The free market responds to demand.
When a government breaks down, free markets respond. This is happening in Greece.
In a town 200 miles north of Athens, a network of bartering townspeople has sprung up. No government agency is involved.
No taxes will be paid.
An unemployed mother and her daughter are selling jams, vegetables, and liqueurs.
They use a digital currency called TEM.
“In the network, people can trade their goods and services,” says Christos Papaioannou, one of the network’s founders. “If I do a service for you, then you owe me a favour. And I can use that favour to get some service from someone else. So, we don’t have to exchange directly, I can get it from some third person.”
To be clear, there is no actual currency or scrip exchanged. Credits are tracked via an open-source community banking software system called Cyclos. Katarina, for example, banks her credits from selling jam to buy staple foods such as eggs and fresh vegetables that are offered through the network.
This is not the only such system in Greece. They are everywhere.
“I think that people are becoming increasingly aware, over the past few years, that financial systems aren’t sustainable. And that boom and bust is always going to be with us, despite politicians continually telling us they are going to work to remove [them],” says Ken Banks, who recently launched a project called Means of Exchange. The idea behind the project, says Banks, is to create a “toolbox” of web-based and mobile apps that will make it easier for people to engage in things like bartering, swapping and alternative currencies.
Mr. Banks has competitors.
This is going to spread. It will appear whenever governments and banks break down. When this happens, production will scape the tax collector’s nets. The tax collector cannot track everything. He cannot brig charges against everyone. The more people who get away with unreported income, the more difficult it will be for governments to avoid contraction.
The future will have smaller, weaker governments.