An Interview with
By Ravi Dykema
money? And how well does it work to solve society’s ills? Bernard
Lietaer, author of the upcoming book Access to Human Wealth: Money beyond
Greed and Scarcity (Access Books, 2003), has made a life’s work of
exploring these questions. Lietaer has been involved in the world of
money systems for more than 25 years, and his experience in monetary
matters ranges from multinational corporations to developing countries.
He co-designed and implemented the convergence mechanism to the single
European currency system (the Euro), and served as president of the
Electronic Payment System in his native Belgium. He also co-founded one
of the largest and most successful currency funds.
is the author of nine books on money and finances, including The Future of Money (Random
House, 2001), The Mystery of
Money (Riemann Verlag, 2000) and a book for kids, called The World of Money (Arena
Verlag, 2001). Formerly professor of international finance at the
University of Louvain, Lietaer is currently a fellow at the Center for
Sustainable Resources at the University of California, Berkeley.
Beginning this fall, he will be a professor at Naropa University. Here,
Lietaer shares his views on the shortcomings of our conventional
currency system, the benefits of creating a complementary currency, and
ways to effect lasting social change.
RD: You’re very
experienced on the world stage with currencies and money—it’s the world
you’ve moved in much of your life, right?
BL: Yes, both in the area of conventional money such as the Euro and
more recently with less conventional money systems. Below the radar
beams of official thought, there has been a resurgence all over the
world for the last 15 to 20 years of what I call complementary
currencies, currencies that are operating on a smaller scale than the
national level, and that can solve social, environmental and education
RD: People think of
someone who works with currencies as being a materialist. Yet it sounds
as if your interests are towards social change through complementary
currencies. How did you come to be interested in this other dimension?
BL: The reason I went to the Central Bank in the first place was to
check whether it was possible to improve the conventional money system
from within. I had been working for a number of years in South America,
and I had seen the damage that the existing money system has created on
a huge scale in Latin America.
RD: You thought it was
the money system and not just the governments?
BL: It’s a chicken and egg story: unstable currency equals unstable
government. There is practically no way today for a developing country
to have a reasonable monetary policy within the current rules of the
game. Joseph Stiglitz, Nobel laureate in economics and formerly head
economist at the World Bank, makes the same claims in his book Globalization and Its
Discontents (Penguin, 2002). Whether you fix your currency to the
dollar or let it float, you end up with an unmanageable monetary
problem, like Brazil, Russia or Argentina have experienced. Eighty-seven
countries have gone through a major currency crisis in the last 25
years. Their fiscal policies are imposed by an International Monetary
Fund (IMF). I am afraid that if the United States had to live by the
rules that are imposed on, say, Brazil, the United States of America
would become a developing country in one generation. It’s the system
that is currently unstable, unfair and not working.
majority of humanity has gone through a recent monetary crisis at least
once already. We’re living here, in America, in an island of perceived
stability. And even that is an illusion. We could have a run on the
dollar under the current rules.
dealing with an unstable system, an ailing system. Back in 1975, I had
come to the conclusion that there would be a systemic series of monetary
crashes, starting with Latin America. And that’s why I wrote my book on
how the money system was not working and its impact on Latin American
development, Europe, Latin America and the Multinationals (Praeger,
1979). I predicted that the first crash in Latin America would be in the
early 1980s. It actually happened in 1981 in Mexico. Since then we have
had more than 80 other countries undergoing similar monetary crises.
RD: So someone’s not
connecting the dots—or are they?
BL: Let me put it this way. The powers that be have no interest in
connecting the dots. If a new international monetary meeting like Breton
Woods were held, the first point on the agenda would be the role of the
dollar. So the United States has no interest in such a meeting. The
dollar is in a very privileged position.
RD: But it would be
anyway, wouldn’t it, because we’re a dominant economic player?
BL: I don’t want to spend a lot of time and energy attacking the
existing system. It is an obvious fact that America is the sole super
power. But when people say, “Well, there are fiscal crises in other
countries because the governments are less stable,” my question is, “How
long would any government last in a country if you had to repeatedly cut
back on education programs, social programs, building roads and all
other programs?” How could that make a stable democratic government
possible? Like I said, it’s a chicken and an egg sequence.
no way of winning in the current monetary game, particularly for the
less developed countries. It’s not accidental that investments in the
Third World have dropped proportionally by a third since 1975.
Currently, investments happen mainly between developed countries, and
that trend isn’t going to create a sustainable world anytime soon.
RD: So the Third World
is just being abandoned?
BL: Yes. Entire continents. Africa for instance has been dropped off
the world economic map for most practical purposes.
RD: And re-envisioning
and re-engineering money itself could change this?
BL: Correct. And the good news is that such re-engineering of money
has started to happen if one knows where to look.
RD: Do a lot of other
people share your views?
BL: Most people haven’t looked at what’s happening in monetary
innovations today. What do you think a frequent flyer mile is, but a
currency issued by an airline? In Britain, you can go to J. Sainsbury,
the largest supermarket chain, and use British Airway miles to buy your
goods. Initially, it was only designed as a loyalty scheme for people
taking planes. Today, you can earn this currency without ever taking a
plane. On Visa cards you get miles. And you can use them to pay
long-distance telephone calls, taxis, restaurants, hotels.
let’s define what a currency is, because most textbooks don’t teach what
money is. They only explain its functions, that is, what money does. I
define money, or currency, as an agreement within a community to use
something as a medium of exchange. It’s therefore not a thing, it’s only
an agreement—like a marriage, like a political party, like a business
deal. And most of the time, it’s done unconsciously. Nobody’s polled
about whether you want to use dollars. We’re living in this money world
like fish in water, taking it completely for granted.
point is: there are many new agreements being made within communities as
to the kind of medium of exchange they are willing to accept. As I said,
in Britain, you can use frequent flier miles as currency. It’s not a
universal currency, it’s not legal tender, but you can go to the
supermarket and buy stuff. And in the United States, it’s just a
question of time before privately issued currencies will be used to make
purchases. Even Alan Greenspan, the governor of the Federal Reserve and
the official guardian of the conventional money system, says, “We will
see a return of private currencies in the 21st century.”
RD: In other words,
private currencies are coming back. How would that change the
circumstances for poor people, for the Third World?
BL: I gave you that first example—a commercial loyalty currency—only
because it would be familiar to most of your readers. But in addition to
those commercial private currencies, there are now more than 4,000
communities around the world that have started their own currency for
social purposes as well.
example, there are about 300 or 400 private currency systems in Japan to
pay for any care for the elderly that isn’t covered by the national
health insurance. They are called “fureai kippu” (caring relationship
tickets). Here’s how they work: let’s say that on my street lives an
elderly gentleman who is handicapped and cannot go shopping for himself.
I do the shopping for him. I help him with food preparation. I help him
with the ritual bath, which is very important in Japan. For this help, I
get credits. I put those credits in a savings account, and when I’m
sick, I can have other people provide such services for me. Or I can
electronically send my credits to my mother, who lives on the other side
of the country, and somebody takes care of her.
an agreement within a community to use as medium of payment something
other than national currencies, to solve a social problem. And it makes
it possible for hundreds of thousands of people to stay in their homes
much longer than they otherwise could. Otherwise, you’d have to put most
of these people into a home for seniors, which costs an arm and a leg to
society, and they’re unhappy there. So nobody’s winning. In contrast,
Japan has created a currency for elderly care.
United States, Florida is the only state that has the same density of
elderly people as Japan does—18 percent of the population is more than
65 years old. But Florida is a model for our collective future. Colorado
will be there in 2020. Germany will be there in 2006, France in 2008,
Britain in 2012. Partly because of the baby boom generation, and partly
because of the fact that health care has improved and people live
longer. If you put all of these elderly in homes for seniors, you’d go
bankrupt. Japan has been looking for another way, and has found it by
introducing a monetary innovation.
give you other examples, already operational here in America today.
There are now several hundred “time dollar” operational systems in the
United States. The unit of account is the hour. I do something for you.
I have a credit for an hour, while you have a debit for an hour. If I
can use my credit with someone else, this creates a currency between us.
For those people who are willing to give some of their time, the money
manifests automatically. It doesn’t quite work that way with dollars,
does it? One of the two of us has to get dollars by competing for them
somewhere outside of our community.
dollars are helping in a lot of communities where conventional money is
scarce: in ghettos, retirement communities, high unemployment zones,
student communities. There are 31 states in America that are paying
employees to start such time dollar systems, because it solves social
problems. There are some operating in Chicago, fairly big ones in
Florida. For example, in Chicago, there are entire neighborhoods that
used time dollar systems to create a neighborhood watch system that got
rid of drugs and gangs. It’s working, it doesn’t cost anything to the
taxpayer, it doesn’t create a huge bureaucracy, and it encourages the
solution of the local problems by and with the very people who know most
RD: What do they use
their time-dollar credits for?
BL: Well, it’s a closed circle. If I do something for you, I have a
credit, which I can use with any member of the community that is part of
the system. I can’t buy cars or pay my telephone bill with this system
because the suppliers of such items don’t participate now in such
systems; but I can obtain services—so I could have my car repaired, my
house painted, my kids mentored.
The inventor of the time dollar
system is Edgar Cahn, who’s the author of No More Throw-Away People
(Essential Works Ltd, 2000). He claims that if you can’t compete in the
dollar economy, you’re thrown away. He shows how a time dollars system
provides a solution to this process, because it operates in parallel
with the conventional competitive economy, and it creates an environment
where everybody can contribute.
RD: So you envision a
world where there are a lot of these alternative currencies?
BL: I don’t call them alternative, because they aren’t intending to
abolish or replace the national currency. I’m not claiming that we could
or should abandon national currencies or the competitive economy. This
is a complementary currency system. It facilitates exchanges additional
to the normal system. It makes it possible to match unmet needs with
RD: I can’t see how
you’d be able to pay your rent with that.
BL: Well, in Ithaca, New York, there is a currency called Ithaca
hours, and some people pay part of their rent with it. Not all of it:
for some it is 50/50, for others it is 80/20. And the landlord or lady
can go to the farmer’s market and buy his vegetables and his eggs.
RD: So the big
things—transportation, housing, food—are those covered in the concept of
BL: It all depends on the agreement you’re making, and whom you are
succeeding in including in that agreement. Let me give you a real-life
example. In Curitiba, the capital city of the State of Paran in Brazil,
if you bring pre-sorted garbage, you are given bus tokens. So in
Curitiba, public transport is clearly part of their complementary
depends on the agreements you have with your landlord, with the
transportation company, with the university, with the business
community. It just depends on who wants or is willing to participate.
You can’t force anybody to accept this currency. They are not what is
technically called “legal tender.” I call them “common tender”: commonly
accepted as payment for debts without coercion of legal means.
RD: I understand that
the government wants to get its chunk out of barter transactions, just
as if they were a cash transaction.
BL: Yes, and those taxes will need to be paid in “legal tender”,
i.e. dollars. The tax issue has nothing to do with the currency you use
in an exchange, but with the kind of transaction you’re performing.
Say I’m a
plumber. I come to your house and fix the plumbing. And you give me a
nice cake in payment. I’m supposed to declare the value of that cake and
pay taxes on it, because I’m in the plumbing business. Now say I am a
professor at a university. I come to your house. I fix your faucet. You
give me a $100 bill. I’m not obliged to declare it because I’m not in
the plumbing business. As I said: it is not the currency used that
determines whether a transaction is taxable or not, but the nature of
Interestingly, there is one complementary currency, the
time-dollar system that we talked about earlier, that is officially
tax-free in the United States. It’s used only to resolve social
problems, and the IRS has ruled that time-dollar systems are
RD: I think
complementary currencies, barter included, should be tax-free, because
they offer solutions to a social problem.
BL: Then I suggest you go and lobby for passing such a law.
Currently that’s not what the law says in the United States.
of complementary currencies is fairly recent. It took off only in the
last 15 years. Even in 1990 there were less than one hundred
complementary currency systems worldwide. Today there are over 4,000.
It’s definitely catching on.
RD: And you would like
to see it continue to expand?
BL: I think it is a useful tool to solve a number of our problems.
It makes it possible to truly create a more gentle society.
last summer in Bali. People are remarkably artistic in that island.
Their communities are unusually strong. They have festivals that are
totally mind-blowing, and can last a month. They’re having a good time.
It’s a comparatively non-violent society. And what I found is that it
isn’t a simple coincidence that they have been using a dual currency
system for many centuries. All these unusual characteristics of Bali
turn out directly to be nurtured by their dual money system. I am
publishing a detailed paper on how this mechanism works in the
forthcoming issue of Reflections, the journal of the
Society of Organizational Learning at MIT.
RD: How does the money
system lead to those outcomes?
BL: Practically all Balinese participate in a dual currency system.
The first is the conventional national currency (the Indonesian Rupiah);
the second is a time currency where the unit of account is a block of
time of approximately three hours. This second currency is created and
used within the “banjar”—this is a community entity consisting of
between 50 and 500 families. It is in each banjar that the decisions are
made democratically to launch any big community project. It could be to
put on a festival or build a school. For each project, they always make
two complementary budgets: one in the national currency, and one in
time. That second currency—called “narayan banjar” (meaning work for the
common good of the community)—is created by the people themselves. They
don’t have to compete in the outside world to obtain that second
currency, and it fosters cooperation between the members of the
community. I call it a yin currency—it’s more feminine in nature. And it
complements the national currency, which is a competitive currency and
therefore of a yang, or masculine, nature.
why it works: poor communities don’t have a lot of national currency,
but they tend to have a lot of time. In rich communities, the opposite
tends to be the case—people have more national currency, but less time.
In either case, each banjar is capable of creating extraordinary events
just by budgeting and using more of the kind of currency—national or
time—in which they are rich. This balance is a key contribution to the
unusually strong community spirit that prevails in Bali. And it’s not
just because they’re Hindus. There are almost a billion Hindus in India,
and they don’t behave that way. Here is an example of how a currency can
make a difference.
RD: We have a strong
emotional attachment to money, and we worry about it. So how we relate
to money influences who we are and how we think of ourselves.
BL: Yes, you’re right. But it is interesting that societies that are
using different kinds of currency have also very different collective
emotions concerning money. The generally accepted theory—dating back to
Adam Smith—is that money is value neutral. Money is supposed to be just
a passive medium of exchange. It supposedly doesn’t affect the kind of
transactions we make, or the kind of relations we establish while making
those exchanges. But the evidence is now in: this hypothesis turns out
to be incorrect. Money is not value neutral.
return to the example of the fureai kippu that I was mentioning earlier,
the elderly care currency in Japan. A survey among the elderly asked
them what they prefer: the services provided by people who are paid in
yen, the national currency; or the services provided by the people paid
in fureai kippu. The universal answer: those paid in fureai kippu,
“because the relationships are different.” This is one example of
evidence that currency is not neutral.
example: there is typically a reluctance among friends to pay for help
provided by using national currency. If a friend is helping you move or
paint and you pay him with national currency, it just doesn’t feel
right. Interesting isn’t it?
RD: So people feel differently
about complementary currencies than national currencies?
BL: Yes, there have been surveys in several countries that prove
this to be the case. Conventional currencies are built to create
competition, and complementary currencies are built to create
cooperation and community, and it’s important to be aware that both can
be available to make our exchanges.
to Paul Ray’s (author of The
Cultural Creatives, Harmony Books, 2000) study, 83 percent of
Americans believe that the top priority should be to re-build community,
and yet the kind of currency we use in our transactions is precisely one
that eliminates community. The word “community” comes from Latin, “cum
munere.” “Munere” is “to give,” and “cum” is “among each other”—so,
community means “to give among each other.” In short, it turns out that
dollar exchanges tend to be incompatible with a gift economy.
Complementary currencies are.
RD: Are you saying
that you can’t have community if you’re using dollar exchanges?
BL: I’m saying that exclusive use of a competitive programmed
currency in a community tends to be destructive for the community
fabric. This isn’t theory. We’ve seen this happen at the tribe level,
with the collapses of traditional societies. I’ve seen one happen myself
in Peru among the Chipibo in the Amazon. That tribe had been in
existence for thousands of years. When they started using the national
currency among themselves, the whole community fabric collapsed in five
thing happened here during the 19th century in the Northwestern United
States and Canada, in the traditional indigenous societies. The moment
they started using white man’s currency among themselves, the community
collapsed, the traditional fabric broke down.
RD: Do you think
complementary currencies really can transform our planet?
BL: Yes. Bali is a perfect example that long-term use of a dual
yin-yang currency system creates a different society. Thirty percent of
a Balinese adult’s life happens in the space of the yin, feminine
currency, which is the time currency. In contrast, we spend close to 100
percent of our time in the masculine, yang, competitive currency. That
30 percent of time spent on community activities creates another
society, where everybody can become an artist, where the community
fabric is stronger, where the social safety net is reliable, where
abandonment is unknown. It nurtures an extraordinary feeling of trust
and a higher quality of life.
RD: And you think this
kind of culture and community can exist in other places, with completely
different religions and cultures?
BL: The short answer is yes. We have evidence from Japan, Germany,
Mexico, Brazil and the United States to show that complementary
currencies make a difference in the way people relate to each
RD: In a really
transformed world, would a community be using multiple complementary
currencies as well as the national currency?
BL: Not necessarily. What has started to happen recently is an
integration—many of these services that were using highly specialized
complementary currencies are beginning to integrate into a single, local
social-purpose currency. For example, youngsters who are taking care of
the elderly in Japan using their credits in partial payment for tuition
at the university, so we’re solving two problems at the same time. It
provides an additional way of making things happen that otherwise is not
available when national currency is scarce. Remember, complementary
currencies simply enable additional matches between unmet needs and
RD: Does the internet
and electronic transfer systems offer a means for the creation of
BL: I am convinced that the reason complementary currencies are
developing now because of cheap computing. Do you really think American
Airlines would have frequent flyer miles if they needed an army of
clerks trying to keep track of your miles? I don’t think so. But today
anybody with access to a PC can start a currency system. It isn’t a
coincidence that about 95 percent of the social purpose complementary
currencies are electronic.
RD: So can we buy an
off-the-shelf program for creating a currency?
BL: Sure. There are even different freewares already available. One
of them is for operating a LETS (Local Exchange Trading System). Another
one that is free of charge is to start a time dollar system. We are in
the process of incorporating a non-profit foundation in Boulder, the
Access Foundation, whose purpose is to provide independent information
on all the different complementary currency systems that are available
worldwide, and on its website one will be able to download the
corresponding softwares. This website ( http://www.accessfoundation.org/)
is planned to be operational early this fall.
Currently, our biggest problem with money and currencies is
unconsciousness. We are not aware of what we are doing around money. We
haven’t really thought about what money does to us—we believe it’s
neutral, so it doesn’t matter. But it’s not neutral: it deeply shapes us
and our societies. The first thing that has to happen before
complementary currency systems can effect real change on a larger scale
is a shift in consciousness and awareness.
RD: You mean, we need
to be aware of how money works?
BL: Let me ask you this. Have you taken an inventory of the number
of days you spend in life getting ready to make money? And when you have
money, to manage the money or spend it? But then, think about how many
hours you’ve thought about what money is. I suspect not very much. We
are spending a huge amount of energy to get something about which we
have surprisingly little understanding.
RD: Well, it’s like
the rain. It’s something you adapt to.
BL: Yes, except that rain is not man-made. That’s precisely the
difference. We’re treating money as if it is God-given, like rain or the
number of planets in the solar system. But it isn’t. If you don’t like
the quality of rain, there’s not much you can do about it. If you don’t
like your money system, maybe you can do something about it.
that a Martian lands in Denver on the wrong side of the tracks. He ends
up in one of the ghettos and finds that the houses are run down, the
kids not taken care of, the elderly in trouble, and the trees dying. He
sees all these things, and discovers that there are people and
organizations absolutely equipped and ready to solve every one of those
problems. So this Martian asks, “What are you waiting for?” The answer:
“We’re waiting for money.” “What is money?” the Martian inquires. “It’s
an agreement in a community to use something as a medium of exchange.”
Don’t you think he may leave the planet believing there is no
intelligent life here?
is: if money is an agreement within the community to use something as a
medium of exchange, we can create new agreements, can’t we? That is
exactly what people are already doing all over the world. So why don’t
we do it here? If we’re waiting for conventional currency to solve all
our problems, aren’t we waiting for Godot?
RD: Is this your whole
campaign now? Are you through with Belgian Central Banks?
BL: I’m trying to contribute to a consciousness shift regarding
money. I believe that by a small change in the money system, we can
unleash huge improvements in our social system. It’s the highest
leverage point for change in our society, and surprisingly few people
are looking at it. If you start a new complementary currency system, it
can become self-perpetuating and facilitate additional transactions
the saying, if you want to feed someone, give him a fish. If you want to
really help him, teach him how to fish. This is just a fishing
lesson—what you do with it is up to you. You can take big fish or small
fish, or you can choose not to fish at all. You decide what issues you
want to deal with in your community, and there is a currency system that
can help you with it.