Building economic democracy with community currencies

The changing character of money
Of all the institutions we live by, the most pervasive is money (see the book that this website is named after). Its power to affect our lives is often disturbing, yet most of us take its form for granted. Here I address what looks on the face of it like a minor subject, community currencies. This generic term covers many different ways that ordinary people can now issue money themselves. They do so in local or virtual associations formed as circuits of exchange, usually on a small scale. But these experiments with money contain the seeds of a profound social revolution.

Now that world society is being formed as a single interactive network, we need to ask how it might be made more democratic, since democracy is universally acknowledged to be the only legitimate basis for our societies. The principle that those who are most affected by decisions should play the main part in making them is simple, but rarely realized in practice. Moreover, political democracy has often been subverted by economic inequality. Rather than follow the tradition that rejects markets and money because they are identified with capitalism, I prefer to explore their potential to sustain a more genuine economic democracy than at present. We express our desires democratically whenever we spend money; but this kind of voting is massively unequal, since some have so much more than others. The vast majority of people alive have hardly any money to spend at all. How much better it would be if we made our own money and voted with that. A radically new approach to money, offering individuals and communities more effective control in their own economic decision-making, is the most direct way to restore democracy to our participation in society.

Money is often portrayed as a lifeless object separated from persons, whereas it is in fact a creation of human beings, imbued with the collective spirit of the living and the dead. We often recognize this aspect of money by speaking of it as if it had a life of its own, animating our lives for better or worse, more often the latter (Marx 1867). For some people, money is the root of all evil; for others it is the source of modern freedom. In both cases it makes the world go round. And this leads to a second point: money is associated with movement in space, with change, with the exchange of objects travelling great distances, in other words, with the market; and it is itself in movement through time, hence the history of money is an essential part of the history of society. Money is not one static thing or idea, much as we would all like it to stand still and be counted.

The standard definitions do not capture the most important feature of money, its evolution as a means of human interaction in society. Money is made by us, but for most people it has long been something scarce which we take passively whenever possible, without any sense of its being our collective creation. From having been an object produced by remote authorities, it is becoming more obviously a subjective expression of our own will; and this development is mirrored in the shift from ‘real’ to ‘virtual’ money. In the last 300 years or so, the money form has evolved from metallic coins through paper notes and ledger entries to electronic digits. In the process, it has become dematerialized, losing any shred of a claim that it is founded on the natural scarcity of precious metals. Even the authority of states, which stamped coinage and issued the notes we are still most familiar with as money, cannot long survive the electronic blizzard that is money in the age of the internet.

The idea is slowly taking root that society is less an oppressive structure out there and more a subjective capacity that allows each of us to learn how to manage our relations with others. Money is a good symbol of this shift. It first took the form of objects outside ourselves of which we usually had a greater need than the available supply; but of late it has increasingly been manifested as personal credit, in the form of digital transfers mediated by plastic cards and telephone wires, thereby altering the notions of economic agency that we bring to participation in markets. If modern society has always been supposed to be individualistic, only now perhaps is the individual emerging as a social force to be reckoned with. This claim rests on a single overwhelming fact, that large amounts of information concerning the participants in economic transactions at any distance can now be processed cheaply, thereby making possible the repersonalization of complex economic life (Hart 2001, 2005). In the process the assumptions that supported mass society for a century are being undermined.

The internet permits almost instantaneous communication between machines using microscopic circuits to process and store information. There are profound implications for the system of money. Now that the internet is no longer primarily a research tool, its use is increasingly as a electronic marketplace, making links between and within businesses and between them and their customers. Electricity travels at the speed of light and the transfer of information itself is essentially costless. This then is a market with unusual time and space dimensions, where the personal and impersonal aspects of economic life meet on new terms. Very little of social significance will be left untouched before long.

The world economy is being transformed once more by radical reductions in the cost of producing a basic commodity, in this case the transfer of information. There was a time when commodities traded internationally were things extracted from the ground and services were performed locally in person. Now the person answering your business call could be located anywhere in the world and a growing number of service jobs are exposed to global competition. Vast profits are to be made in entertainment, education, the media, finance, software and all the other information services. But the digital revolution poses specific problems for accumulation. The saying goes that “information wants to be free” and certainly there is continuous downward pressure on prices in this sector arising from the ease of copying proprietary products.

The cheapening of the cost of information transfers has considerable consequence for the character of long-distance market relations. Money was traditionally impersonal so that it could retain its value when it moved between people who might not even know each other. If you drop a coin or banknote on the floor, whoever picks it up can spend it just as easily as you can. Money in this form is an instrument detached from the persons who use it. The expansion of trade often depended on this objectivity of the medium of exchange and economists have long debated whether money’s value derives from its being a scarce commodity or from the guarantees made by states who issued it (Hart 1986). Bank credit on the other hand has always been more directly personal, being linked to the trustworthiness of individuals and, in the case of paper instruments such as cheques, issued by them. The idea that transactions involving money are essentially amoral comes from its impersonal form, but until recently, in most societies, the bulk of economic life was carried out by people who knew each other and were able to discriminate between individuals on the basis of experience.

The era of mass production and consumption may be ending as a result of cheap information transfers. It is now possible to attach a lot of information about individuals to transactions at distance. For example, keeps a record of every book I have bought from them and they make recommendations for new purchases on this basis. This is similar to the small bookseller who reserves a book for a favorite customer, but it all takes place anonymously at distance. Some firms are already moving towards a system known as Customer Relations Management (CRM) based on data banks that know no limit in scope. This enables them to target buyers who generate above average revenues, to remind them of the need to buy something for their wife’s birthday and so on. Nowhere has this process gone further than in the market for personal credit. A generation ago I relied on the bank manager to extend my purchasing power through making an overdraft available. Now the number and variety of financial instruments on offer is growing exponentially and these are often customized to my personal needs. The trend is definitely to restore personal identity to what were until not long ago largely impersonal contracts. Of course, rich and powerful organizations have access to huge processors with which to manipulate an often unknowing public. But at the very least, for many people, these developments have introduced new conditions of engagement with the impersonal economy. What matters is to recognize that the line between personal and impersonal society is shifting, with significant implications for individual and collective agency (Hart 2005).

Money may seem to be the problem, but it is also the solution. We have to find ways of organizing markets on the basis of equal exchange and that means detaching the forms of money from the capitalist institutions that currently define them. Instead of taking money to be something scarce beyond our control, we could begin to make it ourselves as a means of accounting for those exchanges whose outcomes we wish to calculate. Money would then become multiple sources of personal credit, building on the technology that has already given us plastic cards. All of this stands in stark contrast to state-made money, where citizens belong to one national economy whose currency is monopolized by a political class claiming the authority of representation to manage its volume, price and allocation.

Community currencies in general
Community currencies stand in contrast to conventional money whose sources are closed to most of us. There are many varieties of these, but their basic principles are simple and general. They are open in the sense that they can be created by any association choosing to come together for the purposes of exchange; they are free (libre) in the way that speech is, or ought to be, free. Whereas conventional money is a commodity kept artificially scarce by remote suppliers (the banks, regulated in turn by a central bank), a community currency is simply a measure of exchange whose supply is limited only by the willingness of participants to trade. In this way, the scope for what people do normally, buying and selling, is extended without the restrictions imposed by normal cash.

Community currencies are both a radical subversion of capitalism and its natural extension. It is possible, even necessary, to conceive of them as complementary to existing economic forms and interests, operating at present on a minute scale that offers scant threat to the status quo — so many mice running around the basement, as it were. Thus businesses may accept payment in local and national currencies together; participants in these exchange circuits often pay taxes on their transactions; small increments in human welfare are generated. These are markets based ultimately on the same law of contract as modern capitalism. Yet the forms of money involved are also sharply different. The money we are familiar with and have known for at least four thousand years is produced by remote agencies in amounts that ensure its scarcity. It is therefore a commodity with a value independent of its function as a means of exchange; it is loaned at a price (interest) and hoarded. The markets formed by this money proliferate everywhere, increasing the participants’ sense of their own powerlessness. Community currencies, on the other hand, are issued by people coming together in their own finite associations. There is no inherent restriction on their supply; individuals make them by finding others to trade with. The money does not drain away, but stays within the circuit as a source of future exchange. It is simply a measure with no independent value and thus cannot be transformed into capital. It expresses the word of each participant (whether individual, business or organization), not that of a central bureaucracy. Above all, whereas the social character of conventional money often appears as an anti-social force, the active principle of community currencies is co-operation in society (Karatani 2003).

The technical possibilities for linking community currency payment systems to the internet and to ‘the new economy’ of e-commerce are growing rapidly at this time. The economy emerging today is global, highly connected and favors intangibles, ideas over things. The most powerful technologies enhance soft relationships and decentralized modes of control. There are increasing returns to adding members to any given network; but the loss of an individual to that network matters little. The value of the network takes precedence over the value accumulated by individual units (Castells 2001). In the world of the internet, scarcity gives way to abundance and the common wealth grows fastest through an ethos of sharing and giving. Prices tend to fall towards being free (gratuit). It is an unstable world that rewards innovation, as well as excluding the many who cannot participate or who lose when they do. Community currencies, based as they are on well-established social principles, have the capacity of building bridges between everyday economic life and the opportunities arising in the new economy.

Community currencies have existed in one form or another for a long time. The principle of forming closed circuits of exchange through gifts of valuables is said to be much older than markets. We are familiar with contemporary examples of this such as the Northwest Coast potlatch and the kula ring of the Western Pacific. Utopian experiments in self-sufficient economic community, such as those associated with Robert Owen and William Morris in the nineteenth century, have been commonplace throughout the industrial age (Morris and Bax 1886). There are numerous modern examples of people inventing the means of exchange in the face of scarce money. In the 1970s a bank strike in Dublin was circumvented successfully by the expanded circulation of cheques as a substitute for currency. A wide variety of local experiments in social credit emerged during the Great Depression, often involving the invention of new currencies; these included in one place the circulation of pieces of deerskin known as ‘the buck’. Perhaps the best-known example from the inter-war period was the stamp scrip of Silvio Gesell in Austria, celebrated by Keynes in his General Theory (1936), itself a sustained exercise in the economics of circumventing the scarcity of conventional money. A Swiss complementary currency founded in 1934, the WIR, is still flourishing today as a means of trade between businesses (Greco 2001:67-8; see also Greco 2009).

LETS and ‘open money’
The late twentieth century saw another revival of this form, paradoxically in the leading centres of western capitalism. LETS, meaning ‘Let’s do it’, but later elaborated as Local Exchange Trading Systems, began in British Columbia in 1982-83 at the initiative of Michael Linton. This was in response to a temporary downturn in the local economy because of reduced demand for the defence industry and provincial government finances. Since then the LETSystem design has spread through the English-speaking countries and beyond, to France, Germany, Japan and Argentina. Many thousands of people have joined LETS systems which until now have generally been independent of each other. Most communities and even nation-states depend heavily on imports and exports and their internal economy has a weakly developed structure. Community currencies, on the other hand, sustain self-regulating economic networks allowing members to issue and manage their own money supply within a bounded system. As such, they may be conceived of as a way of closing off local communities from the market economy; but Linton has subsequently emphasized the need to integrate these circuits into existing commerce.

In LETS, people, businesses and organizations open accounts in one or several systems, with the unit of account, often named distinctively for local cultural resonance, made equivalent to the national currency for ease of calculation. Member accounts start at a zero balance with no deposit of normal money nor any requirement to buy before selling. No interest is paid or charged on balances. There is a register of members (which would normally include businesses as well as individuals and organizations), sometimes listing the services they offer. Payment for goods and services may be in some combination of local and national currency, with only the former being registered in the circuit. Transfers and balances are recorded by a registry which is a virtual bank with no ‘real’ money. Minimal administrative expenses are recovered from member accounts in community currency on a ‘cost of service’ basis. There is never any obligation to trade; and, if desired, members may know the balance and turnover of other members. In the latest stage of the technology, these transactions are recorded off-line on smart cards capable of registering a plurality of currencies and then communicated card-to-card via the internet. Any existing bank could perform this function for a large number of such networks, but they do not.

Each individual member listed on the common register issues the currency whenever the balance of their exchanges drops below zero. In doing so, they make a promise to honour their commitment, acknowledging the gift of goods or services made in return. At any moment, the totality of exchanges sums to zero. These multiple-issuer currencies are more robust than the conventional, single-issuer variety in that the ability of members to trade is not diminished by the disappearance — by default, migration, death or whatever — of accounts with substantial negative balances. Even so, trade can dry up if some members accumulate significant positive balances and find little to buy within the circuit. Most of all such a system offers a means of economic empowerment to individuals as members of communities brought together in a practical way through a circuit of exchange with its own medium of communication. This in turn is an education in citizenship of a new kind, where society may take the form of many levels of association, not just those depending on the economic monopoly of the nation-state.

A proper currency service provider would enable users to create their own systems in the space available and give them access to other similar systems. A stand-alone community currency is like a radio or TV that can only tune to one station, a computer with just one programme. Supporting trade between people who keep their accounts in different currencies requires that the registries can communicate with each other through a cross-clearing network. This would be operated primarily through the internet, using its own money domain naming system (MDNS). The MDNS proposed by Linton would start with national top-level domains responsible for the registration of regional sub-domains, which would be in turn responsible for local registration. This facility would be further enhanced by ‘multi-cc’ smart-card systems. The cards can currently carry up to 15 different currencies at a time, off-line and anonymous, and are designed to make community money systems easily adopted in the retail sector. The card system enables every participating business also to have a loyalty loop specific to their own business, if they choose. The combination of the cross-registry clearing and smart card systems would create a platform for virtually any form of open money. When the LETSystem software achieves a kernel of cross-platform protocols capable of defining the integrated platform of any application, it will become open source software, open money in the fullest sense. Of course, co-ordination in this area is difficult when there is no one body concerned with establishing standards.

A powerful ‘free (libre) and open source software’ movement (FLOSS) has emerged in recent years, building on the achievements of the Free Software Foundation’s Richard Stallman and the founder of Linux, Linus Torvalds (Hart 2005). The latter is a free operating system that has gained phenomenal popularity in recent times because it allows users to modify software to suit their own needs. Linux is a collaborative effort of thousands of programmers interacting over the internet and is therefore not owned or controlled by any one company. By exposing software source code to peer review by a community of users quickly and often on the internet, it has posed a strong challenge to the closed business model of seeking to derive monopolistic rents from secret intellectual property. The robustness of the open source model lies in its being able to draw on a much larger pool of potential developers than could ever be employed by a single firm. In similar fashion, the spread of community currencies would benefit from sharing software developments and other forms of innovation within a community of associations using open money. Already community currency design, code and other relevant information has been made freely available for others to use and to contribute to its development. Moreover, like open source, these developments take place through an egalitarian (‘flat’) network rather than through hierarchical institutions. There are other parallels between the two cases. Open source appears to be a driven by a logic of giving and sharing, more than financial reward; and in circuits organized through community currencies concern with money prices is often secondary to the individual and collective purposes of exchange.

There is a paradox in my use of the terms open and closed in this context. For the majority of community currencies such as LETS the definitive principle is that the exchange circuits they sustain are closed. In contrast, the markets sustained by conventional money are open-ended networks of limitless extent, so that money seems to drain away to unseen centres of power that are invariably located elsewhere, leaving us powerless to prevent its passing. The whole point of LETS is that the purchasing power generated by trade comes round again to nourish the participating community; and it promotes internal production rather than the import/export pattern that predominates in mainstream markets. This becomes more obvious when the circuits are small, as they usually are, and when the community supporting a currency is a well-defined local area. But open money circuits may be scaled up to a much larger membership that could easily be dispersed around the internet. There are trade-offs between these poles of association, small- and large-scale, local and virtual, closed and open. Some may choose the intimacy of relations with those they know well, whereas others may prefer looser connection with a large pool of strangers. If they are to succeed, community currencies must embrace both poles. Thus, the greater control afforded by closed circuit networks needs to be offset by an open source approach to the software needed to operate community money. This dialectic of local community and global network, reflected in the combination of closed circuits of exchange and open distribution methods, has been a constant feature of LETS’ evolution over the past two decades.

The variety and limitations of community currencies
The general aim of community currencies is to enable trading and exchange, when purchasing power in the conventional market economy is especially defective. But clearly the form lends itself to a wide variety of social and ecological purposes whose rationale may not be narrowly economic in that sense. LETS and similar systems are differentiated in a number of ways. Of these the most important is the degree of integration in the national economy, but others include: the monetary measure (based on the national currency or on hours of work, for example); the organizers’ reliance on free or salaried labour or government grants; digital or material records of payment; involvement of businesses or exchange of services between individuals only; local or virtual association; forms of leadership and participation; and so on. Many LETS associations are reluctant to band together in case their autonomy is compromised. They still bear the hallmarks of Victorian philanthropy, aiming only at the poor, forming boards and committees, protecting their insular and clubby nature against all-comers. Such institutions are usually time-consuming and dogmatic, with a bias against business and for public grants. Their main motive appears to be to get away from the conventional economy into a separate world of their own, however small.

At another extreme, community currencies may, in their desire for economic integration, mimic national money so closely as to resemble it more than the family of currencies associated with the LETS movement. The Limehouse Townhall in London’s East End has been occupied since 2001 by a miscellaneous network of artists and activists. In October 2005 they launched a series of events known as the World Summit for Free Information Infrastructure ( As part of their engagement in the local economy, they also launched their own currency, known as the lime. This is a bright green paper scrip similar in appearance to supermarket discount tokens. Denominations are 1, 2 and 5 units upwards and have purchasing power equal to the pound sterling. The lime circulates in the local community, where it is accepted by some shops and restaurants. These in turn may redeem the tokens for national currency whenever they choose; some of them offer a discount of ten percent to the issuing authority (not to the customers). Although it is intended as a permanent feature of local life, the lime is mainly used now as an event currency, with many goods and services available internally only in exchange for the community currency.

The organizers of the lime have discovered the joys of central banking: the sole issuer of the currency has the power to create money that did not exist before, to the extent that tokens are not immediately redeemed for normal cash. The scheme also has the merit of being easily understood by participants, some of whom may be just passing through the community; and it adds flexibility to local markets. Its drawbacks are those of conventional currency. The lime is impersonal, undemocratic in origin (single-issuer as opposed to multiple issuers), easily counterfeited and unconnected to the new information technologies. As such, it is a long way from LETS; but what it loses by mimicking the pound sterling, it gains in terms of cultural acceptance.

Persuasion and internalized models of community
Given the cultural longevity of conventional money and the powers of indoctrination held by ruling institutions, it is not surprising that most people are initially reluctant to embrace community currencies. People feel that the monopoly claimed by national money must be inevitable, since no-one would freely choose it. To be told there is an alternative that we could choose makes nonsense of a lifetime’s enslavement to an unrewarding system. So we cling to what we know as the only possibility. The central task, if community currencies are to make serious inroads into society, is to persuade the doubtful, by showing them that money can be made to work for them in practice, that it is the solution as well as the problem. The exchange of objects through money and that of meanings through language are now converging in a universal network of communications, the internet.

This is a world where people have a notoriously short attention span. It is not enough to develop a superb design for exchange circuits employing community currencies. People have to be sold the idea; and this involves a subtle engagement with what is old and new in their experience. The central role of persuasion or rhetoric in economy was understood by those who have most influenced our economic ideas and behaviour. Thus Adam Smith (1762) spent fifteen years lecturing on rhetoric and left instructions in his will for these lectures to be destroyed, presumably so that his Wealth of nations (1776), the founding text of economic science, would not be seen as the self-conscious literary artifact that it is. Maynard Keynes likewise devoted a dozen years to his Essays in persuasion (1931), trying to get across one simple message, that economic recovery would only come when the Victorian recipe of saving for capital accumulation was abandoned. His mantra was ‘spend, don’t save; spend, don’t save. More than any sophisticated academic treatise, such as the General theory (1936), this rhetorical project accounts for the eventually favourable reception of his ideas. Now that we have all absorbed his message, the time is probably ripe for another one.

If one of the obstacles in the way of disseminating community currencies is the difficulty of persuading people consciously to adopt new ideas, another is the unconscious use of old models when designing new forms of association. The nation-state has enjoyed tremendous success as the dominant form of society over the last century or two, so much so that we have internalized its principles and reproduce them whenever we seek to construct new forms of community. I identify four ideal types of community, all of them assimilated within the synthetic notion of the nation-state (Hart and Munro 2000). The nation-state has been a political community capable of offering its citizens a single vehicle for relating to the world outside, as well as the framework of law regulating their internal affairs. It has been a community of place, resting on territorial principles of association with definite boundaries of land and sea. It has also been an imagined or virtual community, a constructed cultural identity relying on symbolic abstraction of a high order. It has finally been a community of interest, in both the subjective and objective senses, uniting members in trade and war by a shared purpose.

Given this extraordinary achievement in making society synonymous with a single form, it is not surprising that, when people come together to make alternatives to the national economy, they should unconsciously reproduce it in the design for their association — as a stand-alone multi-purpose community of like equals rather than, say, as a federated network of unequal social entities. We have already seen this in the contrast between the development of LETS as ‘open money’ and a singular currency such as the lime. Obviously, significant institutional success for community currencies depends on the discovery of complex hybrid forms, combining genuinely new principles with what people already know well.

Why now?
The principles underlying community currencies are timeless and universal, but is our moment in history particularly favourable to their diffusion now? In any case community currencies are to be found today mainly in the countries where capitalism is most deeply rooted, more than in the poorer countries. So this question entails the relationship between community currencies and capitalism.

Capitalism is a historical configuration of people, machines and money which in the twentieth century took the dominant form of ‘national capitalism’, the attempt to manage accumulation and markets through central bureaucracy (Hart 2001). It was an era of mass production and consumption, of heavy industries and centralization, when human destinies were tied to the impersonal institutions of states, capitalist markets and science. Recent advances in both connectedness and inequality mark a new stage of freedom for the owners of money, to which I give the tentative label, ‘virtual capitalism. The ‘globalization’ brought about by the digital revolution of the last two decades has undermined the pretension of states to control their national economies. In the process, long-distance trade in information services has overtaken manufactures as the main focus of economic growth and the money circuit has become increasingly detached from real production and exchange. The world holds its breath, wondering if this is a new stage of human evolution or a financial bubble whose end will engulf us all.

If Marx and Engels (1848) found in the circumstances of factory industry the social possibility of workers’ emancipation, the democratic potential of a community currencies movement should likewise be referred to the conditions generated by virtual capitalism. The cost of transferring information has been radically cheapened and this opens up the scope for peer-to-peer communications and exchange, even as it reinforces the powers of surveillance and control exercised by remote agencies. The financial revolution associated with plastic credit cards and similar instruments has introduced greater personal responsibility for the management of debt, within the constraints of the conventional banking system. For that part of the human population living in the heartlands of virtual capitalism, let us say the western middle classes for short, experience of new financial instruments, the internet, global telecommunications and travel, as well as the erosion of collective security by neo-liberal policies, have had a cumulative impact on individual and social consciousness. Given the rate of diffusion of the new technologies and the growing integration of world society, such consciousness is by no means limited to the western middle classes. We have reached a stage where the historical configuration of people, machines and money could sustain widespread adoption of a radical alternative.

It is perhaps predictable that the early development of community currencies has taken the form of defensive particularistic units offering a temporary refuge from the ravages of capitalism. Such groups normally emphasize relations of personal trust between members, a shared morality in contrast with the ruthless impersonality of the world outside. Harking back to the labour theory of value, some of them have based their measure of money on time (time dollars, Ithaca hours), thereby putting some distance between their exchanges and the national economy. It is also significant that these communities have usually been local and stress the value of policing the boundaries of face-to-face communities. This is what most people imagine community currencies imply; and indeed a substantial part of the movement will retain this character indefinitely. But virtual relations at distance and face-to-face communication reinforce each other in a complementary way and should not be posed as stark alternatives.

Nevertheless, the internet favours virtual association and the more progressive forms of open money that I have highlighted here are designed to allow for multiple combinations and considerable scale. Moreover, while the logic of community currencies, in contrast with conventional money, is intrinsically consistent with a more ethical social agenda, it is important to note that this operates through their abstract design and does not imply any particular type of behaviour from members. Money today is the way we keep track of a potentially bewildering number of contractual agreements linking us to a great variety of associations. It is a memory bank and I find it hard to conceive that we could dispense with this highly personal register of transactions. Nor would most of us be willing to devote large parts of each day to the social nuances of exchange. Community currencies must be built with this objective in mind. They can and should be designed to facilitate exchange reliably at low transaction cost. Individual responsibility comes in at the level of issuing and maintaining a shared currency, not as an ethical requirement that exchange should be personal or even particularly solidaristic.

Community currencies are inevitably small in scale at this stage. But they can be designed with the possibility of scaling up very much in mind. Once the principle of community currencies is seen to be viable, their growth as a sector of modern economies is likely to be rapid. In any case, participation is a learning exercise. They show what conventional money is and does to us, as well as providing opportunities to practice new relations between individual and society. By redesigning the money we live by, we send a message that other things matter more. Experience with LETS has already shown that, when people issue their own currency, the habit of trying to get more for less, of buying cheap and selling dear, dissolves and the real purposes of exchange take precedence over the money involved. Even so, it is a far cry from small experiments like this to the problem of global economic inequality and ecological instability. Community currencies may echo the principles animating the movements that must arise to address these problems (Hart 2004). They offer a source of political education, a means of social connection, perhaps a tool of economic improvement. It is impossible to predict how far or fast this experiment in economic democracy will spread.

Although community currencies are closely identified with the particular interests that bind people together in small-scale associations, we must not lose sight of humanity’s need to remake world society with people in mind. Money is the most universal means of communication we have and the kind of society it reflects is at once both universal and particular. Past projections of unversality, whether made in the name of the Catholic church, colonial empire or neo-liberal ideology, have eliminated cultural particulars in order to dominate them. It is time that we made a society whose universality is realized through its constituent particulars. The principle of such a society could be reproduced in microcosm through the design of community currencies.

Oliver Cromwell established a Commonwealth in 1649 after the English Civil War. It was a government formed with the common consent of the people and was intended to replace the old regime of absolute monarchy and aristocratic rule. British democracy never recovered from the counter-revolution of 1660 (the restoration of the monarchy). But the American democracy subsequently retained the spirit and sometimes the name of that original Commonwealth. And it persists as the title of the largest and most diverse voluntary association of nation-states in the world today, following the break-up of the British empire. In the work of John Locke (1690), whose political philosophy did so much to inform the English-speaking democracies, ‘commonwealth’ referred not just to the form of government, but to what we might call ‘the public good’, the welfare of all citizens. Today the great corporations command our unequal world with all the haughty power and indifference to human welfare that was once the hallmark of the aristocracy in pre-revolutionary France. For us, however, ‘commonwealth’ can no longer refer to anything less than democratic self-government by humanity as a whole; and economic democracy, in thousands of measures, large and small, is indispensable to achieving that end.

What then does the term ‘common wealth’ mean in the context of the community currencies movement? What is the ‘wealth’. Not the money itself, for sure. Money, conceived of as a commodity with its own value to be hoarded and deployed as an instrument of power, as capital, is the opposite of open money. Nor is the collectivization of such capital in the manner of twentieth century socialist regimes remotely appropriate either. Rather, the wealth to be mobilized is the human creativity in all of us, resources that have been ill-used for too long, because of the money regime we have been forced to live by. This creativity belongs to each individual, but it can only be realized in society, together. Society should be conceived of as a multitude of levels of association and many of these could take the form, as one of their dimensions, of a community with its own circuit of exchange and money. Economic democracy in this limited sense would point us to more inclusive forms of polity; and then perhaps the dream of abundance that has long inspired humanity would be realized as more than just the riches of a few.


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Malinowski, Bronislaw Argonauts of the Western Pacific, London, Dutton, 1922.

Marx, Karl ‘The fetishism of commodities and the secret thereof’, Capital Volume 1, London, Lawrence and Wishart, 1979 [1867]: 71-83.

Marx, Karl and Friedrich Engels Manifesto of the communist party, 1848,

Mauss, Marcel ‘Essai sur le don’, Sociologie et anthropologie, Paris, PUF,1950 [1925].

Morris, William and E. Belfort Bax Socialism: its growth and outcome, chapter 13 ‘The utopists: Owen, Saint-Simon and Fourier’, New York, Charles Scribner, 1899 [1886]; see

Nishibe, Makoto ‘The theory of labour money: implications of Marx’s critique for the Local Exchange Trading System (LETS)’, in Hiroshi Uchida Editor, Marx for the 21st Century, London, Routledge, 2005: 89-105.

Servet, Jean-Michel Une économie sans argent: les systèmes d’échange local, Paris, Seuil, 1999.

Smith, Adam Lectures on rhetoric and belles lettres (Volume 4 of the Glasgow Edition of the Works and Correspondence), 1762,

An inquiry into the nature and causes of the wealth of nations, London, Methuen, 1961 [1776].

This paper was originally published in French through a collection edited by Jerome Blanc, Exclusion et liens financiers: monnaies sociales (Economica, Paris, 2006). Any knowledge I have of community currencies has been greatly expanded by association in the period 200-2002 with Michael Linton and Ernie Yacub whose Open Money project still seems to me the most promising initiative in this field.

Comments |9|

  • Building economic democracy with community currencies (The Memory Bank)…

    “Of all the institutions we live by, the most pervasive is money (see the book that this website is named after). Its power to affect our lives is often disturbing, yet most of us take its form for granted. Here I address what looks on the face of it …

  • Keith, thanks for your good work and for referencing one of my books. Are you aware of my latest, The End of Money and the Future of Civilization (Chelsea Green, 2009)? It both provides necessary historical and conceptual background and prescriptions for communities, businesses, and governments. Also, my blog contains a wealth of material dealing with all aspects of the money problem and links to many of my recent presentations and interviews.

    Thomas Greco

    • Thomas, I am indeed aware of The End of Money and the Future of Civilization (which I own), of your blog and the letters you distribute when travelling. No-one has contributed more to illuminating this filed for the general public than you. Your comments forces me to fess up on the origins of this post. I published it in French through an important collection edited by Jerome Blanc, Exclusion et liens financiers: monnaies sociales (Economica, Paris, 2006). I filed an English version away as a page on this website. Then a Mexican member of the Open Anthropology Cooperative posted a thread on “credit money” as one possible response to the Haitian disaster, asking for guidance in this area. I was so overwhelmed by the task of supplying references that i decided to revive this paper. It turned out to have many formatting problems and, by the time I had cleaned it up, I had no energy for bringing the references up to date. I hope to do so soon and have already inserted your 2009 book.

  • I find the ideas you are proposing fascinating. It proposes to bring economies up to their productive capacity by making a convenient medium of exchange available to underwrite it. However there are serious problems it must overcome:

    1) Government has the power and motive to challenge it if it threatens their monopolies. (Helleiner 1999)
    2) Money needs authoritative foundations- some socioeconomic basis.
    The premise of e-money rests on two fallacies- economic value isn’t fixed like the volume a liter of fluid is, or length of a centimeter. Prices fluctuate in response to the fluctuations in the distribution of economic and social power. That’s why money of account needs to be the foundation of exchange and market value. Secondly, standardization of unit of account, needs to be established by an authority. Compare that to monetary unit of accounts which are abstract because the value is partially removed from the free market process.
    3) It is only available within the network participants.

    So I think the end of money is a nice ideal, but this prescription is based on the misunderstanding of our monetary system.
    Here is a much better critique:

  • Great article.

    You should know about the Meta-Currency Project too. This project is addressing the need to clear and exchange the new currencies and much much more. Currencies are for more than exchange, and are also part of rating and measuring a lot of things (think of grades and credits in schools, or Gold medals in sports).

  • Tschäff,

    Over years of looking into these questions, it has become apparent that just about nobody understands money, least of all those who claim they do. This article is based on a more cogent understanding of currencies that you will find in any text with the exception of some of those mentioned here.

    A lot of how it works depends on nobody looking to closely at it. You can show that it doesn’t work, the extraction of money rents creates the need for inflation to keep the system from seizing up. Otherwise we are embedded in a Monopoly game, and it ends with all the money in one player’s hands.

    People have confused money with wealth. When the money is all in the hands of a few, should the rest of us just curl up and die? If the winners of this big Monopoly game are allowed to just sit on their big bank accounts and use it to prevent the wealth of the world from being accessed by the rest of us the whole system comes to a halt. When are we going to withdraw our participation from this stupid game.

    Maybe if more of us had the courage to take this stand:

  • Sounds like we should start asking questions about the big picture…

    Do we need a Referendum For A New Democracy?

    Are you concerned about the future of democracy? Do you feel democracy is under attack by extreme greed in countries around the world? Are you sick and tired of: living in fear, corporate greed, growing police state, government for the rich, working more but having less?

    Can we use both elections and random selection (in the way we select government officials) to rid democracy of undue influence by extreme wealth and wealth-dominated mass media campaigns?

    The world’s first democracy (Athenian democracy, 600 B.C.) used both elections and random selection. Even Aristotle (the cofounder of Western thought) promoted the use random selection as the best way to protect democracy. The idea of randomly selecting (after screening) juries remains from Athenian democracy, but not randomly selecting (after screening) government officials. Why is it used only for individual justice and not also for social justice? Who wins from that? …the extremely wealthy?

    What is the best way to combine elections and random selection to protect democracy in today’s world? Can we use elections as the way to screen candidates, and random selection as the way to do the final selection? Who wins from that? …the people?

Category: Human economy | Money