As I dig further into my research of money and the varied ways we could organize our currency system I have come across an interesting convergence. It is a convergence that I have seen happen in other arenas, but the starting points are vastly different.
I have been researching alternative/complementary currencies (I use the term "alternative" as a loose definition. Effectively meaning a complementary currency, however one that acts as an "alternative" to the national currency) for over 6 months, and political-economy for many years. I have read large amounts of literature with the majority of it coming from groups of people who make the argument for local economies.
These authors include Thomas Greco, Michael Linton, Eric Harris-Braun and many more. What all of these people are trying to do is present the opportunity for communities to create there own medium-of-exchange. And, ultimately, to challenge the monopoly of money creation that the state has aquired. Many of these writers are focused on the "local" and of, "reinvigorating" these local economies with the aim to building new social relations, creating value around community and small businesses. One can see this as a push back, a Polanyian double movement, against the multi-national corporate driven globalization. The argument is in part grownded in the belief that these alternative currencies could capture some of the ground back from the advance of globalization. I have written about my issues of conceptions of the local that dominate much of this literature.
The part that does excite me about it is the idea of actually being able to create your own medium-of-exchange as a community. That this in its own way is paradigm shifting - Keith Hart talks about this, though I don't think he uses the term "paradigm shifting". Eric Harris-Braun, Art Brock and Bernard Lietear also touch on this. It certainly challenges one of the most taken for granted elements of the economic systems - money creation. The goal is to really redefine what currency means and how we view our economic system. Each one of these thinkers/writers deserve a much deeper analyses, but for now I am mearly trying to set the stage for a type of convergence that I want to highlight.
Until recently I had not come across any other main-stream economists making an argument for the creation of alternative currencies. I have heard that Greenspan has talked about the rise of alternative currencies in the 21st century (I have yet to see the actual quote). However, my recent discovery of the book by Frederich von Hayek called, "Denationalising of Money" calls for the end of the state monopoly of money creation - the separation of money creation and government. His argument is founded on the belief in markets and free competition. That these two elements will lead to the creation of multiple, stable (but flexible) currencies and will end the ability of the government, through its monopoly, to create inflation/deflation by printing more money.
One thing that von Hayek does not say in his book is if the government will still be permitted to create money? Or, if all money creation, is left to the private sector. I am inclined to believe he would have defaulted to the latter.
What I find extremely interesting here is that we have, on the left - the community based local economy activists and on the right we have the neo-liberal free-market economists - all coming down to the same conclusion; freeing up the right to create a medium-of-exchange.
What, of course, is critical here is how these alternatives are framed and what, if they are to be created, these alternative currencies look like. This leads to the next, and what I think is probably the harder and more complicated question to answer; what are the critical elements of an alternative currency? What attributes does this currency have? How is it valued? Is it backed by commodities? Assets? These questions are all very murky and are talked about by many different schools of thought.
At this point I believe that a zero-interest (Silvio Gesell and Margrit Kennedy), non-debt based (James Robertson and others) currency offers the greatest possibility of enabling a type of capitalism that does not require continues growth , and helps address the issues of compound interest and exponential growth (Steady State Economics, Herman Daly and many others). The ultimate goal being a reduction in the environmentally destructive nature of our current economic system, and reducing those that live in absolute poverty.
I am not fixed on these attributes, I may discover that there are serious flaws in them. I continue to explore and dig around. The place that this has brought me to is an exploration of the explosion of the mobile phone in Africa and the concurrent development of mobile-banking and airtime bartering/transfers. With a grant that I recently received from the Institute for Money, Technology and Financial Inclusion I hope to explore this intersection between global networks, virtual currencies, under-monetized economies and alternative currencies. My feeling is this intersection offers an incredible opportunity to explore the multiple elements of the issues raised.
More to come....