[From MicroSave Financial Inclusion in Action blog, August 2013]
I’ve been arguing for a while that the mobile phone shouldn’t just be a payment instrument: it should be a planning or accounting tool. A mechanism that captures how people keep tabs of their various pots of value, goals and amounts due is more likely to then in turn capture the transactions that derive from them. That’s what triggered the Money Management Metaphors (Metamon) work I did with MicroSave earlier this year. I thought I was making a somewhat original point. It turns out that I was just echoing millennia of practice. Or so I have learned from David Graeber’s fascinating and provocative Debt: The First 500 years.
Having been trained as an economist, I assumed the logical sequence of events has everywhere and always been: first barter, then currency, then credit systems, finally double-entry book-keeping – a natural evolution towards higher levels of abstraction and complexity in trading arrangements. I am now informed that there is no evidence that human societies ever worked on barter. In the beginning there was debt, as people variously shared, gifted and loaned each other stuff. The fabled “coincidence of wants” problem that makes barter so impractical (the fact that at the market you and I can only transact if I want your chicken and you want my goats) was solved by separating transactions in time (now I take something from you, later you’ll take something from me), developing simple debt tracking devices (such as the tally stick), developing various moral codes to guide the sizing and fulfillment of these dues, and periodically netting out the various debts across people in the community.
In Graeber’s words, “abstract systems of accounting emerged long before the use of any particular token of exchange.” The primary need was to create common notions of value, not necessarily to harmonise how value got stored or passed around. So in the beginning money only fulfilled a unit of value or accounting function; means of payment and storage of value came later, much later.
The startling conclusion is that “there’s nothing new about virtual money. Actually, this was the original form of money.” Yet here we are now worrying about whether poor people in developing countries can make the transition from hard cash to dematerialised electronic money. Might this begin to explain why it is that, given the right conditions, mobile money can just take off as it did in Kenya?
Think about it: people everywhere seem to have no problem managing the “artistry” of gifting – an even more intangible and convoluted practice than exchanging digital money. You can see generosity and balanced reciprocity leading to mutual insurance. But you can equally see dependence and charity preserving hierarchy. In Graeber’s eloquent words, gifts “are usually fraught with many layers of love, envy, pride, spite, community solidarity, or any of a dozen other things.” There’s nothing simple about that, but somehow people work out a proper response to gifts (whether they are an honor, a provocation, or a form of patronage) intuitively.
So there is no reason to believe that dealing with abstract notions of (mobile, digital) money should, in itself, be a barrier for ordinary people who are used to informal debt and reciprocity arrangements. The real challenge will be the formalisation of finance: making them accustomed to reducing financial arrangements to a bunch of numbers and financial relationships to impersonal arithmetic.
Removing the social context from transactions may obliterate much of the intuition and survival strategies people have developed around money matters for centuries. As Susan Johnson vividly explains, the social dimension of informal finance allows for much more open-ended negotiability of resources in case of exceptional need. And it’s not all casual: reading the typologies of informal financial mechanisms documented by Stuart Rutherford, MicroSave and others, one wonders at how inventive and recurring certain structures are. Those can only be the result of a natural evolutionary process based on variation (fed by the inherent flexibility of social arrangements) and selection (the disciplinary and insurance benefits they bring).
With formal finance, all that is replaced by binding credit limits, inflexible terms made up by someone, and an imposed moral requiring you to repay your debts on time (the “criminalisation of debt [non-repayment],” to use Graeber’s graphic if hyperbolic language).
The core problem of digital finance for poor people is then not how intangible it is, but rather how explicit everything becomes. Being more discreet may be an advantage, but must it all become so discrete too? To end with Graeber: “When matters are too clear cut, that introduces its own sorts of problems.”