ISBN 978 1 900322 52 2. “Local Money – How to make it happen in your community” was written by Peter North et al and published by Green Books in 2010. For your money (£Sterling of course) you get 240 pages including obligatory foreword by Rob Hopkins, an introduction, four parts of seventeen chapters, references, resources and index. One important strand of this work is Rob’s “Cheerful Disclaimer” which he walks through on the third page of his four page foreword. It is one core principle of Transition that supersedes all others. It can be roughly translated as: we don’t know exactly how to do this, it is work in progress, we will make mistakes on our journey to find out what truly works. This fundamental principle is often forgotten by Transitioners who insist that there is a “Transition way” of doing something, or that they can justify their method of working because it follows “transition principles”. In truth, if it doesn’t work, then try something else. It is a point Peter North returns to several times in the book. Clearly not all experiments in alternative money have worked. Some have been almost disastrous (Argentina) whilst some have run out of steam (Lewes).
We learn from these mistakes and from successes. Anyone who doesn’t make mistakes makes nothing. It would also be a mistake to think that this book is solely about Transition Towns and local currencies. Far from it. North covers LETS, time banking, Ithaca hours, Argentina’s barter networks, European regional currencies, BerkShares and, finally, multiple Transition Local Currencies (of course). Prior to writing this review we did read an earlier review that pointed out that this list in not exhaustive. There have been other experiments with alternatives to money systems that North doesn’t cover. Take for example, the alternative Banking system offered by the likes of Zopa where you lend your money and it is borrowed directly by a needy borrower. It would be a wrong to think that it begins and ends with the likes of the Brixton pound!
It is a common transition-belief that our local economies are somehow a “leaky bucket” where transnational corporations suck money out into the pockets of remote shareholders. The ideal of a local currency is that it can only be spent locally as a form of loyalty scheme. This money cannot be sucked out of the economy hence it bounces about generating local wealth. Of course this is largely illusory. Leaky buckets eventually empty. Our local economies are not a vacuum of money because it continually pours in. This argument pertains to profits. Hence it is largely an issue of ownership – local versus national and international monopolies. But this is often just semantics – an issue of overwhelming importance to global justice and poverty-eradication campaigners. But not core to our problem. The wealth of a local economy depends upon the volume of currency and the speed at which travels through that local economy. Localism is aimed at reduction in carbon footprints and improving the durability of local communities in a changing world. A thriving local economy can work with a national currency. These are not mutually exclusive. The wealthy shareholders who benefit from these “local” profits just spend that money somewhere else in the economy. They are just as likely to spend it in their own local community. The money doesn’t disappear. The only way to destroy money is to have a financial collapse where there is not enough confidence for new loans to be requested. Since we have no permanent money supply then the volume of money is utterly reliant upon the manufacturing of new debt. Debt is serviced through interest payments. These have to be met through a perpetually growing economy. This is incompatible with a finite planet so must stop. This system cannot stop. It has no steady state. It can only collapse. Hence our money system is not sustainable and will not see us through into a post-carbon economy nor a low-carbon world. Until an alternative form of MONEY SUPPLY becomes available then our communities are not durable against the threat of collapse. All new forms of money, be they local currency or barter systems, must be able to create new money. Transition currencies do not yet do this. It is a self-evident point that North fails to deliver.
Localism requires us all to think small. Small is the opposite of the current globalised paradigm. The reasons why BIG has been so successful over small has been the economies of scale that BIG gives us. If we accept the advantages of small then we have to accept that is an entirely different economic model. Local is probably going to be more expensive and offer less choice. However, it will be more interesting, robust and resilient. It will be low carbon and bolster the community. Hence this is a desirable alternative model – but it isn’t an easy sell. Nor is it easy to explain. Peter largely ignores the macroeconomics of this discussion. He completely ignores monetary reform. Although this is a critical issue in addressing economic growth versus sustainable steady state money systems Peter refers to it only obliquely. In a brief mention of the “Money as Debt” film he refers to it as “conspiratorial”. Anyone familiar with this movie (and its successor) will know that it is NOT “conspiratorial” at all. (If you wish to read about conspiracy then check out the books of Ellen Hodgson Brown or Michael Rowbotham.) It does point out that it has not been in the interest of powerful banking elites for the system to be challenged. This is not a conspiracy. It is a systemic fault. The lack of objective discussion about macroeconomic reform leaves one corner-stone off the house. A stranger to the topic would find this book unappealing as the big picture is missing.
We really don’t know what the future of money is. Most of the small scale local experiments in alternative currencies have been ideologically driven – particularly the one at Stroud as covered in this book. These have clear social objectives and are unlikely to travel very well. The more successful experiments have involved currencies that freely exchangeable and covering a wide area through a network of traditional banking bodies. It is for good reason that the United States is the world’s biggest economy with the most widely acceptable international currency – the Dollar. The Eurozone has been trying to catch up ever since. It is largely a matter of perspective as to the desirability of transnational or national currencies. Local currencies used to be commonplace in an era of local trading. When trading become national and international the local currencies became obsolete as they could not service this new modus operandi. Indeed, as the author points out, the very reason why so many experiments in local currency struggle is that the local businesses, who are expected to use the currency, can’t pay their suppliers in a local currency. Until such time as trade become local then local currencies remain a cultural phenomena. They exist and perpetuate through the character of the community. Hence we need different communities and different economics before we have different currencies. Lots of different changes will have to happen at the same time to evolve this system rather than one panacea or revolution. Not every community is a Lewes-style “latte town” full of little locally owned shops, farmers’ markets and cooperative vegetable box schemes. Most communities are clone-towns. Until they find their local soul will there be a local change to the money system.
North points out on page 18 that “in our imaginary local economy of the future, more of the food a community needs is grown locally and sold in locally owned shops, cooperatives and markets. More of the electricity is generated locally, and delivered by community-owned local power companies.” So it would seem that the cart should be firmly placed behind the horse. Attempts at local currencies in a globalised world get it the other way around. Of course we have to try and it is good preparation but it would be nuts to imagine that creating hundreds of local currencies will make a localised economy happen. A lot of other stuff has to happen. Money is just a medium of exchange. Most Transition Initiatives will never grow to the successful level of sophistication to invest in a local currency experiment. The few who do will find that they need to do it across a large region like the German experiments. Secondly they will need to trade the money through a regular High Street Banking Network. Hence you need local banking before you have local money. Since all our local banks got sucked up into the globalised money system this will have to be undone. We need to go back and do our homework. What sort of economics will sustain the post-carbon world? Currently we are guessing.