Electronic Commerce and the Sociology of Money

Introduction

1.1 There is seemingly little connection between conversations about electronic commerce at an OECD workshop on authentication in San Francisco and talk of ritual cash payments at a Maori funeral in New Zealand. Yet money is at the centre of both conversations. In both instances the form of money is important - credit card payments for electronic commerce and cash for the funeral. The medium of money is critical - the Internet in the first case and personally handing it over in the second.

1.2 The meaning of money is central. For Maoris, the ritual payments at funerals symbolically make evident the closeness and caring within the larger descent and affinal group, the whãnau (Fleming et al., 1997). In the case of electronic commerce, a major thrust of policy in OECD and APEC is to work out ways in which law and technology can help make money on the Internet meaningful and trusted.

1.3 In this paper, I explore some of the reasons why the policy discussion around electronic commerce has not connected to the sociology of money. I am using the term electronic commerce to refer to activities related to the purchase of goods and services over the Internet. I then discuss the findings from the sociology of money particularly in the last five years which could illuminate aspects of the electronic commerce policy debate. In the final section, I explore issues of theory and methodology that could help further the sociological study of money and place it at the centre of discussions of electronic policy.

Sociologists of Money are Absent from Policy Debates on Electronic Commerce

2.1 In June 1999, more than a hundred lawyers, technologists, economists and people from the communications industries from Organisation for Economic Co-operation and Development (OECD) and Asia Pacific Economic Cooperation (APEC) countries came together in San Francisco to move towards a common framework for electronic authentication. The surprise was that cultural issues were recognised as central even for an issue as seemingly technical as authentication in electronic commerce. There is now a hesitant acceptance in regional policy dialogues that the cultural meanings of payments and communication channels have to be taken into account, before any consensus is possible on issues of electronic commerce.

2.2 Steve Orlowski, Special Advisor, IT Security Policy, Australian Attorney General's Department pointed out at the 1999 OECD workshop on authentication that we had to deal with the fact that many countries in APEC do not share the dominant cultural assumption that money and property are individually owned. Once it is no longer taken for granted that electronic commerce deals with individuals who own property or assets, then the framework of authentication and electronic money has to be rethought. This had become patently clear at the 1998 APEC meeting in Papua New Guinea.

2.3 With his APEC hat on, as head of the APEC Electronic Authentication Task Group, Orlowski pointed out there are

2.4 Orlowski firmly placed the meanings of money, trust, and the use of communication channels within their cultural context on the regional policy agenda of electronic commerce. He went on to say that the examples of cultural differences were

2.5 Sociologists and anthropologists of money have much to offer on the cross cultural meanings and use of money. But anthropologists and sociologists have for the most part been absent from this policy debate on electronic commerce. This absence can be tracked to four reasons.

2.6 First, the acceptance of culture as an important dimension of electronic commerce, is very recent. It is being encouraged by the failure of a wholly economic or technological vision rather than an embracing of the social and cultural. The policy debate is still dominated by economists, technologists, lawyers and industry. The issues and language used are primarily legal, technological and economic. More particularly, the concept of money that underlies legal and economic policy is that money belongs to the market, that money is purely an economic phenomenon. This is part of a wider framework, where the social is part of the mission statement, but the objectives that are implemented and monitored have to do nearly wholly with the market.

2.7 Second, the policy debate continues to be dominated by the supply side perspective, with the technology, goods and services at the centre. The dialogue is primarily between government and people in industry who provide the goods and services electronically. When the focus is on users, the emphasis is most often on the user as a customer. Hence the questions are about how the customer uses or does not use the goods or services on offer.

2.8 The third reason is there are two different and mainly unconnected conversations occurring about electronic commerce. It is a classic Pirsig (1974) situation. At the center of this sense of discomfort and lack of connection is a difference of language. As Geertz (1988) says, “The way of saying is the what of saying” (p. 68). Providers who are used to speaking in terms of the “roll-out” of technologies and of “convergence”, are telling a story where technology provides the solutions to modern problems. Many of the metaphors of the public debate around information and communication technologies are from engineering and economics. Hence the talk of “tool kits”, “drivers”, “applications” on the one hand and “demand”, “price”, “determinants” and “take-up” on the other.

2.9 The same kind of shaping of the story is seen with sociologists who most often explore the users’ perspectives. The emphasis is on “use” and “access”, on the process of “constructing meaning” the “mix and match” and the “fit”. These metaphors are influenced by anthropology and sociology and are hard to dislodge. As Geertz (1988) says anthropologists pretend they are “looking at the world directly, as though through a one-way screen, seeing others as they really are…” (p. 141).

2.10 The fourth reason for sociologists’ absence from the policy debate is that electronic commerce has not been a central concern for sociologists. For the most part sociologists and anthropologists of money are still establishing the legitimacy of money as a social phenomenon, even within their own disciplines. Thus the sociology and anthropology of money have not sufficiently challenged the traditional meanings of money in economics and law to have an impact on policy.

2.11 Classical sociologists such as Karl Marx ([from 1927]1971), Georg Simmel ([1900] 1990) and Max Weber (1947, 1978) defined the market in terms of money and money in terms of the market. They saw the possibility of only one kind of money, distinguished only by quantity. It was as if one set of ten dollars can always be substituted by another set of ten dollars. They emphasised different effects of money on society and culture, but did not consider the social and cultural shaping of money.

2.12 Talcott Parsons and Neil Smelser (1956) explored the relationship of the economy and society. Parsons particularly saw money as a symbolic language. However he too saw money as belonging exclusively to the market and the economy and so the symbolism of money was restricted to the economic sphere (Zelizer, 1994). Thus money did not become a major subject of sociological study.

2.13 Anthropological studies of money brought a cross-cultural perspective to the analysis of money. In particular, they show that money can be personal and is often gifted. (See Blau, 1964; Bloch, 1989; Cheal, 1988; Ewen, 1985; Mauss, 1990; Ram, 1991; Singh, 1994; Titmuss, 1970). Anthropologists also analysed multiple kinds of monies in the societies they studied - the way one kind of money gets transformed into money of a different form and meaning, depending on the social context (See Bohannan, 1955 and Douglas, 1967). However like most sociologists, anthropologists saw money in terms of the Western market definition of money. They thus saw the monies they studied as exceptional and failed to connect their studies of primitive money to money in their own societies.

2.14 Sociologists of money also have not engaged with the literatures on innovation, media and the new information and communication technologies. At the same time sociologists of the new media have not sufficiently focused on money. Some of the most perceptive work on the “network society” and the “culture of real virtuality” (Castells, 1996, 1998), and globalization (Giddens, 1999, Holton, 1998) deals with money primarily as capital or in relation to global financial markets. Sociologists dealing with the domestication of the information and communication technologies do not deal with money as new media or as an information and communication technology (See Livingstone, 1999 and Silverstone and Haddon, 1996). The interesting work on gender and technology also does not directly address money as a social phenomenon (See Wajcman, 1991 and Turkle, 1984,1988).

The Sociology of Money and Electronic Commerce

3.1 In this section I discuss the findings from the sociology of money in the 1990s which illuminate aspects of the electronic commerce policy debate.

3.2 What is money?

In the mid-90s, there was the expectation that various forms of digital money would revolutionise the way we pay. At the end of the 1990s, it is clear that consumers have not embraced electronic wallets, digital cash or e-cheques. Cash and cheques remain important retail payments instruments in the United States, Canada, France, Italy, United Kingdom and Australia (Bank for International Settlements, 1999). In many Asia Pacific countries, it is cash rather than the cheque which is the main retail payments instrument (EMEAP, 1997).

3.3 The greatest success with payments instruments has been with plastic cards and direct credit and debit transfers. The growth has been particularly rapid in the use of electronic transaction channels such as automated teller machines and electronic funds transfer at point of sale. The hope of electronic providers of goods and services is that there will be a greater use of the plastic card over the telephone or the Internet.

3.4 The limited success to date of the new digital monies has brought “trust” to the centre of the policy debate on electronic commerce. It is acknowledged as the distinguishing feature of money. It is no longer sufficient to talk of money in terms of its function as a medium of exchange, a unit of account and a store of value. Nigel Dodd's (1994) approach to the definition of money becomes relevant here. He says that money is defined by use, information and networks of social relationships. The failure of digital monies demonstrates that there is nothing inherent in a piece of paper, a plastic card or electronic information that converts it into money. It is individual perception and the use of money which defines money. Central to this perception and use of money is that the information implicit in monetary transactions and the network of social relationships within which these transactions are embedded.

3.5 This approach is also powerfully expressed by Geoffrey Ingham (1998) when he argues that all money is “virtual” in that money is an abstract way of measuring value. It is this conceptual scheme of value that then connects with different forms of money. When money is defined in these terms, the sociological discussion of money connects with the important policy issues of trust and the changing forms of money which are at the centre of electronic commerce.

3.6 “Not all dollars are equal” - The use of multiple monies

In the mid 1990s, it was expected that electronic money - non-paper payments instruments and electronic transaction channels - would supplant paper money and face-to-face transactions. In Australia, banks were berated because they had not moved fast enough to ensure that the electronic substituted for the physical (Singh, 1999) Success for the policy of electronic commerce continues to be measured in the greater incidence and range of use of electronic communication and electronic money. There is some discussion as to how electronic commerce will impact on society but little attention has been paid on how social and cultural values will shape the use of electronic commerce. This approach to electronic commerce follows the economists’ and classical sociologists’ approach to money

3.7 Viviana Zelizer (1994), an economic and historical sociologist changed the sociological discourse of money when she argued there are multiple monies, rather than one kind of money for all purposes. One kind of money cannot always substitute for another kind of money, because some monies have meanings which are particular to them. As she says, “Not all dollars are equal” (Zelizer, 1989, p. 343).

3.8 Market money is different from domestic money in the home. Money for grocery shopping is not the same as money for investment. Money earned is not the same as money inherited. These different kinds of monies are earmarked and often separated, for one kind of money cannot always be substituted for another.

3.9 Zelizer's concept of multiple monies leads one to believe that the greater use of electronic money is not just a matter of substituting a traditional or mechanical payments instrument and/or mode of transaction with an electronic payments instrument and/or medium of transaction. She argues that people actively distinguish between monetary transfers such as compensation, entitlement and gift. The meaning depends on the relationship between the parties to the monetary transaction. That is why there is great unease when talking of salaries for wives or a tip to a friend (Zelizer, in press). People also distinguish between different kinds of monetary media such as telephone cards, national, regional and electronic currencies, depending on the differences in the social relations involved.

3.10 The compatibility and relative advantage of the innovation - to use the language of innovation literature (Rogers, 1995) for electronic money and electronic commerce - does not rest entirely on greater convenience, flexibility, operability and cheaper cost. The reasons for use have much to do with the new ways of paying having compatible cultural meanings.

3.11 The cultural shaping of money

Zelizer's second argument also has relevance to electronic commerce. She argues that cultural values and social relationships shape the allocation, use, management and control of different kinds of money. Drawing on historical data between 1879 and 1930 in the United States, Zelizer (1994) illustrates the changes in the meanings and control of domestic money as it changes from the dole to the allowance and then to the joint account.

3.12 Money given by the husband, that is the “allowance” or the “dole” was qualitatively different from money women earned in the household - “egg money” or “butter money”. This was different yet again from money earned in the labour market as “wages”. These monies were used and managed differently.

3.13 Zelizer's main thrust has been to show that money is important in the non-market domain.

3.14 Building on Zelizer's frameworks, Supriya Singh's (1997)work on money in marriage and banking empirically shows there are multiple monies in the market and these monies are also socially and culturally shaped. The joint banking account is central to the way middle-income Anglo-Celtic married couples in Australia bank. The joint banking account has also been an important way of expressing trust and togetherness in marriage. Hence banking money for this group is personal and joint. It is unlike the ideal type of impersonal and individual market money that underlies economic policy and law.

3.15 Within the wider framework of the social and cultural shaping of money, Singh investigates the use of electronic money and payments policy in Australia. Empirical studies of the use of electronic money in the home (Singh, 1996b, Singh and Slegers, 1997) and by small business (Singh and Slegers, 1998) are directly relevant to the policy debate on electronic commerce. These studies place the user and his or her activities at the centre and demonstrate how the use of a particular form of payment - that is the combination of payments instruments and transaction modes - is influenced by three factors.

3.16 First, the information given by a particular form of payment needs to be compatible to the information required for a particular payment activity. For instance, payment by cash is still widely used for grocery shopping as cash gives immediate information on the money in hand, the money that is spent and the money that is left. A receipt is not as important as for business expenses, when EFTPOS, a credit card or a cheque are used. Second, the choice of the payments instrument and the mode of transaction revolves around consumer trust. The third factor relates to the social and cultural meanings of different forms of payments. These meanings are not only influenced by the value system of the society but also by the historical development and structure of the particular banking system (Singh, 1999).

3.17 Invisible money and the household

There is another strand of work that connects the management and control of money in the household to electronic money. This is an important corrective to discussions of electronic money and electronic commerce that focus only on the volume and dollar value of electronic transactions and the numbers of users. This stream goes back to work in the 1980s and the 1990s in the United Kingdom and Australia. It questioned the established notion that resources were shared equally and that the household was an undifferentiated black box. (See Edwards, 1981, Morris 1990; Pahl, 1989; Vogler and Pahl, 1993; Wilson, 1987). This body of work led to a distinction of four different kinds of money management arrangements - the whole wage system; the household allowance; pooled or shared management and independent management.

3.18 Pahl's (1999) latest work Invisible Money: Family Finances in the Electronic Economy in the United Kingdom, shows there are clear patterns of exclusion from the electronic economy - between households and within households. One of the most significant variables is education. Access to the electronic economy involves being confident about gaining the necessary knowledge to make the best use of all the new forms of money.

3.19 Pahl also finds that gender is significant as men make more use of new forms of money than women do. Men tend to dominate the use of new technologies such as Internet banking. She says this dominance is “changing the gender balance of financial power within families.” Singh and Ryan's (1999) work on gender, money and technology also arrived at the same conclusions. The exclusion of women and those with less education from electronic money gains greater social significance as electronic commerce becomes increasingly important and an idiom of the new economy. As Elaine Kempson and Claire Whyley (Kempson, Whyley 1999) argue, the policy implications are great for financial exclusion translates to social exclusion.

3.20 The cultural dimensions of money

There is growing concern that unless we tackle the issues of financial exclusion, we will endanger social cohesion within countries. The more pervasive the Internet becomes in developed countries, the greater the gap between countries that are globally connected and countries that struggle to get phones. International Telecommunication Union's 1999 data show that the United States had 66.13 main telephone lines per 100 inhabitants compared to Cambodia with 0.23 main lines per 100 inhabitants (James, 2000). The latest data on access of populations to electronic commerce show that the electronic divide is not going to disappear in the near future. Predictions from eStats in 1999 for e-commerce distribution in 2003 are that the United States and Canada will continue to dominate, accounting for 56.9 per cent of the value of e-commerce. The United States and Canada will be followed by Europe with 28.8 per cent; Asia Pacific with 7.1%, Latin America with 6.8 per cent; and the rest of the world with 0.5 per cent (Thomas, 2000).

3.21 This difference in electronic access reflects the socio-economic divide between countries - income and education being two of the most important indicators. The electronic divide is also influenced by regulatory approaches to media and telecommunications. A recent ITU report (1999) shows that fewer than one per cent of mobile subscribers are in countries that do not permit competition.

3.22 Differences in the telecommunication infrastructure and electronic access are often accompanied by cultural differences in the management and control of domestic money. Differences in the boundaries, meanings and management of domestic money are illustrated in a study of Pakeha (the majority group of New Zealanders of British and European descent), Maori and Islander families in New Zealand (Fleming et al, 1997). For the pakeha, family money is household money. Money does not routinely flow out of the household to kin outside the household. But in Maori families, monetary obligations to the whãnau at times take precedence over household obligations. And in Islander families, the extended family is the financial unit, for money flowing in and out.

3.23 The differences between these three groups in New Zealand parallel the differences between the different cultures represented in the 21 APEC countries. The pakeha model mimics the dominant, individualistic Anglo-Celtic approach to money, whereas the Maori and the Islander use of money reflects the more communal approach which APEC policy is trying to recognise.

3.24 These differences also highlight the tussle between money as a means of commercial transaction and money with wider ritual functions as a medium for the expression of relationships and meaning. In many cultures, these ritual functions are often associated with the personal handing over of cash, giving traditional forms of money their particular resilience (Singh, 1996a). It is these meanings that policy makers and providers of electronic money are struggling to understand.

Bridging the Divide: Money, Media and Communication

4.1 There is an excitement in the media, among policy makers and many members of the public who see electronic commerce as an idiom of the future, as portraying everything that is changing in their lives because of the Internet. Social scientists are sceptical of the hype and the technologically deterministic frameworks of much of this discussion. But as Sonia Livingstone (1999) writes

4.2 The challenge for sociologists and policy makers is to forge frameworks that connect money, media and communication in a language that can address issues of electronic commerce and the cultural meanings of multiple monies. These frameworks also need to bridge the users’ and providers’ perspectives, to contribute to user-centered policy and business strategy.

4.3 The sociology of money brings four crucial insights to the debate. The first is that all money is “virtual” and is defined by use, information and networks of social relationships. The second is there are multiple monies in the market and non-market spheres, rather than one kind of money for all purposes. One kind of money cannot always substitute for another kind of money, because each kind of money has distinctive meanings. The third insight is that the social and cultural shaping of money influences the use of different forms and channels of money. This use is influenced by the information required of forms of payment for specific payments activities, trust and the social and cultural meanings associated with payments, gifts, transfers and ritual transactions. Fourth, the management and control of money in the home differs according to the ideology of kinship, family and marriage, together with factors of income, education and employment.

4.4 These insights from the sociology of money can usefully be connected to the cross-cultural study of money as a medium. It is becoming clear that a triple transformation is occurring in the medium of money - in terms of form, channel and meaning. The implications of this transformation are as yet unclear. However the changes in the medium of money pose important questions for sociologists.

4.5 Some of these questions are: How is the use of electronic money influenced by social and cultural factors? How are the new forms and channels of money redefining the activities of payment, management and control of money in the home? How does the use of electronic money redefine the relationship between information, money management and power in the home? How does the symbolism and use of money change in different social and cultural contexts because of changes in the forms and channels of money? How do we understand the factors that are leading to technological and social exclusion within and between countries? How does the different level and nature of use of information and communication technologies across cultures redefine globalisation?

4.6 When adequately translated into the language of policy and industry, these questions are of central interest to policy makers and industry strategists. Addressing these questions would illuminate the use and demand for new services and applications, increasing the effectiveness of policy and business profitability. We could then have a common conversation between sociologists, policy makers and industry strategists on electronic commerce.