His specialties are program development, research, data analysis, agent based modeling, computer simulation, monitoring and evaluation, complementary currencies, informal settlements, environmental programs, cooperatives.

In this episode, Will talks to us about his work over the past eleven years, organizing micro-entrepreneurs in poor areas of Kenya. Central to his work has been the creation of community currencies that have enabled a greater amount of trading and utilization of capacity in those communities. Recently, Will and his associates have been implementing digital forms of those currencies, and networking communities together in a wide area exchange system.

Grassroots Economics, https://www.grassrootseconomics.org
“Through community currencies people have a way to exchange goods and services and incubate new businesses, without relying on scarce national currency and volatile markets.”

Documentary on Will Ruddick and Kenyan Community Currencies, https://youtu.be/ojFPrVvpraU

How to Give People the Same Power As Banks, https://youtu.be/PfEW2atiB4s

Unblock HongKong – Interview with Will Ruddick – Director at BANCOR, https://youtu.be/OagQNEecZhA

M-Pesa, https://en.wikipedia.org/wiki/M-Pesa

This interview with Will Ruddick was conducted 2019 April 30.

Reposted from the Beyond Money Podcast

The post Will Rudrick on Community Currencies and Grassroots Economics appeared first on P2P Foundation.

Photo by haru__q

The post Open 2018: The Nature of Money – Signals and Transitions appeared first on P2P Foundation.

For many currencies to coexist there needs to be an exchange rate between each currency and each other currency, which means either they are literally convertible into a different unit as miles are convertible to kilometers, or that there is a market enabling all currencies to be bought and sold for each other.

It always seemed to me that the whole point of a currency was that it was a shared reference point with a stable value in relation to goods and services, and that a personal currencies would be neither shared nor stable. Furthermore it would be very hard for the market to assess the value of each person’s promises.

There is plenty of monetary theory and historical experience around having multiple issuers of say, dollars. Many cryptocurrency advocates see themselves as implementing Hayek’s proposal for competing currencies. He believed that the most trusted currency provider would beat the competition and the least trustworthy would go out of business, and thus that the free market would give the users of money the highest quality money. I think a regime of personal currencies is an order of magnitude more complex than each bank issuing its own notes.

The Distributed ledger version of Ripple indicated how this might be done by granting every user the possibility to guarantee their friends’ IOUs. Everyone member’s promise was its own asset class or currency, and it provided an automated market for every possible pair of currencies. But the system would never work because any liquidity there might be for my promises of dollars would be spread thinly across many markets.

This was the problem the Bancor Protocol solved albeit with a token-based approach rather than using IOUs. Any user could issue any number of tokens and ‘connect’ them to other tokens in a pool with a common reserve token. The first currency could then be traded with, meaning exchanged for and priced against, the other tokens in the same pool, and therefore for tokens in other pools connected to that pool. Pools would be recursively connected until every token could be traded with every other across a tree structure just as I described in the credit commons white paper. The total number of markets was only the number of pools rather than one for each possible currency pair. Each pool could use its reserve to buy or sell tokens instead of needing a counterparty, meaning all the tokens could be liquid. This was an engineering achievement, and it forces us back to the question of why we thought everyone should issue their own token. It seems to work as a medium of exchange if you have an app connected to a blockchain, but what about other monetary functions? Its not standard of value because all token values are shifting with supply and demand, and its poor a store of value, having no intrinsic worth and only one guarantor.

So beyond those I have three major criticisms of massively multiplayer tokenomics.

The first is that doesn’t nothing to address the balance of trade problem which naturally occurs in any economy where different regions produce and consume different amounts. A money system needs to be explicit about how trade imbalances are handled. Receiving reserve tokens is like being given a interest-free credit which has to be repaid; it enables you to buy stuff from the wider markets, but you still have to sell stuff back to those markets. Economics has been contorting itself to get around the problem that some areas are more (economically) productive than others, and areas do not naturally import as much as they export. Rather what usually happens (see the Eurozone and the globalised dollar) is that the surplus countries start lending their surplus currency to the deficit countries at interest, and a trade imbalance eventually becomes an unmanageable debt leading to poverty and loss of sovereignty. If we are interested in social justice, we have to solve the problem of trade imbalances. There are basically 3 ways:

1. Political arrangements, investment from surplus areas to increase production in deficit areas, also maybe curbing or diverting consumption in surplus areas.
2. Debt forgiveness / grants from surplus areas to deficit areas
3. Block all trade when the trade becomes too imbalanced.

A multicurrency economy may have benefits regarding the issuance of currency and choice of which currency to use, but it obscures this balance of trade problem, especially when money is represented as variable value tokens. The Bancor approach uses a solid theory called the price-specie flow mechanism. The theory says that surplus areas’ currencies become stronger and deficit areas’ weaker, and therefore as trade becomes imbalances, prices change and surplus areas are encouraged to import and deficit areas export – essentially that with a free market in currencies, prices will automatically adjust to affect supply and demand to balance the trade. Unfortunately while the theory is solid, many economists say that in the real world there are many other factors affecting trade and this mechanism has little effect. Also it was never supposed to work for tokens but for a gold standard. So massively multiplayer tokenomics will be no more socially just than other money systems on this score.

My second criticism is that the distribution of risk/reward is very unclear. From time to time token issuers will go bust and the value of their tokens fall to nothing. Others will increase in value. Instead of holding money the purpose of which is to retain a known amount spending power, each user would hold a portfolio of assets whose value would be constantly changing. Every transaction would involve a choice and a negotiation of which tokens to transfer. This can be done automatically, or the user can use their own knowledge of the token issuers and their own assessment of what each token is worth or will be worth. In Bancor where demand is artificial, token values might not reflect any reality. The risk and reward is essentially randomly distributed except insofar as people know each others’ business and take the time to acquire and dump tokens they know about.This table shows who takes the risk in different monetary systems.

My third criticism is usability. I can’t imagine a massively multiplayer token system working with cash; an app would be needed to price everything. The total amount in your wallet would need to be re-calculated hour by hour, and if you wanted to decide for yourself which tokens to spend and which to save, you would either have to configure your wallet or fiddle a lot just as you would if your pocket was full of coins from different countries. What you gain in usability, you would lose in knowledge and control over what was really going on in your wallet.

I’m also concerned that massively multiplayer token systems might not behave as their designers suppose.

Imagine you issued some tokens, but the more you spend them, the lower their price/purchasing power. You would much rather hold other people’s tokens than spend your own. It is very like borrowing money at interest Without mortgage tax relief distorting the picture, anyone would spend their savings before borrowing money because it is cheaper.

That means the only currencies circulating will be those issued by players currently in deficit. Meaning half the players’ token issuances are unnecessary. I see a lot of parallels with the fiat money system:

• the medium of exchange will consist entirely of the credit of the deficit traders, and currencies belonging to surplus traders will be not be needed.
• surplus traders have more spending power than deficit traders, equivalent to interest earned on fiat savings
• deficit traders have less spending power than par, equivalent to interest paid on fiat debt
• a trader who spends all his tokens without earning them back, effectively defaults on his debt, to his guarantors – in this case his neighbours

But unlike the fiat money system

• Our credit is determined by agreement with our neighbours not by the bank but
• We now have many currencies in our wallets
• Currencies purchasing power is constantly changing – we need to consult and app every time we want to know the price of something

My final concern is about competition between currencies. Hayek was keen that different institutions like banks should compete to provide exchange media and store-of-value services to the market. But most complementary currencies are designed by communities for their own use. If they were to compete against each other they might make a more ‘efficient’ economy, if anyone cares to unpack that assertion, but at the expense of exacerbating trade imbalances, and eroding each other’s sovereignty.

Adding these few thoughts up, it seems to me that a system of personal currencies isn’t fundamentally different to what we have now, though it could be much worse since manipulation would be much easier and injustices would all be obscured by unreliable exchange rates. It would democratise credit but there are much simpler and more accountable ways to do this.

A balance needs to be struck somewhere between one world currency a global monetary policy and near-zero risk, and personal currencies which require artificial liquidity and have no fixed value at all. It is as if anyone had the right to crown themselves king, and be sovereign over themselves. Great but somebody still has to clean the toilet every week. More currencies doesn’t mean more sovereignty, more credit, or more wealth, but it does mean more complexity and less liquidity.

After all, isn’t the whole point of a medium of exchange, like a sovereign realm, that it is something shared and agreed and standardised by a community?

Photo by Thomas Hawk

The post Personal currencies: Hayek’s wet dream or Spaghettinomics? appeared first on P2P Foundation.

One of these activists was Robert Swann, co-author of The Community Land Trust: A Guide to a New Model for Land Tenure in America. In the book he explained that, “Israel has been one of the few countries in the world to be successful in preventing the process of uprooting the poor tenant farmer from taking place. The leasehold system has brought security of land tenure to the small farmer and his family and has prevented the control of land by absentee landlords, speculation in land, and the exploitation of farmworkers by a landowning class.”

After learning about the mechanics of a system that had demonstrably protected communities against these unwanted outcomes, Swann and other members of this group, such as the Albany Movement and Student Nonviolent Coordinating Committee’s Slater King and Charles Sherrod, put their knowledge into practice. They would go on to form the first Community Land Trust (CLT) in the Southern US state of Georgia.

ABOVE: Robert Swann and Charles Sherrod with members of New Communities, Inc. at planning meeting circa 1970

Less than one year after the trip to Israel, New Communities Inc. was registered as a farming co-operative and CLT. It was created as a direct response to the political disenfranchisement and vicious economic retaliation faced by Black communities, with the understanding that banding together and sharing ownership of the land would enable these communities to be more resilient and secure their land more effectively. In the following years, New Communities acquired 5,735 acres of land – 3,000 of which was cultivated farmland. At the time in the late 1960s this was the largest tract of land held by African Americans.

CLTs are legal models that separate the ownership of the land itself from the ownership of anything built (or growing) on the land. Importantly, CLTs effectively remove land from the market and, by democratising decision making and offering leases, ensure that the land is used for purposes that serve the surrounding community. New Communities did exactly this by offering leases that allowed farmers and homesteaders to use and manage the land communally.

New Communities operated for a decade and a half, but by the 1980s they were facing the impacts of drought, mounting debt, and racial discrimination. This prevented the acquisition of emergency loans from the United States Department of Agriculture (USDA), and New Communities had to reluctantly sell its land and farms.

Although slavery officially ended in the US in the mid-1860s, it persisted for well over a century after. Once sharecropping was phased out, many white landowners often retaliated and did everything in their power to prevent African Americans from acquiring and retaining land, even pressuring federal agencies like the USDA to deny resources to Black farmers. In fact, the USDA had to pay $13M in 2010 to members of New Communities after losing a class action lawsuit, in which is was ascertained that there had been widespread racial discrimination with regard to loans for African American farmers.

Yet New Communities was not a failure, but rather a seminal experiment in community economics – one which has been learned from and replicated in various ways by hundreds of CLTs across the US and around the world. Mtamanika Youngblood, an early member of this movement, explained that New Communities took “civil rights one step further into economic independence and economic rights, using agriculture as an economic base.” What was significant was their understanding of the interplay between land, finance, and agriculture.

For a community to be resilient against external shocks and capable of directing its own development, it must be able to allocate sufficient resources to the efforts it sees as critical. This not only necessitates a stable system of land ownership and egalitarian land usage – such as the CLT model – but it also requires consistency and risk-management around agricultural production, in addition to a mechanism or set of mechanisms that allow a community to self-finance its own projects.

It’s no coincidence that experiments in community finance and local currency are often linked to agricultural production – think of the grain banks of Ancient Egypt. Agricultural activity directly produces commodities of value in the form of food and materials, but it requires the ability to pay in advance for seeds, equipment, land, and labour.

Since crops are subject to unpredictable external factors like weather, agriculture carries inherent risk. For a financial system that perceives each loan or investment as isolated, loans that increase food security and the overall health of a local economy are neglected or seen as high risk.

Jim Golden and his draft horses Spike and Rosie. His SHARE loan was to complete a barn for the team.

This is where community finance can play a role. Just as organisations like Kiva, a peer-to-peer microlending platform, enable businesses to take out low or no-interest loans guaranteed by their peers today, the SHARE (Self-Help Association for a Regional Economy) programme enabled community finance during a time of historically high interest rates. From 1981 to 1992, the SHARE programme enabled residents of the Berkshires region of Western Massachusetts to collateralise loans to local business – businesses which would otherwise be rejected for bank loans. At the time, the US Federal Reserve had dramatically increased interest rates to fight rampant inflation. By the summer of 1981, interest rates on business loans was sometimes as high as 20%, yet the share programme enabled small businesses to take out loans at half that rate from their own community.

SHARE’s innovation in community finance continued to be successful and, among other programmes, advised two farms in the region to issue a scrip currency. One of the local farms needed funds to heat their greenhouses during the winter when cash was short; the other needed to repair and recover from fire damage. These farms sold what were called Berkshire Farm Preserve Notes for $9 during the winter. Once the harvest came, they accepted the notes back for $10, effectively giving a 10% discount to customers who pre-purchased farm produce.

Robin Van En (center) and other Indian Line members by Clemens Kalischer.

Yet viewed from the other side, this can be understood as a safe 10% return on investment – paid in farm produce – to those who invested in local agriculture. Analysing this further, this type of scrip currency can be seen as a grassroots financing scheme, one not dissimilar from the Community Supported Agriculture (CSA) model.

Under the CSA model, all risks and rewards are shared with the community rather than absorbed by the farmers alone. Community members finance the operations of a CSA farm by pre-paying for CSA shares – a claim to a portion of the farm’s produce in the upcoming season. During a good year, community members with CSA shares receive high-quality produce below market prices; during a bad year, the financial impacts of the bad harvest are absorbed by the community. Importantly, the community reaps long-term benefits regardless of what happens. By smoothing out a farm’s income and insulating it from market shocks and external risk, the community ensures its own access to nutritional food.

In the same spirit, local currencies can and have given communities the tools to self-finance in times and places when the existing financial system cannot or will not do so. Local currencies serve multiple purposes and, depending on how individual currency programs are designed, each will serve some purposes better than others. It is important not to think of local currencies only as incentive systems that increase regional spending; local currencies can also be democratic systems of finance, tailored to the specific needs of the communities they exist in. These systems can (and already do) extend community credit to efforts which would otherwise not receive loans or funding.

The problem of accessing large-scale investment becomes less and less an issue as a regional currency achieves greater adoption. The Sardex currency system in Sardinia, Italy has been receiving a lot of press recently, and currently clears over €8 million in mutual credit payments between business each month. Another mutual credit system, the WIR in Switzerland, provides the means of over 1.5 billion Swiss francs per year and has been growing since 1934 when it was started to address a lack of access to credit. In Kenya, the Sarafu-Credit programmes operated by Grassroots Economics are also mutual credit systems, and they provide microfinance zero-interest loans in local currency to businesses and vendors who would otherwise have no access to credit.

Sharing a common thread with crowdfunding, lending circles, and even investment through credit unions and public banks, local currencies tap into the latent potential for communities to finance their own development. Just like these other community finance initiatives, any profits generated by endogenous financing from local currencies continue to enrich in the region.

Unassumingly nestled at the bottom of a sleepy hill in South Egremont (also in the Berkshires region), Indian Line Farm exists as an example of what the intersection of land, finance, and agriculture could look like in the new economy. Not only was it the first CSA farm in the United States, but Indian Line accepts the BerkShares regional currency as payment. BerkShares was started in 2006 by the same community that initiated the share programme and Berkshire Farm Preserve Notes, and still circulates today.

BerkShares local currency.

If that weren’t enough, Indian Line Farm also sits on CLT land and the lease requires that land to always be used for farming – it can never be used for any other purpose. In an innovation rare among existing CLTs, the farmers at Indian Line are not only entitled to equity derived from value they add to buildings on the land, but also from the value of perennial stock and organic soil improvements. By including this in the lease, the CLT ensures that the farmers’ economic incentives will always remain in alignment with the long-term environmental goals of the community.

Most often, when CLTs are mentioned in the media, it is in relation to low-income housing. This is because CLTs dealing with affordable housing or neighbourhood restoration have tax exempt status under US federal law. Yet there is nothing that actually requires a community land trust to be used for low-income housing.
In fact it is possible for all types of land to be held by CLTs, and it is also possible for equity to be given to individuals living and working on any type of CLT land.

Though a tax-exempt CLT cannot offer equity to individuals, it can use a two-tier framework to do so, where a subsidiary holding company manages the land and offers equity to those who live and work on it. This framework -commonly used by churches and educational institutions – was developed and acted upon by the Community Land Trust in the Southern Berkshires that holds Indian Line Farm’s land.

(in photo from left to right: Bob Swann, Ursula Cliff, Susan Witt, Frank Lowenstein, Clemens Kalisher, Elizabeth Keen and Al Thorp celebrate the 1999 partnership formed in order to transfer ownership of Indian Line Farm from the estate of Robyn Van En. Photo by Clemens Kalischer.)

This framework allows all types of land to be donated, including land used for commercial purposes, and business owners or other leaseholders are entitled to equity in improvements made to businesses or anything else built on CLT land. As far as land reform goes, this innovation is truly groundbreaking in the way it enables most types of land to be held securely in common.

These three elements – land, agriculture, and finance – fundamentally influence the wealth flows and power dynamics that permeate society and shape it. By using and improving existing models, communities can build a resilient foundation where decommodified land is held in trust, the risks of agriculture are socialised, and regions maximise their ability to self-finance. With a foundation this solid, a community would be primed and equipped to direct its own development in any way it sees fit.

Aaron Fernando is a community currency consultant who has worked with multiple community currencies across the United States, and is also a writer focusing on local movements, new economy initiatives, and behavioural economics.

Lead image Indian Line Farm, by Jason Houston.

The post Beyond Civil Rights: Economic Democracy appeared first on P2P Foundation.

Aaron Fernando: The staff at the nonprofit organization HullCoin has done something very unusual in the city of Hull in northeast United Kingdom. Residents of Hull can earn HullCoins, which can be used at various places around the city. It’s an innovative model. But how exactly does it work? To learn more about the group’s approach, we spoke with the two founding members of HullCoin, Dave Shepherdson and Lisa Bovill. Here’s what we learned.

Aaron Fernando: It seems like both of you have had significant experience in civil service before this the start of this project. Can you talk a little about that, and if that influenced you to start HullCoin?  

Lisa Bovill: I worked for the local authority for 20 years. I delivered and managed advice services — so that’s civil rights advice. I was also in charge for developing anti-poverty strategies for the city and as part of that, strategies to combat financial exclusion. So working with those who couldn’t get access to mainstream financial products and were penalized as a result.

At the same time, most local authorities across the U.K. were experiencing funding problems themselves — reductions in the amount they got from central government — which meant that they could do less to help people to manage their finances and less to  combat poverty.

That was really where this whole thing started, and we were looking for creative solutions. We looked at technology and emerging technologies as having potential to help us with that.

I notice many similarities between HullCoin and things like time banks and loyalty reward programs. Could you talk a little bit about the things that influenced you, and what types of programs were you looking at when you developed the concept for HullCoin?

Bovill: We do have a local time bank, and we work closely with the time bank. It’s similar in that we are looking at non-monetary value systems. But we are different in lots of ways: It’s not just an hour for an hour. We are looking for a reward system that isn’t based on time, it’s based on social outcomes. HullCoin has a value, in terms of being able to redeem it for goods or services in a way that a time credit doesn’t have. What we want to do is interact with the time bank in a way that allows us to exchange those non-monetary value systems with each other and to create something like a varied secondary economy.

Shepherdson: When we were looking at mutual credit systems and local currencies — there are a lot of local currencies in the U.K. — the predominant ones are the Bristol Pound and the Brixton Pound — what we saw was that there were mutual credit systems (such as time banks) which are user-to-user exchanges, but local currencies were all effectively pegged to fiat currency. Like Lisa said, we were looking around the anti-poverty strategy in the city and we wanted something that would be generated into existence through social outcomes.

We looked at Bitcoin and blockchain technology as a decentralized clearing house which gave us regulatory freedom. It was 2014 when we started looking at this. In the U.K. certainly, a lot of what was going on with Bitcoin and blockchain was still cottage industry. I mean, kids were still mining cryptocurrency in their bedrooms.

How does an individual HullCoin unit get issued? Is it backed by anything?

Bovill: We will work with a number of grassroots and local organizations that will be given an amount of the currency and then they will be allowed to set their own rules around how they issue it. With some guidelines — quite broad guidelines from us — so it will really be up to those people. We’re not planning to regulate this or be really hands-on in terms of about how you issue or what you issue for. It’s up to those organizations who work with the city to make those decisions.

Shepherdson: And it’s not back by any commodity. It’s backed by the community itself.

When one organization issues HullCoin, will it be the same type of HullCoin as when another organization does? And those can basically cross paths?

Shepherdson: Yeah, absolutely. The only thing that will differentiate between different HullCoins is that into each HullCoin, we insert software which documents evidence of positive social outcomes generated by the coin into the coin itself. An issuing organization — whether that be a charity, a local authority, the NHS, the university, schools, prisons, everybody who signed up for it will be able to insert positive social outcomes and that stays within their own transaction histories.

The person who generates the coin who has done the positive social outcome — that can be for self-improvement or volunteering, or it could be mentoring, or could be caring for relatives — that positive story stays with them on their wallet, on their app. It sits on there and any business or retailer that accepts HullCoin as a form of discount also receives a time-stamped copy of that positive social outcome.

What you get collectively, then, is distributed ledger of all the positive social outcomes that have taken place — in this instance Hull is the city — but essentially, could be spread across numerous geographies or within any context, really.

That’s really interesting. That leads to one of my questions that deals with why you used cryptocurrencies. I was looking your tweets and I came across a question you asked that I wanted to pose back to you: “Why would you create a local currency using blockchain over traditional digital payment systems.”

Shepherdson: We did a full appraisal of all the different systems and which we could use, including blockchain. Because we’d developed links with Feathercoin, we were able to obtain the skills to develop the distributed ledger (blockchain) infrastructure very, very cheaply.

What I think mutual credit systems — and any currency systems — have trouble with, is that at scale they become incredibly inefficient and it becomes more expensive the more successful that that you are.

One the things with local currencies: with paper, the more that you issue, the more your running costs and maintenance costs stack up. While we obviously have server costs around the surrounding tech, the actual payment infrastructure is incredibly efficient. Not only that — it’s incredibly secure at the same time.

We’re a social technology company which specializes in distributed ledger technology. The application of HullCoin in this first instance… This is something that could be genuinely valuable and is complementary to the economy as a whole, but provides that platform for the adoption of the technology.

If we’re able to achieve successful public penetration of [blockchain] technology, then other applications potential the blockchain technology become extremely attractive. If you think of Bitcoin as being the world’s first-ever programmable money then it has become a no-brainer to use the model we’ve landed on — and the fact that we’ve been able to develop the infrastructure and everything at a fraction of the cost of what the industry rates are.

I’ve noticed that there’s often a disconnect between the local currency folk and the digital technology folk — not just crypto enthusiasts but with FinTech and mobile payments generally. Do you encounter this disconnect at all?

Bovill: I think the reason is that one is all about grassroots and people and the other is digital — and therefore automated and not people-centered. But we have come from a background of services that engage with people, so we want to see technology that’s put into the hands of communities in a way that they never thought that the technology would.

But also, I think that it’s difficult when you have a more traditional model that’s trying to achieve something, and then technology comes along and enables you to do it in a different way but you’ve already got an established model. So then you have to switch to a different model, and it’s difficult to accomplish that.

Shepherdson: Now, I don’t know the inner workings of a chip and pin machine. All I need is confidence. As long as I have confidence when I use my contactless payment, I get a reassurance.

So it’s all built upon confidence. What we’ve developed in the last 12 months — the UX on this— it actually resonates with all the communities that were working within Hull and beyond. If you look at what was developed, there’s no mention of blockchain technology. That does not sell to the public. We benefit from the infrastructure internally. All we’ve got to do is build confidence with it.

Once people have done something and they go back to their accounts on the system and see that they have been credited with a balance, they feel that they have been paid. It feels like money. That’s the psychology of money. So we replicate the psychology of money within the system; the technology in terms of blockchain and Bitcoin, from the user side of things is completely irrelevant.

How do you see a local currency scaling? And is it a relevant question for a local currency to scale?

Shepherdson: I think a local currency can scale. I think local communities should own their own currencies.

Bovill: It can be local, but use the same model.

Shepherdson: You can basically share the platform. The way that we’ve designed the whole current platform is that you can take the front and down you can share the back-end and you can have your own customizable set of coins which are specific to your geography or your interests.

It doesn’t just have to be around a local area. You could have one which is specific to a college, education, or health. It’s interoperable in a number of ways and you can white label the same platform and it’s extremely efficient and cheaper to do so rather than developing anything from scratch.

Is there anything unique about the city of Hull it lends itself to success of a program like this? And in the best case scenario what do you hope to achieve with HullCoin?

Bovill: I don’t think there’s anything so unique about the city of Hull apart from the fact that it is a Northern city and every time there’s economic downturn, it’s just battered because the primary economy gets battered. There’s a disproportionate effect on the local citizens.

We were trying to — in our strategies — to prevent that. We were trying to think about some way to create economic resilience for cities like Hull and Northern cities like Hull.

Shepherdson: 90 percent of all of the world’s croutons are made in Hull. [Laughter]

I suppose Hull’s always had a bit of a rebellious streak to some historical extent. I like to think in some ways we plug into that. It is mostly beaten down. But again, when there’s issues like the things that we were looking to address that’s where innovation sometimes comes from— necessity, really.

If we can provide a mechanism which gives people an opportunity to contribute to their economy and their community and also helps themselves and it gains traction — if that achieves success and credibility then our work here is done.

Bovill: In terms ultimate aim, with the local currency, it is about trying to operate a key component in create a secondary economy. A secondary economy which matches unmet need with what would otherwise be wasted resources.

Shepherdson: And also, we have an interest and aspiration to linking with the universal basic income model of welfare. The current model of welfare that we have in the U.K. really is, I don’t think, fit for purpose. And it certainly isn’t fit for purpose in what I think we would determine is a post-automation economy.

You’re going to have to look at “what is value?” In a much broader economic sense then what is currently considered by Western governments. Hopefully what we’ve developed with HullCoin — both within its economic modeling and its blend of technology and application — is fit for purpose for the future model of welfare which reflects the changing economic activities people will be undertaking. You can have a corporate and a communal contribution to your economy, which is somewhat different from what it is now.

And you’re planning on doing an ICO (initial coin offering) as well?

Shepherdson: That’s aligned with our aspirations of creating a parallel currency. We’re working with the number of academics and some people within the blockchain sphere on putting together a draft whitepaper and we’re going to make an assessment whether that draft is fit for purpose, and then we’ll make an assessment whether or not we’ll do an initial token sale on a parallel currency.

The potential is certainly there and I think unlike what a lot of other blockchain crypto startups are doing, we’ve actually got an MVP (minimum viable product). We’ve got a track record, we’re close to market and if we get the economic modeling right we will be able to launch the cryptocurrency.

Image of Dave Shepherdson and Lisa Bovill courtesy of HullCoin

Photo by cactusmelba

The post The English City With Its Own Cryptocurrency: Q&A With the Founders of HullCoin appeared first on P2P Foundation.

With the help of Will Ruddick, a community development specialist in Kenya since 2009, dozens of small business owners in Bangladesh agreed to accept a new currency, the Bangla-Pesa, in exchange for fresh produce, bicycle repairs, tutoring, taxi rides and other goods and services. The new commons-based currency has stimulated a big boost in the local economy while helping families that earn little in the formal economy (and thus have few Kenyan shillings) to earn another currency, Bangla-Pesa, which lets them meet their basic needs. Since its launch, over three million shillings of trade have been transacted using the currency. Its success has recently inspired the launch of a similar currency, Gatina-Pesa, for the neighborhood of Gatina, in Nairobi, Kenya’s capital city.

We interviewed Ruddick, the founder of the Bangla-Pesa to learn more about his remarkable experiment in community-based money.

Will, what are the origins of the Bangla-Pesa?

The concept of the Bangla-Pesa is not new. It was first introduced in Kisumu Ndogo, Shauri Yako and Mnazi Mmoja slums in Kongowea. A number of us brought the idea to Bangladesh in March 2013 as a way to strengthen and stabilize the economy of the neighborhood. Bangla-Pesa is an accounting mechanism of reciprocal exchange or mutual-credit system. Members can accept only as much Bangla-Pesa as they can use in one day for local needs, like food and water. No one is allowed to have more than 400 Bangla-Pesa at any one time. In developing these programs, we incorporated a system of guarantors to the currency and a community fund to make the system more secure and sustainable.

How did you get people interested in using Bangla-Pesa?

The majority of people here live in poverty and are unable to meet their basic needs. Therefore, our goal was to use the currency to encourage economic activity, which in turn would help people who don’t earn much conventional money to be able to buy food and other necessities. People were only too happy to participate in such an experiment.

We saw the currency as a tool to let members of the network trade among themselves. The Bangla-Pesa is a business-to-business voucher system that only registered members can participate in. In this sense, the Bangla-Pesa is a complementary currency to official money. Technically it is a credit clearing system for multilateral reciprocal exchange. People outside the trading network like the Bangla-Pesa because it is used to support community activities like clean-ups; they also know that it can be used to buy goods and services at more than 100 shops.

What sort of system did you organize to launch Bangla-Pesa?

We organized more than 200 microenterprises into a community-based organization called the Bangladesh Business Network. Everyone formally registered as a member and agreed to accept the Bangla-Pesa in exchange for whatever they could offer – food products, services, transportation. Each business must agree to back 400 Bangla-Pesa with their goods and services. Each business must also have a group of four members that endorse their membership. Bangla-Pesa serve as vouchers or promissory notes for members’ goods and services.

What was the initial response to the new currency?

People in the neighborhood quickly saw the value of using it. It helped them meet their needs even though they don’t have much “real money.” But state authorities became quite agitated. They feared that the Bangla-Pesa might try to displace or challenge Kenya’s national currency, the shilling. Six of us who had started the currency were arrested by the Changamwe police and put in jail. The police were apparently worried because there are secessionist groups like the Mombasa Republican Council within the area. The government saw the Bangla-Pesa as a threat to it and the national currency.

The six of us were charged with possession of illegal currency papers in late May 2013. All of the businesses in the Bangladesh Business Network were told to stop using the currency. We found it all perplexing. Why should a simple mechanism that helps people self-organize themselves to make ends meet pose a threat to the country’s Central Bank?

So how did you persuade the government that the Bangla-Pesa is not a threat?

We pointed out that the Bangla-Pesa cannot be traded for shilling. They aren’t convertible into each other. We also emphasized that Bangla-Pesa are a trading voucher more than a currency in the strict sense, since its value is pegged to the Kenyan shilling. I think we also convinced the prosecutor that our goal was and is to uplift the living standards of the poorest. Three months after our arrest, in August 2013, the public prosecutor found we had broken no laws and dropped the charges.

What happened next?

The arrests stopped the economic stimulus that Bangla-Pesa had provoked because suddenly no one could use them. But then we re-launched the currency in November 2013 with the backing of the entire community, including local leaders and government officals. Since then, trading in Bangla-Pesa has resumed in a big way.

How does the Bangla-Pesa help people?

Take the case of Maciana Anyango, who is sixty-four. She is a widow and the sole breadwinner and takes care of her disabled seventeen-year-old daughter and a son who trained as a driver but has not secured a job yet. She says, “I used to be without food because we wouldn’t have enough Kenyan shillings. Now I can eat even when I don’t have the real money because I still have the Bangla-Pesa to use.”

Or consider a bicycle operator who has the capacity for twenty customers a day, but in general only has ten. Now he can give rides to those businesses in exchange for goods and services they have in excess, such as a woman who has extra tomatoes to sell. This helps the community weather poor economic periods. There are hundreds of millions of people around the world like this. They have goods and services to offer. So why can’t they create their own means of exchange, backed by what they have and can do?

Is the Bangla-Pesa mostly about business – or are there other reasons that people join?

People join because it’s good for the community. Fredrick Ochieng is an electronics repairman with a family of seven; such larger, extended families are not unusual in African societies. Ochieng says that he wanted to join to help provide for his family and for things for his children, like merry-go-rounds, and to help the community with things like the trash clean-up. And in fact, since starting to use Bangla-Pesa, it has helped him get to know people in the community as he got to know members of the network and they incidentially became new customers, when they have a problem with their phones.

What makes the currency itself different from the national currency, the Kenyan shilling?

Bangla-Pesa’s value is the same as the Kenyan shilling, but is not exchangeable for it. Bangla-Pesa is a voucher that circulates only among the community. And that means that the value generated within the community stays within the community, and does not flow to people outside of the neighborhood. As a result, the Bangla-Pesa, unlike other currencies, does not generate more poverty. Furthermore, unlike the Kenyan shilling, whose value fluctuates with inflation, the vouchers expire after one year. Bangla-Pesa can be renewed with a sticker upon payment in Bangla-Pesa to the community fund. This creates an annual renewal cycle for community service work.

How does the Bangla-Pesa system constitute a commons?

The Bangla-Pesa is managed by a nonprofit organization called KORU, which stands for “Kenyans Organizing Regional Unity,” which I cofounded with Jacky Kowa, a native Kenyan who works on women’s rights and health issues. The group’s members are elected, and it acts as a validator and steward of the currency. KORU addresses any disagreements that may come up among members.

The Bangla-Pesa is a symbol and instrument for community wealth because it is backed by the common pool of goods and services of the members of the network. The value of the currency is the sum total of the teaching of a teacher, the tomatoes raised by the farmers, the rides given on a motorcycle, and so on. Not more. Not less. So the vouchers represent that community wealth. The vouchers are also a way for people to improve the community. Once accepted into the Network, 200 Bangla-Pesa of the 400 allocated to a business are kept for community service work, such as trash pickup. Members vote on which types of community service work to fund.

Bangla-Pesa have helped created a commons by catalyzing new connections and cooperation among people. Rose Akiny runs a maize mill where she grinds maize to flour, a business that helps her care for her sister’s family after her sister passed away. She said, “I found friends who were doing business using Bangla-Pesa, and they backed me and then I backed them. Now I go to their businesses to buy maize, rice and beans, and they come to grind at my mill. I follow other members who have the Bangla-Pesa and learn where to purchase goods. It’s is also easy to find people because the members’ shops are marked.”

How have Bangla-Pesa improved the situations of families and the overall well-being of the Bangladesh community?

The community now trades the equivalent of roughly 100 euros daily using Bangla-Pesa in addition to its usage of Kenyan shillings. A survey on the impact of the program found that about 83 percent of participants saw an increase in their total sales as a result of the vouchers. Bangla-Pesa represent an average increase of 22 percent of total daily sales over a baseline level, compared to no increase in sales using Kenyan shillings. This implies that Bangla Pesa are responsible for that extra 22 percent in economic activity, which might not have materialized without the program.

Women especially benefit from Bangla-Pesa because 75 percent of the small businesses in Bangladesh have women owners. Bangla-Pesa have also made all of its users less dependent on the formal economy and the volatility of markets.

Among many commoners, the dominance of money and market mechanisms in mediating people’s relationships is usually seen as very controversial. Obviously there are many ways for people to meet their needs and help each other. How important do you think that a currency, or means of exchange, is for improving people’s livelihoods in the settlements that you work with?

It is really important to recognize how people fall into poverty when playing the game of capitalism and the reasons why poverty exists in the first place. Perhaps if we see poverty as manufactured through the control of resources by an elite minority, we can also see how the control of money might itself be a key tool of the elite.

Certainly the people in Bangladesh and Mombasa more generally are “poor” due to lack of education, corruption and lack of jobs. But this is not why poverty exists in the first place. There is a nearly unlimited demand for goods and services, including education, and there is a nearly unlimited supply of people who could provide them. What’s missing is a means of exchange between demand and supply. Sadly this needed means of exchange is usually only available as national currency, which is typically controlled by for-profit institutions, banks, whose goal is to benefit by increasing the debt of others.

If communities could instead control their own means of exchange, they could make exchange work for their own purposes. They could lower their dependency on Kenyan shilling by using Bangla-Pesa when possible. Bangla-Pesa creates a buffer for the community that helps it keep life going even during the worst economic periods.

Thank you.

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.
Image: Yes Magazine

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There is probably no subject that has been written about more frequently than money and its origins. Usually money is portrayed as a natural phenomenon like gravity, energy or light: one of the constants of the universe. It is assumed to have a unitary understanding across cultures and throughout history. It is also assumed to be a top-level concept, a subset of nothing.

There are many schools of thought about the origins of money. There are those who consider it to be a market phenomenon and thus arising out of the needs of the marketplace. Other schools consider it to be always and everywhere the creation of governments or states. Others consider it as arising out of the need for credit or as a necessity to settle debts. Irrespective of which school one supports, money’s origin is sudden: it appears in the human record when ancients first meet in the marketplace, or when states appear for the first time, or when the need for credit arises, or when debtors need to borrow to settle their debts. Whenever historians look back in time and see some activity that today would involve money, they project their conception of money onto the ancients and assume that they understood and used their proto-money in much the same way as money is understood and used today.

The problem with all these different approaches to the origin of money is that they start with the concept of money itself. ‘Money’ is assumed to be universally understood and to have been part of the human story since the beginning of civilisation. As money is considered a top-level concept nothing is used to explain money itself. It just is, like God. Monetary historians tell us that there was a barbarous time before money was ‘invented’, when individuals had to barter to get what they wanted. This was so inconvenient that people invented money, from which point civilisation took off.

If any concept is considered as a top-level concept then its origin can’t be explained by referring to something at a higher level; it can’t be a product of something else. Its origin must be the result of a sudden, inexplicable ‘big bang’. By having top-level concepts thought is broken up into vertical, linear, unrelated stacks of knowledge (like ‘economics’). As we know, everything is related so there can’t be any top-level concepts, for concepts are but abstractions of the totality, useful for helping us understand that complex totality. While there can be levels of abstraction, knowledge is circular without boundaries preventing us from reaching ever higher levels of abstraction that help us explain lower levels.

Exchange

Money is actually a concept that is subsumed under the higher-level concept of exchange. Exchange is subsumed under life itself, for exchange is a property of life and probably of the universe as well. The life of any particular organism cannot be understood or explained adequately without considering its exchange relationships with other organisms. The very word ‘relationship’ implies exchange, for if there is no exchange of any kind there is no relationship.

The same applies to money: it can’t be understood without considering it as an exchange concept. There is no history of money separate from the history of exchange, in the same way that there is no history of oil separate from the history of energy. Exchange is not a consequence of money; money is a consequence of exchange.

Humans, like all living organisms, exchange with other living organisms in a multitude of different ways. Human to human exchange also takes place in a great variety of ways but because humans tend to collectively produce their means of existence instead of obtaining it directly from nature using their instinctual and bodily tools, their exchange relationships are generally more complex than those of non-human organisms of the same type.

Regular, organised exchange results in the establishment of exchange systems. Every human society, from the simplest roving band to the most complex industrial societies of the 21st century, has an exchange system. These facilitate the sharing and exchange of energies in the production and distribution of their means of existence by establishing and maintaining relationships in time and space.

All exchange systems involve a number of modes, means and methods of exchange. On top of that, exchange systems consist of customs, conventions and rules that ensure the smooth flow of exchange without members of the society having to plan how to effect each and every transaction and negotiate fresh terms and conditions each time.

There are various modes of exchange that humans can use when engaging in exchange. Some are more suited for situations where the parties are known to each other, others for exchange between strangers.  As societies become more complex, modes of exchange that deal more effectively with complexity are adopted. Each society is characterised by the combination of these modes and by which is dominant.

Reciprocal exchange (gifting) is dominant in simpler societies but still operates on the margins in more complex societies. Sharing or pooling, which involves distribution and redistribution was predominant in the ancient empires but is still evident in modern industrial societies; exchange mediated with commodities or issued, circulating currencies (market exchange) have been used throughout history, and is the predominant mode in the world today; exchange facilitated by record keeping has likewise been in use since the beginning of  history but will be the predominant mode in our connected world. There is much that can be said about each of these, but let’s keep it at that for now.

The means of exchange are the actual tools and mechanisms that are used to effect and facilitate exchange. Examples are writing, numeracy, accounting, clay tablets, knotted strings, tally sticks, coins, notes, credit cards, ATMs, banks, clearing houses, computer networks, algorithms etc.

The methods of exchange refer to the actual methods that are used to transfer and share value: sharing, gifting, barter, swaps, commodity exchange, monetary exchange, time exchange, record keeping, mutual credit etc.

All exchange systems provide the following, but obviously vary in the way they are applied and the emphasis given to each:

• A means to memorise or record contributions and distributions (given/received, sold/bought, provided/consumed, claims/obligations, input/output)
• A means to measure the value of these contributions and distributions (unit of value/unit of account)
• Rules to ensure a balance between contributions and distributions (credit/debit limits)
• Sanctions to prevent imbalances
• Measures to ensure that obligations to and claims on the community do not become excessive:
  • To prevent freeloading/theft, accumulation of wealth/power
• A means to exchange multilaterally:
  • Those who receive something should not be directly obligated to those who provide it, and those who provide something should not have to receive recompense directly from those they have supplied
• The ability to settle imbalances over a period of time:
  • Those who receive something should not have to provide equivalent value immediately, and those who provide something should not require immediate recompense
• A means to defer claims for a long period (‘store of value’)
• A means to receive credit/go into debit beyond current contributions (loans, credit, deep debit)
• A means to incrementally reduce large obligations over a period of time (loans, credit, debit, incremental reciprocations)
• A means to transfer claims and obligations to others

Class society and states emerged when a certain sector took control of the means of exchange. Since then every exchange system has been hijacked by the ruling class, using the power of the state to enforce usage of the means of exchange under their control. The scope of states has always been synonymous with the domain where they have been able to enforce the means of exchange under their control. Therefore, to create an exchange system that is under democratic control and functions equally for everyone it would need to have the following features as well:

• Exchange media replaced with information (metric currencies). The existence of exchange media permits capture and control of the exchange system and their elimination will get rid of usury, speculation and the ability to extract value without delivering value
• Transparency. Everyone should be able to determine the standing of everyone else (i.e. activity records should be public)
• Public accounts should be open for inspection
• The means of exchange should not be ownable or controllable – to prevent special interests from using them to advantage themselves and control others
• While seamless trade with any entity, anywhere should be possible, the focus should be local and the administration of exchange should be decentralised  at the community level
• All methods of exchange should be promoted to prevent a monoculture that defines how our economies work and corrals us all into one economic paradigm

What is commonly referred to as the ‘financial system’ or ‘monetary system’ fits neatly into the above description of an exchange system. This is because these terms are really just inaccurate names for exchange system. Again, the use of these terms assume that all exchange is ‘financial’ or ‘monetary’ and that exchange that is not monetary is not worth considering (i.e. outside ‘the economy’).

Exchange systems evolve with the social groupings to which they apply. As the population increases and the society becomes more complex, different exchange methods need to be used. Where everyone knows or is related to everyone else the relations of exchange are simple and this is reflected in the use of simpler recording mechanisms that do not require much accuracy. But when societies become more complex, more involved recording mechanisms are required. Historically this led to the rise of a specialised class of administrators who kept track of inputs and outputs. Since these administrators were in control of the society’s product, they effectively had control over the population. This gave rise to class society. Centralised control over production and distribution resulted in centralised, distributionist economies. The bureaucratic overhead required to manage these societies eventually overwhelmed them and resulted in the adoption of exchange media (‘money’) as the preferred mode of exchange. The usage of exchange media gave rise to markets, which was a much more streamlined way of organising exchange than through centralised warehousing and accounting records.

With the formation of nation states, local exchange systems merged into national ones and today all are, in differing degrees, merged into a global exchange system. The trajectory appears to be the creation of a single, global exchange system with a single medium of exchange. The unification of ‘money’ and exchange will be complete.

Because money plays such a large role in all of our lives, we feel that we know exactly what it is. However, when taking an historical perspective, the concept ‘money’ appears to have morphed in meaning over time. It is also a very limiting and restricting concept that focuses only on methods of exchange that involve exchange media, even though for most of human history non-monetary methods of exchange were predominant.

Projection of their own understanding of concepts onto older and other cultures is a common shortcoming of academics, and especially of economists with a political or financial agenda. It is not accurate to say, for example, that the ancient Mesopotamians had ‘money’. This invites us to believe that they had something similar to what we understand as money today, which is about as useful as saying that they also played sport, encouraging us to conjure up visions of bronze age football leagues and tennis tournaments!

It is probable that most ancient and traditional cultures had no word for ‘money’, at least not in the sense that it is used today. Monetary historians tend to lump together cattle, cowrie shells, gold bullion, silver coins, bills of exchange, currency notes, credit cards and Bitcoin under the same rubric ‘money’. While it is true that all of these have been used to facilitate exchange, it is not very edifying to call them all ‘money’. Projecting current conceptions of money onto anything used in the past to facilitate exchange is to deny that earlier cultures had or used their own unique methods of exchange. This diminishes the importance of non-monetary exchange and elevates monetary exchange to a position where it is the only form of exchange worth considering.

When exchange and money are presented as a unitary concept then neither the past nor the future can be any different from the present. There is no scope to reinvent exchange and therefore the relations of exchange can never change. Human economic life is set in stone.

What IS money then?

Economists define money in terms of its functions. They tell us that anything that serves as a medium of exchange, a unit of value/account and a store of value is money. Money is thus defined in terms of itself and thus turned into a static concept that can be applied with equal weight in any situation at any time.

But if money is seen rather as an exchange concept then it becomes less absolute and we can see that it is just one way or method of facilitating exchange, not the only way. Because of its connotations ‘money’ will always be a partisan concept, which means it should probably be discarded. As this is not likely to happen, the following is offered as a description of money (not a definition!) as it applies at the present time:

Money is an exchange method used in many exchange systems. This method involves the use of a medium of exchange that is issued into circulation by a centralised authority such as a state or chartered non-state financial institutions (banks). This medium of exchange is declared ‘legal tender’ in the domain over which the particular state claims to have jurisdiction, meaning that it is ‘illegal’ to refuse it when presented for the settlement of debts and the only ‘legal’ way to pay taxes. The declared medium of exchange is promoted as a monopoly in order to enclose all exchange within its ‘space’ and displace and discourage other modes of exchange.

This description could be padded out indefinitely but it is sufficient for now, provided a few riders are added.

Medium of exchange does not imply something tangible but it does imply that it has the property of quantity. Anything that exists in quantity has to be created, and creation implies a creator. Money is thus something ‘created’ for the express purpose of facilitating exchange, but it can’t be created by anyone as there would then be no control over its supply and no one would trust it. There needs to be some connection between the supply of the exchange medium and the amount of goods and services available for exchange, otherwise it becomes meaningless.

Initially states usurped the role of creating and controlling the supply of the exchange medium as it gave them the most powerful weapon for controlling the population of the area over which the state claimed dominion.

Much subsequent history has been a struggle between states and non-state institutions wishing to take over control of the means of exchange, such that today it is these ‘private’ institutions that are on top. The two, however, have formed a strategic alliance to keep the scheme going. Politics is essentially about who controls the means of exchange.

All states permit only one ‘legal’ exchange medium, the officially declared currency of the country. States also discourage the use of exchange methods that they are unable to tax, as this would decrease their revenue and weaken their ability to control the population. The very first ruler of the very first state realised that in order to control his subjects, he needed to be able to control the system of exchange. States today still operate according to this tried and tested formula.

The non-state institutions that today create the state-sanctioned medium of exchange, support their states’ insistence that there should be a monopoly of the exchange medium. The ‘economy’ is the arena in which people produce and exchange using this monopolised exchange medium. The production of goods and services in this ‘economy’ is purely coincidental and secondary to the prime aim, which is to ‘make money’.

The state/financial-institutions partnership promotes the notion that exchange is a consequence of money, and not the other way around. Without money, we are encouraged to believe, there will be no exchange and the economy will come to a grinding halt – in the same way that a car will not run if it has no petrol. Everyone needs to be kept on the treadmill in the pursuit of money, so that banks can continue to lend it to us at interest, businesses can continue to sell us stuff to realise a profit and states can continue taxing us for using it. There is a whole parasitic infrastructure dependent on our continued belief that money is as essential to life as air and water.

The ‘economy’ (that realm where money is the exclusive exchange method) is a closed box that attempts to enclose the remaining enclaves of social reality where non-monetary exchange continues to operate. Anything not captured by the official ‘economy’ is depicted as evil, illegal or subversive. Hence we have the ‘underground economy’, the ‘dark economy’, the ‘shadow economy’, the ‘black market’.

We are all herded into this singular ‘economy’, which does its best to prevent us escaping by keeping us dependent on money and illegalising non-monetary exchange. We cannot imagine a world without money; that is equivalent to death. The fear of descending into poverty (lack of money, not the inability to produce and exchange) keeps us all prisoners.

Money is not essential for life but exchange is

For those who have grown up in a society where they are taught that the purpose of life is the pursuit of money, it is hard to think outside the ‘money prison’ that incarcerates them. Money, it seems, governs our lives totally and without it life stops. There are too many examples of what happens when money ceases to flow: economies flounder and mass starvation ensues; the population flees in search of ‘economic opportunities’ elsewhere. Everyone follows the money; no one stops to think: “Is there another way?”.

In earlier times most things were obtained directly by producing them or through exchange using non-monetary exchange methods, and somehow people survived. No one thought of ‘the economy’ as something separate from society, as a place where you go to earn money and as something that could cease functioning optimally just because there is a shortage or oversupply of the exchange medium!

Money has penetrated vertically to the deepest levels of our societies and enclosed upon almost every facet of our lives. It has expanded horizontally across the face of the earth and swallowed up just about every enclave that has resisted its expansion. Now money has reached its limits. There is little else for it to enclose, there is nowhere else for it to expand. This is manifesting in the form of a global financial crisis that cannot be resolved because money requires constant growth and expansion. Up against the limits, economies programmed by the logic of money have nowhere to go except collapse.

This widely predicted scenario cannot be resolved by reforming the financial system because it is a broken, dysfunctional system that was designed for a bygone era and as a tool to extract wealth from the majority to benefit the small group who control it. It is premised on growth so cannot serve any purpose in a world where we are up against physical limits and growth is no longer possible. Prolonging its life will just make the crisis worse.

There is a way out of the ‘money trap’, but it will only be found if the starting point is exchange and not money. When it is realised that money is just one method of exchange, and not a very good one at that, it is easier to recognise that there are a multitude of ways to exchange what we have and can do for what we need. We can begin to see that there are ways around money and that we don’t need to go down with it.

The Internet revolution has changed everything. Now exchange media can be seen for what they are: an unnecessary relic from the past. They served their purpose in the era before computers and networks, but now issued, circulating currencies are a completely unnecessary ‘middleman’ inserted between traders when pure information (metric currencies) can do the same job much more efficiently. Metric currencies do not have to be created because all they do is measure and record. And because they are not created no one can control or use them to advantage themselves at others’ expense. For excellent examples of how metric currencies are being used look at the Community Exchange System (CES), Community Forge and IntegralCES. These are all linked into a global network permitting inter-trading in a far more efficient way than the clumsy global financial system.

Older exchange methods such as gifting, bartering, swapping and sharing have been given a new lease of life, and new exchange methods such as time banking, time exchange, service exchange and information exchange have become truly effective as methods for distributing our energies.

States, businesses (entities producing for money) and financial institutions that have always worked together to keep us trapped in the money prison can do nothing to prevent us breaking out. Modern crypto-currencies operate outside conventional channels and blockchain technologies conceal from the parasites what exchanges people are making. Apart from that, metric currencies cannot be controlled, hijacked, stolen, manipulated, diverted, laundered, hidden, and speculated upon. All they do is record, and they do this in retrospect.

Gifting, bartering, swapping, sharing and other methods of exchange that have been enhanced by computer technologies are “off the books” so also cannot be monitored and leeched by the parasites.

There is no need to invent new economic systems, adopt new ‘modes of production’, develop new economic theories or fight against the existing social system (capitalism). It is the mode of exchange that shapes societies, not the mode of production. Relations of production are a consequence of exchange relationships, which in turn are determined by the predominant mode of exchange prevailing at a particular time. Capitalism is ‘moneyism’ (as its name implies!) so unless we develop moneyless exchange methods that can challenge money (centrally-issued exchange media), nothing can or will change.

Commons-based peer production cannot be invented, like any new mode of production. What has to come first is commons-based peer exchange. This is the adoption of exchange methods that are truly commons based and administered, and not ‘enclosed’ by any institutions (state or otherwise). The exchange of commons production using centrally-issued and controlled exchange media (money, in all its forms) is not commons production; it is production that is still subservient to and dependent on the matrix. Commons-based peer production, as a mode of production,  needs to be able to stand on its own. It needs to be detached from the mainstream mode, a separate, parallel ‘economy’ if you will, not something supporting or complementing capitalism. It can only achieve this status if it is founded upon a separate, parallel mode of exchange.

—

So ultimately the answer to the question “what is money?” is that money is an exchange method that has not served humanity well. It has been used to exploit and enslave and it keeps us in thrall to the tiny minority who control it for their own benefit. We don’t need it and can survive without it. Let us reinstate exchange and learn that there are many ways to do it without money. At the same time we can get rid of usury, parasitic classes that have benefited by their control and manipulation of the exchange system, as well as states that have always upheld this exploitative structure. We can create a society that produces to satisfy human needs and not for the sole purpose of generating a profit. This means getting rid of economies (places where production takes place for profit instead of need) and reintegrating production with other social institutions.

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