The Descent of Money

I hardly ever carry cash around with me. I get paid via direct deposit into my bank account. Clothes, groceries, and entertainment are all purchased on credit, and later paid for by pressing a few buttons and shifting some money from one screen to another. Even that most Canadian coffee and donut institution, the one that frustratingly only used to take cash, now happily accepts my MasterCard PayPass. In fact, the only place in which I use cash is in buying my daily hazelnut coffee, and I’m sure that in time my neighbourhood coffee man will be convinced to make the move to electronic payments, despite the charge levied by the credit and debit vendors. And it isn’t just in developed economies that loose change is quickly becoming a thing of the past. The number of “contactless” microeconomic transactions has grown exponentially in the developing world with the widespread adoption of cell phones and cheap, reliable networks. For many, it’s easier, faster and much safer to keep funds locked behind a phone and PIN instead of in a wallet.

It leads me to wonder what it would mean if there were no longer physical currency involved in social interactions (other than “loose change” being filed in the category of “things our children don’t understand,” like the concept of rewinding and rubber stamps)?

I’m less interested in the economic impacts than in the cultural ones. Would a move away from physical currency be a societal progression, or a regression? It would certainly speed up the time it takes to stage transactions. It would also change the nature of crime from physical to intellectual, in the sense that it would be easier to steal several million dollars by hacking into a data server than by breaking into a bank to drill into the vault, where there won’t be cash available.  (Expensive physical assets, of course, would have to stay guarded.) And without being tied to specific pieces of nickel or paper, the amounts themselves would lose meaning and objects would be understood more in relation to each other (somewhat like a barter economy, perhaps). I already know many who think of money in terms of opportunity cost instead of actual amounts (i.e. a Ph.D. costs about 5 new cars or a condo in downtown Toronto ).

Perhaps most significantly, though, the shift from actual to virtual money has enabled the shift from actual to virtual things. The trend is most noticeable in media: online subscriptions instead of newspapers, mp3s instead of CDs, video files instead of DVDs, and the new rise of virtual books instead of the paper kind. The toys and gadgets we use to play these media (computers, software programs, mp3 players, virtual book readers) have also changed the way we understand and experience the world. The shift to the virtual favours collections of experiences – like listening to favourite music on the train, or being able to travel with thousands of “books” in your suitcase with almost no weight – over collections of things. (This certainly bodes well for my sagging shelves of books, CDs, and DVDs and an apartment that regrettably stays the same size.)

The shift to virtual collections also impacts and fragments our view of social status. I don’t mean this concept in a strictly monetary way, but more in a belonging way. Status, that most coveted invisible thing, is really a collection of experiences and things that indicates who a person is and where s/he fits into the world’s social patterns. It is made up of both visible and invisible elements, but the historical trend has always been to study how physical purchases – “conspicuous consumption” – has been a method by which people broadcasted their existing or desired status to the rest of the world. Traditional indicators of social status (such as types of cars, certain clothes, degrees from or attendance at prestigious schools, or trips to the opera) meant most to others who were in or aspired to be in the same social circles. (I, for example, can’t tell a brand name handbag from a knock-off, but I don’t aspire to be trendy, or even carry a handbag if I can possibly help it.) The new virtual conspicuous consumption can be seen in things like buying “gifts” for friends on facebook or collecting “boyfriends” (sometimes up to 150 at $5 each) in various other social networking games – items that don’t exist for any purpose other than to build connections and through that gain status. And considering the history of conspicuous consumption, these new virtual trends make sense in that they mean more to a certain section of the virtual audience than to another. Perhaps fewer things and more experiences means the accrual of “status points” is now more a matter of participating in certain trends, and sharing in them with others, than owning specific material. (Computers have not precipitated the end of the world as we know it, then!)

It’s interesting to me that even as the number of physical things decreases, the amount people spend to be included in various social groups remains steady. It indicates that the value placed on relationships is a constant, regardless of the medium through which they occur. It also indicates that the lack of physical currency has little impact on the worth people place on objects or experiences. So maybe I should get my local coffee man onto that whole PayPass thing.

What do you think? Am I overstating the role of experiences over physical things? Would you pay for a virtual gift on facebook? And does all of this sound to you like impending communism?

One Response to The Descent of Money

  1. Jeremy says:

    Well, I’m not sure that the amount of physical things is declining. How could that happen while I’m surrounded by all this stuff?! While I agree with you that virtual “possessions” are becoming more important, physical things are still imbued with value beyond their physical usefulness or their actual cost. For instance, having a new iPod or Blackberry to wave around is a form of displaying your status, as you mention. But I think it goes further than that due to the level of seriousness people place on it. On the other end of the spectrum, a three dollar keffiyah has a lot of cachet with the hipsters.

    I am a bit old fashioned. About 95% of the music I have I actually own on CD. I prefer to have tangible things rather than intangible things. I would never pay a dollar to give someone a facebook gift. The only place I would consider buying more virtual items is in the realm of computer games, with regard to expansion packs and additional content for games I already own.

    In terms of my personal life, I would say that my most prized possessions aren’t things I display ostentatiously, with the primary exception being my car. Other than that I have a nice collection of military medals nobody ever sees, my two winter hats which aren’t exactly big investments, and things like the talit my parents bought me for my Bar Mitzvah. The other thing that comes to mind is my class ring, which symbolizes my very strong pride in graduating from U of T, which falls into your category of value derived from experiences. Otherwise I think I’m still a bricks-and-mortar person. Maybe I’m swimming against the tide =/

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