Liquidity

Liquidity is an intensive economic property. It is a power to demand to transact. In other words, it is about messaging capability: being liquid means being able to message, to link, to issue and receive messages and to be listened to when you want. Liquidity tells what kind of a membership capacity one has in the network. What counts as liquidity and who decides this, is one of the key questions defining capitalism as a financial system. In capitalism liquidity is governed by the state, the banking system it superintends, and the money it endorses. When only those state-approved agents can issue, then a liquidity premium (a rate of return on money) can be charged for the risks involved in holding illiquid assets. Right now, governments and central banks are spending many billions of dollars/euros a month to maintain liquidity in asset markets: Asset market liquidity is now directly dependent on state funding: liquidity has become a ‘public good’. Furthermore, liquidity means at the moment keeping stock prices high, banks profitable and firms profitable (this is where, and why, we see current monetary and fiscal policy directed). Liquidity doesn’t link to the environment, scientific research or social welfare, or to a viable art communities — indeed, with a fiat unit of account, these must be sacrificed to secure fiat liquidity. Is this sustainable? Can central banks ever sell the trillions of dollars of private assets they now hold? Will governments ever pay down the fiscal deficits they have accumulated? Are there limits to the market/public acceptance of state money printing that underlies these state fiscal and monetary positions? And what happens when that limit approaches? Postcapitalist economic space challenges this hegemony as the source of money issuance, proposing instead distributed issuance (everyone can issue) amongst agents in a network. Where all agents can issue, there need be no rent on money. This doesn’t make liquidity costless, but it can be backed by stake (risking-together around other values) rather than the power of issuance and the transference of risk. Stake, or risking-together around other values, becomes the ‘complement’ of liquidity, giving the notion of ownership a very different meaning from its application in capitalism. The capacity to create liquidity (based on a capacity to issue and accept offers) is a foundational primitive of the new economic space.