Study of Local Currencies and 100 Percent Reserve Banking in Ecological Economics
* Doctoral dissertation: Alternatives to Money-As-Usual in Ecological Economics:A Study of Local Currencies and100 Percent Reserve Banking. By Kristofer Dittmer. Institut de Ciència i Tecnologia Ambientals (ICTA) Universitat Autònoma de Barcelona (UAB). Ph.D. Programme in Environmental Science and TechnologyEcological Economics and Environmental Management, September 2014
"This thesis aims to contribute to the debate in academia and beyond concerning the case for certain alternatives to the monetary systems of existing capitalist economies. Two families of alternative monetary organization are researched; local currencies (or synonymously, community currencies) and 100 percent reserve banking (C-PeRB). The present work focusses mainly on assessing their contemporary relevance to potentially wide-ranging improvements in social equity and ecological sustainability. The methodological approach is issue-driven interdisciplinarity."
"The introductory chapter argues that there is much scope for the development of ecological economics perspectives on alternatives to money-as-usual. A brief exposition of the contribution of Frederick Soddy to the ecological economics of money is offered, arguing that future research along these lines should involve more consideration of the politics of money.
Chapter 2 introduces the degrowth movement and its advocacy of local currencies as tools for advancing socially equitable and ecologically sustainable degrowth. The chapter reviews the academic research about four widespread local currency types – LETS, Time Banks , HOUR Currencies, and convertible local currencies – to assess their performance with respect to four degrowth-related criteria: community-building, advancement of alternative values in economic exchange, facilitation of alternative livelihoods, and eco-localization. We conclude that existing research provides a very weak basis for advocating local currency networks as tools for a purposive degrowth transition, i.e. an intentional departure from growth-based society meant to pre-empt further environmental destruction and human suffering. The chapter develops the application to such networks of the Marxian critique of utopian socialism.
Chapters 3-5 present a case study of Venezuela’s communal currency experiment, which is unique worldwide as a central government initiative. In view of the experiment’s lack of success, we discuss its foundation on strong cultural optimism and on confused concepts of the nature and origins of money. It is argued that government support has been a mixed blessing, helping to spread a single, unadaptive model of isolationist-egalitarian ‘barter’ systems. The present condition and future relevance of Venezuela’s communal currencies is discussed in terms of the government’s stated goal of transitioning to ecosocialism.
The outcome of the experiment suggests that initiating a transition to ecosocialism requires the huge disincentive of near-zero gasoline prices to be tackled before ecologically sensible alternative economies can be constructed in Venezuela.
Chapter 6 assesses the case for C-PeRB – essentially a proposal to make money creation an exclusive privilege of the state – as an element of a steady-state economy.
We identify three groups of green arguments in favour of C-PeRB, namely that it would help to:
(1) limit economic growth by constraining new investments by the availability of savings;
(2) potentially elevate environmental considerations in decisions about resource allocation by increasing the role of the democratic state as an economic actor;
(3) drastically cut debt levels to counter a presumed growth imperative associated with a ‘debt-based’ bank money system.
We offer criticisms of each of these points, and suggest that the green case for C-PeRB is not very solid as it stands. The concluding chapter argues that we may distinguish between the relevance of local currencies to a purposive degrowth transition vs. involuntary degrowth in the context of along-term crisis of global capitalism. The existing track record of local currencies is arguably more relevant to the former scenario, and their role in the second is more speculative. Furthermore, by offering a brief example concerning C-PeRB, we suggest that proponents of particular visions of socio-ecological transition, such as the steady-state economy, should deepen their engagement with political theory of social change. In sum, more efforts need to be made to raise the level of debate about what alternatives to existing capitalist monetary systems are theoretically and practically possible."