Yesterday, I found myself explaining the concept of local community currency to someone who had never heard about them before. Because we were next to a farmers’ market, I picked that context to support my stories about the benefits of local community currencies.
I built upon the story of the Taft Farms local currency, in which a farmer issued his own money to raise funds for the winter, and I explained that a farmers market could create a bank that would issue paper money redeemable only at the farmers market the following year, possibly at a discount (ex. $9 for $10 face value) and use the cash raised to provide credit to farmers in need during the winter season.
Additionally, the farmers market bank could promote itself by donating some of this paper money to non-profit organizations of its choice in exchange for ads for the farmers market in promotional materials issued by the non-profit organizations. Non-profits could follow the Community Way and sell this paper money at auctions to raise funds in real cash.
Last, I explained that the farmers market currency might be denominated in a different unit than the US dollar, say a “basket”, which composition would be defined by the farmer’s market every year. You could buy today baskets and use them as an inflationary hedge if you are a regular customer of the market and are worrying about your fiat national currency losing purchasing power over time.
Today, I found that some of my examples are not that far-fetched from reality.
The Farmers Market in Venice, CA has a program, which is very similar to Community Way: it offers certified market money subsidized by vendors to the organizations of their choice in exchange for mention of the donation in the printed materials of the events organized by organizations receiving donations. Organizations can use this market money to purchase good or auction them off to raise funds for the organization.
I also found two cases of farmers market tokens used as cash alternative: Crescent City Farmers market and Portland Farmers Market both provide a way to buy at one time batches of wood tokens that can be used as cash on the market. This is actually provided as a payment facility for those who want to shop with their credit card at merchants on the market not accepting the, but it could be easily extended to support the scenarios presented above.
I'm all for local currencies but I really wish people would think about the $10 for $9 exchange rate even a little bit. Just because Schumacher Society did it doesn't automatically make it a good idea.
What this exchange rate does is wallop participating businesses with an automatic 10% loss. This is precisely the opposite of what a community currency should be doing for local small businesses. It doesn't help in the least and in fact it makes things worse.
In June, 2007, Reuters reported that there were “…about 844,000 BerkShares in circulation, worth $759,600 at the fixed exchange rate of 1 BerkShare to 90 U.S. cents.” In other words, from October 2006 to June 2007, Berkshares deleted US$84,400 from the Berkshires economy, entirely at the expense of local small business. Ouch.
I understand that people want to cast business as the enemy, but when you devise a local currency with a built-in punishment, the only businesses getting hurt are the ones who employ your neighbors, supply necessities, and otherwise contribute to the community economy. Punishing them is not in anyone's interest, especially when the small businesses you're talking about are small farmers who are trying to feed everyone at the same time they're trying to deal with being perpetually broke.
Hi Paula, I agree with you that if in 2008, I buy certificates for use in 2008 at 10% face value, 10% is a lot. But if I buy 2009 certificates in 2008, this is equivalent to an interest rate on a loan with a better deal than say a credit card. I think it would not be complicated to issue certificates for each year and adjust the sale price according to when they are bought versus when they can be redeemed: buying a 2009 certificate in early January 2008 would get you a 10% discount, but not buying the same certificate in early September 2008, which might only get you a 1% discount.
I agree that businesses are not the enemy (quite the contrary) and should grow their business via community currencies. What did you think of the second scenario? what did you think of the Community Way model http://www.openmoney.org/cw/ ?
But people don't seem to understand; If a communist system has been tried and tried again and has never worked in the past, why would you expect it to work in the future? If the government wasn't leeching off the farmers we wouldn't have this problem.
I don't think what is described above is communist at all.
Communism is a socioeconomic structure and political ideology that promotes the establishment of an egalitarian, classless, stateless society based on common ownership and control of the means of production and property in general. (from Wikipedia http://en.wikipedia.org/wiki/Communist).
A community currency's goal is not common ownership and central planning. Quite the contrary. I would argue that our current financial system, with a central planner of money is more communistic than the vision of community currencies, which is one of decentralized currency issuance, decentralized credit worthiness evaluation, and diversity of currencies.
A community currency actually allows a community of value creators to thrive and keep wealth locally while those that add little value cannot extract wealth from it. Other than that, it leaves people free to accumulate wealth.
But people don't seem to understand; If a communist system has been tried and tried again and has never worked in the past, why would you expect it to work in the future? If the government wasn't leeching off the farmers we wouldn't have this problem.
I don't think what is described above is communist at all.
Communism is a socioeconomic structure and political ideology that promotes the establishment of an egalitarian, classless, stateless society based on common ownership and control of the means of production and property in general. (from Wikipedia http://en.wikipedia.org/wiki/Communist).
A community currency's goal is not common ownership and central planning. Quite the contrary. I would argue that our current financial system, with a central planner of money is more communistic than the vision of community currencies, which is one of decentralized currency issuance, decentralized credit worthiness evaluation, and diversity of currencies.
A community currency actually allows a community of value creators to thrive and keep wealth locally while those that add little value cannot extract wealth from it. Other than that, it leaves people free to accumulate wealth.