Money Commons: Review of ‘Remaking Money for a Sustainable Future’, by Ester Barinaga Martín

Remaking Money for a Sustainable Future: Money Commons by Ester Barinaga Martín was published in 2024 by Bristol University Press in its series Alternatives to Capitalism in the 21st Century. Available through Open Access, you can download it as pdf or epub here: https://library.oapen.org/handle/20.500.12657/89799

The book provides an in-depth view and thorough analysis of various money arrangements. I highly recommend reading it if you are interested in alternative money systems — whether you are new to the topic or not.


“For those interested in how money works, and in how it is made to work, these are lucky times”, writes Barinaga. While it’s up for debate whether these times are lucky in other respects, her statement is certainly true as far as our understanding of money is concerned. 

The financial crises of the last two decades have led to many good books and articles explaining how money is created and managed, not least a 2014 communication by the Bank of England. For anybody taking a closer look, it’s quickly obvious that our current money system isn’t working for most people, nor is it compatible with a sustainable future. This book does a very good job of explaining why that is so.

Barinaga is a professor of social entrepreneurship at Lund University in Sweden, and also a professor at Copenhagen Business School. She had been doing research on social innovation for over a decade, when she first came across local currencies in 2016, in the shape of the Malaga Común. How had she not heard of those currencies before? 

Barinaga soon discovered numerous examples all over the world. She went to a National Congress in Spain on community currencies and was hooked. “I can genuinely confess that money has taken over my life,” she says. She now teaches about reimagining monies, and has been involved in introducing complementary monies in Kenya and Sweden.

The Blind Spot

The “new monies”, as we learn in the book, come in many shapes and sizes. Barinaga also covers arrangements, such as mutual credit, that don’t always involve a physical or even virtual representation of money.

To clarify concepts, she first takes us back to Mesopotamia, and then to Adam Smith and Karl Marx (and further influential figures like John Maynard Keynes and Karl Polanyi).

A key point is that there are two different ways to think of money. 

In the ancient Middle East, debt was recorded on clay tablets that were destroyed in “jubilee years” periodically clearing people of their debt. As in many other cultures, money originated as a debtor-creditor relationship, in this case between the state and the citizen.

Money, in other words, is born out of a relationship and is “double-sided”. One person’s (or institution’s) credit is another’s debt.

Many economic textbooks tell yet another story about the origin of money that involves barter societies: money in the form of tokens was invented because a “double coincidence of wants” rarely happened, and it was inconvenient to carry around large objects or animals to swap against something else.  

There is no evidence that this ever happened. But the resulting image of money as a commodity is widespread, and how most of us would think of it. Money is something you either have or you don’t.

But this isn’t how our money works. In fact, the idea that money is neutral and just an intermediary Barinaga sees as Smith’s and Marx’s blind spot. Instead, it relates to the interests of the economic class that issues and governs it. “Money itself is interested, coloured by the loyalties of its masters,” as she writes.

Relational Money Sold as Commodities

With that, we arrive at our modern predicament.

The global financial crisis of 2007–2009 revealed facts about our money system that hardly anybody, including some politicians and financial managers, had previously known:

  • Up to 97% of the money circulating in the UK is created by commercial banks – effectively ”out of thin air” – in the form of interest-bearing loans.
  • Bankers’ expectation of future profits therefore sets the direction of the economy.
  • Fluctuations in lending cause the real economy to behave in a way that intensifies boom and bust.

In the build-up to the financial crisis, mortgage debts were re-packaged and sold on as so-called securities. A debt-credit relationship was turned into a commodity.

“In purpose, and in effect, the money-​making machine had been detached from the real economy,” the author writes.

Eventually, it all came crashing down. Governments bailed out the banks through “Quantitative Easing” (QE), which let central banks create reserves to buy assets from other economic actors. This way, money is injected into the economy. But this happens selectively. Big businesses and banks don’t necessarily pass on that money to families, workers and entrepreneurs in the real economy.

In some countries, the bailouts were followed by austerity measures. The public was told that cuts had to be made to health services and social welfare to make up for the public deficit. 

After further huge money injections during the Covid pandemic, the wealth gap has grown massively again. Those parts of the economy that derive money from speculation have become further detached from the real economy of goods and services and are extracting value from it. 

Making Money Work – Mutual Credit and “Aging” Money

Having pointed out the many flaws with our current system of money, Barinaga looks at a set of different arrangements.

There are two questions she thinks we must ask when investigating a specific type of money. First: how does it work? And second: how is it made to work?

The first question points at the “mechanics” of the money, such as how it’s created and destroyed and whether it’s backed by another currency. 

The second question points at governance. We want to know who creates the rules and who can adjust them. If the money is created by an algorithm, who can tweak the code? 

Barinaga’s conclusion is that for money to work, it needs a mechanism – what she calls perpetuum mobile – that “imbues in its users a sense of obligation to relate forward”. As she adds: “Only when money-​tokens circulate, only when they are widely accepted and spent, does money work as medium of exchange and means of payment greasing the wheels of markets.”

She then looks at different ways to govern a money ecosystem – community-​based, state-based and private-based.

Barinaga starts with what she calls “one of the most powerful methods”, namely mutual credit

“Monies designed along mutual credit are firmly anchored in an imaginary of money as a credit–debt relationship,” she writes. One example is the local currency Malaga Común, which started after the financial crash of 2007-9. With unemployment soaring, this alternative currency was born as people still had skills to offer that they wanted to share.

It’s striking, however, that members of the currency felt bad when they temporarily got into debt, despite being reassured that they were creating economic activity for the community. Getting rid of the feeling of guilt that we traditionally associate with debt isn’t easy. (See also David Graeber’s book Debt which starts with this dilemma.) 

Another example of mutual credit is the Sardex, which was set up in 2009 by five Sardinian students, who stumbled across a local currency in the UK, where some of them were studying at the time.

They then learned about the WIR bank, which inspired them further. Set up in Switzerland in 1934, it grants its members low-interest credits in a complementary currency, the WIR franc. Strictly speaking, though, it’s not a mutual credit system as is often claimed. 

When Sardex started, the team found it vital to underline its personal element. In fact, they met every potential member in person to explain how the network could benefit their business. 

Over the next decade, the network grew steadily. By 2019 the value of transactions had reached 220 million euros. By 2021 the team employed over 100 workers, around 50 of whom were brokers. Their role is to assess potential new members to see if they link up amongst themselves or with the existing network. They also update their members about new opportunities.

Creating a community among the participating businesses, was crucial at all times. Barinaga quotes Giuseppe Littera, one of the founding members, who said one should “focus on the impact you can have, work every day and try to build communities where there are none. … [In Sardinia] the social fabric was destroyed. And we started knitting.”

Barinaga then writes about the “aging” money that was used in the Austrian town of Wörgl in 1932 to 1933. This, too, is an impressive story. Inspired by the ideas of Silvio Gesell, a German-Argentinian businessman turned economist, Wörgl’s new money was designed to lose value at a fixed date, thus encouraging its holders to spend it before it depreciated. The money was accepted, because it could be used for paying taxes.

The scheme was so successful that in June 1933, Wörgl’s mayor held a meeting in Vienna with 170 other mayors from across Austria who all wanted to copy it.

Sadly, the Austrian central bank didn’t like the experiment and maintained that Wörgl “broke the law”. Wörgl had to withdraw their notes and the town plunged into depression again.

HODL it — Is Bitcoin Money? 

But what about Bitcoin? It seems it was born from a frustration with how the 2007-2009 financial crash was handled. I learned in the book that Satoshi Nakamoto, the pseudonymous author of the 2008 Bitcoin whitepaper, encoded a headline from the Times newspaper into the first Bitcoin block: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. Was Nakamo to in the UK at the time, or even from the UK?

In contrast to the two other examples — community-based mutual credit, and depreciating money issued by the municipality — Bitcoin is not bound to relationships between the various actors creating or using it. It has the characteristics of a commodity money like gold. People hold on to it, speculating on future gains. In fact, 80% of owners have apparently never sold their Bitcoin.

Barinaga shows that Bitcoin in many respects did not fulfil what its inventor had intended. It is difficult to use for minor transactions because the number of transactions that can happen per second is limited. This has to do with the size of the blocks in which the transactions are recorded and the time it takes — roughly 10 minutes — to add each of them to Bitcoin’s blockchain.

Also, the fact that the number of Bitcoin that can ever be mined is predetermined, makes it a rigid currency.

With most owners holding on to their Bitcoin, it’s not in proper circulation. Bitcoin, in other words, has become an asset, not a currency.

Big Changes Come From Small Things

Barinaga explores some further complementary currencies. Three of them — Demos, Mumbuca and GoodDollar — aim to provide a Universal Basic Income (UBI). Another three, meanwhile, aim to serve the planet by either regenerating unused land (Turuta), saving energy (Vilawatt) or picking up plastic bottles from polluted beaches (Plastic Bank).

In each case, Barinaga shows that how the money works — and how it is made to work — affect how the currency behaves in its community and how successful it is.

Towards the end of the book, she analyses observations made from different money systems. The bottom line is that if you make the money, you could make it differently. 

Money is embedded in society and forms it, and is itself formed by society in turn. “Change money and you would change society,” as Barinaga says.

Most of today’s money is created by private financial actors who want to make a profit, which inevitably leads to cycles of boom and bust. Moreover, compound interest too often traps debtors into debt slavery and entrenches inequality. 

Money (or the love of it at least) is said to be the “root of all evil” – but that’s only because of how we have decided to organise our system of money. In fact, as Barinaga states elsewhere, “money can become an instrument for peace”. 

If we stop taking money for granted and examine how it is put together, we can learn about the ways we can design it differently.

It might seem naïve to think that alternative monetary arrangements could achieve anything useful. But I think it’s more naïve to expect, as Barinaga, points out, that “central and private banks [and other players] are going to change the monetary architecture at the root of our many crises out of their own determination.”

Here, it is helpful to move towards the idea of money as a commons that can be managed by a group of people among themselves. 

So to sum up, my concluding thoughts are that:

  • Money can be designed to work much better for people than it currently does if they can issue it themselves in the form of credit. There are impressive examples of this, especially from the past.
  • Local currencies are difficult to implement and often fail after initial enthusiasm, but they are still valuable in creating community and inspiring people to be active.
  • Alternative money systems have more impact if they involve small and medium businesses. In the UK, Mutual Credit Services are working on a local business network in Liverpool that uses credit clearing, which can be seen as a stepping stone to mutual credit.
  • As alternative systems have not yet been widely adopted, it’s vital to look at other ways to divest from the current money system, such as avoiding debt that will incur compound interest. This is Stroud Commons’ approach with the Housing Commons. De-commodify things that used to be shared among people – like taking turns looking after children, cooking for each other, and helping each other out with building things. In short, revive the commons.
  • Where there is a strong community with a diverse set of skills, it will be easier to introduce an accounting system along the lines of mutual credit. The way forward is surely to strengthen both the commons and experiments with alternative money systems so that they can enhance each other. 

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