Gian Piero de Bellis

with notes by John Zube

Some essential requirements of an accounting tool for exchanges

(April 2018)



Throughout history, a number of instruments have been used as means to facilitate exchanges. These intermediate goods could have an intrinsic use-value, such as cattle (pecus from which the Latin word pecunia = money) or a simply symbolic value, such as shells and pearls.

At a later stage, metals (coins) were employed, which had the advantage of durability, divisibility, measurability and transportability. Gold and silver in particular, due to their scarcity and attractiveness (e.g. used in the manufacture of ornamental objects), were desired and accepted almost everywhere.

In modern times, bank notes issued under state control have replaced coins. However, this has allowed for easier and wider manipulation of currency than in the past. It has also favoured some subjects (state, bankers, financiers) to the detriment of others (entrepreneurs, workers). Those disadvantaged have therefore tried, on every occasion, to ally themselves with the privileged strata in order to share certain economic favours (credit facilities, subsidies, economic assistance).

Privileges are such because they exclude many individuals to the advantage of few of them. In this case, new entrepreneurs and self-employed workers have often encountered problems of economic survival in situations dominated by large companies and by the monopoly power of the territorial state, which creates and distributes money as it pleases.
[Not genuine “money” but merely its forced and exclusive currency, usually severely mismanaged. J.Z.]

Therefore, the introduction of new instruments to facilitate credit and trade would be a major step to overcome privileged positions and unwanted bottlenecks. These new instruments should have certain requirements. They should certainly not be a revised and updated copy of those of the past (gold, silver, banknotes); on the contrary, they should allow producers & traders of goods and services to be rewarded for their effort, without any intermediation or parasitic control.
[The producers & traders of goods and services should be themselves directly issuers and acceptors of their own private and at least locally competing currencies, with their self-chosen value standard, accepted by most of their customers and other acceptors of their currency or clearing system certificates or accounts. That itself would make their sales more easy and certain. Just like tickets are likely to be redeemed, soon, in the offered and wanted performance values. J. Z.]

The ten requirements listed below seem to us to be essential for any alternative currency, meaning with that:
(a) currency = accounting and payment instrument for production and trade
b) alternative = usable in place of compulsory legal tender.

The requirements are:

1. Not to be subject to monopoly.

2. Not to be hoardable.

3. Not to be convertible in legal tender currencies.

4. Not to be (easily) taxable as a currency.

5. Do not cost anything (or almost anything) for the issue-certification.

6. Do not cost anything (or almost anything) for use in exchanges (registration).

7. Lacking value (in itself) and price (of sale, of purchase).

8. Be issued by producers and traders of goods and services.

9. Being linked to the production and trading of goods and services.

10. To be used by an increasing number of producers-traders-consumers of goods and services.

The currency that meets all these requirements is one: [their cover by and redemption in - J. Z.] the same goods and services. As Pierre- Joseph Proudhon stated, we must make "of every product of the current work a currency.” In Proudhon's vision, and later in that of William Greene's, the producers set up an Exchange Bank.
[Mainly local shop associations and service providers will be the most common issuers and acceptors of competing alternative currencies or “shop foundation” monies. They would act like note-issuing private banks. J-Z.]
This bank issues vouchers. In the words of Proudhon:
"These vouchers are representative of commercial goods, i.e. products. Therefore, vouchers are payable in the form of products. The quantity of vouchers assigned to each producer is proportional to the amount of goods produced by the individual subscriber, i.e. goods requested or for which, at least, there is a certain demand. This excludes the idea of abnormal production, disproportionate to the demand, out of place.” (The Solution of the Social Problem, 1848) –
[Goods warrants and service vouchers would be “redeemable” in wanted consumer goods and services. J. Z.]

In today's reality, we can do without an actual bank and we can imagine different mechanisms of issue-certification-registration at practically no cost. The profit for producers of goods and services is all in the sale of their goods and services and in the fact that this takes place without additional monetary-banking costs or financial-currency risks.

The use of goods and services as money through simple accounting entries would really be a radical change, a bridge that, overcoming all the inflationary and deflationary imbalances of legal tender banknotes, would take us from gold standard to goods standard. It would give producers and consumers control over the economy, as they would decide, far more directly than at present, on the type and amount of production, investment and the issue of means of exchange, according to their choices, day after day.

The goods and services used as units of account for trade would therefore have the above mentioned requirements of not being subject to monopoly, hoarding, not to be convertible into legal tender, and not being (easily) taxable. In fact, as William Greene says, “you cannot monopolize corn, iron and other commodities, as you can money.” And “what a commotion would exist in the community if a company of capitalists should attempt permanently to monopolize all the corn!” (Mutual Banking, 1919). Moreover, it would be rather uncomfortable for the state to be paid by a dairy factory with units of account for buying milk and cheese or other goods and services.

Hints to the equalization of economic goods with units of exchange can be found in Hernando De Soto (The Mystery of Capital, 2000). The holders of power and privileges (state rulers, economic masters) have done everything, especially in the so-called Third World, to avoid that the small producer-worker also becomes the one who, by producing-working, could get hold of money as, liquid capital. The solution proposed by Hernando De Soto is to free up the economy of producers and allow them to use their resources as collateral to receive liquidity. This is what Muhammad Yunus started doing with Grameen Bank and the micro-credit.

It is now time of taking another step forward by considering the goods produced and the resources available to the producer (house, vegetable garden, etc.) as a sound currency. In the words of De Soto: "... the entrepreneurial creativity of the poor has created wealth on a vast scale - wealth that also constitutes by far the largest source of potential capital for development.” (The Mystery of Capital, 2000)
A much larger source than state investment, development aid and capital used on local stock exchanges. This source must therefore be allowed to deploy freely, i.e. to let people's resources become live capital.

Hernando De Soto, in the wake of Adam Smith, also makes it clear that capital does not mean money. Money is only a form through which capital circulates. Capital is the productive human energy and the resources produced by this energy. These resources must be used for productive credit and trade. Without any intermediation or parasitic control by the state or by the banking- financial apparatus.

The arrival and use of an alternative currency could be achieved through the following steps:

(a) introduction of the unit of account by entrepreneurs, producer cooperatives, consumer groups or other active and productive persons.
(b) promotion through discounts on the purchase of goods and services for all those who adopt the new unit of account.
(c) adoption of the new unit of account by those most likely to be in favour of experimentation and novelties.
d) diffusion of the unit of account as it becomes extremely functional and usable for most or all the exchanges.

We are all, to some extent and at different times, producers and consumers (prosumers). A system based on and managed directly by producers and consumers would greatly facilitate production and exchanges. And it is towards experimenting with such a system that we should make a start and we have probably started already in this direction a long time ago.


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