(Page 4 of 4)

Complementary currencies and the local determination of value
The different kinds of embodied value raise an important question for a rapidly globalising economy, namely, what does it mean when national or supranational currencies are unable to accurately capture and facilitate the exchange of locally-determined value?  Let us consider a thought experiment involving two communities.  One is a region in the Portuguese Algarve that places high value on maintaining the integrity of local soils since erosion is a major regional problem.  The other is the capital city of Estonia which places high value on the preservation of local churches representing local religious heritage.  Each community would pay a large number of Euros to keep either their soils from eroding or their churches from being demolished, but we cannot expect the residents of the Algarve to care about preserving Estonian Churches to the same degree as the Estonians.  Nor can we expect the Estonians to care about preserving Portuguese soils to the same degree as the Portuguese.  What does it mean that the values these communities place on their particular resources are locally-determined?

Now pretend a Portuguese property developer wants to build a large hotel next to a 500 year old church in the Estonian capital, Tallinn .  The Estonian locals demand a high price in Euros for the land to compensate for the cost of the loss of their cultural heritage.  But the foreign developer cannot see how the land could possibly be worth the asking price because he is unfamiliar with Estonian cultural history and its value to local residents, and as an outsider does not consider these things important.  The developer is assessing the worth of the land according to international criteria and cannot see how the land could possibly be worth the asking price.  The consequence may be that the deal falls through because the two parties are negotiating from standpoints that differ too greatly over what is valuable and what is not.  It may be that the Euro has been excessively abstracted away from its original definition of value so that now it is exchanged roughshod in spite the regional differences.

Back to the top

We should acknowledge here that national money probably expresses the vast majority of value circulated in the global economy, but not all value.  That is, all pounds and dollars express economic value, but not all economic value is expressed in pounds and dollars.  Friendships and personal networks have economic value.  One’s reputation can have economic value.  Skills and abilities have potential economic value before they are exchanged with an employer for money.  Regional cultural histories and local soil quality also have economic value.  One of the main points about complementary currencies is that they capture and exchange value lying outside the national currency system that is inadequately expressed in dollars and pounds.  Corporations have done it, communities are doing it, and now local and regional governments should consider how they could do it for the public good.

One main observation from this discussion about the usefulness of complementary currencies may have nothing to do with public or private applications at all but rather with, ironically, international trade.  The results of the thought experiment combined with the two currency systems discussed here suggest that the greater the geographic territory a currency comes to occupy – subsuming therefore an ever greater diversity of regional communities --, the more sub-optimal is the currency’s capacity to efficiently exchange value among economic agents with differing locally-determined value systems.  This means that while trade ministers continue to negotiate agreements to liberalise trade between countries, in the name of economic efficiency and development, they are doing so in the language of an official monetized value systems that does not acknowledge the locally-determined value of diverse cities and regions.  It may be that these policy efforts to improve the efficiency of production and trade actually reinforce a homogenous monetary measure for assessing value that, paradoxically, is increasingly poor at measuring and embodying locally-determined value that falls outside the sphere of national currencies.

Leitaer, B. (2001) The Future of Money: Creating new wealth, work and a wiser world.  Century: London .

 Douthaite, R. (2000) The Ecology of Money. Schumacher Briefing Number 4.  Chelsea Green for the Schumacher Society.

 David Grover is a research fellow at the Institute for Sustainable Development in Business at the Nottingham Trent University .  He recently completed a master’s degree in local economic development at the London School of Economics.

Return to opening page

Download full article:

Click here to download the article in PDF format (132kb)

Useful Links

Waste Recycling Using 'Eco-Money' Starts in Kanagawa Shopping Arcadel

Back to the top

Further Information
For information on this article contact David Grover on the details below:..