The following article was written by Professor Doctor
Tobias Studer, an economist at the
This WirPlus magazine article reviews a research paper by myself, Jim Stodder (no relation to Prof. Dr. Studer, the author of the following piece!) My research paper, entitled "Reciprocal Exchange Networks: Implications for Macroeconomic Stability,” http://www.rh.edu/~stoddj/Stodder_WIR3.htm is a statistical analysis of the bank’s post-war history. This paper shows that WIR’s centralized “barter” arrangements -- based on reciprocal credit arrangements rather than on Swiss currency -- play a stabilizing role in the national economy. This has encouraging long-run implications for the evolving internet economy. E-commerce shows tendencies toward a system of reciprocal credit and exchange, rather than traditional monetary transfers.
The following is my translation of the French article, “Le Système WIR dans l’Optique d’un Scientifique Américain,” or:
by Professer Tobias Studer
Center of Economic Studies
American research findings show that WIR contributes to the stabilization of the Swiss national economy. In periods of economic boom WIR activity shows less-than-average growth, while in periods of recession it shows greater-than-average growth. Over the course of 52 years, there has been another correlation – that between the WIR system and unemployment: while the number of unemployed grows, the activity of the WIR system also grows, playing the role of a stabilizer.
international conference of the Engineering Management Society, held
Equally, however, are these results of interest to the WIR bank itself. For the first time, an independent American researcher has arrived at a surprising conclusion: far from representing a factor of disturbance for national monetary policy, the credits created by WIR constitute a support of the National Bank (Swiss Central Bank) in pursuit of its monetary policy objectives.
Exchange without monetary payment, such as practiced by the WIR system and numerous other “barter” exchanges, has enjoyed a veritable renaissance with the advent of the internet. One of the principal barriers opposing barter up until now – the difficulty in finding suitable partners for any exchange – has disappeared with the internet, since this medium can resolve, in an optimal manner, the problem of identifying potential trade partners. Using the internet, each supplier can present his or her offers to the entire world with minimal difficulty, at any hour of the day or night. Furthermore, it will be quite easy to update this offering as necessary. The trading exchange assumes diverse functions, including standardization of information on the presentation of clients, products, and services.
In principle, it would be possible to make all non-reciprocal purchases on the internet using a conventional payment script or voucher, before receiving the goods. But if the seller and buyer are both in electronic contact, it is more practical, quicker, and less risky to finalize sale and the payment in the same transaction. Nowadays, payment with credit or debit cards has become quite widespread. Nevertheless, this method of payment entails needlessly high transaction costs. Methods of payment are evolving in more advantageous directions, as for example direct withdrawals from bank accounts, or payment via “e-cash” or virtual money.
The ordinary money printed by
Central Banks [e.g., the Federal Reserve, or the National Bank of
Polytechnic Institute in
James Stodder is one of 400
Professor Stodder is a “polyvalent” economic theoretician, one who has become known in numerous publications in well-known specialist journals. Over the last few years, among other things, he has specialized on economic activity that takes place without direct monetary exchange, in particular, on forms of barter. As precursors of “money-less” e-commerce, traditional barter exchanges represent excellent subjects for analysis, especially since one finds them accompanied by a substantial amount of statistical data. Furthermore, given the similarities between both forms of commerce, it may be possible to draw conclusions on the future of e-commerce by analyzing the economic effects of barter exchanges.
Searching the world over for adequate statistical data, Stodder came across the WIR system and integrated this into his research. By reason of the extraordinary continuity of available data (Annual Turnover, Number of Clients, and Volume of Credits Advanced from 1948 to 1999 – a period of 52 years) the WIR system would become for Professor Stodder one of the principal objects of his analysis.
One can say, in summary, that in the course of the last 50 years, the WIR system has given proof of its profoundly anti-cyclical character. In periods of economic boom, it has tended to grow more slowly than the economic average, while in periods of recession, it has tended to grow more quickly than average. Thus it contributes to the stability of the Swiss economy. Such stability, of course, is the primary objective of the monetary policy of the Swiss National Bank. The system of WIR is thus, whether intentionally or not, a useful partner to the National Bank --and certainly not a force to disturb its monetary policy.
It is particularly important to emphasize the contribution the WIR system makes to stabilizing rates of economic activity, particularly in the fight against unemployment. It is especially in this realm that Professor Stodder has identified a very pronounced statistical correlation. Each time that the level of unemployment has risen over the past 52 years, the activity of WIR has also risen, as a compensating factor.
Professor Stodder has measured WIR activity by means of the number of clients, and the relation between the Volume of Credits and the Annual Turnover. The activity of the WIR system is equally anti-cyclical in relation to Gross National Product: faster growth in the GNP is always accompanied by slower growth in WIR activity. Finally, there exists a positive link between merchandise inventories and WIR activity: in cases when there is a fall in sales and a parallel growth in inventories, the WIR system facilitates the reduction of inventories and thus, indirectly, contributes to overall economic stabilization. In checking his findings, Professor Stodder has worked with alternative parameterizations, which permit him to verify the same conclusions.
Stodder’s findings for the Swiss economy are extended by his
study of the effects of US “barter” exchanges – an analysis leading to similar
results. In the
The results of the research of Professor Stodder are interesting for two reasons:
· First of all, it is reassuring to know that the revolution now underway in e-commerce is not tending toward a destabilization of the world economy, but rather is contributing to stabilization. Other studies up to this point have arrived at similar conclusions, noting the stabilizing effect of greater transparency in internet transactions.
· Secondly, it is good news for friends and clients of the WIR system of payments, who are sometimes reproached about the “destabilizing” influence the WIR system might have on national monetary policy. It is good to know that, not only are these criticisms without foundation, but that, contrary to those assertions, the WIR system has a positive influence on the national economy.
That these conclusions come by way of a disinterested and neutral researcher only serves to increase their value.