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Commerce · III.03 · MMXXVI · daylight

La Bourse  /  Volume III  /  Nº III.03  /  Workbook — the student

A man writing at a desk on a balcony above a mountain valley, books stacked beside him, cloud over the peaks.
Plate III.03 · Workbook — the studentThe Stamp, at the End of the Month.A currency is not a thing. It is an agreement with a running cost, and somebody is always paying it. The only question a design settles is who.

WORKBOOK — THE STUDENT

Chapter III.03 · Complementary and Local Currencies

For the person studying this alone, or in a seminar, with no circuit to run and no members to recruit. You are not too early. What you build in this term is an instrument you will point at every monetary claim you meet for the next thirty years, and almost nobody in any room can use it.

WHY THIS WORKBOOK IS DIFFERENT

The chapter was written for someone who could convene four hundred businesses. You cannot, yet. It would be easy to conclude that the method has to wait.

It does not, and the reason is the most useful thing here: the chapter's real content is one division, and the division works on anything that circulates. Cost over turnover. Turnover over stock. Those two ratios will tell you more about a payment system, a loyalty scheme, a mutual aid fund, a library, a tool share or a student society's float than any amount of reading about them.

So you will do exactly what the operator does. You will simply do it on systems you can actually observe — which, for the next few years, is an advantage, because you will observe more of them than any operator ever does.

PART ONE — DISCOVERY

Weeks 1–4: find the circuits you are already inside

Exercise 1.1 — The circulation census (90 minutes)

List every non-national unit of exchange you personally hold or have held. Be literal and be generous about what counts.

For each, write three things: who issues it, who accepts it, and how you get out. The third column is where every scheme's real design lives, and almost nobody looks at it.

Exercise 1.2 — The appreciative interview (45 minutes, with another person)

Find somebody who runs a small business, a society, a club or a community fund and ask exactly this, without variation:

"Tell me about a time somebody paid you in something other than money, or you paid somebody that way, and it worked better than cash would have. What made it work? What would have broken it?"

Then stay quiet. Take notes on the conditions, never on the outcome. This is the core skill of the whole book: the appreciative question returns causes, and the deficit question returns complaints.

Exercise 1.3 — One scheme, read properly (2 hours)

Choose any one of the six in the chapter — WIR, Wörgl, Sardex, the Chiemgauer, fureai kippu, Banco Palmas — and find its primary source. Not a blog post about it. Not a summary. The paper, the annual report, the institute's own page.

Write one page answering four questions:

  1. Who may join, and who may not?
  2. How does the unit come into existence?
  3. How does a holder get out?
  4. Who pays for the staff?

If you cannot answer the fourth from any published document, write that down. That absence is the chapter's central finding, encountered first-hand.

PART TWO — THE ARITHMETIC

Weeks 5–8: compute before you argue

Exercise 2.1 — Reproduce the chapter's figures (2 hours)

Do not take these on trust. Open lib/verify/III_03.py, read it, and then compute these independently, by hand or in a spreadsheet:

  1. WIR velocity in 2005. Turnover CHF 1,613,739 thousand over balances CHF 624,452 thousand. Confirm 2.584.
  2. Sardex velocity in 2015: €51,000,000 over €4,000,000. Confirm 12.75.
  3. Bristol's cost ratio: £150,000 over £952,381. Confirm 15.75 percent.
  4. The Chiemgauer's effective annual paper demurrage: (1.03)² − 1. Confirm 6.09 percent.
  5. The Kaplan–Meier survivor function for the eight British schemes. Confirm the median of nine years.

Then do the thing that matters most: find one figure in this chapter you can check against an outside source, and check it. If you find a discrepancy, write it down and bring it to your seminar. This edition wants to be checked.

Exercise 2.2 — The identity, on something you use (45 minutes)

Choose one scheme from your census in Exercise 1.1 that publishes any numbers at all — a transport authority, a large loyalty programme, a university card system. Estimate M, T and C as best you can. Compute V and c.

Then write two sentences: this scheme charges ___ and costs ___ per unit of turnover, so it is paid for by ___. If you cannot complete the third blank, you have found the interesting thing.

Exercise 2.3 — Kaplan–Meier by hand (60 minutes)

Take any set of things with start dates, some of which have ended: bands, cafés on your high street, student societies, apps you have used, flatmates' tenancies. Build the table. Censor the survivors rather than dropping them.

   S(t) = product over all event times ≤ t of  (at risk − closures) / at risk

Compare the Kaplan–Meier median to the naive median of the ended ones only. Write down the size of the bias you just created by dropping the survivors. This single habit will protect you from a large fraction of the confident numbers you will meet in your working life.

Exercise 2.4 — Find the honest negatives (30 minutes)

The chapter contains three. Find them, and write in your own words why each is there. Then practise the move yourself: take a monetary claim you personally find attractive and write the strongest honest negative against it. Not a straw version — the version that troubles you.

If you cannot write it, you do not yet understand your own position well enough to defend it. That is not a criticism. It is the assignment.

Exercise 2.5 — The breakage audit (45 minutes)

Go back to your census from Exercise 1.1 and total, as best you can, the value you personally hold in units you will never spend. Expired vouchers. A transport card in a drawer in another city. Points in an app you have deleted. Miles on an airline you no longer fly.

Now write the same number from the issuer's side of the ledger, where it is called breakage and is booked as income.

Three questions, answered in writing:

  1. What fraction of your total non-national holdings is breakage?
  2. For each issuer, would their income go up or down if you spent it tomorrow?
  3. Which of those schemes would still exist if everybody spent everything?

The third question is the one that matters, and it is the same question the chapter asks of fureai kippu, where 94.68 percent of credits earned in 2010 were never redeemed. A scheme whose income rises as its currency stops circulating has an incentive pointing exactly away from the thing it says it is for. Name which of yours are like that. You are not looking for villains; several of these schemes are perfectly honest about it. You are learning to read an income line and know which direction it wants the world to move.

PART THREE — DREAM AND DESIGN

Weeks 9–12: build something that clears

Exercise 3.1 — The five-person circuit (one week, live)

Find four other people. Between the five of you, run a real mutual credit circuit for two weeks, on paper, for anything at all: lifts, notes, cooking, proofreading, laundry, a lent bike.

Rules, and they are the whole exercise:

At the end, compute M (the sum of positive balances) and T (the sum of all transactions) and therefore V. Then compute what your circuit would cost to run if one of you did nothing but broker introductions.

Exercise 3.2 — The present-tense description (60 minutes)

Write 500 words describing your town eight years from now, with a working local clearing circuit in it, in the present tense, as description rather than aspiration.

Constraints, and they are the exercise:

The last constraint defeats most people. That is the finding.

Exercise 3.3 — The viability line (45 minutes)

For your five-person circuit, or for any scheme you would like to exist, write the four numbers on one page: target velocity, annual operating cost, stock at full draw, implied fee. Then write the closing number — the velocity below which you would stop — and put a date on the review.

Show it to one person and ask a single question: "What would you want to know that isn't here?"

PART FOUR — DESTINY AND DELIGHT

Make it hold, and enjoy it

Exercise 4.1 — The second owner (this month)

One person running a circuit is a hobby; two is a practice. Recruit a second owner for whatever you built, and recruit them by giving them the credit for the first result. Write their name down.

Exercise 4.2 — The irreversible commitment (this week)

One thing that cannot be quietly undone: a published ledger, a standing slot in a society's agenda, a written undertaking to four people, a monthly figure sent to a list.

Reversal is rarely a decision. It is a slow absence of renewal, and nobody has to defend that. Remove the option of drift.

Exercise 4.3 — Delight, on purpose (ongoing)

The Chiemgauer's stamp is a small, deliberate, physical act of keeping money current, and people report liking it. That liking is velocity, and velocity is the whole arithmetic.

Choose one element of whatever you are running and make it genuinely pleasant — the paper, the hour, the handwriting, the ritual of the weekly balance check. Write one sentence: the part of this I look forward to is ___. If you cannot complete it, redesign until you can. A practice with no pleasure in it has a half-life.

THE TERM PROJECT

One scheme, read to the bottom

Choose a single real complementary currency — one not covered at length in this chapter is better — and take it all the way down.

Deliverables.

  1. The primary-source dossier (800 words). What you found, where, and what you could not find. The could not find list is marked and is worth as much as the rest.
  2. The five numbers (1 page). M, T, V, C, c — computed, with every input shown with its unit and its source, and every estimate labelled as an estimate with its sensitivity.
  3. The survival analysis (600 words plus workings). Place your scheme in a cohort of at least six comparable schemes. Kaplan–Meier, censored properly. State your denominator: which schemes you looked at and which you did not.
  4. The honest negative (400 words). One condition under which this scheme fails, computed rather than asserted.
  5. The viability line (1 page). What it would take for the scheme to fund itself, in the form of a velocity or a fee, and whether that is reachable.
  6. The reflection (600 words). What you expected, what you found, and what the gap tells you about how you were reading before.

How it is assessed. Not on whether the scheme turned out to be good. On whether the arithmetic is reproducible — whether a second reader could take your inputs and reach your outputs — and on whether you reported a figure that did not flatter your conclusion.

A scheme you admired and had to report badly, computed cleanly, is a first-class piece of work. A favourable finding that cannot be reproduced is not.

SELF-ASSESSMENT

Score yourself honestly. This is for you.

Not yetBeginningSolidFluent
I can write the cost identity and say what c means in a member's terms
I can compute a velocity from a published annual report
I can explain why a demurrage and a transaction fee are the same instrument
I censor survivors rather than dropping them
I label an estimate as an estimate and print its sensitivity
I can state a scheme's denominator — what I did not look at
I ask who pays for the staff before I ask anything else
I design the pleasant part in deliberately, rather than hoping for it

The two that matter most are the fourth and the fifth. The rest can be learned in an afternoon. Those two are habits, and habits take a term.

CARRYING IT FORWARD

You will not be convening a clearing circuit for some years. What you will have, if you do this properly, is:

That last one is worth more than it sounds. Most people who write about alternative money have never operated any. You will have, and the specific memory of a balance that would not reconcile at eleven at night is the thing that will keep your later claims honest.

APPRECIATIVE QUESTIONS FOR YOUR SEMINAR

  1. When has one of us been paid in something other than money and it worked better than money would have — and what made it work?
  2. Which circuit that we are all already inside has the highest velocity, and how would we prove it?
  3. What is already working about how this group shares things, and what makes it work?
  4. If every one of us left with one number we had computed ourselves and could defend, what would this seminar be able to do that it cannot do now?