Between “Market” and “Reciprocity”: How Businesses Use Local Currencies

Abstract

This paper explores the relation of money, market exchange, and reciprocity, specifically by investigating how businesses use local currencies. Local currency (transition currency, Regiogeld) is a particular form of alternative monies that circulates in parallel to and backed by legal tender within a restricted local space. It is argued that, notwithstanding the economic objectives of such schemes and their proximity to the formal economy, local currencies can be understood as means of payments for particular, convivial purposes that are based on reciprocity and commensality. The analysis is based on Karl Polanyi’s distinction between all-purpose and special purpose money and his identification of different modes of exchange. Viviana Zelizer’s notion of earmarking is then applied to local currency schemes in order to assess how and for what purposes businesses and traders that accept local currencies actually use it.