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RE: [ox-en] Threads "The Fading Altruism of Open Source" on <nettime>



Kermit,

I am very grateful for the clarity of your post on open money and open
source, especially for seeking to return the argument to basic political
and legal theory, as in:

what kind of contractual instruments, other than those that impose legal
monopolies, are capable of creating sustainable economies.<    and

is this exquisite balance achievable
simply by letting human beings do exactly as they please, or is the thumb
of
coercion (e.g., copyright and central banking) required on the scale?  And
if the latter, whose thumb?  And who will control it?<

I would add that there is a substantial amount of writing about open money
available on the web. See www.openmoney.org for a comprehensive and recent
compilation of educational sources.

As for how LETS systems function, your instant diagnosis goes to what most
people would see as the core of the issue:

Naturally, there are many possible problems with such a system.  What
happens, for instance, if people establish accounts on a LETS system, "buy"
expensive items, and then leave without ever having sold anything
themselves?  Essentially, they've stolen from the community.  If too many
people do this, the system will collapse.  Or what if everybody on the
system is selling aromatherapy and no one is selling legal services?  If
there is a unbalanced distribution of products or services on offer, the
system won't work.  As with any central bank currency, the health of an
"open" currency depends entirely on the economy and behavior of the
community that adopts it.<

But -- there has to be a but -- effective answers to these questions
require some understanding of how community currencies have evolved in the
last two decades. One big problem lies in our general inability to think
outside the box of national currency systems. These are, as you point out,
central bank monopolies encouraging citizens to perceive of 'the economy'
as singular and in important respects self-sufficient. When people try to
set up some alternative, they often unconsciously mimic the dominant model,
setting up a single, self-sufficient closed circuit, with a central
register, its own currency and usually a committee of leaders to run it.
Members are individuals trading goods and services in parallel with the
national economy of which they are of course also members. Soon enough such
organizations run up against problems of size, quality of service, high
transaction costs, inadequate division of labour and so on. Some LETS
systems have persisted for a considerable length of time, but many also
fail in the short run, as often as not because of a weak conceptualisation
of the mechanics of community currencies. One handicap of such systems is
that the participants are sometimes motivated to replicate 19th century
utopian communities, wanting nothing to do with conventional commerce,
perhaps reverting to a labour theory of value in their standard measure.
There is even a Victorian charitable arm of the movement, bringing
subsidised succour to the poor by this means. Many circuits run on paper
scrip like national money.

The key intellectual and practical breakthrough consists in thinking of
community currencies as plural rather than singular. Individuals may belong
routinely to as many circuits as they already have credit cards and other
plastic instruments at their disposal. In the latest phase, smart cards can
carry up to fifteen currencies, reflecting each person's interests and
pattern of association. Just as important, if LETS systems are to allow
people to carry out their daily tasks without spending all their time in
exchange transactions, they much be fast, cheap and effective. This means
integrating them with normal commerce to a variable degree. Businesses and
non-profit organizations can be and are members of LETS communities. If
they sell more than they buy within the circuit, they can give purchasing
power to  deserving causes or to employees as a bonus. Loyalty loops to
particular firms can be built separately into the system. Members who feel
that their interests diverge from those of others can set up a sub-circuit
of their own. Prices can easily be calculated in a mixture of national and
community currencies, with only the latter element being registered. 

It is difficult in this shorthand way to convey the possibilities to people
who have spent their lives adapting to conventional money as inevitably the
only game in town. Each community is free to design its own rules. In many
cases, the moral, political or ecological purposes of the circuit may make
fine calculation of economic benefits to individuals less pressing. The
question of 'free riders' is a problem that every economist brings up
(their lives depend on it). Some communities may insist on positive
balances only (no overdrafts) or limit negative balances to a certain
amount. Most allow new members to buy without selling first and some allow
unlimited negative balances. The money is supplied by any member whenever
they go negative. If they default on their commitment, they lose reputation
and perhaps more. It all depends on the kind of community and its size.
Most LETS systems have been local so far, but the possibility of virtual
communities of exchange is made palpable by recent technological
developments. It is all a matter of learning which methods work best for
particular situations. 

This also should be stressed, that community currencies are a means of
political education, showing people how conventional money works, how other
kinds of money operate, and providing lessons in direct democracy. Open
money has yet to take advantage of the crowds that are now routinely
brought together by the internet. A system of national domain names is
being established and the software for multiple-currency cross platforms is
almost ready. There is no reason why, in an expanded community currency
network, the banks should not handle many transactions, as long as it is at
a fair price. 

Clearly, the vision I am presenting here is not anti-capitalist in the
usual way. Open money is not a scarce commodity, it has no price (interest)
and cannot be hoarded or used as capital. My colleagues and I believe that
markets and money can be developed on non-capitalist principles, initially
as part of capitalist commerce, not independently of it. This inevitably
sets us at odds with those who believe that any taint of exchange or money
is as good as selling out to capitalism. Even so we have been inspired by
the example of the Free Software movement and consider that open money is
one way towards democratising access to money itself. It would be wonderful
if money, which has long been the source of exclusive private property,
might one day be a commons to which all of us have free access to make our
own.

Keith

_______________________
http://www.oekonux.org/


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