Jacinto Garcia buys baked goods with Turutas, the social currency used in the Catalonian fishing town of Vilanova i la Geltru, Spain (Photo: Angel Navarrete)
As Spain’s economic recession has continued to deepen, conditions for people within the country are expected to get worse following austerity measures that increasingly cut into everyday economic survival, Reuters reports Tuesday. However, as many economists grapple over numbers, and search for signs of hope for a free market revival, many people within Spain have increasingly started to turn to alternative currency systems, or parallel euro-free economies — giving up the ghost of a neoliberal recovery in exchange for a new way.
According to Reuters, following recent extreme austerity measures, a rush of consumers and firms withdrew their money from Spanish banks in July, with private sector deposits falling almost 5 percent, to 1.509 trillion euros ($1.896 trillion) at end-July from 1.583 trillion a month earlier, signally an extreme loss in faith in the austerity economy.
“Analysts believe it is inevitable that Spain will soon have to call for a European rescue package to help bring its debt costs down as austerity measures designed to slash the public deficit push the economy deeper into recession,” Reuters reports.
“With much more fiscal austerity in the pipeline and unemployment at astronomic highs, the risks are clearly tilted towards a more protracted recession,” said Martin van Vliet, an economist at ING.
However, as the Washington Post reports today, at a time when the future of the euro is in doubt and millions are unemployed, alternative forms of exchange and survival are springing up in the cracks of capitalism, allowing people to exchange, barter, and live outside of failing currencies.
One example given by the Post is the proliferation of “time banks” throughout the country. Time banks allow people to trade their services amongst one another in a currency of hours. One provides a service for a certain amount of time and can ‘buy’ another service for that same amount of time. Time banks allow people to exchange labor and services without the need for abstract currencies.
In another instance, residents in the city of Malaga have established a website which allows individuals to earn money and buy products using a virtual currency.
In the Catalonian fishing town of Vilanova i la Geltru, residents are experimenting with a localized currency, which is worth slightly more than the euro when it is used at local stores.
“This is a way for people who are on the fringes of the economy to participate again,” said Josefina Altes, coordinator of the Spanish Time Bank Network.
Similar projects have been taking place in Greece, Portugal and other hurting euro-zone countries.
“While each social-money project has its own accounting rules, the basic concept is the same. You earn credits by providing services or selling goods, and you can redeem the credits with people or businesses in the network,” the Post reports.
“These experiments aim to take communities back to a time when goods and services were bartered, before things such as interest rates, market speculation and derivatives complicated the financial world.”
Time Bank organizers say as the crisis deepens more and more people are signing up for such projects.
There are now more than 325 time banks and alternative currency systems in Spain involving tens of thousands of citizens. The projects represent one of the largest experiments in “social money” in modern times.
Peter North, a senior lecturer at the University of Liverpool who has written two books on alternative currencies, told the Post that the recent efforts in Spain may last longer than similar projects in the past because they are connected to the 15M, or “Indignados,” movement — a protest movement which began in Spain and helped inspire the global Occupy movement.
“Instead of just being a desperate way for people to survive a horrible economic crisis, this is part of the cooperatives, credit unions, community banks, organic farms and recovering factories — the alternate economy — that the Occupy movement is groping towards,” North said.
Anger over austerity measures has consumed Spain over the past two years. Tensions heightened again in July when the Spanish parliament passed an $80 billion austerity package, which included pay cuts for civil workers, an increase in sales tax, benefits cuts and a raise in retirement age.
The package came in exchange for a $122 billion rescue package pushed for by Spanish prime minister Mariano Rajoy, and approved finally by the German parliament. Following the deal, protesters took to the streets on a nearly daily basis, culminating in a countrywide protest of tens of thousands of demonstrators across 80 cities on July 19, 2012.
The Rajoy government is expected to formally request additional Euro bailout money by mid-September or October, and is likely to continue drastic austerity policies.