If it’s been a long time since you pulled out actual dollars and coins to pay for something— here’s a conversation for you.
It might seem like cash is slowly becoming obsolete. But, Brett Scott says it’s a false narrative that we’re all pining for a cashless society.
Scott is a journalist, author and economic anthropologist and, in his new book, " Cloudmoney: Why the War on Cash Endangers Our Freedom," he argues that the finance and tech sectors actually benefit enormously from this narrative— and from every tap, swipe or online transaction we make. The Show spoke with him about why.
Interview highlights
SCOTT: Well, the traditional story that's told about so-called "cashless society" is that it's kind of a bottom-up phenomenon that it's driven by the ordinary person. And a lot of what I do is show that there's actually just as many top-down processes.
So large players that have been acting against the cash system for quite a long time. In particular, the finance industry, the tech industry and also certain states have actually been actively trying to undermine the cash system for quite a long time. And that then actually feeds into public perceptions of cash and can actually create these sort of feedback loops, right?
So there is — I'm not saying that there aren't people who enjoy using digital payment — but that's only one half of the story. To understand what's going on with cashlass society, you got to look at the fact that many of these large players actually stand to benefit a lot if they get people to move away from the cash system. And some players, even like a lot of the big tech players, really hate the cash system. So players like Amazon, for example, they can't operate with cash.
What's going on, really the big story in the global economy is ever more automation. And cash basically stands in the way of that. Cash is a form of money that you can't automate essentially.
What's the benefit for many of these major tech interests, banks, etcetera? And how big is it in going cashless?
SCOTT: Sure. So this term cashless is very misleading. It's a kind of a euphemism. It's a bit like calling whiskey beer-less alcohol, right? You're not, you're not talking about what's actually there.
So what is a cashless society? A cashless society is a society where you cannot operate in the economy unless you go via the banking sector. So you have to use bank accounts for everything. And, of course, the banking sector gains enormous amounts of fees and data from that process. So the banking sector itself is one of the big beneficiaries. The Bank of America CEO openly said, "We want a cashless society." ... many bankers will openly state this because they run the entire so-called "cash infrastructure," right, which is basically bank transfers.
Also the the the card companies, like Visa and Mastercard, you know, they shamelessly act against the cash system. Because, bear in mind, every cash transaction that you do is a transaction that Visa and Mastercard are not making money from, they're not making fees from that, right? Because Visa basically specializes in telling the banks who's trying to move money from who to who.
Governments tend to be a slightly more complicated beast because they're they have multiple different mandates, right? You know, so for example, the Central Bank is supposed to try and maintain the stability of the monetary system. So the central banks are worried about the cash system going down, right? Because they realize that actually the cash system underpins monetary stability. So for example, in the U.S., when a when a hurricane is approaching the demand for cash spikes massively, right? Because people realize you want offline money when all the electricity goes down.
So let's talk about the downside of that. What does it mean if cash is phased out for the consumer in terms of first of all, our privacy?
SCOTT: Yeah, maybe a good sort of opening metaphor if you want to sort of think about this issue is, I sometimes talk about, you know, digital payments — those ones you're using with your cards and stuff — as like the Uber of payments. So it's like, you know, the Uber-fication of payments. Whereas, you know, cash is something much more like the mountain bike. It's a, something that you directly control rather than, you know, the Uber, where you're having to rely upon this third party. So actually so-called cashless society is a society of like, you know, totally Uber-fied payments.
And if you think about this metaphor, this transport metaphor, if you, if you imagine that your transport system was totally controlled by players like Uber, you could immediately start to see all the consequences of that. Enormous amounts of data that they get, right. Enormous amounts of power to actually prevent you, for example, traveling if Uber controlled everything. Large centralization of power, massive exclusion.
And it's quite similar with the payment system. If you have this massive Uber-fication of payments, enormous amounts of data get collected. There's also the potential to actually block people, prevent them from spending on certain things that basically firewall them out of the economy if you don't like them. Also large amounts of exclusion. If you can't access those systems, or if you don't want to access those systems, you slowly get excluded from the society.
And then there's massive resilience problems, right? Because these huge digital infrastructures, if they go down and storms cyberattacks hacks, things like that, you can have massive national security problems. So actually some of the people who are most concerned about this are often people in the background of national security who say, you know, actually if we suffer a massive cyber attack when our payment systems being totally digitized, that's and actually you can bring the entire economy to a standstill.
Is it too late already? Don't we already pretty much always use cards, apps, tapping for not just goods in a store but mortgages or any kind of major transaction that the regular consumer already has?
SCOTT: No, I mean the political goal here is to maintain a balance of power. Alright, now I'm not naive. I know that people are not gonna pay cash to, you know, for their rent and their mortgage and things like that, right? But it's very, very important to keep a realm of the payment system in the realm of a small scale, in the local, to keep that cash infrastructure there. And bear in mind, you know, there are many, many people who actually prefer the cash system. I mean, I constantly come across people because I do this work, I constantly come across people who say to me, "We keep on being told that we're supposed to use these digital systems. We don't actually want to use these digital systems. We want to use the cash system."
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