|
Two Sides of the Money Coin
Imagine a coin. The choice of metal does not matter as
it is only backed by your belief in its value. The coin
has two sides, each representing proposed solutions to ‘the
money problem’. One coin – let’s call it
‘money solutions’ - the common aim, a money system
based on principles of justice, equity and participation.
Two sides, two approaches. On the one side, standing on
the monarch’s head of ‘seigniorage’, we have
the Money Reformers who would reshape the present system
of creating the national money supply; on the other, opening
the portcullis gate to new, localised possibilities of money
creation, stand the Complementary or Community Currency
activists. Participants in both movements can be ignorant,
suspicious or dismissive of the efforts of those in the
other.
Complementary Currencies
• Monetary Reform
What do both sides of the same coin, these two movements,
have in common? How do they differ? Are their aims contradictory
or mutually exclusive? If one movement fully achieved its
aims would the other become redundant or will the future
need both of them to succeed?
Before suggesting answers to these questions let us step
back a moment to note that the simple suggestion of two
sides, two poles, two ‘extremes’ habitually conjures
up either/or thinking and the taking of opposite positions
in the Western mind. As we explore these movements let us
remember that the coin metaphor suggests that the two sides
are part of the substance of the same coin and so assumes
that both are necessary at some level.
First, monetary reform. What
are the generic aims of monetary reform? Those campaigning
for reform of existing money systems generally agree that
there are two main problems with money:
(1) issuance of money by banks as a debt rather
than being created by governments debt-free leads to much
personal and social distress and tends to concentrate power
in the hands of private rather than public interests;
(2) dealing with money as a tradeable commodity in
its own right (such as through charging interest) leads
to many abuses and a dilution of its potential power as
a medium of exchange.
Stephen Zarlenga in ‘The Lost Science of Money’
(featured in Prosperity in June/July 2004) reminds us: “Both
Aristotle and Plato noted the paramount monetary principle
– that the nature of money is a fiat of the law, an
invention or creation of mankind and society rather than
a commodity.”
A number of different groups exist to pursue and campaign
on these questions and many of their participants have agreed
to the Bromsgrove Group’s Statement of Belief which
proposes “that the government – via a democratically
accountable authority – undertakes the creation of
a supply of money, debt-free, into the economy”, and
that, “this authority should spend, not lend, a supply
of money into circulation on the basis of proven need. This
will reduce the overall burden of debt in society, break
reliance upon the banking system for the supply of money,
and open potential for limitless change.” The Bromsgrove
Group also acknowledge that within these overall aims there
will be many differences of opinion about how practically
this should be realised. People such as James Huber and
James Robertson in ‘Creating New Money’ have made
respectable attempts to outline such a practical implementation
programme. What these approaches have in common is that
they are centralised solutions to what are seen as problems
created by centralised money supply.
On the other side of the coin, the movement for Complementary
or Community Currencies. Again, this is a diverse
movement with a variety of approaches. What its participants
have in common is the idea that the design and issuance
of currency is not the exclusive right of national, centralised
institutions, whether banks or governments. They believe
that non-national, regional, sectoral or local currencies
can be designed with particular purposes or aims, such as
economic or social regeneration of communities affected
by the ‘externalities’ of the conventional economy
or to encourage business survival. Their solutions range
from the ‘mutual credit’ systems such as Local
Exchange Trading Systems (LETS) and Time Dollars (Time Banks
in the UK), where the participants issue the currency each
time they trade, to fiat systems such as Ithaca Hours or
the ‘demurrage’ currencies inspired by Silvio
Gesell and the ‘free money’ movement in which
credits lose their value over time if not spent.
There are now thousands of such systems being developed
by communities on every continent, including high profile
examples such as Argentina, where the national currency
collapsed, and Japan, which is experimenting with local
currencies on an unprecedented scale. Business barter systems
such as the international Barter Card (trading in the Trade
Dollar) or the Swiss WIR system involve thousands of businesses
worldwide. Many transnational corporations operate points
systems or loyalty cards. What all of these mechanisms have
in common is the creation of a system to acknowledge value
for exchange of goods and services without reference to
a national currency and free of interest charges.
One coin, two sides.
On the one side we might ask - if the aims of monetary reform
succeeded would Complementary Currencies (CCs) be made redundant?
If the government created an abundant supply of currency
“on the basis of proven need”, as the BG Statement
of Belief states, would that mean that CCs would not be
needed? Do Monetary Reformers see CCs as an embarassing
and distracting irrelevance to the serious business of reforming
the national governance of the money creation process?
To approach an answer to this we need to borrow the understandings
and language of ‘systems theory’ which seeks to
model the complexity of both natural and human-created systems,
such as money. Complex eco-systems are complex because they
contain a wide variety of species and micro-habitats. Variety
is the key to their continued existence. National money
systems, like government policies such as interest rates
and even any newly created arms length agency, are blunt
instruments which cannot possibly take account of all local
variety, either actual or desired. CCs are able to value
local variety at the local level, just as national currencies
value national variety at the national level. CCs establish
accountable, interest-free mechanisms for exchange, based
on proven need in a particular region, sector or community
at the local level.
On the other side of the coin we might ask - if CCs were
to be established in every region, sector or community which
desired one, would monetary reform become unnecessary? Do
CC activists regard anything to do with ‘the system’
or government as dangerous and interfering, whether reformed
or not? To attempt to answer these questions dives right
into the middle of ancient debates about the right of the
state to organise anything which affects all citizens. Simply
allowing ‘the market’ of CCs to determine the
local currency supply may help us to design sectoral currencies
designed around, say, local health needs, but would not
help us to coordinate or run more effective public services
nationally and so the national reform questions would still
need to be posed.
I have no doubt whatsoever that the contributions of both
movements are sorely needed. Both sides of our imaginary
coin are in need of a good clean. Both need to polish their
arguments to bring up a better image of their value. Then
imagine the edge of our coin flying through the air to cut
through the self-serving arguments of bankers, economists
and politicians. There is no either/or only a cosmic both/and
which together will “open potential for limitless change.”John
Rogers
Wales Institute for Community Currencies
john.rogers@newport.ac.uk
01495 712925
http://wicc.newport.ac.uk
-
PDF
download
|
