Re-placing money: another currency for local economic development and income generation

Re-placing money: another currency for local economic development and income generation

Version September 2006

Georgina M. Gómez

[email protected] International Institute of Social Studies Erasmus University Rotterdam Kortenaerkade 12, Bus 426 2518 AX Den Haag Nederland

Introduction................................................................................................................2 Local Monetarism and regional economic development ...........................................3 The Argentine Red de Trueque..................................................................................8 Local Monetarism in Argentina .................................................................................9 Local economic development effects.......................................................................11

Nodo Gente Linda in Venado Tuerto...................................................................12 The Red de Trueque Zona Oeste in Buenos Aires...............................................15 Creation of participants’ micro-enterprises .........................................................18

Conclusions..............................................................................................................21 References................................................................................................................23

List of Acronyms CT Club de Trueque or Exchange Club CCS Community or complementary currency system RT Red de Trueque or Exchange Network ZO Red de Trueque Zona Oeste or Exchange Network West Area

Introduction

Monetary localism is one of the various ways in which communities and regions around the world re-claim control over their economies. National or sovereign monetary systems with a single currency used across a whole nation-state became normal only in the last two centuries, making them relatively younger than many other economic institutions (Gilbert and Helleiner, 1999; Van Dun, 1998). Still, after two centuries of successful construction of monetary sovereignty, at a time when global financial flows blur national boundaries and countries around the world regroup around single currencies, localities and communities are back trying to have their own currency. In the last two decades a few hundred regions, localities and communities in both the developed and the developing world have created their own means of payment in an attempt to increase the control over their resources (Lee, 1997; Seyfang, 2001a and b, Pacione, 1999). Monetary systems are, after all, one of the many sets of institutions regulating and supporting economic life, and as such, a social construction (Hodgson, 2004; Leyshon and Thrift, 1996).

The goals and modalities of implementation of complementary currency systems (CCS) vary, but the search for a positive impact in developing the local economy is normally a priority. In general, monetary localism is defined as the organisation of exchanges within a specific space by means of adapting the existent monetary system or constructing an ad hoc monetary system (Blanc, 2002). The purpose of monetary localism is thus not to disconnect off the national monetary system but to complement it, adjust it or adapt it. While the formal national currency is issued by Central Banks to make payments anywhere in a country or abroad, local money only circulates within a specific area among those who chose to accept it. Voluntary participants thus increase their exchanges of goods and services, enhancing local economic activity and stabilising demand during a crisis.

Most of the 2.700 CCS presently active1 have achieved a relatively small scale, also limiting the research on their impact in the local economy (Pacione, 1997, Aldridge, 2001 and 2002; Williams et al., 2001). The remarkable exception is the Argentine Exchange Network or Red de Trueque (RT). It started in 1995 as a bottom-up initiative of a group of environmentalists with 25 participants of the disenfranchised middle class. It then reached a peak of 2.5 million participants in 4.600 centres across the country in 2002. But its institutional weaknesses to deal with such scale led it to collapse to about a fifth of its size a year later. Its remarkable rise and decline hides the qualitative impact of the Trueque as an economic system, as it allowed millions of households to survive through the crisis both in terms of financial and psychological contention. In the long run, the use of local currencies promoted the multiplication of new small businesses, helped the unemployed bridge into regular jobs, alleviated poverty among the marginal population, supported the training of unskilled workers and provided change value to previously unpaid work (mostly women’s activities). In theory, the regular means of payment issued by the Central Bank are neutral and should have achieved the same results. And yet, it took local currencies to reactivate local economies.

This research explores the hypothesis that monetary localism constitutes a tool for the protection and promotion of local economic development. Two questions come to the fore. First, what are the effects of monetary localism on the local economy. And secondly, in what ways it fosters local economic development, why and for whom. These answers would improve the understanding of monetary localism as a possible instrument of local economic development policy.

The findings here are drawn from data gathered during fieldwork carried out in the second semester of 2004. The main data set is a survey of 386 respondents of a

1 Data of Turmel in www.cyberclass.net/turmel/urlsnat.html, last accessed August 2006

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questionnaire with closed and open questions. A total of 40 centres across the country were visited and the survey was carried in 18 of them among participants chosen at random during the market gatherings. Centres were selected to endow the survey with diversity in scale, organisation, relative regional wealth, and geographic diversity. Samples range from 15% to 20% of the participants present at the time of the research visit. Additionally, two cases studies were chosen for their concern for protecting and developing their regional economies. This aim makes them distinctive from the typical local currency groups in Argentina and they cover some variety: one is in the small city of Venado Tuerto (pop. 70.000) in a predominantly rural area and the second one is in the West suburban municipalities of the metropolitan area of Buenos Aires (16 municipalities, pop. 5.5 million).

The next section introduces the concept of monetary localism and the Institutional Regionalism literature on local economic development. The third and fourth sections follow with a description of the Red de Trueque in Argentina in the eyes of the general theory on monetary localism. The two cases of LED promotion with local money are discussed in the subsequent sections.

Local Monetarism and regional economic development

Monetary localism seeks to root exchanges in a specific area by means of a local transformation in the monetary system. All over the world, there are 2.700 cases of CCS in 56 countries, of which around 800 are in Argentina, 200 in Australia, 60 in New Zealand, 300 in the UK, 25 in the USA and the rest in France, Germany, the Netherlands, Norway, Spain, Sweden and Switzerland (Turmel, see footnote 2).

Various forms of monetary localism were used through history (Gilbert et al, 1999). For example during the Napoleonic wars the British isles of Guernsey and Jersey were authorised to print their own money (Schuldt, 1997). In 1832 Robert Owen attempted to set up a monetary system in which the value of the currency was tied to labour time (Angell, 1930). At the local government level, in 1932 the Austrian town of Worgl issued its money to solve tax arrears and high unemployment in the area until the Austrian Central Bank took legal proceedings against the town and stopped it (Offe et al., 1992). Also during the Great Depression, several localities used the scheme in the USA, United Kingdom, Germany and Austria (Collom, 2005, Leyshon et al., 1996). In more recent days, the first “local exchange and trading system” (LETS) was established in the island of Vancouver, Canada, in 1984 (Bowring, 1998; Thorne, 1996). The economy of the small Courtenay, population 50.000, depended on two major employers: a US Air Force base and a timber mill providing raw materials for the paper industry. The former was transferred and the later was closed, leaving the town with no economic base on which to rely. Unemployment rose dramatically and the amount of money to generate trade within the local economy collapsed. A practitioner of remedial exercises then decided to remove the impediment by accepting other means of payment for his services. Through the years, the Courtenay initiative grew to 1.000 members and helped local participants to offset some effects of the economic crisis (Offe and Heinze, 1992).

The idea later spread to other countries. According to Thorne (1996), CCSs were started in 1985 in Norwich, UK one year after the Canadian initiative but did not achieve sufficient scale until the 1990. By 1995 there were more than 300 registered LETS in the UK. Also in the 1990s the scheme of the Ithaca hours in New York was established and provides a successful example of a community local currency. It is accepted in over 240 businesses and it was later replicated in another 20 cities across the USA (Dalton, 1999).

As they spread in the world, CCS adapt to local differences and legal frameworks in their respective countries. Some issue scrap or checks to cancel payments, which are accepted by other members of the social network. Others fix a unit of value

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expressed in hours of work, notwithstanding the type of work offered, as the Ithaca hours. The British LETS function as accountancy system only: people who provide a good or service register a “credit” in their account, which they later use to buy from other community members. (Bowring 1998; Peacock, 2000)

Blanc (2002) distinguishes two types of CCS or monetary localism: territorial and community monetary localism, depending on the area of application of the monetary adaptation. Territorial localism refers to the creation of a monetary system ruling over the exchanges of a certain space and respecting no other restrictions than the boundaries of the area or authority of the issuing institution. It can be guided by an official authority with some sovereignty over a sub-national territory like a province or municipality. It is normally articulated with a monetary authority of higher rank and a hierarchical banking structure, but nevertheless represents a breaking away from the national monetary systems installed since the 1800s (Gilbert and Helleiner, 1999; Van Dun, 1998). Examples are Estonia establishing its own currency out of the rouble area in 1992, the province of Buenos Aires in Argentina issuing the Patacón in 2001 to pay arrears, or the French Chambers of Commerce printing “currencies of need” (monnaies de nécessité) between 1914 and 1923. In contrast, community monetary localism restricts the use of monetary instruments exclusively to voluntary participants of a community. The space of application is thus not bounded but restricted to individuals who wish to do so. It includes most monetary localisms emerged in the last two decades like the moneda sociale in Italy, local exchange and trading systems (LETS) in English speaking countries, monnaies parallèles or SEL in France, or the Red de Trueque (RT) in Argentina and other Latin American countries (DeMeulenaere, 1997, Williams, 1996, North, 2003 and 2005).

Monetary theory offers a very partial explanation for these processes of monetary localism (Blanc, 2002). The theory of optimum currency areas pioneered by Robert Mundell (1961) poses that the creation of a local currency responds to maximum economic efficiency in regards to labour and capital mobility, wage flexibility, and fiscal redistribution of tax inflows in a region. In turn, Fischer (1982) later suggested that the creation of a local currency is motivated by the search of an income from seigniorage and the freedom to manage monetary policy away from the discipline of Central Banks. Indeed, these two perspectives provide some explanation of the rationale for monetary localism but do not analyse it in its complexity or in relation to the objective of developing the local economy.

A recent elaboration on monetary localism distinguishes four main rationalities that often combine with each other in different proportions (Blanc, 2002 and 2006). The first one is related to income collection, mainly through seigniorage, as advanced by Fischer (1982). The mechanism creates a profit to issuing institutions calculated as the net revenue between the total nominal value of fiat money released and the costs of printing it. Alternatively, most Central Banks nowadays define it as the difference between the amount of money released for circulation and the reserves that back it up plus interests earned on those reserves. But for community monetary localism, the seigniorage argument is of little relevance. First, there are no reserves in either official or complementary currency. Secondly, local monetary systems often adopt the form of an accountancy system with no physical scrap. Thirdly, when bills are printed, they are frequently given to participants for free to use, so both the face value and the printing costs are shared. Finally, when there is an issuing institution and revenues from seigniorage, they fund the organising community’s activities.

The second rationale seeks a qualitative transformation of exchange. That is a change in the nature or conception of exchanges and their context. This idea draws on Karl Polanyi’s (1957) description of exchanges as atomistic and disembedded, meaning social contact begins and ends in each transaction independent of the social relations that nest it (Thorne, 1996). In contrast, the creation of a local currency entails a bond of trust between buyer and seller initiating a mutual credit, termed in Blanc (2000) a “bond of customers”. A second difference in the nature of exchanges is embodied in the concept of the “prosumer” elaborated by Alvin Toffler (1980), addressing an individual both producing and consuming at the same time as

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was typical of primitive societies. Performing both functions is seen as recomposing for the economic and social local fabric, bringing closer mutual buyers and sellers.

The third rationale for monetary localism identified by Blanc is the protection of the economic space against external monetary disruptions such as scarcity of means of payment in a recession or inflationary excess. Local currencies reduce the amount of cash flowing out of the region and not compensated by inflows, hence preserving the regional monetary system. When the national or global economy collapses, currency shortages restrain the circulation of goods in the locality generating unsatisfied needs. These could be covered by producers in the same area, in theory without using central money. The mismatch could be solved by local means of payment, with the additional advantage that income generated in the region would stay there (Pacione, 1997). In fact, CCS arouse most frequently in modern history in contexts of deep recession (Schuldt, 1997).

The fourth rationale regards the increase in local economic development. The improved dynamism of the local economy results from either locking locally activities previously carried out elsewhere (repatriation of exchanges) or accelerating regional transactions. The conception here is of the regional economy as a "very small open economy with limited tools to control the entrance and exit of physical resources, human and financial” (Dow et al., 1997). Local Economic Development is defined as “a process in which partnerships between local governments, community based groups and the private sector are established to manage existing resources, to create jobs and stimulate the economy of a well defined territory” (Blakely, 1989; Helmsing, 2001 a and b; 2003). The use of local monies implies a certain organisation of the local economy, partially de-linking it from the central economy. Income generated in local money is geographically restricted to being spent in that same space. The geographic restriction becomes in itself an incentive to spend or lend, clearly against hoarding2.

Several authors (Seyfang 2001a, Pacione, 1997, Danson, 1999, Schuldt, 1997) agree in arguing that CCSs improve the local economy’s independence in line with the Agenda 21 of the 1992 Rio Summit (UNCED, 1992). As any currency, local money coordinates a productive system, tying together producers and consumers in the same space. Further transformations in the local economy are unnecessary, as local currency is a complement to the central one (Seyfang, 2001b). By its own nature, it helps create or protect jobs, incorporate local resources to their economic use, and improve the general standard of living in the area. In this sense, CCS would foster regional development.

The role of monetary localisms in developing economic capacity and rooting economic activity at a local level comes to the fore at a time when the capacity to root economic activity at the national level is being contested (Jones and Macleod, 1999). Global production has increasingly undermined the relevance of national space and the world economy is being reorganised (Dicken, 1998). There is a view gaining prevalence of a borderless world (Ohmae, 1990) or a space of flows (Castells, 1989). National spaces lose ground and regions appear irrelevant. Against this background, monetary localism seems an illogical curiosity.

And yet, it is precisely against the process of disembedding of social and economic activities from local areas to wider worldwide spaces that regions have been rediscovered as a crucial source of competitive advantage (Amin, 1994; Scott, 1995; Cooke, 1997). The “rediscovery” of regions was partially based on studies of success of highly dynamic regional economies which draw extensively upon local assets for their competitiveness and partially connected to the shift to post-Fordist modes of

2 Local currencies are normally interest-free because they are conceived as means of payment and not as a reserve of value. In the original proposal of an “honest currency” by radical economist Silvio Gesell (1958), a demurrage or negative interest rate was included to motivate its tenants to accelerate its spending or else face the loss of its value through time. Bank deposits and loans were held fixed, so the bank as last tenant was pushed to keep money circulating through loans to avoid the loss of value.

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production that favour flexible specialisation (Amin, 1994; Barnes, 1999). The new centrality of territory as improving economic performance gained from the insights of Institutional Evolutionary perspectives, emphasising that institutions mediate socio-economic activity and this is facilitated by proximity (Amin, 1999; MacLeod, 2000). The argument goes that economic performance depends not only on positive macro-economic conditions but on the emergence of institutions to channel and promote selective co-operation between agglomerated actors (Raco, 1999, Gibbs, 2001). In words of MacLeod et al. (1999:704), “the capacity to territorially ‘embed’ global processes in place is now conditional upon a plethora of social, cultural and institutional forms and supports”3.

There are several views on the link between institutions, localisation and economic performance, as discussed by Amin (1999) and Helmsing (2001b). Linked to endogenous economic growth theories, Porter (1994) and Krugman (1995) stress economic externalities and increasing returns to scale associated with clustering, specialisation and agglomerations. The New Economic Geography shares this view but pushes it further into the causes that make territory a crucial dimension in competitiveness (Amin and Thrift, 1994; Storper, 1997; Barnes, 1999). They contend that ties of proximity enhance cooperation and learning, sharing of knowledge, integration of local public goods, and other assets that have a direct impact on a region’s competitive potential. Storper, in particular, has suggested that the economic success of regions is explained by the ‘relational assets’ or ‘untraded interdependencies’ between local economic actors. These consist of rules, routines, practices, networks and other institutions that “generate region-specific material and non-material assets in production” (1995:192). Additionally, Hirst (1994) claims associationalism allows local actors to pursue a common interest and, in banding together, actors develop social networks and build common identities, so that future cooperation is possible. Raco (1999) includes voluntary associations as prelude to networks of local producers creating synergies.

Along this line, Amin and Thrift (1994 and 1995) developed the concept of “institutional thickness”. In what has been defined as Institutional Regionalism (MacLeod, 1999). Institutional thickness explains the success of some regions in embedding or locking economic activity in a global economy. It is a multifaceted concept considering the importance of local social and cultural relations in the development of regional economies along macro-economic factors. The interaction of firms, labour, and various organisations builds a common way of perceiving economic problems and guides the search for solutions (Tödtling, 1995). Strong local institutional relations place regions on track to support new forms of small-producer, learning-based, innovation-oriented economic activity. The following are the four factors contributing to the construction of local institutional thickness (see Powell and DiMaggio 1991; later discussed in Raco, 1999 and MacLeod, 2001):

a. Institutional presence of different kinds provides a basis for social, economic and political practices. The local economy is organised around them; they are the building blocks to enhance institutional thickness.

b. Networks, addressing the regular contacts between local government, firms, financial institutions, training organisations, unions and other civil society associations constituting the social atmosphere of the area.

c. A blend of coalitions and structures of power giving voice to divergent collective interests, socialising costs and controlling rogue behaviour.

d. Mutual awareness by the actors involved that they share a common enterprise, loosely defined as an “agenda” supported by forms of social identification like cultural traditions, region, gender, or ethnicity.

Other authors (Martin 2001b; Gibbs, 2001) later elaborated that the focus needs to shift from the static concept of institutional thickness to a dynamic view of the

3 Emphasis in original

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process of institutionalisation. There has also been scepticism about the usefulness of the concept, narrowly emphasising the quantity of institutions above their quality (Gibbs, 2001). There are cases of strong institutions locked in laggard economic sectors preventing development instead of promoting it (Hudson, 1999), as well as weak local economies with well developed institutional capacities and strong economies without them (Jonas, 1996). This is indeed the case, but Amin (1994 and 1999) himself has warned against taking the concept away from context such as the cultural complexities and path dependency of the local institutions.

The Institutional Regionalism Perspective entails a different policy approach to local development, centred on facilitating the creation of un-traded dependencies and increasing the dynamism of networks in the region. Following Cooke (1998a), local economic development policy should be guided by a balance between encouraging co-operation and stimulating competition. Indeed, this shift in policy focus was already elaborated in the literature on Local Economic Development (LED). Helmsing (2001b; 2003) refers to a current “third generation of regional policies born in practice”. In the first generation until the mid-eighties, it fell under the responsibilities of the central government among other top-down policies. Scepticism on its effectiveness shaped a second generation of LED policies, informed by successful cases of flexible specialisation. The centre moved from the local government to other institutions of the private sector and civil society, emphasising endogenous development, local control, and a general bottom-up approach. But later globalisation changed the frame of reference for regional policies, which entered a third phase or generation in which the focus is still on promoting a bottom-up endogenous development and creating partnerships. However, the center moved further into network forms of governance including other actors in the region (Thompson, 2003; Ansell, 2001). LED policies consider the restrictions and opportunities posed by globalisation and seek to coordinate with other levels of government and economic sectors, while new institutions and collective actors emerge. The present LED generation is thus multi-actor, multi-sector and multi-level in character. (Helmsing, 2001b and 2003)

Furthermore, Helmsing (2001b and 2003) elaborates on three categories of LED initiatives. First, Community Economic Development focuses on facilitating the diversification of economic activity at the meso level, so households may improve their livelihood and reduce their poverty and vulnerability. Survival based home informal micro-enterprises are included here and in a later work (2005), Helmsing links it to the asset capabilities approach, which studies how individual households diversify their survival strategies to obtain a livelihood. The second category refers to Business Development, consisting of initiatives that target enterprises or clusters. Typical initiatives are deepening specialisation and access to markets. The third category is Locality Development –sometimes combining the previous two- referring to planning and management of economic and physical development. Infrastructure building and service provision fall in this category.

Monetary localism, in theory, should be included in the first and second categories, as CCSs are normally but not exclusively targeted at micro-enterprises. It is a form of Community Economic Development (CED) as they present an option for households undergoing unemployment, poverty or vulnerability to diversify their income. And it is Business Development since local money gives preferential access to local firms.

In conclusion, a new generation of Local Economic Development policies guides local efforts to develop the supply base (skills through to innovation) and the institutional base (from development agencies to autonomous political representation). The goal is to transform backward localities into centres of competitive advantage (Amin, 1999). The rationale is to work on non-economic along economic factors generically termed “institutional thickness”: to strengthen existent institutions, networks, social control structures and common interests. It is a clearly supply-side set of policies, focused on improving the conditions of production and of producers, assuming a potential demand for an improved supply. But the possible failure to find buyers is a

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heavy risk for the poor who engage scarce resources and time in community economic development schemes. This is a point that monetary localism could contribute to reduce, as studied for the Argentine case in the next section.

The Argentine Red de Trueque

Unlike the vast majority of CCS across the world, the Argentine Red de Trueque has no problems of scale and even nowadays, after its decline, it retains considerable scale. There are no official data on its size, but based on the fieldwork carried out for this research, there are still about 1000 CCS across the country with an average size of 250 members.

The first Club de Trueque in Argentina in 1995 was a by-product of applied ecology projects of PAR, a tiny publisher of an environmental practices magazine. The idea then was to make use of idle resources such as the forced free time of the unemployed, unproductive plots of land in the neighbourhood, and a wide variety of half-forgotten capabilities. The scheme was almost too obvious. A small group of people met once a week to exchange goods they could produce themselves, such as the vegetables from back gardens, medicinal toiletries, home-made foods and small handcrafts. Participants were called prosumers -producers, consumers and traders at the same time- following Toffler (1980). They were allowed to take goods for an amount similar to what they had brought. Transactions were written in both a computer file and individual cards and were denominated in “trees” as unit of account equivalent to one peso. They adjusted operational details until all in all it evolved into a small market of buyers and sellers. They called it “Club de Trueque” (translates as Barter Club, though in fact they never bartered; henceforth CT).

The initiative proved helpful and effective to the impoverished middle class neighbours in the area. News of it was spread by word of mouth and the number of participants multiplied quickly, some of them travelling a considerable distance. To avoid the unnecessary transport of goods and people, market centres were replicated across the metropolitan area of Buenos Aires. Each CT kept its own records for their weekly markets, but at the end of the day they recorded individual balances in the cards and in a common computer file. The idea was to allow participants to move from one market to the other. However, the process of uploading individual balances turned too burdensome and the PAR then decided to “publish” credit notes as means of payment. Again they tested several alternatives until they came up with a working system of vouchers that followed the denominations of the official bank notes. The computer file was hence eliminated and the replication of CT accelerated to the hundreds. Most CTs were part of an integrated national network, the Red de Trueque (Barter Network and henceforth RT) but a few preferred to stay isolated.

The marked expansion of CT is partly explained by the unusual availability of idle resources following the Mexican and Asian international crisis of 1995 and 1998 respectively. Both crisis hit Argentina and derived in the 1999-2002 meltdown that chopped off 25% of the GDP in four years. However, from 1996 to 1998 the formal economy recovered some ground lost in the recession and in those three years GDP growth averaged 8.5%. As a result, the expansion of the RT cannot be explained as an anti-cyclical mechanism alone. The quality of the unemployed, in addition to class and gender considerations was equally important. Labour, land, technology and the unemployed (often skilled) were shed off the formal economy and decided to enter the RT circuit of low-productivity and small-scale production. They became the “new poor” of Argentina, a disenfranchised middle class with little experience in surviving economic hardships like unemployment, low wages and labour instability. Yet, they had the skills and resources to elaborate a product to offer (Gonzalez Bombal, 2002a and b; Altshuler, 2002). As they struggled to “redefine themselves in the face of increasing impoverishment” (Svampa, 2000:19), they were open to novelties like the Trueque. Women were frequently first to participate -they

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constitute nowadays 85% of the membership- selling home-made foods and handicrafts and hence fitting the CT easily in their traditional household activities or middle-class hobbies (Parysow, 2002). Having said this, the real boom of the RT happened in the toughest months of the economic demise (end 2001 to beginning of 2002), with a devaluation of 300% against the dollar and unemployment at 24%.

Amount of participants (1995-2004) (estimated)

180000

320000

600000

2000000

150000250000

60 1000 2300 50000

500000

1000000

1500000

2000000

2500000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Ovalles (2002) for 1995-2002; La Nación for 2003; own estimation for 2004

As the network turned its biggest scale, serious problems emerged within the CT. Crowds kept flowing in need of food and yet with so little to offer in exchange. There were too many second-hand clothes to sell and too little food; too little production and too much speculation with prices in “trees”. At its peak, there were 5.000 new participants coming in each day, so the distribution of vouchers got out of control and excessive means of payment pushed price increases from inflation to hyper-inflation. Eventually, the system collapsed and the Trueque lost its appeal. Participants no longer trusted it and massively abandoned it, starting by those with higher chances of generating an income in the regular economy (former middle class). CT closed by the hundreds after June 2002 and one year later the RT was reduced to 10% of what it once was. Around 2004 the situation stabilised and the regular economy rebounded. But the RT recovered too, though participants are in general poorer than before or new poor whose poverty is not so new any more.

Local Monetarism in Argentina

Following the four rationales for monetary localism discussed above, there is little room for a discussion of seigniorage revenues, given that the vouchers were often distributed for free or, when a contribution was asked for to cover the costs of the printing, the revenues formed a collective fund to finance common activities. In terms of promoting local economic development, most of the organisations of the Trueque shared their currency and operated in a national network, somehow violating the principle of monetary localism. They present a community monetary localism, best described as complementary rather than as territorial CCS.

A secondary aim of monetary localism verified in the Argentine case was to transform the qualitative nature of exchange, bringing people to environmentally friendly practices, giving a “human face to goods on sale”, and fostering solidarity, as was discussed by other researchers (for example, Hintze, 2003). González Bombal (2002a and b) considers it represented a new type of sociality which brought the

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impoverished middle class out of its embarrassment for the fall and allowed them to reconstruct a new level in the social fabric. Other researchers link it to the political emancipation of the poor and a social movement with an economic edge (Lecaro, 2002; North, 2003).

Regarding the protection of the local economic space, the Trueque in general sought to maintain some activity and income among the poor and unemployed, either to raise or keep standards of living of its members. Typically, this was enacted through employment of own account with low scale and low productivity. Households in which the main breadwinner lost the job in the regular economy or earned too little to make a living then resorted to the CT to provide goods and services. It was as setting a micro-enterprise for a complementary market with local production and local consumption generating an income, in theory, until they could re-enter employment.

Participants thus established a variety of links to the regular economy that protected activity as posed in the literature on monetary localism. Presented in the table below, a fourth of the supply in the Trueque was composed of 2nd hand articles people already had at home and could spare. These sales, of course, have no current macro-economic impact beyond providing some income to the households. An extra 9.50% proceeded from social welfare schemes, either the governments’ or charities, and to keep figures conservative it will be assumed that these were bought directly elsewhere and had no impact on the local aggregate economy either.

The remaining 65.40% did have a local impact in four different ways. Firstly, participants produced themselves 28% of the offer, which was normally done at home so it represents extra local production4. Secondly, they bought in nearby shops in the regular economy to resell later in the CT without further elaboration. It represented 18% of the supply, adding local demand that may not have happened otherwise. Thirdly, they offered up to 10.50% of the supply in goods discarded by third parties as scrap, which did not stimulate production in itself but reduced the amount of waste to dispose. Fourthly, shops and local businesses participated in the CT to market their idle stocks and overproduction, constituting around 9% of the offer. The break-down of the supply thus shows that CCS protect economic activity in the region, either by increasing production, adding demand when the regular market collapses, reducing waste to dispose of (a positive environmental effect) and providing local businesses a secondary market while the crisis lasts.

Break-down of the supply in the Trueque (386 responses)

Social welfare 9.5%

Self-production 28.0%

2nd hand 25.1%

Resale 18.0%

Surplus, reuse, waste 10.5%

Stocks own shops 8.9%

In relation specifically to local factories and shops, they substituted part of the sales lost in the regular economy by directing overproduction or excess stocks to the Trueque. Out of the 40 CT visited in fieldwork, the combination of sales in pesos and complementary money was observed in 29 of them and was also reported by other researchers (Vazquez Abramovich 2003; Hintze, 2003). Shops typically go on with business in both the regular market and the CT. “I’ve had a shop for 25 years but things have not been going well for some time. So I come to the CT twice a week with

4 Includes an undetermined amount of goods bought nearby as inputs that add secondary demand.

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my stuff. It sells a lot easier than in the shop because people want to take home goods instead of these little papers. Of course I prefer pesos, but I fill the fridge of vegetables from here and other home-made foods. It helps me, that is why I do it”, a female trader says.

In the eleven CT where no shop- or business-owners were found, it was noted that in two of them shops were banned, another three were located in slum areas –therefore considered inaccessible- and the last six were too small to attract shops. The proportion of sellers within the CT who owned a business in the regular economy was anyway invariably small, between 7.8% and 10.3% of the participants, with higher scores in CT located in relatively more affluent areas. When asked to estimate the relevance of their sales in complementary currency, 62% of them considered it “crucial” or “very important” in terms of allowing them to keep going. A third eventually closed but even so, all but one of the closed ones indicated they liquidated machines, tools and stocks in the CT and this allowed them to satisfy the basic needs of their households for a while. There were other indirect ways in which complementary currencies helped to protect economic activity. For example, a small factory of toilet paper managed to survive the crisis by paying part of the wages of its employees in own kind, later exchanged for other necessities in the Trueque5. This indicates that the Trueque does not necessarily save shops and businesses, but provides valuable assistance. In other words, it gives them a chance to survive.

The participation of local businesses was considerably more marked during the peak of the crisis6 (2001/2002). Once the regular economy rebounded, the demand from many of these businesses recovered too and they left the Trueque to continue their business as usual. Their exit was so significant marked that one in ten respondents indicated it as one of the three main causes for its decline. "As a retailer, I believe that we all prefer pesos because our suppliers we must pay in pesos and not in scrap paper. But surely, if there are no pesos you take what you can get. It’s about staying afloat. This is a good alternative, all things considered. I painted my house, which I wouldn’t have afforded in pesos", said a participant who owns a bakery and still goes to the CT. The Trueque thus represent a useful “emergency market” for shops and small producers in the locality hit by the demise of the regular economy. The majority then returns to the regular market as this recovers.

Local economic development effects

The fourth rationale for monetary localism -stimulate local economic development- was not an explicit priority of the Trueque. Only a small number of organisations were appealed by this orientation. The rest of the paper focuses on two of them. The creation of a CCS represented for them the addition of an institution to mediate exchanges. What was special about local currency as an institution was its specific orientation to disadvantaged groups of the labour market: unemployed, low-waged or vulnerable employees, informal and temporary workers, the excluded and poor, and individuals regularly engaged in unpaid homework (typically women).

The Institutional Regionalist perspective views the presence of institutions as the first factor contributing to institutional thickness. In relation to monetary localism, a regional currency represents a central institution to stimulate the “thickening” of the local institutional endowment. Eventually, it is capable of promoting LED. Within Helmsing’s (2001b; 2004) categorisation, it corresponds to community economic development, offering a further option for the diversification of households’ income to reduce their poverty and vulnerability. O’Doherty (1999) presents similar findings during research in the UK: monetary localisms reinforce civil society in a locality

5 That was the agreemen negotiated with the workers when the factory was on the verge of bankruptcy in the middle of 2003. The factory eventually survived. 6 Fieldwork was carried out in the second semester of 2004, when the economy was in clear recovery.

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and enhance the benefits of a web of personal networks which derive into the social and economic areas.

Labour Status of participants7 (386 responses)

Waged employment or self-employed 19.9%

Unemployed 43.5%

Unpaid home-workers 31.6%

Retired/ pensioners 5.0%

A factor seen above as crucial to institutional thickness is the presence of active networks in the locality. In the case of the Argentine RT, pre-existing networks plaid a role in the initial growth of the Trueque but as it grew, unknown faces became the rule. Then exchanging with local money brought together a considerable number of individuals excluded from other economic activity who did not know each other. After repeated trading, larger and more powerful networks were formed, consistent with Hirst’s elaboration (1994) that “banding together” allows groups to develop common identities and social networks to cooperate.

In fact, banding together in the CT stimulated the formation of a strong networks and social structures capable of implementing specific projects within the Trueque. On the one hand, alliances sustained the emergence of strong leaders that guided the CT organisations into LED projects. On the other hand, it gave a voice to groups of individuals who normally do not have representation. This was a further factor contributing to institutional thickness.

The final dimension of institutional thickness was the development of a common “agenda” to create awareness or consensus around the promotion of LED. This happened only in a reduced number of cases within the Trueque. As will be shown, certain conditions were necessary to attract social networks and organisations into pursuing local economic development.

Nodo Gente Linda in Venado Tuerto

The Club de Trueque Gente Linda in the small city of Venado Tuerto operated in isolation from the rest of the RT across Argentina using its own local currency8. It started in 1999, when the demise of the regular economy was only starting. It was the initiative of agricultural engineer Daniel Ilari and his group of friends, sensitive to the deterioration of the social situation. The currency in Venado Tuerto is called “puntos” (points), as in a board game.

Ilari comes from a traditional local family and is considered a “notable” in the area. He was inspired by other experiences in monetary localism in Argentina and the ideas of radicals Silvio Gesell and Ernest Schumacher. Ilari proposed three aims for Gente Linda: to introduce a self-help alternative for the poor and unemployed, to foster solidarity among neighbours and to establish a relatively autonomous local economic system. The first two are more or less in line with the goals sought in most

7 The category “Self-employed” implies a regular occupation requiring specific skills and equipment but not a wage relation. Workers alternating irregular informal work and unemployment are considered unemployed. Unpaid home-workers are typically women not participating in the labour market. 8 The rural municipality of Venado Tuerto has a population of 77.000 inhabitants. The head of the district is the city of Venado Tuerto. Its economy is mainly based on extensive modern agriculture (mainly soy and sunflower) and a small industrial base related to agricultural technology.

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CT in Argentina; the third one was a novelty. “Those who have money spend a lot of it in the bigger cities. We need it to stay here where our unemployed live, so they can stop being unemployed. A CT is a great way to help them but it is also a way to support our local economic development in general”, though Ilari9. Although Ilari insists there are no leaders in Gente Linda but purely horizontal organisation, he is undoubtedly the leader of the group. He manages the monetary system, makes changes to solve problems and responds for relations with the municipality, the church, the shops and other businesses. To pursue a LED vision, his strategy was to incorporate more and more actors in the locality with a wide range of offers so the system would strengthen and sustain itself. So from the outset, he sought creative ways to spread the puntos across the city and did not hesitate to start by his own personal network of contacts. In other words, widening and deepening the network of those who are normally excluded from them.

The CT recruited 100 participants in 1999 but expanded to almost 2.000 in its peak in 2001, including middle class inhabitants hit by unemployment. In 2004 it keeps 562 registered members, following the general sharp decrease of the Trueque across the country. The regular economy rebounded and the middle class mostly regained their jobs and lifestyle. In contrast, the poor hardly have a part in the economic bonanza brought to Venado Tuerto by the record high prices of soy and other agricultural commodities produced in the area. As a result, current members are mostly structural poor or participate for social reasons10.

Although Gente Linda followed the model of CT elsewhere, it is different in various ways. The commitment and strong leadership of Illari already marks a difference. Besides, it has always operated autonomously from the RT across Argentina, consistent with the goal of creating an independent local economic system. Another peculiarity of Gente Linda is found in its monetary regulation -inspired by Gesell- including a demurrage of 5% a year (similar to a negative interest rate). The goal is to discourage hoarding and speed up circulation. It is implemented through making vouchers expire every four months. The amount left in participants’ pockets is then changed for the same amount of a new voucher minus 5%. The revenue of this negative interest rate is used to pay the CT assistants. If total liquidity is perceived as too low to permit regular exchanges, members can vote in an assembly to inject currency (e.g. paying to attend training or social gathering).

In turn, new members are recruited by filling in a form specifying the products or services that will be offered and attending a few meetings to introduce them to the principles of the group. They pay $1 for their badge and as contribution for printing the vouchers. They thus become listed in a public directory of participants, ordered by branch of goods offered. This was really atypical within the Trueque in Argentina. For this, Gente Linda relies on support infrastructure that, once again, is Ilari’s contribution11. He runs the computer data base that improves the overall efficiency of the group and keeps the collective fund to pay for its expenses.

Another difference is the integration through to the regular economy beyond the weekly markets. It is a direct way of increasing institutional thickness and linking the poor and unemployed to consumption they could not afford. He persuaded regular shops owned by his neighbours and friends to accept puntos as part of their sales. There are eight of these shops, mostly in the city centre (a bakery, a butcher, a pasta store, a green-grocer, a movie rental, a cleaning products shop, a furniture

9 Interview 22 October 2004 10 Mainly for ideological and religious reasons, seeing in the Trueque a way of helping neighbours. There are also participants who see it as a weekly entertainment and social gathering. 11 While he is away in the countryside as agrarian engineer, his personnel and office have little work, so their idle time is used to update the information on participants, carry away the change of vouchers, prepare the balance sheets of puntos of each participant, etc.

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store, a veterinary, and a computer store). The baker12 (accepts 30% of the sales in puntos) explains that they started mainly for solidarity with the poor and also because “we are friends of Daniel”. They used the puntos to pay a painter, a mason and English lessons for their son. In turn, the butcher accepts 20% of the sales in puntos and uses them to pay taxes and buy detergents. He happily argues that participants are “extremely loyal customers. My business surely improved”. These shops serve customers in the same conditions as those paying fully in pesos; sales in puntos are extra demand.

Monetary localism in Venado Tuerto was also responsible for the promotion of new organisations in the city. It fostered a new type of business taking advantage of the lower barriers of entry entailed by complementary currency: lower state regulations, no taxation, a reduced risk in case of failure, an extended learning period and a loyal market of buyers. The idea of the “proveedurias” came up to expand trade beyond the weekly markets. These are groceries shops that only trade in puntos and open 6 hours a day 6 days a week. They are set by regular participants in locations sought by themselves but well apart from one another to balance competition. The venues are rented in puntos or are unused space of the owners (a garage at the home of someone who does not own a car, for example). People bring their goods there to sell. The proveedurías buy them in puntos, hold them on sale in consignation, or exchange them for other groceries in the shop. Ilari explains that “the proveedurías were not well-accepted in the beginning because others feared that they would reduce trade in the weekly market. It didn’t happen. People appreciate being able to buy in puntos near their homes 6 days a week. Nobody can survive buying food only once a week, right? The proveedurías make life easier”.

What Ilari also understood early in his strategy for LED was that no local economic network would really stand much chance of success without the integration of the local government in Gente Linda. And indeed, the involvement of the municipality of Venado Tuerto went further than most other municipalities in the country: in August 2002 the local council voted for accepting up to 30% of the local taxes in puntos. In fact, Ilari resorted to his reputation in the city to obtain this measure. His main argument was that “we are not talking of great amounts of money here. A simple calculation shows that it is less than 5% the local revenues and still can help a lot of people a great deal. For us it was a great because it also legitimates the CT”. In the first nine months of the year 2004 the local government received an average of 12.500 puntos a month of 450 neighbours listed as members of Gente Linda, indeed negligible in the total revenue of the municipality, but of great strategic significance. “The possibility of paying taxes in puntos is a major argument in getting shops and other middle class participants involved. It integrates the local economy more and then, of course, people see this is an opportunity to help others without really losing anything”, Ilari continues.

The collection of taxes in puntos triggered a real novelty for a small city in Argentina: a local government with its own social policy to assist the poor. The municipality created a Social Welfare Area to distribute the puntos. Each of six boroughs is served by two to four social assistants that allocate them to households in extreme poverty: 140 households receive 80 to 100 puntos a month that they can spend at will in the proveedurías and markets. The puntos keep most households from going hungry. Gente Linda thus helped to add organisations to the region that in turn improved social inclusion and stimulated other sectors of the local economy.

Beneficiaries are encouraged to enter Gente Linda, motivating them to start offering goods and services as well. According to Ilari, “less than half of them do, in fact, because they lack resources to produce: skills, tools, inputs, even the will”. It is one of the weaknesses of the scheme, as this group of households buys goods –especially food- without contributing to the supply in Gente Linda, so they often create food shortages. In response, these households are offered a special contribution in 12 The bakery is a family small enterprise that receives an average of 420 puntos a month, against 13.400 pesos.

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puntos for investments that would transform them from welfare beneficiaries to producers. “About 50 people started a business at home in this way. It is usually small equipment such as a sewing machine or an oven. Some stop after some time and sell the machine, but at least half is still selling for the Trueque and some also in the regular economy”, Ilari tells.

Finally, other actors and sectors got into the network to share its relational assets. The smaller villages and rural hinterland of Venado Tuerto interact in Gente Linda like they have never been part of any integrated local economic system before. Almost naturally small farmers and poor rural workers took their produce to sell (mainly vegetables, fruits, eggs, and small animals like poultry and rabbits). “We never thought about this before. We have always bought milk from the largest milk company in Argentina, which is now French. So we have people producing milk just a few minutes away from here, they sell it to these companies that in turn bring it back to Venado Tuerto at ten times the initial cost. Well, the node finally gave us the chance to buy milk produced here directly from the people that live here. Cheaper than in the supermarket but with an interesting mark-up on the cost of the local producer”, said the owner of a proveeduria. Ironically, rural sellers have permanent shortage of clothes, toys, shoes and school supplies but plenty of food, while cities have shortages of food and plenty non-food stuffs. What were missing were the institutional channels to connect supply and demand. Nobody had organised it before within the regular economy because it was unnoticed or unnecessary. The presence of local money as central institution within the local monetary system got together these complementary supply and demand.

The promotion of LED through monetary localism not only covers supply and institutions, as the Institutional Regionalism poses, but the improvement of the demand as well. In this case, by creating additional demand from those who are normally excluded from consumption and by matching potential local demanders with potential local suppliers. Gente Linda thus started as the initiative of one person who, among other goals, had the promotion of local economic development in mind. Pre-existent resources included Ilari’s own personal network of friends and contacts, which developed into a strong leadership and coalition of supporters, and organisational infrastructure. The first addition to the institutional endowment of the city was a local monetary system which later induced to make a public data base of members with idle goods, skills and resources. In order to improve the effectiveness of the scheme, he sought to integrate it to the regular economy by means of using puntos for partial payments of sales in regular shops and the local taxes of the municipality. In turn, this led to new institutions and organisations at the local level: a local social welfare policy for the poor, the proveedurias run by unemployed participants, a small credit policy in puntos to buy tools and start micro-enterprises (half of them still exist and sell also in the regular economy). The integration of the city to the hinterland was an unexpected side-effect that improved the condition of the rural poor in the vicinity. All the initiatives described so far are still operating at the moment.

The Red de Trueque Zona Oeste in Buenos Aires

One of the earliest organisations in the Trueque, the Red de Trueque Zona Oeste (henceforth ZO) is the regional network of the West metropolitan suburbs of Buenos Aires. The West already had a few CT using non-local complementary currency in 1996 and around the end of 1997 a group of local CT decided to start printing their own money13. According to Fernando Sampayo, later main organiser and leader of

13 Trade in the area increased quickly and by 1997 the organisers travelled 2 hours to the PAR to obtain vouchers. The PAR was also facing unexpectedly fast growth at that time and it was unable to keep up with printing vouchers. The ZO thus got always less vouchers than asked for until they had their own.

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the ZO, "In 1997 several CT in this area got together. Three were already using their own scrap, the others used non-local vouchers. We then decided to use one local voucher in the four CT. It started circulating in the beginning of 1998"14. Other CT in the West suburbs later joined and by the end of 1999 they were 17 CT. The ZO became dominant in an area with approximately 5.5 million inhabitants. It grew quickly, as the West metropolitan suburbs were fertile ground for a self-help scheme for the disenfranchised middle-class left by the structural reforms.

In frank contrast to the geographical isolation of Venado Tuerto, the West suburbs are part of the metropolitan area of Buenos Aires (population 13 million). Their economy is fully integrated to the city’s in supply and demand. There is no obvious differentiation between articles produced there and in other municipalities. However, members were required a current address in the West suburbs and the organisation only involved businesses in the West suburbs. In this sense, their activities are seen as locally rooted. In the period of greatest splendour (beginning of 2002), the ZO had 1,350 CT with a total of 400,000 participants. It was affected by the demise of the Trueque after the middle of 2002, but much less than the rest. It started growing again, old members come back and five new CT opened in 200615. It is now the largest local monetary organisation in the country, with 40 centres and 30,000 participants16. In 2000 the ZO had achieved enough critical mass within the organisations of the Trueque and Sampayo launched a series of more ambitions projects for LED. New participants then began contributing a $2 fee to join the ZO, in exchange for which they received a badge and a pack 50 units of currency to start trading. The contribution financed administrative expenses, printing of vouchers, update of the data base and, it was planned, to provide initial capital for the organisation of a future local production system with micro-enterprises around the ZO. They filled in a form giving information on their skills and previous labour experience, which was entered in a computer file with the idea of summoning them in the future. For Sampayo, the Trueque is a pillar to complement and improve the regular economy: "After the World War in Italy there were no big industries left but each household became a small factory. Italy then progressed. The Trueque is similar: impoverished middle-class households can turn into micro-enterprises with their many idle skills and resources. They are workers in vouchers with a decent living"17. Just as in Venado Tuerto, the ZO prepared itself for LED promotion with a collective fund and a data base of the available resources and skills of the participants.

A final preparation was basic support infrastructure to organise a local production system. Indeed, the ZO had an infrastructure most uncommon within the RT due to its costs and risks. It derived from Sampayo’s past as an entrepreneur and his insistence on transparency and control to optimise the scarce resources of the organisation. The central data base of participants was one of the administrative tools that made the ZO an atypical case of monetary localism in Argentina. From 2001 onwards it used six computers and twelve people working in two shifts to update it, paying wages in vouchers plus regular money for transportation costs. The ZO had another six computers for accountancy, organization of agendas and meetings, logistics and training. It kept a detailed accountancy of all transactions and movements of money and resources. It had centralised logistics, publicity on local radios, and additional structures such as a press to print publications. The ZO also posed great importance on widening and deepening the network around their CCS. It thus established institutional links with traditional organizations of the third sector like the Catholic Church, representatives of the local governments and

14 Interview of August 30th, 2004 15 Interview August 12th, 2006 16 After the fall of the RT, the ZO decided to re-register its members and change the vouchers to adapt it to the present amount of participants. Data of membership correspond to this on-going registration. 17 Interview December 12th, 2004

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small industries. These were seen as potential partners in joint projects to promote local economic development, although the final strategy matured and was put in practice later. In relation to small industries, Sampayo strongly believed that "the Trueque stabilizes the scale of production and sales because retailers and small manufacturers can sell their overproduction, what the market in pesos does not buy from them due to the crisis. By keeping a large production scale, the company has a greater chance of recovering or become more competitive than those that simply hope for the end of the crisis". However, the crucial aspect that differentiated the ZO from other monetary localism systems in the country was the long-term strategy implemented in 2000 to promote LED. It organized several collective enterprises in the area to produce articles with high demand in the CTs and strategic inputs: pre-pizzas, breads and other bakery products, spaghetti and other dry pastas, cakes, etc. The circuit combined local and official currencies. After a while, two plots of land totalling 20 hectares were bought for participants to grow fruits and vegetables. A warehouse of 2,000 m2 was rented for storage. A carpentry was set to provide tables for a mega-fair and later for the CTs. At its peak, the networks’ enterprises produced daily 300 kilos of dry pastas, 1.300 pre-pizzas, 50 tables and 20 benches, 150 baskets of fresh vegetables, in addition to breads, cookies, pies and pastries. With the funds collected in its fairs it bought a light truck for distribution: every day it took the goods from the collective enterprises to the CTs or to the warehouse. Participants paid in vouchers. The ZO retained part of the funds to finance other productive projects and the rest was distributed among the workers. All transactions were registered and kept public for control. "The ZO contributed with a travel allowance in pesos from the collective fund because people need to travel to go to work and it cannot be paid in vouchers. Pesos came from the membership fee and from the revenues of special events like the fairs. But pesos were always scarce and put the limit to everything we wanted to do", another leader of the ZO18 explained. A partner organisation then suggested that they sold in the regular market part of the production of the enterprises in order to get more pesos. But the plan did not prosper because the ZO feared the sale in pesos would reduce the supply in the CT. In sum, the collective enterprises were the main organisations formed by the ZO that added a monthly production volume for the equivalent to US$ 140.000 to the local economy. They generated 70 jobs paid in vouchers and pesos and an undetermined number of apprentices. In terms of building institutional thickness, the ZO thus became the dynamic centre of a network of collective enterprises exchanging goods and knowledge with each other and with the CT participants, increasing the relational assets of the region and providing a means of living to individuals who were otherwise unemployed and poor.

In terms of integrating the Trueque with the local economy, the ZO also tried to get local businesses involved, but mainly driven by the need to get hold of critical basic inputs that could only be paid in pesos. They tried various schemes with different degree of success and typically involved direct barter with local firms. For example, they secured several months of supply of flour -the critical input of several collective enterprises- providing manpower and pesos to small wheat producers in exchange for the crop, which it took to grind to a flour mill on the verge of bankruptcy where it left a part of the flour as payment. The rest supplied the enterprises.

As Gente Linda, the ZO sought to integrate in its network the local governments of the municipalities in the region, but it was coldly received. Its requests ranged from access to goods in disuse, the collection in raw materials of arrears, venues to hold the markets and tax payments in vouchers. According to Sampayo19, "the idea was to take our data base with 100,000 members, a third of which were owners of local homes. To those who had taxes in arrears, we proposed to offer paying in vouchers. The municipality could then with them the goods and services of our participants. They said the accountancy was too complicated and there were legal restrictions. So

18 Interview on December 12th, 2004 19 Interview on August 30th, 2004

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then we asked them to they give us access to whatever was idle, like trucks. They have hundreds of trucks out of order and we a hundred unemployed mechanics ready to start working tomorrow. If we recovered ten trucks, we would keep two or three and they could have the rest. The idea was to give any services to the municipality: repairing, gardening, collection, maintenance. We had countless participants whose capital was just their hands and their will to work. But the truth is that we convinced only a few".

The few municipalities that entered the network of the ZO preferred payments in kind: debts in arrears of third parties paid in food and raw materials were given to the ZO, which it paid back in products. The municipality of Moreno, for example, provided flour and received 10,000 kilos of dry spaghetti that it used to establish a welfare policy: it fed children in extreme poverty in their soup kitchens. With a similar scheme, it gave the ZO wood left over from a bankrupt sawmill with taxes in arrears and the ZO made desks and benches that went partially to the municipal schools. Most often, municipalities lent community centres, clubs, schools and other spaces to hold the markets in exchange for maintenance works. In short, municipalities chose to keep a minimum involvement with the lowest risk. The building of awareness and a common agenda, in this case, failed to appeal the local governments who were afraid of getting involved in a scheme they had not launched and did not control themselves. The network building of the ZO was clearly less successful than Genta Linda, partly because of its location within a large metropolis and partly because Sampayo lacked the personal contacts and reputation that Ilari enjoyed in Venado Tuerto.

After the demise of the Trueque across Argentina, these schemes of LED promotion of the ZO fell apart. "They lacked time, perhaps another six months were needed to formalise the cooperatives and make them sustainable. It worked great within the Trueque but they could not make it into the regular economy", Sampayo laments, though thinking of trying again if CCS rebound. Still, the fact that the ZO dropped less than any other network perhaps reflects the degree of institutional thickness and interconnectedness it achieved. The core of the vision was to regenerate economic activity of the actors in the region, by creating collective and individual enterprises, while Ilari in Venado Tuerto had a stronger commitment to the locality.

The failure of the collective enterprises to do the transition to the regular economy makes it hard to evaluate the long-term LED effects of the ZO. However, the ZO also used the CT to increase the awareness among participants that the local monetary system provided them a sheltered market with a relatively loyal demand to test their own productive projects. Although Sampayo believes that collective enterprises have a greater chance of success than individual ones –the former achieve a larger scale and strength- he views the creation of individual micro-enterprises as a second-best. Its success in generating micro-enterprises is evaluated in the next section.

Creation of participants’ micro-enterprises

In the same way that several small local companies survived the crisis selling their surpluses in the Trueque, flows in the opposite direction occurred too. Some small home-enterprises formed for selling in vouchers managed to sell in the regular economy too. The process started by testing if the same activity in the Trueque would work in the regular money. According to the participants interviewed, chances of graduation into the regular economy are related to two factors: a) the quality and marketability of the product developed in the CT and b) a network of buyers where to start offering the good. In terms of products, the favourites were handicrafts and a variety of home-made foods sold in week-end street markets. Those were normally products that already had a very high demand in the Trueque. In terms of network of buyers, successful graduation relies on a network of clients who were participants and dropped it but wanted to continue consuming those goods and services paying

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in regular money. The transition was seen most often in CT where participants were disenfranchised middle class who bounced back with the recovery of the regular economy, pushing others upwards too when they became buyers in regular currency. In other words, the CT worked as a space where to build a network of potential buyers and learn-by-doing how to develop a marketable product. The point in terms of process is that the existence of local money as central institution led to the development of networks, learning and new products, which is the causality line from institutional thickness to LED described above.

Exactly how many individuals were able to make the transition to the regular economy since the Trueque has existed is perhaps unknowable. But in the fieldwork it was possible to research its dynamics by identifying participants still active in the CT who were selling the same good or service in regular money as in vouchers. As part of the fieldwork survey, the data below refer to 140 respondents in the three CT of the ZO visited.

Considering that participants in the Trueque have none or minimal experience in commercial activities and they received no support, it is remarkable that 78 out of 140 cases (55%) tested their activity in the regular economy -typically in weekend street markets-. The main motivation was the need to obtain official currency to pay expenses in pesos, followed by curiosity, some conviction that the product was marketable and the suggestion of other participants to try. The motivation of participants indicates a “learning by doing” process very valuable in LED promotion.

Why did you decide to sell in pesos? (140 responses) Need pesos for other expenses 37.9%

Curiosity 15.7%

Product was good/liked in the CT 14.3%

Others’ suggestion 11.4%

To pay inputs in pesos 10.7%

Wanted to leave the CT 7.9%

Other 2.1%

Indeed, respondents often indicated that they never thought their hobby or their daily homework (e.g. cooking) could turn into a source of income for themselves and their families. It was a “discovery” they mostly attribute to the Trueque. The CT thus operates as a practical school where individuals can experiment with running their own business. At some point, either pushed by necessity, by self-confidence, or by others they venture to establish a business in the regular economy. In research in the UK, also Seyfang (2001c) found that the scheme was successful at delivering new informal employment opportunities to socially excluded groups and boosting their income.

What was the influence of the Trueque in the decision? (140 responses)

Crucial/ very important 63.57% Valuable 20.71% Of little/no importance 15.71%

So far, the evidence supports the view that the Trueque encouraged people to try new businesses in the regular economy through a learning-by-doing process, but training did not go much further. Only 18% of the participants learnt a new skill in the CTs. The rest were unaware that training was possible or found it unnecessary,

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as their activity there was an extension of what they do/did in the regular economy or at home. Similarly, the tools and equipment for their activity were rarely obtained in the CTs (18%). Instead, inputs were completely or partially bought there (62%).

The Trueque thus operated as an incubator to the extent that out of the 78 individuals who tried selling in pesos 40 cases (51%) are still active after one year. It thus offers a relatively high survival rate for micro-enterprises born under its realm. Whether these new businesses grow to the point of offering a secure and reasonable income to households is an issue open to future research. The point is that local currency systems can help the poor and unemployed to establish a micro-enterprise and generate extra income for their households. This enhances the institutional endowment of the local economy, as it offers another option for making a living. An issue discussed below is why they stay in the Trueque after a year of sales in pesos.

The achievement in creating micro-enterprises needs first to be put in perspective. In macro-economic terms the contribution of these micro-enterprises to the regional economy is probably small, but it gives a chance to a segment of the population that normally lacks options. In this sense, the gender impact makes it most valuable: 32 of the 78 micro-entrepreneurs were women who had never been engaged in paid work before and another 22 were unemployed women. Their only experience ever in paid labour was, in fact, in the Trueque. The women indicated that the main advantage of the experience was to obtain the confidence to leave their homes some hours a day “as in a job” and they valued the opportunity to contribute at home. The empowerment of women is an often neglected aspect of LED, though it represents a positive institutional change, incorporates new workers to the labour market and diversifies/increases household’s income reducing their vulnerability.

The rest of the group -38 respondents who tried a business in the regular economy and abandoned it- were then asked to explain their decision (open question). Two reasons appear most often to explain the failure: low sales and high entry costs they could not afford. Weekend street markets, for example, require the payment of a fee in official money as rent for the table, security and cleaning. Participants indicated that their sales hardly covered those costs, so they stayed in the Trueque where they get relatively higher revenues in kind, it is free, and they can go with children. For them, the entry costs of the regular economy or the risks it entails are still too high.

But the difficulty to sell enough in pesos to make the effort worth it was consistent with the answers given by those who have already combined sales in the regular economy and in the CT for a long time. They were asked why they do not leave the Trueque completely. They typically indicated they needed both incomes and that the revenue in vouchers (valued in goods) was often higher than in the regular economy. “When I sell my handicrafts in a street market, I see people passing. They all say my knits are nice, but they don’t buy because they don’t have the money. Here we all want to have things, not vouchers. Even if I don’t need soap, I buy it. Vouchers do me no good!” a respondent explained. That participants combine sales in both markets also suggests their businesses are incapable of generating enough income to make a living. Naturally, other respondents indicated they keep going to the CT because they liked the social atmosphere and made friends there.

The fact that participants naturally combine sales in vouchers and pesos even after testing the survival of their business in the regular economy for a while casts doubts on whether graduation into the regular economy is, in fact, an appropriate indication of success of the Trueque in promoting LED. The real goal of Community Economic Development as defined by Helmsing (2001a and 2003) is to manage resources, to create jobs and to stimulate the economy of a defined territory. Eventually, the idea behind it is to improve the standards of living of the population and to reduce their vulnerability. In order to obtain a stable livelihood, households often diversify their sources of income. The CTs thus offer an appropriate option for diversification, whether it is achieved in pesos or in vouchers. Additionally, after eleven years of supporting households, the Trueque would seem tested enough in its effectiveness to generate income. Indeed, households that have learnt to work out

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the system perhaps see little incentive to graduate into the regular economy again. Whether this is viable is also an issue that needs further research.

Conclusions Two hundred years ago, fragmented monetary systems were the rule. Different regions had different currencies and diverse segments in society used diverse means of payment. Since then, nation-states have organised sovereign monetary systems that granted the monopoly of issuing money to a Central Bank or a handful of selected private banks. As a result, a single currency for each country is the rule. But this rule admits exceptions: 2.800 regions and communities around the world nowadays hold their own local monetary systems.

Why do regions and localities insist on a creature that goes against the principles of scale and reduction of transaction costs? Moreover, against the tide of globalisation and the trend to single currency areas? In theory, there are four main rationalities: to generate revenues of seigniorage, to change the qualitative nature of exchange, to protect some level of economic activity and to promote local economic development. The first one was considered of little relevance for the community monetary system of the Trueque and the second one was discussed by other researchers. In terms of maintaining economic activity during a crisis, the Argentine case shows four main effects of local monetarism: it adds local production with local inputs, it raises local demand, it reduces waste, and it offers a secondary market for businesses to stay afloat. Even when businesses fail to remain open, it extends its revenues in time by absorbing stocks, tools, overproduction and equipment.

This paper looked into an underscored aspect of local monetarism: it adds a self-help option for households to diversify their livelihoods. It is the essence of Community Economic Development. The Trueque in Argentina brought together in a network the resources of the poor, unemployed and vulnerable, supported the shaping of a common agenda and the building of structures of governance. Banding together gave them a voice and guided them to gain from collective dynamism. The networks that emerged around the use of local money as central institution created synergies among groups of the population frequently excluded from networks with access to assets and resources. Local monetarism is thus inclusive of a multiplicity of agents, acts at multiple levels and moves resources across multiple sectors. These are the core characteristics of the new generation of LED promotion policies.

For local economic development promotion, a series of conditions were highlighted as necessary. The cases of Gente Linda in Venado Tuerto and Zona Oeste in Buenos Aires were different to most Trueque groups (generally oriented to maintaining some economic activity). Gente Linda and ZO were both committed to the promotion of their regional economies. First, they formed a collective fund in regular money to be able to launch complex and specific projects in that direction. Secondly, a part of those funds was used to create a computerised database with details on participants, resources, and skills. In an age when knowledge is crucial for progress, the two organisations invested labour, time and resources in generating information on workers, skills, assets, etc. Thirdly, they both centred on strong leadership figures who contributed time, personal contacts, organisational skills, and infrastructure building. In the case of Ilari, personal reputation was crucial, while Sampayo contributed his managerial experience. Finally, in both cases new institutions were necessary to encompass their bottom-up LED strategies and these were formed too.

But the contrast between the two cases was as marked as the similarities. An obvious difference was given by geography. Venado Tuerto lies in the countryside three hours away from any large modern city, while the ZO is part of a metropolis of 13.5 million inhabitants. So the former was clearly better positioned to gain

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autonomy and set clear boundaries to LED projects. Their differences, however, go beyond geography. They both worked on the institutional thickness of their regions, but reflecting two divergent visions of how to develop a local economic system. While local monetarism in Venado Tuerto was conceived to create synergies and strengthen participants’ autonomy, the ZO saw itself as the central organiser of idle resources in the area. Venado Tuerto thus worked on widening and deepening the network, enhancing inter-relationships and alliances, integrating the hinterland, getting the participation of the local government and eventually pushing a welfare and micro-credit policy for the poor. Instead, the Zona Oeste built a comprehensive logistics system placing itself as brain of a growing and dynamic organisation that included collective enterprises, funds in pesos and vouchers, a distribution system of goods and capital, and a wide range of weak agreements with small industries, local civil society groups, and local governments. Eventually, the local economic development results of Gente Linda achieved sustainability. Their growth is now tied to attracting new users. In contrast, the Zona Oeste did not reach such level of sustainability, which depended heavily on the central organisation. When the ZO declined as the rest of the Trueque, their LED network fell apart. Admittedly, the web of relations and practices it built did protect it from collapsing to the extent that the rest of the Trueque did. But in the end its main achievement was to generate micro-enterprises among its members. This is nonetheless a significant impact, especially considering that it boosted the self-confidence of participants otherwise excluded from the labour market by the demise of the economy, structural reforms and gender discrimination.

All in all, the diversity between the typical groups of the Trueque and the two LED cases presented suggests that the classification of local monetarisms is yet incomplete. If the focus is set on the limits of local monetarism then the categories of community versus territorial types are clearly pertinent. But other possible criteria for categorization were highlighted here and demand further categories. A second criterion is the scope of strategy: while some start and end with the defence of economic activity, others propose a long-term plan of action to integrate a local economic system. In appearance, they take the same action of providing a setting to regenerate lost exchanges. But in fact the way they do it is fundamentally different. While the former just represents a bridge into a post-crisis economy, the later seeks to build a bridge into a reformed economy. It stimulates both economic and non-economic factors alike to improve the local institutional endowment and the general level of development. Their idea is that the following crisis would find the local economy in a stronger position. Their long-term vision thus represents a larger scope of action, including the offer of business support services like micro-credits in local money, the search for partnerships with other actors –principally the local government and small industries- and the organisation of a governance system. As said, Trueque groups with a general LED vision were rare.

A second criterion for classification is related to openness. An option is to allow anyone to participate freely, combining sales in local vouchers and official money and moving resources in and out of the local monetary system into the regular economy. The two cases described here fall into this category. Another possibility is to restrict local monetarism to the poor and unemployed alone (no businesses or shops), to ban the use of all other currencies except the local one, and to sanction the transition in and out of the CCS. In the Trueque, the fear that openness between the regular economy and the local monetary system would undermine the CT was widespread. After all, micro-enterprises graduating into the regular economy implied the loss of participants and resources for the CT. And the sale in the CT of products from mechanised industries poses unequal competition to goods elaborated by hand at home. In other words, while open monetary localism reflects a complementary position in the economy, closed CT pose an alternative, a sharp qualitative change in the nature of the exchange. Both the Zona Oeste and Gente Linda, as much of the Trueque, were cases of open local monetarism, while a few other groups preferred the closed version. The effects of openness and closeness are yet to be researched.

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A third criterion refers to the active and passive role of the organisers of local monetarisms. Active organisations place a well-informed and well-intentioned social entrepreneur at the centre of coordinating resources, workers, skills. The role of broker of alliances was exemplified by what Sampayo in the ZO and Ilari in Venado Tuerto did. Active organisations can also increase awareness among participants of the options of employment by own account, offer a stable sheltered market to learn-by-doing, and provide tools to evaluate the risks and advantages of making a transition into the regular economy. Evidence was presented to support the view that active organisations as the ZO achieve a high rate of survival of micro-enterprises, at least as secondary income in households and especially empowering women. In contrast, the organisations of the Trueque had typically passive roles and expected participants to define individually how far they wanted to go with the CT. Reality shows that not too far, as most of the RT had disappeared.

A final reflection is related to Institutionalism and the Institutional Regionalism perspective. The critique to the concept of institutional thickness partially points out that there is more emphasis on the quantity of institutions than on their quality. The cases analysed here suggest that not all local institutions are of the same relevance in terms of embedding economic activity and promoting LED. Indeed, any level of the economy presents institutions of diverse quality and relevance. Money is clearly a fundamental institution of any market economy, supporting and regulating transactions, enabling accumulation and stimulating activity in general. In the same way, local money is equally fundamental in developing an economic system at the regional level. The identification of what are the other crucial institutions in this hierarchy is still in need of future research.

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