Skip to Navigation

Opinion and Analysis: Economy

Interview with Juan Esteban Lopez of Venezuela’s Network of Exchange Systems

Juan Esteban Lopez is from Medellín, Colombia, and has been living in Venezuela for the past four years where he has helped coordinate the Network of Exchange Systems, which has been implementing local currencies in many different communities in Venezuela.

This interview was conducted and translated by Gregory Wilpert.

What is an exchange system?

An exchange system is a community or popular power—as we say in Venezuela—organization, whose objective is to create a local economy, which operates in a particular locality, in a barrio, in a city, or in a municipality. That is, to create a market among the people themselves who are a part of the exchange network, in order to exchange products, services, and knowledge. It is a market with its own economy, through exchange, which has various types of modalities, but whose main objective is to create a local economy.

What are these modalities to which you refer?

Basically, in Venezuela, in Colombia, in Mexico, we use mixed models for the exchange process. That is, the direct exchange of one product for another or for a service, without any mediation by money, without any type of exchange medium. But direct exchange commerce is limited. The products do not always have the same value or comply with the needs of each of the exchange participants, so a local currency is created, which serves as a facilitating instrument for the exchange. This works to value the products, services, and knowledge, which are exchanged in the system and to broaden the possibilities of exchange. If it were merely based on direct exchange it would be limited. The local currency works similarly to a traditional currency, but traditional currency has a series of other characteristics.

What is the advantage of the exchange system over the traditional system?

First, these systems emerged not just in Venezuela, but in the whole world, as an alternative to the global capitalist economy, which at the heart of it ends up pauperizing communities because productive communities and small businesses, sooner or later, realize that their efforts are not compensated because in the way capitalism functions the money does not remain in the communities, but rather returns to the global financial system. So, exchange networks are created with this objective, where a complementary currency might truly empower the local economy so that this local economy would not be absorbed by the greater global economy.

The advantage that people have in the exchange networks is that they are participating in a market that is more human. It is a market where people are more in solidarity with each other, where people seek to meet each other. The “invisible hand” of the capitalist market dehumanizes human and economic relations. The first advantage of this system of exchange thus is that it humanizes economic relations, where people participate with their neighbors, with people who live in the same area.

Additionally, the costs of the products are not so high because there are no intermediaries. Producers offer their products directly, which allows them to sell them at a lower price.

Also, it is an ecological economy because in the exchange system there are no unnecessary energy costs because there are no large transports to take products form one place to another. Rather, it’s about seeing if we can produce products that we need in our locality.

Well, many times there are products that we cannot make or for which we do not have the raw materials or the knowledge, but it’s also about sharing knowledge, to see if there are certain things that we can produce that are otherwise a relatively expensive part of the basic food basket, for example.

Another example: cleaning products are products that are basically very simple to make, but in the regular market they tend to be very expensive. Within an exchange system one might begin to produce chlorine, for example, which is used in cleaning soap or in detergent for cleaning dishes. Soaps can also be produced within the community. We are thus also generating an ecological economy, which is not causing damage to the environment.

If you are able to generate some sort of raw material for your product, then you can also reduce costs. This is a solidarian logic. The great advantage of the exchange system is that it’s about being in solidarity, which is the opposite of the capitalist economy, where you have to be competitive. So we are eliminating competition and not killing each other.

How many exchange systems are there in Venezuela and what is their average size?

Currently there are 13 exchange systems in Venezuela. On average more or less 120 people participate in each. There are some with less and some where there are between 250 and 300 prosumers (note: a term that combines the concept of producer and of consumer). At first there was a real eagerness to participate. Also, at first people used the local currency more and they only participated in order to receive it and when they spend it they leave the system. The people who have participated more or less constantly and who share the philosophy might be around 120 persons per system. Currently we are in a phase of reinforcing the systems, of incorporating more people, and of creating more exchange systems in Venezuela.

What are the main problems that exchange systems have had to confront?

At first there was quite a bit of criticism from the opposition because they misinterpreted the local currency and attacked it, saying that the intent was to replace the bolivar [the national currency], when this is completely false. In fact, the theorists of local currency, such as Silvio Gesell, called them “complementary currencies” because they are currencies that are used locally and which fulfill certain functions that the national currency cannot fulfill. They are thus complementary. Never was it proposed to replace the bolivar. This was a criticism that we had to confront because many people entered the system fearfully, thinking that at some point it would be exchanged for the national currency. When they noticed that this was not the case they left the system.

Basically there is a lack of consciousness because it is not easy to change capitalist habits, the habit of being egotistical, of pursuing personal gain, of wanting to cheat the other. Also, many people do not understand that the exchange systems ought to be self-managed, even though we live in a country where this has been the national public policy. The facilitators of this process have tried to inculcate in people that this is a self-managed organization. Despite the fact that there was support from the national government at first, this must tend to disappear.

There also have been some problems of a logistical nature because exchange systems were created in very large regions, which cover 4, 5, 6 municipalities. Therefore, in order to have an exchange system it sometime is very difficult for people to get there. Other logistical problems have had to do with acquiring the tables, the tents, but these we have solved with resources from the government.

What has been the relation between the government and the exchange systems?

President Chávez got to know the experiences in Brazil and in Argentina and so the exchange experiences in Venezuela emerged from a government impulse, from the beginning, starting in 2006. I was in Medellín and there we worked on implementing several exchange systems and for some reason they got to know of our work and so the Ministry for the Popular Economy back then contracted us to come here to promote this experience.

So from the start this experience is connected to a public policy. Even, in 2008, two years later where there already were ten exchange systems, President Chávez convoked his ministers in order to draft a law on local currencies, which was decreed within the enabling power of 2008 [which allowed Chávez to pass law-decrees for a year], a Law for the Promotion and Development of the Popular Economy, which recognized various communal socio-productive organizations, including the exchange systems.

And in December 2010 the Organic Law for the Communal Economic System was promulgated, which ratifies and advances some more on the State’s organizational, support, financing, and accompaniment aspects for the creation and conformation of exchange systems. The relationship has thus been one of support, financing, and accompaniment, even though the Ministry of the Commune has not complied with its functions and has not provided an impulse—as it should—for the creation of the exchange systems.

This might be a unique case in the world because in the rest of the countries, for example in Colombia, we have some support from municipal or departmental governments, but never from a national government. In the experience of Argentina there also was at some point support from the government of the province of Buenos Aires, but in general there has been no national support. There they were born from the experience of civil resistance. Even in developed countries, such as the United States, France, or England, the initiatives are from civil society, from the communities. So this could be almost the only case, of support from a national government, because Chávez, within his socialist project, considered that for popular economies exchange systems and local money are a necessary, basic, and important tool.

What is the function of the National Network of Exchange Systems?

For the past two years we have been meeting and it’s an instance of cooperation, of exchange of experiences in order to strengthen each other, in order to being about common policy, to share lessons, experiences. Also, for the future a larger exchange is planned, of products and knowledge. We have done this before, where we meet and exchange knowledge. For example the people who know about medicinal plants exchange seeds and knowledge in general on a national level.