In considering the characteristics of a new economy, the question of money arises: What is the appropriate role of money? What entity or entities should govern its issue? How much should be placed in circulation and on what basis? What determines its value once in circulation? How might its very structure favor financing for regionally-based businesses producing goods in a sustainable manner for local markets? As a global financial crisis continues, economists are examining how national monetary policies may have played a role in the crisis. They are also concerned with the dominance of a single currency as a global medium of exchange.
Responding to these questions and concerns, policy makers are revisiting Friedrich Hayek's idea of competing currencies. Hayek, an Austrian economist, argued that if the public could choose between multiple privately issued scrips, the currency exhibiting the strongest purchasing capacity would prove the favorite, thereby disciplining the rest. Monetary historians recall that regionally issued bank currencies contributed to the economic growth and diversity of the United States in its early years, creating jobs and building skills.
In such a climate of inquiry about monetary matters, BerkShares, the local currency for the Berkshire region of Massachusetts has garnered much new attention, largely due to the fact that it is one of the few privately issued scrips in the US. Hits to the BerkShares website (www.berkshares.org) in December averaged 10,000 daily.... [emphasis added and paragraphing edited for readability]
Interesting that the New Economics Institute, dedicated to perpetuating E. F. Schumacher's work, would be allying itself with Hayek and the Austrian school.
4 comments:
Fools gold.
It is depressing that people are attracted to these dystopian schemes for national devolution. But it is also not surprising that people accustomed to years of failure by the national government to pursue democratic values and the common good are drawn off into these radically local and individualistic directions.
Currency localism is the militia movement of the 21st century.
The idea here is for the American public to give up its currency monopoly and let a million private currency flowers bloom. But a world of private currencies isn't going to end up as a bucolic world of home-ruled local "BerkShares", with people using some kind of farmers' scrip to exchange their squashes and homemade pickles. If you take government out of the currency business, what is left will likely quickly evolve into an oligopolistic system of bank currencies centered on a few giant players who use their market power to manipulate the values of would-be competitor currencies and drive them out of business, and who then use their consolidated, concentrated currency producing power - and the seignorage power that always goes with such power - to indenture us all to their currency systems.
The endgame is to destroy what is left of democratic government. Turning all governments into currency users rather than currency issuers means the eventual takeover of the functions of government by undemocratic corporate hierarchies. If people think Washington is bad, wait until they see a world in which the dominant media of exchange is Goldmanbucks.
Perhaps the localists imagine we can maintain some regulatory regime that will be sufficient to prevent the private currency industry from following its natural evolutionary path toward oligopoly or monopoly. But exactly how do they think any government will be able to preserve the power to enforce a rule of law of any kind against powerful corporations if that government doesn't even control the nation's monetary system any longer?
Do people understand that a world of multiple currencies is a world in which even the most routine transactions will frequently require currency exchanges of the kind one is required to make to do business abroad? Do they realize that means that an extra layer of costs will be built into all those little transactions, with a new industry of domestic money-changers taking a cut out of everything we do?
Do they also understand that since these currencies float against one another, that creates a new market of domestic currency speculation in which a whole new world of hustlers will be out working to game the exchange values of competing currencies, so they can buy low and sell high. This will create either a highly fluid, insecure and ridiculously regionalized world without the national-scale price stability and predictable purchasing power we take for granted - or else a world in which stability and security have been achieved through concentrated corporate control of the monetary system.
Every single user of a currency in a world of competing private currencies is required to be an amateur Forex trader, engaging in ongoing and highly annoying daily currency exchange transactions to keep ahead of the rapid fluctuations in the money game.
More deregulation and privatization. Right. Because we know how great deregulation and privatization turned out the last time.
Whatever happened to progressives? Where are their heads at? They are in a war for the survival of democratic government against the undemocratic, corporate form of organization. More privatization is not the answer!
Great comments as usual Dan, you hit the nail right on the head wrt how there would be even more chaos and corporate dominance under such a system w/ "competing" currencies.
"people using some kind of farmers' scrip to exchange their squashes and homemade pickles."
Even with this I believe under current law the taxman wants this transaction priced in USDs and netted out to determine if there is a tax liability on a party to this transaction. Of course payable in USDs (not pickles;). So these people still have to figure out to get USDs (outside of their barter system) to provide the tax to the govt.
So here even if folks want to just "opt out" of the current chaos system, they really cant; due to the current tax laws.
The Marxists and Anarchists, who imo would perhaps take great advantage of s system that would allow "tax free" barter/CO-OPs, are "trapped" in this current system that they simply are not spiritually aligned with.
Resp,
Matt: Even with this I believe under current law the taxman wants this transaction priced in USDs and netted out to determine if there is a tax liability on a party to this transaction. Of course payable in USDs (not pickles;). So these people still have to figure out to get USDs (outside of their barter system) to provide the tax to the govt.
So here even if folks want to just "opt out" of the current chaos system, they really cant; due to the current tax laws.
Absolutely. This is already in effect wrt barter club currencies, and the IRS has made it clear it is serious about it.
Hello Dan. I'm not sure your fears of monopolistic take over under a free banking system are realistic. You say, "Perhaps the localists imagine we can maintain some regulatory regime that will be sufficient to prevent the private currency industry from following its natural evolutionary path toward oligopoly or monopoly."
It is special privilege obtained through manipulation of the political process that allows hyperthyroidal growth to the point of oligopoly and monopoly. The mechanism are regulation (eg: Pfizer regulating competitors like marijuana out of the market 'for your own good') and externalization of costs/internalization of profits through the political process. (See Gabriel Kolko 'The Triumph of Conservatism' and various works by Kevin Carson including 'Organization Theory' for evidence that dis-economies of scale can only be offset by special pleading, which is precisely the needs to be prevented. I say level the playing field - no special privilege. Monopolies are a result of 'Socialism for the rich, free market for the poor.' Why can't we all play by the same rules?
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