The role of alternative currencies to enhance sustainability – Discussions on a regional basic income and purpose driven tokens

Aug 10, 2020 by

Alternative currencies can either be thought of as substituting or complementing current official currency systems. As the government in most countries has a monopoly on issuing the legal tender, alternative currencies are mostly thought of as complementing it to achieve alternative collective goals. Alf Hornborg, who is professor for human ecology at the faculty of social sciences at the Lund university in Sweden and Shermin Voshmgir, who is author of the Book “Token Economy” and operational director at the cryptocurrency research lab of the WU Vienna joined us for this session. Both provided lectures and participated in an insightful discussion with the students of the AEMS 2020 summer school.

In his lecture on “Regional basic income for local economies”, Alf Hornborg explained his perspectives on ‘general purpose money’ and the tensions between what he terms the logic of money (capitalism) and the vision of a good, fair and sustainable society. These tensions are based on the necessity of enterprises to prioritize monetary profits over all other outcomes, while politcians must make countries attractive to capital. Alf argues that we need to go beyond the polarisation of neo liberal market fundamentalists on the one side, claming the necessity of unregulated economic growth, and leftits and social movements on the other side, claiming that political control of the economy is necessary. The most important question for him is, “how money itself could be redesigned”, i.e. how to design a new monetary logic could be designed that would automatically generate a good society. As a possible soloution, Alf Hornborg, suggests a complementary currency, which would be distributed as an universal basic income. The special feature of about this currency is would be that it only allows purchases of locally produced goods and services.

Shermin Voshmgir gave a lecture about “Purpose-driven Tokens: Tokens as a policy tool”, where she defined what purpose-driven tokens are. The first tokens used to be were shells which were used for trading different goods. As digitalization evolved it is now possible to generate tokens on the web3. There are 2 different kinds of tokens, the simple token (Asset token, Access-right tokens, identity tokens)  and complex tokens like the purpose-driven tokens. In her lecture, she focused on purpose-driven tokens. With thanks to purpose-driven tokens, which are based on incentives directed towards a specific goal embedded in the Blockchain Network. For example, the “Vienna Culture Token” is a purpose-driven token where focusing on CO2 emissions reduction is the main topic. If you go to an event, you can get incentives rewards if you commute using public transports This is a strategy used to reduce CO2 of cultural events.

Alf Hornborg started the discussion emphasizing that collective decisions are necessary to reshape the monetary system in a just, environmental-friendly and efficient way.  As to his suggestion of a regional basic income for local communities, he argues that it may take time to adapt or dismantle supply-chains, but his idea could be implemented as an idea (repetition of “idea”) to incentivize people to increase their consumption of locally produced goods and services. He insisted that this regional basic income should not be confused with as  general consumption money but should rather be considered as purpose-driven currency. Alf Hornborg precised that  he does not suggesting a regional currency, which, according to him, would not change the current economic system. The currency should be designed collectively and democratically.

At the beginning of the discussion Shermin Voshmgir drew our attention to the difference distinguish between digital currencies and blockchain as a technology. The blockchain technology is an infrastructure that can be used for different purposes. She stressed that it is of great importance to spread knowledge on about this technology so people become aware of how to use it: Iit could be used to set up digital token systems. She made it clear to the students, that it is possible for everyone to set up their own currency. So, thinking beyond a top-down approach is not necessary. Communities would be able to set up their own token systems according to the community’s values. At the end, Shermin emphasized the need to quickly understand the power of this tool before it is overtaken by people only interested in financial profit and speculation, stake their claims to turn it into individual economic profit instead of using this tool for the public benefit.

We had an interesting afternoon with the discussion on how to make the financial system greener. We heard different views on that topic: some were focused on the possibilities to repair the actual system, some others where about how to build a completely new system with the help of modern technologies.

Because economics is a social science, we can shape it according to our needs. Now we have to prioritize the climate crisis, otherwise we will not be able to shape anything new.

Written by: Jan Thomas and Matthias

Based on the session with Shermin Voshmgir and Alf Hornborg during the AEMS 2020.