Alternative currency
promotes fresh thinking
about sustainable economics
C.B. Gaines
The angry people crowding
the streets of Buenos Aires, Argentina, last January were armed with
casseroles and wooden spoons and making a hell of a ruckus. Unemployment
was at historic highs, crime had skyrocketed, and the political system
was on the verge of collapse. What was responsible for the sudden onslaught
of bad fortune in this historically wealthy country?
The long answer: a complex
intermingling of social, political, and economic forces that will be
the subject of many a Ph.D. thesis. The short answer is money.
Money has always had globe-trotting
tendencies, as people looking for opportunities have taken their resources
abroad. As a result, the fortunes of countries have often been subject
to rapid, unsettling change. In the words of Bernard Lietaer, author
of The Future of Money: Beyond Greed and Scarcity (Century, £10.99),
"When a government does something not to the liking of the market,
nobody sits down and says, 'You shouldn't do this." A monetary
crisis simply manifests in that currency."
THINK GLOBALLY, ACT LOCALLY
One response to the downside
of our money-based economy is the recent growth of alternative currency
and barter trading systems. These programs stimulate local economic
activity, effectively easing the pain of recessions and currency crises.
They tend to encourage a more cooperative community, since everyone
is linked in local trade. They can also engender accountability, since
all business is out in the open.
Thomas Greco, author of Money:
Understanding and Creating Alternatives to Legal Tender (Chelsea Green,
$19.95), believes these systems are key to the health of communities.
"Locally owned businesses are more likely to use local suppliers,
reducing the environmental costs of transport and stimulating local
production. They are more likely to employ local people, and they contribute
to the culture and uniqueness of a community."
With standard currency, there
is always incentive to chop down non-interest-bearing trees and put
the proceeds into interest-bearing bank accounts. Because alternative
currency systems do not bear interest and in some cases, actually
have negative interest there is less incentive to plunder natural
resources.
In the United States, there
are several well-known examples, such as Ithaca-HOURS, which have been
active since the early 1990s. With a "money supply" of nearly
70,000 HOURS in circulation, the system is creating significant value
for Ithaca, N.Y. Participants earn HOURS by working for each other on
such everyday tasks as lawn mowing, tooth cleaning, bread baking, construction,
and local crafts. The accumulated HOURS then pay for other services.
In addition, 10 percent of the funds are devoted to interest-free grants
for local community organizations, such as senior citizen groups. U.S.
dollars are still in circulation and still are used for a majority of
purchases.
Paul Glover, a tireless promoter
of the HOURS system, believes even more is possible. "We've made
loans of HOURS interest-free up to $30,000 for community development
projects," he said. "In the future, we hope to make loans
to purchase regional farms and prevent suburban sprawl."
LETS DO IT
While the Ithaca-HOURS program
actually issues physical currency, some systems rely only on a book
of checks and balances. The LETS system (the name is not an acronym;
it's meant to indicate consent and embody the "Law of Two Feet,"
meaning, "If you like it, you walk in. If you don't, then you walk
away") is probably the best known of this sort of exchange, which
is also known as mutual credit.
Unlike the HOURS system,
which is relatively open and unregulated, LETS requires membership and
stringent accounting. For example, if your neighbor mows your lawn,
he gets a credit in his account and you receive a debit. The credits
and debits are measured in national currencies dollars in the
United States because people are accustomed to them as standards
of value. Basically, it's like a big I.O.U. program, or grassroots credit
cards. As such, it depends on trust, which tends to have a positive
impact on community spirit.
Not everyone is convinced
of the merits of these systems, however. An official of a group involved
with currency and money issues, who asked not to be identified, said,
"What disturbs me is the general evasion of politics that has accompanied
the movement to find solutions at the local level. I see local currencies
as irrelevant they will never be strong enough to change the
money and banking system, which is one of the great centers of power
in the world." Even if the systems do create value on the local
level, few people believe that taking them beyond that is a realizable
goal.
C. B. Gaines is an intern
at E.