The Community Currency Alternative
We are told that the economy is growing and that such growth benefits all of us, yet most people are experiencing declining economic security. In response to the problems of the global financial system, many communities have turned to local exchange systems to help regain some control over their economic situations.
Local exchange systems come in many forms. They often involve the creation of a local currency, or a system of bartering labor, or trading of agricultural products as a means of supporting the region in which they are traded. Such a system helps preserve the viability of local economies.
Local currencies allow communities to diversify their economies, reinvest resources back into their region, and reduce dependence on the highly concentrated and unstable global economy. Each local currency system serves as an exchange bank for skills and resources that individuals in the community are willing to trade. Whether in the form of paper money, service credits, or other units, a local currency facilitates the exchange of services and resources among the members of a community.
By providing incentives for local trade, communities help their small businesses and reduce under-employment by providing jobs within the community. In addition, the local exchange of food and seeds promotes environmental conservation and community food security. Local food production reduces wasteful transportation and promotes self reliance and genetic diversity. Each transaction within a local exchange system strengthens the community fabric as neighbors interact and meet one another.
There are over 1,000 local exchange programs worldwide -- more than 30 local paper currencies in North America and at least 800 Local Exchange Trading Systems (LETS) throughout Europe, New Zealand, and Australia. Local exchange systems vary and evolve in accordance with the needs and circumstances of the local area. This diversity is critical to the success of the local currencies. The following examples demonstrate the effectiveness of some projects.
In Ithaca, New York, the community prints its own paper money -- a legal scrip. It is valued in hours, based on the trading of labor, but it is commonly thought of as $10 per hour (the average wage for the area). When people sign up to trade in Ithaca HOURS they agree to exchange some goods or services in the local money. For instance, a carpenter who plays the guitar could offer guitar lessons or cabinet installation. A directory is published every couple of months that lists the goods and services that people in the community are willing to trade for Ithaca HOURS. Some people pay rent, shop at the farmers market and buy furniture with HOURS. There is an HOUR bank and the local hospital accepts HOURS for medical care. According to a recent survey by Paul Glover, the founder of Ithaca HOURS, more than two million dollars worth of HOUR transactions have occurred since 1991.
In New Orleans, Louisiana, residents of the low-income CJ Peete Public Housing Complex found that the federal economic system was failing to meet their basic needs. Realizing that skills and talents abounded within the housing complex, they formed a local currency called “Mo Money.” the scrip facilitates the exchange of jobs and services, such as childcare, among the residents of the housing complex.
A bank in rural Massachusetts refused to lend a farmer the money needed to make it through the winter. In response, the farmer decided to print his own money: Berkshire Farm Preserve Notes. In the winter, customers buy the Notes for $9 and they may redeem them in the summer for $10 worth of vegetables. The system enabled the community to help a farm family after being abandoned by the centralized monetary system. As small family farms continue to disappear at an alarming rate, local currencies provide tools for communities to bind together, support their local food growers and maintain their local food supplies.
Service credits are local exchange systems that keep track of individuals’ hours spent doing community service work. Some systems record these credit and debit hours on chalk boards, card catalogues, or on computers. These began in the U.S. and Europe as a way to value the productive resources of older persons. With the breakdown of community, declining social services and the high cost of the medical industry, many senior citizens face difficult economic times. However, with service credits Jane may help Mary do rehabilitation exercises for her recently broken hip. In return Jane can use her credits to hire Fred, a retired electrician, to fix her broken light. These service credits, according to Jonathan Rowe, author and program director at Redefining Progress, “... have a social content and so offer a concrete way to rebuild the non-market economy of family and community that the market tends to erode.”
Local exchange systems are not limited to industrialized countries. Rural areas of Asia, Latin America, and Africa have offered some of the most effective and important programs, by adopting agriculture-based systems of exchange rather than monetary ones. In order to preserve genetic diversity, economic security, and avoid dependence on industrial seed and chemical companies, many villages have developed seed saving exchange banks. For example, the village women in Ladakh have begun to collect and exchange rare seeds selected for their ability to grow in a harsh mountain climate. This exchange system protects agricultural diversity while promoting self reliance.
There is no one blueprint for a local exchange system, which is exactly why they are successful vehicles for localization and sustainability. They promote local economic diversity and regional self-reliance while responding to a region’s specific needs. Local exchange systems play a pivotal role in creating models for sustainable societies. They are an effective educational tool, raising awareness about the global financial system and local economic matters. Local exchange systems also demonstrate the a tangible, creative solutions exist, and demonstrate that communities can empower themselves to address global problems.