Complementary currencies for social change?

August 1, 2003 2:04 AM

Interview with Bernard Lietaer. In this engrossing interview with economist, author, professor and businessman, Bernard Lietaer, he argues that complementary currencies (time dollars, local exchanges, bartering, Ithica dollars, “fureai kippu” (caring relationship tickets)), and other non-dominant currency systems can help to enable social change in small ways. Have any of you had any experience with complementary currencies? More inside...
posted by gen (8 comments total)

Lietaer is briefly mentioned here.

My favorite part of the interview is here:

Assume that a Martian lands in Denver on the wrong side of the tracks. He ends up in one of the ghettos and finds that the houses are run down, the kids not taken care of, the elderly in trouble, and the trees dying. He sees all these things, and discovers that there are people and organizations absolutely equipped and ready to solve every one of those problems. So this Martian asks, “What are you waiting for?” The answer: “We’re waiting for money.” “What is money?” the Martian inquires. “It’s an agreement in a community to use something as a medium of exchange.” Don’t you think he may leave the planet believing there is no intelligent life here?

The point is: if money is an agreement within the community to use something as a medium of exchange, we can create new agreements, can’t we? That is exactly what people are already doing all over the world. So why don’t we do it here? If we’re waiting for conventional currency to solve all our problems, aren’t we waiting for Godot?

posted by gen at 2:07 AM on August 1, 2003

this is good stuff!
posted by timb at 3:21 AM on August 1, 2003

We have a similar thing here called Promises. You get a cheque book, and a list of services. Services are charged in promises, and your account gets debited / credited accordingly. It's a great idea, but for some reason it just doesn't work. All the services offered seem to be new-age sort of things (Raiki, Tarot reading, etc), and people are often unwilling sometimes to provide offered services.

This is especially prevalant in the nearby Hebden Bridge where people only seem to want to get/recieve promises from other people in Hebden Bridge.

So - great idea, but in my experience, it doesn't work very well.
posted by seanyboy at 6:03 AM on August 1, 2003

Found it. The system we use here is called LETS
posted by seanyboy at 6:07 AM on August 1, 2003

And it's not "promises", it's Favours.
http://www.lets-linkup.com/LETS Favours-English.htm
posted by seanyboy at 6:10 AM on August 1, 2003

Wörgl currency:

In the early 1930s the small town of Worgl in the Austrian Tyrol, suffering like every other town in Europe and America from the Great Depression, took the unlikely step of issuing its own currency.

Its burgomaster, Michael Unterguggenberger, faced an empty treasury, because the unemployed citizens could not pay their taxes; roads and bridges needed repair and parks needed maintenance, for which the town could not pay; and idle men and women earned no wages.

He recognised that all three problems could be solved if he could find the connecting link.

That link was money. The three problems coexisted because no one had any of it, and his simple solution was to create money locally.

He issued numbered 'labour certificates' to the value of 32,000 schillings, in denominations of 1, 5 and 10 schillings, respectively. These became valid only after being stamped at the town hall, and depreciated monthly by 1 per cent of their nominal value.

It was possible for the holders to 'revalue' them by the purchase, before the end of each month, of stamps from the town hall, in the process creating a relief fund...

Because it was a depreciating currency, it circulated with rapidity, boosting the local economy. Also, not only did people merely pay their current taxes in the currency, but also discharged their tax arrears. Further, many paid their taxes in advance because it was financially advantageous.

Apart from the obvious employment benefits, physical assets were created. These included improvements in the main street and its drainage system, street lighting, new road construction, manufacturing of kerb stones and drainage pipes, construction of a ski-jumping platform, and fencing and construction of a new water reservoir.

Although the Worgl money was unanimously accepted at the local level, there was great opposition from two centralist forces - the Tyrol Labour Party and the Austrian State Bank.

In both cases, there seemed to be the fear of the experiment spreading, for the idea was copied by the neighbouring town of Kirchbichel. The town monies were valid in both places. Other towns in the Tyrol also decided on issuing depreciating money, but did not proceed because of threats from the State Bank.

Ultimately, the State Bank threatened legal proceedings and on September 1st 1933, the experiment was terminated.

A more detailed and scholarly account here:

The design feature, which is the object of inquiry here is that known as demurrage, which is the intentional depreciation of a currency over time, the main object being to prevent its being hoarded and to speed its circulation from hand to hand. Many of the stamp scrip issues of the Great Depression were based on this idea, which is generally credited to Silvio Gesell. Of all his great insights into money and economics, this idea of "depreciating money" is the one item that his followers have seized upon with great passion. The most celebrated case in which a demurrage currency was issued was that of the Austrian town of Wörgl. The Wörgl experience has often been heralded by modern day Gesellians as proof of the effectiveness of demurrage in stimulating the circulation of currency, and thus, as the main feature that is necessary for the economic advantages of a community currency to be realized. But does the evidence support such a conclusion? The fundamental question, in the Wörgl case is this: Would the Wörgl currency have been just as effective without the demurrage feature, as with it?

posted by languagehat at 7:36 AM on August 1, 2003 [1 favorite]

It's worth noting that currencies depreciate anyway in line with inflation. I think what is different here is that the general population UNDERSTOOD that the currency was depriciating, and so they used it more. Also, the fact that the depriciation was smooth (instead of here when goods will randomly jerk upwards in line with inflation) probably helped people & economists understand what was going on more clearly.
posted by seanyboy at 7:58 AM on August 1, 2003

I used Ithaca Hours a couple of times. Nice idea, and I wish them well with it. They were quite successful on one end of things -- there were quite a lot of businesses there that accepted them, including local fast-food joints and bookstores as well as all the farmer's market stalls. The hard part was the supply of them -- it was very hard to get any short of actually buying them, which seemed to miss the point. I finally got some when I sold some books to a used bookstore that paid me in them. The big problem was that Ithaca's biggest employer by a large margin -- Cornell -- wouldn't have anything to do with them, so they stayed confined to a relatively small segment of the economy.

(I use the past tense because I haven't been to Ithaca in years; I imagine they're still going.)
posted by ramakrishna at 10:57 PM on August 2, 2003