The eurozone crisis: a workable solution, available today…
As this book goes to press, the electorate of Greece – after two years of the most drastic austerity measures in modern history – has voted clearly against the cuts, the bailout and the political mainstream. Chaos in the eurozone seems one step closer.
So we take this opportunity to outline how just one of the proposals from this book can be applied, on the ground, in Greece (and in Spain, Italy, Ireland and anywhere else facing this kind of crisis), right now. It’s a solution that mainstream financiers and media avoid discussing, but it’s elegant and simple. It would work, and the necessary (Open Source) software is available now.
Our proposed solution to the drama unfolding in the eurozone is a systemic one. Current monetary orthodoxy says that 100% of the Greek (or any other national) economy must be either ‘in’ or ‘out’ of the eurozone. Everybody knows that either option will be excruciatingly painful and condemn whole countries to even higher unemployment and yet more misery. But it doesn’t have to be that way!
The core principle of complementary currencies, as set out here, is that they run alongside the main currency, increasing resilience and flexibility for the entire socio-economic system. Here’s one solution in a nutshell:
- Greece continues to use the Euro for all international business: tourism, shipping, exports and imports, etc. Taxes are levied in Euros on profits made in these activities, and used to service the country’s national debt.
- In addition, any Greek city/region wanting to participate issues its own local currency (generically called the Civic in the case study in chapter VIII). Civics are used to pay for urgently needed local social and environmental programmes. In our example, 1 Civic is issued to anyone who completes 1 hour of approved service to the community. Projects for which Civics are paid should be decided democratically and locally.
- The issuing city/region requires payment from each household of, for example, 10 Civics per quarter.
- To support this, an online market (like e-Bay) is set up. Here, households that have not done enough hours work to earn 10 Civics per quarter can buy them with Euros or any other good or service acceptable to both parties, from those that have earned more than they need.
- Civics exist only in electronic form, issued by each participating city/region, using mobile phones as a payment mechanism, as is commonly the case in Indonesia, South Africa and Kenya now. In this way, Civics remain 100% traceable and their use is transparent.
- A new type of non-profit organisation will audit the validity of the Civics in circulation.
- There is no fixed Civic:Euro exchange rate. This is determined in the online market. To increase the value of its Civic, a city simply requires more of them from each household. As the local economy recovers, this number can be reduced, and could even drop back to zero when full employment is reached.
This approach allows the Greek mainstream economy to retain the benefits of the Euro, while the Civic enables each community to solve its own problems in its own way, while mobilising every household (with appropriate exceptions for sickness or handicapped people) to contribute to solving local social and environmental problems.
(In addition to the Civic, a business-to-business currency called C3 – explained in chapter VII– could inject working capital into small businesses, which account for over 85% of all private jobs, and thereby accelerate the recovery of mainstream jobs paid in Euros. Similar approaches could be used in other European countries struggling with the social and economic consequences of the austerity programmes currently being imposed.)