, we looked at capitalism as a system. What are the ghostly features of capitalism? As I called them. How does capitalism operate like a game? The early history of capitalism and the three episodes of mature capitalism. Why capitalism really has no future.

As you may well understand from those chapters, capitalism is totally founded on money. The means of production, like land and factories are owned as capital. This means that they have a monetary value. To maintain that monetary value, capital has to work. To make more money. Every firm is in competition with other firms. To even stay in the same place, they must try to make more money. So clearly money is central to the capitalist system.

This chapter explores money in more detail. To explain why money is a problem. Our efforts to bring about system change will run into endless difficulties if we try to maintain a monetary economy.

Most people think that money is just a means of exchange, that money makes exchange easy. So, I’ve got an apple that I don’t want, and Robert has an orange that I do want. I sell the apple to Mary and use that money to buy the orange from Robert. The other thing people think is that money is necessary in a complex society. Handing things over to other people without money being used is okay in a simple pre-industrial society. But you cannot make an industrial society work without money and the market. The market is the network of monetary exchanges between people. Most people believe the mainstream view of economists. The market is an efficient way of linking people’s desires for consumer goods and the production of those goods. If people want more apples than farmers are selling on the market, the price of apples will go up. This is a price ‘signal’ to farmers to grow more apples. The result is that more people can satisfy their desire for apples, their preference. The market and money are just an information system that links preferences and production.

A common belief is that every society has had markets. It is ridiculous to think we could do without them. Also, as the market is simply an information system, it is politically neutral. Whether you are on the left or the right, you can use the market to implement your preferences and tweak the market to embody ethically sound policies.

I will challenge a number of these ideas in this and subsequent chapters. Markets are not politically neutral. Capitalism absolutely depends upon money, and if you could get rid of money you would get rid of capitalism. The combination of money and the market is disastrous, for the environment, for social justice and for the wellbeing of the people doing the work. The market is the opposite of an efficient mechanism for adjusting production to people’s preferences. Not every society has had money. Egalitarian stateless societies did not have any money at all. This is no surprise when you understand how money does in fact function. The market is not actually necessary to make a complex society work.

The Origins of Money

This is a startling set of claims, and I will take it slowly. Let us start off by looking at the origins of money with the early states of the middle east, like Ur, Sumer, and Babylon. David Graeber talks about this in his book Five Thousand Years of Debt. And I like his explanation. The early states of this region, between the Tigris and Euphrates needed to pay their soldiers. They needed some way of rewarding soldiers and giving soldiers access to goods and services, especially food. They began the cycle by minting money and paying their soldiers with money. Along with this they forced the peasant classes to pay tribute in the form of money. To pay their taxes, the peasants needed to produce something for the market. They had to sell something to get the money to pay their taxes. The soldiers had money and needed to get food. They bought the food from the peasants, providing the cash that the peasants needed to pay their taxes.

The state pays their soldiers. The peasants grow food. The soldiers buy it. The peasants pay their taxes. A cycle.

The work that the peasants were doing to provide food for the market was ‘alienated labour’, as Marx calls it. It was forced upon them. They had to grow food for the market to get cash to pay their taxes. If they failed to pay their taxes, they would be punished. A system of surplus extraction in which money played a key part. The state was freed from the necessity to source food to feed their armed forces directly.

What this little story suggests is that the state, money, and alienated labour were connected at the point of origin of money. And I would argue that thereafter, they are always connected.

Money and Alienated Work

What is money? I am going to explain what are called credit theories of money. And in this, I owe a lot to Anitra Nelson who has written much on this topic. Her recent book is Beyond Money, A Post-Capitalist Strategy. In credit theories of money, having money is as though society owes you a debt. Society guarantees that you will be able to use your money to buy something available on the market. When you have made this purchase, society will have paid off the debt that it owes you. The point of money is that you will be able to buy things. Then what is your money? It is a claim on the social product. It is a promise from society that you will be able to access a certain amount of the social product.

Having money is like having a record of a promise from society at large, that you will be able to buy something. When you buy something, society will pay back the debt that the money represents.

This has certain implications. Money and alienated labour are necessarily linked. The ability of your money to buy things depends on the fact that other people have been forced by economic necessity to sell their working hours, making things that can be sold on the market. You would not be able to buy anything unless other people had to do work and get paid for that work and put things on the market. So, the fact that your money is useful to you is because other people’s labour is forced labour. Just like in the story of the origins of money, where farmers were forced to produce food for the market, because they needed to get money to pay their taxes.

How people have been forced to work for money may vary from case to case. In the most general account, the subordinate class of any class society has been deprived of their means of production. They cannot use the society’s means of production to make the things they need to maintain their lives. In a market-based society — capitalism — they are forced to work for money, making things for sale on the market, to buy the things they need. In other kinds of class society, the monetary economy depends on various kinds of alienated labour. For example, a lord may sell something produced by his serfs for money. The serfs are doing alienated work, and the product of their work becomes a marketable item. Or guild workers in a city might produce goods for money — having to earn money to buy food. In turn the food they are buying as a commodity is sold by a lord who has appropriated it from his peasants. Two kinds of alienated labour. And so on.

But, as I am sure you may have heard, this market constraint is no problem. People are doing things that produce goods and services which people are prepared to buy! In other words, they must be doing some sort of useful work as they are forced to enter the market.

So let us look at the implications of this alienation. This market work is not necessarily the work that people would prefer to be doing. They must choose the work that will get them an income, regardless of their preferences. It could be work that is monumentally boring, useless as far as they are concerned, or controlled by a tyrannical boss. The whole point is to produce something that can be sold to make money on the market. For example, you might be growing strawberries when you might rather be working in aged care.

In the most usual case, someone else owns the means of production with which you are working. The fact that the capitalist class owns the means of production is what forces you to get a job, to earn money by putting goods for sale on the market. The owner of the means of production for your job controls your work. So, a primary factor in alienated labour is the absence of control over the process of labour. While you are at work you must do what you are told. At best you are consulted and given discretion when the boss thinks it is in their interest to have you participate.

Another aspect of this market alienation relates to distribution. The recipient is not necessarily the person you would have chosen to receive your production. As in the example of the previous paragraphs, you might be growing strawberries. You know that they will be bought by the people whose high income makes such a luxury an option. You might prefer that they go to people in the outer suburbs. But you would not be able to make that distribution decision. If your intended buyers had no money to buy strawberries, there would be no point in growing strawberries for them. So, distribution is also something that the market decides.

In what sense is this alienated labour a problem? Well, no one should be expected to live their life doing what the market demands. It is a kind of slavery to have to work to fit with the dictates of the market, a social machine working beyond your control. In fact, beyond the control of any person or group of people. It is like being a slave to an automaton, a cyber person. Even worse when you are also directly controlled by an employer while you are at work. This is just the beginning of the problems with markets and money.

The hidden foot of money

I’m going to now turn to the topic of whether money is politically neutral and talk about the ways in which money has predictable political effects. I’m going to call this the hidden foot of money. Adam Smith talks about the hidden hand of the market. Well, this is the hidden foot of money. Money is ‘naturalized’ in the sense that we don’t really think about it a lot — we treat it as though it was a natural phenomenon. There are assumptions about money that we make without even realizing that we are making them, but actually, they are central to how money works.

And the main one is that the market and money depend upon a hegemonic discourse, a way of thinking which is dominant in society. This hegemonic discourse is that when you are using money you will buy cheap and sell dear. That practice is what a market and money imply, and also depend upon. You will try to get the ‘best value’ by buying the cheapest. If you are selling you will try to get the most money you can. Durggh. Where your labour is alienated — you are being forced to work to get money — it makes absolute sense to try and get the most out of your money. Every bit of your money has cost you something. For example, you go to the supermarket and see a whole shelf of things lined up and you look at them. And you think, well, these are all basically the same, but this one’s lots cheaper and you buy it. In almost every case. It seems sensible to behave like this because everybody else is doing this. And this is in fact what makes prices predictable and makes markets work. The hidden hand of the market that Adam Smith talks about absolutely depends upon this. That is why I call it the hidden foot.

This is the socially dominant discourse. A way of behaving. How most of the time, most people use their money, and think about money. But you are actually free, in any particular instance, to do the opposite of this and buy the dearest product on the shelf. You do not realize that there is a social compulsion to behave according to the hidden foot. Because at any particular moment, you can do the opposite and make a totally stupid decision. It never occurs to you that money as a system requires you to keep buying the cheapest. That the whole system only works because you are most likely to buy the cheapest stuff and to sell stuff for the most you can get for it.

The political consequences

This discourse and the use of money in this way has a huge effect. The effect is to prioritize monetary efficiency. What costs less in any purchasing or production decision. As a seller you want to produce things that are going to cost you less and get the highest possible prices. What that means is that other values, use values for humans and values for other species take second place. For example, for the workforce. In many cases, managers find it cheaper to organize production so that their workers are doing work which is mind numbingly boring. Because that’s more efficient from a monetary point of view. But of course, from the point of view of the people doing the work it’s a disaster. Likewise, it may be sensible from a monetary point of view to have your workers doing a 12-hour day. This is the situation today in much of the global South. Twelve hours a day, six days a week of the most boring work possible. Is that a way to live your life?

To take an environmental example. Production and distribution depend on energy. The more production and distribution, the more money is being made. Fossil fuels have been cheaper than renewables. They probably still are when storage is taken fully into account. That is the reason why business owners are hanging on to fossil fuels as their main energy source. They are making better money by keeping the infrastructure and the fossil fuels that they already have — and making money with that — rather than moving, holus bolus, into renewables. The monetary system operates like this in every case. For example, old growth forest. It’s cheaper to cut down old growth and saw it up for timber. Starting a new plantation on farming land and waiting for the forest to mature is the expensive option.

The same implications of the market create social injustice. A factory making leather seats for expensive European cars. For the two per cent of the global population who can afford to buy them. That makes more market sense than making water pumps for people living in African villages.

It’s not that capitalism hates the environment and wants to keep the poor in their place. But people in the market system will make decisions to buy cheap and sell dear all the way along the line. Because that’s how the market and money operate.

Money and inequality

Another problem is that money creates inequality. Monetary transactions are always competitive because both parties are trying to get the best deal. And one party can only get a better deal when the other party gets a worse deal. For example, a firm gets a higher price for their widget and the consumer has to pay more, getting a monetary loss. Who can get the best deal is always an issue. The effect in the long-term is to create winners and losers from any equal starting point. Some people gradually accumulate money and by using more money, they’re able to accumulate even more and so it goes. This is how the ‘Monopoly’ board game plays out. Let us dream up a fictional example to see how this works. We can assume two players who are getting different amounts of weekly income. Maurice gets $500 a week and spends all of it on necessities. Peter gets $1000 a week and usually has $500 left over at the end of the week. So, Peter is getting twice the income in the first week. In the second week, Peter decides to invest his spare $500 in something that he knows will earn another $500 in the week. So, on the Friday of the second week, Maurice is getting his $500 income and Peter is getting his usual $1000 plus another $1000. $500 of this is carried over from the previous week, so we could say that Peter’s new income at the end of the second week is $1500. Three times what Maurice is getting. The ratio of inequality in weekly income has gone from 2 to 1 up to 3 to 1.

Accidental factors put some people in an advantageous position in the market, and they come to the top. Their good luck allows them to use their advantage to amass greater and greater wealth. As Piketty points out, this can only be countered, to some extent, by the strongest political pressures and regulatory policies. In terms of the money and market as a system, there is a presumption that legally acquired advantage in the market is ethically acceptable and even meritocratic. After all, we are all in the same market business of buying cheap and selling dear. The wealth of the elite is taken as just another example of the same processes that operate in our own lives. And are regarded as perfectly acceptable in that context. We end up with a system where one per cent of the global population owns as much wealth as the bottom fifty per cent. Where a third of the population of the world are not getting enough to eat.

Let us look at how this plays out in the relationship between the Germans and the Greeks. This drama has been considered by Yanis Varoufakis, who was a minister in the Syriza leftist government in Greece and by Wolfgang Streeck, a German sociologist. Their conclusions are very similar.

Germany produces industrial goods, which are high cost and high value. Most Greeks could not afford to buy them. So, what did the German banks do? They offered the Greeks cheap loans to buy these industrial goods. You can see how this move was a great benefit to German industry. They could expand their market, make more money and pay more workers in Germany. Then at the end of the day, the Greeks had a huge debt crisis. The leftist government in Greece went to the EU, controlled by the German banks. They asked for more time and lower repayments for their loans. This was refused. Instead, the EU demanded that the Greek government cut back its spending. With the consequence that social services in Greece were cut so much that many Greeks went hungry.

The interesting thing about this typical episode is how it was understood in Germany and the rest of the EU. The Greeks were seen as lazy. They were not working hard enough to pay off their debts. Spendthrift. They were taking out loans that they could not afford to pay back. They were stupid, thinking they could receive government services without paying for them in taxes. But in fact, of course, the Germans were just lucky that they got these industries up and running decades before. They had cornered the market before the Greeks could get into the same game. It was German banks and industry that saw a profit in lending money to the Greeks — and did super well out of that decision. This unequal situation, and the unforgiveable suffering of the Greeks, is justified by claims that treat the market as an ethical institution. As though it’s all about real values, about who has earned their advantages through their hard work.

The inequality that comes out of the market means that those with more money have more influence on decisions about production and distribution than those with less. Praises for the market treat markets as a kind of democracy. Instead of voting, you put your money where your mouth is. Doing that, your preference is translated into decisions about production and distribution. But in the market these votes are not equal. The weight of your ‘vote’ totally depends on the amount of money you can put into it. That is why it makes more sense to produce leather upholstery for a Mercedes than a bike for an African villager.

Money and capitalism

As I explained in the last chapter, capitalism is the only society where the means of production, like farms, factories, and banks can be privately owned and sold on the market as commodities. The second thing that is unique to capitalism is that the subordinate class offers their labour power on the market as a commodity. Compared to other class societies, capitalism is the class society that is most strongly organized around the money and markets. The class structure of capitalism depends upon the way the market operates. The capitalists are those who have the most money and use their money to grow their capital. The working class and the middle-class are those who have to offer their services, skills and labour power on the market — to make money to live.

The effect of competitive private ownership in capitalism is to create various problems, as I explained in the last chapter. If you are the owner of the means of production in capitalism, you must make the most possible profit. The market is very insecure. You can take out a loan and use it to put a whole lot of stuff into production and then put it on the market — only to find some competitor has a new technology and they are selling their products at a lower price. Or there is a downturn in the economy and your consumers cannot afford your product anymore. Suddenly all the money that you spent on your production is worth nothing. To avoid going under when something like this happens, you must make the most possible profit that you can. To create a buffer, a hedge in case things go haywire. So, every firm is competing to make a bigger profit. How do they do this? They do this by cutting their staff and paying less for their workforce. They do this by getting in new machinery, that produces things at a cheaper price. They do this by expanding their markets and selling the same thing to more people. If every firm is doing this, the effect is growth. Everybody is behaving in this way, and you cannot stop them behaving this way. Because in a monetary market economy these strategies make sense. Managers of firms would be mad to do anything else. From a planetary point of view, we have come to the end of that game. It is not going to work anymore. We need to get away from capitalism, and we need to invent a system that does not depend on money and the market.

Cooperatives and the solidarity economy

In this context, a lot of people think, ‘I know what we’ll do. We’ll run a market economy. That’ll be fine. But instead of those evil capitalists controlling every firm, we’re going to have a co-operative of workers controlling every firm’. Recently, this proposal is often referred to as the ‘solidarity economy’ One problem is that you would end up with just the same kind of evil consequences that you get with any kind of market economy. It’s great that you don’t have a boss. That relieves some of the problems of capitalism, but far from all of them. Thinking through this shows us some of the issues intrinsic to money and markets. Let us imagine how a solidarity economy might work out. Almost all the means of production are owned by cooperatives and the rest is in the hands of governments or small family-owned businesses.

The first thing is you have still got alienated labour. What people must do in these cooperatives is to produce for the market. They are making use of the resources they have, to find a market niche that suits what they can do. So, their cooperative can get an income and they can get paid. As with capitalism today, they’re producing for those who can afford to buy stuff. Those who can’t afford to buy stuff miss out. What does all that mean? That they cannot decide to make things for people who cannot afford to buy them. They’re constrained by the market to that extent. Their labour is alienated. They’re not actually making creative decisions about how to make society work better through their own productive efforts.

Their own labour conditions are also constrained by competition in the market. Your cooperative is competing with all other cooperatives for market share. Doing that, there’s a limit to how much you can improve your labour conditions. Because if you do certain things like, work a three-hour day, then you are not going to be competitive with other cooperatives that are out there working longer hours. This is endless.

There are the same problems that you get with the capitalist economy where environmental and social justice issues are concerned. Cutting corners is necessary to stay in the game. To compete on profit, you must make profit your priority. As with any market economy, market competition drives growth. An environmental problem in its own right.

The Mondragon collectives provide an illustration. Mondragon in Spain is a place where a cluster of industrial cooperatives were initiated by some Catholic clergy during the Franco regime. They produce industrial whitegoods, like washing machines, and fridges. And this went all very well. And it is certainly a great initiative in the context of a broader capitalist economy. But it is interesting to see what happened during the period of globalization in the seventies and eighties. Suddenly these industrial cooperatives were no longer competitive. They were in competition with firms that had moved their manufacturing to low wage countries. The Mondragon collectives responded by outsourcing some of their own industrial work to countries of the global South — where labour was cheaper than in Spain. These workers were not installed as members of the cooperative. They were working with the same pay and conditions as other workers in their own countries. You may see this as an unethical decision, but actually, it’s a decision that made sense in this market situation.

A solidarity economy would end up with inequality just like in capitalism. In the solidarity version of a market economy, cooperatives compete for market share. Some cooperatives win these competitions and others lose them. The result is that some cooperatives, some workers, some regions, some countries end up losing out vis a vis other firms, workers and countries. The ones that continue to win these market contests use their money to gain further advantages and yet more wealth. They become a part of a new solidarity de facto capitalist class. They can dictate terms to other cooperatives. The notion that you can create an egalitarian society through workers’ cooperatives ignores the way the market works.

It is no puzzle that cooperatives have been tried as a left alternative for centuries — and they have never really stuck. They have often been recuperated as typical capitalist firms and not been replicated. Workers have voted with their feet to stay out of these experiments.

Michael Lebowitz is one of the key socialist advocates of the solidarity economy. He promoted the revolution in Venezuela as working towards that model. He also looked at the problems that took place when Yugoslavia attempted an economy based on workers’ cooperatives. Workers’ councils left decisions on marketing and production in the hands of managers and technical experts. With long working days, workers were too tired to manage their firms. Cooperatives competed on prices and quality. As you might well expect in any market economy! Some firms did well in the market. The firms that were not doing well were reluctant to lay off their workers. They went to the banks to get loans to pay workers who were in fact redundant. In defiance of market logic, the banks provided them with help. Why? Members of the regional government were also serving on these state banks. They preferred this solution to paying unemployment benefits. Also, firms that had been successful were entrenched on bank boards. They used the leverage of these loans to confirm their market advantage. In the end, workers doing the same jobs were being paid at wildly different rates, depending on what firm they were working for. There was a lot of resentment and hostility on both sides. Our taxes are being used to pay for these idle workers. We are being screwed by these lucky workers. Ethnic tensions escalated. Managers worried more about their political connections than about market efficiency.

The last thing I want to mention is alienated labour and compensation. One of the features of capitalism that I’ve talked about in the second chapter is the first world bargain. Workers compensate themselves for their alienated labour — with increasing consumption. This has been possible with increasing productivity, producing more with less labour. The worker can buy more and more stuff. This leisure consumption compensates people for the lack of choice and creativity in their workplace. A system of market-based cooperatives run by workers does not get around that problem. Labour is still alienated. The inevitable outcome is political pressures for growth. Workers’ cooperatives hope to do better in the market and get more income. They end up supporting policies that might help them in this.

Ethics tames the market?

When you pose these kinds of questions to people who support the solidarity economy, their reply is always exactly the same. Where we have a solidarity economy and it is backed up by strong public support, workers restrain their competitive market behaviour. They do this because there is an ethic of cooperation and egalitarianism. An ethic of environmental care. For example, Lebowitz, writing optimistically about the revolution in Venezuela in 2006 quotes their Bolivarian constitution:

The constitution envisages an alternative economic model, one marked by concepts of justice, equality, solidarity, democracy, and social responsibility. Guided by those ideas of the constitution, I suggest you can avoid many of the problems that plagued the Yugoslav model — particularly those that resulted from their focus on self-interest, rather than the interests of the working class as a whole.

This answer assumes that the problem of capitalism is the greed of the capitalist class. We get rid of all these greedy capitalists. We have an ethical revolution, a cultural revolution. If we run everything through worker’s cooperatives, we’re not going to have problems. My reply is that the real problems with capitalism come from the market economy and the way that money operates. The ghost and the machine.

One way of looking at this is to say you cannot have a market economy and run it ethically. But now I want to look at this in reverse. If you start to behave ethically you will not be able to maintain a market economy. A thought experiment. In this thought experiment, the solidarity economy has become a reality. Ethical cooperatives own most of the means of production. The priority is ethics, not market success.

These workers are going to go, ‘Okay, how can we run our co-operative ethically? We’re not going to be dominated by the market. When an ethical decision is not a good market decision, we’re going to make the ethical decision rather than the optimal market decision. None of the consequences of the market that you have been talking about will apply because we will be making these ethical decisions, not the market decisions.’ So how would an economy like this work out in practice?

I am going to give an illustration that starts off with Firm A, a steel works in a rich European country. They have decided they’re going to sell a batch of steel that they made last year to Firm B for $2,000. Meanwhile. Guess what? Firm C is prepared to buy their batch of steel for $10,000. So why is Firm A knocking back this fabulous profitable offer? They are giving a huge discount to Firm B. Firm B is a cooperative in an African village. They are going to use the steel to make windmills for their electric power and irrigation pumps. So, Firm A is making the right ethical decision. They don’t care about the money. They have decided not to worry about the market imperatives. All power to their elbow, way to go! And are they worried? No, they are not a little bit worried. Why not? You would think they might be worried, only getting $2,000 for their batch of steel. However, they have a plan. They are going to use that $2,000 to buy a batch of guitar amps from Firm W. Normally the price of these guitar amps would be $10,000. But not in this case! The workers in Firm W are into heavy metal music. They know that workers in Firm A are also heavy metal fans. So, their cooperative has decided to express their aesthetic taste through a cheap offer to Firm A. Firm W believes that their ethical responsibility is to make sure that workers in their cooperative get some leverage over distribution decisions.

This is a somewhat fanciful example of how a society, based on market cooperatives, which are also ethical cooperatives, might work. What can you say about this? Well, imagine that every cooperative in the market behaved like this. Market prices would be completely unpredictable. Without Adam Smith’s hidden foot, the market and money could not actually work. At all. Nobody would know what it would cost to buy a guitar amp, what it would cost to buy a batch of steel. You would not have the faintest clue. The value of money would change from one deal to the next. The worst effects of the Soviet Union’s central planning would look like a model of efficiency. What you can also say about a solidarity economy governed by ethics is that markets and money would have little influence over production and distribution. Adam Smith’s hidden foot would be absent and without it the hidden hand could never work. Instead, it would make sense for the cooperative firms to make decisions with each other through meetings and agreements. Firm A would send representatives to meet with Firm B and promise Firm B a certain amount of steel next year. They would send representatives to meet with Firm W to hear that they would be getting a batch of guitar amps next year. A solid promise. Money would not be relevant. In other words, the solidarity economy in practice could only operate as a gift economy. I will discuss that option in the next chapter.

JK Gibson-Graham, Eric Olin Wright, Michael Lebowitz and others have a vision of an ethically charged cooperative solidarity market economy. I am arguing that this vision is in fact incoherent. It could not possibly work.

Bitcoin

Let’s now look briefly at digital currencies like Bitcoin. Some anarchists are attracted by the idea of Bitcoin, and they are part of a whole digital currency wonk movement, sometimes referred to by the term P2P — peer to peer movement. So let me make a few comments about that. The problems with markets that I have explained also operate with digital currencies. Bitcoins are only useful if other people are being forced to perform alienated labour and put what they produce on the market. Buying cheap and selling dear is the only way to make money work. Bitcoin must work like that and so must any digital currency. As I have explained, the discourse of using money by buying cheap and selling dear has a raft of problematic implications.

Far from Bitcoin being a form of money that has no connection to the state, it is entangled with the state in several ways. In a global society where states create money, the value of any money is inevitably quantifiable relative to state currencies. The default value of any unit of digital currency is always a quantity of a currency guaranteed by a state. We all know how much Bitcoin is worth in US dollars. It is inconceivable that it could be worth anything at all without us being able to quantify that value — relative to monies authorized by states. In turn, as we have seen, state-based currencies are an essential tool of state power in any society that has money and the market.

There is a second kind of state entanglement implied in Bitcoin. The assumption that people make when they transact deals in Bitcoin is at least this. That the state will protect the assets they purchase using Bitcoin. That the state will recognize their ‘ownership’ within the market system that the state validates and regulates. If you buy a house with Bitcoin, you will expect the seller to give you the title deeds. You will expect the state to recognize and protect that title. If a gang of squatters invades your house, you will expect the police and the courts to look after you. These bitcoin devotees want to have their cake and eat it. They want to engage in monetary deals with Bitcoin that evade the scrutiny of the state. To avoid taxation. To run a criminal business. To protect their wealth from their ex. But at the same time, they assume that the state will step in to protect their ownership of goods bought with Bitcoin. This may be a tempting scam in the context of current capitalism, but it is hardly a viable long-term strategy. If we want to get rid of the state, we must get rid of money.

A market without a state?

It is apt at this point to talk about the view of some anarchists that we can have a market economy without a state. These anarchists are either.

1. ‘Anarcho-capitalists’, a branch of right-wing libertarianism.
or
2. Leftist market anarchists, who want market-based workers’ cooperatives.

These related positions are both untenable. As I have explained, the market and money imply a competitive economy. It is always tempting to make a better deal by cheating — theft, embezzlement, fraud, insider trading, ponzi schemes, debt default, contracts that are not met, shoddy work. You name it. We hear about incidents like this every day. For a market to function, the state must act as a neutral arbitrator, at least to a certain extent. Making sure that the obligations implied by market transactions are met in fact and are not just empty promises. If we were to abolish the state and wanted to keep money, these enforcement functions would have to be parcelled out to private companies. These would operate as warlords, funding mercenaries, enforcing monetary imperatives for the people who were paying them. The effect would be that the market would no longer function as a market. Success in this post-market environment would depend on localized armed enforcement. Not upon sales, consumer demand and commodity prices. Not unlike the situation of feudal societies. It would not be a market economy without a state — but a warlord economy without a state.

This may be regarded as an unfair critique of left anarchists who endorse a vision of this kind. Including people like the IWW and Noam Chomsky. Clearly these anarchists envision workers’ cooperatives suspending market competition to achieve egalitarian and cooperative outcomes. As I have explained above, such a suspension implies the end of money as a useful tool, and the impossibility of market-based cooperatives.

What to do now we understand money

What are the implications of this critique of money? This critique does not imply that we must begin to do without money right here, right now. You might want to live a hair shirt existence up in the country using as little money as possible. And I like that as an experiment, pointing the way forward. However, in reality, most of us are not going to do that. The current operation of money is a social fact, and it makes sense to adapt to it.

What the middle class left needs to do right now is at least to use money wisely and be good at the market game. While we look forward to a society without money, money is now a means to access the social product and must be used to develop our political strategies. Secondly, we need to support attempts to do without money. Strategies like those of ZAD (Zone a Defendre), which has taken over a whole district in France and largely operates without money. What Hakim Bey referred to as ‘Temporary Autonomous Zones’. Another thing I will consider in later chapters is that we can operate the market in ways that defy market logic. To use the very limited amount of money that we have, to get the most political impact. In part, by breaking the rules of market discourse. Making gifts to people and the planet. Defying the discourse of buying cheap and selling dear. Even if we go into a supermarket and buy the organic tomatoes, we’re doing that to an extent. Then there are much more elaborate examples of how that works.

Finally, we need to recognize and promote the necessity of a post-capitalism without money and the market. We don’t want to engage in yet another failed revolution that tries to make use of the state and money. We do not want to settle for this failed solution — as though it was the only pragmatic option. Let’s forget that pipe dream and go for a gift economy. The next chapter will explore that option.