Daily CSR
Daily CSR

Daily CSR
Daily news about corporate social responsibility, ethics and sustainability

In a cashless economy, democracy loses ground


The world is approaching the moment when humanity will finally and irrevocably enter the era of a cashless society. Most of Europe has already set foot on this path. India is about to switch to non-cash settlements and increasingly more people in the US are getting used to the new non-cash reality. Soon, our digital world will offer no other options.

And what lies ahead? Officials, hackers, banks will have complete information on all our transactions, purchasing behavior, our profiles and even the overall political and social background in a particular country. Your bank, not you, owns your account, and it can be blocked due to suspicious or illegal activity, unpaid debts through creditors or unpaid debts to the government. Even if you are sure that you do not belong to any of these cases, the bank may disagree. A similar occasion once happened with a young man from the UK. His account had gotten suspended and was restored only after he dealt with the bureaucratic red tape and answered a few uncomfortable questions.

It increasingly becomes clear that soon the sphere of corporate and private payments will provide the government with effective control over legal and private persons. Already, there are global blacklists of organizations that are disconnected from payment networks, such as the Automated Clearing House (ACH) or the Society for Worldwide Interbank Financial Telecommunications (SWIFT). With each step towards cashless society, this surveillance network is gradually expanding and is increasingly being used as a means of influence.

How a lost umbrella turns into low social rating

Cashless transactions imply that you transmit sensitive information to your bank, and, indirectly, to your government. This data is completely individualized and can be easily used against dissenting or unreliable citizens. Attended a "wrong" protest? Your bank account has been temporarily suspended. Interested in a suspicious book? Your personal file is already being reviewed. Expressed opinion that is contrary to official position? Be sure that your transactions are already being viewed for an excuse to find fault with you.

Take as an example China, where various sharing services (short-term lease) are very popular. Basically, there are two types of sharing in the world: car-sharing and bicycle-sharing. In China, however, you can also rent umbrellas, and phone chargers, and basketballs.
It may seem that such a business model is extremely inefficient. Renting a bicycle in the biggest bicycle-sharing Byo costs only one and a half yuan per hour, and a basketball can be borrowed for one yuan per hour in Zhulegeqiu. Often, all these things are not equipped with any geolocation sensors to protect the items from theft. For example, Sharing E Umbrella startup recently lost almost all of its 300 thousand umbrellas.

The items are leased through a special mobile application. Therefore, the company receives information about the user. Now, imagine that a hapless client forgot to return or lost a basketball or an umbrella. It is a small sin, yet it can become a sufficient argument in making a decision to grant a loan or in general assessment of the citizen’s reliability.

Financial writer Dominic Frisby says : “In a world without cash, every payment you make will be traceable. Do you want governments (which are not always benevolent), banks or payment processors to have potential access to that information? The power this would hand them is enormous and the potential scope for Orwellian levels of surveillance is terrifying. Cash, on the other hand, empowers its users. It enables them to buy and sell, and store their wealth, without being dependent on anyone else. They can stay outside the financial system, if so desired.”

John Howland Cochrane, an economist and a Senior Fellow of the Hoover Institution at Stanford University, adds : “The ability to transact with anonymity and privacy has been a central freedom for hundreds of years. It's largely gone already. Losing it entirely and giving the government huge power to enforce any law it passes is not necessarily a good thing”.

Is cashless democracy possible?

To live in a democratic society is to be an informed citizen, to defend one's point of view and manage discussions in a civilized manner. Is all this really possible when authorities follow each your step, security agencies know to whom you talk, and if you are judged by books you read and things you buy?

Total monitoring of private transactions is harmful to democratic institutions. It jeopardizes social relations and limits free opinion. In a world where every cent is controlled and traceable, there is no room for basic personal democratic freedoms, that is, inviolability of person and home; privacy of correspondence, telephone conversations, and telegraphic communications; and freedom of conscience. Only chosen ones will have it full. Take, for example, the Bilderberg Club - can you imagine that the police banned them from holding meetings? And what about a similar gathering organized by ordinary people? Will the government be happy about this?
Cash provides a room for maneuver in case of unforeseen events. You can trust your government - until the next election. A failure can occur in any, even the most stable system, and then your country will be ruled by a person with completely different political views. In this case, anonymous cash deals will be useful to you – not to sabotage the system, but to sleep well and be sure that you don’t hear a knock on the door right after you bought a greylisted book.

Troy Hunt, an independent security researcher, believes : “[It's] much harder to trace someone when you've been paying cash for things — so privacy as we centralise will always be an issue…It's probably one of those things where people may just want to be a little bit more conscious about what their digital records are actually telling people about themselves.”

Brett Scott, a journalist, campaigner and the author of The Heretic’s Guide to Global Finance: Hacking the Future of Money (2013), says the same: “As unsexy and analogue as cash is, it is resilient. It is easy to use. It requires little fancy infrastructure. It is not subject to arbitrary algorithmic glitches from incompetent programmers. And, yes, it leaves no data trail that will be used to project the aspirations and neuroses of faceless technocrats and business analysts into my daily existence”.