Why Do We Need Local Money?


From ROB HOPKINS
Transition Network UK

[Foreword to the book 'Local Money']

The power of holding your community’s own money.

September 2009, Lambeth Town Hall, Brixton. On a beautiful evening with just the first hint of autumn in the air, hundreds of people are packed into the large room for the launch of the Brixton Pound. In the days running up to the launch, the media was full of stories about the currency; it even made the front page of the BBC website on the day. Alongside explanations of how it is intended to work and interviews with advocates were mainstream economists who, somewhat patronisingly, assured readers that this could never really work and that it was all tremendously naive and foolish. Clearly that was a sentiment that those gathered in the hall, and the 70 traders already keen to accept the notes, had chosen to overlook – or, more likely, would fervently disagree with. This event was both a celebration of the new currency and, perhaps most importantly, of Brixton itself.

Derrick Anderson, the Chief Executive of the local council, which had partly funded the initiative, told the audience that he would be using Brixton Pounds, that he hoped they would become ‘the currency of choice for Brixton’, and that he was delighted that this was a good news story about the area. When I spoke to him later, I explored with him how deep the commitment of the council to this new currency would actually run. Would it accept the currency in payment of Council Tax? Would it accept rent from stallholders in Brixton Pounds? The answer to both questions was yes: a national first.

At the end of the evening, the notes themselves were unveiled to rapturous applause. Each note featured a prominent Brixtonian, chosen via a community-wide ‘Vote the Note’ poll. They showed Vincent Van Gogh on the £20 note; C. L. R. James, a local historian, political theorist and cricket writer on the £10 note; Gaia theorist James Lovelock on the £5 note and Olive Morris, Brixton Black Women’s Group founder, on the £1. Morris had died at the age of 27, and some members of her family were present to see this extraordinary memorial to her life and work.

At the end of the evening, people brought the first notes into circulation, and the Brixton Pound was now a reality, ready to take its place in the tills of Brixton. But is this legal? Will it work? And, perhaps most importantly, why would anyone bother?

The emergence of Transition currencies

In 2006, I attended a talk by economist Bernard Lietaer at Schumacher College. He said two things that stuck with me: firstly, that localisation was impossible without having a local currency; secondly, that that local currency had to be designed in such a way that businesses would use it. I was familiar with models such as time banks and Local Exchange Trading Schemes (I had been a member of a few different LETS schemes), but I left Lietaer’s talk thinking that something else was needed. A few days later, I visited a local film company whose offices used to be the Totnes Bank. Lovingly framed and hanging on the wall was an 1810 Totnes banknote – a beautiful handwritten document, which had been legal tender in the town. What would happen, I wondered, if we printed some new ones? If we got a few shops to agree to take them and just ran it for three months and saw where they went? Would we be allowed, or would we suffer dawn raids from the Bank of England and be stuffed into a small and rather unpleasant room in the Tower of London reserved exclusively for those who print their own money? The answer to all those questions was a big ‘no idea’, but in the Transition movement that is rarely a reason for inaction. From the moment when 150 people first sat in St John’s Church waving their freshly minted Totnes Pounds, the first for almost 200 years, the idea of communities printing their own money has, as Peter North so lucidly narrates in this book, grown rapidly.

First came Lewes in Sussex, then Stroud, then Brixton, and now several other places have their own schemes on the drawing board. Each currency learns from the previous ones in a wonderful iterative way, and each currency is fiercely of its place. They are all bold, thought-provoking and charming, and they all embody an important principle of not waiting for permission to initiate the process of relocalisation. They couldn’t have come at a more timely moment.

Why do we need local money?

In spite of the Queen’s musing aloud in early 2009 as to why no one had seen the economic meltdown coming, many people had been only too aware that economics, as currently practised, is designed to draw money upwards, does nothing to stop the poor getting poorer and everything to help the rich get richer, and has no loyalty to communities or individuals. A common national unit of exchange – sterling – is, of course, extremely useful, as it enables national trade. Yet its weaknesses are such that it needs a complementary currency running alongside it. Some transactions can be in one; some in another.

The very thing that sterling is designed to do, i.e. enable and stimulate trading between people and businesses, it often fails to do – especially in times of economic contraction. Money often feels like something ‘done to’ communities. The large corporate chains that now dominate the nation’s high streets are like mining operations, extracting the potential wealth of communities and siphoning it away to shareholders and executive bonuses. It is a vicious cycle: people buy from chain stores, less money goes to local businesses, less money circulates locally, local businesses struggle, and we end up with identical high streets up and down the land – what the new economics foundation calls ‘Clone Town Britain’. A local currency is an intervention that can, it is hoped, start to reverse that trend, building trade for local businesses, creating a mindfulness that means people start to choose local shops over chains, and encouraging them to get out and discover the independent traders in their community.

Money and resilience

Central to Transition is the concept of resilience. This is the concept, originally from ecology, that systems – whether businesses, settlements or entire nations – tend to be more or less able to withstand shocks from the outside. Although just-in-time distribution systems allow us to have access to a dazzling array of foodstuffs and other goods (much of which our great-grandparents wouldn’t have even been able to name), we are left with an economy with little inbuilt resilience. The whole system is highly oil-vulnerable. Price volatility, or worse still, actual shortages, are things we are hugely unprepared for and could be devastating.

In the middle of the nineteenth century, when there was no welfare state and some business owners still paid their employees in a far less ethical form of local currency, one that could be spent only in their own stores, the question of ‘plugging the leaks’ in local economies was not hypothetical: it was, for many communities, a matter of survival. The Cooperative movement emerged, inviting people to invest inwards into their communities; to invest in local jobs and local businesses. It was hugely successful, and its legacy is still with us today. As the scale of the UK’s debt, incurred through years of living beyond our means and the 2008 bailing out of the banks, becomes clear, and the scale of the cuts in public spending that they will necessitate also emerges into reality, we find ourselves needing models and approaches to do the same thing again. Communities will find themselves needing each other again, after years of being able to get by without knowing your neighbours and the very idea of community being pilloried.

Where all this might lead

So where might all this end up, if local currency becomes a key element of our daily lives? One could imagine a situation where several of the approaches Peter outlines here sit alongside our ongoing relationship with sterling. A significant proportion of our weekly shop would be done with local businesses, which, in turn, would encourage them to seek out local suppliers, leading to an explosion of local market gardening and other local manufacturing.

Alongside the printed currencies, we may also make use of time banks, and we may be members of a local credit union. For loans, we may talk to the credit union, or we might visit a website such as zopa.com and borrow direct from other people, with no bank in the middle. Any surplus money that we want to invest, we are now able to invest in local shares or bond issues, which raise the capital for our locally owned energy company to begin installing renewables, or for local food-growing initiatives to secure access to land. There may well be all kinds of evolutions that we can only speculate on at this stage, such as local electronic cards or even the idea of currencies that are stored on our mobile phones. Perhaps there will be regional currencies, as can already be found in Austria, Germany and Switzerland. What is key is that as humanity begins its inevitable shift away from energy-intensive, globalised, corporate economics to a more human-scale, localised version, the way we ‘do’ money will need to catch up. This book identifies a number of possible tools, and doubtless there are many more yet to be thought of.

The Cheerful Disclaimer

What Peter has done here is write a book that is a clear and deeply researched practical guide for you to get started, laying out of some of the tools that increased economic localisation will need. He brings to this project many years of insight and observation of local currencies around the world, and I hope that you will find the result both fascinating and thrilling. It is important at this stage to bring in what we call ‘The Cheerful Disclaimer’. If you are reading this book thinking that local currencies, the Transition idea, projects like the Brixton Pound, are all tried-and-tested things that we can guarantee will definitely work, think again. Transition is an iterative process, a collaborative process of learning as we go along, of sharing successes and failures, of people being bold and trying things out, and learning from what has gone before.

At this time in history when things are changing so fast, this kind of innovative thinking and creativity is something that can really come only from communities, who are able to innovate and experiment in highly imaginative ways. Although this book does not come with a guarantee of success, it does come with the firm belief that what we need to do, what has the most chance of enabling a successful Transition, is to harness engaged optimism. What does engaged optimism look like? The currencies discussed in this book are all just one approach; perhaps just initial experiments from which other, better-refined, approaches will emerge. What they do, though, is give a physical form to that sense of engaged optimism: a tangible statement of a community’s intent.

Moving forward

The Transition movement has developed a power and a speed to its vital momentum around the world. As I write, there are well over 200 formal initiatives and thousands more at earlier stages. Will they all produce their own currencies, and indeed do they need to? Probably not. What they will no doubt do, though, is continue to innovate, and it is that spirit of innovation that we hope this book captures. Having attended the launches of the Totnes, Lewes and Brixton Pounds (I was unable to make the Stroud one), I was struck by the fact that they were all characterised by being incredibly energetic and dynamic occasions. You get a sense at these events of a latent power that governments can’t tap, but which rather can be ‘unleashed’ only by those communities themselves.

This book was preceded by Local Food, which set out an array of things that Transition Initiatives can do to start building resilience around food, seeing this as an opportunity to rethink many basic assumptions in a very creative way. It sought to give Transition food groups the best possible start and save them reinventing too many wheels. This book does much the same, capturing from across the Transition network, as well as from the many projects that preceded and which run in parallel to it, best practice as it is currently understood in relation to alternative currencies.

You don’t need to wait for anyone’s permission to initiate local money. Its potential as a tool for relocalisation is something we are only just starting to grasp. One of the key things for a successful local currency scheme is trust. People use sterling because they know it and they trust it. Without trust, money is meaningless. However, the process of building trust in the currency is also one of building trust in local traders, and of local people learning to trust one another again.

Ultimately, the best thing about these schemes is simply that they are more fun; they feel better. Shopping with 40 Brixton, Totnes, Lewes or Stroud Pounds, you still return home with £40 worth of shopping, but what you leave behind you is a far more virtuous cycle of money cycling around locally, supporting local businesses, local traders and so on. Local currencies are, in effect, ‘mindful money’. Our daily actions can make a huge difference, and local currencies can become a very powerful, and far-reaching, fact of everyday life. This book celebrates those who have taken the first steps to create them.
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