Book Review

Dineros Alternativos Para el Desarrollo Local
Alternative Currencies for Local Development

From the Journal "La Otra Bolsa de Valores / The Other Stock Exchange", #43

Translated with additions by Stephen DeMeulenaere

In recent years, there has been a resurgence in the theory and practice of alternative currencies in the context of economic development. "Dineros Alternativos Para el Desarrollo Local", (Alternative Currencies for Local Development), by Jurgen Schuldt, is one new book which seeks to understand the last major surfacing of alternative currencies, the 1930s, to understand the current developments that began in the 1980s. In his considerable biography on alternative currency, monetary theory and economic reform, Professor Schuldt's book is one of few books published in Spanish that encourages efforts in the theory and practice of building an economy that benefits people.

Instead of meeting the expectations of the neoliberal utopia, the evidence favours Schuldt's hypothesis of the double marginalization of economy and society in a fractured world. More or less, the form that modern capitalism has taken has been a fiasco, for people and minorities, failing miserably to adapt effectively to changing situations, in an atmosphere apparently devoid of alternatives.

In this context of crisis there have appeared new possibilities to tranform the economy from the top down in the 1980s, with the surge in diverse responses to the problems of the capitalist system, each one of them proposing new ways of facilitating development and among others, a way of building an "economy with a human face", "a socialist market system" including a "market economy without capitalism", postulated by the Argentinian (anarchist) economist Silvio Gesell and others.

An important part of this change, with far-reaching consequences for the economy, is the reform of the monetary and financial institutions, especially concerning interest, usury and credit.

We are keen, aside from simple theoretical pretensions, to stress that the importance of implementing these approaches for creating a financial heterodoxy which can contribute to meeting the needs must not pass over the process of decentralization on a national scale, as much as requiring a new state, with the effect of forming, without the necessity of participating in the central government, regional and local development capable of promoting a strategy of development and a new type of honest and just nation.

These proposals provide direction for the initiatives of low-level organizations, mother's centres, commercial organizations, unions and small enterprises, colleges and others in society. Depending upon determining conditions, it will probably be convenient to initiate this work from the municipalities, (provinces or districts) according to the areas with the inclination to carry out such efforts on behalf and in the interest of the people who live in their localities. The role of the NGO, without a doubt, will be fundamental for carrying out these projects and for ensuring the continuity of these efforts, as well as financing and capacity-building.

Imagine a private bank and a small cooperative in a certain locality issuing money in the form of bills denominated as "lunas" (moons), "verdes" (greens), or "valiosos" (valuables), and occasionally issuing "labor tickets" equivalent to a proportion of the remuneration of your work, with which to purchase what you need in shops. Or, a store-keeper or restaurant owner financing the expansion of their business or payment of labour by offering "discount coupons" to your regular customers, which can be redeemed not only at your business but at others as well, proceeding likwise to the artisans, farmers, and others for reducing the costs of financing your efforts.

Consider the determining institutions (cooperatives, unions, NGOs) or groups of related people (for friendship, neighbourhood community, college or profession) exchanging goods and services using cheques to facilitate the exchange which correspond to one of the participating organizations which keeps the accounts for the transactions between the members.

Schuldt's book demonstrates, with the support of ideas elaborated by eminent conventional economists, that it is possible to design a complementary monetary system (or an alternative one) of money of legal tender, using an efficient system and at a very low cost, and meeting the requirements of development on a national scale, and in particular, in local and regional areas. National money is not sacred, not the Peruvian Sol nor the North American Dollar and the Swiss Franc, nevertheless they are the new idols.

Jurgen Schuldt is Vice Rector of the Universidad del Pacific in Lima, Peru. He is also Principal Professor of the Department of Economics and member of the Cientro de Investigacion (CIUP). He holds a master's and doctorate degree in Economics from the Universidad del Pacifico, the College of Mexico and the University of St. Gallen in Switzerland. He has published numerous articles and books in the fields of political microeconomics and development.

The author presents his ideas in three parts, the first analyses the historical experiences of local money, the second looks at the theory for the study and adoption of plans for alternative exchange systems, and in the third part looks at monetary alternative proposals for Peru, focusing on local areas.