On any given Saturday in southeast Chicago, you will find attendees at the Healthy Food Hub Market Day being made aware of a points system in which they earn one point for every dollar spent. Upon accruing one hundred points, they receive a ten dollar discount on the total of their next purchase. Healthy Food Hub is a food system development initiative operating between Pembroke Township and Chicago which aims to create a pipeline of economic resource for rural farmers and provide consistent access to fresh produce for residents of Chicago neighborhoods lacking such options. The points system provides customers with an incentive to continue patronizing the establishment while Healthy Food Hub receives a tool to measure customer loyalty and participation within the social enterprise.
These point schemes are a form of local currency representing real value to regular business patrons. Frequent flier miles, rewards, and other incentives offer a closed loop local currency that benefits the needs of a single business and customer relationship by encouraging continued patronage. What would be the reward to a neighborhood or town if all of its residents, businesses, and organizations endeavored to develop a tradeable local currency designed to meet the needs of this community as a medium of exchange? The scenario we have outlined provides an easy to comprehend example of the value of community currency.
“Currency” and “money” are terms often used interchangeably, but a more nuanced understanding of these terms may be helpful. Currency includes coin, paper money, and other instruments (credit, commodities, goods) that make up all factors placed into circulation as forms of exchange within a town, city, state, or nation. Money on the other hand is usually more narrowly focused on coin or paper currencies which have been issued by a governing body. While money is a type of currency, currency is not strictly confined to money. This becomes important to understand because currency provides us with a more flexible language in discussing all of the forms of capital which might be exchanged within a community when designing what Bernard Lietaer calls a “monetary ecoystem”. In examining the notion of a financial ecosystem, Appleseed Permaculture outlined eight forms of capital including: financial, intellectual, living, material, cultural, experiential, social, and spiritual. These eight forms of capital represent all of the different types of currency which humans trade with one another in order to obtain what they need.
Our current economic construct has curtailed methods of participating in the larger economy to earning and spending money or financial capital in order to meet our needs. Since money is also used as an investment by those with greater access, this increases the scarcity of dollars issued in finite amounts and creates an incentive for holders of dollars to negotiate for the lowest price which slows down the velocity of money. Velocity or economic circulation is the true measure of social prosperity which is the rate at which money changes hands between the members of society. This circulation will not be accomplished in a currency which encourages people to hold it with a closed fist. All of these factors represent reasons why the US dollar may not be the most fitting tool for driving community priorities. Community currencies provide us with another tool for stimulating local economic participation and can exist in parallel to the existing national currency. This tool can be designed to incentivize whatever behavior matches the priorities of the community where it is being deployed whether that is civic and social participation, supporting locally owned businesses, performing cultural work in neighborhood spaces, or decreasing ecological degradation.
Community currencies can appear in several different forms including timebanks, printed regional currencies, local exchange trading systems (LETS), mutual credit associations, or bartering networks. The common thread operating in each of these community currency types is a desire of the participants for greater liquidity or flexibility in how they are able to accomplish trading when dollars are scarce and either of the parties to the transaction finds themselves blocked from accessing dollar markets. In timebanking for instance, participants offer their time on an equal hour for hour basis to earn time dollars which they can can they can then use to purchase services from other participants within the timebank. Finding ways to earn dollars and locate services you can afford to purchase with those dollars can be an expensive and time consuming proposition. Timebanking offers participants a method for immediately accessing a locally available pool of skills and services with a time-based currency which is backed by their reciprocation of service and skill sharing to others within the network. It is a currency protected against inflation because it is pegged to the length of an hour spent within network of exchange where you not only trade time, but build community and develop a supportive infrastructure in the process. This is the dual nature of community currencies. They accomplish the basic purpose of providing us with a medium of exchange while also generating social by-products which may prove useful to future community undertakings.
One of the earliest models in the modern era employing timebanking as a community currency is the Japan based mutual support network “Fureai Kippu” which translates as “ticket for a caring relationship”. In the decades following World War 2, Japan was faced with a rapidly aging population and a devastated national economy which was incapable of providing all of the myriad types of support to meet this aging population’s needs. The challenge was compounded as urbanization influenced the migration of younger workers towards the city where economic activity was centralized. This meant a fracture in the familial structure which had historically provided ongoing care and social engagement for Japan’s elderly population. Within these constraints, Fureai Kippu provided participants with an option for giving their time in one city to earn tickets that could then transferred to elders to purchase services in a different city. This afforded those elders with the dignity of aging in place while still having access to a supportive local infrastructure which could help them accomplish basic tasks such as providing rides, conversation, help in the home, or recreation..
In the United Kingdom town of Bristol, community agencies sought to incentivize residents to reinvest a greater share of their financial capital back into local enterprises. To accomplish this objective, they developed a printed regional currency dubbed the Bristol pound employing design choices that also reinforced a strong local identity and civic pride. Residents can obtain the Bristol pound by opening an account at their local Bristol Credit Union and trading British pound sterling for equivalent amounts of Bristol pound. Some printed regional currencies such as Berskshares offer consumers a percentage discount on the purchase of the currency which immediately increases their purchase power with local retailers. While the Bristol pound does not offer this incentive, retailers have the opportunity to offer their own standalone incentives to shoppers who pay in Bristol pound. This creates a vibrant local economy where residents feel more connected to the business infrastructure whenever they patronize an establishment in Bristol pound. The currency also creates a closed loop economic infrastructure since consumers are only able to spend these pounds in Bristol once they have converted from British pound sterling and there is no reverse conversion.
Local Exchange Trading Systems or LETS are a unique form for community currency based upon a practice called mutual credit. Mutual credit allows which individual participants to generate credit at the immediate outset of any transaction by crediting the account of the provider and debiting the account of the recipient. Similar to timebanking, mutual credit practice affords participants greater flexibility in they ways they are able to trade or offer services through the use of a ledger system where records of each exchange are held. In the past, these may have been basic paper accounting ledgers held with central authority which were updated at the time of trade and made available to all other members within the local network for transparency. Advances in technology have created the opportunity for several online LETS to provide members a digital ledger where debits and credits may be maintained in a less cumbersome manner. These digital ledgers are often paired with an online directory of skills, services, and goods available for trade by members within the network. Unlike timebanking, mutual credit values exchanges in the national currency where the network is located on a one to one basis. Members decide the dollar value of their skills, services, and goods negotiating with other members around details of the exchange. In a LETS, no money ever needs to change hands in order for value to be realized.
Community currencies offer a multitude of ways for citizens and residents to increase the capacity for exchange in their local economy. With a dual bottom line, these currencies are also capable of transmitting multiple forms of value in the course of each transaction. Whether the primary objective is social care (timebanking), economic development (regional currencies), or decentralization (LETS), community currencies offer the opportunity to revitalize local economies through thoughtful design of a currency which carries the values of each locality while stimulating economic participation and opening new avenues for exchange. When dollars are scarce, the needs of economic participants without dollars can often go overlooked. Community currencies allow us to address unmet needs without trying to attract additional dollars by using the assets and internal capacity of the community to meet those needs. This is an asset based community and economic development initiative which reminds us where the true value lives.
References:
Sacred Economics: Money, Gift & Society In The Age Of Transition by Charles Eisenstein (2011)
Mike Strode is a writer, cyclist, IT consultant, and collaborative social economist residing in southeast Chicago. He is founder and Exchange Coordinator of the Kola Nut Collaborative, a time-based skills and service trading platform which seeks to advance the conversation on timebanking, community currency design, and social economy in Chicago. The Kola Nut Collaborative maintains a robust web presence with articles, programming, and research on myriad aspects of social economy at www.kolanutcollab.org.
