The following article explains the advantages of having a local or alternative currency at the village or regional level, in the absence of Social Credit principles being applied at the national level. Indeed, if a financial crash were to occur overnight, it would be useful to create a network of mutual aid and solidarity among the population now, so that products and services could be obtained and exchanged, even in the absence of an official national currency.
by Juan Castro Soto
The theory of Economic Democracy, proposed by the Scottish engineer Clifford Douglas, distributes extra money so that production and consumption correspond equally. It is put into practice through simple techniques known as Social Credit, later promoted by Louis Even:
1) Free issuance of new money without debt,
2) Distribute a free dividend to consumers and producers, and
3) Establish a discount for consumers, returned or compensated to sellers by the government.
A technical problem. — Douglas's proposals for distributing extra money are neither a whim nor simply because he has the freedom and the possibility to do so. This is because, technically and mathematically, it is impossible to consume everything the market pro-duces when receiving only a salary, since this does not include the cost of inputs, such as technology and raw materials: the salary corresponds to labor and nothing else.
Therefore, prices will always be higher than the purchasing power of the salary.
Douglas explained this using the "A+B" price theorem, where A represents wages, B represents other production costs, and A+B represents the total price of a given production. Since wages (A) cannot purchase the total price (A+B), Social Credit fills this gap in purchasing power.
Clifford Douglas and Louis Even intended to apply this Economic Democracy at the national and international levels, as a new financial system that would resolve people's needs due to a lack of money, in a world where, paradoxically, there is an abundance of products and services waiting to be consumed.
However, the world is dominated by a supranational financial system that does not allow for Social Credit, preventing any government from issuing its own money and distributing it for free.
Therefore, in the second half of the last century, local currencies, independent of governments, began to gain traction. They did not arise from Douglas's theory, but rather sought solutions to the shortage of money.
For the proponents of these local currencies, no theorem was needed to demonstrate that money was insufficient; it was an axiom of truth that needs no demonstration! So they simply created it, let's say crudely, without much explanation. On the one hand, Douglas didn't intend to apply his theories at the local level; and, for his part, local currencies were unfamiliar with Douglas's theories 50 years earlier. They didn't coincide in time.
However, the theories of Economic Democracy and Social Credit have a lot in common with local currencies. In truth, local currencies put these theories into practice, which serve as a very useful theoretical foundation for better understanding what they are doing.
Certainly, local currencies don't solve the problems of an entire country, but they improve the situation in small communities, and can become more widespread: there are already around 5,000 of them worldwide, and they are a model and a practice for a fairer economy on a larger scale.
Let's now look at some characteristics that allow most local currencies to be classified as experiences of Economic Democracy and Social Credit.
1. They satisfy needs. — Local currencies are created to facilitate exchange and trade, so that products and services reach the hands of those who need them. This is the main purpose of the economy in general, as well as of Economic Democracy and local currencies.
2. Free issuance of money. — Local currencies are printed or issued by a community of producers and merchants who use this money in their commercial transactions. In other words, they have the monetary sovereignty required by Social Credit to generate the money they need; a sovereignty that governments lack because they depend on usurious banks.
3. Neither debt nor interest. — Social Credit and local currencies are not obtained like a bank debt, nor do they pay interest. They represent an increase in circulating money and purchasing power, while bank loans actually generate a shortage of money, causing prices to rise in order to pay these debts.
4. Social Dividend. — Like Social Credit, local currencies are distributed free of charge to all participants, and equally, helping them finance their consumption or production. Alternatively, they are distributed at a lower cost than the official currency.
This distribution is not based on a percentage of total production, as Social Credit might be, but it helps create a society of abundance when the problem is a shortage of money.
5. Compensated Discount. — Producers and merchants often offer better prices to fellow consumers simply for the sake of solidarity. This is compensated because it is done mutually or reciprocally. Furthermore, products and services become more accessible by facilitating and combining payment methods.
6. Based on Trust. — Social currencies and Social Credit restore trust between people and rebuild the social fabric. But the most important trust goes beyond the functioning of the local currency as an instrument of exchange: it is the trust in the people who use and accept it.
7. Local economy. — Local currencies are intended to strengthen the local economy. They are not intended to be exported to obtain money or foreign currency in exchange for our wealth; they seek to ensure that wealth is consumed by the families of the region.
8. Free Democracy. — Social Credit presupposes that the nation has a real democracy that decides to implement it; however, this is often its main shortcoming. Local currencies, on the other hand, are the fruit of real democratic decisions, where those involved have the freedom to innovate and organize themselves with their own self-governance mechanisms. They do not depend on organizations outside the participants that make arbitrary decisions nor decisions contrary to the common will. Nor do they depend on the conditions or impediments of any government.
9. Non-profit. — Social Credit does not create money to be sold on a stock market, as many digital currencies do. Nor do local or community currencies, as they are not designed to be bought and sold for monetary gain, but rather to exchange goods and services: they are an instrument to facilitate and incentivize trade, not a commodity to be sold.
10. Unintentional Christianity. — Most local currencies were not created to follow Christian principles, nor are they driven by any religion. However, unintentionally, they are deeply Christian, without reciting a single Lord's Prayer, as they are concerned with the benefit of all participants and are not designed to steal nor subjugate anyone. They create a community network of trust, solidarity, understanding, and mutual aid, with fraternal relationships rather than competition.
Juan Castro Soto
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