Towards a Monetary EcosystemWorkshop

Madison, WIMarch 30, 2013

Objectives of Workshop?

1) Next level of Complementary Currency Implementation

2) Becoming Financially Sustainable in US$ +3) Develop a Long-Term Resilient Governance

Objectives => Proposed Solution

Next level of Complementary Currency Implementation => Towards a Monetary Ecosystem

Becoming Financially Sustainable => Monetary Ecosystem includes a B2B currency (« US$ Cash Cow »)

Develop a Long-Term Resilient Governance => Managing Currency as a Commons

A Tale of 3 Cities

• Santa Barbara, CA• Tucson, AR• Madison, WI

Complexity Theory

• Breakthrough: Sustainability is measurable with a single metric as an optimal balance between “efficiency” and “resilience”.– Scientifically Solid:4 Peer-reviewed articles– See www.lietaer.com/research

Sustainability

Towards stagnation(Too little efficiency)

Towards brittleness(Too little diversity)

Greater Efficiency (streamlining) Greater Resilience

Diversity & Interconnectivity

Optimal Balance

100%

0%

Sustainability in Natural Ecosystems

Sustainability

Towards stagnation(Too little efficiency)

Towards brittleness(Too little diversity)

Greater Efficiency (streamlining) Greater Resilience

Diversity & Interconnectivity

Window of Viability

Optimal Balance

100%

0%

Real-life sustainable ecosystems

Sustainability in Natural Ecosystems

Complex Networks

• Diversity and interconnectivity are 2 structural variables => applies to all networks with similar structure, including money system!

• Structural variables are independent from what is being processed in network– biomass in an ecosystem, – electrons in electrical circuit, – information in immune system, – money in an economy…

Resilience

Efficiency

Balance in Natural Networks

Efficiency

Resilience

(In)Balance in Our Financial Network

Sustainability

Towards brittleness(Too little diversity)

Greater Efficiency (streamlining) Greater Resilience

Diversity & Interconnectivity

Optimal Balance

100%

0%

Window of Viability

Current operation of financial system

Application to Monetary System

Sustainability

Towards brittleness(Too little diversity)

Diversity & Interconnectivity

Optimal Balance

Window of Viability

Survival, Very Diverse

InefficientExchanges

After a CrashRecovery in Natural Ecosystems

How natural systemsrecover

Sustainability

Towards brittleness(Too little diversity)

Diversity & Interconnectivity

Optimal Balance

Window of Viability

Collapse ofFinancial system

Survival,Barter

Exchanges

Re-establishment of monetary monoculture

After a CrashReinstating Bank-debt Monopoly

Connectivity c

Sustainability Optimum

0%

100%

Diversity n n

3D Views

Phase 1: Proposed Legal Structure• L3C: Low-profit Limited Liability Company

– Corporation with a social purpose– Low ceiling on profit (e.g. max dividend 2%)

• First legislation in Vermont on April 2008– Now 9 states available for L3C incorporation

• 26 other states interested– Can operate anywhere in US– January 11, 2013: 711 active L3Cs are in operation

• Qualifies as investment for Foundations • Requires a viable business plan (« Cash Cow »)

• Phase 2: Viable business plan• Phase 3: Identify social purpose systems• Phase 4: Governance• Phase 5: Legal Incorporation• Phase 6: Software Adaptation• Phase 7: Implementation

Evaluation as « Cash Cow »

• Advantages– Simple– Choice of softwares

• Disadvantages– US$ come from outside the system

• US$ Income from membership fee and transaction fees• Transaction fees discourage use of system

– No possibility for acceptance in taxes

The Problem of being small…

Cash or30 days

$100K90 days

100KC3

C3 Solution: Phase 1

$100K90 days

100KC3

US$Minus interest + fees

C3

C3 Solution: Phase 2

C3 Solution: Phase 390 days have passed…

US$100K

oodUS$No interest costs

Evaluation as « Cash Cow »

• Advantages– US$ come from inside the system

• US$ Income from exit fee and potentially demurrage• Both fees encourage « good » behavior

– Possibility for acceptance in taxes

• Disadvantages– More complex– Requires participation of insurance company and bank– Initially requires use of Cyclos software

Currency as a CommonsElinor Ostrom’s 7 Criteria for Managing

Commons1) Clearly defined boundaries2) Congruence with local conditions3) Hyper-democratic: Most individuals affected can participate

in modifying the operational rules.4) Monitoring: Monitors are accountable to Users or are Users.5) Conflict-resolution mechanisms: rapid access to low-cost

local arenas to resolve conflicts6) Graduated sanctions: Users who violate operational rules are

assessed graduated sanctions by other Users, by officials accountable to these Users, or by both.

7) Minimal recognition of rights to organize: No contradictions with State of Federal Laws

Sequence of Next Steps

• Prepare Proposal for 3 cities• Find an Insurance Company for C3• Prepare business plan for « Cash Cow » • Agree on Governance Structure• Legal Incorporation, probably in Vermont• Invite participation of all relevant parties • Take Off…