Check. It. Out.
Especially the "Education" link.
wiki.sfbace.org
Saturday, August 1, 2009
Beyond Scarcity: An interview with Bernard Lietaer
Beyond Scarcity: An interview with Bernard Lietaer
by Sarah van Gelder
Few people have worked in and on the money system in as many different capacities as Bernard Lietaer. He spent five years at the Central Bank in Belgium, where his first project was the design and implementation of the single European currency system. He was president of Belgium's Electronic Payment System, and has developed technologies for multinational corporations to use in managing multiple currency environments.
He has helped developing countries improve their hard currency earnings and taught international finance at the University of Louvain, in his native Belgium. Bernard Lietaer was also the general manager and currency trader for one of the largest and most successful offshore currency funds. He is currently a fellow at the Center for Sustainable Resources at the University of California at Berkeley and is writing his seventh book: The Future of Money: Beyond Greed and Scarcity.
YES! editor Sarah van Gelder talked to Bernard about the possibilities for a new kind of currency better suited to building community and sustainability. He can be reached to discuss this topic via an Internet conference at: http://www.transaction.net/money/.
Sarah van Gelder of YES!:
Why do you put so much hope into the development of alternative currencies?
Bernard Lietaer:
Money is like an iron ring we've put through our noses. We've forgotten that we designed it, and it's now leading us around. I think it's time to figure out where we want to go--in my opinion toward sustainability and community--and then design a money system that gets us there.
So you would say that the design of money is actually at the root of much else that happens, or doesn't happen, in society?
That's right. While economic textbooks claim that people and corporations are competing for markets and resources, I claim that in reality they are competing for money - using markets and resources to do so. So designing new money systems really amounts to redesigning the target that orients much human effort.
Furthermore, I believe that greed and competition are not a result of immutable human temperament; I have come to the conclusion that greed and fear of scarcity are in fact being continuously created and amplified as a direct result of the kind of money we are using.
For example, we can produce more than enough food to feed everybody, and there is definitely enough work for everybody in the world, but there is clearly not enough money to pay for it all. The scarcity is in our national currencies. In fact, the job of central banks is to create and maintain that currency scarcity. The direct consequence is that we have to fight with each other in order to survive.
Money is created when banks lend it into existence [see article by Thomas Greco on page 19 of this issue]. When a bank provides you with a $100,000 mortgage, it creates only the principal, which you spend and which then circulates in the economy. The bank expects you to pay back $200,000 over the next 20 years, but it doesn't create the second $100,000 - the interest. Instead, the bank sends you out into the tough world to battle against everybody else to bring back the second $100,000.
So some people have to lose in order for others to win? Some have to default on their loan in order for others to get the money needed to pay off that interest?
That's right. All the banks are doing the same thing when they lend money into existence. That is why the decisions made by central banks, like the Federal Reserve in the US, are so important --increased interest costs automatically determine a larger proportion of necessary bankruptcies. So when the bank verifies your "creditworthiness," it is really checking whether you are capable of competing and winning against other players - able to extract the second $100,000 that was never created. And if you fail in that game, you lose your house or whatever other collateral you had to put up.
That also influences the unemployment rate.
It's certainly a major factor, but there's more to it. Information technologies increasingly allow us to attain very good economic growth without increases in employment. I believe we're seeing one of the last job-driven affluent periods in the US right now. As Jeremy Rifkin argues in his book, The End of Work, jobs are basically not going to be there anymore, even in "good times."
A study done by The International Metalworkers Federation in Geneva predicts that within the next 30 years, 2 or 3 percent of the world's population will be able to produce everything we need on the planet. Even if they're off by a factor of 10, we'd still have a question of what 80 percent of humanity will do.
My forecast is that local currencies will be a major tool for social design in the 21st century, if for no other reasons than employment. I don't claim that these local currencies will or should replace national currencies; that is why I call them "complementary" currencies. The national, competition-generating currencies will still have a role in the competitive global market.
I believe, however, that complementary local currencies are a lot better suited to developing cooperative, local economies.
And these local economies will provide a form of employment that won't be threatened with extinction?
As a first step, that is correct. For example, in France, there are now 300 local exchange networks, called Grain de Sel, literally "Grain of Salt." These systems - which arose exactly when and where the unemployment levels reached about 12 percent*- facilitate exchanges of everything from rent to organic produce, but they do something else as well. Every fortnight in the Ariege, in southwestern France, there is a big party. People come to trade not only cheeses, fruits, and cakes as in the normal market days, but also hours of plumbing, haircuts, sailing or English lessons. Only local currencies accepted!
Local currency creates work, and I make a distinction between work and jobs. A job is what you do for a living; work is what you do because you like to do it. I expect jobs to increasingly become obsolete, but there is still an almost infinite amount of fascinating work to be done. For example, in France you find people offering guitar lessons and requesting lessons in German. Neither would pay in French francs. What's nice about local currency is that when people create their own money, they don't need to build in a scarcity factor. And they don't need to get currency from elsewhere in order to have a means of making an exchange with a neighbor. Edgar Cahn's Time Dollars are a classical example [see page 24 of this issue]. As soon as you have an agreement between two people about a transaction using Time Dollars, they literally create the necessary "money" in the process; there's no scarcity of money. That does not mean there's an infinite amount of this currency, either; you cannot give me 500,000 hours - nobody has 500,000 hours to give. So there's a ceiling on it, yes, but there's no artificial scarcity. Instead of pitting people against each other, the system actually helps them cooperate.
So you're suggesting that scarcity needn't be a guiding principle of our economic system. But isn't scarcity absolutely fundamental to economics, especially in a world of limited resources?
My analysis of this question is based on the work of Carl Gustav Jung because he is the only one with a theoretical framework for collective psychology, and money is fundamentally a phenomenon of collective psychology. A key concept Jung uses is the archetype, which can be described as an emotional field that mobilizes people, individually or collectively, in a particular direction. Jung showed that whenever a particular archetype is repressed, two types of shadows emerge, which are polarities of each other. For example, if my higher self - corresponding to the archetype of the King or the Queen - is repressed, I will behave either as a Tyrant or as a Weakling. These two shadows are connected to each other by fear. A Tyrant is tyrannical because he's afraid of appearing weak; a Weakling is afraid of being tyrannical. Only someone with no fear of either one of these shadows can embody the archetype of the King.
Now let's apply this framework to a well-documented phenomenon - the repression of the Great Mother archetype. The Great Mother archetype was very important in the Western world from the dawn of prehistory throughout the pre-Indo-European time periods, as it still is in many traditional cultures today. But this archetype has been violently repressed in the West for at least 5,000 years starting with the Indo-European invasions - reinforced by the anti-Goddess view of Judeo-Christianity, culminating with three centuries of witch hunts - all the way to the Victorian era.
If there is a repression of an archetype on this scale and for this length of time, the shadows manifest in a powerful way in society. After 5,000 years, people will consider the corresponding shadow behaviors as "normal." The question I have been asking is very simple: What are the shadows of the Great Mother archetype? I'm proposing that these shadows are greed and fear of scarcity. So it should come as no surprise that in Victorian times - at the apex of the repression of the Great Mother - a Scottish schoolmaster named Adam Smith noticed a lot of greed and scarcity around him and assumed that was how all "civilized" societies worked. Smith, as you know, created modern economics, which can be defined as a way of allocating scarce resources through the mechanism of individual, personal greed.
Wow! So if greed and scarcity are the shadows, what does the Great Mother archetype herself represent in terms of economics?
Let's first distinguish between the Goddess, who represented all aspects of the Divine, and the Great Mother, who specifically symbolizes planet Earth - fertility, nature, the flow of abundance in all aspects of life.
Someone who has assimilated the Great Mother archetype trusts in the abundance of the universe. It's when you lack trust that you want a big bank account. The first guy who accumulated a lot of stuff as protection against future uncertainty automatically had to start defending his pile against everybody else's envy and needs. If a society is afraid of scarcity, it will actually create an environment in which it manifests well-grounded reasons to live in fear of scarcity. It is a self-fulfilling prophecy!
Also, we have been living for a long time under the belief that we need to create scarcity to create value. Although that is valid in some material domains, we extrapolate it to other domains where it may not be valid. For example, there's nothing to prevent us from freely distributing information. The marginal cost of information today is practically nil. Nevertheless, we invent copyrights and patents in an attempt to keep it scarce.
So fear of scarcity creates greed and hoarding, which in turn creates the scarcity that was feared. Whereas cultures that embody the Great Mother are based on abundance and generosity. Those ideas are implicit in the way you've defined community, are they not?
Actually it's not my definition, it's etymological. The origin of the word "community" comes from the Latin munus, which means the gift, and cum, which means together, among each other. So community literally means to give among each other.
Therefore I define my community as a group of people who welcome and honor my gifts, and from whom I can reasonably expect to receive gifts in return.
And local currencies can facilitate that exchange of gifts.
The majority of the local currencies I know about have been started for the purpose of creating employment, but there is a growing group of people who are starting local currencies specifically to create community. For example, I would feel funny calling my neighbor in the valley and saying, "I notice you have a lot of pears on your tree. Can I have them?" I would feel I needed to offer something in return. But if I'm going to offer scarce dollars, I might just as well go to the supermarket, so we end up not using the pears. If I have local currency, there's no scarcity in the medium of exchange, so buying the pears becomes an excuse to interact.
In Takoma Park, Maryland, Olaf Egeberg started a local currency to facilitate these kinds of exchanges within his community. And the participants agree that is exactly what has been happening.
That raises the question of whether local currencies can also be a means for people to meet their basic needs for food and housing, or would those sectors remain part of the competitive economy?
There are lots of people who love gardening, but who can't make a living from it in the competitive world. If a gardener is unemployed, and I'm unemployed, in the normal economy we might both starve. However with complementary currencies, he can grow my salads, which I pay for in local currency earned by providing another service to someone else.
In Ithaca, "HOURS" are accepted at the farmer's market; the farmers can use the local currency to hire someone to help with the harvest or to do some repairs. Some landlords accept Hours for rent, particularly if they don't have a mortgage that must be paid in scarce dollars.
When you have local currency, it quickly becomes clear what's local and what's not. K-Mart will accept dollars only; their suppliers are in Hong Kong or Singapore or Kansas City. But Ithaca's local supermarket accepts Hours as well as dollars. By using local currencies, you create a bias toward local sustainability.
Local currencies also provide communities with some buffering from the ups and downs of the global economy. You've been in the business of monitoring, dealing in, and even helping to design the global finance system. Why would communities want to be insulated from it?
First of all, today's official monetary system has almost nothing to do with the real economy. Just to give you an idea, 1995 statistics indicate that the volume of currency exchanged on the global level is $1.3 trillion per day. This is 30 times more than the daily gross domestic product (GDP) of all of the developed countries (OECD) together. The annual GDP of the United States is turned in the market every three days!
Of that volume, only 2 or 3 percent has to do with real trade or investment; the remainder takes place in the speculative global cyber-casino. This means that the real economy has become relegated to a mere frosting on the speculative cake, an exact reversal of how it was just two decades ago.
What are the implications of this? What does it mean for those of us who aren't transacting deals across international boundaries?
For one thing, power has shifted irrevocably away from governments toward the financial markets. When a government does something not to the liking of the market - like the British in '91, the French in '94 or the Mexicans in '95 - nobody sits down at the table and says "you shouldn't do this." A monetary crisis simply manifests in that currency. So a few hundred people, who are not elected by anybody and have no collective responsibility whatsoever, decide what your pension fund is worth - among other things.
You've also talked about the possibility of a crash in this system...
Yes, I see it now as about a 50/50 chance over the next five or 10 years. Many people say it's 100 percent, and with a much shorter time horizon. George Soros, who's made part of his living doing what I used to do - speculating in currencies - concluded, "Instability is cumulative, so that eventual breakdown of freely floating exchanges is virtually assured." Joel Kurtzman, ex-editor at the Harvard Business Review, entitles his latest book: The Death of Money and forecasts an imminent collapse due to speculative frenzy.
Just to see how this could happen: all the OECD Central Banks' reserves together represent about $640 billion. So in a crisis situation, if all the Central Banks were to agree to work together (which they never do) and if they were to use all their reserves (which is another thing that never happens) they have the funds to control only half the volume of a normal day of trading. In a crisis day, that volume could easily double or triple, and the total Central Bank reserves would last two or three hours.
And the outcome would be?
If that happens, we would suddenly be in a very different world. In 1929, the stock market crashed, but the gold standard held. The monetary system held. Here, we are dealing with something that's more fundamental. The only precedent I know of is the Roman Empire collapse, which ended Roman currency. That was, of course, at a time when it took about a century and a half for the breakdown to spread through the empire; now it would take a few hours.
So local currencies could provide some resilience for a community that could help it survive a currency melt-down or some other international breakdown. You've also mentioned that local currencies help promote sustainability. What's the connection?
To understand that, we need to see the relationship between interest rates and the ways we discount the future.
If I ask, "Do you want $100 now or $100 a year from now," most people would want the money now simply because one can deposit money risk-free in a bank account and get about $110 a year later. Another way of putting it is that if I were to offer you $100 a year from now that would be about equal to offering you $90 today. This discounting of the future is referred to as 'discounted cash flow'.
That means that under our current system it makes sense to cut down trees and put the money in the bank; the money in the bank will grow faster than trees. It makes sense to "save" money by building poorly insulated houses because the discounted cost of the extra energy over the lifetime of the house is cheaper than insulating.
We can, however, design a monetary system that does the opposite; it actually creates long-term thinking through what is called a "demurrage charge." The demurrage charge is a concept developed by Silvio Gesell about a century ago. His idea was that money is a public good - like the telephone or bus transport - and that we should charge a small fee for using it. In other words, we create a negative rather than a positive interest rate.
What would that do? If I gave you a $100 bill and told you that a month from now you're going to have to pay $1 to keep the money valid, what would you do?
I suppose I would try to invest it in something else.
You got it. You know the expression, "Money is like manure; it's only good when it's spread out." In the Gesell system, people would only use money as a medium of exchange, but not as a store for value. That would create work, because it would encourage circulation, and it would invert the short-term incentive system. Instead of cutting trees down to put the money in the bank, you would want to invest your money in living trees or installing insulation in your house.
Has this ever been tried?
There are only three periods I have found: classical Egypt; about three centuries in the European Middle Ages, and a few years in the 1930s. In ancient Egypt, when you stored grain, you would receive a token, which was exchangeable and became a type of currency. If you returned a year later with 10 tokens, you would only get nine tokens worth of grain, because rats and spoilage would have reduced the quantities, and because the guards at the storage facility had to be paid. So that amounted to a demurrage charge.
Egypt was the breadbasket for the ancient world, the gift of the Nile. Why? Because instead of keeping value in money, everybody invested in productive assets that would last forever - things like land improvements and irrigation systems.
Proof that the monetary system had something to do with this wealth is that it all ended abruptly as soon as the Romans replaced the Egyptian 'grain standard' currency with their own money system, with positive interest rates. After that, Egypt ceased being the grain-basket, and became a "developing country" as it is called today.
In Europe during the Middle Ages - the 10th to 13th centuries - local currencies were issued by local lords, and then periodically recalled and reissued with a tax collected in the process. Again, this was a form of demurrage that made money undesirable as a store of value. The result was the blossoming of culture and widespread well-being, corresponding exactly to the time period when these local currencies were used.
Practically all the cathedrals were built during this time period. If you think about what is required as investment for a small town to build a cathedral, it's extraordinary.
Because cathedrals take generations to build?
Well, not only that. Besides the obvious symbolic and religious roles - which I don't want to belittle - one should remember that cathedrals had an important economic function; they attracted pilgrims, who, from a business perspective, played a similar role to tourists today. These cathedrals were built to last forever and create a long-term cash flow for the community. This was a way of creating abundance for you and your descendants for 13 generations! The proof is that it still works today; in Chartres, for instance, the bulk of the city's businesses still live from the tourists who visit the cathedral 800 years after it was finished!
When the introduction of gunpowder technology enabled the kings to centralize power in the early 14th century, the first thing they did was to monopolize the money system. What happened? No more cathedrals were built. The population was just as devoutly Christian in the 14th or 15th century, but the economic incentive for collective long-term investments was gone.
I use the cathedral simply as an example. Accounts from 12th century estates show that mills and other productive assets were maintained at an extraordinary level of quality, with parts replaced even before they wore out. Recent studies have revealed that the quality of life for the common laborer in Europe was the highest in the 12th to 13th centuries; perhaps even higher than today. When you can't keep savings in the form of money, you invest them in something that will produce value in the future. So this form of money created an extraordinary boom.
Yet this was a period when Christianity was supreme in Europe and so presumably the Great Mother archetype was still being repressed.
Well, actually a very interesting religious symbol became prevalent during this time: the famous "Black Madonna." There were hundreds of these statues during the 10th to 13th centuries, which were in fact statues of Isis with the child Horus sitting on her lap, directly imported from Egypt during the first Crusades. Her special vertical chair was called the "cathedra" (which is where the word cathedral comes from) and interestingly this chair was the exact symbol identifying Isis in ancient Egypt. The statues of the Black Madonnas were also identified in medieval time as the "Alma Mater" (literally the "Generous Mother," an expression still used in America to refer to someone's 'mother university').
The Black Madonnas were a direct continuity of the Great Mother in one of her most ancient forms. She symbolized birth and fertility, the wealth of the land. She symbolized spirit incarnate in matter, before the patriarchal societies separated spirit from matter. So here we have a direct archetypal linkage between the two civilizations that spontaneously created money systems with demurrage charges while creating unusual levels of abundance for the common people: ancient Egypt and 10th-to-13th century Europe. These money systems correspond exactly to the honoring of that archetype.
How interesting! What potential do you see for local currencies to bring this Great Mother archetype of abundance and generosity into our economic system today?
The biggest issues that I believe humanity faces today are sustainability and the inequalities and breakdown in community, which create tensions that result in violence and wars. We can address both these issues with the same tool, by consciously creating currency systems that will enhance community and sustainability.
Significantly, we have witnessed in the past decades a clear re-awakening of the feminine archetype. It is reflected not only in the women's movement, in the dramatic increase in ecological concerns, or in new epistemologies reintegrating spirit and matter, but also in the technologies that enable us to replace hierarchies with networks (such as the Internet).
Add to these trends the fact that for the first time in human history we have available the production technologies to create unprecedented abundance. All this converges into an extraordinary opportunity to combine the hardware of our technologies of abundance and the software of archetypal shifts.
Such a combination has never been available at this scale or at this speed: it enables us to consciously design money to work for us, instead of us for it.
I propose that we choose to develop money systems that will enable us to attain sustainability and community healing on a local and global scale. These objectives are in our grasp within less than one generation's time. Whether we materialize them or not will depend on our capacity to cooperate with each other to consciously reinvent our money.
by Sarah van Gelder
Few people have worked in and on the money system in as many different capacities as Bernard Lietaer. He spent five years at the Central Bank in Belgium, where his first project was the design and implementation of the single European currency system. He was president of Belgium's Electronic Payment System, and has developed technologies for multinational corporations to use in managing multiple currency environments.
He has helped developing countries improve their hard currency earnings and taught international finance at the University of Louvain, in his native Belgium. Bernard Lietaer was also the general manager and currency trader for one of the largest and most successful offshore currency funds. He is currently a fellow at the Center for Sustainable Resources at the University of California at Berkeley and is writing his seventh book: The Future of Money: Beyond Greed and Scarcity.
YES! editor Sarah van Gelder talked to Bernard about the possibilities for a new kind of currency better suited to building community and sustainability. He can be reached to discuss this topic via an Internet conference at: http://www.transaction.net/money/.
Sarah van Gelder of YES!:
Why do you put so much hope into the development of alternative currencies?
Bernard Lietaer:
Money is like an iron ring we've put through our noses. We've forgotten that we designed it, and it's now leading us around. I think it's time to figure out where we want to go--in my opinion toward sustainability and community--and then design a money system that gets us there.
So you would say that the design of money is actually at the root of much else that happens, or doesn't happen, in society?
That's right. While economic textbooks claim that people and corporations are competing for markets and resources, I claim that in reality they are competing for money - using markets and resources to do so. So designing new money systems really amounts to redesigning the target that orients much human effort.
Furthermore, I believe that greed and competition are not a result of immutable human temperament; I have come to the conclusion that greed and fear of scarcity are in fact being continuously created and amplified as a direct result of the kind of money we are using.
For example, we can produce more than enough food to feed everybody, and there is definitely enough work for everybody in the world, but there is clearly not enough money to pay for it all. The scarcity is in our national currencies. In fact, the job of central banks is to create and maintain that currency scarcity. The direct consequence is that we have to fight with each other in order to survive.
Money is created when banks lend it into existence [see article by Thomas Greco on page 19 of this issue]. When a bank provides you with a $100,000 mortgage, it creates only the principal, which you spend and which then circulates in the economy. The bank expects you to pay back $200,000 over the next 20 years, but it doesn't create the second $100,000 - the interest. Instead, the bank sends you out into the tough world to battle against everybody else to bring back the second $100,000.
So some people have to lose in order for others to win? Some have to default on their loan in order for others to get the money needed to pay off that interest?
That's right. All the banks are doing the same thing when they lend money into existence. That is why the decisions made by central banks, like the Federal Reserve in the US, are so important --increased interest costs automatically determine a larger proportion of necessary bankruptcies. So when the bank verifies your "creditworthiness," it is really checking whether you are capable of competing and winning against other players - able to extract the second $100,000 that was never created. And if you fail in that game, you lose your house or whatever other collateral you had to put up.
That also influences the unemployment rate.
It's certainly a major factor, but there's more to it. Information technologies increasingly allow us to attain very good economic growth without increases in employment. I believe we're seeing one of the last job-driven affluent periods in the US right now. As Jeremy Rifkin argues in his book, The End of Work, jobs are basically not going to be there anymore, even in "good times."
A study done by The International Metalworkers Federation in Geneva predicts that within the next 30 years, 2 or 3 percent of the world's population will be able to produce everything we need on the planet. Even if they're off by a factor of 10, we'd still have a question of what 80 percent of humanity will do.
My forecast is that local currencies will be a major tool for social design in the 21st century, if for no other reasons than employment. I don't claim that these local currencies will or should replace national currencies; that is why I call them "complementary" currencies. The national, competition-generating currencies will still have a role in the competitive global market.
I believe, however, that complementary local currencies are a lot better suited to developing cooperative, local economies.
And these local economies will provide a form of employment that won't be threatened with extinction?
As a first step, that is correct. For example, in France, there are now 300 local exchange networks, called Grain de Sel, literally "Grain of Salt." These systems - which arose exactly when and where the unemployment levels reached about 12 percent*- facilitate exchanges of everything from rent to organic produce, but they do something else as well. Every fortnight in the Ariege, in southwestern France, there is a big party. People come to trade not only cheeses, fruits, and cakes as in the normal market days, but also hours of plumbing, haircuts, sailing or English lessons. Only local currencies accepted!
Local currency creates work, and I make a distinction between work and jobs. A job is what you do for a living; work is what you do because you like to do it. I expect jobs to increasingly become obsolete, but there is still an almost infinite amount of fascinating work to be done. For example, in France you find people offering guitar lessons and requesting lessons in German. Neither would pay in French francs. What's nice about local currency is that when people create their own money, they don't need to build in a scarcity factor. And they don't need to get currency from elsewhere in order to have a means of making an exchange with a neighbor. Edgar Cahn's Time Dollars are a classical example [see page 24 of this issue]. As soon as you have an agreement between two people about a transaction using Time Dollars, they literally create the necessary "money" in the process; there's no scarcity of money. That does not mean there's an infinite amount of this currency, either; you cannot give me 500,000 hours - nobody has 500,000 hours to give. So there's a ceiling on it, yes, but there's no artificial scarcity. Instead of pitting people against each other, the system actually helps them cooperate.
So you're suggesting that scarcity needn't be a guiding principle of our economic system. But isn't scarcity absolutely fundamental to economics, especially in a world of limited resources?
My analysis of this question is based on the work of Carl Gustav Jung because he is the only one with a theoretical framework for collective psychology, and money is fundamentally a phenomenon of collective psychology. A key concept Jung uses is the archetype, which can be described as an emotional field that mobilizes people, individually or collectively, in a particular direction. Jung showed that whenever a particular archetype is repressed, two types of shadows emerge, which are polarities of each other. For example, if my higher self - corresponding to the archetype of the King or the Queen - is repressed, I will behave either as a Tyrant or as a Weakling. These two shadows are connected to each other by fear. A Tyrant is tyrannical because he's afraid of appearing weak; a Weakling is afraid of being tyrannical. Only someone with no fear of either one of these shadows can embody the archetype of the King.
Now let's apply this framework to a well-documented phenomenon - the repression of the Great Mother archetype. The Great Mother archetype was very important in the Western world from the dawn of prehistory throughout the pre-Indo-European time periods, as it still is in many traditional cultures today. But this archetype has been violently repressed in the West for at least 5,000 years starting with the Indo-European invasions - reinforced by the anti-Goddess view of Judeo-Christianity, culminating with three centuries of witch hunts - all the way to the Victorian era.
If there is a repression of an archetype on this scale and for this length of time, the shadows manifest in a powerful way in society. After 5,000 years, people will consider the corresponding shadow behaviors as "normal." The question I have been asking is very simple: What are the shadows of the Great Mother archetype? I'm proposing that these shadows are greed and fear of scarcity. So it should come as no surprise that in Victorian times - at the apex of the repression of the Great Mother - a Scottish schoolmaster named Adam Smith noticed a lot of greed and scarcity around him and assumed that was how all "civilized" societies worked. Smith, as you know, created modern economics, which can be defined as a way of allocating scarce resources through the mechanism of individual, personal greed.
Wow! So if greed and scarcity are the shadows, what does the Great Mother archetype herself represent in terms of economics?
Let's first distinguish between the Goddess, who represented all aspects of the Divine, and the Great Mother, who specifically symbolizes planet Earth - fertility, nature, the flow of abundance in all aspects of life.
Someone who has assimilated the Great Mother archetype trusts in the abundance of the universe. It's when you lack trust that you want a big bank account. The first guy who accumulated a lot of stuff as protection against future uncertainty automatically had to start defending his pile against everybody else's envy and needs. If a society is afraid of scarcity, it will actually create an environment in which it manifests well-grounded reasons to live in fear of scarcity. It is a self-fulfilling prophecy!
Also, we have been living for a long time under the belief that we need to create scarcity to create value. Although that is valid in some material domains, we extrapolate it to other domains where it may not be valid. For example, there's nothing to prevent us from freely distributing information. The marginal cost of information today is practically nil. Nevertheless, we invent copyrights and patents in an attempt to keep it scarce.
So fear of scarcity creates greed and hoarding, which in turn creates the scarcity that was feared. Whereas cultures that embody the Great Mother are based on abundance and generosity. Those ideas are implicit in the way you've defined community, are they not?
Actually it's not my definition, it's etymological. The origin of the word "community" comes from the Latin munus, which means the gift, and cum, which means together, among each other. So community literally means to give among each other.
Therefore I define my community as a group of people who welcome and honor my gifts, and from whom I can reasonably expect to receive gifts in return.
And local currencies can facilitate that exchange of gifts.
The majority of the local currencies I know about have been started for the purpose of creating employment, but there is a growing group of people who are starting local currencies specifically to create community. For example, I would feel funny calling my neighbor in the valley and saying, "I notice you have a lot of pears on your tree. Can I have them?" I would feel I needed to offer something in return. But if I'm going to offer scarce dollars, I might just as well go to the supermarket, so we end up not using the pears. If I have local currency, there's no scarcity in the medium of exchange, so buying the pears becomes an excuse to interact.
In Takoma Park, Maryland, Olaf Egeberg started a local currency to facilitate these kinds of exchanges within his community. And the participants agree that is exactly what has been happening.
That raises the question of whether local currencies can also be a means for people to meet their basic needs for food and housing, or would those sectors remain part of the competitive economy?
There are lots of people who love gardening, but who can't make a living from it in the competitive world. If a gardener is unemployed, and I'm unemployed, in the normal economy we might both starve. However with complementary currencies, he can grow my salads, which I pay for in local currency earned by providing another service to someone else.
In Ithaca, "HOURS" are accepted at the farmer's market; the farmers can use the local currency to hire someone to help with the harvest or to do some repairs. Some landlords accept Hours for rent, particularly if they don't have a mortgage that must be paid in scarce dollars.
When you have local currency, it quickly becomes clear what's local and what's not. K-Mart will accept dollars only; their suppliers are in Hong Kong or Singapore or Kansas City. But Ithaca's local supermarket accepts Hours as well as dollars. By using local currencies, you create a bias toward local sustainability.
Local currencies also provide communities with some buffering from the ups and downs of the global economy. You've been in the business of monitoring, dealing in, and even helping to design the global finance system. Why would communities want to be insulated from it?
First of all, today's official monetary system has almost nothing to do with the real economy. Just to give you an idea, 1995 statistics indicate that the volume of currency exchanged on the global level is $1.3 trillion per day. This is 30 times more than the daily gross domestic product (GDP) of all of the developed countries (OECD) together. The annual GDP of the United States is turned in the market every three days!
Of that volume, only 2 or 3 percent has to do with real trade or investment; the remainder takes place in the speculative global cyber-casino. This means that the real economy has become relegated to a mere frosting on the speculative cake, an exact reversal of how it was just two decades ago.
What are the implications of this? What does it mean for those of us who aren't transacting deals across international boundaries?
For one thing, power has shifted irrevocably away from governments toward the financial markets. When a government does something not to the liking of the market - like the British in '91, the French in '94 or the Mexicans in '95 - nobody sits down at the table and says "you shouldn't do this." A monetary crisis simply manifests in that currency. So a few hundred people, who are not elected by anybody and have no collective responsibility whatsoever, decide what your pension fund is worth - among other things.
You've also talked about the possibility of a crash in this system...
Yes, I see it now as about a 50/50 chance over the next five or 10 years. Many people say it's 100 percent, and with a much shorter time horizon. George Soros, who's made part of his living doing what I used to do - speculating in currencies - concluded, "Instability is cumulative, so that eventual breakdown of freely floating exchanges is virtually assured." Joel Kurtzman, ex-editor at the Harvard Business Review, entitles his latest book: The Death of Money and forecasts an imminent collapse due to speculative frenzy.
Just to see how this could happen: all the OECD Central Banks' reserves together represent about $640 billion. So in a crisis situation, if all the Central Banks were to agree to work together (which they never do) and if they were to use all their reserves (which is another thing that never happens) they have the funds to control only half the volume of a normal day of trading. In a crisis day, that volume could easily double or triple, and the total Central Bank reserves would last two or three hours.
And the outcome would be?
If that happens, we would suddenly be in a very different world. In 1929, the stock market crashed, but the gold standard held. The monetary system held. Here, we are dealing with something that's more fundamental. The only precedent I know of is the Roman Empire collapse, which ended Roman currency. That was, of course, at a time when it took about a century and a half for the breakdown to spread through the empire; now it would take a few hours.
So local currencies could provide some resilience for a community that could help it survive a currency melt-down or some other international breakdown. You've also mentioned that local currencies help promote sustainability. What's the connection?
To understand that, we need to see the relationship between interest rates and the ways we discount the future.
If I ask, "Do you want $100 now or $100 a year from now," most people would want the money now simply because one can deposit money risk-free in a bank account and get about $110 a year later. Another way of putting it is that if I were to offer you $100 a year from now that would be about equal to offering you $90 today. This discounting of the future is referred to as 'discounted cash flow'.
That means that under our current system it makes sense to cut down trees and put the money in the bank; the money in the bank will grow faster than trees. It makes sense to "save" money by building poorly insulated houses because the discounted cost of the extra energy over the lifetime of the house is cheaper than insulating.
We can, however, design a monetary system that does the opposite; it actually creates long-term thinking through what is called a "demurrage charge." The demurrage charge is a concept developed by Silvio Gesell about a century ago. His idea was that money is a public good - like the telephone or bus transport - and that we should charge a small fee for using it. In other words, we create a negative rather than a positive interest rate.
What would that do? If I gave you a $100 bill and told you that a month from now you're going to have to pay $1 to keep the money valid, what would you do?
I suppose I would try to invest it in something else.
You got it. You know the expression, "Money is like manure; it's only good when it's spread out." In the Gesell system, people would only use money as a medium of exchange, but not as a store for value. That would create work, because it would encourage circulation, and it would invert the short-term incentive system. Instead of cutting trees down to put the money in the bank, you would want to invest your money in living trees or installing insulation in your house.
Has this ever been tried?
There are only three periods I have found: classical Egypt; about three centuries in the European Middle Ages, and a few years in the 1930s. In ancient Egypt, when you stored grain, you would receive a token, which was exchangeable and became a type of currency. If you returned a year later with 10 tokens, you would only get nine tokens worth of grain, because rats and spoilage would have reduced the quantities, and because the guards at the storage facility had to be paid. So that amounted to a demurrage charge.
Egypt was the breadbasket for the ancient world, the gift of the Nile. Why? Because instead of keeping value in money, everybody invested in productive assets that would last forever - things like land improvements and irrigation systems.
Proof that the monetary system had something to do with this wealth is that it all ended abruptly as soon as the Romans replaced the Egyptian 'grain standard' currency with their own money system, with positive interest rates. After that, Egypt ceased being the grain-basket, and became a "developing country" as it is called today.
In Europe during the Middle Ages - the 10th to 13th centuries - local currencies were issued by local lords, and then periodically recalled and reissued with a tax collected in the process. Again, this was a form of demurrage that made money undesirable as a store of value. The result was the blossoming of culture and widespread well-being, corresponding exactly to the time period when these local currencies were used.
Practically all the cathedrals were built during this time period. If you think about what is required as investment for a small town to build a cathedral, it's extraordinary.
Because cathedrals take generations to build?
Well, not only that. Besides the obvious symbolic and religious roles - which I don't want to belittle - one should remember that cathedrals had an important economic function; they attracted pilgrims, who, from a business perspective, played a similar role to tourists today. These cathedrals were built to last forever and create a long-term cash flow for the community. This was a way of creating abundance for you and your descendants for 13 generations! The proof is that it still works today; in Chartres, for instance, the bulk of the city's businesses still live from the tourists who visit the cathedral 800 years after it was finished!
When the introduction of gunpowder technology enabled the kings to centralize power in the early 14th century, the first thing they did was to monopolize the money system. What happened? No more cathedrals were built. The population was just as devoutly Christian in the 14th or 15th century, but the economic incentive for collective long-term investments was gone.
I use the cathedral simply as an example. Accounts from 12th century estates show that mills and other productive assets were maintained at an extraordinary level of quality, with parts replaced even before they wore out. Recent studies have revealed that the quality of life for the common laborer in Europe was the highest in the 12th to 13th centuries; perhaps even higher than today. When you can't keep savings in the form of money, you invest them in something that will produce value in the future. So this form of money created an extraordinary boom.
Yet this was a period when Christianity was supreme in Europe and so presumably the Great Mother archetype was still being repressed.
Well, actually a very interesting religious symbol became prevalent during this time: the famous "Black Madonna." There were hundreds of these statues during the 10th to 13th centuries, which were in fact statues of Isis with the child Horus sitting on her lap, directly imported from Egypt during the first Crusades. Her special vertical chair was called the "cathedra" (which is where the word cathedral comes from) and interestingly this chair was the exact symbol identifying Isis in ancient Egypt. The statues of the Black Madonnas were also identified in medieval time as the "Alma Mater" (literally the "Generous Mother," an expression still used in America to refer to someone's 'mother university').
The Black Madonnas were a direct continuity of the Great Mother in one of her most ancient forms. She symbolized birth and fertility, the wealth of the land. She symbolized spirit incarnate in matter, before the patriarchal societies separated spirit from matter. So here we have a direct archetypal linkage between the two civilizations that spontaneously created money systems with demurrage charges while creating unusual levels of abundance for the common people: ancient Egypt and 10th-to-13th century Europe. These money systems correspond exactly to the honoring of that archetype.
How interesting! What potential do you see for local currencies to bring this Great Mother archetype of abundance and generosity into our economic system today?
The biggest issues that I believe humanity faces today are sustainability and the inequalities and breakdown in community, which create tensions that result in violence and wars. We can address both these issues with the same tool, by consciously creating currency systems that will enhance community and sustainability.
Significantly, we have witnessed in the past decades a clear re-awakening of the feminine archetype. It is reflected not only in the women's movement, in the dramatic increase in ecological concerns, or in new epistemologies reintegrating spirit and matter, but also in the technologies that enable us to replace hierarchies with networks (such as the Internet).
Add to these trends the fact that for the first time in human history we have available the production technologies to create unprecedented abundance. All this converges into an extraordinary opportunity to combine the hardware of our technologies of abundance and the software of archetypal shifts.
Such a combination has never been available at this scale or at this speed: it enables us to consciously design money to work for us, instead of us for it.
I propose that we choose to develop money systems that will enable us to attain sustainability and community healing on a local and global scale. These objectives are in our grasp within less than one generation's time. Whether we materialize them or not will depend on our capacity to cooperate with each other to consciously reinvent our money.
Berkshares Update
BerkShares local currency for the Berkshire region is young, only three years old as of September 29th, and still in its early stages of development. It is still backed by federal dollars on deposit in local banks, rather than backed by the productive capacity of the Berkshire region. It is still tied in value one-to-one with federal dollars instead of a floating exchange rate based on its soundness of issue in the local region.
And yet BerkShares is receiving unprecedented national and international media attention. In a failed global economy, the fact of a local currency as strong as BerkShares poses the questions:
Who should issue currency? On what basis? And how is it valued?
The attention to BerkShares is helping us better understand the intricacies of currency issue. As better informed citizens we can advocate for sounder,
fairer monetary policies at the national level a topic, heretofore obscure to us.
Yesterday Andy Jordan of the "Wall Street Journal" posted his video story on BerkShares. You can watch it at http://www.berkshares.org.
On July 12th, "Time Magazine" printed Judith Schwartz' article on BerkShares which you can read below.
Best wishes,
Susan Witt, Sarah Hearn, and Stefan Apse
E. F. Schumacher Society Staff
140 Jug End Road
Great Barrington, MA 01230, USA
http://www.smallisbeautiful.org
* * * * * * * * * *
http://www.time.com/time/magazine/article/0,9171,1908421,00.html
Local Currencies
by Judith Schwartz
"Time Magazine" July 12, 2009
With local economies flailing communities across the U.S. are trying to drum up more action on Main Street. "Buy Local" campaigns are one way to go. But many towns--from Ojai, Calif., to Greensboro, N.C.--are considering going a step further and printing money that can only be spent locally.
Issuing an alternative currency is perfectly legal, as long as it is treated as taxable income and consists of paper bills rather than coins. In the U.S., where local currencies were popular during the Depression, the biggest alterna-cash system is in Massachusetts' Berkshire County. Go to one of several banks there, hand a teller $95 and get back $100 worth of BerkShares, a nice little discount designed to reel in users. BerkShares are printed on special paper (by a local business, naturally--a subsidiary of Crane Paper Co., which has been printing U.S. greenbacks since 1879). And since the program's inception in 2006, more than $2.5 million in BerkShares
have circulated through bakeries, vets' offices and some 400 other businesses that choose to accept the colorful bills, which feature famous former Berkshire residents, including W.E.B. Du Bois and Norman Rockwell.
What's the point of all this pretty, community-printed currency? Money spent at locally owned companies tends to create more business for local suppliers, accountants, etc. The New Economics Foundation (NEF), a London think tank, compared the effects of purchasing produce at a supermarket and at a farmer's market and found that twice the money stayed in a community when folks bought locally. A study of Grand Rapids, Mich., released last fall by consulting firm Civic Economics, concluded that a 10% shift in market share from chain stores to independents would yield 1,600 new jobs and pump $137 million into the area. "Money is like blood," says NEF
researcher David Boyle. Local purchases recirculate it, but patronize mega-chains or online retailers, he says, and "it flows out like a wound."
Interest in cash alternatives has skyrocketed in recent months BerkShares.org logged nearly 42,000 hits a day in April) as the recession has encouraged more innovation. For example, a Vermont business association is getting ready to launch a statewide cashless trading network. Ithaca, N.Y., which has the nation's longest-running independent currency, agreed in June to let people start using the 18-year-old bills to buy transit passes.
But how hard is it to manage and maintain these trade boosters? Ed Collom, an associate professor of sociology at the University of Southern Maine, has studied volunteer-run programs like Ithaca's and found that about 80% failed, chiefly because of administrative burnout. That's why many newer models, like BerkShares, are now set up as nonprofits, complete with administrative support.
Beyond spurring local trade, alternative currencies build awareness about the effect of consumers' choices. "It has started a conversation: Why local currency? Why buy local?" says Oliver Dudok van Heel, who last fall helped launch the Lewes pound to help a British town become more self-sustainable.
Local currency can generate customer loyalty, but not every business feels as though it can offer a discount like the one built into BerkShares. "They just aren't viable for us," says Beth Parsons, whose family owns a grocery store in Lenox, Mass. But as a consumer, she likes the idea. Parsons recently drove to a nearby town to buy some shoes instead of getting them online. Afterward, she says, she passed a BerkShares sign "at the bank and thought, 'Oh, I should've bought BerkShare bucks to save money on these.'"
And yet BerkShares is receiving unprecedented national and international media attention. In a failed global economy, the fact of a local currency as strong as BerkShares poses the questions:
Who should issue currency? On what basis? And how is it valued?
The attention to BerkShares is helping us better understand the intricacies of currency issue. As better informed citizens we can advocate for sounder,
fairer monetary policies at the national level a topic, heretofore obscure to us.
Yesterday Andy Jordan of the "Wall Street Journal" posted his video story on BerkShares. You can watch it at http://www.berkshares.org.
On July 12th, "Time Magazine" printed Judith Schwartz' article on BerkShares which you can read below.
Best wishes,
Susan Witt, Sarah Hearn, and Stefan Apse
E. F. Schumacher Society Staff
140 Jug End Road
Great Barrington, MA 01230, USA
http://www.smallisbeautiful.org
* * * * * * * * * *
http://www.time.com/time/magazine/article/0,9171,1908421,00.html
Local Currencies
by Judith Schwartz
"Time Magazine" July 12, 2009
With local economies flailing communities across the U.S. are trying to drum up more action on Main Street. "Buy Local" campaigns are one way to go. But many towns--from Ojai, Calif., to Greensboro, N.C.--are considering going a step further and printing money that can only be spent locally.
Issuing an alternative currency is perfectly legal, as long as it is treated as taxable income and consists of paper bills rather than coins. In the U.S., where local currencies were popular during the Depression, the biggest alterna-cash system is in Massachusetts' Berkshire County. Go to one of several banks there, hand a teller $95 and get back $100 worth of BerkShares, a nice little discount designed to reel in users. BerkShares are printed on special paper (by a local business, naturally--a subsidiary of Crane Paper Co., which has been printing U.S. greenbacks since 1879). And since the program's inception in 2006, more than $2.5 million in BerkShares
have circulated through bakeries, vets' offices and some 400 other businesses that choose to accept the colorful bills, which feature famous former Berkshire residents, including W.E.B. Du Bois and Norman Rockwell.
What's the point of all this pretty, community-printed currency? Money spent at locally owned companies tends to create more business for local suppliers, accountants, etc. The New Economics Foundation (NEF), a London think tank, compared the effects of purchasing produce at a supermarket and at a farmer's market and found that twice the money stayed in a community when folks bought locally. A study of Grand Rapids, Mich., released last fall by consulting firm Civic Economics, concluded that a 10% shift in market share from chain stores to independents would yield 1,600 new jobs and pump $137 million into the area. "Money is like blood," says NEF
researcher David Boyle. Local purchases recirculate it, but patronize mega-chains or online retailers, he says, and "it flows out like a wound."
Interest in cash alternatives has skyrocketed in recent months BerkShares.org logged nearly 42,000 hits a day in April) as the recession has encouraged more innovation. For example, a Vermont business association is getting ready to launch a statewide cashless trading network. Ithaca, N.Y., which has the nation's longest-running independent currency, agreed in June to let people start using the 18-year-old bills to buy transit passes.
But how hard is it to manage and maintain these trade boosters? Ed Collom, an associate professor of sociology at the University of Southern Maine, has studied volunteer-run programs like Ithaca's and found that about 80% failed, chiefly because of administrative burnout. That's why many newer models, like BerkShares, are now set up as nonprofits, complete with administrative support.
Beyond spurring local trade, alternative currencies build awareness about the effect of consumers' choices. "It has started a conversation: Why local currency? Why buy local?" says Oliver Dudok van Heel, who last fall helped launch the Lewes pound to help a British town become more self-sustainable.
Local currency can generate customer loyalty, but not every business feels as though it can offer a discount like the one built into BerkShares. "They just aren't viable for us," says Beth Parsons, whose family owns a grocery store in Lenox, Mass. But as a consumer, she likes the idea. Parsons recently drove to a nearby town to buy some shoes instead of getting them online. Afterward, she says, she passed a BerkShares sign "at the bank and thought, 'Oh, I should've bought BerkShare bucks to save money on these.'"
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.
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.
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
http://www.futurenet.org/economies/malis-gift-economy
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: www.otherworldsarepossible.org. For more on gift economies, see www.gift-economy.com.
http://www.futurenet.org/economies/malis-gift-economy
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: www.otherworldsarepossible.org. For more on gift economies, see www.gift-economy.com.
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)
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)
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