More Trust, Better Money

Imagine a world where we can choose to live great productive, engaging and meaningful lives without having to use money.

Imagine markets at crossroads of free public transportation corridors where you bring the goods that you produce, or vouchers for your services, to build up your credits. Then imagine using those credits to acquire the goods or services provided by others.

Imagining Another Planet? Not at all, the above descriptions are happening on Earth at this very moment. All around us there are people voluntarily choosing simplicity to reduce their ecological footprint and to live good lives using less and less money. We already have early adaptors living modern lives with no money at all.

Examples of Money-Free Pioneers

While many are doing it quietly--and often out of necessity--a British economics graduate named Mark Boyle is making a public effort to become a Freeconomist and "to see what it is actually like living without money in western civilization":

There is also James Taris from Australia who circled the world in 2004 without using money. We sent James some miles for the privilege of hosting him in San Francisco and in return he gave us a lecture explaining how he was doing it.

Our teenage children listened to him and were mesmerized. They have been traveling this way since. They have seen all continents, have learned stuff that cannot be taught in classrooms and developed a network of trusted friends around the globe that makes them feel at home wherever they are. Our friends feel the same way and they bless us often with their visits giving us a chance to reciprocate their hospitality. Traveling like this with less money is becoming easier since free places to stay are now listed on the web .

Trading Markets

In 2001 and 2002, I traveled with Thomas Greco to Argentina to study a social phenomenon called Clubs del Trueque. These were weekly markets spontaneously organized by their participants to trade among themselves using no money at all.

To facilitate their accounting they printed Papelitos--home made notes that helped them trade and allowed each participant to get out roughly the same value they brought in. I posted some pictures here:

Born out of necessity when all banks closed, the Clubs del Trueque at their peak allowed over 1 million families to survive providing food and services. It was a creative way for people to help themselves since the economic crisis was so big that governments could not respond on time. Once the economy normalized the popularity of Clubs del Trueque decreased, trading is still being done but it is now considered more of a social activity than a necessity. For more information visit Thomas Greco's site .

Being Beyond Money is Cool

A couple generations ago it was cool to be rich and many pretended to be by consuming more than they should. At that time most people felt they were above shopping in a thrift store such as those that make up the Beautiful Store chain in South Korea. "I have seen a big change in the last years," said Kwak Hyunseok, a Beautiful Store manager in Iksan, South Korea, "all segments of the population are supporting us now by donating their used goods, helping us restore them, and by shopping in our stores, it is a new type of life style that is helping our society as a gentle rain." Their first store started in 2002--since then they have expanded everywhere in the country and are considering opening in North Korea.

Money Is Losing Weight

In the span of just a few generations we have gone from getting bruises for riding a horse with a bag full of coins, to carrying bulky paper notes, to a slim plastic card, to entering a password, to a thumb print, to just looking into an eye recognition device…

Collateral is Also Slimmer

We went from delivering cattle as guarantee, to liens on buildings; now one of the fastest growing banks loans to groups of 5 ladies that know and trust each other, the only collateral is their word that they will cover for each other as needed. If this sounds crazy--think again: the bank and countless poor communities are thriving because of this expanded form of collateral, default rates are around 1% and its founder, Muhamed Yunus, got a Nobel Peace Price for creatively monetizing social capital through the Grameen bank. This people power was a value that was there all the time but other bankers never saw it as such.

Democratizing Credit Granting

In a few generations we went from having banks as the main source of credit, to cards issued by businesses, to granting credit ourselves to remote entrepreneurs based on recommendations from peers in the field. You can experience this new power by using Kiva. Loans can be $20 to a street vendor in Timbuktu--but taken together we are now lending over $1 million a week with a default rate around 1%. Compare those stats to the record of the pros at Wall Street banks!

Better Trust

The above examples have one thing in common, the better ways of granting credit (aka issuing money) has evolved as we developed better ways of trusting. While machines can help in the accounting and verification, computers fall short when determining the trustworthiness of a human. Techies have tried to grant trust with proprietary algorithms, but that produced many of the problem loans we are dealing with now.

Back in the 1970's, when I first moved to California, I wrote: "Americans are good people; they just need to learn to trust each other more." Having traveled the world as an ambulant jeweler I had developed a fine tuned inner-radar that quickly told me who to trust. This proved invaluable at trade shows where I quickly could grant credit to buyers I just met and offer no-risk trials of my work. Our business grew and when it was time to hire helpers I mainly looked for their ability to trust people. Their responsibilities empower them with the ability to grant instant credit to some people and to refuse orders from others, so it is vital that they can tell the difference.

Interestingly, when asked "Do you think people can be trusted?" residents in different countries around the world answered in very different ways. 65% said yes in Denmark and 50% in Iran, while 20% said yes in Israel and only 10% in South Africa. The percentage that said yes in the United States was 35%.

Recent neuroscience research suggests that our ability to trust others is related to our brain level of oxytocin--this opens the possibility of treating paranoids with a pill and perhaps accelerating our evolution towards a more caring society.

Cultivating Trust

If we need better trust then we should look for it at places where trust grows well.

Grameen Bank works because villages in Bangladesh are highly interactive--everybody knows everybody and the value of a person’s reputation in their village is highly cherished so they do not dare to let their friends down. Where do we have these conditions around us?

If we are lucky we may experience good levels of trust in our families, then at school, at collage, at the military, at our work place, with our friends, in our church, in our neighborhood, and in our community.

Bernard Lietaer has the best definition of community I've encountered. He says: "A community is a group of people doing favors for each other".

Bernard is the visionary Belgian banker that designed the Euro, the first time in history that one monetary system replaced others without bloodshed. He is not stopping there, has joined forces with Margrit Kennedy to expand the WIR Bank model from Switzerland--where it has thrived for 6 decades--to the rest of Europe.

Merchants issuing money: The WIR Bank

In the WIR Bank, merchant members accept WIR credits from each other in exchange for goods and services. Next time in Switzerland, if you pay attention to the storefronts, you may find the WIR sticker besides the usual credit cards. Merchants that accept it are earning WIR credits as they earn legal tender, but they cannot exchange them for money, only to buy goods or services from another WIR member. This limitation makes WIR less desirable than money, but it has an advantage that makes up for it: WIR members can take NO INTEREST LOANS in WIR credits from a WIR bank by putting their property as collateral.

Established during the Depression, WIR usage has historically spiked when there was less money circulating – like we are experiencing now. While many stores accepting only money closed, merchants accepting also WIR continued doing business in spite of the scarce legal tender--by now thousands of businesses in Switzerland accept WIR.

Image credit: "trust macro money" by doogin, used thorugh a Creative Commons license.