Credit not Commodity

It is admittedly difficult to find many take-home messages from a departmental conference of doctoral researchers who are all studying topics very different from yours. However, there was one notable exception, a completely new concept that offered plenty to ponder on. Namely, that the majority of money circulating in our economy and in our wallets is fundamentally credit, not a commodity.

What does that mean? The research was looking at local currencies, their success and failure, and suggested that failure could largely be attributed to how the scheme interpreted and applied the social construct that is money. In particular, many assume money is a commodity, a representation of something tangible with value that is used for exchange. This may be how currencies were originally envisioned. I’m not an expert and my colleague didn’t go into the history. However, standard currencies have long been divorced from anything tangible and the vast majority is credit created by banks. Thus, if standard currencies are not commodities; then new, local currencies cannot successfully be sold and circulated to individuals or businesses as such.

Instead, local currencies should be seen as the representation of credit similar to the real state of national currencies. That is, money represents future value not yet achieved, or the potential for something tangible to be created rather than something that already exists. In this framework, it makes much more sense to accept local currencies within a local network, where businesses and supply chains can trust that they will see something tangible in the future or realise valuable outcomes in their local area.

So what does this all have to do with transport? Transport is often viewed as a commodity, the sum of its assets. That’s part of the logic behind the ideology that says building roads and other big, shiny infrastructure will stimulate economic growth, whilst funding operational costs, maintenance, and demand management is often undervalued and not seen as an ‘investment’. Commoditisation prioritises quantity of assets over quality of service, and tends to be popular at the more strategic, abstract, national level of politics.

Yet if transport were viewed more as a credit system, then perhaps the value would be in how people use infrastructure. Just as a local currency is successful if it circulates more, transport infrastructure’s success should be measured by how efficiently it is used, how much it is valued by local people, whether it provides quality services. If transport were viewed as a credit system, as investment in the future, then far greater value would be assigned to proper maintenance and management, to spending on providing a better quality of service and on interventions that encourage modes that serve more people in less space. Transport delivery would be more local, bottom-up.

Okay, the commodity / credit dichotomy might be tenuous when applied to transport networks, but what about transport spend? Then we’re looking at capital (commodity) investment versus operating costs. Operating costs are rarely seen as investment, but whilst they may not buy or build an asset, they can increase or create value within the existing system. And they can be credited with having a tangible impact on the sustainability of the public realm and local well-being.

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