Should The Slow Money Movement Be Encouraged Through Regulation?

Arvind Ashta
Banque Populaire Chaire in Microfinance of the Burgundy School of Business Dijon, France Thanks to Burgundy Regional Council for financing this project 8th International Conference on Public Policy and Management Infrastructure: Hard and Soft IIM Bangalore, India August 12-14, 2013

Contextualisation of this normative research: "should" and "encouraged"

Should The Slow Money Movement Be Encouraged Through Regulation?

The case for regulation

Risk Reduction Extenalities and public goods/ public bads "shoud implies regulation will improve the situation

Optimal Regulation
Optimal is a fine line: cost of increased regulation = benefits of risk reduction Therefore, there is always a case of more or less. "should" implies we are in a situation of less / none

Encouraged assumes that desired ends are good

Good for majority or minority? Who is concerned enough: majority or minority? Need for horse trading Ecnouraged implies someone gains enough for reciprocating

Bio Economics Slow Food Slow Management

Sustainable Development Slow Money Open Source

Swadeshi = National / local

L = Local
Localization
Home bias: Less transprot costs,

Swaraj = Self rule/ autonomy Inclusive = Full employment. Everyone contributing to society Sharing work

Local Clusters may lead to international competitiveness

Globalization
Efficient market hypothesis: Economies of scale

A = Agricultural A = Artisanal A = Alternative A= Appropriate A = Amend

Agriculture
basic and essential impacts on environment.

Need for Balance

economic development balance between agriculture and other industrial sectors

Industrialization
Can provide comforts Employment

S = Small
Earth provides enough to satisfy every mans need, but not every mans greed.

Appropriate Technology

Small
protection of the environment reduction of inequalities

Large
economies of scale attract specialists

P = Patience, The Wait of sloW

Long term (patient)

Japan and Germany Delayed gratification: more training

Patience = Maturity matching? Taking the time it takes

Short Term (myopic)

arbitrage costs are lower for short term finance and shortterm projects. delayed gratification leads to frugality. But Long term survival

H = Human
Person 2 Person Cutting out the intermediaries Leading to comprehension

Direct (disintermedition)
Intermediation too complex Examples community supported agriculture, business cooperatives (Ashta, 2013a), as well as that of the CIGALES investment clubs in France (Ashta et al., 2012, EstapDubreuil et al., 2012). Crowd funding (Assadi & Ashta, 2008, 2009, 2010)

Intermeidation Allows specialiszation Should have added value

What does this make?

LASPH LAPHS LAPSH PALSH PHALS HALPS ALPSH SHALP SALPH

Who is slow?
Agri / artisanal/ triple bottom line Human (P2P)

Patient

Local

Small/micro

Microcredit P2P commercial P2P Microfinance Investment funds linked to slow money.com Micro-equity CIGALES (local investment clubs Tontines/ROSCA Pawnshops

/ No /

Ashta, Arvind, An Introduction to Slow Money and its Gandhian Roots (February 2013). Available at SSRN: http://ssrn.com/abstract=2137632

CASE STUDY SAVING IN THE CIGALES

20 euros 7.50 euros

10 euros

30 euros 450 euros

BUILDING UP THE SAVINGS

20 euros 25 euros

CIGALES = Club dInvestisseurs pour une Gestion Alternative et Locale de lEpargne Solidaire

The slow diffusion of slow money in France

Quick in crisis, slow evolution otherwise
3000 2500 2000 250 200 150 1500

Members

100
1000 500 0 50 0

1984 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2009 2010 2011 2012

Number of members

Number of clubs

Ashta, Estap-Dubreuil, Hdou, Bourcieu (2012)

Clubs

Blockages

Internal ideological brakes

Internal structural motivation

External Institutional cage

Entrepreneurs not forthcoming

Can't ask State for help

Delayed gratification is not for all

Cannot invest in soleproprietorships

Information deficit

Ashta, Estap-Dubreuil, Hdou, Bourcieu (2012)

 Should one therefore legislate?

Agricultural Patient Industrial Small Shortterm Local Agricultural

Agricultural
Industrial

Patient
Industrial Big Shortterm Financing Patient Industrial Agricultural

Industrial
Agricultural

Small
Shortterm Global Agricultural Industrial

Agricultural
Patient Industrial Big Shortterm Agricultural Industrial

Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect

Complication
If two alternatives for each criteria,
32 possibilities 1/32 = 3% minority

If three alternatives for each criteria (small/medium large)

729 possiblites 1/729 = 0.1% minority

Recommendation
Reduce number of criteria
Four criteria : 1/16 = 6% At least 4 out of 5: 6/32 = 18% Implies merging with similar movements

Be more tolerant on each criteria

Small and medium Short-term and medium term Implies moving towards a more central political position

Include stakeholders (customers and suppliers

Limitations
Empirical data missing Empirical may not match theory
For example micro and small may be employing much more than 50% in some countries.