Towards a monetary ecology - scientific evidence for complementary currencies. Stockholm 28 January 2013

1. Towards a Monetary Ecology?
Scientific Evidence for Complementary Currencies
Bernard LIETAER
blietaer@earthlink.net

2. Key Ideas
• Chicago Plan is a significant improvement
• It solves 2/3 of systemic monetary crises
• A monetary ecology can solve 3/3 of
monetary crises
• + lower risk
• + solve a series of non-financial sustainability
issues

3. Plan
• Systemic Cause for Instability
• Systemic Solution
• Chicago Plan: Advantages and
Limitations

4. Symptoms of Systemic
Monetary Instability ?
On-going financial crisis is the biggest,
but not the first such crisis:
Since 1970, IMF identified:
145 banking crashes
204 monetary collapses
72 sovereign debt crises
Such crises are a remarkably “hardy
perennial” (Kindleberger)
48 well documented major meltdowns
between 1637 and 1929.
My claim: financial system is structurally
unstable

5. Sustainability of Complex
Networks
• Robert Ulanowicz 25 years of ecosystems
flow data. Natural ecosystems have in
common to be sustainable. What else do
they have in common?
• Sustainability of complex network results
from appropriate balance between
Efficiency and Resilience, emergent
properties from 2 structural variables of
complex networks: diversity and
interconnectivity

6. Complex Networks
Diversity and interconnectivity are 2 structural
variables => applies to all networks with similar
structure, including money system!
Structural variables are independent from what is
being processed in network
biomass in an ecosystem,
electrons in electrical circuit,
information in immune system,
money in an economy…

7. Balance in Natural Networks
Resilience
Efficiency

8. (In)Balance in Our Financial Network
“Monoculture = accident waiting to happen”
Efficiency
Resilience

9. Sustainability Optimum
100%
Excess
Efficiency
Excess
Resilience
0%
Resilience (Φ) Efficiency (A)
(Diversity + Interconnections) (Streamlined)

10. Sustainability Optimum Natural
Ecosystems
100%
Window of
Viability
0%
Resilience (Φ) Efficiency (A)
(Diversity + Interconnections) (Streamlined)

11. Sustainability Optimum
100%
Window of
Viability
Current
Operation of
Financial System
0%
Resilience (Φ) Efficiency (A)
(Diversity + Interconnections) (Streamlined)

12. Sustainability Optimum
100%
Window of
Viability
0% Collapse of
Financial System
Resilience (Φ) Efficiency (A)
(Diversity + Interconnections) (Streamlined)

13. Natural Recovery
Sustainability Optimum
100%
Window of
Viability
0% Collapse
Resilience (Φ) Efficiency (A)
(Diversity + Interconnections) (Streamlined)

14. Sustainability Optimum
100%
Reestablishment of
Monopoly of Bank-debt Money
Window of
Viability
0% Collapse of
Financial System
Resilience (Φ) Efficiency (A)
(Diversity + Interconnections) (Streamlined)

15. Sustainability Optimum
100%
Reestablishment of
Monopoly of Bank-debt Money
Window of
Viability
0% Collapse of
Financial System
Resilience (Φ) Efficiency (A)
(Diversity + Interconnections) (Streamlined)

16. Plan
• Systemic Cause
• Systemic Solution

17. Sustainability Optimum
Effect of
100% Complementary
Currencies
Window of
Viability
Current
Operation of
Financial System
0%
Resilience (Φ) Efficiency (A)
(Diversity + Redundant Interconnections) (Streamlined)

18. Natural Recovery
Sustainability Optimum
100%
Window of
Viability
0% Collapse
Resilience (Φ) Efficiency (A)
(Diversity + Interconnections) (Streamlined)

19. 3D Views
100%
Sustainability Optimum
Diversity n n
0%
Connectivity c

23. Plan
• Systemic Cause for Instability
• Systemic Solution
• Chicago Plan: Advantages and
Limitations

24. Advantages of Chicago Plan
• Arguments of Dr. Kumhof are all valid
• If Chicago Plan had been in place
145 banking crashes
72 sovereign debt crises
would not have taken place

25. Limitations of Chicago Plan
• It replaces a private monopoly with a public
monopoly => lack of diversity in types of
currency!
• 204 monetary collapses could still happen
• Chicago plan can only be implemented all or
nothing => more risky than monetary
ecosystem approach

26. Solution
Chicago Plan + allow experimentation with
other types of media of exchange. Examples:
=> Business to Business Currencies (e.g.
WIR)
=> Environmental currencies (e.g. Terra
making profitable to think long term)
=> Social purpose currenceis (e.g Torekes)

27. Follow Up
• www.lietaer.com
• bernard@lietaer.com
• « Money and Sustainability: the Missing
Link » (Triarchy Press, 2012)
• Articles in 5 different peer-reviewed
journals
=> see www.lietaer.com/research