"Wage slavery will exist so long as there is a man or an institution that is the master of men; it will be ended when the workers learn to set freedom before comfort."
-- G. D. H. Cole [30]
Solutions to global problems require a global perspective and trans-global interaction, but it does not necessarily follow that we need to have a centralized global authority with coercive power to carry them out. Indeed, we have ample evidence to demonstrate that such centralized authorities lack sensitivity to local needs. The more remote the government, the less responsive it is. Competition among nation states has generally compounded human misery through war. What seems more appropriate to the current era is a pyramid of communication and cooperation with power vested in the small societal units which comprise its base.
Manfred Max-Neef in discussing a new paradigm for economics, enumerates nine fundamental human needs which fall into two categories -- "having" needs and "being" needs. They are the needs "for permanence or subsistence; for protection; for affection or love; for understanding; for participation; the need for leisure; for creation; for identity; and for freedom."
He points out that industrialized countries are better at providing for the "having" needs than they are at satisfying the "being" needs, while the lesser developed countries (LDC's) often do the opposite. He argues that it is possible to organize economic systems which can adequately satisfy the entire range of human needs. [31]
The direction which needs to be taken to achieve this goal is toward structures and mechanisms which provide greater personal freedom and wider, more effective, participation. Since adequate participation is possible only within small groups, the emphasis must be upon the strengthening of local communities and voluntary associations. These will, in my opinion, form the foundation of a new world order which will be both sustainable and humane.
Healthy local economies, like healthy individuals, are characterized by a diversity of skills and resources and a large measure of self-reliance and self-determination. Economic empowerment will require some degree of de-coupling from the present global exchange system and the implementation of exchange media which are locally and democratically controlled.
The vogue in economic development strategies for many years has been to go out and find a major corporation to move into the area with some large facility that would bring new money into the community and create jobs. On the surface, this seems perfectly reasonable, but in many cases, there has been insufficient attention paid to the cost side of the equation. This is true especially when the costs come in social and ecological, rather than direct, financial terms. But even in financial terms, the experience of many communities has been less favorable than expected. With communities competing against one another, tax abatements and other concessions needed to lure companies often negate most, if not all of the benefits. Recognition of these costs, coupled with the costs of providing additional public services needed to support the new businesses, is causing many communities to take another look at the efficacy of the "recruitment strategy."
If not recruitment, then what? I believe that the emerging trend in economic development activity will be for communities to become more reliant upon their own resources, to place greater emphasis on quality of life, and to begin restructuring in areas which presently make them vulnerable to external factors such as the supply of money and bank credit, prevailing interest rates, and levels of State and Federal government spending in their area.
What practical steps can be taken to protect local economies from the distorting effects of external monetary and financial machinations, and restore some measure of local autonomy? There are two general ways to go:
An effective strategy will probably require some combination of the two. Reducing reliance upon money and markets implies a number of adjustments. On the personal level, it means becoming free of the consumerist mentality, distinguishing real needs from conditioned wants, eliminating expenditures which are induced by fear, becoming more diversified in one's skills and abilities, learning to do-it-yourself, make do or do without, and, above all, developing mutual support relationships with others of like mind. Communities must likewise take stock of their own resources and take steps to reduce the amount of value imported into the community, substituting local production for imports and thus reducing their need to earn cash by selling exports.
Even the poorest among us is able to exert some power through the purchase decisions which we make every day. Every dollar spent is a vote cast. It is important to recognize that, however much or little money one might have, the choices one makes in spending that money, carry a great deal of weight in determining not only the products and services which the market offers, but also the very quality of community life. Although price is one of the primary criteria to be considered, it is not the only one.
Some consideration should also be given to the question of where one should do business. The familiar aphorism that "charity begins at home" contains much wisdom. An appropriate corollary might be that "prosperity begins at home." The first might be interpreted as "deal with the problems closest at hand," and the second as "support the business efforts of your friends and neighbors."
Local businesses spend most of their revenues in the local area, while chain stores and absentee owners withdraw most of their revenues to other places, building up ever greater pools of capital which can distort economic relationships everywhere. While they may be able to offer lower prices, it is often a false economy. We must ask, at what price do they offer lower prices? It is often at the expense of the environment, poorer working conditions for employees, and depersonalization of human interactions.
Because they control so many jobs and so much revenue, large corporations and chain stores can make a community dependent upon them. They can dominate a community by their lopsided economic power which allows them to wield political power as well. They can buy political influence, negotiate tax breaks, and extort concessions on zoning, safety, and environmental regulations.
It is also becoming more apparent that continual growth and construction, while it may benefit some privileged elements in the community, such as land owners, builders, and real estate brokers, can often be detrimental to the community as a whole. There are several negative effects which need to be considered. First, there are the added costs for services and infrastructure -- fire, police, water, sewer, road construction and maintenance -- which may exceed any additional tax revenues. Second is the cost of living which may increase because of "gentrification" and the increased demand for housing and other limited local resources. Third is the quality of life costs -- increased traffic congestion and noise; air, land and water pollution; loss of farm, forest, meadow, and marsh land, and increasing anonymity and depersonalization.
Locally-owned businesses are more likely to use local suppliers, saving on transportation costs, reducing the environmental costs of transport, and stimulating local production. They are more likely to employ local people, and they contribute to the culture and uniqueness of a community. [32]
Later chapters offer several concrete proposals for bringing money and markets under local, democratic control. These proposals, which can be implemented at the local level by voluntary groups, attempt to incorporate the principles and ideals outlined previously. Some of these ideas have already been tried in some form and to some degree, while others, to my knowledge, are original.
The kinds of exchange systems implied by the above considerations are ones which are both self-regulating and independent of outside control by government or any other central power. To use an organic metaphor, they function autonomically. This implies a decentralized approach in which the creation and extinction of money (the symbol) is directly linked to the creation and transfer of value (the reality which money represents). In such systems the quantity of money (symbols) should adjust automatically to increases and decreases in the value and quantity of goods and services being traded. The process of money creation should be open and accessible, or, to use Ivan Illich's term, "convivial." It must also be debt-free and interest-free. If money were to become a symbol of merit from the very point of its creation, the producer of economic value would be properly rewarded for his/her effort and skill, and production would be encouraged. At the same time, production would be ecologically sound, since money, in a convivial system, is more readily available and has less power to induce people to act in self-destructive ways. Money would be the product of cooperation among individuals within integral communities.
One can perhaps envision two distinct types of exchange systems emerging concurrently. These will be complementary systems. One type will be limited, local, "soft" and "personal" system, along the lines of Michael Linton's LETS system (Local Employment and Trading System) which, in effect, monetize community credit. These will be referred to as "Mutual Credit" (MC) systems. Mutual Credit systems are intended to facilitate exchanges which are intermediate between the informal exchange processes of the family, clan or affinity group, on the one hand, and the formal, impersonal marketplace on the other. Mutual Credit systems are by nature "personal" systems, in that they operate among a relatively small group of people who have ready access to information about one another, and can therefore relate to one another on a personal basis.
The other type of system will be an extended, "hard" and "impersonal" system, necessary for exchanges between individuals in different social units and in trades between relative strangers. While these latter characteristics are also those of the present global monopolistic system, the transformed system which I envision will differ from it in significant ways.
At some point, however, it should be possible to "network" local currency and/or MC systems together into a web extending over a wide geographic area and including a very large total population. It could conceivably be a global network. This would then obviate the need for impersonal systems entirely.
It has been the stated goal of centrally controlled monetary systems to match the money supply to the needs of the economy, but the "needs" have never been well defined in monetary terms, and, as pointed out above, the mechanisms of control have never worked to benefit more than a relatively small privileged class. The supply of money or credit available at any given time should accurately reflect the wealth of material wares and services available for purchase in the near term. This is a principle which has been disregarded in modern money and banking, but must be heeded in establishing a healthy local exchange system.
The fundamental advantages of local currencies or credits are:
When needs remain unfulfilled, the first question that needs to be asked is, is it for lack of skills, resources, or motivation, or is it because of lack of money? Much "good work" is left undone because those who have the will to do it lack the money, and much "bad work" is done because it is in the narrow self-interest of those with money to do it, and others, because they need the money to live, can be persuaded to do it, too. The intentional scarcity of official money has a destructive effect which can be overcome by supplemental local currencies.
The supply of official currency is limited. It is created by entities external to the community which have little sensitivity to or concern for the needs of the local population. Official currency can and does circulate far and wide. It can easily be spent to buy goods and services from remote regions. Money spent outside the local community is no longer available to facilitate trading within the local community. It must be replaced by attracting money from outside, either by exporting products, receiving government transfer payments, or attracting tourists and businesses to come and spend.
The universality of national currency, its greatest advantage from the standpoint of flexibility and spendability, is also its greatest disadvantage from the standpoint of local self-reliance and economic integrity. Rather than the lack of skills or physical resources, local unemployment and business stagnation are more often the result of the fact that the money necessary to connect needs with supplies has gone elsewhere.
A local currency is, by its nature, limited in scope. It is recognized only within a limited area, and therefore can be created, earned, and spent only within that area. This fact tends to favor local producers who have agreed to accept it, and its narrow range of circulation makes it more likely that the spender will be able to earn it back. Local currencies, thus, stimulate local production and employment.
Just as a break-water protects a harbor from the extreme effects of the open sea, so does a local currency protect the local economy from the extreme effects of the global market, and the manipulations of centralized banking and finance. Complete reliance upon national currencies and the competitive conditions of the global market tend to force all communities to the lowest common denominator of environmental quality and working conditions. Local currencies, however, provide a buffer which allows local communities to set their own standards and maintain a high quality of life.
There need never be any scarcity of local currency since it is created by members of the community themselves in the course of trade. Any time two parties wish to make a trade they can do so even if they have no money. Local currency or credits can easily be created to enable the exchange to take place.