Life goes on without money

Money makes the world go round, but what if it did not? The world’s financial and monetary system is still straining against the backlash of a financial crisis that peaked three years ago. The threat of a debt default is hanging over the United States and Europe has lurched from one crisis to another.

There are people who believe that there is an alternative to the traditional economic and monetary system. They are a small minority but their numbers appear to be growing steadily around the globe.

On a sunny winter morning in Muizenberg I met Tim Jenkin and Dawn Pilatowicz, active participants in the Cape Town Talent Exchange, known by its members as “the exchange”. Set up in 2003, it is a complementary or communal currency system in which transactions are paid for, not in rands but in talents.

A talent is best described as an electronic record of a trade between a buyer and seller, according to Jenkin, co-founder of the exchange and its primary programmer. Members join the exchange offering goods or services and, as with sites such as Gumtree, buyers and sellers contact one another directly. Everyone gets an online account, much like an alternative bank account, to record his or her transactions. There is one difference, however, in that the account is open for viewing by all other members of the exchange.

Once a buyer has purchased an item—for example, a pair of shoes—he fills out a trading slip and gives his account details to the seller, who then enters a record of the transaction on the website. This gives a credit on the seller’s account and debits the buyer’s account. The onus is then on the buyer to sell his goods or services to other people on the exchange to ensure that he earns talents and puts back into the community something equivalent to what he took out.

Ideally, there should be an equal amount of debits to credits in the system—totally zero, according to Jenkin. The value of a talent is pegged loosely to the rand, if only to assist people in understanding the system and how to value their offerings on the exchange.

“But it’s not a barter system at all,” Jenkin said. “If someone mows your lawn, you are not obliged to do something for him in return. You pay it back by doing something for someone else.”

The exchange echoes the concept of a pay-it-forward economy. But Jenkin said that even this implied that there was currency traded when, essentially, it was merely a record of the transaction.

Anything from health treatments to architectural services, food, clothing and tutorial services are traded on the exchange—the goods and services are as diverse as its members.

Local economic trading systems
The exchange is one form of what is known as local economic trading systems, which Jenkin said have been around since the 1980s. Because earlier forms of these systems recorded transactions manually in a ledger at a central location they were limited to geographical areas and the number of people who could participate. But with the advent of household computers and the internet, these systems have become more dynamic, open to more participants and spread over larger areas.

The Cape Town exchange has 4 000 members, but more than 300 other exchanges have popped up around the country and the world, using a home-grown online interface. Australia has 64 exchanges, Finland 20, New Zealand 24 and the United States 61. Even Zimbabwe has two exchanges, Zambia one and the little island nation of Vanuatu in the South Pacific Ocean has six, as does Colombia. Not all these exchanges use the talent—many of them opt for their own names, such as the dubb in New South Wales, the sang in Dharamsala, or the trahno in Toronto.

Members can trade through exchanges from region to region and country to country.

Jenkins admitted that it is not possible to live entirely without money. For example, one cannot buy petrol or electricity on the exchange. But it does allow people to trade with a mix of both rands and talents, which alleviates the problem of members having to live in and interact with the mainstream economy.

This problem is perhaps most clearly illustrated by Jenkin’s attempt to take the exchange to township communities. As a recipient of an Ashoka fellowship for social entrepreneurship in 2007, Jenkin took the exchange to areas such as Khayelitsha, where offices with internet connections and computers were established.

Members of the community traded with paper trading slips or cheques, which they then brought into the exchange’s branches to record their transactions. They could also access the lists of goods and services available and advertise their own.

But the project required money to pay for the cost of internet connections and other items, such as rent for premises, and could not continue, Jenkin said.

The hope of fostering grassroots exchanges to aid people left out of the mainstream economy nevertheless continues, with appeals being made to both the government and private businesses.

Jenkin admitted that there were questions about the potential tax implications for the users of exchanges, and whether they could be used as a tax dodge. He said the exchange was simply a service people could use to trade and it remained up to individuals to declare any taxable income to the South African Revenue Service, particularly if transactions were rand-talent combinations.

But, he said, it was not clear how the system could be taxed and it would depend on how the state viewed talents and whether it would accept payment in them. Also the size and number of transactions were still very small: in its eight-year existence, the Cape Town exchange had traded the equivalent of R10-million.

The closest the system comes to a tax is a levy of 2% on every transaction that goes to the exchange’s administration account, which is also open to scrutiny by all users. The levy is used to run the administration of the site and is paid in talents.

Jenkin said that the exchange was not a replacement for the rand but rather a way to step outside the bounds of the traditional economy and trade with people in a manner that fostered local community networks.

Globally, communal or complementary currencies were associated with efforts to localise economic activity, live more sustainably and find ways to live in a post-peak oil period. “The current money system is based on constant economic growth and it is simply not sustainable,” said Jenkins.

The variety of what is offered is limited to the variety of members, and what users get out of the system depends on how actively they use it. Although people can sponge off the exchange—taking without giving anything in return—it is up to individuals to check the standing of those with whom they do business. Because the accounts are open to view, people are able to judge whether or not they should transact with someone.

An empowering alternative
Dawn Pilatowicz has been a member of the Cape Town Talent Exchange since 2004 and is now its steward.

One of the exchange’s most active traders, Pilatowicz has used it not only as a way of buying items and selling her services but also to meet and network with people.

“The exchange has empowered me,” she said.

Disabled by a degenerative muscle disease, Pilatowicz bought her motorised wheelchair through the exchange.

As we talked, her groceries were delivered—shopping for them is a service she sourced on the exchange and paid for in talents.

“All we do is doing favours for one another and keeping track of who’s done what favour for whom,” she said.

She, in turn, has offered everything from time on her computer to things such as second-hand clothing on the exchange.

Another participant is economist Jeremy Wakeford, who also chairs the Association for the Study of Peak Oil in South Africa.

“This is simply an accounting device that records transactions within a community,” he said.

“The rationale is to stimulate the economy at a local level, such as a suburb or area.”

The availability of goods and services can be limited to what is provided in one’s area, according to Wakeford, but inter-group trading is growing, thanks to technological development.

Alternative currency systems have been a long-standing interest of Wakeford and he point out that communal or complementary currency systems tended to develop in times of economic depression.

“It is not intended to replace the rand, but the point is that it is a community-driven way of transacting.”

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