The white homeland of Orania on the banks of the Orange
River will be launching its own currency in the enclave's community
centre on Thursday to a cautious reception by the Reserve Bank.
The currency will be known as the "Ora" and consists of a range of four
denominations -- Ora 10, Ora 20, Ora 50 and Ora 100 -- Eleanor Lombard,
spokesperson for the Orania Movement, said in a statement on Wednesday.
Lombard said that during Thursday's unveiling, special momento packages
would be on sale.
"The symbols on the Ora 10 note showed the Afrikaner's history, the Ora
20 note his art, the Ora 50 note his culture and the Ora 100 note
depicted Orania," said Lombard.
She said the advantages of the town having its own currency was among
others -- available cash being replaced with proof of cash and the cash
earning interest in the bank; buying power remaining in the community
because the currency was only accepted in the town; because the
currency could only be spent locally it was safer than cash.
Meanwhile, Reserve Bank spokesperson Themba Hlengani said the voucher
or currency must not resemble the South African bank note, in whole or
"For instance, it shouldn't be the same colour or font as any of the
South African bank notes," he said.
He said this was regulated in terms of South African Reserve Bank Act
According to Lombard the idea for the currency was first mooted by a
Prof Johan van Zyl during a conference by the Orania Movement in 2002.
Van Zyl apparently emphasised that a community which wanted to empower
itself needed to do so with as many instruments as possible to further
enhance its self determination, and having its own currency unit was
good example of this.
leave aside for now all discussion of the rights and wrongs of the
attempt by the Oranians to perpetuate the old dream of an
Afrikaner-only state; for now, the settlement remains confined to
private property, and they ought to be free to do with themselves as
they wish, as long as no one outside their community is dragooned into
it to serve in some subordinate role. My real interest here is in the
economic thinking behind the launch of the "Ora", and what that implies
for the future economic viability of Orania.
consequences of the new Oranian currency is pretty straightforward,
once we take on the fact that the Ora is actually intended to be non-convertible,
which is what all the stuff about it being "spent locally" implies. In
the real world, non-convertibility has been a condition that virtually
every one of the (exceedingly rare) governments that has desired it has
proven difficult to enforce, as all it takes to circumvent such a
restriction is some tangible commodity that can be used as an
intermediate store of value; if gold and diamonds will not do,
vegetable produce like cabbage and potatoes will also suffice, though
their bulk will make them less convenient for such purposes. But Orania
is a small, remote community of like-minded people, so even if it
proves impossible in practice to completely prevent Oras from being
traded for Rands, it is likely that the members will be able to get
close enough to the goal (at least in the outset) for us to ignore this
difficulty in our analysis.
Now, on the assumption that Professor
Johan van Zyl's vision of a state in which "buying power [remains] in
the community" is achieved, what will this mean for the economic
well-being of the Oranians? Will the Ora then usher in a golden age of
prosperity for the people who are thereby "empowered" by its existence?
I can give an unequivocal answer on to this question, and it is a
categorical NO. All that will be achieved by keeping
"buying power within the community" will be to shut Orania off from all
economic exchange with the rest of the world, a state of affairs better
known by the term autarky.
It will mean Oranians foregoing all of the benefits of trade with the
outer world, including the chance to make use of outsiders' specialized
skills and the opportunity to purchase resources unavailable within
Orania's borders, and the ability to partake in the advantages of scale
that make it possible for most Westerners to enjoy a quality of life
even the Caesars and the Pharoahs might envy. Not only will Oranians
have to grow all of their own food and make their own clothes, but
they'll also have to create the very hoes and ploughs to use in their
farming, and set up textile mills to weave the very cloth; worse yet,
they'll have to mine the raw iron ore themselves, and even on the
unlikely assumption that Orania has great reserves of iron lying about
idle, they'll then have to set up their own ironworks and steelmills,
and build their own (steam?) engines to power these operations!
think all of the above ought to make it clear that Orania's currency
scheme is bound to fail in its current incarnation, as it would lead in
the space of a few years to a standard of living so low that even
Zimbabweans might start to pity the Oranians' lot. Autarky has failed
everywhere it has been tried, and one has only to look at North Korea
for one example of how bad things can get even when it is imperfectly
applied. There's a good reason why it's been far more common for
governments to strive to get their currencies accepted at face value
rather than the reverse, and the denizens of Orania are likely to
quickly discover that whatever field Professor van Zyl's academic
credentials might be in, it certainly cannot be the subject of
economics. South Africa's government would be wise to let this
harebrained scheme play out to its logical conclusion - just as long as
the Oranians pay their taxes of course (and speaking of taxes, how do
they propose to pay these to the South African government if their
currency isn't convertible?)
On a final note*, I'll also add that
it is for the very same reasons I've outlined here that I've always
scoffed at those black activists who tell other black people to keep
money "within the community" by patronizing black-owned establishments
- the idea is just plain stupid. It's true enough that some individuals
would benefit from the scheme, but the gains to those individuals who
would be able to command higher prices for inferior goods and services
would be more than outweighed by the losses incurred by their
customers, and the net result would be that the black community as a whole would actually be poorer
for keeping its money "within the community" than by just operating as
individuals looking for the best value for their money. Anyone who
allows himself to be guilt-tripped into patronizing black-owned
businesses when better bargains can be had elsewhere is not only a
fool, but a traitor to the cause of "black empowerment" he thinks he's
serving. Keeping money "within the community" only makes sense if one
subscribes to the daft notion that there's only a fixed amount of
wealth to go around, and that outsiders' gains can only be at the loss
of those "within the community."