I would be most interested in hearing what other PEN-Lers think about
the feasibility of using complementary currencies today (that is, about
the possibility of adopting them beyond local community-based
experiences and within the context of a global economy tied primarily to
the dollar). Below is brief descriptive excerpt from a paper on the
topic by a colleague of mine. Thanks!
------------------------------
Complementary Currencies
The budding systems to challenge the hegemony of state-issued,
debt-based money have been dubbed complementary currency systems, and at
times have been referred to as community currency systems, or local
currency systems. According to scholars Gill Seyfang and Ruth Pearson,
such systems are local initiatives which let people exchange goods and
services without using conventional money.1 Stephen DeMeulenaere
offers a definition which perhaps better captures the intentions of the
currency transformation movement:
Complementary Currency Systems are appropriately-designed social and
economic networks which encourage cooperation and reciprocation,
self-reliance and mutual aid, local production for local needs,
socio-economic solidarity and economic justice for the meeting of needs,
cultural revitalization, socio-economic harmony and rural
reconstruction. They use a medium of exchange that circulates together
with the national currency to support the local economy in a way that is
socially just.2
Today, CCS takes many forms: mutual non-credit, fiat, mutual
credit, and service credit-based. The mutual non-credit CCS is backed
by a commodity, and is centrally-issued. 3 One example of a mutual
non-credit CCS is a corporate scrip. This could take the form of
frequent flyer miles, or, in one case, deli dollars. In 1989, a local
deli in Great Barrington, MA found itself in a dilemma. It sought to
move locations, but was refused loans by all every bank contacted. The
owner decided to issue his own currency to sell to customers, in order
to raise the money necessary. Each note sold for $9, and could buy $10
worth of food. What he found was the 500 were taken in a heartbeat, and
he was able to gain sufficient capital to complete the move. This
inspired offshoot efforts by farms and other local businesses throughout
the Pioneer Valley, all of which resulted in thousands of dollars raised
which wouldnt have otherwise been available through the traditional
bank lending system. 4
Another example of mutual non-credit CCS is the publicly-issued
variety. The case of Curitiba, Brazil illustrates the use of this
system.5 In 1973, most of Curitibas 500,000 residents lived in
favelas, or shanty towns, and the city faced an enormous garbage
collection problem. Garbage trucks often were not able to access these
favelas, leading to an accumulation of trash which attracted rodents and
subsequent diseases. Jaime Lerner, the mayor of the town, may have
opted for a traditional welfare approach to the problem, but the
prevalent poverty of his constituency led to a tax base that could not
possible support such a strategy. Instead, Mayor Lerner tried a CCS
solution.
He announced that public transportation tokens would be made
available to anyone who could pre-sort and deposit their garbage and
recyclables in bins outside the favelas. Additionally, the sorting of
any organic waste that could be used as fertilizer would be payed by
chits, which could be used to buy food. Without delay, kids living in
slum conditions transformed into paid public servants, and Curitiba was
transformed into a self-organized, self-cleaning, almost-organic system.
The positive results were and continue to be vast. Trash-sorters
suddenly gained access to transportation to the center of town, where
jobs could be better acquired. The pre-sorted trash was sold to
manufacturing companies that could recycle them into new products, and
the additional income generated by the city was more than enough to pay
for additional transport for the recycling. Cost savings have been
achieved by fewer trucks and less gas required for normal pick-up, and
disease reduction as well. Today, 95% of the slum population
participates in the program, 70% of the citys garbage is recycled and
composted saving 1200 trees per day and local industries making use
of the garbage have created employment for thousands of slum-dwellers.6
Fiat CCS are similar to the dominant currency systems of the
world, in that they are not backed by anything except for the trust of
their participants. The HOURS system, developed in 1991 by Paul Glover
in Ithaca NY, uses the hour as the unit of account, which is valued at a
set price of $10. Additionally, HOURS are negotiable, so that different
work can take on different value depending on the transaction. Its
membership is 1,500-2,000 people, and its trade volume is now 6,000
HOURS per month. The issuance of currency happens at association
meetings, where decisions are also made on grant-making for community
projects. An elected Board of Directors oversees the actual printing
process. Each new member gets two newly-created HOURS, and can then
receive two more every eight months. The success of this system is due
to the participation of local businesses, the dedication of its founder
(who is still onboard to publish a monthly newsletter of community
initiatives), and the self-organizing simplicity of the system. There
are forty of these systems known in the US, one in Mexico, six in
Canada, and one in the United Kingdom.7
In mutual credit CCS, all users are also currency issuers.
Generally, these systems have been adopted by either business
associations or communities. In enterprise-based mutual credit CCS,
firms trade with each other using credit, usually with the assistance of
an intermediary for-profit agency which serves as a clearinghouse of all
transactions and records.8 The function of these systems is to allow
firms to trade excess or unproductive assets and thus raise efficiency
and profit. The benefits of membership, which comes with an entrance
fee and continuance fee, are new business relations, the reduction of
unit costs, the conservation of usable cash for more vital expenditures,
and the reduction of unproductive assets also known as waste. This
industry is only two decades old in North America, though 180 commercial
barter companies in 13 countries (including Argentina, Colombia, Turkey,
and South Africa) now belong to a group called the International
Reciprocal Trade Association. Trade volume in North America alone is
estimated to be $7.5 billion, and is growing at an 8% annual average
rate. 300,000 US businesses reportedly used commercial barter services
in 1998. The macroeconomic impact of this industry is an increase in
stability during recessions, when more productive capacity goes unused
and thus the trade of excess assets is allowed to increase.
Mutual credit CCS focused around communities are known as Local
Employment Trading Systems (LETS),9 and were invented in 1983 by Michael
Linton in British Columbia, Canada. These systems are zero-interest,
members-only, cooperatively run organizations that usually serve
individuals as opposed to businesses. Most accounts are kept on
computer, and maximum negative balances are enforced in order to prevent
abuses by participants. Nearly 1500 such systems exist worldwide,
including 400 in the UK, 300 in France, and 250 in Australia.
The final type of CCS is the service credit system, which uses
time dollars as a unit of currency. Invented by a US lawyer named
Edgar Cahn, the service credit system awards one time dollar for every
hour of social service given by the systems participants. Accounts are
registerred in local computerized Time Banks. Service credit CCS has
integrated educational institutions at the high school and university
level, religious institutions, and public social agencies. Over 100
systems in 38 states are known to exist in the US, although no such
systems have been discovered elsewhere in the world.
NOTES
1 Pearson, Ruth; Seyfang, Gill. Time for Change: International
Experience in Community Currencies. Development. 2001.
http://www.appropriate-economics.org/materials/past_post_future_developm
ent_-_Seyfang_&_Pearson.pdf.
2 Homepage, Appropriate-Economics.org.
http://www.appropriate-economics.org/
3 Lietaer, Bernard A. Community Currencies: A New Tool for the 21st
Century. http://www.transaction.net/money/cc/cc01.html, p.9.
4 Lietaer, Bernard A. Community Currencies: A New Tool for the 21st
Century. http://www.transaction.net/money/cc/cc01.html, p.10.
5 Moers, Peter. Community Currency Systems: A Co-operative Option for
the Developing World? 1998.
http://www.appropriate-economics.org/materials/CCS_-_A_Cooperative_Optio
n_for_the_Developing_World.pdf, p.11.
6 Moers, Peter. Community Currency Systems: A Co-operative Option for
the Developing World? 1998.
http://www.appropriate-economics.org/materials/CCS_-_A_Cooperative_Optio
n_for_the_Developing_World.pdf, p.12-3.
7 Moers, Peter. Community Currency Systems: A Co-operative Option for
the Developing World? 1998.
http://www.appropriate-economics.org/materials/CCS_-_A_Cooperative_Optio
n_for_the_Developing_World.pdf, p.13.
8 Moers, Peter. Community Currency Systems: A Co-operative Option for
the Developing World? 1998.
http://www.appropriate-economics.org/materials/CCS_-_A_Cooperative_Optio
n_for_the_Developing_World.pdf, p.14.
9 Moers, Peter. Community Currency Systems: A Co-operative Option for
the Developing World? 1998.
http://www.appropriate-economics.org/materials/CCS_-_A_Cooperative_Optio
n_for_the_Developing_World.pdf, p.1.
10 Moers, Peter. Community Currency Systems: A Co-operative Option for
the Developing World? 1998.
http://www.appropriate-economics.org/materials/CCS_-_A_Cooperative_Optio
n_for_the_Developing_World.pdf, p.18.
11 Moers, Peter. Community Currency Systems: A Co-operative Option for
the Developing World? 1998.
http://www.appropriate-economics.org/materials/CCS_-_A_Cooperative_Optio
n_for_the_Developing_World.pdf, p.23.
Jayson Funke
Graduate School of Geography
Clark University
950 Main Street
Worcester, MA 01610
"The great reigns are only the enlarged projections of little thieves."
- Saint Augustine
