Varieties of money and currency circuits in Argentina (2000-2002)

The article revisits the theories on the ontology of money to find out how the different approaches to the nature and origin of money explain the monetary diversity of Argentina during the crisis of 1998-2002. It first discusses several approaches to the nature of money -commodity money, credit money, state money and money as an institution- in search for theoretical elements to understand that phenomenon of monetary plurality. In the context of a severe fiscal and financial crisis at that time, parallel monetary circuits emerged at the national, sub-national and local community levels. Any given household in Argentina would use, store and count value in several currencies that were not fully convertible to each other. Several elements of the heterodox approaches to the nature of money are combined to understand why monetary plurality sustained a large modern economy, a fact that is at odds with the orthodox view that monetary plurality increases transaction costs. The article contends that provincial currencies emerged as circulating debt that depended on federal sovereignty and subnational tax collection capacities. In the meantime, community currencies started as units of account to facilitate trade among neighbours, who could not conceive of any commodities that would serve as general means of payment. These currencies were pure credit monetary circuits, in Schumpeter’s definition. The initiators adopted the role of issuers, however imperfectly, and the currencies took the extrinsic value of the products exchanged. The fact that several currencies of diverse monetary origins circulated at par for several years shows that monetary plurality may be less exceptional if states did not take concrete efforts to supress monetary plurality. Moreover, it raises doubts on whether monetary plurality is not best equipped to satisfy the diverse monetary demands for various usages, localities and social groups, especially during severe economic and monetary distress.