LOCAL MONIES AND �INTER-COMMUNITY MONETARY FEDERALISM �AS EXPERIMENTAL SPACES FOR DECENTRALIZED DEMOCRATIC ECONOMIC PLANNING

Louis-Maxime Joly

PhD candidate in applied social sciences (UQO)

Under the supervision of Mathieu Perron-Dufour

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With special thanks to

Claire Warmels

MC12/I – Prefigurative postcapitalism:

real-life cases of economic democratization

Introduction

• SASE (2025) Democracy after Globalism:
• Streeck: in the face of increasing centralization and military imperialism, we need decentralized governance and greater local autonomy 🡪 Democracy as power to change things
• e.g. Alternatives to Capitalism : Next System Studies
• AFEP (2025) Diversifying and Decolonizing Economics:
• Kesar: a call for a radical utopian vision as a scientific project
• Vallet: in continuity with the Progressive Era, with the importance of civil society
• Levrel: for multidisciplinary research that’s “action-oriented”
• Great Transition (2025) Social struggle, social reproduction, planning and commons:
• Perron Dufour: Domesticating money as a tool for emancipation

Putting the presentation into context

Decentralized planning with money, especially with local monies that:

• Draws inspiration from both democratic planning (Durand & Keucheyan, 2024) and libertarian municipalism (Biehl & Bookchin, 1998; Durand Folco, 2017),
• Is conceptualized through “thin socialism” (Cullenberg, 1992) and “post-Hayekian socialism” (Burczak, 2006),
• Uses the monetary information permitted by local currencies (Lafuente-Sampietro, 2022),
• Has the “Communal luxury” and its political imaginary (Ross, 2015) in mind!

Putting the presentation into context

• Why local currencies monies? They could permit:
• Community deliberation to determine community goals (democratic planning)
• Monetary creation for the allocation of credit in local currency to permit local economic production
• Generalized usage of local money for local consumption
• But, there are issues with the local currencies as they are, so we need to go beyond what is and offer them the space they need to develop into something more.
• It’s why this presentation is mainly about inter-community monetary federalism!

Presentation plan

1. From crisis to local cooperative solutions
2. From the social solidarity economy to local currencies
3. From complementary local currencies to endogenous local monies
4. From local monetary projects to federalised monetary clearing and lending systems
5. A closer look at what this monetary federalism could look like
6. Conclusions

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1. From crisis to local cooperative solutions

• 2007-2008 Crisis
• UQÀM in economics for some solutions…
• NL-austerity 🡪 2012 Student strike
• Researched post-Keynesian alternatives to austerity for unions (CSN, FTQ, CSQ)
• Solutions? e.g. Wage-led growth (ILO, 2014) or Green New Deal…

The state as domination?

The instituent praxis

For a cosmopolitics of the commons

2. From the social solidarity economy to local currencies

• Conception of the Cooperative solidaire de l’Abbaye d’Oka
• Potential for self-managed spaces for production and living, enabled by the Chantier d'Économie Sociale of Québec
• Limits of alternatives and coops in a capitalist economy
• Access to CAD$ and payment of interest
• Competition from the “normal” capitalist firms
• Solution: Monetary spaces of autonomy for cooperation!

2. From the social solidarity economy to local currencies

• Master's thesis in the history of post-Keynesian thought (under the direction of Till Düppe, UQÀM)
• (2017a) Les génération post-keynésienne + (2017b) The Post-Keynesian Ethos
• Keynes' “real” message according to Robinson (1971) and Davidson (1972) :
• Euthanasia of the rentier and socialization of investment (also true for e.g. Durand & Keucheyan, 2024) :
• ∑: nationalization of the banks, in this neoliberal context?
• Kalecki (1986): “full public control over the banking and finance system”
• Solution: Nationalization/socialization — but if not at the national level, why not experiment at the local level?

No community without money!

The limits of the local

But the necessity of the local!

Source: Koo & Ji (2022) Karl Polanyi’s theory of fictitious commodification as cultural political economy of institutionalization, Journal of Cultural Economy.

(2017)

3. From complementary local currencies to endogenous local monies�

• Local monies for the local development of reciprocity (Fontaine, 2008) by making money in common (Dissaux & Fare, 2016)
• Going beyond fungibility: based on territorial partitioning (Zelizer, 2005) and monetary plurality (Baumann et al., 2008)
• Different scales (Lietaer, 2001) and resilience (WIR - Vallet, 2015; Trueque -Saiag, 2016; CLC - Blanc & Fare, 2025)
• But, also recognizing “finance as a form of economic planning” (Sorg, 2025)

• From models to modules to institutions (Pinsonnault & Tremblay-Pepin, 2024; INDEP)
• Democratized money circuits: community deliberation (for democratic planning) 🡪 allocation of credit 🡪 creation of businesses and initiation of production 🡪 to meet demand!
• This opens up a number of possibilities, such as a monetary advances for wages (Friot, 2024) or a fiscal time currency (Théret, 2021).

Bougrine, H. & Seccareccia, M. (2002) Money, Taxes, Public Spending, and the State Within a Circuitist Perspective, Int’l. Journal of Political Economy.

3. From complementary local currencies to endogenous local monies�

• Following post-Keynesian and institutionalist teachings on money:
• We need to move beyond the exogeneity of complementary local currencies to adopt endogeneity (e.g. Lavoie, 2014), which would make them genuine alternative monies!
• Structural and conceptual problems with complementary local currencies:
• Medium of exchange and not a unit of account;
• Velocity and not money creation (flux-reflux);
• Rejection of debt… (Blanc, 1998, ch. 3)

3. From complementary local currencies to endogenous local monies

J.W. Masson (CUNY)

• Operational problems with one-to-one complementary local currencies:
• Problems of liquidity (e.g. Parguez & Seccareccia, 2002),
• Integration of production and labour,
• Incorporation of the dominant valuation regime (Joly, 2020)
• Lack of involvement (Stamm, 2023) 🡪 People give up because:
• “Not monetary projects, but social ones”… (ex. Eusko, Milanesi, 2025)
• “We need better design” (ex. Tikatsou, Revelli, 2025)

3. From complementary local currencies to endogenous local monies

• A better example 🡪 Sardex (Bazzani, 2020): Multilateral mutual credit system with strict member selection and zero interest rate, but in complementary currencies…
• Go beyond what is:
• Go beyond convertibility and adopt a new unit of account that could allow the creation of credit, and so, money!
• Ex. Mutual credit systems (e.g. LETS or time banks):
• A real, endogenous, associative credit currency based on the value of work (Nishibe, 2006),
• But it’s also complementary in the actual system… (Méthé, 2012)
• Ex. Multi-currency systems (Delandre, Derudder & Fert, 2022): “with four types of resources and their monetary vector”
• Near INDEP: Zeug – Cybernetics & Holistic Accounting with its “token”, but with money creation

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3. From complementary local currencies to endogenous local monies

• In short, we need to create the conditions to move beyond complementary local currencies anchored in national currency and offer the strength of genuine endogenous local monies.
• How do we do this? Monetary federations are needed to achieve this!
• Polanyi’s “federal and democratic mutual socialism” or Proudhon’s mutualism (Théret, 2024)

4. From local monetary projects to federalised monetary clearing and lending systems

• Thesis goal:
• Connect communities and their members
• Overcome normal CLCs challenges
• Maintain local sovereignty and independence.
• Research question:
• What types of institutional organizations would enable communities using local currencies to exchange and develop cooperative financial ties?

Joly, L. M. (2020). Federalism and cooperation for community currencies: Some ideas on the need for intercommunity clearing systems. The Japanese Political Economy, 46(1), 42-64.

4. From local monetary projects to federalised monetary clearing and lending systems

Dashboard for inter-community projects

Stock-flow consistent models

• Multi-level interactions through exchanges and compensation
• Open questions and possibilities:
• What levels of integration and competition?
• Issues of taxation (Théret & Kalinowski, 2012)
• Issues of multi-level democratic planning (INDEP; Planning for the Entropy, 2022; Durand & Keucheyan, 2024)

Joly, L. M. (2020). Federalism and cooperation for community currencies: Some ideas on the need for intercommunity clearing systems. The Japanese Political Economy, 46(1), 42-63.

4. From local monetary projects to federalised monetary clearing and lending systems

5. A closer look at what this monetary federalism could look like

“Non-inspirations” from the current system and its history :

• Problems with the Euro (Rossi, 2015):
• The issues of monetary sovereignty and fiscal conservatism (Griffith-Jones, 2022)
• The Euro benefits the strongest, not the weakest (Mitchell, 2015; D'Arista, 2009)
• Solution: Going beyond a one-size-fits-all currency!
• Problems with Currency Boards:
• USD “convertibility” = loss of monetary and political sovereignty (Ponsot, 2002; Lavoie, 2004)
• e.g. the crisis in Argentina (Roig, 2008)
• Solution: Moving beyond “national currency” anchoring

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5. A closer look at what this monetary federalism could look like

Other “non-inspirations” from the current system and its history:

• Problems with the Gold Standard:
• Large imbalances and highly political (Aglietta & Valla, 2017)
• Mutual indebtedness, but bilateral relations (Eichengreen, 2008)
• Problems with the current “international currency”:
• Problems of liquidity (Toporowski, 2022),
• Clearing problems (Faudot, 2017),
• Political control (Panitch & Gidin, 2012)
• Solution: an alternative accounting and multilateral clearing system!

5. A closer look at what this monetary federalism could look like

• Against the simple “interchange” of complementary local currencies:
• With only the linking of individuals through “interchange”, such as CC-Hub, Cyclos in Europe (Huber & Martignoni, 2013; Martignoni, 2015), Marché B in Québec (Guilmette, 2020)...
• Solution: compartmentalization with internal and external currencies (e.g. Tang Dynasty: Lietaer, 1999; COMECON: Faudot, Marinova & Nenovsky, 2023)

5. A closer look at what this monetary federalism could look like

Inspiration #1 - National clearing system:

• Exchange and payment systems in sovereign monetary countries with endogenous money creation by private banks (Lavoie, 2014).
• e.g. the LVTS system, where the Bank of Canada coordinates and validates interbank information, in addition to enabling the settlement of transactions, thus acting as a clearing house to settle mutual debts (Seccareccia, 2015)

5. A closer look at what this monetary federalism could look like

Inspiration #2: International Clearing Union (ICU) (Keynes, 1942)

• Bancor as a unit of account, not a reserve asset (Amato & Fantacci, 2014);
• Control capacity + economic and political mechanisms;
• Surplus and deficit countries share the burden to develop cooperatively;
• Davidson’s (2015) IMCU: creditor nations spend these surplus credits (products, investments or aid)
• Lietaer (2012) in Terra: a unit of account based on a basket of commodities, services and carbon emission rights (with, also, demurrage or negative interest rates)

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“To [Keynes’ ICU] and beyond!”

5. A closer look at what this monetary federalism could look like

ICU, but beyond equilibrium:

• “By contrast [to Keynes and White], Kalecki and his colleagues recognized that the very compulsion to restore external equilibrium was a way of forcing disequilibrium onto the domestic economy in the form of unemployement and below-capacity production. […] to secure international balance of payment equilibrium […] individual countries [have to resort] to export promotion, import substitution, or deflationary economic policy instruments” (Osiatynski & Toporowski, 2022, p. 5)

5. A closer look at what this monetary federalism could look like

Further propositions beyond the ICU:

• Kalecki & Schumacher (1943): “Clearing and lending combined”
• New ICU (NICU, Alessandrini & Fratianni, 2008): for international cooperation, where “quantity of supranational bank money would be demand-driven”
• Kregel (2023, PK-Lille): “Already in Keynes’ vision”, there was regional clearing, but what I propose is with greater monetary plurality via local monies
• We don’t have to wait for it to happen. Let’s do it locally and experiment!

Kregel (2024) Prospects for the Introduction of a Clearing Union at the International Level, p. 6.

5. A closer look at what this monetary federalism could look like

Other issues:

• “Deadly paradox” (Blanc, 2021): “impossible scaling [...] too small and too big”: replication and competition issues
• Solution: Territorial limitation of local currencies and intercommunity compensation
• Trueque (Saiag, 2015): “Federalism versus centralization of monetary issuance” (ibid., p. 57)
• Solution: Moving beyond the notion of “poor people’s money”.

5. A closer look at what this monetary federalism could look like

Even more issues:

• What to do with the “Trilemma”?
• Solution: “Capital Control”
• Monetary sovereignty = political sovereignty
• However, external market logic and system constraints:
• Kregel (2020) External debt matters [...] limits to monetary sovereignty: external constraints based on trade and external payments
• Solution: Hélène de Largentaye (2023) on “buffer stocks” (with Keynes' “tabular standards”, 1944)
• This is why we need an alternative federative monetary structure!

5. In conclusion

• The goal was to present a prefigurative postcapitalist proposition that could be of use for democratic economic planning.
• It’s time to imagine genuine endogenous local monies for local democratic economic self-determination.
• To make it happen, we’d need inter-community monetary federalism with multilateral compensation and lending, without necessarily going through conversion to national currency or “interchange”, and doing so by adopting a new unit of account between communities.

5. In conclusion

• We need a federative monetary union capable of offering the necessary credit in a monetary language that responds to needs between communities.
• In order to go beyond the objective of equilibrium, we need to go beyond trying to simply settle accounts, but above all try to enable the development of viable alternative spaces within the broader current capitalist one.
• We need to do this while preserving the diversity of communities and monetary languages to enable diversity of action and valorization.