New Values, New Currencies
Is our money really designed to do what we need it to do? New kinds of money can better represent what we truly value and enable new economies, write Leander Bindewald and Rupert Widdicombe.
“Money is not metal; it is trust inscribed” Niall Ferguson
Most of us want more of it. Few of us understand what it really is. One thing is certain though – money does not have to be what it is today, it is a human invention long due for an upgrade.
In his book, Frozen Desire: The Meaning of Money, former FT journalist James Buchan calls money “incarnate desire”, storing and transmitting our wishes. Money is, he concluded, “an outcome of a vast mountain of social arrangements.”
Our everyday money is flawed and has shortcomings that are becoming ever more obvious. For a start, money defines an abstract economic value that is distinct from our social values. This division drives us to behavioural predicaments and catch-22 choices, sedating our personal longings with ever more consumption, while that same consumption commands the exploitation of nature and labour, the twin shackles of perpetuated misery, on the other side of the globe.
We see this subliminal schizophrenia most easily when money is crudely used to sell us things we once considered free – clean water or caring for our children, the vulnerable and elderly.
Monetisation and money-based values have expanded “into spheres of life where they don’t belong”, writes philosopher Michael Sandel in What Money Can’t Buy. “It is time to ask if we want to live this way.”
Economics textbooks list three functions of money – a medium of exchange, a store of wealth and a unit of account. There is, of course, no mention of human values such as morality, fairness, equality and justice.
Today, most of the money in the world is created as interest-bearing debt by private banks (see NEF’s book Where Does Money Come From?). This means our economies are forced to grow to stand still, trying to cover the interest on our debt, which in itself is not a temporal exuberance but an economic necessity. Without debt, there would be no money left in the world. At the same time, rather than wealth trickling down to the many, the perks of this monetary arrangement flow up the social pyramid, concentrating wealth in the hands of those who need it least.
One response to these flaws in our money has been to ‘retrofit’ our existing valuation systems with measures that somehow capture social benefit or human wellbeing. (See the interview with Daniel Fujiwara). A second approach is to take back from the banks the power to create money and put it where most people believe it to be, with our democratically-elected governments. However, there is a third way, an open-source, bottom-up approach – re-engineer money itself.
Complementary currencies have been springing up since the early 1980s when the first Local Exchange Trading System (LETS) was introduced in British Columbia. Today, there are local pounds in Brixton, Bristol and Lewes; 60,000 businesses in Switzerland trade in their own cooperative currency, the WIR franc; and over 100 Banco Palmas operate across Brazil.
In the 1990s, a variant known as ‘time banking’ emerged. Human values were explicitly put into the kernel of the currency through stating five core principles:
Everyone is an asset.
Some work is beyond a monetary price.
Reciprocity in helping.
Social networks are necessary.
A respect for all human beings.
Since then time banking has become a global phenomenon, implemented across the public and third sector, particularly in the UK and the USA. The City of London Time Credits scheme is just one recent addition.
Each complementary, community and transition currency, LETS and time bank, business-to-business currency and exotic variant, has a distinct set of embedded values. These values are disregarded or misrepresented by mainstream money and include the importance of local production, of community and identity, of self-determination and equity.
Another key common characteristic is that these currencies are used voluntarily. To succeed they have to offer a better deal to their users, and encompass their personal values better, than the current ‘one-size-fits none’ money.
Choice is the key and new currencies allow us to coin our values into new wealth: by choosing a particular currency we choose what we want to see represented in our socio-economic networks.
With time banks we focus on social values based on the equality of each individual’s time. The Bristol pound raises awareness of the local economy and the importance of small independent businesses. Currencies designed around renewable energy emphasize the link between our natural environment and our economies (see the NEF report Energising Money). The abundance of value in the information economy, where sharing means more, not less, for everybody, again requires entirely new currencies, some of which we can’t even spend – such as reputation(s) collected on Trustcloud.com.
All these fulfil the universal function of any currency: facilitating collaborations. What kind of collaborations, and between whom, is only in our control if we have a genuine choice of the currency we use. Money is not the neutral agent economists would wish us to think it is. Better currencies would harness the power of innovation and choice to steer our rent-seeking, casino economy in a new direction.
NEF’s work on community currencies
Leander Bindewald manages the INTERREG IVB funded EU partnership Community Currencies in Action (CCIA) for the Finance and Business team at New Economics Foundation. CCIA aims to establish greater coherence in theory and practice of complementary and community currency solutions in the public and third sector.
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Leander holds a master’s degree in Neurobiology (Diplom Biologe) and a Master of Arts (Magister Artium) in Philosophy and Business from the University of Freiburg in Germany. He can be contacted at email@example.com
Rupert Widdicombe is a writer, editor and communications consultant. His articles have been published in The Guardian, Sunday Times, The Economist and other UK and international titles. He has worked as script writer and editor, a communications specialist supporting public sector reform, and a resource for development organisations in Latin American and Africa. He can be contacted at firstname.lastname@example.org