Money, Community & Social Change
An Interview with Bernard Lietaer
By Ravi Dykema
What is money? And how well does it work to solve society's ills?
Bernard Lietaer, author of the upcoming book "Access to Human Wealth:
Money beyond Greed and Scarcity" (Access Books, 2003), has made a
life's work of exploring these questions. Lietaer has been involved
in the world of money systems for more than 25 years, and his
experience in monetary matters ranges from multinational corporations
to developing countries. He co-designed and implemented the
convergence mechanism to the single European currency system (the
Euro), and served as president of the Electronic Payment System in
his native Belgium. He also co-founded one of the largest and most
successful currency funds.
Lietaer is the author of nine books on money and finances, including
"The Future of Money" (Random House, 2001), The Mystery of Money
(Riemann Verlag, 2000) and a book for kids, called 'The World of
Money' (Arena Verlag, 2001). Formerly professor of international
finance at the University of Louvain, Lietaer is currently a fellow
at the Center for Sustainable Resources at the University of
California, Berkeley. Beginning this fall, he will be a professor at
Naropa University. Here, Lietaer shares his views on the shortcomings
of our conventional currency system, the benefits of creating a
complementary currency, and ways to effect lasting social change.
RD: You're very experienced on the world stage with currencies and
money. It's the world you've moved in much of your life, right?
BL: Yes, both in the area of conventional money such as the Euro and
more recently with less conventional money systems. Below the radar
beams of official thought, there has been a resurgence all over the
world for the last 15 to 20 years of what I call complementary
currencies, currencies that are operating on a smaller scale than the
national level, and that can solve social, environmental and
RD: People think of someone who works with currencies as being a
materialist. Yet it sounds as if your interests are towards social
change through complementary currencies. How did you come to be
interested in this other dimension?
BL: The reason I went to the Central Bank in the first place was to
check whether it was possible to improve the conventional money
system from within. I had been working for a number of years in South
America, and I had seen the damage that the existing money system has
created on a huge scale in Latin America.
RD: You thought it was the money system and not just the governments?
BL: It's a chicken and egg story: unstable currency equals unstable
government. There is practically no way today for a developing
country to have a reasonable monetary policy within the current rules
of the game. Joseph Stiglitz, Nobel laureate in economics and
formerly head economist at the World Bank, makes the same claims in
his book Globalization and Its Discontents (Penguin, 2002). Whether
you fix your currency to the dollar or let it float, you end up with
an unmanageable monetary problem, like Brazil, Russia or Argentina
have experienced. Eighty-seven countries have gone through a major
currency crisis in the last 25 years. Their fiscal policies are
imposed by an International Monetary Fund (IMF). I am afraid that if
the United States had to live by the rules that are imposed on, say,
Brazil, the United States of America would become a developing
country in one generation. It's the system that is currently
unstable, unfair and not working.
The majority of humanity has gone through a recent monetary crisis at
least once already. We're living here, in America, in an island of
perceived stability. And even that is an illusion. We could have a
run on the dollar under the current rules.
We are dealing with an unstable system, an ailing system. Back in
1975, I had come to the conclusion that there would be a systemic
series of monetary crashes, starting with Latin America. And that's
why I wrote my book on how the money system was not working and its
impact on Latin American development, Europe, Latin America and the
Multinationals (Praeger, 1979). I predicted that the first crash in
Latin America would be in the early 1980s. It actually happened in
1981 in Mexico. Since then we have had more than 80 other countries
undergoing similar monetary crises.
RD: So someone's not connecting the dots -- or are they?
BL: Let me put it this way. The powers that be have no interest in
connecting the dots. If a new international monetary meeting like
Breton Woods were held, the first point on the agenda would be the
role of the dollar. So the United States has no interest in such a
meeting. The dollar is in a very privileged position.
RD: But it would be anyway, wouldn't it, because we're a dominant
BL: I don't want to spend a lot of time and energy attacking the
existing system. It is an obvious fact that America is the sole super
power. But when people say, "Well, there are fiscal crises in other
countries because the governments are less stable," my question is,
"How long would any government last in a country if you had to
repeatedly cut back on education programs, social programs, building
roads and all other programs?" How could that make a stable
democratic government possible? Like I said, it's a chicken and an
There is no way of winning in the current monetary game, particularly
for the less developed countries. It's not accidental that
investments in the Third World have dropped proportionally by a third
since 1975. Currently, investments happen mainly between developed
countries, and that trend isn't going to create a sustainable world
RD: So the Third World is just being abandoned?
BL: Yes. Entire continents. Africa for instance has been dropped off
the world economic map for most practical purposes.
RD: And re-envisioning and re-engineering money itself could change this?
BL: Correct. And the good news is that such re-engineering of money
has started to happen if one knows where to look.
RD: Do a lot of other people share your views?
BL: Most people haven't looked at what's happening in monetary
innovations today. What do you think a frequent flyer mile is, but a
currency issued by an airline? In Britain, you can go to J.
Sainsbury, the largest supermarket chain, and use British Airway
miles to buy your goods. Initially, it was only designed as a loyalty
scheme for people taking planes. Today, you can earn this currency
without ever taking a plane. On Visa cards you get miles. And you can
use them to pay long-distance telephone calls, taxis, restaurants,
First, let's define what a currency is, because most textbooks don't
teach what money is. They only explain its functions, that is, what
money does. I define money, or currency, as an agreement within a
community to use something as a medium of exchange. It's therefore
not a thing, it's only an agreement -- like a marriage, like a political
party, like a business deal. And most of the time, it's done
unconsciously. Nobody's polled about whether you want to use dollars.
We're living in this money world like fish in water, taking it
completely for granted.
Now the point is: there are many new agreements being made within
communities as to the kind of medium of exchange they are willing to
accept. As I said, in Britain, you can use frequent flier miles as
currency. It's not a universal currency, it's not legal tender, but
you can go to the supermarket and buy stuff. And in the United
States, it's just a question of time before privately issued
currencies will be used to make purchases. Even Alan Greenspan, the
governor of the Federal Reserve and the official guardian of the
conventional money system, says, "We will see a return of private
currencies in the 21st century."
RD: In other words, private currencies are coming back. How would
that change the circumstances for poor people, for the Third World?
BL: I gave you that first example-a commercial loyalty currency-only
because it would be familiar to most of your readers. But in addition
to those commercial private currencies, there are now more than 4,000
communities around the world that have started their own currency for
social purposes as well.
For example, there are about 300 or 400 private currency systems in
Japan to pay for any care for the elderly that isn't covered by the
national health insurance. They are called "fureai kippu" (caring
relationship tickets). Here's how they work: let's say that on my
street lives an elderly gentleman who is handicapped and cannot go
shopping for himself. I do the shopping for him. I help him with food
preparation. I help him with the ritual bath, which is very important
in Japan. For this help, I get credits. I put those credits in a
savings account, and when I'm sick, I can have other people provide
such services for me. Or I can electronically send my credits to my
mother, who lives on the other side of the country, and somebody
takes care of her.
Here is an agreement within a community to use as medium of payment
something other than national currencies, to solve a social problem.
And it makes it possible for hundreds of thousands of people to stay
in their homes much longer than they otherwise could. Otherwise,
you'd have to put most of these people into a home for seniors, which
costs an arm and a leg to society, and they're unhappy there. So
nobody's winning. In contrast, Japan has created a currency for
In the United States, Florida is the only state that has the same
density of elderly people as Japan does -- 18 percent of the population
is more than 65 years old. But Florida is a model for our collective
future. Colorado will be there in 2020. Germany will be there in
2006, France in 2008, Britain in 2012. Partly because of the baby
boom generation, and partly because of the fact that health care has
improved and people live longer. If you put all of these elderly in
homes for seniors, you'd go bankrupt. Japan has been looking for
another way, and has found it by introducing a monetary innovation.
Let me give you other examples, already operational here in America
today. There are now several hundred "time dollar" operational
systems in the United States. The unit of account is the hour. I do
something for you. I have a credit for an hour, while you have a
debit for an hour. If I can use my credit with someone else, this
creates a currency between us. For those people who are willing to
give some of their time, the money manifests automatically. It
doesn't quite work that way with dollars, does it? One of the two of
us has to get dollars by competing for them somewhere outside of our
Time dollars are helping in a lot of communities where conventional
money is scarce: in ghettos, retirement communities, high
unemployment zones, student communities. There are 31 states in
America that are paying employees to start such time dollar systems,
because it solves social problems. There are some operating in
Chicago, fairly big ones in Florida. For example, in Chicago, there
are entire neighborhoods that used time dollar systems to create a
neighborhood watch system that got rid of drugs and gangs. It's
working, it doesn't cost anything to the taxpayer, it doesn't create
a huge bureaucracy, and it encourages the solution of the local
problems by and with the very people who know most about them.
RD: What do they use their time-dollar credits for?
BL: Well, it's a closed circle. If I do something for you, I have a
credit, which I can use with any member of the community that is part
of the system. I can't buy cars or pay my telephone bill with this
system because the suppliers of such items don't participate now in
such systems; but I can obtain services,so I could have my car
repaired, my house painted, my kids mentored.
The inventor of the time dollar system is Edgar Cahn, who's the
author of No More Throw-Away People" (Essential Works Ltd, 2000). He
claims that if you can't compete in the dollar economy, you're thrown
away. He shows how a time dollars system provides a solution to this
process, because it operates in parallel with the conventional
competitive economy, and it creates an environment where everybody
RD: So you envision a world where there are a lot of these
BL: I don't call them alternative, because they aren't intending to
abolish or replace the national currency. I'm not claiming that we
could or should abandon national currencies or the competitive
economy. This is a complementary currency system. It facilitates
exchanges additional to the normal system. It makes it possible to
match unmet needs with unused resources.
RD: I can't see how you'd be able to pay your rent with that.
BL: Well, in Ithaca, New York, there is a currency called Ithaca
hours, and some people pay part of their rent with it. Not all of it:
for some it is 50/50, for others it is 80/20. And the landlord or
lady can go to the farmer's market and buy his vegetables and his
RD: So the big things-transportation, housing, food-are those covered
in the concept of complementary currency?
BL: It all depends on the agreement you're making, and whom you are
succeeding in including in that agreement. Let me give you a
real-life example. In Curitiba, the capital city of the State of
Paran in Brazil, if you bring pre-sorted garbage, you are given bus
tokens. So in Curitiba, public transport is clearly part of their
complementary currency system.
It depends on the agreements you have with your landlord, with the
transportation company, with the university, with the business
community. It just depends on who wants or is willing to participate.
You can't force anybody to accept this currency. They are not what is
technically called "legal tender." I call them "common tender":
commonly accepted as payment for debts without coercion of legal
RD: I understand that the government wants to get its chunk out of
barter transactions, just as if they were a cash transaction.
BL: Yes, and those taxes will need to be paid in "legal tender," i.e.
dollars. The tax issue has nothing to do with the currency you use in
an exchange, but with the kind of transaction you're performing.
Say I'm a plumber. I come to your house and fix the plumbing. And you
give me a nice cake in payment. I'm supposed to declare the value of
that cake and pay taxes on it, because I'm in the plumbing business.
Now say I am a professor at a university. I come to your house. I fix
your faucet. You give me a $100 bill. I'm not obliged to declare it
because I'm not in the plumbing business. As I said: it is not the
currency used that determines whether a transaction is taxable or
not, but the nature of that transaction.
Interestingly, there is one complementary currency, the time-dollar
system that we talked about earlier, that is officially tax-free in
the United States. It's used only to resolve social problems, and the
IRS has ruled that time-dollar systems are tax-free.
RD: I think complementary currencies, barter included, should be
tax-free, because they offer solutions to a social problem.
BL: Then I suggest you go and lobby for passing such a law. Currently
that's not what the law says in the United States.
The use of complementary currencies is fairly recent. It took off
only in the last 15 years. Even in 1990 there were less than one
hundred complementary currency systems worldwide. Today there are
over 4,000. It's definitely catching on.
RD: And you would like to see it continue to expand?
BL: I think it is a useful tool to solve a number of our problems. It
makes it possible to truly create a more gentle society.
I spent last summer in Bali. People are remarkably artistic in that
island. Their communities are unusually strong. They have festivals
that are totally mind-blowing, and can last a month. They're having a
good time. It's a comparatively non-violent society. And what I found
is that it isn't a simple coincidence that they have been using a
dual currency system for many centuries. All these unusual
characteristics of Bali turn out directly to be nurtured by their
dual money system. I am publishing a detailed paper on how this
mechanism works in the forthcoming issue of Reflections, the journal
of the Society of Organizational Learning at MIT.
RD: How does the money system lead to those outcomes?
BL: Practically all Balinese participate in a dual currency system.
The first is the conventional national currency (the Indonesian
Rupiah); the second is a time currency where the unit of account is a
block of time of approximately three hours. This second currency is
created and used within the "banjar." This is a community entity
consisting of between 50 and 500 families. It is in each banjar that
the decisions are made democratically to launch any big community
project. It could be to put on a festival or build a school. For each
project, they always make two complementary budgets: one in the
national currency, and one in time. That second currency-called
"narayan banjar" (meaning work for the common good of the
community)is created by the people themselves. They don't have to
compete in the outside world to obtain that second currency, and it
fosters cooperation between the members of the community. I call it a
yin currency-it's more feminine in nature. And it complements the
national currency, which is a competitive currency and therefore of a
yang, or masculine, nature.
Here's why it works: poor communities don't have a lot of national
currency, but they tend to have a lot of time. In rich communities,
the opposite tends to be the case-people have more national currency,
but less time. In either case, each banjar is capable of creating
extraordinary events just by budgeting and using more of the kind of
currency-national or time-in which they are rich. This balance is a
key contribution to the unusually strong community spirit that
prevails in Bali. And it's not just because they're Hindus. There are
almost a billion Hindus in India, and they don't behave that way.
Here is an example of how a currency can make a difference.
RD: We have a strong emotional attachment to money, and we worry
about it. So how we relate to money influences who we are and how we
think of ourselves.
BL: Yes, you're right. But it is interesting that societies that are
using different kinds of currency have also very different collective
emotions concerning money. The generally accepted theory-dating back
to Adam Smith-is that money is value neutral. Money is supposed to be
just a passive medium of exchange. It supposedly doesn't affect the
kind of transactions we make, or the kind of relations we establish
while making those exchanges. But the evidence is now in: this
hypothesis turns out to be incorrect. Money is not value neutral.
Let's return to the example of the fureai kippu that I was mentioning
earlier, the elderly care currency in Japan. A survey among the
elderly asked them what they prefer: the services provided by people
who are paid in yen, the national currency; or the services provided
by the people paid in fureai kippu. The universal answer: those paid
in fureai kippu, because the relationships are different. This is one
example of evidence that currency is not neutral.
Another example: there is typically a reluctance among friends to pay
for help provided by using national currency. If a friend is helping
you move or paint and you pay him with national currency, it just
doesn't feel right. Interesting isn't it?
RD: So people feel differently about complementary currencies than
BL: Yes, there have been surveys in several countries that prove this
to be the case. Conventional currencies are built to create
competition, and complementary currencies are built to create
cooperation and community, and it's important to be aware that both
can be available to make our exchanges.
According to Paul Ray's (author of The Cultural Creatives, Harmony
Books, 2000) study, 83 percent of Americans believe that the top
priority should be to re-build community, and yet the kind of
currency we use in our transactions is precisely one that eliminates
community. The word "community" comes from Latin, "cum munere."
"Munere" is "to give," and "cum" is "among each other," so, community
means "to give among each other." In short, it turns out that dollar
exchanges tend to be incompatible with a gift economy. Complementary
RD: Are you saying that you can't have community if you're using
BL: I'm saying that exclusive use of a competitive programmed
currency in a community tends to be destructive for the community
fabric. This isn't theory. We've seen this happen at the tribe level,
with the collapses of traditional societies. I've seen one happen
myself in Peru among the Chipibo in the Amazon. That tribe had been
in existence for thousands of years. When they started using the
national currency among themselves, the whole community fabric
collapsed in five years' time.
The same thing happened here during the 19th century in the
Northwestern United States and Canada, in the traditional indigenous
societies. The moment they started using white man's currency among
themselves, the community collapsed, the traditional fabric broke
RD: Do you think complementary currencies really can transform our planet?
BL: Yes. Bali is a perfect example that long-term use of a dual
yin-yang currency system creates a different society. Thirty percent
of a Balinese adult's life happens in the space of the yin, feminine
currency, which is the time currency. In contrast, we spend close to
100 percent of our time in the masculine, yang, competitive currency.
That 30 percent of time spent on community activities creates another
society, where everybody can become an artist, where the community
fabric is stronger, where the social safety net is reliable, where
abandonment is unknown. It nurtures an extraordinary feeling of trust
and a higher quality of life.
RD: And you think this kind of culture and community can exist in
other places, with completely different religions and cultures?
BL: The short answer is yes. We have evidence from Japan, Germany,
Mexico, Brazil and the United States to show that complementary
currencies make a difference in the way people relate to each other.
RD: In a really transformed world, would a community be using
multiple complementary currencies as well as the national currency?
BL: Not necessarily. What has started to happen recently is an
integration. Many of these services that were using highly
specialized complementary currencies are beginning to integrate into
a single, local social-purpose currency. For example, youngsters who
are taking care of the elderly in Japan using their credits in
partial payment for tuition at the university, so we're solving two
problems at the same time. It provides an additional way of making
things happen that otherwise is not available when national currency
is scarce. Remember, complementary currencies simply enable
additional matches between unmet needs and unused resources.
RD: Does the internet and electronic transfer systems offer a means
for the creation of complementary currencies?
BL: I am convinced that the reason complementary currencies are
developing now is because of cheap computing. Do you really think
American Airlines would have frequent flyer miles if they needed an
army of clerks trying to keep track of your miles? I don't think so.
But today anybody with access to a PC can start a currency system. It
isn't a coincidence that about 95 percent of the social purpose
complementary currencies are electronic.
RD: So can we buy an off-the-shelf program for creating a currency?
BL: Sure. There are even different freewares already available. One
of them is for operating a LETS (Local Exchange Trading System).
Another one that is free of charge is to start a time dollar system.
We are in the process of incorporating a non-profit foundation in
Boulder, the Access Foundation, whose purpose is to provide
independent information on all the different complementary currency
systems that are available worldwide, and on its website one will be
able to download the corresponding softwares. This website
(www.accessfoundation.org) is planned to be operational early this
Currently, our biggest problem with money and currencies is
unconsciousness. We are not aware of what we are doing around money.
We haven't really thought about what money does to us. We believe
it's neutral, so it doesn't matter. But it's not neutral: it deeply
shapes us and our societies. The first thing that has to happen
before complementary currency systems can effect real change on a
larger scale is a shift in consciousness and awareness.
RD: You mean, we need to be aware of how money works?
BL: Let me ask you this. Have you taken an inventory of the number of
days you spend in life getting ready to make money? And when you have
money, to manage the money or spend it? But then, think about how
many hours you've thought about what money is. I suspect not very
much. We are spending a huge amount of energy to get something about
which we have surprisingly little understanding.
RD: Well, it's like the rain. It's something you adapt to.
BL: Yes, except that rain is not man-made. That's precisely the
difference. We're treating money as if it is God-given, like rain or
the number of planets in the solar system. But it isn't. If you don't
like the quality of rain, there's not much you can do about it. If
you don't like your money system, maybe you can do something about it.
Assume that a Martian lands in Denver on the wrong side of the
tracks. He ends up in one of the ghettos and finds that the houses
are run down, the kids not taken care of, the elderly in trouble, and
the trees dying. He sees all these things, and discovers that there
are people and organizations absolutely equipped and ready to solve
every one of those problems. So this Martian asks, "What are you
waiting for?" The answer: "We're waiting for money." "What is money?"
the Martian inquires. "It's an agreement in a community to use
something as a medium of exchange." Don't you think he may leave the
planet believing there is no intelligent life here?
The point is: if money is an agreement within the community to use
something as a medium of exchange, we can create new agreements,
can't we? That is exactly what people are already doing all over the
world. So why don't we do it here? If we're waiting for conventional
currency to solve all our problems, aren't we waiting for Godot?
RD: Is this your whole campaign now? Are you through with Belgian
BL: I'm trying to contribute to a consciousness shift regarding
money. I believe that by a small change in the money system, we can
unleash huge improvements in our social system. It's the highest
leverage point for change in our society, and surprisingly few people
are looking at it. If you start a new complementary currency system,
it can become self-perpetuating and facilitate additional
You know the saying, if you want to feed someone, give him a fish. If
you want to really help him, teach him how to fish. This is just a
fishing lesson -- what you do with it is up to you. You can take big
fish or small fish, or you can choose not to fish at all. You decide
what issues you want to deal with in your community, and there is a
currency system that can help you with it.
Forwarded by Dan Drasin with thanks to John Steiner