Local currencies, like these Totnes and Stroud 'pounds' are intended to stimulate local economic resilience and keep benefits within communities. But is there a better way to achieve the same ends, everywhere? Photo: London Permaculture via Flickr.
Closing the money loop to build resilient local economies
Bran Knowles & Michael Hallam
21st July 2014
Using local currencies to stimulate local economies and revalue local labour over imported products and resources sounds like a great idea - but recent experiences have proved disappointing. Are there other ways to 'close the money loop'?
can digital technologies be developed to encourage local spending and resilience in a way that bypasses some of the practical complexities and limitations of alternative currencies?
Since the global recession began in 2008, we are becoming increasingly aware of the vulnerability of the debt-based banking system and the ease with which new money is lent into existence by the banking community as new debt.
Meanwhile, the average person is increasingly unlikely ever to be able to pay off those growing debts.
A new study by the Joseph Rowntree Foundation illustrates that the cost of maintaining a minimum quality of life in the UK has risen by 28% since 2008 in spite of the harshest recession since the 1930's.
Clearly something is fundamentally wrong with our current economic system. But it's not just the economic system that is buckling under strain. The biosphere and our dependence on increasingly scarce finite resources are compounding the stress.
Peak oil, peak climate
There have been concerns since the publication of The Limits to Growthin the 1970s that access to the planet's available finite resources would 'peak' soon.
This is a fact fully recognised and addressed by the Transition Town movement, for example, which encapsulates this as a twin peak of climate change and 'peak oil'.
More immediately worrying than peak oil, environmentalist and activist Bill McKibben in his Rolling Stone article 'Global Warming's Terrifying New Math', and Berners-Lee & Clark, authors of The Burning Question, both illustrate that our only chance of averting a climate change tipping point is to somehow "write off" nearly 80% of the world's oil reserves.
Unless we keep these fossil fuels in the ground, unused, we will unleash a planetary catastrophe - one that, incidentally, would also wreak havoc on the global economy.
What is increasingly clear is that we cannot save the planet and save the global economy in its current form. Facing up to this might be providing the very push we need to create the kind of more equitable society and economy we would most like to live in.
In 2006 Totnes established the world's first Transition Town to prepare for local resilience, which, in 2007 led to the issuing of the Totnes Pound.
Totnes is not unique in establishing a local currency. Many places around the world have used this tactic to try to revive or increase the resilience of local economies in the face of dysfunctional corporate behaviour or local economic collapse.
Local currencies attempt to keep money in the hands of local communities by making it difficult to trade outside of a defined community. But evidence shows they are often only minimally successful. The principle reason for this appears to be the restriction it creates on peoples' ability to spend it.
Yet the limited success of the local currency movement does not make the urgency of solving our structural economic problems any less urgent.
Giving money 'memory'
So the question we're asking is: can digital technologies be developed to encourage local spending and resilience in a way that bypasses some of the practical complexities and limitations of alternative currencies?
The answer is a tentative 'maybe'. The EPSRC-funded BARTER project being developed at Lancaster University holds promise for motivating Lancaster residents to spend locally by working to build on the kinds of initiatives cultivated in pioneering places like Totnes.
By focussing on making visible the trading 'circuits' rather than the particular currency used to 'fuel' them, BARTER potentially does away with the need to produce a unique currency, allowing sterling to perform as if it were a local currency.
The system being pioneered uses mobile devices and NFC-enabled cards to record basic transaction data, which then feeds into a visualisation tool that reveals the traces and patterns that spent and re-spent money makes as it moves around the community.
Money as community glue
The BARTER team propose that making such information and feedback available provides powerful incentives for changing behaviour.
For example, the system also informs users of any 'closed loops' that are completed through exchanges, when money eventually returns to the original spender as evidence of the interconnectedness of the impact of an individual's spending on other people in their community.
Ultimately it is hoped that BARTER will help determine not only how technology might foster local spending behaviour, but also whether people can be motivated to prioritise long-term community gain over short-term individual gain.
For the sake of the planet, we have to believe that purely self-centred activity can 'evolve' into more enlightened self-interest and that the adoption of more noble shared values can be fostered and sustained once the consequence of altruistic actions is made more clearly available to us.
After all, it might be the only chance we have of keeping those un-burnt hydrocarbons in the ground.
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