2.1. Introduction to complementary currencies
2.1.2. A brief historical outline
Only in contemporary history have the three functions of money been contained in a single official currency at national level. Throughout most of history, different forms of money have fulfilled these functions separately for centuries without any impediment.
From a generic perspective, we can trace back to humanity’s earliest barter systems to find the methodology of social monetary systems. For thousands of years, different human communities have created their own currencies for the purpose of meeting the needs of their members and safeguarding themselves against economic instability. Since then, and up to the present day, complementary currencies have gone through various incarnations, and can be found in many countries of the world. National and supranational currencies have evidently obstructed their development, though we should not lose sight of the fact that some complementary monetary systems are based on currencies that need to be redeemed for national currency.
Complementary currencies were used in ancient Egypt, for example, where their existence was intimately connected to the economic prosperity of the ancient North African civilization. Monetary systems of this type were also used in the Middle Ages and in the feudal system. One emblematic example of a local currency is the fact that the so-called “Breakteats” were used for centuries to finance the construction and pay the builders of the great cathedrals of Medieval Europe.
There are many documented experiences of the use of complementary currencies in conjunction with conventional money, from the 1930s on: the Wära in Germany, the Wörgl in Austria, and others in the Nordic countries, Denmark, the Netherlands, Spain, France, Italy, Switzerland, Bulgaria, Romania, Canada, Ecuador, Mexico, and China. These currencies responded to the need for alternative currencies to enable families to buy provisions to feed their families during the Great Depression that began in 1929, though the majority were outlawed by their countries’ governments after they had been in operation for a time. Only one has survived to the present day: the Wir in Switzerland.
Half a century later, in 1983, Michael Linton came up with LETS or “Local Employment and Trade System”. First launched in Canada, LETS are among the most widely used complementary monetary systems in the world. The system soon spread to the United Kingdom, New Zealand and Austria, followed by America, Australia and Europe. Similar systems appeared independently in other countries: SEL or the “Système d’Échange Local” in France, the “Fureai Kippu” in Japan, and the very popular “Time Dollars” and “Ithaca Hours” in the USA.
The combination of conventional money and complementary currencies works as successfully in economically powerful countries as it does in those that are economically dependent, such as Brazil, Thailand, Indonesia and Senegal. Many complementary currencies have appeared at times of economic crisis when paid work and money are scarce. This was the case in Argentina, where the economic collapse of 2001 led to the apparition of alternative credit systems, or complementary currencies. Within a short time, hundreds of thousands of users were using them, and the phenomenon spread to other countries in the region. In the context of economic crisis, exploring alternatives is not restricted to the low-income classes. The large capitalist corporations also take advantage of different ways of attracting and preserving their customers. Frequent-flyer miles are not strictly an alternative currency, but they attract increasing numbers of customers to airline loyalty programmes. Though the capitalist corporations’ money alternatives may resemble complementary money, in the sense that something other than conventional money is being used to make purchases, there is a clear and important difference at the conceptual level: the first was devised according to the rules of capitalist competition, to ‘lock in’ customers, while the second is designed to offer the consumer alternatives to the scarcity of money and market monopolization, among other things.