Social Currency Systems Emerge to Supplement Money in Argentina

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BUENOS AIRES, ARGENTINA – Javier Goglino, 48, a thin man with a white beard, sits at a bar in Buenos Aires, the capital of Argentina. While the world’s stock markets wobble, the United States tries to avoid default and massive protests shake European cities, Goglino says his community has been protecting itself.

“We are prepared for the economic crisis,” Goglino says.

Goglino is neither an economist nor a political analyst. He is an engineer. But he didn’t let that stop him from creating a bartering system, christened “Proyecto Mutuo,” or “Mutual Project,” in his community of Martínez, a Buenos Aires suburb.

Mutual Project is a system in which members can exchange goods and services instead of money. Each member of the community has the option to offer a service or goods in exchange for “merits,” which later help them to acquire new goods and services. The merits register virtually in the participants’ accounts.

Goglino studied electrical engineering in Buenos Aires and is pursuing a master’s degree in renewable energy at the National University of Salta. But he describes the details of Mutual Project with the certainty of an economic expert, or at least someone who studied the subject in detail before undertaking the project.

“We began to outline the idea at the end of 2005 together with a group of parents from the school where our children go,” Goglino says. “And finally everything began to roll in November of 2008 after much reading and contacting different experts on the subject.”

Goglino says he’s proud of no longer having to go to the supermarket to buy food with money. Now, he can buy fresh food with merits from other members of the Mutual Project community. In exchange for the food, he and his wife offer piano and flute concerts. His wife also makes soap to exchange for merits. Their children then use the merits to buy items such as cookies, bread and water from their school’s grocery store.

“The idea is that it strengthens the community ties because, in order to operate, one has to look to the rest of the community and see what it offers,” Goglino says.

Members of the Mutual Project community exchange goods and services in order to reduce their reliance on money. Although some members say spending the merits can be challenging because the community is still growing, Goglino says creativity is key to expanding the system’s offerings. Economic experts say the current global financial crisis creates a need for alternative currencies like this, and even governments have gotten involved in promoting them.

International monetary expert Miguel Yasuyuki Hirota estimates that there are 5,000 bartering systems operating around the world. Hirota, who lives in Fukuoka, Japan, began investigating alternative monetary systems in 1999 and has since been involved with developing them in more than a dozen countries.

Goglino says he consulted Hirota when developing the Mutual Project. Goglino estimates that there are about 10 to 15 other bartering systems across Argentina.

Hirota says that one of the most widespread types of bartering systems around the world is the time bank, in which members offer their knowledge and skills in exchange for the knowledge and skills of the other members of the community. But unlike Goglino’s Mutual Project, the exchange in the time banks is limited to services and excludes goods.

“The key point is that one creates currency in the instant of the exchange,” Goglino says. “There is not a monetary authority that says, ‘Now I am going to produce [money].’ In this way, the currency is created in the fair amount in order to pay the transaction.”

In this community, all the members’ accounts start at zero.

“This is the paradise of the socialists because we all start equal,” Goglino says jokingly.

Mutual Project already has 79 members, from translators and web designers to musicians and plumbers. It fulfills an average of 14 transactions per month, with peaks of up to 30. Members exchange about 1,400 merits per month, with peaks of up to 3,000 merits.

One of the first members of the community was Nicolas Echániz, who offers computer services such as support and maintenance of networks. Members of the community who want to have their own websites can buy the hosting for the sites from him with their merits.

“This is the same service that is currently used in order to accommodate the page of Mutual Project,” Echániz says.

Although members say they enjoy the alternative system, they say spending the merits can be challenging because the community is still growing and goods and services offered are limited.

Echániz used to live in Martínez but now lives in Córdoba, a province in central Argentina, where he holds conferences and participates in forums to promote free software. He says his distance from the Mutual Project makes it difficult for him to exchange merits.

Most members live in Martínez. Still, Alex Von Foerster, another member, says the community’s small size also makes it difficult to exchange merits here.

“The size of the community is still a difficulty,” he says.

Von Foerster owns a chain of natural grocery stores called Mother Grain, which sell items such as vegetables, bread and honey. He says there are pros and cons to the system in his business.

“On the one hand, receiving merits makes us have more sales because the people can use merits on our premises,” he says. “On the other hand, it is not as easy to spend merits that we receive because the community is small. It is developing.”

Until it develops further, he says he has to limit the number of merits he accepts at his stores for now.

“Today I have to limit the entry of merits,” he says. “It would be much easier if I could buy raw materials with merits.”

For now, he uses the merits that he receives to pay for printing brochures, buy hardware or pay for his consultation with an osteopathic doctor, whom he visits often.

Goglino admits that there is still much work ahead to develop the system. He says that what it lacks is creativity.

“Each member has to make an effort and think of how they can use their merits,” he says. “Surely there is always going to be something the member needs and can pay for in merits, so as to keep one’s account balanced.”

But Hirota says there is an ingredient that moves the gears of these communities beyond members’ day-to-day needs: the current global economic crisis.

“There were many initiatives of bartering during the depression of 1930 and also in Argentina 10 years ago,” Hirota says.

For Goglino, the subject of money is complicated, and there is a certain resistance to thinking of alternatives that diverge far from it.

“Around money there is even more taboo than around sex,” he says. “That is why, in order for these systems to work fully, there must be needs. When there is a crisis, there will be needs. And there, one has to resort to creativity.”

Goglino references Bernard Lietaer, considered one of the architects of the euro. In his book “The Future of Money,” Lietaer writes that when conventional currency has been scarce up to the point of causing serious economic problems, the population has managed to get out of trouble by inventing its own money.

Amid the prosperity from the exportation of soybeans, Argentina today looks at the news about the economic crisis with a certain distance. But Goglino says that this will be short-lived because the country is not replenishing its fields, which will affect future production and, therefore, future generations.

“This prosperity is costing someone,” Goglino says. “Specifically it is costing the environment. The prosperity is going to cost my children or my grandchildren.”

He says societies need alternative money systems because prosperity like this can’t last.

“It is necessary to create new monetary systems in order to generate new planes,” Goglino says. “The monetary systems are responsible for the societies that they create. There is no reason to have only one monetary system. They can have several that would satisfy our different needs.”

Adela Plasencia, an economist, university professor and coauthor of the book “Social Currency and Supportive Markets,” says that these alternative systems don’t replace, but instead supplement conventional currency.

“There is no reason to ask for these systems to replace the legal currency, but to do what this cannot do: to generate better sociability, to encourage local development, to mobilize labor and to act in a countercyclical way when the legal money is scarce, avoiding high levels of unemployment.”

Plasencia says that, in contrast to the 1930s, even the government is currently promoting these systems, showing a new openness to alternative currencies.

“They note a new characteristic: the presence of a grand impulse to these systems from the state sphere, not only from the organizations of civil society,” Plasencia says.

Plasencia says various South American governments have gotten involved.

“The systems of social currency are being promoted and regulated – even by laws – in Venezuela, Ecuador and Brazil,” she says. “There are solid experiments in Peru and Colombia. And there is an interest for these proposals in Bolivia and Uruguay, among others, [even when the region] is growing at a rate between 8 and 9 percent annually, and even more in the case of Paraguay.”

Goglino says the Mutual Project is necessary because economic crises are never fully resolved.

“There is always a latent crisis,” he says. “What we do is to believe that it disappeared.”

As the global crisis continues, Goglino says Mutual Project will serve an even greater need. But the expansion of the community will also present new challenges, such as the possible appearance of opportunists.

“Well, we will all learn to look at each other in the face to self-regulate ourselves,” he says with a certain anxiety. “I think that it is going to be very pedagogical.”