Money, credit and regional development: complementary local currencies and the provision of small business credit

Bowles, Stuart Robert (2022). Money, credit and regional development: complementary local currencies and the provision of small business credit. University of Birmingham. Ph.D.

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Abstract

The aim of this investigation is to understand the contribution complementary local currencies can have on regional sustainable development through the provision of credit to small businesses. Complementary local currencies have been studied by researchers for nearly forty years. The literature identifies an implicit relationship between these schemes and regional sustainable development, even though recent research suggests that contributions are limited. More recently there has been a recognition within this field, alongside wider academic and policy maker discourse, that small businesses play an important role in developing a sustainable local economy. This thesis first considers money and credit on an ontological level, which allows a deeper theoretical understanding of what money is as a core concept. It draws on heterodox economic scholars that highlight “credit, and credit alone, is money” (Innes, 1914: 159). With this basis it is able to critically analyse complementary local currencies, identifying a dichotomy between schemes that apply a commodity and a credit understanding of money. This crucial difference is often overlooked by academics and practitioners, however it appears to have a significant impact on the ability of complementary local currencies to operate and scale up. These insights are used to consider how credit-based complementary local currencies can be used to support regional sustainable development through the provision of credit to small businesses.

Empirically, half of the study is dedicated to an under-researched complementary local currency called Sardex, based in Sardinia, Italy. The research applies heterodox understandings of money and credit to understand why this scheme has been so successful. It then considers the initial contributions that Sardex has to regional sustainable development. It identifies positive initiatives that demonstrate that a functioning credit-based complementary local currency can meet a series of policy objectives. The second part of the study turns to schemes in the UK. It first considers the dominant models used in practice, which are largely Convertible Local Currencies, like the Bristol Pound, and locally applied cryptocurrencies, similar to Bitcoin. These models apply a commodity-based understanding of money, which this thesis argues limits their ability to develop a financially sustainable business model or make a significant contribution to regional sustainable development. The thesis considers where credit-based complementary local currencies have been applied by schemes, but have largely failed to start. It draws on Commercial Barter Networks, which are ignored by local currency academics and practitioners, to provide more insights into this credit-based model. Finally, the insights from the first three chapters are used to support the development of a credit-based complementary local currency in Birmingham. Ethnographic techniques are used to detail insights made from direct involvement in starting this scheme.

The contribution of this research centres on the ability to understand money and credit on an ontological basis. The recognition that money within the dominant economy is credit-based, provides a starting point for the development of more effective complementary local currencies, including their ability to meet regional sustainable development objectives. The research provides theoretical insights alongside practical suggestions for policy makers and complementary local currency schemes. The aim is to support the sharing of the good practice identified within Sardex that is operating a financially sustainable complementary local currency and making contributions to a series of regional sustainable development objectives.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):