My latest blog on the London Review of Books site, on local currencies, runny Spanish omelettes and ‘the Miracle of Worgl’:
Death to the Euro.’ The handmade sign was pinned to the wall of a community centre in San Luis, a gentrified neighbourhood just inside the boundaries of Seville’s old city. It was a balmy Friday evening, but inside a crowd of around a hundred people were listening to a 45-minute PowerPoint presentation on puma, a new local currency for San Luis launched last month. Puma is the third local currency to be introduced in the Andalusian capital this year. Pepa and jara already circulate in Macarena, a working-class district on the other side of Seville’s city walls.
After explaining how the new currency would work – euros can be exchanged one-for-one for puma notes, which are valid in designated San Luis shops – the speaker took questions from the floor: an elderly man with a straw hat wanted to know if his local café would acceptpuma; a young mother asked how she could sign up for the scheme on-line.
Repeated doses of EU-enforced austerity have hit Spain hard. Last week, the country officially slipped back into recession. The Spanish economy, the fifth largest in Europe, is expected to contract by 1.7 per cent in 2012.
In the slipstream of the Eurozone crisis, local currencies – perfectly legal, so long as income tax is paid – have proliferated across Spain. Thezoquito has circulated in parts of Galicia since 2007. Local currencies are proving popular in the UK, too: the Totnes pound has been around since 2007; the Brixton pound, with a natty picture of Ziggy Stardust on the tenner, emerged in 2009; the Bristol pound is about to launch.
Local currencies tend to circulate more rapidly than national (or transnational) currencies, as well as keeping money in the area, with the result that local economic activity increases. In 1932, the mayor of Wörgl in Austria replaced the faltering national currency with specially printed ‘Certified Compensation Bills’. Inspired by Silvio Gesell’s theory of ‘free-flowing money’, the Wörgl bills were designed to depreciate by 1 per cent of their value each month in order to promote rapid circulation and dissuade hoarding. Within weeks Wörgl had almost full employment. A new ski jump was built. Roads were repaired. Six neighbouring villages soon copied the ‘miracle of Wörgl’. In 1933, the Austrian Supreme Court upheld the Central Bank’s monopoly over the issuing of currency. Thirteen months after it began, Worgl’s experiment was over; within weeks joblessness in the town returned to around 30 per cent.
At the end of the evening in Seville, plates of runny omelette were passed around the room. An activist in his late twenties – a member of Spain’s M15, or indignados, movement – said the presentation was ‘fantastic’: ‘He wasn’t just talking about money, he was talking about trying to create a new society. We need another system. The currency is just a tool.’