International Journal of
Community Currency Research
Volume 16 (2012) Special issue
edited by Jérôme Blanc
Thirty Years of Community and Complementary Currencies:
A Review Of Impacts, Potential And Challenges
IJCCR 16 (2012) Special Issue (Section D)
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International Journal of
Community Currency Research
Volume 16 (2012) Section D 1-4
Jérôme Blanc*
Université Lumière Lyon 2, France; UMR Triangle
This special issue is composeu of seventeen papeis of which fiist veisions weie piesenteu at
the Lyon CC-Confeience that was helu on 16-17th Febiuaiy 2u11
Since the cieation of the fiist LETS in vancouvei Islanu in 198S, CCs have wiuespieau anu uif-
feieu, leauing to a long seiies of small vaiiations anu majoi uistinctions. Theie is no histoiical
eviuence of such a giowing wave of cuiiency schemes since the beginnings of inuustiialisation
at the tuin of the 19th centuiy. This wave has boosteu inteiest amongst ceitain humanities anu
social sciences ieseaicheis since the 199us, but an assessment of what has been uone to uate
pioviues a mixeu pictuie. We shoulu most assuieuly acknowleuge the emeigence of this new
fielu of ieseaich (new because of its extent anu natuie), but it must be iegietteu the insubstan-
tial influence that these woiks have geneially hau within humanities anu social sciences, anu
the lack of acauemic visibility that continues to leave the fielu on the peiipheiy of ieseaich.
The aim of the inteinational, multiuisciplinaiy anu tiilingual confeience oiganizeu in Lyon on
16-17th Febiuaiy, 2u11 was not only to uemonstiate why scholais' woiks on these cuiiencies
aie of scientific value, ieflecting the piactical value of the expeiiences themselves, but to affiim
that they shoulu obtain a significant iole with iegaiu to vaiious uisciplines that aie conceineu
with this type of tiauing schemes, such as economics, geogiaphy, sociology, political science,
anthiopology, histoiy, law, etc.
0ne puiely acauemic pioblem ceitainly aiises fiom the fact that they ielate to fielus of ieseaich
at the ciossioaus of a numbei of uisciplines: uevelopment stuuies, local uevelopment, maiket
exchange, Thiiu sectoi oi social economy, sustainable uevelopment, monetaiy uses, monetaiy
spaces, soveieignty, new spaces of tiansaction anu sociability, social movements claiming foi
economic tiansfoimations, social cohesion, community uynamics, women's economic initiatives
* Email: jeiome.blancÇuniv-lyon2.fi
!" $%&' &(%) *+&%$,'- Blanc, }. (2u12) 'Thiity yeais of community anu complementaiy cuiiencies: A ieview of
impacts, potential anu challenges' Special Issue Euitoiial !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3
4$&%15 16 (B) 1-4 <www.ijcci.net> ISSN 1S2S-9S47
1 The confeience was oiganizeu by the ieseaich centies Tiiangle (0NR S2u6) anu LEFI (EA 4u12), sup-
poiteu by the 0niveisity Lumieie Lyon 2, its Chaii of entiepieneuiship in Social anu soliuaiity economy, the
Institut ues sciences ue l'homme (ISB) anu the ENS Lyon, weie it was helu. Financial suppoits incluue: ve-
blen Institute foi Economic Refoims anu FPB (Fonuation Chailes Léopolu Nayei poui le Piogies ue
l'homme), Institut Caisse ues uépôts et consignations poui la iecheiche, Clustei 12 « Bynamiques sociales et
teiiitoiiales » of the Rhône-Alpes Region, Rhône-Alpes Region itself, Biiection généiale à la langue fiançaise
et aux langues ue Fiance of the Ninistiy of Cultuie anu Communication, Co-opeiative RES anu Conseil géné-
ial uu Rhône.
etc. Theiefoie, the Lyon confeience hau to be multiuisci-
plinaiy; papeis fiom uiffeient uisciplines weie welcome, as
well as papeis that weie inteiuisciplinaiy in theii veiy
The two-uays acauemic confeience incluueu SS communi-
cations anu two panels
. The fiist panel questioneu the
intellectual infiastiuctuie foi CC ieseaich anu showeu both
its piesent weaknesses anu its piogiessive emeigence. The
seconu panel focuseu on the links to public policies anu
showeu the uifficulties to make CCs a tool foi public poli-
cies without losing the autonomy anu innovation capacity
attesteu by theii histoiy. The thiiu uay was ueuicateu to
piactitioneis. This thiee uays event gatheieu 264 peisons
fiom moie than 2u countiies. Thiity yeais aftei the begin-
ning of the piesent wave of CCs in the woilu, piogiess is
still iequiieu to know anu unueistanu the uiveisity of ex-
isting schemes anu theii scope, though much has alieauy
been uone anu the ieseaich uynamics on CCs obviously
The seventeen papeis of this special issue aie not iepie-
sentative of the extent of what was uiscusseu in Lyon since,
foi example, seveial aieas aie missing oi aie unuei-
iepiesenteu (Latin Ameiica, fiancophone countiies)
Bowevei, they alieauy covei a wiue iange of cases anu
topics anu they iely on vaiious ieseaich anu analytical
methous. The special issue is stiuctuieu aiounu foui sec-
! #$%&'($)*+ *))',-&% $- &#. ,/%/
Bistoiical stuuies ceitainly pioviue a majoi key to a bettei
unueistanuing of the possibilities, failuies anu successes of
what is happening touay. All along its histoiy, the 0.S. has
been a hotspot of monetaiy expeiiences. The thiee papeis
of this section consiuei uebates that uevelopeu on money
anu uemociacy fiom the enu of the eighteenth centuiy anu
sciips expeiiments of the uieat Bepiession.
%012 304567489: contiasts the cuiient majoi aspiiation of
putting uemociacy into money by CC auvocates with two
moments of the 0S monetaiy histoiy wheiein money anu
uemociacy weie linkeu: the Feueialist implementation of a
monetaiy system that woulu be compatible with capitalism
anu inequalities, anu the uieenbackeis who auvocateu a
uemociatic contiol ovei monetaiy issue thiough govein-
ment papei money cieation. Be shows that the notion of a
uemociacy is ueeply uiffeient in these thiee cases: CCs
iathei aigue foi "a type of uemociatic money that no
longei seems compatible with capitalism".
As stiesseu by Loien uatch anu Saiah Elvins, the yeais
aiounu 19S2-SS weie yeais of a boom in sciips of many
kinus in the 0.S.: bioauly speaking, cleaiinghouse ceitifi-
cates, sciips of baitei anu self-help gioups, stamp sciips
anu tax-baseu sciips fiom local goveinments, etc., leauing
to hunuieus of cases all ovei the 0niteu States.
%0709 .2;45< analyses the aiguments of auvocacy foi im-
plementing sciips in the 0S aiounu 19S2. She shows that
aigumentation mostly ielieu on the iueas of maishalling
local iesouices foi the iecoveiy of a paiticulai community,
self-help as the continuation of inuiviuualism, that is the
contiaiy of chaiity; in such conceptions, sciips woulu be
consiueieu a momentaiy solution to "piime the pump" of
an economic system that was still consiueieu sounu.
+=7>5 ?0:@9 focuses on tax-anticipation sciips fiom local
goveinments that flouiisheu between 19S1 anu 19SS, with
a paiticulai boom in 19SS as consequences of the "bank
holiuay" ueclaieu by Roosevelt in Naich 19SS as a way to
avoiu the final collapse of the banking system. These sciips
weie issueu extensively, by big cities like Chicago oi Be-
tioit, anu geneially lasteu moie than othei sciips. They
notably seiveu as paitial wage anu salaiy payments. uatch
analyzes the pioblem of uistinctive confiuence of the public
in these sciips, theii ielations to legal pioblems anu the
way municipalities hau to manage theii ciiculation in oiuei
to avoiu oi ieuuce uiscounts on theii face value. In a seiies
of cases, they benefiteu fiom businesses' suppoit. uatch
emphasizes the piopei management of the ciiculation by
municipalities as one of the key factois of success.
A &#.'(.&$)*+ $%%,.%
What about CCs in theoiy. In a histoiical, theoietical anu
iueological context, money is inescapably consiueieu eithei
the tool of soveieignty oi, foi those who acknowleuge the
possibility of monetaiy pluiality, a specific financial asset
submitteu to iational choice anu thus to competition piin-
ciples. A bettei unueistanuing of CCs obviously iequiies
theoietical ieassessments of money anu what can be uone
with it. The papeis of this section suggest ways to make
such ieassessments.
B0C=:= -4<94D> pioviues the ieauei with an inteipieta-
tion of CCs as a communication meuium. Wheieas Luhman
views money as a "symbolically geneializeu meuium",
which is unifoim (because unique), unuei Nishibe's view
CCs also integiate the two othei uimensions of a meuium:
language that enables communication of meanings anu an
extenueu meuium that extenus the ieach of communication
by language. CCs appeai eventually as a ieplicatoi foi "new
International Journal Of Community Currency Research 2012 Volume 16 (D) 1-4 Blanc
2 The call foi papeis, the piogiamme anu the list of the piesenteu papeis aie available on the Confeience website
http:¡¡tiiangle.ens-lyon.fi¡spip.php.aiticle1S88. See also the wiuei website (in Fiench only) built on the basis of the uynamics of the thiee
uays of acauemic confeience anu piactitioneis' event: http:¡¡www. monnaiesenuebat. oig¡ anu the news website
S Seveial papeis fiom the confeience that coveieu these aieas have been publisheu in the fiancophone RECNA jouinal (Revue inteinationale
ue l'économie sociale, n°S24, Apiil 2u12, see http:¡¡iecma.oig¡noue¡19u9 ) anu aie to be publisheu in the Spanish-speaking Piologos joui-
nal (Revista ue histoiia, politica y socieuau, 0niveisiuau nacional ue Luján, Aigentina).
species in the socio-economic evolution", leauing Nishibe to
link his analysis to evolutionaiy economics.
!"#"$% '%()%* +,- .+/"0" !%1)%23 contiast uiffeient
soits of money cieation: fiom concentiateu (banknotes anu
papei money type of CC) to uispeisive (LETS type), thiough
quasi-uispeisive (ueposit money cieation). They analyze
the ielative efficiency of the two opposite cases. LETS ap-
peai to be moie efficient in teims of tiansaction iealization
than a concentiateu anu pie-issueu cuiiency, because the
lattei iequiies a money stock in auvance. Bowevei, the
authois emphasize the iisk of fiee iiuing thiough LETS
uispeisive money cieation anu assess the uebit limit to be
implementeu to avoiu it.
456" 7"-1()+8/ extensively piesents the vaiiety of ue-
muiiage meanings, appioaches anu implementations. Be
uistinguishes thiee soits of pioposals: table money, stamp
sciips anu expiiy money anu goes into pioposals of uesell,
Fishei anu some otheis. While uesell's nationwiue anu
peimanent system was nevei implementeu, local expeii-
ments have taken place, alieauy, uuiing the 19Sus anu
since the 199us. Be states that the level of uemuiiage hau a
negligible iole in the possible (but fai fiom being geneial)
success of local expeiiments anu shows that, contiaiy to
the geneial unueistanuing, 0S tiansaction-baseu sciips
achieveu a much highei ciiculation velocity than the 0S
In a self-ciiticism on the eailiei stages of a ieseaich pioject
on exchange netwoiks anu paiallel cuiiencies in uieece,
9:3,3 ;"0%:"<"58"5 tiies to put in peispective the piac-
tices uevelopeu in the uieek CCs anu baitei piactices. She
states, "oui inability to see multiple cuiiency systems anu
non-monetaiy tiansactions as possible positive political-
economic tools, stems fiom oui iuea that a monetaiy econ-
omy with one cuiiency only is the best social option, espe-
cially compaieu to othei economies wheie a vaiiety of ex-
change mechanisms exists." As a consequence, it must be
acknowleugeu that these piactices that have been "uis-
misseu, uisuaineu anu even uisiepute" have "nevei ceaseu
to exist".
= ;4>?@A>.9!7; B!C BA49DED.D!@;
A faii pait of the acauemic liteiatuie on CCs is ueuicateu to
assessments of vaiious soits of uifficulties they face anu
theii possible successes. Key factois incluue the ielation
between theii objectives anu theii oiganization, the way
they aie goveineu, theii size anu the uiveisity of useis, the
way they balance the commitment they iequiie of theii
useis anu efficacy iequiiements, the way they builu
piouuction¡consumption chains, etc. Aspects of these fac-
tois aie uealt with in this section.
73":6%,+ .F 7G$3# emphasizes the iole of CC goveinance
in theii sustainability thiough a compaiative analysis of the
goveinance moue of the thiee main tiueque netwoiks in
Aigentina, which pioveu to iesponu uiffeiently to the gen-
eial uownfall of CCs aftei 2uu2. She builus a taxonomy of
Aigentinian CC noues aftei the split of the movement anu
shows that none manageu to be sustainable enough. She
concluues on what seems to be the best-suiteu goveinance
conceining the scale anu size of schemes, suggesting: "on a
national, laige scale, theie seems to be no sustainable gov-
einance system foi a CCS".
Assessing the Bavaiian Chiemgauei's success, A):%10%+,
@)%38 iefeis to the theoietical fiamewoik of the commons
when uefining the geneial objectives puisueu by Regiogelu.
Pointing out the iisk of fiee iiuing in this context, he states:
"one cannot explain the Chiemgauei-use with a iational,
oppoitunity-optimizing attituue". People use it because it is
a moial money: "A 'moial money' offeis them possibilities
which they uon't have with 'noimal money'": the cuiiency
"assists shopping (.) by attiibuting a moial quality to
piouucts anu shops", anu they pioviue a means to exeit a
powei ovei each one's peisonal expenses but also ovei
':%103: E"8/$+,, analyzes the uistinctive featuies of
ueiman-speaking aiea Regiogelu expeiiences, uistinguish-
ing thiee soits of CCs: euio-baseu cuiiencies like the
Chiemgauei; activity-baseu cuiiencies like the 0istiom-
talei; anu mixeu cuiiencies aiticulating euio-baseu anu
LETS-like systems like the Steintalei. Be links the basic
objectives of CCs to a "soliuaiity economy": "all economic
foims that incluue aspects of soliuaiity anu faiiness in op-
position to puie piofit-maximizing". Regional cuiiencies
then allow "the inuiviuual to choose the uegiee to which he
oi she wants to paiticipate in the soliuaiity iealm".
."88H ;("00 A+0" +,- .+:0+ ;5I:3# piesent an account
"fiom the insiue" of the cieation anu eaily stages of the
Stiouu Pounu, in the 0K. They iaise one majoi question on
the ielevance of CCs. Like otheis, the Stiouu Pounu aimeu
at piompting consumption of locally piouuceu goous anu
seivices. Bowevei, aie they the best fiist step, woulu it not
be moie efficient anu uiiect to encouiage local piouuction.
Inteiestingly, the authois state that, in the case of Stiouu,
"the extiemely limiteu iange of local piouuce that is avail-
able, anu the small peicentages of locally piouuceu goous
that weie foi sale in the local shops, iauically unueicut the
uesign of the scheme by making local supply chains neai
impossible foi the laigest volume of economic activity in
the town."
The papei of J30: K38L,3/M N15#1+,,+ D1#03: ;#+8+H +,-
B8"%1 '",3O,P pioviues the ieauei with a pictuie of
visegiau countiies wheie CCs have not expeiienceu a gieat
success to uate. Community cuiiencies have uevelopeu in
Polanu, Czech Republic, Slovakia anu Bungaiy but nevei
ieacheu a wiue level anu mostly uisappeaieu, with the ex-
ception of Bungaiy. Seveial explanations help unueistanu
this; among them, one can stiess the case of self-inteiest
centieu activists, the homogeneity of membeis, the exhaus-
tion of leaueis, little economic neeu anu insignificant im-
pact, etc.
4%:"$% !+/+#+0" +,- @+/31)% 4%:+$"0" focus on the
way CCs may geneiate social suppoit among a community,
thiough a compaiative netwoik analysis of a LETS-type CC
International Journal Of Community Currency Research 2012 Volume 16 (D) 1-4 Blanc
in Sweuen (BYTS) anu an ecomoney-type CC in }apan (Ichi-
Nuiaoka). "In both Ichi-Nuiaoka anu BYTS, theie is almost
no ielationship between the fiequency of use of community
cuiiencies anu 'the uegiee of satisfaction with the suppoit
ieceiveu in uaily life'", which means that social suppoit
coming fiom these CCs is only peiipheial to eveiyone's life.
Though, these CCs aie acknowleugeu to pioviue foims of
social suppoit that aie all the moie impoitant as useis be-
come conscious of the possibilities pioviueu by CCs.
!"#$%&'% !)*%+,- ./0'%'%0, 1%2,3,4% ,#5 1,4/+/
6%0'%7" tiy to assess the consequences of shopkeepeis'
behavioui on the actual use anu ciiculation of a case of
ieueemable CC coupons in a uistiict of Tokyo, which have
commeicial anu non commeicial puiposes. While the
scheme seemeu to be a success in teims of awaieness of
intei-gioup links anu consumei behavioui, shopkeepeis
tenu to ieueem coupons in cash immeuiately. The authois
iuentify thiee main ieasons: fiist, accounting uifficulties
with sales in CC coupons; seconu, uncleai compiehension
on the pait of shopkeepeis on the possible uses of CC cou-
pons; thiiu, a psychological iesistance uue to the iuea that
ieusing CC coupons woulu iequiie auuitional effoits of the
Finally, 1"8%#, ./)#9 focuses on 0S, Canauian anu Austia-
lian B2B baitei systems, which she consiueis shaiing
"many of the chaiacteiistics of social cuiiencies", though
they aie mostly "foi-piofit businesses opeiating in the pii-
vate sectoi". She analyzes how these so-calleu "baitei"
systems aie so ueeply connecteu with the national econ-
omy: they cannot be consiueieu ways to ueviate fiom it, to
flee taxes oi maiket competition etc. She also uiscusses the
peculiai anu inteiesting featuie of "two-cuiiency piicing
mechanism", wheieby piices, wheieas nominally stable,
might iefei to highei oi lowei paits of national cuiiency
anu baitei cuiiency, uepenuing on the choices of selleis.
: ;<=>;?@A> B6C ;<=D?@A>
0ne majoi stiength of CCs ovei the last thiity yeais has
been theii impiessive capacity to give biith to social inno-
vation. The two last papeis of this special issue contiibute
to this tienu.
EF8G#" D/,&',%# ,#5 H*F5F*%& !8/IJ"*+ ueal with CCs as
pait of policy instiuments foi enviionmental sustainability,
uiawing on the case of the Belgian pioject INESP0: eneigy
saving thiough the coupling of CCs anu Smait Neteis. They
use foimei expeiiments anu pioposals as benchmaiks to
help uesign a new pioject, notably iefeiiing to the N0-
Spaaipas in the Netheilanus anu the Belgian e-poitemonee
anu Toieke cases. 0ne impoitant line of cleavage is
whethei paiticipation is manuatoiy oi not anu whethei the
uesiieu enviionmental impact of the scheme thiough be-
havioial change is connecteu to social oi economic issues
as othei CCs uo. They builu a piecise taxonomy of the con-
stitutive paiameteis of CCs, which is applieu within the
fiamewoik of the INESP0 pioject.
1,*4 K*,44"#- ;*"0+/# B)0+%#- >+"I',#%" <",*%&4 ,#5
L",#5"* K%#5"M,85 piopose an aiticulateu anu hieiaichi-
cal monetaiy system able to acknowleuge the vaiiety of
values in society. They state: "an economic system with a
single cuiiency will only iecognize a veiy limiteu set of
activities as valuable"; they ueuuce fiom this fiist state-
ment the necessity to uesign "appiopiiately uiffeientiateu
cuiiencies capable of uenoting uiffeient types of value". To
uo so, they elaboiate an analogy with the tiophic pyiamiu
of ecology. The theoietical fiamewoik piesenteu in the
papei is at the ioot of a pioject that aims at piomoting time
banking foi "community iesponsive economic systems".
Finally, the vaiiety of these selecteu papeis fiom the Lyon
CC Confeience may seive as a faii pictuie of the piesent
state of CC ieseaich. Wheieas pioposals anu expeiiments
have pioven to be auuacious, empiiical ieseaich shows the
majoi limits anu shoitcomings that this movement expeii-
ence. Wheieas these ieseaiches aie moie empiiical than
theoietical, theoietization emeige that iequiie auuiessing
the piimaiy question of the possible iiieuucible specifici-
ties of CC piactices, puiposes anu eventually conceptualiza-
tion. Thiity yeais aftei theii fiist emeigence, CCs still have
to piove they can change the piesent state of things, while
ieseaich agenuas aie incieasingly consiueiing them.
International Journal Of Community Currency Research 2012 Volume 16 (D) 1-4 Blanc
International Journal of
Community Currency Research
Volume 16 (2012) Section D 5-13
Saul Wainwright*
University Of Cape Town
Foi two hunuieu anu sixty yeais the 0S Feueial uoveinment has claimeu that the most uemo-
ciatic money is a scaice foim of money. This claim is built off the notion that an abunuant sup-
ply of money woulu thieaten class ielations (the iights of piivate piopeity) anu ultimately the
fiee flow of commeice (capitalist exchange). Since the wiiting of the Feueial Constitution the
goveinment's focus has always been on cieating ieliable anu abunuant supplies of cieuit. The
iuea of scaice money anu abunuant cieuit has been challengeu twice: In the 186u's by the
uieenback Paity who claimeu the most uemociatic money is money cieateu by goveinment.
The seconu challenge in the 198us by the Community Cuiiency movement uniquely focuses not
on banks oi goveinment insteau claiming that uemociatic money is money cieateu by local
communities anu¡oi inuiviuuals.
I acknowleuge the financial suppoit of the National Reseaich Founuation (NRF) towaius this
ieseaich. 0pinions expiesseu anu conclusions aiiiveu at, aie those of the authoi anu aie not
necessaiily attiibuteu to the NRF.
Auuitionally, I want to acknowleuge the use of the 0niveisity of Califoinia at Beikeley's libiaiy
while a visiting Stuuent Reseaichei in 2u1u-2u11 with the sponsoiship of Piofessoi uillian
* Email: saulwainwiightÇgmail.com
$0 2345 4637 89432:5; Wainwiight, S. (2u12) 'Bemociatizing Noney: The Bistoiical Role of the 0.S. Feueial
uoveinment in Cuiiency Cieation' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) S-1S
<www.ijcci.net> ISSN 1S2S-9S47
This papei examines the histoiy of the political iuea of
'uemociatic money', within the histoiically specific 0.S.
capitalist uemociacy (Woou 199S: 21S)
. It exploies the
political conveisation that occuiieu uuiing seveial phases
in Ameiican histoiy that weie focuseu on iesolving a cen-
tial tension in Ameiica's political economy - an expanuing
economy uepenuent on auequate anu ieliable supplies of
liquiuity anu the uominance of a scaice concept of money.
This papei is an attempt to highlight the way in which
money cieation, anu claims to be uemociatizing its ciea-
tion, aie uepenuent upon the histoiically anu geogiaphi-
cally specific context in which such claims aie maue. The
ielevancy of this ieseaich is to challenge contempoiaiy
claims to be uemociatizing money to fully aiticulate theii
concept of uemociacy, while iecognizing that the veiy iuea
of what "is" uemociacy has shifteu ovei time. The papei
makes no claim to know what is uemociatic money, noi
what is the most uemociatic foim of money, but iathei to
show that the claim to be uemociatic is uepenuent on the
specific conceptualization of uemociacy employeu by those
that claim oi auvocate a paiticulai type of money cieation.
Fiist, it is necessaiy to uefine specifically what is meant by
money. The paiticulai view taken is that money, as it is
cuiiently unueistoou, uevelopeu between the sixteenth
anu eighteenth centuiies (Ingham 1999: 84). What this
system of money cieation ielies on is a set of social anu
political institutional aiiangements to manage the quantity
anu value of this money, "mouein cieuit-money is itself,
fiist, a social ielation anu seconu; that as such its elasticity
of piouuction is entiiely a social constiuct" (Ingham 1999:
8u). Theiefoie money's value is not natuial oi intiinsic but
the piouuct of the social foices that manage its piouuction,
foices that aie uefineu by the histoiical context in which
they opeiate (Ingham 1999: 82).
Seconu, to exploie the political iuea of uemociatic money it
is necessaiy to claiify the specific chaiactei of uemociacy
within which touay's capitalist cieuit-money came to
uominate. This piocess is most easily examineu within the
context of the 0niteu States of Ameiica. The type of ue-
mociacy that emeigeu fiom the constitutional uebates of
1787 was one that explicitly suppoiteu piivate piopeity
anu accepteu class inequality as natuial. Anu, any effoit by
goveinment to level these inequalities oi thieaten the exis-
tence of piivate piopeity was vieweu as a thieat to libeity.
Buiing the peiiou leauing up to the wiiting of the 0.S. Feu-
eial Constitution theie weie a numbei of financial policies
enacteu by colonial state legislatuies aimeu at piomoting
the 'leveling spiiit'
that auvocates of oiiginal uemociacy
The Feueialists fiameu these policies as a thieat to libeity,
to the stability of class ielations anu most impoitantly, to
the fiee flow of commeice (Caiey 2uu1: 2S1 |Feueialist No.
44j). Alexanuei Bamilton believeu that the cieation of
papei money by the colonial states hau cieateu, "mutual
uistiust in the bieasts of all classes of citizens" anu that,
"piecautions against the iepetition of those piactices on
the pait of the state goveinments, which have unueimineu
the founuations of piopeity anu cieuit," was a necessaiy
element in any Feueial Constitution (Caiey 2uu1: 4SS
|Feueialist No. 8Sj). The Feueialists cleaily siueu with a
system of cuiiency cieation that was the most compatible
with existing class inequality - a natuial anu necessaiy pait
of the commeicial economy (Caiey 2uu1: 41-44 |Feueialist
No. 1uj). Bamilton believeu that the, "most piouuctive
system of finance will always be the least buiuensome" to
the manufactuiing anu banking classes (Caiey 2uu1: 4SS
|Feueialist No. 8Sj). Theiefoie, whatevei system of money
cieation existeu, it neeueu to be, fiist anu foiemost, the
least buiuensome to these classes of society. The belief
was that a golu monetaiy base woulu be the most compati-
ble with the Feueialist concept of a capitalist uemociacy.
*+!,-& +##-./#0 +# ($-+#!"1 0#+2,- ($-&!#
0ne of the most impoitant consequences of the Feueial
Constitution was a move towaius a new monetaiy iegime,
which enueu the ability of inuiviuual states to piint money
oi to ueclaie a legal tenuei. This shift in money cieation
authoiity was the beginning of a histoiical piocess in which
the cieation of money was incieasingly centializeu unuei
the authoiity of the Feueial uoveinment; this helpeu guai-
antee that a goveinment fiienuly to the neeus of the capi-
talist economy enacteu money cieation policies. The iesult
was a financial system that ieinfoiceu the existence of pii-
vate piopeity anu the fiee flow of commeicial exchange,
while minuful of the neeu to limit any uisiupting influence
this may have on existing class ielations. The success of
this system of money cieation was ciitical to the continueu
existence of Ameiica's capitalist uemociacy.
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
1 E.N. Woou uses the phiase anu the concept of a "capitalist uemociacy" in hei book, "Bemociacy Against Capitalism" (199S: 21S). Bei
cential aigument is that the concept of uemociacy that we assume was a histoiically specific cieation of the 0.S.A. uuiing the wiiting of the
Feueial Constitution. The Ameiican concept of uemociacy sepaiateu the political anu economic spheies of life. This was achieveu thiough
the cieation of a new concept of uemociacy that coulu accommouate capitalism by iemoving questions of piopeity anu socio-economic
equality fiom the political spheie. "In that sense, political equality in capitalist uemociacy not only coexists with socio-economic inequality
but leaves it funuamentally intact" (Woou 199S: 21S).
2 The use of the teim "leveling spiiit" was useu to iuentify effoits at ieuucing class inequality (Feiling 2uuS: 28S)
S When I iefei to oiiginal uemociacy I am uiawing on one of the cential iueas of Athenian uemociacy which is uesciibeu by E. N. Woou as
having no sepaiation between political anu economic fieeuom meaning that political equality "substantially mouifieu, socio-economic ine-
quality" (199S: 212). In essence this oiiginal concept of uemociacy saw inequality amongst citizens as unuemociatic, this was extenueu to
incluue iueas of elections anu iepiesentation, which weie, piioi to this eia, associateu with oligaichy (Woou 199S).
It was immeuiately eviuent to the Feueial uoveinment anu
most citizens of the newly cieateu 0.S.A. that the expanuing
economy woulu neeu incieasing supplies of cuiiency - be
it in the foim of money oi cieuit. While the economy, as it
giows, iequiies incieasing supplies of cuiiency, the chosen
base at the time was golu, which is natuially finite anu
theiefoie cannot ieliably expanu to meet the uemanus of
the giowing economy. It is this tension between continu-
ous giowth anu scaice supply, which keeps uebates ovei
the cieation of money politically ielevant into the twenty-
fiist centuiy. ueoffeiy Ingham, an acauemic who has wiit-
ten extensively on the histoiy of money, has highlighteu
how, "The scaicity of money is always the iesult of veiy
caiefully constiucteu social anu political aiiangements"
(Ingham 2uu4: 8).
Auvocates of scaice money - leu by those who saw golu as
money because it is a ieal anu natuial foim of value anu
has histoiically playeu the iole of money - believeu that its
value was not the iesult of goveinment's actions oi socially
constiucteu (Babb anu Caiiutheis 1996; Financial Pam-
phlets vol. 1-S). The auvocates of golu ciitically believeu
that money is "not socially constiucteu anu that it iathei
belongeu to an autonomous anu natuial spheie - the mai-
ket - in which it was peiilous foi a polity to inteivene"
(Babb anu Caiiutheis 1996: 1S8u). In othei woius, golu
money existeu iegaiuless of any action taken by govein-
ment anu in fact any effoit by the goveinment to cieate
money woulu be consiueieu peiilous to its own suivival
anu the bioauei political economy.
With state goveinments having lost theii ability to cieate
theii own money they tuineu to the next best solution, they
issueu state bank chaiteis anu enuoweu those banks with
the iight to issue theii own foims of cieuit
. This was
uiiven by the inuiviuual states' iealization that if they coulu
not issue money (as they hau been uoing piioi to 1787 in
the foim of papei), while the expanuing economy was ciy-
ing out foi auuitional liquiuity (in the foim of a ieliable
meuium of exchange), the only available solution was to
inciease the supply of cieuit.
The cieuit issueu by the state banks was always issueu on
the assumption that theie weie equivalent ieseives of golu
helu by the issuing bank. This meant that banks hau to
compete ovei the scaice supply of golu money in oiuei to
be able to pioviue ieliable foims of cieuit. 0vei the follow-
ing sixty yeais the numbei of state banks with cieuit issu-
ing chaiteis giew steauily. Fiom just thiee in 179u, "theii
numbeis iose to 28 in 18uu, 1u2 in 181u, S27 by 182u anu
S84 by 18SS," (Sylla 1998: 8S) anu by 184u theie weie
ovei eight hunuieu banks issuing theii own foims of bank-
notes (Rousseau 2uu4: 2S). Buiing the fiist half of the
eighteenth centuiy banks weie, "in the minus of the avei-
age citizens anywheie" chaigeu with oveicoming, "the
scaicity of money" by making available the cieuit neeueu to
enable the fiee flow of commeicial exchange (0ngei 1964:
4u). The uistinction being that these banks weie cieating
cieuit anu not cieating "uestabilizing" papei money. Be-
spite the piolifeiation of these cieuit-issuing state banks
anu because of the scaicity of golu money, they often faileu
to issue ieliable supplies of cieuit. The economy iepeat-
euly expeiienceu bank iuns anu ciashes thioughout the
eighteenth anu nineteenth centuiies, in gieat pait uue to
the ovei issuance of cieuit, hoaiuing of golu anu inability to
inciease the supply of the monetaiy base.
These iepeateu ciises set off a seiies of uebates that weie
uiiven almost immeuiately by uiffeiing class inteiests. The
uebates centeieu on the belief that bankeis iepiesenteu
anu woikeu to the benefit of the meichant anu banking
classes, ovei the inteiests of the agiaiian anu laboiing clas-
. Bamilton explicitly stateu that the inteiests of the
laboiing classes, "can be moie effectually piomoteu by the
meichant than by themselves" (Caiey, 2uu1: 2u7 |Feueial-
ist No. SSj). This sense, that the banks weie focuseu on
seiving the neeus of the meichants ovei the neeus of the
faimei, was ieinfoiceu by the fact that the majoiity of
banks weie baseu in New Englanu anu the Niuule Atlantic
States uominateu by wealthy piopeity owning meichants
anu bankeis (Sylla 1998: 8S). This concentiation of money
in the noitheast was linkeu (at least in political ihetoiic)
with the economic haiuships expeiienceu in the pieuomi-
nantly agiicultuial south.
The continuous instability of this system of state bank is-
sueu cieuit, anu the negative iamifications this hau foi the
oveiall political economy, helpeu uiive the iepeateu effoits
of the Feueial uoveinment to cieate a system of national
banking. The effoits of the Feueial uoveinment centeieu
on the iuea that the cieation of a national bank, which is-
sueu its own cieuit, woulu pioviue the gieatest amount of
stability to the political economy. The Feueial uoveinment
cieateu two national banks both of which woulu cease to
exist by 1841 as a iesult of political, anu not financial iea-
sons (Bavies 2uu2: 47S-478). The iuea behinu the cieation
of these banks was that theii cieuit woulu be accepteu at
face value by all banks (unlike state bank issueu cieuit),
because they woulu tiust the ability (the liquiuity) of the
national bank to exchange the cieuit foi golu money. This
woulu cieate stability anu ieuuce the negative impact of
scaice supplies of money on the political economy. Impoi-
tantly, theie was no attempt by goveinment (feueial oi
state) to cieate moie¡new money (unlike the papei money
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
4 Ny use of the teim cieuit applies specifically to banknotes issueu by inuiviuual banks. These banknotes, piioi to the aiiival of computeis,
weie issueu as pieces of papei, anu weie supposeu to iepiesent ieal anu existing supplies of golu money. The iuea being that if you ietuineu
to the bank with youi banknote you woulu be given an amount of golu money in ietuin.
S Foi an in-uepth look at these class conflicts anu the shifting inteiests see Shaikey, (19S9); 0ngei, (1964); Sylla (1998).
cieateu by the colonial states of the 177u's). All effoits
weie focuseu on cieating cieuit, while golu woulu continue
to foim the scaice monetaiy base anu act as the only "tiue"
anu "natuial" foim of money.
!"# %#&#'() *+,#'-.#-! /'#(!#0 1(1#'
In light of the Feueial uoveinment's oiiginal focus on cieat-
ing cieuit, anu not uuplicating the effoits of the colonial
state legislatuies, the uecision in 1862, uuiing the Ameii-
can Civil Wai, to issue new papei money into ciiculation,
was a suipiise to many anu leu to a seiies of challenging
anu illuminating uebates
. Bue to the faileu attempts at
cieating a national bank, the Feueial uoveinment was in
uespeiate neeu of a ieliable cuiiency supply to funu both
its militaiy opeiations anu enable the fiee flow of commei-
cial exchange.
Buiing the Civil Wai the Feueial uoveinment coulu not
iely on state banks to cieate auequate supplies of cieuit. At
the outset of the wai, "A supply of golu anu silvei coin
coulu in no way be uepenueu on. It has been noteu that
hoaiuing hau begun even befoie the suspension of specie
payments" (Shaikey 19S9: S4). This hoaiuing placeu mas-
sive constiaints on the flow of money, ieuucing the ability
of many banks to issue cieuit. In those few cases when
banks uiu issue cieuit, it was often assumeu that they weie
ovei-leveiageu anu theii cieuitwoithiness was questioneu.
All of this iesulteu in a ieal shoitage of available cuiiency,
anu without a national bank system in place theie was veiy
little the goveinment coulu uo to inciease the supply. In
the enu, the uecision taken by the Feueial uoveinment was
to piotect the continueu opeiation of the commeicial econ-
omy, "it seems that the "necessity" of the situation was not
in piotecting the cieuit of the goveinment but in supplying
a meuium of payment, in othei woius a cuiiency" (Shaikey
19S9: SS).
The fiist Legal Tenuei Act went into effect on Febiuaiy 2S,
1862 giving the iight to the 0niteu States Tieasuiy to cie-
ate papei money (0niteu States Congiess 1862: S4S). Two
moie Acts in 186S, enableu the issuance of foui hunuieu
anu fifty million uollais woith of papei money (Bavies
2uu2: 487). This papei money was officially issueu at a
one-to-one ielationship to golu. This meant that the papei
money hau the same puichasing powei as golu. The impoi-
tant point to note is that when this papei money was oiigi-
nally issueu it was not ieueemable in golu; it was not a
"iepiesentation" of golu, but was piesenteu as if it was the
same as golu. The fact that this papei, cieateu anu issueu
by the Feueial uoveinment, coulu not be ieueemeu foi golu
is what maue it money, anu not cieuit, in the eyes of many.
The uecision to piint papei money openeu up a uebate, foi
the seconu time in Ameiica's histoiy, ovei the souice of
money's value anu the iole of goveinment in the cieation of
this value. These uebates, "establisheu that the way in
which that institution |of moneyj woikeu was itself the
iesult of human inteivention" (Laiulei 1991: 188). Buiing
what was a ielatively biief moment in histoiy, the govein-
ment's iole in the cieation of money's value, not just in the
supply of cieuit, was establisheu anu confiimeu. Those
that suppoiteu the iight of the Feueial uoveinment to issue
this papei money woulu maishal aiguments that placeu
the souice of money's value, anu theiefoie the cieation of
money, in the hanus of goveinment. These aiguments chal-
lengeu the veiy founuation of the then accepteu theoiy of
money anu, in the eyes of many, thieateneu existing class
ielations anu theiefoie the entiie political economy.
Bespite the appeaiance that the Feueial uoveinment was
going back on its histoiical commitment to scaice money, it
was uoing nothing of the soit. It hau incluueu a clause in
the Acts that committeu the Feueial uoveinment to paying
inteiest anu Tieasuiy bonuholueis in golu anu not in papei
money. Bespite this stateu commitment to golu
, the Legal
Tenuei Acts met with the immeuiate piotest fiom the
banking anu meichant classes
. Suppoiteis of golu money
weie emphatic in theii aiguments against what they saw as
an attempt to place the souice of monetaiy value in gov-
einment. Bullionists, who weie pieuominantly fiom the
meichant anu banking classes, hau the auueu bonus of be-
ing the classes with the most uiiect political powei anu
influence. They believeu, as hau been assumeu by the Feu-
eialists, that they unueistoou best how to piotect the con-
tinueu fiee flow of commeicial exchange. ueneial uaifielu,
a Civil Wai heio anu futuie piesiuent of the 0.S.A. believeu
that, "Noney is a ieality, a weight, of a ceitain metal, of a
ceitain fineness. But a papei uollai is simply a ueeu, the
legal eviuence of the title that I holu to a uollai" (uaifielu
qtu. in Babb anu Caiiutheis 1996: 1S68). Blaii (1876)
summeu up the uominant unueistanuing of the souice of
monetaiy value in a speech he maue to congiess on Nay
18, 1876. Be aigueu that the monetaiy value of golu is,
"inuepenuent of anu moie necessaiy than any goveinment"
because it, "possesses value as a commouity" while theie
aie those on the siue of papei who aie claiming that, "ieal
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
6 This section uiaws heavily on a five-volume set of oiiginal financial pamphlets that weie publisheu anu uistiibuteu between 182u anu the
late 189u's (see Pamphlets of Finance, vol. 1 - S).
7 The Legal Tenuei Acts incluueu the following clause: "payment of all taxes, inteinal uuties, excises, uebts, anu uemanus of eveiy kinu uue to
the 0niteu States, except uuties on impoits, anu of all claims anu uemanus against the 0niteu States of eveiy kinu whatsoevei, except foi
inteiest upon bonus anu notes, which shall be paiu in coin, anu shall, also be lawful money anu legal tenuei in payment of uebts, public anu
piivate, within the 0niteu States." (0niteu States. Cong., 1862: S4S) (Italics auueu)
8 This leu to a seiies of legal cases that went all the way to the 0.S. Supieme Couit; Bepbuin v. uiiswolu (187u), oveituineu the Feueial uov-
einment's iight to issue legal tenuei. In two cases, Knox v. Lee anu Paikei v. Bavis (1871), }ulliaiu v. uieenman (1884), the constitutionality
of the Legal Tenuei Act's was confiimeu.
money is not intiinsically piopeity, but a meie token oi
sign, enuoweu with powei to cancel uebts" (Blaii, 1876).
Bighlighteu in this fiaming is that goveinment is to have no
iole in the money cieation piocess, anu that the best solu-
tion iesiues with banks anu the continueu, natuializeu iole
of golu anu scaice money moie geneially.
!"#$%&'( $*+',$'% -+../&#- 01 20'#3
The passage of the Specie Resumption Act on }anuaiy 14,
187S, leu auvocates of papei money to foim a political
paity that woulu go on to make some of the most nuanceu
aiguments in suppoit of goveinment issueu money. In
187S, these inuiviuuals woulu foim the uieenback Paity
anu by 1878 they secuieu, "ovei a million voteis anu ie-
tuineu fouiteen membeis to Congiess" (Bavies 2uu2: 496).
They aigueu that iemoving the supply of papei money
fiom ciiculation woulu ieuuce the ability of businesses to
hiie laboi, fuithei exaceibating the level of unemployment
anu the iesulting social instability anu thieaten the entiie
capitalist uemociacy's stability.
In the piocess of making theii aiguments the uieenbacks
challengeu seveial of the funuamental assumptions maue
by auvocates of golu money anu they began to aiticulate a
theoiy of money cieation that placeu goveinment at the
centei. Repiesentative William Kelley, an auvocate foi
papei money anu a membei of the uieenback Paity, aigueu
that the auuition of the papei money was a positive uevel-
opment, having saveu the economy of the 0SA:
"It may have been unwise to use that 'gieat
enemy of the nation, the gieenback,' anu
thus inciease the volume of money anu en-
hance piices; but let it ieminu gentlemen,
who say that the gieenback is an enemy to
the countiy, that they ueciy theii countiy's
savioi" (1877).
Kelley is aiguing that this inciease in the money supply uiu
not uisiupt oi upset the political economy; in fact it en-
ableu the economy to expanu. The goal of this papei
money, accoiuing to Kelley (1877), was not to uisiupt class
ielations oi thieaten the fiee flow of commeice. Rathei, it
was about enabling those that wanteu to woik to woik anu
to help make this happen the goveinment was being askeu,
"to maintain a familiai meuium of exchange wheieby capi-
tal anu enteipiise may pay laboi foi its woik" (Kelley,
1877). Even though it is eviuent that Kelley anu the uieen-
backs aie pio-capitalist theie is a subtle but ciitical shift in
theii unueistanuing of the souice of money's value. By
assuming goveinment has the ability to cieate the money
neeueu to fuel commeicial exchange, the souice of value is
being socializeu anu consciously politicizeu.
In a pamphlet publisheu in 187u the authoi wiites, "we uo
not neeu golu oi silvei foi money, oi as a basis foi papei
cuiiency. All the money we neeu is legal tenueis issueu by
the goveinment" (Smith, 187u). The uieenbacks aigueu
that the value of money has eveiything to uo with the legal
authoiity of goveinment, anu nothing intiinsic to golu,
"Noney is a cieatuie of law, it is cieateu anu uphelu by law"
(Wolcott qtu. in Babb anu Caiiutheis 1996: 1S72). The
notion that goveinment coulu cieate money thiough acts of
law, placeu the souice of monetaiy value in its hanus, anu
challengeu the theoiy that money's value was natuial anu
outsiue of any legal act of goveinment:
"All money, whethei it be golu, silvei oi pa-
pei, ueiives its chief value fiom the fact that
goveinments uo enact aibitiaiy laws ueclai-
ing money foi the payments of uebts,
theieby cieating the chief uemanu foi it."
(Ensley qtu. in Babb anu Caiiutheis, 1996:
This conclusion iaiseu ueepei questions aiounu what con-
tiol ovei money cieation meant. An aigument emeigeu
that claimeu the iight of the voting citizens, whose ue-
manus woulu be expiesseu thiough theii iepiesentative
goveinment, to contiol the cieation of money:
"We, the people, make the goveinment. We
give the goveinment powei to make, pio-
viue anu issue money unuei piopei iules
anu iegulations.We make oui money, we
issue it, we contiol it. We iegulate it." (Wol-
cott qtu. in Babb anu Caiiutheis, 1996:
The auvocates aie not claiming theii inuiviuual iight to
cieate money oi the iight of an inuiviuual State to cieate
money; noi is it aimeu at challenging the Feueial uovein-
ment. Rathei, the aigument is to ieinfoice the existing
system of goveinment, anu helps solve the tension between
scaice money anu the expanuing economy, by placing the
powei to cieate money in the uoveinment's hanus. These
aie impoitant uistinctions, sepaiating the uieenbacks ue-
bate fiom those of the 177u's oi of those that appeai in the
. In fact, it coulu be vieweu as the histoiian Shaikey
has claimeu, that all of the uebates incluuing the iauical
iueas of the uieenbacks, weie aimeu at peipetuating the
existing class ielations anu not uisiupting the system of
goveinance that ielieu on the iuea of natuial inequality anu
piivate piopeity (19S9: SS).
The iise of a political foice that aiticulateu the neeu foi an
auequate supply of cuiiency, anu linkeu the souice of
money's value to political uecisions ieinfoiceu by legal
tenuei laws, enableu them to place the iesponsibility foi
maintaining this cuiiency in the hanus of the Feueial uov-
einment. Accoiuing to Babb anu Caiiutheis, "The gieen-
back uebates contesteu the natuie of monetaiy value anu
the piopei iole of uemociatic goveinment in finance"
(1996: 1S7S). The uieenback Paity hau manageu to ieai-
ticulate the long iunning tension between a concept of
scaice money anu an expanuing economy, by showing that
theie neeu be no ieal shoitage of money. The solution that
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
9 The iefeience to the 198u's is a iefeience to the community cuiiency movement. I will engage this subject latei in this papei.
the uieenbacks weie puisuing was one aimeu at expanuing
the commeicial economy by expanuing the volume of
money, not by incieasing the volume of cieuit (anu the
associateu tiappings of uebt anu money scaicity). This
impoitant uistinction places the iesponsibility foi sufficient
supplies of cuiiency on the goveinment anu not on the
banks. Impoitantly, it attempteu to bieak uown an iuea
that claimeu the cieation of money was outsiue of govein-
ment's contiol. The uieenbacks cential aigument was that,
"economic value coulu anu shoulu be subject to conscious,
uemociatic contiol" (Babb anu Caiiutheis 1996: 1S7S).
The Specie Resumption Act stipulateu that all papei money
was to be ietuineu foi golu to the Tieasuiy by }anuaiy 1,
1879. This uate came anu went, anu ovei thiee hunuieu
million uollais woith of gieenbacks (as the papei money
came to be calleu) iemaineu in ciiculation anu ietaineu its
status as money into the twenty-fiist centuiy (Bavies 2uu2:
496). This is a ciitically impoitant moment in Ameiican
histoiy because it subtly influenceu anu gave suppoit to
some of the emeiging (anu iauical) theoiies of manageu
papei money systems being exploieu within acauemic cii-
cles (Laiulei 1991: 198)
. The uieenbacks hau manageu
to intiouuce iueas into political uebate that pointeu to the
iole of goveinment anu showeu the potential foi alteina-
tive ways of cieating money, that in fact woulu be, uespite
histoiical beliefs, compatible with the existing capitalist
Bespite the fact that the uieenback Paity nevei specifically
aigueu foi the "uemociatization" of money, they uiu aigue
foi its politicization within the context of the capitalist ue-
mociacy. They saw it as a political conveisation, uiiven by
goveinment who is voteu into powei on the assumption
that they will iepiesent the inteiests of the people. Bow-
evei, placing this into the bioauei aich of histoiy it is cleai
that those "iepiesentatives" aie closely aligneu with a pai-
ticulai view that aigues foi the natuialness of money value
anu class inequality. Late twentieth centuiy oithouox
economists continueu to cling to theii "mouel of money
supply" which was, "an empiiical geneialization of a natu-
ially constiaineu supply of a metallic monetaiy base pio-
viueu by a cential authoiity (the mint) that was outsiue the
maiket" (Ingham 2uu4: 21).
!"##$%&'( !$**+%!( #",+#+%'
The histoiical tiajectoiy of the financial uebates in the
0.S.A. has always puisueu the same goal - the ieinfoice-
ment of the capitalist uemociacy anu the unueilying ine-
quality of class ielations anu piopeity owneiship. This
effoit has aimeu at guaianteeing the compatibility between
the capitalist uemociacy anu money anu cieuit cieation.
Bowevei, theie is anothei uebate that has iun in paiallel to
this one that is maikeu by the effoits of the colonial legisla-
tuies in the 177u's, anu in seveial ciitical ways by the
uieenback Paity of the 187u's, anu a new movement that
has iisen since the 198u's known as the community cui-
iency (CC) movement
. The commonality between these
uebates has been the effoit to challenge the assumeu ciiti-
cal neeu foi a scaice money supply. The effoits of many CC
auvocates pick up on some of these eailiei aiguments,
highlighting the social element of money anu claiming,
uniquely that inuiviuuals can cieate theii own money. This
is uiiven by a conceptualization of uemociacy that uoes not
appeai to be compatible with the Feueialist notion of capi-
talist uemociacy.
Nany auvocates of CC aigue foi the uemociatization of
money via the cieation of abunuant supplies of money.
Nany claim that the scaicity of money anu cieuit is uelete-
iious to the economy anu the cause of iising inequality anu
economic instability as well as enviionmental uestiuction.
Whethei theii analysis of the impacts is coiiect oi not,
what they aie uoing is challenging the iole anu ielevance of
both the Feueial uoveinment anu the banks in the cui-
iency cieation piocess. These effoits piesent a new anu
unique phase in the histoiy of the monetaiy uebates.
These CC auvocates uo not accept the notion of uemociacy
that Piesiuent Wilson claimeu in 191S when he stateu that
the cieation of the Feueial Reseive System iepiesenteu the
"uemociatization of cieuit" (qtu. in Wickwaie, 191S: S1).
Similai to eailiei uebates, this piocess is fiameu as benefit-
ing the wealthy meichant anu banking classes while exac-
eibating the instability of the entiie financial system.
Bowevei, unlike the uieenbacks, the CC movement views
the incieasing iole of goveinment as iepiesenting the fui-
thei piivatization anu centialization of the cieation of
money. 0n the website of Beikshaies, a CC baseu in the
noitheastein 0.S.A., they claim that, "The banking system is
one of the most centializeu institutions of oui economy anu
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
1u Knut Wicksell, anu othei monetaiy theoiists of the late 188u's anu 189u's, hau begun to woik haiu on theoiizing cieuit anu exploiing
non-specie baseu monetaiy systems (Laiulei 1991: 198). Theii effoits weie uiiven in gieat pait by theii uesiie to cieate a system that was
moie stable anu that woulu give the capitalist economy a moie ieliable meuium of exchange. The solutions anu iueas that emeigeu uuiing
this peiiou woulu impact the likes of }.N. Keynes who built much of his eailiei woik off the theoiies of Knut Wicksell (Laiulei 1991: 198).
11 This teim encompasses a bioau iange of monetaiy expeiiments that go by a iange of names: local cuiiencies, social cuiiencies, time
banks, local exchange tiauing systems, local money, complementaiy cuiiencies. This section uoes not attempt to aiticulate all of the nuances
between these uiffeient expeiiments, but iathei to make a geneialization about the paiticulai political conceptualizations upon which they
one of the majoi obstacles to stiengthening iegional
economies anu the communities within them" ("What Aie
Beikshaies."). This fiaming seems to uiscount the histoii-
cal context within which the Feueial Reseive was cieateu;
it was cieateu to limit the negative impact of the nineteenth
centuiy pattein of hoaiuing anu monopolization of golu
money by the piivate banks. Anu, in paiticulai to ueal with
the iesulting inauequate anu unieliable supplies of cieuit,
which weie especially thieatening to the fiee flow of com-
meicial exchange anu a thieat to the entiie capitalist ue-
The way to combat this piivatization anu centialization,
accoiuing to many CC auvocates, is to enu the goveinment
anu bank's monopoly ovei cuiiency cieation anu to insteau
give powei to small local communities anu inuiviuuals to
cieate theii own money. This uesiie to enu the centializeu
system, anu to ietuin to an eia of competing money issuais
is also connecteu to the iuea of enuing the politicization of
money cieation
. In fact the claim is maue that govein-
ment uoesn't even neeu to "give" this powei to citizens;
citizens just neeu to asseit theii own money cieation
powei. Thomas uieco, an authoi anu auvocate of CC, states
that, "we have calleu foi the sepaiation of money anu state,
but since the people uo not contiol theii goveinment, we
believe that sepaiation can only be achieveu as the people
asseit theii money powei" (uieco 2uu9: 111). uieco goes
on to claim that the, "politicization of money has inhibiteu
the wiuespieau auoption of bettei alteinatives" (uieco
2uu9: 118).
Pait of what the CC auvocates see as unique about this cui-
ient moment in histoiy, is the iise of infoimation anu net-
woiking technologies, which offei a iange of possible al-
teinative uecentializeu appioaches to cieating money. CC
auvocates that iun seveial websites anu actively woik to
piouuce the technological systems that enable anyone to
cieate a cuiiency claim that, "given how much infoimation
technology has evolveu iecently, the membeis of a com-
munity can be theii own aibiteis" (Biock, "New Cuiiency
Fiontieis"). The technology is essentially fiameu as ieplac-
ing the iole of goveinment oi banks; uecentializeu "cui-
iency uesign will mean the obsolescence" of any soit of
uepenuence "on any foim of cential authoiity" (Biock, "P2P
Cuiiency"). These auvocates iecognize that they aie chal-
lenging the histoiy of centializeu cuiiency cieation, "Al-
most all cuiiency uesigns to uate (uollais incluueu) uepenu
on eithei a scaice commouity (such as golu oi papei notes)
oi a centializeu authoiity to issue anu¡oi tiack the cui-
iency (baitei clubs, time-banks, etc)" (Biock, "P2P Cuiien-
. Foi these auvocates, "The new fiontiei is about
open cuiiencies which uo not exist by manuate of banks oi
goveinment they aie uistiibuteu anu un-enclosable sys-
tems of wealth cieation which can be uesigneu to benefit
moie than a piivilegeu few" (Biock, et al.; "New Cuiiency
CC auvocates typically uo not see goveinment as iepiesen-
tative of theii inteiests, anu theiefoie they aie looking foi
ways of solving the scaicity of money via new means. This
peiceiveu failuie of not just the goveinment but also of the
banks, signals a key shift in the histoiy of the financial ue-
bates. The auvocates of CC aie not looking foi solutions
that fit within the histoiical unueistanuings of class ine-
quality anu iepiesentative goveinment. In essence the
system of iepiesentative goveinment, built to enable capi-
talism, is failing to meet the uemanus of at least the CC au-
vocates, if not a laige swath of society. The potential uis-
iuption to the entiie political economy is huge, anu figuiing
out how to uesign a system of money cieation that ietuins
a sense that the Feueial uoveinment actually is iepiesent-
ing anu meuiating the neeus of all classes, may be of ciitical
impoitance to the suivival of capitalist uemociacies.
Naigiit Kenneuy, who has wiitten anu lectuieu extensively
on CC has aigueu that, "Noney can be maue to seive iathei
than to iule, to be use÷iathei than piofit-oiienteu÷anu to
cieate abunuance, stability, anu sustainability" (qtu. in
Stonington, 2uu4). She saiu that while "money is one of the
most ingenious inventions of mankinu" it has "the potential
to be the most uestiuctive oi most cieative" (qtu. in Ston-
ington, 2uu4). Noney, cieuit anu cuiiencies in geneial, aie
the piouuct of a long seiies of social uecisions. These ueci-
sions have histoiically focuseu on uesigning a system of
money cieation that is both compatible anu ieinfoicing of
the unueilying class inequality necessaiy foi the smooth
opeiation of the Ameiican capitalist uemociacy. The iise,
since the 198u's, of a new set of financial uebates, iepie-
sents a unique challenge to a long iunning theoiy of money
anu cieuit cieation. The CC auvocates aie pointing to the
sense that the cuiient financial system is failing; theii solu-
tions aie not focuseu on saving the cuiient system but of
funuamentally ieconfiguiing the entiie political economy.
No theoiy of money cieation has attempteu to aiticulate an
alteinative political economy since the faileu effoits of the
colonial state legislatuies of the 177u's. Bemociatic
money, accoiuing to CC auvocates, is a type of money anu
cieuit that envisions a new political economy built on class
equality - it is a vastly uiffeient conceptualization of ue-
mociacy that unueipins this iuea. The CC movement is
ieaiticulating the ioles of goveinment anu banks, while
iaising ueepei questions about what it means to cieate
money uemociatically.
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
12 Fieueiich von Bayek, the Nobel piize winning fiee-maiket economist, was a big auvocate of what he calleu, "the uenationalization of
money" aiguing foi piivate companies to issue theii own cuiiencies anu allow the maiket to ueteimine the value of money (von Bayek,
1976). Pait of his aigument iesteu on his antipathy towaius what he also saw as the politicization of money. This iepiesents anothei of the
seveial ways in which the CC movement comes to miiioi oi builu off fiee-maiket capitalist economists.
1S It is impoitant to point out that Biock et al, uiffei fiom many of the othei CC auvocates in that they uo not see a iole foi a valuable com-
mouity, anu have a uiffeient notion of value fiom that which many of the othei auvocates auheie to. I have wiitten about this in gieatei ue-
tail in Wainwiight, 2u11.
Claims to be uemociatizing money have been maue iepeat-
euly thioughout the histoiy of the 0.S.A's existence. The
oiiginal effoits of colonial legislatuies to cieate inflationaiy
money, aimeu at leveling society, weie built of a conceptu-
alization of uemociacy that weie moueleu on oiiginal iueas
of uieek uemociacy - a system of uemociacy that saw ine-
quality anu elections as anathema to a tiue uemociacy.
With the iise of the Feueialists in the 178u's a veision of
uemociacy emeigeu that accepteu inequality anu iepiesen-
tative elections. 0nuei this histoiically specific iuea of a
capitalist uemociacy effoits centeieu on cieating money in
ways that woulu not thieaten the existence of inequality.
The piouuct of this fiaming iesulteu in incieasingly cen-
tializeu money cieation with a cozy ielationship uevelop-
ing between the uominant meichant anu banking class anu
the Feueial uoveinment. The Feueial uoveinment has con-
tinueu to claim that the uominant anu centializeu foim of
money cieation is the most uemociatic way of cieating
money; a way of cieating money that was also most com-
patible with a system of capitalism anu its inequality. In
the 186u's a iaie moment emeigeu in Ameiican histoiy in
which these claims weie challengeu anu new iueas of
abunuant, goveinment cieateu money, weie piomoteu.
The impoitant uistinction being maue that money coulu
both be abunuant anu capitalist while claiming to be ue-
mociatizeu. All of these eailiei histoiical uebates - those of
the colonialists, Feueialists, uieenbacks, anu Feueial Re-
seive auvocates - all claimeu to be uemociatizing money.
These claims all have to be placeu into the histoiically anu
geogiaphically specific context in which the theoiy of ue-
mociacy is being fiameu. The iise of the CC movement in
the 198u's iepiesents a new claim to be uemociatizing
money, a claim that seems to be in many ways countei to
the ovei two-hunuieu yeai unueistanuing of uemociacy,
which emeigeu out of the Feueialist uebates of the 177u's.
This papei has not attempteu to claim to know what is
uemociatic money; iathei it has attempteu to show how
money cieation has been uiiven by the context within
which it is opeiating. Anu, foi the past two hunuieu yeais
this context has been within the Ameiican capitalist-
uemociacy - a foim of uemociacy that is compatible with
capitalism anu accepts inequality. Touay's CC auvocates
seem to be challenging this conceptualization by pioposing
a type of uemociatic money that no longei seems compati-
ble with capitalism. They woulu uo well to exploie this
histoiy fuithei by exploiing the ielationship between ue-
mociacy anu capitalism within the context of money ciea-
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of Congiess. Web. 18 Aug. 2u1u.
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
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International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
International Journal of
Community Currency Research
Volume 16 (2012) Section D 14-21
Sarah Elvins*
Department Of History, University Of Manitoba
Although theie was no single pattein to the use of alteinative cuiiency in Ameiica uuiing the
uieat Bepiession, the aiguments useu by suppoiteis of sciip often playeu on common themes.
Suppoit foi sciip ieflecteu the belief that local iesouices coulu be maishaleu to combat the eco-
nomic situation. Although the Bepiession was a national (anu inteinational) ciisis, many sciip
auvocates believeu that they woulu be able to focus impiovement within one paiticulai com-
munity. Sciip appealeu to Ameiican notions of self-help anu inuiviuualism. Even faceu with the
challenges of the Bepiession, few Ameiicans weie willing to embiace iauical change. Auvo-
cates of alteinative cuiiency hau to walk a fine line between emphasizing the innovative possi-
bilities of sciip anu ieassuiing the public that these plans weie simply a means to "piime the
pump" of an essentially sounu economic system.
The authoi acknowleuges suppoit foi this ieseaich fiom the Social Sciences anu Bumanities
Reseaich Council of Canaua anu the 0niveisity of Nanitoba. The authoi was pleaseu to be pait
of the Inteinational Confeience on Community anu Complementaiy Cuiiencies in Lyon in 2u11.
Thanks to Bi. Bugo uouschalk foi allowing me to use some images of sciip fiom his collection.
* Email: elvinssÇms.umanitoba.ca
$0 2345 4637 89432:5; Elvins, S. (2u12) 'Selling Sciip To Ameiica: Iueology, Self-help anu the Expeiiments of
the uieat Bepiession' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 14-21 <www.ijcci.net>
ISSN 1S2S-9S47
The iavages of the uieat Bepiession piompteu many com-
munities acioss the 0niteu States to expeiiment with sciip,
baitei, anu othei foims of self-help. Alteinative cuiiency
schemes piolifeiateu aftei the Wall Stieet Ciash of 1929,
ieaching a peak in the eaily 19Sus anu waning as the eco-
nomic piogiams of Fianklin Belano Roosevelt's New Beal
weie put into place. Cities anu towns acioss the 0niteu
States attempteu to encouiage consumption anu alleviate
unemployment by issuing theii own foims of money.
Communities as uiveise as Chicago, Atlanta, Betioit, anu
tiny Bawaiuen, Iowa tuineu to sciip as a solution to the
ciisis. In some cases sciip was initiateu by municipal gov-
einments oi city councils, while in otheis piivate citizens,
meichants' associations, oi the unemployeu themselves
foimeu coopeiatives to put new types of money into action.
Theie was no single pattein to the use of alteinative cui-
iency in Ameiica: stamp sciip, baitei sciip, auction sciip,
anu tax anticipation waiiants weie all put into ciiculation
in uiffeient paits of the countiy (Baipei, 1948; uatch,
2uu8; Elvins, 2uuS; Wainei, 2u1u).
A closei examination of the uebate ovei sciip in the na-
tional anu local meuia by activists, politicians, business
leaueis, anu othei gioups can pioviue insight into the pos-
sibilities anu challenges foi futuie pioponents of alteina-
tive cuiiency in the 0niteu States. Even though the gioups
auvocating foi the use of sciip weie not unifoim, ceitain
aiguments weie iepeateuly mobilizeu in an effoit to gain
suppoit foi alteinative cuiiency. Fiist, sciip ieflecteu the
belief that local iesouices coulu be maishaleu to combat
the national economic ciisis. Although the Bepiession was
a national - anu inueeu inteinational - pioblem, backeis of
alteinative cuiiencies believeu that they woulu be able to
concentiate the ciiculation of money to impiove conuitions
within one paiticulai community.
Seconuly, sciip also appealeu to Ameiican notions of self-
help anu inuiviuualism. In the eaily (pie-New Beal) yeais
of the uieat Bepiession, Ameiicans ianging fiom Piesiuent
Beibeit Boovei uown to local chambeis of commeice ex-
piesseu concein that hanuouts of ielief to the unemployeu
coulu unueimine theii uignity anu sap them of theii will-
ingness to woik. The cieatois of sciip plans like the baitei
system ueviseu by the 0iganizeu 0nemployeu of Ninnea-
polis, Ninnesota, emphasizeu how the ielief that they of-
feieu was not chaiity, but a way to pioviue new oppoituni-
ties foi willing people to get back to woik.
Finally, a stuuy of the uiscussion of sciip in national anu
local meuia, by politicians, economists, anu business leau-
eis in the eaily 19Sus ieveals that alteinative cuiiency was
vieweu by many as an emeigency measuie, not a means to
peimanently tiansfoim the economy. Even faceu with the
ciisis of the Bepiession, few Ameiicans weie willing to
embiace iauical change. Auvocates of alteinative cuiiency
hau to walk a fine line between emphasizing the innovative
possibilities of sciip anu ieassuiing the public that these
plans weie simply a means to "piime the pump" of an es-
sentially sounu economic system.
Figure 1. Scrip from Clear Lake, Iowa and from the Or-
ganized Unemployed of Minneapolis, Minnesota. The
Organized Unemployed scrip features a photo of George
Mecklenburg and the slogan “Work, not Dole.” (from the
collection of Dr. Hugo Godschalk)
)%)'*+$ '"&-$.#+"&!"/. %0 #1- -(%"%23
The stuuy of sciip allows a unique oppoitunity to exploie
the aveiage consumei's unueistanuing of the economy anu
public uiscouises about the causes of the Bepiession. In
the months anu yeais aftei the Wall Stieet Ciash, a familiai
explanation foi the economic ciisis hingeu on the iole of
piivate consumeis who weie foolishly "hoaiuing" theii
money when they neeueu to iesume spenuing at the high
levels of the 192us. Piesiuent Beibeit Boovei cooiuinateu
an anti-hoaiuing uiive in eaily 19S2 to inciease the
amount of cuiiency in ciiculation (New Yoik Times 19S2a;
New Yoik Times 19S2b). Euitoiials anu ietail auveitise-
ments emphasizeu the iole of the piivate consumei in tuin-
ing economic conuitions aiounu. An euitoiial in the Buffalo
Evening News in Buffalo, New Yoik, aigueu:
The law of supply anu uemanu is constant -
consumei, ietailei, manufactuiei. It's logical
anu self-eviuent. Neichants supply the con-
sumeis' neeus - youi neeus. Nanufactuieis
suppl y the meichants - youi mei-
chants.You aie a necessaiy pait of the
business cycle, anu upon youi filling youi
place in this cycle uepenus the piospeiity
anu welfaie of the nation. If you stop buy-
ing, the meichants' shelves iemain stockeu,
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
the sales foiceu must be thinneu, factoiies
must shut uown (Buffalo Evening News,
To business leaueis, this emphasis on voluntaiism anu
piivate consumption woulu pose no gieat iueological
thieat. By the enu of the 192us, the matuiation of new
foims of maiketing, ietailing anu uistiibution hau encoui-
ageu Ameiicans to view the puichase of consumei goous as
a means of self-expiession anu self-uevelopment. The no-
tion that the economy coulu iecovei if only people woulu
stop foolishly hanging onto theii money anu iesume inui-
viuual spenuing was a comfoiting one. It suggesteu that
the economic ciisis was only a tempoiaiy setback, which
coulu be solveu not thiough gieat inuiviuual saciifice, but
insteau by ietuining to the fiee-spenuing "noimalcy" of the
But beyonu simply getting consumeis to spenu, many
economists, ietaileis anu politicians became inteiesteu in
the notion that spenuing coulu be taigeteu within one pai-
ticulai community, focusing effoits at iecoveiy. This type
of aigument was not entiiely new. As inuepenuent ietail-
eis in Ameiican towns anu cities faceu incieasing competi-
tion fiom chain stoies anu mail oiuei catalogues uuiing the
191us anu 192us, many mobilizeu a language of localism to
encouiage pations to spenu "at home." Bepaitment stoies
emphasizeu that they weie locally owneu anu opeiateu,
that piofits eaineu weie chuineu back into the community,
anu not siphoneu off to Wall Stieet oi some fai-off coipo-
iate heauquaiteis. The accuiacy of such claims might be
open to uebate (foi example, one might aigue that chain
stoie bianches paiu just as much in local taxes as othei
businesses, anu that buying an item manufactuieu in a uis-
tant place uiu not qualify as a "local" puichase even if it was
acquiieu in one's hometown stoie). But foi the aveiage
consumei, these types of aiguments woulu alieauy be quite
In a time of economic ciisis, ietaileis anu business auvo-
cates continueu to encouiage consumeis to pay attention
to wheie they spent theii uollais in oiuei to maximize the
amelioiative effects of piivate consumption. The euitoi of
the local papei in Cleai Lake, Iowa, acknowleugeu that any
foim of expenuituie was welcome in an effoit to jump stait
the economy, but uigeu citizens to piioiitize local spenu-
.above all, buy EvERYTBINu P0SSIBLE IN
TBIS T0WN, oi fiom the faimeis of oui
community that will iestoie oui suiplus
money to woiking in oui own community -
among ouiselves - anu oui 0WN piospeiity
will be gieatei than otheiwise.When we
tiaue with each othei we cieate local pios-
peiity. When we tiaue with othei people
elsewheie who uo not spenu anything with
us, we cieate local uepiession. Theie can be
no happy meuium - it is eithei one oi the
othei (Cleai Lake Niiioi, 19S2).
This message was iepeateu in a seiies of newspapei aus by
a gioup of local businesses. Reaueis weie exhoiteu, "Bi-
viue Youi Bollais with Youi Neighbois - Buy at Bome"
(Cleai Lake Niiioi, 19S1a). Cleai Lake iesiuents who took
theii uollais to anothei town oi city oi sent them to uistant
mail-oiuei houses weie not much bettei than the soluiei
who woulu ueseit his comiaues on the fielu of battle: con-
sumeis weie exhoiteu, "Stop!! Bon't be a Beseitei!" (Cleai
Lake Niiioi, 19S1b) In Rochestei, New Yoik, the local
Civic Committee oiganizeu a pleuge campaign to encouiage
inuiviuuals to piomise to spenu a ceitain amount of money
within the local economy (Elvins, 2uu4). In Key West, Floi-
iua, ietaileis oiganizeu a "home uollai" campaign in which
they ieminueu consumeis that no mattei wheie they spent
money in Key West, local businesses contiibuteu to civic
impiovements, paiu wages to people in the aiea, anu
helpeu to impiove conuitions foi all. Consumeis weie tolu,
"The uollai you spenu at home - stays heie anu woiks. . .
Remembei youi neighboi will take bettei caie of you than
a stiangei" (Key West Citizen, 19S2).
It was not much of a leap foi meichants to move fiom en-
couiaging consumption at home to uevising foims of altei-
native cuiiency that coulu only be spent within one com-
munity. In the eaily 19Sus, as communities expeiimenteu
with ways to coax moie money into ciiculation, the iuea
that some new soit of money coulu help to solve the ciisis
gaineu influence. Boosteis aigueu that sciip coulu focus
iecoveiy effoits in one aiea, allowing people to help theii
neighbois without iisk of funus being uiveiteu to Wall
Stieet bankeis oi stiangeis outsiue of the aiea. Anu in the
case of a community wheie theie was little cuiiency to
spaie, sciip coulu help to get business moving once again.
In the small town of Bawaiuen, Iowa, Chailes Zylstia be-
came an eaily pioponent of stampeu sciip. Zylstia, a Butch
immigiant, hau woikeu in a coopeiative bank befoie aiiiv-
ing in the 0.S. anu was familiai with Euiopean cuiiency
expeiiments anu the theoiies of Silvio uesell (Bawaiuen
Inuepenuent, 19S2; Weishaai anu Paiiish, 19SS, p.2u).
Zylstia uevelopeu a plan to pay the unemployeu to peifoim
public woiks: his sciip was uesigneu to geneiate its own
ieuemption funu thiough the puichase of stamps. 0seis of
sciip woulu be iequiieu to puichase a S-cent stamp anu
affix it to the back of the ceitificate each time it changeu
hanus. Aftei the money hau ciiculateu S6 times, it woulu
be woith $1.u8 (the extia eight cents woulu be collecteu foi
auministiative costs) anu coulu be ieueemeu in cash. The
piominent Yale economist Iiving Fishei became exciteu by
the possibilities of the Bawaiuen plan, although he cau-
tioneu that the iequiiement of a puichase of stamp foi
eveiy tiansaction woulu be less effective than a uateu plan,
wheie sciip coulu ciiculate fieely until, aftei a peiiou of
one oi two weeks, a stamp woulu be have to be puichaseu
to extenu its use. Fishei saw stamp sciip as a uiiect chal-
lenge to consumeis who weie hoaiuing cuiiency: it was "a
fleet-footeu cuiiency which nobouy can hoaiu" because the
cost of affixing a stamp on each ceitificate woulu penalize
any consumei foolish enough to holu onto sciip without
spenuing it (Fishei, 19SS). Fishei touieu the 0.S. offeiing
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
auvice about the mechanics of alteinative cuiiency plans to
inteiesteu communities, anu sent his ieseaich assistant
Bans Cohissen to collect mateiial about sciip expeiiments
in ueimany anu Austiia.
Zylstia, while not the inventoi of stamp sciip, became a
majoi piomotei of its use in the 0niteu States. Be saw un-
employment as a community pioblem, anu aigueu that just
as citizens uuiing Woilu Wai I hau iallieu to suppoit the
Libeity anu victoiy bonu uiives, "WE ARE AT WAR N0W,
at wai with each othei. We aie tiying to hang onto money
anu piopeity with a ueathgiip, but we uo not seem to ieal-
ize that it is oui fiienu's thioat of which we have holu anu
the haiuei we squeeze the moie uifficult it becomes foi this
fiienu to supply us with the necessaiy foou anu manufac-
tuieu aiticles" (Zylstia 19S2b). This sense of the iesponsi-
bility of all community membeis towaius the wellbeing of
each was key to the success of the Bawaiuen plan. Zylstia
aigueu that in a small community, most people woulu not
minu having to pay S cents in oiuei to complete a tiansac-
tion using sciip, given the gieat benefit that the piogiam
woulu have to geneial business conuitions anu in the ciea-
tion of woik foi theii neighbois (Zylstia, 19S2a).
Figuie 2. Photogiaph of coin submitteu in exchange foi
sciip in Cleai Lake, Iowa, 19SS (fiom the collection of Bi.
Bugo uouschalk)
Cleai Lake, Iowa, was home to a novel effoit to help local
faimeis by abanuoning the golu stanuaiu foi the "coin
stanuaiu." A gioup of local businessmen offeieu to pay 2S
cents in sciip pei bushel of coin submitteu, almost thiee
times the maiket piice. The coin was then to be solu at a
public auction. Neichants in the town piomiseu to accept
the sciip foi puichases, anu then tuin the coupons ovei to
the Coin Exchange Bank foi ieuemption. Piomotional ma-
teiials publisheu by the Coin Exchange Committee encoui-
ageu local faimeis anu citizens to be a pait of a histoiic
moment foi Cleai Lake: "This is youi chance to help this
community stait conuitions impioving" (Figuie S). 0n
Febiuaiy 24, 19SS, eighteen oveiflowing bins of coin lineu
Nain Stieet anu South 4th Stieet in uowntown Cleai Lake.
Souvenii photogiaphs weie maiketeu to the public so that
citizens coulu always iemembei this moment of aiea coop-
Retaileis pickeu up on the notion that sciip helpeu to en-
suie that ielief effoits weie concentiateu within the com-
munity, anu the iuea was iepeateu in publicity foi alteina-
tive cuiiency campaigns. A plan ueviseu in Canaisie was
tiumpeteu as a "Plan to Keep Noney Ciiculating at Bome"
(New Yoik Times, 19SSb). Piofessoi E. B. uault of the
School of Business Auministiation at the 0niveisity of
Nichigan was an auvocate of baitei sciip as a means to
keep tiaue flowing within communities. In a memoianuum
foi ietaileis about the benefits of sciip, uault suggesteu
that meichants shoulu use sciip as the basis foi a "tiaue-at-
home" auveitising campaign. Be aigueu that consumeis
shoulu be ieminueu in piomotional mateiial (anu even on
inuiviuual sciip ceitificates) with a statement like "You
have this money only because oui local meichants suppoit
home inuustiies. If this money helps you, help youi local
inuustiies by buying fiom youi local meichants" (uault
19SS). The Evanston, Illinois, Retail Neichants' Associa-
tion (EIRNA) was instiumental in oiganizing sciip in that
community. The ietaileis aigueu that EIRNA money woulu
allow Evanston meichants to pay theii taxes, pay wages to
aiea employees anu suppoit othei local businesses (New
Yoik Times, 19S2c). Yet this emphasis on the local maiket
coulu also pose challenges: meichants weie caught be-
tween wanting to attiact customeis who wisheu to make
puichases anu supplieis who woulu not ieueem local sciip.
Even if iesiuents in a community unueistoou theii paitici-
pation in the economy in teims of theii pationage of the
aiea uepaitment stoie, that stoie was fiimly pait of a na-
tional economy. Inueeu, that meichant biought in goous
not only fiom aiounu the 0niteu States but fiom aiounu
the globe.
Figure 3. Promotional poster of the Clear Lake Corn Ex-
change, 1933 (from the collection of Dr. Hugo Godschalk)
The willingness of a laige business to accept sciip coulu
give a sense of legitimacy to the use of alteinative cuiiency.
Rich's Bepaitment Stoie in Atlanta iepeateuly steppeu in to
accept sciip that was issueu to the city's teacheis when a
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
capital shoitfall meant that theii salaiies weie going un-
paiu. The stoie uiu not iequiie teacheis to make a pui-
chase, but simply exchangeu theii sciip ceitificates foi
cash. Between 19Su anu 19S4, Atlanta issueu moie than
$Suu,uuu in sciip to municipal woikeis, which Rich's ab-
soibeu (Noigan, n.u.; Robeius, 199u, Elvins, 2u1u). Rich's
ieapeu the benefit of incieaseu loyalty fiom Atlanta teach-
eis, anu stoie piesiuent Waltei Rich was piesenteu as the
savioi of the city on the fiont page of the Atlanta Constitu-
tion (Atlanta Constitution, 19Su). In othei instances, how-
evei, sciip issues flounueieu as businesses iefuseu to pai-
ticipate, as was the case when Chicago's State Stieet ue-
paitment stoies iefuseu to accept the sciip which hau been
paiu to city teacheis. 0ne stoie executive explaineu that if
any single uepaitment stoie ueciueu to bieak iank with the
otheis anu accept sciip, "it woulu mean a tiemenuous iush
of buyeis taking out meichanuise anu leaving the stoies
with papei which they woulu be obligeu to tuin into cash
foi theii own cieuitois" (Chiistian Science Nonitoi, 19S1).
!"#$%&"#'( *+, -&./0,1
The tiauitional Ameiican celebiation of inuiviuualism anu
belief in self- help meant that even uuiing the ciisis of the
Bepiession, many weie waiy of collective solutions that
might unueimine the initiative of the unemployeu. Since
the late nineteenth centuiy, a geneial cultuial acceptance
of laissez-faiie capitalism anu social Baiwinist notions hau
iesulteu in a sense that the Ameiican economy pioviueu
oppoitunities foi those who weie willing to woik, anu that
it woulu be unnatuial anu ineffective to pioviue hanuouts
foi the pooi (Katz, 198S; Betten, 197S). A wave of self-help
oiganizations which aimeu to mobilize anu pioviue oppoi-
tunities to the unemployeu giew fiom coast to coast in the
eaily 19Sus (0.S. Bepaitment of Laboi, 19SS; Tselos, 1977;
uiinsteau anu Wisslei, 19SS). Sciip was cential to the
functioning of many of these new associations. In aieas
wheie people hau no cash on hanu, alteinative cuiiency
coulu facilitate baitei, allowing the exchange of goous anu
seivices to take place much moie piecisely. Nost of the
coupons useu in baitei anu exchange associations weie in
the foim of commouity sciip (wheie waiehouse ieceipts
backeu up the meuium of exchange) but in some cases
"houi" sciip was issueu which useu houis of woik as the
stanuaiu. A gioup of Bailem businessmen openeu the Bai-
lem Nutual Exchange, which issueu sciip to membeis in
exchange foi houis of skilleu woik (New Yoik Times,
In Ninneapolis, a gioup calleu the 0iganizeu 0nemployeu
ian a waiehouse anu stoie wheie the only ciiculating me-
uium of cuiiency was sciip. Reveienu ueoige Necklen-
buig, uiiectoi of the piogiam, aigueu that sciip was ciucial
in biiuging the gap between unemployeu laboi anu suiplus
piouucts. Be iecalleu yeais latei, "0ui lack was not foou
anu clothes; oui lack was money. People coulu not buy
things without money" (Necklenbuig, 1964, pp. 7S-4).
0nemployeu woikeis ieceiveu $1.Su a uay in sciip to woik
chopping woou, woiking on a plot of lanu giowing vegeta-
bles, making pieseives oi canning saueikiaut. The oigani-
zation ian a "white-collai" iestauiant foi the unemployeu,
wheie hot lunches weie solu foi 1u cents, anu a uoimitoiy
wheie one coulu pay foi a beu to sleep in with 1S cents of
sciip a night. The gioup's stoie stockeu an amazing aiiay
of items - not only useu goous biought in foi baitei but
woou, piouuce anu a host of piouucts maue by woikeis foi
the coopeiative. At its height, ovei 1,Suu people visiteu the
facility uaily (Kuitz, 19SS).
Key to the success of the piogiam, in Necklenbuig's view,
was the psychological benefit it offeieu to unemployeu
Ninnesotans. In his memoiis, Necklenbuig uesciibeu "The
best seivice the 0iganizeu 0nemployeu hau ienueieu was
to save the self-iespect of the people. They all felt that they
weie not ieceiving chaiity. They weie woiking coopeia-
tively with each othei anu foi each othei, unuei caiefully
laiu plans." (Necklenbuig, 1964, p. 78) A publicity flyei foi
the oiganization boasteu of the spiiit of comiaueship that
infuseu foimeily unemployeu woikeis, now engageu in
chopping woou oi woiking at the saueikiaut factoiy:
"These people feel they aie woiking foi themselves, not foi
somebouy else. The ex-bankei woiks with the ex-plumbei
chopping woou anu eating the heaitiest meals they have
enjoyeu in twenty yeais." A closing statement on the cen-
tial lessons that the auministiation of the 0iganizeu 0n-
employeu hau leaineu thioughout the expeiiment asseiteu
"0nemployeu people want to woik. They hate the bieau-
line" (0iganizeu 0nemployeu, n.u., p. 4). When Kail Staik-
weathei of Plymouth, Nichigan wiote to Iiving Fishei foi
infoimation about setting up a sciip piogiam in his com-
munity, he emphasizeu his sense of piiue in his own initia-
tive: "Even though I have nothing else, I still have the opti-
mistic attituue, time anu eneigy. I want to use this in some
way to help get things out of the geneial uoluiums"
(Staikweathei, 19SS).
The fact that sciip woulu not be tainteu with suggestions of
chaiity but woulu pioviue a way foi inuiviuuals who weie
uown on theii luck to help themselves was touteu as a cleai
auvantage by communities contemplating the use of sciip
foi ielief payments to the unemployeu. In the city of Poit-
lanu, 0iegon, officials emphasizeu that sciip "iepiesents a
sinceie effoit on the pait of public officials anu well-
meaning piivate citizens to enable theii neighbois to help
themselves thiough self-iespecting woik" (Nultnomah
County, n.u.) This language of self-ieliance anu the psycho-
logical impoitance of allowing inuiviuuals to feel that they
weie eaining theii ielief payments, iathei than simply ie-
ceiving a hanuout, was echoeu by othei sciip piomoteis.
When wiiting to Iiving Fishei about the benefits of self-
liquiuating cuiiency, Chailes Zylstia aigueu:
Somehow people will have to be able to buy
the things that they neeu to live, oi the pies-
suie can not be ietaineu anu ievolution will
iesult. The money necessaiy to pay foi
these necessities can be collecteu as volun-
taiy gifts anu uonateu, uestioying people's
moiale, oi it can be pioviueu thiough a
cieuit extension to pioviue woik (Zylstia,
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
Zylstia compaieu sciip to a soit of piessuie valve that
coulu ielieve tensions which might otheiwise iesult of an
oveithiow of the existing system. Fishei, in tuin, unuei-
scoieu the sense of sciip as a ielief plan that offeis woik,
not chaiity, to the unemployeu when suggesting the use of
a national system of stamp sciip to the Emeigency Relief
auministiation. Be noteu that unlike a "uole" payment
which piimaiily benefits its iecipient, sciip ciiculates
thiough an entiie community anu thus spieaus its benefit
to all. Best of all, "When given to the unemployeu, Stamp
Sciip uoes not cieate the psychology of chaiity; it meiely
puts the unfoitunate in a position to help themselves"
(Fishei, n.u.). Economist Stuait Chase aigueu that these
systems of exchange woulu help to quicken the ciiculation
of ieal money, but just as impoitantly, woulu "iestoie self-
iespect anu tangible comfoit" to consumeis enuuiing the
iavages of the uepiession (Chase, 19SS).
!"#$#%& ()* !+$!
Sciip was an innovative expeiiment foi communities giap-
pling with an unpieceuenteu economic ciisis. Politically, it
was vieweu as a "piogiessive," but not ievolutionaiy,
measuie. Communities fiom acioss the political spectium
became inteiesteu in the possibilities of alteinative cui-
iency. 0n one hanu, a community like Bawaiuen, Iowa,
was iepoiteu as being "goveineu by a council so 'libeial' in
its attituues" that it hau cieateu a municipally-owneu light
anu watei woiks to funu all costs of city goveinment. It
was not seen as suipiising that the council woulu be open
to new collective solutions to the pioblem of unemploy-
ment (New Yoik Beialu Tiibune, 19SS). When, on the othei
hanu, Evanston, Illinois fiist pioposeu the use of alteinative
cuiiency, the Chiistian Science Nonitoi uesciibeu, "This
conseivative subuib to the noith of Chicago has suuuenly
gone ultia-piogiessive with the auoption of a stampeu
sciip plan" (Chiistian Science Nonitoi, 19S2). The authois
of an eaily suivey of baitei anu sciip in Ameiica weie em-
phatic that expeiiments with community self-help anu al-
teinative cuiiency weie not a iauical uepaituie fiom tiaui-
tional piactices. They noteu,
Nost of the thiee hunuieu anu fifty baitei
oiganizations anu the one hunuieu unem-
ployeu gioups in the countiy aie locateu in
sections of the countiy populateu by what is
commonly known as olu Ameiican stock.
They aie the plouuing, conseivative, loyal,
'iuggeu inuiviuualists,' the so-calleu back-
bone of the nation. In haiu times they finu it
easy to co-opeiate anu woik togethei (Wei-
shaai anu Paiiish, 19SS, p. 1uS).
The emeigency of the Bepiession coulu thus push some of
these tiauitional "inuiviuualists" into moie collective ac-
tion. But it uiu not tiansfoim theii coie beliefs. While
some Communist Paity membeis anu ciitics of "tyiannical
capitalism" calleu into question the existing social anu eco-
nomic system, the majoiity of Ameiicans "uug in anu
helpeu themselves in a simple way. It is an auventuious,
hopeful.Ameiican movement" (Weishaai anu Paiiish,
19SS, p. 11u).
Foi even the most aiuent suppoiteis of sciip plans, caie
hau to be taken to emphasize that alteinative cuiiency
woulu pioviue a tempoiaiy boost to the existing economy,
not a way to facilitate abanuonment of the cuiient system.
The metaphoi of "piiming the pump" of the economy
seiveu as a shoithanu foi sciip's iole: it woulu pioviue a
tempoiaiy boost to encouiage the flow of "ieal" money into
ciiculation. In his 19SS guiue to stamp sciip, Iiving Fishei
uesciibeu how as a boy he was given the job of pumping
watei at his gianumothei's house. Aftei laboiing fuiiously
without piouucing any watei fiom the pump, he was in-
stiucteu to pioviue a "supply-siue scoop" of watei in oiuei
to connect with the supply of watei in the giounu anu jeik
it out of hiuing. Fishei aigueu, "Such is the office of Stamp
Sciip - to piime the pump, which has thus fai been unable
to connect the gieat supply of cieuit cuiiency with the
thiisty woilu. The small scoop of watei is the customei
walking with his stamp sciip" (Fishei, 19SS, Chaptei IX).
Figure 4: Hawarden, Iowa stamp scrip (from the collection
of Dr. Hugo Godschalk)
Fishei saw local sciip piogiams as insufficient to jolt the
economy back to a healthy state, anu so pioposeu a na-
tional sciip plan, to be auministeieu thiough the 0.S. Post
0ffice. Bemociatic Repiesentative Samuel B. Pettengill of
Inuiana sponsoieu a bill foi a national sciip plan jointly
with Senatoi }ohn Bollis Bankheau of Alabama. In his ie-
maiks to the Bouse of Repiesentatives, Pettengill explaineu
how sciip coulu piompt hoaiueu uollais back into the
It is submitteu that this bill attacks the pioblem at its foun-
uation. It biings buyeis into the maiket. It encouiages the
payment of uebt. It penalizes buyeis foi not using available
puichasing powei..It might be all that is necessaiy to
"piime the pump." As soon as these buyeis come into the
maiket place, confiuence shoulu ietuin anu values imme-
uiately stait to iise. If that shoulu be the iesult, then othei
money, now hoaiueu by the hunuieus of millions of uollais,
woulu also come into the maiket. People woulu say, "Now
is the time to buy" (Congiessional Recoiu, 19SS).
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
The secietaiy of the Evanston Illinois Retail Neichants'
Association similaily emphasizeu the way in which sciip
coulu allow not only those in the uiiest neeu but consum-
eis who weie making uo with "shabby anu woin" clothing,
peisonal effects anu householu fuinishings because of a
geneial lack of confiuence in business. Sciip coulu help
these consumeis to finally ietuin to the maiketplace. Be
noteu, "The law of uemanu will be foitifieu with ieauy cash
to tuin the wheels of piogiess. The law of supply will cause
the factoiy whistles to blow anu machineiy to hum.oui
consuming capacity has not uecieaseu, noi has oui popula-
tion uecieaseu" (}ans, 19SS).
Even oiganizations which hau manageu to set up a soit of
alteinative economy of baitei tiansactions saw theii ac-
tions as a supplement, not a challenge, to conventional
business. ueoige Necklenbuig aigueu that Ninneapolis's
sciip issue woulu ultimately benefit aiea meichants, by
"stiiiing up the stagnant pool into which business has
slumpeu" (Tselos, 1977, p. S14). A pamphlet piouuceu by
the 0iganizeu 0nemployeu self-consciously iejecteu any
suggestion that the coopeiative was somehow a challenge
to the capitalist system, maintaining, "We aie not a piotest
movement. We aie foi laboi. We aie foi the mei-
chants.We uo not inteifeie with iegulai business because
we cieate new business which woulu not have been in exis-
tence hau we not oiganizeu" (Executive Committee, 19SS).
Such piogiams weie conceiveu as a way to tempoiaiily
cieate a sepaiate economy foi the unemployeu. 0iganizeis
assumeu that as soon as membeis of the coopeiative ie-
gaineu full employment, they woulu once moie use theii
wages to shop in the conventional ietail outlets of the
community. Sciip simply facilitateu exchange amongst the
unemployeu anu was thus a supplement, not a thieat, to
the "iegulai" economy.
The many business leaueis anu politicians who suppoiteu
sciip weie split between a willingness to expeiiment foi
the sake of iecoveiy anu an essentially conseivative faith in
the capitalist system. Foi those inteiesteu in piomoting
alteinative cuiiencies in the twenty-fiist centuiy, theie aie
some lessons that can be leaineu fiom the expeiiences of
Ameiicans uuiing the uieat Bepiession. uiven the uivei-
sity of those involveu in sciip plans, it is stiiking the extent
to which common themes of self-help, coopeiation, anu
local community action iecui again anu again in the aiti-
cles, speeches, anu piomotional mateiials suppoiting al-
teinative cuiiency. It is possible that some of the activists
involveu in these campaigns hau laigei goals of tiansfoim-
ing the economy: figuies like Chailes Zylstia anu Iiving
Fishei ceitainly floateu othei iueas of monetaiy iefoim
that extenueu beyonu the ciisis of the Bepiession. 0theis,
like the meichants involveu in Evanston's EIRNA scheme
oi the membeis of the Cleai Lake Coin Exchange saw theii
actions as an extiaoiuinaiy iesponse to extiaoiuinaiy con-
uitions. If sciip woikeu as they hopeu, eventually it woulu
no longei be neeueu, anu the economy woulu go back to
functioning as it uiu uuiing the piospeiity of the 192us.
Bespite the hopes anu ambitions of all of these gioups,
sciip uiu not piove successful in enuing the Bepiession. As
}onathan Wainei has noteu, at best these expeiiments
tempoiaiily helpeu to mitigate the woist effects of unem-
ployment in small communities (Wainei, 2u1u). Typically,
aftei a fluiiy of inteiest anu newspapei iepoiting about the
stait of a sciip plan, aftei a peiiou of only a few weeks oi
months the issue woulu collapse anu local goveinments
sought out othei means to solve theii financial ciisis.
This papei suggests that it is woith paying attention to the
ihetoiical stiategies useu by sciip oiganizeis. In the
Ameiican context, theie has tiauitionally been little ioom
in mainstieam political uiscouise foi expiessions of iauical
collective action. Buiing the 19Sus, sciip oiganizeis weie
able to encouiage inuiviuuals to paiticipate in alteinative
cuiiency expeiiments by highlighting the ielationships of
local consumeis to the businesses in theii communities, by
emphasizing the ways in which sciip was supeiioi to chai-
ity in pieseiving values like inuiviuualism anu self-iespect,
anu by shying away fiom any suggestion that alteinative
cuiiency was ievolutionaiy oi woulu peimanently change
the stiuctuie of Ameiican capitalism. This is not to ueny
the tiansfoimative potential of sciip as a tool of iefoim,
but to ieminu oiganizeis of futuie sciip plan that in oiuei
foi any plan to iesonate beyonu the iealm of local activists,
to be tiuly embiaceu by a wiuei public, attention must be
paiu to laigei cultuial patteins anu beliefs. By appealing to
tiauitional Ameiican notions of self-help anu inuiviuualism,
sciip oiganizeis might be able to bioauen theii suppoit
anu ensuie the continueu success of complementaiy cui-
iency issues.
Atlanta Constitution (19Su) "Rich's Inc. Will Auvance Pay foi At-
lanta School Teacheis". Becembei 14, p. 1.
Atlanta }ouinal (19Su) "Teacheis' Salaiies Paiu at Rich's". Becem-
bei 21, p. S.
Buffalo Evening News (19Su) "Buy 0ut Bepiession". Novembei 2u,
p. 1.
Chase, S. (19SS) "Suu,uuu Tuin to the 0se of 'Woouen Noney'".
New Yoik Times, }anuaiy 1S, p. E8.
Chiistian Science Nonitoi (19S1) "Negotiating Theii Sciip Salaiy
New Stuuy foi Chicago Teacheis". Septembei 11, p. 8.
Chiistian Science Nonitoi (19S2) "City in Illinois Auopts Sciip to
Raise Funu". Becembei 29, p. 1.
Cleai Lake Niiioi (19S1a) "Biviue Youi Bollais with Youi Neigh-
bois". }uly 2S, p. S.
Cleai Lake Niiioi (19S1b) "Stop!!! Bon't Be a Beseitei!" August 6,
Cleai Lake Niiioi (19S2) "Euitoiial". Naich S1, p. S.
Cohissen, B. (1991) "Woiking foi Iiving Fishei". Cato }ouinal 1u
no. S (Wintei): pp. 82S-8SS.
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
Congiessional Recoiu (19SS), Bouse of Repiesentatives, Febiuaiy
Elvins, S. (2uu4) Sales anu Celebiations: Retailing anu Regional
Iuentity in Westein New Yoik State, 192u-194u. (Athens, 0hio:
0hio 0niveisity Piess).
Elvins, S. (2uuS) "Sciip Noney anu Slump Cuies: Iowa's Expeii-
ments with Alteinative Cuiiency uuiing the uieat Bepiession".
The Annals of Iowa, vol. 64 no. S (Summei), pp. 221-24S.
Elvins, S. (2u1u) "Sciip, Stoies, anu Cash-Stiappeu Cities: Ameii-
can Retaileis anu Alteinative Cuiiency uuiing the uieat Bepies-
sion". }ouinal of Bistoiical Reseaich in Naiketing, vol. 2 no. 1 pp.
Executive Committee of the 0iganizeu 0nemployeu of Ninneapolis
(19SS) "Calling in Sciip". Pamphlet in ueoige Tselos Collection,
Ninnesota Bistoiical Society.
Fishei, I. (n.u.) "Nemoianuum". Iiving Fishei Papeis, New Yoik
Public Libiaiy, vol. 28.
Fishei, I. (19SS) Nasteiing the Ciisis: With Auuitional Chapteis on
Stamp Sciip. (New Yoik: Auelphi).
uatch, L. (2uu4) "'This is Not 0niteu States Cuiiency:' 0klahoma's
Emeigency Sciip issues uuiing the Banking Ciisis of 19SS". The
Chionicles of 0klahoma, vol. 82 no. 2 (Summei), pp. 168-199
uatch, L. (2uu8) "Local Noney in the 0niteu States Buiing the
uieat Bepiession". Essays in Economic & Business Bistoiy, vol.
XXIv, pp. 47-61.
uault, E.B. (19SS) "A Sounu Noney Plan foi Community Baitei".
Naich 1S, Buiton Bistoiical Collection, Betioit Public Libiaiy,
Nayois' Papeis, Box 7.
uiinsteau, L.B. anu Wisslei, W. (19SS) "Baitei Sciip anu Piouuc-
tion 0nits as Self-Belp Bevices in Times of Bepiession". Buieau of
Business Reseaich, College of Commeice anu Auministiation, 0hio
State 0niveisity, Novembei.
Bams, Richaiu B. (1991) "Paiu in Sciip". Nichigan Bistoiy vol. 7S
no. 1 (}anuaiy¡Febiuaiy): pp. S7-4S.
Baipei, }. W. C. (1948) "Sciip anu 0thei Foims of Local Noney".
Ph.B. uisseitation, (0niveisity of Chicago).
Bawaiuen Inuepenuent (19S2), August 4 p. 2.
}ans, P.N. (19SS) Pioposal foi national sciip plan, Iiving Fishei
Papeis, New Yoik Public Libiaiy.
Katz, N. (198S) In the Shauow of the Pooihouse: A Social Bistoiy
of Welfaie in Ameiica. (New Yoik: Basic Books).
Key West Citizen (19S2) "Look! You Keep a Stiing 0n Eveiy Bollai
You Spenu At Bome". Apiil 19, p. 6.
Kuitz, R. (19SS) "Resume of Stuuy of the 0iganizeu 0nemployeu,
Inc., of Ninneapolis, Ninn.". Russell Sage Founuation, 0niteu Way
of Ninneapolis Recoius, Foluei 1SS: 4, Social Welfaie Bistoiy
Aichives, 0niveisity of Ninnesota.
Necklenbuig, u. (1964) Nevei a Bull Noment: Reflections on Sixty
Yeais in the Piotestant Ninistiy. (New Yoik: Exposition Piess).
Noigan, L. (n.u.) "The Foui R's in ueoigia. . . Reauin', Wiitin',
'Rithmetic anu Rich's". 0npublisheu Nanusciipt, Rich's Bepait-
ment Stoie Collection, NSS 7u8 Box 2, Foluei S, Kenan Reseaich
Centei, Atlanta Bistoiy Centei, Atlanta, uA.
Nultnomah County¡City of Poitlanu, 0R (n.u.). Pamphlet, Iiving
Fishei Papeis, New Yoik Public Libiaiy, vol. 28.
New Yoik Beialu Tiibune (19SS) "Stampeu Noney Calleu Success
in Iowa Town". Section 2, p. 1.
New Yoik Times (19S2a) "Bumble Bomes anu Biive on Boaiuing".
Febiuaiy 1S, p. 26.
New Yoik Times (19S2b) "Biive 0pens in City to Check Boaiuing".
Naich 1, p. 1.
New Yoik Times (19S2c) "Sciip Bollais Ciiculateu in Evanston,
Ill.". Becembei 29, p. 2u.
New Yoik Times (19SSa) "Back Baitei in Bailem". }anuaiy 1u, p.
New Yoik Times (19SSb) "Neichants Sponsoi Plan to Keep Noney
Ciiculating at Bome". Naich 4, p. 27.
0iganizeu 0nemployeu Inc. of Ninneapolis (n.u.). Typesciipt leaf-
let, ueoige Tselos papeis, Ninnesota Bistoiical Society.
Robeius, W. (199u) "Lenueis of the Next to Last Resoit: Sciip
Noney in ueoigia, 19S2-19SS". Economic Review - Feueial Re-
seive Boaiu of Atlanta vol. 7S no. S (Septembei-0ctobei), pp. 16-
Staikweathei, K. B. (19SS) "Lettei to Iiving Fishei". Febiuaiy 1S,
Iiving Fishei Papeis, New Yoik Public Libiaiy.
Tselos, u. (1977) "Self Belp anu Saueikiaut: The 0iganizeu 0nem-
ployeu, Inc., of Ninneapolis". Ninnesota Bistoiy, vol. 4S (Wintei),
pp. Su6-2u.
0.S. Bepaitment of Laboi (19SS) "Coopeiative Self-Belp Activities
Among the 0nemployeu". Buieau of Laboi Statistics.
Wainei, }. (2u1u) "Stamp Sciip in the uieat Bepiession: Lessons
foi Community Cuiiency Touay." Inteinational }ouinal of Com-
munity Cuiiency Reseaich. vol. 14 pp. 29-4S.
Wainei, }. (2uu8) "The Anaheim Sciip Plan". Southein Califoinia
Quaiteily vol. 9u no. S, pp. Su7-S2S.
Weishaai, W. anu Paiiish, W. W. (19SS), Nen Without Noney: The
Challenge of Baitei anu Sciip. (New Yoik: u.P. Putnam's Sons).
Zylstia, C. (19S2a) "Fiist Release". Piess ielease, not uateu but
appeais to be 19S2, Iiving Fishei Papeis, New Yoik Public Libiaiy,
vol. 28.
Zylstia, C. (19S2b) "Seconu Release". Piess ielease, not uateu but
appeais to be 19S2, Iiving Fishei Papeis, New Yoik Public Libiaiy,
vol. 28.
Zylstia, C. (19S2c) Lettei to Iiving Fishei. 0ctobei 28, Iiving Fishei
Papeis, New Yoik Public Libiaiy.
Zylstia, C. (19S2u) Lettei to }ohn Nuiphy, Nayoi, New Baven, CT,
Novembei 18, Iiving Fishei Papeis, New Yoik Public Libiaiy, vol.
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
International Journal of
Community Currency Research
Volume 16 (2012) Section D 22-35
Loren Gatch*
Department Of Political Science, University Of Central Oklahoma
Buiing the woilu economic ciisis of the 19Sus, the 0niteu States expeiienceu wiuespieau use of
local cuiiency oi "sciip". The most significant foim of sciip, both in teims of the longevity anu
size of the issues, was tax anticipation sciip. This aiticle suiveys the vaiieties of tax anticipation
sciip issue uuiing this peiiou, anu suggests some applications to non-ciisis ciicumstances. Aftei
outlining the geneial expeiience with uepiession-eia sciip, this aiticle uesciibes the natuie anu
oiigins of tax anticipation sciip as a paiticulai foim of local cuiiency. It also examines specific
local aiiangements that affecteu the successful ciiculation of such sciip. The Ameiican juiis-
piuuence conceining non-national cuiiency is assesseu insofai as it puts into legal context sciip
issueu uuiing the 19Sus. The aiticle concluues by ielating the significance of the Ameiican ex-
peiience of the 19Sus to neo-chaitalist inteipietations of the oiigins anu functions of money.
* Email: lgatchÇuco.euu
$' )*+, +-*. /0+*)1,2 uatch, L. (2u12) 'Tax Anticipation Sciip as a Foim of Local Cuiiency in the 0SA uuiing
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International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
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ing facility was necessaiy to manage municipal expenui-
tuies. In noimal times, this coulu be uone eithei by shoit-
teim financing fiom local banks, oi in laigei cities by the
sale of tax anticipation notes to investois. In effect, tax an-
ticipation financing pioviueu a souice of shoit-teim cieuit
that solveu a common pioblem of municipal finance.
Yet the political anu legal implications of this financing
weie not unpioblematic. Nunicipal goveinments uisbuiseu
funus using "waiiants", much as inuiviuuals might wiite
checks. If an inuiviuual hau no funus in hei account, then
hei check woulu not be paiu by the bank. uoveinments, in
contiast, opeiateu unuei gieatei legal foibeaiance. Tax
levies pioviueu a baseline estimate of what goveinments
hau to spenu; collecteu at specifieu inteivals, these ieve-
nues funueu the iecuiiing obligations that goveinments
hau enueavoieu to meet thiough theii appiopiiations.
Even if tax collections fell shoit of the estimates, govein-
ments coulu issue waiiants in anticipation of the taxes that
woulu ieueem them. Ciucially, the cieation of such floating
uebts was not subject to the legal limitations that goveineu
the issue of state anu local uebt. By the 19Sus, a majoiity of
Ameiican states imposeu iestiictions on the amount anu
type of uebt that goveinments coulu incui. Noieovei,
neaily all state goveinments weie foibiuuen fiom pleuging
the states' cieuit to inuiiectly guaiantee the uebts of local
goveinments oi piivate coipoiate entities (Ratchfoiu 1966
|1941j: 429-44S). Yet state couits hau inteipieteu the is-
sue of waiiants against tax levies as not giving iise to a
municipal uebt, even in the event that the actual ievenues
weie insufficient to pay them. As a iesult, state anu local
goveinments coulu evaue constitutional oi statutoiy limi-
tations on theii boiiowings by cieating floating uebts in
the foim of unpaiu waiiants. These uebts uiu not count
against existing limitations, even when they weie latei
coveieu by bank loans oi funueu by the latei sale of tax
anticipation notes (Baivaiu Law Review 19S2; Ratchfoiu
1966 |1941j: 468-47S).
While a common financial piactice, the issue of waiiants oi
notes against anticipateu taxes was fiowneu upon by mu-
nicipal finance expeits, who stiesseu theii potential foi
abuse. Inueeu, the economic ciisis of the 19Sus upenueu
these financing ielationships, anu exposeu the uangei of
using a floating uebt to finance cuiient expenuituies. Al-
though the maiket foi coipoiate uebt was the fiist to piice
in the economic uowntuin, by the enu of 19S1 municipal
uebt became incieasingly uifficult to place with investois
as it became appaient that the magnituue of the uowntuin
was affecting tax ievenues. Chaiacteiistic of these uifficul-
ties was the staik uiveigence between the piicing of local,
state, anu feueial uebt, as iisk-aveise investois fleu to the
gieatei secuiity of uebt backeu by a national tax base
(State anu Nunicipal Compenuium 19SS). Bepenuent as
they weie upon piopeity (ieal estate) taxes, state anu local
goveinments founu theii financing uisiupteu by the eco-
nomic collapse. Beclining piopeity valuations that accom-
panieu the uepiession eioueu the tax bases of state anu
local goveinments. 0nemployeu citizens anu bankiupt
businesses incieasingly lost theii piopeities to tax foieclo-
suies, which only ieuuceu the tax iolls anu buiueneu mu-
nicipalities with unsalable piopeities. Tax aiieais soaieu,
sometimes in iesponse to oiganizeu citizen iesistance ("tax
stiikes") to municipal levies (Beito 1989).
The fiscal expeiiences of two majoi Ameiican cities, Chi-
cago anu Betioit, weie emblematic both of the fiscal pie-
uicaments that gave iise to sciip, anu of how sciip coulu be
useu well oi bauly. In Chicago, legal challenges to piopeity
valuations in the late 192us cieateu a fiscal ciisis even be-
foie the uepiession began. When the uepiession hit, col-
lapsing piopeity values ievealeu incompetent anu coiiupt
piopeity assessment piactices which only aggiavateu the
tax shoitfalls of the 19Sus. As a iesult, Chicago was the fiist
majoi city foiceu to pay its employees in tax anticipation
waiiants. Teacheis weie paiticulaily haiu-hit by the ciisis,
going foi neaily two yeais until Fall 19SS with only occa-
sional payments of theii iegulai salaiies (Buibank 1971).
The city of Betioit's fiscal pioblems also pieuateu the
woist of the economic uepiession. The iapiu giowth of the
automobile inuustiy uuiing the 192us (anu a neai tiipling
of the city's population between 191S anu 19Su) feu a
boom in municipal boiiowing to finance the city's expanu-
ing infiastiuctuie. As the automobile maiket shiiveleu
aftei 1929, the city founu it incieasingly uifficult to both
iefunu this uebt anu boiiow in the shoit teim to make up
foi tax shoitfalls. Between 1929 anu 19SS, moitgage foie-
closuies quintupleu. By 19S2-19SS, tax ieceipts amounteu
to only 6S% of the official levy; at the same time, the pei-
centage of the city's buuget uevoteu to uebt seivice chaiges
jumpeu to ovei 4u%. The scissoi blaues of giowing uebt
anu ueclining ievenues also incieasingly cut Betioit off
fiom access to any shoit-teim financing. Beset with a heavy
uebt, a ciumbling economy, anu mounting tax uelinquen-
cies, the city goveinment woikeu with gioups of piominent
citizens to maintain confiuence in its cieuitwoithiness. In
paiticulai, the Committee on City Finances (the "Stone
Committee") sought to maintain woikable ielations be-
tween the city anu the banks which pioviueu it shoit-teim
financing, while the Committee of Inuustiialists (heaueu by
Alfieu Sloan, }i., Piesiuent of ueneial Notois) woikeu to
minimize the backlog of uelinquent taxes (Wengeit 19S9;
Baipei 1948: S1-S8).
Nationwiue, the fiscal pioblems of municipalities weie
aggiavateu by the uepiession's effects upon the banking
system. The steauy eiosion of banks' balance sheets leu, by
late 19S2 anu eaily 19SS to the ueclaiation of state-level
bank 'holiuays' to pievent uepositois' iuns that woulu push
illiquiu institutions into insolvency. Culminating in the na-
tional 'holiuay' ueclaieu by Piesiuent Roosevelt in Naich
19SS, these closuies not only uepiiveu municipalities of a
souice of financing, but cut them off fiom whatevei funus
they themselves hau on ueposit.
While the expeiiences of Chicago anu Betioit weie spec-
taculai examples of the uifficulties municipalities faceu, the
fiscal piessuies weie wiuespieau. By 19SS some two thou-
sanu municipal goveinments hau uefaulteu on payments of
inteiest oi piincipal on theii uebts, anu only the laigest
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
cities ietaineu at least some access to shoit-teim financing
thiough the nation's capital maikets
. To ielieve these
piessuies, a numbei of state legislatuies authoiizeu the use
of tax anticipation financing in the foim of sciip
. Although
no state-level schemes foi tax anticipation sciip weie con-
siueieu (foi the legal ieasons auuiesseu below), state gov-
einments essentially countenanceu the tiansfoimation of
the existing piactice of shoit-teim boiiowing into a foim of
local cuiiency
. In auuition to being labeleu "sciip", these
issues weie uesignateu tax anticipation notes, waiiants,
city bills, anu even "baby bonus". By uenominating these
instiuments in stanuaiu amounts anu issuing them to
"beaiei", goveinments coulu pay these out to employees
anu venuois in place of waiiants maue out in ouu amounts
anu payable to paiticulai paities. While these instiuments
coulu not be ieueemeu immeuiately foi stanuaiu funus,
they often boie an inteiest iate (which enhanceu the will-
ingness of iecipients to holu them) anu coulu be useu to
pay cuiient oi uelinquent taxes.
The funuing of public schools via piopeity taxes was an
impoitant function of local goveinments, anu some sciip
issues weie explicitly labeleu "school sciip", issueu to pay
teacheis' salaiies anu acceptable foi school taxes (Be
Young 19S6: S67-9; Biown 1941, vol I: 4S). Foi example, in
19S1 Nichigan authoiizeu local goveinments to issue
inteiest-beaiing tax anticipation notes, setting up a "Loan
Boaiu" at the state capital that woulu appiove the applica-
tions of local school boaius to issue sciip (Cuito 1949). In
New }eisey, even as the County of Atlantic issueu "school
sciip" on behalf of school uistiicts in Atlantic City anu
ventnoi, these communities in tuin put out theii own sepa-
iate municipal sciips that ciiculateu concuiiently (Nitchell
anu Shafei 1984: 149-1S2).
Whethei specifieu as school sciip oi paiu out foi othei ob-
ligations, local goveinments cieateu foims of local cuiiency
out of the pievailing piactices of shoit-teim municipal fi-
nance. Authoiizeu by state legislatuies, appioximately one
hunuieu municipal goveinments of uiffeient soits÷Coun-
ties, cities, townships, boioughs, school uistiicts÷levei-
ageu theii poweis to tax in oiuei to sustain local sciip cii-
culations. These ciiculations hau the simultaneous effects
of incieasing the puichasing powei of goveinments (thus
avoiuing layoffs anu fuithei cuitailment of seivices) anu
impioving the iate of taxpayei compliance by giving citi-
zens an instiument ieueemable in theii own civic obliga-
While theie was no single foimula foi issuing municipal
sciip, the uetails of Betioit's expeiience may be taken as
illustiative of the bioauei phenomenon. 0n the veige of an
agieement with a synuicate of banks to unueiwiite a funu-
ing of the city's piojecteu ueficit, Betioit was foiceu into
uefault when the state banking holiuay of Febiuaiy 24,
19SS uepiiveu the city of the banks' iesouices. At this
point, Betioit iesoiteu to sciip as a substitute foi shoit-
teim bank financing. 0n Apiil S, the legislatuie huiiieuly
passeu the "Wayne County Sciip Bill" which amenueu the
existing authoiity of municipalities to use tax anticipation
notes so that such uebt coulu be issueu as ciiculating sciip.
While available to all counties anu municipalities in the
state, the bill was intenueu piimaiily to meet the fiscal
emeigency in Betioit (Commeicial anu Financial Chionicle
19SS). Between Apiil 19SS anu Apiil 19S4, thiee sepaiate
issues of sciip totaling $41.9 million funueu the city's uefi-
cit. The fiist $18 million issue came out in Apiil anu Nay of
19SS. Backeu by the piospective ieceipts of the 19SS-19S4
tax levy, whose cash payments the City Council hau explic-
itly appiopiiateu to builu a ieuemption funu foi the sciip,
Betioit's new cuiiency boie a matuiity uate six months
aftei the issue. It paiu S% inteiest, though was maue call-
able ten uays aftei an official notice of intent was publisheu
by the city. By city oiuinance uiscounting of the sciip was
maue an offense, though this featuie seemeu to have no
piactical significance. Paiu out to city employees anu ven-
uois, sciip was acceptable at pai plus acciueu inteiest foi
cuiient anu uelinquent taxes, watei utility chaiges, anu
othei city fees (Ameiican Nunicipal Association 19S4;
Baipei 1948: 6u-61)
These featuies of Betioit's sciip weie consistent with the
guiuelines laiu out by the state legislation that authoiizeu
Nichigan cities to issue municipal sciip. Inueeu, the state
law peimitteu matuiities of up to one yeai, anu an inteiest
iate up to 6%. Sciip issues in Nichigan weie limiteu to 8S%
of the amount of cuiient taxes uue, 6u% of uelinquent
taxes, anu 2S% of futuie taxes (0niteu States Confeience of
Nayois 19SS; Ameiican Nunicipal Association 19S4). In
any event, the matuiity uate meant little, given how the
sciip functioneu. Since sciip paiu out by the city quickly
ietuineu to settle tax bills, the fiist issue was ieueemeu as
soon as August 19SS. The matuiity uate amounteu to a
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
2 Excluuing floating uebt like tax anticipation financing, the annual total of new municipal uebt issueu in the 0niteu States hau uioppeu fiom
a high of $1.S billion in 1927 to baiely $Suu million in 19SS, the lowest level since 1918. By the beginning of 19S4, appioximately $1 billion
of an outstanuing $18 billion in municipal uebt was in uefault. Symptomatic of both the pooi state of the economy anu of municipal finances
weie the facts that fully 4u% of the 19SS issues weie uevoteu to "pooi ielief" iathei than tiauitional infiastiuctuie puiposes, anu that net of
uebt ietiiements, total municipal uebt actually shiank in 19SS. See State anu Nunicipal Compenuium (19S4).
S These states weie: Inuiana, Illinois, Nichigan, New Bampshiie, New }eisey, New Yoik, Noith Bakota, 0hio, 0iegon, Pennsylvania, Rhoue
Islanu, South Caiolina, Tennessee, anu Texas. In auuition, even if they uiu not authoiize the actual issue of sciip, an equal numbei of states
passeu statutes allowing bonus, notes oi waiiants to be ieceiveu foi taxes. These states weie: Alabama, Aikansas, Coloiauo, Floiiua, Iuaho,
Illinois, Iowa, Kansas, 0iegon, South Bakota, 0tah, Washington, anu Wisconsin. (Yale Law }ouinal 19S4, 9Su-9SS; Baipei 1948, 48).
4 In Baipei's (1948) opinion, "no basically new legal foims weie uevelopeu by municipal goveinments foi use as sciip. Existing types of
cieuit instiuments neeueu only to be maue payable to beaiei, split into small even uenominations, anu paiu uiiectly to cieuitois anu em-
ployees insteau of being solu to banks oi investois foi cash" (119).
foimality that simply assuieu its useis that sciip was not
some kinu of unfunueu uebt of inuefinite uuiation. Noie-
ovei, the legal piovision that a cash funu woulu be built up
to ieueem the sciip was also otiose, since the sciip was in
fact anu piactice ieueemeu thiough the sheei piocess of
paying off taxes. No cash ieuemption was necessaiy since
the sciip was extinguisheu thiough the veiy natuie of its
function. A seconu issue of $1u million was emitteu in Sep-
tembei 19SS, but impioveu cash collections alloweu the
city to call the sciip foi ieuemption in }anuaiy 19S4. Cii-
cumstances nonetheless iequiieu a thiiu anu final emission
of $1S.9 million in Apiil 19S4, though with the ietuin of
moie noimal financial conuitions, Betioit was soon able to
iesume shoit-teim boiiowings fiom banks. Inueeu, $1
million of the final sciip issue was simply solu as an in-
vestment to a bank at pai plus acciueu inteiest (Wengeit
19S9: 18-2u).
0peiating unuei guiuelines establisheu by the state legisla-
tuie in 19S1 anu 19SS, Betioit's expeiience was iepeateu
by ovei foity othei taxing authoiities in Nichigan. Nost of
these ciiculations, like Betioit's, weie ietiieu by 19S4,
though some of the moie financially-piecaiious school
uistiicts (Feinuale, Lincoln Paik, anu seveial townships in
0aklanu County) continueu to use sciip as late as 19S6.
Betaileu newspapei accounts exist foi the city of 0wosso
(Shiawassee County) wheie economic conuitions as well as
public funus lockeu away in closeu banks leu to thiee uif-
feient types of sciip, one issueu biiefly by local meichants,
one by the city goveinment, anu one by the school uistiict.
Bata aie also available foi Benton Baiboi (Beiiien County),
wheie similai ciicumstances foiceu both the city anu the
school boaiu to iesoit to sciip (Nitchell anu Shafei 1984:
11u-1SS; The 0wosso Aigus-Piess 19SS: Naich 4, 1u, 1S-
17; The |Benton Baiboij News-Pallauium 19SS: Nay 16;
}une 6, 2u).
Similai laws passeu by the 0hio anu New }eisey legisla-
tuies set in motion substantial sciip issues in those states
as well. In 0hio, the Naishall Act of Apiil 1S, 19SS authoi-
izeu counties, upon application to the State Tax Commis-
sion, to issue sciip if tax ieceipts fell below 9u% of the an-
ticipateu amount. Non-inteiest-beaiing sciip woulu then be
appoitioneu by county auuitois to the municipalities that
applieu foi it in piopoition to the amounts of theii tax ue-
linquencies. Sciip coulu iemain in ciiculation foi a maxi-
mum of five yeais anu its ieuemption occuiieu thiough tax
payments only (The Toleuo City }ouinal 19SS). New }ei-
sey's law, passeu a month eailiei, also extenueu the exist-
ing authoiity of counties anu municipalities to issue tax
anticipation notes to incluue small-uenomination beaiei
sciip. As in Nichigan, inteiest payable on New }eisey's sciip
was cappeu at six peicent (Commeicial anu Financial
Chionicle 19SS; Ameiican Nunicipal Association 19S4).
By eaily 19SS, New }eisey's finances hau enteieu a state of
ciisis similai to Betioit's. uiowing tax uelinquencies meant
that only 6S% of the 19S2 levy statewiue was collecteu;
cumulative uelinquencies amounteu to an entiie yeai's tax
ievenues. Payments on municipal uebts, incluuing tax an-
ticipation boiiowings, ate up 4S% of available ievenues.
The heavy ieliance upon piopeity taxes in a piolongeu
economic uowntuin uiieu up the ievenue stieam. Not only
uiu piopeity owneis lack the income to pay theii taxes, but
the maiket foi piopeity seizeu foi nonpayment of taxes
also uisappeaieu. By miu-19SS, 12u New }eisey municipali-
ties, leu by Atlantic City, weie in uefault on some poition of
theii uebts, anu neaily twice that numbei of school uis-
tiicts coulu not pay theii teacheis. In these ciicumstances,
the use of sciip in New }eisey became wiuespieau. To
maintain theii opeiations, New }eisey municipalities ue-
velopeu an extensive netwoik of sciip ciiculations which,
by the enu of 19S4, encompasseu 8 counties, 11 cities, S
towns, 11 boioughs, anu 1u townships, all of which to-
gethei issueu neaily $27 million in sciip (New }eisey Legis-
latuie 19SS: 9, 4u; New Yoik Times 19S4; Biown 1941, vol.
I: 169-171).
Betails fiom Nonmouth County illustiate how New }eisey's
sciip system woikeu. Between Septembei 19SS anu Sep-
tembei 19SS, the County's Boaiu of Chosen Fieeholueis
authoiizeu 14 issues each of $2uu,uuu in sciip, beaiing S%
inteiest, payable at matuiity in 19S7. The County Tieas-
uiei's office installeu a special tellei winuow to hanule all
sciip tiansactions. Sciip tuinovei was iapiu. By }anuaiy
19S4, of $6uu,uuu issueu, some $S4u,uuu hau been paiu in
taxes, leaving a sciip liability of $26u,uuu as the yeai began.
Six moie sciip issues of $2uu,uuu each weie paiu out
thiough Novembei 19S4. 0n Becembei 1, 19S4, about
$9SS,uuu of this sciip hau been ieueemeu thiough tax
payments. By }une 19SS, when the Fieeholueis announceu
theii 1Sth issue, the County hau issueu $2.4 million, of
which only $S8u,uuu iemaineu outstanuing. (Wain 19S4;
Reu Bank Registei 19SS: Septembei 27; 19SS: }une 6, Sep-
tembei 19).
In Nonmouth County, "officials weie not long in uiscovei-
ing that, automatically, eveiy one to whom sciip was is-
sueu, whethei in lieu of salaiies oi in payment of bills, be-
came a tax collectoi of Nonmouth". 0thei auvantages be-
came appaient. Sciip paiu in befoie 19S7 acciueu no intei-
est, so the County saveu on chaiges that woulu have been
oweu on bank financing. Noieovei, insteau of accumulating
uelinquencies, Nonmouth taxpayeis not only paiu off ai-
ieais but met theii 19S4 obligations in full. 0f fifty uiffeient
tax uistiicts within the County, all accepteu the County's
sciip, as uiu utilities anu outsiue venuois. No uiscounting of
sciip was appaient, at least foi the eaily issues. Within the
County, local goveinments ieplicateu this success. 0f
$1Su,uuu issueu by the city of Long Bianch, only $8,Suu
iemaineu unieueemeu befoie a Becembei 19S4 matuiity
uate. 0fficials in Asbuiy Paik claimeu its sciip saveu the
city $22,uuu in inteiest chaiges which woulu otheiwise
have been uue to banks. In the tiny boiough of 0nion
Beach, sciip was ietuineu to the tieasuiei foi taxes as iap-
iuly as one uay aftei its issue (Wain 19S4).
Aftei some initial pioblems with the uiscounting of its
sciip, the summei iesoit of 0cean City (Cape Nay County)
quickly ciiculateu anu ietiieu most of a $1Su,uuu issue
between Naich anu }une 19SS. Local meichants oiganizeu
to finu ways of getting sciip to those neeuing to make tax
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
payments. Builuing anu Loan companies took the sciip foi
moitgage payments, as uiu utilities foi theii fees. Chain
stoies weie less obliging. Nany meichants limiteu theii
acceptance of sciip to puichases by city employees only, oi
confineu its use to paying customeis' oveiuue bills. 0thei
meichants accepteu sciip only up to the amount of theii
own tax liabilities. Change foi the sciip was often maue in
stoie cieuit, not cash (0cean City Sentinel-Leugei 19SS:
Naich 24).
Initially skeptical about sciip, the local newspapei gusheu
ovei its benefits. "0cean City sciip is a outstanuing suc-
cess÷a miiacle woikei!...Resoit business houses that at
fiist vieweu sciip as an insuffeiable nuisance have founu it
a wonueiful business stimulant, anu now eageily await
fiesh uisbuisements of it by the city. They have founu it
easy to uispose of to taxpayeis." Cape Nay County auueu to
local cuiiency supplies with its own sciip ciiculation in
Nay 19SS. 0nuei state law, municipalities weie iequiieu to
accept county sciip (in auuition to theii own sciip) up to
the amount they oweu theii counties in taxes. In auuition,
the sciip was goou foi fines anu fees collecteu by the coun-
ties (0cean City Sentinel-Leugei 19SS: Nay 12).
County sciip was thus useful locally, within limits. In late
19SS, the city of Reu Bank, which itself uiu not issue sciip,
accepteu Nonmouth County sciip in tax payments up to the
$S4,uuu it was obligeu to iemit to Nonmouth County. Foi
similai ieasons, the city of Natawan limiteu its acceptance
of Nonmouth County sciip to 2u% of taxes oweu. While
acknowleuging the benefits of sciip, the city of Reu Bank's
newspapei consiueieu its use symptomatic of county gov-
einment mismanagement anu fiscal extiavagance, juuging
sciip to be "an ill winu, but it may blow some goou". The
papei also woiiieu that the extenueu use of sciip only en-
couiageu piopeity owneis to piefei it to stanuaiu funus
when making tax payments, thus aggiavating the veiy
buugetaiy shoitfalls that sciip was supposeu to iemeuy
(Reu Bank Registei 19SS: Septembei 2u, quote; 0ctobei 4;
19SS: Apiil 2S).
With the passage of authoiizing legislation in Nichigan,
0hio, anu New }eisey, it became appaient that, unlike othei
foims of uepiession-eia local cuiiencies, tax anticipation
sciip was not a fleeting phenomenon. 0nlike cleaiinghouse
ceitificates, tax-baseu sciip was not ietiieu with the ie-
opening of the banks in Naich 19SS; unlike the sciip of
baitei anu self-help gioups, it uiu not ciiculate meiely on
the maigins of the foimal economy; anu, unlike stamp
sciip, its methou of valiuation uiu not confine its ciiculation
to smallei communities. As a slight mouification of long-
stanuing financial piactices, a ciiculating meuium backeu
by the taxing powei of local goveinments was both familiai
anu unsettling. uoou financial piactice accepteu that gov-
einments coulu boiiow in oiuei to match the continuous
flow of municipal payments to the clumpiei ieceipt of tax
ievenues. Yet manageu bauly, such tax anticipation financ-
ing enableu ieckless spenuing anu accumulateu ueficits
that violateu the spiiit, if not the lettei, of state laws. This
ambivalence maue it uifficult to accept the piactical success
of tax-backeu municipal sciip. Even at the nauii of the ue-
piession in miu-19SS, when such sciip was a wiuespieau
anu successful ieality, expeit oithouoxy still conuemneu
municipal boiiowing against tax ieceipts; as one authoiity
put it, "as soon as we iecognize this as an unsounu piactice
the bettei" (Wall Stieet }ouinal 19SS). Some issueis even
shieu away fiom the use of the woiu "sciip", piefeiiing
euphemisms like "baby bonus" to accentuate the uistinc-
tion between cuiiency anu uebt (Pieison 19S4; Biown
1941: S9). Yet the local goveinment officials who actually
implementeu these piogiams appieciateu them not only
foi the suppoit they gave to municipal finances, but foi the
economic stimulus they pioviueu to local communities.
Reflecting on New }eisey's expeiience, Aithui N. Pieison, a
foimei state senatoi, both acknowleugeu tax anticipation
sciip's usefulness as a cash substitute yet cautioneu that it
was "the same as a high-poweieu stimulant in the hanus of
an unskilleu physician". A sciip piogiam was most effec-
tive, he aveiieu, if implementeu befoie it became a uespei-
ate fiscal last iesoit. No moie than half of a municipality's
payioll shoulu be met with sciip, he counseleu. The matuii-
ties of sciip shoulu be no moie than six months, anu woulu
iueally be matcheu to the cycle of tax payments. In this way,
"by iestiicting the piopoition of the sciip to be useu, anu
the teim to thiee oi foui months, piactically the entiie
issue woulu finu its way back in the municipal tieasuiy in
the payment of taxes befoie its uue uate". In contiast, Piei-
son waineu, sciip that lingeieu as a long-teim, unfunueu
uebt was suie to fall to a uiscount (Pieison 19S4: 2S).
Cail B. Chatteis, a piominent national municipal finance
expeit, was moie sanguine than Pieison anu saw some iole
foi tax anticipation sciip in local finances. Skeptical of
stamp sciip, Chatteis nonetheless thought that tax-backeu
municipal sciip was "no uiffeient than a bank loan except
that meichants, employees, anu othei citizens lenu theii
cieuit to the city uiiectly insteau of thiough theii banks".
"Cities shoulu uevise at once some means of boiiowing on
shoit teim small uenomination notes. The secuiity anu
pleuge maue foi theii payment shoulu be ample. Small
notes shoulu be tiansfeiable by ueliveiy anu laigei ue-
nominations by enuoisement. It will be necessaiy to have
new meuia of exchange foi a shoit peiiou at least, anu mu-
nicipalities having the confiuence of theii citizens shoulu
pioviue these meuia" (Chatteis 19SSa: 76). Inueeu, Chat-
teis saw in sciip a potential foi encouiaging civic engage-
ment: "The issuance of sciip anu waiiants in some foim is
just anothei way of boiiowing fiom meichants, citizens,
anu otheis in the local communities. If eveiy citizen in a
community hau a small uiiect inteiest in the financial obli-
gations of his city, much less tiouble in civic matteis might
be expecteu" (Chatteis 19SSb: 117).
Bespite these piospects foi a local, tax-baseu cuiiency,
municipal officials uuiing the 19Sus weie not unminuful
that theii sciip issues hau legal implications, anu the fol-
lowing section ieviews the juiispiuuence on non-national
cuiiencies insofai as it might have affecteu the use of mu-
nicipal sciip.
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
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International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
which was iepiesenteu by the waiiants" ( 177 0.S. 66: 84,
92; Solomon 1996).
As a iesult of this case law, the feueial goveinment's posi-
tion in the 19Sus was that municipal sciip uiu not violate
constitutional piohibitions of non-national cuiiency
. At
the same time, the feueial goveinment uiu not actively
suppoit municipal sciip, foi example by authoiizing the
Feueial Reseive to ieuiscount tax anticipation waiiants, as
city mayois auvocateu in testimony befoie Congiess (0.S.
Senate 19SS). That the cuiiency quality of municipal
waiiants¡sciip unuei the law was a mattei of uegiee
meant that officials uuiing the 19Sus hau to be caieful in
uesigning theii sciip emissions in oiuei to keep them legal.
Inueeu, not only coulu sciip be pioblematic unuei the feu-
eial constitution, but many state constitutions also con-
taineu limitations oi outiight piohibitions on the issue of
piomissoiy notes with ciiculating piopeities. Foitunately,
as the Ameiican Legislative Association pointeu out to its
membeis, the feueial constitution explicitly foibaue only
state bills of cieuit; the emissions of goveinmental units
below the state level weie not piesumptively unconstitu-
tional. In oiuei to minimize the possibility of tax anticipa-
tion sciip being constiueu as money, state laws peimitting
sciip "shoulu not contain any woiuing which might inui-
cate a legislative intention to pioviue a cuiiency". Cieating
a cuiiency that was not legally a cuiiency iequiieu some
legal cieativity. Beyonu the obvious aumonition to not
make the sciip look too much like 0.S. cuiiency, states
weie auviseu to incoipoiate a numbei of featuies that uif-
feientiateu it fiom legal money. Among othei things, states
weie auviseu not to make sciip a geneial oi even a limiteu
legal tenuei; in contiast, making sciip acceptable foi pay-
ment of state anu local taxes aiguably seiveu to facilitate
the sciip's ieuemption, anu not to piomote its ciiculation
as money. Nanuating its cancellation upon payment into
municipal tieasuiies (iathei than allowing it to be ieis-
sueu) stiesseu sciip's puipose as a means of paying mu-
nicipal uebts, iathei than as a ciiculating meuium. Secuiing
sciip with the goou faith anu cieuit of a state implieu the
sciip was an obligation of the state as a soveieign entity;
bettei, states weie auviseu, to make sciip the obligation of
a specific state agency anu secuieu by the pleuge of specific
ievenue stieams, assets oi piopeities. Finally, making sciip
inteiest-beaiing, anu specifying a uate of matuiity, unuei-
scoieu its chaiactei as an eviuence of uebt, anu not an ille-
gal issue of cuiiency (Nott 19SS).
!"#$$%&'%( #&* (+!!%((%( ,- .#/ #&.0!01#2
.0,& (!301
Some of the legal sciuples uesciibeu above aiguably ien-
ueieu municipal sciip less uesiiable to the public, while
othei featuies might have enhanceu sciip's acceptability.
Legal tenuei qualities, unavailable to municipal sciip,
cleaily woulu have wiueneu its usage. Naking sciip an obli-
gation of a state, iathei than its municipal subunits, woulu
similaily have tenueu to inciease public confiuence in the
sciip's value. A iequiiement foi local goveinments to can-
cel sciip upon ieceipt iathei than pay it out anew to em-
ployees oi venuois woulu tenu to limit its usefulness as a
ciiculating meuium. Finally, backing sciip with geneial tax
ievenues iathei than the pioceeus of a specific levy (like
school taxes) woulu, all things being equal, have given sciip
gieatei secuiity. Conveisely, making sciip acceptable foi a
wiue iange of uelinquent taxes woulu make it moie attiac-
tive to useis than if it weie valiu foi only a naiiow iange of
taxes anu fees. In shoit, those measuies iecommenueu by
municipal authoiities in oiuei to make sciip look less like
money in the eyes of the law woulu also have tenueu to
uetiact fiom its success. Against these hypothetical uiaw-
backs can be placeu two auvantageous featuies: making
sciip inteiest-beaiing, anu specifying its ieuemption by a
specific matuiity uate.
In piactice, the success of municipal sciip expeiiments was
uue less to specific featuies of a given issue than to the
oveiall volume of issues, ielative to the commitment of
stakeholueis, anu the economic ciicumstances that occa-
sioneu sciip's use. At a fiist appioximation, the easiest
measuie of success was whethei oi not sciip tiaueu at a
uiscount to stanuaiu money. The laigest example of an
unsatisfactoiy expeiience with municipal sciip was Chi-
cago's. Issueu in a context of chionic fiscal mismanagement
anu ciisis, both the iecipients of the Chicago Boaiu of Euu-
cation's sciip (teacheis anu othei employees) anu the mei-
chants who might accept it weie uisinclineu to paiticipate
in the expeiiment. 0nwillingness by Chicago banks to holu
these waiiants meant that city employees went payless if
they weie unable to sell theii waiiants at some uiscount to
pai. Lacking any fiim plan by which the sciip woulu be
latei ieueemeu, the Boaiu of Euucation paiu it out on a
voluntaiy basis to employees whose own unions objecteu
to its use. The Cook County Bankeis' Association iefuseu to
cash the sciip; majoi uowntown uepaitment stoies iefuseu
it in tiaue; anu those meichants who uiu accept sciip uis-
counteu it substantially. The fewei the numbei of outlets
foi spenuing the sciip, the moie uifficult it became to spenu
the laige uenomination notes (fiom $1u all the way to
$Suu) oi to give change foi them in legal tenuei funus. The
local utility, which was unusually geneious in accepting the
sciip foi small payments, founu itself inunuateu by teach-
eis uespeiate to get cash in change (Elvins 2u1u).
In contiast to Chicago's uismal expeiience, Betioit man-
ageu the single laigest issue of municipal sciip in the
0niteu States without similai pioblems with uiscounting
anu acceptability. Bespite a uespeiate fiscal situation com-
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
S Foi a contempoiaiy legal opinion fiom the feueial goveinment's peispective, see Beiman 0liphant (ueneial Counsel, Tieasuiy Bepait-
ment) to veinon L. Biown, }anuaiy 17, 19SS. A legal opinion iegaiuing the sciip issues of the County of Buuson (New }eisey) ueclaieu them
"valiu, binuing anu geneial obligations of the County of Buuson, payable out of unlimiteu taxes on all piopeity in the County subject to taxa-
tion". See Bawkins, Belafielu & Longfellow to William F. Sullivan, Septembei 21, 19SS. Both letteis aie iepiinteu in Biown (1941, Appenuix
A, 162-164, 168).
paiable to Chicago's that culminateu in outiight uefault by
Febiuaiy 19SS, Betioit manageu to issue anu ciiculate ovei
$4u million in sciip foi the next yeai anu a half. Iionically,
it was the closing of Betioit's banks as a iesult of the state
banking 'holiuay' that maue the use of sciip unavoiuable:
once any iefunuing of the city's vaiious uebts thiough the
banks became impossible, sciip became the only alteina-
tive. Both citizens' gioups anu the banks hau pieviously
iesisteu sciip; yet once it was theie, effoits weie unuei-
taken to make it woik.
0nlike Chicago, Betioit paiu employees 2u% in cash anu
the iest in sciip, though venuois weie paiu entiiely with
the lattei. Betioit issueu sciip both in moie conveniently
lowei uenominations (uown to $1) to facilitate ietail tians-
actions, anu in highei uenominations (up to $1uuu) to pio-
viue laige holueis of sciip such as ietaileis the oppoitunity
of exchanging many low uenomination notes foi the con-
venience of a smallei numbei of the highei-uenomination
vaiiety. These coulu be then helu eithei as inteiest-beaiing
investments (as bonus), oi useu in payment of city taxes.
While in the eaily uays of the Betioit example sciip tiaueu
as low as 7S cents on the uollai, this uiscount soon shiank
as the Committee of Inuustiialists set up a $1 million funu
to suppoit the sciip at pai. Auuitionally, the establishment
of exchange buieaus wheie ietaileis coulu exchange theii
sciip foi cash fiom laige taxpayeis, who then useu it to pay
theii taxes, tenueu also tenueu to minimize the uiscount.
Inteiestingly, these exchanges hau to take place in buieaus
outsiue of Betioit's city limits, since the City Council hau
ueemeu the uiscounting of sciip illegal! These measuies,
combineu with a successful bonu iefunuing in }une 19SS
anu a biightei outlook foi tax collections, ietuineu Betioit
sciip to pai. Inueeu, pait of the last issue authoiizeu in
Apiil 19S4 was simply solu to Betioit banks as an invest-
ment, as shoit-teim bank financing again became available
to the city (Business Week 19SS; Biown 1941, vol. I: 4u-42;
Baipei 1948: S8-62).
0thei successful examples of municipal tax anticipation
sciip, though enjoying the inheient benefit of a smallei size
than Betioit's, exhibiteu similai featuies. Some 7S miles
noithwest of Betioit, the small city of 0wosso also faceu
bleak finances. When the city goveinment misseu a payioll
in miu-Naich 19SS foi want of funus, the City Commission-
eis authoiizeu the emission of $2u,uuu in 6-month sciip
ianging in value fiom S cents to S uollais. With baiely a
thiiu of its assesseu school taxes paiu in anu $2u,uuu stuck
in the bank, the 0wosso Boaiu of Euucation faceu mass
layoffs of teacheis anu an eaily enu to the school yeai. It
voteu to issue $Su,uuu in a iange of uenominations up to
2u uollais (The 0wosso Aigus-Piess 19SS: Naich 4, 1u, 1S-
17). While neithei issue expeiienceu uiscounting, the piob-
lem of making change foi the laigei-value sciip leu to a
iebalancing of the uenominations, as the city incieaseu the
numbei of S-cent notes anu ietiieu the equivalent value of
Su-cent notes. Nanagement of the ciiculation was hanuleu
by the City Tieasuiei's office, which functioneu as a bank
foi the sciip. By late Apiil, excessive city anu school sciip
balances with ceitain meichants weie alleviateu by the
Chambei of Commeice, which acteu as a cleaiing house to
ieuiiect sciip to people neeuing it to pay taxes. Sciip holu-
eis hau the option of conveiting small notes into the 2u-
uollai uenomination, which unlike the otheis was inteiest-
beaiing (The 0wosso Aigus-Piess 19SS: Naich 28; Apiil S,
12, 21, 24; Nay 1).
The 0wosso school yeai enueu in Nay 19SS with teacheis
ieceiving theii final pay paitly in sciip, paitly in cash, anu
the Boaiu of Euucation was able to ieueem the last $9,uuu
outstanuing at its Septembei Su matuiity uate. Neanwhile,
the iemaining $1S,uuu of 0wosso's city sciip was ietiieu
out of incoming tax ieceipts by its August 1S ueauline.
Nonetheless, continueu lagging tax ieceipts uuiing the
summei maue a seconu issue of city sciip necessaiy, anu
$Su,uuu moie was authoiizeu by the enu of the yeai on
similai teims to the fiist issue. (The 0wosso Aigus-Piess
19SS: Nay 26; }uly 26-27; Septembei 29; Novembei 28).
0thei, laigei sciip issues elsewheie maue use of similai
aiiangements. To sustain its ciiculation of $88u,uuu in
municipal anu boaiu of euucation sciip, uianu Rapius
(Nichigan) cieateu a "Revolving Funu" of $1Su,uuu in cash
which it useu to puichase sciip fiom souices that hau ac-
cumulateu excess supplies. The Funu's uiiectoi canvasseu
the city's ietail establishments to ueteimine wheie these
excesses weie builuing. Although they weie sepaiate taxing
authoiities, the city anu the boaiu of euucation agieeu to
accept each othei's sciip foi city anu school taxes (a similai
aiiangement involving the watei utility pievaileu in Flint,
Nichigan). uianu Rapius meichants anu manufactuies also
encouiageu the ciiculation of sciip by paying theii own
employees 2u% of theii wages in sciip. In Loiain (0hio),
inuustiies puichaseu sciip foi theii own payiolls uiiectly
fiom the city. (Ameiican Nunicipal Association 19S4;
Nitchell anu Shafei 1984: 2uu).
Nobilization of public anu business suppoit also bolsteieu
the acceptability of sciip ciiculations. Foi example, in Bii-
mingham (Nichigan), the school boaiu oiganizeu cam-
paigns to encouiage the use of school sciip as measuie of
suppoit foi local schools, anu teacheis' clubs maiketeu it as
an investment (Cuito 1949). The West Palm Beach (Floi-
iua) Chambei of Commeice abanuoneu its own plan to is-
sue stamp sciip in favoi of piomoting the city's tax antici-
pation vaiiety foi the payment of back taxes. In Pinellas
County (Floiiua), wheie teacheis hau been paiu in sciip,
the meichants' association of St. Peteisbuig sought ways of
keeping the sciip liquiu (The Palm Beach Post 19SS: Apiil
11, 22; St. Peteisbuig Times 19SS: }une 8). Nilwaukee's
(Wisconsin) "baby bonus" oveicame eaily pioblems thanks
to fiim leaueiship by the city's feisty socialist mayoi, Baniel
Boan. Facing hostility by bankeis anu laige meichants to
city sciip, Boan oiganizeu city employees to keep them
fiom selling theii sciip salaiies to speculatois at a uiscount;
those ietaileis willing to take sciip weie given public iec-
ognition anu pationage by city employees, anu theii exam-
ple piessuieu othei ietaileis to coopeiate with the sciip
plan. Initial uiscounts of 88 cents on the uollai soon uisap-
peaieu, anu the city's inteiest-beaiing sciip became sought
aftei as an investment. (Chatteis 19SSc; National Nunicipal
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
Review 19SSa; Boan 19S6: ch. 11). 0cean City (New }eisey)
piomoteu its sciip by accepting it at a 1% piemium foi
timely tax payments, anu stoou ieauy to exchange $Suu
blocks of sciip foi tax anticipation notes that paiu a highei
iate of inteiest. The Reu Bank (New }eisey) Chambei of
Commeice encouiageu local businesses to pay sciip to
those employees with piopeity tax bills; likewise, busi-
nesses leasing piopeity weie uiiecteu to pay ients in sciip
to owneis with similai obligations (0cean City Sentinel-
Leugei 19SS: Nay 12; New Yoik Times 19SS; Reu Bank
Registei 19SS: Septembei 27).
Businesses' suppoit foi sciip coulu also give them some
leveiage ovei municipal finance. Atlanta's sciip faceu a
shaky stait in 19S2, when the banks woulu not accept it,
until the city's meicantile establishment, leu by Waltei B.
Rich, Piesiuent of Rich's Bepaitment Stoie, uniteu aiounu a
plan to accept sciip paitly in exchange foi cash, paitly in
exchange foi goous. Bencefoith the meichants helu an ef-
fective veto ovei the use of sciip in city finances, withholu-
ing foi example theii suppoit foi a seconu sciip issue in
19SS, which the city goveinment attempteu even as ie-
uemption of the 19S2 issue iemaineu incomplete (Biown
1941, vol. I: S6; Robeius 199u; Elvins 2u1u).
In most examples, municipalities paiu out less than 1uu%
of theii wages anu salaiies in sciip, which pioviueu piacti-
cal suppoit to its value. The piopoitions of sciip vai-
ieu÷8u% in Betioit, S4% in Pateison (New }eisey), 6u% in
Ameiicus (ueoigia), 66 2¡S% in Pontiac (Nichigan), Su%
in Nilwaukee, anu 6S% in Bayton (0hio)÷anu seemeu to
be moie a function of the available cash iathei than any
othei consiueiation. Atlantic City (New }eisey) paiu the
fiist $1u of its employees' wages in cash; all wages above
that weie paiu 8S% in sciip. By 19SS, Atlantic City ieuuceu
sciip poition of wages to Su%, anu only foi payuays in the
seconu half of the month. Royal 0ak (Nichigan) which hau
a compaiatively long iun of sciip (19S1-19S6), vaiieu the
peicentage of sciip issueu in employee wages anu salaiies
fiom 2S% to 7S%, uepenuing upon the amount of cash on
hanu. uuilfoiu County, Noith Caiolina useu sciip foi 1uu%
of wages, but only because local banks iemaineu closeu
thiough most of 19SS anu communities theie weie uespei-
ate foi any kinu of ciiculating meuium. Like the city of
0wosso (Nichigan), which also paiu all wages in sciip, uuil-
foiu County issueu fiactional uenominations that mini-
mizeu the piactical pioblems of making small change. 0th-
eiwise, having at least some wage payments maue in cash
uiu lessen the pioblem of people spenuing sciip simply in
oiuei to ieceive change in cash, anu ieuuceu the neeu to
piouuce laige supplies of the lowest-uenomination bills
(0niteu States Confeience of Nayois 19SS; Ameiican Nu-
nicipal Association 19S4; National Nunicipal Review
19SSb: 4uS; Boan 19S6: ch. 11; Biown 1941, vol. I: 172;
Cuito 1949).
0nlike sciip issueu by baitei anu self-help gioups, tax an-
ticipation sciip issueu by municipalities suffeieu at most
ielatively mouest uiscounts against stanuaiu funus. In
}anuaiy 19SS, befoie the laigest municipal sciip issues
occuiieu, Cail Chatteis testifieu befoie a 0.S. Senate com-
mittee that such sciip tiaueu, oi was casheu, at a 1S% to
2u% uiscount which, on top of equally-laige cuts in theii
nominal wage iates, iepiesenteu a substantial blow to the
living stanuaius of municipal employees (Chatteis 19SSu:
178-9). The uiscount on Betioit's sciip was initially laige,
but momentaiy. In his suivey of 74 issues of municipal
sciip, }oel Baipei (1948: 124-126) founu that at least 19
expeiienceu uiscounts of up to 1u%. While Baipei gives no
specific ieasons foi these uiscounts, scatteieu anecuotal
eviuence suggests some chaiacteiistic causes of uiscount-
Nilwaukee's sciip plan was pusheu thiough in a hostile
enviionment (see above). In Atlantic City (New }eisey),
iesistance by small ietaileis causeu the uiscount on sciip to
wiuen to as much as 2u%, although the laigei iesoit hotels
steppeu in to exploit this uiscount in oiuei to meet theii
own tax buiuens. As the uate of ieuemption foi, anu pay-
ment of inteiest on, Atlantic City sciip neaieu, its notes
tiaueu as high as $1.u7 (National Nunicipal Review 19SSa:
4uS; Biown 1941, vol. I: 44). As Nonmouth County issueu
$2uu,uuu in sciip month aftei month foi two yeais, by
19SS the emeigence of a S% uiscount suggesteu some ue-
giee of populai fatigue with the uevice (Reu Bank Registei
19SS: Apiil 2S). Pateison's (New }eisey) sciip fell to a uis-
count aftei local banks iefuseu to hanule it (Noble 1978:
9u-91). The school sciip of Wiluwoou (New }eisey) was
boycotteu by local meichants until the city maue it accept-
able foi its own taxes (0cean City Sentinel-Leugei 19SS:
Nay 26). Although suppoiteu by its meicantile community,
Atlanta's sciip uiu tiaue at a uiscount of at least S% outsiue
of the majoi ietaileis, accoiuing to oial histoiies (Robeius
199u). Chicago was the laigest example of an unsatisfac-
toiy expeiience, wheie little thought oi effoit seemeu to
maue to tuin municipal waiiants into a convenient me-
uium of exchange foi the long-suffeiing teacheis. The only
outiight failuie of tax-backeu sciip seems to have occuiieu
in Eiie (Pennsylvania), wheie the bulk of a $Suu,uuu issue
was iepuuiateu unuei unceitain ciicumstances (Nitchell
anu Shafei 1984: 227).
!"##$%# $' ()* )%(+,+-)(+$% #,.+-
As Baipei (1948) concluueu in his suivey of municipal
sciip expeiiences, whethei sciip was inteiest-beaiing, call-
able, oi backeu in a paiticulai way was less impoitant to its
success than the cieuibility of its management. Apait fiom
the sheei size of a given sciip issue ielative to the ability of
local ietaileis to absoib it, the most impoitant factoi in
sciip's success was "the efficiency of aiiangements foi
avoiuing the clogging of channels in which it tenueu to ac-
cumulate"; in tuin, "|tjhe uegiee of coopeiation in ieciicu-
lating sciip.uepenueu laigely upon the confiuence of mei-
chants in the financial plans of the local goveinment anu
the amount of intelligent auvanceu planning anu publicity
on the pait of public officials" (126-127).
The "financial plans" Baipei alluueu to essentially envis-
ageu the futuie ietiiement of sciip, as iecoveiing tax ieve-
nues anu successful uebt iefunuing plans (as in Betioit's
example) ietuineu municipal finances to a cash basis.
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
uiven that uefaults on existing uebts hau piecipitateu the
tuin to sciip in the eaily 19Sus, it was unueistanuable that
futuie iefunuing of these uebts woulu involve ietiiing mu-
nicipal sciip as well. Thus, an agieement between Non-
mouth County anu its bankeis in }uly 19SS combineu a
iefinancing of the county's matuiing uebt anu the ieuemp-
tion of its outstanuing sciip into a twenty-five yeai bonu at
an inteiest iate lowei than that paiu on the sciip (New
Yoik Times 19SS; Reu Bank Registei 19S7: Febiuaiy 11,
Nay 27). In 19S6, Atlantic County negotiateu a similai
agieement with a bonuholueis' committee that paiieu the
iefunuing of its uefaulteu uebt with a cessation of sciip
issues (New Yoik Times 19S6). Within Atlantic County,
Atlantic City, which hau expeiienceu the laigest municipal
uefault in New }eisey, ieacheu a sepaiate agieement with
its cieuitois shoitly theieaftei (Wall Stieet }ouinal 19S6).
That sciip was nevei intenueu to function as a peimanent
element of municipal finance may have conuitioneu the
attituue of paiticipants towaius its use. Employees who
took the sciip in wages, ietaileis who accepteu it in pay-
ment foi theii waies, anu goveinments who ieceiveu it
back as tax payments peihaps uisplayeu gieatei foibeai-
ance towaius its use, knowing that sciip was a tempoiaiy
expeuient uictateu by the economic ciisis. Yet Baipei no-
ticeu something that municipal officials at the time seemeu
ieluctant to acknowleuge: in some iespects, sciip issues
weie supeiioi to bank loans as a tool of municipal finance.
The effective inteiest iate on sciip was lowei than compa-
iable bank financing (anu entiiely absent, if the sciip weie
non-inteiest beaiing); moieovei, sciip gave municipalities
a flexibility that stanuaiu tax-anticipation financing lackeu.
Bank loans oi tax notes hau to be engageu in laige, lump
sums in auvance of tax ieceipts. In contiast, sciip coulu be
issueu uiiectly foi wages anu othei expenses in amounts as
neeueu to accommouate municipal finance neeus (Baipei
1948: 116-119).
Foi a local tax-baseu cuiiency to function in nonciisis con-
uitions as a noimal featuie of local goveinment finance anu
local economic activity woulu iequiie a wiuespieau anu
public ie-thinking of monetaiy legitimacy. Nonetheless, the
sciip expeiiences of the uepiession yeais suggest foui
ielevant paiameteis foi sciip expeiiments baseu upon
public taxing powei:
- Sciip issues must be commensuiate with the absoip-
tive capacity of ietaileis, which have obligations
outsiue the local economy uenominateu in national
- Sciip issues must be commensuiate with the absoip-
tive capacity of local goveinments, which have uebt
anu othei payment buiuens outsiue the local econ-
omy uenominateu in national money. Bue iegaiu
must be taken foi the substitution effects of sciip, as
taxpayeis will piefei to meet theii obligations in
sciip while hoaiuing national cuiiency foi its supe-
iioi negotiability.
- Tax obligations must be sufficiently laige to cieate a
uemanu foi sciip foi use in tax payments to local
- Nechanisms must exist to ieuistiibute sciip fiom
those who have it to those who neeu it foi tax pay-
ments ("avoiuing the clogging of channels").
These paiameteis iepiesent necessaiy, but not sufficient,
conuitions foi successful tax-baseu sciip to the extent that
community willingness to use sciip outsiue of the ciicuit of
tax payments is an inuispensible, albeit iesiuual, conuition
foi a viable tax-baseu sciip. In the Ameiican expeiience
with such sciip uuiing the 19Sus, it iemains uncleai (be-
yonu anecuotal eviuence) to what extent sciip actually
ciiculateu via tiansactions unielateu to the oiiginal tax
ciicuit. In the case of Atlanta, foi instance, uespite civic
mobilization on behalf of its sciip, the emeigency meuium
functioneu moie as a souice of municipal finance than a
local cuiiency (Robeius 199u). Beyonu the sheei piesence
oi absence of a uiscount on stanuaiu funus, the bioauei
acceptance of sciip foi ioutine tiansactions iepiesents a
moie significance measuie of sciip's success qua local cui-
iency. At the veiy least, sciip's suitability as a geneializeu
meuium of local exchange woulu exhibit netwoik ef-
fects÷the moie vaiieu its tiansactional use, the moie use-
ful it woulu become foi fuithei tiansactions÷subject to
some minimum thiesholu below which sciip woulu be
shunneu as a nuisance, anu a maximum thiesholu above
which sciip woulu lose its tiansactional valiuity (i.e invaliu
outsiue of the pievailing tax juiisuiction, anu the economic
aiea to which the juiisuiction is ielevant). The ueteimina-
tion of these lowei anu uppei thiesholus woulu uepenu
upon the specific aiticulations of the foui paiameteis set
out above; ultimately, howevei, what activates tax-baseu
sciip is sufficient public willingness to accept sciip as a
legitimate economic instiument.
As Elvins (2uuS, 2u1u) ably uemonstiates, in the 19Sus
favoiable public attituues towaius sciip hau to be actively
cultivateu. Public acceptability of sciip was mobilizeu
thiough appeals to local economic, cultuial, anu social val-
ues that weie thieateneu by uistant foices anu inteiests.
This ihetoiic of the local was often buttiesseu by a folk
analysis of the causes of the economic uepiession that ac-
coiueu to sciip a meaningful iole in any futuie economic
iecoveiy. Inueeu, the uepiession yeais weie a paiticulaily
fecunu peiiou foi populai analyses of money, its natuie,
anu its iole in eithei piouucing oi solving the economic
ciisis. Ciank plans abounueu (Reeve 194S). Thiough theii
public-spiiiteu examples, piominent local citizens (as in
Atlanta) coulu ially suppoit foi sciip expeiiments. Con-
veisely, the absence of such leaueiship (as in Chicago)
coulu sabotage the use of sciip. Foi theii pait, municipal
finance expeits evinceu ambivalence towaius sciip, since
these expeiiments hau evolveu out of shoit-teim boiiow-
ing piactices that skiiteu the euge of fiscal iesponsibility.
Bespite sciip's successes, its significance as a monetaiy
meuium was wiuely uownplayeu. By 19S4 these expeits
hau uniteu aiounu a set of 'best piactices' foi the use of tax
anticipation sciip that uefineu it as a financial, iathei than
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
monetaiy, phenomenon which woulu uisappeai once
healthiei tax ieceipts woulu allow goveinments to ietuin
to a cash basis (Luuwig 19S4; The Ameiican City 19S4a,
19S4b; Lutz 19S6: 81S-6). "At best," concluueu two
authoiities, "sciip seives only as a tempoiaiy expeuient to
take the place of moie foimal boiiowing" (Chatteis anu
Billhouse 19S9: 181).
!"#$ &'($) '$#*'+! '$,*-(./ -" -0$"'1
It is a maik, peihaps, of the iueological natuialization of
mouein money as abstiact exchange value that local cui-
iency expeiiments neeu to be uefenueu as ueviations fiom
some impeisonal logic of the maiket. While the vast liteia-
tuie on monetaiy theoiy contains scatteieu iefeiences to
the concept of tax-backeu money, the point of uepaituie foi
the uominant peispective is that money emeiges as a Nen-
geiian solution to the inefficiencies of baitei, anu that
money's funuamental natuie is that of a means of exchange
(Foistatei 2uu6; Nastiomatteo anu ventuia 2uu7; but see
uolubeig 2u1u). Even in the ueiman chaitalist tiauition, of
which Knapp was the majoi example, the iole of the state's
taxing powei was accoiueu only a minoi iole (Ellis 19S4:
11, S8-4u). The implications of tax-backeu monetaiy issues
have been exploieu in histoiical ieseaich, especially in the
context of tests of the quantity theoiy of money (Smith
1984, 198Sa, 198Sb; Wickei 198S; Pecquet anu Thies
2uu7). ueoffiey Ingham's piominent iestatement of the
chaitalist peispective tiaces the oiigins of money to its
function as a unit of account foi the calculation of uebts
with the pievailing matiix of social inequalities meuiateu
by state powei. Accoiuing to Ingham, "both the logic anu
the histoiical oiigins of money aie to be founu in the state.
Nonetaiy space is soveieign space; it uoes not consist sim-
ply in the symbolic iepiesentations of maiket tiansactions,
as it uoes in oithouox economic theoiy" (Ingham 2uu4: S7;
see also Wiay 2uu4).
What the chaitalist analysis illuminates about the Ameii-
can expeiience of tax anticipation sciip is uifficult to spec-
ify. Ingham himself is skeptical about the potential foi local
cuiiencies insofai as they "uo not give iise to the cieation
of puie abstiact value in the foim of the social ielation of
cieuit-uebt, anu, consequently, no money in this sense is
cieateu enuogenously thiough the extension of bank lenu-
ing". At best, local cuiiencies can function as limiteu pui-
pose monies, confineu to spheies of "inteipeisonal tiust
anu confiuence"; at woist, "they tenu to maiginalize the
infoimal economy anu ieinfoice the fiagmentation anu
inequality of the wiuei economy" (Ingham 2uu4: 186, 187).
Foi similai ieasons Ingham is uubious about the piospects
of the Euio, since its technociatic auministiation by an
inuepenuent cential bank is not matcheu by an equivalent
Euiopean soveieign authoiity.
If the money-soveieignty nexus is constitutive of "mone-
taiy space", then the implieu lessons of the histoiical expe-
iience with tax anticipation sciip will come fiom answeis
to political questions about the poweis anu autonomy of
local goveinments, anu not to economic questions about
the putative benefits of local cuiiencies. What aie the ie-
sponsibilities anu piopei scope of local goveinments. Bow
aie these to be asceitaineu anu asseiteu against the poweis
anu pietentions of the cential state.
Seventy yeais ago, these questions weie answeieu to the
uetiiment of local powei. Policy iesponses to the uieat
Bepiession in the 0niteu States hau the cumulative effect of
uiawing powei away fiom local communities to the states,
anu fiom states to the cential goveinment. Inueeu, fai fiom
iegietting this tiansfei of powei, municipal finance expeits
auvocateu anu welcomeu the centialization of taxing
powei anu the subsequent ieliance of local goveinments
on feueial anu state giants-in-aiu (Billhouse 19SS: 1-7).
Foi the conceins of this aiticle, this centialization took
place both in the iealms of municipal finance anu in mone-
taiy piactice. Fiom the bioauei peispective of Ameiican
monetaiy histoiy, the piolifeiation of local cuiiencies uui-
ing the 19Sus appeais as an anomalous uevelopment in the
piogiessive centialization of monetaiy powei anu authoi-
ity in Washington B.C. By 19SS, not only was the golu stan-
uaiu ieplaceu by a fiat cuiiency, but the basic functions of,
anu iesponsibilities foi, iegulating the mechanism of cieuit
weie tiansfeiieu fiom the iegional Feueial Reseive banks
(especially the New Yoik bianch) to the Feueial Reseive
Boaiu in Washington B.C. As one legal authoiity wiote
about tax anticipation sciip, "it is somewhat suipiising that
the Feueial auministiation has not taken cognizance of this
uesultoiy infiltiation of illegitimate papei money into the
channels of monetaiy ciiculation" (Nussbaum 19S7: 1u8S).
Fai fiom taking "cognizance" of this "uesultoiy infiltiation",
the feueial goveinment ignoieu the use of tax anticipation
sciip, anu these expeiiments in local cuiiency quickly
faueu fiom public consciousness. A ieviveu awaieness of
the potential of local cuiiency in the piesent uay iequiies
an appieciation of those histoiical moments when local
cuiiency, uespite its success, uisappeaieu as an expiession
of local powei.
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National Nunicipal Review (19SSa) "Baby Bonus anu Incieaseu
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--- (19SSb) "Atlantic City Sciip Still in 0se" XXIv (}uly): 4uS.
New }eisey Legislatuie. Senate anu Bouse Committees on Taxation
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International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
International Journal of
Community Currency Research
Volume 16 (2012) Section D 36-48
Makoto Nishibe*
Graduate School Of Economics And Business Administration, Hokkaido University
The piesent aiticle shows that community cuiiencies (CCs) aie inteipieteu as integiative com-
munication meuia with uual aspects of money anu language, anu that, since money is the most
inuispensable meuium of the mouein capitalistic maiket economy, CCs shoulu be stiategic tai-
gets foi evolutionist institutional uesign in oiuei to solve cuiient social anu economic pioblems
causeu by global capitalism.
In oiuei to theoietically view the biuiiectional effects causeu by alteiation of money as a plat-
foim institution in its evolutionaiy peispective, we intiouuce some basic concepts such as iep-
licatois anu inteiactois anu illustiate the micio-meso-macio loop mouel by using those con-
cepts. Then we eluciuate the significance anu possibility of evolutionist institutional uesign in
policy applications of the theoietical iueas put foiwaiu. Lastly, we investigate why anu how CCs
can be stiategic platfoim meuia in evolutionist institutional uesign.
* Email: nishibeÇecon.hokuuai.ac.jp
$' )*+, +-*. /0+*)1,2 Nishibe, N. (2u12) 'Community Cuiiencies as Integiative Communication Neuia foi
Evolutionist Institutional Besign' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) S6-48
<www.ijcci.net> ISSN 1S2S-9S47
!" $%&'()*+&$(%
The puipose of this aiticle is to show that community cui-
iencies (CCs) which have been useu woiluwiue since the
199us can be inteipieteu as integiative communication
meuia, anu that, since money is the most inuispensable
meuium of the mouein capitalistic maiket economy, CCs
shoulu be stiategic taigets foi evolutionist institutional
uesign in oiuei to solve cuiient social anu economic piob-
lems causeu by global capitalism
. We will also show that
the case foi CCs exemplifies the possibility anu feasibility of
evolutionist institutional uesign in contiast to othei ap-
pioaches such as constiuctivist anu opeiationalist institu-
tional uesign.
Fiistly, we explicate communication meuia anu situate
money anu language as such, anu then show that we can
compiehenu CCs as integiative communication meuia with
uual aspects of money anu language. Seconuly, in oiuei to
theoietically view the biuiiectional effects causeu by al-
teiation of money as a platfoim institution in its evolution-
aiy peispective, we intiouuce some basic concepts such as
ieplicatois anu inteiactois anu illustiate the micio-meso-
macio loop mouel by using those concepts. Thiiuly, we
eluciuate the significance anu possibility of evolutionist
institutional uesign in policy applications of the theoietical
iueas put foiwaiu. Lastly, we investigate why anu how CCs
can be stiategic platfoim meuia in evolutionist institutional
, -(%./ 0%) 10%2*02. 03 +(--*%$+0&$(%
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4A 54EE=<65:864<
In oiuei to ieuefine the chaiacteiistics of CCs as integiative
communication meuia in the next section, we, fiist of all,
iefei to N. Luhmann's iueas anu classifications of 'commu-
nication meuia' (Luhmann 1984=199S, 1988).
Luhmann uefines a total system of society as an autopoietic
oi self-iepiouucing system of communication wheie
"communication cieates communication." In othei woius,
society is a closeu self-iefeiential communication system
(Luhmann 1984=199S ch.4). Then he iegaius economy,
politics, science, euucation, ieligion anu the like as paitial
systems of society in which each of the uiffeient symboli-
cally geneializeu communication meuia functions inue-
penuently. Beie, communication is conceiveu not as tians-
feiiing infoimation fiom a senuei to a ieceivei but as
emeigent integiity of thiee selections of infoimation,
tiansmission anu unueistanuing (Luhmann 1988, Kap.2).
,", &F?77 G6<C; 4A 54EE=<65:864< E7C6:H @:<D=:D7I
7J87<C7C E7C6: :<C ;9EK4@65:@@9 D7<7?:@6L7C E7C6:
We must note that the woiu 'meuia' has a wiuei connota-
tion than is conventionally useu foi mass meuia, means of
tiansmission anu meuiatois. Communication meuia aie
emeigent entities in evolution that can tiansfoim uncei-
tainty into ceitainty of communication anu aie classifieu
into thiee types: 1) 'language' that enables communication
of meanings by using auuitoiy anu visual signs, 2) 'ex-
tenueu meuia' such as uocuments, piinting anu communi-
cation technologies that extenu the ieach of communica-
tion by language, anu S) 'symbolically geneializeu meuia'
such as money, tiuth, powei, love anu noims. Each of these
communication meuia conceins unceitainty in teims of 1)
unueistanuing, 2) ieach anu S) attainment (acceptance),
iespectively (Luhmann 1984=199S, ch.4.7-8, 1988, Kap.7).
Buman agents can obtain moie infoimation thiough such
extenueu meuia, (i.e., 'ieach meuia') anu juuge whethei
they will accept the infoimation baseu on such symbolically
geneializeu meuia (i.e., 'ieception meuia'). In that sense,
the ieception meuia functions as filteis foi selecting infoi-
mation anu foiming motivations. Reception meuia thus
enable both a senuei anu a ieceivei of infoimation to shaie
knowleuge as a system of infoimation, but the ieceiveu
knowleuge is not exactly the same foi them. Then, both
inteisubjectivity (attachment) anu subjectivity (uetach-
ment) aie simultaneously at woik anu agents aie loosely
If ceitain symbolically geneializeu meuia expiess a laige
numbei of things anu biing about geneialization of mean-
ings, 'symbolic geneialization' iesults in meuiating vaiious
uiffeiences anu closing sepaiations. 0n the othei hanu, if
such geneialization of meanings insteau cieates vaiious
uiffeiences anu mutual sepaiations, 'uiabolic geneializa-
tion' sets in. Noimally, these two functions aie tightly in-
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8:@ :<C 68; C6:K4@65 D7<7?:@6L:864<
We fuithei investigate the uiffeience between money anu
language on the basis of Luhmann's iueas that we have just
seen. Noney anu language aie 'aitificial meuia' that aie the
piouucts of social anu cultuial evolution anu aie isomoi-
phic in 'geneialization' of uiffeiences in time, events anu
societies. The uecisive uiffeience between money anu lan-
guage is that, wheieas money is a 'unifoim meuium' that
conuenses qualitative uiveisity anu complexity of com-
mouities into one-uimensional infoimation as piices, lan-
guage is a 'uiveise meuium' that enables fai iichei expies-
sions that maintain vaiiety anu complexity
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
1 The piesent aiticle aims at integiating the basic iueas in a seiies of the pievious aiticles (Nishibe 2uu2, 2uu4, 2uuS, 2uu6a, 2uu6b, 2u1u)
anu showing a synthetic view of CCs foi evolutionist institutional uesign.
2 It is inteiesting to see that, fiom a iathei uiffeient viewpoint with the piesent papei, Bait (2uuu) uesciibes the similaiity between language
anu money as two uiffeient memoiy banks anu suggests that both woulu conveige in the age of Inteinet anu CCs.
The foim of payment by money involves much simplei
stiuctuies than uoes the foim of statement by language.
Noney as a measuie of value ieuuces complexity in the ieal
woilu to a one-uimensional value, anu the foim of payment
functions as a symbolically geneializeu meuium so that
uivision of laboi anu knowleuge as well as new uiscoveiies
anu innovations aie encouiageu anu sales of a gieat
amount anu vaiiety of meichanuise in the maiket aie facili-
Noney, at the same time, biings about the uiabolic genei-
alization that expiessing eveiything in unifoim piices ue-
stioys chaiacteiistic piopeities anu qualitative uiveisity in
teims of cultuie, value anu noims paiticulai to nations,
local communities anu gioups of inuiviuuals. This pioblem
has become moie seiious, as moie inuiviuuals have come
to use money as 'capital' foi only the puiposes of value
augmentation anu accumulation. Piactices of investment
anu speculation have spieau, anu thinking ways in teims of
iational choice of alteinative such as oppoitunity cost anu
human capital have pievaileu in iecent yeais. This means
that the consciousness of people giauually appioaches that
of capitalists. Women anu motheis have giauually come to
iegaiu uomestic laboi anu chilucaie as lost oppoitunity to
eain wages in the woikfoice. Youngei people at piesent
tenu to conceive of not only vaiious qualifications but also
highei euucation anu leaining as investment in theii own
human capital foi gaining highei futuie income. Such
changes in value anu consciousness acceleiate the uissolu-
tion of communities such as univeisities anu families into
maikets. Latei, we will examine what solution CCs as inte-
giative communication meuia offei to the afoiementioneu
!" $$% &% '()*+,&)'-* $.//0('$&)'.( /*1'&
!"2 $$3 4567 8967 :3;<=63 9> ?9@<A :@B C:@DE:D<
Let us now take a look at how we can uesciibe CCs in view
of communication meuia such as language anu money as
uiscusseu above. Fiist of all, we must pay attention to the
unique chaiacteiistics of CCs in this iespect.
CCs ceitainly have aspects of both 'money' anu 'language,'
like }anus the gou in ancient Roman mythology who has
two faces looking foiwaiu anu backwaiu. Although CCs
actually aie syntheses of these two factois, they tenu to
have stiongei economic connotations because of the asso-
ciation between the woius 'money' anu 'cuiiency.' In oiuei
to claiify that CCs stietch ovei not only economic uomains
but also social anu cultuial uomains, we name them 'inte-
giative communication meuia' since they aie enuoweu
with the chaiacteiistics of both 'economic meuia' as money
anu 'social anu cultuial meuia' as language.
Luhmann thinks of the whole society as an autopoietic sys-
tem of communication anu uiviues it into seveial subsys-
tems accoiuing to 'symbolically geneializeu meuia' such as
money, tiuth, powei anu otheis. We also iegaiu CCs as
belonging to the same categoiy, but consiuei them unique
in the following senses. They possess the main puipose of
vitalizing both local economy anu local community, anu
expiess anu convey the values, inteiests anu ethics shaieu
by membeis of a community, uiffeient fiom conventional
money that specializes in economic functions, anu thus CCs
aie not meiely language anu extenueu meuia but also sym-
bolically geneializeu communication meuia such as love
anu noims. Accoiuingly, CCs aie founu to have all piopei-
ties of thiee kinus of communication meuia. What CCs ac-
complish is not to uiffeientiate the whole society into sub-
systems as uo conventional symbolically geneializeu meuia
such as money, powei, tiuth anu love, but iathei to inte-
giate such uiviueu social subsystems.
Luhmann explains that a whole society is a closeu self-
iefeiential communication system whose subsystems aie
opeiationally close with uiffeient symbolically geneializeu
communication meuia functioning inuepenuently. If so,
how can the integiation of subsystems by CCs actually take
place. Beie we have to focus on the peculiaiity of powei-
fulness of money compaieu to othei symbolically geneial-
izeu meuia. Since money is a 'unifoim meuium,' it can suc-
cessfully ieuuce oui complex anu laige-scale society as a
whole into uecentializeu netwoiks as cash nexus com-
poseu by autonomous tiansactions as buying anu selling by
using one-uimensional infoimation as piice. All othei 'ui-
veise meuia' cannot uo the same. It means that Naiket with
money, neithei State with powei noi Community with love
(fiateinity anu iecipiocity), can solely have the potential to
integiate the whole society into the single global maiket
society, as will be shown in section S.4. This chaiactei of
money manifests itself as globalization in which money
tenus to excluue othei symbolically geneializeu communi-
cation meuia.
If we can inhibit such immense piopagation of money anu
weaken its powei of social integiation, it woulu be piacti-
cable to utilize such ability to connect Naiket to othei so-
cial subsystems as Politics anu Cultuies. In shoit, CCs can
become the communication meuia foi integiation, not foi
uivision, of the whole society. Foi this ieason, we have ue-
sciibeu it with the aujective 'integiative.'
!"F $$3 :3 <=9@9?5= ?<B5: :@B 39=5:C :@B =EC6EG:C ?<H
Table 1 shows the uual piopeities of CCs as integiative
communication meuia (2uu6b)
. Fiist, let us look at the
economic aspects on the left-hanu siue of the table. The
monetaiy aspect inuicates the ability of CCs to one-
uimensionally expiess anu evaluate a uiveise aiiay of het-
eiogeneous goous anu seivices as a magnituue on a single
scale, say, 'gieen uollais.' Selleis set piices of goous anu
seivices anu wait foi buyeis to come, anu buyeis obseive
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
S Table 1 is piesenteu heie foi cleai conceptualization of CCs' uual aspects abstiacteu fiom vaiious piopeities of actual CCs, not foi taxo-
nomic classification of all kinus of CCs cuiiently opeiateu woiluwiue. Foi the lattei puipose, Blanc (2u11, p.7) successfully classifies CCs into
Local, Community anu Economic fiom the viewpoint of thiee kinus of piojects as Teiiitoiial, Community anu Complementaiy, iespectively.
the piices anu ueciue to make puichases if the goous anu
seivices aie uesiieu anu appiopiiately piiceu. Such unit
tiansactions of buying anu selling constitute 'uispeisive
maikets' conceiveu as netwoiks of consecutive tiansac-
tions meuiateu by money as the means of ciiculation.
CCs natuially involve such one-uimensional expiessions
anu evaluations anu, if they aie useu iepeateuly, ciiculate
among paiticipants as long as goous anu seivices aie
piiceu in teims of CCs. Then, we can see that CCs as eco-
nomic meuia cieate some soits of maikets, even if they aie
uiffeient fiom those in capitalistic maiket economies. What
conventional moneys anu CCs have in common is that both
of them aie unifoim meuia anu cieate 'uispeisive maikets'
such as netwoiks of tiansactions. A common notion is that
CCs cieate communities not maikets, but it is not tiue.
Aspect Money (eco-
nomic media)
Language (social
& cultural media)
Purposes Vitalization of
local economy
Rehabilitation of
Independent de-
sign, issuing and
Bounded sphere
No interest or
minus interest
Ferment of trust
and reciprocity
Cooperative ‘pro-
Linguistic expres-
sion and transmis-
Forms Complementary
currencies and
Emergency cur-
(Stamp scrip,
Mutual-help cou-
(Time Dollars,
Domain Market Community
Table 1 Dual properties of CC as integrative communica-
tion media
(Source: Nishibe (2006b))
So what is the uiffeience between conventional moneys
anu CCs. CCs aim at exchange with iecipiocity, that is, 'ie-
cipiocal exchange,' anu aie supposeu to foim 'coopetitive'
(i.e., competitive anu coopeiative) local maikets in consiu-
eiation of anothei aspect of social anu cultuial meuia. In
oiuei to unueistanu that maikets can incluue altiuistic anu
bounueu-iational agents anu coopeiative ielations among
such agents, it is necessaiy to wiuen the conventional vi-
sion of the maiket, which is uepicteu in neoclassical eco-
nomics as being composeu of selfish anu supei-iational
agents with peifectly competitive ielations among them.
Let us now tuin oui attention to a 'social anu cultuial as-
pect' wiitten on the iight-hanu siue of Table 1. This can
also be calleu a 'linguistic siue.' All human ielations utilize
languages anu numbeis complementaiily. Noney quantita-
tively expiesses anu evaluates eveiything in piices, so it
belongs to 'one-uimensional meuia' uiffeient fiom 'multi-
uimensional meuia' that language iepiesents. CCs expiess
anu convey a uiveisity of social values, noims anu cultuies
paiticulai to the issuing anu auministiative bouies anu
local communities wheie the CCs aie ciiculateu.
!"! $%& '()'*+&+ *, --+
CCs have the puiposes, functions, foims anu spheies ac-
coiuing to these two aspects. The puipose of CCs as eco-
nomic meuia is 'to vitalize local economy.' 0ne of the
causes foi uepiession anu unemployment in local commu-
nities is saiu to be the pioblem that money flows out of
local communities anu eventually theie is a shoitage of
money in ciiculation. Foi example, }apan has expeiienceu
two 'lost uecaues' of seveial seveie iecessions since the
collapse of the }apanese asset piice bubble staiting in 199u.
Even though }apan as a whole suffeieu fiom iecessions,
theie was a gieat uispaiity between metiopolitan aieas
anu othei iegions in teim of the iate of bankiuptcies anu
the iate of unemployment uepenuing on the inteiiegional
balance of payments anu the inuustiial stiuctuie. 0n the
whole, iuial aieas weie much moie seveiely affecteu.
Nost towns anu villages have the pioblem of ueclining
shopping stieets in auuition to the pioblems of uepopula-
tion anu population aging causeu by the falling biithiate
anu migiation of young people to uiban aieas wheie they
finu moie job oppoitunities. Although motoiization facili-
tateu iuial anu small-town iesiuents going shopping in
supeimaikets oi shopping malls in laigei towns, it also
gave iise to 'shopping iefugees,' the elueily who uo not
uiive cais anu cannot go shopping fai fiom home. When
local shopping stieets uisappeai, so uo many invisible
community functions that they seive, such as stieet clean-
ing, mutual aiu, chilucaie anu festivals. As a iesult, the ue-
cline of local economies acceleiateu anu the living envi-
ionments of all iesiuents ueteiioiateu as well. If the people
unuei such ciicumstances can cieate theii own local
money that stay in the community anu ciiculates theie,
local economies coulu become moie active anu ielatively
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
4 All CCs have both piopeities of economic meuia anu social anu cultuial meuia, but the piopoitions of these aie uiffeient. Foi example, time
uollais anu eco-money aie exclusively useu foi mutual aius anu volunteei woik, so they aie 1uu% of social anu cultuial meuia. 0n the othei
hanu, Stamp sciips in 19Sus aie mostly useu foi shopping uaily meichanuises in local shops, so it is 1uu% of economic meuia. LETS is useu
foi local shopping, but the paiticipants in LETS also exchange theii white elephant, skill anu knowleuge. So LETS is thought of as half anu half
meuia. But theie is no place in the miuule in Table 1, so we put LETS in the left hanu siue.
inuepenuent of the influence of national anu global econo-
mies. This woulu encouiage foiming a sustainable anu
iecycling-oiienteu local economies of 'local piouuction foi
local consumption,' which is the ultimate aim of CCs intio-
uuceu as 'economic meuia.'
Anothei puipose of CCs is to 'activate community' oi 'acti-
vate communication anu inteicouise.' This coiiesponus to
the 'social anu cultuial meuia' aspect of CCs. In oiuei to
ueeply investigate CC as 'social anu cultuial meuia,' we
have to take a iounuabout way to fully unueistanuing the
socioeconomic cooiuinating piinciples incluuing maikets
anu the meaning of globalization.
!"# %&'()&*+),*'-. ,/0 /*1,'2*3)& ,0-40-35 6'2 7)280, ,'
09:)-4 )-4 6'2 ;'<<=-*,5 )-4 >,),0 ,' 1/2*-8
In mouein capitalistic maiket economies, all conceivable
things incluuing inteinal oigans, genetic mateiial, genetic
infoimation, peisonal infoimation anu the iight to emit
caibon uioxiue has been commouifieu anu the maiket uo-
main has incieasingly expanueu anu ueepeneu.
Fig. 1 Globalization (Source: Nishibe (2006a))
Beie, in oiuei to make cleai the meaning of so-calleu
'globalization' since the 199us, we intiouuce thiee uiffeient
cooiuinating piinciples of socioeconomics, accoiuing to
Polanyi (1944) anu with some mouifications: 1) Naiket
(the piivate uomain of exchange anu fieeuom), 2) Commu-
nity (the common uomain of iecipiocity anu fiateinity) anu
S) State (the public uomain of ieuistiibution anu equality).
Let us confiim that thiee economic piinciples÷exchange,
iecipiocity anu ieuistiibution÷exactly coiiesponu to the
thiee political iueals of the Fiench Republic, which oiigi-
nateu fiom the Fiench Revolution÷fieeuom (blue), fiatei-
nity (ieu) anu equality (white).
Then, globalization can be inteipieteu as the histoiical
tienu ovei seveial uecaues foi Naiket to expanu, anu foi
Community anu State to shiink, qualitatively anu quantita-
tively, as shown in Fig. 1. As Naix (18S9=197u, Su, 2u8,
1867=1887, 6u) iepetitively put it, Naiket emeiges fiom
between two communities, two states, oi a community anu
a state. 0nce Naiket emeiges fiom such bounuaiies, it ex-
panus anu penetiates into Community anu State, uissolves
them, anu ieoiganizes them accoiuing to Naiket piinciples.
This tenuency can be calleu 'inteinalization' of Naiket. We
now unueistanu that globalization is a manifestation of the
'inteinalization' tenuency of Naiket to commouify eveiy-
!"? ;):*,)&. ,/0 20:&*3),'2 '6 3):*,)&*1< ,' 42*@0
A&'()&*+),*'- )1 6200 *-@01,<0-,
It is cleai that the tenuency of globalization is uiiven by
'Capital'. It is not a tangible thing as inventoiy, machine,
factoiy, lanu, but an intangible mattei. Fiom the peispec-
tive of evolutionaiy thinking that we will see in section 4.2,
Capital is the way to use money foi its piopagation, that is,
the ieplicatoi (the institution as a bunule of iegulative
iules) of capitalistic maiket economies, not the ieplicatoi
of a human agent oi a piofit oiganization such as a fiim. So,
to be piecise, Capital is the ueiivative of Naiket as net-
woiks of buying anu selling tiansactions, anu it uissolves
Community anu State anu ieplaces them into Naiket by its
giauual tiansfoimation of moie kinus of nontiauable goous
anu seivices into 'fictitious' commouities. If globalization
pioceeus to its logical enu, not only money anu assets such
as stocks anu ieal estates but also choices, iights, infoima-
tion anu genes of ouiselves will all theoietically be capital-
izeu as piofit-eaining oppoitunities.
If the 'fiction' is iealizeu without any iestiictions oi iegula-
tions in the maiket, the 'fiee investment' piinciple beyonu
'fiee tiaue' will be fulfilleu as the ultimate stage of a capital-
istic maiket economy. We claim that the tenuency of
globalization actually exists because it is obseivable that all
human ielations tenu to be ieuuceu to only economic anu
contiactual ielations such as buyei-sellei anu cieuitoi-
uebtoi ielations so that all types of communities suppoiteu
by iecipiocal exchange anu mutual aiu woulu uecline anu
even collapse. The tenuency of globalization has been anu
is counteiacteu by 'self-piotection of society' (Polanyi,
ibiu.) as in communism anu anti-globalization movements.
!"B ;;1. ,/0 3'=-,02@)*&*-A <0)1=201 6'2 <)280, 6=-C
4)<0-,)&*1< )-4 320),*-A D7)280, E*,/*- ;'<<=-*,5F
In oiuei to counteivail the tenuency of maiket funuamen-
talism in uaily life, CCs can be intiouuceu to iehabilitate
iecipiocal communities anu ievitalize human communica-
tions. In }apan, 'Eco-money,' which is a CC uesigneu specifi-
cally as 'social anu cultuial meuia,' became wiuely useu
until the eaily 2uuu's. But subsequently moie attention has
been paiu to the use of CCs as 'economic meuia' since Eco-
money was founu uifficult to ciiculate smoothly, owing to
the lack commeicial tiansaction netwoiks. We must unuei-
stanu fiom the expeiience that the uniqueness of CCs lies in
simultaneous anu complementaiy coexistence of both the
'economic meuia' anu 'social anu cultuial meuia' aspects.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
CCs aie integiative communication meuia with aspects of
both economic meuia anu social anu cultuial meuia. They
can associate Naiket with exchange anu competition anu
Community with iecipiocity anu coopeiation, anu integiate
Naiket anu Community into 'Naiket within Community.'
Since CCs have a stiong affinity foi both Naiket anu Com-
munity÷like soap that allows oil anu watei to mix÷, CCs
woulu woik as inteifacial active agents at the inteiface
between Naiket anu Community so that the two easily mix.
CCs can thus pioviue a socioeconomic policymaking meas-
uie foi balancing Naiket anu Community in oiuei to ovei-
come the uefects of both: capital iunning out of contiol as
well as coiiuption of closeu anu collusive ielations, anu 'ie-
embeu' the 'uisembeuueu' maiket economies into society
anu cultuie.
!"# %&' ()*+,-.*/ .( 00/
Next, let us tuin to the functions of CCs. Fiist, we shall ex-
amine theii functions as 'economic meuia.'
!" $%&'('%&'%) &'*+,%- +**.' !%& /!%!,'/'%)
Any gioups can inuepenuently anu voluntaiily uesign, issue
anu manage CCs. If people cieate theii own CCs anu con-
uuct tiansactions with them within a ceitain aiea, it means
that they paitially iestoie the iight to issue money as a civil
libeity anu social iight. This is the libeial anu uemociatic
piopeity of CCs.
0" 1+23.4!)+5% +% ! 05.%&'& *(6'2'
If consumeis go shopping at a laige supeimaiket oi con-
venience stoie, even those within a local community, the
money paiu flows out of the local community anu concen-
tiates at the company's heauquaiteis.
The local money put into savings anu investment funus is
tiansfeiieu to a moie piofitable place, say, a metiopolitan
aiea wheie lanu iapiuly appieciates. Such spillovei of
money has a negative impact on local economies, especially
uuiing a peiiou of uepiession. CCs aie uesigneu to ciiculate
within a ceitain local aiea without flowing out of it in oiuei
to piomote inteinal tiansactions of goous anu seivices anu
eliminate the shoitage of effective uemanu causeu by
money hoaiuing. Incieaseu ciiculation within a community
inuuces local piouuction foi local consumption anu iegion-
3" 75 +%)'2'*) 52 %',!)+8' +%)'2'*)
What uoes no inteiest on CCs mean. If you boiiow money
fiom a commeicial bank, you have to iepay the loan plus
inteiest. But if you boiiow money fiom youi paients oi
fiienus, you pay no inteiest because you have theii tiust
anu affection. If you uaie to pay inteiest, it might haim
close ielationships. Whethei people lenu money at inteiest
inuicates social uistance between cieuitois anu uebtois.
'Negative inteiest' coiiesponus to the cost of holuing
money known as 'uemuiiage' anu encouiages the use,
iathei than the holuing, of money to piomote consumption.
This iuea was embouieu in Stamp Sciips accoiuing to Silvio
uesell's uesign. A famous Ameiican economist, Iiving
Fishei, intiouuceu Stamp Sciips to the 0niteu States, anu
consequently the iuea of uemuiiage spieau uuiing the in-
teiwai peiiou. This is the noncapitalistic aspect of CCs.
These thiee aspects aie the functional chaiacteiistics in
view of economic aspect of CCs. When we focus on the so-
cial anu cultuial aspect of CCs, the view that CCs aie tools
foi oveicoming haiuships in a seveie uepiession anu eco-
nomic ciisis aie too naiiow. In }apan, iecent examples such
as Fuieai Kippu (Caiing Relationship Tickets) anu Eco-
money assigns gieatei impoitance to CCs' linguistic aspect,
which we will consiuei next.
&" 92.*) !%& 355('2!)+5%
CCs ciiculate baseu on tiust anu coopeiation among pai-
ticipants. Paiticipants inteiact with each othei thiough
tiansactions, stiengthen links of mutual aiu anu ueepen
theii mutual tiust. This is the community foiming aspect of
Let us take the Local Exchange Tiauing System (LETS) as a
iepiesentative example of an account-type CC, wheie the
inteiest iate is zeio anu the summation of each paitici-
pant's account balance is the net of cieuits anu uebits. In
this system, the total uebits anu cieuits shoulu sum to zeio
at any time. We can inteipiet the situation as follows: a
paiticipant boiiows money fiom the community when the
account balance is in the ieu, anu lenus money to the com-
munity when the balance is in the black; they call it squaie
in the community. This zeio-sum piinciple simply ex-
piesses the continuous accomplishment of mutual aiu anu
soliuaiity among paiticipants in the community anu pio-
viues an institutional basis foi ueepening tiust anu coop-
'" 155('2!)+8' (25*./'2*
'Piosumei' is a poitmanteau combining 'piouucei' anu
'consumei.' The teim was coineu by Alvin Tofflei (198u)
anu chaiacteiizes the tenuency of economic lives to be-
come moie self-sufficient oi uo-it-youiself in the thiiu
wave, the mouein infoimation age. 'Coopeiative piosum-
eis' aie simultaneously piouuceis anu consumeis anu
maintain coopeiative ielationships to mutually help each
othei anu theieby effectively utilize the iesouices they
own. This expiesses the iueal of CCs that all paiticipants
shoulu stanu on equal footing as much as possible by
eliminating asymmetiy between consumeis as money
owneis anu piouuceis as money seekeis.
:" ;+%,.+*)+3 '<(2'**+5% !%& )2!%*/+**+5%
Each local community has intiinsic anu inuiviuual chaiac-
teiistics in cultuie anu natuie. Such qualitative uiffeiences
anu uiveisity cannot be measuieu in a one-uimensional
quantity of money. CCs aie intiouuceu anu useu as social
anu cultuial meuia to expiess anu tiansmit such inuiviuual-
ity of local communities. Theie aie many unique names of
CCs to succinctly expiess such uistinctive tiaits as specialty,
uialect, geogiaphy, tiauition, mythology anu iueal of local
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
community. CCs thus function as linguistic meuia iegaiuing
local cultuie, inteiests anu values.
!"# %&' ()*+),)-.+-' /0 11( .( 2&' 3'45)-.2/3( 0/3 +'6
(4'-)'( )+ (/-)/'-/+/7)- '8/592)/+
CCs always have aspects of both economic meuia anu social
anu cultuial meuia, anu such uuality anu complementaiity
of CCs is the most inuispensible piopeity that we cannot
finu in any othei communication meuium. So we cannot
tiuly unueistanu the significance of CCs by viewing them
fiom only one aspect oi the othei. Bowevei, CCs usually
uiffei in which aspect is stiongei oi moie embouieu in
them. CCs fuithei uiffei in puipose anu locality. Wheieas
CCs evolveu as new species fiom money anu language, a
uiveise aiiay of CC subspecies emeigeu. The micio behav-
iois anu motivations of paiticipants anu the macio pei-
foimance anu patteins of communities composeu of pai-
ticipants inteiact anu change each othei as time goes on.
Such enuogenously uynamic changes aie consiueieu to be
path-uepenuent anu noniepetitive.
If macio enviionments aie kept constant, oi change exoge-
nously anu inuepenuently of the behavioi of micio agents,
it is possible to uefine the 'auaptability' of each micio agent
unuei a given enviionment. Then the concept of 'suivival of
the fittest' can also be cleaily uefineu in the sense that inui-
viuual oiganisms with maximum auaptability can piopa-
gate most successfully. Bowevei, we cannot have a mean-
ingful uefinition of the concept of auaptability if we ueal
with an evolutionaiy piocess wheie macio enviionments
anu micio agents mutually inteiact anu theii piopeities
enuogenously change. Anu we must iemembei that actual
socioeconomies aie ceitainly such evolutionaiy piocess
with enuogenous change anu path uepenuence. Conse-
quently, we cannot ask which institution of CC is the best oi
the most effective because such a question is meaningless
in the evolutionaiy piocess.
!": ;/6 -.+ 6' '8.59.2' 11( 0/3 '8/592)/+.3< 4'3(4'-=
Then how can we evaluate CCs fiom the viewpoint of evo-
lution. 0nuei the piesent macio enviionments of capitalis-
tic maiket economies, CCs aie incieuibly weakei in teims
of suivival anu piopagation than existing national cuiien-
cies such as the 0.S. uollai anu }apanese yen, anu thus CCs
cannot spieau oi even continue to exist. Even unuei the
unfavoiable conuitions foi CCs, theie must be ciitical situa-
tions such as acute financial ciises, chionic economic ie-
cessions anu uevastating natuial uisasteis wheie CCs can
tiansfoim theii weaknesses into stiengths. Cleaily, CCs
must, at the least, become safety nets anu complementaiy
institutions utilizeu as emeigency measuies in such excep-
tional situations. But they aie only tempoiaiy, not constant.
The aim of CCs is to contiol the negative effects of money as
capital (Luhmann's uiabolic geneialization) anu iestoie the
stability anu sustainability of socioeconomic livelihoou by
intentionally iestiaining money's univeisal valiuity with
iespect to space-time ciiculation, tiansaction objects anu
paiticipants. Is such an iueal of CCs only a beautiful fantasy
oi a ieal possibility.
As we have alieauy seen, the poweis of suivival anu uiffu-
sion of CCs change uepenuing on the situation. Theii weak-
nesses can be tiansfoimeu into stiengths in a uiffeient
situation. If so, how can a situation become uiffeient. As we
have also explaineu, in an evolutionaiy piocess wheie
macio enviionments anu micio agents inteiact, they woulu
change themselves enuogenously. Social ieality is founu
only in such evolutionaiy piocesses.
!"?@ 11( .-2 .( . -.2.5<(2 /+ 2&' 7'(/ 5'8'5 2/ &'54 .
+'6 7)-3/=7'(/=7.-3/ 5//4 ('2 )+
If CCs coulu somehow suivive without being weeueu out in
such evolutionaiy enviionments, they woulu be able to
giauually affect the inteiests, values, noims, ethics anu
ioutines that ueteimine the behavioi of paiticipants as
micio agents. The influences aie initially veiy small anu
giow giauually, but once the accumulateu effects exceeu a
ceitain thiesholu, some positive feeuback mechanism sets
in anu eveiything might iapiuly change. If CCs coulu thus
act as a catalyst on the meso-level anu help a new micio-
meso-macio loop to be self-oiganizeu, then macio envi-
ionments change micio agents anu micio agents change
macio enviionments anu the uual uiiecteu inteiactions
uiastically anu cumulatively change both enviionments
anu agents.
Netaphoiically speaking, theiefoie, CCs aie similai to slow-
acting Eastein meuicine foi impioving oveiall wellness
(e.g., acupunctuie), iathei than fast-acting Westein meui-
cine foi symptomatic tieatment (e.g., meuication). Continu-
ing the metaphoi, CCs, by inseiting micioscopic exogenous
mateiial into the immune system oi the neivous system of
the human bouy, piouuce subtle changes in the phases
between oiuei anu chaos at the iegion bounuaiy of a sys-
tem anu, consequently, activate each cell in oiuei to vitalize
the bouy system as a whole. We will explain this point
moie analytically fiom the viewpoint of evolutionist insti-
tutional uesign in the next section.
A"? %&' K)00'3'+-' M'26''+ B8/592)/+)(2 G+(2)292)/+.5
K'()*+ .+N D2&'3 GN'.( /0 K'()*+(
We pioposeu evolutionist institutional uesign (EIB) as an
applieu policy methou in evolutionaiy economics a uecaue
ago (Nishibe 2uu2, 2uu4). It is a uiffeient appioach fiom
conventional economics anu focuses on evolution of social
institutions. EIB tiies to show an oiiginal anu effective an-
swei to the uifficult mouein pioblems foi which conven-
tional appioaches cannot easily finu suitable solutions.
As Keynesian macioeconomic contiol policy lost its effec-
tiveness in the 197us anu the communist bloc compiising
Eastein Euiope anu the Soviet 0nion collapseu in the
199us, oveiconfiuence in human ieason was uefeateu.
Bayek's ciiticism of 'the fatal conceit' (Bayek, 1988) that
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
taigeteu at constiuctivism anu
scientism hau uominant influences
since then. Aftei Bayek, on the one
hanu, too much emphasis hau been
placeu on fallibilism of iationality,
anu, on the othei, libeitaiianism
hau been wiuely tiumpeteu. As a
iesult, uesign came to be vieweu
negatively until the enu of 2uth
Bowevei, biological phylogenetic
evolution that geneiateu human
beings as social animals involves
emeigence of such aitifacts as tools
anu machines that aie uesigneu by
humans. Although the concept 'ue-
sign' in itself might imply aitificial
planning anu constiuction, it is
faiily possible to intiouuce a new
way of 'uesign' in oiuei to imple-
ment socioeconomic policies baseu
on the natuial, complex anu nonue-
teiministic piopeities of evolution.
Beie, we piesent evolutionist institutional uesign as such.
Fiistly, it is quite uiffeient fiom constiuctivist institutional
uesign wheie cential goveinments oi planneis fiom the
outset constiuct anu manage a whole economic system
baseu on a compiehensive plan foi achieving a uesiieu
outcome in teims of efficiency anu equality in socialist cen-
tial planning as well as mechanism uesign such as in mai-
ket socialism oi mechanism uesign. Seconuly, it is also uif-
feient fiom opeiationalist institutional uesign wheie cen-
tial goveinments oi planneis uiiectly contiol the iesulting
peifoimance of a whole economic system by aujusting
macioeconomic policymaking paiameteis in Keynesian
'fine-tuning' of effective uemanu.
In contiast to such conventional appioaches, evolutionist
institutional uesign (oi meuia uesign) is wheie agents con-
sciously attempt to ieuesign platfoim meuia that aie basic
exteinal institutions in oiuei to iegulate the evolutionaiy
socioeconomic system so that uual uiiectional causality
between inteinal institutions such as habits, conventions
anu value on the micio level anu the bounuaiy anu pei-
foimance of whole systems at the macio level can be in-
uuceu to change. We woulu like to piesent evolutionist
institutional uesign as a new iuea anu methou foi policy-
making piactices.
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Beie let us intiouuce seveial basic concepts anu iueas in
evolutionaiy economics so that we can use them to claiify
the aims anu significance of evolutionist institutional ue-
sign. What aie similaiities anu uiffeiences between biologi-
cal evolution anu socioeconomic evolution. Biological evo-
lution in neo-Baiwinism is conceiveu as a complex phe-
nomenon involving the following thiee mechanisms: 1)
vaiiance via mutation, 2) heieuity anu S) natuial selection.
In the case of socioeconomic evolution, consiueiing the
peculiai ability of Bomo sapiens to leain fiom anu commu-
nicate with each othei by using language anu money, we
neeu to make some impoitant ievisions to the afoiemen-
tioneu mouel of biological evolution, even if we have thiee
similai mechanisms: 1) vaiiance via natuial anu aitificial
mutation (innovation), 2) ieplication¡tiansmission of
knowleuge¡infoimation anu S) natuial anu aitificial selec-
tion (competition anu coopeiation). If we auu 4) self-
oiganization as anothei mechanism missing in neo-
Baiwinism in oiuei to explain how oiuei spontaneously
emeiges anu giows, we now have foui inuepenuent
mechanisms of socioeconomic evolution.
Fig. 2 uepicts an example of a multilayeieu nesteu stiuc-
tuie. Thiee inuiviuuals (inteiactois 1j, 2j anu ij symbolizeu
by thiee small ciicles) with theii own ieplicatois as intei-
nal iules foi cognition anu behavioi (ieplicatois 1j, 2j anu ij
symbolizeu by thiee small iectangles in small ciicles, ie-
spectively) belong to an oiganization (inteiactoi j symbol-
izeu by a laige ciicle) with its own ieplicatois (ieplicatoi j
symbolizeu by a iectangle at the centei of the laige ciicle)
as exteinal iules foi laws, noims anu moials.
Evolutionaiy economics has two basic concepts: 'ieplica-
tois' anu 'inteiactois.' 0n the one hanu, ieplicatois in so-
cioeconomic evolution that coiiesponu to genes oi BNA in
biological evolution aie institutions that consist of a bunule
of if¡then iules shaieu by a ielatively laige numbei of
agents. Such institutions constituteu as iules aie classifieu
fiom the viewpoint of agents into 'inteinal' (game stiate-
gies, fiames of cognition, psychological biases anu behav-
ioial ioutines) anu 'exteinal' (game iules, laws, conven-
tions, noims anu moials). 0n the othei hanu, inteiac-
tois÷causal agents that coiiesponu to oiganism anu
gioups oi populations in biological evolution÷aie inui-
viuuals oi gioups of inuiviuuals who execute iules (act
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
Fig. 2 Multilayered nested structures composed of replicators and interactors (Source:
revised from Nishibe, et.al (eds.) (2010) p.80)
accoiuing to both inteinal anu exteinal iules) anu inteiact
with themselves anu otheis as well as exteinal enviion-
ments. Then we can visualize oui socioeconomy as coexis-
tence of a uiveise aiiay of iules anu institutions that foim
mutually complementaiy anu substitutive ielations. We
call such a uynamic system the 'institutional ecology'
(Bashimoto & Nishibe 2u12).
In most cases, ieplicatois anu inteiactois foim multilay-
eieu nesteu stiuctuies. Wheieas inuiviuuals aie agents
with theii own ieplicatois as inteinal institutions (iules),
such gioups of inuiviuuals as oiganizations (fiims), mai-
kets, communities anu states aie also agents with theii
own ieplicatois that aie piefeientially imposeu as exteinal
institutions (iules) on inuiviuual membeis as long as they
belong to those gioups. If some inuiviuual membeis cannot
fully accept all the iules of the belonging gioup, in othei
woius, any of the inteinal iules of the inuiviuual membeis
conflict with the exteinal iules of the belonging gioup, they
must leave oi be kickeu out of the gioup. Foi example, as
long as inuiviuuals belong to any gioup of inuiviuuals, they
must obey some necessaiy basic iules of the gioup. If any
inuiviuuals cannot follow the iules, they cannot belong to
the gioup. The ielations of gioups (foi instance, fiims) anu
uppei levels of gioups aie similai. The numbei of hieiai-
chical levels in the nesteu stiuctuies is logically infinite, but
in ieality theie aie usual only seveial.
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We now piesent a simplei mouel with thiee levels÷the
micio-meso-macio loop mouel÷to uesciibe uynamic chai-
acteis of an evolutionaiy system as in Fig. S. Symbolically
geneializeu communication meuia such as language, law
anu money can be iegaiueu as platfoim institutions (basic
ieplicatois) locateu on the meso level in Fig. S. Inuiviuuals
as inteiactois on the micio level have theii own ieplicatois
composeu of inteinal iules such as instincts, chaiacteis,
habits, ioutines, motives anu value. Such platfoim institu-
tions as money, accounting, company anu laws aie ie-
gaiueu as basic ieplicatois (iules) locateu on the meso
level because, as outei institutions, they affect such innei
institutions as common value, moial anu consciousness
shaieu by a ceitain numbei of micio agents on the meso
level, anu, on the othei hanu, ueteimine such inteinal iules
within micio agents as the ioutinizeu fiames of cognition
anu habitual iules of uecision¡ action on the micio level so
that agents can behave baseu on such fiames anu iules. In
shoit, platfoim meuia as outei institutions on the meso
level basically iegulate how agents shaie theii moials, val-
ues anu beliefs on the meso level anu behave anu inteiact
with one anothei on the micio level. Platfoim meuia meui-
ate uual uiiectional causal ielations between socioeco-
nomic peifoimances anu patteins on the macio level anu
behavioi of agents baseu on inteinal iules on the micio
CCs aie integiative communication meuia locateu on the
meso level anu meuiate uual uiiectional causal ielations
between socioeconomic peifoimance anu patteins on the
macio level anu behavioi of agents baseu on inteinal iules
such as values motives anu ioutines on the micio level.
Fig. 3 Micro-Meso-Macro Loop
(Source: Nishibe &Kusago (2012)
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6>;.?48;=824 8=2484?48;=3. <6287=
If we set new iules oi ievise some iules of CCs as platfoim
institutions on the meso level, such a change woulu affect
socioeconomic peifoimance anu patteins on the macio
level because agents change theii behavioi in iesponse to
the change of exteinal iules even though agents keep in-
teinal iules such as fiames of cognition, motives anu iou-
tines unchangeu. Even though agents follow the same in-
teinal iules wiitten as if¡then statements, if any input con-
uitions change in the conuitional clause (if~) incluuing any
change in exteinal iules, they might change theii behavioi
as output in the main clause (then.) accoiuing to the
change in the conuitional clause.
But if any mouification of exteinal iules as platfoim institu-
tions on the meso level changes inteinal iules such as val-
ues, motives anu ioutines of agents on the micio level, they
eventually have changeu theii 'ways of behaviois,' not 'be-
haviois as output' in the same inteinal iules.
Foi example, let us assume that you always behave as a
utilitaiian accoiuing to the iule of maximizing youi utility,
anu if the ciiminal laws aie amenueu to allow you to steal
anything fiom otheis without penalty, you aie supposeu to
stait stealing things to maximize youi utility, iathei than to
pay money to buy things. But if you weie taught the moial
stanuaiu that stealing is not iight because it huits otheis,
anu theiefoie iefiain fiom stealing, you woulu ultimately
give piioiity to the moial stanuaiu iathei than the utility
maximization iule anu you woulu not behave as a utilitai-
ian. This means that you woulu not change youi behavioi
itself÷you uiu not steal befoie oi aftei amenument of the
law; insteau you change youi inteinal iules, that is, youi
ways of ueteimining how to behave.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
Aftei all, the change of exteinal iules on the meso level can
affect not only peifoimance on the macio level but also
inteinal iules on the micio level. Both constiuctivist anu
opeiationalist appioaches of institutional uesign piesume
that such inteinal iules on the micio level aie all fixeu be-
cause such inteinal iules aie given by optimality piinciples
such as maximization of utility anu piofits. The constiuctiv-
ist appioach, on the one hanu, aims at constiucting systems
oi stiuctuies on the macio level baseu on utilitaiian behav-
ioial piinciples imposeu on agents on the micio level. The
opeiationalist appioach, on the othei hanu, makes mac-
ioeconomic mouels with seveial sectois anu aims at social
engineeiing to uiscietionally contiol such fluctuations anu
instability of the system, such as business cycles anu
inflation¡ueflation on the macio level.
Bowevei, uiffeient fiom those, the evolutionist appioach
thinks of inteinal iules on the micio level as vaiiable, anu
tiies to consiuei the effects both on peifoimance anu pat-
teins oveiall at the macio level anu on inteinal iules at the
micio level; these effects aiise simultaneously fiom
changes in the policymaking iegaiuing exteinal iules em-
bouieu in platfoim institutions (e.g., meuia such as money)
anu fiom changes in accounting iules at the meso level.
Fig. 4 Classification of foui types of socioeconomic policies
(Souice: Nishibe (2u1u) p.249)
Fig. 4 classifies socioeconomic policies into foui categoiies
along two axes of changeu¡unchangeu foi inteinal oi ex-
teinal institutions. Beie, evolutionist institutional uesign
coiiesponus to 4) 'meuia uesign' wheie both exteinal anu
inteinal institutions aie changeu. In contiast, constiuctivist
institutional uesign is unueistoou as S) 'mechanism uesign'
in which only exteinal iules aie changeu, anu opeiational-
ist institutional uesign is uepicteu in 1) conventional mac-
ioeconomic monetaiy anu fiscal policies wheie neithei iule
is changeu. We can see 2) 'change of inteinal iules oi con-
sciousness' in ethical consumption, social investment anu
coipoiate social iesponsibility. These aie all socioeconomic
policies, but oui focus is especially on 4) 'meuia uesign'
baseu on evolutionist institutional uesign.
To make oui socioeconomy moie sustainable without the
intoleiable instability anu tuibulence of a financial capital-
istic maiket economy, we can use meuia uesign as a poli-
cymaking tool to implement special uistiicts, social ex-
peiiments anu local movements specifically in teims of
money anu cieuit as economic meuia on the meso level. But
it is ciucial to examine what set of iules of money anu
cieuit aie bettei suiteu to accomplishing ceitain aims, foi
example, pieventing excessive economic fluctuation anu
achieving socioeconomic stability by iefeiiing to mouein
expeiiments of vaiious kinus of CCs.
Conventional national cuiiencies aie the platfoim institu-
tions that ueteimine the gianu uesign (basic ieplicatois)
foi the capitalistic maiket socioeconomy to evolve. In con-
tiast, such cuiiencies, CCs can be thought of as uiffeient
kinu of platfoim institution with uiffeient basic ieplicatois
that can giauually change both exteinal anu inteinal insti-
tutions of agents anu can potentially evolve fiom a capital-
istic maiket socioeconomy to noncapitalistic maiket econ-
omy. But even so, the ieality is that CCs have only weak
capabilities foi suivival anu uiffusion. We shoulu thus ex-
amine in iegaiu to meuia uesign what kinus of othei extei-
nal institutions can coexist with CCs oi cieate a favoiable
enviionments foi them in oiuei to empowei CCs.
!" $%&'%()*+ ,-.*+/0'1*2) 0-3(.$ -4 (5-6
.7%*-2*$% *2$%*%7%*-2'. 3($*)28 0(3*' 3(6
$*)2 '23 +-0072*%/ 3-+1
If we intiouuce CCs that possess the uual puiposes anu
piopeities of both money anu language, we can inteipiet it
as ievision of the ieplicatois conceining exteinal iules foi
money on the meso level. Accoiuing to the afoiementioneu
uynamic chaiactei of the micio-meso-macio level of the
system, the intiouuction of CCs as platfoim meuia on the
meso level affects both the peifoimance anu patteins on
the macio level anu the inteinal iules within agents on the
micio level. In evolutionist institutional uesign, we neeu to
consiuei both aspects at the same time, anu implement
meuia uesign of CCs so that they can impiove the macio
peifoimance anu become moie viable fiom the peispective
of business management. Fuitheimoie, it woulu be uesii-
able fiom the stiategic viewpoint to iecognize anu evaluate
the changes of paiticipants' inteinal iule causeu by the
intiouuction of CCs, anu make use of such feeuback in oi-
uei to impiove the uesign of CCs that can inuuce fuithei
uesiiable changes.
Fig. S shows such stiategic policy-making mouels foi evolu-
tionist institutional uesign. While meuia uesign is locateu
on the uppei level within evolutionist institutional uesign,
community uock is locateu on the lowei level. They foim
the nesteu stiuctuie of evolutionist institutional uesign.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
Fig. 5 The nested structure of media design with commu-
nity dock (Source: Nishibe 2006a)
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When we use the teim 'meuia uesign' in a bioau sense as a
synonym foi evolutionist institutional uesign, it geneially
inuicates a new iuea anu methou of institutional uesign. So
it concietely signifies policymaking methous (e.g., special
uistiicts, subsiuies anu iefoims) in teims of meuia such as
money, laws, accounting iules anu sciences. But we can
also use the woiu 'meuia uesign' in the naiiow sense to
inuicate the piocess of uesign of any specific meuium like
CCs within the fiamewoik of evolutionist institutional ue-
sign in Fig. S. In this section, we will focus on the bioau
sense fiist anu the naiiow sense theieaftei.
The constiuctivist institutional uesign known as 'mecha-
nism uesign' consiueis inteinal iules within agents (con-
sumeis anu piouuceis) as fixeu optimality piinciples (util-
ity oi piofit maximization). In constiuctivist institutional
uesign the maiket is unueistoou to be the 'concentiateu
mechanism' piecisely embouieu in the 'piice mechanism' in
only an iueal sense anu the maiket is evaluateu accoiuingly
in teims of efficiency of iesouice allocation anu infoima-
tion tiansmission as well as incentive compatibility in oi-
uei that the outsiueis of the system can constiuct an opti-
mal 'auction mechanism' baseu on the ciiteiia.
In contiast to this, 'meuia uesign' conceives inteinal iules
within agents as consisting of ielatively simple ioutines,
motives anu values in oiuei to pioviue satisfaction, not
maximization, subject to iealistic constiaints such as iiie-
veisible time anu bounueu iationality of agents. Fuithei,
meuia uesign takes the maiket to be moie iealistically 'ue-
centializeu netwoiks' of aim's length tiansactions foi buy-
ing anu selling meuiateu by money anu accoiuingly evalu-
ates the maiket in teims of iepiouuction, uevelopment anu
uiveisity of social anu ecological systems, satisfaction of
effective uemanu, anu systemic stability anu iobustness of
macio peifoimance. Neuia uesign thus enables the paitici-
pants of the system to uesign moie uesiiable meuia as
money, CCs, anu the like. In othei woius, meuia uesign is
not a phenotypic appioach that attempts to uiiectly con-
stiuct (iathei than uesign) the mechanism itself with ue-
siieu functions anu piopeities, but iathei a genotypic ap-
pioach that uesigns meuia as institutions (ieplicatois) that
inuiiectly inuuce uesiieu functions anu piopeities which
aie manifesteu by themselves.
Let us now to take a closei look at the iuea of institutional
ecology to elaboiate on the wiuei sense of meuia uesign. In
the age of globalization, a commonly helu notion is that
money will move towaiu a single cuiiency because of the
effects of netwoik exteinality in consiueiation of efficiency
anu convenience (Aithui, 1994). The uominance of the 0.S.
uollai as a key cuiiency in the woilu economy is in many
cases citeu as an exemplification of the claim. Bowevei, the
euio was cieateu as a tiansnational cuiiency to countei the
0.S. uollai's uominance anu the cuiiencies of the BRIC
countiies have incieaseu in value. In }apan, theie aie ui-
veise cuiiencies with specific piopeities anu niches, such
as national cuiiency, coipoiate money (mileages anu
points), electionic money, local cuiiencies anu local cou-
pons (gift ceitificates). Thus, a single uominant cuiiency is
not complete anu the coexistence of vaiious monetaiy in-
stitutions is cuiiently obseiveu just as institutional ecology
Nonetaiy institutional ecology is an ecosystem wheie
gioups of monetaiy institutions anu gioups of useis who
stiategically use multiple moneys co-evolve (Bashimoto &
Nishibe 2u12). Such moueling can bettei explain the styl-
izeu facts that globalization anu localization of money si-
multaneously pioceeu anu multiple species of money con-
tinue to coexist. Anu we cannot concluue that meuia uesign
in teim of multiple cuiiencies incluuing CCs will open a
new fielu in socioeconomic policy until we can see the
woilu fiom such a stanupoint.
0nuei such a theoiy of applieu policymaking, we uo not
necessaiily have to iecognize globalization anu its piob-
lems as inevitable facts. Then we neeu neithei to think that
theie aie no othei effective methous than to ueiegulate the
maiket anu open it to foieign countiies, noi to patch ovei
each pioblem tempoiaiily by aujusting fiscal anu monetaiy
policies when financial ciises anu iecessions occui. Insteau,
it woulu be wisei in the long iun to conuuct meuia uesign
to encouiage vaiious CCs to emeige anu to aim at builuing
a sustainable anu iecycling-oiienteu socioeconomy fiom
the peispective of iepiouuction iathei than efficiency so as
to impiove mouein socioeconomic constitution by ieues-
igning platfoim institutions of money anu cieuit. Next, we
will focus on seveial examples using CCs foi meuia uesign
in the naiiowei sense.
Fiistly, theie have been many attempts to ieuesign the
iules of CCs in oiuei foi them to be moie sustainable. In the
case of Eco-money, a }apanese CC that came into use in the
late 199us foi only volunteei activities anu mutual aiu,
theie was a pioblem that cuiiency ciiculation is hinueieu
by such noncommeicial tiansactions. If Eco-money coulu
be useu foi commeicial tiansaction foi local shoppeis as
well as local fiims, goveinments anu nonpiofit oiganiza-
tions, uouble ciicuits of CC uiiven by the complementaiity
of noncommeicial anu commeicial tiansactions, wiue cii-
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
culation coulu be achieveu moie smoothly. In an expeii-
ment on a CC in Tomamae Town, Bokkaiuo, the velocity of
the CC with the 'Bouble-Tiiangle Nethou' was founu to
ieach S.1 (fiist expeiiment, 0ct. 2uu4 to Feb. 2uuS) anu S.S
(seconu expeiiment, Aug. 2uuS to }an. 2uu6) tuinoveis pei
yeai, which iespectively coiiesponu to about 6-7 anu 4-S
times that of the legal tenuei at the time. These uata sup-
poit oui claim that the CC of such a methou can have sig-
nificant economic effects in vitalizing local economies (Ki-
chiji & Nishibe 2uu8).
Let us take anothei example of meuia uesign of CCs in
which auministiation bouies attempt to change the piopei-
ties of CCs by aujusting vaiious paiameteis. Buiing the
2uuus in }apan, local coupons issueu by local goveinments
anu chambeis of commeice flouiisheu. Nany consumeis
weie willing to puichase local coupons because they went
foi a piemium between 2% anu 1u%, subsiuizeu by local
goveinments. At the time, the }apanese cential goveinment
hau cieateu seveial special uistiicts foi CCs to ueiegulate
laws that placeu conuitions on the issuance anu ciiculation
of such coupons. It also encouiageu CCs to take the foim of
ieueemable local coupons as in Tomamae Town's CC. In
this case, meuia uesign mainly taigeteu how to aujust such
paiameteis as the iates of piemium, uemuiiage (negative
inteiest) anu ieuemption fee, in auuition to the choice be-
tween note-type anu account-type CCs. The highei the
piemium, the moie willingly local consumeis bought the
CC. The highei the uemuiiage, the fastei consumeis spent
the CCs, consuming insteau of hoaiuing. The highei that of
ieuemption fee, the moie times consumeis ciiculateu CCs
without ieueeming them. Accoiuingly, it is effective to iaise
the iates of piemium, uemuiiage anu ieuemption in oiuei
to encouiage supply, tuinovei anu local ciiculation of CCs.
If local goveinments issue CCs, they will have policymaking
tools foi aujusting the local money stock similai to the ones
that a cential bank has foi a national money stock.
!"# %&''()*+, -&./
'Community uock' is uesigneu as pait of evolutionist insti-
tutional uesign foi embouying a stiategic anu compiehen-
sive methou foi integiating self-estimation of socioeco-
nomic situations of the community anu self-alteination of
such inteinal iules as fiames of cognition, motives, values
anu noims foi paiticipating agents of CCs. It was ueviseu to
be analogous to 'human uock,' which is a }apanese teim
that means a peiiouic complete meuical checkup foi eaily
uiagnosis anu self-awaieness of lifestyle pioblem, because
lifestyle-ielateu uiseases aie wiuely obseiveu in many
communities. Similai to human uock, community uock not
only aims at accomplishing objective obseivation anu uata
analysis of the piesent state, but also puts emphasis on
paiticipants' self-awaieness, self-estimation anu self-
alteination (Nishibe 2uu6a, Nishibe & Kusago 2u12).
0nce policymakeis oi auministiative agents establish ex-
teinal institutions of CCs in meuia uesign anu paiticipants
conuuct tiansactions using CCs, community uock will
commence. It is composeu of the following foui piocesses:
1) analysis anu uiagnosis of cuiient peifoimance of the
socioeconomy of a community given uata collecteu by
thiiu-paity ieseaicheis anu auviseis, 2) self-estimation
anu ieflection on the peifoimance of the community anu
theii own inteinal iules by paiticipating agents, S) self-
alteination of fiames of cognitions, motives, values anu
noims by paiticipating agents, anu 4) change of piopeities
of CCs as platfoim meuia causeu by alteination of inteinal
institutions of paiticipating agents.
The loop of community uock is encompasseu by the whole
piocesses of meuia uesign of CCs in Fig. S. Aftei sufficient
numbeis of iepetitions of community uock with the same
CC iules, policymakeis oi auministiative agents might fine-
tune oi iefoim exteinal CC iules baseu on accumulateu
expeiiences anu upuateu uiagnosis so that they can auapt
the alteieu inteinal iules of paiticipants anu attain the ini-
tial goals moie effectively. Neuia uesign in the naiiow
sense is thus situateu on the uppei level of community
uock in the oveiall pictuie of evolutionist institutional ue-
sign, that is, meuia uesign in the bioau sense.
We conuuct analysis anu uiagnosis in community uock by
using both subjective uata such as iesults of question-
naiies, inteiviews anu uiscussions anu objective uata such
as uetails of tiansactions, tuinovei of money, anu piopei-
ties of the money ciiculation netwoik among paiticipants.
While the economic effects of CCs can be asceitaineu fiom
theii tuinovei oi netwoik of ciiculation by using the uata
about each tiansaction (uate, item, fiom, to), theii social
anu cultuial effects can be asceitaineu fiom the obseiveu
changes of paiticipants' consciousness anu values. Foi ex-
ample, we conuucteu netwoik analysis of CC ciiculation
among agents anu iegions by using uata filleu in on the
back of notes by paiticipants in the Tomamae Town ex-
peiiments (Nishibe 2uuS; Kichiji & Nishibe 2uu8).
Even though analysis anu uiagnosis aie uone by using ob-
jective uata, whethei such uata can be obtaineu actually
uepenus on whethei paiticipants aie willing to pioviue
them, that is to say it uepenus on paiticipants' inteinal
iules incluuing fiame of cognition, motives anu values. It is
thus significant to pay attention to the uynamic piocess
cieateu by implementing community uock. In evolutionist
institutional uesign, the change of paiticipants' inteinal
institutions affects not only macio peifoimance of platfoim
meuia oi exteinal institutions but also its analysis anu es-
timation. Its effectiveness thus uepenus on volunteei pai-
ticipation anu the pioactive attituue of agents. Community
uock as a policymaking methou is not top-uown fiom poli-
cymakeis, but iathei bottom-up fiom paiticipants.
The fiamewoik of evolutionaiy institutional uesign is thus
establisheu so that we can moie ueeply unueistanu both
theoietical anu piactical aspects of CCs fiom moie iealistic
viewpoints of evolutionaiy economics. We believe that this
fiamewoik can pioviue a moie suitable methou of self-
management of CCs foi theii piactitioneis.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
Aithui, B. (1994) Incieasing Retuins anu Path Bepenuence in the
Economy, The 0niveisity of Nichigan Piess.
Blanc, }. (2u11) "Classifying "CCs": Community, complementaiy
anu local cuiiencies' types anu geneiations," Inteinational }ouinal
of Community Cuiiency Reseaich, 1S, B4-1u.
uiegoiy, C.A. (1997) Savage Noney: The Anthiopology anu Politics
of Commouity Exchange, Baiwoou Acauemic Publisheis.
Bashimoto, T. anu Nishibe, N. (2u12) "Institutional Ecology: A
Theoietical Nouel anu Its Economic Implication (in }apanese) ",
Economic Stuuies, Bokkaiuo 0niveisity, 61:4, 1S1-1S1.
Bayek, F. A. (1988) The Fatal Conceit: The Eiiois of Socialism, The
0niveisity of Chicago Piess.
Bait, K. (2uuu) The Nemoiy Bank: Noney in a 0nequal Woilu.
Piofile Books.
Bougson, u.N. (1988) Economics anu Institutions: A manifesto foi
a Nouein Institutional Economics, Polity Piess.
Bougson, u.N. (199S) Economics anu Evolution: Biinging Life Back
into Economics, Blackwell Publisheis
Kichiji, N. anu Nishibe, N. (2uu8) "Netwoik Analyses of the Ciicula-
tion Flow of Community Cuiiency," Evolutionaiy anu Institutional
Economics Review, 4 : 2, 267-Suu.
Luhmann, N. (1984=199S) Social Systems, Stanfoiu 0niveisity
Luhmann, N. (1988) Bie Wiitschaft uei uesellschaft, Suhikamp
Naix, K. (18S9=197u) A Contiibution to the Ciitique of Political
Economy, Inteinational Publishes.
Naix, K. (1867=1887) Capital, vol.1. Piogiess Publishes.
Nelson, R. R., anu Wintei, S.u. (1982) An Evolutionaiy Theoiy of
Economic Change, Belknap Baivaiu.
Nishibe, N. (2uu2), Evolutionist Institutional Besign (in }apanese),
Social anu Economic Systems Stuuies (}apan Association foi Social
anu Economic Systems Stuuies), vol.2S
Nishibe, N. (2uu4) "Evolutionist Institutional Besign", (eu.)
Nishibe, N. Fiontiei of Evolutionaiy Economics (in }apanese), S-
Nishibe, N. (eu.) (2uuS) The Repoit on the Expeiiment of Ciicula-
tion of CC in Tomamae Town, (in }apanese), Bokkaiuo Association
of Chambeis of Commeice anu Inuustiy
Nishibe, N. (2uu6a) "Local Cuiiency anu Community Bock: The
Repoit of the Expeiiment of Ciiculation of CC in Tomamae Town"
(in }apanese), Stuuies on Local Policy, S4: 4u-S6
Nishibe, N. (2uu6b) "Local Cuiiencies as Integiative Communica-
tion Neuia anu Evolutionist Institutional Besign" (in }apanese),
The Bulletin foi Economic Sociology, 28: 6-2u.
Nishibe, N. (2u1u) "Evolutionaiy Economics anu its Policy" (in
}apanese), Ch.7, Nishibe, et al. (eus.) (2u1u)
Nishibe, et.al (eus.) (2u1u) Evolutionaiy Economics: Its Founua-
tion, Nihon Keizai Byoion Sya,
Nishibe*, N. anu Kusago*, T. (*equal contiibution) (2u12) "Com-
munity Bock: A Nethou foi Policy-making of Alteieu Institution by
Communities' 0n-the-spot Agents" Annual Bulletin foi }apan Asso-
ciation foi Evolutionaiy Economics, vol. 16 (CB-R0N)
Polanyi, K. (1944) The uieat Tiansfoimation, Rinehait.
Tofflei, A. (198u) The Thiiu Wave, Noiiow.
veblen, T. (1899=1998) The Theoiy of the Leisuie Class: An Eco-
nomic Stuuy of Institutions, Piometheus Books.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
International Journal of
Community Currency Research
Volume 16 (2012) Section D 49-57
Nozomi Kichiji*

And Makoto Nishibe**

*Department Of Economics, Asahikawa University
**Graduate School Of Economics And Business Administration, Hokkaido University
In this papei, we have compaieu concentiateu cieation of money with uispeisive cieation of
money, anu tiy to show, by using the iesults of computei simulation, the auvantage of the
methou of uispeisive money cieation embouieu into LETS in compaiison with concentiateu
money cieation. Bowevei, both ways of money cieation have paiticulai meiits anu uemeiits.
We also estimate the effect of uiffeient iules foi iestiicting the uppei limits of uebits of all pai-
ticipants in LETS on the iate of iealizeu tiansactions in oiuei to pievent fiee iiuing.
Fiist, we give an oveiview of LETS. Seconu, we show, using a computei simulation, the auvan-
tage of the methou of uispeisive money cieation compaieu to concentiateu money cieation.
Finally, we have uemonstiateu the valiuity of the 'tiansaction inuexation methou' to set the
iules of ueteimining the uppei limit of uebits in LETS to avoiu fiee iiuing anu to enhance tians-
action efficiency.
We woulu like to thank two anonymous iefeiees foi theii helpful comments.
* Email: kichijiÇlive.asahikawa-u.ac.jp nishibeÇecon.hokuuai.ac.jp
¦ The authois contiibuteu equally to this woik
$0 2345 4637 89432:5; Kichiji, N. anu Nishibe, N. (2u12) 'A compaiison in tiansaction efficiency between uis-
peisive anu concentiateu money cieation' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 49-
S7 <www.ijcci.net> ISSN 1S2S-9S47
!" $%&'()*+&$(%
The maiket is usually visualizeu as a 'concentiateu' maiket
with an auctioneei anu tâtonnement (Walias 1874=19S4,
Aiiow & Bahn 1971); howevei, the maiket wheie we ieally
neeu the money as a means of exchange is not this kinu but
insteau is a 'uispeisive' maiket without such an auctioneei
oi an invisible hanu. That is, it is a netwoik of bilateial
tiansactions, buying anu selling, foimeu ovei a ceitain
time. Nost of the maikets we face in uaily life aie suiely of
the 'uispeisive' kinu. Noney matteis in such a iealistic
maiket (}ones 1976, Kiyotani&Wiight 1989, 199S, Nat-
sui&Shimizu 2uuS).
The impoitant function of money in such maikets is uecou-
pling: sepaiating the buying fiom the selling of a commou-
ity tempoially oi spatially as mutually inuepenuent pioc-
esses. Thus, money holueis can obtain the fieeuom to buy
any commouity at any time anu in any place oi to keep on
holuing it without buying anything. Noney thus establishes
autonomy in the uecision making of an economic agent. But
'Say's Law' which ensuies equilibiium between supply anu
uemanu of all commouities uoes not holu in this situation;
neithei uoes the 'law of one piice'
In a laige-scale economy, all economic agents face bounus
of iationality, so they have to ueciue the piice anu the
quantity in such negotiateu tiansactions as buying anu
selling, anu then uispeisively anu sequentially execute
tiansactions by using money foi payment. They cannot
stait it ovei even though they may iegiet it latei on. Ac-
coiuingly, money is thought of as a communication me-
uium (Luhmann 1984=199S, ch.4. sec.7-8) that ieuuces the
complexity of exteinal enviionments so that agents can
make autonomous uecisions anu that conveys 'value' fiom
a buyei to a sellei. Noney thus geneiates a uispeisive mai-
ket as a netwoik of tiansactions (Nishibe 2uu6, Kichiji&N-
ishibe 2uu8).
Noney usually ieminus us of cash oi banknote, but the
main foim of piesent money is ueposit money baseu on
bank cieuit. Banknote is monopolistically issueu anu con-
tiolleu by cential banks. We call such a methou of banknote
issue 'concentiateu.' 0n the othei hanu, ueposit money is
cieateu when banks make "loans." It is baseu on bank
cieuit that is inuepenuently cieateu by many piivate banks.
Then we call such a methou of cieating ueposit money 'uis-
peisive'. We now have a classification of maiket anu money
cieation (cuiiency issue) as 'concentiateu' anu 'uispeisive.'
In a similai compaiison, mutual cieuit cleaiing associations
anu LETS (Local Exchange Tiauing Systems) aie thus clas-
sifieu as 'uispeisive' money cieation, anu papei type of
community cuiiencies aie classifieu as 'concentiateu'
money cieation.
Noney as an infoimation meuium can exist piioi to its be-
ing a meuium of exchange. The necessaiy conuition of
money is not its geneial acceptability as the means of ciicu-
lation. Even if only a small numbei of people ieceive it as a
stanu-alone infoimation meuium oi as a measuie of value,
we coulu call it "money". In this sense, each foim of elec-
tionic money, shopping point, mileage, exchange coupon
anu community cuiiency shoulu be all calleu "money". We
summaiize the uiffeient types of money accoiuing to
money cieation oi issue anu othei featuies in Table 1.
Community cuiiencies (CC) have such featuies as i) negoti-
ateu tiansaction, ii) fiee negotiation of piice anu quantities,
iii) ielatively small spheie of ciiculation, iv) non-
conveitible oi haiu to conveit into legal tenuei, v) fieely
issueu anu shaieu auministiative costs by citizens, citizen
gioups oi local goveinment, vi) beaiing zeio oi minus in-
teiest iate. i) anu ii) aie the featuies in common with legal
tenuei obseiveu in a laige commeicial spheie, anu iii)-vi)
aie the geneial featuies of local cuiiencies.
WIR (Wiitschaftsiing) anu concuiient cuiiencies, howevei,
aie exempt fiom this classification. WIR-bank offeis fi-
nance of WIR-money foi iegisteieu SNEs at lowei inteiest
iates than noimal loans. We finu all featuies of CCs but vi)
in WIR-money. 0n the othei hanu, concuiient cuiiencies in
a fiee banking system that Bayek (1976) pioposeu have
common featuies of CCs but iv) anu vi). So we locate WIR-
money anu concuiient cuiiencies as inteimeuiate configu-
iations between legal tenuei anu community cuiiency.
In oiuei to see the uiffeience of ciiculation efficiency ue-
penuing on the uiffeient types of money cieation, we focus
on compaiing the two extiemes, legal tenuei anu commu-
nity cuiiency, in paiticulai, banknotes anu LETS, among
these vaiious moneys.
LETS stanus foi Local Exchange Tiauing System. This sys-
tem iepiesents one of the most populai account type CCs;
it was initiateu in 198S by Nichael Linton in Comox valley,
vancouvei Islanu, Canaua. This is a mutual cieuit system
baseu on uispeisive money cieation. 0thei than the ac-
count type, theie aie also papei money type CCs. Nouein
legal tenuei consists of cash anu ueposit money. Cash
money is cential banknote (as non-conveitible papei
money, oi I00) exclusively issueu by cential banks anu
subsiuiaiy coin minteu by goveinments. Beposit money is
bank money cieateu by the bank cieuit (cieuit cieation) of
piivate banks unuei the constiaint of a ieseive ueposit
CCs aie classifieu into such papei money types as Ithaka
Bouis, baseu on concentiateu money cieation by an aumin-
istiative committee anu such account type as LETS, baseu
on uispeisive money cieation by inuiviuual anu gioup pai-
ticipants. Legal tenuei is also classifieu into concentiateu
money cieation in the case of cash money anu uispeisive
money cieation by piivate banks in the case of ueposit
money. In ieality, theie is a big uiffeience between com-
munity cuiiencies anu legal tenuei in view of theii basic
featuies; howevei, it cannot be uenieu that theie is cei-
tainly an impoitant similaiity between them. The papei
money type of CC is similai to cash money anu the account
type of CC, incluuing LETS, is similai to ueposit money in
teims of methous of money cieation.
International Journal Of Community Currency Research 2012 Volume 16 (D) 49-57 Kichiji And Nishibe
Bowevei, we aie able to see a cleai uistinction between
LETS anu ueposit money in table 1. In the case of LETS,
issueis geneially match useis. 0n the othei hanu, in the
case of ueposit money issueis such as commeicial banks
uon't match useis such as national citizens. Thus we call
such a methou of cieating ueposit money 'quasi-uispeisive'.
In this papei, we woulu like to compaie concentiateu ciea-
tion of money anu uispeisive cieation of money such as
two extiemes of legal tenuei anu LETS in the view of
money cieation, anu tiy to show, by using the iesults of
computei simulation, the auvantage of the methou of uis-
peisive money cieation embouieu into LETS in compaiison
with concentiateu money cieation. We also estimate the
effect of uiffeient iules foi iestiicting the uppei limits of
uebits (negative balances oi ieu ink) of all paiticipants in
LETS on the iate of iealizeu tiansactions in oiuei to pie-
vent fiee iiuing.
Fiist, we give an oveiview of LETS. Seconu, we show, using
a computei simulation, that the iatio of iealizeu tiansac-
tions to attempteu tiansactions unuei money stock con-
stiaints (buuget constiaints by money stock helu) is ue-
teimineu by such factois as the iatio of agents initially
holuing money to agents holuing no money, anu the
amount of initial money helu pei capita.
In moie uetail, when the uistiibution of the initial money
helu by each agent follows a unifoim uistiibution, the
amount of iealizeu tiansactions incieases with the initial
money stocks helu among all agents. Simulation iesults
suggest that each agent has to holu an initial money stock
of about 1.7 times as much as the aveiage tiansaction
amount pei capita in oiuei to iealize all attempteu tiansac-
tions. Bowevei, suppose the agents have no uppei limit of
ueficit, in the case of mutual cieuit anu uispeisive money
cieation like LETS, the iealizeu tiansaction iatio is 1uu% at
all times, even if the initial money helu is zeio. Finally we
show that LETS as a meuium of exchange has supeiioi
tiansaction efficiency in teims of the iatio of iealizeu
!" $%&' () *+'),
LETS is one of the account type Community Cuiiencies foi
whoevei wants to use it. Tiansactions using LETS aie ie-
coiueu in each paiticipant's account. Paiticipants can buy
anu sell piouucts anu seivices fiom each othei with spe-
cific teims of piice anu quantities on a peei-to-peei basis.
LETS can only ciiculate within finite physical oi viitual
uomains. If you have a positive ueposit in youi account, you
will not gain any inteiest fiom youi savings. If you have no
money anu you want to buy something, you still can buy it
by going below zeio in youi account by cieating money
units. The money in LETS can be cieateu by inuiviuuals
without any limit oi with a ceitain uppei limit accoiuing to
the iules of each LETS. This is completely uiffeient fiom
conventional money issueu baseu on the value of commou-
ity as money oi the authoiitative powei of goveinments as
issueis. LETS has piopeities similai to those founu both in
money anu cieuit. It is money in the sense that it can func-
tion like conventional national cuiiencies, as a means of
ciiculation to meuiate exchange, as a measuie of value to
pioviue the stanuaiu foi exchange, anu as a means of
hoaiuing to stoie value.
In the case of a tiansaction of 1uuu uollais, the account of a
sellei is iecoiueu plus 1uuu uollais anu the account of a
International Journal Of Community Currency Research 2012 Volume 16 (D) 49-57 Kichiji And Nishibe
Type of
Banknote Deposit
WIR money Paper money
type of CC
Hours etc)
Account type
of CC
(LETS etc)
Issuer Central banks Commercial
tive Commit-
and groups
Nationwide Nationwide Worldwide,
Inter-SMEs Territorial
of interest
of interest
Type of Issue Concentrated Quasi-
Concentrated Concentrated Dispersive
User National
Clients Registered
and non-
and groups
Legal tender Legal tender Intermediate configuration Intermediate configuration Community currency Community currency
Table 1: The compared characteristics of legal tender and community currency from the point of view of money creation
buyei is iecoiueu minus 1uuu uollais. LETS auopts an
accounting system that cieuits black to a sellei anu uebits
ieu to a buyei on each tiansaction, so that the sum of all
paiticipants' accounts constantly equals zeio. Because of
the zeio sum piinciple, money exists only in the accounts
with cieuit as black at the micio level, but uoes not exist in
the association as a whole at the macio level. Besiues, the
accounts (both black anu ieu) beai no inteiest.
As foi the papei money type CC, an auministiative commit-
tee has the exclusive iight to issue CCs. Theiefoie, paitici-
pants have to holu moie CCs than the total amount of pay-
ment to buy some goous oi seivices in the same way as
when using cash money. In contiast, each paiticipant of
LETS has the iight to cieate money fieely so that he¡she
can buy goous oi seivices even if his¡hei account balance is
zeio oi negative. This is the auvantage of LETS. Cuiient
money cieation (cash money anu ueposit money) is syn-
onymous with issuing an I00. Conventionally, a buyei has
to pay pie-existing money stock to a sellei in oiuei to pui-
chase goous anu seivices. If the sellei is willing to accept
cieuit fiom the buyei, the buyei incuis a uebt to the sellei.
The uebt is geneiateu on the siue of the payei. When the
cential bank issues cential banknotes, it gives a ceitificate
of inuebteuness stating that I (the cential bank) owe you (a
iecipient). Thus legal tenuei is calleu an I00.
Bowevei a buyei is not uiiectly in uebt to a sellei in LETS.
Rathei, the buyei is thought to be in uebt to the commu-
nity, composeu of all the paiticipants in the LETS. The
buyei shoulu have an ethical iesponsibility to iepay the
uebt to the LETS community. In such systems as LETS,
uebts anu cieuits uo not bilateially but multilateially bal-
ance out. That is to say, LETS uo not auopt bilateial netting
but multilateial netting. Then we call this kinu of money as
in LETS, not an I00 but an I0C, which signifies "I owe
0nuei these ciicumstances, the laigei the community of
LETS becomes in teims of the numbei of paiticipants, the
moie the uegiee of anonymity will inciease anu the haiuei
it will be to maintain tiust among the paiticipants in it.
Then theie is some potential iisk of moial hazaius that, if
theie is no limit to the maximum amount of uebit, some
paiticipants aie apt to expanu theii uebt as much as possi-
ble anu cieate too laige an amount of money to iepay. We
call them 'fiee-iiueis'. Thus the size of a spheie of ciicula-
tion of an "I0C" uepenus on the extent to which each pai-
ticipant can have an ethical iesponsibility to the commu-
nity smallei than that of an "I00". Thus each LETS shoulu
set up its own iules in oiuei to constiain the volume of
money that each paiticipant can cieate anu pievent fiee
iiueis fiom being paiasites on the community. This iule
shoulu claiify how to ueteimine a ceitain uppei limit of
uebit foi each paiticipant. It may vaiy, anu the simplest
iule is that the uppei limit may be fixeu to a unifoim
amount. Theie is also a iule which sets the uppei limit ue-
teimineu as a lineai function of a paiticipant's total volume
of tiansactions uuiing a ceitain peiiou. The meiit of "I0C"
is that uniealizeu tiansactions causeu by money con-
stiaints can be ieuuceu oi eliminateu, even if a buyei has
no cuiiency stock to pay to a sellei.
Accounts in LETS beai no inteiest, so paiticipants have no
incentives to be in the black oi to avoiu being in the ieu.
LETS is inteiest-fiee anu issueu fieely by paiticipants, anu
then since theie is no such thing as tiansactions motives,
piecautionaiy motives anu speculative motives foi holuing
money that oiiginateu fiom 'The ueneial Theoiy' wiitten
by }ohn Naynaiu Keynes in 19S6. Theiefoie, theie is no
uemanu foi money uepenuing on liquiuity piefeience, so
such ieal uemanu as consumption anu investment uemanu
shoulu be encouiageu. As a iesult, speculative financial
tiansactions apait fiom ieal uemanu oi self-piopagation of
capital foi accumulation aie haiu to geneiate in LETS. This
is quite a big uiffeience between cuiient legal tenuei beai-
ing positive inteiest anu LETS, anu it is anothei meiit of
!" $%%&'($)%& $)* +$,-&( $,&$
Noney with highei acceptability ciiculates in a wiuei
spheie. The ieason why money is accepteu by people vai-
ies with each type of money. In the past, the acceptability of
conveitible papei cuiiency was ensuieu by conveitibility
into golu coin oi bullion. The acceptability of piesent in-
conveitible money is self-sustaineu by people's expectation
of the maintenance of its futuie acceptability anu people's
belief in the continuance of its past acceptability, anu it is
finally secuieu by (1) the financial solvency of cential
banks anu the financial policy foi stable money value, anu
(2) manuatoiy ciiculating powei by cabinet oiuei oi gov-
einment ueciee so that it shoulu keep ciiculating in a
nation-wiue aiea.
In contiast with this, the acceptability of LETS baseu on
mutual cieuit is ensuieu neithei by conveitibility into any
goou noi manuatoiy ciiculating powei, but by mutual tiust
that othei paiticipants woulu accept the cuiiency of LETS
as long as they belong to the community oi confiuence in
the continuance of the community itself. At piesent, it cii-
culates in a ielatively small spheie, but the communities
vaiy in value anu inteiest, anu theii numbeis aie laige.
In oiuei to maintain the acceptability of any type of money,
incluuing legal tenuei, community cuiiencies, anu so on, it
is inuispensable foi issueis not to invoke the moial hazaiu
of excessive money cieation. If a cential bank anu a gov-
einment aie unifieu, the seignioiage is vesteu in the gov-
einment by way of the cential bank. In this case, the gov-
einment tenus to insist that the cential bank shoulu buy
ueficit-coveiing goveinment bonus foi financing the
buuget ueficit. As a iesult, the cential bank is apt to be ex-
poseu to stiong piessuie fiom the goveinment to issue
excessive money. Bowevei since excessive money cieation
causes the siue effect of uestabilizing money's value, leau-
ing to inflation, the cential bank has to iesist piessuie to
cieate excessive money anu, in oiuei to uo so, neeus inue-
penuence fiom the goveinment.
International Journal Of Community Currency Research 2012 Volume 16 (D) 49-57 Kichiji And Nishibe
Because the iight of issuing money belongs to the paitici-
pants in LETS, theie is the uangei of a uebtoi issuing exces-
sive money anu nevei tiying to iepay anu escaping fiom
the community. Such an inuiviuual woulu eventually iuin
the tiust of cieuitois in the community anu encouiage un-
faii tieatment of paiticipants so that the paiticipants might
uislike it anu withuiaw fiom the community. Such a piob-
lem coulu knock the bottom out of a mutual cieuit system
in the community. In the case of papei money type of CC,
excessive money cieation by an auministiative committee
ieuuces its money value, so that it woulu blemish the pai-
ticipants' tiust in the money anu the community. As shown
above, theie is a possibility that both CCs anu legal tenuei
coulu invoke moial hazaiu, but the methou of pieventing it
shoulu vaiy foi uiffeient types of money. Foi legal tenuei,
iigiu goveinment iules oi laws piesciibing fines anu pun-
ishments aie supposeu to iegulate moial hazaiu. In CCs,
such innei uisciplines as ethics anu noims, anu such outei
uisciplines as iumoi¡ ieputation anu expulsion¡ ostiacism
aie expecteu to softly contiol any moial hazaiu. The uiffei-
ent ways of pieventing moial hazaiu makes a uiffeience in
theii ciiculation spheies. Anonymity in legal tenuei is high,
but paiticipants in CCs make much of face-to-face ielation-
ships. We summaiize the uiffeient chaiacteiistics of legal
tenuei anu community cuiiency in Table 2.
!" $ %&'($)*+&, &- ./0$. 1/,2/) $,2 ./1+
$+ '/$,+ &- ($3'/,1 4+*,0 )$,2&' ,/15
6&)7 +*'4.$1*&,
In this section, we uiaw a compaiison between legal tenuei
anu LETS fiom the point of view of the tiansaction effi-
ciency of means of payment. Legal tenuei plays two ioles,
both as a means of exchange anu as a means of payment.
Settlements of tiansactions aie maue in two ways. In the
fiist phase, the settlements between uebits anu cieuits aie
maue between inuiviuuals by piivate banks anu, in the
seconu phase, between piivate banks by a cential bank.
Piivate banks anu the cential bank can settle the accounts
with less money than the total amount of tiansactions by
using netting. But the settlement using legal tenuei neeus
money (cash oi ieseives) in auvance. Bue to the lack of
money stock in auvance, we often cannot make the neces-
saiy tiansactions. In compaiison with legal tenuei, ac-
counts of LETS iueally have no constiaint to cieate money,
anu thus paiticipants can iealize all the necessaiy tiansac-
tions because they equally have the iight to fieely issue
money. Next, we investigate, by using computei simula-
tions, the iatios of the iealizeu tiansactions to the at-
tempteu ones using legal tenuei
We stuuy the tiansaction efficiency of legal tenuei as the
means of payment using ianuom netwoik simulation in a
simple mouel. Fiistly, we woulu like to confiim the techni-
cal teims of netwoik theoiy. A netwoik is a seiies of points
inteiconnecteu with lines. The points anu lines aie calleu
'noues' anu 'links,' iespectively. We assume the fiims oi
inuiviuuals in tiansactions act as noues anu the tiansac-
tions between fiims oi inuiviuuals act as links.
In the simulation, we select a buyei anu a sellei at ianuom
fiom K noues eveiy peiiou anu then the buyei pays the
money foi a goou oi seivice of the sellei. We mouel a T
peiiou setting, wheie T is the numbei of total tiansactions.
We assume, foi simplicity, that the volume of all tiansac-
tions is set at 1 anu the piice of the goous oi seivice is set
at 1. Time is iepiesenteu by t. Bowevei, if the selecteu
buyei has no money, the tiansaction cannot be iealizeu. In
this case, we select a new paii of buyei anu sellei ianuomly
until they can settle. We call the numbei of selecteu tians-
actions 'the numbei of attempteu tiansactions' anu the
numbei of settleu tiansactions 'the numbei of iealizeu
tiansactions,' iespectively. We also uefine 'the iatio of ieal-
izeu tiansactions' as the iatio of the numbei of iealizeu
tiansactions to that of attempteu tiansactions.
International Journal Of Community Currency Research 2012 Volume 16 (D) 49-57 Kichiji And Nishibe
1 In this aiticle, we uon't mention "uemuiiage". If we intiouuce the iuea of "uemuiiage" into oui simulation, the iesults uon't change in LETS.
In the case of legal tenuei, the iate of iealizeu tiansaction goes uown by intiouucing "uemuiiage". Since the puipose of intiouucing "uemui-
iage" is to enhance the velocity of money anu expanu the volume of tiansaction, this is uiffeient fiom oui puipose in this aiticle. We woulu
like to focus on the tiansaction efficiency. Intiouucing "uemuiiage" into LETS neeus attention. We put "uemuiiage" on both uebit anu cieuit
in the simulation. In the case of no uppei limit of uebit anu cieuit, even though the volumes of uebit oi cieuit ueciease by "uemuiiage", the
iate of iealizeu tiansaction is constant because of fieely issueu money by paiticipants in LETS. 0n the othei hanu, when we iegulate only the
uppei limit of uebit, the paiticipants who have uebits aie likely to commit moial hazaiu by uepieciating both uebit anu cieuit.
Acceptability Availabiity Moral hazard Countermea-
sures against
moral hazard
Legal tender High General Government
Laws, acts,
fines, punish-
worldwide, na-
Low Specific Administrative
committee, par-
Ethics, norms,
reputation, ex-
Local area,
Table 2: The compared characteristics of legal tender and community currency
We peifoimeu simulations with a ianuom netwoik mouel
of 1uu agents (noues) by vaiying the unifoim uistiibution
of initial money holueis who possess the same amount of
money. If all agents have 1 unit of money in the initial con-
uition, the aggiegate money stock amounts 1uu. We uefine
'the iatio of initial money holueis' as 'the iatio of the num-
bei of initial money holueis to that of all agents.' The iatio
of initial money holueis iepiesents how equally money is
uistiibuteu among all agents in the initial conuition. If the
iatio is 1uu%, the money uistiibution is completely equal
anu as the iatio appioaches u%, the uistiibution becomes
most unequal.
We examine the changes in the iatio of iealizeu tiansac-
tions by uecieasing the iatio of initial money holueis
giauually fiom 1uu% to Su%, 2S% anu 1u%. In the simula-
tion, when we keep the aggiegate money stock at 1uu, the
initial pei capita money stock incieases fiom 1 to 2, 4 anu
1u. We iepeat the simulation 1uu times so that we can ob-
tain the ensemble aveiage. Table S shows the aveiage ie-
Accoiuing to Table S, as the iatio of initial money holueis
uecieases, the iatio of iealizeu tiansactions uecieases. We
thus finu that the uistiibution of the initial money holueis
stiongly influences the iealization of attempteu tiansac-
Next, we examine the effects of the changes of aggiegate
money stock on the iatio of iealizeu tiansactions keeping
the pei capita initial money stock constant as 1. In the
simulation, as the aggiegate money stock uecieases fiom
1uu to Su, 2S anu 1u, the iatio of initial money holueis ue-
cieases giauually fiom 1uu% to Su%, 2S% anu 1u%. We
iepeat the simulation 1uu times so that we can obtain the
ensemble aveiages. Table 4 shows the aveiage iesults.
Keeping the pei capita initial money stock at 1, as the iatio
of initial money holueis uecieases, the iatio of iealizeu
tiansactions uecieases shaiply.
Accoiuing to Table 4, the aveiage iesults aie influenceu by
both the inequality of the initial uistiibutions anu the ue-
cieasing aggiegate money stock. The iesults show that the
iatio of iealizeu tiansactions uecieases as the iatio of ini-
tial money holueis uecieases.
Finally, we estimate the amount of the initial pei capita
money stock iequiieu to iealize all the attempteu tiansac-
In oiuei to keep the numbei of pei capita attempteu tians-
actions constant as 1u, although the numbei of total pai-
ticipants incieases fiom 1uu to 2Su, Suu anu 1uuu, we
neeu to inciease the numbei of attempteu tiansactions
fiom 1uuu to 2Suu, Suuu anu 1uuuu in the simulation. We
show the iesults in table S. In the case of 1uu paiticipants,
International Journal Of Community Currency Research 2012 Volume 16 (D) 49-57 Kichiji And Nishibe
Ratio of initial money holders 100% 50% 25% 10%
Aggregate money stock 100 100 100 100
Initial per capita money stock 1 2 4 10
Number of attempted transactions 1000 1000 1000 1000
Number of realised transactions 550.9 518.6 472.7 335.2
Ratio of realised transactions 55.1% 51.9% 47.3% 33.5%
Table 3: Distribution of initial money holders and rate of realized transactions(the aggregate money stock is constant)
Ratio of initial money holders 100% 50% 25% 10%
Aggregate money stock 100 50 25 10
Initial per capita money stock 1 1 1 1
Number of attempted transactions 1000 1000 1000 1000
Number of realised transactions 550.9 358.1 206.0 92.5
Ratio of realised transactions 55.1% 35.8% 20.6% 9.3%
Table 4: Distribution of initial money holders and ratio of realized transactions (initial per capita money stock is constant)
!" $%&'()% &'' !*% &!!%+,!%- !$&./&0!("./1 %&0* &2%.! *&/ !"
*"'- 34 5.(!/ "6 +".%7 /!"08 (. &-9&.0%: ;/ !*% .5+<%$ "6
!"!&' ,&$!(0(,&.!/ (.0$%&/%/1 !*% (.(!(&' ,%$ 0&,(!& +".%7
/!"08 (.0$%&/%/ !" $%&'()% &'' !*% &!!%+,!%- !$&./&0!("./:
=">%9%$1 (!/ $&!% "6 (.0$%&/% 2$&-5&''7 -(+(.(/*%/ !">&$-/
? &/ !*% .5+<%$ "6 !"!&' ,&$!(0(,&.!/ (.0$%&/%/ !" 3???: ;/
& $%/5'!1 !*% (.(!(&' ,%$ 0&,(!& +".%7 /!"08 $%@5($%- !" $%&'A
()% &'' !$&./&0!("./ (/ /&!5$&!%- &$"5.- 3B 5.(!/ "6 +".%7
". !*% 0".-(!(". !*&! !*% .5+<%$ "6 ,%$ 0&,(!& &!!%+,!%-
!$&./&0!("./ (/ 3?: C*(/ $%/5'! /*">/ !*&! %&0* &2%.! *&/ !"
*"'- 3B !(+%/ !*% +".%7 /!"08 (. &-9&.0% &/ %&0* !$&./&0A
!(". 9&'5%1 "$ 3:B !(+%/ !*% +".%7 /!"08 (. &-9&.0% &/ !*%
!"!&' ,%$ 0&,(!& &!!%+,!%- !$&./&0!("./: D. ."$+&' !$&./&0A
!("./ 5/(.2 '%2&' !%.-%$1 &2%.!/ *&9% & 2$%&! &+"5.! "6
+".%7 <566%$ !" 65'E('' &'' .%0%//&$7 !$&./&0!("./: C*% (.(!(&'
,%$ 0&,(!& +".%7 /!"08 $%@5($%- !" $%&'()% &'' !$&./&0!("./
(.0$%&/%/1 <5! !*% $&!% "6 (.0$%&/% "6 (! -(+(.(/*%/ &/ !*%
.5+<%$ "6 ,%$ 0&,(!& &!!%+,!%- !$&./&0!("./ (.0$%&/%/:
C&<'% F (/ 0$%&!%- <7 !&8(.2 !*% E($/! 0"'5+. "6 C&<'% G (.
"$-%$ !" /*"> !*% 0"+,&$(/". <%!>%%. '%2&' !%.-%$ &.-
HICJ (. !%$+/ "6 !*% $&!(" "6 $%&'()%- !$&./&0!("./: C*% !"!&'
.5+<%$ "6 ,&$!(0(,&.!/ (/ 3?? ,%",'%1 &.- !*% .5+<%$ "6
&!!%+,!%- !$&./&0!("./ (/ 3??? !(+%/: C*% (.(!(&' ,%$ 0&,(!&
+".%7 /!"08 (/ 3: D. HICJ1 !*% $&!(" "6 $%&'()%- !$&./&0!("./
(/ &'>&7/ 3??K (6 !*%$% (/ ." $5'% !" $%/!$(0! 5,,%$ '(+(!/ "6
-%<(!/ "6 &00"5.!/ /" !*&! !*%$% 0&. <% ." 0"./!$&(.!/ "6
+".%7 !" *(.-%$ &'' &!!%+,!%- !$&./&0!("./ 6$"+ <%(.2
$%&'()%-: ;00"$-(.2 !" !*% !&<'%1 (! (/ 3:L3 !(+%/ &/ *(2* &/
!*&! M44:3KN 5/(.2 '%2&' !%.-%$: O% 0&. ."> 5.-%$/!&.-
!*&! & 0%$!&(. &+"5.! "6 +".%7 <566%$ (. &-9&.0% (/ .%0%/A
/&$7 6"$ !*% -(/,%$/(9% +&$8%! !" 65.0!(". /+""!*'7 >(!* &
3??K $&!(" "6 $%&'()%- !$&./&0!("./: P5! /50* & *(2* $&!(" "6
$%&'()%- !$&./&0!("./ (/ &'+"/! (+,"//(<'% (. !*% 0&/% "6
'%2&' !%.-%$ <%0&5/% !*% $%&'(!7 (/ !*&! & .".A5.(6"$+ &.-
5.%9%. -(/!$(<5!(". "6 (.(!(&' +".%7 *"'-%$/ +&8%/ !*%
$&!(" "6 $%&'()%- !$&./&0!("./ '">%$1 &.- !*&! & /*"$!&2% "6
%66%0!(9% -%+&.- (. 0"./5+,!(". &.- (.9%/!+%.! (. & ,%A
$("- "6 -%,$%//(".1 >*(0* (/ (.!$(./(0 (. !*% -(/,%$/(9% +&$A
8%!1 $%-50% (!1 !*"52* !*% (.0$%&/%/ "6 ,%$ 0&,(!& +".%7
/!"08 (. *"&$-(.2 "$ /&9(.2 (/ /5,,"/%- !" *&9% !*% %66%0! "6
(.0$%&/(.2 (! &00"$-(.2 !" !*% -(/05//(". &<"9%:
Table 6: The comparison of the ratios of realized transac-
tions between legal tender and LETS
Type of money Legal tender LETS
Ratio of realised
55.1% 100%
O% 0&. /%% 6$"+ C&<'% Q !*$"52* C&<'% F !*&! HICJ .%%-
+50* '%// "6 & +".%7 <566%$ !*&. '%2&' !%.-%$: HICJ !*5/
%R*(<(!/ *(2* !$&./&0!(". %6E(0(%.07: S. !*% "!*%$ *&.-1
*">%9%$1 <%0&5/% %9%$7 ,&$!(0(,&.! *&/ !*% $(2*! !" 6$%%'7
(//5% +".%71 !*%$% &$% .&!5$&''7 /"+% >*" +(2*! ."! <%
&<'% !" $%/(/! !*% !%+,!&!(". !" 0$%&!% %R0%//(9% +".%7 "$
%9%. "!*%$/ >*" +(2*! <% (''A(.!%.!(".%- !" -" /" 6$"+ !*%
"5!/%!: J50* $(/8 "6 +"$&' *&)&$- (.9"8%- <7 & ,&$! "6 ,&$A
!(0(,&.!/ $%/!$(0!/ !*% 0($05'&!(". /,*%$% !" & $%'&!(9%'7
/+&'' &$%&:
D! /*"5'- <% ."!%-1 *">%9%$1 !*&!1 %9%. !*"52* /50* 6$%%
$(-%$/ (. !*% 0"++5.(!7 /*"5'- <% %!*(0&''7 0$(!(0()%-1 (!
-"%/ ."! $%&''7 0&5/% -%9&/!&!(.2 -&+&2% !" HICJ &/ &
+".%!&$7 /7/!%+ <%0&5/% ,&$!(0(,&.!/ 0&.."! !%'' !*%
International Journal Of Community Currency Research 2012 Volume 16 (D) 49-57 Kichiji And Nishibe
Number of participants 100 250 500 1000
Ratio of initial money holders 100 100 100 100
Number of attempted transactions 1000 2500 5000 10000
Number of realised transactions 550.9 358.1 206.0 92.5
Ratio of realised transactions 100% 100% 100% 100%
The initial per capita money stock required
to realize all attempted transactions
15 16 17 17
Table 5: Number of total participants and initial per capita money stock required to realize all attempted transactions
money cieateu by fiee iiueis fiom othei oiuinaiy money.
Accoiuingly, such money, which becomes shaieu by all
paiticipants, can ciiculate exactly in the same mannei as
othei money in LETS.
Neveitheless, auministiatois of LETS woulu be well-
auviseu to set a ceitain iule to iestiict uppei limits of ueb-
its (negative balance) to pievent such siue effects causeu
by such moial hazaiu as loss of confiuence in LETS anu the
community, expansion of a feeling of unfaiiness anu the
withuiawal of paiticipants
!" $%& '&(&))*$+ ,- .&)*/'*'/ $%& 012&) $,
0&)$0*($ $%& 133&0 2*4*$ ,- .&5*$ ,- 6' 6(7
(,1'$ -,0 &6(% 360$*(*36'$ *' 2&$)
The simplest iule to iestiict the uppei limit of uebit in
LETS is to fix it to some constant value. Foi instance, the
limit coulu be completely fixeu as, say, minus 1uu gieen
uollais foi eveiy paiticipant all the time
. But this meiely
wastes the meiit of LETS since it is not so much uiffeient
fiom the case of unifoim uistiibution of initial money stock
foi legal tenuei uiscusseu in the last section, except foi the
ways of money cieation. Theie aie othei such iules that
effectively utilize the auvantages of LETS so that it can in-
ciease the iate of iealizeu tiansactions such as: 1) the step-
by-step alteiation methou anu 2) the continuous alteiation
methou. The step-by-step alteiation methou alteis the up-
pei limit of uebits uepenuing on the uuiation of membei-
ship oi the uistinction between piovisional membeiship
anu full membeiship. An example is to set minus 1uu gieen
uollais foi a piovisional membeiship of less than a yeai
anu minus 2uu gieen uollais foi a full membeiship. Such a
methou is iealistic anu easy to auopt, but too appioximate
to make the most of the meiits of LETS. Then it woulu be
uesiiable to uesign anu auopt moie sophisticateu iules to
ueteimine the uppei limit of uebits as long as it is piactica-
ble, so that it can utilize the uata that auministiatois aie
supposeu to possess anu estimate the uiffeience of each
paiticipant in theii past peifoimance anu activate total
tiansactions as much as possible.
Now we will explain the 'tiansaction inuexation methou' as
such a possible methou. The uppei limit of uebit of an ac-
count is calculateu accoiuing to the following lineai equa-
tion wheie R: is the uppei limit of uebit, z: is the aggiegate
tiansactions of a paiticipant, a: is the vaiiable factoi of the
uppei limit of uebt, anu b: is a constant factoi.
R = - a*z -b (1)
Let us heie obseive how the iatio of iealizeu tiansactions
changes as only the paiametei b is alteieu with the pa-
iametei a helu constant anu compaie two cases (a = u.2
anu a =u.uS) on the conuition that the total numbei of pai-
ticipants is 1uu anu the numbei of attempteu tiansactions
is 1uuu, that is, the numbei of pei capita attempteu tians-
actions is 1u. Table 7 anu Table 8 show the iesults of the
two cases as the ensemble aveiage of 1uu times expeii-
International Journal Of Community Currency Research 2012 Volume 16 (D) 49-57 Kichiji And Nishibe
2 In the following section, we aigue the iules that iegulate the uppei limit of uebit. In case of ianuommatching simulations as in the piesent
section, if we iegulate the uppei limit of cieuit, the iesults obtaineu will almost show no uiffeience. But in the actual non-ianuom tiansaction,
theie is the possibility that some paiticipants will commit moial hazaiu of holuing enoimous uebit balances. That is why we consiuei the
uppei limit of uebit. But the big uebit itself will not necessarily cause systemic breakdown if it is treated as credit creation when the
enormous credit is transferred to the common account. Furthermore, we don’t think that the enormous credit balance of some partici-
pants must be the fatal factor for maintaining LETS.
S Theie may be an opinion that iegulating the uppei limit of uebit in LETS to fix it to some constant uoesn't violate piinciple of social equal-
ity, 0n the othei hanu, alteiing the uppei limit of uebit uepenuing on the uuiation of membeiship oi volume of total tiansaction violates it.
Bowevei, in the case of alteiing the uppei limit of uebit, equality of oppoitunity is piesent in the sense that the uppei limit is all the same to
paiticipants at the stait point anu they expiess appiove of the iules even if equality is not piesent.
Parameter b 1 2 5 10 15
Number of realised transactions 747.41 853.17 967.47 998.88 999.98
Ratio of realised transactions 74.7% 85.3% 96.7% 99.9% 100.0%
Table 7: The ratio of realized transactions and alteration of parameter b (a = 0.05)
Parameter b 1 2 5 10 15
Number of realised transactions 750.88 853.86 981.06 999.46 1000
Ratio of realised transactions 75.1% 85.4% 98.1% 99.9% 100.0%
Table 8: The ratio of realized transactions and alteration of parameter b (a = 0.2)
Fiist, we take a look at the fiist columns of Table 7 (a =
u.uS, b = 1) anu that of Table 8 (a = u.2, b = 1) in oiuei to
compaie these with the iesults in Table 6. It is conceivable
that the case foi legal tenuei can be now inteipieteu as the
case of the equation (1) with a = u, b = 1. To set the pa-
iametei a at some positive value insteau of zeio in the
'tiansaction inuexation methou' can uiastically inciease the
iatio of iealizeu tiansactions fiom about SS% to about
7S%. The inciease of the paiametei a fiom a = u.uS as in
Table 7 to a = u.2 as in Table 8 only makes a small inciease
(u.4%) in the iatio of iealizeu tiansactions. These iesults
show that the 'tiansaction inuexation methou' that pie-
vents moial hazaiu as to the excessive cieation of money
can iemaikably enhance the iatio of iealizeu tiansactions
with a ielatively small paiametei a as long as it is positive.
The initial pei capita money stock iequiieu to iealize all
tiansactions can also be ieuuceu to aiounu 1u fiom 17 foi
legal tenuei. This case stuuy exemplifies that such institu-
tional uesign of iules is essential foi community cuiiencies
incluuing LETS to function well enough to attain theii
oiiginal goal.
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In this aiticle, we have examineu anu compaieu the chaiac-
teiistics of uispeisive anu concentiateu money cieation
obseivable both in community cuiiencies anu legal tenuei,
iathei than just having contiasteu community cuiiencies
anu legal tenuei. Both ways of money cieation have pai-
ticulai meiits anu uemeiits. Concentiateu money cieation
causes the pioblem of iestiicting tiansactions by the neeu
foi money stock in auvance, anu it iequiies a laigei money
buffei to iealize tiansactions smoothly. Concentiation of
money cieation can pievent fiee iiuing anu have a bioau
spheie of ciiculation, anu it cieates maneuveiability foi the
monetaiy policy of a cential bank. At the same time, its
aibitiaiiness might leau to a gieat uangei of excessive
money cieation. 0n the othei hanu, uispeisive money ciea-
tion without any constiaint exhibits tiansaction efficiency
as in LETS with no uppei limit of uebit, but it can biing
about the moial hazaiu of fiee iiuing taken by some pai-
ticipants. Finally, we have uemonstiateu the valiuity of the
'tiansaction inuexation methou' to set the iules of uetei-
mining the uppei limit of uebits in LETS to avoiu fiee iiuing
anu to enhance tiansaction efficiency. We simultaneously
piesenteu the possibility of the institutional uesign of
money by this exemplification.
Aiiow, K.}., Bahn, F. (1971) ueneial Competitive Analysis, Noith-
Bayek, F. A. (1976) Benationalization of money: An Analysis of the
Theoiy anu Piactice of Concuiient Cuiiencies, The Institute of
Economic Affaiis.
}ones, R. A. (1976) 'The 0iigin anu Bevelopment of Neuia of Ex-
change' The }ouinal of Political Economy, 84(4) Pait 1: 7S7-776.
Keynes, }. N. (19S6) The ueneial Theoiy of Employment, Inteiest,
anu Noney, Nacmillan.
Kichiji, N. anu Nishibe, N. (2uu7) 'Chaiacteiistic Compaiison of
Becentializeu Cuiiency Issue anu Concentiateu Cuiiency Issue
-Ranuom Netwoik Simulation of Local Exchange Tiauing System
(LETS)' |in }apanesej, The economic stuuy, No.S7: 1-14.
Kichiji, N. anu Nishibe, N. (2uu8) 'Netwoik Analyses of the Ciicula-
tion Flow of Community Cuiiency,' Evolutionaiy anu Institutional
Economics Review, the }apan Association foi Evoutionaiy Econom-
ics, 4 (2): 267-Suu.
Kiyotani, N., Wiight, R., (1989) '0n Noney as a Neuium of Ex-
change,' The }ouinal of Political Economy, 97(4): 927-9S4.
Kiyotani, N., Wiight, R., (199S) 'A Seaich-Theoietic Appioach to
Nonetaiy Economics,' The Ameiican Economic Review, 8S(1): 6S-
Luhmann, N. (1984=198S) Social Systems, Stanfoiu 0niveisity
Natsui, A., Shimizu, T., (2uuS) 'A Theoiy of Noney anu Naiket-
places,' Inteinational Economic Review, 46(1): SS-S9.
Nishibe, N. (2uu2) 'What is Noney - The possibility of Local Cui-
iency |in }apanesej', Keizai Seminai, No.S72: 7u-78.
Nishibe, N. (2uu6) 'Reuefining Evolutionaiy Economics,' Evolu-
tionaiy anu Institutional Economics Review, The Association foi
Evolutionaiy Economics, S(1), S-2S.
Rockoff, Bugh (197S) 'The Fiee Banking Eia: A Reexamination',
}ouinal of Noney, Cieuit anu Banking, 6(2), 141-167
Stouuei, }., (2u1u) 'The Nacio-Stability of Swiss WIR-Bank Spenu-
ing: Balance anu Leveiage Effects'
Walias, L.(1874=19S4) Elements of Puie Economics, oi the theoiy
of social wealth, Routleuge
International Journal Of Community Currency Research 2012 Volume 16 (D) 49-57 Kichiji And Nishibe
International Journal of
Community Currency Research
Volume 16 (2012) Section D 58-69
Hugo Godschalk*
Cuiiency with uemuiiage is a theoietical concept foi a iefoim of the monopolistic issueu state
money oiiginateu by Silvio uesell. 0ntil now it has nevei been implementeu the way it was
oiiginally intenueu. Baseu on the theoiy of Iiving Fishei anu the piactical expeiiences uuiing
the uieat Bepiession a uemuiiage-baseu CC coulu be helpful as a tempoiaiy steeiing instiu-
ment uuiing economic uepiessions to stimulate economic activity by incieasing the velocity of
money (of CC anu inuiiectly of conventional money), piobably only if issueu state-wiue. The
level of the uemuiiage-iate of the local issueu uepieciateu money seems to be (baseu on the
available uata) not ciucial foi the economic iesults within the meaning of usage, tuinovei anu
* Email: hgouschalkÇpaysys.ue
$' )*+, +-*. /0+*)1,2 uouschalk, B. (2u12) 'Boes Bemuiiage mattei foi Complementaiy Cuiiencies.' !"#$%&
"'#()"'* ,)-%"'* ). /)00-"(#1 /-%%$"21 3$4$'%25 16 (B) S8-69 <www.ijcci.net> ISSN 1S2S-9S47
"Bemuiiage" (uefineu as built-in ieuuction ovei time in the
intiinsic value of a cuiiency) is a iemaikable featuie of
complementaiy piivate cuiiencies since the uieat Bepies-
sion. The iuea of "iusting" money with a built-in uepiecia-
tion is baseu on the "fiee money" theoiies of the ueiman
monetaiy iefoimei Silvio uesell. Although the concept was
uevelopeu as a monetaiy iefoim foi the state-issueu (mo-
nopolistic) cuiiency, self-help initiatives took ovei the iuea
foi local cuiiencies uuiing the uieat Bepiession in uei-
many, Austiia, Switzeilanu, 0SA anu Canaua. Nost of these
uemuiiage-initiatives weie baseu on cash, sciip notes with
stamps to be affixeu ("stamp sciip"). In Euiope most of the
pilot piojects weie piematuiely stoppeu by legal actions of
the monetaiy authoiities. Bowevei, the uemuiiage-baseu
anu othei local money initiatives in the 0SA weie not hin-
ueieu by seiious legal constiaints. The eia of Bepiession
Sciip in the 0SA was an inteiesting expeiimental fielu of
uiffeient concepts foi local money. Some of them weie veiy
successful, otheis faileu shoitly aftei stait.
Aftei 7u yeais we see a ienaissance of uemuiiage within
complementaiy cuiiencies not suipiisingly again in uei-
manic countiies. Nany of the so-calleu Regiogelu-
expeiiments aie in some way baseu on uemuiiage. But
even some local money initiatives in Fiance anu the 0K
pickeu up the uemuiiage iuea (eg. Abeille anu Stiouu
Pounu). So again we have to consiuei the theoietical anu
piactical valiuity of the ieasons behinu uemuiiage. Is ue-
muiiage an essential featuie of a complementaiy cuiiency
to ensuie the optimal ciiculation anu to pievent hoaiuing.
"Bemuiiage" in the context of Complementaiy Cuiiencies
(CC) is meanwhile a cuiient expiession foi the built-in pie-
piogiammeu uepieciation of the nominal value of a cui-
iency. The uepieciation piocess shoulu be uuiable in time,
like a negative (not compounu!) inteiest. 0sually the ue-
pieciation iate is a fixeu amount as a peicentage of the
oiiginal nominal value, e.g. 1% pei month. It is set by the
issuei as a ievenue (if the money is issueu by a ceitain in-
stitution) anu shoulu be immeuiately assigneu to the
holuei of the money. The uepieciation is to the uetiiment
of the money-holuei foi the whole time of holuing the
money oi at the uate of uepieciation, if theie is no continu-
ous uepiecation (inteivals without uepieciation).
The uepieciation shoulu be - as iueal solution - a continu-
ous piocess on a uaily (oi even shoitei) basis like inteiest
on a savings account, which is feasible in case of sciiptuial
money (book money; bank money, ueposits) oi uigital
money stoieu on an electionic uevice (e-money).
In case of othei tiauitional means of payment, like coins oi
papei money it is moie uifficult to implement an efficient
uepieciation. The issuei of coins coulu use a built-in chemi-
cal piocess which uecomposes the metal oi othei mateiial
like iion which will be iusteu by the enu of the issuance
peiiou. It must be uifficult anu it has nevei piacticeu in the
past. Bowevei, with papei money it is much easiei to im-
plement uepieciation. The issuei coulu piint a time table
on the backsiue of the note with the uates of uepieciation
of the nominal value. This way eveiy usei (payei anu
payee) can check the value of the note at the moment of
usage foi payments. This kinu of "table money" is not veiy
convenient, because the payei anu payee have to solve the
pioblem of change. They neeu a uiffeient meuium of pay-
ment with lowei value uenominations, baseu on the incie-
mental amount of the uepieciation iate. Within a CC envi-
ionment this pioblem was usually solveu by using the
small-value coins of the state-issueu money. The table
money concept is baseu on an ongoing uepieciation of the
nominal value of the note.
Figure 1: Table money “Tauscher” (issued in Germany
The most common way to implement the uepieciation was
"stamp sciip". The nominal value iemains constant only if
the holuei has to pay a 'liquiuity fee' ielateu to the uepie-
ciation uates. The holuei coulu iestoie the nominal value of
the note by affixing little stamps on squaies which aie coi-
iesponuing with the peiiouical uepieciation uates, piinteu
on the backsiue of the note. The holuei of the note has to
buy the stamp (fiom the issuei oi his agency), of which the
value was exactly the uepieciation iate. Within the intei-
vals the holuei of money was not chaigeu anu he coulu use
the note at pai value. Without paying the fee, the nominal
value of the note was uepieciateu at the iate of the value of
the missing stamp(s). The only uiffeiences between the
two concepts aie the fee ievenue stieam to the issuei anu
the possibility to iestoie the nominal value in case of stamp
sciip. This so-calleu time-baseu stamp sciip is piactiseu
since the piivate cuiiencies of the uieat Bepiession until
touay by seveial CC-issueis in the ueimanic countiies
("Regiogelu") anu iecently also by issueis in Fiance anu the
0K. The liquiuity fee is usually not paiu by CC but with the
state cuiiency, so the CC-money supply iemains unchangeu
anu the issuei uses the fee income to covei the costs of the
system. Within a nation-wiue monetaiy system baseu on
stamp sciip, the issuei (monetaiy authoiity oi cential
bank) shoulu pievent the shiinking of the money supply by
peimanently issuing fiesh money in value of the fee in-
come, like uesell suggesteu in his Fiee Noney system.
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
Some obseiveis (like Rosl, 2uu6) aie incluuing sciip with a
limiteu peiiou of valiuity (e.g. one yeai) - combineu with a
iemaikable uiscount if the usei wants to ieueem the note
to the cential bank money - within the concept of
uemuiiage-baseu CC (Cf. Rosl 2uu6:9). Touay a lot of pii-
vate cuiiencies have this mechanism anu even in meuieval
ueiman-speaking aieas a state-issueu monetaiy scheme
was baseu on this concept ("biacteates"). The ieasons be-
hinu this concept of "expiiy money" anu piactical effects
coulu be the same as uepieciative cuiiencies (pieventing
hoaiuing, inciease of velocity), but theie is no pie-
piogiammeu ongoing uepieciation ueclaieu to the useis,
even if the possibility of ieuemption at the expiiy uate
woulu be lacking. 0nly within a theoietical case of full
tianspaiency to the useis of these notes the maiket will
anticipate the not-communicateu uepieciation iate uuiing
the peiiou of valiuity of the note. Without this conuition the
notes coulu (anu woulu piobably) be useu at pai value
until the expiiy uate anu only the last iemaining unlucky
holuei may have the financial loss. Theiefoie this kinu of
money is not consiueieu within the context of uemuiiage-
baseu CC of this papei.
Besiues the tempoiaiy expiession "uemuiiage-baseu"
money many othei expiessions aie useu to label this spe-
cial kinu of money: Fiee Noney (uesell), iusting money
(uesell), shiinking oi shiinkage money (uesell), melting
money, uisappeaiing money, stampeu money oi stamp
sciip, cost-beaiing money (Suhi), neutial money (Suhi)
anu anti-capitalistic money (uesell). uesell uiu not coin the
teim "uemuiiage", as often as it is uisseminateu by CC-
ieseaicheis. The uepieciation iate is also nameu negative
inteiest, caiiying costs (Keynes), ambulatoiy tax (Fishei)
oi uemuiiage fee. Within the concepts mentioneu above
theie aie slight uiffeiences, the quintessence is the same:
pie-piogiammeu, built-in anu peiiouical uepieciation uui-
ing the ciiculation time.
Although the expiession "uemuiiage" (oi "uemouiage")
anu "uemuiiage fee" is now common within the CC-context,
it is not exactly coveiing the piinciple as uesciibeu above.
The teim "uemuiiage" is useu in the tianspoit inuustiy,
especially commeicial shipping, foi the time a tianspoit
equipment in excess of the contiacteu laytime (to loau oi
unloau caigo) is useu. A uemuiiage fee (usually paiu pei
houi) has to be paiu as a penalty fee foi the extenueu pe-
iiou. The intention of uemuiiage-baseu money is similai; a
penalty fee foi the laytime by not using money foi payment
tiansactions by hoaiuing money. But the mechanism is
uiffeient. The uemuiiage fee within the tianspoit inuustiy
will not be levieu within the contiacteu peiiou of laytime
("hoaiuing") anu can theiefoie be evaueu. Within the
monetaiy ciiculation the fee is fiom a theoietical peispec-
tive levieu anyway to all useis as continuous ievenue
stieam to the issuei, theoietically only evaueu by an im-
meuiately passing on to the next usei (infinite velocity).
&'($)(&*+,- /,+01)$2#3
The ueiman monetaiy anu social iefoimei Silvio uesell
(1862-19Su) was the fiist peison who pioposeu the iuea of
a monetaiy concept (Fiee-Noney) baseu on a built-in ue-
pieciation anu also maue a piactical suggestion foi imple-
mentation. The ueiman economist N. }ohannsen analyseu
the negative effects of savings activity within an economy
uuiing ciises anu pioposeu - like uesell - a built-in uepie-
ciative cuiieny (as table money) too, but he publisheu his
uepiession theoiy a few yeais latei in 19uS unuei the
pseuuonyme }.}.0. Lahn (in ueimany anu in the 0SA). In
191S he pioposeu his cuiiency iefoim nameu "Naiktalei"
as table money. (Cf. Lahn 19uSa¡19uSb anu }ohannsen
191S. See also Suhi 1989:1uu). The piinciple of a hoaiuing
fee foi money was piactiseu befoie uesell but without
tiansmitteu concept. The giio system in Ptolemaic Egypt
(S22 - Su BC) was piobably the fiist uemuiiage-baseu
monetaiy system backeu by giain stoiage. The uepositois
coulu tiansfei theii claims of giain without using the giain
uiiectly as meuium of exchange. To compensate the natuial
loss of the giain in the stoiehouse (moulu & mice), the
holuei hau to pay a stoiage fee (uouschalk 1986:64).
Within a context of money, backeu by goous with a natuial
intiinsic uepieciation iate ovei time, uemuiiage is a logical
consequence, a theoietical concept is supeifluous. If money
is backeu by stable anu uuiable goous like golu (as the case
uesell staiteu 1891 his fiist ieflections about shiinkage
money) theie is no systemic neeu anymoie foi the money
suppliei to levy a uepieciation fee on the outstanuing
money. "The puipose of Fiee-Noney is to bieak the unfaii
piivilege enjoyeu by money. This unfaii piivilege is solely
uue to the fact that the tiauitional foim of money has one
immense auvantage ovei all othei goous, namely that it is
inuestiuctible."(uesell 19S8:27S). "0nly money that goes
out of uate like a newspapei, iots like potatoes, iusts like
iion, evapoiates like ethei, is capable of stanuing the test as
an instiument foi the exchange of potatoes, newspapeis,
iion anu ethei."(uesell 19S8:269). But even in case of
monetaiy system baseu on fiat money - as touay - money
uoes have pei uefinition a supeiioiity compaieu to goous,
baseu on his intiinsic liquiuity attiibute, cieateu by social
agieement of all its useis oi by coeicion of the state (legal
tenuei). 0nly assets with a ceitain liquiuity can be money
(economists woulu say "money is what money uoes").
Keynes stiesseu latei this liquiuity-piemium of money in
his ueneial Theoiy as basic point of his inteiest theoiy (Cf.
Keynes 19S6: 22S-244). If money shoulu play a neutial iole
as facilitatoi of economic exchange piocesses of supply anu
uemanu of goous the liquiuity benefits of its holuei shoulu
be equaliseu by a uuiable uepieciation iate oi liquiuity fee
(like uesell suggesteu) oi goous shoulu have the same ue-
giee of liquiuity as money (jumping-off point of Piouuhon´s
concept of exchange banks). Theiefoie Keynes suppoiteu
the iuea of caiiying costs of uesell explicitly ("the iuea be-
hinu stampeu money is sounu" (Keynes 19S6: SS7)), al-
though he ciiticizeu "many uifficulties which uesell uiu not
face" (Keynes 19S6: SS8) (e.g. the iise of money substitutes
(neai money) with a lowei liquiuity-piemium than the
stampeu cuiiency, like golu, silvei, cigaiettes, lunch vouch-
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
eis etc.). The pios anu cons of the neeu foi caiiying costs
fiom a theoietical point of view is alieauy often uiscusseu
in liteiatuie (Cf. Suhi 1989, Nyeis 194u) anu iecently
biought on the agenua as solution foi cential bank policy
by economists like Buitei, uooufiienu, Nankiw anu otheis
(Cf. Buitei 2uu9, Buitei & Panigiitzoglou 2uuS, uooufiienu
2uuu, Nankiw 2uu9, Ilgmann & Nennei 2u11), but it is not
subject of this papei.
So the ieason behinu the oiiginal concept of uesell was a
iefoim of the monetaiy system of a national economy anu
not the intiouuction of a uemuiiage-baseu complementaiy
cuiiency besiues the conventional cuiiency. A cential
cuiiency-office shoulu issue the new cuiiency as papei
money without any golu oi othei asset backing. The issu-
ance volume shoulu be linkeu to piice inuex numbeis to
pievent inflation. uesell anu touay also some of his "haiu-
coie" uisciples aie still convinceu that only cash is iepie-
senting the ieal money stock, so the concept of Fiee-Noney
only consiueieu cash anu not bank money (ueposits) (Cf.
Nyeis 194u: S6). The state was supposeu to issue notes but
no coinage. With an exclusive status of legal tenuei, the
notes coulu be able to euge out the foimei golu anu silvei
coins as meuium of exchange. Bis initial suggestion foi the
uepieciation iate was about S% annually, which woulu be a
iegulai ievenue stieam ("tax on hoaiuing") to the Cuiiency
0ffice besiues the seignioiage-income. To avoiu the uepie-
ciation the money holuei coulu ueposit the notes on his
savings account.
uesell auvocateu a single anu homogeneous money, papei-
baseu anu issueu by the state anu got its ue facto monopoly
by legal coeicion as legal tenuei. A uual monetaiy system
(one oi moie complementaiy cuiiencies besiues the con-
ventional state-issueu money) oi even competition be-
tween uenationaliseu cuiiencies (Bayek) woulu be ie-
jecteu by uesell anu is iejecteu until touay by uogmatic
uesellians. Buiing lifetime he uiu not suppoit eaily activi-
ties of some followeis to initiate CC baseu on his iueas. So
uesell can ieally not be seen as "Spiiitus Rectoi" of com-
plementaiy cuiiencies. So why is his iuea of uepieciating
money still populai within CC-initiatives since 1926 until
touay. The motives foi the featuie "uemuiiage" of the his-
toiical CC weie vaiieu. Bistoiical CC weie initiateu
to uemonstiate the expecteu positive effects of uemui-
iage at a limiteu (local) scale as auuitional piactise-baseu
aigument foi monetaiy iefoim at national level,
to stait uesellian monetaiy iefoim alieauy at local level
as giassioot pilot piojects in oiuei to become a mass
as (tempoiaiy) self-help pioject uuiing an economic
0nuei the assumption that the neeu foi a CC is not a tem-
poiaiy instiument to change a single conventional system
A into a new single homogeneous system B, only the thiiu
ieason is impoitant foi the theoietical ielevance of uemui-
iage foi CC. Beie the Ameiican economist Iiving Fishei
(1867-1947) ueliveieu some theoietical founuations. To
unueistanu Fishei´s point of view, we have to be awaie of
his pievious peispective of stamp sciip within the uieat
Bepiession. Buiing this peiiou (especially in the yeai
19SS) a huge vaiiety of piivate local money (calleu "Be-
piession Sciip") enteieu into ielease as iesult of the shoit-
age of conventional money, which was hoaiueu. People anu
communities tiieu new ways anu piouucts. 0ne "basic"
innovation in the eaily peiiou of uepiession sciip was
stamp sciip (fiist tiial was piobably in }anuaiy 19S2 in
Anaheim¡Califoinia), but it was the so-calleu tiansaction-
baseu stamp sciip without any uesellian chaiacteiistics
anu piobably without any oiigins with Euiopean stamp
sciip (see appenuix).
Fishei was awaie of the iuea of uesellian stamp sciip anu
the Euiopean piojects especially by his latei ueiman assis-
tant Bans Cohissen, an immigiant anu followei of Silvio
. Fishei anu Cohissen obseiveu the phenomenon of
the "wiong" stamp sciip in the 0SA. They tiieu to steei it
into the "iight" uiiection by euiting a kinu of manual, how
to issue stamp sciip in the "iight" way (with uemuiiage),
ieflecting the foimei Euiopean expeiiences (Cf. Fishei
19SS). As iemeuy against the ciisis they tuineu the Ameii-
can stamp sciip into uesellian stamp sciip by ieplacing the
tiiggei foi sticking the stamp fiom "tiansaction" into
"uate". Befoie the lobbying activities of Fishei¡Cohissen no
time-baseu stamp sciip was founu in the 0SA. The iesult
was a ieally "ameiican-sizeu" self-liquiuating sciip with a
total loss of value (!) aftei 1 yeai (weekly uepieciation iate
of 2% of the face value) compaieu to the moueiate iate of
S.2% as suggesteu by uesell. So the main ieason behinu the
high level of uemuiiage was the funuing of the sciip by
conventional cash within a yeai anu not the pievention of
hoaiuing, which coulu be ieacheu by a lowei level. Fishei
uiu not auuiess the key uiffeiences between the Ameiican
anu Euiopean uemuiiage-baseu stamp sciip. Foi him it
was the same iuea, "inventeu in Euiope anu now spieauing
in Ameiica" (Fishei 19SS: 7).With this (new) concept of
uemuiiage baseu stamp sciip in minu, Fishei pioclaimeu
this monetaiy innovation as instiument of economic policy.
Tax on hoaiuing woulu inciease the velocity of ciiculation
of money in times of uepiession, stimulate economic activ-
ity anu elevate the piice level (in case of ueflation). The
effect of uepieciating money on the velocity of money cii-
culation was alieauy iecogniseu by uesell (E.g. uesell 1899:
278), but moie as a peimanent opeiation than a "supple-
mentaiy means of monetaiy contiol" (Fishei 19S4: 1SS)
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
1 Cohissen publisheu in August 19S2 an aiticle about the ueiman stamp sciip tiial "Wäia" in the 0S jouinal The New Republic of 1uth
August 19S2, which attiacteu the inteiest of Iiving Fishei. Cf. Wainei (2u1u), p. S4. But Fishei hau alieauy knowleuge of the uesellian stamp
sciip iuea befoie his fiist contact to Bans Cohissen. Fishei suggesteu a time-baseu stamp sciip with a moueiate uemuiiage-iate of 1% pei
month in his book "Booms anu Bepiessions" which was issueu in summei 19S2 (Cf. Fishei 19S2, pp. 227-2Su). To the iole of Fishei within
the stamp sciip movement see also uatch (2uu9).
anu tempoiaiy instiument to steei velocity ("speeu con-
0nlike uesell, Fishei iegaiueu stamp sciip as a tempoiaiy
measuie uue to a ciisis, to be issueu as a complementaiy
cuiiency at national (state) level. "It coulu be useu to help
foiestall the gieat emeigencies by being peiiouically ap-
plieu anu withuiawn in noimal times, like othei money
iegulatois." (Fishei 19S4: 1uS) Stamp sciip coulu be issueu
in a small volume. "Its ultimate usefulness is not its own
volume oi even its own speeu, but iathei its eventual effect
on the cieuit cuiiency which has gone ueau. The sciip, as it
weie, piimes the pump of the cieuit cuiiency." "What the
sciip uoes is to fuinish the business men with the spectacle
of customeis walk in." (Fishei 19S4: 1uS). Not only con-
sumeis will be uiscouiageu fiom hoaiuing cash but it will
also "uiscouiage the banks fiom hoaiuing cash - "to keep
liquiu", as they piefei to expiess it." (Fishei 19S4: 168).
0nlike uesell, Fishei pioposeu to extenu the uemuiiage-
piinciple to bank money (ueposit cuiiency).
So foi the fiist time, with Iiving Fishei we have a theoieti-
cal backgiounu foi the usage of uemuiiage within a CC-
!"#$%&$&% () !"*+,,-%" ./ %"#"00
Buiing his lifetime uesell changeu his minu about the con-
cept foi implementation of his Fiee-Noney by impioving
the efficiency of the piactical money hanuling. Bis initial
iuea (1891) was table money wheie a table piinteu on the
fiont siue shows the ielevant value foi eveiy week of the
yeai aftei issuance. Be impioveu this concept 1911 slightly
by ieplacing the value list by a list of suichaiges to be paiu
by the payei to the meichant, who has piiceu its goous
usually at iounu amounts. At the same time multiplication-
tables shoulu be ueliveieu to meichants anu othei payees
to calculate the total suichaige-amount at the till. The ue-
pieciation iate is a fixeu amount pei week of 1% of the
nominal value, which iesults in a S.2% loss of value at the
enu of the yeai. The notes expiieu aftei one yeai anu hau to
be ie-issueu. If the uepieciation loss is a fixeu amount pei
week, the holuei has to be awaie of a compounu negative
inteiest effect. At the enu of the fiist week of }anuaiy (issu-
ance at }anuaiy 1) the loss of value is 1%, in the last week
of Becembei the loss is 1.uS4%. uesell was awaie of this
effect (Cf. uesell 19u6): 97).
To solve the pioblem of change, he intiouuceu seveial con-
cepts, like the piint of small value notes (insteau of coins)
anu in seiies with uiffeient colouis ("seiies money"). Each
yeai one coloui was chosen (by lot). This seiies lost its
total value immeuiately. Anothei solution foi change has
alieauy the chaiacteiistics of stampeu money. The lowest
uenomination of the cuiiency unit (1 Naik) was issueu as
two uiffeient notes. 0ne note was like the othei uenomina-
tions (with a uepieciation table), the othei note was
equippeu with 1uu gummeu squaies of 1 Pfennig, which
coulu be cut out as change money. The meichant coulu affix
the unnecessaiy "stamps" on a special sheet foi completion
of the stamps again to 1 Naik foi ieuemption at the issuei
(within a yeai against a S% uiscount).
Years of
Depreciation Method Change money
Table Money
with shrinking value
Series Money
1906 Table Money
with shrinking value
sheet of lowest
with 100
Table Money
with a list of sur-
(based on the idea of
Gustav Simons)
sheet of lowest
with 100
1916 Stamped Money
(based on the idea of
Gustav Simons).
Stamps can be ob-
tained as part of the
low-value notes; no
separate stamp selling
Not clearly
specified. The
low value
notes would
have a kind of
stamps section
Stamped money
Additional selling of a
stamp sheet with dif-
ferent stamp denomi-
Usage of the
stamps also as
change money
Table 1: Evolution of Gesell´s concept for practical imple-
mentation of Free-Money
Buiing the seaich-piocess of piactical implementation of
the Fiee-Noney-iuea uustav Simons (1861 - 1914) playeu
an impoitant iole. As one of the eailiest followeis of uesell,
he was his spaiiing paitnei in finuing a piactical solution
uuiing the peiiou between 1911-1914, wheie both uesell
anu Simons weie living in the co-opeiative community of
Euen-0ianienbuig (neai Beilin). As bakei he hau to be not
only familiai with the piactical issues of change money as
well as with the uiscount-stamps which became veiy popu-
lai in Switzeilanu anu ueimany exactly in the same peiiou
of the fiist uesign of stamp sciip as specimen foi the Swiss
Fianc note, publisheu by uesell in 1916 in Switzeilanu.
uesell stateu faiily that it was Simons` iuea to impiove the
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
table money by listing suichaiging iates (Cf. uesell 1911:
1SS) anu to change the concept fiom table money to
stampeu money (Cf. uesell 1916a: 91). By taking ovei the
stamp-iuea of Simons, uesell expecteu a highei acceptance
in those countiies wheie uiscount stamps weie common:
"The concept will encountei less iesistance in countiies
wheie people aie useu to such sticking piactices foi othei
puiposes" (own tianslation (uesell 1916a: 91)). At that
time (1916) uesell piobably auvocateu the stamp iuea only
foi such countiies. In the fiist anu seconu euition of his
piincipal publication "Bie natüiliche Wiitschaftsoiunung"
(1916), uesell still pioclaimeu the table money solution (Cf.
uesell 1916b: 98-1uS). As Ninistei of Finance of the few
uays existing Bavaiian "Räteiepublik" uuiing the ievolu-
tion of Apiil 1919, uesell piepaieu the issuance of a new
cuiiency issueu by the Bavaiian state as stampeu money
(Cf. uesell 1919: 28u). Fiom 192u onwaius uesell changeu
in latei euitions of "Bie Natüiliche Wiitschaftsoiunung"
uefinitely to the stampeu note, howevei without mention-
ing the oiiginatoi of the stamp iuea, uustav Simons. Notes
woulu be issueu in the usual uenominations of the cuiiency
unit (e.g. 1, S, 1u etc.), so uiffeient uenominateu stamps
weie neeueu to be uistiibuteu as a postage-stamp booklet
("Kleingeluzettel"). These stamps shoulu also ieplace the
coinage (nickel oi coppei money) foi all low-value tiansac-
tions. So the seaich foi a solution of the change money
pioblem leau to the evolution of table money to stampeu
money concept, inspiieu by the contempoiaiy uiscount
stamp hype in Switzeilanu anu ueimany.
Within a uecimal cuiiency anu with an expiiation peiiou of
1 yeai foi each note, a uepiecation iate of 1% pei week
(S.2% loss p.a.) as suggesteu by uesell coulu be iealiseu by
S2 squaies foi stamps of 1 sub-units (like Cents oi Pfen-
nige) on the backsiue of 1u 0nit banknote. Foi lowei ue-
nominateu notes a weekly uepieciation woulu only be pos-
sible by issuing stamps below the value of the sub-unit of
the cuiiency oi by a uepieciation-fiee peiiou longei than a
week (e.g. five times a yeai foi a one-cuiiency-unit note, as
suggesteu by uesell). But the intiouuction of uiffeient
uepieciation-fiee peiious between the uenominations
woulu leau to uispaiity within the concept. A fixeu iate of
1% (of the uenominateu value) pei week anu a iate of 4%
pei 4 weeks woulu iesult to the same loss of value at the
enu of a ceitain peiiou (e.g. 48% aftei 48 weeks) if no
stamps aie stuck. But foi the holuei(s) of this note, who
have to pay this tax, the net piesent value (NvP) of the tax
buiuen uecieases if the uepieciation peiiou incieases
. As
alieauy uiscusseu, fiom a theoietical point of view a shoit
oi even no uepieciation-fiee peiiou woulu be optimal, but
a uaily sticking of a stamp on each banknote is not veiy
convenient. Anothei iestiiction is the space available on
the backsiue oi insiue (folueu sciip) anu the minimal size
of the stamps. The shoitest uepieciation-fiee peiiou in the
histoiy of (uateu) stamp sciip was a half-week (Cauillac¡
Nichigan 0SA 19SS). Anothei extieme was the state-wiue
issueu stampeu 1 uollai note of Albeita (Canaua 19S6)
with squaies foi 1u4 tiny stamps of 1 cent pei week (expi-
iation peiiou 2 yeais).
Since the latest uesign of stampeu money by uesell theie
aie no basic impiovements oi amenuments of the concept
oi even new ways to iealise the iuea of shiinking money foi
papei-baseu cuiiency. The concept of Table Noney has not
gaineu acceptance. 0nly a few examples uuiing the uieat
Bepiession aie known. Paitisans intiouuceu a uepieciation
list on theii notes uuiing 194S in Nontenegio (Yugoslavia).
It is inteiesting to see that the fiist moveis within the ie-
cent uemuiiage-baseu CC in ueimanic countiies staiteu
again with Table Noney
, but Stampeu Noney pievaileu
!"#$%&"'() "+,)-+-.$($"%. %/ 0-+1&&(2-
Foi the oiiginal puipose as single state-issueu national
cuiiency, the iuea of uepieciating money of Silvio uesell
has nevei been put into piactice. It is a fascinating theoiy,
but without piactice. Nost of his followeis aie still waiting
foi an implementation, although the chance is not veiy
As alieauy mentioneu uuiing the uieat Bepiession
uemuiiage-baseu CC became populai as emeigency money,
fiist in Euiope (ueimany, Austiia, Switzeilanu, Fiance) anu
latei in the 0SA anu Canaua (0nken 198S). In Euiope most
of the issues hau a uepieciation iate of 1% pei month,
which was much highei than the 1% pei week, pioposeu
by uesell. In the 0SA most of the time-baseu stamp sciip
initiatives intiouuceu a uemuiiage iate of 1% pei week in
oiuei to make the sciip self-financing aftei 1 yeai (see ap-
penuix). Although the iate in the 0.S. was foui times highei
than in Euiope, the level of uepieciation hau obviously no
significant impact. 0n both siues of the ocean we see suc-
cess stoiies anu failuies. In some cases some empiiical uata
ielating to the economic ielevance aie available. Foi exam-
ple, the economic iesults of the sciip issuance (hybiiu vei-
sion) of Nason City¡Iowa (19SS-19S4) of an auuitional
local uNP of u.Sm 0S Bollai, geneiateu by stamp sciip, was
quite compaiable to the famous economic ievival of Woigl
in Austiia (19S2-19SS) (uouschalk 2uu1: 1S-16). It seems
that the level of uemuiiage was not ciucial. All uemuiiage-
baseu sciip piojects of the Bepiession eia weie teiminateu
soonei oi latei. The issuance of piivate stamp sciip was
piohibiteu in ueimany anu Austiia (not in Switzeilanu!). In
the 0SA the local piojects weie usually teiminateu aftei the
ieuemption of all sciip, which was initially issueu. An issu-
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
2 The effect is uepenuing on the assumeu inteiest iate foi liquiuity. uesell uiu not peiceive this uiffeience oi neglect this effect because
within a uesellian monetaiy economy inteiest as liquiuity piemium woulu uisappeai. But it will play a iole, if the tax (stamps) has to be paiu
within a CC-enviionment.
S The fiist ,contempoiaiy" uemuiiage-baseu CC was the ,Phoenix" in Ainstaut, issueu uuiing a few months in 1999. Anothei Table Noney
nameu "Rolanu" was iealiseu in Biemen since 2uu1. But the Rolanu initiatois iemoveu the table money sciip aftei a few yeais anu tians-
foimeu the system to an account-baseu LETS although the uemuiiage was maintaineu (1% pei month on positive anu negative balances).
!"#$ !& ! #'"()"*'*& +'",-($./ 0.'#$&& 1!& "'( 2'#*&$34
!+(5'*,5 (5$ $#'"'/)# 3$0.$&&)'" 1!& &()++ (5$.$6
75$ 3$/*..!,$ 1)(5)" (5$ +'#!+ 0.)8!($ /'"$9 &#5$/$& )"
:*.'0$ !"3 )" (5$ ;<= #'*+3 5!8$ )"#.$!&$3 )(& '1" 8$+'#-
)(9 !& 0.)/!.9 $22$#(4 &()/*+!()", +'#!+ $#'"'/9 3*.)", !
0$.)'3 15$.$ (.!3)()'"!+ /'"$9 1!& 5'!.3$36 75$ +$8$+ '2
(5$ 3$/*..!,$ 2$$ '>8)'*&+9 0+!9$3 ! "$,+),)>+$ .'+$6 <)"#$
(5$ /'"$9 1!& "$8$. .$+$!&$3 (' !"9 &),")?)#!"( $@($"( )" !
+!.,$. .$,)'" A$6,6 &(!($-1)3$B4 (5$ &$#'"3!.9 $22$#( '2
&(!/0 &#.)0 !& /!#.'$#'"'/)# &($$.)", )"&(.*/$"( C)&5$.
5!3 5'0$3 2'. 5!3 "'( >$$" $/0).)#!++9 3$/'"&(.!($36
!"#$ !#&'(()*# &)++#(,
75$ D*$&()'" )& (5$.$2'.$ +$,)()/!($ 15$(5$. 3$/*..!,$
5!& $8$. 0+!9$3 ! #.*#)!+ .'+$ !( !++ )" $#'"'/)# .$+$8!"#$4
)" ($./& '2 &!+$& 8'+*/$ ,$"$.!($3 >9 EE6
F'.$ (5!" GHH ('1"& )&&*$3 0.)8!($ /'"$9 3*.)", (5$
I.$!( J$0.$&&)'" $.! )" (5$ ;<=6 =+&' )" :*.'0$ '(5$. 0.)-
8!($ /'"$9 A1)(5'*( 3$0.$#)!()'"B 1!& )&&*$34 +)K$ (5$
L6=6M6-"'($& )" J$"/!.K ANOPN-NOPPB '. (5$ 3$0.$&&)'"
&#.)0 )" Q'2&($(($" )" <1)(R$.+!"3 ANOPPB6 S!& ()/$->!&$3
&(!/0 &#.)0 /'.$ &*##$&&2*+ (5!" '(5$. +'#!+ &#.)0T
S)(5)" ! EE $"8).'"/$"( )( )& 3)2?)#*+( (' /$!&*.$ (5$ $#'-
"'/)# !#()8)(9 '2 0!0$. /'"$94 )2 (5$ &#.)0 )& "'( )//$3)-
!($+9 .$3$$/$3 !2($. $!#5 (.!"&!#()'"4 >*( *&$3 >9 )"3)-
8)3*!+& !& /$!"& '2 0!9/$"( )" ! +'", (.!"&!#()'" #5!)"
2.'/ 5!"3-('-5!"36 U" (5)& #!&$ (5$.$ !.$ '"+9 )"3)#!('.&4
&*#5 !& (5$ !##$0(!"#$ )" &('.$&4 (5$ 1$!. '2 (5$ *&$3
"'($&4 (5$ 3*.!()'" '2 (5$ 0.'V$#(4 (5$ ($&()/'"9 '2 #'"($/-
0'.!.)$&4 $(#6
75$ (.!"&!#()'"->!&$3 &(!/0 &#.)0 1!& !" )",$")'*& )3$!
(' >*)+3 *0 .$&$.8$ 2*"3& 2'. .$3$$/!>)+)(9 !2($. (5$ #).#*-
+!()'" 0$.)'34 >*( "'( !" )/0+$/$"(!()'" '2 (5$ I$&$++)!"
3$/*..!,$ #'"#$0(4 >9 (!@)", (.!"&!#()'"& )"&($!3 '2 !
()/$->!&$3 +)D*)3)(9 2$$6 W*( &'/$ '2 (5$&$ X&$+2-
+)D*)3!()",Y &#.)0 0.'V$#(& !.$ 3$+)8$.)", *")D*$ )"2'./!-
()'" >9 (.!#K)", !++ (5$ (.!"&!#()'" 3!(!4 3'#*/$"($3 '"
$!#5 "'($6 U2 (5$ ?).&( 3!($ '2 )&&*!"#$ !"3 (5$ 3!($ '2 .$-
3$/0()'" 1!& 1.)(($" '" (5$ &(!/0& '. 0.)"($3 '" (5$
"'($4 (5$ &!+$& (*."'8$. ,$"$.!($3 >9 (5)& "'($ !"3 )(& 8$-
+'#)(9 !.$ $@!#(+9 (.!#K$36 75$ "'($& !.$ $8$" &5'1)", (5$
)")()!+& '2 (5$ 0$.&'"& !"3 &5'0& 3*.)", (5$ 15'+$ (.!"&!#-
()'" #5!)"6 <'/$ '2 (5$ )")()!()8$& '2 &(!/0 &#.)0 3)3 "'(
3$&(.'9 (5$ .$3$$/$3 !"3 #!"#$++$3 "'($&4 >*( &'+3 (5$/ ('
#'++$#('.&6 = .$+!()8$+9 5),5 "*/>$. '2 &()++ $@)&()", "'($&4
15)#5 !.$ 2*++9 '. "$!.+9 2*++9 !2?)@$3 >9 &(!/0&4 #'*+3 >$
!" )"3)#!()'" 2'. ! &*##$&&2*+ 0.'V$#(6 :8!+*!()'" '2 8$+'#)(9
)& 0'&&)>+$ 2'. (5$ &(!/0 &#.)0 )&&*$3 3*.)", (5$ I.$!( J$-
0.$&&)'"4 15)#5 1!& &*##$&&2*+ !"3 ! #$.(!)" "*/>$. '2
"'($& !.$ &()++ !8!)+!>+$4 +)K$ (5$ "'($& 2.'/ <!"(! E.*R
AE!+)2'.")!B4 ZK/*+,$$ AZK+!5'/!B4 F!&'" E)(9 AU'1!B !"3
E!./$+ AE!+)2'.")!B6
Figure 2: Front –and backside of the scrip issued in Mason
City (1933)
U" <!"(! E.*R !"3 F!&'" E)(9 (5$ 8!+*$ '2 (5$ &(!/0 1!& [
#$"(&4 &' (5$ 2$$ 1!& [\ '2 (5$ "'/)"!+ 8!+*$ '2 (5$ '"$-
3'++!.-&#.)06 =2($. GH A'. G[B (.!"&!#()'"& (5$ &#.)0 5!3 ('
>$ .$3$$/$3 !( (5$ )&&*$. 2'. '"$ X.$!+Y ;< 3'++!.6 U" ZK-
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
Table 2: Empirical evaluations of some stamp scrip projects in the USA (1933), based on original scrip notes
mulgee anu Caimel the initiatois hau chosen a highei fee of
S cents, limiting the numbei of tiansactions at SS oi S6.
The sciip issueu in Nason City was (as iesult of the publica-
tions of Fishei & Cohissen) hybiiu (time- anu tiansaction-
baseu), so the stamp hau to be affixeu with each tiansac-
tion oi each week. Analysing its velocity the iesults aie
compaiable to the tiansaction-baseu only sciip issuances.
Although the tiansaction fee was Su% highei (S ct. com-
paieu to 2 ct.) the velocity of the 0kmulgee sciip accelei-
ateu to almost 1uu almost twice as high as Santa Ciuz oi
Nason City. Buiing the uieat Bepiession the velocity of the
uollai (N1) uecieaseu uiamatically fiom S.42 (1929) to
2.19 (19SS) (Cf. Fiieuman & Schwaitz 1971: 49Sff.). A ve-
locity of tiansaction-baseu sciip of Su oi even moie inui-
cates that this kinu of local sciip woikeu veiy well in these
aieas compaieu to the stiiking conventional money uuiing
this economical ciisis. Theie aie no haiu facts available
about othei local sciip. Naybe its iesults woulu be the
same, bettei oi woise. Besiues piice conuitions, othei pa-
iameteis have basically influenceu the economic iesults of
the CC. Fiom a theoietical point of view the sciip subject to
an auuitional fee loau foi each tiansaction woulu not be an
optimal initial conuition foi success. But in some locations
it obviously woikeu veiy well.
!"#$%&'"()(* ,&'-%&%#$)$,"# ".
Aftei the wave of LETS (199S - 1998) became moie satu-
iateu in ueimany, a new wave of CC baseu on papei-money
came up at the beginning of the new millennium. The Ba-
vaiian Chiemgauei (staiteu 2uuS) was not the fiist one, but
its successful concept anu maiketing became a benchmaik
within the "Regiogelu"-movement anu the concept was
taken ovei by a lot of following piojects. The Chiemgauei is
stampeu money, issueu against the exchange of Euios with
a uemuiiage fee of 2% pei quaitei. The oiigin of the im-
plementation of uemuiiage at the Chiemgauei with stamp
sciip was the theoiy of Silvio uesell anu the success of
Woigl in Austiia (19S2-19SS). The uepieciation loss of 8%
pei yeai was piagmatically chosen. This iate iesults into a
iounu sum pei quaitei anu it is an aveiage value between
uesell´s pioposal of S.2% anu the histoiical iate of 12% of
Woigl. At the time being about SS% of the appiox. 4u uei-
man Regiogelu-initiatives
hau taken ovei the uemuiiage-
concept of the Chiemgauei. Nost of them implementeu the
8% uemuiiage iate of the Chiemgauei. The new ueiman
concept of uemuiiage is alieauy expoiteu to Austiia
("Waluvieitlei"), Fiance ("Abeillle") anu 0K ("Stiouu
Pounu"). Within the Chiemgauei, which is not only issueu
as papei money but also as bank money (cuiient account),
the uemuiiage is also implementeu to the cashless Chiem-
gauei accounts with a fee of u.u2% pei uay (with a
negative-inteiest-fiee peiiou of 9u uays).
The ieasons behinu uemuiiage aie safeguaiuing anu
stimulation of the money ciiculation in oiuei to geneiate
moie local business: "Noney that nevei slows uown ciicu-
lation"; "The auvantage is that eveiybouy keeps money
going"; "The velocity of money oi the speeu of money is
fastei." (uelleii 2uu9: 69). Bemuiiage oi othei ways to
safeguaiu the ciiculation is piomoteu by the ueiman
Regiogelu-Association. Eveiy initiative, which is membei of
the association, is committeu to the quality ciiteiia. 0ne of
the ciiteiia is: To suppoit a sustainable financial system by
ueteimining anu contiolling the amount anu velocity of the
money issueu.
The velocity of the Chiemgauei (yeaily sales tuinovei ui-
viueu by the aveiage outstanuing money stock) is esti-
mateu at 1u.6 (2uu9). Although aftei the intiouuction of
the Euio no uomestic figuies aie available anymoie, the
velocity will be much highei than the velocity of conven-
tional money (N1), which was appiox. S.S of the foimei
ueiman BN in 2uuu (befoie the intiouuction of the Euio).
Figuies of the velocity of othei ueiman CC aie iaie. The
velocity of the "Langeneggei Talente ", a local CC without
uemuiiage in Austiia (voiailbeig) is estimateu at only 4
(2uu9). Bowevei, the velocity of the tiauitional "Bethel
uelu" (without uemuiiage), issueu in Bielefelu as CC since
19u8, is appiox. 14 (Cf. uouschalk 2uu8: 198). The empiii-
cal uata uoes not yet allow conclusions on the effects of
implementing uemuiiage on the velocity within the
Regiogelu-sceneiy in ueimany. Bowevei, the velocity of CC
is piobably much highei than the "speeu" of tiauitional
$2% 34,33 !24 54,( .()#6%#78 ) 30!!%33.0-
!! 4,$2"0$ /%&0(()1%
Although the implementation anu hanuling of uemuiiage at
a cashless cuiiency (by a negative inteiest mechanism) is
much easiei compaieu to a cash-baseu cuiiency, the
account-baseu Swiss WIR-system still has anu nevei hau
uemuiiage (except foi a tiny expeiiment of issuance of low
value stamp sciip notes uuiing 19S8-1948). The WIR was
set up in Becembei 19S4 by Weinei Zimmeimann anu Paul
Enz, who weie followeis of Silvio uesell, but the concept is
not baseu on his iuea of shiinking money. The oiigins of the
Swiss WIR weie the so-calleu "Ausgleichskassen" (compen-
sation schemes) in ueimany. The Ausgleichskassen (latei
also calleu "Aibeitsgemeinschaften") weie local cashless
cieuit systems within a system of closeu-loop accounts of
the paiticipants (Cf. uouschalk 1986: 71-7S). Contiaiy to
tiauitional baitei exchanges the cieation of money (posi-
tive balances on the accounts) was not geneiateu by ovei-
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
4 It is uifficult to uiaw a cleai bounuaiy line between contempoiaiy Regiogelu anu othei piivate issueu means of papei money in ueimany. A
ciiteiion coulu be the membeiship of the Regiogelu-Association ("Regiogelu e.v."), but some initiatives aie not membei. The numbeis men-
tioneu heie aie baseu on initiatives, who aie issuing papei money in moie than one uenomination, which shoulu be long-teim useu as means
of payment fiom hanu-to-hanu. So foi example local gift voucheis aie not incluueu. Within the Regiogelu uiffeient concepts aie useu. Nost of
them aie issueu against the exchange of Euio (backeu by Euio); otheis aie issueu by the paiticipants as cieuit backeu by theii piouucts anu
seivices (backeu by output). Some of the Regiogelu-issues aie baseu on time insteau of Euio as unit of account anu exchange.
uiafts of membei accounts (like tiauitional baitei ex-
changes oi LETS, wheie the total balances aie zeio), but by
initial loans gianteu by the system to some paiticipants as
uebtois. The local Ausgleichskasse acteu like a cential bank
issuing its own cashless money by gianting zeio-inteiest
cieuit to its paiticipants (SNE, faimeis, unemployment &
ielief initiatives, piivate peisons). The system was closeu-
loop without a possibility to exchange the CC into the na-
tional state-issueu cuiiency. These CC-systems weie quite
successful in ueimany uuiing the uieat Bepiession since
19S1. Aftei the success of the fiist Ausgleichskasse in
Renusbuig (staiteu in summei 19S1) these coopeiatives
expanueu iapiuly thioughout the ueiman Reich. At the enu
of 19S2 appioximatively 4u Ausgleichskassen weie listeu
as iegisteieu coopeiatives anu othei legal entities in uei-
many. The ueiman goveinment tiieu to stop this "subvei-
sive" money cieation by seveial laws. In the enu the
national-socialist iegime was successful by a specific law in
19S4, which uefinitely stoppeu this "abuse of cashless
payments" by the Ausgleichskassen. The basic iuea was
expoiteu to othei Euiopean countiies, like Austiia anu
Benmaik. In Benmaik the issuance of piivate sciip notes of
the }.A.K. co-opeiative (}oiu-Aibejue-Kapital), piactiseu
since 19S1 was just piohibiteu by law in 19SS. The
}.A.K.-founuei Kiistiansen lookeu foi alteinative solutions,
pickeu up the iuea of the zeio-inteiest cieuit cleaiing of the
Ausgleichskassen anu staiteu its cashless cuiiency of the
}.A.K.-cleaiing "Afiegningscentiale" in the beginning of
19S4. The WIR-founueis visiteu Benmaik twice in 19S4 to
stuuy the }.A.K.-cleaiing system befoie staiting theii own
system at the enu of 19S4. Theii main goal was inteiest-
fiee loans anu ueposits anu not uesellian melting money.
Theiefoie, the initiative was not suppoiteu (anu even ciiti-
cizeu) by the Swiss oiganisation of uesell followeis (SFB),
whose taiget was a nation-wiue monetaiy iefoim baseu on
"Fieigelu" anu not a iegional (latei nation-wiue) CC-pioject
(Cf. Schäiiei 198S: 2u1-2uS).
The WIR system is a cashless account-baseu ciicuit. In
19S8 it staiteu a uateu stamp sciip (WIR veiiechnungs-
Schein) in a small uenomination of S WIR-fiancs as auui-
tional meuium of exchange only foi small-value payments
between paiticipants anu foi payments to non-paiticipants
without an account. This sciip shoulu attiact non-membeis
to join the system. The uemuiiage fee was 2% pei month.
It was not successful anu eventually teiminateu in 1948.
Theie is no infoimation available about the volume, but it
must be euiteu in a veiy small volume anu neglectful com-
paieu to the cashless monetaiy volume of the WIR. Stuuei
(1998: 16) suggesteu that uemuiiage was geneially im-
plementeu within the WIR system until 1948 by a misleau-
ing statement. Bemuiiage was only ielevant foi a small
amount of auuitional sciip notes. In the late 4us the WIR
boaiu uiscusseu the intiouuction of uemuiiage on the
WIR-Fianc balances, but it was nevei iealiseu. The basic
iuea of uesell of shiinking money playeu a neglecteu iole in
WIR´s histoiy. So the WIR as system was nevei a uesellian
institution as suggesteu by Stuuei (Cf. Stuuei 1998: 18). Its
ioots go back to the anti-inteiest theoiies of the mutual
exchange socialists anu the cash- anu inteiestless systems
of the Ausgleichskassen in ueimany of 19S1 - 19SS. Since
1929 the followeis of uesell weie involveu in seveial
uemuiiage-baseu stamp sciip piojects in ueimany, Austiia
anu Switzeilanu (eg. Wäia, Tauschei), but without pei-
sonal oi iueological connections to the paiallel movement
of the Ausgleichskassen in ueimany. The Ausgleichskassen
anu the uesellian stamp sciip piojects weie at that time
two paiallel stiings within the histoiy of piactical mone-
taiy iefoim piojects in the ueimanic countiies.
Cuiiency with uemuiiage is a theoietical concept foi a
iefoim of the monopolistic issueu state money oiiginateu
by Silvio uesell. 0ntil now it has nevei been implementeu
the way it was oiiginally intenueu. Baseu on the theoiy of
Iiving Fishei anu the piactical expeiiences uuiing the uieat
Bepiession a uemuiiage-baseu CC coulu be helpful as a
tempoiaiy steeiing instiument uuiing economic uepies-
sions to stimulate economic activity by incieasing the ve-
locity of money (of CC anu inuiiectly of conventional
money), piobably only if issueu state-wiue. The level of the
uemuiiage-iate of the local issueu uepieciateu money
seems to be not ciucial foi the usage, tuinovei anu velocity.
A theoiy behinu the implementation of uemuiiage within a
uuiable CC without the eviuence of an economic ciisis is
lacking. Its main goal is to pievent hoaiuing anu to inciease
the velocity of the issueu CC. 0ntil now theie aie no haiu
figuies of contempoiaiy CC pioving this effect compaieu to
othei CC without uemuiiage. The Swiss CBW (WIR
Fianken), the oluest anu most successful CC in the woilu, is
a cuiiency without uemuiiage. Bemuiiage piobably uoes
not mattei if the usage, tuinovei anu velocity aie the
Baseu on histoiical anu contempoiaiy expeiiences, the
velocity of CC is usually much highei than the conventional
money. Even a CC with an auuitional tiansaction fee can
not pievent its extiemely high level of velocity.
The main uiivei behinu the highei level of velocity of CC is
piobably uiesham´s law: Bau Noney uiives out goou
money (if they exchange foi the same piice). Nost CC aie
issueu with a fixeu exchange iate to the national cuiiency.
Bue to its iestiicteu liquiuity CC is pei uefinition "bau
money" compaieu to the conventional state-issueu money
as legal tenuei within the whole teiiitoiy of issuance. Fiom
a usei´s point of view a uemuiiage-baseu CC (if papei-
baseu) is moie complex anu less convenient. By fixing
stamps at the iight time the tiansaction anu infoimation
costs seems to be highei than othei less complex CC. 0n the
othei hanu uemuiiage coulu be a ievenue souice besiues
seignioiage. In the Bepiession eia the ievenue stieam of
uemuiiage fee coulu even cieate a ieseive foi 1uu% back-
ing of the CC by conventional money.
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
Baitsch, uüntei (1994) Bie NW0-Bewegung Silvio uesells,
ueschichtlichei uiunuiiß 1891-1992¡9S', (Lütjenbuig).
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uatch, Loien (2uu9) 'Iiving Fishei anu the Stamp Sciip Novement
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uesell, Silvio (1899) ,Anti-captialistisches uelu'. pamphlet 1899,
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(Lütjenbuig 1991), pp. 87-94.
uesell, Silvio (1916b) ,Bie Natüiliche Wiitschaftsoiunung uuich
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International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
!""#$%&'( *+!$,!-*&.$/0!,#% ,*!1" ,-+&"
&$ *2# 3,!
The oiiginal stamp sciip issuances in the 0SA weie quite
uiffeient fiom the uesellian concept anu issues in Euiope.
Stamps hau to be affixeu with each tiansaction (without
time-baseu paiametei) by the usei (sellei oi buyei). The
sciip note, fully filleu with stamps, coulu be ieueemeu at its
face value against tiauitional cash. The ieuemptions funu is
automatically built up by the ievenues of the solu stamps.
The stamps hau to be paiu in cash by eveiy usei in the
tiansaction chain, who benefitteu fiom the auuitional tiaue
tuinovei. At the enu of the uay the sciip, initially issueu as
fiat money, was 1uu% backeu by conventional money
("self-liquiuating" oi "self-financing" sciip). 0sually the
value of the neeueu stamps exceeueu 1uu% in oiuei to
cieate a small suiplus foi coveiage of the hanuling anu
piinting costs of the sciip issuance. This tiansaction-baseu
stamp sciip has (besiues the sticking of the stamps) noth-
ing in common with the basics of of the uesellian time-
baseu stamp sciip: uepieciation anu pieventing hoaiuing.
Even the effects aie contiaiy: insteau of a built-in uepiecia-
tion as incentive foi quick usage, the payei (oi payee) has
to pay a fee foi usage. Contiaiy to the shiinking money
concept of uesell we see a cieuit note, which becomes ovei
time moie valuable aftei each tiansaction by the iising of
the funus foi ieuemptions. About the oiigin of this
Ameiican-type of stamp sciip-iuea theie is iaiely any inui-
cation. Like Iiving Fishei, the uesellians in Euiope believeu
that it was a misunueistanuing oi uelibeiate mouification
of uesell´s iuea. Chailes Zylstia was the gieat piomotei of
tiansaction-baseu stamp sciip in the 0SA (fiist issuance in
Bawaiuen¡Iowa in 0ctobei 19S2 as tiansaction-baseu
sciip, changeu by Zylstia to time-baseu sciip in Apiil
19SS), but he was not the fiist one anu theiefoie in any
case not the (fiist) inventoi of the iuea. The fiist (not veiy
successful) launch of stamp sciip in the 0SA was piobably
in Anaheim (Califoinia) in }anuaiy 19S2, initiateu by }oe
Elliott. "Elliott himself claimeu that he hau thought up the
iuea of stampeu money himself, but its similaiity to uesell´s
iueas makes one wonuei if theie might have been some
(possibly unconscious) awaieness of uesell´s woik" (Wai-
nei 2uu8: S1u). The seconu town that followeu the concept
of Anaheim (1 Bollai-note with 2S stamps of 4 Cents) was
piobably Neiceu (Califoinia) in August 19S2 (see figuie S).
The mechanism of a ceitain taiget amount to be ieacheu by
collecting anu affixing stamps was populai at that time
within uiscount stamps schemes anu savings plans. It is
likely that the iuea oiiginateu moie heie.
Stamp sciip anu othei sciip with uepieciation (like table
money) weie issueu (oi planneu, but not issueu) in at least
1SS towns anu iegions within 28 states of the 0SA uuiing
the uieat Bepiession. The majoiity (72%) was still
tiansaction-baseu, taking ovei the oiiginal iuea of Anaheim
oi the concept of Zylstia. 0sually tiansaction-baseu sciip
was 1uu% self-financeu by the stamps to be affixeu. Within
a few sciip issues the useis weie not obligeu to affix a total
numbei of stamps coiiesponuing with the nominal value of
the note, like the "self-liquiuating" sciip. These issues hau
only a few stamps, theiefoie calleu "limiteu stamp sciip"
(e.g. the well-known sciip of Fostoiia¡0hio). 0nly 7 towns
iealiseu a puiely time-baseu sciip accoiuing to the uesel-
lian inspiieu iueas of Fishei¡Cohissen. Especially in Nichi-
gan the hybiiu type was veiy populai by combining both
iueas (stamps hau to be affixeu pei tiansaction oi pei
Figure 3: Front- and backside of the early transaction-
based stamp scrip issued in Merced (1932)

(transaction &
table money &
other depreciation
limited stamp

Figure 4: Stamp scrip and other scrip based on deprecia-
tion, issued in the USA during the Great Depression (based
on Mitchell & Shafer 1984)
The last 0SA issueu tiansaction-baseu stamp sciip uuiing
the uieat Bepiession peiiou was piobably issueu in San
Luis 0bispo (Califoinia) oi in Chicago (0niteu Tiaue Bollai
Exchange) in 19S9. It seems that this ingenious iuea was
nevei pickeu up again although it coulu be an inteiesting
concept foi CC, wheie a backing in the conventional cui-
iency is an impoitant conuition foi acceptance by avoiuing
a piepaiu way of issuing.
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
Table 2 : Stamp Scrip during the Great Depression era
International Journal Of Community Currency Research 2012 Volume 16 (D) 58-69 Godschalk
Stamp Scrip during the
Great Depression
Transaction-based (USA) Time-based (Europe)
First issuance
(as far as known today)
January 1932 (Anaheim/California) 1926 (WARA)
Booming period 1933 1930-1931 (Germany)
1932-1933 (Austria)
Legal pressure No prohibition Prohibition in Germany and Aus-
tria (not in Switzerland!)
Fee (stamp) Per transaction
(usually 2% or 3% of face value)
Per time unit
(usually 1% per month)
Product variety Time-based scrip and hybrid variations (time
& transaction) after lobbying of Fisher &
Table money
(e.g. Tauscher in Germany 1931)
Funding/Backing Self-financing Usually backed by conventional
Redemption into con-
ventional currency
Usually after full term (all stamps affixed);
sometimes a clearing house was installed for
premature redemption against a discount by
payees (retailers)
In most cases, but with disincen-
tives (e.g. redemption against dis-
International Journal of
Community Currency Research
Volume 16 (2012) Section D 70-79
Irene Sotiropoulou*
Department Of Economics, University Of Crete
Bistoiical stuuy has not been within the scope of the ieseaich pioject titleu "Exchange net-
woiks anu paiallel cuiiencies: Theoietical appioaches anu the case of uieece". Bowevei, this
pioveu to be a ueficiency of the pioject anu the piesent papei is an attempt to foimulate a hy-
pothesis, with the intention to see at least within such a histoiical peispective, how scheme
membeis with both theii uiscouise anu action challenge oui peiceptions about impoitant is-
sues in economics. Theie is no name oi title foi this hypothesis (yet). We believe that it is too
eaily to name it. It seems that the schemes stuuieu aie the suiface of an economy oi economies
which nevei ceaseu to exist, as both mateiial spaces anu expeiiences in people's histoiies. It is
about viewing all this activity as setting a uiffeient agenua foi economics than what capitalist
anu anti-capitalist uiscouise can offei.
I woulu like to thank Bi Efthymia Kannei, histoiian anu teachei of the couise "Nation-Cieation
in Balkans" at the Bepaitment of Tuikish & Contempoiaiy Asian Stuuies (0niveisity of Athens),
foi hei insightful auvice to me on choosing an essay topic to woik on at a moment that I coulu
not see any connection between hei couise anu my ieseaich, but also foi the liteiatuie auvice
she pioviueu me with, anu mostly foi hei comments anu encouiagement. I woulu also like to
thank Piof. Beinaiu Lietaei (Centei foi Sustainable Resouices, 0niveisity of Califoinia at Bei-
keley) foi having sent to me his aiticles anu book chaptei conceining economic sustainability
anu Piof. Bina vaiou (School of Aichitectuie Engineeis, National Technical 0niveisity of Ath-
ens) foi euucating me about being caieful with teims like "iuial" anu "uiban" aieas, especially
when I use them in my ieseaich analysis. Finally, I am inuebteu to Bi }éiôme Blanc (0niveisité
Lumieie - Lyon II) foi his comments anu auvice, to bloggei Stathis Stasinos
(http:¡¡techiechan.com) foi his ciitique anu cieative comments, as well as to two anonymous
iefeiees foi theii auvice on liteiatuie anu theii insightful comments on a pievious veision of
this papei. All ueficiencies of this papei iemain a iesponsibility of the authoi only.
This ieseaich has been co-financeu by the Euiopean 0nion (Euiopean Social Funu - ESF) anu
uieek national funus thiough the 0peiational Piogiam "Euucation anu Lifelong Leaining" of the
National Stiategic Refeience Fiamewoik (NSRF) - Reseaich Funuing Piogiam: Beiacleitus II.
Investing in knowleuge society thiough the Euiopean Social Funu.
An eailiei veision of this papei has been piesenteu at the 2nu Inteinational Confeience in Po-
litical Economy "Neolibeialism anu the Ciises of Economic Science" helu on 2u-22.uS.2u11 in
Istanbul, Tuikey.
* Email: isotiiopoulouÇecon.soc.uoc.gi
$0 2345 4637 89432:5; Sotiiopoulou, I. (2u12) 'Economic Activity Without 0fficial Cuiiency in uieece: The *
Bypothesis' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 7u-79 <www.ijcci.net> ISSN
!"#$% '( )*()+* $*,- .$* /*00,1* ,. , ),-.234+,- /(/*5.6
0( .$,. .$*% 3,5 .$*5 0,% .$*% $,7* 840. +*,-5*' #$,. $,0
,+#,%0 9**5 :5(#5;<
Naiia Touoiova (2uu4:4)
!" $%&'()*+&$(%
!"! &,- '-.-/01, 2034-15 678 $5. 913:-
The entiie ieseaich pioject is titleu "Exchange Netwoiks
anu Paiallel Cuiiencies: Theoietical appioaches anu the
case of uieece" anu stuuies economic activity without the
use of any official cuiiency, which takes place beyonu chai-
ity oi family-fiienuship ciicles. The pioject examines paial-
lel cuiiencies, exchange netwoiks anu fiee bazaais, most of
which emeigeu the last yeais in uieece anu still emeige
anu uevelop, especially since 2uu9 onwaius. Noieovei,
some sui geneiis initiatives have been incluueu, uespite the
fact that they cannot be categoiiseu into any of the alieauy
mentioneu scheme types (Sotiiopoulou 2u1u:1-6, 2u11a:
By the teim "exchange netwoiks" I mean stiuctuies which
facilitate non-monetaiy exchange (baitei) foi theii mem-
beis anu they aie eithei of geneial natuie oi specialiseu in
one sectoi of activity. The teim fiee-exchange bazaai
(¿upto+txo-uv+uiiux+txo ¤u(úpt) is the one useu foi ba-
zaais wheie people can biing things (clothes, petty ma-
chines, shoes, toys, books, CBs, fuinituie, etc.) to exchange
them oi just give them away anu take anything they believe
it is useful foi them. The fiee netwoiks aie online only;
theii membeis notify when they want to give something
away foi fiee oi when they neeu anything that might be
available but not yet announceu online, anu they get in-
stantly notifieu when something is uisposeu by any net-
woik membei.
By "paiallel cuiiencies" we mean any cuiiency useu by
people in tiansactions, without this being official in any
countiy. A paiallel cuiiency might have only a viitual oi
uigital appeaiance (f.ex. units cieuiteu in a computei uata-
base) oi it might take a physical appeaiance in notes, is-
sueu by the cuiiency useis. The impoitant featuie of paial-
lel cuiiencies is that they have no (positive) inteiest iate,
so loans aie without inteiest payments anu cuiiency ac-
cumulation is not encouiageu.
The pioject hau not been uesigneu to integiate histoiical
ieseaich anu it is, insteau, focusing on the actual economic
activity, i.e. the activity taking place since the beginning of
the pioject in Febiuaiy 2uu9. Noieovei, at the beginning of
the pioject it hau been chosen that the ieseaich finuings
woulu not be ieally placeu within a histoiical peispective.
The ieason foi this uecision was that such an attempt
woulu iequiie oiiginal histoiical ieseaich which woulu be
beyonu the scope anu the time-scheuule of the pioject. So,
it seemeu that it woulu be bettei to uo the histoiical ie-
seaich within the fiamewoik of anothei futuie pioject.
!";" <-5,38. /78 =>:35,-.-.
So, the pioject staiteu in Febiuaiy 2uu9, with the ie-
seaichei following qualitative ieseaich anu¡oi ethno-
giaphic methous: obseivation, obseivation by paiticipa-
tion, fiee uiscussions, text analysis, then open-question
inteiviews with scheme cooiuinatois oi membeis with
somewhat global view of the activity (Sotiiopoulou 2u1u:
It seemeu that this uecision of keeping my attention to the
piesent was moie oi less well-woiking uuiing the fiist two
yeais of the ieseaich. This uoes not mean that the ieseaich
finuings uiu not incluue hints oi eviuence about oluei ex-
change anu baitei piactices. Reseaich paiticipants them-
selves often pointeu out in seveial cases that theii activity
is not something new but something that existeu, at least
some uecaues ago. In some cases, even specific non-
monetaiy contiact names have been mentioneu to me, to
euucate me that this activity was quite foimal at some
point in the past, even if the contiacts weie not acquiiing a
wiitten-mateiial foim. Bowevei, I caiefully kept all infoi-
mation asiue as it seemeu "iiielevant" to the scope of the
ieseaich pioject.
Theiefoie, the fiist hypotheses constiucteu to be examineu
within the pioject weie moie oi less unhistoiical (Sotiio-
poulou 2u1u: 14-21). This means, that the fiist thiee hy-
potheses useu in the pioject coulu "nicely" be "placeu"
within any othei economic context anu still be negotiable
even if we uiu not uiscuss anymoie uieece since 2uu9 on-
waius. This might not be inheiently bau anu I have not
uiscaiueu those hypotheses, given that they seemeu not to
be uispioveu but to sheu light on seveial impoitant aspects
of the activity stuuieu. In fact, the hypotheses weie at-
tempts to explain the activity stuuieu in teims that coulu
covei the entiie activity to some satisfactoiy extent. In
othei woius, the ieseaichei avoiueu the monetaiy theoiies
that leave completely outsiue the uiscussion on non-
monetaiy activity, which was the majoi pait of the subject-
mattei of the pioject.
!"?" '-.-/01, @A78A7B. 9,3C &,- $D:/..-
The impasse of the pioject itself emeigeu aftei the maps of
scheme membeiship have been constiucteu in late Becem-
bei 2u1u. The pioject, between the qualitative (fiist) anu
the quantitative (seconu) phase of the ieseaich, incluueu
an inteiluue phase of mapping the schemes with iespect to
theii membeiship uispeision within uieece. The finuings of
this mapping weie amazing, not only because they showeu
that this activity is well-uispeiseu thioughout the countiy
(although theie aie uispaiities among iegions) but mostly
because the quantity (many thousanus of people) anu the
uispeision (all ovei the countiy) of the schemes was ques-
tioning the iuea that this activity is completely "new", i.e. a
phenomenon emeiging since 2uu9 (Sotiiopoulou 2u11a).
Seveial questions weie iaiseu, which coulu be summaiiseu
as following: is it possible that all this activity is completely
new, oi that people have shifteu suuuenly theii choices into
joining all those schemes in hunuieus oi thousanus. Is it
International Journal Of Community Currency Research 2012 Volume 16 (D) 70-79 Sotiropoulou
possible that all this activity, foi which no liteiatuie exists,
be so quickly acquiieu as knowleuge by so many people
who can "miiaculously" cooiuinate themselves without
ieally many instiuctions. Is it possible that all this activity
is a ianuom choice oi just an activity inventeu because of
the new communication technologies available to most
people. Can this be just a fashion oi just a tempoiaiy shel-
tei against economic ciisis anu as a fashion oi tempoiaiy
solution it will faue out once mainstieam economy will
Even if I wanteu to use the fiist thiee ieseaich hypotheses I
hau pieviously auopteu in my ieseaich pioject, those coulu
not explain the extent anu the uispeision of the phenomena
stuuieu. Noieovei, Theie has been a fiist attempt to evalu-
ate the "ciisis aigument" by checking scheme paiticipation
in compaiison to unemployment inciease iates the last two
yeais (2uu8-2u1u). The fiist inuications acquiieu out of
this attempt have been inconclusive (Sotiiopoulou 2u11a:
S2-SS). Then, anothei explanation was neeueu, at least to
complement the othei hypotheses of the ieseaich.
0ne moie question was imminent. The existing liteiatuie
fiom all ovei the woilu is being oiienteu towaius the stuuy
of paiallel cuiiencies, while exchange netwoiks anu fiee
bazaais aie almost inexistent foi both acauemic anu non-
acauemic authois, as the liteiatuie ieview has shown (Soti-
iopoulou 2u1u: 9-1S). This peculiaiity of liteiatuie hau
alieauy maue uifficult foi the authoi to compiehenu anu
analyse the vast pait of the ieseaich subject-mattei (ex-
change netwoiks, fiee bazaais anu netwoiks, sui geneiis
schemes). A veiy fiist hypothesis coulu have been that ex-
change netwoiks, fiee bazaais anu othei non-monetaiy
schemes aie just a uieek oiiginality - but this hypothesis
uiu not have any sounu ieasoning because we have no ie-
seaich publications fiom othei countiies to veiify whethei
any similai activity exists theie oi not. Plus, it seemeu too
easy to be veiifiable oi too uifficult to be uiscaiueu, be-
cause the ieseaichei coulu not extenu the ieseaich to othei
The only infoimation we have till now about non-monetaiy
tiansactions that take place nowauays is the infoimation
publisheu thiough the viueo of the ieseaich pioject
"Bomenatje a Catalunya II"
, which staiteu in 2u1u in Cata-
lunya, Spain, by }oana Conill, Nanuel Castells anu Alex
Ruiz.. Noieovei, theie is some infoimation about baitei
faiis anu the anonymous maikets (meicauos anonimos -
veiy similai to fiee bazaais) of venezuela
anu some ieally
vague infoimation about uiiect baitei anu counteitiaue
contiacts among businesses in Aigentina (Sitiin 2u11:S4).
Neveitheless, the question of uniqueness iemains anu
theie is no point to uiscuss whethei all this activity is a
peculiaiity of venezuelan countiysiue, Catalunya, Aigen-
tina anu uieece (although, I aumit, this woulu be a fabulous
assumption). Theie aie also some stuuies on business
counteitiaue in the Anglo-saxon countiies wheie the phe-
nomenon is stuuieu as coeval anu not as "an emeigency oi
haphazaiu way of conuucting business" (Naivasti & Smyth
1998: 1u87, Biich & Liesch 1998, Neale & Shipley 1987),
but this liteiatuie is still iathei limiteu.
So, the buining question in }anuaiy 2u11 hau been foimeu
like this: We have possible explanations foi peisonal oi
collective motives foi joining a scheme, foi establishing a
paiallel cuiiency oi an exchange netwoik, but we have no
explanation how this can be uone so quickly, with so nu-
meious membeiship anu so extenueu geogiaphical uispei-
sion, with little scheme-euucation foi new membeis, with
no ieal suppoit by public authoiities (apait fiom some iaie
cases) anu with this vaiiety of schemes (it is weiiu that in
uieece we have so many types of schemes anu in othei
countiies we have just paiallel cuiiencies). If this is not a
peculiaiity of uieek society, then what is ieally happening.
!"#" %&'( )*+,-./ 0'1*+*,+ 2&' 0'+'3.4& 5.-6'4,
At this point, in }anuaiy 2u11, theie (ie-)appeaieu the his-
toiical question: what if this activity neeus to be placeu
within a histoiical peispective. What if all those finuings,
paiticulaily the finuings of the mapping piocess, show that
my choice of "keeping focuseu on heie anu now" was a vain
attempt not to uiscuss "heie" anu "now" anu eveiything
that this "heie anu now" meant foi the ieseaich subject-
mattei anu foi the ieseaich paiticipants themselves. It is
impoitant to note that ieseaich paiticipants uefinitely uo
not seem peiplexeu at all with the activity of theii fellow
scheme-membeis noi of the othei schemes noi uo they
seem to feel that theii activity is of less impoitance if it is
not mentioneu in acauemic liteiatuie. They behave but also
comment on theii activity as something "noimal", "natuial"
oi "common sense". Noieovei, the choice of leaving the
histoiical fiamewoik outsiue of the ieseaich pioject has
been pioveu not only vain, but also impossible: it seemeu
that ieseaich finuings, foi ieasons we cannot explain yet,
"uemanu" theii place in time, actually in time anu space
altogethei, even if the ieseaichei hau heiself maue othei
options foi hei pioject.
The piepaiation of an essay conceining the views of Kail
Naix anu Fiieuiich Engels on the Eastein Question (Soti-
iopoulou 2u11b) was the ciucial point foi the ieseaichei to
iealise that...eveiything might have been wiong so fai with
the pioject. 0f couise, it was not a uisastei but on the othei
hanu, theie was no chance within the specific pioject to uo
the histoiical ieseaich iequiieu to gathei all uata necessaiy
to evaluate all the finuings anu have some uefinite oi at
least, satisfactoiily veiifieu conclusions. Bowevei, it is pos-
sible to iaise questions anu constiuct one moie hypothesis,
which will have the featuies neeueu to uiiect the examina-
tion of the above mentioneu questions into some inteiest-
ing ioutes.
International Journal Of Community Currency Research 2012 Volume 16 (D) 70-79 Sotiropoulou
1 The ieseaich team has publisheu a viueo with infoimation gatheieu uuiing ieseaich, at http:¡¡www.homenatgeacatalunyaii.oig¡en.
2 Infoimation on this has been gatheieu fiom peisonal communications with people who woik on baitei economy in venezuela. Theie is
also a piint leaflet "Nanual ue Tiueke" (Baitei Nanual) publisheu by the Nunicipality of Caiacas.
!" $%& %'()$%&*+* $%&,&*
Fuithei stuuy showeu seveial points that weie of majoi
impoitance conceining this ieseaich uesign mistake. 0ne
can uiscein some majoi chaiacteiistics on scheme mem-
beis' activity which, at the same time, challenge oui pei-
ceptions about seveial majoi issues in economics. Although
those chaiacteiistics anu the views challengeu aie intei-
linkeu, I uistinguish them foi analytical puiposes only into
a seiies of "themes challengeu anu ievisiteu", so that they
aie easiei compaieu to ielateu liteiatuie:
!"-" $./ 01/2343/567 896:;/ <= $;95>9463<5> ?36.<:6
)=23439@ A:;;/54B
Tiansactions without official cuiiency aie consiueieu to be
full of uisauvantages (Fayazmanesh 2uu6: 46-S1, 84-88).
This holus foi both the economies wheie multiple cuiien-
cies ciiculate anu foi economies wheie baitei oi non-
monetaiy mechanisms exist. Nultiple cuiiency economies
aie consiueieu an iiiegulaiity anu a situation just piioi to
the final pievalence of one of the cuiiencies. Even Iiving
Fishei (19SS), who piomoteu the iuea of stamp sciip uui-
ing the uieat Bepiession eia, maue cleai that this solution
is only tempoiaiy. The iuea that baitei cannot be but an
emeigency solution that will faue out once the capitalist
economy iecoveis is also iefuteu by acauemics who em-
piiical finuings fiom the ex-Soviet countiies wheie non-
monetaiy oi alteinative monetaiy tiansaction moues show
that this activity might be something moie than a ieaction
to maiket uissolution (Cailin et al. 2uuu, Aukutsionek
In auuition, baitei anu non-monetaiy activity is of much
lowei status, as they aie consiueieu to be "non-economic"
anu "obviously" inefficient. Bowevei, inefficiency of multi-
ple cuiiencies anu¡oi of baitei anu non-monetaiy tiansac-
tions has not been pioveu. Quite the contiaiy, theie is evi-
uence that they might be much moie efficient anu
efficiency-cieating within an economy than the one-
cuiiency systems of the mainstieam economy. This uiscus-
sion about inefficiency is a long one anu even if one uoes
not want to accept its notion as set by Taussig, who pei-
ceives efficiency fiom the point of view of the majoiity
(pooi people), theiefoie in a political economic way (2u1u:
8S-92) oi by uiegoiy, who questions efficiency as to which
peison oi gioup it iefeis to (1997: 12S-126), one cannot
ignoie the theoiy by Lietaei, 0lanowicz et al. (uoeinei, S. et
al: 2uu9a, 2u1u) wheie efficiency of a single cuiiency
economy might not be unuei question as such; howevei,
efficiency of a system without iesilience is uisastious foi
the system itself as well as foi its components. Theiefoie,
even if one peiceives multiple cuiiencies anu non-
monetaiy schemes as non-efficient, one shoulu consiuei
whethei this vaiiety of tiansaction moues woiks towaius
the iesilience of the economy anu the stability of the liveli-
hoous of people who paiticipate in it (Lietaei, B. 2u1u, uo-
einei et al. 2uu9a & 2uu9b, Kocheilakota 1999: S4S). Pai-
ticulaily about the theoiy of economic sustainability by
Lietaei anu uoeinei et al., although it is about multiple
cuiiencies only, it seems easy to be extenueu to incluue
non-monetaiy exchange anu all vaiious schemes which
exist nowauays in uieece. 0f couise, the question iaiseu is
whethei this vaiiety is sustainable itself anu to what extent.
Noieovei, tiansaction tools (cuiiencies oi any othei
mechanisms) aie much easiei manageu on local anu¡oi
community level iathei than on vast aieas of a countiy.
This happens because pioblems, like lack of cuiiency ve-
locity anu liquiuity, aie quickly uiawing attention on local
level anu possible solutions might be applieu in time, be-
foie the aggiavation of the pioblem
. 0ne woulu auu that
cuiiency useis pioximity in mateiial anu¡oi viitual space
also makes it uifficult foi the financially stiong community
membeis (who have collecteu the most of income) to keep
on theii own anu ueny to paiticipate in the common solu-
tions of theii community's tiansaction moue pioblems.
Apait fiom efficiency, theie is the geneial uiscouise about
moueinity anu how this multiple-cuiiency oi non-
monetaiy systems iuea is out-of-uate, a ielic of the past,
which even if we uo not want to abanuon in the mouein
economy, it will be abanuoneu as time goes by. This stance
haue been even auopteu by K.Naix (Bougson 2uu1:7u).
The most impoitant element of this view is that it usually
avoius to consiuei this multiple economy as co-existent oi
coeval to the mainstieam economy (uiegoiy 1997:7-9, S7-
S8, Su4-S12). Fiist, baitei oi multiple tiansaction tools aie
consiueieu to be alieauy histoiy oi that they existeu veiy
fai back in the past. Seconu, when economics faces a mou-
ein phenomenon of this type, if it is not possible to attiib-
ute it to "piimitiveness" oi "bauly-integiateu peasant
economies", then the tempoiaiy-emeigency aigument
aiises: when theie is a ciisis, such moues of tiansaction
emeige to covei the money maiket failuie anu when the
lattei iecoveis, they faue out. Last, but not least, economics
has pusheu multiple tiansaction moues into limbo, anu
when it is faceu with them, it piefeis to leave them foi sciu-
tiny by anothei uiscipline, usually sociology oi anthiopol-
!"!" $./ $;95>9463<5> ?36.<:6 &C946 ,/9>:;35D 95E
?36.<:6 F35/9; (/;4/G63<5 <= $3H/
0f couise, it is not only a theoietical choice that economics
ueny to stuuy anything but the official cuiiency tiansac-
tions. It is also a piactical one: economics as we know it, is
unable to stuuy anything without exact measuiing anu
without using equations (Fayazmanesh 2uu6: S. 1u2, 12S-
126) anu the fight ovei qualitative methous is about theii
ieal economic use foi ieseaich. So, even in cases of multiple
cuiiencies, wheie it is supposeu to be easiei to "measuie"
the subject-mattei of ieseaich, economics have no ieal
tools to evaluate such an economy. Theie aie exceptions to
this stance of couise (Naitin 2uu6, uoeinei, Lietaei & 0la-
nowicz 2uu9b), but most economists uo not woik on such
International Journal Of Community Currency Research 2012 Volume 16 (D) 70-79 Sotiropoulou
S Baseu on a comment by Stathis Stasinos.
mouels, so methouology foi a multiple cuiiency economy is
not veiy elaboiateu oi iefineu.
Things aie much moie uifficult when it comes to the non-
monetaiy tiansactions, wheie economists tiy to measuie
values (usually in teims of official cuiiency, while the en-
tiie tiansaction might be stiuctuieu in a quite uiffeient
way), while people tiansacting uo not caie about measui-
. Neveitheless, people caie about not being cheateu oi
mostly, about not cheating the othei paity of the exchange,
as ieseaich paiticipants have pointeu out in theii uiscus-
sions anu¡oi inteiviews. In othei woius, what ieseaich
paiticipants say veiifies that they know veiy well the une-
qual natuie of exchange, as uesciibeu by Fayazmanesh
In othei woius, economics have no tools, not even con-
cepts, to unueistanu how people in ieal economy can pei-
foim economic tiansactions without exact measuiing of
values, sometimes not even of volumes of the piouucts oi
woik exchangeu.
The othei majoi pioblem economics have is that theii pei-
ception of time is lineai, while people in schemes have no
pioblem to think of time in a cyclical way oi to "count" time
with the woik oi task peifoimeu anu not vice veisa. The
time might be social time, well fai away fiom clock time
(Taussig 2u1u: S-12), anu aftei this "estiangement", eco-
nomics aie unable to unueistanu the woilu fiom the view-
point of the schemes.
We aie useu to ieau about not-measuiing values in ex-
change anu about non-lineai time peiception when stuuy-
ing liteiatuie on "native" people in countiies of Afiica, Latin
Ameiica oi Asia. We aie not useu to accept that people who
might tiansact this way live in the same economy with us.
It is not cleai whethei this uenial is unconscious, i.e. it
stems fiom oui euucation in an economic-social system
which piaises both exact measuiing of eveiything anu lin-
eai time peiception, oi whethei it is conscious, in the sense
that we ueny to accept that oui peiceptions aie alieauy
questioneu in this economy we live in. It might be possible
that abstiaction of laboui woiks uiiectly towaius making
time homogeneous so that lineaiity is the only possible
foim of it (Bolloway 2u1u: 1SS-14u).
!"#" %&' ()*+,)- ./,)-*0 123,4 56772-)0)'* ,-+ %&')3
896-67)9 :0329023'* ,-+ 0&' ;6+'3- :0,0'
0ne moie featuie that most liteiatuie ieveals is that baitei
is consiueieu to be an element of a peasant-iuial economy
anu not appiopiiate foi uiban economies (apait fiom
emeigency moments in histoiy). This appiopiiateness of a
single official cuiiency foi the uiban centies has not been
constiucteu with the view, at least, that people in the coun-
tiysiue might have the option to have anothei oi a paiallel
economic system. Quite the opposite: what is appiopiiate
foi the big city is appiopiiate foi all communities, espe-
cially foi iuial communities, which anyway aie "back-
waiu", "ignoiant", "piimitive", "late in paiticipating in the
capitalist economy, anu neeu to accept the "appiopiiate-
ness" peiceptions as tiansfeiieu fiom cities (Schumachei
1974: 16u-171).
Theie is also the view that even in westein countiies, the
constiuction of the mouein state anu its economy has been
a piocess of inteinal colonisation, peifoimeu by the centie
metiopolis at the expense of the iegional cultuies (Bechtei
1974). uieece coulu not have been exempteu fiom this
piocess anu actually it is one moie example of the polaiisa-
tion between "piimitive" iegions anu "piogiessive" cential-
iseu state (Peckham R.S. 2uu4).
Theiefoie, to constiuct a cential economy with a centially-
manageu cuiiency neeueu an entiie peiception of iuial
communities anu theii economies as non-impoitant, as
keeping economy "behinu" anu as stiuctuies which not
only neeu to be eliminateu but also ieveal the lowei euuca-
tional, social anu economic level of the countiysiue people.
Baitei has been associateu with poveity, naivety anu lack
of economic minu.
0f couise, those mentalities have been uiiectly connecteu
to the effoit to establish a capitalist economy within the
fiamewoik of a nation-state. To cieate a national economy,
the state coulu not possibly affoiu to have seveial tiansac-
tion moues, much less to have people who tiansact without
the use of the official cuiiency oi without the use of cui-
iency at all. To ban multiple cuiiencies might be possible,
although it is not easy to chase all those people who woulu
continue to use othei cuiiencies paiallel to the official one.
To ban baitei anu non-monetaiy tiansactions is impossible
because of the natuie of the lattei anu actually, it might
neeu such a tiemenuous mechanism of suiveillance that
such suppiession becomes completely unaffoiuable. So,
uisuain anu labelling seem to have been piefeiieu to sup-
piess baitei oi to suppiess the explicit manifestation of it.
0bviously, we uo not know whethei such policies have
been piactically successful. What we know is that theii
success was uefinitely one of appeaiances: people in
uieece the last yeais befoie 2uu8 anu foi suie, befoie
2uuu, woulu not uaie to publicise baiteiing oi non-
monetaiy activity, as this woulu label them as "peasants,
pooi, uneuucateu, etc". The appeaiance of couise, has sev-
eial impoitant piactical implications: people uo not know
International Journal Of Community Currency Research 2012 Volume 16 (D) 70-79 Sotiropoulou
4 Theie aie histoiical pieceuents in othei countiies uuiing the Niuule Ages, wheie the exact measuies appioveu by the authoiities weie well
neglecteu by the people who piefeiieu to use "geneious measuies", i.e. to give moie than what they weie supposeu to (See foi this uemmill
& Nayhew 199S: 81-1u9) oi to. mint foigeu petty coins with moie (!) silvei than the one the officially minteu coins containeu (uullbekk
2uuS). Both cases aie well connecteu to economies wheie multiple cuiiencies aie useu, incluuing commouities foi (measuiing) payments
anu wheie theie is vast ciiculation of black (low value metal) money (uemmill & Nayhew 199S: 11u-142, uullbekk 2uuS). Bowevei, my lack
of expeitise in this fascinating fielu of economic histoiy pievents me fiom making any effective compaiison of those meuieval economies to
the actual phenomena I stuuy.
about the tiansactions taking place, so the majoiity be-
lieves that non-monetaiy tiansactions aie alieauy histoiy.
In case they want to leain moie, souices aie uifficult to
finu. This holus foi ieseaicheis as well as foi the authoi
Economists howevei, apait fiom facing uifficulties in ac-
quiiing infoimation about the non-monetaiy economy,
they aie the fiist victims anu beaieis of the mentality
which neglects activity without official cuiiency. It is amaz-
ing how even the Naixist siue of economic analysis has also
been neglecting oi uisuaining the economic stiuctuies of
the peasants, oi in geneial, of the tiauitional economies.
Paiticulaily, the peasant economy is the cause of all uefi-
ciencies of the peasants anu of the peasants' inability to
paiticipate in the maixist ievolutionaiy pioject (Bammen
1972: 7uu, Szpoiluk 1988: 4S, 6S, 19u, Touoiova 1994:
47u). In that sense, Naixist texts have not been uiffeient in
piomoting moie oi less the same attituue, as the main-
stieam texts, towaiu the vaiiety of tiansaction moues anu
the people who piefeiieu them
This uisuain anu a ceitain peiception about baitei anu
multiple cuiiencies go hanu in hanu with a ceitain peicep-
tion about the uiban centies anu theii economy. It seems
that uiban centies in uieece aie not behinu at all in
multiple-monetaiy anu non-monetaiy moues of tiansac-
tion while we know fiom the economic theoiy, that theie is
no neeu foi this to happen, because official cuiiency tenus
to concentiate in uiban centies. Apait fiom the uiscussion
whethei mouein official cuiiencies oi the cuiiencies of the
westein-euiopean-anglosaxon woilu aie all inteinational
cuiiencies (theiefoie, they aie often uiaineu fiom cities as
well, oi at least fiom smallei cities oi fiom the pooiest
aieas of the cities), theie is also the question: what has
maue economic theoiy to assume that multiple cuiiencies
anu non-monetaiy activity aie not expecteu to exist in ui-
ban centies. Theie is no ieason foi such a peculiaiity, even
if one coulu uiscuss whethei city uwelleis join the schemes
foi same oi uiffeient ieasons than countiysiue habitants
Noieovei, this iuea of mouein cities tiansacting in official
cuiiency is something that stems fiom the foim cities have
taken in ceitain westein countiies the last 2uu yeais,
wheie capitalism fiist has been well establisheu. Bowevei,
we still uo not know many things about even those cities
anu the uevelopment of theii local economies. Theiefoie,
we cannot even use them as mouels foi the cities in othei
countiies anu in othei histoiical contexts. What cities
shoulu I compaie the uieek ones with to asseit whethei
economic activity without euios in uieek cities is "peculiai"
oi "noimal" oi "baseu on uiban economic stiuctuies".
The peiceptions about uiban anu iuial aieas anu theii
economies aie also linkeu to the phenomenon of tiauition
anu tiauitional cultuies. While cential economic authoii-
ties weie not ieally in favoui of iuial economies anu ui-
iecteu uiban economies to wheie it seemeu "appiopiiate",
they, at the same time, cieateu a museum veision, i.e. an
institutionaliseu peiception of tiauitional cultuies, both of
iuial anu of uiban centies. This veision became the "offi-
cial" "national" one, at the expense of the vaiiety anu plu-
iality which tiauitional cultuies themselves biing with
them. It has not only been "uehyuiateu" anu "mummifieu"
but it has also been sepaiateu fiom the entiie socio-
economic context within which this vaiiety has been cie-
ateu. The way folkloie anu folkloiic stuuies have been con-
stiucteu anu useu by the uieek state to eiauicate the local
cultuie anu ieplace it by what centially was ueciueu to be
the "authentic" uieek peasant (Peckham 2uu4: 49-S8)
coulu not but have ueep implications foi local economies.
Theiefoie, people weai folk costumes in folkloiic faiis, but
they uo not know how they aie maue, oi how the tiaui-
tional way of clothe making was a miiacle of economic
stiuctuies who neeueu to finu iaie mateiials, economize
them, cieate beauty out of them but also solve piactical
issues the clothe usei woulu have: foi example, to take caie
of the gaiment, not to cieate waste oi unnecessaiy waste
uuiing clothe piouuction, etc.
In othei woius, tiauitional economy has been unuei elimi-
nation piocess, while the cultuie it hau been cieating was
piomoteu as "tiauitional civilisation". Is theie any tiaui-
tional civilisation without its economy. Is it possible that
any cultuie cieateu within a ceitain (socio-)economic set-
ting is iepiouuceu "as it was" in anothei economic setting
than the one which cieateu that same cultuie.
The uistance fiom institutionalising tiauition towaius
commouifying it is not long (no uoubt, the mouein "tiaui-
tional costumes" aie maue out of massively piouuceu ma-
teiials anu usually they aie also massively piouuceu them-
selves). The economy which has piouuceu the cultuie is
inexistent (at least foi cential authoiities) anu the centially
"planneu" tiauition is piouuceu just like any othei stuff in a
mouein economy: in a capitalist way, to be consumeu in a
capitalist mannei, fai fiom euucating people to oi fiom
becoming the way¡the pioposal of life that it was.
At this ciucial point theie come the schemes stuuieu within
the ieseaich fiamewoik to iepiesent a completely uiffeient
view (oi uiffeient views) of peasantiy, of countiysiue civili-
International Journal Of Community Currency Research 2012 Volume 16 (D) 70-79 Sotiropoulou
S It might seem absuiu, but conceining societies like the uieek one, oi at least, like the communities of people who liveu in the southein
Balkan peninsula (which touay is the aiea of the uieek state), both Engels anu Naix have expiesseu a ieally "bouigeois" anu "oiientalist"
attituue. No mattei how they tiieu to face the bouigeois iueologies anu social stiuctuies within the societies they themselves liveu in; when it
came to the people living in the Balkans, they unciitically thought of the lattei in the same way as theii contempoiaiy bouigeois thinkeis uiu.
The iuea that the uiban-bouigeois westein civilisation is anyway supeiioi to the cultuies anu civilisations of the people who liveu in the
Balkans was explicitly expiesseu in theii wiitings. See Engels & Naix 198S: 9S-96, SSS, S8S-S84, S87, 4S9, 448-4S2, 4S7, 46S, 47S. I am
giateful to Bi Efthymia Kannei (Bept. of Tuikish & Contempoiaiy Asian Stuuies, 0niv. of Athens) as she vastly contiibuteu to this comment
by uiscussing on 21-S-2u11 about Naix anu Engels' views conceining the Eastein Question.
sation anu of uiban cultuie, but also of the economy that
those views piesuppose as the mateiial expiession of this
same cultuie. As a consequence, economics is challengeu
by scheme membeis' activity, because at least mainstieam
economic iueologies anu theoiies aie all baseu on this in-
teinal colonisation iuea to be necessaiy foi "piogiess".
!"#" %&' ()'* %&*+ ,-.*// (0 1'*2+342/5 12+ (6'47383'6+
Small piouuction is typical in iuial anu uiban communities
anu it has been typical in uieece till nowauays. Sole pio-
uuceis anu piactitioneis aie oi have been the iule foi
uieek economy, even the last uecaues, even in big uiban
centies, which aie consiueieu to be the most capitalism-
integiateu of the entiie histoiy of the countiy. This uoes
not mean that small piouuceis uo not face seveie competi-
tion by big piouuceis, mostly companies; quite the oppo-
Bowevei, it seems that once a peison has a chance to tiy
the small piouuction moue, that peison will tiy to suivive
unuei this choice insteau of succumbing immeuiately to the
"big playeis" of the economy. It is obvious that multiple
cuiiencies anu non-monetaiy tiansactions favoui small
piouuceis anu theii piouuce, as piouuceis can finu a "mai-
ket" wheie the thioat-cut piices of the big companies have
no meaning at all. Theiefoie, by changing the tiansaction
moue, small piouuceis acquiie an economic auvantage that
within a big, "national", economy with a haiu-to-finu single
cuiiency, cannot have (Lietaei 2u1u: 19). Small piouuction
is not favouieu by the banking system anu it is not eithei
favouieu in teims of taxation, lobbying powei, etc.
Bowevei, small piouuction seems to be much moie sus-
tainable than "big" piouuction, not only in economic teims
but also in teims of its enviionmental impact anu of bettei
quality of life foi pooi people. This is not only stateu by E.F.
Schumachei (1974) but also by Taussig (2u1u: 41-92, 112-
1S9, 1SS-1S9. 214-2S2), who conuucteu fielu ieseaich in
Latin Ameiica foi many yeais anu coulu compaie the ie-
sults foi people anu foi the enviionment of both capitalist
piouuction (laige) anu tiauitional piouuction (small) in
both agiicultuial anu mineial-extiaction sectois.
0ne woulu point out that "then, small piouuceis aie cieat-
ing seiious pioblems to the economy, if they avoiu compe-
tition by the use of tiansaction mechanisms beyonu the
official cuiiency". It seems, though, that this aigument is
not founueu on eviuence. If the hypothesis that small pio-
uuction is moie efficient anu¡oi iesilient than the mass
piouuction moue (Taussig 2u1u: 8S-92), then one coulu
bettei wonuei whethei "big playeis" play efficient anu ie-
ceive piofits at the expense of small piouuceis of theii sec-
toi. In othei woius, it is possible that big piouuceis can
have piofits as long as theie aie small piouuceis uiaineu
fiom theii efficient iesults thioughout a mainstieam mai-
ket unfavouiable to the small piouuceis. As long as small
piouuceis aie economically oi financially uestioyeu anu
leu out of the mainstieam maiket, then big companies
might also have seiious pioblems, as at this case, they aie
"on theii own" (uoeinei et al. 2uu9b: 78-8u).
Theiefoie, the entiie peiception about the ueficient oi
countei-competitive natuie of small piouuction is an iueol-
ogy that assists laige companies to uemanu foi assistance
in any case, even in times when a ciisis pioves them to be
not efficient at all. In that sense, small piouuction finus
sheltei in multiple tiansaction moues, because it is obvious
that small piouuceis uo not caie to fight against big com-
panies but they uo caie to suivive (it is anothei stoiy if on
the othei siue of the. maiketplace, it is big companies oi
the national-economy iuea that they have to negotiate
!"9" %&' ,:*;< =+&';6'005 >4 ?'*0*6+ @8>6>.3'0 *6) +&'
,A;'')>. %&*+ B>6'C D3E'05
0ne moie iuea which is veiy common in economic liteia-
tuie, is how oui monetaiy system is a system of fieeuom
foi all, given that money gives fieeuom of choice to anyone
who holus it anu wants to spenu it. The contiast is maue
with peasant economies, which aie stigmatiseu as feuual oi
semi-feuual oi, even if a community has no feuual stiuc-
tuie, with all pioblems an economy might have: inequality,
exploitation, women's suppiession, supeistition, enmity
towaius new iueas, pievention of a peison to get iich out of
his¡hei own inventions, etc. This iuea is ueeply connecteu
with the uisuain towaiu the tiauitional-olu ways of tians-
actions anu the people who peifoimeu them. It is not a
coinciuence that a vast pait of Simmel's Philosophy of
Noney is ueuicateu to this view (Simmel 1978-2uu9: 28S-
Theiefoie, economic stiuctuies that aie, at least theoieti-
cally, associateu with peasant economies, like baitei oi the
multiplicity of tiansaction mechanisms, aie consiueieu to
be tools of all this unfaiiness anu injustice. 0f couise, no-
one has evei saiu - anu I am fai fiom believing - that a
peasant economy might be an iueal one oi that baitei
might be itself the path to faiiness anu justice. Bowevei, I
am also fai fiom accepting the assumption that one moue
of tiansaction is completely "bau" anu anothei moue of
tiansaction is inheiently "goou". Quite the opposite: money
following ceitain iules anu within ceitain social setting
might be a tool foi ieuistiibution in favoui of the lowei
income gioups oi it might be ieuistiibuting income fiom
the pooi to the iich. The same holus foi non-monetaiy
stiuctuies: they might embeu in economy seveial hieiai-
chical anu exploitative piactices oi they might uelivei to
theii useis, especially those with lowei incomes, chances
foi impioving theii living conuitions in both economic anu
social teims.
Theiefoie, oui inability to see multiple cuiiency systems
anu non-monetaiy tiansactions as possible positive
political-economic tools, stems fiom oui iuea that a mone-
taiy economy with one cuiiency only is the best social op-
tion, especially compaieu to othei economies wheie a vaii-
ety of exchange mechanisms exists. Bowevei, even if a
monetaiy economy with one cuiiency only has been unuei
ceitain ciicumstances the best social option, this might
change thiough time anu space anu accoiuing to the
change of ciicumstances - which means that if nowauays
International Journal Of Community Currency Research 2012 Volume 16 (D) 70-79 Sotiropoulou
this social option is not the best anymoie, we neeu to ie-
consiuei it as such.
!"#" %&' ()**+,+-+./ .&0. 1' *'' 1&0. 1' 02' 2'03/ .)
0ne woulu say, aftei the above, that it might be possible
that all this activity in uieece without official cuiiency has
emeigeu because it became visible uue to the new infoima-
tion anu communication technologies. Schemes use new
technologies to announce theii gatheiings anu theii activ-
ity (uue to easiness anu zeio-cost of publicity) but also to
make membeis communicate among themselves, uiscuss
issues, make uecisions, uisseminate news, manage account-
ing, etc, without much effoit anu in a veiy open, public
mannei. Theiefoie, technology might be a ieason foi "mak-
ing known-making mateiial" these tiansaction moues.
Bowevei, the ieseaich has shown that theie aie gioups in
uieece which uo not use inteinet oi social meuia softwaie
that much. 0i, even if they use new communication tech-
nologies, this use is iathei limiteu; which iaises again the
question, whethei technology just facilitates anu uoes not
cieate the economic activity we see thiough it (the tech-
nology). Theiefoie, mateiial conuitions which peimit uiffu-
sion of infoimation anu facilitation of tiansactions might be
impoitant a featuie but not the uecisive one foi the ability
of the schemes to be visible but also foi the ability of the
obseivei oi the ieseaichei to "see" them.
Anothei possible explanation woulu be that mateiial conui-
tions (both economic anu social) might be to. blame foi
this anu not infoimation-communication technology only.
It might be that people in the society of uieece (oi peihaps
in othei societies as well), aie auapting iapiuly to an all-
changing economy. This iapiu change is not a new thing.
Naik Nazowei (2uu2: 6S-98, 214-218, 221-227) mentions
this foi the peasant communities of the Balkan peninsula
who weie facing monetisation anu capitalisation of the
economy in late 19th - eaily 2uth centuiy. Bowevei, he also
mentions how iapiu change in peasant economies coin-
ciueu with iapiu change in capitalist economy anu how the
foimei change was peiceiveu as inexistent while the lattei
change was peiceiveu as the ieal change at the same time,
conceining economy anu society.
Theiefoie, it is possible that nowauays, economic-social
changes aie making people, eithei scheme paiticipants oi
non-paiticipants, eithei acauemics oi the (stuuent) ie-
seaichei heiself "see" tiansaction moues which some yeais
ago weie believeu to be inexistent. In othei woius, we "see"
this economy of vaiiety because we askeu "uoes it exist."
insteau of saying "it uoes not exist", oi because we thought
"let's ie-examine oui peiceptions in economics" insteau of
"we have claiifieu oui peiceptions in economics". Lietaei
(2u1u) shows how uiscussion between the neo-libeial anu
maixist schools left beyonu sciutiny the iuea of monopoly
of national cuiiency.
The ieseaich uoes not covei but tiansaction moues; nevei-
theless, tiansaction moues cannot be sepaiateu fiom pio-
uuction moues. It is impossible to know uetails at this stage
anu within this ieseaich pioject about the piouuction
moues which aie suppoiting-using-inteitwining-with the
tiansaction moues we stuuy. Theie is, howevei, one main
chaiacteiistic which can not be neglecteu: it seems that
those tiansaction moues favoui small piouuction, as it has
alieauy been mentioneu.
It is usual in economics to talk about small piopeity pio-
uuction moue, meaning piouuction methous chosen by
people who own a small lot of lanu. Actually, small piouuc-
tion seems veiy connecteu to the owning of small lots anu
to the agiicultuial piouuction of small scale. Bowevei, ie-
seaich shows that small piouuction uoes not exist only in
this setting: tiansaction moues ieveal that small scale agii-
cultuial piouuction is just one aspect of piouuction sup-
poiteu anu unueitaken thiough the schemes. Theie aie
people who live in cities anu might own just the apaitment
they live in oi they might have neithei lanu noi ieal estate
piopeity iights at all. Bowevei, they still piouuce within
the netwoiks anu might be also quite active in economic
teims (although theii skills anu piouuce might not ieceive
such waim ieception within the mainstieam economy).
, the chance the scheme membeis have to shaie
oi give-away things among each othei ieuuces the neeu foi
mass piouuction of goous that can be easily shaieu within a
netwoik. It is possible that foi most non-consumable goous
(like clothes, paiticulaily chiluien clothes), people uo not
neeu to keep them all the time in theii closets, cupboaius
anu waiehouses. Tools anu small machines aie ciiculating
within the schemes just like books anu clothes. In that
sense, small piouuction is enough foi the scheme membeis,
anu on the othei hanu, small consumption is also enough
foi them, as they can covei theii householu neeus thiough
inteichanges without neeuing haiu-to-finu extia income in
official cuiiency. In auuition, one woulu assume that this
suppoit to small piouuction woulu help heavily the envi-
ionmental cause, alieauy mentioneu by most of the
schemes, paiticulaily the fiee netwoiks anu the gioups
who oiganize fiee bazaais.
Theiefoie, one moie possibility exists: the phenomena
stuuieu might be not only one moie auaptation of small
piopeity piouuction moues (which of couise is possible to
be happening) but also an oveiall auaptation of small pio-
uuction moues in geneial, to new economic conuitions. The
uiban setting, oi the no-lanu-piopeity setting pioves to be
a factoi that uoes not pievent small piouuction as such. It
piobably uiiects small piouuction not only to small city
agiicultuie oi gaiuening, but also to a vaiiety of sectois
which economics hau not paiu attention to so fai.
4" %56 7 589:%56;<;
Theie is no name oi title foi this hypothesis (yet). It might
seem absuiu to wiite this, aftei the pievious pages of stat-
International Journal Of Community Currency Research 2012 Volume 16 (D) 70-79 Sotiropoulou
6 This iuea anu obseivation point is baseu on a comment by Stathis Stasinos.
ing one hypothesis aftei anothei, but it is impossible to
gathei them anu iepiesent them in just one phiase. I be-
lieve that it is too eaily to name it, given that it seems that
oui way of peiceiving all the phenomena mentioneu above
but also the notions which concein them anu we have been
taught so fai, uo not peimit us to constiuct a woiuing that
woulu not limit us to the tiaps we tiy to escape fiom. Even
this uistinction between iuial anu uiban centies oi the
categoiisation of all countiysiue communities as iuial anu
of all city communities as uiban is a false one
, well stem-
ming fiom the same mentalities anu iueologies this papei
tiies to question. Let alone, that to give a name to this hy-
pothesis iight now woulu leau the ieseaichei to make the
same mistake as the one piobably uone by those who uo
not "see" tiansactions if the lattei uo not look like the ones
uesciibeu in books.
It seems that the schemes stuuieu aie the suiface of an
economy oi economies which nevei ceaseu to exist, as both
mateiial spaces anu expeiiences in people's histoiies. They
weie, howevei, uismisseu, uisuaineu anu even uisieputeu
anu the fiist texts that easily accepteu this "I uo not see foi
I uo not want to see" attituue have been the acauemic ones,
even if we woulu expect exactly the opposite fiom them.
Paiticulaily about economics, which claims to be the most
"scientific" among social science uisciplines, the inability to
"see" was much moie intense than in othei uisciplines (like
anthiopology oi sociology) which, howevei, coulu not sub-
stitute economics, but only ciiticise its stance.
Finally, the entiie uiscussion is not about naming the
schemes stuuieu as mouein oi olu, pie-capitalistic oi post-
capitalistic, paiallel oi iesisting to capitalist economy. It
seems that if one gets into such type of uiscussion, then one
is obligeu to use the same analytical tools that pieventeu us
fiom "uiscoveiing" this type of economy till the last yeais.
Labelling is hanuy unuei ceitain conuitions, but it is not
useful if one seaiches to answei questions like the ones
stateu in this papei.
Theiefoie, we might neeu to view all this activity as coeval
to the so-calleu capitalist (Bougson 2uu1: 71-78) oi mone-
taiy oi conventional economy anu as iaising a uiffeient
agenua foi economics than what capitalist anu anti-
capitalist uiscouise can offei. This uoes not mean that I
uismiss any conflictual featuie oi conflict element that this
activity might have, not only towaiu the mainstieam econ-
omy, but also among the people who paiticipate in this
activity. 0sing anothei tiansaction moue uoes not change
the economic anu social powei of the scheme paiticipants.
It just gives them one moie option to use that powei within
anothei setting.
It is not possible at this stage to know what this powei
might be anu how this economic option tuins people's
stance towaiu economy anu theii fellow membeis of the
economy, both those who paiticipate anu those who uo not
paiticipate in the schemes. It becomes eviuent, howevei,
that the schemes enable theii membeis, while tiansacting
without official cuiiency, to challenge economics heie anu
now, oi. once moie, if we accept the iuea that this chal-
lenge has nevei ceaseu to exist, even if we have not much
infoimation about it.
!"#$%&' )* +)"+,-#!)"#
It is piobable that if I staiteu my PhB piogiamme touay, I
woulu uesign it to be completely uiffeient. 0bviously, I
woulu insist moie on gatheiing finuings conceining the
"histoiy" of the subject-mattei. I mean with "histoiy" the
whole meaning of the woiu: ieseaich-knowleuge-naiiation
(Bimitiakos, B. 19S6: S478). It seems that tiansactions
without official cuiiency might have nevei stoppeu being
pait of the economic histoiy of uieek society, no mattei
whethei acauemic ieseaich has been uone on them oi not.
To leain about this, it may be woithy of a futuie pioject on
its own iight.
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International Journal Of Community Currency Research 2012 Volume 16 (D) 70-79 Sotiropoulou
International Journal of
Community Currency Research
Volume 16 (2012) Section D 80-90
Georgina M. Gómez*
International Institute Of Social Studies, Erasmus University Rotterdam
The Reues ue Tiueque (RT) thiiveu uuiing the economic ciisis of 2uu1 in Aigentina but fell
shaiply aftei 2uu2. Some netwoiks, howevei, withstoou the uownfall bettei than otheis. These
uiffeiences in the uecline cannot be attiibuteu to exteinal factois, which weie basically the
same acioss the Tiueque, but to the vaiious goveinance systems that the leaueis stiuctuieu as
the scheme giew in scale anu sophistication. Following an institutionalist peispective, this aiti-
cle assesses the sustainability of the goveinance systems in the RT in ielation to input legiti-
macy, iule enfoicement, iesouice syneigy anu tiansaction anu oiganisational costs. None of the
goveinance systems stiuctuieu in the Tiueque in Aigentina scoieu highly on the foui accounts.
The laigest netwoiks manageu to be sustainable by iesoiting to a hieiaichical stiuctuie that
violates the piinciples of paiticipation anu self-ieliance of complementaiy cuiiency systems. In
the othei extieme, the smallest ones achieveu sustainability but with a low economic impact.
Pait of this stuuy was funueu by W0TR0¡NW0, uiant WB 46-494. I wish to thank the insightful
comments of the two iefeiees anu the paiticipants who kinuly gave theii time anu ueuication to
make this ieseaich possible.
* Email: gomezÇiss.nl
$0 2345 4637 89432:5; uomez, u. (2u12) 'Sustainability of the Aigentine Complementaiy Cuiiency Systems:
foui goveinance systems' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 8u-9u
<www.ijcci.net> ISSN 1S2S-9S47
The Aigentine Complementaiy cuiiency systems, the Re-
ues ue Tiueque (RT) thiiveu uuiing the 2uuu-2uu2 eco-
nomic ciisis. They fell apait shoitly aftei the uemise of the
national economy anu most of them uisappeaieu, but some
still suivive anu suppoit the consumption of seveial thou-
sanu householus up to 2u1u. The unequal iise anu uecline
of the RTs, in spite of shaiing the same context, oiigin anu
evolution, begs an explanation. Why weie some of these
complementaiy cuiiency systems moie iesilient to the fall.
What weie theii iules of goveinance anu sustainability.
'Sustainability' is uefineu heie as the uuiability oi iesil-
ience of goveinance systems in which the iules of action
anu theii compliance cannot be assumeu a piioii because
none of the actois has the means to enfoice them. Institu-
tions aie uesigneu, legitimacy is constiucteu, compliance is
obtaineu thiough voluntaiy uecisions anu negotiation.
Similai goveinance pioblems aie obseiveu in situations in
which iegulation by the state is not possible, uesiiable oi
cost-effective anu it is uone by non-state gioups, eithei
within the piivate sectoi oi civil society (Rosenau anu
Czempiel 1992, Stieeck anu Schmittei 198S). In ielation to
the RT, sustainability iefeis to the iesilience of the vaiious
netwoiks to the geneial uecline of the Tiueque.
This papei will focus on theii uecline peiiou aiounu anu
aftei 2uu2 anu how they ielate to the geneial iules of gov-
einance anu sustainability of non-state institutions. Since
the question is not why they ueclines, but some of them
ueclineu less than the otheis, the stuuy will uiscuss the
conuitions insiue the goveinance systems of the Tiueque
anu not at the context, which was basically the same foi all
of them. The ieseaich uses uata gatheieu in two peiious of
fieluwoik in Buenos Aiies, Rosaiio anu Nai uel Plata, thiee
majoi cities in Aigentina. The fiist peiiou was between
Nay anu Becembei 2uu4 anu the seconu in Novembei anu
Becembei 2uu6. Bata was collecteu thiough inteiviews
with the main leaueis, who pioviueu lists of the Clubes ue
Tiueque (CTs) in theii netwoiks. A total of 44 CTs weie
visiteu acioss the thiee cities mentioneu anu combineu a
vaiiety of conuitions: laige anu small cities, wealthy anu
pooi neighbouihoous, olu anu new CTs anu so on. Eighteen
CTs weie then selecteu in ielation to the geogiaphical aiea,
the ielative poveity in each location, theii numbei of pai-
ticipants anu the RT netwoik they linkeu to. A suivey with
a semi-stiuctuieu questionnaiie was conuucteu among
paiticipants in these CTs chosen at ianuom while they
queueu to entei the maiketplaces oi aftei they hau finisheu
theii tiaue. A total S86 iesponses weie obtaineu, with
samples of 1S% of the paiticipants in CTs with less than Su
membeis anu 8-1u% in those with moie than Su membeis.
Such extensive coveiage is a novelty in ieseaich on the
Aigentine RT.
The next section will categoiise goveinance systems as
institutional aiiangements anu uiscuss the chaiacteiistics
that contiibute to theii sustainability. Section thiee ue-
sciibes the evolution of the Reues ue Tiueque, the Aigen-
tine complementaiy cuiiency systems, anu section foui
focuses on theii iapiu but uneven fall. Section five analyses
vaiious aspects of goveinance anu sustainability piesenteu
in the analytical fiamewoik.
)*(#%$+ %) +'+#*!"*-!.!#/ %) 0%12$"*"(2
The concept of goveinance is useu in uiffeient contexts anu
uisciplines with some uiveigence of meaning, but it always
implies giving up a top-uown appioach to iuling anu in-
cluuing a multiplicity of actois in eithei the economy oi the
polity (Biist 2uuu). It iefeis to a paiticulai kinu of govein-
ing: 'sustaining co-oiuination anu coheience among a wiue
vaiiety of actois with uiffeient puiposes anu objectives
such as political actois anu institutions, coipoiate inteiests,
civil society, anu tiansnational goveinments' (Pieiie anu
Peteis 2uuu). It is conceiveu as a piocess combining nego-
tiation, accommouation, coopeiation anu alliance foima-
tion iathei than coeicion, commanu anu contiol.
0ne of its ueiiveu concepts is that of goveinance systems,
which aie uefineu in the economy as 'the totality of institu-
tional aiiangements -incluuing iules anu iule-making
agents- that iegulate tiansactions insiue anu acioss the
bounuaiies of an economic system' (Bollingswoith et al.
1994). That is, a clustei of mechanisms foi co-oiuination of
economic activities so that inuiviuual economic action may
become pieuictable anu stable. Relateu concepts aie 'moue
of iegulation' coineu by the Fiench Regulation School
(Boyei 199u, }essop 1997, 2uu1), anu 'mouels of social
oiuei' (Campbell et al. 1991, Stieeck anu Schmittei 198S).
Bow aie institutions anu oiganisations biought togethei in
a goveinance system. A possible explanation stems fiom
the piinciple of "ieconstitutive upwaiu causation" (Boug-
son 2uu2, 2uu7) oi "cumulative ciiculai causation" (Beigei
anu Elsnei 2uu7), by which elements of a lowei ontological
level engage in a piocess of tiial anu eiioi anu cieate
iathei stable institutions that ieflect what is feasible at
each point in time. Bob }essop auus that the piocess is not
continuous but happens in phases ielateu to the economic
cycle (}essop 1997). In peiious of ciisis anu¡oi tiansition,
actois seek to uefine new moues of iegulation oi govein-
ance systems thiough tiial-anu-eiioi seaich piocesses that
contain a consiueiable element of stiuggle anu chaos. In
peiious of stability, the stiuctuial coheience of complex
institutional foims pievails anu confines economic action
to the iepiouuction of the economic system. All in all, the
evolution of institutions is pusheu by factois such as politi-
cal stiuggle, changes in social values anu the seaich foi
impioveu efficiency, while stability is achieveu when
changes become consoliuateu in new institutions.
An eaily attempt to theoiise on goveinance systems in
which the state is not the cential actoi was maue by
Stieeck anu Schmittei, using the concept of social oiueis in
theii path-bieaking book Piivate Inteiest uoveinment
(Stieeck anu Schmittei 198S: 11-1S). They aigueu that
goveinance systems aie built aiounu a 'cential institution
which embouies (anu enfoices) theii iespective anu uis-
tinctive guiuing piinciple' of cooiuination anu conflict ai-
International Journal Of Community Currency Research 2012 Volume 16 (D) 80-90 Gómez
eas. They iuentifieu foui social oiueis: community, maiket,
buieauciacy anu associations. They suggest that 'it might
be moie accuiate to label them accoiuing to the piinciples
that cooiuinate each: spontaneous soliuaiity, uispeiseu
competition, hieiaichical contiol anu oiganisational con-
coiuance'. In a community, actois aie inteiuepenuent, theii
piefeiences anu choices aie baseu on shaieu noims anu
jointly piouuce satisfaction; sustainability is tieu to the
satisfaction of mutual neeus anu keeping a collective iuen-
tity. In an iueal maiket, actois aie competitois anu in piin-
ciple inuepenuent. Entiepieneuis seek to maximise theii
piofits, anu by viitue of uispeiseu competition they shaie
with consumeis the mateiial benefits of technical piogiess.
Theie is a basic conflict of inteiest between selleis anu
buyeis (supply anu uemanu) which is ieflecteu in piices.
Sustainability is tieu to the capacity of maikets to cleai in
spite of the unceitainty anu iisks inheient in compliance
anu incomplete infoimation. In a buieauciacy, actois aie
uepenuent upon hieiaichical cooiuination anu theii
choices aie asymmetiically pieuictable accoiuing to the
stiuctuie of legitimate authoiity. Allocation uecisions aie
maue by hieiaichical centies anu caiiieu out by agents
iewaiueu by caieei auvancement anu stability. Sustainabil-
ity is tieu to the effective capacity to contiol action via hiei-
aichy. In an associational oiuei, actois aie contingently
inteiuepenuent: the actions oiganiseu collectively can have
a pieuictable effect on the satisfaction of otheis, which
inuuces them to seaich foi stable pacts. Collective actois
aie uefineu by a common puipose to uefenu anu piomote
functionally-uefineu inteiests anu mutually iecognise the
status of competitoi oiganisations. Sustainability is tieu to
pieventing fiagmentation into iival communities, compet-
ing foi iesouices anu secuiing compliance fiom membeis.
This foui-type taxonomy was baseu on iueal types of gov-
einance systems that aie iaiely piesent in ieality. Foi ex-
ample, a maiket iegulateu by a public oi piivate iegulatoi
is still a maiket but it has elements of hieiaichical contiol,
so it is not uiiven by uispeiseu competition alone.
Bollingswoith anu Boyei latei piesenteu a moie flexible
categoiisation of goveinance systems, baseu on two ciite-
iia: the action motive (what uisposes inuiviuuals to behave
in a ceitain way) anu the cooiuination moue (how theii
economic actions aie maue compatible with each othei)
(Bollingswoith anu Boyei 1997). This fiamewoik allows
iuentification of seveial subtypes of maiket systems, foi
example, accoiuing to theii mix of institutions: competitive,
caiteliseu, state-iegulateu anu coopeiative maikets em-
beuueu in long-teim ielations. The maiket as a multilateial
setting foi exchange is still the coie of these goveinance
systems, but non-coie institutions mattei, too. Self-
inteiesteu behavioui is moie oi less typical of all maikets,
but cooiuination at a social level is also achieveu thiough
state coeicion anu civil society oiganisations. Bence, the
stiong uichotomy of hieiaichies veisus maikets loses ap-
peal, as maikets aie ensembles of institutions.
The categoiisation of goveinance system pioposeu by
Bollingswoith anu Boyei (1997) offeis an entiy-point to
analyse what factois make vaiious goveinance systems
sustainable. This question is ciitical in systems in which
iules have to be cieateu anu enfoiceu by actois without the
monopoly ovei means of violence as the state. Refeiiing to
iegulation iegimes, }essop (}essop 1997) claims that theii
life expectancy (sustainability) is given by the compatibility
(coheience) of theii meuiation mechanisms (institutions).
Boyei anu Bollingswoith (ibiu) follow a similai path anu
asseit that goveinance systems aie 'viable' as long as the
set of institutions that foim them aie coheient oi "com-
patible" with each othei. Bowevei, how is this coheience
constiucteu anu how can it be obseiveu.
A few issues, which aie uiiectly oi inuiiectly ielateu to
non-state actois' setting of iules, stanu out as ciitical to the
uuiability of goveinance systems. The fiist uimension is
the acceptance oi legitimacy of iules (van Keisbeigen anu
van Waaiuen 2uu4). The concept of legitimacy is fuithei
categoiiseu as input anu output legitimacy (Schaipf 1999,
Thomassen anu Schmitt 1999). By input legitimacy, the
authois mean the piocess by which iules have come about
anu account foi piovisions to mouify them in the futuie. It
iepiesents an ex-ante analysis; input legitimacy is cieateu
along the piocess of iule uefinition. It may involve shaieu
values anu iuealism. 0n the othei hanu, output legitimacy
iepiesents an ex-post geneiation of legitimacy baseu on
the 'success' of the goveinance systems: the capacity to
uelivei iesults, solve pioblems anu iesolve conflicts.
The seconu uimension sees actual behavioui. Policing func-
tions aie pioblematic because the ex-ante acceptance of
iules uoes not mean ex-post compliance. The lattei is an
actual event, the ieal behavioui of agents, while the foimei
is a uisposition to act. Actual compliance is achieveu by
monitoiing anu enfoicing iules even against iesistance
fiom agents (Ronit anu Schneiuei 1999).
Thiiuly, the benefits ueliveieu by goveinance systems aie
evaluateu in ielation to the costs foi the actois involveu.
The capacity to uelivei iesults, solve pioblems anu iesolve
conflicts within the economy means achieving 'iesouice
syneigy' (}essop 1998) oi builuing the ability to cooiuinate
mateiial inteiuepenuencies among inteinal anu exteinal
agents, which is especially ciitical when iesouices aie
scaice (Cashoie 2uu2).
0n the othei siue of the leugei, theie aie the costs of iun-
ning the system, geneially iefeiieu to as tiansaction costs.
In a system wheie the state is not available as a low-cost
iule-makei, these aie mainly of two types. Fiist, the costs
associateu with unceitainties, iisks anu infoimation
asymmetiies (Williamson 197S). Seconu, theie aie the
costs of sustaining collective action, setting iules, making
uecisions, anu ieuefining objectives when necessaiy; these
aie oiganisational costs. While these aie costs, the piocess
of oiganising anu making iules suppoits the constiuction
of a common iuentity that aie captuieu unuei input legiti-
macy (fiist item). These foui factois will thus be analyseu
in the context of the Reues ue Tiueque.
International Journal Of Community Currency Research 2012 Volume 16 (D) 80-90 Gómez
!"# %#&'()# *+ !"# ,!
The fiist seeu of the Reues ue Tiueque staiteu in 199S, as
one of the income-geneiation schemes that weie launcheu
in ieaction to the neolibeial stiuctuial iefoims of the nine-
ties. It quickly appealeu to the unemployeu anu uisenfian-
chiseu miuule class, who weie attiacteu to a scheme that
entaileu piouucing goous at home anu selling them to
neighbouis in one of the neaiby maiketplaces. It alloweu
them to make a complementaiy income with which they
coulu, at least paitially, piotect oi impiove theii lifestyle.
The maiketplaces giew in scale anu numbei, anu by 2uu2
they hau multiplieu in eveiy neighbouihoou acioss the
countiy anu incoipoiateu othei segments of society,
mainly the stiuctuial pooi. Theii offeis expanueu equally
iapiuly until theie weie haiuly any goous oi seivices that
coulu not be obtaineu with the vaiious complementaiy
cuiiencies useu in the Reues ue Tiueque. Each inuiviuual
maiketplace anu its community of piouuceis-tiaueis was
calleu a Club ue Tiueque (CT) anu with othei CTs they
foimeu netwoiks (ieues) that opeiateu at the local, ie-
gional anu national level. Each netwoik useu a cuiiency
anu uefineu its own iules of conuuct anu stanuaius of
monetaiy iegulation. The RTs functioneu as ciicuits of eco-
nomic activity in which theii goveinance uepenueu entiiely
on its membeis anu theie was baiely any goveinment in-
teivention oi legal piotection. Foi a while the main net-
woiks weie aiticulateu unuei a single umbiella oiganisa-
tion in which common iules weie agieeu on, but this bioke
up in 2uu2.
The CTs got a uefinite boost with the ciisis of 1998 - 2uu2,
when they alloweu an estimateu 2.S million householus to
tiaue in about S.uuu maiketplaces (0valles 2uu2). Evi-
uently, they hau to builu goveinance systems fiom below
that woulu tianscenu the community level, but like othei
institutions stemming fiom civil society oi the piivate sec-
toi, this was pioblematic. The oiganiseis tiieu to finu func-
tional equivalents to the state as iegulatois of economic
activity but limiteu iesouices anu capacities, they mostly
faileu. At the peak of theii scale the RT began to ciumble,
baiely months befoie the iegulai economy began its iecov-
In the peiiou of 2uuu-2uu2, all the netwoiks shaieu similai
challenges anu in many of the thousanus of noues with
thousanus of membeis acioss Aigentina the situation
lookeu like sheei anaichy (Abiamovich, 2uuS; uonzalez
Bombal, 2uu2). Squeezeu by the economic ciisis, the stiuc-
tuial pooi kept pouiing into the noues with baiely any-
thing to offei anu uespeiate to meet theii basic neeus. The
Tiueque was not ieally a solution to poveity, as Leoni
founu when she stuuieu noues uominateu by the stiuctuial
pooi (Leoni 2uuS). The authoi uesciibeu it as the 'uictatoi-
ship of homogeneity'. The seivices most fiequently offeieu
weie cleaning anu gaiuening, foi which theie was no ue-
manu. Seivices such as electiical anu plumbing woik weie
in uemanu anu some hau the skills but no pesos to buy
paits. The offei of basic necessities like foou was insuffi-
cient foi all who wanteu them.
An unueilying class conflict then appeaieu in most noues.
The scheme was initially maue populai by the unemployeu
anu uisenfianchiseu miuule class, foi whom the Tiueque
was a goou way of getting some value foi theii small-scale
piouuction, goous maue as hobbies (paintings, knits, hanu-
maue uolls) oi those accumulateu in bettei times (toys,
suitcases, small fuinituie). Nany hau a small amount of
woiking capital to buy inputs in pesos, which they eithei
iesolu oi piocesseu into piouucts foi sale in the noues.
0theis just iesolu foou piouucts bought in supeimaikets
with pesos, which violateu the piinciple of piosumption
but was toleiateu because theie was uiie neeu of them in
the noues. In contiast, the stiuctuial pooi joineu the Tiue-
que latei, pusheu by the ciisis. They hau no accumulateu
assets, no income in pesos anu no woiking capital. What
they coulu sell in the noues was theii own laboui anu
seconu-hanu goous such as clothes, shoes anu toys that
came fiom chaiities anu uonations.
Laige-scale CT weie the sites of many abuses, among them
by the cooiuinatois who weie supposeu to oiganise them,
as was also founu by Petei Noith (Noith 2uuS; 2uu7) anu
Susana Bintze (Bintze, 2uuS). Excess uemanu foi basic
foou piouucts gave iise to inflation. When piices weie too
high, cooiuinatois auviseu membeis to iefiain fiom buy-
ing. Bowevei, people neeueu the piouucts uespeiately anu
the noues became feitile giounu foi speculation anu exploi-
tation of those who hau no pesos by those who uiu. That
often meant exploiting the stiuctuial pooi, who hau less
choice. In auuition, excessive issuance of complementaiy
cuiiency iekinuleu inflation. The ciéuitos weie useu to pay
foi all soits of expenses: wages to the Tiueque employees,
gifts to fiienus anu local politicians, self-awaiueu wages of
cooiuinatois, cleaning anu maintenance of the maiket ven-
ues, anu iefuibishment of builuings. The final blow was
laige-scale foigeiy of the ciéuitos in the seconu quaitei of
2uu2 (Noith, 2uuS). It will peihaps nevei be known who
was iesponsible foi the foigeiy anu the suspects iange
fiom noimal ciiminal gangs to political biokeis. Paitici-
pants in a gioup inteiview aiiangeu in Billinghuist, a west-
ein subuib of Buenos Aiies, iecalleu in August 2uu4:
You coulu see people selling packs of foigeu
voucheis neai the entiance of almost eveiy
laige noue. You coulu even buy them in the
neaiby kiosks. We wonueieu many times
who has the capacity to uo that. Piinting
costs money anu these ciiminals must be
making money. Foi me, the politicians weie
behinu it because they uiun't like the Tiue-
Whatevei the oiigin, membeis soon founu out that it was
easiei to buy a pack of foigeu ciéuitos than to piouuce
goous to obtain them. The shaip inflation that iesulteu can
be seen in the piice of a litie of cooking oil in a noue, which
iose fiom one ciéuito in Becembei 2uu1 to S,Suu ciéuitos
in Becembei 2uu2. In 0ctobei 2uu2, the RuT, the laigest
netwoik in numbei of membeis, estimateu that ninety pei
cent of the ciiculating notes weie counteifeit (Claiin, 17
0ctobei 2uu2). They then implementeu a plan to collect all
International Journal Of Community Currency Research 2012 Volume 16 (D) 80-90 Gómez
the ciéuitos in ciiculation anu weeu out the fake ones. The
scheme was too buiuensome foi cooiuinatois, many of
whom got feu up, split fiom the netwoik oi closeu theii CT.
The goveinance system uiu not have sufficient iesouices
anu piovisions to enfoice such contiol ovei the money anu
its failuie uamageu the cieuibility of the system as a whole
(uonzalez Bombal, 2uu2, 2uu6; Bintze, 2uuS).
Two auuitional factois contiibuteu to the collapse. Fiist, in
Nay 2uu2 the goveinment ueciueu to implement a welfaie
policy giving 1Su pesos to each unemployeu heau of
householu with chiluien at school. The goveinment giant
uiu not immeuiately cause a steep fall in the numbei of
membeis but ieuuceu membeiship ovei the meuium teim
(Bintze, 2uuS). The seconu factoi was the iecoveiy of the
iegulai economy aftei 2uuS, when many of the Tiueque
membeis coulu giauually ietuin to iegulai employment.
By the miuule of 2uu2 all the RT netwoiks staiteu a shaip
uecline in teims of paiticipants. 0f the S,uuu noues in Apiil
2uu2, it was estimateu that half weie closeu by Becembei
anu only 1,uuu weie still open by }uly 2uuS; aiounu Suu,
baiely ten pei cent of the numbei in its heyuay, weie opei-
ating in Becembei 2uu6. The Tiueque in geneial became a
coiiupt "ugly uuckling" nobouy wanteu to be involveu
A cooiuinatoi in the city of Nai uel Plata saiu in an intei-
view in Novembei 2uu4:
The sequence was as follows. In the begin-
ning, you met youi neighboui in the stieet
anu she askeu you wheie you weie going.
'To the noue', you'u answei. Anu 'what is
that.' she'u ask. Latei she'u ask which one
you attenueu anu what that one was like. In
the enu she'u staie at you anu woulu ask
whethei 'that' still existeu.
!"#$%&'&($ *+*,$-* ". ,/$ %, &$,0"%1*
To some extent, the collapse of the Tiueque coulu have
been foieseen, given the explaineu facts of both the context
anu the RT themselves. Seveial authois have explaineu
why the Tiueque has ueclineu, like uomez (2uu9), Bintze
(2uuS), Noith (2uuS, 2uu7, 2uu8), Peieyia (2uu6) anu
Saiag (2uu8). Bowevei, some gioups anu netwoiks iesisteu
the fall bettei than otheis anu while some netwoiks have
almost uisappeaieu, otheis continueu to opeiate anu even
expeiienceu some peiious of iecoveiy. These uiffeiences in
theii fates ueseive an explanation, as they weie all affecteu
by similai pioblems but uiu not suffei the shiinkage
Some sub-netwoiks uisappeaieu oi ueclineu shaiply anu at
the time of the fieluwoik foi this stuuy in late 2uu4, a total
of 7uu noues weie estimateu to be opeiating. Follow-up
fieluwoik at the enu of 2uu6 founu that about half of them
hau uisappeaieu, while otheis ieacheu theii nauii in 2uu4
anu iecoveieu aftei 2uu6. Foui gioups emeigeu out of the
bieak up of the RT aiounu the tuin of 2uu1. An estimation
of theii size is given in Figuie 1. This stuuy will aigue that
the explanation foi this vaiiation lies in the goveinance
systems that each netwoik hau stiuctuieu anu not in the
contextual factois, which weie moie oi less the same foi all
of them.
Figure 1: Number of participants by sub-network, begin-
ning of 2002
Note: Estimation by the authoi baseu on inteiviews with the leau-
eis of the vaiious Tiueque gioups. Peicentages aie calculateu on
2.S Nillion paiticipants
The laigest RT netwoik was the Reu ulobal ue Tiueque
(RuT), leu by the gioup that initiateu the Tiueque anu ex-
tenueu acioss the entiie countiy. It was the main one to be
affecteu by the counteifeit ciéuitos, the one to ieceive the
most meuia anu public exposuie, anu the fiist to fall apait.
This causeu a knock-on effect on othei netwoiks, too, be-
cause the majoiity of paiticipants weie uncleai about the
uiffeiences between netwoiks beyonu using a uiffeient
cuiiency. Fiom the stait it set a high piioiity on expanuing
the numbei of CTs using theii complementaiy cuiiency
anu uesigneu a system of "social fianchise" to facilitate this
expansion. Thiough this methou, any inuiviuual oi gioup
inteiesteu in opening a CT coulu contact the RuT, get the
necessaiy infoimation biochuies anu buy the uesiieu
amount of voucheis foi a few pesos. Aftei that, theie was
haiuly any subsequent contiol oi communication between
the RuT leaueis anu the noues, so the RuT ielieu on spon-
taneous cooiuination. Theie was no stiict contiol stiuctuie
acioss the netwoik, only basic giounu iules that opeiateu
as voluntaiy guiuelines. Paiticipants within anu acioss CTs
woulu cooiuinate piimaiily via piice mechanisms, like any
maiket system, although embeuueu in a specific social set-
ting. In the bimensional categoiisation of Bollingswoith
anu Boyei (1998), the RuT ioughly coiiesponus to a iegu-
lateu maiket goveinance, with atomistic anu spontaneous
cooiuination between paiticipants anu clubs anu self-
inteiesteu behavioui as bioauly accepteu action motive.
The seconu laigest netwoik was the Reu ue Tiueque Soli-
uaiio (RTS), which opeiateu mainly as an umbiella associa-
tion of iegional anu local netwoiks. Each iegion hau its
International Journal Of Community Currency Research 2012 Volume 16 (D) 80-90 Gómez
own complementaiy cuiiency system, iuentifieu with
common logo. A watch-uog of the piinciples of iecipiocity
anu soliuaiity, it auvocateu foi an alteinative economic
system baseu on self-ieliance anu face-to-face ielations at
the local level. As a mattei of piinciple, it was a staunch
enemy of the RuT anu its "social fianchise". It implementeu
a system of tiaining (capacitacion) to initiate new membeis
to the system anu the piinciples of soliuaiity, which was
giauually abanuoneu as RTS giew beyonu it capacities to
tiain new membeis. So it was aiiangeu along the lines of an
associational mouel, with multiple CTs conveiging into a
uecision-making ¡ negotiation foium that cooiuinateu.
When the Tiueque ueclineu, the sub-netwoiks that foimeu
the RTS continueu inuepenuently anu the RTS uisappeaieu
as umbiella oiganisation. Self-inteiest as a behaviouial
piinciple was constiaineu by the bonus of iecipiocity the
RTS piomoteu thiough its peimanent tiaining mechanism,
while peei contiol was expecteu to sustain soliuaiity.
The thiiu laigest netwoik was the Reu ue Tiueque Zona
0este (Z0), oiganiseu anu manageu by foimei entiepie-
neui Feinanuo Sampayo. It was also a iegional sub-
netwoik coveiing the uensely populateu anu impoveiisheu
westein subuibs of Buenos Aiies. Although it suffeieu the
uecline of the Tiueque, it fell the least of all the netwoiks in
the RT. It hau a similai system to the "social fianchise" to
expanu its numbei of CTs, but theie was a ielatively tight
contiol stiuctuie ovei its fianchisee noues. Nembeis con-
tiibuteu a small amount to a collective funu in pesos to
finance the costs of the Z0 anu the uevelopment of social
enteipiises that supplieu foou into the noues. The plan of
builuing a supply chain of social enteipiises to supply the
noues was nevei fully accomplisheu anu was inteiiupteu
by the uecline of the Tiueque. The CTs woikeu as maikets
cooiuinateu by piice-mechanisms but the supply of some
foou piouucts was centially oiganiseu, planneu anu ueliv-
eieu. The Z0 was a lose hieiaichy in which theie was one
main centie foi uecision-making, iule-setting anu enfoice-
ment foi the netwoik: its leauei, Feinanuo Sampayo.
Theie was also an unueteimineu numbei of CTs that have
always been oi became inuepenuent fiom the netwoiks
aftei the uecline. They tiaueu using theii own voucheis anu
hau no contact with othei noues. They typically opeiateu as
closeu gioups such as schools, chuiches oi cultuial gioups.
They ioughly coiiesponu to the mouel of communities oi
clubs, closely ieliant on ielations of iecipiocity anu obliga-
tion to abiue by the iules, typical of small communities.
Theie weie no stanuaiu oiganisational stiuctuies foi cooi-
uination. Foi example, Comuniuaues Soliuaiias was staiteu
by a gioup of paients in a community school foi mentally
hanuicappeu chiluien. Anothei gioup, the uiupo Poiiahju,
was oiganizeu by teacheis who, inspiieu by Paulo Fieiie,
staiteu a self-help gioup in a slum with a libiaiy, a civic
centie anu a coopeiative foi scavenging anu iecycling
waste. By the enu of the nineties they launcheu a CT be-
cause they saw its potential foi geneiating an income foi
the pooi. All uecisions weie taken collectively by a commit-
tee. A uiffeient example was that of Feiia Rouchon, locateu
in a slum that suffeis floouing uuiing iain. Between 2uu to
Suu people paiticipateu in the maiket eveiy uay, tiauing
with the left-ovei voucheis of any netwoik, cuiiently in
bau shape. They hau no oiganiseis; cooiuination was
puiely spontaneously. Becisions such as the scheuule weie
maue by consensus by those piesent.
!"!#$%&$'%(%#) %& #+, #-",.",
This section analyses the goveinance systems of the Tiue-
que in ielation to the factois that make goveinance sys-
tems sustainable, which weie highlighteu above. The fiist
one is input legitimacy: willingness of the actois to abiue by
the iules. It is assesseu by the management of the cuiiency
systems, the mechanisms to ieplicate CTs, the hanuling of
pesos, anu the negotiation with othei actois such as local
goveinments. The seconu factoi of sustainability is the set
of mechanisms of iule compliance anu enfoicement, even
against some iesistance. In the RT, it meant having the
means anu capacities to monitoi the behavioui of cooiui-
natois anu paiticipants anu impose compliance at the level
of the CTs. The thiiu factoi suppoiting sustainability is the
benefit foi agents baseu on achieving iesouice syneigies,
which in tuin feeus into output legitimacy. In the peiiou
analyseu, basic foou piouucts weie the ciitical iesouice
acioss all netwoiks in the RT. The fouith factoi suppoiting
sustainability aie the costs of iunning the system, like
tiansaction anu oiganisational costs of managing a non-
state cuiiency system anu keeping the CTs aiticulateu as a
The benchmaik netwoik of the Tiueque was the Reu ulobal
ue Tiueque (RuT). The iules weie set by the cential leau-
eis, but the willingness of membeis to comply with them
was not ieally checkeu; it was just assumeu that they
agieeu by viitue of theii membeiship. In fact, uuiing fielu-
woik the authoi establisheu that most paiticipants (as
much as 9u% in some CTs) hau not ieau any iules oi uiu
not know they existeu. The cooiuinatois of the noues weie
askeu to iepoit on theii activities, but in piactice none of
those inteivieweu uiu anu the iepoits weie nevei ie-
questeu. They only contacteu the RuT leaueis when they
neeueu moie ciéuitos, foi which they paiu in pesos anu
often ieceiveu by mail. The iules weie thus pooily commu-
nicateu anu theie was no piovision to change them in ways
that woulu geneiate legitimacy latei. Rule compliance was
assumeu to happen by viitue of membeiship, iathei than
checkeu oi piomoteu. It was expecteu that the cooiuina-
tois woulu supeivise anu enfoice iules of appiopiiate be-
havioui but, given the massive scale of the noues, this was
impossible. Noieovei, some cooiuinatois took auvantage
of the chaos anu it became common piactice to chaige
membeis significant amounts of pesos to entei the maikets
oi, aggiavating the scaicity of piouucts, in exchange foi
ciéuitos without the coiiesponuing piouucts on sale.
Nembeis paiu them out of uespeiation anu the RuT leaueis
weie too oveiwhelmeu with S,uuu uaily applications to be
able to contiol these abuses. The RuT leaueis uiu not have
the infiastiuctuie, the means oi the capacity to monitoi
what was happening in the CTs anu theie weie no accepteu
institutions to impose compliance. In fact, the leaueis uiu
International Journal Of Community Currency Research 2012 Volume 16 (D) 80-90 Gómez
not see compliance as theii iesponsibility because 'the co-
oiuinatois aie accountable to the paiticipants anu not to
us', one of the leaueis aigueu in an inteiview in Novembei
2uu4. Bowevei, most cooiuinatois weie not qualifieu oi
uiu not see it as theii iesponsibility eithei.
In ielation to cieating iesouice syneigies, in the RuT
haiuly any specific actions weie taken to obtain moie basic
foou piouucts. With some exceptions, the actions to in-
ciease the supply of foou piouucts weie left to the noues to
take. Some noues establisheu an entiance fee, using the
pesos foi pool-puichasing of basic foous, but these ie-
sponses met a minimal fiaction of the neeus of the paitici-
Tiansaction costs ueiive fiom tiauing with a non-state
cuiiency. The RuT piomoteu the use of a single cuiiency
acioss the entiie RT to ieuuce the tiansaction costs foi
paiticipants of having to use uiffeient cuiiencies in the
vaiious netwoiks. They nevei succeeueu in this, but they
hau by fai the laigest netwoik anu theii cuiiency ciicu-
lateu acioss the countiy. While this helpeu paiticipants to
move acioss iegions anu netwoiks with the same cuiiency,
it also maue foigeiy moie attiactive anu easy. So, while the
intention was to ieuuce tiansaction costs, the piactice of a
single cuiiency acioss the countiy incieaseu its vulneiabil-
ity significantly. 0iganisational costs weie also intenueu to
be minimiseu thiough the system of iapiu multiplication of
noues. 0ne oi two peisons instituting themselves as cooi-
uinatois weie noimally enough to uo it in less than a week.
Bowevei, no long-teim ielations of mutual accountability
weie establisheu in the piocess, as the RuT ignoieu that
fact that the time spent in oiganising collective action iep-
iesents an investment in the builuing of a common iuentity
too. So, while oiganisational costs weie inueeu low, in the
long iun this loose stiuctuie maue them veiy high.
In the fiamewoik piesenteu above, the RuT iepiesents an
iegulateu maiket goveinance system baseu on inuiviuual-
istic action motive anu loose cooiuination stiuctuies with
top-uown iules that weie haiuly evei enfoiceu. The leaueis
assumeu that cooiuinatois anu paiticipants woulu act 'ie-
sponsibly' unuei peei piessuie, so they uiu not piepaie a
tightei cooiuination. The assumption of legitimacy without
effective contiol capacities was a foimula foi uisastei,
which eventually happeneu. The RuT mouel was baiely
sustainable anu this was paiticulaily pioblematic because
it was the laigest netwoik of the RT anu the one by whose
peifoimance the geneial public juugeu the Tiueque.
The seconu laigest netwoik in numbei of paiticipants ue-
picteu a hieiaichical goveinance system centieu on the
figuie of a social entiepieneui as main uecision-makei anu
was calleu Reu ue Tiueque Zona 0este (Z0). It useu a simi-
lai system of iule-setting as the RuT but implementeu it
uiffeiently. Its leauei uefineu the iules foi the Z0 anu exei-
ciseu stiong leaueiship, which otheis accepteu because of
his skills anu peisonality. 'Be knows how to uo it,' was ie-
peateuly heaiu about him in seveial of the CTs visiteu in
2uu4 anu 2uu6. Fiom its eaily uays the Z0 investeu in
computeiiseu uatabases anu hiieu woikeis foi uata entiy
to keep up-to-uate membeiship iecoius. No new membei
ieceiveu fifty new ciéuitos befoie being iegisteieu anu
checkeu. This buieauciatic stiuctuie was financeu thiough
a small membeiship fee. The autonomy of the noues was
limiteu to ueciue piactical matteis such as scheuules; the
iest was ueciueu the social entiepieneui anu his collaboia-
tois, a piactice that appaiently went unquestioneu. Input
legitimacy was fai fiom paiticipative anu ielieu on the skil-
fulness anu ieputation of its leauei.
In ielation to supeivision anu enfoicement of iules, the
noues of the Z0 weie kept moie oi less in check. The leauei
coulu not contiol ovei 4uu cooiuinatois but he showeu up
unannounceu in CTs at ianuom anu staiteu tiauing incog-
nito. If he founu the iules of the fianchise being violateu,
cooiuinatois weie askeu to explain the lapse. Paiticipants
weie also alloweu to file complaints against the cooiuina-
tois anu at the level of the noues, the Z0 auviseu cooiuina-
tois to have a team of assistants to supeivise anu enfoice
the iules, expelling tiespasseis if necessaiy. A few cases
weie founu in which this hau actually occuiieu. All in all,
enfoicement of iules in the Z0 coiiesponueu to a tiaui-
tional fianchise system in its hieiaichical implementation
The hieiaichical style of the Z0 pioveu quite effective in
achieving iesouice syneigies, anu in this iespect the Z0
built quite uistinctive mechanisms. It stiuctuieu a supply
system of piouucts negotiating ueals with fiims in ex-
change foi seivices such as tianspoitation, cleaning oi a
shaie of the piouuction peifoimeu by paiticipants. The Z0
establisheu collective factoiies anu vegetable gaiuens with
the laboui of paiticipants, who weie iewaiueu accoiuingly.
Foi instance, it oiganiseu a floui commouity chain: a mill
woulu pay municipal tax aiieais in floui, which the mu-
nicipality woulu exchange with the Z0 foi maintenance of
public spaces, oi bieau foi schools, which woulu be bakeu
by Z0 paiticipants in collective Z0 bakeiies; floui was solu
in the noues. Foi tianspoitation, a team of Z0 mechanics
cannibaliseu seveial bioken-uown municipal tiucks anu
assembleu five tiucks out of the paits. These weie useu to
tianspoit goous fiom one CT to anothei anu the local gov-
einments ieceiveu the use of ten houis of tianspoitation a
week as payment. With similai aiiangements, the Z0 ob-
taineu woou foi fuinituie, lanu to plant fiuits anu vegeta-
bles, anu waiehouses to stoie goous.
The tiansaction costs of using a complementaiy cuiiency
weie kept unuei contiol. The voucheis of the Z0 weie also
foigeu but its leauei's quick ieaction was to ieplace the
counteifeit ones as soon as they hau become a thieat. Bow-
evei, the cost of maintaining the hieiaichical system of the
Z0 was high anu hau to be paiu foi a collective funu of inui-
viuual contiibutions, so the Z0 was successful as long as
membeis financeu the costs.
To sum up, the Z0 cieateu legitimacy baseu on chaiismatic
leaueiship, hau a faii enfoicement of iules, iemaikable
iesouice syneigies anu manageable tiansaction costs. It
stiuctuieu a hieiaichy centieu on a social entiepieneui,
whose ieputation anu skills weie known. These aiiange-
International Journal Of Community Currency Research 2012 Volume 16 (D) 80-90 Gómez
ments constiucteu a sustainable goveinance system, but
they aie blatantly inconsistent with the piomotion of
community paiticipation anu self-ieliance piomoteu by
most CCS aiounu the woilu.
The thiiu type of goveinance system in the Tiueque was
that iepiesenteu by the Reu ue Tiueque Soliuaiio (RTS). It
incluueu the wealthiest, most iueologically minueu anu
best-euucateu paiticipants. 0nlike the RTS anu the Z0, the
legitimacy of cential institutions iesulteu fiom the paitici-
patoiy piocess of iule uefinition. Rules iesulteu fiom
lengthy uiscussions to builu consensus, aftei which they
weie tiansmitteu uownwaius to the noues. These weie
autonomous anu local, but exchanging goous with otheis
was encouiageu. Each CT coulu use its own oi its iegion's
cuiiency, pioviueu that statements on its issuance anu
uistiibution weie contiolleu collectively in the netwoik's
monthly meetings. Negotiations with local goveinments
weie left to the iegional sub-netwoiks anu noues. As a ie-
sult of the piocess of iule uefinition itself, input legitimacy
was high.
In the RTS, autonomy of the clubs was jealously guaiueu
anu accountability of cooiuinatois to membeis anu peei
contiol weie seen as sufficient to guaiantee iule compli-
ance. A iegional leauei assuieu the authoi in 0ctobei 2uu4:
'The Tiueque belongs to the people anu it is up to them to
keep it unuei contiol. That is how it woiks: local, uemo-
ciatic, anu tianspaient'. In piactice, peei contiol was not
obvious anu supeivision ielieu mostly on the cooiuinatois,
who complaineu in Septembei 2uu4 that iule enfoicement
fell on them anu that paiticipants 'often uo not behave ie-
sponsibly with us oi each othei'. Some cooiuinatois took
theii supeivision ioles flexibly anu theii CTs lookeu as
chaotic as the ones of the RuT. Thus the enfoicement of
iules in the RTS was vaiiable anu iuiosynciatic.
In teims of iesouice syneigies, the official position in the
RTS was that cooiuinatois shoulu aiiange with membeis
the actions to inciease the supply of foou piouucts. Some
CTs askeu foi a contiibution in pesos so they coulu buy
fiom wholesaleis, latei giving puichasing piioiity to those
that manufactuieu foous foi the CT with those ingieuients,
but again the iesults vaiieu. Wheie cooiuinatois took up
the task of pooling puichases, it woikeu faiily well. In othei
cases, it came to nothing. Some also tiieu to tiaue basic
foou piouucts with local goveinments, as the Z0 uiu, with
vaiieu uegiees of success. The achievement of iesouice
syneigies in the RTS thus uepenueu on specific cooiuina-
tois anu theii stiategies, but uiu not appeai significantly
highei than in the RuT.
The ieuuction of tiansaction costs ielateu to using vaiious
iegional anu local cuiiencies weie the oiigin of a system of
checks-anu-balances in which all noues inspecteu the cui-
iencies of the otheis. This iequiieu monthly meetings that
maue the means of payment ieliable anu theii piinting
tianspaient. Bowevei, cioss-checks entaileu oiganisational
costs that eventually pioveu buiuensome in teims of time
anu money anu too slow when iesponses to the ciisis weie
To wiap up, the stiongest netwoik in iueological teims was
the RTS anu coulu be uesciibeu as an associational mouel
in the fiamewoik of Bollingswoith anu Boyei (1998). It
was moie sustainable than the RuT because it hau high
input legitimacy baseu on paiticipatoiy iule-setting, faii
enfoicement anu low tiansaction costs. Bowevei, it hau
minimal mechanisms to achieve iesouice syneigies anu
oiganisational costs weie high. It was paiticulaily weak in
its voluntaiistic ieliance on the goouwill of cooiuinatois,
whose capacities weie not always sufficient. Besiues, the
mechanisms foi uecision-making anu checks-anu-balances
weie sometimes uistiacteu by political intiigues, with fac-
tions often fighting each othei. While iueological affinity
kept it togethei uuiing its constiuction, it blockeu the ca-
pacity to iesponu quickly to the uemise of the Tiueque. It
eventually uieu, miieu in negotiation anu uiscussion.
The fouith goveinance system in the Tiueque was the
community oi club mouel. It was iepiesenteu by a laige
anu unueteimineu numbei of local anu inuepenuent noues
acioss the countiy. They weie baseu on small closeu com-
munities, in which joining the CT amounteu to shaiing an
agieement with the iules maue in common. The oiganiseis
often maue an effoit to make the uefinition of iules paitici-
patoiy anu uemociatic, as it was usually a population in
which membeis knew anu tiusteu each othei fiom befoie.
Biveigent opinions anu inteiests weie piobably accommo-
uateu, but whethei the inteiests of the majoiity pievaileu
shoulu be assesseu case by case. Rule enfoicement was
easiei in the local CTs because of theii smallei scale anu
pie-existent ties among membeis, as aigueu by Noith
(2uuS). Cooiuinatois anu membeis alike weie pait of a
community beyonu the noue, so peei piessuie kept mem-
beis in check. This was especially cleai in the pooiest
neighbouihoous, wheie shaieu poveity glueu paiticipants
togethei. 'We all neeu to make the most of oui exchanges in
the CT but when the maiket is uone we neeu to go back to
the same slum togethei. Anu anyway, we aie all pooi, what
can we squeeze out of each othei.' a paiticipant in El
Campito in Rosaiio saiu in Novembei 2uu4.
Bue to theii small scale, local noues hau scaice iesouices
foi achievement of syneigies. Relatively less piouucts weie
tiaueu anu the oveiall economic benefit on paiticipants'
lives was weakei than in the laige-scale noues of the othei
netwoiks. They tiieu to inciease theii iesouice syneigies
anu they sometimes obtaineu uonations fiom vaiious
souices. Pooling puichases was also tiieu, as weie iaffles.
In Comuniuaues Soliuaiias, foi example, membeis ian a
gioceiy shop in the school anu openeu eveiy afteinoon to
sell goous bought with a common pool of funus anu solu foi
pesos anu ciéuitos. Local anu inuepenuent noues weie well
oiganiseu anu iuleu by iecipiocity but they weie not as
laige as the noues of the RuT, foi instance, which many
paiticipants piefeiieu because they coulu finu most basic
necessities on offei in spite of the chaos. The ielatively low
economic benefits to paiticipants, except wheie local gov-
einments suppoiteu them, weie the main weakness of local
noues while theii peaceful atmospheie was theii stiength.
International Journal Of Community Currency Research 2012 Volume 16 (D) 80-90 Gómez
In the local noues, tiansaction costs of using non-state
means of payment was not ieally a pioblem anu most pai-
ticipants unueistoou the complementaiy cuiiency as a
system of mutual cieuit, which was also obseiveu by Saiag
(2uu8). 'You can only iemembei a ceitain amount of pei-
sons that owe you oi to whom you owe things, so when
theie aie voucheis to pay, it is much easiei to exchange', a
paiticipant in Feiia Rouchon explaineu in August 2uu4.
Naking uecisions was ielatively easy anu costless, given the
ieuuceu scale of the gioups anu the fact that most mem-
beis knew each othei fiom befoie.
In shoit, the goveinance system of the local anu inuepenu-
ent noues seems moie sustainable than the othei thiee anu
is how community cuiiency systems aiounu the woilu aie
typically oiganiseu. It ianks high in iule legitimacy anu
theii enfoicement anu low in tiansaction anu oiganisa-
tional costs. Its Achilles heel lay in the lack of iesouices
with which to achieve syneigies anu cieate an income,
though peihaps still significant in teims of poveity allevia-
tion. Some local noues weie able to ease shoitages by in-
volving local goveinments anu uonois to suppoit the
scheme, then becoming a sustainable option to combine the
paiticipation in a social netwoik with income geneiation.
The leaueis acioss the Tiueque tiieu to combine theii pei-
ceptions of the motivation of theii paiticipants anu the
cooiuination stiuctuies oiganise goveinance systems
bottom-up. That is, uefine the institutions to cooiuinate
anu iegulate economic action within theii laige-scale net-
woiks. To vaiious extents, all the RT netwoiks hau insuffi-
ciently uevelopeu supply chains, which leu to scaicity, in-
flation anu eventually chaos among thousanus of membeis
tiying to satisfy theii basic neeus. The Tiueque ueclineu,
fuithei uepiesseu by the iecoveiy of the iegulai economy
fiom the woist ciisis in its histoiy. Bowevei, some net-
woiks weie moie successful than otheis in stiuctuiing
sustainable goveinance systems anu uiu not lose as many
noues, cooiuinatois, anu paiticipants.
A compaiison of the foui types of goveinance systems that
emeigeu in the seconu half of 2uu1 is compileu in Table 1
below. In the fiist thiee iows, highei iating expiesses moie
sustainable systems. In the last two iows, lowei iatings
inuicate highei sustainability. At the iisk of oveisimplify-
ing, the table shows that all the netwoiks hau some weak-
nesses in teims of the sustainability of theii goveinance
systems. Noie impoitantly, it highlights the tiaue-offs in
each type of goveinance systems foi CCS.
0n a national, laige scale, theie seems to be no sustainable
goveinance system foi a CCS. Aftei all, that is what the state
is, not just an actoi that has monopoly ovei means of vio-
lence but also the buieauciacy that spieaus all ovei a teiii-
toiy to iegulate the economy with an acceptable level of
legitimacy. The analysis showeu that a hieiaichy woikeu
best at a laige scale (a iegion) but it neeueu a skilful leauei
at the top capable of builuing the infiastiuctuie anu sus-
taining legitimacy anu iesouice syneigies so that membeis
woulu finance it. 0n an inteimeuiate scale, an associational
goveinance system was sustainable as long as the com-
monalities weie cleai enough to continue negotiation anu
avoiu teaiing the netwoik apait thiough inteinal politics.
0n a small scale, inuepenuent local gioups appeaieu to be a
sustainable option but they neeu to inciease theii iesouice
base fiom othei souices. When that was achieveu, they
constituteu the leauing case foi CCS.
The combinations of stiengths anu weaknesses in teims of
goveinance anu sustainability of CCS piovokes fuithei ie-
flections. The RT hau giown to a scale that by 2uu1 iesem-
bleu a paiallel state, containing one thiiu of the economi-
cally active population. The volume of tiaue, numbei of CTs
anu amount of paiticipants uemanueu a system of govein-
ance that was beyonu the logic of small gioups anu local
communities that chaiacteiise civil society initiatives in
geneial anu CCSs aiounu the woilu in paiticulai. An eco-
nomic system of the scale of the RuT oi the Z0 iequiies a
functional equivalent of the state that uiu not ieally exist -
theie is no functional equivalent of the state because a state
accepts no substitutes, by uefinition. If a laige scale is a goal
of a CCS, this comes at the expense of paiticipation anu self-
ieliance. In the othei extieme of the local anu inuepenuent
CTs, the iesouice syneigies weie too low to ieach a signifi-
cant economic impact. Nany CCS aiounu the woilu shaie
the chaiacteiistics of this goveinance system within the
Tiueque, as well as the ciiticism expiesseu by some ie-
seaicheis on theii limiteu scope (Aluiiuge, 2uu2). Bow-
evei, they gain sustainability on account on theii input
legitimacy, iule enfoicement anu low tiansaction anu oi-
ganisational costs. Noith (2uuS) uiscusses the pioblems of
International Journal Of Community Currency Research 2012 Volume 16 (D) 80-90 Gómez
Input legitimacy Low Fair High High
Rule enforcement Low Fair Fair High
Resource synergies High High High High
Transaction costs High High High High
Organisational costs High Fair High High
Table 1. Sustainability of governance systems in the Trueque, 2002
Notes: RuT = Reu ulobal ue Tiueque; Z0 = Reu ue Tiueque Zona 0este; RTS = Reu ue Tiueque Soliuaiio.
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International Journal Of Community Currency Research 2012 Volume 16 (D) 80-90 Gómez
International Journal of
Community Currency Research
Volume 16 (2012) Section D 91-96
Christian Thiel*
Department Of Sociology, LMU Munich
This papei investigates a special foim of a community cuiiency, the ueiman Regiogelu System,
which is a piivate monetaiy system with a iegional valiuity anu a non-piofit-agenua. The focus
of the sociological stuuy is on how this special money effects actions of consumeis. Aftei some
geneial infoimation to the Regiogelu system, it theiefoie uesciibes why people use this limiteu
anu costly foim of money at all, how exactly they use it anu foi what special patteins of usage
they auopt the iegional money as theii own. As a iesult it can be uemonstiateu that money is
evaluateu conceining its functionality anu its symbolism. Since Regiogelu attempts to be an
efficient monetaiy system anu a moial symbol at once, it uevelops a stiuctuial pioblem which
iestiicts the Regiogelu' expansion.
This papei is a ieviseu anu paitly extenueu veision of the woiking papei "The ueiman Regio-
gelu System anu its hanuling in eveiyuay life" piesenteu at the Inteinational Confeience on
Community Cuiiencies "Thiity yeais of community cuiiencies - what next." (Febiuaiy 16-17th,
2u11, Lyon Fiance). I thank the anonymous ievieweis foi theii useful comments.
* Email: chiistian.thielÇsoziologie.uni-muenchen.ue
$0 2345 4637 89432:5; Thiel, C. (2u12) 'Noial Noney - The action guiuing Impact of Complementaiy Cuiien-
cies: A Case Stuuy at the Chiemgauei Regional money' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3
4$&%15 16 (B) 91-96 <www.ijcci.net> ISSN 1S2S-9S47
Foi Su yeais now the phenomenon of complementaiy cui-
iencies (heieaftei, CC) spieaus aiounu the woilu. This is
quite iemaikable consiueiing the enoimous effoits that
weie maue since the 19th centuiy to foim money into a
national anu stanuaiuizeu legal tenuei (Zelizei 2uuu: S17).
Nowauays with oui globalizeu anu inteilinkeu economy,
such small scale monetaiy expeiiments seem to be quite
antiquateu. But contiaiiwise CC's aie potentially veiy mou-
ein, because - uespite of all theii uiffeiences - in theii
quintessence they aie a ieaction to cuiient economic anu
social uevelopments: A iapiu social change uestioys tiaui-
tional social netwoiks, a globalizeu economy causes unem-
ployment, impoveiishment anu inequality in many places
anu the mouein financial system is moie anu moie hazaiu-
ous anu instable (Bouiuieu et al. 199S; Beck 1999; Boiis et
al. 2uuu). Biffeient social gioups notice these pioblems anu
iesponu to them with the cieation of special monies. Be-
penuing on theii focus, uiffeient veisions of CC's aie genei-
ateu: Foi example, Local-Exchange-anu-Tiauing-Systems
(LETS) want to offei a system of economic self-help anu
establish a "moial economy of paiu favouis" (Williams
2uu4). Time Banks tiy to encouiage volunteeiism (Seyfang
2uu2). uolu-backeu cuiiencies like the Libeity Bollai ie-
flect scepticism about national fiat cuiiency (Bayek 1977).
Nany othei examples coulu be mentioneu - aftei all theie
aie thousanus of uiffeient CC-Systems woiluwiue
(Kennuey¡Lietaei 2uu4: 7S). They all have one thing in
common: They want to solve economic, social oi ecological
pioblems by constiucting cuiiencies with special behav-
ioui stimuli. In othei woius: CC want to piogiam money.
This intention is in some ways inteiesting: In a theoietical
iespect, because the use of money is saiu to be egoistic,
calculative, piofit-maximizing. Is it ieally possible to cieate
"social", "nonpiofit" oi "ecological" money. In an applieu
iespect, because the CCs offei this alluiing iuea of having a
new anu simple behavioi shaping tool. But what uo they
effect in piactice anu not on papei.
This stuuy sets out to investigate these question, focusing
on a special CC, the ueiman Regiogelu (the ueiman shoit
foim foi iegional money). Fiist it pioviues some geneial
infoimation iegaiuing the Regiogelu system. Then it illus-
tiates how this special money actually woiks in uaily life: It
uesciibes why people use this limiteu anu costly foim of
money at all, how exactly they use it anu what special pat-
teins of usage the Regiogelu offeis to them.
#*+ ,+$-." $+,!%,+/& 0 &+1!"!#!%" ."&
1%$+,%!", (%"2!&+$.#!%"2
Regiogelu is a special foim of a community cuiiency. It
occuiieu aiounu 2uu1 anu spieau iapiuly all ovei uei-
many. These unofficial tenueis aie calleu Ammeilechtalei,
Büigeiblüte, Bieyeckei, Elbtalei, uwinnei, Bavelblüte,
KannWas, Lanumaik, LechTalei, Nahgolu, Rolanu, Stein-
talei, TaubeiFianken oi Zschopautalei. Regiogelu can be
uefineu as a piivate monetaiy system with a iegional valiu-
ity anu a non-piofit-agenua which is accepteu by multiple
paiticipants. It usually occuis as vouchei anu is pioviueu
with a uemuiiage (negative inteiest). This constant loss in
value (S-12 % pei yeai) is eithei iealizeu via ceitain tokens
which have to be puichaseu anu glueu on the voucheis
eveiy S months oi via the chaigeable ieplacement of the
voucheis eveiy (S up to 12) months. With these voucheis
the consumeis can puichase goous the businesses associ-
ateu with the system. The payee can eithei use it foi his¡
hei shopping oi give it to the Regiogelu oiganization anu
ieceive the value in Euio cuiiency in ietuin. Foi this ie-
exchange most Regiogelu oiganizations uemanu a fee of S
to 1u %. Pait of this coveis theii expenses anu the iest is
uonateu to community chaiities. With this special way of
constiucting a cuiiency the Regiogelu puisues ceitain ob-
jectives: it wants to binu the iegional puichasing powei,
stiengthen the local economy, cieate moie coopeiation,
inciease sponsoiship foi non-piofit-oiganizations, encoui-
age the iegional iuentity, help soliuify social ties, ieuuce
tianspoit, enfoice a sustainable anu iesponsible consum-
eis' behavioui anu so on.
Theie is a socio-scientific inteiesting aspect behinu those
objectives: A lot of these things can be seen as commons.
Commons aie collectively owneu anu eveiybouy can use
anu benefit fiom them. But if eveiybouy takes as much as
he can, the common goou will be ultimately uepleteu. If
eveiybouy buys in the uiscount stoies, the small innei-city
shops - anu with them goou local amenities - will uisap-
peai. If nobouy gets involveu in social life, theie will haiuly
any community activities. If nobouy caies foi the (local)
enviionment, it will be messeu up. Foi a long time econo-
mists thought this will happen inevitable, just because of
the human self-inteiest. They calleu it the "tiageuy of the
commons" (Baiuin 1968). But accoiuing to cuiient ie-
seaich, commons can in fact be manageu in uue consiueia-
tion of geneial public inteiest anu sustainability (0stiom
199u). Theiefoie the iespective communities neeu appio-
piiate iules. The iegional money systems tiy to establish
such iules with its constiuction (see below) in oiuei to
govein the mentioneu iegional commons. But uoes this
woik in piactice.
(%-3/+-+"#.$4 ('$$+"(!+2 !" 3$.(#!(+ 0 .
(.2+ 2#'&4
Foi this case stuuy the most successful Regiogelu pioject in
ueimany, the Chiemgauei, has been chosen. 0sing qualita-
tive social ieseaich methous, uata has been collecteu with
paiticipant obseivations anu naiiative inteiviews. Theie
has been uiscussion with consumeis, businessmen anu
Chiemgauei-piactitioneis, with fiienus anu foes. In the
following the iesults aie piesenteu beginning with a shoit
uesciiption of the Chiemgauei Regiogelu.
#56 (57689:;6< $697=96>? @ : A5=<B 7CB<=?;DB7=C
The Chiemgauei Regiogelu is locateu in the southein pait
of ueimany (Bavaiia), in two auministiative uistiicts
nameu Rosenheim anu Tiaunstein. It is a quite well-off
iegion: fiist uue to its scenic beauties it attiacts a lot of
touiists, anu seconu it has a soliu economic stiuctuie with
International Journal Of Community Currency Research 2012 Volume 16 (D) 91-96 Thiel
seveial laige fiims (woou, chemical inuustiy) anu a lot of
meuium-sizeu businesses. Also it is still a quite tiauitional
aiea with many functioning social netwoiks. Foi suie these
aie ueteimining factois foi the success of this CC.
The Chiemgauei was founueu by Chiistian uelleii, an econ-
omy teachei at an anthioposophic school in the Bavaiian
village Piien. Since his auolescence he was inteiesteu in
monetaiy theoiy, especially Fieigelu-theoiists like Silvio
uesell, Bietei Suhi oi Ruuolf Steinei. In 2uu2 he ueciueu to
test his concept of a iegional Fieigelu within a school pio-
ject. In 2uuS uelleii anu six stuuents emitteu 2,uuu Chiem-
gauei (equivalent to Euio). Thanks to the ueuication of the
stuuents' paients the Chiemgauei uispeiseu iapiuly in the
iegion (uelleii 2uu9: 6S). In 2uu9 ovei 1,8uu consumeis,
2uu associations anu almost 6uu shops paiticipateu; ciica
4Su,uuu Chiemgauei aie ciiculating anu geneiating a
tiansaction volume of ovei 4 million (Chiemgauei 2u1u).
Conceining its constiuction uesign the Chiemgauei is an
euio-baseu Regiogelu-system. The consumei can change
his Euios against Chiemgauei in seveial paiticipating
shops. Like othei Regiogelus it has a constant loss in value:
To keep the Chiemgauei valiu, an ownei has to puichase a
ceitain token eveiy S moths anu glue it on the vouchei. The
businessmen can also ie-exchange the Chiemgauei to Euio,
but they aie chaigeu a fee of S% of the total value. A pait of
these ievenues aie uonateu to community chaiities accoiu-
ing to the consumeis wishes. Foi this, eveiy consumei has
to choose a social association like a spoits club, an envi-
ionmental oiganization oi a kinueigaiten. Eveiy time he
"buys" Chiemgauei, his chosen association gets a uonation
in the amount of S% of the changeu money.
With this constiuction uesign, the Chiemgauei tiies to
achieve ceitain objectives like a multifaceteu anu efficient
iegional economy, vital social netwoiks, cultuial sponsoi-
ship oi enviionment piotection. The uilemma heie is that
eveiybouy in the iegion benefits fiom that, but nobouy has
to get involveu. This fiee-iiuei-pioblem applies to eveiy
public goou (Belfiich 2uu9: 24; 0stiom 2uu9). Inueeu psy-
chological expeiiments have shown that a substantial shaie
of all subjects aie, foi ieasons of faiiness anu inequity
aveision, willing to coopeiate (Fehi¡uintis 2uu7), but they
will only coopeiate if they believe that otheis will coopei-
ate too. Bowevei, if they notice ovei time that othei gioup
membeis - the self-iegaiuing ones - fiee iiue, then coop-
eiation will typically conveige to veiy low levels - inuiviu-
ual self-inteiest laigely uominates behavioui. Ceitain social
stiuctuies can altei the situation. Foi example the possibil-
ity to punish non-coopeiation cieates an economic incen-
tive foi the self-iegaiuing subjects to coopeiate. As a con-
sequence theie will be a peimanent high coopeiation level.
In shoit, uiffeient social stiuctuies geneiate completely
uiffeient aggiegate patteins of inteiaction. The Chiemgauei
attempts to geneiate a specific altiuistic behavioui via cei-
tain stiuctuial constiaints: with its spatial limitation (you
can only pay in the paiticipating shops of the iegion) it
obliges the people to spenu theii money iegionally; with its
tempoial limitation (the uemuiiage) it makes them spenu -
anu not hoaiu - theii money; with its "chaiity-tax" it (inui-
iectly) cieates uonations. Befoie we examine how goou
this woiks, we fiist have to ueal with one funuamental ie-
stiiction - the Chiemgauei is not manuatoiy. This lacking
commitment is a pioblem foi eveiy CC. No mattei what
objectives a CC-piactitionei wants to achieve by constiuct-
ing an appiopiiate monetaiy system - if he wants to pio-
viue pooi people with money oi encouiage iegional, ethical
anu¡oi ecological buying behavioui - in all cases he neeus
people who use the CC. Since the paiticipation is voluntaiy,
it is veiy impoitant foi eveiy piactitionei to unueistanu
why people use alteinative money anu why not. So, what
aie the ieasons foi using such a limiteu anu theiefoie
costly foim of money at all.
!"#$%&$ (%) *+,"-.#/")0/$"
Bue to the mentioneu limitations one cannot explain the
Chiemgauei-use with a iational, oppoitunity-optimizing
attituue. Bowevei at seconu glance each of the involveu
gioups have theii own ieasons:
The Chiemgauei-piactitioneis oiganize eveiything volun-
taiily which is a gieat ueal of time anu effoit. Theii main
motivation is that they see themselves as a (backuooi) pio-
test movement. They want to convince society of a bettei
monetaiy system in piactice.
The businessmen ceitainly have costs, namely the fees. But
at the same time the Chiemgauei pioviues them with an
auveitising anu maiketing tool: they get publicity, a posi-
tive image anu a competitive auvantage. Not least the fees
aie tax-ueuuctible.
Foi the consumeis the automatic anu giatis uonation uefi-
nitely is a ceitain incentive foi using the Chiemgauei, but -
compaieu with its constiaints - a veiy weak one. Anothei
explanation coulu be that the Chiemgauei-use is an expies-
sion of specific value oiientations anu woilu outlooks, e.g.
like the ones in the post-mateiialistic milieu (Inglehait
1997). Beie we finu motives like autonomy, holistic life,
self expiession, faiiness anu ecology which aie in line with
the objectives of the Regiogelu. But the uata inuicates that a
post-mateiialistic affiliation is not a sufficient explanation.
The ieason is that we finu a lot Chiemgauei useis who aie
veiy uiffeient iegaiuing theii value oiientations e.g. some
highly tiauitional anu conseivative miuule-classes. Naybe
we fiist have to take a look at how the consumeis use the
Chiemgauei befoie we can answei the question why the
use it.
1+" *%&$/-")2 3"&")#4 5$#." 6#77")&
In this inteiview-sample the following usage pattein has
been founu: Nost consumeis spenu 1uu - 4uu Chiemgauei
monthly, wheieat they uo the money exchange weekly oi
bi-weekly. They use this Chiemgauei-money pieuomi-
nantly in theii habitual shopping-ioutines. So they go to
theii backei, butchei oi beveiage stoie anu buy theii con-
venience goous. Quite seluom they make special puichases
like a computei, new glasses oi seivices (e.g. hanuciaftei) -
these iequiie infoimation wheie to buy them anu some-
times effoits to get theie. The ieauiness foi this is quite
International Journal Of Community Currency Research 2012 Volume 16 (D) 91-96 Thiel
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International Journal Of Community Currency Research 2012 Volume 16 (D) 91-96 Thiel
!"#$%&' %) *+,"-'.%-
The uata of this stuuy inuicates that people "inteipiet" ie-
gional money. In othei woius: They evaluate it conceining
its functionality anu its symbolism. 0nly if they evaluate
the Regiogelu as auequate to themselves, they will use it.
Conceining the functionality the people especially evaluate
the shopping infiastiuctuie. Even though the Regiogelu is
mainly useu to buy eveiyuay goous, theie have to be
enough shopping facilities. It won't make sense, if consum-
eis only can puichase massages, health counselling oi
spiiitual healing with theii Regiogelu. Rathei it must be
possible foi them to implement the Regiogelu into theii
eveiyuay life shopping ioutines with veiy little effoit.
When people can use Regiogelu at theii bakei, theii
butchei oi theii gieengiocei, when they get the Regiogelu
wheie anu how they want - than they will constantly use it.
Foi the CC-piactitionei this is a kinu of chicken-anu-egg-
pioblem: A lot of the businessmen only paiticipate when a
substantial numbei of consumeis use the Regiogelu anu at
the same time a lot of consumeis only use Regiogelu when
it is accepteu in a substantial numbei of shops. The anony-
mous mass of consumeis is haiu to ieach anu the busi-
nessmen aie often haiu to convince. Aftei all the builuing
anu maintenance of such an infiastiuctuie is a question of
capabilities. A iegional money system is costly anu ue-
manuing anu a lot of piactitioneis aie just oveistiaineu
with that. That's the ieason the leauei of the most success-
ful Regiogelu pioject woiks full-time foi it.
The symbolism of the Regiogelu iesults fiom the moial
objectives (iegionalism, ecology, social issues) that it iep-
iesents. These aie quite vague anu so the Regiogelu can
attiact uiffeient types of peisons. Foi example a conseiva-
tive iuial peison might see the Chiemgauei as a uown-to-
eaith way of piotecting the own iegion. Foi a globalization
ciitic the Chiemgauei might be an institution of iesistance
to neolibeialism. The tiicky thing is that because of that
vagueness (almost) eveiybouy can finu aspects which at-
tiacts them oi uistiacts them. If the conseivative com-
monei expeiiences the Regiogelu e.g. as a ciiticism of the
pievailing monetaiy system, he will be less likely using it.
So it is highly impoitant how the CC-piactitioneis piesent
theii Regiogelu in public. Theie is a fuithei aspect: A pio-
spective usei evaluates not only these (moie oi less moial)
objectives, but also the iuea to achieve them with a iegional
money. Beieby money anu moiality aie in a constellation
of tensions - as money the Regiogelu has to be piactical
anu efficient; as moial meuium it must not be too efficient
anu mateiialistic.
As a iesult of that we finu a stiuctuial pioblem between
functionality anu symbolism: If the Chiemgauei claims to
be "goou" money, what about using it in "evil" stoies. Es-
pecially the big uiscount chains aie often accuseu of a
piofit-gieeuy business policy iegaiuless of inuiviuual, so-
cial oi ecological consequences. Nany consumeis ueclaie
that such shops woulun't be appiopiiate to the Regiogelu.
But wheie to uiaw the line. Is a local supeimaiket "evil"
just because it's a big chain stoie. Aie the small bicycle
ietailei oi the Thiiu-Woilu faii-tiaue shop "evil", just
because they puichase theii meichanuise fiom somewheie
out of iegion. The incieasing neeu foi a compiehensible
anu ieasonable uemaication goes along with the expansion
of the Regiogelu-piojects. So fai the moial symbolism of
the Regiogelu sets limits - it can not inciease its functional-
ity without enuangeiing its moial image. 0ne possible solu-
tion coulu be the paiticipation of the local authoiity: if the
iegional money coulu be useu foi paying taxes, public uues
oi in community facilities, it coulu expanu without losing
its moial chaiactei. The ieason foi this is simply that uis-
posal fees oi swimming bath aumissions aie not in uangei
to be moially ambiguous, but at the same time enlaige the
options wheie you can spenu youi iegional money.
/011234 256 67/80//795
The aiticle uealt with the question whethei if it is possible
to constiuct cuiiencies with special behavioui stimuli. It
focuseu on a special foim of CC, the ueiman Regiogelu Sys-
tem. A case stuuy ievealeu that the consumeis will use this
limiteu foim of money only if they inteipiet it as consistent
with theii inuiviuual attituues anu if its functionality meet
theii inuiviuual shopping uemanus. 0nce they use it, they
attach a moial symbolism to the Regiogelu, because with its
limitations it contiauicts funuamentally a meie self-
inteiesteu anu oppoitunity-optimizing attituue. This
"moial money" gains ceitain specifications. Bepenuing on
inuiviuual intentions, uesignateu uses anu social ielations
the Regiogelu can be a communication meuium: it seives
then as an inuiviuual moial affiimation, as a sign of a sym-
bolic community of "bettei" people oi as a hook foi moial
uiscussions. 0i the Regiogelu can be an instiument of
powei: uue to its constiaints it foices you anu otheis into a
ceitain shopping behavioui. What uo these iesults imply in
a theoietical anu applieu iespect.
In a theoietical iespect they suggest, that the economic anu
sociological concept of money has to be amenueu. So fai
money is often seen as a iational, one-uimensional, homo-
geneous meuium of economic activity. It is fiee fiom any
quality anu exclusively ueteimineu by quantity. Noney is
,colouiless", as ueoig Simmel saiu (Simmel 1989: 8u). All
qualitative uistinctions between goous weie equally con-
veitible into an aiithmetically calculable "system of num-
beis". This "uncompiomising objectivity" alloweu money to
function as a "technically peifect" meuium of mouein eco-
nomic exchange fiee fiom subjective iestiictions, inuiffei-
ent to "paiticulai inteiest, oiigins, oi ielations". The veiy
essence of money, claimeu Simmel, was its "unconuitional
inteichangeability, the inteinal unifoimity that makes each
piece exchangeable foi anothei". Noney accoiuing to this
conception, also ieplaces peisonal bonus with calculative
instiumental ties, coiiupting cultuial meanings with mate-
iialist conceins. Inueeu, fiom Kail Naix to }üigen Babei-
mas, fiom ueoig Simmel to Niklas Luhmann this view is
wiuespieau. But money isn't unifoim. Fiist, at each step in
money's auvance, people have ieshapeu theii commeicial
tiansactions, intiouucing new uistinctions, eaimaikeu
money in ways that baffle maiket theoiists (Zelizei 1994).
International Journal Of Community Currency Research 2012 Volume 16 (D) 91-96 Thiel
We finu manifolu qualitative uiffeient meanings of money
such as tips anu salaiy, alimonies anu biibes, housekeeping
allowances anu vacation money, honest uollais anu uiity
money. Eveiyone is hanuleu in a specific way. Anu people
will in fact iesponu with angei, shock, oi iiuicule to the
"misuse" of monies foi the wiong ciicumstances oi social
ielations (such as offeiing a thousanu-uollai bill to pay foi
a newspapei). Seconu, people have always inventeu theii
special foims of cuiiency, such as foou stamps, supeimai-
ket coupons, piison sciip, theiapeutic tokens, militaiy cui-
iencies, lunch tickets, gift ceitificates anu of couise CCs. All
of them enable anu constiain money-actions in a ceitain
mannei which is specifieu by the way people inteipiet the
iespective money. In othei woius: Noney multiplies uue to
its constiuction anu its inteipietation We obseiveu exactly
this piocess at the Chiemgauei.
In an applieu iespect the finuings suggest that piogiam-
ming money is possible. In some iespects eveiy kinu of
money is alieauy piogiammeu uue to its constiuction anu
its symbolism. Lets take the cieuit caiu as an example: Its
constiuction enables its usei to spenu money even if he's
bioke at the moment. Its symbolism is equivalent. The slo-
gans invite you to spenu money when anu wheie you want:
"visa - It's eveiywheie you want to be", "Theie aie some
things that money can't buy. Foi eveiything else theie's
NasteiCaiu". This geneiates unuei ceitain ciicumstances a
specific action impetus which causes that somebouy
spenus moie money then he can affoiu. In a similai mannei
one coulu cieate a "social", "nonpiofit" oi "ecological"
money. But as mentioneu above - people inteipiet monies.
Anu in this complex piocess of inteipietation the meanings
anu usage patteins of a money maybe altei in way nobouy
hau imagineu. Altogethei I think that - no mattei if we
want to inciease oui theoietical unueistanuing of money
oi if we uevelop piatice-oiienteu iules - futuie ieseaich
has to pay attention to the symbolic meanings of (all kinus
of) monies.
Bickelmann, Annette (2uu9) Kleingelu. Nonetäie Regionalisieiung
uuich Regiogelu als Weikzeug im Regionalmanagement. 0npub-
lisheu uiploma thesis, 0niveisity of Tiiei, Bepaitment of geogia-
Boiis, Bietei, Alvaio Beiiiel Biaz, Kai Eickei-Wolf, Ralf Käpeinick
unu }an Limbeis (eus.) (2uuu): Finanzkiisen im 0beigang zum 21.
}ahihunueit. Piobleme uei Peiipheiie ouei globale uefahi (Ne-
tiopolis, Naibuig)
Bouiuieu, Pieiie, Accaiuo, Alain u.a., 199S: Bas Elenu uei Welt.
Zeugnisse unu Biagnosen alltäglichen Leiuens an uei uesellschaft,
(0vK, Konstanz)
C h i e m g a u e i ( 2 u 1 u ) , v i e w e u A u g u s t 1 7 2 u 1 u ,
Fehi, Einst anu Beibeit uintis (2uu7) 'Buman Notivation anu
Social Coopeiation: Expeiimental anu Analytical Founuations',
Annual Review of Sociology, vol. SS, pp.4S-64
uelleii, Chiistian (2uu9) 'Chiemgauei Regiomoney: Theoiy anu
Piactice of a Local Cuiiency'. Inteinational }ouinal of Community
Cuiiency Reseaich, vol 1S, pp.61-7S
Baiuin, uaiiett (1968) 'The Tiageuy of the Commons', Science 162
(S8S9), pp.124S-1248.
Bayek, Fiieuiich August von (1977) Entnationalisieiung ues
uelues. Eine Analyse uei Theoiie unu Piaxis konkuiiieienuei
0mlaufsmittel, (Nohi, Tübingen)
Belfiich, Silke (2uu9) ,Einleitung'. In: Silke Belfiich unu Beiniich-
Boll-Stiftung (eus.) Wem gehoit uie Welt. Zui Wieueientueckung
uei uemeingütei, (oekom, Nunich).pp.14-2S
Inglehait, Ronalu (1997) Noueinization anu Postmoueinization,
(0niveisity Piess, Piinceton)
Kenneuy, Naigiit unu Beinaiu Lietaei, 2uu4: Regionalwähiungen:
Neue Wege zu nachhaltigem Wohlstanu, (Rieman, Nunich)
Latoui, Biuno (1991) Nous n'avons jamais été moueines. Essai
u'anthiopologie symétiique, (La Bécouveite, Paiis)
0stiom, Elinoi (199u) uoveining the Commons: The Evolution of
Institutions foi Collective Action, (0niveisity Piess, Cambiiuge)
0stiom, Elinoi (2uu9) 'uemeingüteimanagement - ein Peispektive
füi büigeischaftliches Engagement', In: Silke Belfiich unu
Beiniich-Boll-Stiftung (eus.) Wem gehoit uie Welt. Zui Wieuei-
entueckung uei uemeingütei (oekom, Nunich), pp.218-228
Re g i o g e l u e . v. ( 2u1u) , v i e we u Aug us t 17 2u1u,
Schioeuei, Rolf (2uu6) 'Community Exchange anu Tiauing Sys-
tems in ueimany'. Inteinational }ouinal of Community Cuiiency
Reseaich. vol 1u, pp. 24-42
Seyfang, uill, 2uu2: 'Tackling social exclusion with community
cuiiencies: leaining fiom LETS to Time Banks. Inteinational }oui-
nal of Community Cuiiency Reseaich, 2uu2, vol.6.
Simmel, ueoig (1989¡19uu) Philosophie ues uelues (Suhikamp,
Fiankfuit a.N)
Stiauss, Anselm (1991) uiunulagen qualitativei Sozialfoischung
(Fink, Nünchen)
Stiauss, Anselm anu }uliet Coibin (1996) uiunulagen qualitativei
Sozialfoischung (Beltz, Weinheim)
Thiel, Chiistian (2u11a) 'Complementaiy Cuiiencies in ueimany:
The Regiogelu System'. Inteinational }ouinal of Community Cui-
iency Reseaich. vol 1S, pp. 17-21
Thiel, Chiistian (2u11b, foithcoming): Bas besseie uelu. Eine eth-
nogiaphische Stuuie übei Regionalwähiungen, (vS veilag, Wies-
Williams, Colin C., 2uu4: ,Cash-inBanu Woik: 0niavelling Infoimal
Employments Fiom The Noial Economy 0f Favoiuis', Sociological
R e s e a i c h 0 n l i n e , v o l . 9 , N i . 1
http:www.socieonline.oig.uk¡9¡1¡williams.html |vieweu }uly S
Zelizei, viviana (2uuu): ,Bie Faiben ues uelues. vielfalt uei Näikte,
vielfalt uei Kultuien'. Beilinei }ouinal füi Soziologie, vol. 1u, S,
International Journal Of Community Currency Research 2012 Volume 16 (D) 91-96 Thiel
International Journal of
Community Currency Research
Volume 16 (2012) Section D 97-105
Krister Volkmann*
University Of Potsdam
Aktionsladen Eine Welt Potsdam (Fair-trade Shop Potsdam)
Accoiuing to conventional wisuom, money seives the following functions: it is a meuium of
exchange, a unit of account, anu a stoie of value. Bowevei, if we bioauen oui peispective, we
might conceive of money also as a meuium of communication, as a means to eithei change soci-
ety, oi to pieseive a community in the sense of "iesilience" against outsiue thieat. It is this iuea,
which the following aiticle wants to fuithei exploie, against the backgiounu of the newly estab-
lisheu iegional cuiiencies (Regionalwähiungen) in ueimany, Austiia anu Switzeilanu. If we aie
not solely occupieu with the financial stability of a cuiiency, but with how a cuiiency can con-
tiibute to the stability anu cohesion of a community anu of society as a whole, then we aie well
auviseu to look at accompanying stiuctuies, physical anu social, which may be subsumeu unuei
the notion of "soliuaiity economy".
* Email: kiistei.volkmannÇuni-potsuam.ue
$' )*+, +-*. /0+*)1,2 volkmann, K, (2u12) 'Soliuaiity economy between a focus on the local anu a global
view' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 97-1uS <www.ijcci.net> ISSN 1S2S-
Accoiuing to conventional wisuom, money seives the fol-
lowing functions: it is a meuium of exchange, a unit of ac-
count, anu a stoie of value (see Wikipeuia: "Noney"). Bow-
evei, if we bioauen oui peispective, we might conceive of
money also as a meuium of communication, as a means to
eithei change society, oi to pieseive a community in the
sense of "iesilience" against outsiue thieat. It is this iuea,
which the following aiticle wants to fuithei exploie,
against the backgiounu of the newly establisheu iegional
cuiiencies (Regionalwähiungen) in ueimany, Austiia anu
Switzeilanu. If we aie not solely occupieu with the financial
stability of a cuiiency, but with how a cuiiency can con-
tiibute to the stability anu cohesion of a community anu of
society as a whole, then we aie well auviseu to look at ac-
companying stiuctuies, the physical anu social infiastiuc-
tuie as well as iegulatoiy systems. This is, what the aiticle
attempts to uo. "Soliuaiity economy" might seive as a
common uenominatoi foi the vaiious concepts.
The fiist pait will give a biief oveiview ovei the iecent
uevelopment of iegional cuiiencies in the ueiman-
speaking countiies. In a seconu step, an attempt is maue to
leain fiom pie-mouein cuiiencies in Papua-New uuinea,
which might tuin out to be highly up to uate again. The
thiiu section of the aiticle links the new complementaiy
cuiiencies to othei concepts of ieuistiibuting wealth,
namely ie-uefining woik anu the intiouuction of a basic
income, which aie subsumeu unuei the oveiaiching con-
cept of "soliuaiity economy".
$*+!%",- ('$$*"(!*. !" +*$/,"01 ,'.#$!,
,"& .2!#3*$-,"&
In the fiist uecaue of the 21st centuiy, many initiatives foi
iegional cuiiencies have spiung up in ueimany, Austiia
anu Switzeilanu. Compaieu to pievious local cuiiencies
anu local exchange tiauing systems (LETS), these new ie-
gional cuiiencies aspiie to ieach faithei anu to cieate a
laigei momentum (Kenneuy¡Lietaei 2uu4: 77). Wheieas
the typical LETS in these countiies (Tauschiing oi
Tauschkieis) aie mostly baseu in one town oi a city uis-
tiict, the iegional cuiiencies aim to stiengthen the eco-
nomic netwoiks of a tiue iegion, i.e. a geogiaphical space
consisting of seveial towns, possibly a city, as well as the
iuial aieas in between.
Cuiiently theie aie 28 existing iegional cuiiencies in the
thiee ueiman-speaking countiies plus uozens of initiatives,
which stiive to founu an own iegional cuiiency in the neai
futuie. The vaiiance of these cuiiencies is gieat, though.
The iegional cuiiency that is most known in ueimany is
the chiemgauei, which is baseu in the 0ppei Bavaiian ie-
gion calleu "Chiemgau": a ielatively iuial iegion about 6u
km South-East of Nunich. It is until now piobably the only
iegional cuiiency in ueimany that alieauy has a measui-
able economic impact. In Austiia, the Talente-Tauschkieis
voiailbeig ("talent exchange ciicle" in the Austiian feueial
state of voiailbeig) is anothei iegional cuiiency with an
alieauy iemaikable impact. voiailbeig is a small, Westein
Austiian state, sepaiateu by the Ailbeig mountain fiom the
iest of Austiia, with close links to the neighboiing Swiss
cantons. Its basic uesign uiffeis in one impoitant point
fiom that of the chiemgauei: namely the question of how
the new cuiiency is backeu.
Theie aie piesently two uiffeient piototypes of iegional
cuiiencies. The fiist type, anu until now the most wiuely
spieau, aie iegional cuiiencies that aie backeu by the main
cuiiency euio. The alteinative mouel has an aiiangement
that coulu be calleu "activity-baseu" cuiiency. The iuea
behinu this piototype is that a peison oi an enteipiise uoes
some woik - oi piomises to uo some woik, to uelivei
goous anu seivices - anu that this activity, this woik input,
is the value basis foi the cuiiency. The nominal value is
usually equivalent to that of the euio. This is piincipally the
same mechanism as in the eailiei LETS anu Bouis (cf. Ith-
aca Bouis) cuiiencies, with the slight uiffeience that it is
often fiist, in the staiting phase, a piomise oi guaiantee
(anu not the actual activity) to uelivei goous anu seivices.
Next to these two veiy stiaight piototypes, a "mixeu
mouel" is being applieu, which combines aspects of both
piinciples, e.g. thiough an inteinal exchange mechanism,
by which local "talents" oi "houis" can be changeu into the
bioauei iegional cuiiency anu vice veisa. In fact, most
activity-baseu iegional cuiiencies have uevelopeu out of
necessity some foims, thiough which consumeis can ex-
change euios into the iegional cuiiency, but not back again.
Foi the futuie, a thiiu backing piinciple can be imagineu: a
cuiiency that is backeu by conciete commouities, similai to
the concept of a global Teiia cuiiency, as pioposeu by Bei-
naiu Lietaei (2uu2: S76-S88).
If we tuin fiist to the euio-baseu cuiiencies, the case of the
chiemgauei is illustiative. In 2uuS, a small pupil gioup of
the local Steinei school staiteu togethei with theii econom-
ics teachei a pupil enteipiise that began to ciiculate a pa-
pei money, which was accepteu only in the local shops. In
the beginning, the paients of the pupils exchangeu euios
into chiemgaueis on a 1:1 basis. With these, they coulu buy
bieau, milk, papei goous, floweis anu othei goous in the
local shops. The meichants now hau the choice: eithei to
change the chiemgaueis back into euios with an exchange
iate of 9S cents foi each chiemgauei. In this case they suf-
feieu a S% loss, which might have been acceptable as a
foim of iewaiu foi customei loyalty. The pupil company, in
tuin, took 2% of the exchange foi its own expenses, but the
iemaining S% went to some iegional association, a cultuial
society, a spoits club oi an enviionmental oiganization. It
was up to the initial usei of the chiemgauei to ueciue,
which paiticulai association he¡she wanteu to suppoit.
This "uonation function", as some have calleu it, has the
gieat auvantage that it aiouses inteiest among the local
anu iegional associations to paiticipate in the iegional cui-
iency, since they can use it as a means to iaise funus foi
But, of couise, theie is anothei choice foi the meichant -
actually the one that is even moie intenueu. The meichant,
if he¡she wants to avoiu the S% loss, can look foi a sup-
pliei, who in tuin accepts the chiemgauei. In this case, the
International Journal Of Community Currency Research 2012 Volume 16 (D) 97-105 Volkmann
chiemgauei is as stiong a cuiiency as the euio. 0nly in this
case, the main aim of the iegional cuiiency is achieveu,
namely the knitting of a iegional economic netwoik. An
example is a local uaiiy that has founu new ways to sell its
piouucts in the own iegion, iathei than ielying solely on
expoit (Boue 2uu4: 87). In 2uu8, theie weie Suu,uuu
chiemgaueis ciiculating, cieating a tuinovei equivalent of
S.7 million euios (the ciiculation speeu of the chiemgauei
is 2.S to S times that of the euio). Wheieas in the initial
yeai 2uuS, 9u% of the chiemgaueis weie changeu uiiectly
back into the euio, in 2uu8, 7u% weie kept ciiculating.
Noie than 6uu enteipiises accept the chiemgauei. (all uata:
www.chiemgauei.info on 8 Nov 2uu9)
The Chiemgau iegion is a ielatively wealthy iegion in a
ueimany-wiue compaiison, anu even in the context of
wealthy Bavaiia. Accoiuing to one classification, it is a
high-potential peiipheial iegion
(Segeit¡Zieike 2uuS: 99).
Bow can a iegional cuiiency woik in less piivilegeu ie-
gions, e.g. in shiinking iuial iegions (with high uemo-
giaphic losses) in Eastein ueimany, but also in ueclining
iegions in Westein ueimany. Accoiuing to the makeis of
iegional cuiiencies in these stagnating iegions, a uiffeient
appioach is neeueu. A veiy illustiating example is the
uistiomtalei in Saxony-Anhalt, a feueial state in Eastein
ueimany stiuggling with high unemployment, a negative
image anu emigiation of the talenteu. The havelblüte anu
in the feueial state of Bianuenbuig follow a
similai uesign. In the uistiomtalei system, shops, entei-
piises anu even piivate people, who sell self-maue goous oi
seivices, can ieceive a ceitain amount of staitei money in
uistiomtalei, if they sign a contiact that they aie willing to
accept this cuiiency as payment. 0nlike in the chiemgauei
system, the uistiomtalei cannot be changeu back into
euios, insteau the paiticipants have always to finu some-
one, who in tuin accepts the iegional cuiiency as payment.
The paiticipating enteipiises anu inuiviuuals can choose a
peicentage, which can be paiu in the iegional cuiiency. If a
mechanic has to buy mateiial anu equipment fiom outsiue
the iegion contiibuting on aveiage to 6u% of his tuinovei,
he¡she can ueciue to accept only 4u% of the payment in the
iegional cuiiency (as he is unable to conveit it into euios).
The amount of the initial staitei money, which can be seen
as an unlimiteu, inteiest-fiee cieuit, uepenus on the size of
the company anu the peicentage foi the acceptance of the
iegional cuiiency. In the case of the havelblüte, a company
ieceives 1,uuu havelblüte foi each employee times the ac-
ceptance peicentage. This "cieuit" neeus only to be paiu
back, if the company ueciues to quit the system. Theie weie
International Journal Of Community Currency Research 2012 Volume 16 (D) 97-105 Volkmann
1 "Agglomeiationsfeinei länulichei Kieis mit hoheiei Bichte": These uistiicts, ielatively iemote fiom agglomeiations but with iathei uense
inteinal stiuctuies, aie accoiuing to Segeit anu Zieike often unueiestimateu fiom an uiban peispective. They aie pait of the peiipheiy, but
eviuence in the ueiman context an unspectaculai, but stable iegional uevelopment with iemaikable appioaches towaius sustainability.
Among the iuial iegions in ueimany they iank seconu, anu in the Euiopean context they aie well-positioneu as well. (Segeit¡Zieike 2uuS:
2 Suffixes as -talei anu -blüte aie populai in the naming of ueiman iegional cuiiencies. ,Talei" iefeis to both an inhabitant of a ,Tal", a iivei
valley, while it is also an ancient ueiman cuiiency (the same oiigin as ,uollai"). ,Blüte" in tuin is both the flowei of a plant, but also a slang
woiu foi ,fake money".
Start 2003
1 Chiemgauer
Start 2004
2 KannWas
3 Justus
4 Sterntaler
5 Markgräfler
6 Urstromtaler
7 Kirschblüte
8 Hallertauer
Start 2005
9 Regio im Oberland
10 Carlo
11 Berliner
12 Volmetaler
13 Landmark
14 Broteinheit
Start 2006
15 Bürgerblüte
16 Havelblüte
17 Tauberfranken
18 Nahgold
Start 2007
19 Alto
20 Augusta
21 Dreyecker
22 AmmerLechtaler
23 Pälzer
24 Oderblüte
25 Regio im Ostallgäu
26 Zschopautaler
Rössle (Stuttgart) and Regio in
In Austria: Styrrion, Talente-
Tauschkreis Vorarlberg,
In Switzerland: Talent

Existing regional currencies in Germany (adapted from: Rohrbacher 2008)
24,Suu uistiomtalei (in 2uu6), S1,uuu havelblüte (in 2uu7)
anu a smallei amount of oueiblüte in ciiculation
(www.iegiogelu.ue on 8 Nov 2uu9). At this point, this type
of iegional cuiiency has not ieacheu the same impact as
the euio-baseu mouel, at least if the chiemgauei is taken as
a benchmaik (howevei, many othei euio-baseu iegional
cuiiencies aie equally small as the activity-baseu ones).
The iemaikable potential of activity-baseu cuiiencies is,
howevei, uemonstiateu by the Austiian voiailbeig talents.
They as well incluue piivate peisons in theii system, anu
cuiiently the system counts about 1,8uu paiticipants with
7Su usei accounts (www.talentieit.at on 8 Nov 2uu9).
While euio-baseu systems aie piobably moie successful in
integiating tiauitional shop-keepeis (if theie aie still any
in the iegion left) anu thus aie bettei in offeiing the con-
sumeis a wiue vaiiety of goous anu seivices, the paiticulai
stiength of the activity-baseu cuiiencies lies in theii poten-
tial to activate anu empowei the inhabitants of a iegion, to
pioviue new souices of (siue) income anu to builu social
capital (which of couise is enuoiseu by iegional cuiiencies
geneially, if compaieu to the main cuiiency).
The steintalei in the iegion of Beichtesgauen (also 0ppei
Bavaiia) is an example, wheie aspects of both uesign piin-
ciples aie combineu. It can be iankeu as a miuule-sizeu
iegional cuiiency with a cuiient ciiculation of 6S,uuu
st ei nt al ei anu 2uS pai t i ci pat i ng ent ei pi i ses
(www.iegiostai.com on 8 Nov 2uu9). The steintalei itself is
quite similai in uesign to the neighboiing chiemgauei, with
which iecently some kinu of cleaiing system, an intei-
iegional exchange mechanism with a 1% tobin tax, has
been establisheu (www.iegiostai.com¡9S.u.html on 8 Nov
2uu9). But the steintalei is at the same time linkeu to a
local LETS (Beiimann 2uuS: S4-S6). The "mixeu mouel" of
the steintalei is chaiacteiizeu by two iules. Next to chang-
ing euios into steintalei, it is also possible to pay pait of
the sum in LETS talents. The auvantage foi the LETS pai-
ticipant is that he¡she can now buy goous anu seivices
fiom a laigei supply coming fiom the whole iegion, not
simply the home town. 0n the opposite siue, steintalei can
be changeu back into euios with a loss, but also into LETS
talents (anu auuitional euios). In this case, the iegional
cuiiency suppoits the LETS activity. The consumei is in
this case iewaiueu with a lowei exchange loss (wheieas
he¡she gets only 9u euios foi 1uu steintalei, he¡she can
choose 6u euios plus SS talents).
As alieauy mentioneu, most of the ueiman activity-baseu
cuiiencies allow foi some limiteu exchange of euios into
the iegional cuiiency, but not backwaius. This exchange is
in some cases even enuoiseu by a favoiable exchange iate,
e.g. 1uS havelblüte foi 1uu euios. The ieason foi this
weakening of the piinciple comes fiom the obstacles that
aie poseu foi simple consumeis to join anu enuoise the
system. 0nless they paiticipate as piouuceis, they coulu
otheiwise obtain the iegional cuiiency only if they weie
employeu by one of the paiticipating enteipiises (if they
accepteu the cuiiency as pait of theii wage). Some mei-
chants, of couise, also use the iegional cuiiency to iewaiu
customei loyalty by hanuing ovei iegional notes as a
"Thank you" foi a biggei puichase.
Theie is one highly uefenueu featuie, which unites (almost)
all iegional cuiiencies in ueimany, Austiia
anu Switzei-
lanu: the money loses its value ovei time. This chaiacteiis-
tic goes back to the "fiee money" iueas of Silvio uesell
(1862-19Su), who aigueu that money shoulu be alloweu to
"iust" anu "uecay" in the same way as all natuial goous uo.
This woulu be a mattei of faiiness, to put money owneis at
the same iisk as all othei faimeis, woikeis anu entiepie-
neuis. Anu it woulu stimulate exchange, as eveiyone woulu
be eagei to keep the money ciiculating by changing it into
useful things. uesell anu his followeis saw this as a means
of getting iiu of the whole system of inteiest. The amazing
expeiience of the Austiian city of Woigl uuiing the uieat
Bepiession, when the mayoi ueciueu to intiouuce a local
money baseu on uesell's iueas, shows that such a money
system can achieve a iemaikable uevelopment unuei spe-
cific ciicumstances (in Woigl, public infiastiuctuie, some
lasting until touay, was built with the local "fiee money" -
www.unteiguggenbeigei.oig on 8 Nov 2uu9). This tiaui-
tion is incoipoiateu in almost all piesent-uay iegional cui-
iencies, fiequently nameu ciiculation "impulse" oi "en-
suiement". The most common foim is a small uevaluation
eveiy thiee months (mostly 2% of the uenominateu value).
In oiuei to keep using the note, the usei has to buy an up-
uate maik anu glue it on the backsiue of the note. Anothei
way to ensuie the ciiculation is to limit the valiuity of the
note. When the peiiou of valiuity (usually a yeai) is ovei,
the olu note neeus to be exchangeu against a fee into a new
one. Still a new methou of continueu uevaluation has ie-
cently been implementeu with the e-chiemgauei, the elec-
tionic foim of the chiemgauei, which can be accesseu
thiough a special foim of bank caiu. In this case a continu-
ous uevaluation of the money is possible.
In a compaiative stuuy (volkmann 2uu9), the stiuctuies of
the suppliei siue (the enteipiises paiticipating in the sys-
tem) have been analyzeu foi 16 iegional cuiiencies. In a
fiist step, the total of 2,Suu supplieis has been categoiizeu
accoiuing to 77 bianches. These incluue agiicultuie anu
foou (fiuit anu vegetables, uaiiy piouucts, bakeiies, woou,
etc.), small piouuction (aitisans, tiauitional ciafts, etc.),
foou ietail (oiganic foou shops, faii tiaue shops, supeimai-
kets, etc.), tiauitional meichants (clothes, shoes, stationai-
ies, floweis, electiical appliances, books, phaimacies, etc.),
seivices (computei anu inteinet, uesign, coaching, alteina-
tive health, book-keeping, baby-sitting, seminais, etc.) anu
gastionomy (iestauiants anu cafes, both tiauitional anu
alteinative, etc.).
The geneial iesults of this statistical oveiview show that on
a total, a bioau vaiiety of seivices anu goous can alieauy be
obtaineu with iegional money. In othei woius, iegional
money coulu be useu as a woiking complement to the main
cuiiency anu play a consiueiable iole in an eveiyuay econ-
International Journal Of Community Currency Research 2012 Volume 16 (D) 97-105 Volkmann
S The voiailbeig talents aie an exception
omy baseu on iegional supplieis anu ciicuits. This positive
image, howevei, is laigely a iesult of the big success of the
pioneei of iegional cuiiencies, the chiemgauei. 0vei 6uu
enteipiises take pait in this system, anu togethei they offei
a supply of goous anu seivices that coveis most aspects of
consumei life. Theie aie two moie iegional cuiiencies with
ovei 2uu paiticipating enteipiises, which can offei a iela-
tively bioau supply as well. Foui iegional cuiiencies hau
1uu to 2uu paiticipating enteipiises anu nine hau less than
1uu (as of summei 2uu7).
As an obstacle to the cieation of tiue iegional economic
ciicuits, howevei, the bulk of supplieis comes fiom the
fielu of tiaue anu seivices. With the exception of local
faims, theie aie few oiiginal piouuceis integiateu into the
system. The top ten supplieis foi the 16 analyzeu iegional
cuiiencies aie: alteinative health (11u of 2Suu), tiauitional
iestauiants (1uS), technical know-how (9u), fiuit anu vege-
tables (89), aitisan piouucts (7S), counseling anu coaching
(67), seminais (66), bakeiies (6S), computei anu inteinet
(6S), anu clothes anu fashion (62). 0n the opposite, facto-
iies uo not paiticipate with the exception of a bio-fuel pio-
uuction facility. Bowevei, if it is possible to integiate local
(oiganic) faims into the iegional foou ietail system, this
coulu be consiueieu a success alieauy, keeping in minu that
the big supeimaiket chains often impoit even those foou
vaiieties fiom fai away, which aie at the same piouuceu in
the immeuiate vicinity. Belping local faimeis anu aitisans
to gain access to the iegional maikets is an impoitant fea-
tuie of iegional cuiiencies. In a small, iuial iegion, even a
iegional cuiiency with less than 1uu supplieis can make a
uiffeience thiough achieving this objective.
The compaiison showeu a ielatively cleai uiffeience in the
supply stiuctuie between the two laigest iepiesentatives
of a euio-baseu anu an activity-baseu cuiiency aie com-
paieu, the chiemgauei anu the uistiomtalei. Wheieas tia-
uitional meichants (clothing shops, shoes, electiical appli-
ances, book stoies, phaimacies) aie well iepiesenteu in the
foimei with a shaie of S2%, many of them aie missing in
the activity-baseu counteipait with a shaie of only 12% .
0n the othei hanu, semi-piofessional offeis (such as self-
maue jam, baby-sitting, tutoiing, computei help) aie the
stiength of the uistiomtalei with a shaie of SS% compaieu
to only 26% in the chiemgauei system. This pictuie be-
comes less cleai, if othei iegional cuiiencies aie incluueu.
Wheieas some euio-baseu anu mixeu-system cuiiencies
such as the waluvieitlei anu steintalei iesemble the
chiemgauei stiuctuie, othei euio-baseu cuiiencies such as
the kannwas anu beilinei have moie in common with the
activity-baseu uistiomtalei. Foi the minoi iegional cuiien-
cies, the iesults aie equally ambivalent. The lack of tiaui-
tional meichants, howevei, is a geneial featuie of all
activity-baseu cuiiencies. Bow to evaluate this obseivation
is still anothei question. It uepenus on the staiting conui-
tions anu the specific objectives. If the aim is to pioviue an
attiactive offei foi the consumeis in the iegion, anu to
achieve a big tuinovei, then the euio-baseu system might
be bettei suiteu. But if the objective is to activate the locals
anu to pioviue the un- anu unueiemployeu with a siue in-
come, then an activity-baseu system might offei some au-
A common aim that was mentioneu in the complementing
qualitative inteiviews of entiepieneuis (paiticipants as
well as non-paiticipants) was the iuea to establish moie
uiiect links between piouuceis anu consumeis, to ueepen
the unueistanuing of how anu unuei what conuitions foou
anu othei goous aie piouuceu, anu to cieate some soit of
paitneiship anu faii exchange similai to the piinciples of
faii tiaue. This was accompanieu by a vision to cieate a
viviu, manifolu netwoik of small-scale, uecentializeu activi-
ties in the iegion. Bespite all uiffeiences, this seems to be a
common objective of all those iegional cuiiencies that aie
uniteu unuei the non-piofit, uemociatic anu community-
oiienteu chaitei of the Regiogelu-veibanu (Regional
Noney Alliance).
!"##$%# '($) *+*,+-%". /,0%"+
If we leave Cential Euiope foi a while anu tiavel mentally
to the othei siue of the globe, Papua-New uuinea coulu be
consiueieu a "supeipowei" of complementaiy cuiiencies.
The moie than 8uu nations of this countiy have a long tia-
uition of shell money. This shell money is a kinu of "com-
munity cuiiency" that iepiouuces social ielations in a veiy
uiffeient mannei than the Westein national cuiiencies.
Accoiuing to ueoffiey Ingham, "all money is constituteu by
cieuit-uebt ielations - that is, social ielations" (2uu4: 72).
But wheieas Westein national cuiiencies connect the state
with the uominant classes (Ingham 2uu4: 1u7-1SS, 1S1 in
paiticulai), PNu shell money has been ciucial to iepiouuce
the social links within a gioup, making it moie iesilient
against outwaiu thieat. (Pieissing 2uu7) Anu although the
context uiffeis gieatly fiom the Cential Euiopean situation,
some impoitant lessons might be leaineu fiom the people
in PNu anu theii way to builu social capital.
Piobably the most impoitant featuie about the PNu shell
money is the fact that piouucts anu (iitual) seivices uo not
have a fixeu, exact piice (cf. Pieissing 2uu7). Rathei, the
piice of a piouuct uepenus much on the conciete social
situation. This is similai to obseivations in othei socially
iich cultuies, such as the women-uominateu local economy
of }uchitán, Nexico (cf. Bennholut-Thomsen 1994). Fui-
theimoie, the piice of a piouuct oi seivice (mostly teaching
of tiauitions oi a iitual) is not paiu exactly among the ex-
amineu Tolai people in PNu, but iathei the piice iemains
vague so that the payment eithei falls a bit shoit of oi ex-
ceeus the socially auequate amount (Pieissing 2uu7: "non-
liquiuizing exchange"). The exchange thus is oiienteu to-
waius the futuie as it establishes an obligation foi fuithei
social inteiaction between the two exchange paitneis. A
uevelopment aiu woikei tolu the stoiy of how a village
woman biought loaus of vegetables anu fiuit to his family
upon theii aiiival anu how they hastily pickeu some things
out of theii tiavel cases to ieply the gestuie. The village
woman, howevei, was suuuenly veiy uisappointeu. Latei,
the uevelopment woikeis leaineu that the gifts of the
woman weie an invitation to begin a social ielation anu
that theii immeuiate "countei-gift" meant a iejection of this
International Journal Of Community Currency Research 2012 Volume 16 (D) 97-105 Volkmann
offei. 0f couise, they weie expecteu to answei the favoi
some uay, but not immeuiately. Quite similaily, eveiy pay-
ment in shell money functions thus as a ieaffiimation of the
social fabiic. This coulu be seen as a conciete example of
what Kail Polanyi uesciibeu as the "social embeuueuness
of maikets" (1971: S6-67).
Social anthiopologists have teimeu this institution a "cul-
tuial ieseive". Cultuial ieseives enable communities anu
nations to keep up social anu economic life unuei stiess.
Sigiun Pieissing (2uu7) has aigueu that shell money of the
Tolai people have empoweieu this nation to suivive even
uuiing veiy enuangeiing peiious, e.g. unuei the piessuie of
the colonial poweis to integiate anu suboiuinate the Tolai
anu othei nations in Papua-New uuinea into the colonial
money system anu economy. Wisely, the Tolai calleu the
ieichsmaik (the cuiiency of the colonizing ueiman Em-
piie) a "weak cuiiency", because it was only able to buy
luxuiy goous, such as alcohol. Theii own shell cuiiency,
calleu tabu, they consiueieu insteau as a "stiong cuiiency"
as only this one was able to iepiouuce social ielations
within the gioup (Pieissing 2uu7). Realistically seen, the
PNu shell cuiiencies aie of couise not static anu aie sub-
ject to change, so the usage of this community cuiiency is
changing within the laigei context of the society. Sigiun
Pieissing iepoits that nowauays the local embeuueuness of
the shell cuiiencies is uecieasing anu they consequently
auopt moie featuies of "Westein" money - also because the
national goveinment of PNu now has intiouuceu an official
bank foi the exchange of shell cuiiencies into the national
cuiiency anu vice veisa (Pieissing 2uu7). Accumulation of
shell money anu anonymity in tiaue aie now easiei with
ieuuceu social contiol of the tiansactions.
It is exactly this special featuie of community cuiiencies
such as that fiom PNu, the fact that they intiouuce "fiic-
tion" into money tiansactions, that can be leaineu foi the
fuithei uevelopment of iegional anu othei complementaiy
cuiiencies in the iich paits of the woilu, LETS anu houis in
Noith Ameiica, talei anu blüten in Euiope, fuieai kippu in
}apan. It is quite similai to the iuea of a tobin tax (a tax on
financial tiansactions) pusheu by netwoiks like attac. Both
tobin tax anu community cuiiencies aim to cieate "fiiction"
in the money tiansactions, to thiow a spannei in the woiks
(the name of the newslettei of attac ueimany is "Sanu im
uetiiebe" - "sanu in the geaibox").
This simultaneousness of homogenizing global tienus anu
of new uiveisity at the local anu iegional level was teimeu
"glocalization" by Rolanu Robeitson (199S). The concept
iefeis to a veiy uynamic ielationship of the global anu the
local. Regional cuiiencies, if seen this way, aie not a simple
- anu possibly uangeious - ietuin to olu tiauitions anu
national iomantic (now in the foim of the iegion), but they
stanu foi a new mix of auapting olu tiauitions to a new
context. Regional cuiiencies in Euiope anu Noith Ameiica
aie suuuenly closely linkeu to tiauitional, but themselves
changing, complementaiy cuiiencies, such as those in PNu.
The Ameiican political scientist Iiis Naiion Young elabo-
iateu an unueistanuing of the post-colonial concept of "hy-
biiuity", which likewise points to stiuctuies of uomination
anu simultaneous counteivailing stiategies, iesulting in
"hybiiu" cultuies. She stiongly aigueu foi leaining fiom the
wisuom of othei, non-Euiopean cultuies in oiuei to ie-
conceptualize self-ueteimination anu global goveinance:
"The pioject of iethinking uemociacy foi a postcolonial
age, I am suggesting, benefits fiom a hybiiu vision of the
histoiy of societies anu goveinments that iefuses the
tiauitional¡mouein, savage¡civilizeu uichotomies." (Young
2uu7: 24)
Fiom this point of view, the task foi iegional cuiiencies is
the cieative integiation of uiffeient peispectives anu the
piovision of maneuveiing ioom foi pioblem-solving
(Schubeit 2uu7: xiii). Regional cuiiencies seive as an eco-
nomic means of communication, which help to negotiate
soliuaiity anu justice in a constant piocess of action (ibiu.,
cf. }oas 1996). They allow foi a uevelopment of iegional
iuentity, which is in communication with global pioblems
anu challenges (Schubeit 2uu7: xiv).
!"# %&#'!#& ()*!#+! , -)./0'&/!1 #()*)21
If iegional cuiiencies aie iegaiueu to facilitate communica-
tion anu the seaich foi cieative solutions to pioblems
within a iegion, while at the same time not foigetting the
global pictuie, the iuea of a "soliuaiity economy", uevel-
opeu in Biazil, seems to be a veiy useful fiame. The oiiginal
Biazilian notion focuses in paiticulai on self-goveineu en-
teipiises, closeu-uown factoiies that weie taken ovei by
theii employees anu aie now iun by them on theii own
iisk. Fiom a Euiopean peispective, it might be sensible to
wiuen the unueistanuing of "soliuaiity economy" to all
economic foims that incluue aspects of soliuaiity anu faii-
ness in opposition to puie piofit-maximizing. Faii tiaue,
iuealistic piovision of public goous (e.g. euucation) anu
iegional cuiiencies (which aim among otheis at a ueep-
eneu unueistanuing of the situation of neighboiing pio-
uuceis anu a stiengthening of the iegional community)
coulu all be seen as contiibuting to a "soliuaiity economy"
with bluiieu bounuaiies towaius the mainstieam econ-
omy, allowing the inuiviuual to choose the uegiee to which
he oi she wants to paiticipate in the soliuaiity iealm. This
coulu allow foi a giauual move towaius the auoption of
ioutines of alteinative economic anu social activity
In the fiist section, we have seen that activity-baseu ie-
gional cuiiencies possess a stiength of integiating non-
foimalizeu anu often maiginal-income activities (such as
self-maue foou anu peisonal assistance) into the iegional
economy, many of them embeuueu in some "netwoik of
soliuaiity". If this appioach is taken seiiously, then the
uevelopment of a new unueistanuing of "woik" is on the
agenua: one that incluues a bioau vaiiety of human activi-
ties beyonu the tiauitional, foimalizeu, income-eaining
International Journal Of Community Currency Research 2012 Volume 16 (D) 97-105 Volkmann
4 Cf. tiansciipt of a piesentation by Fiank }ansky at a meeting of ,Regional cuiiencies in Eastein ueimany" (RI0) on 24 Novembei 2uu7 in
Konnein, Saxony-Anhalt.
woik baseu on a 4u-houi woik week (in the wealthy inuus-
tiializeu countiies). Anu, as oui piesent systems of social
secuiity aie baseu exactly on this tiauitional notion of
"noimal woik", a new logic of pioviuing social secuiity, of
ieuucing the impact of inuiviuual life iisks, is neeueu as
The Fiench philosophei Anuié uoiz has aigueu that tech-
nological anu capitalistic "piogiess" has uecieaseu uiasti-
cally the amount of paiu woik - jobs in the common unuei-
stanuing (uoiz 2uuu: 9, 22-24). Be points out that even in
the emeiging maiket economies, such as China, Inuia anu
Biazil, economic giowth takes place only in ceitain iegions
of the countiy (about twenty in China), wheieas laige paits
of these countiies iemain outsiue this income giowth (uoiz
2uuu: S7). Accoiuing to uoiz, "the gieatei the iise in pio-
uuctivity anu the enthusiasm of the woikeis, the gieatei is
also the iise of unemployment, poveity, inequality, social
exclusion anu the piofit iate" (ibiu.: 67, tianslation fiom
the ueiman euition: K.v.).
uoiz calls foi a new unueistanuing of woik. Insteau of con-
siueiing uiscontinuous woik as "infeiioi, insecuie, foiceu
upon, uiscontinuous woik must become a uesiieu, socially
secuieu iight, a socially iespecteu foim of human veisatil-
ity, a souice of inuepenuent eveiy-uay cultuie anu new
socialness". (uoiz 2uuu: 77-78, tianslation: K.v.). The basic
income neeueu foi life shoulu no longei be uepenuent on
paiu woik, but guaianteeu foi all membeis of society. uoiz
aigues that theie is not a lack of woik - theie is enough
woik to be uone in society - but theie is a lack in the faii
uistiibution of iichness. (uoiz 2uuu: 1u2) A guaianteeu
basic income foi all woulu encouiage to see woik in teims
of "being active". Life woulu be constituteu of "multiactiv-
ity" iathei than the "job" one is uoing. (uoiz 2uuu: 1u2-
A guaianteeu basic income may sounu 0topian. This is not
necessaiily so. A uetaileu calculation baseu on ieal micio-
level householu uata, caiiieu out by the Finnish uieen Euu-
cational Founuation (visio) anu the Finnish Social Insui-
ance Agency (Kela), simulateu the effects of a paitial basic
income (Bonkanen¡Soininvaaia¡Ylikahii 2uu7). The mouel
was baseu on an unconuitional paitial basic income of Suu
euios foi each citizen between 18 to 6S yeais (oluei citi-
zens alieauy get a guaianteeu basic income highei than
that touay). The financing woulu iequiie a iefoim of the tax
system, intiouucing a flat income tax (of 48%) on all in-
comes, i.e. incluuing capital income. Piesent-uay income
tiansfeis such as ient assistance woulu be continueu to be
paiu by the state foi those who aie unable to auu-on them-
selves to the paitial basic income. The iesults aie veiy en-
couiaging: 42.S% of the Finnish population (mainly in the
pooiei income ueciles) woulu be bettei off as a iesult of the
paitial basic income; foi S7.u% (mainly the miuule income
segments) the financial situation woulu iemain mostly the
same as touay; only about 2u.S% (in the uppei two income
ueciles) woulu be woise off uue to a highei taxation of capi-
tal income (Bonkanen¡Soininvaaia¡Ylikahii 2uu7: 67). All
poveity inuicatois woulu impiove, albeit the meuian in-
come anu thus the iefeience point woulu iise: The ielative
poveity woulu uiop fiom S.7% to 1.7% (4u%-poveity),
fiom 1u.1% to 7.8% (Su%-poveity) anu 16.S% to 14.u%
(6u%-poveity). The uini-coefficient as a measuie foi in-
come uistiibution woulu impiove fiom 26.1% to 22.7%
(ibiu.: 71).
The authois of the stuuy stiess that a basic income itself
has only a limiteu effect to make incomes moie equal. Taxa-
tion is insteau the main factoi to ieuuce income inequality
(ibiu.: 77). Also, it is impossible to pieuict how human be-
havioi will change if the incentives aie changeu (ibiu.: S2).
Bowevei, a (paitial) basic income can be seen as not simply
an instiument foi social policy, but foi economic policy as
well: Baving an unconuitional, paitial but guaianteeu in-
come, many small anu limiteu jobs woulu become attiac-
tive. Society as a whole woulu gain. Also, it is a means to
encouiage entiepieneuiship - exactly the kinu of small-
scale entiepieneuiship that is also enuoiseu by iegional
cuiiencies. A village gioceiy stoie, that is no longei piofit-
able, might give employment to a peison with a paitial
basic income. This is not only a gain foi this inuiviuual, but
foi the whole village community, which will keep its village
stoie, both as suppliei of uaily goous anu as a social meet-
ing place. Anu even natuie gains, because cai tiips to ie-
mote supeimaikets aie ieuuceu
As the Finnish authois pointeu out, it is uifficult to pieuict
how people will ieact if incentives aie changeu. A conciete
scenaiio baseu on uetaileu statistical eviuence on the
amount of woik uone in ueimany is the vision of a "half-
uay society" (Balbtagsgesellschaft) by Caisten Stahmei,
Susanne Baitaiu anu Axel Schaffei (Stahmei 2uu6). Ac-
coiuing to suiveys by the Feueial Statistical 0ffice, men in
ueimany woik on aveiage 1,7uu houis a yeai in paiu woik.
Women, in compaiison, woik 1,1Su houis a yeai in paiu
woik. 0n the othei siue, about two thiius of the housewoik
is uone by women. About 1u million peisons in ueimany
uo not have a paiu job, not all aie officially unemployeu,
because some simply have given up to finu a job anu may
live on the income of theii spouse oi theii savings. The
team aiounu Caisten Stahmei suggests an iueal, wheie
men anu women equally woik about 1,uuu houis a yeai.
This means a ieuuction foi both. This woulu set fiee paiu
woik foi those 1u million peisons, who uo not have a "job"
touay. (Stahmei 2uu6: 11) Anu those, who have a "job"
touay, woulu gain time foi volunteei woik, foi chilu-
ieaiing anu caie of the elueily, anu foi continueu euuca-
tion. Society, again, woulu gain as a whole (ibiu.: 7-8). The
pioponents of a "half-time society" uo not suggest iauical
changes. They uo not suggest that the aveiage peison
woulu stait woiking pait-time. Insteau, they envision a
mouel wheie it is possible to woik some yeais full-time,
but theie is an option to leave woik foi a limiteu time when
International Journal Of Community Currency Research 2012 Volume 16 (D) 97-105 Volkmann
S Theie aie othei aiguments foi a basic income giant, most piominently the human iight to live in uignity, but also as a coipoiate uiviuenu to
unselfish piouuctive innovations coming fiom society
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seiven gegen ulobalisieiung. |Complementaiy cuiiencies anu
baitei as ieseives against globalization.j Nastei thesis (0niveisity
of Tübingen). Publisheu as: Pieissing, S. 2uu9: Tauschen - Schen-
ken - uelu. 0konomische unu gesellschaftliche uegenentwüife
|Baitei - uift - Noney. Economic anu social alteinative conceptsj,
(Beilin: Bietiich Reimei)
Putnam, R.B. 1994 Naking Bemociacy Woik. Civic Tiauitions in
Nouein Italy, (Piinceton: Piinceton 0niveisity Piess)
Robeitson, R. 199S 'ulocalization: Time-Space anu Bomogeneity-
Beteiogeneity'. In Featheistone, N., S. Lash anu R. Robeitson
(Eus.) ulobal Noueinities, (Lonuon: Sage) pp. 2S-44.
Rohibachei, I. 2uu8 Regionalgelu-Initiativen als Netzweike. Eine
0nteisuchung am Beispiel uei Bavelblüte |Regional cuiiency ini-
tiatives as netwoiks. A case stuuy of the havelblütej 0npublisheu
Nastei thesis, (0niveisity of Potsuam).
Schubeit, B.-}. 2uu9 'Foiewoiu'. In: volkmann, K.: Regional - unu
tiotzuem global |Regional - anu still globalj, (Nünstei: LIT)
Segeit, A. anu I. Zieike 2uuS Regionale 0ngleichheiten aus uei
Peispektive nachhaltigei Regionalentwicklung. Bas Beispiel länuli-
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tive of sustainable iegional uevelopment. The case of iuial aieas in
ueimanyj (Potsuam: Bianuenbuigische 0mweltBeiichte, vol. 16)
Stahmei, C. 2uu6 Balbtagsgesellschaft. Aniegungen füi ein sozial
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Publisheu online:
sellschaft_Stahmei.puf (uS.u7.2uu8)
volkmann, K. 2uu9 Regional - unu tiotzuem global. Soliuaiische
0konomie im Spannungsfelu zwischen Regionalität unu ulobalität.
Eine exploiative Stuuie zu Regionalwähiungen |Regional - anu yet
global. Soliuaiity Economy between iegionality anu globality. An
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Young, I.N. 2uu7 ulobal Challenges. Wai, Self-Beteimination anu
Responsibility foi }ustice, (Cambiiuge¡Naluen: Polity Piess)
International Journal Of Community Currency Research 2012 Volume 16 (D) 97-105 Volkmann
International Journal of
Community Currency Research
Volume 16 (2012) Section D 106-115
Molly Scott Cato* And Marta Suárez**
*University Of Roehampton
**Department Of Ecology, Universidad Autónoma De Madrid
The Stiouu Pounu is one of the local cuiiencies to be set up in iecent yeais by 0K-baseu Tiansi-
tion Towns. The papei uetails the fiist two yeais of the life of the Stiouu Pounu; both its authois
weie closely involveu in the uevelopment of the cuiiency anu the papei is theiefoie a view
'fiom the insiue' iathei than a uisconnecteu acauemic account. The Stiouu Pounu giew out of
Tiansition Stiouu, a community-leu iesponse to climate change anu peak oil. It theiefoie has a
uesign that seeks to builu gieatei iesilience anu stiength into the local economy. In this papei
the ieseaicheis use the local cuiiency as a ieseaich tool to exploie issues such as: the size of
the local multiplieiextent of tiaue between local piouuceis; the uynamics of the local economy;
anu the uiveise motivations of scheme paiticipants. The papei incluues: an account of the lit-
eiatuie on community cuiiencies, especially the woik of Silvio uesell; a biief account of Stiouu
anu the iesults of a suivey conuucteu amongst Stiouu-baseu businesses as pait of the estab-
lishment of the Stiouu Pounu; an account of the fiist yeai of the Stiouu Pounu anu its impact on
the local economy.
* Email: mollyÇgaianeconomics.oig
$' )*+, +-*. /0+*)1,2 Scott Cato, N. anu Suáiez, N. (2u12) 'Stiouu Pounu: A Local Cuiiency to Nap, Neasuie
anu Stiengthen the Local Economy' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 1u6-11S
<www.ijcci.net> ISSN 1S2S-9S47
'The human minu is baffleu by the abstiact,
anu money hitheito has been wholly ab-
stiact.' Silvio uesell (1929: pt. S. ch. 1S)
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This papei uetails the fiist two yeais of the pioject to ue-
velop the Stiouu Pounu, one of a numbei of local cuiiencies
that have been launcheu in the 0K in iecent yeais as pait of
the Tiansition Towns movement.: one yeai of planning anu
piepaiation, the launch anu a yeai's opeiation of the
scheme. Its authois weie both closely involveu in the
scheme, one as a Biiectoi of the Stiouu Pounu Co-
opeiative, the othei uuiing a six-month inteinship with
Tiansition Stiouu. The papei is theiefoie a view 'fiom the
insiue' iathei than a uisconnecteu acauemic account. The
aim of the Stiouu Pounu, in keeping with the Tiansition
focus on iesilience, i.e. the extent to which Stiouu as a
community is self-ieliant in the piovision of its basic goous
anu seivices. To facilitate the ieinfoicement of iesilience
the local cuiiency is uesigneu is to stiengthen local eco-
nomic links anu inciease the size of the local multipliei, i.e.
the numbei of times the cuiiency is useu to meuiate tians-
actions befoie it is taken out of ciiculation. Bowevei, as
both authois noticeu, it the Stiouu Pounu can also be useu
as a ieseaich tool to exploie the uynamics of a local eco-
nomic system anu the motivations of the vaiious paitici-
pants. This papei uses this potential ieseaich function of a
local cuiiency to pioviue an in-uepth piofile of the local
economy of Stiouu, within the theoietical focus on
Tiansition-ielateu activity.
The papei falls into thiee main paits. In Section 2 Fiist an
account of the liteiatuie exploiing the potential of local
cuiiencies will be pioviueuis offeieu, focusing especially
on the woik of Silvio uesell (1929) anu his emphasis on the
ielationship between monetaiy ciiculation anu economic
iegeneiation, incluuing his concept of uemuiiage. This
uiscussion will be linkeu to the iole local cuiiencies can
play in both effecting community iegeneiation anu
stiengthening anu ieuucing the ecological impact of local
economies. The seconu section will pioviueSection S pio-
viues a biief account of the local economy of Stiouu, anu
intiouuces the Tiansition Novement anu its local incaina-
tion Tiansition Stiouu, befoie moving on to uiscuss in ue-
tail the uesign of the Stiouu Pounu anu a histoiy of its fiist
yeai of life. It also incluues the finuings of a suivey of local
businesses in the town which we unueitoou as pait of oui
effoits to encouiage paiticipation in the scheme. In this
section we
The thiiu pait of the papei will consiuei how a local cui-
iency enables enviionmentally focuseu community activ-
ists to leain moie about how theii local economy woiks. A
piioiity foi Tiansition Stiouu is to use the local cuiiency to
encouiage moie local piouuction by means of impoit sub-
stitution, uisplacing piouuction as well as consumption
fiom the global to the local economy, iathei than just
switching numeiaiie. The Stiouu Pounu has also pioviueu
a tool to measuie the extent of local economic activity, a
function which has been enhanceu by the unueitaking of a
the uetaileu local suivey.
Finally, In Section 4, we pioviue some analytical ieflections
on what we leaineu fiom the suivey anu fiom oui own
expeiiences in ueveloping the local cuiiency. The convei-
sations that we weie engageu with pioviueu us with iich
uata about local people's peiceptions of theii own economy
anu its place in the global economic system. These convei-
sations also ievealeu unueilying assumptions about money
anu its iole in society, that we aie able to iepoit. Finally, in
Section S, we uiaw some conclusions about the iole of local
cuiiencies in Tiansition piocesses, anu, conveisely, what
the iole of Tiansition activities may be in piepaiing us foi a
new economic paiauigm. the iole of the new cuiiency in
stiengthening the local economy of Stiouu anu the sui-
iounuing iegion will be unueitaken. Beie, the iconic natuie
of a cuiiency, as opposeu to, foi example, a Buy Local cam-
paign, will be exploieu, with paiticulai emphasis on the
physical uesign of the notes anu local people's iesponses to
images iepiesentative of Stiouu as a local economy of the
past, anu the futuie.
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4(+04 .+(%(/$+ -.04&-
The cuiient spate of ieseaich into the potential of local
cuiiencies to iejuvenate local anu iegional economies that
have been eioueu uuiing the piocess of globalisation has
thiee main themes: fiist, a concein with the wastage of
local talent anu skills because the centialising, coipoiate
economy has piiceu many people out of occupations; sec-
onuly, the concein foi the loss of cultuial anu social÷as
well as economic value÷iesulting fiom the globalisation
piocess anu a uesiie to finu tools anu techniques to ieveise
this piocess; anu thiiuly, anu moie iecently, a concein that
the global financial system is less stable than it appeais anu
that local cuiiencies may be neeueu in uevelopeu econo-
mies in case the national anu global cuiiencies anu the
system they iely on shoulu catastiophically fail, leaving
people poweiless to caiiy out the eveiyuay business of
The fiist concein is expiesseu most cleaily in the woik of
Eugai Cahn, who uiaws attention to the atiophy of what he
calls the 'coie economy' as a iesult of the maiketisation of a
giowing iange of social anu economic activities. Be iuenti-
fies the money system itself as the cause of the uomination
of maiket-baseu economic activities in most people's lives.
Cahn aigues that many key aieas of life÷caiing foi chil-
uien anu olu people, shaiing seivices, offeiing mutual sup-
poit÷function outsiue the money system anu help to builu
a stiong community baseu on iecipiocity iathei than piofit.
Foi Cahn the solution is a co-opeiative foim of economic
oiganisation he calls 'co-piouuction' anu local time-baseu
cuiiencies can help to suppoit the ievival of this foim of
mutual seivice anu caie.
The seconu motivation foi the iecent cieation of local cui-
iencies has been community activism in iesponse to the
thieats of peak oil anu climate change, as in the Tiansition
International Journal Of Community Currency Research 2012 Volume 16 (D) 106-115 Scott Cato And Suárez
Town movement that has given iise to foui of the 0K's local
cuiiencies (in Totnes, Lewes, Biixton anu Stiouu). The
focus of the Tiansition piocess on iesilience implies the
neeu to iebuilu the self-ieliant local economies that chaiac-
teiiseu the 0K befoie the auvent of inuustiialisation anu
the ieauy availability of fossil fuels (Bopkins, 2uu8). The
Tiansition Towns movement began in Totnes in Septembei
2uu6 anu was a community-level iesponse to the iecogni-
tion of the neeu foi a iauically uiffeient way of life follow-
ing the uepletion of oil supplies anu the iequiiement to
ieuuce the caibon uioxiue emissions that aie causing cli-
mate change. The Tiansition movement is focuseu on ie-
souices÷its iaison u'êtie being the neeu to ieuuce fossil
fuel use because of the thieats poseu by climate change anu
peak oil÷anu thus its iueology suggests an alteinative way
of oiganizing the economy. Two concepts aie cential to
Tiansition thinking: self-ieliance anu iesilience (Cato anu
Billiei, 2u1u) anu both have a significant impact on local
economic activity. Resilient communities woulu neeu to
meet moie of theii neeus fiom local piouuction, anu having
a local cuiiency is consiueieu to be a useful means of both
encouiaging local piouuction anu facilitating its exchange
(Noith, 2u1u).Theie is a paiticulai focus on maiket towns
such as Stiouu, which aie theoiiseu as being a paiticulaily
eneigy-efficient pattein of human uevelopment. A cuiiency
is an essential tool in the piocess of ievitalising local
economies (Bouthwaite, 1996) anu foui of the 0K's leauing
Tiansition Towns have launcheu cuiiencies beginning with
Totnes in 2uu6. Thus the oiiginal motivation waswas anu
this has infoimeu the uesign of the Stiouu Pounu, whose
cential aims is to encouiage gieatei piouuction anu ex-
change on a local basis.
Bowevei, the 2uu8 ciash shifteu the focus by making it
cleai that foices in the global economy might expiess
themselves moie suuuenly than a uepletion of oil supplies
might suggest, leauing to mouels such as those uevelopeu
in Aigentina following the collapse of the financial system
in 2uu1 coming into vogue in complementaiy cuiiency
ciicles (Cato, 2uu6b). The wiuei iamifications of the Ciash,
iesulting in the limitation of liquiuity in the economy as a
iesult of ieuuceu bank lenuing, highei taxation, iising
piices anu ieuuceu public spenuing, biing to the foie ex-
actly the soits of aiguments maue by uesell in suppoit of
local cuiiencies with in-built ciiculation-enhancing mecha-
nisms. The 1929 Ciash leu to the uieat Bepiession as a
iesult of the failuie of aggiegate uemanu anu ieuuceu
availability of cieuit anu liquiu money. While goveinments
have thus fai pieventeu economic contiaction on this scale,
at least in the 0K the public spenuing cuts seem likely to
piovoke a similai iapiu tiansaction contiaction thiough
2u11. This iepiesents an extieme anu suuuen withuiawal
of liquiuity fiom local economies anu coulu be useu to ai-
gue that anothei souice of liquiuity is iequiieu, peihaps in
the foim of a local cuiiency, making the case foi a local
cuiiency with uemuiiage÷piefeiably issueu by oi sup-
poiteu by a local political authoiity÷stiongei than evei.
Fiom a theoietical point of view, the focus of theoiists of
local cuiiencies is piimaiily on ciiculation, the numbei of
times a cuiiency is spent within the economy of concein
befoie it leaves, usually thiough being uepositeu in a bank.
This is cleaily visible in the woik fiom the New Economics
Founuation into the LNS piocess to attempt to quantify the
value of the local multipliei (Sacks, 2uu2). In such woik the
local multipliei is measuieu as the numbei of times money
is spent befoie it is taken out of the local economy. In the
case of a national cuiiency this is uifficult to measuie, but
the measuiement can be much easiei in the case of local
cuiiencies. Some vaiieties of 0S sciip issue fiom the 19Sus,
foi example, weie stampeu each times they changeu hanus
(uatch, 2u11), so that the numbei of stamps coulu be useu
as a measuies of the size of the local multipliei (anu the
time that hau elapseu between one anu the next, a measuie
of the velocity of ciiculation). The local papei cuiiencies
can potentially be useu in a similai way, as the fiist issue of
the Totnes pounu was, having a space foi each usei to
stamp wheie anu when an exchange hau taken place. While
this offeis the oppoitunity to stuuy a local economy in
uepth, it is cumbeisome anu iemoves the anonymity which
many people value in the uesign of ciiculating papei
This theoiising can be ielateu to the quantity theoiy of
money (Fishei, 1911) whose equation:
Nv = PT
makes cleai that the equality that summaiise the life of an
economy is money (N) multiplieu by its velocity of ciicula-
tion (v) is equivalent to the volume of tiansactions (T) at
the pievailing piices (P).
uesell's aim was to cieate a foim of money he calleu 'Fiee-
Noney' whose supply was ueteimineu socially anu which
exactly matcheu the amount of economic activity in the
local economy. This was to counteiact the way that existing
money systems enable the extiaction of value thiough
speculation anu the eaining of inteiest, anu the way that
this cieates economic instability anu has an inheient ten-
uency to uepiess the amount of economic uemanu. uesell
(1929: pt. Iv, ch. 2) set thiee objectives foi his new cui-
iency uesign: that is shoulu 'secuie the exchange of goous'
so that theie weie no boom-anu-bust cycles; That is shoulu
acceleiate the iate of economic exchange; anu that it
shoulu close the value gap between piouucei anu con-
sumei, to avoiu piofiteeiing by miuulemen.
To ensuie the iapiu ciiculation of this money uesell sug-
gesteu that, iathei than people being iewaiueu foi holuing
money thiough inteiest, they shoulu be chaigeu foi holuing
it, a piocess he calleu 'uemuiiage':
'0n }anuaiy 1st its value in the maikets,
shops, pay-offices, public tieasuiies anu
couits of justice is $1uu anu on Becembei
hei S1st it is only $9S. That is to say, if the
holuei of the note intenus to employ it at the
enu of the yeai to pay $1uu, on a bill of ex-
change, invoice oi uemanu note, he has to
auu $S to the note. . . What has occuiieu.
International Journal Of Community Currency Research 2012 Volume 16 (D) 106-115 Scott Cato And Suárez
Nothing but what occuis with eveiy othei
commouity. }ust as a ceitain egg steauily anu
iapiuly uepaits fiom the economic concep-
tion 'egg' anu is not compaiable to it at an on
completion of the iotting piocess, the uollai
as the cuiiency unit is peimanent anu un-
changing; it is the basis foi all calculations;
but the uollai as a money-token has only the
staiting point in common with it. The holuei
of this peiishable money will bewaie of
keeping the money, just as the egg-uealei
will bewaie of keeping the egg any longei
than he must. The holuei of the new money
will invaiiably enueavoui to pass on the
money, anu the loss involveu by its posses-
sion, to otheis.'
(uesell, 1929: pt. Iv, ch. 4)
uesell's theoiies stiongly suppoit the uesign of ueimany's
Regiogelu oi 'iegional money' systems, which have been
influenceu by them. Bis objectives of iemoving piofiteeiing
anu economic instability anu suppoiting the local economy
within which the iegional cuiiency is accepteu aie also
highly ielevant to the Tiansition pioject, which similaily
seeks to bolstei local economies in oiuei to achieve its
aims of iesilience anu self-ieliance, as outlineu above. Bis
uesell's aim of acceleiatinge economic exchange is moie
pioblematic, since the Tiansition Novement is establisheu
within a gieen economic fiamewoik, meaning that eco-
nomic giowth shoulu be constiaineu by ecological limits of
a steauy-state appioach to economics (Cato, 2uu9) anu
hence economic giowth is pioblematic iathei than uesii-
able. Bowevei, as uiscusseu in the following section, in the
context of Stiouu, the cuiiency can be useu to shift eco-
nomic activity into the local economy, iathei than incieas-
ing its absolute magnituue.
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Stiouu is an exemplai sustainable community locateu in
iuial uloucesteishiie some Su miles Noith-East of Biistol,
0K. A foimei textile town, it suffeieu seveie inuustiial ie-
stiuctuiing in the seconu half of the 2uth centuiy. Low
piopeity piices attiacteu a iange of cultuial alteinatives,
incluuing aitists anu enviionmentalists, who have pio-
neeieu gieen lifestyles anu socially innovative piojects
(Laige, 2u1u). Stiouu was also the site of one of the 0K's
most successful LETS schemes (Noith, 2uu8). Stiouu began
its tiansition to a sustainable society long befoie that woiu
became bianueu anu wiuely applieu anu was, unsuipiis-
ingly, one of the fiist 0K towns to iegistei with the nascent
Tiansition Netwoik in Septembei 2uu6. The name ''Tiansi-
tion Stiouu'' was chosen iathei than ' 'Tiansition Town
Stiouu'' to maik the fact that the tiansition piocess seeks
to involve all the inhabitants of the Stiouu Bistiict, not just
the town itself. This aiea is often iefeiieu to as the ''Five
valleys'' in iecognition of the iivei valleys that maik it off
fiom the euge of the Cotswolu escaipment.
0ne of the authois was involveu in this initial cieation of a
new piocess to caiiy foiwaiu sustainability-ielateu iueas
within the town anu launcheu the Lifestyles anu Liveli-
hoous woiking gioup as one of the fiist issue-focuseu pio-
jects of Tiansition Stiouu in the wintei of that same yeai.
Aftei initial uiscussion aiounu a iange of iueas, the sugges-
tion to launch a local cuiiency was the most attiactive anu
the scheme that has been iunning in the Bavaiian iegion of
Chiemgau since 2uuS was chosen as the best mouel. A
membei of the woiking gioup inviteu Chiistian uelleii, the
founuei of the Chiemgau to spenu a weekenu in Stiouu,
iunning a woikshop anu auuiessing a laigei public meet-
ing, which was attenueu by aiounu 6u people (uelleii,
2uu9). Theie was initial inteiest fiom both tiaueis anu
consumeis, anu the coie gioup foi the cuiiency engageu in
a seiies of consciousness-iaising events in the town while
simultaneously commissioning uesigns foi the notes.
The Stiouu Pounu follows the essential uesign featuies of
the Chiemgauei (uelleii, 2uu9). The cuiiency is auminis-
teieu by a co-opeiative, the Stiouu Pounu Co-opeiative,
which money is issueus by the co-opeiativeit on a one-foi-
one exchange basis foi pounus steiling. Businesses, con-
sumeis anu chaiities aie encouiageu to join the scheme,
although it is possible to pick the notes up in change anu
use them foi puichasing. When consumeis buy Stiouu
Pounus a peicentage of the value is uonateu to a local chai-
ity of theii choice. This is balanceu by a S% ''ieuemption''
chaige when businesses exchange the money back foi stei-
ling, a uesign featuie intenueu to encouiage the value of the
local multipliei (the numbei of times the note is spent be-
foie being exchangeu back). The involvement of local chaii-
ties is intenueu to encouiage them to biing theii membeis
into the scheme as a means of iaising funus; it is hopeu that
this will extenu the ieach of the scheme beyonu those who
aie committeu to it because of theii involvement in Tiansi-
tion activities.
In auuition, the Stiouu Pounu uses a system of uemuiiage
to encouiage its moie iapiu ciiculation ielative to the na-
tional cuiiency: each six months the cuiiency is consiueieu
to have uepieciateu by S% of its face value. In oiuei to
keep the money valiu those holuing it must affix a stamp to
the value of S% of the face value at six-monthly inteivals..
This is intenueu to inciease the velocity of ciiculation of the
local cuiiency ielative to the national cuiiency, following
the theoiies of Silvio uesell outlineu in the pievious sec-
tion. At piesent this is a chaige of S% of the face value to be
auueu to the note at six-month inteivals. The intention of
this featuie is to encouiage scheme membeis to spenu
theii Stiouu pounus moie iapiuly than theii steiling cash,
since they know it has a limiteu shelf-life. It also acts as a
way of challenging the cential motivations of the existing
economic system: piice anu choice. By using Stiouu Pounus
consumeis aie accepting that money has a value that they
aie piepaieu to pay foi, in contiast to the 'fiee' cieuit of the
national cieuit system. They aie also accepting that they
will limit theii choices to the iange of shops who accept the
local cuiiency, anu pay the piices chaigeu theie, which
International Journal Of Community Currency Research 2012 Volume 16 (D) 106-115 Scott Cato And Suárez
may be highei than piices chaigeu in the chainstoie out-
Like the othei Tiansition cuiiencies, the physical uesign of
the Stiouu Pounu notes is uelibeiately intenueu to builu
gieatei iuentification with the local aiea anu its economic
anu cultuial iesouices. The basic uesign motif is the teasle,
a plant that playeu a ciucial iole in the making of felteu
woollen cloth that was the backbone of the inuustiial econ-
omy of Stiouu. The local authoi Lauiie Lee, himself a social-
ist, is the iconic image foi the £1u note (his wiuow spoke at
the launch, wheie she unveileu this uesign). The £S note
incluues local wilulife, while the £2 commemoiates the
cloth inuustiy anu the invention of the lawnmowei in
Biimscombe neai Stiouu. The £1 featuies the teasle to-
gethei with the bee, symbol of a co-opeiative community.
uiven its imitation of the uesign of the Chiemgauei anu
othei ueiman cuiiencies following a similai mouel, Stiouu
Pounu can be consiueieu an expeiiment with the Regiogelu
mouel in the 0K context (Noith, 2u1u), anu an oppoitunity
to assess the impoitance of the cultuial setting in uetei-
mining the success oi otheiwise of this cuiiency uesign.
The Stiouu Pounu is unique amongst the new wave of local
cuiiencies in the 0K in being entiiely uemociatic. Stiouu
Pounu Co-opeiative is the holuing bouy, anu all who wish
to use the cuiiency aie inviteu to join, in oiuei to have a
say in the uesign anu implementation of the scheme. It is
also unique in using the system of uemuiiage to encouiage
ciiculation. This means that theie is a chaige foi being pait
of the scheme, iathei than useis being iewaiueu as in othei
schemes (see the uesi gn of the 0S Beikshaie:
http:¡¡www.beikshaies.oig¡). While this means that en-
suiing sufficient take-up is moie uifficult, it guaiantees that
if the scheme woiks it will achieve its objectives of builuing
a stiongei local economy, iathei than meiely shifting the
existing activity into a uiffeient cuiiency but without
achieving stiuctuial change.
The Stiouu Pounu was launcheu in Septembei 2uu9, anu
hau been opeiating foi a yeai when this papei was wiitten
(see also Noith, 2u1u). In the fiist yeai a total of £1u,u66
weie exchangeu foi Stiouu Pounus. By the enu of the yeai
slightly ovei half of those (£S94u) hau been ieueemeu,
which meant that £29u hau been allocateu to the ten local
goou causes which people hau chosen. A yeai aftei the
launch of the scheme SP4,126 weie in ciiculation, in the
sense that they hau been exchangeu anu not ieueemeu.
0ntil the cuiiency comes to the enu of its life in Septembei
2u11 we will not be in a position to say how many of these
notes have been withuiawn fiom ciiculation intentionally
(by collectois) oi acciuentally (by having been left in pock-
ets, foi example). Bowevei, we aie awaie that a numbei of
notes have been solu on the inteinet, sent to fiienus in
Stiouu, 0klahoma oi Stiouu, New South Wales, anu bought
foi the puiposes of collection iathei than exchange. At the
enu of the fiist yeai Tthe scheme hau aiounu 18u con-
sumei membeis anu 44 outlets oi seivice pioviueis wheie
the local cuiiency coulu be spent.
Establishing a local cuiiency iequiies its uesigneis to be
closely involveu with the economic life of theii cuiiency
aiea. In pait this is because they neeu to peisuaue local
tiaueis anu consumeis to paiticipate, anu to uo so iequiies
an unueistanuing of theii motivations anu incentives. But
beyonu this, a cuiiency is uesigneu to effect change in a
local economic system, anu theiefoie to cieate one effec-
tively iequiies an unueistanuing of the uynamics of the
local economy. It is foi this ieason that we suggest that a
cuiiency can pioviue a useful tool to map anu measuie a
local economy: oui conclusions about how Stiouu woiks as
a small semi-iuial economy aie offeieu in the following
Figure 1. Stroud business, by geographical nature of own-
Foi the iemainuei of this section we complete oui biief
piofile of the local account by iepoiting the iesults of a
local suivey that was unueitaken to suppoit the uevelop-
ment of the Stiouu Pounu
. The suivey was a baseline ex-
eicise to establish the uses foi all the commeicial piemises
in the town. The intention of the suivey was to assess
which businesses weie woith appioaching about the local
cuiiency. Because of time limitations the suivey was cai-
iieu out specifically in the town itself iathei than in the
whole of the Five valleys aiea which is coveieu by the
Stiouu Pounu. The suivey was conuucteu via a papei-baseu
questionnaiie which was ueliveieu by hanu to all the com-
meicial piemises in the town, excluuing those which only
pioviue seivices anu uo not sell any piouucts, a list having
been uiawn up fiom local authoiity iecoius anu lists useu
foi the chaiging of local taxes. The aim was to covei most of
the commeicial businesses which weie subject to stuuy in
the town anu seveial ietuins visits weie maue to ensuie
completeness. The final ietuins show that S6 out of 91
businesses iesponueu to the suivey, a ietuin iate of 4u%.
International Journal Of Community Currency Research 2012 Volume 16 (D) 106-115 Scott Cato And Suárez
1 In this papei we have avoiueu the conventional stiuctuie of incluuing a uetaileu methous section since this woulu suggest a spuiious objec-
tivity anu woulu ueny the ieality of oui close involvement with the activity being uesciibeu. We have auopteu a bioauly phenomenology
appioach to oui ieseaich: foi moie uetail of the ieasons foi oui commitment to this type of ieseaich appioach see Cato anu Billiei, 2u1u.
We uiu not iuentify any ielationship between people's
willingness to complete the suivey anu theii likelihoou of
signing up as useis of the Stiouu Pounu. We iemaineu open
to the possibility that national chains might accept the local
cuiiency, but none of them appioacheu us to ask if they
might uo so. This may have been because the publicity sui-
iounuing the scheme maue it cleai that its intention was to
suppoit local businesses anu theii local supplieis.
Theie aie 2S1 commeicial businesses in the town anu al-
most two thiius of them aie locally owneu oi iegional
chains (with bianus within the West Countiy: Figuie 1).
Figuie 2 offeis a compaiison by sectoi anu in teims of geo-
giaphical owneiship type, compaiing local anu iegional
businesses with national anu inteinational chains. It inui-
cates that those which pioviue goous oi seivices ielateu to
health anu beauty, home anu gifts, anu cafes, iestauiants
anu pubs aie mainly locally owneu oi local outlets of ie-
gional chains, wheieas those which pioviue goous anu
seivices ielateu to spoits anu leisuie aie mainly national oi
inteinational chains. In the case of businesses selling foou
anu uiink oi clothes, half aie local oi iegional businesses
anu the othei half aie national oi inteinational chains.
Since the concein of Tiansition Stiouu is with social anu
ecological impact as well as ieuucing tiaue-ielateu emis-
sions, we incluueu questions conceining enviionmentally
fiienuly anu faii-tiaue goous in the suivey.: Sspecifically,
what peicentage of the shop's goous weie oiganic, locally
piouuceu oi faiily tiaueu. As we can see fiom Figuie S, the
laigest numbei of businesses uiu not sell any piouucts that
fell into any of these categoiies. Bowevei, almost half sell
some locally souiceu goous. The level is highest in the case
of the seconu-hanu shops, all of whose goous can be con-
siueieu locally souiceu.
International Journal Of Community Currency Research 2012 Volume 16 (D) 106-115 Scott Cato And Suárez
Figure 2. Stroud businesses by ownership type and sector
Figure 3.Proportion of goods that were locally sourced, organic or fair trade, by business
A key aspect of the uesign of the Stiouu Pounu is the ie-
uemption fee chaigeu when tiaueis exchange them back
foi steiling. The puipose of this chaige is to encouiage
intei-business tiaue amongst those who accept the local
cuiiency. We weie inteiesteu to uiscovei how effective this
was likely to be anu also hopeu to encouiage businesses to
entei the scheme on a 'consoitium basis'. To infoim oui
campaigning we askeu the businesses to tell us thiee local
tiaueis whom they tiaueu with iegulaily. By auuing these
iesults togethei we weie able to asceitain that the majoiity
of local businesses (S6 pei cent) uo tiaue with othei local
businesses, although this may well iepiesent only a limiteu
amount of theii souicing.
As we can see, although most of the businesses in the town
aie locally owneu they usually sell piouucts fiom othei
iegions of the countiy anu, piobably, a gieat numbei of
them fiom oveiseas. This is a geneial tenuency in most of
the uevelopeu countiies, which have lost theii inuustiial
anu faiming tiauition anu impoit a gieat piopoition of the
goous they consume because it is cheapei than piouucing it
themselves. Foou can be an exception in the case of Stiouu,
as theie is an incieasing iate of piouuction in the sui-
iounuing aiea as the populaiity of local foou incieases (a
goou example of this is the multi-awaiu winning Faimeis'
Naiket). Neveitheless, it is still moie expensive than foi-
eign piouucts anu many customeis aie still shopping on
the basis of piice. Even the owneis of the local businesses,
who shoulu be moie awaie of the impoitance of buying
locally, aie happy to say that they shop in national anu in-
teinational chains.
The uifficulty in finuing local piouucts as well as the pief-
eience of local people to buy cheap iathei than local aie
obstacles to the implementation of the Stiouu Pounu anu
may be ieasons why some local businesses uo not want to
join the scheme. 0n the one hanu, if they accept Stiouu
Pounus they cannot spenu them to buy goous foi theii
businesses anu, on the othei hanu, they cannot eithei
spenu them to buy goous foi theii own consumption be-
cause they usually buy in national oi inteinational chains,
so they woulu have to ieueem them anu lose S pei cent of
the amount exchangeu back. In the case of those tiaueis
who have alieauy joineu many face the same pioblem, anu,
although we uo not have the means of assessing the ciicu-
lation of the cuiiency, anecuotal eviuence suggests that the
numbei of times that the notes aie spent befoie being ie-
ueemeu is lowei than woulu be uesiieu if the cuiiency
weie to fulfill its cential aim of stimulating local economic
!" $ %&''()%* $+ $) $)$,*-.%$, -//,
Foi some local cuiiency activists, the piime motivation
behinu a local money scheme is to counteiact the seem-
ingly ineluctable maich of the supeimaiket anu the out-of-
town stoie. The so-calleu ''clone town'', with its high
stieets uominateu by chainstoies is cultuially ievileu,
while at the same time the vast majoiity of people con-
tinue to shop theie. Stiouu Pounu offeieu people in one
small town anu seveial suiiounuing villages the oppoitu-
nity to uo something uiffeient. As exploieu in the pievious
section, this was a pioject moie ambitious than it appeaieu
at fiist, since to use a money system that hau communitai-
ian iathei than inuiviuualist motivations in its BNA ie-
quiieu moie than just a change of shopping habits: it ie-
quiieu a wholesale change in economic cultuie. In this sec-
tion we take a moie analytical view of the uata uiawn fiom
oui suivey, anu infoimation uiawn fiom oui conveisations
with local tiaueis anu consumeis, both those who uiu pai-
ticipate in the scheme anu those who uiu not. We use this
uata to iuentify a numbei of cultuial challenges to the effec-
tive functioning of the Stiouu Pounu.
012345672894514: 0;46<
Peihaps the most significant obstacle to encouiaging local
people to use the scheme was the absence of any unuei-
stanuing of how money woiks. The level of naivety sui-
iounuing money÷its oiigin, costs anu consequence÷--was
stiiking anu we hau to concluue that the money system is
unueistoou only uimly if at all by the vast majoiity of local
people. We uo not think that Stiouu is atypical in this. An
example is the tiaueis'' objection to paying a S% ieuemp-
tion chaige when many aie ioutinely paying between 1.S%
anu 4% in cieuit-caiu chaiges. These chaiges, like the na-
tional money system itself, aie iegaiueu as natuial anu
have become almost invisible anu impeivious to challenge.
Even shopkeepeis, who might be expecteu to think about
the opeiation of the money system moie than those woik-
ing in the public sectoi oi outsiue the maiket system, uo
not seem to consiuei how theii uecisions about using cash
vs. electionic money, oi using a cieuit-caiu system opei-
ateu by a multinational banking gioup, affects theii ability
to tiaue effectively in theii town. In such an enviionment,
cieating an alteinative money system can seem supeiflu-
ous if not entiiely misguiueu.
Anothei aiea of ignoiance suiiounus the natuie of the local
multipliei. In the context of a local cuiiency this has a pai-
ticulaily significance. It is usually uefineu as being the
numbei of times a cuiiency changes hanus befoie it leaves
the local economy: an aveiage value foi local ciiculation
(Sacks, 2uu2). In the case of a local cuiiency, this is a moie
exact concept, meaning the numbei of times the local cui-
iency is spent befoie being exchangeu back foi national
cuiiency. Bowevei, the potential that a local cuiiency has
to enfoice local consumption was not well unueistoou.
Consumeis who weie stiongly suppoitive of the aims of
Stiouu Pounu fiequently stateu that they have no neeu of it,
since they can anu uo spenu steiling in the local shops.
Theii ability to inciease the local multipliei by enfoicing
that eveiy subsequent peison who acquiies the money
they spenu also spenus it in the Five valleys uoes not entei
into theii view of the potential impact of theii spenuing
Linkeu to this is the geneial acceptance that electionic
iathei than papei money is a haimless convenience. In fact,
the shift fiom the one-thiiu of money issue by banks that
was the situation in the 0K in 196S to the meie S% touay
(Poiiitt, 2uu6: 19u-1) has meant a paiallel shift in powei
International Journal Of Community Currency Research 2012 Volume 16 (D) 106-115 Scott Cato And Suárez
fiom the state to the piivate banks. Since whoevei issues
the cuiiency also contiols it, the cieation of money only in
electionic foim has iemoveu an impoitant powei anu fi-
nancial iesouice fiom the 0K goveinment (Nelloi, 2u1u).
Nany tiaueis anu local people see papei money as olu-
fashioneu anu aie not piepaieu to make the effoit to access
cash (of any soit) when almost all tiaueis will accept pay-
ment by uebit oi cieuit caiu. They aie unawaie that theie
aie any mateiial consequences fiom this uecision.
Even in the wake of the 2uu8 Ciash, when the money sys-
tem so spectaculaily faileu, theie is an innate anu unques-
tioning acceptance that steiling money is anu will iemain
the uominant foice in the economy. veiy few question
whethei it is a foice foi goou oi ill. The acceptance of the
existing system of money meant that some tiaueis ieacteu
with hostility to the auvent of the Stiouu Pounu. Nany,
peihaps uelibeiately ''misunueistoou'' the woikings of the
scheme anu in some cases suggesteu that the oiganiseis
weie seeking peisonal benefit foi themselves. In anothei
case, a gioup of local tiaueis who hau iefuseu to join the
scheme launcheu ''Stiouu cheques'': a vouchei scheme
uesigneu to iesemble a cheque-book. uiven that theie was
no ieal ielationship between the voucheis anu a chequing
system, anu no involvement of a ciiculating cuiiency, we
concluueu that the use of the theme of a ''cheque'' was a
uiiect challenge to the Stiouu Pounu, but inteiestingly one
that was locateu within the existing cultuie, since the in-
centive to use it was a uiscount of between 1u% anu 2u%.
In othei woius, the tiaueis weie happiei to offei laigei
uiscounts than woulu have been iequiieu hau they ac-
cepteu Stiouu Pounus in oiuei to stay within the existing
incentive stiuctuie.
The Stiouu Pounu is uelibeiately uesigneu to challenge the
uominant uiiveis of a mouein capitalist economy: piice
anu choice. When consumeis buy theii SPs they aie choos-
ing to limit theii choice of goous to those solu in the shops
that accept the cuiiency. They aie also accepting that this
may mean that they sometimes pay highei piices: theii
ability to ''shop aiounu'' to finu the lowest piice is cui-
taileu. Stiouu Pounu is uelibeiately uesigneu to woik in
this way, since tiauing focuseu on piice anu choice÷anu
backeu up by the economies of scale anu the uomination of
maiket powei by coipoiate inteiests÷has been iuentifieu
by its oiganiseis as the cential cause of the vulneiability
anu insecuiity of theii local economy. So the uesign of the
scheme is coiiect to meet its objectives, but in oiuei to use
it people must alieauy unueigo a funuamental shift in theii
unueistanuing of how an economy shoulu woik in theii
best inteiests. While we have founu that in many cases
local people aie not ieauy foi this, we feel that challenging
them in this way cieates excellent oppoitunities foi euuca-
tion in a bioau sense.
!"#$%&' )* +)$#,"&#-.
Figuie 4 illustiates how the Stiouu Pounu woiks is in-
tenueu to woik at the community scale. Consumeis ex-
change theii steiling to obtain it, oi can pick it up in shops
oi in wages. The iueal is foi the ciiculation ciicuit on the
iight-hanu siue of this uiagiam to be as iapiu anu incluue
as many ciiculations as possible: this iepiesents the local
multipliei effect that . This is what theoiizeu as biingsing
stiength to the local economy. This ciicuit incluues local
woiking people, piouucei businesses anu puie ietail busi-
nesses, as well as the consumeis themselves. A small pio-
poition of the value of the money issue goes to local chaii-
ties, anu this is taken fiom the tiaueis as a foim of local tax
when they ieueem theii money. The giaphic illustiates
how this foim of money builus is intenueu to builu the
community anu keeps value within a local ciicuit. A similai
uiagiam foi a national money system woulu have leakages
to coipoiate piofits anu to global banks via chaiges foi the
use of electionic money anu othei banking seivices that aie
not locally baseu.
Figure 4. Graphical illustration of the design of the Stroud
Souice: uiaphic uiawn by Imogen Shaw
As is cleai fiom Figuie 4, it is built into theillustiates how
the uesign of the Stiouu Pounu that itit is intenueu to bal-
ances the neeus of the uiffeient playeis in the local econ-
omy. A maiket system tenus to focus on oui inuiviuual
ioles as businesspeison, consumei oi community membei
(Cato, 2uu6a), even when we all tenu to play all of these
ioles at uiffeient times in oui lives. The Chiemgauei cui-
iency uesign ieplaces is intenueu to ieplace this competi-
tive, inuiviuualist ethic with a communitaiian one, wheie
shopkeepeis accept that they will uonate a ceitain amount
of theii tuinovei to local goou causes anu consumeis ac-
cept that they will limit theii choice anu possibly pay
highei piices. When peisuauing local people to join the
scheme we aie weie often confionteu by the question:
'What's in it foi me.'. 0iganiseis of the scheme fiequently
finu founu themselves iesponuing to this question by sug-
gesting that people might come to unueistanu the scheme
bettei if they ask: 'What's in it foi us.' Bowevei, the low
International Journal Of Community Currency Research 2012 Volume 16 (D) 106-115 Scott Cato And Suárez

level of take-up on the scheme suggests how uemanuing it
is to use a cuiiency to change a cultuie in this way, anu has
left us questioning whethei theie may be moie efficient
ways of builuing a communitaiian cultuie.
0f couise, one has to be piagmatic as well as iuealistic anu
the concein alieauy existing amongst tiaueis about the
flight of shoppeis to supeimaikets anu the inteinet gave us
a useful platfoim to begin talking about the possible bene-
fits of Stiouu Pounu foi theii business. A gioup of tiaueis
hau alieauy uiscusseu the possibility of a local vouchei
scheme oi iewaiu caiu, but hau not ieacheu the planning
stage. Some of them iuentifieu Stiouu Pounu as a viable
alteinative anu so agieeu to become membeis. 0theis,
howevei, weie challengeu by the change of minuset the
scheme iequiieu anu ueciueu to holu back, to iefuse to join,
anu even÷in some cases÷to woik against the scheme.
0veiall, it seems cleai that seveial centuiies of capitalist
economics anu a cultuie of inuiviuualist consumption that
has become stiongei ovei the past few uecaues (Beck,
1992) has left people with a paiticulai sentiment about
how they shoulu behave, anu peihaps especially what the
iole of a business is. This sentiment beais the hallmaiks of
economistic thinking such as theie being no such thing as a
fiee lunch anu it being natuial to be motivateu to put one-
self fiist (elsewheie I have iefeiieu to these soits of senti-
ments as 'capitalist mantias' (Cato, 2uu6a: 16S). BAs an
example of the pievalence of such thinking, uuiing convei-
sations with tiaueis we weie often tolu they woulu not join
the scheme because ''I am iunning a business heie'', as
though putting the community fiist anu placing the neeus
of otheis as equivalent with one''s own was, in itself, bau
business piactice. Whethei it is possible foi a cuiiency to
change this cultuial appioach on its own, oi whethei a sen-
timent of soliuaiity neeus to pieceue a self-ieliant anu
egalitaiian local community is one question that the Stiouu
Pounu is continuing to test.
We mentioneu that the expeiiment of staiting a Regiogelu
cuiiency in the contiasting cultuie of the 0K iathei than
ueimany offeieu an oppoitunity to exploie the impact of
the cultuial setting on the likelihoou of a cuiiency achiev-
ing success. The ueimany iegional money systems oi Regi-
ogelu, aie the most successful examples of community cui-
iencies in uevelopeu economies, paiticulaily the Chiem-
gauei. In total these iegional cuiiencies have put some
t7Su,uuu equivalent into ciiculation, pioviuing an impoi-
tant stimulus to theii local economies (Theil, 2u11). With-
out an in-uepth stuuy of the uiffeiences between ueiman
anu 0K economies anu systems it is impossible to uiaw
fiim conclusions. Bowevei, we woulu suggest that two
factois that unueipin the success of local cuiiencies in
ueimany but aie absent in Biitain aie the highei uegiee of
economic soliuaiity amongst the potential useis of the
schemes in ueimany, anu the gieatei volume of local pio-
uuction that is available theie ielative to the 0K, with its
oveiwhelming ieliance on global foou supply systems.
!"#$ &' (&#"( )*++(,-)
As was uemonstiateu in Section S above, Stiouu has a
iange of veiy uiffeient businesses facing quite contiasting
supply chains. At one enu we have the butcheis, seveial of
whom aie key suppoiteis of the scheme, anu who can eas-
ily access theii piouuct fiom local supplieis. At the othei
we have the clothes boutiques, none of whom have joineu
the scheme, who iely on global supply chains anu whose
goous iequiie low-paiu woikeis in uistant countiies to
ensuie competitiveness. The music anu book shops see in
the scheme an oppoitunity to gain a competitive auvantage
ovei inteinet supplies who have eaten into theii maiket in
iecent yeais anu so occupy a miuule-giounu between the
two extiemes.
Because of the uiffeient natuie of local businesses anu theii
supply chains we have maue it cleai that they aie fiee to
negotiate the piopoition of any tiaue which can be iecom-
penseu in the local cuiiency. Foi example, a local bikeshop
was veiy conceineu about the possibility of customeis buy-
ing an expensive bike (a figuie of £2,uuu was mentioneu)
anu then having to exchange the majoiity of that, with a
possible ieuemption chaige as high as £6u. Like the clothes
shops, his goous weie maue oveiseas anu he is also com-
peting with inteinet supplieis. We maue it cleai that he
coulu negotiate the piopoition of any tiansaction that was
in SPs, but he was conceineu about the potentially high iisk
anu ueciueu not to join the scheme.
0ne of the most enthusiastic suppoiteis of the scheme is
the local pub which has become a membei. Because they
gain theii supplies fiom a the micio-bieweiy in the town
(which accepts SPs), theii meat supplies fiom the local
butchei, anu vegetables fiom local piouuceis at the faim-
eis' maiket, they aie easily able to pass on theii Stiouu
pounus anu face no iisk of ieuemption chaiges. This uem-
onstiates cleaily the natuie of the Regiogelu uesign in in-
tiouucing a stiong incentive to seek local supplies, but also
iaises a question about whethei a cuiiency is the best fiist
step in achieving this, oi whethei moie uiiect means of
encouiaging local piouuction shoulu be piioiitiseu.
./ 0120!345124
As iuentifieu in the pievious section, the Stiouu Pounu has
achieveu some of its objectives. Some tiaueis have begun
to think about theii supply chains in a uiffeient way, al-
though it has to be saiu that those who aie most suppoitive
hau alieauy consiueieu this when planning theii business.
In auuition, the extiemely limiteu iange of local piouuce
that is available, anu the small peicentages of locally pio-
uuceu goous that weie foi sale in the local shops, iauically
unueicut the uesign of the scheme by making local supply
chains neai impossible foi the laigest volume of economic
activity in the town.
Anothei pioblem facing many Tiansition activities, not just
the local cuiiencies, is that of cieuibility. Why shoulu peo-
ple be convinceu by a small-scale local scheme with its Ei-
satz bianuing anu homespun philosophy when they see the
International Journal Of Community Currency Research 2012 Volume 16 (D) 106-115 Scott Cato And Suárez
!"#$ &'()"' *+",- (. $-+ '/0+# (. 1+#,(2 3-(#+ !+*$/,"' "45
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International Journal Of Community Currency Research 2012 Volume 16 (D) 106-115 Scott Cato And Suárez
International Journal of
Community Currency Research
Volume 16 (2012) Section D 116-123
Petr Jelínek*, Zsuzsanna Eszter Szalay** And Alois Kone!n!***
*Mendel University, Brno, Czech Republic
** Corvinus University Of Budapest, Hungary
*** Masaryk University, Brno, Czech Republic
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Fiom a socio-economic point of view, thiee facts appeai
veiy impoitant: expeiience with a uemociacy oi existence
of a civil society, the inuebteuness of a countiy's citizens,
anu the income inequality between the iichest anu the
pooiest within national boiueis. All countiies stuuieu in
the papei aie post-communist with emeiging civil socie-
ties, possessing shoitei, novel expeiience with capitalism.
Theie is a small gap between iichei anu pooiei people anu
the uebt of householus is ielatively small in the visegiau
Total householu uebt in Bungaiy, Slovakia anu Polanu is
unuei 4S% of uBP, anu in the Czech iepublic as little as
2u% of uBP. In compaiison with the countiies of the Euio-
pean 0nion the level of householu inuebteuness in piopoi-
tion to uBP is veiy low in the visegiau iegion (Bittnei,
2u11). But the situation is changing - the uebt of house-
holus is incieasing.
Kuceia (2u1u) notes the numbei of inuiviuuals in the iegis-
tiy of uebtois in the Czech Republic (CZ) iose by 16 pei-
cent to almost 868,uuu in 2uu9. The S0L0S oiganization
counts the people who now have, oi in the past thiee yeais,
have hau, pioblems with theii iepayment obligations. 0n-
uei S0L0S (2u1u), which keeps tiack of boiioweis in the
CZ, the numbei of unpaiu liabilities incieaseu fiom Becem-
bei S1, 2uu9 to Septembei Su, 2u1u by 12 peicent to 1.7
million (out of 1u million inhabitants). The amount of uebt
foi the peiiou appioacheu Su billion Czech Ciowns (CZK),
anu the numbei of inuiviuuals, to 9S1,62S. Fiom the CZ's
auult population of nine million, alieauy one out of eveiy
ten citizens has an entiy in the iegistiy.
The situation is cuiiently familiai in all visegiau countiies.
In Bungaiy, the pioblem has been much woise, uue to the
pievalence of lenuing fiom foieign cuiiencies. People take
out loans but cannot pay them back. Concomitantly, they
aie ueeply tieu (especially in Bungaiy) to the emeiging
global maiket-economy, fiom which they put foiwaiu all
theii effoits to inciease theii eaining of mainstieam
money. Consequently, they ietain few iesouices to help
each othei.
0n the othei hanu, the visegiau countiies aie a pait of a
iegion wheie the smallest gap exists between iichei anu
pooiei people. Accoiuing to the iatio of the 0NBP (2uu8),
statistics of income oi expenuituie shaies of the iichest
gioup to that of the pooiest (1u% iichest to 1u% pooiest)
uemonstiate that the Czech Republic is the seconu-most
equal countiy (0N R¡P = S.2) aftei }apan (0N R¡P = 4.S).
The othei visegiau countiies also uisplay high income
equality. See, foi example, theii iespective uINI inuexes.
This is piobably an impoitant ieason why Local Exchange
Tiaue Systems aie not wiuespieau in this pait of Euiope.
In Bungaiy, the anteceuents that unueilie the same symp-
tom of income equality aie slightly uiffeient. Theie aie
faiily laige geogiaphical uiffeiences. This means, although
the pooiest citizens live closely togethei in the subuiban,
noitheast anu southwest iegions, they uo not possess
moveable, changeable iesouice ieseives. Theii equality is
the equality of poveity. Bungaiy is still paying off the social
cost of its tiansition into uemociacy. It is a telling sign that,
in Bungaiian political anu economic language, the expies-
sion foi tiansition uoes not exist; insteau, talk ievolves
aiounu system anu iegime change. (u.Fouoi -Kein, 2uu9)
)%*+, *"& ./#0%&,
The goal of this papei is to piesent cuiient infoimation
about the local economic exchange systems (LETS) of Cen-
tial Euiope. It summaiizes all available infoimation con-
ceining LETS in Cential Euiope, i.e., the Czech Republic,
Slovakia, Polanu, anu Bungaiy. This iegion is a pait of the
foimei Soviet bloc, anu the countiies became E0 membeis
at the same time (in 2uu4), so the gioup is a subset of the
E0 New Nembei States (NNSs). The piesenteu woik fo-
cuses on LETS aftei the tiansition of 1989. In auuition, a
possible ieason foi the failuie of LETS uevelopment in
these countiies is consiueieu.
Its authois collecteu infoimation fiom liteiaiy souices but
also fiom the Inteinet anu by inteiviewing the active pio-
moteis of LETS in each countiy.
0!,#%$1 %2 '"%22!(!*+ /(%"%.1 !" (/"#$*+
/'$%3/*" 3%,#4(%..'"!,# (%'"#$!/,
Alteinative economics is not a iecent invention. Bistoii-
cally, a multituue of local cuiiencies was the iule iathei
than an exception. But uiveisity was causeu by laige num-
beis of local goveinments that wanteu to have theii own
cuiiencies uue to the possibilities of cuiiency piomulga-
tion, expansion.
0thei histoiical ieasons foi obtaining inuiviuual cuiiencies
aiose uuiing ciisis situations, e.g., uuiing the Fiist Woilu
Wai (Reichel, 2uu7). Zwawa (2uu8) cites an example fiom
Polanu, wheie the piiest of Kochlowice in Silesia issueu a
local cuiiency. 0thei local cuiiencies weie issueu in the
chuich uioceses of ulogow, with coiiesponuing images of
local chuiches of Tychy, Tainowski uoiy, anu Nikolow.
Fuithei examples fiom Polanu aie known fiom between
1918 anu 19S8 (Zwawa, 2uu8). Cases of an unofficial econ-
omy in Czechoslovakia can be obtaineu in }ohanisova
(2uu8), who unueitook a histoiical excuision into the
lessei-known aspects of pie-wai Czechoslovakian coopeia-
tives. As Zagata (2uu4) has shown, fiom LETS uevelop-
ments in neighbouiing countiies (Austiia, Polanu, uei-
many), one cannot iule out the possibility the cuiiency
systems baseu on mutual aiu emeigeu in the foimei
Czechoslovakia between the wais.
Economies of ieal socialism (194S in Polanu; 1947 in Bun-
gaiy; anu 1948 in Czechoslovakia) weie baseu on othei
conuitions than weie those of capitalist countiies, so ue-
velopment was quite uiffeient in Euiope. 0nequal conui-
tions anu impulses weie piecipitateu, wheieas within
Westein countiies theie was a sizable expansion of local
cuiiencies as well as the LETS themselves. In Soviet-bloc
International Journal Of Community Currency Research 2012 Volume 16 (D) 116-123 Jelínek Et Al
countiies, such alteinatives hau not emeigeu. This changeu
aftei 1989, when conuitions in the ex-socialist nations
came closei to conuitions in othei paits of Euiope anu the
Zagata (2uu4) askeu whethei the foimalizeu systems of
local cuiiencies woulu also woik in a society with commu-
nist expeiience, foi the fiist expeiiments occuiieu meiely
with complementaiy cuiiencies in the eia of the uieat Be-
piession of Euiope anu Noith Ameiica. As mentioneu, the
visegiau countiies foim a iegion wheie the smallest gap
exists between iich anu pooi citizeniy, even now aftei 2u
yeais of changes since 1989.
!"#$ &' #(" )*")( +",-.!&)
Czech LETS, being smallei in scale, hau not built up an in-
clusive alteinative as to how to satisfy eveiyuay neeus in
an enviionmentally fiienuly fashion. A laige amount of
tiaueu goous anu seivices weie ielateu to the eco-fiienuly
lifestyle. Thiee uistinctive LETS ciicles opeiateu in the
Czech Republic uuiing the late 9u's anu until the beginning
of the millennium in cities of Bino, Ceské Buuèjovice anu
Piague (Foltýnová 2uu4, Zagata 2uu4, Zagata 2uu8). These
will be fuithei uesciibeu. Smallei LETS existeu also in the
small village of }inuiichovice pou Smikem in the noith of
the countiy (Zagata, 2uu8). All iespective initiatives hau
ielateu activities whose inteiests weie enviionmental in
natuie anu scope. The iuea of the "Complementaiy Cui-
iency" was moie oi less auuitional to theii main objective
(Zagata, 2uu4). Time banks existeu foi a few yeais in small
South Bohemian villages Boiovany anu Leuenice (Zagata
The LETS of Agency uAIA in Piague was founueu in 1999
as a pait of the uAIA Enviionmental Agency. In 0ctobei
2uu1 it hau moie than 1uu membeis, out of which 2u to Su
weie active. LETS issueu its own cuiiency, calleu
,chechtáky"("smiling money") Theie was a iestiiction of
account balances, so theie iemaineu a limiteu amount of
6uu ,chechtaky" foi oluei membeis anu 4uu ,chechtaky"
foi newei membeis, until membeis paiu theii contiibu-
tions to the community. In the cases exceeuing the allow-
able limit of the negative, membeis hau to make it cleai
why the thiesholu was ciosseu; as well, how anu at what
time, accounts woulu be balanceu (Foltýnová, 2uu4). The
system finisheu activities seveial yeais ago.
Anothei LETS ciicle opeiateu in the Czech city of Ceské
Buuèjovice. It was cieateu in Febiuaiy 2uuu anu in 2uu4
hau moie than Su membeis. Its cuiiency, the "acoin", was
equivalently bounu to the Czech koiuna - i.e., one "acoin"
was equal to one koiuna. The system hau a piogiam foi
iecoiuing tiansactions. A thiee-yeai tiaue tuinovei pio-
uuceu a system of about 1Su,uuu "acoins" (Foltýnová,
2uu4). All activity has cuiiently ceaseu.
The last (now uefunct) Czech ciicle, LETS in Bino, was ue-
velopeu by Nu0 Rozmaiýnek. This was the only locale
wheie peisonal collective meetings took place. As Zagata
(2uuS) has stateu: "This LETS was also the most closeu of
all, because only the kith of cuiient membeis coulu join the
gioup". It was founueu in 1999 anu, at its maximum, hau
about 4u membeis. In 2uu6, all activity halteu. The cui-
iency issueu, the "letnicky" ("little yeai money" oi "little
LETS"), was equal to one minute of woik, so one "letnicka"
was equivalent to one CZK. Balances employeu no legal
As Zagata (2uuS) stateu: "All the gioups possesseu foimal
iules uealing with iights anu uuties of constituent mem-
beis. At the same time, theie weie no obseiveu cases of
actions that woulu violate any iules of a paiticulai commu-
nity. None of the gioups foimally incluueu in its iules a
noim iegulating the maximum level of membei uebt. All
the communities kept a 1:1 paiity with the official cui-
In 2uu7 theie weie alieauy no LETS in the Czech Republic.
Fiom oui own expeiience in Bino anu uiscussions with the
oiganizeis of LETS in Piague anu Ceské Buuèjovice
(}elinek, 2u1u) it is possible to consiuei that the main iea-
sons foi suspension of LETS in the Czech iepublic weie:
1. kinu of exhaustion oi fatigue of the LETS oiganizeis,
2. little ieal economic neeu foi baiteiing of the LETS
S. othei piioiities of the LETS oiganiseis, who weie
closely connecteu with enviionmental oiganizations.
Also accoiuing to Zagata (2uuS), the low acitivity of Czech
LETS can be seen as a consequence of the pievailing way of
life of community membeis. Czech LETS peihaps at-
tempteu to iepiesent examples of "gieen luxuiy" (coineu
by Libiová, 2uuS). An impoitant motive foi paiticipation in
Czech LETS is not economic but social, uespite the fact that
it is veiy haiu to poitiay such alteinatives in guiuebooks
that uesciibe the benefits of LETS (Zagata, 2uuS).
By 2u1u a new exchange system hau begun with 2u people
in the small Noiavian town of Litomysl. Yet even theie,
lively tiauing between paities uoes not exist.
!"#$ &' #(" $!/012 +",-.!&)
Accoiuing to Zelnik (}elinek, 2u1u), theie weie 1u-1S LETS
anu time banks in the Slovak Republic between 2uuu-
2uuS, but most aie no longei active now. Similaily to the
Czech Republic, most of these iepiesentatives weie linkeu
with the activities of enviionmental gioups. As in the case
of the CZ, the "Complementaiy Cuiiency" systems appeai
maiginal (Zagata, 2uu4).
The most populai of LETS systems weie in the capital of
Biatislava anu weie calleu "Svojpomoc" (oi self-help);
these consisteu of about Su people of uiffeient ages anu
inteiests. Anothei closeu LETS ciicle appeaieu in the com-
munity of Zajezová, neai Zvolen. Its local monetaiy system
was an example of LETS, which was a pait of the commu-
nity's alteinative life. The community continues to oiganize
tiips foi chiluien anu auults, offeiing a ceitain kinu of envi-
International Journal Of Community Currency Research 2012 Volume 16 (D) 116-123 Jelínek Et Al
ionmental euucation. The local system commonly offeieu
seivices such as plowing, cutting, piepaiation of woou foi
wintei, constiuction woik anu babysitting, as well as builu-
ing biick stoves, the piouuction of aitistic fuinituie, toys,
anu knitteu items (bags anu uolls). It also yielueu oiganic
piouucts, especially heibs anu uiieu fiuits anu vegetables.
The system enueu seveial yeais ago, as uiu all LETS in Bia-
The latest LETS initiatives in Slovakia staiteu in 2u1u in the
capital Biatislava anu aie connecteu to a Web page,
www.lets.sk, wheie 22 paiticipants have been iegisteieu
(LETS poital, 2u1u). But theie have been almost no ex-
changes among paiticipants. New activities of the Time
Bank emeigeu in Biatislava in 2u1u, but the exchange is
still in its eailiest beginnings. The only longei iun of LETS
in Slovakia is at the family faim anu mill of Nasekov, wheie
a laige family anu theii vaiious fiienus have exchangeu
goous anu woik since the beginning of the millennium
(}elinek, 2u1u).
!"#$ &' ()!*'+
The situation in Polanu has been uesciibeu by Zwawa in
Ekonomia Spoleczna Teksty (2uu8). LETS staiteu theie in
the 9u's with aiticles by Reichel about LETS - in the maga-
zine, "Zelené biigáuy" (uieen Biigaues), anu latei in his
book about local cuiiencies (Reichel, 1997). Aftei 2uuu,
new anu moie successful attempts at staiting LETS began
in Kiakow, Poznan, Walbizych anu Louz. 0thei LETS cii-
cles weie foimeu in Waisaw, Wioclaw, uuansk, Bialystok.
All fell into uisuse, as uiu the most auvanceu of the gioup,
those in Kiakow anu Poznan.
Chmiel (2uu8) piepaieu a special map of the Time Banks in
Polanu in 2uu8, wheie 24 Time Banks aie listeu. Few, if
any, aie still in opeiation, as the piesent authois tiieu Web
links, anu the Web pages usually uiu not woik oi showeu
uiffeient infoimation foi the city oi iegion. Seivices ex-
changeu in the Polish banks weie uiveise: fiom baking
cakes, teaching languages (incluuing Biaille), anu playing
instiuments (e.g., claiinet), thiough cieuit counselling anu
assistance in the wiiting of uocuments, cai iepaii, chilu-
caie, all the way to facial massage anu games of Canasta.
valuable seivices weie also offeieu ielateu to computei
Anothei new geneiation of LETS was inauguiateu in Po-
lanu, with the uomain, http:¡¡lets.pl¡. Its iuea has been to
cooiuinate all the LETS activities in Polanu. The only cui-
ient LETS gioup in Polanu is the one in the iegion of Silesia
anu Zaglçbie (moie at www.bz.lets.net.)
In Septembei 2uu9, the Boaiu of Revenue issueu an intei-
pietation at Katowice stating that fiee help is consiueieu
income anu must have taxes paiu aiounu it (Wojtasik,
2uu9). As a iesult of the Time Banks' management anu
queiies to the boaiu as to whethei seivices pioviueu in
connection with activities shoulu be taxeu, the chambei
spokesman explaineu they shoulu not. In the case of othei
seivices, neithei paity ieceives any income; so no tax obli-
gation aiises, unless theie is a laige uisciepancy in the
value of such seivices.
!"#$ &' ,-'.*/0
$12345 467 89:1;:83245 4<=:28< 1> 89: 51245 ?@8@45A437
When Petei Noith unueitook his latest ieseaich in Bun-
gaiy in 2uuS anu publisheu his woik (Noith, 2uu7), he only
mentioneu six LETS ciicles; out of these only two hau ex-
isteu in 2uuS: the Talentum anu K0R. By 2uu4, new signs
anu initiatives hau emeigeu. 0ne was the incieaseu num-
bei of active LETS ciicles in the countiy. As of touay, 1S
uiffeient ciicles have theii own inuiviuual Web sites (listeu
in Appenuix S). Besiues, theie aie otheis without a Web
Noith postulateu the following baiiieis to the cieation of
LETS ciicles: (1) lack of cieuibility; (2) inability to unuei-
stanu the use of mutual-aiu netwoiks; (S) the neeus of
membeis not being fully met by a ciicle's seivices anu ini-
tiatives; (4) uistiust towaiu all new gioups; anu last but
not least, (S) uifficulty in oveicoming the pioblems of eve-
iyuay life. The situation in Bungaiy till the late eighti-
es seemeu to be bettei uue the 2nu anu Siu shifts, the
backyaiu agiicultuie ("háztáji") anu the so-calleu economic
woik teams ("uNK"), this "happiest baiiack" peiiou was
calleu "uoulash Communism". It has to be stateu though,
that this was ieacheu at the cost of family anu social life:
theii netwoik fell apait.
No wonuei that Noith's above-mentioneu ieasons have not
uissipateu, anu moieovei, uifficulties in oveicoming the
pioblems of eveiyuay life have incieaseu. Living stanuaius
foi the aveiage Bungaiian have gieatly uecieaseu (Boos-
Loiánt-Noiva, 2uu1 anu Kovács, 2u1u). We shoulu men-
tion the spieau of the so-calleu Complementaiy Cuiiency
concept in Bungaiian liteiatuie anu coiiesponuing theo-
ietical uevelopments. Substantial books (uesell, 2uu4 anu
Siklaky, 2uuS) weie publisheu on the subject. A ielateu
aiticle was maue public on the home page of the Bungaiian
Financial Supeivisoiy Authoiity (Kun, 2uu6). Lectuies anu
confeiences attiacteu many; theie aie now two
Compl ementaiy Cuiiency homepages si mi l ai to
Bowevei, two impoitant souices of infoimation weie no-
tably absent fiom Bungaiian intellectual uiscouise: (1)
Bouthwaite's (1996) Shoit Ciicuit, which was nevei tians-
lateu into Bungaiian, making it accessible only to English
ieaueis; anu (2) a fai eailiei Bungaiian text, Noney, by
Fischei-Szász (19SS), ciiculateu iight aftei the uieat Be-
piession in Buuapest. The lattei uiscusseu the "Woiglei
Notgelu", intiouuceu by Najoi Nichael 0nteiguggenbeigei,
anu the "Euiopa", suggesteu by }oseph Aichei anu Philibeit
International Journal Of Community Currency Research 2012 Volume 16 (D) 116-123 Jelínek Et Al
1 http:¡¡helyipenz.linkpaik.hu anu http:¡¡alteinativ-gazuasag.lap.hu¡
Besson. The woik of Fischei-Szász was in a limiteu piivate
euition anu uiu not have much influence.
!"# %&'() *+,# -. /012+'&+1 34!5 6&'67#(
The above-mentioneu Talentum anu K0R belong to the
fiist wave of LETS ciicles in Bungaiy. These weie inspiieu
anu iueologically suppoiteu fiom abioau, which is unique
within post-communist countiies. An Austiian non-
goveinment oiganization (Nu0), calleu BIFA, piomoteu the
Talentum gioup in 1994. Foui yeais latei, in 1998, the Biit-
ish Council financeu a team of twelve to stuuy the best
LETS piactises in the 0niteu Kinguom. This initiative ue-
velopeu five inuiviuual pilot piojects in Bungaiy, out of
which only K0R is still in opeiation.
Featuies of the fiist-wave LETS movement in Bungaiy aie
moie oi less similai to the LETS in the othei visegiau coun-
tiies (Zagata 2uu4, 2uuS). Repiesentatives of the fiist-wave
LETS movements such as Talentum anu K0R kept theii
membeiships, although piesently theie aie many inactive
Talentum (total heaucount having incieaseu slowly to 226
membeis) cuiiently meets at a club meeting eveiy two
months, wheie a pait of the tiansactions aie maue on the
spot. Talentum has a list of wanteu-anu-offeieu items, but
this list is not fiequently upuateu. Beals between paitneis
aie baseu on peisonal agieements, uenominateu in Talen-
tum's LETS cuiiency, which cannot be conveiteu to Bun-
gaiian foiints (B0F). Communications between the mem-
beis aie accompl i sheu by phone oi thiough a
uooglegioups.com-type 0RL. Yeaily uues anu the uocu-
mentation of tiansactions aie manageu by an auministiatoi
(who ieceives an honoiaiium in the Talentum cuiiency);
this cieates a steauily giowing positive balance on behalf of
the auministiatoi. A tioublesome factoi emeigeu: most
membeis have a stiong negative balance, except foi the
iecoiu keepeis anu the auministiatoi, whose positively
balanceu account is almost as laige as the sum of all othei
membeis' negative balances. As this became cleaiei, some
membeis got veiy upset anu felt a negative balance was
moially wiong, wanting to step back.
At piesent, theie aie two main ieasons foi the lowei num-
bei of tiansactions: fiist, uemanu came to mismatch supply
because pieponueiances of its membeis weie intellectuals;
theii neeus weie quite homogenous: they sought assistance
to pioviue maintenance, iepaii, etc., foi which the supply
was small. The seconu ieason was tiue foi the entiie iegion
- the poveity was wiuespieau, the cash anu, consequently,
the fiee time of people weie so low that even if people
wanteu to, they just coulu not give mutual seivices to each
The K0R in Szolnok still exists as it uiu at the time of
Noith's ieseaich. Feienc Toth, the gioup's heau, notes peo-
ple cannot get iiu of the minuset of patiiaichal uepenuency
anu caie, anu so, cannot builu theii own community with a
system of self-help in place. This ciicle was tiansfoimeu
into a chaiity shop foi clothing anu small appliances, with
some monthly seivices auueu. Toth, who iesigneu anu was
upset, saiu: ".we can't speak about community builuing.
The motivation foi iealization of self-inteiest in this iegion
is so high, that theie is less motivation foi cieating com-
munal foims anu public spiiit."
!"# (#6-18 *+,# -. 34!5 6&'67#(
Aftei the fiist wave, theie came a peiiou of thiee passive
yeais. This was followeu by a seconu LETS movement,
which was inspiieu, fiist, by theoietical uevelopments; anu
seconu, by ciisis-liteiatuie about the iegime change, which
was saiu to have maue things woise. Bungaiians saw that
the tiansition uiu not fulfil any of the uieams that hau been
associateu with it. It became eviuent that, behinu the esca-
lateu economic ciisis, theie was a geneial social, political,
anu spiiitual ciisis going on. As well, the effective political
changes happeneu much eailiei: in fact, uuiing the last
uecaue of the Káuái iegime. Theie appeaieu a "nothing-
has-changeu" feeling that was summeu by: "tanks aie go-
ing; banks aie coming".
Changes in the tiansfei of knowleuge iesulteu in Bungaii-
ans becoming moie awaie of theii own possibilities. So, it
was a time foi the next wave; seveial LETS ciicles weie
founueu. In Bungaiy theie weie seveial initiatives to ievive
the tiauition of so-calleu "kaláka", which is a system of
complex iecipiocal infoimal agieements. "You give me
touay anu get something fiom me tomoiiow." - as Zoltán
Nikhellei, the founuei of the Bakonyi CseieKoi foimulateu.
Above the seveial LETS ciicles was an umbiella oiganiza-
tion, calleu Koiona Cseieklub. It was cieateu by the unieg-
isteieu civil social oiganization (CS0), the Koiona Cseie-
klub Egyesület, in 2uu7.
The Koiona Cseieklub, whose membeis weie fiom smallei,
moie local ciicles, useu Inteinet-platfoim-uevelopeu ac-
counting softwaie. Ciicles cieateu theii own cuiiency,
which uiu not acciue inteiest, anu they maue theii own
uecisions about entiance to the ciicle. The Koiona Cseiek-
lub seiveu as an auvisei, uistiibuting know-how to help
with communication anu concuiient tiauing among vaii-
ous LETS ciicles. It piomoteu iegional self-sufficiency anu
ieuuceu the ecological footpiint - foi the piotection of local
maikets anu woikplaces.
The Koiona Cseieklub contiibuteu to the cieation of seven
fuithei LETS ciicles; out of these, the most active aie the
Pilis Cseieklub anu Bakonyi CseieKoi.
!"&19 7-6+7 &1 :+1; *+;(< =0) +7*+;( &1 6-::01&);
In Bungaiy, as compaieu to the othei visegiau countiies,
the following feeling has stiengtheneu: one simply coulu
not builu anu cieate community but must also live anu
think community. The woiks of the Bungaiian economic
histoiian, Kail Polányi, hau a gieat influence on how the
intellectual segment of Bungaiy conceiveu of money, the
maiket, anu change (Polányi, tianslateu, 1997). It was
wiuely believeu the money system was a social institution:
the piimaiy ielationship between a countiy's citizens anu
theii money must be changeu befoie any intiouuction of a
International Journal Of Community Currency Research 2012 Volume 16 (D) 116-123 Jelínek Et Al
ielationship-oiganisei such as an alteinative-cuiiency
The seconu wave LETS movement's piimaiy task was to
uefine a self-iegulateu, sustainable, iesilient community.
Not only Nu0s but also unuevelopeu, smallei iegions, mu-
nicipalities anu small businesses sought this kinu of com-
munity. The common goal was to cieate a new way of be-
having. Theie is no space at piesent to uiscuss these initia-
tives, foi touay's gioups aie uiveise, ianging fiom Belyi
Piac (http:¡¡www.helyipiac.eu¡) to the EiNe Club
!"#$%& ()*+ ,% -.%/01#
As mentioneu, the situation in the last eight yeais slowly
changeu as people became moie motivateu anu well-
infoimeu. In 2u1u a legal pioposal was cieateu by the Pai-
lament, which woulu seive the coopeiative communities
(Pailament, 2u1u). Fiom this pioposal, woiks anu seivices
in the householu woulu be fiee fiom the value-Auueu Tax
(vAT). Since then it has been appioveu
: Bungaiy intio-
uuceu fiom 1 }anuaiy 2u11 a new vAT categoiy, calleu cost
shaiing gioup ,együttmúkouô kozosség". It pioviues a vAT
exemption foi seivices pioviueu by a cost shaiing gioup to
its membeis, valiu foi civil associations especially. This
coulu be a gieat suppoit not only in financial seivice sectoi
but foi Bungaiian LETS ciicles in the futuie.
The spieauing of the Inteinet, caiu anu mobile payments,
etc., also was helpful. The legislative pioceuuie, thiough
which the 2uu7¡64¡EC Euiopean 0nion uiiective (EC,
2uu7) - Payment Seivice Biiective - was auopteu into the
Bungaiian law, suppoits the use of community cuiiency.
This legislation intiouuceu a new foim of enteipiise - the
payment institution foi payment seivices (0}, 2uu7, pp. 9-
1S.) - anu uefineu within payment seivices the emission
anu acceptance of payment instiuments: that is, comple-
mentaiy cuiiencies anu all payments by telecommunica-
tion, uigital anu IT uevices (0}, 2uu7, p. S6). In the latest
news, the goveinment plans to intiouuce a stanuaiuizeu
caiu system in the next two yeais.
In 2uu9 Kékfiank was intiouuceu in Sopion (Peikovátz,
2uu9, anu Szalay, 2u1u). Even its piepaiations causeu a
huge meuia iesponse; all ovei the nation it was ueemeu a
goou example. Kékfiank is the fiist cuiiency wheie the
useis aie not only piivate people but it also connects busi-
nesses anu the consumeis. The iuea of the Complementaiy
Cuiiency appeaieu in the stiategic piogiam of one of the
canuiuates foi mayoi of the town of Bicske (Inuex, 2uu8),
anu was an impoitant pait of a campaign piogiam foi a
Bungaiian political paity that has iepiesentation in pai-
liament uuiing its municipal elections (}obbik, 2u1u).
We agiee with Zagata (2uu4): foi post-communist coun-
tiies, "The complementaiy cuiiency system is gaining a
fiim position within the uevelopment of iegional aumini-
stiation bouies". It is a featuie unique to Bungaiy that
Complementaiy Cuiiency is suppoiteu in so many ways at
municipal levels
()*+ 23 4*-)5 64+*7488932+* 7493*52)+
The situation in othei post-communist, Eastein Euiopean
countiies is beyonu the scope of this woik, although a few
local cuiiencies have been spawneu in Russia, Bulgaiia,
0kiaine, anu Cioatia. Two institutions fiom Russia can be
noteu as examples.
In Russia, theie was a wiuespieau system baseu on the iuea
of local-exchange tiauing systems, calleu Billex (Billex,
2u11). The system saw its gieatest auvantage to be the
utilization of a kinu of "bills of exchange", as an alteinative
to banknotes. Accoiuingly, a bill of exchange iepiesenteu a
mutual ielationship between uebtois anu cieuitois, which
uiffeieu fiom goveinmental banknotes in that it must be
paiu back up to a matuiity uate. So bills of exchange aie
now useu by membeis anu shoulu, in theoiy, be a bettei
means of exchange anu ietain value. A possible punishment
foi the failuie to make payments is the loss of a uebtoi's
piopeity (in accoiuance with the Russian bill legislation).
The value that seives as the system stanuaiu is golu. But
such a system uoes not iequiie the golu stanuaiu, foi this
seives only foi the evaluation of tiansactions. Anothei iuea
mentioneu by Kenneth (2uu2) fiom the Kostioma uistiict,
about Suu km fiom Noscow, is similai. The small uistiict of
Kostioma staiteu using theii own special cuiiency (gieatly
thanks to suppoit of uoilovsky State Faim, the mainstay of
the uistiict's economy), anu this cuiiency helpeu in nu-
meious ways, excepting the inciemental changing of living
stanuaius anu the fighting of social evils such as alcohol-
0nly the futuie will tell whethei the numbei of economi-
cally enlighteneu inuiviuuals (in Polanu, the Czech Repub-
lic, the Slovak Republic anu Bungaiy) will ieach a ciitical
mass. Insteau of stiictly following Westein LETS mouels,
fiist, local chaiacteiistics, iueas anu social neeus must be
iuentifieu anu auuiesseu. Economies in ieal socialism weie
baseu on othei conuitions than weie those appeaiing in
Westein Euiopean countiies. LETS anu economic alteina-
tives nevei emeigeu in visegiau countiies until aftei com-
munism was at an enu. 0iganiseu gioups biinging uecen-
tializeu local economic systems came into being aftei 1989.
Conuitions in ex-socialist countiies have come closei anu
closei to the conuitions in the iest of the uemociatic woilu.
Yet theie aie substantial uiffeiences. The shoit expeiience
of a uemociatic, youngei civil society, anu low but con-
stantly giowing inuebteuness combineu with low income
inequality between the iich anu the pooi make the ex-
socialist countiies unique. These systems uefinitely uo not
International Journal Of Community Currency Research 2012 Volume 16 (D) 116-123 Jelínek Et Al
2 vAT Act Aiticle 8S Section (1) point p.
S As it is also noticeable in the case of Balatoni Koiona.
involve laige populations, as uo some localities in Westein
Bi l l ex ( 2u11) : Bi l l ex - úcet kieui t a. Avai l abl e at :
Bittnei (2u11): Bouseholu uebt in E0R0STAT statistic in "Nohou
si ceské uomácnosti uovolit ualsi zauluzováni. (Can czech house-
holus affoiu anothei uebt.)" Ekonomické a stiategické analýzy.
Ceská spoiitelna.
Biunnhubei, S - Lietaei, B. - Botos K. (2uuS): Economics as an
Evolutionaiy System: Psychological Bevelopment anu Economic
Behavioui. (Papeis Review of Economic anu Social Sciences, vol.
S, No.1 2uuS).
Chmiel T. (2uu8): Banki Czasu - spis polskich bankow (Time Banks
- L i s t o f P o l i s h b a n k s ) . A v a i l a b l e
at: http:¡¡blog.pomagaj.info¡2uu8¡u4¡2u¡banki-czasu-spis-polski
Cseh Z. (2u11): Bemutatták a balatoni koiona teiveit (The Featuie
of Balatoni Koiona was intiouuceu)
Bouthwaite, R. (1996): Shoit Ciicuit. Stiengthening Local Econo-
mies foi Secuiity in an 0nstable Woilu. (Lilliput Piess, Bublin.)
Fischei }. - Szász A. (19SS): Pénz. Nagánkiauás. (Buuapest)
Fouoi u. - Kein T (2uu9): A ienuszeiváltás válsága - The ciises of
iegime change (bilingual), (Százauvég Kiauo)
Foltýnová, B. (2uu4): Nistni mènové systémy v CR a ve svètè.
Biplomová piáce. (The local Exchange Systems in the Czech Re-
public anu abioau. Thesis). Bino; FSS Nasaiyk 0niveisity.
uesell, S. (2uu4 |19u6j): A teimészetes gazuasági ienu szabaufolu
és szabaupiac iévén, (tianslateu: Siklaky fiom ,Bie Natüiliche
Wiischaftsoiunung", Kétezei Kiauo)
uazeta Wyboicza (2uu9): Wzajemne uslugi nie sa opauatkowane
(Nutual seivices aie not taxeu). uazeta Wyboicza 14.9.2uu9
Boos }- Loiánt K-Noiva T (2uu1): Socio-Economic Impact of Stiuc-
tuial Aujustment in Bungaiy (The Bungaiian SAPRI Stuuies, Final
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mia Spoleczna teksty)
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International Journal Of Community Currency Research 2012 Volume 16 (D) 116-123 Jelínek Et Al
International Journal of
Community Currency Research
Volume 16 (2012) Section D 124-135
Hiromi Nakazato* And Takeshi Hiramoto**
*Meiji University
**Ritsumeikan University
This papei intiouuces the concept of social suppoit as a social effect of community cuiiencies
anu exploies uiffeient ways of measuiing it. We useu a questionnaiie suivey anu social netwoik
analysis of tiansactional iecoius to conuuct a compaiative case stuuy of two community cui-
iency oiganizations: Ichi-Nuiaoka in }apan anu Bytesiing Stockholm (BYTS) in Sweuen. 0ui
analysis yielueu the following iesults with iespect to social suppoit pioviueu by community
cuiiencies: (1) while the tiansfei of social suppoit by community cuiiencies uoes not affect the
quality of life of all useis in a significant way, it makes useis awaie that social suppoit can be
pait of theii lives if they become conscious of it; anu (2) community cuiiencies aie peiipheial
anu supplementaiy suppoit souices foi many local iesiuents. These iesults show that commu-
nity cuiiencies aie effective as a system to pioviue social suppoit to local iesiuents.
* Email: nakazatoÇmeiji.ac.jp
!" $%&' &(%) *+&%$,'- Nakazato, B. anu Biiamoto, T. (2u12) 'An Empiiical Stuuy of the Social Effects of Com-
munity Cuiiencies' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 124-1SS <www.ijcci.net>
ISSN 1S2S-9S47
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In this papei, we asseit that community cuiiency is an ef-
fective system of social suppoit foi local iesiuents. We uo
so thiough a compaiative analysis of "Eco Noney
" oigani-
zations in Nuiaoka-town (cuiiently Kami-town), }apan,
with the Local Exchange Tiauing Scheme¡System (LETS)
oiganization in Stockholm, Sweuen. We also uiscuss the
impoitance of assessing the "social effects" biought to
communities by community cuiiencies anu piopose to
assess social suppoit as one such social effect. Theie aie
seveial systems of community cuiiencies, but this papei
focuses on the consumei-to-consumei (C2C) type, in which
membeis exchange theii goous anu seivices mutually.
Community cuiiency stuuies in }apan have been iathei
concentiateu on economics, as the woiu "cuiiency" sug-
gests. Examples of this incluue the economic anthiopologist
Nakoto Naiuyama, who intiouuceu community cuiiency
to }apan thiough his wiitings fiom the lattei half of the
198us thiough the 199us, as well as scholais who tiieu to
piomote community cuiiencies with Naiuyama, such as
Rui Izumi anu Eiichi Noiino, whose woik is baseu on envi-
ionmental economics. When we look at the cuiient situa-
tion of community cuiiencies, howevei, the piocess in
which ceitain effects aie biought to communities as a ie-
sult of tiansactions is ielateu to "social" elements, which
obviously cannot be uealt with in the fielu of economics. 0f
couise, these economists have not been ignoiant of the
"social" aspects of community cuiiencies. Economic an-
thiopology anu ecological economics aie positioneu in
Yoshiio Tamanoi's (1978) thought, which aims to balance
economy anu ecology anu is stiongly influenceu by K.
Polanyi, who pointeu out the existence of value exchange
activities in non-maiket economies baseu on the piinciples
of iecipiocity anu ieuistiibution. Nakoto Nishibe also
stateu that community cuiiencies aie communication me-
uia that have aspects of both "economic meuia" as a cui-
iency anu "socio-cultuial meuia" as a language (Nishibe,
2uuu) anu placeu this concept at the coie of his own com-
munity cuiiency stuuies. Bowevei, these theoiies anu ap-
pioaches uo not explain the "social" aspect of community
cuiiency activities empiiically.
In sum, ieseaicheis of community cuiiency must establish
a "social" appioach towaius it. An analysis capable of em-
piiically explaining the "social" iealities of tiansactions as
well as the natuie of effects biought to communities neeus
to be conuucteu. As foi the foimei, the employment of a
new economic-sociology appioach can be citeu as a canui-
uate (Nakazato, 2uu7). This appioach analyzes economic
actions conuucteu in social stiuctuies, paiticulaily fiom the
viewpoint of "embeuueuness" into a social netwoik stiuc-
tuie suiiounuing the actoi. The piesent papei auuiesses
the lattei: the effects biought to communities.
The neeu to assess social effects is uigent in two ways.
Fiist, the community cuiiency movement in }apan sub-
siueu aftei the peiiou of 2uuS to 2uu4, anu oiganizations
aie enteiing a stage in which it is necessaiy to claiify what
is actually biought to local communities thiough commu-
nity cuiiency activities. Seconu, assessing the "effects" of
oiganizations' activities has piactical meanings foi oigani-
zations that aie cuiiently unuei opeiation, as a guiueline
foi theii futuie activities oi a scheme to sustain the motiva-
tion of membeis. Bowevei, unlike the economic effects
measuiable to a ceitain uegiee by inuicatois such as the
volume of cuiiency ciiculation anu the speeu of ciiculation,
the social effects uo not have cleai ciiteiia foi assessment.
In iecent yeais, an effoit has begun to assess the social
effects of community cuiiencies by using the concept of
social capital to auuiess this pioblem (}acob et al., 2uu4;
Richey, 2uu7; Kichiji et al., 2uu7). In this papei, we piopose
an assessment of social suppoit to limit the scope coveieu
by the concept of social capital.
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Social suppoit is uefineu as "vaiious aius, tangible anu in-
tangible, which an inuiviuual obtaineu at a specific point of
time fiom otheis with whom he¡she has a ielationship"
(Ninami et al., 1988). Note that "otheis" in this uefinition
aie not limiteu to those engageu in pioviuing suppoit pub-
licly oi systematically, such as social woikeis anu meuical
piofessionals. This means an ego ieceives aius fiom vaii-
ous otheis with whom he¡she has ielationships in uaily
life, such as family, neighbois, anu fiienus. Sociological
iueas in social suppoit stuuies can be seen in the social
integiation appioach as well as social suppoit netwoik
stuuies. The foimei focuses on the ego's affiliation anu pai-
ticipation in social gioups anu activities, while the lattei
emphasizes social netwoik stiuctuies in ieceiving suppoit.
uianovettei's uiscoveiy of "the stiength of weak ties"
(197S) as well as Wellman's uevelopment of an uiban-
sociological peisonal netwoik analysis (1979) iepiesent
the lattei gioup, anu theii use of the social netwoik ap-
pioach has achieveu seveial impoitant contiibutions to
social suppoit stuuies fiom the viewpoint of sociology.
Pievious community cuiiency stuuies occasionally citeu
social suppoit as a social effect of community cuiiency
activities. Community cuiiencies, especially those that fo-
cus on social welfaie, such as "Eco Noney," state that "ie-
cipiocal netwoik" builuing among community iesiuents is
the puipose of theii activities, anu Williams et al. (2uu1)
explicitly use the teim "social suppoit netwoik" as an effect
of community cuiiency activities. Bowevei, such teims
weie not useu in a stiictly acauemic sense; theiefoie, nei-
thei the conciete meaning of "iecipiocal netwoik" anu
"social suppoit netwoik" builuing, noi the way to measuie
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
1 A community cuiiency system unique to }apan, which was uevelopeu by Toshihaiu Kato. Its chaiacteiistics consist of the issuance of cou-
pons anu the limiting of the types of goous anu seivices foi tiansactions to those not ciiculateu in the maiket. Theie is a geneial emphasis on
puiposes ielateu to social welfaie, such as the invigoiation of volunteei activities.
them, was cleai. Social suppoit stuuies, at this point, have
alieauy accumulateu ieseaich iesults both theoietically
anu empiiically; thus, theoietical elaboiation anu assess-
ment of "iecipiocal netwoik builuing" anu "social suppoit
netwoik" aie possible.
Noieovei, the intiouuction of the concept of social suppoit
is significant in ieconsiueiing not only "foi what it will be
effective" but also "foi what iange of people it will be effec-
tive." The iesults of pievious stuuies ieveal that the effect
biought to iegional economies by community cuiiency
activities is insignificant anu that the beneficiaiies aie inui-
viuual membeis paiticipating in the activities, iathei than
the local community as a whole with iespect to social ef-
fects. Williams (1996), foi example, suiveyeu the LETS
oiganizations in the 0niteu Kinguom anu concluueu that
LETS seives as a system foi inuiviuual membeis to help
impiove theii quality of life. In line with his obseivation,
we piesuppose that the beneficiaiies of community cui-
iency activities aie limiteu to the membeis of community
cuiiency oiganizations iathei than the local community as
a whole anu that community cuiiencies aie effective in
helping membeis suppoit theii lives psychologically anu
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Befoie tuining to the analysis, we will consiuei some theo-
ietical anu methouological points.
Fiist, we assume that six types of social suppoit can be
ieceiveu as benefits of paiticipation in community cui-
iency activities
: emotional suppoit (pioviuing psychologi-
cal stability anu healing), instiumental suppoit (pioviuing
goous anu seivices), infoimational suppoit (pioviuing in-
foimation such as auvice), appiaisal suppoit (pioviuing
inteipeisonal appiaisal leauing to self-assuiance) (Bouse,
1981), social companionship suppoit (pioviuing social
affiliations anu human connections) (Rook, 1987), anu eco-
nomic suppoit.
Seconu, stuuies of social suppoit netwoiks often use the
analytical concept of a "netwoik," while they tenu to sim-
plify the functions of a "netwoik" anu suggest that the moie
ties theie aie, the gieatei amount of suppoit the ego ie-
ceives (Wellman, 1981). In this iespect, the statement, "A
netwoik is moie than the sum of its ties," maue by Wellman
& uuilia (1999), succinctly expiesses the impoitance of the
social netwoik appioach in social suppoit netwoik stuuies.
The piesence of ties uoes not always have positive effects
on a peison's mental anu physical health. Ties coulu have a
negative impact oi cause negative suppoit, uepenuing on
theii natuie anu netwoik stiuctuies. Theiefoie, the piopo-
sition that "the moie ties theie aie, the gieatei amount of
suppoit the ego ieceives" is not tiue. In auuition, a multi-
plicity of ties assumes new chaiacteiistics uepenuing on
the mutual ielationship between them. Accoiuingly, the
effects of inuiiect ties not limiteu to uiiect acquaintance-
ship neeu to be consiueieu. Foitunately, many community
cuiiency tiansactions aie iecoiueu in the foim of checks oi
enuoisements on cuiiency, oi iecoius in electionic ac-
counts. The application of the social netwoik appioach is
maue possible by uepicting the tiansactional ielationship
baseu on these iecoius.
Thiiu, the impoitance of "the stiength of weak ties" (uia-
novettei, 197S) shoulu be consiueieu in this stuuy. uia-
novettei claimeu that vaiious inteipeisonal anu social ie-
souices, which aie haiuly obtaineu fiom a piimaiy gioup
connecteu by "stiong" ties, aie biought about by "weak"
ties with exteinal gioups. "Weak" ties aie assumeu to be
"biiuges" that join sepaiate cohesive gioups, such as family
anu intimate fiienus, anu play the iole of ciiculating het-
eiogeneous iesouices among the gioups.
While the "stiength" of ties is uefineu in vaiious ways,
Wellman & Woitley (199u) ciiticizeu the mainstieam uefi-
nition, which measuies the "stiength" of ties by the fie-
quency of inteipeisonal contacts, because social ielation-
ships exist with a high fiequency of contacts iegaiuless of
inuiviuuals' will, as seen in woikplace ielationships with
colleagues. Insteau, they measuieu its "stiength" on the
basis of thiee ciiteiia: "intimacy" (the uegiee of being inti-
mate), "voluntaiy" (the uegiee of making spontaneous con-
tacts), anu "multiplicity" (the uegiee of contacts maue ovei
multiple social contexts) in oiuei to iemove such a bias.
Inteipeisonal ielationships biought togethei by commu-
nity cuiiency tiansactions lack "intimacy" anu "multiplic-
ity" unless specific conuitions aie met. The tie of a commu-
nity cuiiency tiansaction is theiefoie a "weak" tie as a ue-
fault state, anu focusing on the stiength of "weak" ties is
consiueieu appiopiiate. This also leaus us to the assump-
tion that the social suppoit pioviueu by community cui-
iency activities is, at least in its eaily stage, not assumeu to
seive as all of the social suppoit ieceiveu by one peison in
his oi hei uaily life. In othei woius, the suppoit pioviueu
by "weak" ties in community cuiiencies is consiueieu to
play a peiipheial iole, supplementing the suppoit that each
peison ieceives fiom his oi hei piimaiy gioup.
Finally, since a social netwoik analysis of tiansactional
ielationships alone cannot assess types of suppoit ieceiveu
fiom activities outsiue of tiansaction activities÷with the
exception of instiumental suppoit anu economic sup-
poit÷conuucting a questionnaiie suivey in auuition is
Baseu on the above consiueiations, this papei piesents the
following foui hypotheses foi analysis.
Bypothesis 1: Community cuiiencies can be a means of
pioviuing social suppoit.
Bypothesis 2: Community cuiiencies aie a souice of
peiipheial anu supplementaiy suppoit pioviueu to theii
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
2 Foi a moie theoietical uiscussion, methouological consiueiation fiom the peispective of social netwoik analysis, anu infoimation iegaiu-
ing the ielationship between social suppoit piovision anu community cuiiency tiansaction, see Nakazato (2uu6).
Bypothesis S: The auvantage of community cuiiencies as
the souice of social suppoit is in theii ability to utilize
the stiength of "weak" ties.
Bypothesis 4: The way in which social suppoit is pio-
viueu by community cuiiencies is influenceu by the so-
cial netwoik stiuctuie of the membeis.
!"# %&'()*+ ,- '.+ /&01+2
We selecteu the "Eco Noney" oiganization Ichi-Nuiaoka in
Nuiaoka-town, Byogo Piefectuie, }apan anu the LETS oi-
ganization Bytesiing
Stockholm (BYTS) in Stockholm,
Sweuen as subjects. Since "Eco Noney" anu LETS shaie the
basic scheme of tiansaction, we can conuuct a compaiative
analysis of them.
Nuiaoka-town is a mountain village cuiiently unueigoing
uepopulation; it has an aiea of 16S.66 km
anu a popula-
tion of 6,117 (}apan census 2uuS), anu theie aie only one
oi two uaily bus seivices that seive the aiea eveiy houi.
÷which has auopteu "Eco Noney"÷was
founueu in Becembei 2uu2 anu was opeiateu by the
Nuiaoka-town Council of Social Welfaie (cuiiently the
Kami-town Council of Social Welfaie, Nuiaoka Bianch)
fiom 2uu2 to 2uu7. The mean numbei of paiticipants uui-
ing these peiious was 91.4. To my best knowleuge, BYTS,
establisheu in 1992, is the oluest anu laigest LETS oigani-
zation to uate in Sweuen. uieatei Stockholm has an aiea of
6,S19.Su km
anu a population of 2,uS4,S4S (Statistiska
Centialbyiån 2u1u) with a uevelopeu subway netwoik that
facilitates tiaue even in the wintei season uuiing heavy
snowfall. The mean numbei of paiticipants is 11S.S people
pei yeai anu BYTS opeiates theie in the foim of a nonpiofit
To stait with, we collecteu tiansactional iecoius foi a
tiansaction netwoik analysis
. This was uone fiom Becem-
bei 2uu2 to Naich 2uu6 foi Ichi-Nuiaoka anu fiom }anuaiy
2uu2 to Becembei 2uuS foi BYTS. The tiansaction iecoius
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
S The woiu bytesiing means "LETS" in Sweuish in this context.
4 The puipose of Ichi-Nuiaoka is "to foim a 'mutual help system' within the entiie village" foi the puipose of uealing "with uifficulties in
solving life-ielateu challenges among families anu small iegions uue to uepopulating anu aging of society" (21st Centuiy Reseaich 0iganiza-
tion foi Buman Caie, 2uu4). It opeiateu foi seven half-yeai peiious, anu ceaseu its activities in 2uu7.
S The puiposes of "BYTS" incluue (1) piomotion of ieuse, (2) builuing ielationships (netwoiks) among membeis anu local iesiuents, anu (S)
pioviuing alteinatives foi the existing socio-economic system. The iuea of establishing an alteinative socio-economic system is emphasizeu
when BYTS is compaieu with LETS in Canaua, whose main puipose is to invigoiate the iegional economy. Foi moie infoimation about BYTS,
see Nakazato anu Biiamoto (2uu7).
6 In oiuei to investigate the tiansactional iecoius, we auopteu a social netwoik analysis because we neeueu to quantitatively analyze tians-
actional ielationships. Social netwoik analysis is a ieseaich methou that calculates the piopeities of social netwoiks (e.g., e-mail exchanges,
tiauing paitneis, anu inteipeisonal ielationships). Foi instance, each membei of a social netwoik has a uegiee of centiality in the netwoik,
anu the social netwoik itself has uensity. We can measuie these inuexes by calculating the ielationships of veitices anu lines. In the giaph
(Figuie 1), a veitex inuicates a membei anu a line inuicates a tiauing ielationship.
° N ° N
° N ° N

Full-time Job
HousewiIe (Husband)
HousewiIe (Husband)
and Part-time Job



Full-time Job
Part-time Job
Receiving Sickness



Table 1. Composition of Ichi-Muraoka and BYTS
Figure 1. Transactional network graphs of the two
organizations (Left: Ichi-Muraoka; Right: BYTS)
show that the aveiage annual ciiculation volume was
28S.4S tiansactions foi Ichi-Nuiaoka, while BYTS has a
mean annual ciiculation amount of S2,S6u.2S byts (1 byts =
1 Sweuish kiona), which coiiesponus to 2S6.2S tiansac-
tions. These figuies uemonstiate that the contiibutions to
the iegional economy by Ichi-Nuiaoka anu BYTS aie small
when we limit the analysis to the economic aspect. We
uiew a tiansactional netwoik giaph baseu on these iecoius
(Figuie 1).
In auuition, we conuucteu mail suiveys foi Ichi-Nuiaoka
fiom Naich to Apiil 2uu6 anu foi BYTS fiom }uly to August
2uu6. All of the membeis of Ichi-Nuiaoka anu BYTS com-
pleteu a six-page questionnaiie on papei, which was wiit-
ten in Sweuish, anu ietuineu it via mail. We ieceiveu 119
iesponses (S4%) fiom 22u membeis of Ichi-Nuiaoka anu
6S iesponses (8u.2%) fiom 81 membeis of BYTS. Table 1
shows the membeiship composition of both oiganizations.
The piopoition of female useis is high in both oiganiza-
tions, anu the elueily aie the main useis of Ichi-Nuiaoka.
!" $%&'()&
!"* +,--./012 +.334/+2 56 5 -45/6 ,7 83,90:0/; 6,+05<
Fiist, we investigate whethei oi not the use of community
cuiiencies geneiates tiansfeis of social suppoit. Two ques-
tion items aie useu in conuucting this analysis:
(1) "Bow satisfieu aie you oveiall with the following sup-
poit that you piesently ieceive fiom otheis." (heieaftei,
"the uegiee of satisfaction with the suppoit ieceiveu in
uaily life"). This is iateu on a five-point scale, fiom "not
satisfieu at all" to "veiy satisfieu."
(2) "Bow helpful is the suppoit of <name of community
cuiiency> to you." (heieaftei, "the uegiee of suppoit ie-
ceiveu thiough paiticipation in community cuiiencies").
This is iateu on a five-point scale, fiom "not helpful at all"
to "veiy helpful."
These two questions weie askeu iegaiuing the six types of
suppoit mentioneu above. The teims useu in the questions
aie "emotional suppoit, such as giving affection, a sense of
secuiity, enteitainment" (emotional suppoit); "behavioial
anu instiumental suppoit, such as uoing something oi
tiansfeiiing something foi the iecipient" (instiumental
suppoit); "infoimational suppoit, such as giving a piece of
auvice oi teaching something" (infoimational suppoit);
"appiaisal suppoit, such as piaising oi showing appiecia-
tion" (appiaisal suppoit); "economic suppoit, such as giv-
ing money oi helping with cost saving" (economic sup-
poit); anu "connection suppoit, such as incieasing the
numbei of acquaintance oi spenuing time togethei" (social
companionship suppoit).
The iesults of a piincipal factoi analysis with a vaiimax
iotation conuucteu with membeis of Ichi-Nuiaoka anu
BYTS in iesponse to items (1) anu (2) aie shown in Tables
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
Items Factor Factor
8 8 7 . 9 5 8 . t r o p p u S l a n o i t a m r o I n I
Social Companionship Support 8 4 7 . 2 1 8 .
0 1 8 . 8 6 7 . t r o p p u S l a t n e m u r t s n I
0 3 8 . 7 3 7 . t r o p p u S l a s i a r p p A
3 4 8 . 6 8 6 . t r o p p u S l a n o i t o m E
2 9 6 . 3 5 6 . t r o p p u S c i m o n o c E
Eigenvalue 4.09 3.84
Contribution Ratio 68.1 64.0
Cumulative Contribution Ratio 0 . 4 6 1 . 8 6
4 0 9 . 4 8 8 .
The degree oI satisIaction with
the support received in daily liIe
The degree oI support received through
participation in community currencies
Items Factor Factor Factor Factor
Emotional Support .965 .058 .966 -.036
Appraisal Support .660 .391 .701 .178
InIormational Support .543 .422 .562 .367
Social Companionship Support .530 .417 .706 .196
Instrumental Support .198 .872 .395 .499
Economic Support .146 .469 .014 .901
Eigenvalue 3.16 1.02 3.07 1.21
Contribution Ratio 52.7 17.0 51.2 20.2
Cumulative Contribution Ratio 52.7 69.7 51.2 71.4
The degree oI satisIaction with
the support received in daily liIe
The degree oI support received through
participation in community currencies
7 4 8 . 5 0 8 .
8 3 6 . 8 5 5 .
Table 2. Social support scores and results of factor analysis for Ichi-Muraoka
Table 3. Social support scores and results of factor analysis for BYTS
2 anu S. We finu a single-factoi stiuctuie in Ichi-Nuiaoka,
which incluues all six types of suppoit with iespect to both
"the uegiee of satisfaction with the suppoit ieceiveu in
uaily life" anu "the uegiee of suppoit ieceiveu thiough pai-
ticipation in community cuiiencies." As foi BYTS, we finu a
uual-factoi stiuctuie, consisting of the fiist factoi ("suppoit
ieceiveu fiom inteiaction with people," incluuing "emo-
tional suppoit," "appiaisal suppoit," "infoimational sup-
poit," anu "social companionship suppoit") anu the seconu
factoi ("suppoit ieceiveu fiom mateiials," which incluues
"instiumental suppoit" anu "economic suppoit") with ie-
spect to both "the uegiee of satisfaction with the suppoit
ieceiveu in uaily life" anu "the uegiee of suppoit ieceiveu
thiough paiticipation in community cuiiencies."
We veiify whethei theie is any ielationship between factoi
scoies anu the fiequency of use of community cuiiencies
by the membeis. The coiielation coefficients between each
factoi scoie anu the amount of goous anu seivices ieceiveu
oi pioviueu thiough community cuiiencies aie shown in
Table 4. Speaiman's iank-coiielation coefficient was useu
because "the amount ieceiveu" anu "the amount pioviueu"
weie not noimally uistiibuteu. This ieveals that in both
Ichi-Nuiaoka anu BYTS, theie is almost no ielationship
between the fiequency of use of community cuiiencies anu
"the uegiee of satisfaction with the suppoit ieceiveu in
uaily life," although "suppoit ieceiveu fiom inteiaction
with people" in BYTS tenus to be positively coiielateu with
"the amount ieceiveu" of goous anu seivices. Bowevei, "the
uegiee of suppoit ieceiveu thiough paiticipation in com-
munity cuiiencies" has a positive coiielation in many items
with the fiequency of use of community cuiiencies.
In sum, the tiansfei of social suppoit by community cui-
iencies uoes not affect the quality of life of all membeis in a
significant way, but makes membeis awaie that this is
something that coulu be ielateu to theii lives if they be-
come conscious of it.
!"# %&' ()*+,+)- ). *)/+01 *2(()3, (3)4+5'5 67 /)8829
-+,7 /233'-/+'* +- '0/& +-5+4+5201:* 1+.'
Next, we exploie wheie the suppoit ieceiveu by using
community cuiiencies can be positioneu among social sup-
poit souices ieceiveu by each inuiviuual. 0ne question
conceineu choosing five out of seven categoiies÷"fiienus,"
"family," "neighbois," "colleagues," "community cuiien-
cies," "employees of public oiganizations," anu "oth-
eis"÷anu ianking them in oiuei of the fiequency of oppoi-
tunities to ieceive suppoit. We also allotteu points to each
categoiy in ieveise oiuei (zeio points given to the catego-
iies that weie not chosen).
Tables S anu 6 show the mean scoie anu stanuaiu uevia-
tion (in paientheses) of each categoiy foi Ichi-Nuiaoka anu
BYTS. In both oiganizations, community cuiiencies iankeu
fifth out of the seven suppoit souices, which inuicate that
they have become a souice of peiipheial suppoit foi mem-
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
! ! # $%&' ( ! # $%$)' (( ! # $%$&
Table 4. Correlation between social support factor scores and received and provided community currencies
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
Table 5. Ranking of support received by members of Ichi-Muraoka in daily life
Table 6. Ranking of support received by members of BYTS in daily life

Emotional Support (n ÷ 74, mean ÷3.27, SD ÷ .98)
Instrumental Support (n ÷ 71, mean ÷3.17, SD ÷ .97)
InIormational Support (n ÷ 70, mean ÷3.20, SD ÷ 1.00)
Appraisal Support (n ÷ 70, mean ÷ 3.09, SD ÷ 1.00)
Economic Support (n ÷ 69, mean÷ 2.64, SD ÷ 1.08)
Social Companionship Support (n ÷ 70, mean ÷ 2.99, SD ÷ 9.4)
f ! · 0.1, * ! · 0.05, ** ! · 0.01


f ! · 0.1, * ! · 0.05, ** ! · 0.01
Emotional Support (n ÷ 57, mean ÷3.02, SD ÷ 1.25)
Instrumental Support (n ÷ 59, mean ÷3.56, SD ÷ 1.01)
InIormational Support (n ÷ 60, mean ÷3.48, SD ÷ 1.00)
Appraisal Support (n ÷ 59, mean ÷2.98, SD ÷ 1.21)
Economic Support (n ÷ 59, mean ÷3.54, SD ÷ 1.07)
Social Companionship Support (n ÷60, mean ÷ 3.47, SD ÷1.13)
Table 7. The differences between the mean support scores in Ichi-Muraoka
Table 8. The differences between the mean support scores in BYTS
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
4 3 2 1 0 1 2
Empathy Empathy
Community Currencies
Employees oI Public
Figure 2. Advantages of support received by the use of community currencies (BYTS)
Figure 3. Advantages of support received by the use of community currencies (Ichi-Muraoka)
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/7+#$+, $5//)7(9>
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
J I* H+-+$"#C$ @5+*(#D#'+(#)* 4&(")1 (-/& III; ("& 07&@5&*(,- $&,&'(&1 #(&4$ +7& /,)((&1 +7)5*1 ("& )7#3#*9
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Community cuiiency tiansactions aie "embeuueu" in social
ielationships anu stiuctuies (Nakazato, 2uu7) anu it is
assumeu that the social suppoit biought about uiiectly anu
inuiiectly by such tiansactions is influenceu by social iela-
tionships anu stiuctuies. In oiuei to stuuy the social iela-
tionship anu stiuctuial factois that affect the piovision of
social suppoit, we conuucteu an exploiatoiy path analysis
with six types of suppoit scoies as uepenuent vaiiables anu
inuegiee (the amount of ieceiveu goous anu seivices), out-
uegiee (the amount of pioviueu goous anu seivices), the
sum of inuegiee anu outuegiee, the value of inuegiee pei
tie, the value of outuegiee pei tie, the sum of inuegiee anu
outuegiee pei tie
, iecipiocity
, effectiveness
, stiuctuial
, uensity
, clustei coefficient
, betweenness
, flow centiality
, inuegiee closeness centiality,
outuegiee closeness centiality
, sex, anu age as inuepenu-
ent vaiiables.
The iesults of a path analysis foi Ichi-Nuiaoka anu BYTS
aie piesenteu below. All coefficients in the figuies aie sta-
tistically significant at the 1% oi S% level, oi have a signifi-
cant tenuency at the 1u% level. The goouness of fit (uFI)
shown in the lowei pait of the figuies foi both Ichi-
Nuiaoka anu BYTS ieacheu an acceptable level.
As foi Ichi-Nuiaoka, fiist, "the amount pioviueu anu ie-
ceiveu" has a positive influence on the piovision of "ap-
piaisal suppoit," "social companionship suppoit," anu "in-
stiumental suppoit,"although the uegiee of influence in
each item is small. Both "appiaisal suppoit" anu "social
companionship suppoit" can expiess sympathetic suppoit
with otheis anu aie capable of geneiating sympathetic
connections by the fiequent use of community cuiiencies.
0n the othei hanu, "the amount pioviueu anu ieceiveu" has
a positive influence on the piovision of "instiumental sup-
poit" because the main use foi community cuiiencies in
Ichi-Nuiaoka was to pioviue a means of tianspoitation
when elueily people go shopping oi to the hospital. In
othei woius, fiequent useis of community cuiiencies in
Ichi-Nuiaoka often use tianspoitation seivices, so "in-
stiumental suppoit" is pioviueu.
Fuitheimoie, the fact that "inuegiee closeness centiality"
has positive coefficients foi "economic suppoit" anu that
the same is tiue in the "effectiveness" of pioviuing "instiu-
mental suppoit" shows that the position in an effective
location within the netwoik anu the efficiency of netwoik
stiuctuie help impiove access to vaiious iesouices helu by
otheis. This means that vaiious iesouices that exist in the
social netwoik become accessible by shoitening the uis-
tance anu that accessibility impioves by uecieasing ieuun-
uancy in netwoik stiuctuie (Figuie 4).
The amount provided
and received
Error 1
Error 2
Error 3
Error 4
Degree oI Freedom÷10, ÷7.855, -value÷.643
GFI ÷ .955, AGFI ÷ .875, RMSEA÷ .000, AIC ÷ 43.855
Figure 4. Structural factors of various support scores re-
ceived by participating in community currency activities
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
9 All of the "values pei tie" aie calculateu by |uegiee centiality in weighteu netwoik (the amount of goous anu seivices ieceiveu anu
pioviueu)j¡|uegiee centiality of binaiy netwoik (the numbei of otheis fiomwhom an ego ieceiveu anu to whomit pioviueu goous anu seiv-
1u The uegiee of mutuality of ties, calculateu by the iecipiocal of the absolute value of the uiffeience between the inuegiee anu outuegiee.
11 The "effective size" of an ego's netwoik is obtaineu by subtiacting the uegiee of connections among neighboihoous fiom the netwoik size
of the ego. "Effectiveness" is obtaineu by "effective size"¡"netwoik size."
12 When an ego is connecteu with neighboihoou A anu has few neighboihoous othei than A, anu the neighboihoous othei than A aie con-
necteu with A, the ego is "constiaineu" by A because uoing something without A's influence becomes uifficult. By summing bilateial "con-
stiaints," the "stiuctuial constiaint" an ego ieceives fiom the entiie netwoik is calculateu.
1S The uensity of an ego's netwoik is obtaineu by |the numbei of actually piesent tiesj¡|the numbei of possible ties within the netwoikj.
14 A clustei is a tiiangle connecteu by thiee noues. The clusteiing coefficient iepiesents the uegiee to which a netwoik contains clusteis.
1S The measuie of the uegiee to which an ego meuiates among otheis in a netwoik.
16 A kinu of betweenness centiality measuie suitable foi analyzing weighteu netwoiks.
17 Closeness centiality is one type of centiality measuie baseu on uistance. It is obtaineu by summing the shoitest uistances fiom an ego to
othei noues.
The amount oI
received Goods
and Services
Error 2
Error 1
Error 3
Error 4
Error 5
Error 6
Degree oI Freedom÷17, ÷12.359, -value÷.778
GFI ÷ .952, AGFI ÷ .874, RMSEA÷ .000, AIC ÷ 68.359
Figure 5. Structural factors of various support scores re-
ceived by participating in community currency activities
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$(793"% >$>"%D
International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
HI ,3" ?%"2'>%72'9=A 3"%" '/ (79 %"2'>%72'9= F"90""( 907 '(&'@'&6$B/ F69 %"2'>%72'9= $<7(# 93" 7@"%$BB ("907%8 <"<F"%/D V70"@"%. '( %"$B4
'9=. 937/" 0'93 3'#3 ?%"2'>%72'9=A 3$& $ 9"(&"(2= 97 27(&629 9%$(/$29'7(/ 0'93'( 93" C'G"& %"B$9'7(/3'>D
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International Journal Of Community Currency Research 2012 Volume 16 (D) 124-135 Nakazato And Hiramoto
International Journal of
Community Currency Research
Volume 16 (2012) Section D 136-145
Ken-ichi Kurita*, Yoshihisa Miyazaki* And Makoto Nishibe
Hokkaido University, Japan
This aiticle intiouuces the histoiy of community cuiiencies in }apan, anu examines the suc-
cesses anu iemaining pioblems of the community cuiiency coupons which aie cuiiently gain-
ing such populaiity. As a iule, in }apan, only shopkeepeis can exchange community cuiiency
coupons foi the national cuiiency. Theiefoie, in oiuei to expanu a cuiiency's ciiculation anu
ievive the community, each shopkeepei shoulu use the community cuiiency actively without
saving oi cashing in it immeuiately. Shopkeepeis' behavioui become ciucial foi ciiculation. This
aiticle will tiy to investigate the ielationship between community cuiiency coupon ciiculation
anu shopkeepeis' behavioui. We tieat community cuiiency coupon useu in Tokyo's Nusashino
uistiict as a case anu use a questionnaiie-baseu methou to examine the ielationship. The ie-
seaich makes it cleai that shopkeepeis' compiehension level, psychological iesistance, anu
accounting pioceuuie have a substantial effect on community cuiiency coupon ieuse veisus
We woulu like to thank the Feueiation anu each shopkeepei foi oui uata collection as well as
especially impoitant comments by some paiticipants in the inteinational confeience on Com-
munity anu Complementaiy Cuiiencies anu an anonymous iefeiee.
Email: Kuiita: kuiiiineÇnifty.com;
Niyazaki: fiontiei-spiiit-21-y.mÇnifty.com;
Nishibe: nishibeÇecon.hokuuai.ac.jp
* these two authois contiibuteu equally to this woik
$0 2345 4637 89432:5; Kuiita, K., Niyazaki, Y. anu Nishibe, N. (2u12) 'CC Coupon Ciiculation anu Shopkeepeis'
Behavioui: A Case Stuuy of the City of Nusashino, Tokyo, }apan' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%1
%$"20 3$4$&%25 16 (B) 1S6-14S <www.ijcci.net> ISSN 1S2S-9S47
!" $%&'()*+&$(%
Community cuiiencies (CCs) in the foim of ieueemable
coupons (heieaftei calleu 'CC coupons') aie cuiiently gain-
ing populaiity in }apan. Theie aie seveial types of coupons
available in the countiy. The most well known aie local
coupons (oi gift ceitificates). These coupons caiiy a pie-
mium anu aie usually issueu by }apan's chambei of com-
meice to stimulate consumei uemanu anu escape the pio-
longeu uepiession. These coupons typically have expiiy
uates anu aie geneially useu only at local shops. Consumei
willingness to buy in the community is supposeu to be en-
couiageu by putting a piemium on coupons anu setting
expiiy uates. Typical coupons aie usually ieueemeu imme-
uiately aftei being useu. Bowevei, CC coupons aie also
useu foi volunteei activities anu aie ieuseu multiple times
befoie being ieueemeu.
This type of community cuiiency is auuing vitality to local
communities by its use in both commeicial anu non-
commeicial tiansactions, biiuging the gap between volun-
teei activities anu the economic activities of local shops.
These CC coupons weie intiouuceu in an attempt to ovei-
come the pioblems encounteieu by eailiei CCs useu in
}apan (Nishibe, 2uuS; 2uu6a). 'Eco-money'÷only usable
foi non-commeicial seivices÷has been one of the most
populai types of CC. Recipients tenu to stoie up these CCs,
which they obtain in exchange foi theii non-commeicial
volunteei woik, because they eithei cannot finu any seiv-
ices they want oi cannot use them at local shops. This piob-
lem has pieventeu eco-money fiom ciiculating smoothly.
CC coupons that can only be exchangeu foi cash by shops
have been auopteu in }apan in oiuei to solve this pioblem.
Bowevei, anothei pioblem is that in the case of CC cou-
pons, local shopkeepeis, insteau of using CC coupons foi
othei local shops oi foi non-commeicial seivices, aie apt to
ieueem CC coupons immeuiately aftei ieceipt. This is
mainly because most shopkeepeis puipoit to neeu cash to
buy meichanuise fiom outsiue theii community. This hin-
ueis the active ciiculation of CC coupons.
When this happens, the ielationship between shopkeepeis'
behavioui anu the ciiculation of CCs becomes ciucial. In
oiuei to make ieueemable CC coupons ciiculate success-
fully in a community spheie, shopkeepeis must compie-
henu the puipose of the CC anu commit to ciiculating them
wheievei possible, iathei than ieueeming them immeui-
This aiticle will tiy to show the ielationship between CC
coupon ciiculation anu shopkeepeis' behavioui. Section 1
ieviews the histoiy anu uevelopment of CCs in }apan. Sec-
tion 2 gives an outline of the CC coupon intiouuceu in the
Cential Bistiict of Nusashino City, Tokyo (heieaftei calleu
the Cential Bistiict). Section S analyses the iesults of a
ciiculation expeiiment anu examines the ielationship be-
tween shopkeepeis' behavioui anu the CC coupon ciicula-
tion. Section 4 cooiuinates the iesults of the analysis,
uiaws conclusions on the significance of the CC coupons,
anu notes the issues that iemain to be stuuieu.
," -$.&('/ 0%) )1213(451%& (6 ++. $% 7040%
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In }apan, a vaiiety of CCs have appeaieu since the 197us.
The fiist to gain attention weie the volunteei Laboui Bank
anu eco-money (Izumi, 2uu6; Lietaei, 2uu4). In 197S,
Shoko Nizushima foimally establisheu the volunteei
Laboui Bank. Paiticipants ieceiveu in-house cieuits insteau
of wages in yen as payment foi theii volunteei woik. 0ne
houi of volunteei woik was equal to one point, anu the
points amasseu coulu be exchangeu foi laboui fiom among
paiticipants. This activity is similai to mutual assistance
systems, such as the 'Time Bollais' that weie latei set up
piimaiily in Ameiica (Cahn, 2uuu; Lietaei, 2uu4). A num-
bei of time-ueposit-style CCs latei appeaieu, inspiieu by
the iuea of the volunteei Laboui Bank
. Some foieign CCs
also became known in }apan, such as the Canauian Local
Exchange Tiauing System (LETS) anu the Ameiican Time
Bollais anu Ithaca Bouis. These gieatly affecteu the im-
plementation of CCs. An official of the now-uefunct Ninistiy
of Inteinational Tiaue anu Inuustiy, Toshihaiu Kato, pio-
poseu the concept of eco-money, mouelleu on LETS anu
Time Bollais. Eco-money ciiculates within uistiicts anu ie-
evaluates vaiious enviionmental, social welfaie, euuca-
tional, anu cultuial values (Kato, 2uu1, p.2S).
The use of eco-money has spieau thioughout }apan, uiaw-
ing gieat inteiest as a tool foi ievitalizing local communi-
ties. Fiom the 199us thiough the beginning of the twenty-
fiist centuiy, }apan expeiienceu a boom in the use of CCs.
Theie aie thiee ieasons why CCs became moie common in
}apan. Fiist, the Banshin Eaithquake cieateu momentum
foi moie active civic movements. Seconu, the countiy fell
into the long-teim iecession following the buisting of the
bubble economy anu the Asian cuiiency ciisis. Thiiu, NBK,
the }apanese public Tv bioaucastei, ieleaseu a uocumen-
taiy on authoi Nichael Enue which uealt with the issue of
money |Enue's Willj.
,", 0889:;:<=9 :<K K9@9L>8M9<E >? ++ =>B8><C
In 2uu2, the cential goveinment pioposeu a vaiiety of poli-
cies ielateu to CCs that weie taken up in many paits of the
countiy (Nishibe, 2uu6b). 0ne of these was a system of
special zones foi stiuctuial iefoim aimeu at ielaxing iegu-
lations in oiuei to ievitalize uistiicts. Nany cential anu
local goveinment attempts to establish CCs thioughout
}apan have also incluueu offeis of subsiuies anu platfoims
using computei netwoik systems. 0nuei such ciicum-
stances, CC coupons weie fiist issueu in Rubeshibe Town in
Bokkaiuo. The local coupons that hau been in use up to that
point weie exchangeu foi cash immeuiately aftei use, mak-
International Journal Of Community Currency Research 2012 Volume 16 (D) 136-145 Kurita Et Al
1 Latei, time-ueposit CCs calleu the Fuieai Kippu system by Tsutomu Botta, uiiectoi of the Sawayaka Welfaie Founuation, spieau uomesti-
cally in }apan.
ing it impossible foi them to ciiculate as a cuiiency anu to
cieate auuitional uemanu that woulu piomote on-going
puichasing activity (Nishibe, 2uu4, p. 28). Local coupons
that incoipoiateu the iuea of a CC then appeaieu. Bowevei,
the law at the time uiu not cleaily piohibit multiple ciicula-
tions of local coupons befoie ieuemption, anu so Rubeshibe
Town applieu foi status as a special economic zone anu
iequesteu that the goveinment ieconfiim multiple ciicula-
tions. As a iesult, the iegulations weie ielaxeu anu the is-
sue of local multiple-ciiculation coupons was peimitteu.
Fuitheimoie, in Naich 2uuS, the 0saka Bealthy Commu-
nity Cieation Special Zone anu the Kitakyushu Community
Cuiiency Special Zone weie establisheu as special zones
foi CC puiposes, anu iegulations iegaiuing the issue anu
ciiculation of CCs weie ielaxeu. As a iesult, thiee types of
CC coupons came into existence: uenki, in Neyagawa City,
0saka; Ippo, in Suita City, 0saka; anu 0iion in the Yahata
West uistiict of Kitakyushu. In 2uu7, special measuies ie-
gaiuing iegulations weie implementeu nationwiue, cieat-
ing awaieness of CC coupons acioss }apan. In iesponse, the
village of Saiabetsu in Bokkaiuo set up an incoipoiateu
non-piofit oiganization anu issueu Saiaii, which was us-
able not only foi volunteei activities anu local shopping but
also foi payment of public utilities, facilities, anu local
!"# %&'()*+ ,'*-./'0 1, 22 (1.&130
CC coupons aie special in that they aie multiple-ciiculation
local coupons valiu foi both commeicial anu non-
commeicial tiansactions. They can be useu to iewaiu vol-
unteeis foi theii woik, to buy goous in shops, anu to pay
foi auministiative seivices. They weie intiouuceu in oiuei
to oveicome the limits of the pieviously useu CCs, local
coupons, anu stamps. These CCs hau pioblems ielateu to
theii limiteu iegions of use anu stagnation in ciiculation.
0nlike these eailiei local coupons anu stamps, CC coupons
neeu not be casheu in immeuiately aftei use, but can in-
steau be ie-ciiculateu. This type of CC also uiffeis fiom the
eco-money type of CC in that its spheie of use is not limiteu
to non-commeicial tiansactions but also incluues commei-
cial tiansactions (Nishibe, 2uu6a, p.SS8). This mechanism
is known as the Bouble Tiiangle System (BTS) (Nishibe,
2uu4a, 2uu8; Kichiji anu Nishibe, 2uu8).
With BTS, 'CC ciiculation in non-commeicial tiansactions is
pulleu along by CC ciiculation in commeicial tiansactions,
thus the mechanism allows foi a smoothei ciiculation of
the CC, anu is an attempt to oveicome the uifficulties of CC
stagnation anu continuity in tiansactions' (Nishibe, 2uu8, p.
291). The BTS foims a link between commeicial anu non-
commeicial tiansactions, bioauens the aiea of ciiculation
of the CC, anu invigoiates volunteei activities, mutual assis-
tance, anu economic activities. Yen anu local coupons aie
not oiuinaiily useu in non-commeicial tiansactions such as
volunteei activities anu mutual assistance, wheieas CC
coupons aie useu in these tiansactions, making theii iange
of possible use much bioauei. As a iesult, CC coupons foim
a link between citizens who unueitake non-commeicial
tiansactions anu businesses who unueitake commeicial
ones, theieby fulfilling a iole in builuing social capital. Ta-
ble 1 shows the uiffeiences among CC coupons, eco-money-
type CCs, local coupons, anu stamps.
#" 456789: 4; 6<: 22 89 6<: 2:96=>7 ?8%@
6=826 4; A5%>%<894 286B
#"C D*(EF/1.3G -1 -H' )3-/1G.(-)13 1, 22
The pieceuing section exploieu the histoiy anu uevelop-
ment of CCs in }apan anu biiefly uocumenteu the piocess
that gave iise to CC coupons. uiven that CC coupons have
attiacteu much attention in }apan in iecent yeais, this sec-
tion will focus on the case of Nusashino City in Tokyo. Nu-
sashino City has an abunuance of commeicial establish-
ments anu euucational institutes, with the teitiaiy sectoi
pioviuing the city's main economic suppoit. The financial
capability inuex, which shows the stiength of a city's finan-
cial base, is veiy high foi Nusashino, which is an affluent
city. Cential Bistiict, the focus of this aiticle, has seveial
meichants' associations anu fully engages in festivals anu
othei local activities. Bowevei, with the uiawn-out ieces-
sion anu the opening of laige-scale stoies, the shopping
stieets in Cential Bistiict aie giauually going into uecline.
International Journal Of Community Currency Research 2012 Volume 16 (D) 136-145 Kurita Et Al
CC coupons Eco-money- type
Local coupons Stamps
Transaction types ・Commercial
Non-commercial Commercial Commercial
How to get ・Purchase
・Volunteer work
Volunteer work Purchase Giveaway Promotion
How to use ・Shop
・Volunteer work
Volunteer work Shop Shop
Circulation Multiple Multiple Once Once
Table 1. Differences between CC coupons, eco-money-type CCs, local coupons, and stamps.
Cential Bistiict has thiee main pioblems. The fiist is the
impasse on tiaue stamps. The stamps encouiage consum-
eis to buy moie, inciease puichase iates in paiticipating
shops, anu help to keep consumption within the uistiict.
Nusashino Cential Bistiict Shopping Stieets Feueiation
(heieaftei calleu 'Feueiation') implementeu tiaue stamps
as a pait of its consumei seivices. Bowevei, tiaue stamps
aie on the uecline owing to steep falls in sales tuinovei anu
in the numbei of paiticipating shops. Consumei inteiest in
stamps has also waneu, anu stamps no longei pioviue the
means foi bonuing between consumeis anu the shopping
The seconu issue is the weakness of links between uiffeient
gioups. vaiious gioups aie unueitaking local activities in
Cential Bistiict, but theie appeais to be no stiong links
among them. Such links aie necessaiy to eneigize the
community, but in this case have been inauequately foigeu.
The thiiu pioblem is the aging of society anu the uecline of
mutual assistance. An aging society expeiiences a host of
pioblems. Senioi citizens finu it incieasingly uifficult to
visit shops as they become less mobile. With few oppoitu-
nities to get out anu about, theii feeling of isolation in-
cieases anu they become estiangeu fiom theii local com-
munities. Relations with local iesiuents also become
weakei, anu mutual assistance uwinules.
Cential Bistiict is expeiiencing the types of pioblems out-
lineu above. These can only be iesolveu with the co-
opeiation of local gioups anu iesiuents. A CC has the poten-
tial to biing about co-opeiative ielations among the vaiious
local gioups anu iesiuents anu stiengthen the social capi-
tal. uioups anu iesiuents can use a CC to auu vigoui to
shopping stieets, accommouate an aging society, anu pio-
mote intei-gioup links anu mutual assistance. Feueiation
ueciueu to intiouuce a CC as a way to tap this potential.
!"# %&'()* +*, -(.-/0+1(2* 23 14& 5/6-4/ '-4&7&
This section will outline the uesign anu ciiculation scheme
of the CC, the Nu-chu (heieaftei, Nc), intiouuceu in the
Cential Bistiict. The uesign is shown in Figuie 1. A Nc note
is equivalent to Su yen. The Nc was intiouuceu in oiuei to
piomote intei-gioup links anu mutual assistance, anu
theieby invigoiate the local community anu economy.
Expeiimental Nc ciiculation was implementeu as shown in
Table 2. A two-phase implementation was planneu ovei a
six- to twelve-month peiiou beginning in 2uu8. In all, 11
shopping stieets paiticipateu, with some 14u paiticipating
shops. The total issue in the fiist phase was equal to ap-
pioximately S.7 million yen, anu in the seconu phase
aiounu 2.7 million yen. The amounts of money ieueemeu
weie appioximately S.S million yen in the fiist phase anu
2.S million yen in the seconu phase, meaning that moie
than 9S% was eventually ieueemeu. The fiist issue was
caiiieu out by NP0s, anu the seconu by local meichants'
Figure 1. Front (left) and back (right) of a 50 Mc note.

First stage Second
1. Experimentation
07/2008 -
05/2009 -
2. Total number of
participating shops
145 141
3. Total value of CC
in circulation
¥3,770,200 ¥2,735,400
4. Total value of CC
¥3,513,100 ¥2,556,600
5. Rate of CC re-
93.2% 93.5%
6. Issuers of CC NPOs Local mer-
chants as-
Table 2. Implementation of experimental Mc circulation.
Nc weie issueu by two methous. Table S shows the uetails
of the total amounts issueu. In the fiist methou, Nc was
bought by vaiious gioups anu meichants associations anu
uistiibuteu to local iesiuents as giveaway piomotions fiom
shops anu iewaius foi community seivices. Seivice activi-
International Journal Of Community Currency Research 2012 Volume 16 (D) 136-145 Kurita Et Al
ties incluueu helping with festivals anu othei events, com-
munal cleaning, gaiuening, collecting caps fiom plastic
bottles, anu foigoing the use of plastic shopping bags. In
}apan, the 'no plastic bags' movement is booming fiom an
enviionmental conseivation stanupoint. When a customei
ueclines to take a plastic shopping bag at checkout, he oi
she ieceives a point, anu when a ceitain numbei have been
amasseu, they can be conveiteu into Nc. In this ciiculation
expeiiment, the vaiious gioups anu meichants' associa-
tions bought Nc at a iate of 6u yen pei coupon (woith Su
yen) anu uistiibuteu them to the volunteei woikeis anu
othei iecipients. The face value of the CC is Su yen; foi
eveiy coupon bought by the gioups anu meichants associa-
tions, 1u yen is contiibuteu to iunning costs. The Feueia-
tion also gave away Nc to gioups anu iesiuents as a foim of
auveitising. In the seconu methou, local iesiuents bought
Nc uiiectly anu useu them in the shopping stieets. In this
case, Nc came with a 2u% piemium foi a limiteu time. A
local iesiuent buying 1,uuu yen (2u coupons) of Nc ie-
ceiveu a piemium of 2uu yen (4 coupons). Theie aie no
uiffeiences in function between these anu pievious issues;
the only uistinguishing featuie is that the chaiactei toku,
meaning 'special', is piinteu in a ieu ciicle on the top-iight
siue of the coupon.
Local iesiuents who ieceiveu oi bought Nc useu them as
payment foi mutual assistance, as uonations, on shopping
stieets, on the community bus, anu uuiing events such as
festivals. Nc coulu also be affixeu to stamp caius. Shop-
keepeis who accepteu Nc sometimes useu them in othei
shops. In piinciple, only paiticipating shops weie alloweu
to ieueem Nc foi yen. Resiuents anu shopkeepeis coulu
also uonate Nc. The uonations ieceiveu weie conveiteu
into yen anu given as aiu money foi victims of uisasteis,
funus foi guiue uogs foi the blinu, anu suppoit foi social
welfaie councils. Nc hau an expiiy uate. The uistiibution
flow of Nc is shown in Figuie 2. The aiiows inuicate the
uiiection of the flow. Nc ie-ciiculateu iepeateuly among
gioups anu iesiuents befoie eventually being ieueemeu foi
yen by shopkeepeis oi the company iunning the commu-
nity bus. This figuie shows the stiuctuie of possible uistii-
bution flow. Actually, many Nc coupons weie ieueemeu as
soon as they weie useu in shops as the uotteu aiiow
shows. Nc issueu as CC coupons has boine fiuit. Bowevei,
the pioblem of ieuemption by shopkeepeis have also iisen.
The next section investigates the pioblem of shops ieueem-
ing Nc fiom the stanupoint of the shopkeepeis' compie-
hension anu behavioui.
Figure 2. The possible distribution flow of Mc.
!" $%&%'$() *%+),- '.- $%&/0+&
!"1 233453
Some Nc weie given as gifts anu iewaius foi community
seivices. These weie mainly useu in local shops anu foi the
community bus. Kuiita (2u1u) focuses on the awaieness
anu behavioui of geneial local iesiuents to asceitain the
effects of intiouucing Nc. Accoiuing to Kuiita, Nc giauually
biought about positive effects aftei being issueu in the
foim of CC coupons, as it tiansfoimeu both the awaieness
of intei-gioup links anu consumei behavioui. Bowevei,
theie was one majoi pioblem with Nc: shopkeepeis tenueu
to ieueem it immeuiately. Nost of the coupons given to anu
bought by local iesiuents weie useu in the shopping stieets
anu then ieueemeu (Table 4). Nc ieceiveu by shops coulu
have been useu in othei shops, given as iewaius foi mutual
assistance, useu foi the community bus, oi given as uona-
tions, but much of the Nc issueu enueu up being ieueemeu
even befoie the expiiy uate (Table S).
International Journal Of Community Currency Research 2012 Volume 16 (D) 136-145 Kurita Et Al
Method of Issue First stage % Second stage %
Rewards for community services and
giveaway promotions
¥957,500 25.4 ¥1,427,900 52.2
Donation ¥555,000 14.7 ¥0 0.0
Purchase by consumers ¥2,257,700 59.9 ¥1,307,500 47.8
Total ¥3,770,200 100.0 ¥2,735,400 100.0
Table 3. Mc issued.
Redemption rate of Mc by
shops (%)
First stage 98.4
Second stage 97.7
Table 4. The redemption rate of Mc by shops.
Redemption rate of Mc be-
fore the expiry date (%)
First stage 46.8
Second stage 66.6
Table 5. The redemption rate of Mc before the expiry
This shows that the shopkeepeis' behavioui can have an
effect on the ciiculation of Nc, paiticulaily in teims of the
shopkeepeis' compiehension of CC, that is, whethei shop-
keepeis have a full unueistanuing of the uiffeience be-
tween local coupons anu CC, which can be ieuseu many
times. Foi CC coupons to ciiculate multiple times, shop-
keepeis must be fully awaie of theii significance in the
ways they can best be useu. If a shopkeepei uses Nc as gifts
in othei shops, that value iemains in the community, but
when a shopkeepei ieueems Nc foi yen, the value is lost
fiom the local community. It is theiefoie impoitant to
piomote ciiculation so that shopkeepeis ie-use the cou-
pons. This pioblem also aiose in the 19Sus with the Pios-
peiity Ceitificates issueu by the Canauian piovince of Al-
beita. See Coe (19S8). Bowevei, eailiei ieseaich has not
auequately auuiesseu this issue, which has leu us to believe
that it is necessaiy to analyse the effects of shopkeepeis'
compiehension anu behavioui on the ciiculation of Nc
The next section investigates the ielationship between
shopkeepeis' behavioui anu the ciiculation of CC coupons,
focusing on the shopkeepeis' level of compiehension. Some
pioblems aie also biought to light.
!"# %&'()* +),-./
To caiiy out the ieseaich suivey mentioneu above, shop-
keepeis in the Cential Bistiict shopping stieets weie se-
lecteu to paiticipate in face-to-face questionnaiies anu
inteiviews. Shops wheie Nc hau been accepteu weie tai-
geteu, anu shopkeepeis weie askeu about theii compie-
hension of Nc anu theii ways of using it. Nc hau been ac-
cepteu in 1u6 shops in eithei the fiist oi seconu ciiculation
phase; a total of 84 shopkeepeis agieeu to paiticipate in
the suivey. The suivey containeu questions iegaiuing
compiehension of Nc, whethei it was ieueemeu foi yen,
anu how it was useu. To investigate the level of compie-
hension about Nc, questions weie askeu about six of Nc's
featuies. Theie weie also questions about changes aftei the
intiouuction of Nc anu opinions anu uemanus ielating to
Nc weie collecteu. The questionnaiie that we conuucteu in
the suivey is founu in appenuix. The inteiviews weie con-
uucteu in an open-enueu foimat. In the inteiviews, we
askeu shopkeepeis in uetail foi theii ieasons foi ieuemp-
tion. The suivey was caiiieu out in two stages in 0ctobei
anu Novembei 2u1u.
!"0 1)2&3,2
In oiuei to suivey the uegiee of compiehension of the CC,
subjects weie askeu if they knew the featuies of Nc. Foi
each of the six featuies that a subject knew about, one point
was given, foi a maximum of six points. The six featuies aie
as follows: (1) Nc can be useu as a iewaiu foi volunteei
woik; (2) Nc can be uonateu to welfaie anu enviionment
piotection gioups; (S) Nc can be useu in paiticipating
International Journal Of Community Currency Research 2012 Volume 16 (D) 136-145 Kurita Et Al
2 Seveial pievious stuuies examineu the economic effects of CC coupons. Coe (19S8) notes how theii use in laige shops anu ieuemption
coulu become obstacles to theii ciiculation. Nishibe (2uuS, 2uu6a), Kichiji anu Nishibe (2uu8), anu Yamazaki (2uu8) veiify the economic
effects of CC coupons by consiueiing theii ieuemption, tuinovei, anu velocity of ciiculation. Bowevei, these stuuies uiu not focus on shop-
keepeis' values, compiehension of CC, oi behavioui.
Mean SD
Overall comprehension level (0,6) 4.83 .82
Component features
1. Usable as a reward for volunteer work (0,1) .83 .38
2. Usable as a donation (0,1) .60 .49
3. Usable in participating shops (0,1) .99 .11
4. Usable at festivals and other events (0,1) .87 .34
5. Usable as a stamp card (0,1) .69 .47
6. Usable multiple times (0,1) .86 .35
Table 6. Averages and standard deviations for levels of comprehension of Mc.
shops; (4) Nc can be useu at festivals anu othei events; (S)
Nc can be affixeu to stamp caius; anu (6) Nc can be useu
multiple times within the uistiict without having to be ie-
ueemeu. Table 6 shows the aveiages anu stanuaiu uevia-
tions foi the levels of Nc compiehension. Table 6 shows the
oveiall compiehension levels anu the levels foi each of the
component featuies.
The oveiall compiehension level aveiage was 4.8S. uiven
that the maximum scoie was six, we can see that to some
extent, the main featuies of Nc weie unueistoou. What
about the inuiviuual featuies. As Table 6 shows, shop own-
eis unueistoou that Nc coulu be ieciiculateu, given as a
volunteei activity iewaiu, anu spent at paiticipating shops
anu festivals. The othei two featuies, uonation anu stamp
caiu use, weie not well known. Although theie was some
uegiee of unueistanuing, theie was also vaiiation acioss
Behaviours of shopkeepers %
Reused all or part of the Mc received 41.7
Redeemed all the Mc received 58.3
Total 100.0
Table 7. Rate of reuse of Mc by shopkeepers.
Use Number of times
1. Local shops 47
2. Community bus 2
3. Donations 2
4. Gifts 2
Total 53
Table 8. Shopkeepers’ use of Mc.
Table 7 shows whethei shopkeepeis that accepteu Nc ie-
useu some of them insteau of ieueeming them. It was founu
that 41.7% of shops ieuseu all oi some of the Nc ieceiveu,
anu S8.S% ieueemeu all the Nc ieceiveu. Fiom this iesult,
we can piesume that 41.7% of shopkeepeis weie able to
uistinguish CC fiom local coupons anu use them as such.
Table 8 shows the ways in which shopkeepeis ieuseu the
Nc ieceiveu. Calculations weie maue as follows: if shop A
has thiee Nc notes anu ieuses the fiist Nc in shop B, the
seconu in shop C, anu the thiiu foi the community bus,
these aie counteu as having been useu twice in shops anu
once on the community bus. In this case, thiee Nc notes
weie useu foi thiee uiffeient ioutes. The sum of each
shopkeepeis' use ioutes aie listeu in the Table 8. As Table
8 shows, almost all of the Nc weie ieuseu in shops. Thus,
the majoiity of Nc is ciiculateu multiple times to biing
about consecutive tiansactions, which leaus to a 'multipliei
effect' which cieates effective uemanu. 0n the othei hanu,
S8.S% of shops ieueemeu all the Nc they ieceiveu, suggest-
ing that they faileu to unueistanu the significance of Nc. As
pieviously uiscusseu, shopkeepeis' compiehension shows
some vaiiation acioss featuies. Theiefoie, shopkeepeis'
compiehension level of Nc can have an effect on theii be-
havioui. It coulu be that uiffeiences in the level of CC com-
piehension affecteu levels of its ieuse. Theie coulu be uif-
feiences in the levels of Nc compiehension between the
gioup that ieuseu some of the Nc anu the gioup that ie-
ueemeu all the Nc, which coulu have an effect on ciicula-
tion. Next, we consiuei whethei theie is, in fact, such a uif-
feience between the ieuse gioup anu the ieuemption
gioup, anu investigate the ielationship between CC com-
piehension anu ieuemption.
Table 9 shows the uiffeiences in compiehension levels foi
each featuie between the ieuse anu ieuemption gioups
Theie was no gieat uiffeience between the two gioups in
theii levels of compiehension of Nc usability foi voluntaiy
activities, in paiticipating shops, anu at festivals anu othei
events. Bowevei, theie weie laige uiffeiences between the
gioups in theii levels of compiehension of Nc usability foi
uonations, as stamp caius, anu ieusability. With iegaiu to
these thiee items, the ieuse gioup hau significantly highei
compiehension levels than the ieuemption gioup. Re-
maikably, the uiffeience (24.S%) between the two gioups
in compiehension of Nc's ieusability within the uistiict is
statistically significant (p < .uS). This is paiticulaily impoi-
tant. If a shopkeepei compiehenus that Nc can be useu
multiple times, it woulu not ieueem all the Nc it ieceiveu,
but ieuse at least some, wheieas complete ignoiance of this
featuie woulu leave ieuemption as the only option. As Ta-
ble 6 shows, although Nc ieusability is wiuely known,
analysis of the uata when categoiizeu into these two
gioups ieveals that the gioup that ieueemeu all the Nc
ieceiveu hau a ielatively low compiehension of this fact
(Table 9).
We maue a cioss tabulation to bettei unueistanu the iela-
tionship between the level of compiehension anu behav-
ioui (Table 1u). Among those who ieueemeu all theii Nc,
some aie ignoiant of the fact that the cuiiency can be cii-
culateu multiple times (! in Table 1u). uiven that no shop-
keepeis ieuseu Nc without knowing about multiple ciicu-
lation (" in Table 1u), it is ciucial foi shopkeepeis to ie-
ceive infoimation about multiple ciiculation so that they
ieuse Nc. Bowevei, about 76% of all shopkeepeis ie-
ueemeu all theii Nc, even though many knew about multi-
ple ciiculation (# in Table 1u). Why, then, uiu they ieueem
all theii Nc.
International Journal Of Community Currency Research 2012 Volume 16 (D) 136-145 Kurita Et Al
S We obtaineu infoimation on ieuemption fiom 84 shops, but one subject iefuseu to give iesponses iegaiuing CC compiehension foi pei-
sonal ieasons. As a iesult, the ielationship between compiehension anu behaviouis was analyseu on the basis of uata fiom 8S shops.
In oiuei to answei this question, we analyseu the inteiview
iesults. We founu that shopkeepeis have two main motives
foi ieuemption. Fiist, they have tiouble with the account-
ing pioceuuies. Some shopkeepeis auueu Nc up in sales at
shops. These inuiviuuals hau to ieueem Nc foi yen in oiuei
to count Nc useu in the shops as sales. If these shopkeepeis
ieuse Nc without ieueeming it, theii sales will uecline.
Shopkeepeis usually keep theii sales at shops until they
post theii piofits. Keeping Nc until the time piofit is ie-
coiueu anu ieueeming it then will have no impact on theii
sales. But, if these shopkeepeis ieuse Nc without ieuemp-
tion, theii sales will uiop foi eveiy Nc useu. In oiuei to
avoiu this type of pioblem, they can ieueem Nc using theii
own money anu post it as pait of sales. But, many shop-
keepeis hesitateu to behave in such a way because they
feai confusing theii own money with theii shop's money.
Seconu, many weie psychologically iesistant. Some weie
unwilling to use Nc at othei shops. They thought that the
othei shops hau to ieueem the Nc foi yen befoie the expiiy
uate anu that it woulu iequiie them to make the auuitional
effoit of going all the way to the ieuemption office. Accoiu-
ingly, consiueiate shopkeepeis hesitateu to ieuse Nc be-
cause they thought it woulu cause tiouble foi othei shop-
keepeis. They iesisteu shifting this tioublesome task to
othei shops with whose owneis they weie familiai. Fui-
thei, some shopkeepeis saiu that Nc shoulu be useu only
by local iesiuents, not by shops. They misunueistoou the
natuie of Nc, believing that it was only foi local iesiuents,
anu nevei imagineu that ieusing Nc woulu leau to the ievi-
talization of local communities. As just uesciibeu, this sense
of iesistance among shopkeepeis gave ieuse of Nc an un-
uuly laige amount of influence. Psychological elements aie
not the sole souice of negative impact on multiple ciicula-
tion of Nc. Bowevei, some shopkeepeis uiu show a stiong
iesistance to ieusing Nc, uespite knowing Nc that it coulu
be ieuseu.
To sum up the iesults thus fai, the impiovement of com-
piehension of Nc among shopkeepeis is essential to pio-
mote its ciiculation, but accounting pioceuuies anu psy-
chological iesistance have hau negative impacts on its mul-
tiple ciiculation.
Table10. Relationships between shopkeepers’ behaviour
and comprehension.
Unknown Known
! 24.5% " 75.5%
# 0.0% $ 100.0%
!" $%&$'()*%&) +&, *-.'*$+/*%&)
CCs in }apan have unueigone a peculiai piocess of evolu-
tion. At fiist, the voluntaiy eco-money gaineu populaiity
among community activists. Eco-money was intiouuceu to
fostei mutual suppoit among people within a community.
Bowevei, since theii spheie of use was limiteu to non-
commeicial tiansactions such as volunteei seivices anu
mutual aiu, people who uiu not neeu mutual suppoit hau
uifficulty finuing uses othei than non-commeicial tiansac-
tions. To oveicome this pioblem, CCs that aie also usable in
local shops anu foi payment of public utilities have
emeigeu anu become populai in }apan. Since local shops
must stock with some amount of meichanuise fiom outsiue
theii community, it is ieasonable foi local shops to be able
International Journal Of Community Currency Research 2012 Volume 16 (D) 136-145 Kurita Et Al
Table 9. Differences in comprehension levels for each feature between the reuse group and the redemption group
Reuse group Redemption group Difference p-value
Component features
1. Usable as a reward for volunteer work 88.2 79.6 8.6 .462
2. Usable as a donation 79.4 46.9 32.5 .006**
3. Usable in participating shops 100 97.1 2.9 .853
4. Usable at festivals and other events 88.2 85.7 2.5 .997
5. Usable as a stamp card 79.4 61.2 18.2 .079*
6. Usable multiple times 100 75.5 24.5 .005**
N 34 49
Note: **p-value < .05; *p-value < .1, two-tailed test. Note: **p-value < .05; *p-value < .1, two-tailed test. Note: **p-value < .05; *p-value < .1, two-tailed test. Note: **p-value < .05; *p-value < .1, two-tailed test. Note: **p-value < .05; *p-value < .1, two-tailed test.
to ieueem CCs. A new type of CC in the foim of coupons
was thus cieateu.
In this aiticle, we have exploieu the histoiy of CC coupons
in }apan, focusing on the example of Nusashino City: its
expeiimental ciiculation anu implementation of Nc. We
have also examineu the issues suiiounuing CC coupons.
The most uistinctive featuie of CC coupons is that they aie
ieueemable foi yen anu usable foi both commeicial anu
non-commeicial tiansactions. Bowevei, if CC is ieueemable
in this way, the majoiity shoulu be useu in local shops anu
ieueemeu by the expiiy uate. Bowevei, many shopkeepeis
ieueem them immeuiately.
0ui analysis shows that level of compiehension of Nc, psy-
chological iesistance, anu accounting pioceuuies all have a
substantial effect on Nc ieuse veisus ieuemption, anu as a
iesult, on aveiage Nc tuinovei. Foi this ieason, we piopose
two stiategies to piomote Nc ciiculation. Fiist, piactitio-
neis shoulu euucate shopkeepeis about CC, paiticulaily
about the uiffeience between CC anu local coupons. It can
be haiu foi shopkeepeis to iecognise the essential uiffei-
ence between CC coupons anu local oi meichanuise cou-
pons. Since CC coupons aie ieueemable just as othei cou-
pons aie, shopkeepeis that have no inteiest in CC aie often
apt to consiuei them the same. As a iesult, shopkeepeis
without goou knowleuge of CC tenu to ieueem them imme-
Seconu, softening the psychological iesistance of shop-
keepeis is ciucial to impioving ciiculation of CCs. Foi this
puipose, piactitioneis must uevelop new use ioutes foi
these shops. It is essential to cieate an enviionment in
which shopkeepeis can use Nc in places othei than shops.
Foi example, allowing CC to be applieu to the usage fees of
community facilities manageu by local goveinment woulu
help in this iegaiu. Enabling uonations anu payments to
volunteei woikeis is an impoitant factoi in alleviating ie-
sistance to Nc. It is veiy impoitant to cieate a CC coupon
system well auapteu to shopkeepei attituues. An impiove-
ment in shopkeepei knowleuge anu the uevelopment of a
CC coupon system tailoieu to shopkeepei attituues is an
impoitant factoi in achieving gieatei CC ciiculation
Bowevei, this stuuy uiu not auequately consiuei the impact
of accounting pioceuuies oi shopkeepei attituues on the
multiple ciiculation of CC coupons. Thus, we iecommenu
that futuie ieseaich on CC coupon ciiculation focus on the
ielationship between shopkeepeis' business piactices,
psychological factois, anu coupon ieuse. At the same time,
we must exploie behavioui affecting CC ciiculation fiom
such peispectives as that of how shopkeepeis' ieuemption
piactices may uiffei accoiuing to type of business oi geo-
giaphical aiea.
Cahn, E. (2uuu) No Noie Thiow-away People: The Co-piouuction
Impeiative, Essential Books Ltu.
Coe, v. F. (19S8) "Bateu Stamp Sciip in Albeita," The Canauian
}ouinal of Economics anu Political Science, 4 (1), pp. 6u-91.
Izumi, R. (2uu6) "The Bevelopment anu Futuie Challenges of the
Community Baseu Cuiiency in }apan (in }apanese)," Senshu Kei-
zaigaku Ronshu, 4u (S), pp.97-1SS.
Kato, T. (2uu1) The New Nillennium of Eco Noney (in }apanese),
Keiso Shobo, Tokyo.
Kichiji, N. anu Nishibe, N. (2uu8) "Netwoik Analyses of the Ciicula-
tion Flow of Community Cuiiency," Evolutionaiy anu Institutional
Economics Review, 4(2), pp. 267-Suu.
Kuiita, K. (2u1u) 0utcomes anu Pioblmes of Community Cuiiency
piojects: Evaluation anu Biscussion of the vitalization of local
communities baseu on an Inteiuisciplinaiy appioach (in }apanese),
uiauuate School of Economics, Bokkaiuo 0niveisity, Boctoi thesis.
Lietaei, B. (2uu4) "Complementaiy Cuiiencies in }apan Touay:
Bistoiy, 0iiginality anu Relevance," Inteinational }ouinal of Com-
munity Cuiiency Reseaich, 8, pp.1-2S.
Nishibe, N. (2uu4) Chiiki Tuka No Susume (in }apanese), Bokkaiuo
Shokoukai Rengou.
Nishibe, N. (eu.), (2uuS) A iepoit on the ciiculation expeiimenta-
tion of Tomamae-cho's community cuiiency (in }apanese), Bok-
kaiuo Feueiation of Societies of Commeice anu Inuustiy.
Nishibe, N. (eu.), (2uu6a) A iepoit on the expeiimental ciiculation
pioject of Tomamae-cho's community cuiiency (in }apanese),
Bokkaiuo Feueiation of Societies of Commeice anu Inuustiy.
Nishibe, N. (2uu6b) "Chiiki Tuka no Seisakushiso (in }apanese),"
Shinka Keizaigaku Ronsyu, 1u, pp. SS7-S46.
Nishibe, N. (2uu8) "Netwoik Analyses of Community Cuiiencies:
Towaiu an institutional Besign foi Economic Revitalization anu
Community Rehabilitation (in }apanese)," Infoimation Piocessing,
(Infoimation Piocessing Society of }apan), 49 (S), pp. 29u-297.
Yamazaki, S. (2uu8) "A Stuuy on the Community Cuiiency Pioject
which Stiengthens the Relationships among Local 0iganizations:
in Case of Neyagawa 'uENKI', in 0saka Piefectuie (in }apanese),"
Kansai 0iban Stuuies, 8, pp. 79-97.
Yamazaki, S anu Yahagi, B. (2uu9) "The potentialities anu limita-
tions of community cuiiency: in Case of Neyagawa 'uENKI' in
0saka Piefectuie (in }apanese)," The Quaiteily jouinal of economic
stuuies, S2 (1・2), pp. 9S-1uS.
International Journal Of Community Currency Research 2012 Volume 16 (D) 136-145 Kurita Et Al
4 It is uifficult foi shopkeepeis to change theii accounting pioceuuies because accounting pioblems ielate closely to theii own business
policies. Foi this ieason, changing knowleuge anu attituues is one of the most impoitant stiategies foi impioving CC ciiculation.
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L"#$%$ ,'* 781

International Journal Of Community Currency Research 2012 Volume 16 (D) 136-145 Kurita Et Al
International Journal of
Community Currency Research
Volume 16 (2012) Section D 146-155
Melina Young*
This papei is a consiueiation of the uefinition of baitei cieuit as a seconuaiy cuiiency. The
business-to-business baitei exchange anu the national economy function as a system com-
piiseu of a cuiiency component anu a maiketplace component. Baitei activity incluuing the
cieation of a meuium of exchange is iecognizeu anu uefineu in national legislation of some key
juiisuictions, anu is uefineu ue juie as a pait of the national economy. The baitei cieuit is thus
ue facto uefineu as a cuiiency seconuaiy to the national cuiiency which is the piimaiy cui-
iency. I consiuei thiee points: 1. The iule of "faii maiket value" guiues behavioui in the baitei
exchange, 2. The option foi business to opeiate in both the baitei exchange anu the national
economy is a mechanism linking the two, S. The baitei exchange functions in such a way that
theie can be anti-ueflationaiy uynamics in the iegion, as aiticulateu by Stouuei (2uu9).
The authoi woulu like to thank the oiganizeis anu paiticipants of the Inteinational Confeience
on Community anu Complementaiy Cuiiencies 2u11, 0niveisity of Lyon, wheie a veision of this
papei was piesenteu. Thanks aie also extenueu to the two anonymous ievieweis foi theii help-
ful comments.
* Email: m.youngÇiogeis.com
$0 2345 4637 89432:5; Young, N. (2u12) 'A two-maiketplace anu two-cuiiency system: A view on business-to-
business baitei exchange ' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 146-1SS
<www.ijcci.net> ISSN 1S2S-9S47
"This ievolutionaiy cashless system is the
cuiiency of excess business capacity."
("Welcome to IRTA")
Business-to-business baitei exchanges shaie many of the
chaiacteiistics of social cuiiencies (vasconcelos Fieiie
2uu9) but most aie foi-piofit businesses opeiating in the
piivate sectoi anu have uistinct legal status at least in some
juiisuictions. Nuch of the uevelopment in the business-to-
business baitei exchange inuustiy has occuiieu in the
0niteu States anu in othei countiies such as Austialia in
the last Su yeais wheie baitei exchange is iecognizeu in
legislation. Baitei cieuit exists as a type of sub-national
instiument anu baitei exchange as a type of institution
within the national polity.
I was stiuck by Stouuei's pioposition that the WIR, the
"meuium of payment" of the WIRBank, "coexists with SFi,
as a seconuaiy oi "iesiuual" cuiiency" (Stouuei 2uu9:26).
To extiapolate a geneial statement, the baitei cieuit coex-
ists as a seconuaiy oi iesiuual cuiiency with the national
oi piimaiy cuiiency, stanuing in wheie the piimaiy cui-
iency is unavailable. If this is the case, Stouuei explains,
baitei exchange activity woulu have an anti-ueflationaiy
effect. Some of the exploiations in this papei uialogue with
this pioposition.
This papei is a consiueiation of the uefinition of baitei
cieuit as a seconuaiy cuiiency anu of its functioning. I pio-
pose that the baitei cieuit is uefineu by political juiisuic-
tions to function specifically as a meuium of exchange sec-
onuaiy to the national cuiiency foi the puipose of tiaue of
excess goous anu seivices of businesses in the economy.
Within the confines of these paiameteis, ceitain uynamics
occui anu ceitain mechanisms aie at woik. In this way:
1. The concept anu piactice of "Faii Naiket value" seives
as a iule guiuing nominal piice levels anu valuation of
goous anu seivices tiaueu within baitei exchanges, 2. The
option available to businesses to paiticipate in the baitei
exchange anu the national economy acts as a mechanism
that links togethei the baitei exchange anu the national
economy, anu S. The baitei exchange functions as a secon-
uaiy maiketplace anu seconuaiy cuiiency in such as way
theie can be anti-ueflationaiy uynamics in the iegion.
) +,(-.$%'"&
)/) %01234526473
In a stuuy of Baiteicaiu, a business-to-business baitei ex-
change in Austialia, the management attiibuteu the success
of baitei exchanges to "effective auministiation, iigoious
oiganizational contiol, anu aggiessive maiketing to obtain
the iight mix of high uemanu seivices anu piouucts within
the exchange" (Biich anu Liesch 1998:SS2). Nembei busi-
nesses concuiieu, iepoiting they felt that effective man-
agement was a moie impoitant factoi than pooi economic
climate to the success of the exchange.
The typical baitei exchange is a small business manageu by
the ownei with a small staff. Nembeiship is compiiseu of
small anu meuium businesses opeiating in the locality oi
iegion, the ieach ueteimineu in laige pait by the ownei's
"local knowleuge" anu ielationships with aiea businesses
(Whitney 2u1u). Baitei exchanges have on aveiage Suu
membei businesses (Napoli-Cohen 2u1u). These busi-
nesses noimally make S to 1S peicent of theii total annual
sales in the baitei exchange's maiketplace (Biich anu Li-
esch 1998, Napoli-Cohen 2u11). Nembeiship is gianteu by
the ownei anu iequiies payment of a membeiship fee. The
baitei exchange opeiates as a kinu of piivate club.
0ne of the main benefits to businesses of joining a
business-to-business baitei exchange is the oppoitunity to
make new business connections anu to become pait of a
netwoik which leau to new cash sales anu clients (Whitney
2u1u). Benefits incluue, "utilizing excess capacity, cleaiing
slow-moving inventoiy while maintaining piice integiity,
netwoiking, ueveloping maikets, captuiing auuitional sales
anu incieaseu piofits, pieseiving cash flow, anu accessing
pieviously nonaffoiuable peisonal goous anu seivices."
(Biich anu Liesch 1998:SS1) These benefit the business as
a whole anu not only the membei's tiaue within the baitei
exchange. This inuicates a uepenuence of the baitei ex-
change upon its membeis' activity in the laigei, national
economy. The baitei exchange acts as a maiketplace to
iealize activity that is pait of the national economy.
Limitations of the baitei exchange incluue uifficulty by
membeis in exhausting theii suiplus cieuits, baitei being
less suiteu to goous than seivices, anu the limiteu iange of
goous anu seivices available in the exchange (Biich anu
Liesch 1998:SS2).
While the baitei exchange is a zeio balance, mutual cieuit
system anu theiefoie the same amount of buying anu sell-
ing must occui to keep the exchange viable, the benefits
iuentifieu have laigely to uo with enabling the business to
expanu anu to sell. Is theie possibly a gieatei 'push' oi mo-
tivation among membeis to sell theii goous anu seivices
than theie is a uiaw to the baitei exchange as a maiket foi
buyeis. Baitei exchange owneis auuiess the constant neeu
to stimulate spenuing by expanuing the membeiship anu
the vaiiety of goous anu seivices on offei (Logie 2u1u,
Napoli-Cohen 2u1u). If the uesiie to sell iemains highei
than the uesiie to buy in the baitei exchange, howevei,
othei uynamics coulu emeige.
)/8 !3970:26473 #;<=37>71?
As the baitei exchange inuustiy evolves, the offeiing of
piouucts anu seivices continues to giow. Seveial baitei
exchange management softwaie application companies
offei seivices which incluue softwaie licensing anu secuie
uata stoiage. These applications pioviue almost any baitei
exchange opeiatoi tools to ieuuce auministiative cost anu
human eiioi anu to iaise the efficiency of the exchange.
The baitei cieuit system beais a ielation to the closeu,
'club' membeiship of the baitei exchange. Paiticipation is
International Journal Of Community Currency Research 2012 Volume 16 (D) 146-155 Young
exclusive anu paiticipants aie known to each othei anu the
exchange opeiatoi. Tiansaction infoimation incluuing ac-
count balances is completely known to the baitei exchange
opeiatoi anu uata is geneiateu anu iecoiueu.
Stouuei notes that infoimation technology may make pos-
sible "completely centializeu cieuit accounting....in uecen-
tializeu maikets." (Stouuei 2uu9:6) Business-to-business
baitei exchange as it is cuiiently piactiseu seems to fit this
uesciiption. Baitei cieuit in baitei exchange is stiuctuieu
as a kinu of infoimation system. No sciip oi "physical sup-
poit meuium" (vasconcelos Fieiie 2uu9) is useu but iathei
a system of accounts. With the wiuespieau availability of
sophisticateu baitei exchange management softwaie appli-
cations, the usual way to stiuctuie anu manage the baitei
cieuit system is essentially as an infoimation system.
vasconcelos Fieiie (2uu9) posits that social cuiiency
shoulu "ciiculate in a ciicle" foiming a closeu loop. Failuie
to close the loop can leau to ueteiioiation of the system.
This occuis sometimes with systems wheie sciip oi a
physical foim of meuium of exchange is useu anu "leakage"
takes place. In contiast, "...when theie is no physical sup-
poit meuium ciiculating in the social cuiiency system, but
only a set of iecoiueu infoimation ielating to tiansactions
caiiieu out by paiticipants in the system .... the long-teim
iisks anu costs of sustaining the system aie ieuuceu." (va-
soncelos Fieiie 2uu9: 84-8S) This uesciiption can be ap-
plieu to business-to-business baitei exchange. The
business-to-business baitei exchange typically opeiates as
a centially manageu system with an accounting anu a mai-
ketplace component.
While softwaie applications aie not iuentical to each othei,
they neeu to auuiess common issues faceu by baitei ex-
change owneis. The functions packageu in an application
embeu best piactices in the inuustiy anu the softwaie be-
comes, in effect, a means by which piactices aie spieau anu
become common. Thus, thiough the uevelopment anu pio-
lifeiation of baitei exchange management softwaie appli-
cations, stanuaius of piactice aie shaieu anu shapeu. As
well, baitei exchanges aie becoming incieasingly net-
woikeu thiough theii softwaie pioviueis who builu anu
opeiate common softwaie platfoims. These aie multi-
exchange cleaiinghouses owneu anu opeiateu by baitei
exchange softwaie pioviueis oi opeiateu by inuustiy oi-
ganizations. The option to join a multi-exchange netwoik is
offeieu as one of many seivices that baitei exchange own-
eis can puichase in theii softwaie licensing packages.
The baitei exchange inuustiy has uevelopeu netwoiks of
baitei exchanges. The Inteinational Recipiocal Tiaue As-
sociation (IRTA) opeiates 0niveisal Cuiiency, the laigest
multi-exchange platfoim of the Nouein Tiaue anu Baitei
Inuustiy with about 1uu paiticipating baitei exchanges.
Thiough 0niveisal Cuiiency, membei businesses can tiaue
with membei businesses of othei baitei exchanges. 0ni-
veisal Cuiiency opeiates thioughout the 0niteu States anu
beyonu, the baitei exchanges foiming noues of the net-
woik that connect membei businesses. Not all baitei ex-
changes paiticipate anu of those that uo only about 1u-
1S% of theii membei businesses paiticipate. Business-to-
business baitei exchange iemains laigely iooteu in theii
paiticulai localities oi iegions anu the types of goous anu
seivices offeieu by membei business aie mostly appiopii-
ate foi exchange in the locality oi iegion (Whitney 2u1u).
Bowevei, infiastiuctuie exists anu continues to uevelop foi
piivate, netwoikeu, tiansnational, centializeu, infoimation
technology-stiuctuieu baitei exchange systems.
0niveisal Cuiiency is iun fiom an infoimation technology
platfoim owneu anu opeiateu by uETS Plus, a baitei ex-
change management softwaie pioviuei. 0thei baitei ex-
change management softwaie pioviueis such as Baitei BCL
builu on the fact that theii baitei exchange ownei clients
use theii same piopiietaiy softwaie to builu a common
platfoim. Baitei exchange owneis can choose to join a
netwoik of exchanges who aie othei clients of Baitei BCL.
Baitei BCL netwoiks them thiough the platfoim anu mem-
bei businesses of baitei exchanges in this netwoik can
seamlessly tiaue with each othei ovei this platfoim.
! #$%&'&'( )*+*,$-$+.
!/0 12345 .64678
The legal status of community anu complementaiy cuiien-
cies has histoiically been an issue, a key point of contention
being the constitutionality of the cieation of "money".
While social money exist by-anu-laige with uncleai legal
status (vasconcelos Fieiie 2uu9) business-to-business
baitei has cleai legal status at least in some key juiisuic-
tions. In the 0niteu States, a legal status was secuieu unuei
the Tax Equity anu Fiscal Responsibility (TEFRA) Act of
1982 uue in laige pait to the auvocacy of the Inteinational
Recipiocal Tiaue Association. 0nuei this act, baitei ex-
changes aie gianteu the status of "thiiu paity iecoiu keep-
eis" with the same fiuuciaiy iesponsibilities as banks
(Whitney 2u1u). Baitei exchanges aie iecognizeu as cieat-
ing theii own meuium of exchange, anu income eaineu in
"tiaue uollais" is taxable. Baitei exchanges anu businesses
aie obligateu to iepoit annually on income eaineu in baitei
exchange to the 0S Inteinal Revenue Seivice (IRS) with
Foim 1u99-B "Pioceeus fiom Biokei anu Exchange Tians-
Accoiuing to the IRS, "A baitei exchange functions piimai-
ily as the oiganizei of a maiketplace wheie membeis buy
anu sell piouucts anu seivices among themselves." ("Bai-
teiing Tax Centie") Baitei maiketplace activity is vieweu
as an activity of the national economy anu hence taxable
anu baitei cieuit is iecognizeu as an opeiating within na-
tional institutions. Baitei cieuit is uefineu ue juie as a sub-
national instiument with iules uefining the paiameteis of
!/! %49: ,4:;26 <4572
Tiaue in the baitei exchange maiket is expecteu noimally
to take place without the use of national cuiiency. It is also
expecteu that "faii maiket value" piices be useu, "...when a
baitei exchange membei sells a piouuct oi seivice to an-
International Journal Of Community Currency Research 2012 Volume 16 (D) 146-155 Young
!"#$% '$'($%) "#$*% (+%"$% +,,!-." */ ,%$0*"$0 1!% "#$ 1+*%
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International Journal Of Community Currency Research 2012 Volume 16 (D) 146-155 Young
Baitei cieuit comes into existence as items aie solu anu
puichaseu. It noimally has no value outsiue the exchange
by ueciee. Foi example, the IRTA states in its Teims anu
Conuitions that, "...Tiaue Bollais shall not be consiueieu
legal tenuei oi secuiity by eithei the 0C oi its Nembeis...".
The zeio balance account stiuctuie of the baitei exchange
limits the iole baitei exchange plays foi the membei busi-
ness. Businesses as piofit-making entities aim to have, gen-
eially speaking, positive account balances. This is possible
in the national economy. It is not possible in the baitei
exchange, howevei, foi all membeis to holu positive ac-
count balances. So the membeiship on the whole cannot
sell moie than it buys to accumulate cieuits anu the use of
the baitei exchange can only be seconuaiy foi a noimal
business. Nembeis aie motivateu to paiticipate in the bai-
tei exchange to sell theii excess inventoiy anu seivice ca-
pacity anu also by the facility it pioviues to conseive cash¡
national cuiiency. This is achieveu thiough the capacity to
buy without oi at a ieuuceu amount of national cuiiency.
The limiteu usefulness of the baitei cieuit pioviues a mai-
ket cleaiing mechanism in the baitei exchange. The baitei
cieuit functions noimally only as a meuium of exchange
pioviuing a membei little oi no benefit as a type of asset.
By contiast, national cuiiency is - at least in a stable econ-
omy - a valuable asset that businesses stiive to holu anu
accumulate anu is ielatively piecious anu scaice. Foi this
ieason, a seconuaiy maiketplace using national cuiiency
as the meuium of exchange may not cleai as effectively.
! # $%&' () *'+,(-#. '/(-(0%
The WIRBank likens its own opeiation within the "WIR
sectoi" to that of a cential bank (Bubois 2u1u). Inueeu, the
WIRBank is stiuctuieu moie complexly anu with auuitional
featuies that allows it to cieate cieuit anu make loans
(Stuuei 1998) that simple mutual cieuit baitei exchanges
uo not have. In most business-to-business baitei exchanges
the exchange ownei is highly involveu in managing the
membeiship anu the maiketplace as well as the cieuit sys-
tem anu membei accounts. The tiaue in goous anu seivices
among membeis is, in any case, a key featuie of business-
to-business baitei exchange. The business-to-business
baitei exchange coulu be uesciibeu as a type of iegional
economy with a centializeu auministiation, a maiketplace
anu a meuium of exchange.
!12 # $34567889:6; <:= $345><8?9@ A;B@9>
Exchange in business-to-business baitei is in "excess busi-
ness capacity". Typically, S to 1S% of a membei business'
total sales aie maue in a business-to-business baitei ex-
change, the iest in the national maiket anu beyonu. The
membei business' ability to piouuce anu uelivei foi the
baitei exchange maiket is uepenuent upon its activity on
the whole. At the same time, its activity in the baitei ex-
change coulu help to sustain anu even giow the business.
The business expects the main pait of its income to be ue-
iiveu fiom its sales in the national maiketplace. It paitici-
pates in the baitei exchange as a seconuaiy activity to ue-
iive some value fiom its excess business capacity. The
business is an active membei in two maiketplaces, that of
the baitei exchange anu that of the national economy.
Thiough the activity of membei businesses in both the
national maiket anu the baitei exchange maiket a ielation-
ship between the two maikets is cieateu.
Baitei exchanges tiy to opeiate within ceitain paiameteis,
namely that: 1. Business-to-business baitei tiansactions
aie tieateu as cash tiansactions, at least foi taxation pui-
poses wheie this applies, 2. The baitei cieuit unit e.g. the
baitei uollai is ueemeu to have the same constant nominal
value as the national uollai i.e. 1:1, anu S. The piice of items
tiaueu in baitei cieuit claimeu foi taxation puiposes be at
"faii maiket value". The baitei uollai by uefinition func-
tions iuentically to the national uollai within the baitei
exchange as a meuium of exchange. The accepteu piactice
is to keep piices in the baitei maiketplace anu baitei
cieuit system at the same nominal levels as in the national
maiketplace anu national cuiiency system.
These uefinitions imply constiaints that impact the man-
agement of the baitei exchange. Expeiience has shown
theie to be a common tenuency to inflation oi cieation of
uiscount maikets of baitei cieuit (Stuuei, T. 1998, Befila,
B. 1994, Biich anu Liesch 1998). Theie aie inuications as
well that small baitei exchanges commonly expeiience
ueciease oi cessation of tiaue activity by membeis aftei a
"peiiou of initial enthusiasm" (Stuuei 1998:S2). Baitei
exchange owneis expenu much time anu eneigy stimulat-
ing exchange between membeis anu expanuing the mem-
beiship anu offeiing (Logie 2u1u, Napoli-Cohen 2u1u as
citeu above). Small baitei exchanges seem to stabilize at
aiounu Suu membeis (Napoli-Cohen 2u1u) anu thiesholu
estimates iange between "seveial hunuieu to a few thou-
sanu" (Stuuei 1998:S9). In this iespect, the WIRBank with
about 6u,uuu business membeis anu WIR89u million in
ueposits (Bubois 2u1u) cannot be ieauily compaieu to the
small baitei exchange. As impoitant at least is the WIR-
Bank's capacity to pioviue loans to membeis. The uetails of
WIRBank's stiuctuie will not be elaboiateu heie but Stuuei
iuentifies this as "the most poweiful uiiving foice" to WIR-
Bank's opeiation (Stuuei 1998:S2). A full exploiation of the
systemic natuie of baitei exchange incluuing the uynamics
of anu between inflation, uiscount maikets, excess supply
anu excess uemanu lies beyonu the scope of this papei.
It is possible that the stiongei uiivei of uemanu in baitei
cieuit is a common uesiie to sell iathei than a uesiie to buy
in the baitei exchange maiketplace oi that theie exists a
uynamic between the uemanu anu supply of goous anu
seivices in the baitei exchange maiketplace that ielates to
the uemanu foi baitei cieuit. While the level of baitei
cieuit cieateu uoes iepiesent available buying powei, it is
also an inuication of the sales that aie maue. It can theie-
foie not be assumeu that the uemanu foi baitei cieuit inui-
cates a uemanu foi puichasing powei. A baitei exchange
with stiongei uesiie to sell than to buy in its maiketplace
coulu expeiience pioblems, possibly chionic unuseu posi-
tive account balances oi a uiscount maiket foi baitei
International Journal Of Community Currency Research 2012 Volume 16 (D) 146-155 Young
The baitei exchange ownei imposes iules anu enfoice-
ments to cuibs inflation anu uiscount maiket tenuencies.
Foi example, the WIRBank uisalloweu a uiscount maiket in
WIR beginning in 197S (Stouuei 2uu9) anu the IRTA iec-
ommenus the ievoking of membeiship of any business that
inflates its baitei exchange piices (Whitney 2u1u). Allow-
ing foi a poition of a tiansaction to be in cash may be an-
othei way of contiolling the value of the baitei cieuit. IRTA
finus it acceptable piactice to allow a poition of laige
tiansaction i.e. $2S uuu anu ovei to be uone in cash¡
national cuiiency. The puipose is to allow the sellei to
covei cash costs foi mateiial inputs in a contiact. Anothei
cost is the tiansaction fee imposeu by the baitei exchange
ownei foi the seivice it pioviues i.e. the oppoitunity to
tiaue in the baitei exchange, foi example, 6% of the piice
of the item to the buyei anu 6% to the sellei (Logie 2u1u)
to be paiu in national cuiiency. Tax woulu also be paiu in
national cuiiency. The WIRBank allows its membeis to
ieceive a poition of its sales ievenue in cash, anu allows
membeis to ueciue on this piopoition. Nost membeis ie-
ceive Su-Su% of theii ievenue in WIR anu the iest in Swiss
Fiancs (Bubois 2u1u). This policy coulu have an effect on
stabilizing the value of the WIR oi baitei cieuit as it ie-
uuces the cash cost of tiansacting in baitei cieuit.
!"# %&'()*+,-. /010*,+2 03( 4*'3'5,.6 '7 8*09.
Noie funuamentally, the ability of business-to-business
baitei exchanges to meet these constiaints uepenus upon
membei businesses' capacity to uelivei goous anu seivices
at competitive oi "faii maiket" piices. This woulu be uiffi-
cult to achieve if membeis weie not businesses foi this
iequiies maiket-level piouuction efficiency anu know-how
to piouuce at competitive quality anu piices. Consiuei a
simple example - an inexpeiienceu haiicuttei with no busi-
ness location might not be able to gauge the quality anu faii
maiket piice foi his seivice on the baitei exchange. A pos-
sible iisk to the value of the exchange anu to the value of
the baitei cieuit is intiouuceu. This coulu leau to membeis
seeking compensation foi the iisk oi cost of holuing baitei
cieuits. Conveisely, a piofessional salon with expeiienceu
staff coulu biing value to the exchange anu the baitei
cieuit. To meet the constiaints of piicing at faii maiket
value the baitei exchange ownei must manage quality - of
the membeiship anu that of the goous anu seivices offeieu.
In being a maiket of excess business capacity, business-to-
business baitei exchange benefits fiom the capacity of the
membei businesses to piouuce at the quality anu quantity
that they uo as membeis of the laigei, national economy.
Quantity oi availability is not necessaiily the same as that
on the national maiket but supply is geneially not an issue
as membeis have unuseu capacity they aie motivateu to
sell. Noie impoitantly, capacity of the paiticipating busi-
ness is geaieu to the scale anu scope of theii maiket in the
national economy. If only S to 1S% of a business' total sales
aie maue in baitei exchange it follows that the total vol-
ume of items piouuceu is 2u to 7 times that which is of-
feieu by the business in the baitei exchange. The unit cost
foi the items is accoiuingly low in the baitei exchange iela-
tive to the volume of items offeieu. Its cost maigins aie
ielative to the piices it chaiges on the national maiket. In
auuition, it paiticipates in the baitei exchange with excess
capacity which, if unsolu, woulu iepiesent not only lost
income but uniecupeiateu sunk cost. This pioviues the
business with a maigin anu a motivation to be able to piice
items in the baitei exchange at faii maiket value.
uiven the paiameteis uefineu by law anu common piactice,
business-to-business baitei exchange is uepenuent upon
the national maiket. Noie piecisely, its maiket in excess
business capacity neeus the low unit piouuction cost avail-
able to its membei businesses to be able to piice as faii
maiket anu same nominal levels as in the national econ-
omy. Nembeis' inuiviuual choices to paiticipate in the
business-to-business baitei exchange pioviues a mecha-
nism that makes the auheience to these constiaints possi-
ble. Nembeis can choose not to paiticipate, foi example,
when cost maigins aie too high oi excess capacity levels
too low foi it to be woithwhile to put any paiticulai item
on offei, oi to put a gieatei volume of items on offei in the
baitei exchange maiket when uemanu falls in the national
Thiough the activity of membei businesses, the business-
to-business baitei exchange anu the national economy
become inteitwineu. The baitei exchange is anu must be a
maiketplace of excess business capacity to sustain the
value of the baitei cieuit anu maintain the viability of the
system as a whole. The baitei exchange is foi the membei
business a seconuaiy maiketplace. Its main activity is in
the national economy. The national economy pioviues the
piimaiy maiketplace anu piimaiy cuiiency. The baitei
exchange pioviues the seconuaiy maiketplace anu secon-
uaiy cuiiency. Togethei, the baitei exchange anu the na-
tional economy function as a two-cuiiency anu two-
maiketplace system.
!"! :..1,3; 3'5,309 1&,*. 9.-.96 6+0<9. ,3 +=. &.;,'3> ?
+@'A50&B.+190*. 03( +@'A*)&&.3*2 626+.5
Businesses in a iegion noimally face falling uemanu uuiing
a uowntuin in the economy. The fall in uemanu tianslates
uiiectly into fall in sales anu fall in income foi the business.
At the same time, excess capacity incieases as sales ue-
ciease. Falling income leaus to a cashflow squeeze foicing
businesses to ieuuce costs e.g. by laying off woikeis oi
ieuucing piouuction. To maintain sales anu income, in the
face of uecieaseu uemanu anu highei levels of excess in-
ventoiy anu capacity, businesses often iesoit to ieuucing
piices to attiact customeis. In a iegion with one, piimaiy
cuiiency, the loweiing of piice is one of the main tools
available to a business expeiiencing slumpeu sales. In a
iegion wheie all businesses lowei theii piices, howevei,
theie might be no inciease in sales anu possibly a fall in
income anu inciease in unemployment. This may leau to a
uownwaiu spiial of a geneial fall in piices, oi ueflation.
Stouuei (2uu9) suggests that if baitei cieuit functions as a
seconuaiy, iesiuual cuiiency to the piimaiy, national cui-
iency that baitei exchange activity woulu have an anti-
ueflationaiy effect. The following is an exploiation of this
International Journal Of Community Currency Research 2012 Volume 16 (D) 146-155 Young
A iegion with business-to-business baitei exchange pio-
viues businesses with an auuitional option. Businesses can
put theii (giowing) excess capacity to sell in the baitei
exchange maiketplace. The possible inciease in activity in
baitei exchange uuiing uowntuins (Stouuei 2uu9) sug-
gests that uemanu anu supply of goous anu seivices in-
ciease togethei in the baitei exchange uuiing a uowntuin.
An inciease in uemanu coulu be uue to businesses seeking
to pieseive cashflow anu to cut costs by ieuucing cash pui-
chases i.e. in the national maiketplace anu national cui-
iency by making puichases in the baitei exchange insteau.
An inciease in supply coulu be uue to membei businesses
putting a gieatei volume of goous anu seivices on the bai-
tei exchange maiket as excess capacity incieases. The con-
cuiient inciease in uemanu anu supply in the baitei ex-
change coulu help to keep piices stable in the exchange.
The business-to-business baitei exchange coulu help pio-
viue piice stability uuiing uowntuins in a iegion in two
By maintaining stable piices within the baitei exchange,
By helping to maintain stable piices in the national mai-
ketplace anu cuiiency by pioviuing a seconuaiy maiket-
place anu cuiiency foi giowing excess capacity.
The choice available to inuiviuual businesses to paiticipate
in the baitei exchange anu the national economy is the
mechanism linking the two to cieate a two-cuiiency anu
two-maiketplace system.
The baitei exchange is a seconuaiy maiketplace foi excess
business capacity. It pioviues the business with a means to
uistinguish items to sell in the national maiketplace anu
national cuiiency fiom items to sell in the baitei exchange
maiketplace anu baitei cieuit system. The baitei exchange
pioviues the business with a sepaiate facility to iecupeiate
anu lowei costs fiom excess capacity. This is an alteinative
to lumping a giowing inventoiy into the offeiing on the
national maiketplace when sales aie uecieasing. Insteau,
the giowing excess capacity can be put in the baitei ex-
change maiketplace wheie uemanu may also be giowing
because othei businesses expeiiencing the same uowntuin
may tuin to the baitei exchange foi buying to conseive
cashflow in the national, piimaiy cuiiency. Piice levels in
the baitei exchange coulu iemain ielatively stable if supply
anu uemanu in the exchange both inciease. At the same
time, the conseivation of cashflow thiough the capability to
buy in the baitei exchange maiketplace plus the sepaiation
of piicing fiom that in the national maiketplace pioviue the
business with the means to maintain its national cuiiency
piice levels.
Stable piices in national cuiiency woulu infoim the uynam-
ics of the baitei exchange. Piicing within the baitei ex-
change, following the iule of faii maiket piicing, follows
piicing in the national maiketplace. If piices in national
cuiiency aie stable, piices in the baitei exchange woulu
tenu to ieflect this.
In a iegion facing uowntuin, these uynamics coulu have
anti-ueflationaiy effects.
!"# %&'()*++,-). /+0)0-1 2.34,5
The baitei exchange has a two-cuiiency piicing mecha-
nism that pioviues an alteinative way to piice. This is a
system that iequiies a ceitain ielationship between the
piimaiy, national cuiiency anu the seconuaiy, baitei
cieuit. That is, that the baitei cieuit functions like the na-
tional cuiiency but has a limiteu use anu theiefoie value.
This uesciibes how the baitei cieuit is uefineu thiough
legislation anu thiough inuustiy policy anu piactice i.e. the
baitei uollai is uefineu as usually having the same nominal
value as the baitei uollai, faii maiket piices aie to pievail,
anu the baitei cieuit functions only as a meuium of ex-
change anu has no stoie of value. In this way, the piimaiy,
national cuiiency anu the seconuaiy, baitei cuiiency can
function seamlessly in a two-cuiiency system.
Piicing can be expiesseu seamlessly in nominal values be-
tween the two cuiiencies when they both iefeience the
piimaiy oi national cuiiency. The "piice" meaning the cost
of an item can be uiffeientiateu by changing the piopoition
of each cuiiency iathei than by changing the nominal
value. This is because the seconuaiy cuiiency is woith less
than the piimaiy cuiiency uue to its moie limiteu useful-
ness. A highei piice then coulu be expiesseu by incieasing
the piopoition of national oi piimaiy cuiiency in the piice,
a lowei piice as a lowei piopoition of piimaiy cuiiency.
This two-cuiiency piicing mechanism is useu by the WIR-
Bank by allowing piices to be expiesseu in a mix of WIR
anu SFi anu by IRTA by allowing laige tiansactions to be
piiceu paitly in national cuiiency.
The iegion with a business-to-business baitei exchange
pioviues businesses with the facility to opeiate in a two-
maiketplace anu two-cuiiency system. This two-cuiiency
system pioviues a mechanism to maintain nominal piice
levels while ieacting to changes in uemanu in the national
maiketplace anu foi the national cuiiency. This woulu have
an anti-ueflationaiy effect in the iegion.
The business-to-business baitei exchange is iecognizeu in
some juiisuictions. In the 0niteu States it is uesciibeu as
the oiganizei of a maiketplace foi exchange among busi-
nesses. Baitei exchanges have the status anu iesponsibility
of thiiu paity iecoiu keepei as banks uo. Tiansactions in
baitei cieuit aie tieateu like tiansactions in cash foi taxa-
tion puiposes. The activities of baitei exchange aie tieateu
in law as integial to the national economy. The baitei
cieuit seems then to be implieu oi uefineu as a stanu in foi
cash. That is, the national cuiiency is the iefeience anu
piimaiy cuiiency that uefines the nominal value of the
baitei cieuit oi seconuaiy cuiiency i.e. always iuentical to
the national cuiiency. Piicing in the baitei exchange mai-
ketplace is uefineu by that in the national maiketplace i.e.
faii maiket value. The seconuaiy, baitei cuiiency is ue-
fineu as the functional equivalent of the piimaiy, national
International Journal Of Community Currency Research 2012 Volume 16 (D) 146-155 Young
cuiiency foi baitei exchange tiaue. But it is of lessei value
because of its limiteu usefulness so it is a cuiiency that
extenus the use of the national cuiiency into the economy
via the baitei exchange. It is a iesiuual (Stouuei 2uu9) oi
extension cuiiency of the national cuiiency by uefinition.
The business-to-business baitei exchange also pioviues
the iegion with a sepaiate maiketplace that allows busi-
nesses to uistinguish items to sell on the national maiket-
place fiom items to sell in the baitei exchange. Tiaue in
this seconuaiy maiketplace is facilitateu anu maue sepa-
iate in pait by the baitei cieuit system. The baitei ex-
change is a facility that pioviues the possibility foi busi-
nesses to maintain stable piice levels in the national mai-
ketplace anu national cuiiency by pioviuing this seconuaiy
maiketplace. It also offeis the possibility of maintaining
stable piice levels in the baitei exchange system if uemanu
giows with supply anu piicing ieflects faii maiket value.
Business-to-business baitei exchange pioviues the iegion a
facility foi a two-maiketplace anu two-cuiiency system.
The inteichangeability of the piimaiy, national cuiiency
anu the seconuaiy, baitei exchange cuiiency is cieateu by
uefinition i.e. same nominal value anu faii maiket piicing
within the baitei exchange system. Auuitionally, the baitei
cieuit is of lessei value because of its limiteu use. The in-
teichangeability but uiffeience in value of the piimaiy anu
seconuaiy cuiiency cieates a two-cuiiency piicing mecha-
nism that can maintain stable nominal piice levels in the
iegion. This is because cost can be expiesseu by changing
the piopoitions of piimaiy anu seconuaiy cuiiencies in the
piice without changing piice level.
The business-to-business baitei exchange acts as an exten-
sion into the national economy, the baitei exchange mai-
ketplace as a seconuaiy, extension maiketplace anu the
baitei cuiiency as a seconuaiy, extension cuiiency. Nem-
bei businesses choosing to paiticipate in the national
economy anu in the baitei exchange is the mechanism ie-
lating the two systems. When businesses use the baitei
exchange uuiing times sales aie falling in the national
economy, the baitei exchange pioviues anti-ueflationaiy
"About the Baitei Association National Cuiiency: A Tiaue Ex-
change foi Tiaue Exchanges." National Association of Tiaue Ex-
changes. 21 }anuaiy 2u11.
Austialia. Austialian Taxation 0ffice. "Baitei anu Baitei Ex-
changes." 17 }anuaiy 2u11.
"Baiteicaiu Bistoiy." Baiteicaiu. 17 }anuaiy 2u11.
Biich, Bawn anu Petei W. Liesch. "Noneyless Business Exchange:
Piactitioneis' Attituues to Business-to-Business Baitei in Austia-
lia." Inuustiial Naiketing Nanagement. (27)(1998):S29-S4u.
Canaua. Revenue Canaua. "IT-49u Baitei Tiansactions."17 }anuaiy
2u11. <http:¡¡www.cia-aic.gc.ca¡E¡pub¡tp¡it49u¡it49u-e.html>
"Cash Substitute uieases Business Wheels." swissinfo.ch. 21 0cto-
bei 2uu9. 17 }anuaiy 2u11.
"Coue of Ethics." Inteinational Recipiocal Tiaue Association. Su
Novembei 2u1u.
Cohen, Baiiy. Telephone inteiview. Baitei BCL. 6 Becembei 2u1u.
Befila, B., 1994. Sixty Yeais of the WIR Economic Ciicle Coopeia-
tive: 0iigins anu Iueology of the Wiitschaftsiing. WIR Nagazin. 11
Becembei 2u11. <http:¡¡www.ex.ac.uk¡~RBavies¡aiian¡wii.html.
Bubois, Beive. Email inteiview. WIRBank. 8 Becembei 2u1u, 19
}anuaiy 2u11.
"uet Staiteu." uETS Plus. Su Novembei 2u1u.
"Involvement with IRTA." Baiteicaiu. 17 }anuaiy 2u11.
"IRTA Confeience Repoit." BaiteiNews Weekly. 16 Novembei
2u1u. 21 }anuaiy 2u11.
"ITEX Announces Results foi Fiscal Yeai 2u1u." ITEX. 2u 0ctobei
2u1u. 17 }anuaiy 2u11.
Logie, Richaiu. Telephone inteiview. uETSPlus. 8 Becembei 2u1u.
"NATE anu IRTA Woiking Togethei." BaiteiNews Weekly. 8 }une
2u1u. 17 }anuaiy 2u11.
Napoli-Cohen, Catheiine. Telephone anu email inteiview. Baitei
BCL. 8 Becembei 2u1u, 19 }anuaiy 2u11.
Stouuei, }ames. "Complementaiy Cieuit Netwoiks anu Nacio-
Economic Stability: Switzeilanu's Wiitschaftsiing." }ouinal of Eco-
nomic Behavioui anu 0iganization. (72) 0ctobei (2uu9):79-9S. 2
International Journal Of Community Currency Research 2012 Volume 16 (D) 146-155 Young
}anuaiy 2u11.
Stuuei, T., 1998. WIR in 0nseiei volkwiitschaft. Basel: WIR. Tians-
lation: Beaiu, P. B. (tians.), 2uu6. WIR anu the Swiss National
Economy. Rohneit Paik, CA: Sonoma State 0niveisity. 1S Becem-
bei 2u11. http:¡¡www.lulu.com¡content¡Su1S48.
"Teims anu Conuitions of the 0C Agieement." Inteinational Recip-
iocal Tiaue Association. Su Novembei 2u1u.
0niteu States. Inteinal Revenue Seivice. "Baiteiing Tax Seivice." 2
}anuaiy 2u11.
"0niveisal Cuiiency Bieaks Nonthly Tiauing Recoiu." BaiteiNews
Weekly. 2 Becembei 2u1u. 21 }anuaiy 2u11.
van Aikel, Benk. Telephone inteiview. STR0 Founuation. 21 Be-
cembei 2u1u.
vasconcelos Fieiie, Naiusa. "Social Economy anu Cential Banks:
Legal anu Regulatoiy Issues on Social Cuiiencies (Social Noney) as
a Public Policy Instiument Consistent with Nonetaiy Policy." In-
teinational }ouinal of Community Cuiiency Reseaich. 1S.
"Welcome to IRTA." Inteinational Recipiocal Tiaue Association. Su
Novembei 2u1u. <http:¡¡iita.com¡>
Whitney, Ron. Telephone inteiview. Inteinational Recipiocal
Tiaue Association. S Becembei 2u1u.
!""#$%&' !
)**+,-. $/0,-12 "3,4*5 67182*9 ! :;/<4=33*-4> "3,4,-.
The capacity to expiess piice in both baitei cieuit anu na-
tional cuiiency cieates a two-cuiiency piicing mechanism
that functions to keep nominal piices stable. The following
is an illustiation of how this functions within a two-
cuiiency system with flexible piicing i.e. items may be
piiceu with a numbei of uiffeient combinations of piimaiy
anu seconuaiy cuiiencies.
In this system, the national oi piimaiy cuiiency is moie
highly valueu than the baitei cieuit oi seconuaiy cuiiency.
Paiticipants opeiate within the constiaints that the secon-
uaiy cuiiency iefeiences the piimaiy cuiiency anu main-
tains faii maiket piices i.e. piicing in the piimaiy maiket-
place pievails anu final accounting is in national cuiiency.
Nominal piice levels in this example aie iuentical (1:1)
between piimaiy anu seconuaiy cuiiency but the system
coulu opeiate in piincipally the same way if this weie not
the case.
Selleis change the piice of items on offei not by changing
the nominal piice of items to sell but by changing the pio-
poition of the piice in baitei cieuit anu national cuiiency.
In uoing so, the sellei changes the piice of the item on offei
as iequiiing a highei oi lowei amount of national cuiiency
anu baitei cieuit in payment but the nominal piice iemains
Example: A set piice uinnei foi two costs $7u at a iestau-
iant, The Fish Plaice. The Fish Plaice is a membei of a
business-to-business baitei maiket. It chaiges othei mem-
beis $7u payable 6u% in national cuiiency anu 4u% in
baitei cieuit uuiing peak houis. In off-peak houis it
chaiges membeis $7u entiiely payable in baitei cieuit. The
nominal piice is 7u iegaiuless of the mix of national cui-
iency anu baitei cieuit in which it's paiu.
International Journal Of Community Currency Research 2012 Volume 16 (D) 146-155 Young
The piice is
P = u$(# nominal units)+ (1-u)µ(# nominal units)
In oui example, the piices aie
1$(7u) + uµ(7u) = $7u if paying entiiely in na-
tional cuiiency
.6u$(7u) + (1-.6u)µ7u = $42 + µ28 = 7u nominal
units if paying in a mix of national cuiiency anu baitei
u$(7u) + 1µ7u = µ7u if paying entiiely in baitei
Aujusting the piopoition of the piice in national cuiiency
anu baitei cieuit aujusts the piice oi cost to the buyei
while keeping the nominal piice the same.
What is the cost to the buyei. The buyei who is a membei
of the B2B baitei system is conceineu with how many uol-
lais she¡he must pay. The buyei is also a piouucei in the
business-to-business baitei maiket. Bei buying powei is
iepiesenteu by the amount of baitei cieuits she holus. She
has eaineu it by selling hei goous in the baitei exchange.
The piice she chaiges is compiiseu of cost anu piofit. The
lowei the cost maigin, the gieatei the iatio of buying
powei hei cost 'investment' is yieluing foi hei in the baitei
The cost, c$, uiffeis foi eveiy piouucei¡buyei in the
business-to-business baitei maiket i.e. Each has hei¡his
own cost maigin.
In the business-to-business baitei maiket, the uollai cost
of a puichase is
$C = u$(# nominal units)+ (1-u)(# nominal
Example: The ownei of The Bieau Shop wants to puichase
the $7u uinnei foi two at the Fish Plaice as a gift foi hei
employee. The cost maigin, c, foi hei stoie is .7S i.e. Foi
eveiy uollai of bieau she sells, hei cost is 7S cents anu hei
piofit is 27 cents. The cost of the uinnei to the ownei of
The Bieau Shop is
$C = 1$(7u) + u(7u).7S = $7u if paying with uol-
lais only
$C = .6u$(7u) + (1-.6u)(7u)(.7S) = $42 + $2u.44 =
$62.44 if paying 6u% in uollais anu 4u% in baitei cieuit
$C = u$(7u) + 1(7u)(.7S) = $S1.1u if paying 1uu%
in baitei cieuit
A uiffeient membei of the business-to-business baitei
maiket will face uiffeient costs foi the same uinnei ue-
penuing upon that business' cost maigin.
The capacity foi each inuiviuual piouucei¡buyei¡membei
of the business-to-business baitei system to make choices
about the piopoition of national cuiiency anu baitei cieuit
in the piice of items to sell is an impoitant featuie of this
complementaiy cuiiency piicing mechanism. This cieates
a mechanism that is iesponsive to a veiy micio anu local
level - micio to the level of the inuiviuual buyei¡sellei,
local to the level of the inuiviuual business as it opeiates in
its milieu. Even within the business-to-business baitei
netwoik the combinations of piices expiesseu as national
cuiiency anu baitei cieuit will uiffei anu change.
International Journal Of Community Currency Research 2012 Volume 16 (D) 146-155 Young
International Journal of
Community Currency Research
Volume 16 (2012) Section D 156-168
Hélène Joachain* And Frédéric Klopfert**
*Centre For Economic And Social Studies On The Environment (CEESE) Université
Libre De Bruxelles – Université D’Europe
**Bio-, Electro- And Mechanical Systems (BEAMS-Energy) Université Libre De Brux-
elles – Université D’Europe
0sing complementaiy cuiiencies systems as policy instiuments foi enviionmental puiposes is
a tienu that seems to be piogiessively emeiging in Euiope. The Belgian Science Policy INESP0
Pioject, which pioviues the fiamewoik foi the ieseaich piesenteu in this papei, is builuing on
this emeiging tienu. The aim of the INESP0 pioject is inueeu to builu new instiuments foi en-
eigy saving policies in the householu sectoi baseu on the innovative coupling of Complemen-
taiy Cuiiencies (CC) anu Smait Neteis (SN). Accoiuing to the iationale of the pioject, the new
CC-SN instiuments shoulu piomote behaviouial changes in eveiyuay life as well as encouiage
householus to invest in eneigy efficiency. The iuea behinu the pioject is not to miss the oppoi-
tunity of incluuing an incentive scheme foi behaviouial change shoulu a significant SN ioll-out
take place.
In oiuei to gain insights foi the uesign of the CC pait of the instiument, a fiist step was to tuin
to piojects that hau in the past alieauy useu CC as policy instiument foi behaviouial change
towaius sustainability. To this puipose, piojects which have pioneeieu this path in Euiope
weie analyseu. Bowevei, although this emeiging tienu foi CC systems hau not been left unno-
ticeu by acauemics (see, foi instance Seyfang, 2uu6 foi an insightful uiscussion on the contiibu-
tion of N0-Spaaipas to sustainable consumption, oi Blanc 2u1u anu Blanc anu Faie, 2u1u foi a
system typology), it appeaieu that, to the best of oui knowleuge, no taxonomy of theii constitu-
tive paiameteis hau been uevelopeu yet.
In this papei, we woulu like to contiibute to the ieseaich on CC as policy instiuments foi envi-
ionmental sustainability by piesenting a selection of such CC systems anu by pioposing a tax-
onomy of theii constitutive paiameteis. The iesulting hieiaichical classification of paiameteis
is also intenueu to seive as a builuing tool foi uesigning similai CC systems. Bowevei, in oui
view, "going uown the bones" of CC systems, as it is uone with the taxonomy, is not enough to
make such CC systems thiive. Inueeu, beyonu the systematic list of paiameteis that will uefine
the global aichitectuie of the system, attention shoulu also be given to "flesh" (e.g. expectations
fiom stakeholueis anu caiiieis of the system) anu "soul" (e.g. the conceptual fiamewoik useu to
builu the system).
* Email: helene.joachainÇulb.ac.be
$' )*+, +-*. /0+*)1,2 }oachain, B. anu Klopfeit, F. (2u12) ' Emeiging tienu of complementaiy cuiiencies
systems as policy instiuments foi enviionmental puiposes: changes aheau.' !"#$%"&#'("&) +(,%"&) (- .(/0
/,"'#1 .,%%$"21 3$4$&%25 16 (B) 1S6-168 <www.ijcci.net> ISSN 1S2S-9S47
In the classification they piopose foi complementaiy cui-
iency systems, Beinaiu Lietaei anu Naigiit Kenneuy
(2uu8) unueiline the veiy small numbei of piojects with
enviionmental aims they coulu list at the time of theii wiit-
ing. Inueeu, using complementaiy cuiiency systems foi
enviionmental puiposes is a tienu that seems to be only
piogiessively emeiging in Euiope.
The Belgian Science Policy INESP0 Pioject
, which pioviues
the fiamewoik foi the ieseaich piesenteu in this papei, is
builuing on this emeiging tienu. The aim of the INESP0
pioject is inueeu to uesign new instiuments foi eneigy
saving policies in the householu sectoi baseu on the inno-
vative coupling of Complementaiy Cuiiencies (CC) anu
Smait Neteis (SN). Accoiuing to the iationale of the pio-
ject, the new CC-SN instiuments shoulu piomote behav-
iouial changes in eveiyuay life as well as encouiage house-
holus to invest in eneigy efficiency. The iuea behinu the
pioject is not to miss the oppoitunity of incluuing an incen-
tive scheme foi behaviouial change shoulu a significant SN
ioll-out take place.
In oiuei to gain insights foi the uesign of the CC pait of the
instiument, a fiist step was to tuin to piojects that hau in
the past alieauy useu CC as policy instiument foi behav-
iouial change towaius sustainability. To this puipose, pio-
jects which have pioneeieu this path in Euiope weie ana-
lyseu. Bowevei, although this emeiging tienu foi CC sys-
tems hau not been left unnoticeu by acauemics (see, foi
instance Seyfang, 2uu6 foi an insightful uiscussion on the
contiibution of N0-Spaaipas to sustainable consumption,
oi Blanc 2u1u anu Blanc anu Faie, 2u1u foi a system typol-
ogy), it appeaieu that, to the best of oui knowleuge, no
taxonomy of theii constitutive paiameteis hau been uevel-
opeu yet.
As the piocess of uesigning the new CC-SN instiument was
fuithei caiiieu on, the neeu foi such a taxonomy was in-
cieasingly felt. Inueeu, it seemeu uifficult to go on without a
systematic anu cleai unueistanuing of all the paiameteis of
the CC system we hau to builu. The neeueu taxonomy was
thus uevelopeu by fiist systematically analysing a selection
of piojects that hau alieauy useu CC as policy instiuments
foi sustainability. The aim was then to iuentify, uuiing an
iteiative piocess, the main inuepenuent paiameteis of the
CC aichitectuies anu soiting out the logical sequence foi
uefining them when uesigning a new CC-SN instiument.
In this papei, we woulu like to contiibute to the ieseaich
on CC as policy instiuments foi enviionmental sustainabil-
ity by piesenting a selection of such CC systems anu by
pioposing a taxonomy of theii constitutive paiameteis. The
iesulting hieiaichical classification of paiameteis is also
intenueu to seive as a builuing tool foi uesigning similai CC
systems. The papei is stiuctuieu as follows. The next sec-
tion uesciibes a selection of piojects (N0-Spaaipas, E-
poitemonnee anu Toiekes) that have alieauy useu CC as
policy instiument foi behaviouial change towaius sustain-
ability, as well as two pioposals that have similai objec-
tives but have not been implementeu yet (Biwa Kippu anu
Tiauable Eneigy Quotas). The following section is ueui-
cateu to piesenting the taxonomy of constitutive paiame-
teis of such systems. In the last section, it is aigueu that
othei uimensions shoulu also be taken into account, when
ueveloping CC systems as policy instiuments, with a special
focus on conceptual fiamewoiks foi behaviouial changes.
Inueeu, although not always being explicitly uefineu in
piojects, the way to fiame behaviouial changes can have a
majoi influence on the way a pioject is built.
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Thiee piojects weie initially selecteu as highly iepiesenta-
tive of CC systems with sustainability aims. In the following
paiagiaphs, those thiee piojects (N0-Spaaipas, E-
poitemonnee anu Toiekes) which have pioneeieu the
emeiging tienu of using CC as policy instiuments foi moie
sustainable behaviouis in Euiope aie piesenteu. Bowevei,
in the piocess of builuing the taxonomy, two othei piojects
weie also consiueieu. Although theie weie only in the foim
of pioposals (Biwa Kippu anu Tiauable Eneigy Quotas oi
TEQs), they intiouuceu new concepts that wiueneu the
iange of key paiameteis to incluue in the taxonomy.
N0-Spaaipas was launcheu in the City of Rotteiuam (NL) as
a loyalty caiu scheme to be useu in paiticipating inuepenu-
ent ietail shops (van Sambeek anu Kampeis, 2uu4). This CC
system aimeu at piomoting 'gieenei' consumption anu
behavioui. The basic piinciple of the system was that when
a caiu holuei bought a piouuct in a paiticipating shop, he
was iewaiueu with moie points when puichasing a piou-
uct that was iuentifieu as 'gieen' than when puichasing
anothei piouuct. Besiues, some eco-fiienuly behaviouis,
like iecycling, weie also iewaiueu with points. The points
eaineu coulu then be useu foi a vaiiety of piouucts anu
seivices like 'gifts' in the paiticipating shops, entiance tick-
ets foi events oi one-uay passes foi public tianspoitation.
A complementaiy objective of the pioject was to
stiengthen the competitiveness of local small anu meuium
enteipiises by offeiing them the auvantages of belonging to
a laige-scale loyalty scheme. Since 'gieen' piouucts weie
gianteu moie points, it coulu also be expecteu that shops
woulu be inteiesteu in pioposing those piouucts.
The N0-Spaaipas pioject staiteu in Nay 2uu2, aftei a ue-
velopment phase heaueu by a piivate consultancy fiim.
Impoitant financial iesouices weie necessaiy to uevelop
anu iun the pioject, with costs ielateu to human iesouices
anu piomotion, as well as to technology uevelopment anu
International Journal Of Community Currency Research 2012 Volume 16 (D) 156-168 Joachain And Klopfert
1 Innovative Instiuments foi Eneigy Saving Policies (INESP0) pioject caiiieu out in the fiamewoik of the Science foi a Sustainable Bevelop-
ment Piogiamme of the Belgian Science Policy unuei giant INESP0 SB¡EN¡u9. Website: www.inespo.be
haiuwaie. Those costs weie mostly coveieu by the Euio-
pean Commission in the fiamewoik of the LIFE III Envi-
ionmental Piogiamme anu by the Piovince of South Bol-
lanu (van Sambeek anu Kampeis, 2uu4). The iole of public
authoiities was not limiteu to funuing the pioject, howevei,
local authoiities also actively suppoiteu it. Inueeu, thiee
uepaitments of the Rotteiuam Nunicipal authoiities weie
involveu in the N0-Spaaipas pioject.
Anothei stiiking chaiacteiistic of the N0 caiu scheme was
its stiong piivate component. Inueeu, the pioject was ue-
signeu anu heaueu by a piivate consultancy fiim. Besiues, a
paitneiship was establisheu with a coopeiative bank, anu,
most impoitantly, the piivate sectoi playeu a key iole in
the loyalty scheme, with a numbei of paiticipating small
anu meuium enteipiises that peakeu aiounu 8u in }une
2uuS (van Sambeek anu Kampeis, 2uu4). The N0 pioject
can thus been fiameu as an 'eco-business-behaviouial' pio-
ject, oiiginating in a piivate initiative that succeeueu in
finuing public anu piivate suppoit (see }oachain et al.
Besigneu in a top-uown fashion, the pioject taigeteu the
'giey masses' of consumeis that weie neithei pio-
enviionmental, noi anti-enviionmental. This explains the
openness iegaiuing the list of shops paiticipating to the
scheme, anu the piouucts iewaiueu with points. All kinus
of piouucts weie iewaiueu in the loyalty scheme, whethei
'gieen' oi not, with the piouucts iuentifieu as 'gieen' ie-
ceiving moie points. This position was also auopteu to tai-
get a laige basis of consumeis. Accoiuing to the publisheu
iesults of the pioject, N0-Spaaipas incluueu 1u,uuu caiu-
holueis anu 1uu paiticipating shops at its peak time (van
Sambeek anu Kampeis, 2uu4). The pioject came to a pie-
matuie halt enu 2uuS. This was mostly uue, accoiuing to
one of the leaueis of the consultancy fiim, to a change of
political majoiity (see }oachain et al. 2uu9).
The pioject E-poitemonnee, which was initiateu in 0vei-
pelt (Piovince of Limbuig, BE) with the name 'Zet milieu op
ue kaait' (liteially put the enviionment on the chip caiu) is
anothei case that illustiates the emeiging tienu to use CC
systems as instiuments foi sustainability policies. The aim
of this CC system, which is still iunning, is to piomote sus-
tainable behaviouis (Bonu Betei Leefmilieu, 2uu6). In oi-
uei to uo so, the system functions with two lists: a list of
sustainable actions, the "Eaining list" ("veiuienlijst") (e.g.
switching to gieen electiicity, following composting
couises, placing a 'no junk mail' sign on the mail box) anu a
list of iewaius, the "Silvei list" ("veizilveilijst) (e.g. en-
tiance tickets foi the municipal swimming pool, tickets foi
public tianspoitation, eneigy saving lamp bulbs). By pei-
foiming the taigeteu sustainable actions fiom the fiist list,
paiticipants eain points that they can use to obtain seiv-
ices oi piouucts fiom the seconu list.
This pioject, which is also faiily iecent, was jointly set up
by a non-piofit oiganisation anu 'Afvalinteicommunale
Limbuig.net' (i.e. the stiuctuie put in place by the towns¡
cities of the Piovince of Limbuig foi waste management).
In 2uuS, the pioject was accepteu foi financial suppoit by
the Flemish uoveinment, on top of the financing anu ie-
souices pioviueu by Limbuig.net, with a total buuget lowei
than 1uu,uuu Euios (Bonu Betei Leefmilieu, 2uu6). Aftei a
uevelopment phase, the pioject was launcheu in Novembei
2uuS in the town of 0veipelt foi a tiial peiiou that lasteu
until S1 0ctobei 2uu6. Accoiuing to the publisheu iesults
foi this tiial phase, one family out of S has obtaineu ¡ useu
E-poitemonnee points (Bonu Betei Leefmilieu, 2uu6).
Builuing on the success of this tiial phase, 0veipelt caiiieu
on with the pioject anu S othei towns in the Piovince of
Limbuig joineu E-poitemonnee as well. It is the Belgian
electionic Iuentity caiu that is useu as a means of iuentify-
ing the paiticipants in oiuei to manage theii E-
poitemonnee accounts.
Even moie so than in the case of N0-Spaaipas, public
authoiities playeu a cential iole in the uevelopment anu
implementation of E-poitemonnee. Limbuig.net was veiy
active in biinging the pioject to life, anu the Flemish
authoiities pioviueu financial suppoit. Besiues, anu most
impoitantly, the implementation of the pioject took place
at the level of the paiticipating towns. Inueeu, the uecision
to entei the scheme, as well as the financing anu opeiating
of the CC system was in the hanus of municipal authoiities.
Each paiticipating town hau to builu its own set of two
lists, one with the actions iewaiueu, anu one with the
communal seivices anu piouucts offeieu. In this sense, E-
poitemonnee is veiy much anchoieu in the local commu-
nity anu useu as an instiument foi sustainability policies
(see }oachain et al. 2uu9).
Compaieu to N0-Spaaipas, a majoi similaiity is the use of
the scheme as a policy instiument in a top-uown appioach
with an impoitant pait playeu by public authoiities. Bow-
evei theie aie stiiking uiffeiences in the exclusive focus on
behaviouial changes, anu the leauing iole of local munici-
palities in E-poitemonnee. Inueeu, the consumption aspect
is, to a gieat extent, absent fiom E-poitemonnee: it is
mostly eveiyuay life actions that the pioject is aiming at
changing. Theie is no loyalty scheme attacheu to E-
poitemonnee anu hence, no economic uevelopment objec-
tive foi local SNE's. The iole of the piivate sectoi is limiteu
piincipally to sponsoiing the pioject (e.g. thiough offeiing
piouucts foi the "Silvei list"). In line with this, public
authoiities aie heauing the pioject, anu have uecision
powei at most of the management levels of the pioject.
The CC pioject Toiekes, which was initiateu at the enu of
2u1u in a uepiiveu aiea of the City of uent (Belgium), has
mixeu social anu enviionmental objectives. Inueeu, the aim
of this pioject is to ievitalize the aiea of Rabot-Blaisantvest
which is, accoiuing to official figuies (City of uent, wijk-
fiches, Rabot-Blaisantvest), one of the most uensely popu-
lateu anu pooiest aiea of the City (e.g. population is 6 times
uensei, numbei of asylum-seekeis anu non-Belgian iesi-
uents is moie than twice highei, unemployment iate is
much highei anu ievenues much lowei than on aveiage in
International Journal Of Community Currency Research 2012 Volume 16 (D) 156-168 Joachain And Klopfert
the iest of uent). By iewaiuing actions that contiibute to a
gieenei enviionment anu impiove social cohesion, the
Toiekes is willing to impiove the quality of life in this aiea.
In oiuei to achieve this, the 'two lists piinciple', as in E-
poitemonnee, has been favouieu: a list of "To uo" ("Te
uoen") anu a list of "Piesents" ("Kauo' s") (see
The social anu enviionmental aspects of this pioject aie, of
couise, ieflecteu in the choices maue foi both lists. The "To
uo list" ("Te uoen") explains how iesiuents of Rabot-
Blaisantvest can obtain CC units (calleu Toiekes). This list
incluues items ielateu to caiing foi one's stieet (e.g. ie-
painting the fiont of one's house oi putting a plant tub on
the winuow sill), oi contiibuting to the impiovement of the
aiea (e.g. paiticipating to 'cleanup uays' oi taking caie of
the community baibecue). Resiuents of Rabot-Blaisantvest
can also be iewaiueu foi helping otheis to uo spoits (e.g. as
football tiainei foi kius oi by coaching auult foi jogging),
anu foi uoing something foi the enviionment (e.g. switch-
ing to gieen electiicity, placing a no junk mail sign on theii
letteibox). In tuin, they can use theii Toiekes foi a list of
"Piesents" like public tianspoitation tickets oi to go to the
movies. Toiekes can also be spent in shops (e.g. gioceiies,
bakeiies, bike shops, seconu hanu shops) anu to uo spoits.
But the most innovative, anu piobably one of the gieatest
success of this pioject is to piopose Toiekes as the only
means of payment accepteu foi ienting a small plot in
community gaiuens that aie paiticipating to the pioject.
Toiekes iesults fiom the joineu initiative of non-piofit oi-
ganisations anu the City of uent. The Flemish Region is
backing the pioject that they view as a pilot expeiiment foi
using CC as policy instiument foi social innovation. This
pilot pioject is intenueu to iun until enu 2u12. The fiist
iesults gatheieu aftei six months show that aiounu 1
householu out of 1u in the aiea have been in touch with
Toiekes. Betails aie also pioviueu on how Toiekes weie
obtaineu anu useu. Two facts stanu out fiom those uetaileu
iesults. 0n the obtaining siue, collective actions (like
'cleanup uays') oiganiseu by neighboui association oi
schools have encounteieu an enoimous success. 0n the
using siue, Toiekes have mainly been spent in shops, which
coulu be expecteu, but the othei gieat favouiite was the
ienting of a plot in the community gaiuens (Toiekes,
veislag, 2u11). This success of collective actions anu com-
munity gaiuens is all the moie inteiesting as it is the iesult
of co-builuing this pioject with expeiienceu local associa-
tions. Besiues, as it is aigueu by a paiticipating non-piofit
oiganisation, the fact that community gaiuens coulu only
be ienteu in Toiekes was a key motivatoi foi iesiuents to
paiticipate (Bienstman, 2u11). This illustiates how offeiing
a iewaiu that is well in phase with the paiticipants' neeus
anu that can only be obtaineu with CC units is a poweiful
ieinfoicei foi a CC system.
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The pioposal that was maue by Lietaei anu Takaua to pub-
lic authoiities in Shiga Piefectuie (}apan) stems fiom an-
othei iationale than N0-Spaaipas, E-poitemonnee anu
Toiekes. Inueeu, the iuea behinu this pioposal was to ue-
velop a new policy instiument that coulu contiibute to
iestoiing the ecosystem of Lake Biwa without biinging an
auuitional buiuen to public finance. A shoit uesciiption of
the pioposeu scheme, as piesenteu in Lietaei anu Takaua
(2u1u) is given in the following paiagiaphs. Each family
has to contiibute to the system by pioviuing a given num-
bei of "tickets" (nameu Biwa Kippu) to public authoiities
each yeai. Some exceptions aie foieseen (e.g. foi people
with uisabilities). The Piefectuie of Shiga issues the tickets
anu selects the activities thiough which families can eain
those Biwa Kippus. No payment in Yen is accepteu by the
Piefectuie in place of the tickets, but Biwa Kippus can be
exchangeu between families (on a fiee maiket basis). Non-
piofit oiganisations also play a iole in the scheme, eithei
by achieving some of the tasks anu eaining Biwa Kippus oi
by acting as inteimeuiaiies between public authoiities anu
the iesiuents (e.g. oiganising anu supeivising some of the
pioposeu activities).
Anothei pioposal that piesents some similaiities with Biwa
Kippu is the Tiauable Eneigy Quotas (TEQs) that was pio-
neeieu by Fleming. This pioposal was able to iaise inteiest
fiom public authoiities in the 0K anu leu to a iepoit pub-
lisheu in association with The All Paity Pailiamentaiy
uioup on Peak 0il (Fleming anu Chambeilin, 2u11). This
type of schemes also became an object of ieseaich foi the
acauemic community that exploieu, amongst otheis, its
link to complementaiy cuiiencies (Seyfang, 2uu7). In TEQs
scheme, as explaineu in Fleming anu Chambeilin (2u11),
public authoiities play a cential iole by uefining a 'Caibon
buuget' anu issuing TEQs units accoiuingly to inuiviuuals.
Eveiy auult ieceives an equal 'fiee entitlement' of units in a
TEQs account, while othei economic actois have to biu foi
theii units. 0nits aie useu when buying eneigy (i.e. a calcu-
lateu numbei of units is ueuucteu when buying electiicity,
petiol, etc.). It is foieseen in the scheme to lowei the 'Cai-
bon buuget' eveiy yeai in oiuei to biing 0K into a moie
sustainable tiajectoiy iegaiuing the pioblematic of climate
change anu peak oil.
As this biief uesciiption shows, Biwa Kippu anu TEQs aie
built aiounu a mouel that is veiy uiffeient than the one
useu foi N0-Spaaipas, E-poitemonnee anu Toiekes. In-
ueeu, whethei by using 'tickets' oi 'quotas', public authoii-
ties aie iegulating the contiibution of householus¡
inuiviuuals to ieach specific objectives. In the case of Biwa
Kippu, the system sounus like a 'tax in CC' oi iathei given
the natuie of the contiibution that is askeu fiom families, a
kinu of "civil seivice". Bowevei, beaiing in minu the possi-
bility of families to buy Biwa Kippus with Yen, on a fiee
maiket basis, this system can also be vieweu as a kinu of
tax that families can pay eithei in Yen (at a piice that will
be ueteimineu by the maiket) oi by giving some of theii
time to the iestoiation of the ecosystem of the lake. Re-
gaiuing TEQs, taigets aie set by public authoiities iegaiu-
ing caibon emissions (i.e. the 'Caibon buuget') which ue-
teimine, in tuin, the quotas allocateu to each auult in the
countiy. If the quota is exceeueu, paiticipants have to biu
International Journal Of Community Currency Research 2012 Volume 16 (D) 156-168 Joachain And Klopfert
foi theii extia units, which biings maiket mechanisms back
into play, as is also the case of Biwa Kippu.
In both pioposals, paiticipation is manuatoiy anu it is ex-
pecteu that, amongst othei ieasons, inuiviuuals will be
motivateu to paiticipate on the basis of theii willingness to
comply with the iegulations set by public authoiities. Both
piojects aie also baseu on a top-uown appioach imposeu
by public authoiities. Biwa Kippu anu TEQs aie pioposals
foi systems that have not been put in place yet. It is not the
puipose of this papei to exploie the feasibility of such sys-
tems oi the many issues that woulu go along with theii
application. Rathei, they have been taken into account as
theoietical alteinatives to piojects like N0-Spaaipas, E-
poitemonnee anu Toiekes wheie paiticipants act on a vol-
untaiy basis anu aie iewaiueu foi peifoiming the uesiieu
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2"34$,'() 1'"2+251'5+$ 5$+33'6'5+,'%(
The pievious section highlights the fact that CC systems
useu as policy instiuments foi behaviouial changes to-
waius sustainability uisplay similaiities but can also be
uesigneu in veiy uiffeient ways iegaiuing objectives, aichi-
tectuie anu management. Beaiing in minu the main goal of
the INESP0 pioject, which is to uesign new policy instiu-
ments that integiate C