“It was the best of times, it was the worst of times..”
So begins Charles Dickens’ famous novel ‘A Tale of Two Cities’. It is an apt metaphor for our times.
The richest one hundredth of one per cent have never gotten so rich so fast. The rest of us haven’t been so thoroughly screwed over since 1929 and there is more to come. The good news is that people are now sensing that the emperor is indeed naked and new ways of doing commerce are not only being talked about, they are actually working. More-over we are seeing a shift in perception as significant perhaps as that which followed Martin Luther nailing his thesis to that big old door at the local Cathedral in Wittenberg (about which read more in my book)! The following video provides some background.
Money and Life
How are people surviving the GFC and what is working in practice?
In researching this question I found four things that are working stupendously well. They are local time limited currency, community exchange systems, worker take-overs of factories, and the free economy.
Local time limited currency
One of the strangest experiences I had following a long bushwalk (5 days) was handing some cash over a counter and getting stuff in return. It felt unreal. The food I got was real. But after five days immersed in nature the bit of plastic impregnated paper I handed over seem unreal – ephemeral, disconnected. Something someone just made up – because money is just made up. Banks create it out of nothing and so can we.
In the 1930’s German mines and towns were threatened with closure and starvation for lack of available currency. With hyperinflation any currency they did get devalued so quickly it was barely worth getting. Faced with the imminent collapse of their businesses and communities local authorities and companies simply issued their own currency. The currencies they issued were time limited to prevent hoarding and were used as tender for certain goods or within defined communities. Their communities, factories and mines kept going, and public works flourished until local currencies were stamped out by the central bank in the early 1930’s. It is worth reflecting that if the German central bank had encouraged this innovation Hitler might be a footnote to the successful history of the Weimar Republic and WWII in Europe might not have happened (see further here: http://www.guardian.co.uk/commentisfree/2009/jan/20/george-monbiot-recession-currencies).
Well, the Europeans are at it again. In towns across France and Southern Europe local currencies are being issued and are once again rescuing local economies. After all, the productive capacity of those communities hasn’t changed; all that has is the movement of computer code on distant servers representing something that doesn’t exist, owned by people who don’t care, controlled by people who don’t contribute.
Note however that local currencies work best as a compliment to the national currency, and like all currencies, there needs to be a match-up between the amount in circulation and the value of the goods and services traded. For a discussion of local currencies in Europe see here: http://www.cafebabel.co.uk/politics/article/alternative-local-currencies-in-europe-money-must-be-funny.html
For a bit of a clue about where the 'real' currency is going see below:
Community Exchange Systems
A community exchange system is essentially a tally system where goods and services are exchanged by members of the system and tallied on a database accessible to all members. The beauty of this system is that it works entirely outside of the money economy (although some exchanges may be tax liable). This has enormous benefits for people who have skills but little income – retirees, unemployed, and poor people in developing countries – since money is no barrier to participation. The benefit for those on fixed incomes is that they don’t have to earn the money and pay tax on it before spending it in order to buy things. You can just exchange and your money stays in your bank. That frees more money to pay down debt or to invest, or simply survive. The benefits for business are that they can reach a bigger market for their products and services. They are also seen to be good corporate citizens.
There are hundreds of CES setups (also known as LETs) worldwide. I read one estimate of USD 10Billion equivalent in trades but no one really knows. Like local currency these are also complimentary systems but are growing rapidly in reach and scope. Conceptually there is no reason why most domestic commerce could not happen this way. To gain a fuller understanding of the practical workings and philosophy of CES setups I suggest starting with their own websites. The peak one for Australia is here: http://www.communityexchange.net.au/ Note that you can join one or start your own with freeware available here: http://www.gmlets.u-net.com/zips/index.html
Worker take-overs of factories
A factory starved of funds and in debt closes. The workers occupy it, take physical control of the machinery, elect a management group, incorporate a cooperative, and keep working. This has happened in hundreds of factories in the last few years, mostly in Argentina and Brazil, but also in Greece. The thing I love about this (apart from the obvious good things) is that it makes non-sense of the traditional worker/boss, socialist/capitalist divide. You could call it ‘social capitalism’. Make no mistake - these are privately owned commercial enterprises selling products in a competitive market place. The difference is that the workers are making money for themselves and their families, not for the share profits of people in other countries. Anecdotally these arrangements have worked best in small to medium enterprises with local markets, but there is nothing wrong with that! See further: (http://www.solidarityeconomy.net/2012/07/08/argentinas-200-recovered-factories-a-new-global-trend/comment-page-1/#comment-81008/ ).
This is the most unlikely sounding option. There is no real exchange. You join a group. You indicate the kind of stuff you do for free or give away. You do it for free or give it away. Other people do the same for you. That’s it. See further here (http://www.moneylessmanifesto.org/about-the-author/ ) OK the whole world can’t work that way but it is working very well for some things – notably hot showers (for cyclists and backpackers) and homestays. While it attracts a fair amount of derision it is growing in popularity in Britain and Ireland and is making a helpful contribution to combating real poverty. In a way it is what the Amish and countless other communities in the developing world do all the time – it’s just that it is considered radical in industrialised countries.
Doubtless new ways of cooperative commerce will evolve with time.