India did it, and many other governments are thinking about it, long and hard. With years of trends showing people more and more resorting to third-party payment solutions, such as modern mobile payments and connected wallets, digital currency seems to be the way of the future which States are keen to replace cash with. Beyond the promises of curbing corruption, tax evasion and crime, many civil rights activists are blowing whistles on the large privacy-infringement it would represent.
A cashless society’s consequences on civil liberties must be examined in two different perspectives: upstream and downstream. If a cashless society arises, not much will change on the surface. European citizens are already using banks and mobile solutions to store and exchange their cash, and not cash. However, if payment is made with anything else but cash or barter, it necessarily means a bank or a payment solution company (such as Paypal) has knowledge of the payment which occurred. That company has the amount, the date, the location, the buyer and the seller’s identity, the medium which was used to perform the payment, and other types of information.
These payments are kept in electronic logs in data-warehouses. This is known as the “paper trail” which States always inspect when conducting an investigation. This is the reason why illicit operations were so often financed in cash. If cash were suppressed, banks and payment solution companies would have detailed information about every single person in the country, not just the 1% which are involved in criminal activity and already use alternative transaction solutions such as Bitcoins or dummy companies.
Shazeda Ahmed, from the Citizen Lab, studied how China is using cashless solutions to expand its totalitarian rule (1): “Part of what makes such an endeavor unique in China is the vagueness and in some cases complete absence of regulations regarding big data collection for credit scoring purposes, potential third party uses of such scores, and privacy protections of the user data that factors into credit score calculations.” All of this information could then potentially be turned over to the State upon a simple request. In a normal state of affairs, such police or investigator’s demands would only be issued in a regular and lawful setting. But can one really expect banks and companies to hold the government agencies accountable for the lawfulness of such demands? Actually, the government will potentially have an uncontrolled and unchecked eye on every citizen. Alex Newman, from New America, warns his readers that the EU’s push for a cashless market is a major threat (2) to fundamental liberties : “The goal, according to the unelected EU bureaucrats behind the plot, is to fight “anonymity” in economic transactions — or, said another way, to crush privacy and give authorities the power to monitor every exchange”.
Downstream, it gets worse. If a State has complete knowledge of a citizen’s belongings, it can pressure citizens, for whatever reason it sees fit. If you think that you are immune to State pressure because you are an honest citizen, perhaps you should think again. Here in Britain, it isn’t easy to count the number of laws, because the nature of our legislative system prevents it. But if we turn to America, it gives us an idea: only on the subject of gun control (a fraction of the laws passed and in effect in the United States), the tally is at 20 000 guns. Dave Kowal counted (3): “From the start of 2000 through 2007, Congress had created at least 452 new crimes, so that at that time the total number of Federal crimes exceeded 4,450.” No matter how clean and honest you are, you have necessarily and unknowingly crossed the line on many offenses, and the State’s full knowledge of your possessions places you at risk of it taking it all away from you. True, the government today would probably not attack you in such a way for political reasons, and seize your last penny. But if you trustingly let your current government gain total control over you, the next government, which may not be so nice, will not let it go. At which point, your goose is cooked.
True, many of us already keep most of our wealth in the non-cash form, mainly in bank deposits. But cash is an option which enables us to keep our livelihood, even if banks collapse, or if an Orwellian government comes to power, be free of the financial or even electrical system, and conduct our business operations without having to look over our shoulder, wondering who is looking. If cash goes, that goes. This means that, from there on, every single thing you rent, sell or purchase, will be under someone else’s control, presumably the state’s, with no exit strategy.
Economic experts do not agree on the level of benefit which a cashless reform could bring. Some say it would only yield little advantages, some claim it would hugely boost our economic performance. But even if, for argument’s sake, we admit that such a reform would jolt our economies, is it really worth the price? Perhaps we should take the matter in the opposite way: first, we should ask ourselves which civil liberties, such as the right to privacy, we are willing to give up. Then we can decide if we want to put all of our wealth into third party hands. And before asking ourselves these questions, we should remember that fundamental civil rights are not made to regulate the normal operations of a society, they act as limits to a State’s potential power. In a cashless society, the State’s power would be potentially limitless.
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