Why do we need regional complementary currencies? -Considerations from an integrative point of view-...

Why do we need regional complementary currencies?

-Considerations from an integrative point of view-

Boulder, Naropa, March 2004

www.stefan-brunnhuber.de

http://www.stefan-brunnhuber.de/

1. Sustainability

2. Towards an integrative approach

3. The money-system

4. Regional complementary currencies

5. Time for a change

Sustainability „...is a development, which fulfills the present needs without risking that future generations cannot fulfill their

own needs...“.

Brundlandt-Report, UN, 1986

1.Sustainability

D x T x V x I

1.Sustainability

S =

= D x T x V x I

SustainabilityDemography

Technology

Values

Institutions

social

economy

ecology

finance

1.Sustainability

S = D x T x V x I

Money is not a natural law, but a convention, like a marriage contract or

club rules…

1.Sustainability

What does sustainability means from a financial perspective?

1. to achieve a long term- perspective (SHV)

2. closing the income gap (military conflicts, life expectance)

3. covering the debth load by one generation

4. tackling social issues (unemployment ect.)

5. coping with the energy carrier (non-renewable vs.renewable)

Indicators:

Ecological footprint (Wackernagel and Rees, 1996)

Area that is needed for resources/ emmissions of a country

Index of ecological sustainability

(World economic forum)

21 key factors

Index of human development

(UNDP, 1999)

Considers life expectancy, education and income

Index for sustainable economic welfare (ISEW)

Corrected by positive and negative factors (homework, defensive costs).

Human Development Index (HDI, 1997)

Life span, knowledge, standards of living

1.Sustainability

?

ISEW:

•Income Inequality

•Domestic Labour

•Health

•Education

•Services from consumer durables

•Air pollution

•Depletion of resources

•Cost of climate change

•Costs of ozone depletion

•Other Factors

http://www.foe.co.uk/campaigns/sustainable_development/progress/

1.Sustainability

1. Sustainability


3. The money-system



neoliberal neokeyensian

•Conventionell money-system•Growth paradigma •Trickling down effect•Start at the real economic sector

•Deregulation

•Privatization

•Liberalization

•Personal responsibility

•Defizit spending

•Increase of demand

•Anticyclical

•Public goods

Integrative

Integrative

•From inside out

•Enyclopedic knowledge

•Homo economicus

Towards an integrative approach:

Integrative

1. Helicopter view

2. Less affected by the given models

3. Looking for overlooked connections

4. bring individual responsibility and public goods together

F. Vester, 2002, K. Wilber, 2001

neoliberal neokeyensian

Complementary currencies as they mainly have

a „built in target“ (BIT)

Integrative

1. Sustainability


3. The money-system



„The last beings to comprehend the nature of water, are fish“

B. Lietaer, 2000

3. Money system

Money-system is not neutral:

• Functions of money

• National Monopoly

• Fiat-currency

• interest

• Supply-profil:

• Non-neutral

storage

exchange Control

reference

scarcity

sufficency abundance

3. Money system

Money-system

??

3. Money system

Short-term

In-stability

Social-capital

GrowthIncomeMoney-system

Concen-tration

1. Immanent instability: Lack of reference standard procyclical, banking crisis

2. Force to grow: interest-rate driven credits, limited options

3. Money system

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

35,00%

40,00%

45,00%

50,00%

55,00%

60,00%

65,00%

Force to grow: Energy and labor*

Energy Labor

Produktionsmächtigkeit

Kostenanteil

Production-elasticity (PE)

Costs

Energy Labor

Production-elasticity ( PE) 44% 9%

Ratio of costs 5% 65%

*Henn, Lindenberger, Kümmel, 2000 (1960- 1989)

3. Money system

Short-term

In-stability

Social-capital


Concen-tration



3. Short-termism: Shareholder value, discounted cash flow

3. Money system

Physical realitytree metaphor

costs: 10€

costs: 10€ € 100€

1000

€ 168.903,82

Financial investment with interest rate

Financial investment with anchorage due

Currency with a positve interst rate of 5% per year

Currency with an anchorage due of 5% per year

Demurrage

Value calculated as from today:


€ 61,39€ 7,60

€ 167,02

10 years

100 years

3. Money system


costs: 10€

costs: 10€ € 100€ 1000

€ 168.903,82


Financial investment with anchorage due

Currency with a positve interst rate of 5% per

year

Currency with an anchorage due of 5% per year

Demurrage



€ 61,39€ 7,60

€ 167,02

10 years

100 years

3. Money system


costs: 10€

costs: 10€ € 100€ 1000

€ 168.903,82


Financial investment with demurrage


year

Currency with an demurrage of 5% per

year



€ 61,39€ 7,60

€ 167,02

10 years

100 years

3. Money system


costs: 10€

costs: 10€ € 100€ 1000

€ 168.903,82


Financial investment with demurrage


year

Currency with an demurrage of 5% per

year



€ 61,39€ 7,60

€ 167,02

10 years

100 years

Short-term thinking is not intrinsic to human nature, but created by today’s money system

NB: Historical Precedents: Dynastic Egypt

“Age of Cathedrals”

Japan 16th century

3. Money system

Short-term

In-stability

Social-capital


Concen-tration



3. Short-termism: Shareholder value, discounted cash flow

4. Concentration: high capital stock, subsidied

5. Income disparity: from labor to capital life time expectance

6. Erosion of social capital: selection of behaviors

3. Money system

Short-term

In-stability

Social-capital


Concen-tration

• Immanent instability

• Obligation to grow

• Short-termism

• Concentration

• income discrepancy

• Erosion of social capital

• The money-system is a non-neutral system

• The money-system is encouraging non-sustainable pathway

3. Money system

1. Sustainability


3. The money-system



Stucture of the financial system

conventional solutions:

•Changes within the financial architecture

•Based on ádditional growth

•Instability•Compulsory growth pressure•Short-term priority•Income disparity•Concentration effect•Erosion of social capital

Introduction of complementary

Innovations

•Extension of the Financial architecture

•Regional complementary currencies

• (neo-) liberal:• Privaization• Deregulation• Liberalization• Indivdiual responsibility

• Keyensian:• Defizit spending• Regulation• Anticylical• Financing public goods

4. complementary

- REGIONAL COMPLEMENTARY CURRENCIES-

Region:

Currency:

Complementary:

Regional complementary currency:

4. complementary

Definition:

Region: geographic area where people tend to identify with; between global and local neighborhood (10.000 – 5 Mill.)

4. complementary

Definition:

Currency: „… is a convention, an agreement of a community to use something as a medium of exchange“

B. Lietaer, 2001

4. complementary

Complementary:

- Found in different disciplines (physics: Pauli, Heisenberg, psychology: C.G.Jung, Weizsäcker, Uexkuell, DNA-coding)

- General issues: Continuity and stability, semantic and syntax, content and form ect.

- Act as a “medium of exchange” in addition to the given system

- Not linked causally to each other, but run parallel and depend on each other

- Necessary to balance the whole system- To match unused resources and unmeet needs

Definition:

4. complementary

Definition:

Regional complementary currencies:

„medium of exchange that mets regional unmet needs and unused sources and operates parallel to the conventional system“.

4. complementary

Complementary solutions:

•(regional) complementary currencies

Principles:

• interest-free

• mutual credits of

real goods and services

• cooperation and peer

control

• sufficient supply

• chaordic-PrincipleUSA + Canada

UK

Benelux

Germany + Austria

Other Europe

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Elsewhere

Japan

Argentina

Other Europe

Italy

Germany +Austria

France

Benelux

UK

Australia

New Zealand

USA + Canada

4. complementary

Basic Goals of complementary currencies:

1. partial decoupling from the globalization

2. financial liquidity for the region

3. „Built-in-target“: stabil and more sustainable

4. empowering the region (diversity, visibility)

5. Human resources are encouraged (social capital)

4. complementary

1. Sustainability


3. The money-system



S = D x T x V x I

Regional complementary currencies can produce indirect susstainable

feed back loops……


Stucture of the financial system

conventional solutions:

•Instability•Compulsory growth pressure•Short-term priority•Income disparity•Concentration effect•Erosion of social capital

Introduction of complementary

Innovations

•Extension of the Financial architecture

•Regional complementary currencies

• (neo-) liberal:• Privaization• Deregulation• Liberalization• Indivdiual responsibility

• Keyensian:• Defizit spending• Regulation• Anticylical• Financing public goods


Positive

sustainable

feed-back

loops


social

economy

ecology

finance

Indirect sustainable feed back loops:

Economy: anticyclical, anti-inflationary, credits get cheeper, local liquidity, costs for transport, empowers regionalization central bank policy, deficit spending

Social: social capital, population decreases, alternative values, discrimination, crime rate, less geopolitical wars, sick days, transparency

Ecology: long term-thinking, alternative technologies

What`s the case for business?

1. High fixed and low marginal costs

2. Added value > marginal costs of an additional costumer

3. For example: airlines, hotels, movies, restaurants

4. Unused resources and unmet needs


What`s the case for public financing?

1. cost – benefit analysis: factor 3-7

2. Increase of „social capital“ in the region

3. Decrease of public costs

4. f.ex.: social costs, sick days, crime rate,


Our future economy

Money and sustainability

The overlooked connections

www.stefan-brunnhuber.dewww.futuremoney.de


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