In today’s global economy, national currencies have the effect of centralizing ownership of wealth, and of widening the gap between the rich and poor. They undermine local communities, devastate indigenous peoples, and pollute the environment.
Decentralized regional currencies, in counterpoint, work to redistribute wealth more broadly, while supporting unique regional identities, cultures and communities. A local currency defines a regional trading area, favoring those small independent businesses willing to trade in the currency. Local businesses, unable to compete with the products of an increasingly predatory global economy, become strong players in resilient, regional marketplaces.
Local currency strengthens the local economy by maximizing the circulation of trade within a defined region. Unlike a national currency, which easily leaves the region in which its value is created, a local currency circulates only in a limited regional area. Local currencies and local capital do not travel to the money centers to finance the operations of multinational corporations or interest payments on debt.
Local businesses that accept the currency are distinguished from chain stores that do not, building greater affinity between citizens of the region and their local merchants. Spending that would normally flow to catalogue stores and malls would instead go to the locally owned stores that accept local “dollars.”
Those who choose to use the currency are making a conscious commitment to the local businesses that accept it. When individuals commit to buying locally first, they take personal responsibility for the health and well-being of their community, laying the foundation of a truly vibrant, thriving local economy.
Local currencies, widely used in the United States in the early 1900s, introduce the possibility of the kind of systemic change that will lead to sustainable economic practices. Locals working in their own communities can, region by region, foster ecologically responsible production of goods and a more equitable distribution of wealth. When goods consumed in a region are produced in the same region, the cost and energy consumption of long-distance transportation is eliminated.
A fully realized local currency program engages all the economic players of a region. Once it is operational in a region and proven effective, a local currency can be self-supporting, with the businesses that benefit from its circulation carrying the cost of yearly administration.
Renewed interest in local currencies, as well as other alternative economics, was inspired by World War II conscientious objector Bob Swann. He relates how he and 40 other COs, while in prison during the war, ìput together a sort of post-graduate course for ourselves on economics, with a heavy emphasis on the kinds of things that Gandhi was doing in India, things related to nonviolence and the peace movement.î (See ìBob Swann: An Interview,î Community Economics, Summer 1992.)
Swann continued to develop these ideas after prison. In 1972, he worked with economist Ralph Borsodi to issue a local currency in Exeter, New Hampshire, called the Constant. Swann also worked with E.F. Schumacher, author of Small is Beautiful, and founded the E.F. Schumacher Society in 1980. The society, based in the Berkshires of Western Massachusetts, developed the SHARE (Self-Help Association for a Regional Economy) micro-credit system, Deli Dollars, and Berkshire Farm Preserve Notes.
Inspired by a radio interview with the Schumacher Society staff in the summer of 1991, Paul Glover organized Ithaca HOURS in his hometown of Ithaca, New York, as a way to create more local jobs and more security for the townís underemployed. The project has grown to include more than 900 participants who accept Ithaca HOURS for goods and services. The scrip can buy food items, construction work, professional services, health care, and handicrafts. The Ithaca HOURS program continues to grow, and now offers participants business loans at no interest.
Over the next decade, HOURS programs spread to more than 50 communities throughout the United States and Canada, engaging a public discussion toward creating their own regional monetary systems. Only a few of these start-ups are still running. One factor in the attrition of local currency programs is the failure of community groups to anticipate the start-up time and costs involved in promoting and sustaining new currency issue.
But back in the Berkshires, locally owned businesses, concerned residents, and community-based banks joined together to launch BerkShares in September 2006. There are presently 135,000 BerkShares in circulation, with 230 businesses signed up to accept them, and seven bank branches willing to exchange them.
Local currencies and bartering programs have grown globally. Local Economic Trading Systems (LETS), founded in the early 1980s in Canada, is now being used in 11 countries.
“Today, we see worldwide experimentation with local exchange, barter and swap clubs, such as Deli dollars, LETS, Ithaca HOURS and other scrip currencies in the USA and Canada,” notes Hazel Henderson in her 2006 book The Politics of Money. “All this hands-on experimenting resulted in an explosion of grassroots awareness about the nature of money itself. As local groups and communities created their own local scrip currencies and exchange systems, they learned about economists’ deepest secret: money and information are equivalent — and neither is scarce!”
As people develop deeper understandings of globalization and economics, the development of alternatives is imperative. We can create our own economic systems, but it takes good organization and follow-through, as all constructive programs do.
- Compliled primarily from the writings of Robert Swann and Susan Witt of the E.F. Schumacher Society
