Social contracts in designing money
Much like all architecture works are monuments that stand for something (commemorating at least what makes them possible), all design solutions are vessels not just for things and gestures, but for behaviour and moral.
The following text is part of a service design project focused on creating a better form of money, named ‘Unit.’ Inclusivity is a key principle in this project. I started with an initial rough idea or solution and employed a process-driven, collaborative approach. New questions were posed, revealing the aspects that the service could and could not address. This process exposed the underlying, fixed principles of the initial concept, making the framework visible. The framework is then adjusted. At this juncture, a decision had to be made: should the gaps be filled, or should they be left open intentionally? In the case of Unit, I chose to leave them open by design. The core framework will be set, but atop that framework lie unanswered questions, intentionally left for future users to fill in and take ownership of their own paths.
Social Contracts
Political philosophy has proposed the concept of social contract as a model to represent how individuals consent (or tacitly agree) to surrender some of their freedoms to maintain some rights.
Thomas Hobbes (1588–1679) was one of the first modern view philosophers that tried to understand why governments’ legitimate authority should be obeyed¹. He argued that:
People are unsociable in the state of nature because we are selfish, and incurably so. Selfishness is embedded within our emotions and thought processes, and we will always be acting in ways that benefit each of us individually. Even when it seems as though we are acting from motivations of kindness and compassion, beneath the surface we are still thinking about ourselves
According to Hobbes, in the original State of Nature, everyone has the right to everything. The social contract then becomes the tool through which humans transmit their natural rights to each other: “I give up my right to steal your property, if you give up your right to steal mine”. Hobbes theory presented the social contract as a way to solve what he deemed to be a State of Nature, in which humans are natively brute and selfish. Arguably in distinct ways, others before (Glaucon, Plato, the Mahāvastu, Epicurus, Grotius…) and after (Locke, Rousseau, right until Proudhom) also worked and valued this social contract idea. However, from Proudhom (1851) to John Rawls (1971) there was an 120 year hiatus during which other political philosophic currents (Adam Smith’s free market and Marxism) disregarded the philosophic notion of the social contract as a way to organise society and economics. By the time Adam Smith and Marx were developing their theories, society was going through the initial stages of the industrial revolution — the transition from creating goods by hand to using machines. This commodification quickly extended from goods to labour and even ideas so back then it was only natural to look at money as a mere commodity. Both liberals and socialists adopted the Aristotelian idea that value is based on physical properties such as conductivity, scarcity, or the ability of a material to withstand the effects of erosion.
The general features of Adam Smith’s monetary doctrine were clearly defined. The inconveniences of barter early lead to the use of an interposed commodity in economic exchange. Experience has shown that the precious metals, by virtue of favorable physical properties, are best fitted to serve as money materials.
(Hollander, 1911)³
Even today, there are still those who argue for a return to the gold standard, which would mean that the value of currency is directly linked to the fixed amount of gold. But there are other interpretations:
(Adam) Smith thought he had found commodity money but had really “discovered” credit and highlighted examples of how the law and convention existing at the time had permitted particular debtors to settle their debt when it was due using specific commodities. However, these commodities were merely permitted “signifiers”, given a value in terms of the unit of account (pounds) and were not a means of measuring value or indeed a medium of exchange in the sense of being a circulating medium which was used to settle debts in general.
(Armstrong & Sidiqqi, 2019, p.98)⁴
The refusal to conceptualise money as a social contract allowed Karl Marx and Adam Smith to focus their own particular grand-narratives on explaining the forces that drive social behaviour without exploring money’s most human and complex side. But while Smith stringent view only allowed him to think of money as a commodity, Marx himself wasn’t completely oblivious to the social role of money:
Marx emphasises that money is embedded in the social relations underlying commodity exchange and that money mediates between capital and labour. This gives money a crucial role in determining the way the contradictions embedded in social relations manifest themselves over time.
(Armstrong & Sidiqqi, 2019, p.108)
Most of the XX century mainstream debate about political economy revolved around socialism and liberalism. However, by the late XX century, John Rawls and David P. Gauthier revived the social contract theory.
Notably, Gauthier reinterpreted the Prisoner’s Dilemma⁵ to prove that if two self-interested and independent parties were to stick to an original agreed-upon arrangement and morals outlined by a contract, they would both experience an optimal result in the long run. The crude insight here is that reasonable individuals benefit from caring about the same moral code. His findings have since been supported by the results in various other fields of research (computer sciences, game theory, and biology specialists have explored the Prisoner’s Dilemma⁶ with matching conclusions). Gauthier’s take on the Prisoner’s Dilemma seems to answer one of the main big questions regarding moral in ample and flexible fashion: why should we care about moral? Simply putting it: because all things considered, it’s reasonable to do it.
Similarly, Rawls based his proposition on the assumption that reason suffices to establish a moral agreement among people:
A correct account of moral capacities will certainly involve principles and theoretical constructions which go much beyond the norms and standards cited in everyday life; it may eventually require fairly sophisticated mathematics as well. This is to be expected, since on the contract view, the theory of justice is part of the theory of rational choice.
But Rawls approached the same philosophical question from a slightly different viewpoint. Instead of trying to answer Gauthier’s question ‘Why should we care about moral?’, Rawls provided a clear framework to pose and answer the question ‘How should we care about moral?’. For this, he devised a philosophical thought experiment. Whereas Hobbes talked about an initial State of Nature, Rawls called this hypothetical initial state the Original Position (also known as the Veil of Ignorance)⁷. Rawls hypothesis sustains that if a group of self-interested and independent people is asked to design a new society from scratch (before taking part of that same society and without knowing which attributes each of them would end up having in society), they would never design an unfair system because it would be irrational to propose it. But he adds a cautionary note (Rawls, 1971)⁸:
The idea of the Original Position of an agreement on principles does not seem too complicated. Indeed, these notions are rather simple and can serve only as a beginning.
I will not try to account for all the possible interpretations of Rawls’ and Gauthier’s contributions to political philosophy and ethics. I wish solely to highlight the importance of reason to grant legitimacy to the pursuit of fairness in the definition of a social contract.
If the model herein proposed would have to be immersed in one of the following political philosophy currents — Utilitarianism, Marxism, Contractualism — it would likely append to the latter. Contractualism simultaneously supports that cooperation principles are embedded in the phenomenon of life, whilst reinforcing that civilisations are based on a self-directed social contract (a myth or a belief system in which a group of people deposit trust) allowing them to keep looking for fairness, to provide justice and social order.
Civilisations naturally reformulate their beliefs. Moments of crisis can become a starting point towards different horizons. There is this romanticised notion that when social contracts become unfair to the majority, a revolution happens and a new fairer society emerges. This is not certain — crises can be used to push society to accept unfair social contracts. Basically when everything seems uncertain we tend mess things up. Naturally because any critical situation generates an intense feeling of anxiety and vulnerability, leaving us susceptible to make and accept unreasonable claims. We have seen it before and we will likely see it again: whenever there is a big societal shock that breaks our belief systems, we quickly jump from being confident, calm, and empathetic, to states of panic, catatonia, depression, mania, or belligerence.
The idea I am giving shape in this work is that a monetary system is in itself an essential part of a social contract. Despite their many well known flaws, there are traditional centralised institutions that are crucial to guarantee some of our current rights and levels of societal development (public sanitation, public road systems, judiciary systems, just to state a few). These institutions need a new monetary system. Such system should in itself be flexible enough to accommodate a wide array of governance policies while facilitating exchange between people operating within different social contracts.
Complex systems are the more stable the more flexible they are to absorb shocks. And yet, a social contract always entails a compromise between freedom and social responsibilities. For this reason, a social contract will always have to compromise between defining bolted points and flexible areas. If a good balance between fixed and flexible aspects is achieved, a social contract will be apt to test and iterate itself when needed. As Stafford Beer (1926–2002), a British theorist, consultant and professor at the Manchester Business School, wrote⁹:
Our institutions were set up a long time ago. They handled a certain amount of variety, and controlled it by sets of organizational variety reducers. They coped with a certain range of perturbations, coming along at a certain average frequency. As time went by, variety rose. This meant that more variety reducers were systematically built into the system, until today our institutions are nearly solid with organizational restrictions. Meanwhile, both the range and the frequency of the perturbations have increased. This produces a mismatch. Hence our institutions are in an unstable condition. The ball keeps bobbing, and there is no way of recognizing where an equilibrial outcome is located. If we cannot recognize the stable state, it follows that we cannot learn to reach it — there is no reference point. If we cannot learn how to reach stability, we cannot devise adaptive strategies — because the learning machinery is missing. If we cannot adapt, we cannot evolve. Then the instability threatens to be like the wave’s instability — catastrophic. (p. 6)
The constructive and creative nature of design can help us prepare for an eventual emergency (even a monetary one). Design’s contribution will grant a balance between a pragmatic and methodical mindset, and a subjective poetical optimism:
It must be understood that as long as art stands aside from the problems of life it will only interest a very few people. When the objects we use every day and the surroundings we live in have become in themselves a work of art, then we shall be able to say that we have achieved a balanced life.
Munari, 1966
In the seek of a solution I’ve partnered and collaborated with a wide array of people, but admittedly the design process has not been as inclusive as it could be if this model would be developed at a larger scale — besides art and design, these issues are well addressed by other fields such as cybernetics, anthropology, economics, political philosophy, and law. My finite and capabilities have therefore narrowed the this work’s scope.
If a country wants to start using UNIT
If this would be the case UNIT will become a massive service. But any monetary model that aims to be inclusive must be prepared for scaling up. With this in mind I’ve deliberately left some questions unanswered because: 1) I lack the legitimacy or capabilities to be able to define them; and more importantly perhaps 2) because all social institutions, including monetary systems, are dynamic systems and they should be able to take in variety as time and civilisations progress.
UNIT’s variables
These variables (in some cases buckets of variables) are unanswered questions that can be decided later by whatever representation system a nation uses. But this doesn’t mean that UNIT is a loose cannon. The single exercise of noting down these variables in form of a question helps unveiling some of the hard bolted premises of this model:
1) Which essential services? Which services are so essential to human dignity that they should be provided by an organisation at the minimum cost possible for the user?
2) Universal Basic Income: Given UNIT allows creating money to pay everyone a UBI, UNIT leaves to the users the definition of this value — a range that goes from 0 to infinite
3) Salary policies: besides UBI, users can definite the salaries for each role in their organisations
4) Data privacy and transparency levels: How can organisations achieve an equilibrium between citizen right to privacy and the need for transparency to avoid the corruption?
5) Lifespan/saving limits: Since UNIT’s money destruction mechanisms are currency lifespan and caps on accounts — How much time can money survive on a current account? How much can a citizen accumulate on a current and savings account?
These particular questions might not make sense to the reader, but bear with me. By asking these questions about UNIT’s model, more than disclosing the adjustable parts of this model, I am disclosing some of the solid premises on which I’m basing this model.
What I hope to have demonstrated by the end of this work is that UNIT is a defined set of monetary mechanisms that empowers various social contracts and governance models. In the process, I will use examples of some particular forms of governance and may have to commit to a synthesis of seemingly opposing political ideologies. I might also tend more to one side than another. But since none of the long-standing political ideologies (Utilitarianism & Marxism) have attempted to redesign money, it’s not possible to reasonably claim from the opening that this model wouldn’t be able to alleviate some current political deadlocks. Indeed, UNIT can be implemented by a government of a democratic state and it can be implemented by a despot. It can be implemented by a school, a community, a DAO or by a multinational corporation. What UNIT promises to deliver is organisation and monetary flexibility and a way out of whatever organisation you might be in. Any group of individuals can decide to leave an unfair UNIT organisation, create their own UNIT organisation using the governance platform (a user-friendly ERP) to define new roles, and define their own monetary parameters in order to activate their economy and promote their own social contracts — for this UNIT will provide a transparent exchange rate to trade with others UNITs.
By leaving a vital space for variety, the model allows different policies to input different variables, and still remain stable. Relevantly, during the prototyping co-designing and workshop sessions, I have often asked participants, collaborators and partners, to put themselves in the Original Position.
A thought on grand narratives
This work has helped me steer away from a bipolar and noisy public discourse and I can only hope it does the same for the reader. It has also allowed me to develop a holistic view of money as both a commodity and a social contract: a topic that is paradoxically one of the biggest taboos and hottest topics of our society. For this purpose I am assuming that all societies and communities imply a sense collective purpose and identity. From smaller units (friends, families) to international organisations, we are relying on common stories, myths, to hold us together allowing us to move as a group with some sense of individual freedom. From religion to political ideologies, from advertising and propaganda to fake-news, we humans desperately cling to some form of consensus to become engaged in a concerted project.
Besides Hobbes, Rawls, Marx, and Bentham, many other modern times philosophers have sought for a framework that could effectively build these grand narratives. The spectrum of perspectives is rich, wide, and perilous. In 1895 Gustave le Bon, a French polymath whose knowledge and areas of interest spanned anthropology, sociology, medicine and psychology, claimed:
When studying the fundamental characteristics of a crowd we stated that it is guided almost exclusively by unconscious motives.
For Gustave le Bon there were only five remote factors that could affect the beliefs of the crowd: Race; Tradition; Time; Political and Social Institutions; and Institutions and Education. But on the other hand, Gustave le Bon also considered children and women to be inferior to men and used the term ‘savages’ to refer to populations native to Africa, Asia and remote islands. Significantly, his book The Crowd: A Study of the Popular Mind¹⁰ is known to have been read by Hitler who relied on The Crowd’s propaganda techniques to disseminate his Nazi ideas.
A century later (1983) Benedict Anderson, a Chinese-born Irish political scientist and historian who lived and taught in the United States, argued that nations are social constructions, products of the imagination of the people that perceive themselves as part of those specific groups. Instead of five different cultural factors, Anderson attributed to Print Capitalism the capacity to create nations — for Anderson the printing press was the material medium through which modern nationalism was established thereby giving birth to the nation-state as the main actor in political legitimacy.
More recently, in the full blown Digital Era, the historian Yuval Noah Harari attributed to fiction, not Print Capitalism, the capability of uniting people in communities. For Harari, without fiction we cannot grow as a collective (Harari, 2015:pp.29–30)¹¹.
Sociological research has shown that the maximum natural size of a group bonded by gossip is about 150 individuals. Most people can neither intimately know, nor gossip effectively about, more than 150 human beings…
But once the threshold of 150 individuals is crossed, things can no longer work that way…
How did Homo sapiens manage to cross this critical threshold, eventually founding cities comprising tens of thousands of inhabitants and empires ruling hundreds of millions? The secret was probably the appearance of fiction. Large numbers of strangers can cooperate successfully by believing in common myths.
These myths range in form¹²: but one thing that is common to all of them is that they all embody narratives that seek to establish order by offering a moral compass balancing the interests of small social units within a wider vision for the group. And just like no new human invention is completely harmless there is also no myth or vision of the future that is completely innocuous. Luckily for humanity, it is impossible to find a story in which every single human being believes. Whenever someone or a group of people attempts to define a new story, there’s a very good chance that same story is questioned and frustrated by other voices. Especially if it’s not inclusive enough. This is precisely the same frustration that has initially allowed me to freely dive into a speculative co-design process according to my own particular set of ideas. First and foremost this is a model, not an implemented system. I will demonstrate how it could function and expose some essential policies/features. The overall contribution of this work is to help framing this complex political problem through a different set of lenses — including (but not exclusively) the one from System and Service Design.
- UKEssays. November 2018. Comparison of Marx and Hobbes. [online]. — Available at: https://www.ukessays.com/essays/philosophy/contrast-and-compare-the-views-of-marx-and-hobbes.php?vref=1 [Accessed 15 January 2021].
- Sterba, J. (1982). A Marxist Dilemma for Social Contract Theory. American Philosophical Quarterly, 19(1), 51–59. — Available at: http://www.jstor.org/stable/20013941 [Accessed: 13 January 2021]
- Hollander, J. H. (1911). The Development of the Theory of Money from Adam Smith to David Ricardo. The Quarterly Journal of Economics, 25(3), 429. 10.2307/1883613
- Armstrong, P., & Siddiqui, K. (2019). The case for the ontology of money as credit: money as bearer or basis of ‘value.’ 90, 98–118. — Available at: http://www.paecon.net/PAEReview/issue90/ArmstrongSiddiqui90.pdf[Accessed: 4 January 2021]
- Two members of a criminal gang are arrested and imprisoned with no means of communicating with each other. The prosecutors lack sufficient evidence to convict them on the principal charge, but they have enough to convict both on a lesser charge. Simultaneously, the prosecutors offer each prisoner a bargain. Each prisoner is given the opportunity either to betray the other by testifying that the other committed the crime, or to cooperate with the other by remaining silent. The possible outcomes are:
– If A and B each betray the other, each of them serves two years in prison
– If A betrays B but B remains silent, A will be set free and B will serve three years in prison
– If A remains silent but B betrays A, A will serve three years in prison and B will be set free
– If A and B both remain silent, both of them will serve only one year in prison (on the lesser charge). - Both Plotkin & Stewart’s study, and Kurokawa study used the Prisoner’s Dilemma
- Participants are asked to consider which principles they would select for the basic structure of society, but they must select as if they did not know ahead of time what position ((they wouldn’t know their ‘future’ gender, skin colour, abilities, disabilities, place of birth…) they would end up having in that society
- Rawls, J. (2009). Theory of Justice. Harvard University Press.
- Beer, S. (1993). Designing Freedom (p. 1). House of Anansi. — Available at: https://monoskop.org/images/e/e3/Beer_Stafford_Designing_Freedom.pdf [Accessed 18 January 2021]
- Le Bon, G. (1895). The Crowd: A Study of the Popular Mind. — Available at: http://www.gutenberg.org/cache/epub/445/pg445-images.html
- Harari, Y. (2015). Sapiens — A Brief History of Humankind. London: Vintage
- From dense religious, military, political, and philosophical narratives, to lists of principles, local rules, manifestos, lex non scripta, and deontological ethics that address the concerns of specific sectors of human activity (like journalism, medicine, accounting, or sports)
