Silvio Gesell – P2P Foundation https://blog.p2pfoundation.net Researching, documenting and promoting peer to peer practices Tue, 24 Oct 2017 09:15:20 +0000 en-US hourly 1 https://wordpress.org/?v=5.5.15 62076519 Patterns of Commoning: WIR Currency – Reinventing Social Exchange https://blog.p2pfoundation.net/patterns-of-commoning-wir-currency-reinventing-social-exchange/2017/10/31 https://blog.p2pfoundation.net/patterns-of-commoning-wir-currency-reinventing-social-exchange/2017/10/31#respond Tue, 31 Oct 2017 09:00:00 +0000 https://blog.p2pfoundation.net/?p=68377 James Stodder and Bernard Lietaer: The Swiss WIR (“We” in German) is the longest surviving social or community currency, sometimes called a complementary currency. (This last name reflects an ambition to supplement rather than replace a national currency.) WIR is not a physical currency per se, but a system of credits and debits. Once a... Continue reading

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James Stodder and Bernard Lietaer: The Swiss WIR (“We” in German) is the longest surviving social or community currency, sometimes called a complementary currency. (This last name reflects an ambition to supplement rather than replace a national currency.) WIR is not a physical currency per se, but a system of credits and debits. Once a buyer and seller negotiate a price in WIR, the seller is credited and the buyer debited that amount. Nowadays, the process can be completed in seconds, on a smartphone.

Today’s WIR-Bank, originally the Wirtschaftsring (“Economic Circle”), was founded in 1934, in the depths of the Great Depression. It was based on the ideas of Silvio Gesell, a German-Argentine merchant and economist who saw how ordinary money circulation had collapsed. Money fearfully clutched rather than freely exchanged only makes a downturn worse.

By reinventing their own currencies based on long-term reciprocity among community members – rather than gold or central bank limits – communities can break this vicious cycle. Hundreds of such currencies sprang up in the Great Depression, as noted by Yale’s Irving Fisher, the early monetary economist.1 Recent research by the authors2 confirms that WIR circulation does indeed accelerate in a recession; as people hoard their limited holdings of Swiss Francs (SFr), they are more willing to use WIR for market exchanges.

WIR are actually somewhat less valuable than SFr because they are less negotiable: not easily changed for another currency, nor accepted outside the circle of WIR users. But that circle of Swiss circulation is fairly wide. In 2013, WIR counted some 50,000 small and medium enterprises (SMEs) among its clients, enabling 1.43 billion Swiss Francs (SFr) of trade, or US$1.59 billion.3 About 80 percent of WIR users are SMEs and larger firms; the rest are households.

What is the social basis of the WIR’s long-term reciprocity among people? Textbooks on the origin of money usually start with the “double-coincidence of wants” problem: If you and I are both to benefit from barter, it’s not enough for you to want what I have – you also need to have what I want. As the division of labor grows, such double-coincidences are harder to find. We need to find long circular chains of single coincidences, wherein A gives Bread to B, who gives Cheese to C, who gives an Apple to A. Money helps solve this problem by serving as an intermediary “good” that everyone wants.

This explanation begins and ends with individual wants. But our species has not survived primarily by such exchange. A century of anthropological and historical research shows that it was gifts – not money or barter – that brought the original human economy into being.4

In his Great Transformation, Polanyi characterizes the gift economy as “free gifts that are expected to be reciprocated, though not necessarily by the same individuals – a procedure minutely articulated and perfectly safeguarded by elaborate methods of publicity.” This is the original solution to the “double coincidence” problem – a network of multilateral gifts and reciprocity between individual and group – not just two individuals.

Even the earliest forms of currency were community records, not impersonal stores of value. Lietaer’s Mystery of Money describes pottery-based currencies centered on ancient temples to Mother Goddesses and medieval shrines to the Virgin Mary. These early monies were a way of remembering personal indebtedness. The Latin root for “monetary” – deriving from the temple of , the mother goddess who “monitors” all exchange – reflects this fact. The WIR is Juno’s descendant, a way of monitoring multilateral (not just bilateral) reciprocity, within a community of named individuals.

Impersonal money as the basis of trade came much later, allowing the economy to stretch far beyond interpersonal community. But this new impersonal money creates its own new problem – How should its quantity be controlled? Too much means inflation and wasted resources; too little causes deflation and unemployment. Precious metals are an arbitrary form of control, and central banks a blunt one. History shows shortages and gluts for gold and silver, and the limitations of central banks are confirmed by current conditions.

The supply of WIR is not limited by gold or central bank “base money” – it grows by as much or as little as people are willing to trade in it. That willingness is greatest (a) in a recession, (b) in highly cyclical industries like construction and hospitality, and (c) among those shortest on cash. Unlike ordinary money, it flows where it is most needed.

WIR is a community currency, but at even its small-nation scale, it is no longer highly “communitarian.” Time Banks (US), LETS (Canada) and Fureai kippu (Japan) are other notable currencies that are closer to their community roots. But like all of these, the WIR recreates an awareness of need-based gift exchange. It may be the form of exchange to which our species is best suited.


JamesStodder photoJames Stodder (USA) teaches economics and econometrics in the School of Management at Rensselaer Polytechnic Institute and the Management Department at the US Coast Guard Academy. His research is on exchange systems, behavioral economics, inequality and economic anthropology.

 

 

BernardLietaer photoBernard Lietaer (Belgium) is the author of The Future of Money (translated into eighteen languages), and an expert in the design and implementation of currency systems.  He codesigned and implemented the convergence mechanism to the single European currency system (the Euro) and served as president of the Electronic Payment System at the National Bank of Belgium (the Belgian Central Bank).

 


Patterns of Commoning, edited by Silke Helfrich and David Bollier, is being serialized in the P2P Foundation blog. Visit the Patterns of Commoning and Commons Strategies Group websites for more resources.

References

1. Irving Fisher, “100 Percent Money and the Public Debt.” Economic Forum, Spring 1936, pp. 406-420.
2. Stodder, “Complementary Credit Networks and Macro-Economic Stability: Switzerland’s Wirtschaftsring.” Journal of Economic Behavior and Organization, 2009. Stodder and Lietaer, “The Macro-Stability of Swiss WIR-Bank Credits: Balance, Velocity and Leverage.” Working Paper, Rensselaer Polytechnic Institute, 2014.
3. WIR-Banque, Rapport de Gestion 2013, Basel: WIR-Banque.
4. See, e.g., Marcel Mauss’ classic book, The Gift: Forums and Functions of Exchange in Archaic Societies; Karl Polanyi’s The Great Transformation; Frederic Pryor’s The Origins of the Economy; Bernard Lietaer’s The Mystery of Money; and James Stodder’s “The Evolution of Complexity in Primitive Exchange,” in Journal of Comparative Economics (1995).

 

Photo by AlicePopkorn

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Dmytri Kleiner on the workings of a Venture Commune https://blog.p2pfoundation.net/dmytri-kleiner-on-the-workings-of-a-venture-commune-2/2017/09/22 https://blog.p2pfoundation.net/dmytri-kleiner-on-the-workings-of-a-venture-commune-2/2017/09/22#comments Fri, 22 Sep 2017 08:00:00 +0000 https://blog.p2pfoundation.net/?p=67729 Guerrilla Translation’s transcript of the 2013 C-Realm Podcast Bauwens/Kleiner/Trialogue prefigures many of the directions the P2P Foundation has taken in later years. To honor its relevance we’re curating special excerpts from each of the three authors. For our third and final extract, Venture Communist and Miscommunication specialist, Dymtri Kleiner offers a proposal to answer the... Continue reading

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Guerrilla Translation’s transcript of the 2013 C-Realm Podcast Bauwens/Kleiner/Trialogue prefigures many of the directions the P2P Foundation has taken in later years. To honor its relevance we’re curating special excerpts from each of the three authors. For our third and final extract, Venture Communist and Miscommunication specialist, Dymtri Kleiner offers a proposal to answer the following question: How can we create socially-oriented companies without the start-up capital to fund them?

Dmytri Kleiner

So, to try to explain what “venture communism” is, which is my own project, predating the term “peer production”, but very relevant to it. I think we’re talking about the same thing, even if I was using different terms. As a technologist, I was also inspired by the functioning of peer networks and the organization of free software projects. These were also the inspiration for venture communism. I wanted to create something like a protocol for the formation and allocation of physical goods, the same way we have TCP/IP and so forth, as a way to allocate immaterial goods. The Internet gives us a very efficient platform on which we can share and distribute and collectively create immaterial wealth, and become independent producers based on this collective commons.

Henry George

Venture communism seeks to tackle the issue of how we can do the same thing with material wealth. I drew on lots of sources in the creation of this model, not exclusively anarchist-communist sources. One was the Georgist idea of using rent, economic rent, as a fundamental mutualizing source of wealth. Mutualizing unearned income is essentially what that means in layman’s terms. The idea is that people earn income not only by producing things, but by owning the means of production, owning productive assets, and our society is unequal because the distribution of productive assets is unequal.

Even within the cooperative movement, which I’ve always admired and held up as an example, it’s clear that the distribution of productive assets is also unequal. The same with other kinds of production; for example, if you look at the social power of IT workers versus agricultural workers, it becomes very clear that the social power of a collective of IT workers is much stronger than the social power of a collective agricultural workers. There is inequality in human and capital available for these cooperatives. This protocol would seek to normalize that, but in a way that doesn’t require administration. The typical statist communist reaction to the cooperative movement is saying that cooperatives can exclude and exploit one another, and that solution is either creating giant cooperatives like Mondragon, or socialist states.

Silvio Gessel

But then, as we’ve seen in history, there’s something that develops called an administrative class, which governs over the collective of cooperatives or the socialist state, and can become just as counterproductive and often exploitive as capitalist class. So, how do we create cooperation among cooperatives, and distribution of wealth among cooperatives, without creating this administrative class? This is why I borrowed from the work of Henry George and Silvio Gesell in created this idea of rent sharing.

The idea is that the cooperatives are still very much independent just as cooperatives are now. The producers are independent, but instead of owning their productive assets themselves, each member of the cooperative owns these together with each member of every other cooperative in the Federation, and the cooperatives rent the property from the commune collectively. This is not done administratively, this is simply done as a protocol. The idea is that if a cooperative wants an asset, like, an example is if one of the communes would like to have a tractor, then essentially the central commune is like a bond market. They float a bond, they say I want a tractor, I am willing to pay $200 a month for this tractor in rent, and other members of the cooperative can say, hey, yeah, that’s a good idea,we think that’s a really good allocation of these productive assets, so we are going to buy these bonds. The bond sale clears, the person gets the tractor, the money from the rent of the tractor goes back to clear the bonds, and after that, whatever further money is collected through the rent on this tractor – and I don’t only mean tractors, same would be applied to buildings, to land, to any other productive assets – all this rent that’s collected is then distributed equally among all of the workers.

So, the unearned income, the portion of income derived from ownership of productive assets is evenly distributed among all the cooperatives and all the stakeholders among those cooperatives, and that’s the basic protocol of venture communism.

Whatever productive assets you consume, you pay rent for, and that rent is divided equally among all members of the commune. Not the individual cooperatives, but the commune itself. This means that if you use your exact per capita share of property, no more no less than what you pay in rent and what you received in social dividend, will be equal. So if you are a regular person, then you are kind of moving evenly, right? But if you’re not working at that time, because you’re old, or otherwise unemployed, then obviously the the productive assets that you will be using will be much less than the mean and the median, so what you’ll receive as dividend will be much more than what you pay in rent, essentially providing a basic income. And conversely, if you’re a super motivated producer, and you’re greatly expanding your productive capacity, then what you pay for productive assets will be much higher than what you get in dividend, presumably, because you’re also earning income from the application of that property to production. So, venture communism doesn’t seek to control the product of the cooperatives. The product of the cooperatives is fully theirs to dispose of as they like. It doesn’t seek to limit, control, or even tell them how they should distribute it, or under what means; what they produce is entirely theirs, it’s only the collective management of the commons of productive assets.

Photo by T a k

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