It has been a while between posts, in the main because I have been grappling with the very real problem of creating a completely new form of financial product which promotes investment for the mainstream without conforming to the conventions of the investment ‘market’ of the City. However, the new Stroud pound was profiled by the BBC (here) but for me the report missed out the most important point which is that for the first time in the UK the currency will be subject to ‘demurrage’. Essentially it is negative inflation (-3% per 6 months) which requires stamps to be purchased on 1st April (3p per pound) to pay for the costs of running the currency and encourage its usage. Any currency without a stamp on that date will no longer be accepted as tender.
The pounds also cannot be exchanged for sterling – they have to be ‘spent’ and circulate in the local community.
While I have posted before about the benefits of such an initiative in the local community and the perception of money that is created, this example does begin to sound not so much as an alternative ‘money’, but rather the promotion of a form of gift exchange with a built in depreciation to pay for the creation of the gifts themselves. Each transaction is no longer an end in itself – the objective agreement of the value of a good in terms of a price between two individuals – but rather the beginning of a series of transactions within the community which, I would guess, establishes both social as well as economic relations and ‘capital’. A gift is not something to be hoarded and taken out of circulation but rather something to be passed on, like the well known examples of kula shells and potlatch ceremonies with Mauss’s own essay (and the excellent book "The Gift: how the creative spirit transforms the world" by Lewis Hyde)
The store of value which is created by this currency is therefore in the social relations created by its usage. The Stroud pounds will come to represent the value of exchange between people who come to know one another rather than the anonymous exchange of the supermarket check-out. As such it aims to do more than some whiat I perceive to be slightly contradictory messages about ‘local consumption’ – there being no real guarantee that the participating businesses are truly local in their sourcing and environmental credentials. Instead, the Stroud pound represents a form of capitalism which thrives from the creation of community rather than anonymous competition. The surplus therefore which creates this momentum and encourages the flow is therefore in the intangible social capital which these transactions represent – the hidden obligations and reciprocations upon which a local town survives and thrives.
So perhaps rather than the surplus being allocated to a local charity, which is admirable but merely replaces a function which can be carried out by sterling, the money should be used to create and promote further collaboration and collective enterprise which aims at enriching the social life of Stroud and transforming the nature of social relations between the individual and the collective identity which the town encompasses?
where these schemes always seem to come unstuck in the uk is from a complete distrust, almost paranoid fear among small busineses which is ironic because it is exactly these small busineses that would benefit most from a demurrage scheme.
I think all countries should use this type of local money, after all the channel islands became super rich because of demurrage money although they no longer use it, before introducing it a few hundred years ago they were just about banrupt.
Demurrage is not THE answer but it is AN answer.
Ireland for example should introduce demurrage money now while they still have an economy. I can't beleive that such a fantastic idea is so rare in the world
Posted by: Andrew | February 28, 2011 at 06:29 PM