Ethical Perspectives on Mandatory Digital Currencies

PARTNERS' & EXTERNALS' PERSPECTIVE

ETHICAL PERSPECTIVES ON MANDATORY DIGITAL CURRENCIES

Răzvan-Ștefan Bunciu Member of ELSA Bucharest

After the financial crisis of 2008-2010, the digital currency market gained momentum to such an extent that I am wondering whether ‘cash’ will survive the following decades. There are several types of digital currencies that share some peculiarities: they can be accessed by electronical means, exclusively, and they are sometimes referred to as ‘cybercash’.1 I will use this term for digital currencies as it clearly portrays the contrast between this type of currencies and ‘traditional’ ones. The suggestion for mandatory exclusive use of cybercash is based on considerations such as the speed and simplicity of virtual transfers. In this respect, China gives an example of a state-led digital currency (e-yuan) that is aimed to create a society without cash.2 Nevertheless, the US and the EU also want to create digital versions of their currencies.3 These decisions seemingly have a purely economic scope, and they aim at high and sustainable growth, especially in the context of the struggle for global hegemony. The topic I discuss is whether it is ethical 1 Jake Frankenfield, ‘Digital Currency’ (Investopedia, 10.8.2021) <https://www.investopedia.com/terms/d/digital-currency.asp> accessed 10.10.2021. 2 Andrew Browne, ‘Bloomberg New Economy: China Cashless Economy and Surveillance’ (Bloomberg, 20.2.2021) <https://www. bloomberg.com/news/newsletters/2021-02-20/bloomberg-new-economy-china-cashless-economy-and-surveillance> accessed 10.10.2021. 3 Luca D’Urbino, ‘The digital currencies that matter’ (The Economist, 8.5.2021) <https://www.economist.com/leaders/2021/05/08/thedigital-currencies-that-matter> accessed 10.10.2021. to impose technology and force people to give up traditional means of payment (such as cash) in order to achieve a competitive economy. J.S. Mill, the father of utilitarianism, argues that a doctrine is moral if ‘actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness’.4 Therefore, utilitarianism has at its core the concept of happiness, which Mill sees as the sum of the happiness of all people, so ‘that each person’s happiness is a good to that person, and the general happiness, therefore, a good to the great aggregate of all persons’.5 Consequently, it is ethical to force the mandatory exclusive use of cybercash, as long as it brings more benefits. The idea that Rawls6 considers weak in utilitarianism is that a person must act according to the interests of the group, not according to his/her interest, so the case of how happiness is distributed within the group is not considered. Subsequently, a person acts morally if he or she perceives himself or herself as spectators and acknowledge the interests of the group which may therefore be to his or her disadvantage. Rawls argues that utilitarianism makes no distinction between people, and that happiness is different for

4 John Stuart Mill, Utilitarianism (first published 1861, The University of Chicago Press 1906) 9. 5 ibid 53. 6 John Rawls, A Theory of Justice (first published 1971, Harvard University Press 1999) 19-22.

each person.7 I believe Rawls would consider the forced use of cybercash unethical, as it would create unhappiness among some people that have to submit to the general will. Kant’s deontological ethics operate within the framework of categorical imperative, contained in the following quote: ‘So act that you use humanity, whether in your own person or in the person of any other, always at the same time as an end, never merely as a means’.8 Thus, the person, as a rational being, is the one whose interest takes precedence and must be treated as a goal. In this sense, the human being possesses the right to guide his/her decisions according to his/her own autonomous will, which must come from within, because he/she is a free being.9

7 ibid 25. 8 Immanuel Kant, Groundwork of the Metaphysics of Morals (1st published 1785, Cambridge University Press 1997) 38. 9 ibid 38-41. Consequently, proponents of deontological ethics believe that the spread of digitalisation transforms the deliberative society into one where state’s own decisions prevail, i.e., they transit to a regime that restricts their freedom. The critique is that people will accept transitions without trying to understand or criticise them.10 Given the many strengths of cybercash, is it moral to force its use upon individuals? From a particular utilitarian perspective, the answer would be positive because virtual transfers are faster, the money is kept safe, cybercash reduces pollution according to some studies11, the production of banknotes generates a high economic and environmental cost etc. Thus, states’ 10 Andreas Spahn, ‘Digital Objects, Digital Subjects and Digital Societies: Deontology in the Age of Digitalisation’ (2020) 11 MDPI 1, 10-11. 11 Hass McCook, ‘Under the Microscope: The Real Costs of a Dollar’ (CoinDesk, 5.7.2014) <https://www.coindesk.com/microscope-realcosts-dollar> accessed 13.10.2021.

intervention to force the exclusive use of cybercash would be appropriate, since this ethic assumes that it is moral to act in a certain way that will create, in sum, greater benefits for the whole group. Rawls criticises this ethic by stressing that the distribution of happiness within the group is not uniform, so that one’s unhappiness may be as great as the total happiness of the others.12 There will be individuals who do not agree with the mandatory exclusive use of cybercash for several reasons. Therefore, the negative aspects of cybercash will generate unhappiness. E.g., it may lead to loss of jobs in the financial sector.13 There is the issue of data security. One of the fears is that states will collect data and transactions that the consumer will make, raising the issue of violation of the right to privacy. Whether in democratic states there is at least hope that data will be protected, in totalitarian states, forcing the exclusive use of cybercash could lead to greater control. Last but not least, those who fail to keep up with such changes will suffer, given that there are no payment alternatives. For example, in China most payments are already made only through cards or e-applications. This has led to dire consequences over the fact that millions of people do not have access to an internet

12 Rawls (n 7) 19-24. 13 Waseem Sadiq, ‘Digital currency: The good, the bad and the ugly’ (ITProPortal, 6.6.2018) <https://www.itproportal.com/features/digital-currency-the-good-the-bad-and-the-ugly/> accessed 14.10.2021. network that could allow them to operate in a digital economy.14 We might thus state that forcing the use of cybercash does not bring widespread happiness. From a Kantian perspective, persons, as rational beings, should not be forced to behave in a particular manner, because for an action to be considered moral, it must spring from within: ‘Morality is thus the relation of actions to the autonomy of the will, that is, to a possible giving of universal law through its maxims [...]. The dependence upon the principle of autonomy of a will that is not absolutely good (moral necessitation) is obligation. This, accordingly, cannot be attributed to a holy being’.

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Additionally, Rawls created a connection between his principles and Kant’s, leading to the idea that persons (subject to moral laws) are rational and free to act as they see fit for their own good.16 As a conclusion, the ethics of Kant and Rawls do not justify the mandatory exclusive use of digital currencies, since a coercion is exercised, and it will generate unhappiness. The individual must not be sacrificed for the common good, as each and everyone’s pleasures must be acknowledged.

14 Simon Kemp, ‘Digital 2021: China’ (DataReportal, 9.2.2021) <https://datareportal.com/reports/digital-2021-china> accessed 14.10.2021. 15 Kant (n 9) 46. 16 Rawls (n 7) 221.