THE SOLIDAR SYSTEM
a currency for sustainable economy
beyond capitalism and socialism
On a radiant autumn day in 1994 an aspen tree attracted my attention. It was lit by the sun like a lamp, beckoning with its golden coin leaves in a breath of air. Absorbed by the scenery I pictured the sun’s ever-renewed energy dancing around me on its way out in space as warmth, partly saved and distributed by the oceans. Inspired by the energy interplay around me I started to develop a way to find a corresponding stream of money, mirroring the energy we exchange in trade.
I did not want personal values to destroy the logic, but I cannot deny that many logical conclusions made me happy and erased the rest of my right-left thinking. Consequences appeared, every week, every day, often thanks to inquisitive friends who forced me to go into details. Still I had to stick to deductive thinking out from the premises of nature, refusing politics to mix into the system.
During the time of development I realised that in my curiosity I had stumbled onto not just a monetary system, but potentially an entirely new economics for ecological and cultural renewal.
At first I was constrained by the limitations of using paper notes until I realized that we could use a “smart card” that can be connected to more than one account. The machinery to administer it all is already there, or we can set up our own if required.
How the system operates
The proposed solidar is a local complementary currecy used with microchip cards and scanners. A new solidar is nothing but an electronic number, issued free of charge every night as potential money on so-called Basic accounts of persons and their commons in a solidar region.
The solidar is “born” as money at the first time it is used. At that moment it enters the market as payment on so-called Trade accounts of sellers. On these account the sums are gradually reduced at the same rate as the inflow of basic income on the Basic accounts. The ever-new streams of solidars always follow the variations of sold products. It means that the flow of solidars always mirror the flow och goods and services on a free real market served by solidars as means of exchange. That makes the solidar a symbol of real value at any time.
The common sector only has Basic accounts for common purchases. Companies have Trade accounts only. Private persons have Trade accounts for transactions and Basic accounts for receiving and saving basic income.
One-way-locks on the Basic accounts will hinder deposits and transfers between them. On the Trade accounts all sums are gradually reduced at the same rate all over the solidar region. Such a gradual reduction is usually called demurrage. Normally the disappeared solidars are currently re-issued as new basic income, equally distributed to the solidar members every night, and partly to their commons according to votes among them. The system can be transparent, allowing people to see the streams of money on a computer screen.
The solidar can be used within members of a regional NGO or coop. From the moment it enters a Trade account of a seller it moves as payment on the market until it is gone - and replaced by a new solidar, also once used from a Basic account. That makes an ever new stream, always reflecting the real values sold on a free market liberated from debt.
When the total solidar sum is the same in each round it makes a constant circulation. But in case of a nature disaster or another sudden change of real value the flow can be adjusted by regulating the amount of basic income and/or the rate of money reduction on the Trade accounts.
At the departure of a user his or her accounts are nullified along with a proportional part of the commons. That is for the balance of the system.
THE SOLIDAR FLOW IN A REGION
Companies have Trade accounts only. The commons only have Basic accounts, and private persons have one of each from birth to death.
1. The gradual money reduction on the market is normally compensated by a corresponding inflow of basic income, equally distributed each night to all the users and partly to their commons according to democratic decisions. Alterations of the rate of reduction at the Trade accounts could be made as with a tap in case of a sudden ecological and/or demographical change, for example by a natural disaster.
2. Exchange to foreign currency by import and for travelling.
3. Exchange from foreign currency by export and for visitors
Exchanging solidarsSpeculation-proof exchanges could be done via the administration of the Currency reserve from where the solidars are exchanged to and from foreign national currences and other currencies within the region - and also with solidars from other solidar regions with different rates of exchange. One idea is that regionally elected ecologists will administrate the system - and even the Currency reserve of the region. Their over-all responsibility will to save the global climate on a regional level.
By import and for travelling the solidars are exchanged from Basic accounts, private and public, and always via a group of ecologists for handling the Currency reserve. Their job would also be to secure a balance of trade in the region on the premises of ecological and fair trade.
Foreign currency enters the Currency reserve by export and tourism where it is used for import, travels and to pay foreign debts. Visitors get a time-limited Basic account for their travelling funds and a Trade account to use it. Remaining solidars can be exchanged back at their departure.
Income in foreign currency for export goes into the Trade accouts of the exporting companies. As it cannot be saved there it will be used for current expenses like salaries, company improvements and returns to the owners in case of surplus on their Trade accounts.
Private persons could buy and sell over the borders of the region in the same crosswise way.
Even the solidar common sector can import when it is needed, but it cannot export. That will be done via coops and enterprises on the new speculation-proof and free market.
The common sector is for society purchases for common needs and society protection. As such it also can pay for common international aid like soil- and water sanitation, fuel cells for solar energy and other global needs according to regional votes. Orders for such projects could go to companies both inside and outside the region. If the system works well it can be imitated in other regions and even spread to any society where the reform is needed. Principally it could spread all over the world where there is electricity available.
ConsequencesA nature-congruent innovation like this would change not only economics but also the spirit of society and peoples attitude to life. The relief of interest can be seen as a triviality, but it could also be like a door, leading to innumerable win-win solutions.
People who live on basic income would supply the market with money while resting or working idealistic. And those who work for salary would fill the needs of others. In the meantime their savings would accumulate on their Basic accounts to fill a dream in the future. Most people, however, would surely combine the use of their two accounts and vary their saving and consumption during the cycles of life.
All are needed in a system with a combination of Basic and Trade accounts. As people living on basic income will supply the market with money for those who produce what is asked for everybody would contribute to a sustainable society.
Demand would then be the only incentive for production, as there would be no obsolete old investments to protect anymore. That is because the time-limited money that cannot be saved.
Commons without taxesThe commons would be funded by a democratically decided part of the total basic income, that would have gone to the private Basic accounts if no commons where needed.
The solidar commons is a body evolved from a democratically strengthened form of our existing national and local governments to handle the provision of “government level services” such as railways, power stations, street lighting, garbage collection, and to organise other large scale works that is agreed to be in the common good.
The Basic accounts for commons is a simple and organic replacement for our taxation system, and the demurrage (money reduction) on the Trade accounts can be regarded as a negative interest compensated by the daily basic income for people and their commons. The currently compensating basic income makes a neutral, zero-interest economic system.
Private basic income replaces the private part of the taxes of today, such as subsistance allowances, child allowances, pensions and so on, including insurances and the administration costs of it all.
The basic income also covers common costs for international cooperation. The speculation-proof way of exchanging the solidar would make it possible, even in a large scale.
The attractive passive saving on the Basic accounts would stimulate a decent lifestyle by free choice. That is what is needed when the climate and thus the biosphere is threatened by over-consumption in the rich parts of the world.
When the commons are funded by ever-new streams of new-issued and time-limited money our interest costs of taxation and transfers would be gone, and so would the interest costs of the companies now baked into the consumer-prices. Even the interest-on-interest on money would be gone. Such interest is now charged repeatedly by bank after bank where interest is added to interest on every loan with security in another loan against interest - in round after round. That is called fractional banking. It results in an explosive debt expansion through the multible interest-on-interest. The scarcity that comes from the fractional banking makes immense social problems in society, demanding compensating tax-based transfers to the losers in our artificially induced race for the money of today.
In the Solidar System that race would never occur. In addition to the deliverance from poverty it also would lower the society costs to a minimum.
If the solidar system is introduced in a region - and if it shows to be attractive enough to spread - it could reduce our common costs to almost nothing according to calculations based on statistics by the Swedish Statistical Central Bureau.
In addition to saved human and natural resources the system includes a continuous capital allocation, promoting real resource decentralisation and release of urbanization with its polluting long transports. As a whole the system would give a maximum of result by a minimum of sacrifices. That means cost-efficiency and an "economic economy".
Nature congruent economy
A sustainable economy has to be in tune with laws of Nature. It means that it has to be backed by real value at any time. This condition is filled by money born at the moment it is used as payment - and then disappear after a while, followed by other time-limited money, also is born as payment. That is the way the market is served by a continuous stream of new money.
The Earth needs soil and water sanitation and renewable energy from sun, wind and waves. Such global, seemingly impossible projects can be paid by ever-new streams of interst-free money. It also could slow down our over-consumption in the west by free choice. That is because of the passive saving on the Basic accounts.
Dreams are strong. Remember that the speculative money-market, now occupying about 98 % of all money on Earth, is built on dreams. In the solidar system the same dreams would motivate us to save our basic income. That could slow down our consumption to an ecological level by free choice.
The maldistributing and debt-creating system of today has a built-in compulsion of economic growth. Most of the interest costs, mainly baked into the consumer prices, are paid by those who have little or no compensating income by capital. It means that the poor and the nature pay the bills.
Doing nothing means an escalating destruction of non-renewable recourses and human disasters hard to imagine. About 24.000 persons starve to death, every day, year after year. Compare that with the tsunami that took about 200.000 lives.
Free market of workThe basic income makes a fundamentally new lifestyle based on new values. The free money makes you free to work. That is the opposite of the system of today, where you can survive only if you work for money. The Solidar system breaks the old coupling between work and money.
Secondly, the security of the basic income gives freedom to refuse destructive work. If you do a very needed work that others refuse you could claim for a high salary, and you might also be sponsored by the commons if the work is necessary for society protection such as cleaning infection clinics or disarming land mines. This makes a free market of work in addition to a free market of goods and services. You can see it as the end of an era of slavery on Earth.
The money-reduction on the Trade accounts of companies motivates gradual payments all over the solidar economy. Expensive things would be paid by instalments or leasing, for example equipment for production of different kinds. Houses would be paid gradually during the construction, and flats would be leased until they are fully paid. A diversity of non-profit coops would be started.
To avoid loss companies and persons would pay their costs gradually, at least at the same rate as the money-reduction on the Trade accounts. In case of a surplus on the accounts of a company returns would immediately be sent to its share-buyers. That promotes a diversity of requested production and small-scale real markets all over the countryside.
When a company does not sell anymore it will be closed without bankruptcy, because there is no debt in the system.
New demands are filled by new productions more adjusted to actual needs and wishes, because there would be no obsolete old investments to protect. Companies and even private persons could give the surplus on their Trade account to persons or help organisations or just to support a needed production by buying shares for it.
That would make a flexible market of work with fine-meshed networks of money-rills and small-scale real markets free from money speculation - for the first time adjusted to availability and demand only.
Returns to the supporting co-owners of coops would be a buffer for the companies in case of a surplus that could not be saved because of the demurrage on their Trade Accounts. So, the returns would motivate people to support really needed production.
The concentration of money-rills in companies can be seen as nerves converging in the organs of the body of society. Combined with the passive saving it could reverse urbanisation and promote a cultivated countryside.
The built-in friction in the system makes many fine-meshed networks of instalments and leasing all over the society, even promoting small scale production and shorter transports. That results in saved resources, black work turning to white, and protection against economic crimes. If spread worldwide the solidar would even mean the end of starvation and misusing people.
Getting richA high salary means a long term salary. It could last long after the work is done - even until you die and your accounts are nullified. It means that you can get many parallel streams of income, all coming at the same rate. That is the way to get rich in this system.
You could get income from some part-time works, which is also a way of earning more. Maybe you would support some companies as well, and save your basic income for the fulfilment of a dream.
Getting rich is possible, but not at the cost of others because of the ever renewed stream of passing solidars - like a wind to breath or ever-new solar energy in different forms, exchanged as goods and services in trade.
Saving solidars means saving nature. But there is a risk. The economic man might build up a fortune on his Basic account until he dies. If he was wiser during his life he would have used his time better, spending more time with family and friends or giving and helping when it still was possible. His lack of life-quality could be a warning though, because his low life-quality could encourage his descendants to catch the day in a better way than he did.
When they get old they would rather take the chance to help others instead of letting their saved basic income disappear. Some would buy shares in hope-inducing production, and some would contribute to global sanitation projects. And all would surely give gifts to those they love.
Introducing the systemThe system could be introduced as a pilot project in a village or municipality where the taxation cannot cover the needs anymore, maybe because of an aging population. It could also be introduced to stimulate a multitude of countryside entrepreneurs lacking risk capital in the system of today.
When the system is prepared it remain resting until it is activated, maybe as a regional civil preparedness or just to replace empty pension funds.
The solidar can be introduced parallel to any other currency, because there is a speculation-proof way to exchange it to and from other currencies and solidars from other solidar regions with different rate of exchange due to different nature and man-power.
Software, microchip cards and scanners for the first users should be ready as a preparation.
To introduce the system in the third world the electricity problem has to be solved by technological aid, maybe even for sun plants in deserts. That would be possible because the system does not create debt. There are no loans in the system, and no minus in a solidar bookkeeping.
ContextThe interest-demanding credit money of today has a built-in mal-allocation that leads to suffering, fear, greed, and antagonism all over the earth, and it creates losers all the time. That is why the old system cannot last anyway. It simply contradicts mathematical laws. In spite of that obvious fact the system is kept going by issuing ever more new interest-demanding money out of nothing. The consequence is clear; we have to invest ever more human and natural recourses until the bitter end.
The amount of the virtual money of today is varying around 90 and 98 % of all money on Earth. It enters the market as debt against interest, issued worldwide at an explosive rate to pay a likewise growing global debt, which is a way to postpone the collapse of our financial system through the increasing “economic growth”. The exponentially growing turnover is forced forth by a likewise growing world debt, now threatening eco-systems and humanity.
As long as we cannot see an alternative we continue the race of economic growth. Doing nothing to stop it is a risky option. It could lead to a World Government, which I see as a horror scenario. Even if the first world leaders would be wise, it does not guarantee that the followers are. History shows that even the most caring people get speed-blind and develop greed for ever more power. Power-addicts lose their conscience, and some of them turn into beasts. Power works like a drug.
Another nightmare is that nations with collapsed economies would together start to build simple independent economies trading with one another and, because of the threat they could evoke in a still resting financial world, may suffer military consequences. That is why the new economies have to favour everyone and every group on earth in a very clear and obvious way.
Everything regarded as money is money. It is a mental construction built on agreement. It works for good or bad, depending on the way we issue the money.
In spite of a spreading knowledge of its built-in disaster we still use the old interest money in a global game that counteracts our aim of household - just because it builds up a common debt that never can be paid. The more involved we are, the less we want to understand the origin and consequences of our exponentially growing world-debt and the following race of economic growth.
But there is hope. Intelligence-of-heart synchronized with intuition, knowledge and logic can clear the way to future economies of household that would give space for cultural renewal and a generous spirit of society. That demands a mental transformation, which would neither be a cause nor a result of a monetary reform - but a spontaneous process where mutual influences cooperate in social and personal development at the same time.
Imagine the chain of aha-experiences that would follow on an open debate about the nature of money! Such a chain of insights could start in many ways, even involuntarily which once was the case on Gotland, a poor island in the Baltic Sea. People on Gotland often exchange goods and services without mediating means of exchange. Often they negotiate about the payment that could be some hours help with the harvest for example. One of the farmers told me about an event that once happened on Gotland.
A fuel station on the island had been broken. In spite of the warning signboard people put their money in the machine and took the receipt - but got no fuel. They complained of course, and were told to save the receipt to get their fuel later. Because of this little event fuel receipts were moving as payment on the island - even a long time after the fuel station was repaired.
I liked the story from real life and told the farmer that they had used a currency of their own. He protested at first, very intense, and then he got silent and said: “Yes, we use the receipts, but we did not make false money.” I asked about the difference, and he concluded that the difference was the security of fuel behind the receipts, but he was not sure about the security behind the bank money. At last we agreed that money is just a matter of belief, and - at the same time - a question of life and death.
Now you can go to FAQ and read the most frequently asked questions and my answers.
Åsa Brandberg, Sweden
I was born in 1940. Once I had a family of nine including 4 young foster teenagers who later rendered me a job as a foster-home adviser. After studying psychology and Waldorf education and a long term work with autistic teenagers I suddenly was a widow with 3 children in school age. Inspired by my own money problems in addition to ideas by Rudolf Steiner and others I studied the phenomenon of money during the seventies and eighties. I also stumbled onto “three-folding” through a work with a Norwegian association of producers, sellers and consumers. Later I started a non-profit silk import, mainly for mail order in Sweden. Now I am working in some assosiations for ecological and social renewal. Being retired is great!
Do you have comments or questions about the system?
Can you do the software for it?
Please send a mail to me at: firstname.lastname@example.org
1.David C. Korten: The Post-Corporate World, Berrett-Koehler Publisher
2.The magazine of the Swedish Central Bank “Penning- och valutapolitik”, 1993 (In Swedish)
3.Thomas Greco: New Money for Healthy Communities
4.M. Kennedy ”Interest- & Inflation-free Money” Seva International, ISBN 0-9643025-0-0
5.Gränsöverskridaren nr 7, can be ordered at: email@example.com (in Swedish)
6.SCB 1996. Ekonomiforum 5,6, Nordiska Sparlån, Box 94, 614 22Söderköping,(in Swedish)
7.David C. Korten: When Corporations Rule the World, Berrett-Koehler Publisher
8.Erik Dammann: Pengarna eller livet, Natur och Kultur, Stockholm (In Swedish)
9.Mikael Nordfors: Representativ direktdemokrati, www.vivarto.se (In Swedish)
10.Richard Douthwaite: Short Circuit, s 109-113, Green Books Totnes 1996
11.Nature Magazine, December 1999
12.Statistics from The Swedish Statistical Central Bureau, via firstname.lastname@example.org
13.Rudolf Steiner: World Economy, Rudolf Steiner Press, London 1972, ISBN0 85440 266 7
14.Lester Brown: Eco-Economy, W.W.Norton & Co 2001, ISBN 0-393-32193-2
15.Nicanor Perlas: Globalisering på mänskliga villkor, Robygge, Järna (Swedish)
16.Kyrkornas U-forum: Pengarna eller livet, Global ekonomi 1999 (Swedish)
18. Klas Eklund: Vår Ekonomi, Stockholm 1992, world list page 453-460 (Swedish)
19. Richard Douthwaite, The Ecology of Money,
20. Future in Our Hands, Erik Dammann. Norway
21. For a Social Credit Economy http://www.geocities.com/Athens/Rhodes/4061
22.Prof. Auriti "Value and structure of money" http://www.moneymaker.com/money/italy
23.Josef Hasslberger Articles on "interest" What is wrong with our Economy?
24Gary Alexander: eGaia, ISBN 0907637248