Business Essentials for Professionals

The cashless society, an epic betrayal of democracy


Many economic actors are in favor of an ongoing trend: the slow demise of cash, gradually phasing out of our economies, leaving its historical place to more modern, convenient and virtual methods. Among these supporters, government agencies are looking forward to moving on to the cashless era of post-modern economics. If such a turn of events were to arise, the balance of powers would be gravely jeopardized.

Several categories of economic and social entities are in favor of the suppression of cash from our societies, which they see as an impractical thing of the past. High on that list is banks, which receive from the states the responsibility to manage and secure cash at street level. Not only does the safeguarding and management of that currency represent a significant expense for them, with no return, but it increases their structural risk. In the case central banks press interest rates to (or beyond) zero, customers will be tempted to withdraw all of their cash, potentially stretching banks beyond their capacity. Australian bank Citibank, for instance, informed its clients that its agencies would become cashless in last November. More and more businesses are tempted to kick cash out: it increases their risk of robbery, and it complicates their accounting with the necessity to join the two channels of cash flow.
Vincent McKevitt, founder of a British food chain, opened new outlets in London in March 2017, where cash is not accepted. He claims Most operators face speed and capacity issues at lunchtime, but ours are intensified because we make our food fresh-to-order and most guests like to customise their food to suit their health and taste requirements [...] This unique point-of-sale solution allows our team to focus their energy on our speed of production.” Finally, some activists also see the retirement of cash as the next era for modern economics. Carl Manlan advocates general demonetization for Africa, so as to secure financial inclusion, security and prosperity. He claims : “With a smart strategy, underpinned by patience and commitment, Africa can build a cashless economy, with high levels of financial inclusion supporting economic prosperity and security. Before too long, buying a “Kofi broke man” – a roasted plantain with groundnuts – by the roadside in Ghana could be a cashless transaction, one that helps the vendor prosper in the present – and save for the future.”  But the main cashless-era  supporter is the public entity in charge of managing cash, and also in charge of safeguarding individual liberties.
Governments are hostile to cash, on several levels. The perceive it as both the preferred vector for criminal activities that wish to remain below radar cover, and as the main leak through which tax avoidance and evasion occurs. According to Business Insider, “criminals move 2 trillion dollars every year”, mostly in cash. It adds: ”money that is traceable means higher tax revenues”. They share the cash responsibility with the banks, as they are the ones in charge of managing currency: this implies the costly activities of designing cash, producing, distributing it, maintaining it and fighting off counterfeiters. The European Union took the 500-euro bill out of production, which it saw as purely crime-useful. In May of 2016, it published the Governing Council of the European Central Bank (ECB) concluded a review of the denominational structure of the Europa series. It has decided to permanently stop producing the €500 banknote and to exclude it from the Europa series, taking into account concerns that this banknote could facilitate illicit activities.” And last November, the Indian government violently pushed the envelope by deleting the validity of most of its own currency, in an attempt to curb black market activities and corruption. That governments would try to make their own jobs easier is understandable, but is the limitation of our most fundamental liberties part of their mission?
In the case of India, not only did the desired outcome not arrive, but the social and economic cost of the reform was staggering - with some economists saying they haven’t even finished assessing the damage yet. Oxford professor Barbara Harriss says it’s not a good decision badly implemented, it’s a bad decision badly implemented. It is a sledgehammer and we now know that it didn’t crack the nuts it was apparently aimed at.” But even if this reform, or another, were eventually to come through : is a society where citizens are totally under the prying eye of their governments something healthy and desirable? What is to become of the balance of powers between States and their peoples? Should the right to privacy be thrown out the window? Are citizens to be irreversibly locked into one single state-and-corporation-controlled system? Isn’t our freedom precisely what governments are in charge of protecting? If the abolition of cash comes through, States will be three hundred and sixty degrees around each citizen, able to control their every move, action and purchase with the click of a mouse on a screen. If we entrust our governments with the protection of our freedom, and our governments use this warrant to lock us up into their system, they will have failed their mission and betrayed our trust.
It’s not to say that the arguments held for the economic evolution of our societies are all false and invalid. New payment methods do present various advantages which people obviously appreciate, since they use them. But what is the point of reducing one’s options? Killing off cash will not rid us of the plagues and unsavory activities which have a preference for cash but it will be a tremendous, yet inconspicuous, game-changer. If cash disappears, there will never again be a transaction where two people get together and agree on something : there will always be someone else, there, looking in.