Rethinking Money

by Bernard Lietaer

  National Currencies In many countries, national currencies will be used for a long time to come. They continue to play an important role within any country that has not joined a formal multinational currency integration system. Most exchanges continue to involve national currencies at least in partial payments, if only because they remain the official legal tender with which national taxes are being paid.

  The main difference would be that national currencies would lose their monopoly as the medium of exchange. Payments could consist of a mix of national currencies, corporate scrips, or Internet currencies, even in a single transaction.

  The only places where the national currencies have retained their monopoly are a few underdeveloped countries and backward dictatorships, where political control over the Internet has kept the cyber-economy completely shut out.

  Regional Currencies Under pressure to reduce long-distance transport, a significant source of harmful carbon emissions, many businesses are reorganizing their supply chains into regional networks. The C3 mechanism was one of the pioneers in this area. Supply chains have also emerged around specific industrial sectors, such as food production and processing or automobile components, and, of course, the regios in German-speaking Europe.

  Even in the domain of conventional currencies, this trend is in evidence. Today, 14 U.S. states, namely, Colorado, Georgia, Idaho, Indiana, Missouri, Montana, New Hampshire, North Carolina, South Carolina, Tennessee, Utah, Vermont, Virginia, and Washington, have taken action to create their own state currency, usually backed by a precious metal such as gold or silver.24 In the case of Utah, for example, the Utah Legislature has passed a bill allowing gold and silver coins to be used as legal tender in the state—and for the value of their precious metal, not just the face value of the coins. Utah’s bill allows stores to accept gold and silver coins as legal tender. It also exempts gold and silver transactions from the state’s capital gains tax, though that does not shield exchanges from federal taxes.25

  Local Cooperative Currencies In reaction to economic globalization and in parallel to it, organization of currencies at the local level has become very popular. The information revolution brought about a systematic reduction of production and service-related jobs. As jobs grew scarcer, communities created their own currencies to facilitate local exchanges among their members. Once critical mass was attained, cooperative currency clearinghouses on the Internet made it possible for members of these communities to participate in the cyber-economy as well.

  Functional Currencies The field where the most creativity has emerged is special function currencies. There could be carbon-reducing currencies, energy-saving currencies, beautifying-neighborhood currencies, and currencies designed to stop overfishing in certain waters. There are systems like reputation currencies (such as seller ratings in the model pioneered by eBay) and learning currencies (the saber, talents, and alegres). The list of what is being and can be created is limited only by our imaginations and our abilities.

  With all these currencies in circulation working in tandem with the conventional money, how would life be? What transformations would possibly take place? Let’s take a glimpse at a possible future.

  Chapter Twelve

  OUR AVAILABLE FUTURE

  The Cooperative Society

  What if you slept, and what if in your

  sleep you dreamed, and what if in your

  dreams you went to heaven and there

  you plucked a strange and beautiful flower,

  and what if when you awoke you had

  the flower in your hand? Ah, what then?

  SAMUEL TAYLOR COLERIDGE,

  19th-century English poet and philosopher

  Since the dawning of the Industrial Age and the instigation of the modern monetary system, no truly cooperative society has been able to operate, let alone thrive on a large scale.

  The five scenarios that follow portray how a future society might look once it has transitioned from today’s highly competitive structure to one based on greater cooperation and mutual support, within the span of one generation. The discrepancies between where we stand now and our possible future are enormous. The driver behind each of these transformations is a cooperative currency innovation. Such transformations are possible not because of the amount of money that is circulating but rather from the type of money that is in use.

  These vignettes portray individuals and communities being enabled to shape their own lives, each arising from a history of uncertainty and insecurity, whether poor or rich. The first four relate to monetary technologies introduced in each segment of society—respectively, government, businesses, NGOs, and the individual—and the last story relates to the era of wisdom emerging from the postmodern industrial-knowledge age, bringing the monetary and societal systems into greater balance.

  Foreseeing this available future can elicit a variety of strong reactions: delight and anticipation at the prospect or shock or despair because it seems so improbable, given what we have endured. New options for a brighter future can engender derisive and even dismissive cynicism—this simply can’t happen as it has never happened before and, therefore, will never come to pass.

  The good news, as evidenced in the previous pages, is that the know-how and gumption to bring about this conversion already exist. It is not in-the-box solutions for the redistribution of wealth, bond measures, or enlightened self-interest from corporate entities that is catalyzing this evolution but, rather, ordinary people who are jumping outside the prescribed boundaries and simply rethinking and reengineering their money.1

  MAE HONG SON PROVINCE, NORTHERN THAILAND, FEBRUARY 6, 2027

  It was hard to tell Cha Cha’s age, as she swept her raven-black hair back off her face with her earth-soiled hand, but it was clear that life had not been kind. She put her foot on the spade and leaned her lithe body up against the handle, taking a moment to rest from her toil in the community garden.

  “I really wanted to find a way to restore confidence in government. For too long it has been the same. You know, cynical and resigned, very easy to be angry and frustrated. There’s been enough bloodshed in my country,” she remarked, as her face darkened. “We needed to start where we could. We needed to show good results quickly. It had to be easy—not much bother. Or else it wouldn’t have worked.”

  She pointed to acres of verdant fields stretching beyond, as far as the eye can see. “We now have almost full employment. Everyone who wants to work can. The shops and markets are booming in trade. There’s no one begging on the sidewalks. There’s no mass exodus to the big cities anymore. There are no girls and boys walking the streets looking for customers and their next meal. Every child has access to education; everyone can get to see a doctor or a nurse practitioner. It may not be fancy, but everyone is taken care of. We changed from being one of the poorest regions in the county to one of the wealthiest in Asia within a decade,” she said.

  Now an Interior Ministry–appointed na-yok umphur (regional representative), Cha Cha worked her way up through the ranks swiftly, from an elected pu- yai-baans (delegate) for her village to the kamnan (mayor) for her district. She has known tough times herself. She, like a lot of women in these parts, is without a spouse. Husbands abandon their wives and children for a new partner and a fresh start, only to have the cycle repeat itself with yet another woman. She has had trouble making ends meet and providing for her children when her previous partners walked out.

  As a result, there is nothing theoretical about her experience of poverty. And there was no book learning to find an answer. Her way out was culled from observing how the women took care of one another, sharing what they had and giving of themselves in terms of time, street smarts, and friendship.

  “So how did we do it, you ask?” She posed rhetorically, pulling herself up to her full five feet, two inches.

  “It took money! But not in the way you think,” she said, shaking her finger. “Not baht, but civics. Yes, civics—money that does civic or public good. Sta
rting with a couple of villages, we created local money so we had the cash to pay people to provide the goods and services that we so desperately needed. Anyone who was willing and able to work got paid in civics. With each success, it spread like wildfire.

  “What is critical, looking back, and I suppose what made it really work, was when I got into regional government. We started paying off some old debts thanks to savings made possible with this new kind of money. Within two years, we had a balanced budget, wiping out the deficit, and were able to fulfill our big-picture agenda. What’s more, people were actually paying their contributions in advance for the following quarter. With each year, we expanded our programs, tackling new problems. We made, and continue to make, a very special effort to incorporate innovative ideas from the local communities.

  “And, here we are, a decade later. Will I run for president in 2020? No comment,” she said, with a twinkle in her eye.

  OAKLAND, CALIFORNIA, SEPTEMBER 5, 2037, BOARDROOM OF THE BECHTEL CORPORATION

  The following text is extracted from the minutes of a board meeting of the largest construction and civil engineering company in the world.

  The Board considered the two main investment projects on today’s agenda:

  • A 25-year nature restoration project of the Southern Himalayan watershed

  • A 100-year reforestation project of the sub-Sahara desert

  The Board decided unanimously to implement the 100-year sub-Sahara project, given that the internal rate of return on this project is clearly superior to the 25-year project. The chairman added that the contribution of this project to overall global climate stability has been an additional incentive for him to vote for this project. The currency of all payments for goods and suppliers is the demurrage charged, similar to the Terra currency. The annual reports to the shareholders are similarly expressed in Terra.

  LAKE VICTORIA, AFRICA, OCTOBER 7, 2023

  Embu, a 23-year-old Kenyan Bantu-speaking woman and mother of one, takes the microphone and beams a broad, proud smile at the assembled group of representatives. They’ve traveled from far and wide across the expansive Nyanza Province, which borders on Lake Victoria, for this important quarterly joint NGO meeting. Delegates from across the culturally diverse region, including members of the Luo, Gusii, and Kuria tribes, sit in excited anticipation to hear the financial reports and updates on their area’s comprehensive network of cooperatives and trade associations. Preliminary accounts and animated gossip, along with obvious evidence of vibrant commerce transacted daily, bode well for good news and a well-deserved celebration later that evening.

  While waiting for the eager chatter to die down, some attendees quickly check their account balances on their mobile phones. Sammy sees that the consignment of goat skins and meat from his co-op to their neighbors across the border in Tanzania has been paid in full in zutus, local money that circulates in the ecoregion around Lake Victoria. This trading currency was designed to facilitate local commerce by keeping the zutu circulating within their larger community and has brought tangible wealth to the region.

  Their local currencies are backed by time—one hour of work equals one unit—or by a commodity, such as timber. A special savings currency, called the muti and named after the Zulu word for “tree,” is backed by shares in reforestation plantations. Sammy works there part-time. The future earnings from the trees harvested in 20 years will be helpful in looking after his parents’ retirement, and, additionally, the new woodlands are reversing decades of soil erosion, enticing indigenous species back into the region.

  His mobile e-purse carries several currencies: three national (euros, Kenyan, and Tanzanian shillings) and several local, including the zutu and the muti. There is an education currency called the saber, which has leveraged a government grant of 10 million 12 times over, each and every year. Based on his hours of mentoring younger students and helping them with their English and math homework, Sammy has earned saber credits, which have enabled him to pay the tuition for his long-distance learning degree in bookkeeping and business law.

  Food, which was a major problem for decades, is now grown locally, either within the local forest or on organic farms, rather than imported. The vibrant forest supports a constructed ecosystem to provide bananas, coconuts, and other tropical fruits and nuts. Little labor is required since it is self-sustaining. The organic farms provide yields as high as conventional intensive farming methods while helping to build soil. The overall economics of the system, which includes grains, vegetables, and livestock, far exceed those of the massive farm that previously occupied and destroyed the land just outside the village. Labor is paid for using a time-backed local currency, where one hour of service equals one unit of currency. This money can be used to purchase a wide array of products and services in the local community and, by its design, tends to remain there.

  Bebel, another meeting attendee, takes a moment and looks around the assembly hall with a certain satisfaction. The old building, which was constructed by the British in the early 1960s, has been totally retrofitted with passive energy features by Bebel and his team. Energy use in the community has been drastically slashed, while the residents still live and work in comfort. The new adjacent structure where tonight’s banquet will be held actually generates energy to feed into the local utility grid. Even though the temperature today is going to be high, and there is a large group assembled inside, these design modifications allow everyone to remain cool without the need for air conditioners. All appliances, when required, are highly efficient, often using as little as a tenth of the energy of comparable products built in 2010.

  Embu clears her throat and raises her arm to call the house to order. The entrepreneurship and innovation that are clearly evident within the hall were ignited through an integrated series of trainings and programs. These encouraged each individual to have the self-assurance to trust their own observations of what was appropriate action, given their unique real-world awareness, experience, and knowledge. This newfound confidence—to be able to address issues on a grassroots level, along with an integrated plan of training, education, access to information, and the introduction of appropriate low-tech technologies and new monetary innovations—formed the lever that shifted their universe forever.

  The air is electric with anticipation as the applause for Embu dies down.

  “My dear colleagues and friends, I know you are all excited to get the financial reports and stories from our various co-op and team leaders on their collective breakthroughs and successes over the past few months. I know you’ve been talking among yourselves and have a sense of the good news we have to share,” she begins.

  “But there is something far more important I want to tell you. We have been contacted by some wai-Kukuyu in Nairobi. They live in terrible misery, with little food and no real opportunity, in the center of the capital in a heap of rubbish and filth.

  “We have been asked to come and share our knowledge and capabilities with them. As we are country folk and not knowing the ways of the big towns, I was able to contact people in a faraway place called Curitiba, Brazil—on the other side of the world—who had rescued their own big town from terrible poverty, disease, and no hope 20 years ago, by using local money and local people’s ideas—just like us.

  “The news is I have asked and they have agreed to come to Kenya to help the Kukuyu.” Her voice breaks with emotion.

  There is a gasp of surprise and awe from the assembled group.

  “So, my question to you, delegates and friends, can we, will we, use our time and abilities to help our brothers and sisters in Nairobi? Are we willing as Kenyans, no, better still, as fellow human beings, to make a difference and share the knowledge and resources that were so generously given to us? Are you with me?”

  With that, all 300 attendees leap to their feet and roar a resounding “Yes!”

  DUBLIN, IRELAND, AUGUST 5, 2020

  The vintage sporting-green Morgan smoothly hugs the tight corner on Vico Road,
as Stephen winds his way through the narrow coastal roads to Dalkey. The small village in the capital city’s greater metropolitan area is just starting its day. The engine purrs as he pulls up in front of a trendy coffee shop. Nicholas, the car’s owner, comes out, and Stephen, as he throws the keys to him, poses a question with a raised eyebrow.

  “It’s a great ride. Are you firm on the 15,000 quid?”

  “Yeah, for 15,000 euros, she’s yours.”

  Stephen exhales audibly as they take a table on the sidewalk café and order two expressi.

  “Well, the car is in great shape. You’ve checked it out online?”

  “Yeah, and I was hoping that we could do something on the price,” Stephen adds hesitantly, as he reaches for his iPhone. Nick, in quick succession, pulls his out of his jacket pocket. Typical of their generation, they’re very savvy, inured to marketing hype, and totally fluent in the latest technologies.

  “Well, if your funds pass the sniff-test, I might be open to doing something. You’re on Veri-funds, I presume?”

  “Who isn’t!” comes the almost indignant reply.

  With a tap of his index finger, Stephen grants Nicholas access to view the pedigree of the various blocks of euros he’ll be using for the transaction.

  Nicholas pauses, waiting for the rating on the proffered funds to download. He glances quickly at his knock-off Cartier watch that he bought recently on his Erasmus year in Asia.

  As they wait, the through-put of every euro being submitted for this negotiation since issuance is filtered through a preselected matrix of preferences. In Nicholas’s case, they’re for predominantly green and socially responsible companies, causes, customers, and citizens. Each end user can customize their preferences to support their personal principles and ideals. A rating of 10 would be a bull’s-eye, a complete alignment of values between the seller and buyer.