Special Purpose Money

Our mainstream money system locks-in economic growth. It is characterised by general-purpose money (GPM) implying that all values are commensurable. This system is exclusive, leaving at the fringe of economic participation individuals and organisations who cannot compete in the value realm created by banks. GPM also promotes increasing globalisation and long-distance transports, as people looking for the best deals will tend to purchase commodities produced with the lowest-cost labour and the least concern for the environment.

The aim of our research project is to conceptualize the foundation of a special-purpose digital currency (SPDC) and its enabling infrastructure to create a complementary socio-economic system that captures and transacts value realms other than those that GMP recognizes. The project will undertake a systematic review of the literature on local complementary economy initiatives followed by primary research through international case studies to identify the factors (e.g. governance and management), the stakeholders (e.g. communities, local authorities) and the conditions (e.g. currency convertibility) required for the development of a SPDC that would encourage sustainable production and consumption. By applying a humanities approach to the investigation of general-purpose money as an artifact generating unsustainable practices, the project will shed light on how the design of a digital special-purpose currency may promote more sustainable practices.

In the humanities and social sciences, academics have long questioned the role of mainstream markets and fiat money, both now hegemonic, recognising that these ostensibly human artefacts have come to play roles as quasi ‘agents’ by preordaining economic decisions: they have become de facto economic ‘decision makers’. In this context, the way that fiat money is issued as interest-bearing credit is a serious concern. The ‘general purpose’ aspect of fiat money is also important since it imposes ‘commensurability’ on transactions, making everything tradable against everything else, but this is largely overlooked in mainstream economic analysis. The humanities have long recognised different and distinct ‘realms of value’, but the significance of this has not been fully appreciated more broadly as a potentially potent critique of fiat currencies and explanation for their capacity to drive unsustainable development or, conversely, to be an entry point for interventions to steer more sustainable development pathways.

Political tractability raises questions about how the level of dependence of governments and citizens on the mainstream globalized (and globalizing) market economy might be reduced, as a basis for increasing the degrees of freedom for governments to intervene in markets more forcefully, and how opportunities to meet fundamental needs and create wellbeing, security and resilience might be developed through economic activities organised and optimised at other than global levels and on principles and values other than only market values. At grassroots level, there has been a global surge in initiatives to create complementary currencies and economies, often at a local scale, to use these to mobilise assets and resources that the global market economy has no need for and would be wasted, and to address these to local needs, challenges and opportunities. Such initiatives offer a mechanism, in principle, through which citizens and governments could reduce dependence on the mainstream market economy and its institutions and the ‘agency’ these have come to exert as well as through which SPC might emerge via efforts to increase individual and group autonomy and system resilience.

The history of complementary currency schemes is nevertheless mixed. In some instances, schemes show design weaknesses. This makes it important to analyse and evaluate experiences and relationships between contexts, purposes, money systems and currency types and forms for insights about the determinants of scheme effectiveness, especially because schemes are often developed bottom-up and without sufficiently robust design guidance. It has also been observed that such schemes face shared challenges in attaining the scale, scope and diversity of participants necessary to thrive. The emergence of new forms of digital currency holds a potential to address many such challenges, but also introduces new issues in the socio-material governance of digital currencies. This prompts the question: what roles might complementary currencies (CC) play in achieving transition to SPC in different contexts around the world if their design and implementation were better supported with insights from the humanities and social sciences and by empirical evidence developed in part using data collected by digital currency in the course of transactions?