A Viewpoint for the Future Markets Consultation

As part of the Future Markets Consultation, individuals and organizations are invited to submit a viewpoint on any topic that is of relevance for creating a more just and sustainable market economy in Europe. This is a viewpoint submitted by the Dutch NGO United Economy.

This viewpoint is a call to let a parallel economy come into existence that empowers people and connects companies with a commitment sustainability (including social sustainability). An economy where money is only a means, not an end in itself. A parallel economy that is provided with the necessary financial resources through cooperative finance, with the aim of a powerful acceleration of the sustainable transition. The time has come for such a transition, now that problems with our existing economy provide more and more room for renewal.

Suddenly things are moving fast. In Dutch companies BAM, KLM, Tata Steel, Shell, in companies everywhere layoffs are being announced. And this list will undoubtedly grow. Within the boundaries of the current economic system this is problematic: people end up without work, the spending on social benefits goes up, talent is being wasted. Plus, there are consequences like increasing poverty, stress, social disruption, and so on.

Circular money

What is the cause of these layoffs? In a nutshell, it is that companies receive too little money and are therefore forced to cut costs. This leads to a domino effect. After all, people without work will also become more careful with their own expenditures, causing even more companies to see their turnover decrease and so on. Is this an unavoidable situation that we have to accept? Or can things be done differently? Are there already proven practical examples of a different way of dealing with these problems?

Let’s look at the situation while imagining different economic rules of the game. As part of that alternative perspective, we introduce the term circular money. Circular money is money like that has been created to serve a higher purpose and that constantly circulates at places where it can serve that purpose. Circular money is often introduced in a cooperative context, also called cooperative finance. This concept will be explained in this article in a practical matter.

As we all know, money often plays a dominant, even crucial, role in our economy. You cannot do anything without money. Or so it seems. In fact, this situation is rather unnatural, since money should be merely a medium to facilitate exchange. It should be secondary. This article assumes the (perhaps obvious) paradigm that money is nothing more than a means: something you only start thinking about after you have clarified what the goal is. However, in what follows we will also see why this is often not the case in our current economy.

A situation of abundance

To begin with, we will look at the real meaning of high unemployment in an economy. It means that there are a lot of people who would like to work, but who are not working at that moment. Viewed from the economy as a whole, this is a situation of abundance: an abundance of available human capital. In addition, it is human capital of high quality, with a lot of knowledge, talents and expertise in all kinds of areas. It’s capacity that has been released by companies laying people off.

The logical question then is what we, as a society, want to do with that abundance. Given the size of the challenges that we face as humanity in the areas of climate, raw materials, biodiversity, food transition, and so on, it would make perfect sense to put this abundance of human capital to good use: addressing those issues.

In other words: there are plenty of people available and there is plenty of work to be done. Work that is going to help humanity to move forward towards a sustainable future. To put it more concretely, there is a great need for projects / companies / organizations / initiatives that collect, select, and process waste materials from production chains in order to turn them into new raw materials and products. In other words, companies that boost the circular economy. And of course, there is also a need for companies that generate sustainable energy generation, make homes and buildings more sustainable, make mobility more sustainable, and so on. It is about time that we will implement this on a large scale.


“From the perspective of the usual economic paradigm, obstacles arise the moment you want to put these two things together”


Thinking in terms of end and means, we now have a clear goal. The goal is to keep the world in which we live it livable (and even to make it better), so that for humans and other forms of live a flourishing existence is and remains possible.

Now that we have clarified the goal, we should address the means. This means should link the aforementioned abundance to the goal. It should realize the connection between on the one hand people who are available for work (and of course want to make a living) and on the other hand the sustainable work that needs to be done. From the perspective of the usual economic paradigm, obstacles arise the moment you want to put these two things together; Then the question arises: where does the money come from to finance these projects and companies? If there are too little investors and money lenders that believe in their viability, these initiatives will not get off the ground.

Return on investment

Yet the moment that this problem is inserted in the discussion, a second goal has been added through the back door. Namely the purpose that investors, money lenders and banks in general hve, namely making a profit on the capital made available. Then all of a sudden money is no longer just a means, but also an end in itself. The purpose of making money with money. And that goal usually does not sit well with circular and sustainable initiatives. Because the return on investment that these initiatives aim for, is in the first place a social return. Moreover, insofar as there are financial returns, this is often only possible in the long term and there can be substantial financial risks involved. From the perspective of an investor and bank the investment is then not ‘wise’ to make.

From a social and human point of view, however, it is an extremely sensible investment to fully commit to the transition to a sustainable economy. This is all the more the case if we consider the talented people that would otherwise remain on the bench. So how can we look at this situation from the perspective of another paradigm, so that we can proceed with these sensible investments?

Circular money can in this case play an important role as a means. To explain what circular money entails, it helps if we first understand a little more about “normal” money. How does it come into existence? How does it circulate? Who’s calling the shots? For most world currencies (euro, dollars etc.), it is the commercial banks that initially make the decisions for which goals (i.e. companies, projects etc.) money is created. Businesses approach the bank for a loan and the bank decides whether to grant the credit. At the moment credit is provided, new money is created. The bank uses mainly (although not exclusively) financial criteria for making credit assessments. After all, the bank aims to realize financial returns for its shareholders. Because banks are the most important link in providing the real economy with (new) money, as a society we are highly dependent on financial returns as a goal in itself.

A cooperative context

This is not necessarily a bad thing. This way of organizing money, economy and society – often referred to as capitalism – has brought us a lot. But it is time to ask ourselves if this is still what we need. The world is different now than it was about 200 years ago. It is clear that we as a society are in need of a radical change of course. The way we organize money will certainly also have to change. Only a new economic paradigm will accelerate the sustainable transition needed. As part of that, money, or at least the money needed to finance a sustainable transition, should be disconnected from the pursuit of financial returns.

Circular money can play an important role in this. Money can also be created within a cooperative context, which is very different from a commercial approach. When money is created in a cooperative context, the necessity disappears to realize a profit for the shareholders by providing credit. In fact, in that case there are no shareholders. There are only cooperative members (e.g. companies) and for them it is fine – as laid down in their own rules and regulations – that no money will be made through credit provision (= money creation). It is money as purely medium of exchange that serves the cooperative members best. The cooperative members have no interest in making money with money, but in accessible and affordable finance for their company and for doing business with each other. That leads to a big change in the way credit applications are assessed. Social and sustainable value creation becomes the primary criterion. The financial health of a project or business will still be a factor that counts, but financial returns for the credit provider no longer plays a role.

This is not theory, but practice. Worldwide there are already various examples of cooperatively created circular money, such as the WIR in Switzerland and the Sardex in Sardinia. In the Netherlands, the organizations United Economy and Circular Money Netherlands now have a couple of hundreds of companies that participate. What is striking is that these companies manage to find and help each other in a wide range of areas. So, these networks turn out to be much more than just trading networks with their own circular money. But circular money does play an important connecting and guiding role. It is money that the cooperative members have collectively created, without the goal of profit and interest. In the Netherlands the combined turnover in 2019 was more than 1 million in these circular currencies.

Free space for experimentation

Now that our economy is entering very turbulent waters, we can use the momentum for a sustainable transition, by supporting it strongly with the application of cooperative finance on a large scale. With this article, we are calling for a large-scale ‘free space for experimentation’, where people and companies acting from a new economic paradigm, focused on real value creation, are connected. And where money serves as a pure medium of exchange, aimed at facilitating collaboration between these people, companies and initiatives. Allow for a ‘parallel economy’, so to say, emerge in which everyone who wants to can participate. And where the mutual money supply has been set up in such a way that it continues to circulate within that parallel economy and can no longer end up at places where it undermines sustainability.

In this parallel economy, the capacity of freed up human capital is linked to existing and new companies / initiatives that will boost and promote the sustainable transition. In such a way that everyone can earn a living.

This parallel economy focuses on the growing group of people and businesses that are intrinsically committed to sustainability and innovation. This intrinsic motivation is important, because sustainability requires patience, commitment, creative thinking, cooperation and a unanimous support of the intended goal. When this parallel economy consists of like-minded people, the breeding ground will prove to be much more fertile.

The connection between the current economy and the new parallel economy will be made in many different ways. In this new parallel, sustainability-oriented economy, the following applies:

  • People, companies, organizations and initiatives connect in this sustainable way economy. Because they connect in concrete terms, the sustainable economy becomes stronger, more visible and more impactful. The appeal for others will increase over time.
  • Existing and newly established companies can participate. They will get to know each other (better), focus their joint efforts on the sustainable transition, help each other with knowledge sharing, inspiration, collaboration etc.
  • Within this parallel economy, the participants trade with circular money. In other words: with euros that can only be a means of payment within this parallel economy, and that will thus continue to foster sustainability. These circular euros cannot, for example, be spent on fossil fuels or other things that undermine sustainability. (This is a great win for sustainability, because in our regular euro economy the vast majority of money is spent in a non-sustainable way1)
  • People who work, or will work, for these companies will be wholly or partly paid in circular money. That circular money can for example be spent at shops and restaurants that help shape the food transition, suppliers of sustainably generated energy, sustainable mobility, etc.
  • This circular money is digital money. Every company and person who participates has her/his own payment account on a payment platform for circular money2. By using this payment platform, it is prevented that circular money can be spent on things like, for example, fossil fuels. Because suppliers of these goods are not on the payment platform.
  • Each company that and person who participates will also have a regular bank account, because (certainly in the beginning) it is not yet possible to make all required purchases entirely in circular money. That also makes it possible for companies that supply sustainable products, to continue to supply them to customers who are not yet participating in this parallel economy. Concretely: a sustainable energy supplier that participates in the parallel economy will continue to supply sustainable electricity to companies that are not yet participating in the parallel economy and then receive regular euros for their service.
  • It is always possible (but not mandatory) to convert euros to circular euros.
  • In a cooperative context, a committee will be set up to deal with the admission of participants in the parallel economy. It’s important to use scientifically substantiated and clear criteria in that process. These criteria should take into account that we are all still in a transition phase. Which means that participants do not have to be a 100% sustainable (because nobody can live up to that expectation at the moment), but products with a clearly negative footprint should be kept out.
  • The participants (people and companies) have a lot of interaction with each other and encourage each other to become increasingly sustainable. That can be shaped by means of intervision, inspiration, knowledge sharing, transparency, organizing critical voices, an open culture, leading by example, etc.
  • The parallel economy is fed with circular money that is being created in a cooperative way. Credits are provided without the intention of financial return. Of course, the financial health of the company receiving credit is important. When receiving credit, a risk supplement needs to be paid to cover the risk of bankruptcy. This risk supplement can be paid by the company itself, but can also come from another source (from the value chain, from the government or through crowdfunding).
  • By making use of the aforementioned method of cooperative finance we can provide the parallel economy with the necessary financing at low cost. Moreover, the money continues to circulate within the parallel economy. The money will not (in the long term) end up in unsustainable businesses and will with every transaction it will again help the sustainable economy grow.

What is needed?

To form a coalition with sustainability initiatives and sustainable business networks (in the Netherlands this could, for example, be MVO Nederland, Natuur & Milieu, Stichting Ons Geld, the Sustainable Finance Lab, and local sustainable business networks).

The coalition will consist of a small core group that will weekly meet to discuss progress and take decisions. And a larger group of people and organizations is in addition required that works on spreading the word. Volunteers will be needed for marketing and so on.

The initiative should start off with many participating individuals and companies.

What is also needed, are good opportunities for (local) governments to stimulate this (in their own region).

Authors / contributors

Also available in: Dutch