WABA.network: creative money for community empowerment

The world economy is going through a period of financial accumulation. The ratio of the stock of foreign investment liabilities to GDP jumped from 51% in 1995 to 183% in 2016 (McKinsey, 2017). For anyone familiar with modern history this should be no news. Taking a long-run perspective, from the Renaissance to our times there have been four “long centuries”, each of them marked by a phase led by production and trade, followed by another one driven by financial activities. The same pattern was observed in Genoese hegemony of the 15th and the 16th centuries, the Dutch leadership of the 17th century and the British empire of the 19th century (Arrighi, 1994). The contemporary systemic cycle, commanded by the United States, has been in place for more than 100 years. Its current phase started in the 1970s and has been labeled financialization. The most widely used definition of financialization is the one given by Gerald Epstein, who has defined it as “the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies.”

Among the most salient features of financialization we find a growing interconnectedness of financial systems, the emergence of shadow banking, increasing financial innovations and the diversion of investment from the real to the financial sphere of the economy. The result of these compounded changes has been an unstable global financial system. Although for some time the belief about a Great Moderation spread across financial markets and governments around the world, the financial crisis of 2008 and the Great Recession that it gave way to brought everybody back to reality. A reality that finds most of us subject to massive upheavals coming from the financial sphere, where decisions are hardly made following social welfare but short-term profit criteria.

There are two main reasons why nation states have lost their ability to shape the future of the society they represent. First, the internationalisation of production gave rise to the process of global value chains, enabling large firms to choose where to establish their production units. In order to become more attractive to transnational corporations, many emerging and developing countries initiated a race to the bottom of labour market deregulation and tax cuts that, in the end, thwarted any attempt to deploy a national development strategy. Second, the liberalisation of financial flows at a global scale, facilitated through financial market deregulation in both developed and developing countries gave global banks the possibility to enter and withdraw billions of dollars from a country in a matter of seconds. As a result, the local monetary scenario (such as credit available to finance productive entrepreneurship) in peripheral economies has become strongly subordinated to the monetary conditions in the big financial centres. The massive amounts of liquidity that flowed down from the US, Europe and Japan to Latin America in the context of the Quantitative Easing programmes and their impact on the exchange rate (appreciation) and production (reprimarisation, bankruptcy of industrial firms) are just one of the many manifestations of the consequences of the current working of the international monetary system and the effects it produces on most countries in the world.

In a financialised world where global banks and transnational corporations seem to have overtaken the nation state as the shaper of social and economic development, societies have become hostages of forces they cannot directly identify. Miguel, a worker of a gold mine in Peru, may get unemployed overnight due to a sudden drop in the price of gold. Even though he is not responsible for the speculative behaviour that may have driven the price of gold down, he will have to face the consequences on his own. The same can happen to Clara, mother of five children, who works in the Brazilian textile industry. The arrival of financial capital into the country seeking for carry trade profits may turn the company where she works unable to compete with lower wages somewhere in the other end of the world. Similarly, the industrial truss deployed across the Great Buenos Aires may find itself in difficulties as a result of a restrictive monetary policy that dries the credit market up. The people that work there and their families may have nothing to do with the decision of the Central Bank, but there will surely be the first to pay for the broken dishes.

It is in this complex world where nation states have lost their sovereignty -at the hands of global banks and transnational corporations- and individuals seem to have lost their autonomy -defined as the effective capacity to choose their own life plan- that Waba.network proposes an innovative and breaking-through solution. Standing on the shoulders of the countless experiences on local and complementary currencies as well as on the developments made by the sharing and the circular economy paradigms, we’ve come up with an alternative monetary system based on the Blockchain technology. The aim of this system is to provide local communities with a tool that allows them to pursue triple impact (economic, social and environmental) endeavours, regardless of the ups and downs of their external environment. The monetary setting is built upon the foundations of fair trade and social economy. The technological infrastructure ensures that the system is transparent and incorruptible. The EOS platform will provide us with the required scalability. The final goal is to achieve higher and sustainable levels of wellbeing for all in every community.