State-regulated cryptocurrency and micro-managing people claiming welfare

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Context

I’ve written more than one critical piece about the Government’s part-privatised Behavioural Insights Team (Nudge Unit), particularly with regard to its insidious and malevolent influence, manifested in a range of psychoregulation policies aimed at “behavioural changes” which are being imposed on the poorest citizens. Technocracy is the “science of social engineering.” Nudge is a technocratic approach to fulfilling the requirements of neoliberalism. It’s about maintaining an established socioeconomic order, rather than advancing progressive social change.

In 1932, Howard Scott and Marion King Hubbert founded Technocracy Incorporated, and proposed that money be replaced by energy certificates. The group argued that “apolitical, rational engineers should be vested with authority to guide an economy into a thermodynamically balanced load of production and consumption, thereby doing away with unemployment and debt.” Sounds just like old school sociological Functionalism to me: it’s a systems theory  – utterly tautological and deterministic tosh. Bear with me, because there’s a couple of contemporary parallels I want to discuss.

The Conservatives prefer to do away with unemployment and debt by “incentivising behaviour change” to ensure that poor people who don’t have any money to live on are punished out of their poverty. 

Smart Cards, another antiwelfarist, technocratic imposition, entered our collective consciousness during autumn 2012, as Iain Duncan Smith declared his intention to discipline Britain’s “troubled” families. In unveiling his proposals at the Conservative Conference back in October 2012, Duncan Smith attempted to frame the cards as better value for taxpayers’ money, implying that poor people don’t pay taxes, (when the poorest actually pay proportionally more) and his rhetoric was extremely stigmatising.

He said: I am looking […] at ways in which we could ensure that money we give [benefit claimants] to support their lives is not used to support a certain lifestyle.”  [Boldings mine.]

Then MP Alex Shelbrooke presented his private member’s bill in December 2012, providing us with yet another shuddering glimpse into the underlying Tory moral outrage, prejudice and punitive attitudes towards people claiming benefits. He argued for a “welfare cash card” to limit spending to absolute basics. Isn’t welfare provision as it is just enough to cover the absolute basics for survival? It’s calculated to meet the basic cost of food, fuel and shelter only.

Despite his scapegoating narrative about addressing “idleness”, Shelbrooke’s proposed psychocompulsion was intended to apply to those in work, who claim benefits such as tax credits and housing benefit, penalising and outgrouping those on a minimum or low wage, also. The plan was to restrict the goods that people claiming benefits could buy with their cards. Not so much offering a “nudge” or “incentive”, but rather, delivering a bludgeoning enforcement, without a shred of respect for diverse needs and individuals’ autonomy and choice. 

A principled objection is that we should not be stigmatising or inflicting punishments on people, or reducing their freedom to spend money as they need and wish, just because they are forced to spend some time out of work, or because they aren’t paid a wage that is sufficient to live on. Such an approach is extremely draconian.

Having been previously rejected, this is certainly not a democratically endorsed policy.

This is an authoritarian restriction on what people claiming benefits may buy, and a limiting of lifestyle choices that they are permitted. It is a particularly spitefully directed ideological move that does not make any sense in terms of the wider economy, or in terms of any notion of “supporting” people, and “fairness.” The latter two categories of reason would entail extending opportunities and freedoms, not repressing them. 

Financial hardship already limits choice. When people are struggling financially, budgeting isn’t the problem: low wages, benefit cuts and rising costs of essential items are. Those factors are ultimately shaped by government policies, not poor people.

No matter how this is dressed up by the Tories, poor people don’t respond to “corrective” narratives and coercive policy like Pavlov’s dogs. Yet the Tories nevertheless insist on placing a psychopolitical variant of operant conditioning – behaviour modification – at the core of their increasingly repressive class-contingent policies. This isn’t about state “assistance” for the entitled poor, most of who have worked and contributed to the treasury, contrary to the politically expedient “economic free rider” label.  It’s about traditional Tory prejudices, state interference and coercion. It’s more blaming and punishing the casualities of neoliberalism and social conservatism. 

Having failed in introducing the punitive smart card more than once, the Conservatives are now resorting to a stealthy introduction of a variation to curtail the freedom of poor people claiming social security, using cryptocurrency, state regulation and an unprecedented, Orwellian level of state monitoring and control of what people who are struggling to make ends meet are buying. 

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Some basic (but wordy) definitions

Cryptocurrency is a medium of exchange, alternative to Fiat currencies, which uses a type of virtual currency, such as bitcoin. It uses cryptography for security and anti-counterfeiting measures. Public and private keys are often used to transfer cryptocurrency between individuals. Ownership of bitcoins, for example, implies that a user can spend bitcoins associated with a specific address. To do so, a payer must digitally sign the transaction using the corresponding private key. Without knowledge of the private key, the transaction cannot be signed and bitcoins cannot be spent. The network verifies the signature using the public key.

Bitcoin is a pseudonymous currency, meaning that funds are not tied to real-world entities, but rather, to bitcoin addresses. For cryptocurrency enthusiasts, the pseudoanonymity element is attractive, as it tends to empower individuals rather than institutions. Cryptocurrencies typically feature decentralised and unregulated control, and transactions are recorded in a public distributed ledger called the blockchain. 

Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public

The value of a cryptocurrency is determined by the market (whatever people are willing to pay for it). The welfare or state of your nation’s economy will not affect the value of your cryptocurrency. The value of a cryptocurrency is based solely on global supply and demand and functions much like a commodity on the stock market.

Cryptocurrencies are ordinarily used outside of existing banking and governmental institutions and exchanged over the Internet. They have often been seen by the establishment as a “rogue currency”, and as a potential threat to the monetary order. Because of the pseudoanonymity afforded by “virtual assets”, cryptocurrency is also sometimes used in controversial settings such as online darknet markets, like Silk Road, accessible by Tor, (free software for enabling anonymous communication, it conceals a user’s location and usage) which further minimises the risk of detection by law enforcement agencies. (See: Silk Road and Bitcoin.)

People in Russia and China have been bypassing very strict surveillance laws by using bitcoin-like cryptocurrencies in order to communicate securely. Cryptocurrencies, starting with bitcoin, have emerged and been increasingly utilised almost in parallel with revelations from National Security Agency (NSA) whistle-blower Edward Snowden about mass government surveillance. 

As the sheer extent of government spying still continues to emerge, encrypted communication services become important and have surged in popularity. Tech companies, including Facebook, Google and Apple, have capitalised on this by adding encryption to their services. However revelations that these same companies seem complicit in the NSA’s surveillance operations have led to some reservations from users. Now it seems the UK government wants to utilise cryptocurrency, inverting the political freedom it allowed by turning it into a tool of state control. 

Government proposals: virtual food vouchers and automated nudge

Earlier this year, the government set out proposals in a report regarding how Blockchain Technologies’ distributed ledger technology which provides “efficient and transparent” digital records of cryptocurrency transactions, could be used for public services. In their report called Distributed Ledger Technology: Beyond block chain, the government’s scientific advisor says:

“Distributed ledger technology (DLTs) offer significant challenges to established orthodoxy and assumptions of best practice, far beyond the recording of transactions and ledgers. These potentially revolutionary organisational structures and practices should be experimentally trialed — perhaps in the form of technical and non-technical demonstrator projects — so that practical, legal and policy implications can be explored.”

“Areas where we believe work could be taken forward include the protection of national infrastructure, reducing market friction for SMEs [Small and medium-sized enterprises] and the distribution of funds from Department for Work and Pensions and other government departments.” [Boldings mine.]

To recap, a distributed ledger is a database that can record financial, physical or electronic assets for sharing across a network through what is claimed to be entirely transparent updates of information.

Its first incarnation was Blockchain in 2008, which underpinned digital cash systems such as Bitcoin. The technology has now evolved into a variety of models that may be applied to different business problems.

Speaking at Payments Innovation Conference earlier this month, Lord Freud, one of the main architects of the welfare “reforms” said:

“Claimants are using an app on their phones through which they are receiving and spending their benefit payments. With their consent, their transactions are being recorded on a distributed ledger to support their financial management.”

The Department for Work and Pensions (DWP) has been working with Barclays, Npower, University College London and a UK-based distributed ledger platform startup called GovCoin to create an app which tracks people’s benefit spending

The ongoing trial which, is designed to demonstrate “the practical applications of the technology,” began in June. It’s yet another Conservative experiment on people claiming social security.

Jeremy Wilson, the vice chairman of corporate banking at Barclays, said: “This initiative focuses on adding an additional layer of richer data and identity onto payments, so that a deeper and more effective relationship can be established between the government and claimants.”

I wonder exactly what that “effective relationship” will entail? I bet it’s not one based on mutual respect and democratic dialogue. I also wonder if the Department for Work and Pensions will be issuing people who have no income with Smart phones. 

How will the collected information on spending be used? Are we going to see people claiming social security being named and shamed for buying Mars bars, a bottle of wine or a book? Or birthday and Christmas presents for their children? Will the state be sanctioning people that make purchases which the government deems “unnecessary”? 

He added: “We are keen to see how the positive potential of this service develops and adds to our wider efforts to explore the uses of distributed ledger technology.”

Distributed ledger technology was identified as a way of potentially “saving billions of pounds a year from welfare fraud and overpayment errors.”

Oh, that whoppingly over-inflated 0.7% of claimants again. Many of whom were simply overpaid as the result of an administrative error, after all. Just imagine how many trillions we would save if we used technology to get a grip of tax avoidance and tackle offshore tax havens, and addressing the “spending habits” of the hoarding wealthy. 

The technology is hoped to provide a cheap and easy way of getting welfare claimants without bank accounts into the system as well as verifying their identities, and would also provide a “transparent account of how public money was spent, transform the delivery of public services and boost productivity,” the government’s chief science adviser, Sir Mark Walport, said in a report last January. Those same words are used every time vulture capitalists are circling a public service, on the hunt for easy profits.

Walport said: “Distributed ledger technology has the potential to transform the delivery of public and private services.”  

More words from the vulture capitalist crib sheet of glittering generalities.

“It has the potential to redefine the relationship between government and the citizen in terms of data sharing, transparency and trust and make a leading contribution to the government’s digital transformation plan.”

The government distributes £3.8bn in payments every day. However, there are some serious concerns over how protection of data and privacy with the technology will be “managed.”

The Open Data Institute (ODI) welcomed the findings on the whole. However, it warned that the government must be wary of the challenges involved in blockchain technology and apply it in an effective way. They say: “We agree that blockchains could be used to build confidence in government services, through public auditability, and could also be used for widely distributed data collection and publishing, such as supply chain information. Smart contracts also hold great potential; what if your train tickets were smart contracts that meant you paid less for delayed trains?” 

Smart cards and smart contracts, the more things change, the more the Tories stay the same.

Further comment from the ODI: “However, in our research we have seen cases where people are trying to bolt old, failed or impossible policy and business ideas onto the new technology or to unnecessarily reinvent things that work perfectly well.”

The institute also warned of the privacy issues raised by incorporating private data and suggested the government better develop and solve these challenges by focusing on industry specific groups such as the finance or healthcare sectors.

Some thoughts

Conservatives claim to endorse personal responsibility, limited government, free markets, individual liberty, and deregulation, amongst other things. They believe the role of government should be to provide people the freedom necessary to pursue their own goals. Conservatives claim their policies generally emphasise “empowerment of the individual to solve problems”.

So how does any of this tally with harsh welfare cuts, public service cuts, restrictions on the right to by certain goods, the removal of access to legal aid, limiting housing options for the poorest, bedroom tax, numerous human rights contraventions, increasing conditionality for sick and disabled people, psychocompulsion through increasingly stringent welfare behavioural conditionality and the draconian sanction regime, for example?

Limiting consumer choice and spending flies in the face of the Tories’ own free market dogma. Furthermore, as it stands legally, the government cannot currently stipulate how people claiming benefits spend their money. So they would have to re-write the law to suit their “policy outcomes”. Again.

The Tory definition of “troubled family” conflates poverty, ill health, unemployment and criminality. Iain Duncan Smith claims to be targeting substance abusers (“drug addicts” and “alcoholics”) but it’s clear that the government’s definition means he’s referring largely to the poor and disabled people. His proposal to deal with people who don’t buy their children food because they’re “drug addicted” would actually target people who don’t buy food because they can’t afford it.

Once again we see the disciplinarian and psychocratic Tories stigmatising the poorest people for the conditions that Tory policies have caused. If such “troubled families” existed (and the Joseph Rowntree foundation research has put paid to the myth of families with three generations unemployed), it would not be reasonable to treat their situations as an issue of personal spending choices rather than a consequence of how our economy is run.

The Tories have, over the past five years, parodied a political process that is supposed to be about engaging the public’s rational, conscious minds, as well as facilitating their needs within society. The UK is not an inclusive democracy. Instead we see the employment of a behaviourist brand of psychocomplulsion, and the media are complicit in propping up an increasingly incoherent, irrational and profoundly prejudiced ideology which informs class-contingent, anti-social and deeply damaging neoliberal policies.

I’ve pointed out previously that government policies are expressed political intentions regarding how our society is organised and governed. They have calculated social and economic aims and consequences.

In democratic societies, citizen’s accounts of the impacts of policies ought to matter. “Accountability to the taxpayer” is being used more and more by the state as a justification to exclude those needing financial support from democratic society. Yet those people claiming benefits are not the same people year by year. The “economic free-rider” myth assumes that people claiming welfare do so continuously, yet we know that most move in and out of work, being forced to undertake insecure, poorly paid work regularly. It’s hardly fair to punish people for the detrimental conditions of the wider labor market.

In the UK, the way that policies are justified is being increasingly detached from their aims and consequences, partly because democratic processes and basic human rights are being disassembled or side-stepped, and partly because the government employs the widespread use of linguistic strategies and techniques of persuasion to intentionally divert us from their aims and the consequences of their ideologically (rather than rationally) driven policies. Furthermore, policies have become increasingly detached from public interests and needs. Instead, policy is about directing us in how to be. We are being coerced into behaving only in ways that accommodate and prop up neoliberalism.

Neoliberalism is a system of economic arrangements that greatly benefits a few powerful and wealthy people and impoverishes the majority of the public incrementally. As each social group reaches a crisis – struggling to survive – scapegoating narratives are constructed and disseminated via the media that blame them for their insolvency, creating socially divisive and politically managed categories of “others,” which serve to de-empathise the rest of the population and divert them from the fundamental fact that it isn’t the poor that create poverty: it is the neoliberal decision-makers and those who are steadily removing and privatising our public funds and ebulliently shrinking state responsibility towards citizens, leaving many at the mercy of “market forces” without a state safety net – it’s economic Darwinism.

“Workers of the World unite. You have nothing to lose but their blockchains.” Hubert Huzzah

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All despots and bullies are behaviourists. They inflict punishment on others to get the “outcomes” that they want. 

Governments are elected to reflect and accommodate public need. In the UK, the government expects the public to change their perceptions, expectations and behaviours to meet the government’s need. They say:

“Behaviour change is one of the primary functions of government communications – helping change and save lives, helping the government run more effectively as well as save taxpayer’s money.

Our approach is to use a mix of awareness raising, persuasion, practical help and behavioural theory, to demonstrate why changes in behaviour are important and to make these changes easy for the public to adopt”.

The Government Communication Service guide to communications and behaviour change

gcs-guide-to-communications-and-behaviour-change1

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15 thoughts on “State-regulated cryptocurrency and micro-managing people claiming welfare

  1. sooooo if this is to try and help them get out of and not accumulate more debt, how the hell is limiting them to JUST THE BASICS(whatever those evil B******s deem are basics …pass the gruel mother……) how are they goin to be able to pay off any debts they already have? ..Maybe a longggggggg course of say a year, should be undertaken involving practical work in the REAL world should be part of the rules for ANY person who wants to be an MP let alone a government minister at the top table… involving living on minimum money like 50quid a week in a council house with council rules and trying to find a normal job. etc like most ppl do plus going round on district seeing people who are legitimately ill /or disabled. watching from a distance at ashton under lyne (?lyme? jobcentre as people are given sanctions, told they’ll hav no money to live on for months even years then visit those people just before the sanction finishes (if they arte not on the streets or dead by then) to see how destitute they are. made to attend coroners hearings into pple who gave up on life………. sorry. but this makes my blood boil. but maybe ,just maybe, all that will hit a nerve somewhere (if they have any.,) but i suspect the way they’ve been brought up in a nanny ruled nursery with parents chucking money away on them for whatever they wanted (because they couldnt be bothered to partent them themselves, yet teaching them that they are the elite.and how to be a snob etc .will be too deeply ingrained for anything to penetrate the dirt in their heads and the blocks of ice they have as hearts.

    Liked by 2 people

  2. Apart from claimants lack of privacy this worries me a great deal. It appears people will be limited to certain shops and energy suppliers, so not the cheapest. Without cash, access to cheap services will disappear, the washing machine fixer, the plumber etc. It appears the tories are determined to stamp out the poor people’s black market, which they depend on. The big boys are still avoiding billions in tax – amazon et al.

    Liked by 1 person

  3. Hi Kitty I was prompted back here via Jayne Linney’s post on Gov coin 29th Nov 17.

    This summer in an EasyJet mag I saw this write-up (took photo of page) explaining about VCode, easier to read than a bar code and being tested on those least able to defend themselves – people in receipt of benefits in India: https://drive.google.com/file/d/1aWcbh8-3LNIIlr5dF9lLZd1uaV2b24kr/view?usp=sharing

    more about the ceo tech ‘guru’ sporting a silly symbols round his neck here: http://www.businesscloud.co.uk/news/vcode-tech-pioneers-vtse-could-be-as-big-as-google

    Liked by 1 person

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