Recently, a colleague drew my attention to the “Bristol Pound“, an example of a “local currency“. Ah yes, I said, that’s been around for a few years now. Embarrassingly, I later realised I was thinking about the “Brixton Pound“. Having attended many concerts at the legendary Brixton Academy (Nick Cave, Ministry and the Sugarcubes among them), I really should have known the difference between Bristol and Brixton!
There are now a number of local currencies in Britain. The first to appear in recent years was the “Totnes Pound“, launched in March 2007. According to their website, the benefits of the Totnes Pound are:
- To build resilience in the local economy by keeping money circulating in the community and building new relationships
- To get people thinking and talking about how they spend their money
- To encourage more local trade and thus reduce food and trade miles
- To encourage tourists to use local businesses
The aims of the Brixton Pound, the Bristol Pound and the other local currencies are essentially the same. As far as I can tell, the take up of these currencies to date has been modest, but the Bristol Pound represents an interesting new development. Not only does it have a far slicker website, but it also offers payment by mobile phone. Perhaps most significantly, according to the FAQ, “Business members that pay business rates to Bristol City Council will be able to pay in Bristol Pounds.”
A key tenet of “Modern Monetary Theory” is that the value of fiat money is not underpinned by gold or any other commodity; rather its value derives from the government levying tax in that currency. Since almost everyone has to pay tax at some point, this creates a base level of demand for the currency. So, perhaps the fact that the Bristol City Council is supporting the Bristol Pound will enhance its take-up prospects. It would be even more interesting if the council decided that they would only accept Bristol Pounds as payment for rates.
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Finally another Mule post!
And a very timely one, too. Let me play the devil’s advocate here: if the Bristol City Council demanded payments in Bristol Pounds we could say that there is a coercion. That is, if you do not pay your council rates, you are liable to some kind of sanction. So, you need to pay your rates. But if only Bristol Pounds were accepted as payment, you would have to acquire Bristol Pounds. No freedom there.
Would that put us in a slippery slope towards some kind of dictatorship?
I suppose you could characterise it as coercion and indeed some libertarians would characterise all taxation as coercion (and I’m not sure mandating the form of payment makes a tax any more or less coercive). Others would prefer to describe it as part of the social contract. After all, it’s not just dictatorships which tax…dictators do too.
The council currently insists that residents pay rates in British pounds. Why would it be any less (or more) dictatorial to insist they pay in some other currency?
However I suspect this would be seen as treading on the prerogatives of the state, and that there would be legal challenges to local governments using non-standard currency.
Danny and Stubborn
To have in place a requirement to pay Council rates (if that were the case, which is not) in Bristol Pounds, would be in any way different than to demand drivers to stop at the red light?
Perhaps a particular driver would prefer to stop when the light is green, or not to stop at all; however, she is now forced to stop when it is red. There is coercion there, I suppose we’ll agree.
Would traffic regulations also lead to an slippery slope, the road someplace or another?
I’d say no. Traffic regulations have existed for a long while, without any apparent systematic change, one way or the other. Some regimes are more authoritarian, some are less, but the traffic regulations remain virtually unchanged.
What say you?
They could just offer an incentive to pay in Bristol Pounds instead of British Pounds. A 5% discount off rates, or a fridge magnet.
Interesting one! Would love to pay my taxes with my coffee cards and flyer miles. Never quite got what libertarians were on about with privatising money. Private monies abound. Hell, even stock is money:
http://bbs.cenet.org.cn/uploadImages/20036151475144013.pdf
@Zebra: the discount idea is a good one (much less coercive too!). It would also be interesting if they started paying council workers and other expenses in Bristol Pounds.
@mule – many years ago when I worked summers at the Kalgoorlie nickel smelter they had an onsite store you could buy stuff from with “safety points”. Maybe Bristol Council could offer workers say 10% of salary in Bristol Pounds with a 5% bonus. Basically if they think its a good idea there must be some amount of money they are prepared to spend to promote it which could subsidise this as well as discounts.
The Bristol pound is highly absurd but a good anecdotal example of the devolution craze that seems to be sweeping the UK. It’s really nothing more than Disney Dollars and I would say the oldest example would be the Scottish pounds issued by the three banks (Both have to be backed by BoE notes or deposits so not to change M0) You may counter that these notes are legal tender in England but see how far you get paying for a round in Brixton Pub with a Scottish Ayrton (Senna tenna)!!!!
Does Mr Mule have an updated opinion on BitCoins?
Stubby and Zebra,
The idea solves the coercion problem and I am all for it!
At the other hand, to try and look at things from all different angles, maybe it could be countered that the 5% bonus gives something for nothing…
Any replies to this?
Just listened to this excellent Planet Money podcast: http://www.npr.org/blogs/money/2012/04/13/150586792/should-iceland-kill-the-krona
Where they interview Nobel Laureate, Bob Mundell who got the gong for work on optimal size of currency areas.
But killer quote is that “more poeple use the Disney Dollar every day than the Icelandic Krona”.
So I don’t think we should be dissing the Disney Dollar on this blog. Especially since its motto is “In Chocolate we Trust”.