A crash course in changing the world.
cents for each $1 BerkShare. Photo by Jason Houston" height="220" width="146""> | |
BerkShare board member Asa Hardcastle visits Berkshire Bank in Great Barrington, Massachusetts, to exchange his federal dollars—95 cents for each $1 BerkShare. Photo by Jason Houston, jasonhouston.com |
Total dependence on one currency is like total dependence on one crop, or, for that matter, a single energy source:
there’s always the risk that crop failure or a cutoff in supply will
topple the wh*** system. This is the scenario we’re seeing now—credit
has dried up and unemployment is soaring. In small pockets throughout
the world, in rural areas and inner cities, and spots as far-flung as
Bavaria and Thailand to Massachusetts and Michigan, people are
responding by launching their own currencies. Such monetary renegades
are not simply thumbing their noses at the dollar (or the mark, or the
euro, or the baht…) They are making a carefully considered choice to
promote the well-being of their communities.
“From the beginning we had two objectives—to promote the region and promote local charities,” says Christian Gelleri. In
2003, Gelleri and a group of his students at a Waldorf School developed
the Chiemgauer currency in the Lake Chiemsee region of Bavaria, Germany.
Since then, some 3 million Chiemgauer notes (equivalent in value to the
euro) have been placed in circulation. The currency, accepted by 600
businesses in
the region, typically is spent and spent again 18 times a year—three
times more than the Euro. This means that the currency is encouraging
trade and cooperation in the region, which keeps the shops and
restaurants and artisans active. Think of this faster rate of use (what
economists term “velocity”) as a kind of reinvestment in the community.
Local currencies can help a community counter some of the problems with conventional money. For example, bank-issued
currency tends to flow toward the money centers for investment. If you
shop at a chain store, the profit gets whisked out of town and into the
corporate coffers and then, often, to the speculative market. A local
currency stays in the community, encouraging local business and trade,
adding value to local products and services, and supporting the local
infrastructure.
Reliance on national currency means being at the mercy of the national credit situation. As we’ve recently seen, credit
constriction can paralyze local economies. Despite the availability of
goods and the need for business, when there’s no money, consumers don’t
buy. Stores don’t sell. Start-ups can’t get a toe-hold. An alternative
currency gives people another way to buy, sell, lend, and borrow. If
the community creates its own currency, local business can go on even
if the supply of national currency dries up.
At the most basic level, currency functions as a means of exchange (I give you a dollar and you give me an ice cream
cone), a unit of value (a dollar, pound, etc.) and a store of value (you
can hold onto a dollar as it maintains its worth). It’s also a source
of information about relative value, and about what is needed to keep
trade flowing, for instance, by adjusting the supply of money or the
exchange rate so that those in other markets can afford your goods.
With local currency, a community can meet currency needs that the national tender isn’t fulfilling. If the idea seems fanciful, there are models up and running—some for many years.
Jason Houston" height="220" width="165""> | |
A now-common sign around Great Barrington, this one at Rubi’s Cafe. Photo by Jason Houston, jasonhouston.com |
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BerkShares
Author and urban activist Jane Jacobs’ work was one inspiration for the
monetary experiment called BerkShares—considered the best-designed and
most successful local currency in the United States, with more than $2.4
million-worth passing from bank to hand to till and around again since
fall 2006. The attractive paper bills—one BerkShare is worth $1, but is
sold into circulation for 95 cents—are accepted at more than 400
businesses in the Berkshire region of western Massachusetts.
Jacobs pointed out that national currencies cover such broad geographical areas that they provide no local feedback. The
way our system is now, regions subsidize each other, and weaknesses are
not corrected. Local currencies, however, have clear feedback loops so
that trade and production imbalances can be addressed more quickly.
As Susan Witt, executive director of the E.F. Schumacher Society, explains, “Whenever a BerkShare must be returned to
the bank [instead of recirculated], that means there is not a source or
product available locally to fill that business’s needs.” For example,
say a toy store finds itself stuck with the currency. This presents an
opportunity for a local craftsperson to provide the store with wooden
figures, games, or puzzles to be purchased with BerkShares.
Witt, co-founder of the BerkShares program, took to heart Jacobs’ belief that regional economies need their own currencies
to grow and thrive. “Businesses are now trading with other local
businesses, so that they’re sourcing their printing, accounting, and
food products locally rather than out of the area,” says Witt. “People
are getting off Amazon.com and back to the local bookstore and camera
store. They like the personal exchanges and the ambiance, so they stay.”
The currency belongs to the community, Witt stresses. And its use has been a valuable exercise in community
empowerment. “The use of BerkShares is educating people on the
importance of supporting local businesses. With that comes a sense of
empowerment—that people can make positive changes in the local economy.
The fact of BerkShares raises questions like: Can we issue currency that
is not backed by the U.S. dollar? It’s prompting people to think about
other ways of thinking about money.”
Van Olst. Photo by Jason Houston" height="146" width="220""> | |
Hardcastle buys food with BerkShares from Rubi’s Cafe worker Kate Van Olst. Photo by Jason Houston, jasonhouston.com |
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On a recent visit to Great Barrington, Massachusetts, I purchased Berkshares at Lee Bank and spoke to Branch
Manager Paula Miller, who expressed enthusiasm about the currency.
“Customers love it. We’ve gotten to know other businesses better,” she
said, adding that it’s always fun when clients recognize the work of
local artists who designed the bills. “It makes it a little more real.”
Time Banking
Time Dollars, now used in settings as varied as small towns, retirement homes,
schools, and prisons, respond to conventional currency’s limited
capacity to measure worth. “Dollars don’t measure value very well,” says
David Boyle, a Fellow at the New Economics Foundation in the United
Kingdom. They are good, he says, at measuring “the instantaneous value
of Microsoft or currencies on the international exchange. But not the
value of, say, a local shop, or of me if I’m very old or young. I might
have skills, but not those that are conventionally marketable.”
Time Dollars were developed in 1980 by law professor Edgar Cahn, who lamented that crucial work to improve people’s
lives—such as child and elder care—is much needed but little valued. He
saw that many who could do these tasks were idle and felt useless. To
get people economically engaged, Cahn proposed a system where people
earn credit according to the number of hours they work. These Time
Dollars can then be “cashed in” for services, like yard work, tutoring,
etc.
Not only does Time Banking promote social justice by connecting people, promoting reciprocity, and improving
neighborhoods—it has also proved quite versatile: People have exchanged
Time Dollars for wool spinning, “rune making,” and having a baby
delivered by a midwife. And there’s always an ample supply since no
community is going to run out of hours.
TimeBanks USA offers a start-up kit that includes instructions and software for starting a Time Bank anywhere. Rose-Marie
Pelletier is working on launching a Time Bank in her town of Pownal,
Vermont, an economically diverse rural community of 3,500. At a town
meeting, Pelletier looked at the listings of delinquent taxes over
recent years and saw that they had increased geometrically. She’s a math
teacher, and the numbers spoke to her; she saw the extent to which
people were hurting. “People want to help each other—when we know how to
do it,” she says. “I see Time Banking as a way of building community,
one hour at a time.”
Chiemgauer Regional Currency
Conventional currency excels at serving as a store of
value—so much so that use of money for actual trade slows down, leaving
some local economies stuck. Coin and paper currencies do not lose value
like the products one buys with them can, which makes hoarding and
speculation attractive, particularly with the enticement of interest.
Argentine economist Silvio Gesell described this phenomenon in 1913 and
said that money also should lose value: that it should “rust” or go
moldy like other commodities, and suggested a penalty, or demurrage fee,
for holding onto it. Nearly 75 years later, then-teenager Christian
Gelleri read Gesell’s work and was fascinated. As a high school teacher,
he saw the chance to test the model with a local currency. This is how
it works: Each quarter, every Chiemgauer bill loses 2 percent of its
value. In order to spend the money later, the consumer needs to put a
special sticker on the paper currency.
In the beginning, Gelleri got complaints. Then people figured out how to make the model work for them. For instance,
one cinema owner said that business went way up at the end of the
quarter when people wanted to shed their currency. Increased cash flow
at quarter’s end was helpful for accounting, he said. The 2 percent
loss, he added, was insignificant compared to the advertising he’d have
to buy to secure the same level of customer loyalty he has from
accepting the Chiemgauer.
A consumer can exchange euros for Chiemgauers at 50 offices in the region.Three percent of the purchase price goes to a
nonprofit the buyer chooses. So far, more than $100,000 euros have gone
to charities such as school athletic programs and environmental groups.
The “good cause” component reinforces people’s investment in the
currency, and in their community.
Maybe we’re asking national currencies to do too many things. As Thomas H. Greco, Jr. points out in his new book, The End
of Money and the Future of Civilization, some functions are inherently
contradictory: If money is for trading, you want to use it; if money is
to store value, you want to save it. Greco and others such as David
Boyle say that people could be better served by separating out the
functions of money—and using different currencies, depending on whether
you are, say, meeting friends at a local café or saving for college.
Back on Main Street in Great Barrington, Matthew Rubiner, of Rubiner’s Cheesemonger & Grocers, says the issue of
local currency has shifted quickly from the theoretical to the here and
now. “When BerkShares started we talked about what would happen if the
economy falls apart and we were really forced to look local.” The
economic downturn, he says, has “brought the question into bolder
relief.”
Judith D. Schwartz wrote this article as part of The
New Economy, the Summer 2009 issue of YES! Magazine. Judith is an author/journalist in Bennington, Vermont now writing about alternative/complementary currencies and localization movements. www.judithdschwartz.com Interested? Read “The Local Multiplier Effect” |
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