Digital currency

Digital currency | Sasin Paraksa / Shutterstock

The history of capitalism is dotted with periods of public controversy about the nature of money and the ways societies should manage monetary systems. We are living through one of those periods. Shifts in macroeconomic policy in advanced economies since the 2008 financial crisis have challenged orthodoxies about money and its management by states. Dissatisfaction with the inequities contained in today’s Dollar-centered international monetary system has grown across developing economies, fueling calls for reform. And technological innovations have upended several established institutional  and social realities bound up with contemporary money.

It is in this space that Rachel O’Dwyer’s Tokens: The Future of Money in the Age of the Platform (Verso, 2023) makes a welcome contribution. Extensively researched, it’s an entertaining account of the ways new electronic platforms are defining new monetary and quasi-monetary forms.

Here are some of the characters we meet: nineteenth-century anarchists, socialists, and populists who hoped to change society by reforming money; early promoters of mobile telephony payment systems; content creators on Twitch and OnlyFans; anarchist cryptonistas; online retailers and the government regulators trying both to limit and exploit their networks; present-day gig economy workers paid in company script; and online gamers procuring “skins” and other quasi-monetary tokens. 

Transferrable tokens like mobile telephony credits, gift cards for platforms like Amazon, and platform credits like Twitch’s “Cheer” and Fortnite’s “V-Bucks” can mediate a wide variety of social interactions, acting at times like gifts and forms of communal recognition, other times like monetary payments. Their ambiguity helps situate contemporary money and the commodity exchanges it mediates within the broader set of instruments and representations that have mediated social relations across human history. It has also created new ways for private actors to circumvent government restrictions on certain transactions (like sex work, international monetary transfers, and script wage payments) by disguising monetary payments. 

Electronic platforms can also be thought of as a distinctive type of “terrain” that, like land, can define specific types of revenue and power for those who control them. O’Dwyer lays out the ways companies like Alibaba, Amazon, Twitch, and mobile telephony networks generate revenues by regulating the terms on which tokens exchanged on their platforms trade for legal-tender tokens, and by monetizing information about interactions and transactions taking place in their networks. She also discusses the new forms of social power that platforms define—powers to predict the behavior of their participants, powers of surveillance—and the power to restrict the uses to which any given token may be put.

Obviously, the appearance of such new extra-governmental powers has drawn the attention of states, provoking both conflict and collaboration between private and state actors. 

O’Dwyer recounts the tortuous relationship between the Chinese state and Alibaba’s Ant Group, which owns the payment platform Alipay and the private credit-rating system Zhima: a relationship that culminated in the Chinese government’s transformation of the Ant Group into a company explicitly overseen by Chinese central bank. O’Dwyer also tells the story of Facebook’s plans to launch a new international electronic payment platform, which was summarily scuttled as governments in Europe and the United States made it very clear they would not tolerate the creation of any such system. 

Facebook’s move also strengthened the hand of proponents of central-bank digital currencies (CBDCs): electronic tokens representing state-fiat monetary units, traded in payment platforms run by central banks. By making state-backed electronic payments widely and freely available, CBDCs have the potential to undermine the traditional business of banking, which has for centuries bundled together the provision of payments system and financial intermediation services. 

In the brave new world made possible by CBCDs, traditional banks would likely have to work harder to secure public holdings of their liabilities, and arguments for implicit state guarantees of private banks could lose some of their resonance in capitalist polities. CBDCs also raise concerns about privacy. 

The second part of Tokens engages with applications of Blockchain technology to decentralized payments and transactions systems. This section’s length, which may seem unwarranted to readers in 2024 (and would have seemed unwarranted to many of us ten years earlier), reflects recent enthusiasm for that technology’s ability to transform monetary and ownership-registry systems. 

O’Dwyer situates her account of Blockchain applications within a history of earlier socialist and anarchist efforts to curb the injustices generated by market societies with monetary innovations—like “labor notes” and Silvio Gessel’s perishable money. Many may balk at this framing—Bitcoin will remind them not so much of the idealism of Robert Owen and Pierre-Joseph Proudhon but of the fraudulence of Charles Ponzi. 

Still, O’Dwyer’s historical framing is both useful and pertinent: it points to the persistent tendency among radicals and populists to seek redress for perceived economic ills or injustices not in the transformation of the underlying social realities defining them but in technocratic changes in the structure and management of monetary systems. 

The book’s shortcomings strike me as casualties of its ambitious interdisciplinarity. Economists and political economists will demand more detailed substantiation for a number of assertions: for example, that the Bretton Woods regime was a straightforward gold standard (page 52) and that its abolition in 1971–3 was intended to promote trade by making markets more flexible (page 194). The same goes for the notion that the physical destruction of cash instruments has a deflationary effect because it reduces the stock of money (page 80).

Tokens’s engagement with rival theories about the nature of money is scattered and does not put them in conversation with each other or with the realities it discusses. While this makes for a great narrative flow, it precludes the explicit development of hypotheses that could be related to the large body of evidence her research uncovers, including how it should inform our understanding of money, quasi-monetary tokens, and their social relations. 

This is particularly unfortunate, because O’Dwyer’s book should unsettle many orthodoxies in monetary thought. 

O’Dwyer confronts conventional economists with the fact that all monetary systems are platforms—and that as such, they define forms of social power that shape economic outcomes. Her book should encourage Marxists to consider that the intervention of money as a measure of value in the capitalist circulation of commodities can be usefully considered as a particular instance of the more general use of representations and abstractions that enable and shape social interactions. Recognition of this may open avenues for innovative Marxist treatments of the role that capitalist states play in national monetary systems and relations, including in the regulation of the value of money, the distribution of income between labor and capital, and in the definition of international monetary systems and hierarchies that shape flows of value among national economies.

Tokens also challenges recent efforts to cast the nature of money in transhistorical terms, which emphasize that money is always and everywhere a social convention or a creation of states. There should be no question that neo-Chartalist proponents of Modern Monetary Theory have succeeded in dispelling several orthodox myths about macroeconomic management, prompting rich and long-overdue debates about how governments whose currencies are held as international reserves might use their control over national monetary systems to pursue economic, social, or environmental goals. It is also indubitably true that money is a social convention, and that states have consistently played central roles in the definition of this convention. 

But O’Dwyer’s discussion also supports the contention that the nature and content of the relationship between monetary platforms, social practices, and states is dynamic and deeply historical. Its evolution is driven by the shifting boundaries between market and non-market interactions, the sociopolitical interplay between private actors and state institutions, and by technological innovations that challenge pre-existing arrangements. 

O’Dwyer’s book is a notable contribution. It dramatizes, as no previous account has, the ways even brand-new forms of money—dazzling and subversive though they may appear—are intertwined with existing realities of power. It should be read widely, particularly by those hoping to grapple with contemporary monetary realities.