Wednesday, July 29, 2009

What’s the Economy For Anyway?

I hosted a discussion a few months back after a film called “the Ascent of Money” and posed the question, “what is the economy for?” This question threw people off. They had come thinking we would discuss the nuts and bolts of how to reform the economy and rescue it from itself. But how can we know how we should change the economy if we don’t consider what the economy is for and what we want it to look like? A roadmap is useless without some sense of direction or destination.

A few days ago I saw a film called, “What is the Economy for Anyway?” The film went into great detail about what the US economy currently doesn’t do for us. The facts presented were startling. The US spends more on healthcare than any other country, but we are now 50th in longevity and 47 million people in the US are without health insurance. More Americans declare bankruptcy than graduate from college. There are 2 million nonviolent offenders in jail, likely due in large part to crimes related to economic stress like theft and drug dealing. CEOs make 400 times what the average worker makes. The top 1% wealthiest Americans make more than the bottom 50% in the economic pyramid. Twenty-nine percent of us have no paid time off at all and fifty percent have less than one week off. We are the only industrialized nation without a paid vacation law. The US is only one of four countries – Swaziland, Papua New Guinea, and Liberia – that doesn’t offer new mothers paid time off. The infant mortality rate in the US ranked 27th in the world in 2000 and has been dropping since. 3.5 million people, 39% of them children, currently experience homelessness every year and 30% of American are on the edge of poverty. 36.2 million people lived in households considered to be food insecure. Of these 36.2 million, 23.8 million are adults (10.6 percent of all adults) and 12.4 million are children (16.9 percent of all children). We are clearly going in the wrong direction.

So what IS the economy for? It is certainly not even meeting everyone’s most basic needs. At least the economy should make sure that everyone has food, shelter and healthcare. But what else do we value that the economy is not supporting? It is fostering community, protecting our environment, facilitating good governance or creating happiness? Without trying to quantify indicators of whether our economy supports those values, I think it is quite clear that it does not support these values either. How do we create an economy that does? Decentralization to the extent possible, I believe is key. The US economy is too big to be transparent, to have adequate feedback mechanisms, or to regulate or reconstruct the economy based on progressive values. The scale and centralization of our economy enables corruption and doesn't facilitate the consideration of context and relationship that should guide good economic development and policy. Of course some economic functions probably need to remain at a national level, but these should be minimized and greatly reformed. Venezuela, a work in progress, is one model. They are trying to redistribute and decentralize wealth and power and meet the people’s basic needs. The other part of the equation is rebuilding the grassroots economy. This can be done through a variety of initiatives that are already underway but need greater support and synergy: community currencies, worker cooperatives, credit unions, land trusts, urban food production, municipal participatory budgeting, local investment strategies, recuperation of closed businesses, affordable housing cooperatives, preferential purchasing, decentralized energy sources, gift economies and mutual aid projects…

The solutions exist. We need only to take a step back to see the big picture. What kind of economy do we want? An economy where people serve the needs of the economy and the profit motive or many economies that create happiness, health, sustainability, equality, freedom, care, and connection. This is what we should be working towards, not tinkering with the worst aspects of a highly dysfunctional, centralized and corrupt capitalist economy. It won’t work. It needs fundamental change and now is the time.

Tuesday, July 28, 2009

Crisis as Opportunity

These are truly challenging times. People are losing their jobs and homes and businesses are shutting down, while the government is giving billions of taxpayer dollars to banks and corporations to bail them out, as well as to the military to fight unjustifiable wars. Corporations are simultaneously stealing and polluting our collective commons. People are working harder for less money and less free time doing work that is alienating and doesn’t reflect their values.

The centralized monetary system creates money out of debt and so money tends to accumulate wealth and power into the hands of small percentage of the population. The real wealth of communities should stay mainly within the communities themselves to assure that the local economy is taking care of its people, its environment, and to give communities some measure of self-sufficiency and also self-determination about how they spend their time, energy, and money. We can do much of this with community currencies.

There are hundreds of regions in the US using their own currencies and over 2000 across the world. Some of the most successful are Ithaca paper hours, Berkshares which involves 360 business and 5 banks, Timebanks USA which has over 120 community timebanks. There are many other kinds of mutual credit systems, including LETS or Local Exchange Trading Systems of which there are over 140 in the world and the WIR Bank in Switzerland that circulated over a billion and a half Swiss dollars in 2004 and kept small businesses alive during recessions.

In a mutual credit system there is never scarcity. Credit is created by a transaction between two businesses or people when a good is produced and sold or a service is given, instead of through a loan from a bank that charges excessive interest for profit. In mutual credit there is no interest. There is simply mutual aid that is registered in an accounting system that pools the productive wealth of the given community. It is a way to create a commons of resources so that everyone is taken care of regardless of their value to the market or regardless of the scarcity of US dollars. Timebanks have the added stipulation that everyone’s time is equal- one hour for one hour and because of this they are considered tax exempt by the IRS. Women and people of color make a fraction of what a white male makes per hour in the market for the exact same job with the exact same qualifications. In Timebanks, everyone makes the same amount so that prejudice and accumulated privilege is not permitted. It is also a way of saying that we honor everyone and their time here on Earth rather than seeing them as a function of the profit system to be exploited for maximum gain.

Community currencies are a significant part of the solution. However, in order for them to work well we need to completely reconstruct our economy. Everyone should have adequate housing, food, health care and access to low cost, clean transportation- call this grassroots, participatory socialism if you will. We need to retrain people to provide jobs that are both useful to their communities and healthy for them. We need to replace goods that are imported from sweatshops with locally produced, sustainable, quality goods, ideally using recycled materials as much as possible and fixing goods that are broken instead of throwing them away. We need to give our communities more control over government spending through participatory budgeting. We need redesign our communities so that people start connecting again locally and face-to-face to rebuild trust. We need to recognize our spiritual and material interdependence. Let this new consciousness bloom in a thousand ways.

None of this will be easy. It will be a long struggle, but we are already working on it here in the San Francisco Bay Area, designing community currencies through Bay Area Community Exchange and creating a communal time exchange. The JASeconomy (Just. Alternative. Sustainable economy) project, initiated by the Network of Bay Area Worker Cooperatives, is also hosting a conference and festival on Sept. 26 in Oakland to attempt to demonstrate and synergize all the different aspects of the alternative grassroots economy here in the Bay Area. We hope you join us and build this movement together.

We have the power to create a loving, abundant, sustainable and equitable economy. Let’s use this crisis as an opportunity to remake our economy to reflect our highest values. Now is the time to take our economy back.

Sunday, July 26, 2009

Mali's Gift Economy

Yes! Magazine, written by Beverly Bell
posted Jul 22, 2009

“If you trust it”—the Malians’ hands all go down for two pounds on the table—“just do it! If you have it, just give it!”

Teaching in the Gift Economy In the red-dust town of Kati, Mali, a meeting is underway between the leaders of the local Institute for Popular Education, who have just called out the chant, and a group of Western visitors who came to the West African nation for the 2007 World Social Forum.

At the Forum, 30,000 people came together in hot pursuit of alternatives to the reigning winner-take-all-and-screw-the-rest economic model. The case of West Africa is unusual. Here an alternative already exists, and has for thousands of years.

The Institute for Popular Education (IEP) and Other Worlds collaborated to document this below-the-radar gift system called dama, in which human beings have more worth than the market. The ‘co-visionaries’—as the Malians call it—are rendering explicit and publicizing a system that is well-known to most Africans and many indigenous peoples, but something short of a miracle to those of us in lands colonized by the Holy Profit.

dama is a vibrant economy and culture propagated primarily through a strong, though informal, women’s social network. Gift-giving is not based on exchange or equivalence between giver and receiver. The person who receives a gift will probably pass it on to someone else. Another person altogether, on down the line, will give back to the original giver. dama involves return, but from within a broadly defined community to which the gift has moved on.

Gifting, and the message to keep it moving, exist at most times and places throughout Mali. Nature as well as culture are understood in terms of the gift. For example, if a baby’s umbilical cord doesn’t fall off right away, one woman might say to another, “That father doesn’t give enough.” Even the primary greeting in Mali as in Senegal, ince, means at once ‘hello,’ ‘thank you’, and ‘I know my link with you.’

In its purest form, a gift economy is about the collective, allocation based on need, and abundance. Behind gifting is human relationship, generation of goodwill, and attention to the nurturance of the whole society and not just one’s immediate self and family. Maintaining economic and social relations outside of the market keeps cooperation and ethics thriving.

The Value of the Gift

A courtyard in Mali

A gift is never just a material object or service. One of its purposes is to maintain social connections. Be it a bracelet for the arm or a bed for the night, gifts are strings which create and strengthen friendships, family, regional community, religious grouping, and other social networks. dama reflects a worldview that society, indeed the world, is a web of relationships—not just between individuals, but between an inseparable whole. Gifting is not an economic activity so much as a spinning of that web, continually reinforcing interconnectedness and the collective. IEP educator and cultural worker Coumba Toure says, “Who we are is very much defined by how much we give to others. The objects are just the symbol. The highest gift is recognizing people and accepting to be connected to them.”

A second purpose of dama is to sustain and celebrate the values of sharing and humanity—what is known as maaya or ‘being human.’ “Maaya, the link we have between ourselves, is why dama works,” says Djingarey Maïga, president of the organization Women and Human Rights. “It’s the link with your neighbors, your parents, your relatives. If you can’t keep that link, you are not a human being.” She illustrates with the case of her children who, if they are at a neighbor’s house at mealtime, will be fed. If it is bath time, the neighbors will bathe her children as well. A common Malian expression explains maaya: “Life is a cord. We make the cord between ourselves, and you have to hold on to it. One should not drop the cord.”

Thirdly, dama is an essential strategy for keeping the community well. Malians’ understanding of community is that it is only as strong as its parts. Only by all providing for each other will all survive and thrive. Wherever your gift ends up will be an important contribution toward everyone’s welfare. For example, one afternoon I pass a small cash gift on to my friend Madou. Yaye, a bystander looking on, immediately thanks me. “What you give Madou you also give me, because I will also benefit from his well-being.”

Coumba says, “If you ask any number of people how they live, what they eat, where they get what they wear, you would quickly notice that most of it has been given by someone.” dama is a time-honored, well-honed means of keeping away hunger, prolonged illness, and early death. It provides the social safety net which the state—egged on by the World Bank and IMF—has neglected: a working health system, social security for the elders, education, and child care.

In addition to trying to prevent anyone from being too poor, yet another purpose of dama is to prevent most everyone from becoming too rich. While in the U.S. there often exists social reinforcement to accumulate as much as possible, with wealth and the wealthy frequently being revered, in Mali the cultural norm is to give away as much of your accumulation as possible, with generosity and the generous being most respected. The social pressure to give acts as a disincentive to hoard, or what we call save. Coumba offers, “Being rich here means that the person has abandoned his or her values, that he or she is not giving enough to the needs around. People really start worrying about what has happened to that person.”

Passing it On

School girls in MaliIn one study in Bamako, each person gave an average of 1.5 gifts per day. Another study found that gifts account for 18% of total expenditures among Malian villagers, comprising the largest single category. Presents are passed along everywhere: a small household decoration, change to buy a school notebook. When a family’s harvest of millet or peanuts is ready, they pass on a portion to the homes around them. If a household is hosting guests, neighbors will typically send over food.

Services are rendered, too, mainly by girls and women: sweeping or washing dishes, running to the corner to buy sugar, tending a market stall, lending a chair or a pot, braiding hair. Women often care for the children of a neighbor who has to leave home to work.

During the rainy season, when the heavens open with a stupendous force, standard practice is that the closest household offers hospitality to an immediately drenched passer-by, inviting the friend or stranger in to dry off with a towel, share a cup of hot tea, and wait out the torrent. Community organizations regularly give small contributions of money or the loan of a conference room to another group. Town residents give lodging to those from their original village until the new migrants can get on their feet. The examples are endless.

Malian homes themselves are testaments to dama. One study found that households consist of an average of 11.5 individuals. They may include orphans, refugees of abuse, or those whose first (biological) family is too poor to feed them or too far from a school to educate them.

Gifts encircle each life cycle. When a woman gives birth, neighbors care for all her material needs for the first forty days, organizing themselves to share in providing meals, milk, and the like. At a baptism and wedding, guests show up with soap, a length of cloth, some palm wine, or a dish of food. On the seventh day after the death of a wealthy person, his or her family distributes food to the children of the area.

Signs of dama abound throughout religious practice, too. Every Friday, Muslim communities distribute milk and bread to village children. Catholic women organize themselves to feed the village priest throughout the year, each one signing up for two weeks at a time. The Rastafari Movement of Mali gives half of the produce of its community gardens to street children.

Lines of giving are complex and often circuitous. “You never know how it will come back. But you have to give because you can’t let the cord break with you,” explains IEP backbone Maria Diarra. She tells of helping a man in the community some years back. Now the man’s sister brings Maria’s family gifts of charcoal and food, gives them rides, and visits whenever she comes to Kati.

“Maybe the link gets broken in a larger community," says Coumba. "But when you are in a community where everyone believes that, it really does work.”

And in the World's Richest Nation...

Western academics are often tempted, as one of them noted, to delineate “a radical break between premodern and modern cultures, with the gift reserved for the premodern, while we must deal through the market and the state.” We are to believe that, as capitalism developed and exchange systems spread, markets supplanted morals and gifting was destroyed.

Certainly the messages many of us got from childhood to accumulate riches and spend them on ourselves, strive to make that theory real. And yet, in the most consumptive nation on earth, gifts are given frequently, spontaneously, and without thought of reciprocity. One gift advocate offers this analysis: “We just don’t have the right glasses on to see the gifting happening all around us. We see it as exchange manqué or only a defensive position of those who aren’t capable of exchange.”

In fact, people in the U.S. give infinite forms of services and goods to family and friends, neighbors, and strangers without calculation of return. We give where there is no emotional tie, no reciprocity, and often (in the case of a donation to a community organization, for example) not even a thanks from the ultimate recipient. We give anonymously; think of those multi-million dollar donations from unnamed individuals reported from time to time in the newspaper. We push strangers’ cars, give their batteries a jump in a parking lot, shovel snow from elderly neighbors’ walks, leave tips for waitresses we’ll never see again. We even donate organs. In 2005, people in the U.S. gave $260.28 billion to non-profits and charities, and 61.2 million volunteered, with each person giving a median of 52 hours per year.

Escaping the Crocodile's Lake

dama is under threat by the neoliberal marketplace that is converting much of the gifting sphere to exchange relationships, monetizing the economy, and placing a dollar value on many forms of worth. West Africans’ challenge today is to keep dama thriving despite the expansion of markets, advertising, and cash transactions. A canary in the proverbial coal mine, dama is an indicator of how well cultural traditions can hold up under conditions of globalization.

What is certain is that dama will survive in at least a subterranean way, as do other gifting and solidarity economies throughout the world. Also certain is that dama and other non-market economies will remain strong and viable only if organized movements vigorously defend them.

Kadidiatou Baby, director of the Malian Association for the Support of Schooling of Girls, suggests that, “We can’t go fully back to the traditional economy. But we can organize people so they can better support each other in a parallel economy that nurtures society. You can exploit individuals easily, but it’s harder before a well-organized system.”

As free-market capitalism is being globalized, so are economies that function on a different logic, that of solidarity. Grassroots movements have organized community kitchens in Latin America, fair trade production in South Asia, clothing and book exchanges in North America, and open source software networks in Europe—to name only a few of the spiraling examples. They emphasize women's initiatives, ecological agriculture, ethical financing, and appropriate technology. The World Social Forum hosts a permanent solidarity economy network, and the U.S. Solidarity Economic Network held its first meeting in March, 2009. Brazil even has a secretary of state for solidarity economy.

“You know that difficulty usually gives way to creativity,” Kadidiatou says. “Sometimes people come out of the crocodiles’ lake alive. Go figure how they got out, but they do. Even if they leave with one less limb, they do. When you believe in the survival of humanity, you invent the response.”

Beverly Bell is Associate Fellow at the Institute for Policy Studies and the coordinator of Other Worlds, which collaborates with grassroots movements in documenting and publicizing large-scale economic alternatives, and generates support for them. Special thanks go to the research and analysis of Maria Diarra, Coumba Toure, Debbie Fredo, Anne Mayher, Genevieve Vaughan, and Moira Birss.

For more information on dama, including a short video, check Other Worlds’ web site: For more on gift economies, see

Sunday, July 19, 2009

The WIR Bank- A model for NoBAWC?

Could the successful WIR Bank in Switzerland be used as a mutual credit model for the Network of Bay Area Worker Cooperatives or the US Federation of Worker Cooperatives?

The WIR Bank, formerly the Swiss Economic Circle (GER: Wirtschaftsring-Genossenschaft), or WIR, is an independent complementary currency system in Switzerland that serves small and medium-sized businesses. It exists only as a bookkeeping system, with no scrip, to facilitate transactions.

WIR was founded in 1934 by businessmen Werner Zimmermann and Paul Enz as a result of currency shortages after the stock market crash of 1929. Both Zimmermann and Enz had been influenced by German libertarian economist Silvio Gesell[1]; however, the WIR Bank renounced Gesell's "free money" theory in 1952, opening the door to monetary interest.

"WIR" is both an abbreviation of Wirtschaftsring and the word for "we" in German, reminding participants that the economic circle is also a community. According to the cooperative's statutes, "Its purpose is to encourage participating members to put their buying power at each other's disposal and keep it circulating within their ranks, thereby providing members with additional sales volume."

Although WIR started with only 16 members, today it has grown to include 62,000 — among whom is traded approximately CHF 1.65 billion annually (as of 2004). The available money supply (currency code CHW) was 839 million equivalent Swiss francs (as of 2005).

The WIR bank is a not for profit bank. It serves the interest of the clients, not the bank itself. It is a very stable system, not prone to failure as the current banking system is. It remains fully operational even in times of general economic crisis. WIR may have contributed to the remarkable stability of the Swiss economy, as it dampens downturns in the business cycle.

(Selections from "Initial Results of WIR Research in Switzerland"
by Erick Hansch, November 1971)

In August, 1971, during a stay of several weeks in Switzerland, I had lengthy interviews with managing personnel of the WIR-Cooperative, both in the Zuerich and Basel offices, the latter being the headquarters of the Wirtschaftsring (meaning: Economic Ring, using the first three letters as acronym; also, the German word 'wir' means 'we').

WIR is a cooperative association of small to medium sized, independent Swiss businesses for the purpose of mobilizing their own credit potentialities, i.e., without using commercial banks as intermediaries, to facilitate business transactions within their own circle. This arrangement prevents, or at least inhibits, the outflow of capital and profits to the large chain stores, department stores, stock corporations, etc. WIR credit can be described as supplementary, low-cost credit, but has had also the fully intended result of increasing the business volume of their members. As a self-help measure, it appears to have been successful in large measure in protecting the small, independent businessman against the constantlyincreasing pressure from large, financially strong competitors.

The WIR Cooperative has been in existence and uninterrupted operation since 1934, when a small band of independent businessmen, joined together to form this 'internal credit' organization. Their motto was: 'Free exchange of goods and services, without exploitation of our fellowmen, and without government coercion.' In their minds, high interest charges were one of the more apprehensive aspects of exploitation, and they sought to avoid it.

Transactions among WIR participants are quite simple. To join as a participant, a businessperson need only declare his/her intention to accept WIR booking orders as partial or total payment in any transaction with other participants. The percentages of WIR accepted are listed in the classified directory. Regarding pricing, transactions in WIR are at par as transactions in Francs. Each participant has a set of booking order forms, similar to the conventional bank checks, with the imprint of name, address and account number. In making purchases from another participating member, the buyer will give to the seller such a booking order after having written in the amount for whatever the seller has obligated himself to accept. Many participants commonly accept 100% payment in WIR.

In contrast to regular bank checks, WIR booking orders are not transferable by endorsement, the main reason being that this would lead to avoidance of the 1% booking charge. The income from this charge is used to defray WIR-office administrative overhead expense.

Upon application of a businessperson to participate, a WIR-field representative will make a preliminary investigation as to reputation, character, business acumen, etc. The WIR Co-op subscribes to a credit bureau and obtains information on the applicant, which, with the field report, is submitted to an Admissions Committee of three members. When accepted, the new participant can accept WIR booking orders in payment, and send them in to the WIR head-office in Basel for credit to his/her WIR
account. He/she can then dispose of this credit similarly by making purchases from other participating members, either for business purposes, or for private use and consumption.

The present structure of the WIR Cooperative is such that of about 18,000 participants (in 1970) in the credit operation, only a comparatively small number (761) are active members of the cooperative with paid-in shares (Fr.802,000) and voting rights in the general assembly.

The form and amount of dues and their collection, as well as of the booking charges, were changed from time to time. At present, there is a one-time charge of 1% (the lowest for the entire period of existence) of all credit entries made to a WIR credit account. These charges are billed quarterly and are payable in cash, while the yearly dues of Fr.12.- are deducted in WIR from the account balances. There is no initiation fee.

Participants receive without additional charge the classified directory listing participating firms by articles, with geographical subdivision in each article. Participants also receive free a copy of the monthly magazine WIR-Pioneir (WIR Pioneer), which beside articles of general interest to business owners, carries a large amount of ads by participants. These ads in some cases list WIR-percentages higher than those in the directory as specials for certain months to attract business during an otherwise stagnant period.

New WIR are being created by any participant applying for additional credit over the amount already in his WIR credit account. Reasons for such applications may be the planned acquisition of more costly articles like furniture or large electrical appliances, also cars, or even houses.

A Credit Approval Committee must pass on these applications, and sufficient security must be available as collateral. The present management is of the opinion, based on past experience, that an optimum ratio of WIR-credit outstanding to total WIR turn-over should not vary substantially from a proportion of 1:3. There is at present a limitation put on paid-in capital of Fr.250.- per co-op member. Share capital now receives 12% interest p.a.

A few data will give a brief run-down of the organizational start of WIR and the rapid spread of the idea:

1. Founding of the WIR Cooperative on October 16, 1934, in Zuerich. The first group of cooperators consisted of 16 persons with a total paid-in cooperative capital of SFr. 42,000, average per person SFr.2625.

2. Already on November 1, the first issue of the WIR-News (WIR-Nachrichten) came out. Initiation fee was set at Fr.5.-. and the required minimum amount of a share of Fr. 25.- could immediately be used for credit transactions with other members.

3. In 1935, local WIR-groups were set up in Basel, Bern, Zuerich, Winterthur, Biel and Derendingen. That year also saw the first edition of the Classified Directory. During the 1st and 2nd of August, 1936, the first WIR-convention was held at the Vierwaldstaetter See.

4. 1939 to 1942 was a period of reorganization. As personal comments by WIR-personnel indicated, it was a critical time for the organization, and an appeal was made to the members to subscribe additional capital for the emergency. The prospects were dim, but additional capital was signed for about Fr.250,000, mostly from loyal members, and the organization pulled through.

5. There were 900 participants in 1945; transactions in WIR credit were Fr. 717,000. The number of participants stayed below 1000 until 1949 when it began to climb rapidly. The stagnation during the preceding years had to do with the shortage of goods during the war.

6. In 1958, there were between 11,000 and 12,000 participants, and transactions in WIR credit had climbed to Fr.53 million. (Estimating conservatively 40% WIR in all transactions as an average rate, the total turn-over in goods and services involving WIR would be over Fr.130 million.)

7. There were over 18,000 participants in 1970, and WIR credit transactions ran to over Fr. 180 million. Figuring about 50% WIR participation (as indicated by the president of the executive committee, Mr. F. Hubschmid, in the Business Report for that year), the total value of goods and services involved can be assumed at over Fr.360 million.

(Note that by 2007 when I visited WIR offices in Basel, the amount of WIR in yearly circulation had grown to 1.6 billion. The WIR Co-op is now functioning more like a bank. In addition to its WIR accounts, it accepts deposits in Swiss Francs. The dual currency capability has meant that it can offer credit partially in WIR at little or no cost, and partially in Francs at conventional interest rates, providing the convenience of one loan application for its members. WIR exchange began strictly as business to business transactions. For the past several years individuals have been encouraged to open deposit accounts in Francs at the bank and then convert deposits as needed to WIR for purposes of trading with WIR businesses. This has expanded the program, inviting in the consumer. Circulation of WIR continues to strengthen the independent businesses of Switzerland even during difficult economic times. (Susan Witt)

Berkshares- a model for a Bay Area regional currency?

The purpose of BerkShares is to function on a local scale the same way that national currencies have functioned on a national scale—building the local economy by maximizing circulation of trade within a defined region. Widely used in the early 1900s, local currencies are again being recognized as a tool for sustainable economic development. The currency distinguishes the local businesses that accept the currency from those that do not, building stronger relationships and a greater affinity between the business community and the citizens of a particular place.

The people who choose to use the currency make a conscious commitment to buy local first. They are taking personal responsibility for the health and well-being of their community by laying the foundation of a truly vibrant, thriving local economy.

BerkShares will not, and are not intended to, replace federal currency. Their use will help strengthen the regional economy, favoring locally owned enterprises, local manufacturing, and local jobs, and reducing the region's dependence on an unpredictable global economy.

BerkShares are placed in circulation when citizens exchange federal dollars for BerkShares at any of the BerkShares Exchange Banks (see list below). Some restrictions may apply.

The exchange rate is ninety-five cents per BerkShare. Ninety-five federal dollars will yield one hundred BerkShares. BerkShares are printed in 1, 5, 10, 20, and 50 denominations of BerkShares.

Federal dollars remain on deposit at the BerkShare Exchange Banks to redeem excess BerkShares at a five percent discount. 100 BerkShares would be exchanged for ninety -five federal dollars.

The five percent discount is part of the exchange rate, not a discount given at the point-of-sale. That 5% doesn't "go" anywhere - no one is making a percentage on BerkShares transactions. To explain more clearly, let's follow 100 BerkShares through a common transaction:

One day, you decide to go out for a nice dinner. You go to the bank to purchase BerkShares to spend at a local restaurant. You go in with 95 federal dollars and exchange them for 100 BerkShares. You go to dinner, and the total cost comes to $100. The restaurant accepts BerkShares in full, so you pay entirely in BerkShares. Therefore, you've spent 95 federal dollars and received a $100 meal - a five percent discount for you. The owner of the restaurant now has 100 BerkShares. They decide that they need to deposit them for federal dollars and return them to the bank. When they bring them to the bank, the banker deposits the 100 BerkShares you spent on dinner and gives the restaurant $95 federal dollars, the same 95 dollars that you had originally exchanged for BerkShares. The end result? You receive a five percent discount because of the initial exchange, but the same $95 you originally traded for BerkShares all goes to the business where you spent those BerkShares.

Citizens with BerkShares in hand will look for the "BerkShares Accepted Here" sign in store windows or can browse the BerkShares Directory. BerkShares are accepted at face value for goods and services—10 Berkshares for a $10 purchase, though some restrictions may apply. Every business listed in the BerkShares Directory and displaying the BerkShares sign commits to taking full or partial payment for its goods or services in BerkShares. Most listed businesses accept BerkShares for the full value of an item, but some find they cannot and so it is important to ask about store policy before making a purchase. BerkShares provide a flexible and adaptable tool to meet the needs of differing business.

Change for purchases in BerkShares will be made in BerkShares. Customers paying with federal dollars may ask for BerkShares in change.

By accepting BerkShares merchants are helping to establish markets for locally made products, providing an incentive for the growth of home-based industries and creating opportunities for those underemployed and unemployed to turn latent skills into business ventures.

Any business or individual may accept BerkShares as payment and then spend them as they choose. You are not required to sign up with BerkShares, Inc. to trade in BerkShares! However, we strongly advise that you do choose to sign up with us and join our business directory for a number of reasons. First, you'll receive materials that will help you trade in BerkShares, including brochures, information, stickers, and other promotional materials; second, you'll receive our updates and newsletters, which will keep you informed of the latest BerkShares developments, and third, you'll receive free listings in our online directory and in any future print or display advertisements or catalogues that feature a list of businesses.

Everyone benefits from using BerkShares. Consumers benefit from receiving a 5% discount on purchases. Businesses benefit from increased patronage. Local non-profit organizations can also benefit by purchasing BerkShares at the 5% discount rate and selling them at full face value to their supporters.

It will take citizens working in their own communities, region by region, to create the kind of systemic change that will lead to sustainable economic practices—practices that foster ecologically responsible production of goods and a more equitable distribution of wealth. Local currencies are a tool to bring about such change. BerkShares are about building community while building the local economy.

(This information was taken from the Berkshares website. To the best of my knowledge, it is my understanding that Berkshares intends this project as a transition and hopes to delink from the US dollar at some point.)

Thursday, July 16, 2009

Beyond Money

I went to a panel and discussion last night hosted by a spawn of Daniel Pinchbeck’s Evolver group, which aims to create positive transformation of consciousness by 2012. The topic of the discussion was “Beyond Money” with Guillaume Le Bleu from Open Money in San Francisco and Matthew Edwards from Circle Center in Fairfax.

Guillaume talked about tools for facilitating indirect reciprocity or karmic payback for good deeds in the community in order to reinforce the doing of good deeds and support the lives of those that do them, including creating reputation-based systems that certify the goods deeds and then receive economic benefits in their communities. One example given was when people help fix potholes in the road, there is no direct payback. But we could facilitate that payback by giving them some kind of certificate that they could then use at a bike shop for a discount.

Matthew emphasized building networks and systems of trust and reciprocity or gift-giving within the local community that meet everyone’s needs. Right now we usually rely on a small family or friends circle that meets few needs without money and then a much wider circle that meets needs through the monetary system and global economy. We could develop (or redevelop) the middle circle of local community that could meet many of our needs through alternative currencies. We can do this through things like time exchanges that don’t place too much emphasis on keeping score. He has a system that allows the receiver of a service to make a gift to the giver of the service in whatever amount they see fit.

The most interesting discussion blossomed in the World Café. We came up with more questions than answers. Matthew raised another question, “ how do we bridge gift economies and alternative currency systems?” –bringing the best of the two together. Along a similar vein, I observed that there seems to be two primary goals that currencies systems seem to want to meet: achieving better allocation of resources/getting good things done and overcoming alienation to create community and trust. So I asked, “how do we create systems that synergistically meet both of these goals?”

We spent some time in small groups discussing these questions and came up with more questions. How do create systems that assess true value, not market value? You can create a system that minimizes the individual accounting of services and goods so that there is space to value things in other ways, using gifts to reward, simple accounting of hour-for-hour, offering zero and up sliding scale, making sure everyone’s needs are met. Creating abundance of things a community needs permits less commodification and then other values emerge. If exchanges are not moderated simply by the market and how much cash you have in your account, it permits the complexity of the individual and community context to be more transparent and hence exchanges can be adjusted based on principle (how much does this person need this thing and how good have they been to the community) rather than the simple question of, “do they have the money to pay?”

Reputation and trust-based systems help reinforce doing good for the community, but the system should in some way make sure that everyone’s needs are met regardless of their reputation, work or status or there will be individual and possibly community breakdown. People should receive rewards for doing positive acts in their community but no one should be made to suffer as the community as a whole will likely suffer.

The market often makes money flow to certain people or businesses based on image and advertising, not what they actually do. We have politicians, celebrities, pollution companies, financial institutions, internet companies all making lots of money regardless of the fact that few do much for the world given their enormous resources. How do we create a system that assess rewards what people actually do to help meet needs and create happiness and not just what their image purports they contribute? This can be done in smaller scale networks of trust so that transparency and feedback can occur within the group. This also makes sure that everyone, at least in the network, is cared for. Is it much harder to let people you know in a circle of trust fall through the cracks if they become unable to care for themselves than if we are all separated by an anonymous medium of exchange. People then are also less seen as functions or roles in the economic system to be owned by the employer and supported by dollars if their service is up to par rather all divine beings worthy of care and love and autonomy to make some decision about how they spend their life energy. Exchanges based on complexity of context and relation rather than anonymous exchange also help build community and collective wisdom as you are developing connections with others and assessing how the whole context and the value of the exchange fits into the transaction.

This group was optimistic that synergies of gift economies and community currencies would help facilitate the necessary transformation of consciousness to make 2012 something to look forward to. We already working on it. Come join us. Or start a project yourself.

Wednesday, July 15, 2009

What is a Community Currency?

A community currency is a means of exchange that has a localized value, usually restricted within a geographical region. This structure keeps the wealth created by the exchange of goods and services within the local community -- it cannot be extracted, exported, or benefited by entities outside of the community. If they are constructed properly, local currencies can insulate communities from the rollercoaster market economy and create greater sustainability, equality, connection and self-determination. Community currencies represent real value created by our communities rather than market value and as such promote a different economic paradigm.

There are over two thousand communities across the world and hundreds of regions in the United States using their own monetary systems—the most well-known in the US being Ithaca Hours of Ithaca, New York. Started in 1991, this fiat paper currency works on the hours model, which means that an hour’s work is used as the unit by which the value of goods and services are compared. Berkshares paper currency in Massachusetts is currently backed by the US dollar and has been very successful in getting businesses (360 currently) and banks participating with over two million Berkshares in circulation. Timebanks USA is a group of over 120 local time banks that pool community resources and issue credit to their members in an hour-for-hour time exchange that is considered tax-exempt by the IRS. LETS or Local Exchange Trading Systems (also known as Local Employment Trading Systems) operate by mutual credit, a system in which the currency necessary to mediate a transaction is created at the time of the transaction as a corresponding credit and debit in the balances of the two parties. There are currently over 140 LETS systems. Another successful mutual credit system is the WIR Bank which has supported small and medium businesses within Switzerland since 1934 and traded CHF 1.65 billion in 2004. Other types of community currencies in use today include business or government-issued scrips, commodity-backed currencies, plastic local discount cards, reputation currencies, and bartering systems.

Tuesday, July 7, 2009

Alternative Currencies as a Catalyst for Social Change

I came to alternative economics after a decade of environmental and social justice activism. During that decade, sometimes we won the good fight and often we lost or won only tentatively, usually because of imbedded financial interests, power brokers, and structures. Even more often, change was not even attempted because it was predetermined you just create that kind of change in this economy. So I decided it was time to change the economy- change its values, change its functions and tools, and most importantly put it in its place, under the control of the community it is supposed to serve in order to support our needs and true happiness.

How do you do this- socialism, green businesses, worker cooperatives, mutual aid, really really free markets, free skools, credit unions, participatory budgeting, land trusts, community supported agriculture, community gardens, housing cooperatives, social and environmental responsible investing? I say “yes, yes, yes!” Let the new communal consciousness blossom in a thousand ways!

Why alternative currencies? The element that draws me to currencies is that you and I can make one. We have that power and believe it or not, it is legal. We can make it abundant, we can make it green, we can make it local, we can make it egalitarian. If we as a community in the Bay Area have control over our monetary supply, or if there are many alternative currencies that serve our most progressive values, we can make decisions about where that money flows and we can make sure that everyone has enough. We can stop money flowing to wars and direct it towards health care. We can stop it from funding deforestation and nuclear power and put it towards renewable energy in our own communities. We can stop sending jobs abroad that turn developing countries into slave colonies for cheap goods and create green living wage jobs here. We have the power to create currency based in trust, love and abundance.

Potential Use Cases for Alternative Currencies in the SF Bay Area

-Veggie shares- An alternative currency in which money and/or time is invested into a Community Supported Agriculture (CSA) or Veggie bank. Your share is invested in future food production in the form of: expanding current organic farming operations in your area; funding start-up costs of new farms for low income families, immigrants, and worker-owner cooperative organic farms; and creating new urban agriculture projects, including buying urban land and start-up materials for urban farms, school gardens, rooftop gardens, back and front yard gardens and community gardens. It would be an investment in your community food shed and therefore your future as the cost of importing food rises with the price oil, this would be a very good investment. These veggie shares could be traded as currency and redeemed for veggies at any time from the veggie bank. Time, in addition to money, invested in these projects could be logged and used to purchase shares. Many individual CSAs today already do something similar, using prepaid veggie boxes to fund next season’s growing and occasionally expanded operations. The difference here is the pooling effect that allows for great development of funding for seed projects as well (ideally selected by members of the CSA or Veggie Bank voting for projects), and a greater guarantee that you will have veggies when you want them as the boxes are supported by more than one local operation. It would be a sort of super veggie co-op union bank and currency. Veggie shares currency funded projects would be required at some point when profitable to return money and time to the veggie bank to perpetuate new projects.

-Community health fund currency (Karma currency?)- An alternative currency in which money and/or time is invested the development and maintenance funding of community health services and projects. Your shares would be bought by contributing volunteer time in the form of care-giving to the sick and money invested on a regular basis that might otherwise go to a health insurance company (which usually make a huge profit). Ithaca, New York already has a successful community health insurance fund. Edgar Cahn, who invented Timebanks, has developed the concept of investing time in a bank while you are able-bodied and then redeeming as you age and need care-giving by professionals or volunteers- a great idea for aging baby boomers. Karma currency backed by money or time could be used to support free community health clinics and their volunteers, as well as an emergency care investment fund.

-Cooperative currency- This currency would be purchased through donated time or money or as a rebate for shopping at bay area worker cooperatives that could be added onto a card or as paper. The money or time stored could then be used to help perpetuate new worker cooperatives, preferably in the context of a good worker cooperative or collective training program run by the Network of Bay Area Worker Cooperatives (NoBAWC). It would be interesting to have the currency be primarily or only useable at worker cooperatives or similar businesses or nonprofits that have cooperative structures and values, that is, the workers have collective ownership, decision-making authority, profit sharing, etc. This cooperative currency circuit could also include collectively run gardens, farms, and clinics as described above. I like the idea of having these development projects funded both by money to cover fixed costs of rent and materials and time exchange to cover labor in an egalitarian way that is also much less limited than the available abundance of cash in an area. As new projects become profitable, they should again contribute to the funding of new cooperatives. Thus, we would have an unstoppable Bay Area Mondragon-like complex of cooperatives. Cooperatives would take over unused buildings and land in the City and the CIty would give preferential purchasing to cooperatives. We would have import replacement, become more self-sufficient as a region, and be less subject to the tyranny of the scarce, undemocratic, and centralized monetary system. Thus, the end of wage slavery in the Bay Area.

Sunday, July 5, 2009

Creating a Giving Culture? An Interview w/ Bernard Leitaer

Interviewed by Pamela Gerloff

Is it natural to be generous and to share our resources? Maybe, says Bernard Lietaer, author of 10 books, including The Future of Money: Creating New Wealth, Work, and a Wiser World (Century/Random House, 2001) and Of Human Wealth: Beyond Greed and Scarcity (ACCESS Foundation, 2003), but it goes against our cultural norms. And that, he maintains, is the fault of our money system. Our money system shapes us, fostering particular emotions and behaviors, thereby affecting fundamental aspects of society. To create a giving society, change the way our money system works. Sound impossible? Not to Lietaer. He says it's perfectly do-able, and within a single generation, too.

MTM: Is this an entirely new way of thinking about money?

LIETAER: I believe it to be a new angle. The reason is that I have been exposed to money systems from a variety of perspectives, in a way that few people have. My friend Willis Harman, who was the founder of the Institute for Noetic Sciences and a mentor in my life, said I had been trained for 25 years to look at money systems as no one else has. Most people believe that the existing system is the only one possible. The image that comes to mind is that humans are to money like fish are to water. Fish are born, live, and die in water. That is why it is so difficult for them to understand the nature of water. Similarly, we humans live within our money system and it is generally transparent to us. But I've been tossed around a few times and become a flying fish, so I've been exposed to our money system from the outside. That's why I may have a different perspective on money.

MTM: If what you say in The Future of Money is true, the ideas you introduce are startling in their ability to get at the root of core social problems, such as poverty, the breakdown of the family in Western society, and even, perhaps, violence. They can also make us more generous people.

LIETAER: Yes. Our money system affects, in particular, our emotions and relationships. Money systems can promote greed and scarcity or generosity and abundance. Therefore, different money systems have predictably different effects on individuals, communities, and societies.

MTM: And this is not theoretical; it is based on empirical evidence?

LIETAER: Yes. In the world today there are several thousand communities that are experimenting with non-conventional money systems operating right alongside conventional money. These exist in places like the United States, Europe, China, and Japan. And we now have considerable evidence that different currencies create different behavior patterns and relationships among the people who use them.

MTM: What are some of those behavior patterns and relationships and how can a money system do all of that?

LIETAER: Let me start first by defining what money is, and is not. It is not a thing, though it may appear to be one. If you have a thing-say, a pen-and you go off to a deserted island, you still have a pen; it will still function as a pen on the island. In contrast, money is an agreement within a community to use something as a medium of exchange. Therefore, when you take money to your island, the money becomes simply a piece of paper or metal or whatever. But it is no longer money because on your island the agreement has become meaningless.

Because money is an agreement within a community, we can design money to be almost anything we want it to be. For example, it can be a piece of paper, a coin, practically any item, or a service performed. When we agree to consider something an acceptable medium of exchange, we have established a form of currency.

MTM: And because money is an agreement, it exists only where relationships among people exist.

LIETAER: Yes, the very existence of money implies a community within which the medium of exchange is acceptable to all. The community could be a group of friends who meet to play cards and use tokens as money. The community could be a temporary one, such as soldiers on the war front who used cigarettes as a medium of exchange. Or it could be the world community in which an exchange agreement is reached by treaty, as in the case of the Bretton Woods agreement in 1945, which made the dollar acceptable reserve currency worldwide.

MTM: You say that the kinds of relationships that result from money exchanges are different, depending on the currency system you're using.

LIETAER: That's right. When you go to a store and buy a pack of batteries, you pay with dollars and the transaction is over. It's complete; something has been exchanged for another thing.

However, in what is called a gift-giving economy, when you make a transaction, something very different occurs. Let's say you're on your way to the store to buy some AA batteries. Your neighbor, sitting on his porch, sees you. You stop to chat and he says, "Oh, I have some extra batteries. Here, you can have a couple." Now you have the batteries; you have made a transaction. But it's an "open transaction" -a reciprocal exchange has not occurred. So you now have a connection to your neighbor that, as a human being, you are not likely to ignore. Perhaps the next time your neighbor runs out of milk, he'll knock on your door and ask if he can borrow some. A relationship has been formed or strengthened.

MTM: And when relationships are formed, community is built.

LIETAER: Exactly. Gift exchanges actually build community. In fact, the word 'community' derives from the Latin cum munere, which literally means, "to give among each other." So in our language itself, there is the recognition that community is related to the act of giving to one another.

MTM: It seems that the idea of reciprocity is important to your concept of community and gift-giving. In community, there is a giving back and forth. The giving isn't in only one direction.

LIETAER: Yes, gifts tend to become reciprocal. When I give you something, someday you will give something back- either to me or to someone else in my community. In contrast, commercial money exchanges are a closed transaction, so no ongoing relationship is formed. I give you the money and you give me the item or service and we're done. Neither of us owes anybody anything. It's an effective means of exchange, but it doesn't tend to lead to community building.

MTM: And this is true within the family as well?

LIETAER: Yes. We used to live in extended families. In fact, we can still observe such extended families in southern Italy and South America, where a familia typically consists of 70 or 80 people. But, gradually, there has been a systematic worldwide trend toward replacing extended families with nuclear families. Why? Part of the answer is that we now have money exchanges within the extended family. When Granddad moves in, we expect him to pay for his housing with his pension. When our children do household chores, we pay them for their work. Such monetized exchanges fail to create relationships of reciprocity. The parents have given their children the gift of life, the gift of education, and so many other things. If the children don't have the opportunity to give back to their parents, they are unable to participate in an essential aspect of true community.

MTM: The "giving among each other."

LIETAER: Yes. So when you start paying your son to cut the grass, you may unwittingly undermine the family.

MTM: So how do we restore families and communities through our money system?

LIETAER: Many communities now are using "local currencies" that create and reinforce community. There are various systems in use. One of the simplest is time-dollars, where the unit of account is the hour of service. For example, for every hour you give in service to someone in your community you are entitled to receive an hour of service from someone else.

Another system is in operation in the town of Ithaca, New York. There, they have created a paper currency called "Ithaca Hours," which is intentionally limited in its circulation to approximately a 50-mile radius around Ithaca. Many local businesses accept payment in both Ithaca Hours and conventional money. Keeping the currency local ensures that the money remains within the local economy, rather than being spent elsewhere. It also tends to create ongoing relationships among community members.

These local currencies, used in conjunction with our conventional money system, allow communities to solve many of their problems without relying on conventional money to do it. This means that scarcity of money is no longer an obstacle to solving social problems.

MTM: In The Future of Money, you give many examples of non-conventional currencies throughout the world that have had very positive social effects. If these currencies are so effective, why don't we replace our conventional money system with them?

LIETAER: I don't believe we should discard the money system we currently have. For one thing, it is so deeply embedded in our social and economic system that it would be very hard to do. But the deeper reason has to do with the necessary complementarity between cooperation and competition within a society. There has to be a balance between "gift-giving" and "monetized" economies.


  • money -an agreement within a community to use something as a medium of exchange.
  • gift economy -exchanges in which people offer gifts, or their skills and talents, to others without receiving conventional money in exchange.
  • monetized economy - an economy where informal gift exchanges have been replaced by exchanges using conventional money. The United Nations uses this criterion to define a "developed country."
  • conventional currency - a money system that uses conventional money as the medium of exchange. In a conventional currency system, money is issued with interest, through bank-debt; by definition, the money must be scarce and therefore elicits competition among it users.
  • complementary currency - a means of exchange other than conventional money, used in local communities to link unmet needs with unused resources. Complementary currencies do not have interest, and elicit cooperation rather than competition among users.
  • I use the Taoist concept of yin-yang to articulate this idea because English does not have adequate words to express it. Using Chinese words may seem exotic, but the concept of yin-yang is a very precise construct for which Western language simply has no equivalent. It means more than just opposites co-existing together. It contains the idea of transcending polarity to reach a higher unity.

    In Chinese philosophy, yin represents the feminine energy, and yang represents the masculine. They are not opposites; they are complementary elements of a whole. Both are needed to have a balanced system. Each element of the whole has its own characteristics. For example, yin diffuses, flows, and creates networks; yang centralizes, concentrates, and creates hierarchies.

    Our "normal" or conventional money is an extreme yang construct. It is centralized and hierarchical. It is created by bank-debt through an authority-the Federal Reserve and the banking system. As economists Jackson and McConnell correctly state: "Debt-money derives its value from its scarcity relative to its usefulness." In other words, conventional money has to be scarce or it will become valueless. Furthermore, it is always created with interest, which further concentrates money; by definition, interest flows from those who don't have money to those who do. Finally, everybody needs to obtain this money because it is the only one the tax authorities accept in payment. So people have to compete among each other to obtain that scarce currency. In short, every feature of our conventional money system is yang.

    A yin money system is the opposite. The currency is not issued by a central authority. In the time-dollar system, if I do something for you I get a credit and you have a debit; the money is created by the people who use it. And there is always enough of it. If we agree that I do something for two hours instead of one, we create enough currency to reflect that fact. We don't have to compete to obtain this currency, and I don't have to borrow it from somewhere and pay interest on it.

    The potlatch model of the Northwest Indians is an example of a yin economy. In that system, those who are most admired and respected are those who have given the most. They spread their wealth out among the community through the potlatch ceremony. In our yang economy, we tend to view people who have concentrated wealth as being the ones to admire.

    MTM: What you're saying makes a yin economy sound more desirable than a yang economy.

    LIETAER: I don't see yin as "good" and yang as "bad." My point is that we need both in proper balance. There is a role for competition and concentration of money and a role for cooperation and flow of money. However, I do maintain that in our modern society, the fact that we have a monopoly of yang currency systematically distorts that balance.

    In the Taoist system, when there is an imbalance toward yang, the solution is not to get rid of the yang, because that would only create excess yin-which would be another kind of imbalance. Instead, whenever there is excess yang, Taoists always recommend that we "calm the yang and activate the yin."

    Among the Northwest Indians- who lived in what is today Washington, Oregon, and Northern California-the potlatch ceremony was a ritual through which gifts such as food and clothing were distributed to members of the community. Those who shared their wealth in this way were regarded with admiration and respect.

    MTM: How do we do that?

    LIETAER: One powerful way to "calm the yang" is to give some of your money away when you have more of it than you need. In a yang economy, this takes effort because you're operating 'out of the box,' from a yang perspective. If, for example, you're giving money away for reasons other than to avoid paying more taxes, you're abnormal in such a monetary system. But giving away money will help create a balance in the overall system, because it is dispersing some of the currency, which has been overly concentrated in one place.

    A good way to "activate the yin" is by introducing what I call complementary (or yin) currencies into local communities.

    MTM: What are complementary currencies?

    LIETAER: They are currencies that link unmet needs with unused resources. Such currencies don't have interest, and elicit cooperation rather than competition among the people who use them. Complementary currencies-when sufficiently developed-counterbalance the effects in a community of the conventional currency.

    In Bali, for example, there is a traditional "dual currency" system-one is a gift-giving currency, where people offer their skills and talents to others; the other is the conventional national currency. Typically, an adult Balinese spends about 30% of his or her time in the complementary- currency (yin) economy, and the balance in the conventional (yang) economy. People who have visited Bali and have been able to appreciate the quality and joy of life of the ordinary Balinese will have some idea of what a world in balance might feel like .

    MTM: Would you say more about what happens when we don't have a balance of currencies?

    LIETAER: A society that operates exclusively with a yang currency will tend to "starve" all yin functions: for example, community building, and taking care of our kids, our elderly, and the environment. It will also suffer from various dysfunctions, which even those who have a lot of that currency will experience.

    MTM: Such as?

    LIETAER: Well, the countries that are most "developed" are those that are the most "monetized;" that is, they have replaced informal gift exchanges with conventional (yang) currency exchanges. They are also those that, by many measures, have the least healthy community functioning; they have very high levels of despair, suicide, and social dysfunction.

    On an individual level, I know some wealthy people who are truly happy, but they are rare. In a discussion I had with several financial professionals who advise multimillion-dollar families about what to do with their money, unhappiness was one thing those advisors could say that their clients had in common. Unhealthy family relations was another.

    MTM: And you attribute this to our currency system?

    LIETAER: An extreme yang currency system has a shadow phenomenon, in the Jungian sense of shadow; it is the manifestation of something that is repressed. For a long time, I asked myself, "What is the difference between a society that is using only conventional (yang) money, and a society using a dual (yin-yang) money system?" It took me six months of research and four months of living in Bali to realize what the answer is.

    MTM: What is it?

    LIETAER: The short answer is trust. In a society with dual currencies-which is therefore in greater yin-yang balance- people trust the universe to be supportive; they trust their community to be helpful when needed; they trust the family to be there, whatever happens; and they trust the future. In a society where the yin is repressed, people lack trust.

    In our culture, the most typical dysfunction within wealthy families is distrust. This lack of trust manifests in a pattern of four concentric circles, which psychologist Bernice Hill calls "the sacred wounds of money."

    The outer circle represents the social level. Let's say I am known as a person of wealth in my community, and I make a reservation at the restaurant down the hill. There is a whole set of expectations that comes into play even before I arrive. People at the restaurant will expect me to come with a specific type of car, a specific type of woman, and a specific type of interest in food, because of my financial reputation and status. This is known as "the burden of expectations." I, Bernard, do not exist anymore as an individual. I am everything that goes along with the label of me as a wealthy man. Of course, because I am a wealthy person, I'm supposed to leave a big tip, even if I didn't think the service was good. If I don't, I'm a bastard. So I can't trust the feedback society gives to me about myself and who I am.

    The second circle represents the lack of trust among my friends. One of the major questions people of wealth have is, is he or she really my friend? If I were no longer wealthy, would this person be my friend? So, people who are wealthy have trouble trusting their friends.

    Then there is the family level. Let's say my brother is being very nice to my grandfather. I wonder: Will that create a problem with my inheritance? (Will he get more than I will?) Or perhaps my father says to me, "If you marry that girl, I'll disinherit you." So my family interactions are tainted by money, which makes it difficult for me to trust my family.

    Finally, there is the individual level- and this shows up particularly among those whose wealth is inherited. Who am I? Am I only a bank account? Is there something about me that's me and not just my money? In the end, I have no clue. So I don't quite trust myself.

    These are the shadow sides of money. Loss of trust is the core of the problem. And the first reaction that people who are not wealthy have is, "I wish I had that problem"-which is absolutely not understanding the depth of the issue. The cliché, of course, is that money doesn't buy you happiness, but even that doesn't address the deeper issue of loss of trust.

    MTM: Lack of trust does seem to be a pervasive phenomenon.

    LIETAER: All of that is from the perspective of an individual with wealth. From a broader societal viewpoint, the distrust manifests as the breakdown of community. If we believe we can address social problems by throwing money at them, we are not addressing the issue of people not being able to trust each other.

    In a society using exclusively conventional money, money typically gets concentrated at the top of the social system. If you have money, you get more by just having it. Then you find that others are jealous of it, so you need police and an army to protect it. In such an environment, people can't trust anyone or anything.

    So, by introducing local (yin) currencies into an excessively yang conventional currency system, we begin to recreate community. It's like weaving a tapestry. When I give to another person, I weave a community strand by creating a relationship with the particular community member I am giving to. We are becoming interdependent.

    If I am using a time-dollar system, I am weaving strands a little differently. I am still creating strands within the community, although not with the particular individual I have given to. It is, instead, a multilateral process. I give something to one person, that person gives something to another, and eventually, someone else gives something to me. It is the combination of all these interactions-all these many strands-that completes the tapestry. This is what it means "to give among each other." And this is how we build community. The role of the gift is greater than it may appear.

    The bottom line is that we need to realize that our current conventional money is not value-neutral. We now have evidence that complementary currencies create different types of relationships than conventional currencies do. We can promote competition, greed, and scarcity, or cooperation, generosity, and abundance with our money systems. The choice is ours.

    For 25 years, Bernard Lietaer has been active in the domain of money systems in an unusual variety of functions. While at the Central Bank in Belgium he codesigned and implemented the mechanism for converting Europe to a single currency system (the ECU). During that period, he also served as president of Belgium's Electronic Payment System. His experience as a consultant addressing monetary issues spans four continents and ranges from working with multinational corporations to governments of developing countries. He co-founded one of the largest and most successful currency funds, becoming its general manager and currency trader. Mr. Lietaer was a professor of international finance at the University of Louvain and is currently a visiting professor at Naropa University in Boulder, Colorado. He is the co-founder of ACCESS Foundation, an educational non-profit organization that focuses on disseminating best practices in the domain of complementary currencies.