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Be wary of a cashless future



We live in an era of hyper-transactionalism, whereby most of what we do is subject to the exchange of money and market pricing. Whereas in the past much of humanity was bound to a political system, now most of us are bound to a globalised monetary system. That is why a proposed change in Australia to how we use cash should receive far more attention than it does. It is not just a technical matter; it is about how power is expressed.

Person handing over a debit card (Getty images/Westend61)

There is a proposal to make Australia a cashless society. The Reserve Bank has declared that physical currency will become a ‘niche payment’ that may only end up being used in emergencies; cheques will be phased out all together.

It is, inevitably, being touted as a good thing because it will improve ‘productivity and efficiency’ although there is, as ever, an element of circularity here. How do we measure efficiency and productivity? With money. What are we measuring? Money. 

Another possible change being considered is a ban on any cash transactions above $10,000, which would have an interesting effect on those Chinese purchases in Australia’s property market where the buyers, literally, arrive with suitcases of cash.

In one sense, going cashless seems more convenient. In another sense, it is disturbing, because it means it will be possible to monitor everything we do financially — an issue that will become increasingly important. This is the era of transactions, and nearly all of us are mired in it — although Papua New Guinea is an exception. Eighty five per cent of the population, mostly in the highlands, is not in the formal economy and does not earn money. At least there is one part of the world that has escaped for now.

The hyper-transactions have many levels, the biggest of which is the cross border capital flows, which, according to the Bank for International Settlements run at over $US4 trillion a day (annual global GDP is only about $US80 trillion). That is a staggering volume of transactions; the global capital markets sit atop the earth like a giant roulette wheel threatening to crush us all — as nearly happened with the global financial crisis in 2008.


'Transactions and reality are not the same — money is only something we create — but it is all too easy to allow transactionalism to take over.'


Another level is the encroachment of transactions into human activities that were not part of the pricing system. As the economist Mariana Mazzucato quips: ‘If you marry your babysitter, GDP will go down, so do not do it. Because an activity that perhaps was before being paid for is still being done but is no longer paid.’ A great deal of what we call ‘economic growth’ is really just the monetising of things that once did not involve any financial exchange. Mazzucato notes that up until 1970, most of the financial sector’s activity was not included in GDP. Now, finance dominates. 

A similar dynamic occurs when government assets are privatised, especially physical assets. Usually this is done by loading up the private entity with debt. The effect is to produce transactions for the benefit of the privateers with little or no gain to anyone else, in fact, often losses. 

Journalist John Pilger has documented how this was done in Britain with hospitals, for example. America’s health system takes up 16 per cent of GDP, double the level in Australia, while providing similar or worse actual care. That means that the profiteers have found ways to create more transactions to benefit themselves without improvements in the actual services. Transactions and reality are not the same — money is only something we create — but it is all too easy to allow transactionalism to take over.

It is through this prism that what seems an innocuous proposal to go cashless should be seen. For now, escaping from the transactional matrix seems all but impossible, but with physical money a person’s activity cannot easily be tracked. That is why it should be retained; it is a sliver of freedom.

Shoshana Zuboff outlines how what she calls ‘surveillance capitalism’ treats human experience as ‘free raw material for translation into behavioural data’ then turned into ‘prediction products’ and ‘behavioural futures markets.’ 

That is what is occurring in consumer product markets. The intrusion is even greater in finance markets and it is only likely to get worse. At least using physical currency represents some kind of resistance.



David JamesDavid James is the managing editor of businessadvantagepng.com. He has a PhD in English literature and is author of the musical comedy The Bard Bites Back, which is about Shakespeare's ghost.

Main image: Person handing over a debit card (Getty images/Westend61)

Topic tags: David James, cashless, economics



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Existing comments

I think this report was very well written and presented although a lot of it was sitting in a cloud way over my head. I am not a financially minded person but instinctively feel that having a cashless society is a means of "big brother" keeping tabs on everything we do and could had negative outcomes for those of us who are unable to work. If we purchased a single lottery ticket it may be seen by government as a means of wasting tax payers money. No matter how long we have worked in the past and been taxpayers. Too much scrutiny for my liking and yes, money is the Capitalist God.

Mavis Jean Symonds | 04 March 2020  

Tracking transactions is another form of control in domestic violence. Women with controlling partners especially suffer in cashless transactions. Their every purchase and geographic move can be known and used against them. Controlling men don’t allow women to keep a separate account; limiting money or tracking its use is a basic element in domestic violence. Without the anonymity of cash, thousands of women’s’ lives will be made so much worse.

Robbie | 04 March 2020  

Money "is a sliver of freedom." Yes. I dread the cashless society. Total government and corporate control.

Janet | 04 March 2020  

Thanks David for this timely warning.

Tom Kingston | 04 March 2020  

I wonder about the robustness of the electronic system - given some disaster (or sabotage) our electronic data system may be 'offline'. Then what do we do? It's a good idea to ban cash transactions over $10,000, but we should keep cash.

Russell | 04 March 2020  

Cash transactions are indeed a ‘little sliver of freedom’. A powerful defence of this little sliver is honest and independent journalism - serious commitment to the facts and competent reporting skills. David’s article has both - his knowledge of the financial system is at least matched by his competence with written communication. There are others like him, of course - but the death of AAP suggests we as a society don’t value truth or freedom. We deserve what we will certainly get, but do our children?

Joan Seymour | 04 March 2020  

I use cash to buy newspapers coffee and when buying food etc but use my credit debit card for transport tickets and buying something on the internet.

Stuart lawrence | 04 March 2020  

“With physical money a person’s activity cannot easily be tracked. That is why it should be retained; it is a sliver of freedom.” Agreed. China’s totalitarian government can monitor the behaviour of all its citizens via its Social Credit system. But in a free society, governments should not be able to track how each citizen spends their own money. Even worse is the criminalization of cash by imposing jail penalties on people who engage in cash transactions above $10,000. With the Reserve Bank running out of ideas as to how to stimulate the economy, one wonders if this is an attempt to force people into the clutches of banks. After all, if interest rates go any lower and into negative territory (several countries such as Japan, Sweden, Switzerland and Denmark have negative rates) will the banks then, instead of paying interest to depositors, be able to charge people for holding their cash?

Ross Howard | 04 March 2020  

It's only a couple of years ago that treasury were having difficulty finding $100 bills for cash circulation...a significant reason was that $50 & $100 notes are the preferred denomination for drug deals. It must be a bit embarrassing for the Feds that both the illegal drugs and the associated cash are still significant enough to impact the economy. Nevertheless, eft based on the regulation currency does give government control of potential crooked and tax avoiding contracts and seems to be the desired/preferred check...although I don't doubt that some sophisticated bartering of high value assets and property will still evade the tax and the law. I anticipate bearer bonds and certain asset/share title transfer documents will have increased popularity under a cashless surveillance scheme. I can forsee this hitting franking credits as an attractive stock feature big-time.

ray | 05 March 2020  

Perhaps bartering will become the norm (and it's GST free!) On the downside the postmodern way of doing it - online - leaves its own audit trail.

RJ | 05 March 2020  

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