July 26th 2022

PA.070 | Money of the Poor, money for the poor or money by the poor?

Parallel Sessions
In modern industrialized societies poverty is defined as an insufficiency of money. It suggests a circular relationship between our understandings of poverty and money: poverty is the state of being deprived of money, while money is the indicator used to discriminate between rich and poor. This almost intuitive relationship between poverty and money should be further examined. On the one hand, the understanding of poverty as lack of money has been heavily criticized because it ignores the multidimensionality, practices and political economy of poverty (for example, see Bujra, 2000; UNDP, 2006; Banerjee et al, 2006). On the other hand, a problematisation of money, its origins and its diversity have been outside the scope of scholars interested in poverty studies, which have established that individuals can be deprived of money without being poor but have not looked into the links between types of poverty and means of payments. Moreover, using money comes with different costs and advantages depending on whether users are poor or rich. The higher the quality of money is, the higher the costs of using it are. Money is not a purely additive unit of account: it also comes with a measure of social value (Zelizer, 1994) and incorporates social violence as well as the tools to disguise it (Aglietta and Orléan, 2002; Bähre, 2007). The relationship between means of payment and poverty has a long historical empirical occurrence, (Marmefeld, 2018; Gómez, 2018), although it has not been traced in the way proposed in this panel. A few examples illustrate the present implications of the relationship between the poor and the means of payment they use. In current days, the Eurozone is being divided between relatively richer countries, in which small copper coins appear as a bulky and cumbersome nuisance to be disposed of, and relatively poorer countries in which a few cents make a worthwhile difference in everyday life, and deserve to be maintained. Greece and Spain are examples of the latter (Bitzenis et al. 2015; Amable, 2000; Batiz-Lazo, 2016). A second group of examples relates to financial exclusion (Demirgüç-Kunt, 2008). Paying attention to this unserved market, Facebook and two dozens of companies recently announced the proximate issuance of a new currency, the Libra, with a message precisely addressing this issue: “people with less money pay more for financial services”, calling for an innovative approach to financial services and money (Libra, White book, June 2019). A third group of examples, with cases starting at least in the ancient Roman Empire (Hollander, 2007), is composed of various camps of soldiers, slaves, prisoners and most refugees, whose residents are undoubtedly among the poor and experience problems related to money – its shortage often fuelled trafficking including sex and drugs. More and more innovative schemes related to the distribution of local or complementary currencies attempt to tackle their lack of means of specific payment to enable trade (Ranalli, 2014; UNHCR, 2018). In the three groups of cases, money circulates among the poor but has largely been designed by the non-poor and presented to them as the best solution. An alternative path is the one by which the poor themselves generate approaches or genuine local innovations in response to the drawbacks of such top-down approaches (Gomez, 2010). History and anthropology provide many examples of such agency and various situations in which the access of poorer people to money came either at a higher cost or through supplementary or peripheral means of payments. Empirical work also highlights that the classical functions of money (means of exchange, store of value, unit of account) may be coordinated in a different fashion at the bottom and at the top of the income scale. Ismael Moya thus stresses the “preference for illiquidity” of the inhabitants of Thiaroye, in the suburbs of Dakar (Senegal) (Moya, 2017), while Akinobu Kuroda shows that despite a shift to modern fiat money in China in 1935, local markets resting on locally issued private notes remained largely aloof from the national forms of liquidity, creating large conversion costs (Kuroda, 2005). Farther in the past, crises, riots and reforms show how sensitive the question of the money of the poor and its relations to the monetary system were. Contrary to what most historians of French national modernization argue, monetary riots occurred in the late 1890s fuelled by the losses incurred by small change reformation (Baubeau, 2018). Rebecca Spang showed convincingly how the small change issue influenced the monetary reforms during the French revolution (Spang, 2015). Jan Lucassen (Lucassen, 2018) proposed a general layout of the relationships between labour wages and money, and showed this relationship did not evolve linearly over time. Catherine Grandjean and Aliki Moustaka acknowledged the fiduciary character of Greek bronze coins as far back as the 5th century BC in relation to intercultural exchanges and wars (Grandjean & Moustaka, 2013). These probes in the past also help distinguish between the money “for” the poor and “by” the poor, for example in showing that the first official issuance of copper coins by the king Henri III of France was designed for alms, while during the 16th century book credit developed in England partly in reaction to small change scarcity (Muldrew, 1998). This panel proposes to study the relationship between money and poverty by rethinking the two concepts together. We propose a novel starting point, to distinguish among the moneys for the poor (designed by authorities for the poor, such as tokens in refugee' and prisoner' camps), the money of the poor (all-purpose money that the poor are most likely to use, like copper coins), and the money by the poor (designed by the poor according to their own needs, such as local currencies). Such a distinction is meant for analytical purposes but helps capture the crucial differences between means of payment that are designed and circulated in the upper strata of society and those that the poorer – not necessarily the poorest – create or adjust to their own needs. Such an approach enables us to understand the monetary conflicts of past and present societies and the limitations of a “lack of money” approach to poverty. The panel builds on the results of a program launched in the Boston WEHC 2018 session “Small Change in a Global Context: “Fractional Currencies” or “Minor Coins”?” (nb 030216), which aimed at gathering scholars in economic history, anthropology or sociology around this innovative issue.
A - General Economics and Teaching
A14 - Sociology of Economics
B - History of Economic Thought, Methodology, and Heterodox Approaches
B52 - Historical • Institutional • Evolutionary • Modern Monetary Theory
D - Microeconomics
D51 - Exchange and Production Economies
E - Macroeconomics and Monetary Economics
E12 - Keynes • Keynesian • Post-Keynesian • Modern Monetary Theory
E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy
E24 - Employment • Unemployment • Wages • Intergenerational Income Distribution • Aggregate Human Capital • Aggregate Labor Productivity
E3 - Prices, Business Fluctuations, and Cycles
E4 - Money and Interest Rates
E42 - Monetary Systems • Standards • Regimes • Government and the Monetary System • Payment Systems
E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
E59 - Other
I - Health, Education, and Welfare
I3 - Welfare, Well-Being, and Poverty
Gomez Georgina - Erasmus University Rotterdam
Fractionary Money and the poor
Patrice Baubeau - Universite Paris Nanterre
The analysis of the social scales of money aims to go beyond the idea that money represents only a pure quantity of value. The aim is thus to understand, through the study of the material, technical and symbolic specificities of the “money of the poor”, the meaning of this necessary and agreed fiction of a “common currency” at the same time as evaluating the costs, benefits and conditions of access to the services provided by money. The proposed approach consists in starting from the “money of the poor”, i.e. the monetary material used mainly by this fraction of the population, generally a majority, which does not have access to the most elaborate forms of currency (strong gold coins in the Eurasian regions where they circulated; bank accounts in Western Europe in the 19th century…), but which depends for its daily life on access to various monetiform objects: “small” coins, “fractional” coins, monetary substitutes and other tokens, private notes, IOUs, etc. This excludes the monetary behaviour of the richest part of the population but, interestingly, replaces the assessment of the relative importance of a means of payment according to the amounts concerned with an assessment based on the quantity of monetary objects. A contemporary illustration of this contrast: in France, cash payments represent more than half of individuals’ payments, but barely 5% of the cumulative amount of payments. This focus on user costs and the benefits of access to money also raises questions, following the work carried out by Jan Lucassen in particular, about the place and role of money in defining and achieving the income of the poorest. These studies show a reciprocal relationship between the increase in the frequency of money use, the forms taken by labour remuneration (most notably the existence of wage labour) and finally the means of payment available. Similarly, Akinobu Kuroda shows how the existence of numerous, frequent and accessible markets in modern and contemporary China, even in a context of frequent individual relationships, encourages the development of anonymous exchanges, fuelled where necessary by local currencies. Such comparative approaches allow a re-reading of monetary material in the most concrete sense, in relation to the place of work and the market in the lives of the most modest women and men. They thus enrich Viviana Zelizer’s contribution, which shows how the money was allocated to different uses according to its origin, but also according to social or gender criteria. This survey also raises the problem of the availability of these monetary resources and the power thus instituted in an object (material or virtual) vis-à-vis goods, services and capacities available in the surrounding society. It is unlikely that the monetary power thus entrusted to the “poor” can have the same scope or intensity as the monetary power enshrined in the most sophisticated means of payment. Local forms of monetary usage thus reflect the relative powers of users such as their social and gendered positions, monetiform objects being able to incorporate a significant share of social prestige, which are now found in “exclusive” payment cards but also in the freshness of new banknotes compared to notes that have circulated and therefore soiled. Consequently, the study of “monetary scales” can renew the study of economic, social and political differences and question the role played by money in them. To do this, we intend to measure the quality and quantity of power – monetary, social, symbolic – in the various monetary instruments, in particular according to their name (quantitative scale) or their access criteria (discriminating scale), against interpretations that consider currencies as simple sequences of perfectly substitutable values.
Poor's money in Medieval Japan
Hisashi Takagi - Osaka University of Economics
This paper describes the means of exchange used by the common people for small transactions in Medieval Japan, especially focused on the 16th century, that is, the transitional period from Medieval to early-modern Japan. The main means of exchange covered in this paper are bronze coins, silver currency, and credit use. The private sector in the 16th century Japan produced imitations of China’s bronze coins and autonomously defined a new standard bronze coin (called bita); that is, the authorities were not involved in the administration of the currency. In the latter half of the 16th century and the beginning of the 17th century, the government approved the currency system for use in society.
Deep Monetization in India C16th-19th
Jan Lucassen - University of Amsterdam
Deep monetization, i.e. the use of small denomination coins (currencies) by important parts of the population is related to the development of markets, and especially of labour markets. It therefore may serve as a guide fossil of larger societal processes, in particular related to work (see my recent The Story of Work. A New History of Humankind, Yale University Press). The problem for most monetized societies for the last 2,500 years, however, is how to quantify deep monetization. Several methods have been proposed where written sources are lacking totally or to a great extent. In my presentation I will discuss several research possibilities for India from 1500 to about 1880 when quantification on the basis of published production figures becomes possible.
Atomic Currencies for the Exchanges among Commoners
Akinobu Kuroda - The University of Tokyo
Locals in early twentieth-century Indochina made a zinc coin, sapèques, small enough to purchase a slice of papaya or a cup of tea. There were various forms of a single unit currency for indivisibly minute transactions across the world until the early 20th century: copper coin, cowries, glass beads, etc. We call it atomic currency. The merit of supplying atomic currencies in a marketplace is to support the seller and the buyer, both of whom were engaged in small business, in minutely gradating the price through negotiation and enabling them to finally find a point where both could agree. In some cases, rulers supplied atomic currencies to secure their system for collecting taxes from the ground level, but they often failed to sustain the issuance. When locals suffered from the shortages of atomic currencies, they had no hesitation to unofficially made them by themselves.
Poor money for the poor: Social inequality and Italian monetary unification (19th century)
Maria Stella Chiaruttini - University of Vienna
Money and the poor are two categories conspicuously absent in the history of the Italian unification. The imposition of the lira – the currency of Piedmont-Sardinia – on most of Italy in the early 1860s was a dramatic change which, however, is often ignored as if it were a technocratic reform easily accomplished. Instead, introducing a new currency, soon to become inconvertible, was a long and arduous process impacting differently on regions and social classes. For the rich, the nationwide integration of monetary markets opened up new speculative possibilities, while the poor had to struggle on a daily basis with unfair exchange rates set by both the government and the shopkeepers. Note inconvertibility, declared in 1866 and never durably lifted, hit the latter particularly hard: many workers were at first denied their salaries because of the lack of small-denomination notes while thereafter they were paid with notes of very poor quality or scrip issued by non-authorised issuers. In Southern Italy, monetary problems were compounded by the ravages of Bourbon loyalist guerrilla and the surge in taxation, falling disproportionately on the poor (both directly and indirectly through the issue of small notes of inferior quality). The glorious Neapolitan Mint ceased its activities (as minting was centralised in the North) but skilful workers could now turn to note forgery, an increasingly successful cottage industry in unified Italy. Although authorities and public opinion was mainly concerned with the difficulties experienced by the upper classes, existing sources – from parliamentary to banking records to newspapers – nonetheless offer us a glimpse into the monetary daily life of poor Italians in the first decades after unification.
Silver, yams and qëmek in the Kanak small custom in continental France
Sophie Laligant - Université de Tours
What does “poor” mean in this context? Many Kanak people leave their tribe for a few months or a few years to work or study, supported by relatives or the customary Senate, and in order to fight their marginalization. The Kanak average revenue is much lower to the French minimum wage and pluri-activity is more and more frequent strategy to increase revenues that also fuels a movement towards stable employment – notably as civil servants. But these revenues remain to low to finance college studies in France, hence scholarships that come in two forms: Crous state scholarships (a monthly stipend plus a dwelling grant) and the supplementary “pil” (Provincial Islands scholarship). The amounts vary but are generally comprised between 500 and 700 euros – meaning that Kanak students generally live below the poverty line as it is defined in France. This situation provokes a conflict between two conceptions of poverty, that of the French society (the dictionary defines poverty as material deprivation, lack of resources) does not work in a Kanak context were wealth and poverty are mostly social and symbolic notions, linked to the webs of relationships, weddings, power… Also, in a Kanak context, the idea of poverty is mainly related to neglect (djewe katcho) and work comes in two distinct forms: work for money and customary work. All Kanak students reach France with a “bag” containing all the things received in order not to forget the ancestors. In 1985, the independence movement leader Jean-Marie Tjibaou defined the custom as “the somewhat scornful name that non Kanaks give to what kanaks do”. Also, customs cannot be seen only as what is opposed to modernity, since it is also a way to cope with it while living in relation to the others and to the invisible world of ancestors. Last, the small custom is not a devalued version of the grand custom. Money and yams are part of two aspects of the small custom: When welcoming someone, for example s student receiving another is being offered a gift, i.e. something or money. In case of a birth: there is a receiving clan and a giving clan, creating a large circulation of small banknotes during the customs 3 days. Thus, students could buy and use yams to perform the small custom. But they do not know these yams they may find in markets and supermarkets and that do not come from New Caledonia. That is why they use money in lieu of yams, this same money that has no importance in the customary context. Which explains why the term “money” is never used. Besides, even if students say that the “price is free”, the amount is never very high. Accumulating money is unthinkable in a context where money can be put to other uses.
Argentine Redes de Trueque: the currency of the poor and the impoverished
Gomez Georgina - Erasmus University Rotterdam
Argentina had the largest complementary currency system in the world between 1995 and 2006, known as Redes de Trueque. The case is well-known among counter-cyclical mechanisms because it multiplied the consumption of thousands of low-income households during the economic demise of 1998-2002 that skimmed 25% of the GDP. This chapter revisits the Argentine case and discusses its generative conditions. Large-scale complementary currency systems appear in periods of general economic demise with deep recession, unemployment, and poverty, in addition to crunches of the means of payment and the relinquishment of monetary sovereignty by the state. These generative conditions were all present in the Argentine case but to varying degrees and timeframes, and only coincided during part of the crisis. The convergence of generative factors makes it unlikely that a similar system would develop again, although it improved the match between currencies and their users, especially low-income women and informal workers.