[p2p-research] Local currency issues & post-scarcity (Re: present and future)

[Paul D. Fernhout]

Michel Bauwens wrote:
 > On Fri, Jul 3, 2009 at 11:13 PM, Thomas Greco <thg at mindspring.com> wrote:
 >
 >>  The Schumacher Society has been very successful in getting publicity and
 >> mainstream support.
 >>
 >> The particular method of issuing Berkshares, however, is not very
 >> empowering (sold for cash; redeemed for cash). But they are gaining
 >> acceptance of the idea of alternative currencies and paving the way for more
 >> empowering things like mutual credit clearing and currencies that are SPENT
 >> into circulation based on solid ability of the issuer to redeem it in kind.
 >>
 >> The Swiss WIR is the model that comes closest to optimum empowerment, but
 >> that, too, needs some improvement.

The alternative local currencies I've seen (Ithaca HOURS), often local 
businesses accept some 10% of so of the amount of regular dollar purchases 
as the alternative currency. In a way, this functions as both advertising 
for them (that they accept them) and local lock-in of consumers (if you have 
such currency, that is the place to go to get some conventional products for 
it). Other people may take mixes of amounts, like 50%.

Example, from a more recent local currency:
   http://www.berkshares.org/directory/dir_alphabet.htm
"""
Please note that stores may have specific restrictions concerning the uses 
of BerkShares at their business, and that some of these restrictions may 
differ from those listed here. Please ask for details when you purchase from 
a store using BerkShares.
"""

Example, with Ithaca HOURS, with a different justification:
   http://www.ithacahours.org/faq.php
"5. Why don't all member businesses accept 100% HOURS for purchases and 
services? Most businesses have economic relationships that extend beyond the 
local community, where Ithaca HOURS are not accepted. These businesses must 
take in U.S. currency to do business with suppliers outside of the HOURS 
system. We ask merchants to calculate a rate of HOURS acceptance that is 
proportional with their ability to put them back into the local economy."

But some places may take entire payment in them, but expect it won't be a 
big part of their income:
   http://cornellsun.com/node/23743
"""
ABC Café owner Ken Hallett says that his business, which accepts full 
payment from customers in Hours, has profited from Ithaca Hours. “I think it 
brings in some people who have them and might not come here as often if they 
didn’t have them,” Hallett said. Hallett uses his Ithaca Hours revenue to 
pay his employees and provide them with benefits, as well as to buy items 
for the café. If he has any Hours left over at the end of the year, he 
divides them among his employees for their holiday bonuses. However, Hallett 
says that only about 5 percent of the business in his restaurant is 
transacted in Ithaca Hours.
"""

It is not clear to me how much this bridge to mainstream currency is 
significant in defining the value of such currencies? Maybe it is not?

Even with Ithaca HOURS, it looks like there is an aspect of money as debt:
"""
10. How do new HOURS get into circulation?
1. New HOUR notes are issued as disbursements to those who pay for a listing 
in the directory.
2. New HOUR notes are issued when Ithaca HOURS makes loans to participants 
or gives small grants to community organizations.
3. A limited number of HOUR notes are issued to help cover basic system 
expenses, such as printing new currency and office supplies.
"""

I like the idea of local currencies, especially from a perspective of 
decentralization and escaping dysfunctional global financial hierarchies to 
a degree. Still, I see local currency as essentially about increasing local 
abundance from a classically libertarian / fiscal Republican perspective (at 
least the aspect of that ideology that argues hard work leads to abundance).
And there are many issues such a perspective does not address.

Local currencies don't address facts like:
* that not every one can "work" in a conventional sense,
   http://en.wikipedia.org/wiki/Disability
* that work may not even be the right way to organize an abundant society,
    http://www.whywork.org/rethinking/whywork/abolition.html
* that things like child care or community involvement are generally not 
recognized as productive work at the societal level,
    http://crookedtimber.org/2009/02/02/feminism-and-basic-income-revisited/
* that money as debt has structural collapse issues among others,
   http://www.moneyasdebt.net/
* that easy availability of debt has driven up consumer prices and driven 
down wages,
   http://www.capitalismhitsthefan.com/
* that many individuals might be more productive with social things like 
access to health care that may be beyond their individual capital to afford 
an a personal investment:
   http://medicareforall.net/
* that the flip-side of currency is theft (the other side of the coin) and 
thus any currency imposes a social cost on society as a way or organizing 
production:
   http://en.wikipedia.org/wiki/Property_is_theft!
* that two-income families have bid up the cost of homes and college,
    http://www.amazon.com/Two-Income-Trap-Middle-Class-Mothers/dp/0465090826
* that economic transactions have externalities not reflected in the 
peer-to-peer transaction price (negative ones like pollution, or positive 
ones like increasing social connectedness),
   http://en.wikipedia.org/wiki/Externality
* that most informational commons connected to the internet function most 
effectively as a gift economy without obvious transaction costs, or
   http://www.thepublicdomain.org/
* that capital affects industrial productivity in a very inequitable way 
that breaks the work-to-income link (by driving down the value of labor 
relative to capital, since increasing technology makes capital -- what money 
can buy -- even more productive as a replacement for labor through better 
design and improved automation).
   http://en.wikipedia.org/wiki/Triple_Revolution

This is not to be against local currencies. It has been said the US American 
revolution (celebrated today) was mostly about the right to have local 
currencies:
   http://www.xat.org/xat/moneyhistory.html
"""
During a visit to Britain in 1763, The Bank of England asked Benjamin 
Franklin how he would account for the new found prosperity in the colonies. 
Franklin replied. "That is simple. In the colonies we issue our own money. 
It is called Colonial Script. We issue it in proper proportion to the 
demands of trade and industry to make the products pass easily from the 
producers to the consumers. In this manner, creating for ourselves our own 
paper money, we control its purchasing power, and we have no interest to pay 
to no one." America had learned that the people's confidence in the currency 
was all they needed, and they could be free of borrowing debts. That would 
mean being free of the Bank of England. In Response the world's most 
powerful independent bank used its influence on the British parliament to 
press for the passing of the Currency Act of 1764. This act made it illegal 
for the colonies to print their own money, and forced them to pay all future 
taxes to Britain in silver or gold. Here is what Franklin said after that. 
"In one year, the conditions were so reversed that the era of prosperity 
ended, and a depression set in, to such an extent that the streets of the 
Colonies were filled with unemployed." "The colonies would gladly have borne 
the little tax on tea and other matters had it not been that England took 
away from the colonies their money, which created unemployment and 
dissatisfaction. The inability of the colonists to get power to issue their 
own money permanently out of the hands of George III and the international 
bankers was the PRIME reason for the Revolutionary War." By the time the war 
began on 19th April 1775 much of the gold and silver had been taken by 
British taxation. They were left with no other choice but to print money to 
finance the war. What is interesting here is that Colonial Script was 
actually working so well, it became a threat to the established economic 
system of the time. The idea of issuing money as Franklin put it "in proper 
proportion to the demands of trade and industry" and not charging any 
interest, was not causing any problems or inflation. This unfortunately was 
alien to the Bank of England which only issued money for the sake of making 
a profit for its shareholder's.
"""

This is just to suggest that local currencies don't fix a lot of deep issues 
related to technology and society, even as they may increase local peer 
production. I'll agree there is truth to the libertarian / fiscal Republican 
perspective to create abundance from hard work in small businesses (and 
local currency helps with that) -- but it is only part of the truth in a 
complex economic system. For all the fact that alternative currencies sound 
New Agey and Leftist and Green and Progressive, they really are fiscally 
conservative at the core.

Celebrating alternative currencies reflect a bit of a Protestant work ethic, 
even when trying to look at work from other religious points of view:
   http://www.smallisbeautiful.org/buddhist_economics/english.html
"Equally, to strive for leisure as an alternative to work would be 
considered a complete misunderstanding of one of the basic truths of human 
existence, namely that work and leisure are complementary parts of the same 
living process and cannot be separated without destroying the joy of work 
and the bliss of leisure."

Contrast E.F. Schumacher's point above with Richard Bolles's ideas about 
integrating learning, work, and leisure into unified experiences:
   "The Three Boxes of Life and How to Get Out of Them: An Introduction to 
Life/Work Planning"
   http://www.amazon.com/Three-Boxes-Life-How-Them/dp/0913668583
"Argues that three stages of life -- education, work, and retirement -- have 
become three boxes for learning, achievement, and leisure."

Fiscal conservatism, at least the aspect that local currency reflects, while 
full of truths, is less and less a big part of the truth it a society moving 
toward a post-scarcity future (as one by one, artificial scarcities are 
worked around). Ultimately, if fiscal conservatism is not understood for its 
limits in regard to the points I mentioned above (plus other limits relating 
to other aspects of the larger ideology), it leads to using post-scarcity 
technology to create artificial scarcities, since the basis of 
currency-based commerce is to get somebody to want something that you 
control the distribution of, and then you can stand between that person and 
what they want and collect a toll and put the money in a box. Given we now 
have post-scarcity technology in our hands, the easiest way to enforce tolls 
is ironically to use post-scarcity technology to do that (whether RFID in 
cars or password protected electronic funds transfers of Ithaca HOURS using 
computers that will soon be able to do most jobs, as Marshall Brain talks 
about in Robotic Nation or Manna).

In that sense, local currencies are *misleading* about the most pressing 
issues of a transition to a post-scarcity economy, IMHO. Our economy has 
changed significantly in character since July 4, 1776, due to a variety of 
interacting changes like improved designs and a better understanding of 
materials, better automation including robotics and AI, the spread of the 
internet, and also from huge externalities (both positive and negative) 
given our huge productive potential. Those changes are continuing in an 
accelerating way. So, our approaches to rethinking economics need to change 
to. Again, my objection is not to local currencies by themselves, as they 
can be helpful; my objection is to not seeing them in the larger context of 
a transition to a post-scarcity society.

It may be best to see local currencies as a bridge to aspects of a 
post-scarcity society, by improving the balance of a society from a very 
hierarchical financial system back toward a mix of grass roots meshwork and 
smaller hierarchy. That's a great thing. But it is not enough by itself to 
address a lot of pressing issues.

--Paul Fernhout
http://www.pdfernhout.net/