In recent years, the acceptance of the current economic system has faced serious difficulties from several directions. Above all, the money and global currency system has been heavily criticised on account of speculative excesses, the debt problems of the Third World, the equally high level of state indebtedness in industrial countries as well as various currency and stock market crises in emerging and developed countries. If we were to classify these critics, they include socialists, opponents of globalisation, members of the middle class, as well as academics and practitioners who subscribe to the Austrian tradition surrounding the monetary theory of Ludwig von Mises or the approach of Friedrich August von Hayek, as well as a circle which takes the theory of Silvio Gesell (1916) as a reference. Furthermore, the debt theory of Paul C. Martin, the related property theory of economics and the new growth market in “Islamic Banking” have also become talking points.

Above all, both of the above approaches of the Austrian school and the free money theory of openly liberal approaches to solutions show definite potential for combination under liberal general conditions. These undoubtedly share scepticism about the long-term stability of the monetary and economic system in its current institutional form. While followers of Mises regard what they see as a detrimentally high level of liquidity as being primarily caused by the state monopoly on money and demand a relaunch of the disciplinary gold standard, the “Gesellians” see the problem of regularly recurring economic crises as primarily due to the present system of interest rates, which misleads the system into severe hoarding of money and which ultimately can only be avoided by impossible exponential economic growth.

The fact that both approaches have already functioned well in the past can be seen from several practical examples. Gesell and his followers thus refer to the historical example of the mediaeval bracteate coinage, various attempts at a paper currency, to the Austrian Wörgl experiment, as well as to current trends based on successful regional or sectorial complementary currencies, such as the Canadian LETS system, the Swiss Wirtschaftsring cooperative (WIR), the Danish-Swedish JAK system, the German “Chiemgau money” system and the “Saber” educational currency developed within academic circles in Brazil. Within Austrians, many recall the positive experiences of the gold standard, and following the rise in commodity prices, refer to the rediscovery of gold as an investment and monetary medium, which, since the discovery of money several millennia ago, has lost nothing of its character as a crisis metal.

Thorsten Polleit, the Chief Economist of Barclays Capital and “ECB-Watcher” [1] expresses this as follows:

“The notion that gold will not reachieve its monetary role derives from the belief that the paper money standard which today underlies all the major currencies, is a ‘secure’ regime. However, it is a great experiment, the result of which is still obscure. Paper money is a ‘fair weather regime’. It is not therefore guaranteed that it is a reliable institution in the long term. It thus cannot be excluded that at some point in the future the need shall arise to return to a link to gold or precious metals.” [2].

The contemporary relevance of this discussion is shown by the topics at the Prague Conference on Political Economy in April 2006, and the OIKOS Conference on a sustainable monetary system in May 2006, each with a workshop on monetary systems and complementary currencies. The speakers at this year’s Commodities Fair in Munich are also likely to give ample consideration to this problem.

[1] ECB-Watcher describes a group of academics and practitioners who document and evaluate the activities of the European Central Bank.

[2] Thorsten Polleit in “Die Welt”, 20 December, 2004.

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