S. Flor
Organisational Essentials of the Dual Economy

When the old style market economy collapsed in the Great Crisis of the year 2004, a number of initiatives mushroomed on the local level. For some it might have come as a surprise, but with the economic recovery these entities did not vanish but ultimately proved to be an important counterpart of the world market system. The consolidation of the provisional post-crisis institutions in 2009 contributed to this upturn; in that year the various administrative arrangements became harmonized. The most important rules fixed in 2009 are still in force and are recapitulated in the following:

  • Anyone is entitled to participate at the local market of his/her residence. There are no economic relations between the local markets. They are closed units with limitations, both, in respects of their geographical size and the number of their participants.
  • The administration of the local markets organizes payment transactions and the financing of investments. Other tasks of these centres comprise, for instance, the promotion of technology transfers and the provision professional training. The board members in charge of these operations are democratically elected by the community.
  • Payment is performed not in ordinary currency but in units of account. The seller acquires a credit, the buyer incurs a debit. The balance of all transactions is drawn at the end of the year and a surplus or a deficit becomes payable in ordinary currency.  A deficit is increased by value added tax which is levied here as in any ordinary global market transaction. Buying on the local market makes therefore only sense for a consumer if he/she is willing and capable to sell products at the same level. To generate profits on these markets is also not possible: a surplus is not only subject to income tax but also to a local levy. Only in as far as expenditure and income is balanced over the year for a participant the local markets are separate from the world wide economic system. This autonomous character is secured by the impossibility to exchange local accounting units against ordinary currency or accounting units of other local markets. They are non-convertible!
  • To settle balances at the end of the year means that no savings are generated to finance the investments necessary for local production. Although local markets typically mediate labour-intensively produced goods and services, this production also requires high-tech assets which are only provided in the traditional market and have to be financed in ordinary currency. For this purpose financial funds have been set up which are endowed from the value-added-tax income.
  • Of course, there have been profound modifications over the past two decades.  The improvement of digital cash via local intranets has simplified administrative procedures. The traditional economy experienced a recovery also due to the new kind of demand for investment goods on the local level. Economic prosperity made it possible to establish moderate forms of welfare state functions also to the benefit of the local markets: social care services are paid in local money which provided an additional impetus to the economies in various regions. Worth mentioning in this context is the recent introduction of a Guaranteed Minimum Income.

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