Since meeting Margrit Kennedy in 2004, our network expert Stephanie Rearick from Wisconsin, USA, has been working with complementary currencies and building, from the ground up, a social and solidarity economy that is true to its name. To take local learning and tools into the world, and being ever curious about what work elsewhere, she has been touring the US many times, as an advocate and trainer of cooperative economics and as the wonderful musician she also is. Since 2010 she has been touring in Europe as well. Due to the pandemic there was a multi-year hiatus to her inter-continental wanderings, but we were thrilled to meet her again last autumn and visit some other experts from our networks with her. Here is her report from this trip and a snapshot of how local initiatives are faring in countries across Europe:

In 2004 I read The Future of Money by Bernard Lietaer and it changed my life. A couple months later, inspired by the book, I went to a conference titled Local Currencies in the 21st Century and the first keynote I heard was Margrit Kennedy, and she changed my life even more. They sold me! I needed to drop what I’d been doing and devote myself to realizing the vision they’d laid out.

Now almost 20 years later, I’m wandering far and wide to meet the others similarly inspired, reach more people with the exciting possibilities, and hook this system up and make it real.

Here’s what happened on that wandering,
and how it’s going to change the world.

On September 24 I left my home in Madison Wisconsin to join friends old and new on a 2 1/2-week Solidarity Sprint through parts of Europe and the UK (more details here). A Solidarity Sprint is a practice we’ve adopted where we travel to meet people and projects who align with our values in working toward a cooperative, human-scaled economy that supports thriving life.

In conducting our decades of experiments and explorations in a human-scaled economy, we realized that the core of it all is work. How we work, who we work with, how we define and divide labor, reward it, and incentivize good clean healthy practices. Not only do we need to be sure that the really important work gets done, and done well – the work of caregiving, creating, growing healthy beings in healthy communities in healthy ecosystems – but we also need to displace people’s need to engage in any old crappy jobs they can find in order to pay the bills. We fully intend to displace exploitative work with rewarding mutual aid-supported work (see our introductory short video here).

And so we’ve embarked on a multi-disciplinary learning and creating journey to take both work and compensation in much more pro-social directions. This report from our recent sprint aims to show a variety of facets of this.


So, who are we? We’re the HUMANs!

Humans United in Mutual Aid Networks is a cooperative open for membership globally. That means individuals, projects, organizations, and businesses can join and each has one vote, along with ownership of the organization and an invitation to shape it.

We create networks of real trust in communities of place or practice, exchanging and sharing resources in mutually beneficial ways. Then we connect those networks with one another through the same means of mutual aid. This creates a web of trust that spans locales and interest areas. Our aim is to build a neighborly global economy and, since this Sprint, we feel well on our way.

What this means in practice is that we use any cooperative economic technology that we know of, if it’s values-aligned, and work to put it together in a way that can facilitate serious economic exchange and displace the need for participation in exploitative economic activities. First of all, we use timebanking, the form of mutual credit that trades only in units of time, where everyone’s hour is valued equally and we don’t put a price on our time. We also build and participate in more commonly-stewarded resources like tool libraries, common gardens, makerspaces, shared spaces, and the like. We also combine this with other forms of mutual credit as much as possible, and are working to build that capacity as quickly as we can. In those mutual credit systems businesses of all sizes can more easily participate, because the credits of those systems are denominated in national currency, and can be accounted for and taxed just like any other business transaction. And we pool conventional money and steward it collectively in order to provide do-it-ourselves risk pooling and voluntary wealth redistribution in our communities.

We connect all that with peer-to-peer work practices, governance, and software tools, in order to build the sophisticated back-end that can make community-enriching work easy to create, plug into, sustain, and be meaningfully remunerated for. This is because we recognize that real wealth is not Dollars and Euros, and we know how to recognize, build, and value it in more expansive and values-aligned ways. As we carry out our mutual-aid-supported projects, we share our processes, documentation, materials, knowledge, and moral support to help others replicate, learn from failures and successes, and stay inspired.


Stephanie, Matthew, Sybille and Gorazd in Ljubljana

Now back to the topic of real trust and vibrant community – upon my arrival in beautiful Ljubljana Slovenia, I was met by Sybille Saint-Girons from France, seeing her in person for the first time in 6 years. We first met in 2013, traveling around Paris doing training and outreach as “The Economistresses” and have worked together ever since. She designed our first tech home, the Mutual Aid Platform, and helped create the vision for its next iteration, our current and very functional HOME, which stands for HomeOstatic Mutual Environment. This is the open source tech- and exchange-ecosystem we’re building together in order to facilitate all of that work flow and knowledge sharing stuff mentioned in the previous paragraph.

 

The other creator of our new HOME, Gorazd Norcic, was our host in Ljubljana. It was lovely to meet him in person for the very first time, at the LJU airport. Trained as a mechanical engineer, and old enough to have graduated in socialist Yugoslavia/Slovenia and then gone on to get his MBA in capitalist USA, Gorazd is now combining his previous life experience as an entrepreneur in turnaround management, marketing, software projects, distributed animation production in the extractive capitalist realm with the experience of Yugoslavian self-management practices. He is now contributing to the creation of non-extractive, sustainable, self-managed ecosystems, and we’re proud to say he’s the main architect of our HOME.

Proudly presenting: the new HOME-homepage

Gorazd and his lovely wife Mateja hosted us for the week. Mateja is a magician in the kitchen and we were treated to the most delicious healthy food for the week, courtesy of her catering business (and HOME partner) Pomander. Pomander z.b.o. is a cooperative created as an incubator. Currently it’s hosting a thriving and mostly vegan zero waste catering business, along with the Humanum Institute and several projects in the making – effectively using our HOME software tools to manage their operations. They help to show us how we can use these tools to really connect the business/production world with the world of human-scaled economics, so that we all support each other better and begin to co-opt business-as-usual into more pro-social practices. Everything is based on the same non-extractive Reciprocity Loop model that we’re implementing in our HOME project, which you can read about in detail here (PDF for download).

Matthew Slater, who’s been helping and supporting us since working on making Madison HOURs in the early 2000s (that’s the local currency my community launched back in 1996 as a paper currency, then tried to move to mutual credit before shutting down to become a component of our local MAN). He has consistently continued to introduce us to amazing new partners and ideas, and now joined us for the week in Slovenia where we were able to dive deeply into our tech picture. Matthew is the primary creator of the Community Forge mutual credit software, which is what the HUMANs and my own Madison Wisconsin Mutual Aid Network use for our marketplaces. Matthew wrote the mutual credit module for the Drupal CMS that many if not most timebanks and LETS systems base their exchanges on. Matthew is upgrading and maintaining our current marketplaces in addition to working on Murmurations, a way to aggregate organizations and also offers and needs, across platforms (more about this later). We’re excited to be early testers of Murmurations between our local and global systems, as a key piece of the direction we’re taking in the HOME project.

Matjaz, our friendly local Odoo wizard, came for an afternoon to help us work out important details (Odoo is a primary component of the open-source technology under the hood of our HOME). Zach of Moneyless Society came to Ljubljana to film us for a full-length documentary he’s working on, and graciously gave us lots of great footage to use in our own reporting and on our upcoming Mutual Aid Podcast. In fact, the Moneyless Society podcast we made together at his instigation has been published just as this is going to press.

Last but not least, Kate came over from Hull to share her experiences of their flourishing Mutual Aid sister site, work with us through their own tech and support needs, and connect with all of us on wider strategy questions. What a fruitful week! And that was just the first half…

Onward to Austria

Gorazd and I hit the road and traveled the rest of the way together, meeting many friends and partners old and new. At the start of this, I played a show (original piano music)  in Vienna with Edward Reardon, my old friend and producer of most of my music. If you like, you can watch the concert on Peertube, a video-sharing platform which I use through a shared interface with Communecter, one of our cooperative tech partners.

Project management tools in the new HOME

In our HUMAN economy we’ll use mutual aid networks to find people to help promote shows like this, we’ll make tickets available in the network, we’ll exchange air miles and hosting to lighten the costs of performing and make shows more accessible and known to more people. We started toward that by logging our time with our hosts, in our HOME marketplace. This is the global network we’re already experimenting with and connecting to other networks through above mentioned Murmurations.

The next morning we caught the train to Wörgl, then met up with dear old friend Leander Bindewald of monneta. We came this way to meet with the wonderful Veronika Spielbichler who showed us around the then yet-to-open-in-its-new-location museum and the Unterguggenberger Institute. In case you don’t happen to know that name, Unterguggenberger was the surname of Wörgl’s mayor during the Great Depression, when a local group introduced a local currency that lifted the city out of poverty and into international notoriety. The experiment was being celebrated and replicated worldwide, seen as a key to ending the Depression. But the nascent League of Nations (precursor to the United Nations) realized this could be problematic for them and the recent bail-out deals they had brokered with international financiers. We can read their reasoning and speculate on it ourselves, but in the end, such opposition meant that the project was forcefully terminated (there is great movie from 2018 about the experiment if you want to see more about it). Besides ending and outlawing these local currency experiments (in parallel, Franklin Delano Roosevelt, US President during the Great Depression, outlawed local currencies in the US when announcing his New Deal), the world’s plunge into chaos and war all added to mo

re waves of poverty and mayhem. We learned a lot of detail about this, and other histories of complementary currencies in Wörgl. This can all help us chart a more resilient path in our new chaotic circumstances.

Meeting monneta-experts Veronika Spielbichler and Leander Bindewald

Some of the key lessons of this visit were:

  • Here as elsewhere, one political figure is generally given credit for a currency experiment, when it was actually a community effort designed by a dedicated group of volunteers.
  • The currency’s success was a big part of what put it in danger. Drawing attention to a solution that gets people out from under the artificial central control of the money supply creates a palpable threat to the people in control, and they respond by asserting their authority to suppress it. Any economic solution we’re creating needs to be resilient to these types of threats, and we need to be prepared for them.
  • Community-created currencies really are capable of solving local supply and demand problems, and we need to take them seriously. At the same time, when the conventional money supply loosens up, people tend to prefer its flexibility.
  • We need to be aware of the political context in which we operate and the very real dangers and possibilities it supplies.
  • Want to see pictures and little videos of our learning? Check them out here, at our values-aligned file sharing space.

Onward to serious practical solutions
operating in the here and now

A few hours’ drive from Wörgl we saw a long-standing and well-organized system based in Dornbirn, the westernmost city of Austria. There, the Allmenda cooperative connects a very systematic model of timebanking and other local currencies. Their current flagship ”Zeitpolster“ allows adults to care for others while they’re able, then shift into a receiving mode when they age into needing care themselves. A sensible business model brings in money from members who pay for care (without having contributed care-services first) and the money pays for future help when it isn’t available via timebanking. In the state of Vorarlberg, where Allmenda is situated, they also run regionwide timebanks (called“Talente”) that they connect with some euro-backed local currencies, often at big pop-up markets that also help build their communities.

In addition, Allmenda franchises their Zeitpolster model, and are seeking partners in more countries including Germany, the US and Slovenia. This can be a good way to adopt a well-developed model, get needed support, and support their work in turn. Gernot Jochum-Müller, Allmenda’s brilliant founder and director, is a wealth of knowledge and experience in this realm and my notes from this visit fill 6 pages!

With Gernot Jochum-Müller at the office of his Zeitpolster (literaly meaning time-cushion)

Here I’ll aim to summarize a few of the many gems we’re bringing away from our meetings with him:

  • This approach to timebanking is much more structured and rigid than our approach in the US, and in the HUMANs overall. While we tend to view timebanking as very fluid, and adopt an approach that has no debit limit (members can spend hours before earning any, and are welcome to have as large a negative balance as they need as long as they offer reciprocity in some form – when able), Allmenda’s systems are built to provide serious levels of care and sustainability. Plus timebanking itself appears to be more tightly regulated in Austria. An example of how their system works: If someone comes into the Zeitploster system needing care, they pay a modest sum in Euros, half of which go to sustain the system overall, the other half going to paid carers. When a member joins as a giver, they give hours of service and accumulate credits in their account. Then when a member ages into needing more care than they can provide, their membership switches into a receiving member, and they then receive hours of care paid for with the time credits they accumulated earlier.
  • The leaders of Allmenda have a tremendous amount of legal knowledge and institutional respect, and are available to help other projects.
  • The Allmenda business model includes creating franchises, and you can become a franchisee and thus avail yourself and your community of their incredible pool of knowledge.
  • The legal recognition they win for their methods benefits all other projects in the EU.
  • They have a business model which is much tighter than anything we have developed, which makes it harder for the world to learn, adopt, and adapt their practices freely but which keeps the integrity of their model as they have designed it, and which provides long-term economic sustenance for their projects. This is good inspiration for us to chart and adopt a course somewhere in the middle of our two very disparate-so-far approaches to collaboration and knowledge sharing.

Thus concluded our work in Austria –
onward to the UK

Gorazd and I flew to London and schlepped over to the lovely home of Dil Green, a co-founder of both the Credit Commons Society (CCS) and Mutual Credit Services (MCS). Mutual Credit Services provide software tools to clear invoices in a local business community, much like banks do among themselves, where they zero out their debts to one another before transferring any outstanding amount of money. We can do the same! And MCS can help. Credit Commons Society, on the other hand, is the non-profit educational arm of the project, creating useful ways to do mutual credit accounting (called Credit Commons) and educating people about its usefulness in a fair economy context.

Dil hosting us in his London home

Dil hosted us for the night so we were able to talk deep and wide about common experiences and values, and ways we could collaborate. We came up with some exciting ideas! One major one is exploring working together to make the Credit Commons mutual credit tool our main means of exchange, and creating opportunities to connect with many other exchange systems (timebanks, LETS systems, Community Exchange systems, business-to-business mutual credit networks). Another possibility is offering our own HOME odoo-based tools to do some of the functions needed by MCS. These are exactly the connections we’ve been seeking to make, ways that each of us can reduce our individual work-load while increasing our impact and the scope of our peer support network.

Dil made a lovely statement which I’ve often quoted since, something like – “without material interdependence communities tend to fall prey to the narcissism of small differences”.

In the development of our own material interdependency, we have now decided to partner up with Dil and are working regularly toward using the Credit Commons to facilitate exchange in the HUMANs network and beyond. All this working with a standard Value Flows vocabulary (more on that in another article, see this link to get the gist) in order to create a way to exchange in and among a huge variety of communities around the world, in a network of neighborly economic exchange sophisticated enough to meet any needs.

From Dil’s we went straight to the man we’ve all known online only as Oli SB, full name Oliver Sylvester Bradley, a founder of Open Cooperative and meet.coop, and a key driver of the Murmurations project. We’ve heard of Oli’s work over the years and have been excited with how vision-aligned it all is with what we want to do. Visiting in person, we found more overlap of work and interests, especially with the tech used for Murmurations, which is capable of aggregating and showing offers and needs across different exchange systems and which we’re trying out as a means to manage our own cross-system exchanges, and maybe all our offers and needs over time.

We also participated in a web meeting with Robert Woolf of madeopen, who recently created the new timebanking software for timebanks.org. We plan to continue exploring how we can apply mutual credit, mutual aid, and peer support to make our own work easier as individuals and organizations, pool the risk and pool the reward in ways that nourish us AND the system we’re building.

We are now partnering to connect Murmurations’ aggregated offers and needs with the functionality of the Credit Commons, and the standard vocabulary of Value Flows, to hook up the beating heart of the economic system we’re building at HOME.

Onward to our last stop, Hull in the northeast UK,
where we land for the rest of the Sprint

Here we see Kate again, as she picks us up at the Beverley train station with her adorable little dog Ted who can ‘circus walk’ – meaning he walks on two legs like a furry little man, and goes really fast! This alone was worth the trip. This leg may have been the sprintiest of the sprint.

Meeting Kate and her incredible dog

The HUMANs have had a strong connection with Hull since I met Kate Macdonald, Director of the thriving 893-member Timebank Hull and East Riding, at a Timebanking UK conference back in 2014. Since that meeting, Kate came to Madison for our initial 10-day MAN Up Summit and became a HUMANs sister site steward. I’ve always been impressed with the breadth and depth of their work. They now run a thriving community center and have been sparking food sharing and food business incubators, among many other great activities. We’ve gone to Hull three times and appeared on the BBC talking about restorative justice. In 2016 we co-hosted a MAN Up Summit there, spending about a week in shared learning, visioning, and implementing sessions.

At the time we were all excited to partner up with Hull Coin, a project new to town and focused on bringing a blockchain-based complementary currency to the city, with the intention of a formal partnership with the city. We saw ways Hull Coin could fill a function that in the HUMANs we expect to fill with things like price-based mutual credit or the Common Good card. Saving details for a different, longer story, I’ll share now that Hull Coin never came to fruition in the way it was intended, which was to incentivize volunteering with blockchain-based tokens good for discounts at local shops.

In my experience, it’s quite common for complementary currency efforts that are more tied to money and the corporate economy to be more easily picked up by the press and public, as they relate more directly and are more recognizable within an economy based on transactions alone – payment as opposed to reciprocity and relationships. But in my view this is too much a replication of the system that is driving the atomization of our communities, whereas mutual credit provides more individual agency, can drive more systemic change, and is more readily deployable. Using the two in synergy with one another could have been a powerful bridge, but alas it was not to be. A common factor in most communities I’ve met, we continue to have much to learn about how to create effective partnerships that build on synergies and strengthen all parties.

We then had a full-day training on The Art of Invitation, with a full room of participants being led by a Ruth Ben-Tovim online, with lots of active support from the staff of Timebank Hull and East Riding. It was a great example of engaging the community in a fun way, and also building leadership and capacity through co-hosting and apprenticeship. People often overlook the essential fact that changing our economy means changing our behavior and how we relate with each other and our communities. It is absolutely key that we recognize the importance of bringing together our unintentional communities and build our capacity to do so.

Speaking of which, the next day the Timebank hosted a party at their Marfleet Community Center, and I played some music followed by the DJ Earthman. It was a very cool event that brought together a great mix of people. Sunday was a meetup in the Plotting Room of Ye Olde White Harte Pub. A historic site of anti-establishment planning! With a couple different ‘official’ histories, interesting in themselves. And our conversation was rich, and fitting of the setting. We were joined by a few members of Cooperation Hull, our DJ from the night before, some members and friends of Timebank Hull and East Riding, a couple artists, a generally interesting and inspiring group. The topics were loosely the role of creativity in building the mutual aid economy, but even more just an open exploration of our common dreams, desires, strategies, tactics, and how we can better support each other to build the world we’re dreaming of. Very fruitful! We’ve since sent notes and contact info around and are following up on action steps, including mutual support and timebanking between Coop Hull and the other mutual aid efforts based in the timebank.

Working at the community center in Hull

Following the meetup we went to tour DJ Earthman Steve’s incredible, ever-giving community garden plot planted with permaculture principles and bearing tons of food and beauty. The same allotment also hosts a garden plot owned and run by the timebank and its members, along with plots owned by the NHS for people needing mental health support. It’s cool to see that large institutions recognize the value of gardening and community to people’s mental health.

Monday was our last work day and it was a big, fun, and focused one. We went back to the Marfleet Community Center where we were joined by some friends, partners and members for a virtual tour of our HOME tech ecosystem, and what dreamer and sister site membership might mean for them. Most exciting was the participation of our partners from Alderman Kneeshaw Park, where they’re doing fantastic work making gardening and community available to people of all stripes. The staff of the park have found themselves in that common quandary brought by success – it’s time to incorporate officially, get money, and develop a staffing picture along with outreach and infrastructure.

It looks like our tech HOME and associated peer support network can be very helpful now to both our Hull sister site/timebank and their partners in Alderman Kneeshaw Park, and we’re working together to develop the tech presence and support they need, while documenting the experience to make it smoother and more helpful to future participants.

Phew!

After a celebratory meal, we each flew to our respective homes and have now been working every week to follow up on all the connections and avenues we discovered on the Sprint.

We couldn’t have done it without the support of monneta, and now we look forward to connecting with more of monneta’s followers, working together to bring to fruition the vision that Margrit Kennedy so beautifully espoused during her lifetime, and now being carried on by Kathrin Latsch, Declan Kennedy, Leander Bindewald, and all those supporting and following this work. A big thank you to all, and looking forward to the day we realize we’ve succeeded.

You can see and benefit from what we’ve accomplished so far by joining our coop, posting offers and needs at our marketplace, or participating in our upcoming Summits, Sprints and other events where we’ll showcase some of the fruits of our labors.

 

Since 2011, the international research association RAMICS has organised the largest bi-annual congresses about complementary currency systems worldwide. In September 2019 the second-but-last congress had taken place in Hida-Takayama, Japan. Only a few months later, most our scheduled events were brought to a complete halt by the Covid pandemic. The following 6th RAMICS congress had already been scheduled for September 2021, but it soon became apparent that this would not be possible without massive restrictions. In order not to loose the possibility of face-to-face encounters with colleagues and friends if the conference had been organised entirely online, the organisers postponed the event by a year. Finally, it took place last month, from 27-29 October 2022, in the Bulgarian capital Sofia.

Rossitsa Toncheva from the University for National and World Economics and the Bulgarian Monetary Research Center had already offered to organise the follow-up event at these institutes at the end of the conference in Japan –  despite or because the idea of complementary currencies is still hardly known in Bulgaria. This made it clear from the outset that the combination of a research conference and a meeting of activists and initiatives, which had proved highly inspiring at the five previous RAMICS congresses, would be difficult to implement this time.

Moreover, many of the researchers who had submitted their papers for presentations during the conference still preferred not to travel to Bulgaria in person, but to take advantage of the virtual lecture format widely practised during the pandemic.

A total of 52 research papers and field reports were presented in the end (see final program here). 30 of them by participants in Sofia who had come here not only from Europe, but also from Brazil, the USA, Japan and many other countries. Together with interested people from Bulgaria and students from the university itself, there were over 40 participants in the audience, at least during the high-profile keynotes and the opening event.

For the online presentations during the first two days, a total of 85 participants were registered, spread over 4 parallel sessions at a time. This was because, unlike other “hybrid” events in recent years, a strict distinction was here made between online and “on-site” sessions/panels. This offered those who had taken the effort and risk of travelling to Bulgaria more opportunities for precious exchanges with other on-site participants, without being limited by the practical and technical difficulties that any exchange with online participants still entails.

Sofia presented itself in her most beautiful autumn dress for the whole duration of the congress!

Even though there were fewer presentations overall than at previous congresses, in terms of content they offered no less interesting and varied insights into the many diverse aspects of complementary currency research (a compilation of all abstracts can be downloaded here). Likewise, the number of reports was sufficient to refute the impression held by some in recent years, that community-based complementary currencies are attracting less public interest today. To name just a few facts contradicting this impression: in France there are now 82 initiatives similar to the German Regiogeld. In Brazil, such currencies continue to receive support from both national social policy and municipal governments. In the USA and Canada, long-standing projects such as Berkshares and Calgary Dollar are developing steadily and, inspired by positive examples from East Africa, even the German Development Agency (GIZ) is currently running pilot-projects with complementary currencies in Cameroon.

A clear novelty since the past congresses has been the greater availability of transaction data and correlatable demographic and sociological surveys. This could be seen as a positive side-effect of the advancing digitalisation in the field and the otherwise often misguided enthusiasm for digital currencies. Although very few projects actually use blockchain protocols for their transactions, even those with central databases now generate data which can be made available to science and analysed anonymously. So far, visualisation and conceptual modelling of what is happening in complementary currency networks has dominated this research trend. But ideas on how to derive clues for better currency design and incentives for users have already been echoed in several papers using such data analysis tools. Likewise, greater attention to evaluation and impact studies, and the additional data collection needed to conduct those, was observed in many contributions – another aspect of research that has clearly gained profile and attention compared to previous conferences. Even if the impact of complementary currencies is still comparatively small and localised in the face of major challenges such as the Corona pandemic and global climate change, they at least indicate a maturation of this type of monetary and financial reforms, which gives hope for future developments.

Opening event and keynote by Prof. Nikolay Nenovsky

How long such conceptional development processes histroically take was indirectly represented through the selection of keynote speeches at the congress. To start with, the Bulgarian economist and central banker Prof. Nikolay Nenovsky gave an overview of the history of the financial landscape of the host country and the rest of the Balkans – a region in which questions of joining the euro-zone and other international integration still seem far more vivid than the promises of complementary currencies. In fact, there is currently only one complementary currency initiative in Bulgaria, which presented its ideas and first activities on the third day of the conference (see picture below).

The second plenary lecture was given by Thomas Greco from the USA, invited because of his tireless commitment to and advocacy of “mutual credit” systems, which makes him a cornerstone of the field complementary currencies to many activists and researchers alike. Prof. Bruno Theret form France, the third keynote speaker, in turn presented a detailed comparison between the value theories of Pierre-Joseph Proudhon (1809-1865) and John R. Commons (1862-1954), who contributed significantly to the ideas of cooperative financial practices in the 19th and 20th centuries and can thus be considered ancestors of the modern money reform movement, albeit with different tools. Finally, Susanna Belmonte from Spain used current examples from her home country and various EU programmes to show in the last plenary session how complementary economic and monetary initiatives can serve as nuclei for solutions to larger social and environmental issues.

Sales stall of Bulgaria’s only compl. currency at a Sunday market in the city.

In this same line of thinking it was interesting to observe how several research presentations were about the connection of complementary currencies and ideas of an unconditional or universal basic income. Even if the data in this field is still very limited – and its interpretation sometimes questionable – this at least shows how grand aspirations and small-scale experimental approaches can cross-fertilise each other.

Integrating individual case studies and grand theoretical designs was another strand of research that linked different presentations during the congress. For example, the three members of the monneta expert network present in Sofia, Christian Gelleri, Jens Martignoni and Leander Bindewald, all presented aspects of their doctoral dissertations, which had as an common denominator the interplay between the practice of complementary currencies and economic monetary theory – and how both can be made more robust by including the change of perspective they both demand of eachother.

Jens Martignoni was also elected to the RAMICS management committee during the associations general assembly held on the last day of the conference. In addition, he will relieve Georgina Gomez after many commendable year in her position as Editor-in-Chief of the International Journal of Community Currency Research (IJCCR). We congratulate on both positions and wish him all the best!

Finally, the practicalities and quality of the interactions between local and online participants was praised by many participants during and after the conference. Especially if the next conference in two years should take place outside Europe once more (the next venue has not been decided yet), the hybrid option of presenting papers onlineis more inclusive for those who cannot afford or do not want to travel. But especially after the past years of virtuality, we very much hope that soon the value of face-toface encounters will again come more and more to the fore. This is also what monneta stands for as a network organisation, especially for the German-speaking members in our expert-network. And this concern for fruitful exchange is also what motivated us to become a co-organisers of the congress in Bulgaria and to continue as the only institutional member of RAMICS.

In this spirit, we hope to meet many of our colleagues, friends and readers in person again soon, at the RAMICS Congress 2024, or hopefully before that at other events organised by and with monneta. For updates on this, keep following our newsletters.

 

This article was published on our German site in September 2020. Now, in January 2022, we mourn the passing of Edgar Cahn, father of timebanking across the US, distinguished professor of law in Washington D.C. and most-valued and tireless advocate for social justice globally. Since this article calls for the idea of timebanking in times of crisis, we republish it in English now, as a tribute to Edgar Cahn’s work. Find his latest publication with his own take on timebanking in times of pandemics here.

Since March 2020 we have just witnessed such an astounding turn of events. Suddenly, a virus made health seem more important than the economy (at least for a while), even at government levels. Suddenly many of us had plenty of time at our hand, but were alone in our four walls. For many the questions was: What do I want to do with my time? How would I prefer to spend it? If it weren’t for the economic uncertainty, there would be something liberating about it. I can make good use of my time. No more traveling to work in rush-hour traffic. No time pressure from the work-schedule. No conforming to workplace conventions. Instead, the circle of friends and the neighborhood become more important – albeit restricted by the new distancing rules. Who can cut my hair when the hairdresser is closed? Who will care for the sick at home when hospitals are overloaded and visits risky? Who will help the elderly with shopping?

The corona crisis has taught us how important care services are as a foundation of our society. In families, it is usually taken for granted and raising children and caring for each other is hardly considered work. Parents give their children a lot of time – without expecting anything in return. This can also be called the gift economy. In any case, it is a basis of our society that deserves recognition, because without this donated time, there would be no people to do economics. Instead, the parents who worked at home during the corona lock-down are among the most disadvantaged, because they were alone and naturally overburdened with childcare “on the side”. Their experience shows that “home office” and “home schooling” cannot happen at the same time. How lucky were those who could ask grandparents for help, who have a garden. The closure of children’s playgrounds exacerbated social inequality.

One of the reasons the corona crisis has hit us so hard is because health care services are priced so poorly. And because working conditions have deteriorated for decades under the dictate of “economic efficiency” through austerity measures. Care needs more appreciation and better conditions – for children, the elderly and the sick – in other words, for all of us.

A good way to improve social exchanges in cities, communities and neighborhoods is through so-called timebanking or time-exchange systems. In these systems, people exchange their time on the basis of volunteered hours. One hour from me equals one hour from you. Everyone can volunteer hours and we all need people to help us – not only when we are sick. In time-exchange systems, voluntary work such as helping with homework, caring for the sick and elderly, giving somebody a life, repair work, cooking and childcare can be made visible and rewarded – without deepening the reaches of the monetised economy. And an increase in time being exchanged this way can document how the community is growing along with the trust between its members. In the end, its about more conviviality for all participants.

Of course, I would have done those hundreds of volunteer hours at my children’s schools anyway. But the possibility of an extra recognition through time-credits on my time-exchange account would have been an added benefit if I could redeem them later, when I require help myself and my children have moved to another city. For example, when carrying the groceries home or getting to my doctor’s appointment. With a time-exchange system it would be easier to ask for help, because I have “earned” it.

Who would ever thinks the corona epidemic was the last crises? We are probably only at the beginning of a longer economic crisis that will bring us many more financial crashes. The current crisis should make us aware that it is not the Euro, gold and Bitcoins that are the real source of wealth, but friends, family and a strong personal network.

Time-exchanges are not about the economisation of voluntary work or about charging for our precious time. No, it is about better collaboration, personal relationships and taking better care of our fellow human beings – together. Because the wealth of time is about quality – not quantity and not financial growth. A win-win for all – without profits.

Now is the right time to start such exchange systems, to demand government programmes in their favor and the adequate levels of data protection. This would promote social cohesion and community building, which are particularly difficult to achieve in times of corona-induced impositions of social distancing and contact restrictions. Exchange systems can perpetuate our willingness to help each other and cooperate peer-to-peer, nurture its potential and expand it into the future. For humanity. Time’s worth more when it is shared. And time-sharing systems show us that time is ultimately much more important than money. So let’s use our time better together!

More information about time-exchange systems on our website:

  • In-depth article on timebanking (CCIA 2015), and one about similar systems as part of our online course.
  • Monneta expert Stephanie Rearick has developed an integrated time exchange system “Human Aid Networks“. New groups anywhere are welcome!
  • More links to timebanking experts in the UK, the US and elsewhere (amongst other examples of complementary currency and monetary reform) can be found on our website under Examples and Initiatives.

 

Special Issue “Monetary Plurality and Crisis” in the Journal of Risk and Financial Management (JRFM)

 

In addition to our commitment to the implementation of innovative currency ideas and the ongoing educational work on money and monetary reforms, it is above all the academic treatment of these two fields of activity that will ultimately pave the way for a new monetary and economic order in the long term. Especially in the young scientific field of complementary currencies research, the linking of practice and science was considered from the beginning. Thus, since the early 2000s, the international conferences on this topic have seen themselves as a forum for both activists and academic researchers. Under the auspices of leading universities in France (2011) and the Netherlands (2013) these conferences lead to the establishment of RAMICS, the “Research Association on Monetary Innovation and Community and Complementary Currency Systems”, founded in 2015 during the conference in Brazil. Since then, the specialist journal IJCCR, which has been published since 1997, has also been taken under the wings of this association.

However, it takes time for a new field of research to establish itself, both in the academic discourse and institutions, and in the awareness of academics and students. Publications in one’s own circles help, but full recognition in the discourse of the scientific establishment cannot be fully achieved this way. Therefore, it is a great achievement to place the rather unknown topic of monetary diversity in a conventional and broad-based business journal such as the Journal of Risk and Financial Management. The recently completed special issue on “Monetary Diversity and Crisis”, made this possible. This has not only motivated established scholars to consider new topics and share their thoughts on monetary theory and the practice of complementary currencies, but it has also given young authors the opportunity to publish the results of their work.

To ensure that these articles are not only accessible to a specialist audience with access to institutional libraries, it is of particular value that this journal operates according to the “open access” principle. This means that every article can be viewed in full by anyone at any time, and downloaded free of charge. Since such an approach eliminates the retrospective funding of publishers via subscriptions and “pay per view” fees, their editorial effort and costs of publication are commonly be paid in advance by the author or their institution. Unfortunately, for young and independent scientists this is often an insurmountable financial hurdle, even for many scientific institutions outside the industrialized nations. Therefore, it was a stroke of luck that for this special issue we were able not only to gather the interest of the journal, but to gain the financial support of the editorial team’s organisation. The funding of most of the publishing fees, for articles that passed the rigorous scientific review process, were financed in equal parts by Prof. Georgina Gomez’s research group at the University of Rotterdam and monneta.

Most of the articles now published deal with the economic benefits of monetary diversity. These are examined, on the one hand from a theoretical, macroeconomic perspective (see the articles by Simmons et al. and Kuypers et al.), and secondly on the basis of practical local examples – supported by data from established complementary currencies such as the REC in Barcelona (see Martín Belmonte et al.), the Sardex in Italy (see Fleischmann et al. and Simmons et al.), the Chiemgauer in southern Germany (Zeller) and Sarafu in Kenya (Ussher et al. and Zeller).

Historical examples with parallel currencies are also examined (see Kokabian and Sotiropoulou), as well as lesser-known monetary practices such as the obligation clearing in Slovenia (see Fleischmann et al.). And beyond the economic advantages of complementary forms of currency, some articles examine more fundamental issues, such as the legal definitions of “money” and “currency” as a basis for a sustainable and more equitable monetary order (see Bindewald), the effects of profit-oriented creation of currency on the stability of the financial system (see Kuypers et al.), and the influence of economic inequality on the diffusion of innovations and the importance of cash (see Srouji).

What all these authors seems to have in common is that their research questions are formulated with a concern for social justice and ecological sustainability. The monetary innovations here examined are not evaluated solely in terms of their micro- or market-economic efficiency but are seen in the light of their contribution to a sustainable world.

[The author of this article is also co-editor of the special issue described, and author of one of the articles published therein.]

 

“The other day you said on the phone: Give me a problem and I’ll develop a complementary currency with which you can solve it. And I have to tell you this: Your imagination, your inexhaustible ideas on how to design, invent and transform money, simply amaze me every time. ”  Margrit Kennedy in a letter to her long-time work colleague and friend Bernard Lietaer

Review of
Peter Krause: Bernard Lietaer – Life and Work
(Berlin: epubli, 2020. Volume I: 400 pages, Volume II: 250 pages) – links to order the books online below

Bernard Lietaer passed away on February 4th 2019. For many who deal with new forms of economy and money, this means a trend-setting intellectual beacon and reference point of international standing has died. Like no other, Lietaer’s career and personal journey had encompassed all areas of finance: a celebrated Harvard graduate in 1969 and central banker in the early 80s, he became the most successful hedge fund manager of 1989, and ending as one of the sharpest system critics and simultaneously most creative visionaries of a new, socio-ecological monetary order.

However, only a few were aware that Lietaer’s expertise and reputation were not limited to finance and monetary reform. The recently translated biography of Peter Krause is the first publication for which Lietaer explicitly allowed insights into all areas of his life and work. From two personal conversations during the last weeks of Lietaer’s life, to countless interviews with friends, colleagues and family members, as well as numerous documents found in his bequest or sent in from all over the world – Peter Krause put together a holistic portrait of a most remarkable man. The topics for which Lietaer was publicly known now appear in unison with a much  wider spectrum of lived experience and intellectual prowess. Only very few close friends seem to have been granted glimpses of this wealth and depth of Lietaer interests before, while some elements were published under his literary pseudonym “René de Bartiral”.

In partly factual and partly poetic prose, the two volumes of this biography reflect the author’s fascination with the person he describes, and as if through a retrospective prism, they illustrate an extraordinary and courageous life in all its colorful richness. The first volume contains the actual biography. The second volume supplements it with a treasure trove of pictures, illustrations and previously unpublished texts and interviews. It may seem under-representative that only about a quarter of the text is dedicated to Lietaer’s life in chronological order. But it makes up for brevity by being vividly and lifelike embellished with information from interviews, archive material and an unexpectedly large number of personal details. This conveys intimate insights into Lietaer’s personal, professional and intellectual journey – from his youth in Belgium, through his studies and career, especially in North and South America, to the last months of life in northern Germany – which harbours ever new turns and astonishing developments.

The remaining three topical parts of the first volume sum up Lietaer’s work under the headings “Knowledge”, “Wisdom” and “Mystery”. Layer by layer, they complete a picture of Lietaer that was previously imperceptible to the public. In the section “Knowledge”, his professional career in the financial economy and his role as a pioneer of a new monetary paradigm is mapped through his early and best known publications. Even for those who have already read most of Lietaer’s books, this anthological approach offers new topical links and an appreciation for the incremental development of his arguments.

In “Wisdom”, the psychological and historical approaches that Lietaer already mentioned in some of his publications (e.g. in Mysterium Geld, 2000, Riemann) are introduced and traced through both their biographical and ideological backgrounds. Among other things, it deals with general philosophy, the arch-types of Gustav Jung, and the historic transition from matrifocal to patriarchal societies. In a separate section that is dedicated to the future,various utopian and dystopian scenarios that Lietaer developed in several of his publications are brought together.

The last part of the first volume, “Mysteries”, provides the most astonishing insights into the person Bernard Lietaer. Based on his little-known work on Rembrandt’s self-portraits, this chapter outlines a large number of topics, fields of engagement and influences, all of which were of central importance for Lietaer, but were largely left out of his previously published work. These include art and architecture, Freemasonry, spirituality, metaphysics and practices of personal development. Remarkable here is the depth of the knowledge exhibited in areas that are predominantly considered “esoteric”, i.e. secret and exclusive, and commonly treated as such. This turn towards transparency, if only posthumously, is one of the last gifts of Bernard Lietaer.

The second volume primarily offers accompanying pictorial material that underlines the text of the first volume. It makes the life and work of Lietaer tangible, especially where art, architecture and esoteric knowledge are concerned. It contains a large number of photos – of Lietaer and the objects of his interest – as well as drawings, manuscripts and graphics from his own hand. The effect of this material should not be underestimated for the overall impression of both Bernard Lietaer and this biography. The second half of this volume contains texts through which Lietaer himself, directly or indirectly, is allowed to speak. Two interviews with Tesa Silvestre from 2008 are included here to which Lietaer himself had repeatedly referred to as comprehensive summaries of both his contributions to monetary reform and his personal, spiritual convictions (this latter interview was previously unpublished). This part also contains the first translation of an archaeological-anthropological study about a pre-columbian temple complex in Peru, for which Lietaer first used his pseudonym in 1982.  Finally, Lietaer’s master’s thesis on the management of exchange rate risks, on which his early international reputation and professional success were based, is reviewed here in detailed yet comprehensible language.

The author ends his text with words by Bernard Lietaer, which, published in 2008 under the name René de Bartiral, have only become more topical again in the second half of 2020. Through them, the appreciation and legacy of the life and work Bernard Lietaer lives on:
“As I see it, we are at a key juncture, just a step away from ‚rupture‘; on the edge of the chaos of a major change. This involves a choice between what the English so neatly call ‚breakdown or breakthrough‘ – either we break through to a new level of complexity or collapse backwards to a lower level.» The contribution of one remarkable man to the positive continuation of this human journey on this planet is traced and illustrated in this biography.

This review first appeared in German, in the Zeitschrift für Sozialökonomie, on 08/17/202

You can order the books “Bernard Lietaer – Life and Work“, Volume 1 and 2, by Peter Krause (ISBN-10: 3753443379), through your local bookshop. In Europe, you can also order them through the self-publishing site Books on Demand. In other parts of the world you might have to turn to Amazon for now (Volume IVolume II).

 

I gave this article that title on submitting it, on May 5, 2020 – 20 days before the police killing of George Floyd in Minneapolis, and the subsequent steps to both revolution and violent crackdown. I can no longer say something that light, but I can say that current circumstances make it all the more painfully obvious that the end of this globalized racial capitalist world is long past due. And that deserves its own treatise, which will not be found here today.

I first left this article needing one big last rework when the COVID pandemic became visible in my part of the world [USA]. Feeling it had been made obsolete along with the rest of the old world, I moved on and into using what I’ve learned, and more importantly connecting with who I’ve met, in the world of cooperative economics, in order to take this moment to transform the world into what we’ve been dreaming all along.

In my article I wrote about the many people, including lots I failed to name — especially women, and indigenous people, and immigrant communities, and “poor” families, and squats, and tent communities, and black communities, and indigenous land rights organizers, and on and on — who have been enacting the “new” economy all along, at their peril, invisiblized and subjugated by the form of patriarchal extractive exploitative capitalism most of us mistakenly refer to as “the economy.”

I refer to many “failed” experiments in complementary currencies, and many efforts that continue to ebb and flow, like our own timebank here in Madison Wisconsin, and ones that turn into plain old relationships where people help each other out, and ones that get eaten by the non-profit industrial complex. I finally came to the conclusion that the efforts that embrace what’s known as “emergent strategy” – working with their communities, expressly building relationships and tapping into group process and collective intelligence, honoring the wisdom of each participant, aiming for diversity of perspectives, adopting clearly communicated values systems, explicitly aiming to redress wrongs and create solutions that work for everyone – are the ones that continue to live and thrive.

And now, these are some of the ones springing into action to support people in time of COVID-19. Some are providing infrastructure and guidance for new mutual aid networks, some are able to tap into membership where ready networks of people already know how to help each other out in an organized way. All the nutrients of all the various projects in different stages of birth, life, death, decomposition, are beginning to come together now to create systems that can relieve some of the suffering from the crisis, then help mitigate the damage, carry out transformative work, and usher in a lasting economic transformation.

And then, before the final edits were made, the world completely changed again with the 5/25 police killing of George Floyd. All showing even more starkly the dynamics covered here, and opening of new possibilities — beautiful as well as horrific— that were  virtually unfathomable before.

Like the solutionary work I refer to below, it is all emergent, and you’re invited to participate.

But first, here is what I wrote back in February 2020…

Sometime in 1995 my spouse and I, then two 20-something spanking new owners of a little neighborhood coffeehouse, stumbled on a tiny magazine piece on the Ithaca HOURs currency. We were floored by this great idea that you could create your own local money. Amazing, and so clearly needed! We joined up with a local group to make and launch our own local currency, Madison HOURs, to a lot of excitement and fanfare.

Then we spent 20 years dragging the thing behind us like a dead elephant — finally, joyfully laying it to rest with much relief in 2012.

That was my introduction to the world of complementary currency, a world in which I’ve continued to operate precisely because I don’t want people to make the same mistake we did.

That mistake was in starting with an answer to a question nobody was asking.

With all its tremendous flaws, the dominant capitalist economy IS built for business, even when it’s disadvantaging locals through its economies of scale. The market economy has not been crying out for an additional way to accept payment, especially not one that requires an extra drawer in your till, extra training for your staff, and fewer ways to spend it.

What our world IS crying out for is ways to encourage, value, and reward care. For ways to make sure our vulnerable and sick neighbors get what they need, ways to facilitate equitable distribution of resources among people especially including those who have been shut out of today’s dominant economy (black, brown, old, young, immigrant, differently abled, neuro-atypical, ‘unattractive’, lots of women, lots of men, lots of LGBTQ folks, the list goes on…). Our world is crying out for an economy that doesn’t create a fake battle of ‘jobs v. environment’ battle, an economy not built on slavery, stolen land, and a prison industrial complex. We need an economy that doesn’t steal people’s time and life energy in exchange for very basic access to very basic needs (still hard to obtain for many in the US even at full- or more than full-time employment). Our world is crying out for an economy that’s not built on eating and excreting said world.

A local currency provides a friendlier way to do business and is an excellent learning opportunity – but it does not provide the regenerative economy the world needs. However, principles of it can be a key player in the ecosystem that DOES provide that economy.

That’s the understanding that underlies my current work with Mutual Aid Networks, and the global cooperative network we’ve formed, HUMANs (Humans United in Mutual Aid Networks).

My work in mutual aid began in earnest about 10 years into the Madison HOURs experiment, when I read Bernard Lietaer’s “The Future of Money”. I was completely convinced by his description of a robust currency ecosystem, where different forms of currency are used to facilitate different types of exchange.

The perspective I gained from that book drove me to start the Dane County TimeBank, a mutual credit exchange where members exchange time instead of money, where everyone’s time is valued equally and no monetary value is attached to time. This showed me how elegant, powerful, and transformational – both on an individual and a community level – this form of equal exchange and mutuality could be.

I also saw that, like nearly every other community effort, in order to do timebanking we had to begin to play the non-profit game: applying for and reporting on funding from foundations and government sources, being dependent on their requirements, largesse, and shifts in direction. Plus, while timebanking is excellent for rewarding those infinitely abundant things like care, creativity, civic engagement, and community building, it is NOT built for business and shouldn’t mingle too much in that domain.

That’s why we started looking at how other solidarity economy tools fit into the picture, and developed our vision of the different ways of exchanging that fit together like a food chain in natural ecosystems. We realized that with a comprehensive approach to sharing, exchange, and ownership, we could much more meaningfully and systemically change how we approach work and compensation, and could more effectively change the economy by changing our own work lives and the work lives of people in our networks. We realized that, in combination, the various means of sharing and exchange already available to us could meet our needs pretty well.

To explore these ideas and also to build solidarity, the Mutual Aid Networks team (a rotating cast of collaborators since 2009) have been traveling around the US, parts of Canada, Europe and New Zealand, meeting people in person and learning about projects.

Especially in the US, but everywhere, we’ve found timebanks, local currencies, transition towns, and eco-villages that are struggling with scarcity and competition, working hard to facilitate sometimes vanishingly small amounts of participation, and burning out.

We know it’s time to put Mutual Aid tools to work for us, all who are struggling to show the world that they work, laboring away in our ‘free time’ while we work day jobs in the exploitation economy. Or working for free while the exploitation economy eats our future security (like savings or equity or familial goodwill).

In fact, a major theme throughout my solidarity economy work has been the sheer number of strong leaders and project stewards – by far a majority women – who are leading their respective projects without monetary compensation, or with sporadic and insufficient monetary compensation, or with giant strings attached to their funding.

At the same time there is the dawning of our collective consciousness that we already have what we need, have always had it, and it’s the invisibilization of that awareness that is the crux of the problem. And that we’re at the heart of the problem by defining our success and ourselves in the old capitalist paradigm, by capitalist measures. We complementary currency activists say we know these models can provide a solution, yet most of us use them marginally at best. We say we have what we need yet we don’t employ these tools to support our own efforts. Instead, you’ll find many complementary currency activists mired in endless funding pitches, competing with one another to be turned down for yet another big grant.

The complementary currencies in the US and elsewhere, almost to a one, are moribund to varying degrees – higher profile systems like Bay Bucks CA and Hudson Valley Current in NY make lovely public cases for local economies, while vanishingly small numbers engage in their exchange. From my vantage point, this is a reflection of my previous case that business already has plenty of exchange mechanisms at its disposal and the convenience costs don’t outweigh the benefits of another currency in their tills. Timebanks are faring somewhat better but tend to have very few exchanges recorded. This is also true for my own “very functional” timebank which has almost 3000 members signed up, of whom just about 100 record exchanges in any given year.

However, there is a magic in the timebank, and Madison HOURs before it, and every other limping or defunct cooperative economy experiment: it’s the dawning awareness that the economy is US, what we offer, what we share, what we receive, and that we’re free to enact it however we want. And once we have relationships with one another, and knowledge of each other’s gifts, we tend to choose to share and exchange with minimal paperwork and maximal joy.

We’re right that money is the problem. But at its heart, the problem is the central role that money has taken in human society, sucking in the rest of life like a black hole. So the solution must rest in removing it from that central space, and filling in the social vacuum around it.

When we start from that place, we make smarter choices about what economic tools to use and when. For example, we start using the formal timebank just to invite new community members and to find and build new services, but not to log transactions among people we’ve come to know. Many timebanks have begun to offer shared savings (of regular old bank money) once the need becomes apparent (LA’s Arroyo Seco Timebank is a great example), and those start with a community who already know one another and how to cooperate. And many timebanks morph into cooperative enterprise-generating organizations (e.g. in Lake County CA, or the Nuria Social in Catalonia) when the need becomes apparent and the community has built their organizing skills.

The local business-oriented complementary currency project “rCredits” morphed into a much simpler yet more powerful model, Common Good, that skips over the creation of a new currency, and combines cooperative saving-giving-lending, and a debit card. The complementary currency just wasn’t needed.

The common thread I’m witnessing is that people and projects who embrace (or at least roll with) change, unpredictability, fallow times, and emergent strategies are the ones who are flourishing.

When we recognize that defunct or barely-there currency and community projects aren’t “failures” after all, but nutrients for a more verdant garden, the picture shifts. Besides the examples in the previous paragraphs, we can point to many of our own partners who have recently obtained their own public spaces where ongoing in-person organizing, building, and emergent strategies can flourish – including our Mutual Aid pilot in Hull UK, our partners in BC-area Working Group on Indigenous Food Sovereignty, friends at STIR Magazine UK, and my own local Madison Mutual Aid Network and Dane County TimeBank. In addition, peer-to-peer support and learning opportunities are abounding:- Commons Transition, Shareable, People’s Hub, our own HUMANs network — and actively connecting formerly disconnected approaches and communities. We’re about to witness a whole new level of effectiveness, complexity, and, even more importantly, social justice and equity in our cooperative economic ecosystem.

At Mutual Aid Networks we’ve always had the ‘pave the cowpath’ philosophy – in other words, invite people to experiment freely, then document the commonly successful modalities and make them more replicable. You are invited.

Now that COVID has so clearly shown the world that the highways and byways of globalized capitalism lead us off the edge of a cliff, we can go fast in the other direction – toward creating enjoyable new livelihoods that provide clean food, water, and air, care, comfort, joy, security, and beauty. For everyone.

While we have the world’s attention, let’s show that mutual aid not only gets us through our crisis with less pain, it gets us a whole, healthy, beautiful world on the other side of it.

You can join us by offering and requesting stuff in the HUMANs global cooperative network, participate in one of our newly-hatching Common Funds, start or join projects within our collective framework, and start enjoying life as a lively human. All you need to get started can be found at mutualaidnetwork.org

Good news for all who remember our late founder Margrit Kennedy: Her biography, written by Peter Krause, is now available in English – and of course its a valuable read for all who were not familiar with her before, too!

 

 

Based on interviews, and many autobiographic texts, the book covers all aspects of her life inlcuding but not limited to her leading role in the field of monetary reform. It portrais a gifted and versatile woman: Margrit Kennedy the archtect, ecologist, womens’ rights activist and trail-blazer for the recognition of compelmentary currencies. Her committment as a “monetary expert” was always founded on and sustained by her desire for social justice which turned her into one of the most convincing personalities of the ecological movement of the 20th century.

The book is available at bookshops or online from the website of the German print-on-demand publisher ePubli.

 

We are mourning for Bernard Lietaer, who died from cancer on February 4th. He was a friend, colleague and mentor to us for many years, who blessed us with extraordinary insights and invaluable inspiration. Not only has the world now lost the person with the most far-reaching knowledge about money, but also a head and heart that knew how to design monetary systems for the benefit of people. He was out to change the world of money for the better. He knew that money is such a powerful instrument that determines not only our economies but also our thinking. His enthusiasm for the topic never faltered because “if there is a single instrument, that can be brought to bear on all issues that we need to address to save mankind, it would be the money system.”

Fundamental terms like “complementary currency” and “monetary ecosystem” are attributed to him and he kept saying: “Name a problem and I will design a complementary currency to help you solve it.” Margrit Kennedy wrote to her friend and co-author of many years: “Your creativity, your inexhaustible ideas on how to design, invent and transform money, simply leave me in awe.” Both of them were convinced, that diversity in currency systems would be far superior for the benefit of people, the economy and the planet than our singular money system, in which banks create money by giving loans.

He suffered seeing how his ideas failed to be systematically implemented in policy: Despite the many thousand local complementary currencies that were launched in the past decades, he never received substantial recognition within the conventional financial system. “I have lost my illusion that having the solution is what matters. It’s absolutely irrelevant.” he remarked to us in one of his last video-interviews in 2016. And it pained him deeply that Greece never got the chance to issue a national parallel currency. He was convinced, that the Greek people would have been much better off, if they had their own second currency – much like Britain has with the Pound – to be used alongside the Euro.

Bernard Lietaer was a great thinker with an unusual bright intellect, enriching the lives of so many people. For us he stands in the line of economist like S. Gesell, J.M. Keynes or N. Georgescu-Roegen. Isaac Newton is quoted saying that we are all standing on the shoulders of giants and hence can look further into the future. On the 7th of February Bernard would have celebrated his 77th birthday. We will always love him and are now standing on his shoulders, to continue his work and built a better world.

 

Stefan Brunnhuber und Kathrin Latsch
February 7th, 2019

 

We talk a lot about the ‘money system’. In what sense does money form a ‘system’? Does it have a function or purpose? Does it have interconnections? Does it have identifiable elements?

1. Elements of a money system

The elements of a money system include the structures and institutions that create it – governments, central banks and commercial banks – the ‘players’ who use it – individuals, consumers, traders, savers, investors, employers and employees, businesses, voluntary organisations, government agencies – and the processes that manage it – creation of loans, designation of currencies, transaction mechanisms, debt collection procedures and many others.

2. Interconnections in a money system

The simplest money system we might imagine would have three people who agree to use some object to ‘keep score’ of exchanges between themselves. At this level the purpose, the elements and the potential interconnections are relatively simple. Once we scale up to a nation state with millions of people using the same medium of exchange for myriad purposes with multiple elements and uncountable interconnections, it is no longer possible to analyse its complexity and feedback loops. This is why oversimplified economic ‘models’ and theories so often fail in their prognoses and predictions. Unforeseen or unintended consequences of economic or financial actions are common.

The money ‘system’ embraces multiple, often conflicting, purposes. For instance, when we use money for trade, we are not saving it for future use and when we save or invest, we take money out of general circulation, which can affect the state of the economy for everyone else. Add interest payments into the mix and investment can become a risky medium with big winners and losers. Irresponsible banks and governments can quickly corrupt the medium of exchange that everyone else depends on for exchange.

Depending where you draw the line around the ‘system in focus’, it may even be appropriate to talk about multiple money ‘systems’ serving different purposes for different users, all interacting with each other through multiple feedback loops. Clearly, money means very different things to a beggar on the street thinking about the next meal and to an investment banker looking for the next deal. Yet these two actors are part of the same money ‘system’ if they both use the same monopoly national currency to do their business.

3. Reforming the money system

The complex of these multiple purposes, elements and interconnections can lead to great crashes in which a lot of people get hurt. The 2008 financial crisis was just the latest and most spectacular in a long line of crises stretching back decades. An International Monetary Fund Working Paper identified147 banking crises, 218 currency crises and 66 sovereign debt crises between 1970 and 2011. This is ‘systemic’ – or in-built – instability1.

In the long history of money, there have regularly been calls to reform it from one group or another for whom it was not working well. Some want to keep money scarce and valuable to protect their wealth. Others want a plentiful but stable medium of exchange so they can eat or plan for the future. Money must serve many masters. You can read some of the history of monetary reform in the UK in my previous blog post.2

There has been a small but largely ignored monetary reform movement in the UK for decades. It sponsored a handful of Early Day Motions in Parliament with proposals for reforming the national money supply that gathered little support. Since the 2008 crisis, however, a new force has arrived on the scene in the form of the Positive Money (PM) campaign. It has made smart use of modern social media with short videos and bite-sized information to reach a much wider audience with messages of monetary reform.

Positive Money’s analysis and proposal

Positive MoneyPM clearly divides its website into three areas: The Issues; How Money Works; Our Proposals. Each section gives a clear overview of that theme, then breaks it down into detailed sub-sections followed by lots of helpful links to explanatory videos, books and articles.

1.The issues of our money system

The first issue raised by Positive Money is how many individuals and businesses are trapped in debt because most money in the UK is created by banks when they make loans. The only way to get extra money into the economy is to borrow it from banks. House prices have constantly been inflated by the hundreds of billions of pounds of new money that banks created in the years before the financial crisis. There is persistent inequality because our money is issued as debt and the interest that must be paid on this debt results in a transfer of wealth from the bottom 90% of the population (by income) to the top 10%, exacerbating inequality. Environmental destruction is accelerating because there is a direct link between the perceived need for continuous economic growth and damage to nature through exploiting natural resources for monetary profit. Money creation is undemocratic because banks create 97 per cent of the money supply when they make loans, so they control where newly created money goes and have the power to shape the economy. In the 5 years before the financial crisis, the banks approved a total of £2.9 trillion in loans. Over that same period, the government spent a total of £2.1 trillion. So banks’ power to create money through loans, gives them more ‘spending power’ to shape the economy than the whole of our elected government. There are regular financial crises because banks are able to create too much money, too quickly, and use it to push up house prices and speculate on financial markets. A ‘boom and bust’ economy fuelled by easy credit is bad for jobs and businesses, creates systemic instability and makes environmental sustainability impossible. Taxpayers foot the bill for financial crises because the proceeds from creating new money go to the banks rather than the taxpayer, and because taxpayers end up paying the cost of financial crises caused by the banks.

After this presentation of a range of problems created by the current monetary system, the second area of the website explains how money works.

2. How our monetary system works

Positive money also shows how most of the money in our economy is created by banks, in the form of bank deposits – the numbers that appear in your account. 97% of the money in the economy today is created by banks, whilst just 3% is created by the government as notes and coins. Bank loans create numbers in a customer account, which then act like electronic IOUs circulating in the economy until a loan is paid off, so banks can effectively create a substitute for printed money. Banks create new money whenever they make loans and there are several statements by experts from the Bank of England that confirm this fact. In short, money exists as bank deposits – IOUs of commercial banks – and is created through some simple accounting whenever a bank makes a loan.

Banks aren’t middlemen between savers and borrowers as many people think. By creating money in this way, banks have increased the amount of money in the economy by an average of 11.5% a year over the last 40 years. From the time when the Bank of England was formed in 1694, it took over 300 years for banks to create the first trillion pounds. It took only 8 years for banks to create the second trillion.

In a short historic overview Positive Money also explains how banking evolved out of the inconvenience of carrying heavy coins around and the need for better security into note-issuing and finally deposit-making. The 1844 Bank Charter Act only stopped the creation of paper bank notes – it didn’t refer to other substitutes for money, such as bank deposits or ‘loans’ so banks could still create money simply by opening accounts for people or companies and adding numbers to them. Computers revolutionised banking so that today over 99% of payments (by value) are made electronically. With the rise of computers and financial deregulation, banks received almost unlimited power to create new money and are only required to keep a tiny fraction of their liabilities in reserve for emergencies (fractional reserve banking).

Deposit money now makes up over 97% of all the money in the economyaround £2.1 trillion, compared to only £60 billion of cash. By value of payments, bank deposits are used for 99.91% of transactions and transfers, with cash being used for just 0.09% of transfers. Consequently, the physical currency issued by the state has been almost entirely replaced by a digital currency issued by private companies. The UK’s money supply has been effectively privatised.

3. Positive Money’s Proposal

Positive Money’s proposal for reform makes three fundamental demands:

1. Take the power to create money away from the banks, and return it to a democratic transparent and accountable process

2. Create money free of debt

3. Put new money into the real economy rather than financial markets and property bubbles.

PM staff have written a 64 page report “Sovereign Money: An Introduction3, which outlines their reform proposals in detail. They claim the economy would be more stable and society better off if we transfer the power to create money from the banks back to the state, working in the public interest. This can happen if the Bank of England creates money and transfers it to the government to be spent into the real economy (rather than the financial or property markets). This reform would transfer the ability to create new money exclusively to the state, creating a ‘sovereign money’ system.

Taking the power to create money out of the hands of banks would end the instability and boom-and-bust cycles that are caused when banks create too much money in a short period of time. It would also ensure that banks could be allowed to fail without bailouts from taxpayers. It would ensure that newly created money is spent into the economy, so that it can reduce the overall debt burden of the public, rather than being lent into existence as happens currently.

The power to create all money, both cash and electronic, would be restricted to the state via the central bank. Changes to the rules governing how banks operate would still permit them to make loans, but would make it impossible for them to create new money in the process.

Banks would then serve two functions:

1. The payments function: Administering payment services between members of the public and businesses, and holding funds safe until they need to be spent.

2. The lending/saving function: acting as an intermediary (middleman) between savers and borrowers.

The central bank would be exclusively responsible for creating as much new money as was necessary to support non-inflationary growth. It would manage money creation directly, rather than using interest rates to influence borrowing behaviour and money creation by banks (as is the case at present). Decisions on money creation would be taken independently of government, by a newly formed Money Creation Committee (or by the existing Monetary Policy Commitee). The Committee would be accountable to the Treasury Select Committee, a cross-party committee of Members of Parliament who scrutinise the actions of the Bank of England and Treasury.

Positive Money’s presentation of the systemic instabilities caused by the money system and the profit-seeking mechanism by which commercial banks create most of the money we need creates a compelling case for reform.

Its proposals for reform are, however, much less convincing to this writer. To be fair to PM, it has also responded to many criticisms of its proposals but even its responses leave me uneasy about several major aspects. 4

A critique of the Positive Money Proposal

In my opinion, any credible reform proposals needs to meet three criteria:

(a) they need to be ‘systemic’ ie looking at the whole system, not just a part of it

(b) they need to be economically credible

(c) they need to be politically desirable.

1. Systemic reform

PM effectively proposes replacing a banking cartel with a government cartel. It seems like a mechanistic nineteenth century solution to complex twenty-first century problems rather than a systemic response to systemic problems. PM claims that “in a sovereign money system, there is a clear thermostat to balance the economy. In times when the economy is in recession or growth is slow, the Monetary Creation Committee will be able to increase the rate of money creation to boost aggregate demand. If growth is very high and inflationary pressures are increasing, they can slow down the rate of money creation. At no point will they be able to get the perfect rate of money creation, but it would be extremely difficult for them to get it as wrong as the banks are destined to.”

This is a bold claim that does not answer a fundamental question: on any given day, how would a committee sitting in London decide how much money the economy needs? By looking at trading statistics, GDP, how exactly? There are no known instruments that can measure such a critical statistic because the economy and financial system are complex and emergent, like all systems. The myriad of purposes and connections that need to be served by a single national currency cannot be reduced to a single number.

PM goes so far as to admit that its proposal would be less flexible than the current system of banks creating money in response to consumer demand. It is not clear how a less flexible system of money creation would help the economy, individuals or the environment. Nature teaches us that more diverse, flexible systems are more resilient and better able to withstand shocks than monocultures. Any credible systemic reform needs to demonstrate how the various system elements – users of money, commercial banks, central bank and government – can be realigned to be more flexible and better serve the needs of users, rather than replacing one monopoly with another.

Another reason why PM’s proposal is not a systemic solution is that it assumes a single national currency as the norm that everyone aspires to. In fact, monetary history shows us that people will accept almost any object as money so long as everyone else does. Stones, shells, beads, copper, silver, paper and now computer digits command belief so long as belief in them as a medium of exchange lasts. Single national currencies controlled by central banks are an eighteenth century invention that paved the way for globalisation but their monopoly is bought at a price of essential economic and social diversity. Over the last thirty years people all over the world have experimented with non-national currencies – local, regional and virtual – that do not replace national currency but complement it. They fill other niches that scarce national currencies cannot fill. A truly systemic reform would allow for currency diversity, not try to impose even greater currency uniformity than currently exists.

2. Economically credible

Over the last few years, the UK has experienced some of the most economically and socially damaging policies in living memory, in the form of ‘austerity’. Many economists have condemned these policies as counterproductive and yet the government has persisted with them, dressing them up as unavoidable or blaming the poor or people in debt for systemic problems caused by the reckless lending of banks and the poor regulatory oversight of government.

PM’s proposals give government the power to create the money it needs without raising taxes or incurring debt so it could theoretically pay for all public services and stimulate the wider economy in the process. No government has ever done this – they have always incurred more debt and raised taxes to service the debt – so this would be economically unknown territory and hard for anyone to predict the effects.

What is also uncertain are the economic effects of restricting commercial banks to simply being intermediaries for existing money and forbidding them to create new money. PM claims it would prevent the chaos of irresponsible lending that led to the 2008 crisis, that better oversight and regulation of banks simply won’t work and that it would automatically create a more stable and just money system but these are theoretical assertions that have no grounding in practice yet. An economically credible reform needs to provide enough flexibility to all economic actors – businesses, individuals, government – to do their business in a complex, globally networked modern economy.

3. Politically desirable

England had a ‘sovereign’ money system for centuries – the king or queen strictly controlled the nation’s money supply and punished any counterfeiters with death. Experience showed that this system could not keep up with the complex needs of a growing economy, let alone the abuses of the sovereigns themselves, and so the Bank of England – one of the world’s first central banks – was born and the power of commercial banks grew with it. Just because this system has in turn led to great abuses is not an argument for a reactionary policy to create a new state monopoly of the money power, which in turn could lead to great abuses in the wrong hands.

PM proposes that a government appointed committee, accountable to Parliament, should alone decide how much money the nation needs to do its business. Given the increasing ‘democratic deficit’ in Britain’s political system, isn’t this a little naive? Who appoints this committee? Do members of the committee represent a true cross-section of society and economic interests or will it just be the usual members of the ‘great and the good’? What happens in the case of disagreement about how much money the country needs?

An alternative proposal

For me, there are just too many unanswered questions about the political mechanics of this proposal for it to be either desirable or credible. Government plays a critical role as a ‘referee’ and rule setter in the money system but not as a micro-manager and certainly not as the monopoly issuer of monopoly money. I fear that Positive Money’s great work of analysing the very real problems created by the current system is not matched by the credibility of its proposals. I fear that, out of desperation for something different, they are grasping for centralised solutions that, if implemented, could end up achieving the opposite of what they hope and just create new problems.

In a complex world, noone has all the answers and it is crucial that we enable systemic solutions to the multiple economic, social, demographic and environmental problems facing us to emerge naturally rather than forcing top-down solutions that people may come to regret. Complex systems require frameworks and processes rather than levers and pulleys to function optimally.

I would rather support a campaign group in drafting a piece of legislation that creates a framework for multiple money systems with equal legal status to emerge – let’s call it “The Money Diversity Bill”. This bill would allow for:

(a) government created, debt- and interest-free money for running national services

(b) more strictly controlled, interest-free, bank created money for business and personal loans

(c) city and regional currencies for regional development

(d) virtual and crypto-currencies for transnational trade.

And the government would be required by the new law to establish two agencies with branches in each UK region:

(e) a monitoring and evaluation agency using the best statistical techniques for measuring relative currency flows and economic effects

(f) an education and training agency for demonstrating the pros and cons of different types of money systems.

 

If you would like to comment on this article please write to the author and MONNETA expert John Rogers.

 

A constant in the history of money is that every remedy is reliably a source of new abuse.

John Kenneth Galbraith, Money: whence it came, where it went

For as long as money has existed in its two most popular forms – either as debt-based accounting systems or as notes and coins – it has had its critics. Some think there is too little of the stuff and others think there is too much, depending on your point of view, or more crucially, your existing wealth.

This is how a leading historian of money describes the historical pendulum swing between these two poles:

We shall see as our history of money unfolds that there is an unceasing conflict between the interests of debtors, who seek to enlarge the quantity of money and who seek busily to find acceptable substitutes, and the interests of creditors, who seek to maintain or increase the value of money by limiting its supply, by refusing substitutes or accepting them with great reluctance, and generally trying in all sorts of ways to safeguard the quality of money.i

So the history of money is also the history of proposals for money reform.

Increasing the quantity of money

Before the modern era, kings and emperors always held a monopoly on the official money supply. Licensing the mints to create the ‘coin of the realm’ was a lucrative business for rulers. Generally, they tended to allow enough money to be created to meet their own needs but there was often greater demand for money at the local level than the ‘legal tender’ money could supply. Into this gap stepped the counterfeiters, who created money to look like the official stuff. If they were caught, they would be executed because rulers viewed such activity as equivalent to murder but that did not stop many trying because that too was a profitable business.

From about 700 AD to 1800 AD, England’s coinage was mainly a marriage of silver and gold. The Spanish conquest of new gold and silver mines in South America was also exploited by English and Dutch pirates, who were officially licensed by their governments as ‘privateers’ to intercept and plunder the Spanish ships. The result was a large influx of new money into Europe. In Spain, it led to hoarding by the rich and price inflation in the economy. In northern Europe it tended to encourage commerce. As long as the economy was growing, potential inflation from the new money was kept in check.ii

War and the need for credit

There is a strange symbiotic relationship between war and peace. The need to defeat an enemy makes people very inventive: jet engines, computers, navigation systems – all these technologies were either invented or rapidly developed during the crisis of war and then found new uses in peace time. War also consumes money. That makes those who wage it get creative in developing new monetary instruments that can also be used for peaceful purposes when war ends.

In the late seventeenth century, England was fighting the increasing power of France under King Louis XIV, the ‘Sun King’. England suffered a humiliating naval defeat at the hands of the French in 1690 and needed to rebuild its navy. It desperately needed money. The traditional way to raise money was to go to the money lenders and pay high rates of interest. However, a previous King Charles II had notoriously defaulted on his debts so the moneylenders were reluctant to lend King William the money.

Scotsman William Paterson proposed a bold plan: the creation of a new Bank of England with subscriptions from the public. £1.2 million (roughly £155 million today) was raised within 12 days, half of which was used to rebuild the navy. This great shipbuilding effort created employment, stimulated the economy and paved the way for the rise of the British navy and later a global empire.

The birth of the Bank of England in 1694 also signalled the birth of the ‘national debt’, which has grown along with the economy ever since. Over the last three hundred years, there has been a constant debate about the wisdom of a national debt. There are three typical positions on this question: “pessimist”, “optimist” or “realist”:

Public debt pessimists argue that government provides no truly productive services, that its taxing and borrowing detract from the private economy, while unfairly burdening future generations, and that high and rising public leverage ratios are unsustainable and will likely cause national insolvency and long-term economic ruin…

Public debt optimists believe that government provides not only productive services, such as infrastructure and social insurance, but means to mitigate what they perceive to be “market failures,” including savings gluts, economic depressions, inflation, and secular stagnation. Optimists contend that deficit-spending and public debt accumulation can stimulate or sustain economy activity and ensure full employment, without burdening present or future generations…

Public debt realists contend that government can and should provide certain productive services, mainly national defense, police protection, courts of justice, and basic infrastructure, but that social and redistributive schemes tend to undermine national prosperity. Realists say public debt should fund only services and projects that help a free economy maximize its potential, and that analysis must be contextualized – i.e., related to a nation’s credit capacity, productivity, and taxable capacity. According to realists, public leverage is neither inevitably harmful, as pessimists say, nor infinite, as optimists say.iii

Great Recoinage of 1696

At first, the new Bank of England only affected those who had invested in it – who earned a handsome 8% return on their investment – and those who benefitted from the new employment opportunities created by rebuilding the navy. Of more concern to most people was the silver coin of the realm used to do daily business. For centuries, both monarchs and counterfeiters had tried to get ‘more bangs for their bucks’ by adulterating the precious metal of official coins with base metals. By the year 1696, English silver coinage was in a sorry state. Years of ‘clipping’ the edges had reduced the value of many coins and, according to one estimate, up to 10% of the coins in circulation were counterfeit. Added to these problems was the ancient conflict between commodity money acting both as a medium of exchange for trade and as a valuable commodity in itself. Silver as a commodity had a higher market value in Paris and Amsterdam than in London, so vast quantities of silver coins were being shipped out of the country and thus no longer in circulation as a medium of exchange.

Isaac Newton, who had already transformed the world with his scientific theories, was invited to apply his knowledge of chemistry and mathematics to rescue the coinage from the counterfeiters and adulterators. Newton approached the problem in a thorough manner. He proposed withdrawing all silver coinage from circulation and issuing new coins. New mints were established at Bristol, Chester, Exeter, Norwich, and York. Old coin could be given back by weight rather than face value. The new strategy did not work. Silver was still worth more when melted down into bullion and sold. Out of this experience, England eventually developed the ‘gold standard’ because gold was perceived to be more stable than silver.iv

Newton also went after the counterfeiters ruthlessly. He cross-examined more than 100 witnesses and personally gathered much of the evidence he needed to prosecute 28 ‘coiners’. One of these was a notorious con man called William Chaloner, who was eventually convicted of high treason and suffered the ultimate gruesome penalty: he was hanged, drawn and quartered.v

More war, more debt

The Napoleonic Wars of 1803-181UK National Debt5 left the British economy in chaos. The national debt was now over one hundred years old and decades of war had only increased it. While an economy is growing, public debt is not necessarily a problem, as there is enough national income to pay back the debt without incurring further debt. The crucial statistic is its relationship to national income (now called Gross Domestic Product or GDP). In 1815, the national debt stood at 200% of GDP, a record ratio it would never again reach. The rapid growth of the industrial revolution and the global trading monopolies of the British empire would later ensure a continual decline of the debt to GDP ratio to a low of about 30% on the eve of the First World War in 1914, after which it shot up again.

Banking reforms in the nineteenth century

The wars against France from 1789 to 1815, combined with economic conflicts, created a shortage of silver and copper coins. Paper money was legalized in 1797 to help fill the gap. All over the country, local banks and private companies created local notes and tokens.

According to historian Glyn Davies, “By the turn of the century the total supply and velocity of circulation of tokens, foreign coins and other substitutes very probably exceeded those of the official coin of the realm.vi

This power of local money creation certainly played a dynamic role in empowering entrepreneurs in the early stages of the industrial revolution but it also inevitably led to abuses. Local companies created ‘truck shops’ at which their workers were forced to buy overpriced goods with the tokens their employers had created. Local banks created worthless paper notes and then crashed, leaving their creditors with nothing.

All of these abuses led to calls for reform. A series of banking acts in 1826, 1833 and 1844 made local notes and tokens illegal and began the monopoly of ‘legal tender’ national money in England, Wales and Northern Ireland, which lasts to this day.

The Great Crash, Keynesianism and Monetarism

The greatest monetary event of the early 20th century was the Great Crash on Wall St. in 1929, which sparked a worldwide economic depression. This event clearly showed how interconnected the world economy had become in the preceding century of unprecedented growth fostered by industrial capitalism. It also called into question the orthodoxies of ‘laissez faire’ market based economics and sparked great debates about economic and monetary policy.

The Gold Standard Act of 1925 had obliged the Bank of England to sell gold at a fixed price. But in the economic chaos following the 1929 crash the Bank feared it could not meet its obligations and in 1931 Britain left the gold standard, which gave the government more flexibility in economic policy.

One perceptive observer of these events was the economist John Maynard Keynes who published The General Theory of Employment, Interest and Money in 1936. He called into question the economic theories that seemed to have led to the events of 1929 and after. This book would deeply influence the next generation of economists and policy makers, whose policies came to be known as ‘Keynesian’. These policies generally encourage an increase in the money supply in order to stimulate economic growth.

During the 1960s and 1970s, however, there was a widely observed phenomenon of ‘stagflation’ – a wicked combination of stagnant economic growth, high unemployment and price inflation – that Keynesian theory had no direct answers for. Some non-Keynesian economists argued that UK policy makers had failed to recognize the primary role of monetary policy in controlling inflation. Keynesianism fell out of fashion and the ‘monetarist’ theories of Milton Friedman, which argued for ‘tight money’ policies, were enthusiastically adopted, particularly in the UK and the USA in the early 1980s. Strict monetarism was later relaxed as it did not deliver the economic results it promised and the price in unemployment was so high.

These extreme swings of fashion from one theory to another seemed to confirm Glyn Davies’ ‘pendulum theory’ of monetary history:

There are few things more impressive than the haughty analytical certainty with which fundamental theories of money are for a time almost universally held, only to be discarded in favour of a diametrically opposite but equally firmly and widely held new orthodoxy which in turn lasts until the whole process reverses itself suddenly a generation or so later.vii

Modern calls for reform

Although a few idealists argue for a world without money – and most written utopias abolish money altogether – most people accept that complex, interconnected modern economies need money in some shape or form to function. Only 3% of modern money exists as notes and coins. The rest – from bank loans to mortgages to your monthly salary – is stored as digital records in computers.

Just like the 1929 crash before it, the 2008 economic crash – the biggest in history – unleashed unprecedented questioning of economic and monetary orthodoxies of the preceding generations and reinvigorated debates around various longstanding ideas for monetary reform:

Monetary Reform Movements

Organised monetary reform movements are relatively small and they face a massive challenge. In our basic education, most of us do not learn about where money comes from, who creates and controls it and for what purposes. Monetary reformers therefore have to first educate and inform  before they can mobilise and reform. They have to create a basis of understanding of the existing financial system and its shortcomings in the public mind before they can convince people to consider and campaign for other ways of doing things.

Britain first became a fully representative democracy less than one hundred years ago, when all women over the age of 21 won the right to vote in 1928.viii Over the last century, citizens of democratic states have won a voice in many areas of policy that affect us all such as education, sexual and mental health, environmental issues. We can see from this short history of monetary reform that problems with the money system were always debated amongst a small elite of (mostly) male bankers, economists and politicians and the 2008 financial crisis made it clear that monetary policy, which profoundly affects all other areas of public life, is maybe the last bastion of policy not truly under democratic control.

A ‘democratic deficit’ describes a situation where institutions claiming to be democratic do not act according to democratic principles of representation. This is most clearly the case in the area of monetary policy. In all the centuries of elite debate, the basis of a monetary system in which privately owned, profit-seeking banks create most of the money supply through interest-bearing loans has never been called into question. It is taken as a given and all economic policy is based on it. No alternatives are seriously considered.

For many years such issues and proposals for reform were debated on the fringes of society by small groups of concerned citizens such as: Christian Council for Monetary Justice; Forum for Stable Currencies; Prosperity UK with its annual Bromsgrove conference.

After the financial crash of 2008, a new campaigning group emerged called Positive Money, which has been very successful at reaching a much wider audience with monetary reform ideas by smart use of modern media. Positive Money highlights the economic problems created by reliance on the private banking system to create most of the money supply and proposes giving government the powers to create interest-free, debt-free money for the public benefit. There is now an International Movement for Monetary Reform.

In November 2014, the UK Parliament debated money for the first time in 170 years. ix

Seven MPs spoke at the debate, 12 MPs asked questions and another 15 were in attendance out of a total of 650 MPs. This historic debate has so far produced no concrete proposals for reform from the Parliament of a country suffering the ravages of deeply contested austerity policies, in a world holding its breath for the next big financial crash.

Whether reformers are campaigning for changes in the national monetary system, for banking reform or for alternative systems such as regional and virtual currencies, they will need to work harder to reach both hearts and minds with arguments and strategies that are believable and workable – economically, technically and politically.

It took thirty years from the first anti-slavery debate in the House of Commons until William Wilberforce and his colleagues saw victory with the first anti-slavery legislation. We can only hope it does not take so long to free us from financial slavery to big banks and their unjust grip on the financial system and we create a monetary system that is truly under democratic control for the first time in history.

 

In my next post I will take a more detailed look at the proposals of Positive Money and another campaign “QE4 People”. Will they prove GK Galbraith wrong, quoted at the start of this post? Or will the ‘remedy’ be a source of new abuse?

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