Thursday, January 21, 2010

Keep it in the community: Local / complementary currency

How have I never heard of complementary currencies?  Basically bartering, keeping local money feeding back into the local, community economy.  Did they teach this in the high school econ class I barely passed?

I've never had a money mind. As a kid, Monopoly bored me. There was no point, no story.  ("To win" or "make money" is not an answer in my world.) Instead, I used the pieces to create plays, to tell stories: what happened when the boot landed on Park Place?  Did he meet a snooty dog (enter that piece) and donning the top hat, take off together on the Reading Railroad for untold adventures?

I always wished I could pay for my popsicles and Fun Dip with Monopoly money, it was so much prettier than the U.S. dollar.  And maybe I could, if my community of West Hollywood chooses that as their local money. 

In Whole Life Times, Maria Fotopoulos reports on creating and using a local currency in "Think Global, Spend Local."

"In 1932, while the world struggled through the Great Depression, a small Austrian town tried an economic experiment. To stimulate the local economy, leadership in Wörgl created its own local currency, or scrip, known in German as freigeld (literally, free money).

"Based on the thinking of Silvio Gesell, an early 20th-century social activist and economist, the new currency was novel in that it depreciated monthly, which increased the pace of its circulation. Rapid currency circulation goosed the economy, putting residents back to work. Advocates of local alternative currency systems explain that what’s really happening with this sort of currency “velocity” is real reinvestment in the local community."

..."The first question might be, is that legal? It is. Creating and using a local currency—sometimes called complementary currency, in that it “complements,” but doesn’t replace, a national currency—will not unleash the dogs of the U.S. Treasury, as long as it isn’t coin and doesn’t look like U.S. currency. Well before the Wörgl experiment, local currencies were common, and there are hundreds of more recent examples, from Canada’s Vancouver Island to San Luis Obispo, Calif., and Totnes, U.K. In a less formal way, barters take place all the time, albeit not transferable via a common coin of the realm.

..."In the Massachusetts Berkshires, another local currency project took off in 2006 with the support of the E. F. Schumacher Society, a kind of alternative economic think tank. Named for a British economist who advocated decentralization, the society studies how local currencies work. More than 2.5 million BerkShares have been issued, with about 150,000 now circulating. Accepted at 385 area businesses, BerkShares are colorfully illustrated with historic Berkshire figures and other artwork by regional artists, further emphasizing localness. Offered through 13 branches of five local banks, 100 BerkShares are equivalent to $100 U.S., but can be purchased with $95 U.S. Thus, users receive a 5 percent discount at local businesses that accept the currency."

..."Hollis Doherty, a student of the Wörgl experiment, shares Wendt’s enthusiasm for establishing a local currency. ... 'My focus is on a currency that includes more people in the economy, one that is more abundant for more people, and favors exchange over hoarding by the few,' Doherty says. 'The Institute would say there is no perfect system, but they do say it’s healthier if more than one medium of exchange is available.'"

"Hopefully an alternative currency would help to buffer Los Angeles in the event of a future economic downturn, regardless of what happens in Sacramento or Washington, D.C.

"'It will be a very regional effort that promotes a thriving economy for the L.A. region, driven by locally owned businesses and local farms committed to sustainable business practices,' says Wendt. 'What’s most important is that this be a catalyst for change.'"

Is this the future as we live more and more local lives? I like the idea of feeding more into Los Angeles farms and local businesses.  Read the whole story here.


Mark Herpel said...

I liked your article/post. Community currency is becoming very popular including some local trading systems which can also help local commerce. In the LA area, I know of the Echo Park Time Bank and also a group in Santa Monica or SMDP.


Rebecca Snavely said...

Thanks for the info Mark, and for stopping by. I'll definitely check these, I'm fascinated by how it works and where it could take us.

King of the Paupers said...

"an alternative currency would help to buffer Los Angeles in the event of a future economic downturn, regardless of what happens in Sacramento or Washington, D.C."
Jct: Community currencies aren't called anti-poverty life-boats for nothing. Best of all, I'll take 5 Hours worth of your currency to put you up in Canada if you'll take my IOU for 5 Hours of my currency to put me up in your town.