Money Day with Bernard Lietaer – Post 2

Aug 10, 2017 by

by Aishwarya Krishnan & Olena Kokliagina

In 1903, an American woman named Elizabeth Magie devised a widely popular but rather misunderstood learning tool, masked as a board game, as a protest against the concentration of wealth and assets in private monopolies and the evils of the new economic policies of that time. This game is Monopoly, a name known in practically every household across continents. Magie’s concept and ideology was split in half and selectively reworked to create the rules of Monopoly and with a swift renaming of the game from ‘The Landlord’s Game’, Magie was slowly written out of history.

Our present financial system works rather similarly but with far more complexity and even further misinformation or even the lack of it. Questions about the creation of money, function of banks and the fallacies that mask them are not raised in mainstream media. Although not the first to bring up this issue, Lietaer highlights that all bank money is created out of nothing as “fiat” money through a bank-debt mechanism. This mechanism further amplifies the detrimental business cycle and makes economic growth compulsory, regardless of the socio-ecological implications; consequently making it an extractive device and concentration system.

Lietaer defines money as an agreement within a community (either a nation state, or a group of neighbours) to use a standardized unit as a medium of exchange based on their values. Moving beyond unregulated bank money, he suggests a “complementary currency” – an agreement within a community to use a standardized unit other than present bank-debt money. He argues that “normal” economy is fuelled by bank money, which doesn’t take into consideration unused resources and unmet needs. This issue can be perfectly solved by a complementary currency, which acts as a bridge connecting the two unaddressed aspects. A large number of Social Purpose Complementary Currencies are currently used throughout the world.

One of the most striking examples is from Brazil’s “green capital,” Curitiba. Not too long ago, garbage was a major problem in Curitiba with landfills piling up and segregation of waste was an unachievable feat (unmet need). Additionally, due to the vast economic disparities within the city, it also had an underutilized bus system (unused resources), with many residents unable to afford public transportation. With an improved bus system set in place, a new Green Exchange programme was introduced in 1989. The innovative approach made use of these local resources. Anyone who deposited a bag full of pre-sorted garbage received a bus token, an ‘ecological currency’; also accepted at local markets in exchange for food. Today, 90% of the city’s inhabitants participate in its recycling programme, and more than 10,000 residents make use of the trash-for-tokens exchange, recycling 70% of its garbage. Other programs have also been launched to fund the restoration of historical buildings, create green areas, and provide housing—all by methods that placed little to no financial burden on the municipality.

In this creative take to governance, Curitiba discovered a means by which to match unmet needs with unused resources. They did so by making use of complementary currencies with monetary initiatives that did not replace but rather supplemented the national currency system, providing much needed improvements to the local economy. This case illustrates how the introduction of a complementary currency was able to help a developing and impoverished city leverage its untapped resources to creatively solve a host of challenges and support environmental cleanup, job creation and city restoration.

The key about complementary currencies is that it can be tailored to suit the community that chooses to take up an alternative solution to the pressing issue at hand by adapting it to the values and culture of the land. Examples include the Ithaca HOURS in New York, U.S.A and the Fureai kippu in Japan that encourages altruism. Another interesting concept is the ‘demurrage currency’, one in which the value is designed to fall over time at a fixed rate, (Eg: Chiemgauer currency in Bavaria, Germany)

Can such a multi-faceted method like the one in Curitiba apply to other cities that face similar issues? Curitiba is a best case example of the benefits of government intervention but most cases of complementary currencies arise from within the community itself; highlighting that it is with the intrinsic motivation stemming from communities that change is paved. Complementary currencies are intended to change behaviour and relationships within communities by encouraging dialogue about the values we share. Resonating from the discussion about money with Bernard Lietaer in a room full of motivated students from different regions with different sustainability concerns is a quote by Rumi, “Why do you stay in prison when the door is wide open?”

So why do we?