Friday 24 May 2013

Outrage in the local currency world

Ever since 1992, when I saw green dollars in action in New Zealand, I’ve been fascinated by the idea that we should be able to conjure money out of nothing, by using our social networks.

My complementary currency heydays are now behind me but, during the 1990s, I found that I had got to know almost everyone involved in the idea of new kinds of money in the world – from Michael Linton in Canada (LETS and Community Way) to Heloise Primavera in Argentina (Global Barter Clubs).

I still think these ideas are important, and especially now that the Eurozone is grinding to a halt because big single currencies don’t work very well – they share the same fantasies as the gold standard, that money values are objectively real.

What Greece, Italy and Spain urgently need to do is to organise a range of regional currencies to operate alongside the euro to solve the basic problem – lots of people wanting to work, lots of work to be done, but no means of exchange to bring the two sides together.

But that’s another story. The complementary currency story has moved on somewhat since those days, thanks to bitcoin for the internet and time banks in public services, and my colleagues at the New Economics Foundation are in the midst of a fascinating pan-European project bringing together some of the most innovative new projects (ccia)

But the currency world has been thrown into some disorder by an important article in an academic journal called, of all things, Journal of Cleaner Production, which reviews all the evidence and says they don’t work.

It urges reformers to abandon the idea and concentrate instead on changing the way conventional money is created (97 per cent of it is now created in the form of loans by banks).

Well, having looked at the article, I’m not sure the argument is so clear cut, for the following reasons:

1.  The author (Kristopher Dittmer) only looks at the prevailing models, like LETS and the German regional currencies, and these are only in the early stages of development.

2.  He acknowledges the role that time banks play in rebuilding social networks, and points out that they don’t rebuild local economies – which they are really not designed to do anyway.

3.  He doesn’t look at the new generation of complementary currencies emerging from Latin America, which concentrate on poverty reduction by supporting small enterprises.

This is important because, as the eminence gris of the movement Bernard Lietaer (one of the original designers of the euro) says, what we really need to do is to experiment with city regional currencies that can provide loans for productive enterprise.

This is what the network of community banks do in Brazil, and they now – rather unexpectedly – have the enthusiastic support of the Brazilian central bank. That is what the new currency started by French Prime Minister Jean-Marc Ayrault will do in Nantes.

I could say more, but I don't wnat to try the patience of my readers (if there are any). But the issue here is not whether we are going into a multi-currency world rather than a single currnecy one – bitcoin and Facebook will see to that.

The issue is whether we can, at a local or regional level, create our own money - and provide productive loans in it - to claw our own way out of recession. And I think we can.


Tony Budak said...

Well said and thanks for saying so. Here's my 1/2 time credit thought,

David Boyle said...

Thank you, Tony, and good luck with it!

harry te riele said...

Thanks David,
We - Dam Foundation Rotterdam - think so too. Dam has just started and holds 165 account-holders, mainly enterprises in the Rotterdam area. Mutual Credit Clearing, initiated by seven independent professionals. No coins, no notes, no piles of debt, no bonusses, no drama. Just trade.
Harry te Riele
Dam Foundation