Are alternative currencies more inclusive?

Inclusive Economy25 Jul 2013Rolf Schroeder

Do alternative monetary models have the power to increase social inclusion? We should not be too optimistic.  

Alternative monies are in vogue. Images of notes issued by the Chiemgauer, Brixton Pound and other initiatives are attracting public attention. New technologies promise to facilitate these new forms of exchange. However, many dashed hopes and expectations in this field remind us to be careful.

Most first-generation systems, like LETS, SEL or Tauschrings, have been set up by volunteers. This limits their scope. New types of systems strive to become reliable partners for their users, institutional partners and, sometimes, the business community. This requires professional management and paid staff. How can the financial basis for this and other cost factors be organized? Activists are quick to propose crowdsourcing as a new way to raise money, but this is unlikely to generate the constant flow of income required to cover current costs. External funding has rarely led to the creation of sustainable systems.

In 2004 Margrit Kennedy and Bernard Lietaer concluded that newly founded regional money systems needed between 10,000 and a million participants to enable the organization to be funded from member fees. But even the relatively successful Chiemgauer regional currency has not reached break-even point. After about ten years this system has approximately 3,500 participants. The highly professional service provided by the team of organizers is mainly based on voluntary work. Furthermore, empirical evidence indicates that it takes a lot of effort to become a Chiemgauer user. Generally speaking, overall transaction costs are a major problem of these systems. A participant might need a hairdresser, but the only one who has joined the system may live in another part of the city. The one next door is not a green enthusiast and when they hear that they will have to keep a second set of accounts, their answer is a clear ‘No, thanks’.

There is no simple solution to this dilemma. I am convinced that we have to depart from the idea that alternative money alone will do the trick. Social scientists have found that complementary currencies have to be understood in their socioeconomic contexts. The problem is that the results of this academic research are too complex and diverse to be useful to activists. I suggest creating a broader framework and interpreting these social innovations as ‘finite currencies’, systems that operate within boundaries. The term ‘complementary’ already suggests that they are distinct from the euro, dollar and other established currencies; their convertibility is at least restricted. Most of these social innovations operate within spatial boundaries, and some focus on specific goods, like online platforms for books. Different types of currencies apply different measures of value, making them incompatible. These are just a few examples. The characteristics of each system can be explained only by correlating its monetary aspects with the boundaries relevant to the system.

This approach allows an evaluation of whether an alternative monetary model facilitates social inclusion. Complementary currencies are so flexible that they have been used to disguise neoliberal austerity policies,1 and by racists in South Africa to create a ‘whites only’ system, the Orania project. These are clear-cut examples of social exclusion. But in most cases it is difficult to judge whether certain schemes are the right steps towards overcoming the social cleavages in our societies. Time banks, for instance, may be designed as a means of quarter management in problematic neighbourhoods. But the need to secure continuous funding creates the risk that they will become instruments of a social policy that is not in the interests of their participants. Complementary currencies develop their full potential when they integrate people from all walks of life. For such schemes, top-down designs with ‘incentives’ planned by experts are inappropriate. A policy that pursues social inclusion should acknowledge that a democratic constitution and a certain level of autonomy are necessary conditions to achieve this objective.

Is it possible to square the circle and create sustainable complementary currencies that fulfil these conditions? My answer is yes, but we should be aware that this is a complex task and operate on different tiers:

L’Accorderie, a social and democratic currency system from Quebec, shows that professionally managed systems can be financed in a sustainable manner.

– First-generation systems should not be left aside.

– We should be open-minded with regard to ideas that, at first glance, lie outside the conventional institutional framework of our time. The scenario of the dual economy of the year 2029 shows that it is possible to develop autonomous socioeconomic structures beyond the established institutions of market and state. This vision illustrates that the creation of new boundaries also has an innovative potential.

– In addition, complementary currencies may offer a perspective if combined with other approaches, like a basic guaranteed income.


    1. North, P. (2007), Money and liberation: The micropolitics of alternative currency movements. Minneapolis, London: University of Minnesota Press, pp. 126-148