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Cooking the Books: Towards a Cashless Society?

‘CASH WAS king, but debit cards rule now’ the Times (30 April) reported:

‘Notes and coins now account for less than £1 in every £5 spent by British consumers, according to a new survey (…) Halifax found that cash is now used in 17 per cent of all transactions, while debit cards, the most popular way of paying, are used in more than half (…) Cash has also been overtaken by direct debit, which is used for just under 20 per cent of transactions.’

The following week Patrick Hosking speculated (Times, 6 May) in an article on ‘contactless cards’ (cards you simply swipe without having to key in a PIN and can use for payments up to £20) that this trend might go even further:

‘For future historians looking back at social trends, it may just be the moment when the slow trudge towards a cashless society took a leap forward – a turning point when people chose to use plastic for even the tiniest purchases, whether a coffee, bus fare or newspaper.’

A cashless society? That’s quite possible. The paper notes and metallic coins that are ‘cash’ are not money but only tokens for it and there is no reason in principle why they could not be replaced by plastic cards to fulfil money’s role as a means of payment. In practical terms of course this assumes a highly-developed IT infrastructure. And cash does have the advantage of being anonymous so that transactions using it cannot be traced, which is why some people will always prefer to use it, though Bitcoins and the like are an attempt to reproduce this electronically.

A cashless society would not be a moneyless society as serving as a means of payment is only one of money’s functions. ‘Money’ is also a standard of price, a store of value and a unit of account. As an expression of price and a unit of account, money reflects in however a roundabout and indirect way the labour-time value of goods and services produced for sale (‘commodities’ in Marxian terminology). These days it is not a stable standard of price as it is official government policy to increase the general price level by around 2 percent a year. Money, even electronic money, is still a store of value, even though in insecure times people prefer to transform their wealth into something that it intrinsically valuable (such as gold or jewellery) or that will keep or increase its price (such as works of art).

It could be that the concept of a cashless society makes that of a moneyless society more plausible, but the replacement of cash by electronic transactions has given rise to all sorts of wild ideas of what money is and where it comes from. Despite the illusion that money is created by banks by a keyboard stroke, purchasing power arises in the first place out of production, either as the wages and salaries of the workers or as the realisable profits of the investors, together corresponding to the total value of what has been produced.

Unlike a cashless society, a moneyless society would be one in which goods and services would not be priced but would be freely available to take and use and in which the calculations involved in the production and distribution of useful goods and services would not be done in a single, general unit of account but simply in units measuring specific amounts of goods (weight, number, etc).