Community Currency Experiment in Quito, Ecuador
Connections ('compromisos') in Toctiuco, People's Quarter
From "La Otra Bolsa de Valores", translated from the Spanish
by Stephen DeMeulenaere
By Jurgen Schuldt, Vice-Rector, Pacifico University, Lima Peru
jschuldt@upacif.edu.pe
From the end of 1995, a community currency system called
"Compromisos" has been operating in Toctiuco, a low-income people's
quarter in the hills above Quito with approximately 30,000 residents.
Directed by Mr. Alfonso Gandarillas of the Development NGO "Hombres
de Tierra" (people of the land) and funded by the Pestalozzi Foundation,
this system keep accounts and mediates payments between three
related currencies: 1 Connection = 1 Sucre = 1 Resource.
The SINTRAL system is one of the thirty young initiatives that
the Development NGO introduced in the community. Each member
receives a cheque with which they can acquire goods and services of the
other members, the cheques are then collected and the values put into
a computer for keeping the accounts of each member. In this case,
there is no review of the offers and requests that are made, but the
members list the goods and services that they would like to acquire,
and what they are offering in return.
It is certainly possible that in the long run, when the quantity of
members reaches an adequate number they can circulate a photocopy
of the diverse offers and requests, including the location of where they
can obtain these goods or services. For now, it reduces the cost of
transactions, and deals primarily with the individual requests for
specific offers.
There are a number of differences between this project and the
other community currency project in Peru, the SINTRAL project in
Rumihuaico in that this community is comprised almost entirely of one
social class, and in this case are described as people scarcely able to
achieve the most basic standards of living and education. For
instance, those that are half-involved, or not involved in the project are
characterized by high levels of hoarding, unemployment, delinquency,
gangs, drug addiction, sexual abuse, alcoholism, etc. (this low-income
community was created by the migration of large numbers of poor
peasants to urban areas in the 1960s.) Although the infrastructure of
the community has improved substantially (paved roads, modern camps
for the homeless, well-equipped schools, street lighting and water), in
the change to the present generation the people live in conditions of
extreme poverty. The large majority go into the city to work, where they
work as labourers or in domestic services.
The leader of the system acknowledges a defect in the function, in
the sense that some people purchase more than they offer, leading to a
permanently high negative balance. Consequently, others have
substantial positive accounts, which has led others to claim they are
being defrauded by participating in the system, leading to some people
losing sight and leaving the system (basically due to the consequences
of inflation in the internal currency). It's considered necessary to
resolve this problem, considering the conditions of poverty in the
community.
That is to say, it requires solving the problem of offers of goods
and basic services, that the structural problem is undermining the
great demand and potential of the system. This also requires
establishing a "credit limit" for each member.
On the other hand, another occurrence of great benefit to the
community is the creation of businesses capable of operating according
to the methods used by the businesses of the city, which is beginning
to replicate goods and services offered by these business, and which can
explain for a series of "economic externals" derived from the system, the
principal of these taking root known as "mutual aid", and a feeling of
mutual reciprocity ("today for you, tomorrow for me"). But this is also
leading towards major social interaction, where the information learned
in the course of trading build solid social relations within and
throughout the community, instead of purely economic relations
normally encountered in the conventional economy.
As for the rest, "many families cannot survive if these system
does not exist", explains Gandarillas, who is now offering loans for the
purchase of goods. In this sense, the members of the system can be
seen as a "mutual aid group", very supportive of the local businesses of
the peasant communities of the diverse regions of the country which
originally provides for families, which is in turn of great value for
overcoming the painful breaches which can occur in the budgets of
some families between the moment when one calculates their expenses
and the moment when one receives their income.
Most transactions are very small, such as chocolate, rice with
chicken, pies, clothing, etc. Equally, some members also offer services
such as repairing vehicles, washing clothes, etc. Slowly but surely
there comes an interesting process of interaction with a similar
experience, of which an enterprising exchange of different productive
specializations of the community. A problem appears when differences
in standards of quality between members leads to dissatisfaction, now
that the offers of Toctiuco increase, except services such as
construction workers, seamstresses, painters, gardeners, etc. At most,
if one insists on high standards from a community that is not able to
provide them, the system solely rests on a paternalistic base, simply
reproducing the related conditions of dependency and subordination.
From this, one can derive a series of recommendations that one must
consider:
* In the first place, it is necessary to develop the internal
conditions that are indispensable for the community of Toctiuco to
generate the production of the services necessary to activate the local
economy from within. This requires installing education and capacity
building systems, especially for those members who show the greatest
difficulty in becoming more involved or using the system so that they
are able to expand the range of goods and services offered.
* Secondly, it is essential that accounts are added, not only for
transactions of small amounts (as we have now), without being
concerned about the type of goods and services, -in quantity, quality
and value- which is traded daily among the members. For they can
record, on the back of each cheque, noting the amount traded of each
product or service (many also note the quality of good or service
received in the extra space).
* Thirdly, we must consider the use of cheques in order to reduce
transaction costs. It has been decided that a member who receives a
cheque for 1,000 compromisos can then re-endorse the cheque for
buying goods or services for the same or another value, without the
transaction disrupting the counting system.
* Fourthly, we think that initially and while the people become
familiarized with the system, over three or four months they ought to
work to keep their accounts balanced, in order to avoid excessive credit
or debit. After three or four months, the differences ought to be
eliminated with the payment in coin (sugars) for part of the deficit. We
believe that after this correction of a lapse the members adjust their
standards of buying and selling, with the system building solidarity and
confidence among the members.
* Fifthly, to attract a large number of members and increase use of
the "compromisos", one ought to be able to buy basic goods (rice, sugar,
cooking oil, medicine, construction materials, etc.) which can be sold
directly to the members and in "sugars". Of course, one must consider
the possibilities, costs and risks of storing. In the end, securing the
values for the goods is inferior to the providing the service to the people
of the community.
* Sixthly, it will be necessary to install similar systems in other
low-income communities in Quito with similar living standards, where
one may be able to produce other basic products which cannot be made
in Toctiuco, to generate a network of intercommunity exchange: bricks,
corn, frijoles, bread, livestock, textiles, pottery, metalwork, etc. This
requires a background study to assure a larger-scale interaction
between the low-income communities of Quito and the rural peasant
communities. This allows for the creation of an interdependent system
between people without subordinating their communities to the large
commercial centers, while eliminating a large part of the middlemen.
In the end, the people of low-income communities know that only
the solidarity of a community can lead them to a greater destiny. But
this social cooperation cannot be built on top of nothing, or without
building a solid economic base little by little, and in collaboration with
other productive and commercial economic projects, and founded upon
a system of offers of goods and services, providing an adequate quality
and quantity of goods. Only if the neighbourhood comes together, and
builds the conditions for creating value together, will it be possible to
share resources and the existing local capacities.