In some sense, aren't Cuba, Venezuela, and Bolivia adopting some form of complementary currency through their alternative trade pact (Cuba's exchange of medical knowledge/expertise, sending its doctors to these countries and training students at Cuban universities, in exchange for oil or other vital resources)? As far as I know, there is not a great deal of capital flowing between the three nations (please correct me if I am wrong here), but there is still a substantial amount of trade occurring. Could this system not provide the basis for an alternative to neoliberal (or even Keynesian at that) models of development that are structured to siphon wealth out of developing nations?
Thanks 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 -----Original Message----- From: PEN-L list [mailto:[EMAIL PROTECTED] On Behalf Of paul phillips Sent: Thursday, May 25, 2006 1:37 AM To: [email protected] Subject: Re: [PEN-L] Complementary Currencies Jayson, Jim, The existence and use of alternative currencies is nothing new nor any real threat to finance capitalism though it can be an ameliorating practice in marginal (meaning at the margin) communities. For the most part, these 'complementary' currencies are, or at least act as, real 'money' using the definition that we used in our textbook -- "money is anything that acts as money", and such complementary currencies act as money perhaps more usually as a measure and standard (and store) of value rather than as a medium of exchange. Perhaps the earliest widespread use of such money in Canada was during the fur trade when the standard of exchange was the 'made Beaver' which was used as the standard of account by the HBC in its trade relations with the aboriginals. This does not mean that the made Beaver had a fixed exchange value -- as Skip Ray has demonstrated in his book _Give us Good Measure_. There are countless other examples though perhaps the most common was the houseraising/barnraising bee where neighbours 'donated' labour to help others with capital accumulation. Though no common books or values were recorded, it was *expected* that beneficiaries would reciprocate. A well known example occurred in Manitoba in the 1920s and early '30s when there were no banks in the Mennonite areas of southern Manitoba and hence, no supply of accessible paper money. The local merchants who purchased eggs and agricultural produce from the local farmers and sold the excess to Winnipeg for 'bank money' paid the local farmers in 'egg money' -- coupons or credit denoted in eggs which circulated in the local community. This practice lasted for well over a decade into the depression when bank money became even more scarce. It is interesting to note that in these communities where alternative currencies existed, there is no demographic evidence of the depression since, apparently, there was no depression economically in the local communities with their own money supplies. (I had an excellent student paper, actually virtually a thesis, on this by a student who had grown up in this Mennonite community and whose relatives had issued the egg money. Unfortunately, somewhere along the way I lost the study and I have been kicking myself ever since.) The LETs system has been quite popular amoung left-alternative groups for some time. Interestingly, it is based on a 'labour theory of value' in that an hour's labour is valued at $10 (though there is some allowance for higher values for 'skilled' or 'professional' labour.) Though I have known many people involved with such schemes, they never seem to have much impact, in part, I think, because they are so costly to administer. What seems to be far more common, and far more effective, is the 'grey economy' where people exchange goods and services either for money or for 'future considerations' without recourse to paying consumption taxes or income taxes. When I looked into the LETs system several years ago, I was told that the government has no objection -- except we would have to keep detailed records and pay income and GST (value added) taxes on the transactions. Since this would have absorbed any potential economic benefit from the system, most of us gave it a miss. The grey or informal economy, however, continues unabated. I suspect, however, it does not work well in major urban centres. However, here I would think that alternative money systems would also not work well if at all. Paul P Jim Devine wrote: > Jayson Funke wrote: > >> I would be most interested in hearing what other PEN-L'ers 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! < > > I don't know much if anything about this, but I have a small number of > comments. > >> ...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." ... < > > corporate scrip, frequent flyer miles, and deli dollars aren't really > money (as usually defined) because their liquidity (i.e., status as a > medium of exchange) is severely restricted. You can only use your deli > dollars at the deli, right? if so, it's really just a short-term loan > (or note) used to get over inadequacies with the banking system. The > exception would when you can easily trade in your deli dollars to pay > for goods and services. If so, they are more like the HOURS system > (see below). > > You should remember that corporate scrip can be a (non-financial) > liabiltity. Company towns often paid their employees using scrip, > redeemable only at the company store, giving the company more power > than usual over its employees. > >> Another example of mutual non-credit CCS is the publicly-issued > > variety. The case of Curitiba, Brazil illustrates the use of this > system.[5]... Jaime Lerner, the mayor of the town, may have opted for > a traditional welfare approach to the problem,...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. ...< > > again this isn't really money, though it does get around credit > problems, as before. > >> 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 "dominant currency systems of the world" are backed by more than > the trust of the participants. They are also backed by the power of > the state, something that seems much more important. If the government > accepts the fiat money and is expected to do so in the future, > everybody else will, too. (Supposedly, Pres. Jackson stopped accepting > paper money in return for state-owned lands. This led to a rapid > inflation of prices in paper terms, depreciation of the currency.) The > ability of the US government to tax us is behind its ability to avoid > "running the printing presses" to pay for expenditures. It also can > prevent significant counterfeiting, which could undermine the > purchasing power of the currency. > >> 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....< > > > this is more like money (again as usually defined) than the types > discussed above because it's more liquid, but (despite the reference > to labor hours) it seems like it's linked to the US dollar using a > fixed exchange rate. It's a way of increasing the local money supply, > stimulating local business. It can work. But to the extent that it > affects the national economy (lowering interest rates below the > Federal Reserve's target), the Fed would counteract its effects. > >> 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." ... 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. .... < > > this type of system seems very similar to the original idea of the > savings & loan associations or mutual banks or credit unions. It's a > way of providing credit to small businesses (and sometimes > individuals) who are often snubbed (denied credit) by the commercial > banks. > >> 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 system's participants. Accounts are > registerred in local computerized "Time Banks." ... < > > again this kind of money seems a bit limited in its liquidity. This, > like the system of paying bus tokens for helping with garbage > collection, is a way of getting around credit rationing that prevents > government-type organizations from achieving their goals. > > conclusion: these types of "money" seem in general to be solutions to > local problems of credit rationing ("imperfect capital markets") that > cause local recessions and stagnation. Because these types of problems > hit so many localities, I would expect that they would become more > general over time. However, to the extent that their effects are > general (i.e., macroeconomic), they will be counteracted by central > banks. I can expect that the commercial banks will also try to get > into the act and provide more local credit -- while using their > political influence to fight the local systems. In the end, I would > expect that these local credit systems would be limited to the > interstices of the world financial system rather than replacing it > (unless, of course, that system is abolished). > -- > Jim Devine / "Capitalism without bankruptcy is like Christianity > without hell." -- Frank Borman > > This email was cleaned by emailStripper, available for free from > http://www.papercut.biz/emailStripper.htm > > -- No virus found in this outgoing message. Checked by AVG Free Edition. Version: 7.1.394 / Virus Database: 268.7.1/347 - Release Date: 5/24/06
