Translator: Michele Gianella Reviewer: Nicoletta Pedrana
I was born in 1980,
so that’s where I’ll start my story from.
The twentieth century is known and is often called,
"The century of self".
It is defined in this way
because it is the century of the affirmation,
especially in the field of economics,
of neo-liberal market theories.
As John Maynard Keynes said, the money motivation
has often led us in the course of time
to label those who use money
with a number of adjectives which,
if associated with people who are close to us,
would definitely bother us.
When we think of money,
we think of individualism, selfishness, competition, greed,
profit, cynicism, power and materialism.
But these features are indispensable
if we take into consideration the economic-based vision of the world
where this "homo economicus", who is a perfectly rational man,
works to maximise his own profit.
Where does this conviction come from?
It comes from the theories - at least this is what they often tell us -
of an economist named Adam Smith.
In the "Wealth of Nations", in one of the passages
that's most often quoted for this goal,
Smith said:
"It is not from the benevolence of the butcher, the brewer or the baker
that we expect our dinner,
but from their regard to their own interest".
However, besides writing "The Wealth of Nations",
Smith wrote another book called "The Theory of Moral Sentiments".
And what is it about?
What is the interest of every man?
It is sympathy.
Sympatheia means, in fact, "to feel the emotions of others".
So it means sharing.
In a certain way, it means empathy, recognizing oneself in others.
Therefore, as you can notice, some of the dogmas, of the convictions
at the heart of the market and neo-liberal economy
are often plain misunderstandings and manipulations.
Let’s take the very concept of efficiency:
we are all, for the sake of efficiency, willing to endure any kind of effort.
This is a definition of economy found on the Internet, in books, schoolbooks:
"Economics is the science that studies
the allocation of scarce resources to alternative uses
in order to maximize the satisfaction - namely, the profit - of the individual,
whose individualistic-rational actions lead, we are told,
"to the satisfaction of collective needs".
But how does this process work?
And is it true that the only needs taken into account in economy
are those met by financial goods?
How does the consumer – who is the sovereign of a market economy,
and determines the success of a product or of an entrepreneurial activity - vote?
Marketocracy is not a democracy.
While in a democracy every single person has a vote,
in a marketocracy there is a vote for every currency,
every dollar, every euro.
As you well know, these votes are not distributed equally among the population.
But at this point, given that votes take place through currency,
we realised we’d better try to understand together what a currency is.
First, we saw that we often relate to things
as if they were "brute facts", the philosopher Searl would say,
or things that exist beyond us.
But if we relate to money as something existing beyond us,
as if it were the wind, or a mountain,
then we won't be able to understand that money is an anthropic construct,
and that we can change the way in which it is distributed,
that is change the rules of credit,
the rules through which money is created and distributed
and through which it moves.
So, if I asked in this room - I did it countless times -
what currency is,
I'd get hundreds of different answers.
Not even economic science
has given a single answer to this question.
The relationship that we have with money
is the same relationship
as in St Augustine's words men have with time -
"If no one asks me, he wrote in "the confessions",
I know it;
if I have to answer this question to someone, I know not".
And so we started from there.
Since in 1971 - not many people know -
the Bretton Woods agreements were suspended,
there is no longer, behind the money
the promise of convertibility in gold, which was specific to the dollar,
but there is simply an agreement.
It's part of the construction of social reality:
let's say it's part of a kind of our collective consciousness,
therefore it's part of an agreement.
We therefore agreed on the definition
that money is an agreement within a community
that decides to use a given means, a given instrument
as a means of exchange.
At this point, you will wonder: how did you interpret this?
Clearly, the first thing that comes to mind
is the beginning of our adventure.
In 2007, we began to imagine Sardex.
I come from a village of 10,000 inhabitants.
At the time our province, Medio Campidano, was the second poorest province in Italy.
While we were still thinking about Sardex, in 2009 we became the first.
So the situation was already starting to improve.
(Laughter)
What happened then?
The economic and financial crisis broke out,
and we knew that two things would originate from the crisis:
a lack of liquidity and a credit crunch.
We were already coming in Sardinia from a credit crunch situation,
meaning we were having difficulty in accessing credit,
so we had no idea what would come next.
We therefore asked ourselves the first, very simple question.
The day after the Lehman Brothers crisis, my father got up and went to work.
Nothing had changed for him: his company was able to produce,
the other companies were able to produce and we were there with our intact needs.
So if we are able to produce, what is really important?
To find a way to keep trading goods or services.
So the lack of money is not a problem:
it would be like saying
that we cannot build a road out of a lack of miles.
Exactly the same thing.
So what did we do?
We created a system of mutual credit.
We drew inspiration mainly from two experiences:
one is that of the Wir bank, born in 1934 in Switzerland,
which started an exchange system
where, after the crisis of 1929, always because of the lack of liquidity,
the companies recorded a debt every time they bought
from other companies belonging to this economic circuit;
and every time they sold,
they instead recorded a credit towards these companies.
In addition to this, we were inspired by another project
that is, let us say, fundamental in the history of the economy,
namely the proposal of an International Clearing Union
first promoted by J.M.Keynes,
Keynes, who was concerned all his life
with passing off the economic problem as a secondary problem,
says, "We need to rewrite the relationship between debtors and creditors".
How?
Treating debtors and creditors symmetrically:
then we will see how this influenced our project.
How does it work? Very simple: one Sardex is worth one euro.
Before we were talking about virtual currency:
actually I would like to tell you that it is a digital currency.
Virtual currency comes from the Latin "virtualis", and it means "potentially":
what is potential still has to become actual.
From this point of view,
the only potential property that money has is its value.
How is it put into effect?
The moment we give money in exchange for a commodity.
So money is a potential value which turns effective not by being owned,
but by being given to another.
Anyway, one Sardex is worth one euro.
At this point one joins the network.
No need to tell you how hard it was to build a network from scratch.
We went to submit the project to hundreds of companies,
and finally we found a mad guy
who said: "Yes, I'm in! Who else?" - "Just you"
(Laughter)
... at the moment".
After that, we tried to get more and more companies to sign up
and within a year we had 250 companies.
So, when a company signs up, it makes its goods or services available,
the ones required by the network.
Every time it sells, it receives a credit;
every time it buys, it records a debt;
but it may start off with a debt,
and therefore buy even before having sold,
through a credit line awarded by the collectivity,
namely the set of the member enterprises.
This completely changes the relationship of trust,
which turns from bilateral to multilateral:
every credit, every handshake made within the circuit
becomes an act of trust
between the individual and the community, and the other way around.
We started from Business-to-Business, that is among companies,
then operated according to a logic
that gradually won over thousands of companies.
We will see there are 3,000 companies, we will see the numbers.
But what is the logic?
The system we live in presents two opposing forces,
which debtors and creditors are subjected to:
for each credit, there is a debt.
This means that the creditor
will be led by the fact of having a hoarding premium,
an interest in accumulating more and more credit.
This prevents the debtor from repaying his debt.
What we did was to treat symmetrically debtors and creditors,
that is eliminate interest rates, eliminate the liquidity of the currency
to ensure that the creditor was led to spend his credit as soon as possible
and put the debtor in the position of repaying his debt, striking a balance.
The only sensible position in the Sardex circuit is to be around zero:
if I accumulate a billion Sardex, I am an idiot, that's all.
(Laughter)
I only own them because I have to spend them, and nothing else.
We then decided to allow employees to enter the circuit,
because there was a lack of fundamental things, in my opinion.
On the one hand, all the bonuses and rewards for overtime:
there was no more money to give.
We reactivated them as credits.
This means more purchasing power for families,
it means pushing the aggregate demand for local goods and services
and ensure the forging of strong relations between employees and entrepreneurs.
So, after working on the relations between entrepreneurs,
we worked on the relations between entrepreneurs and their workers.
But not only: the workers have an extraordinary opportunity,
asking for advances on future wages.
And we've really seen employees asking for advances for anything:
for a house renovation project, a wedding, dental expenses -
because today, in a single-income family,
even tackling dental costs becomes challenging.
The last step will be the entry of private citizens.
How will citizens get in?
Those who choose to reward the companies in the circuit
will receive bonuses in Sardex credits that can be spent in the network.
These are the results we have achieved: as you can see, 170,000 transactions.
Behind each transaction, a handshake
based on the trust between two entrepreneurs.
You emerge from anonymity: when you pay in Sardex, it's different,
because if you pay in euros, nobody asks you, "What do you do?"
"It’s none of your business!" they would reply.
If you pay in Sardex, the question is spontaneous,
"What do you do?", "Ah, I do this". Because it's part of the human dimension.
Transactions for 90 million euros in the last three years,
42 million of which just during this last year.
Speed of circulation: what is it?
It's the speed at which credits changes hand.
A currency made to be spent shuffles very fast, nobody keeps it:
Sardex circulation speed is 12.35.
The euro, 1.5.
1120% is the growth of transactions in the system.
When we set out,
we would never have expected what then actually happened;
to collaborate with Yale, with the London School of Economics,
who are studying our model.
To be invited to the United Nations, as will happen on the 7th of December,
to talk about the spread of our model in emerging countries.
But what we did expect, and we were right,
was to see a strong need for collaboration among people.
Here you can see an analysis of our network
in which, as I told you, each of the links between these nodes
is a handshake among member companies.
Therefore, what we want to do
is to work in parallel with the economic system,
combining the currency we use every day with another tool with other functions.
Moving from the "century of self" to the "century of us",
moving from "do ut des" to "do ut possis dare".
In short, I’m giving something to you so that you may then give to others.
Because if in the future "communities will be the new currencies",
mutual trust and collaboration will be the basis
for building a model of sustainable and lasting development.
Thank you.
(Applause)