Moneyless Euro Proposal

[alberto]

Solid idea, but how to propose it?

The idea is solid, though so radical as to make it unsuited to the faint of hearts. I spent a few minutes trying to shoot it down, but could not. Receiving taxes in kind is better than not receiving taxes at all. There are a couple of iffy incentive positions:

1. impoverished citizens who are, at the moment, not paying taxes might wonder why they would give material goods like food to the government in return for a receipt of tax payment. Once you stop paying, life becomes really simple, at least if you don't own anything that the tax man wants to reclaim. These people would be parting from valuable food in return for more or less meaningless pieces of paper.
2. government employees might apply Grisham-like logic to food, and insist they be paid in euro instead. The vastness and complexity of govt budgets makes it very tempting for any one group to say "pay us, plug the holes in the budget cutting elsewhere".

But, assuming people could be brought on board and do not try to game the system (which is admittedly a big assumption), the scheme could work. And it is big and ambitious: bravo!

I wonder, though: who to address this project to? And how?

[matthias]

Thanks for the feedback, I feel a bit better about that crazy idea now Analyzing incentive positions is a nice technique, I’ll remember it! On your first point: most tax debtors will be business owners, esp. small business owners – not employees, as income tax on wages is deducted “at the source” and not paid out. So the motivation to pay off the tax debt in-kind is to avoid the impending danger of having ones business closed down.  On the second point: yes, granted, that will be a problem. To avoid another incentive problem though, the barter scheme should probably only be applied to the current unenforceable tax debt, as a one-off measure (still 69 000 000 000 EUR though!) … else everyone would start to hide their money in order to pay their taxes in-kind, which can’t keep a state going.

What I’m still wondering about is the macro-economic effects of this scheme: Would it maybe boost the national economy, since the government acts as a “consumer of last resort”? However, enforcing tax debts is extractive, how could that be responsible for boosting the economy?

How to present this proposal? Yea, difficult. Two months ago posting a comment on yanisvaroufakis.eu would have been a good idea, since he has always been responsive there and is open to outlandish ideas (such as here). But he seems to have little time lately The Syriza contacts mentioned by @fjanss above seem our best bet so far.

[billy_smith]

This would be an ideal set-up for manufacturing, farming and food co-operatives.

With a co-op structure you’ve got the time-tracking and task-tracking built in.

Makers co-ops would be able to produce all of the hardware necessary to perform urban-farming.

Allow sale of pruduce on the free market, and you’ll avoud the productivity problems that were found in the USSR and China.

Set the tax-deficit-repayment of the produce provided to the common stocks equal to the market sale value, and you’ll have an equitable solution.

If the maker’s co-ops use this as the opportunity to upscale to modern CNC systems, and you’ll get an increase in productivity, whioh is where the Greek experience has been lacking as compared with Germany.

When setting the co-ops up, include clauses in the Constitution, the Articles and Memorandum, that specifiy that if the co-op shuts down, all of the assets can only be tranfserred to another co-op with identical rules to the original co-op, and you’ll stop anyone trying to loot the assets.

All long-term dividends are paid to the members of the co-operatives.

Have every greek citizen be a member of these co-ops, and you’ll be able to harness their own self-interest.

It would only require that the Greek government initally set them up, and provide spaces to make things and spaces to grow food. Once they’re up and running then the co-op’s would be run by their members, so the admin/bureaucracy would be minimum that the members require.

Automation of the growing systems would mean that the amount of time required to ensure consistent food supply would minimal.

And that’s based on existing solutions, with existing technology. No new research required, just design and implementation.

[billy_smith]

I forgot to mention the GPL-like clauses for co-op set-up.

When working with co-op’s before, i came across the clauses system in the articles of one co-op, where if the co-op folded, all of the assets could only be transferred to another co-op with identical rules.

Add in the clause that if anyone proposes taking the co-op to a limited company model, so it could be sold off, the co-op is immediately dissolved, and all assets transferred to another co-op with identical rules, an identical roster of members, and an identical set of legal relationships, before the changes are allowed to be voted upon. This allows blocking any attempt by 51% of the members of the co-op trying to rip off the other 49% of members.

Please note that these clauses say nothing about how the co-op is to do business on the operational side of things. This doesn’t affect the day-to-day running of the business.

They are purely protective.

Using these in any business is a clear indicator that the business owners aren’t looking to make a quick buck by punting a really bad idea as a dodgy IPO. These rules mean that they intend to make a long-running viable business. One housing co-op i know of that’s using this model is still going 43 years later, and since they’ve bought the freehold to the land, they’ll still be running and providing low-cost housing for as long as the co-op exists.

[alberto]

High mistrust!

I appreciate the need for protection and long-term thinking. However, one must be careful in injecting too much rigidity in one’s work. Italy, for example, is a country with a very strong cooperative tradition: and yet, one sees plenty of co-ops still dominated by the mythical founder, typically in his 70s, who has been a visionary and now is holding on. Protective clauses work well, but protect the co-op from positive change too.

Also, there is something unconvincing in building something with others, under the assumptions that these others are stupid and/or evil and you have to put in place very tough legal armor. I mean, safeguards should be there, but they should be minimal. A co-op is not a religion, it is just a legal form for doing things. As the environment changes, that form might no longer be adequate to the original mission.

[billy_smith]

I’m from the UK.

I’ve seen the privatisations that have been running since the beginning of the 1980’s, and i’ve seen the rip-off’s and fraud that took place during the privatisations of what had previously been state-owned enterprises.

When BT was privatised, they posted a profits boost in the first few weeks of operation. They hadn’t changed how the business was run, they just changed how they counted the  money as turnover.

It meant that they were making it explicit about how their customers had been ripped off, while it was a monolithic state-run enterprise, but they didn’t change anything, except the pockets that the money was going to. Now they were a monolithic private enterprise. With a physical monopoly on the existing telecoms infrastructuire of the UK…

It’s been improving, but the local ISP’s and co-operative ISP’s have had to fight tooth and nail to get BT to provide the services that they’ve been contracted to do. In terms of exchange access which BT are legally required to provide, in terms of rural digital exchange upgrades, and in many other ways, BT have been dragging their heels about letting other players into the market.

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As an engineer and techie, i’m more interested in efficient solutions than most people.

As someone who worked in the music biz, i’m always looking for the ways that people can be ripped off, because if you don’t have all of the loopholes nailed shut, then it WILL happen.

And don’t get me started about Hollywood accounting…

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Note, i didn’t say anything about how the co-operative was going to be RUN, i was only saying that they need explicit clauses about how it should be OWNED.

I’ve seen the studies from China that showed when it was a state-run model, you got lots of free-riders, who didn’t put their share of the work in, because they weren’t directly benefiting, both on the ground doing the labour, and higher up the hierarchy.

It was only when the peasants were able to sell direct to the market and profit for themselves, that the state farming enterprises were able to function effectively.

That was the real secret behind the economic miracles of Hunan and Shenzen.

Harnessing people’s inherent self-interest efficiently.

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What i was trying to create was a rule-set that would mean that the longer-term self-interest, would win out over the short-term quick buck.

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There was one attempt to try and privatise a housing co-op, while one friend was living there. To paraphrase what he said at that particular meeting. “Yes, we could realise a quick profit by moving out and selling the buildings, but if we still wanted to live in London, we’d end up paying commercial rents. The share of the money that we’d each get, would cover one year’s commercial rent. Which is why we have the minimum length of membership being one year.”

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It doesn’t mean that i’m approaching the idea of co-operatives dogmatically as an ideology. Here in the UK, the simplest and quickest way to start a co-operative, is to use a limited company as a legal structure, with rules that set it up so it behaves according to the co-operative principles.

I just want to have explicit guarantees built-in from the start, so that they can avoid the routes to fraud that have already taken place.

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To misquote Kim Stanley Robinson, “Do you want real change, or do you want business-as-usual with a different set of faces in charge?”

[nadia]

Use the Brussels connection?

If you want Matthias I can call the Greek MEPS most likely to be interested, or check with Julia Reda on Monday what she thinks? We;re meeting anyway about a possible collaboration so it’s no extra trouble to ask…

[matthias]

Yes please

If you’d do a bit of concurrent networking on EU level, I’d really appreciate it. But just a bit, since this is clearly a “shooting the blue sky” idea. So I don’t want you or me or anyone to sink a lot of time into this idea. A first contact from or near the Greek public finance people, to send a rough proposal to, and who can then say “Ok, elaborate this and that, then I can do this and that with it and get it close / closer to being considered for implementation.” … that would be the ideal case.

That said, I’m amazed by the ideas and connections that everyone contributed in this thread already! Didn’t expect that the Edgeryders community is that resourceful now Thanks everyone!

[alberto]

Macroeconomic benefits of writing off toxic credits…

There is plenty of evidence that writing off toxic credits has a highly positive macro effect. If you have a credit of 10 units towards someone who has no chance in hell of paying you back, that’s a burden. After the subprime bubble burst, brokers were selling toxic debt at 10 cents to the dollar, remember? What you are saying is you have a way to recover a bit more value from unenforceable credit, where “unenforceable” is the key word.

The other selling point is obviously reducing of EUR costs of government employees. That even the troika could like, because you are saying that you can reduce deficit, by salvaging some unenforceable debt by its transformation in in-kind stuff. Another way this could happen (less likely to give rise to conflict with the powerful trade unions of the civil service) is a scheme whereby people can bring food to, I don’t know, hospitals or refugee centers, and be paid in vouchers (denominated in EUR) redeemed against tax reports. The state would save EUR by not having to buy that food, and at the same time reduce the amount of delinquency in paying taxes. Not bad!

[matthias]

Really good!

I like your idea of payment in tax credits for providing supplies to the government, esp. supplies that serve social security / solidarity. The tax credits idea has been proposed by Yanis himself here, but he proposed to let people buy them for Euros and redeem for face value in money any time, and alternatively for, say, 120% their face value in tax payments on maturity (2 years). That still requires people to have Euros to pay at least some taxes, so it won’t happen for the 69 billion EUR outstanding tax debt. With your idea however, these can be recovered at least in part. And at the same time, it plays along with the conditions on the ground in Greece: lots and lots of soup kitchens, medical services etc. which took over former functions of the state and are run by volunteers and on donation basis, also in-kind. Syriza would like the state to take on these functions again and “solve the social emergency”, but there’s very little money for it. Paying it from outstanding tax debts in-kind by re-framing and re-inforcing the civil solidarity movement that provides these functions at the moment anyway is kinda ingenious So I’ll put that into the proposal, not paying public employees 20% in barter value.

From this starting point, adding more flexibility to such economic exchanges is either possible by making tax vouchers tradeable like a currency, or by using network barter. Tradeable vouchers would allow anyone to pay their taxes in-kind, by trading stuff for such circulating vouchers, which costs the government real money in cases where tax debt could be enforced to be paid in money. So, tradeable vouchers are only an attractive option when they are bought in money as in Yanis’ proposal. With network barter, vouchers would not be tradeable, they’d rather be immediate tax debt reduction and would be available only to those who qualify as having unenforceable tax debts.

Haha I really like this We “found” up to 60 billion EUR to fight the Greek social emergency. Debt towards the government is transformed from something that cripples the economy and makes small businesses close for good to a tool for government to say: “Look people, we have a lot of problems, there’s a lot to do in this society, and you have to do it, and you can do it because without a full job you have the time.” Underemployment, tax debts and social crisis are problems that could just cancel each other out.

[alberto]

Think locally

Have you considered doing a local pilot? It reduces perceived risk (and I imagine the Greek govt does not want to be seen as doing too edgy stuff lest the markets get trigger-happy); and it simplifies logistics. I don’t know if cities levy taxes/charges in Greece: in Italy they do, they levy an urban waste tax that comes down to a few hundred EUR a year per household. This is also a reasonable sum that a person could attempt to clear in kind, so the psychological barrier would be low. You could maybe knock on the door of our old acquaintance Spiros Pengas (you remember him from LOTE1?), who seems to be still deputy mayor of Thessaloniki – the second largest Greek city. I think this is way more practical than addressing an MEP, because a city administrator has direct administrative leverage to make things happen, whereas a MEP has to work by moral suasion, call a meeting, set up a committee, you know the drill.

BTW: a local pilot does not have to be in Greece. You could just walk to your own city hall in Salzburg and ask the mayor for an appointment.

[alberto]

Or Italy

QED

[matslats]

What has this to do with the government?

It is not clear why you would approach the government with this project proposal. Are you looking for funding, and if so, what order of magnitude? Or are you looking for a change in the law, and if so, shouldn’t you be a bit more specific? Or are you looking for legitimacy, and if so, shouldn’t it come from the right kind of Greek institution? Are you looking to support the government, and if so, have you enquired what the government intends for economic development? Or are you just looking to get your software deployed, having invested so long in it, which is what it looks like.

What you describe above looks like what I’ve heard called multilateral circular barter - Setting up a whole loop of transactions before executing them. It could be better than normal credit clearing because much less credit is needed. But is there a single example of such a system working in practice? And what scale of economy would be needed to try it? Is this idea (let alone the software) ready to try on a national level?

I considered volunteering myself to support the Greek government implement alternative means of liquidity. And if I did I would

• align it with stated Syriza policy
• clear my mind of ready made technical solutions
• invite partnerships with other projects, such as Community Forge, D-CENT, Sardex, NEF/CCIA and especially greek orgs like the European Sustainability Academy and orgs from the Commons Fest

[alberto]

Necessity is the mother of adoption

Hello @matslats. @Matthias might have a different angle on it, but the way I see it the Makerfox is a solution in search of a test bed. So this is not so much about solving Greece’s problems per se; it is more about deploying a specific solution, which (Matt thinks) happens to be a good match for Greece’s problems. Having big, urgent problems makes a test bed attractive, because the incentive is there to do something new about them.

I myself suggested a much scaled-down local implementation a couple of comments above this one.

This is turning into a really good discussion!

[matthias]

Well, it is part of solving Greece’s problems

Indeed I did not try to design a holistic solution for Greece’s problems, which are complex. Though I do care about Greece’s problems, and only did this writeup because I do. My approach to solving complex problems is an agent-based model though. Each idea has its agents, and they interact on a theory and practical level, and if this is done in a civil and honest manner, a nice solution emerges.

In this case, I’m the agent of network barter. My task is finding out what it can contribute to help. And to interact with other agents (incl. you and everyone else here) to let the solution take shape.

[matthias]

We have talked a bit before, right? So, hello again, welcome to Edgeryders, and thank you for contributing! I value your opinion a lot, esp. because you have a different take on the alternative economic exchange topic.

> Are you looking to support the government, and if so, have you enquired what the government intends for economic development?

This one. Or rather, to support the Greek people, but in this case the difference is (hopefully) not big. I don’t care about funding here – if this works, it will be an honor to support the Greek people. And if I believe this idea can work to help them, I have kind of a moral obligation to tell them, no?

So, it’s “just” an experimental, radical proposal to contribute to the discussion, like Yanis Varoufakis’ just-as-radical FT-Coin proposal. It’s not “ready” to try on national level in a conventional sense of “ready”. What does “ready” mean under crisis conditions though? Purely from an innovation perspective, WW2 was a fruitful time because lots of outlandish ideas were tried and some turned out to work well.

You’re right to relate the proposal to multilateral circular barter: it’s a generalization of that, working with networks rather than circles / loops, which improves market clearing. It can work without credit, though adding a bit of either P2P credit or currency / currencies helps quite a bit.

When using a barter / currency hybrid system, it can connect multiple complementary currencies / community currencies into an intra-community trading system. Currencies are simply traded as commodities, like other products. One would simply order only the currencies one trusts in, from everyone who offers them and whom one trusts to deliver. This respects the requirement of local trust within each currency community, while still allowing to trade with people from other communities using inter-community network barter. For Greece, it could look like an ecosystem of 100 or more local currencies (most of which probably exist already), connected with a credit-free barter system between them. Sounds like yet another radical proposal: a way to make complementary currencies applicable for nation-wide trading. It seems to solve the challenges that a single national complementary would otherwise have (as stated by Yanis Varoufakis … ah, here, this part of his “Erratic Marxist” speech). What do you think, is there a need for a community currency clearinghouse like this? And, could it work?

[matslats]

Hi Matthias yes we’ve talked before.

I think the notion of multilateral circular barter is very interesting and instructive because it attempts to facilitate exchange without money AND without credit, and therefore it helps us to understand the role and function of money and credit in an exchange system.

but I’m concerned that this mechanism might not work in practice, or might need a very large critical mass before it starts to find loops, and thus it might only work as a top-down solution. This is why I’m not paying much attention.

On the subject of joining all the systems together, that is increasingly my focus, and the subject of a stonking CAPS proposal! But again, this would use the mutual credit approach along with building systems of participative governance.

If you want to do work that will have definite impact on existing local currency systems, your help would be appreciated. Are you going to CommonsFest in Athens mid-may?

[fjanss]

Reply from Michel Bauwens

I received this reply from Michel Bauwens (on the networkedlabour mailing list) :

“This seems to me something to be experimented first at the B2B level … perhaps best via the business people who are active in the ANEL alliance partner, or any small business organisation …”

[mariramona]

Target the youth!

For nearly a year now, with @srifer, i am working on a concept to involve the urban youth in tree planting activities and rewarding them through an unique points based rewards system. The idea is that these points can be used at local shops in exchange for specific goods! Thus with a single set-up we achieve two results - (1) a parallel net based economy and (2) better urban environment and environmental awareness.

By involving the youth, through their formative years, we  inculcate in them a sense of responsibility towards the environment, in the process, making them responsible adults.

Putting some extra money (through online points and rewards) in the pocket of the youth is quite rewarding(for them) and will boost the local market too!

[commonfutures]

Regulation

I’m workin up proposals for local govt in England to explore the scope something ‘kindred’ - but, I think they could well fall foul of regulations, as per those developed/overseen by the likes of the European Banking Authority. Do you have a work around? Also, it might be worthwhile noting the work underway around @banknotey in the Isle of Man + the statement on the treatment of assets and income tax and VAT published by @jonesiom, which further complicates the regulation of ‘transactions’ - at least, where there is a discernible ‘currency’ exchange implied…so, that may be where you ‘escape’ the regulations?! Any thoughts/suggestions on this topic would be very welcome…