Reviews
Ingredients of Transition: Strategies for Plugging the Leaks
Transition Culture Blog - November 8, 2010
...As Peter North puts it in ‘Local Money’, “local currency models are still in their infancy, more like Wright’s biplane than a Boeing 747”. Transition groups have been experimenting with local currencies and have generated a very valuable body of experience and knowledge. The Transition experiments stand on the shoulders of, and have learned a great deal from, previous attempts at local currencies, such as Ithaca Hours and the currencies that emerged during the economic collapse in Argentina[2]. The idea is straightforward. A printed currency that can only be spent in a given community by necessity can only circulate locally and is prevented from passing through the holes in our metaphorical leaky bucket.
...
Reflecting on the Transition local currency schemes set up this far, Peter North argues that they appear to work well among ‘green’ and ‘lifestyle’ businesses where alternative minded customers are happy to accept them in their change. For Molly Scott Cato, one of the originators of the Stroud Pound, “making people believe that change is possible is the first step towards change. Local currencies do that like nothing else”. As North also notes, all of the Transition currencies launched thus far focus on consumption, none have yet cracked influencing local production of local goods for local consumption.
Transition currencies, he argues, need to start “moving from being a means of circulation between existing local businesses to tools for building greater local resilience by stimulating new local production”. For Cato, while so far local currencies haven’t been proven to stimulate local production, they are “a fantastic educational tool because they demonstrate this weakness with local supply (and therefore lack of resilience) so clearly”. For her, the next step is for local currencies to be run in partnership with local food production systems.
This idea of backing local currencies with something tangible, such as food or Shann Turnbull’s idea of energy backed currencies, such as ‘Kilowatt Dollars’, could prove important in the evolution of these currencies. Another important consideration is the fact that so few people regularly use cash in their daily transactions as we increasingly favour cards and electronic transfers of money (which, it could be argued, is in itself a form of exchange which affords a community less control over its affairs than a printed currency does). Transition Network and nef are looking to develop an electronic currency system, initially to be piloted in Bristol and in Lambeth in London, which may offer another interesting way forward.
Read the whole article here...
Energy Bulletin Review
By Joanne Poyourow
August 24, 2010
Local currencies are, in effect, "mindful money." - Rob Hopkins, from the Foreward
I was very excited to get a copy of Peter North’s new book, Local Money. Here in Los Angeles our local Transition group just piloted a LETSystem, so the financial and currency discussions were fresh in my mind. I wish I had Peter North’s book back in January when we were trying to figure all these things out!
Local Money: How To Make it Happen in Your Community takes a panoramic view of noteworthy local money from around the world (including some historical systems) and provides a vignette of each one. There are also vignettes of LETS and time banking, even though these aren’t technically money.
Along the way, Local Money teaches about the lack of resilience in our national currency, regardless of whether that be pound, dollar, or peso. The book gives a basic introduction to “what is money” – helpful since most of us really don’t understand this. North briefly touches on alternative financial institutions, and –oh yes-- he does mention how to set up a local currency.
Money and finance are complex topics, and I hope this review serves to illustrate the panorama of issues North manages to cover. But I’m not going to beat around the bush: Local Money is a tough read. First of all, it can be emotionally challenging to read about money. And it’s particularly challenging to read about the bald fact that the monetary systems we have always known are going to need some significant supplementation in order to gain any sort of resilience. (deep breath.)
Secondly, between the British-isms and the deep financial terminology, even though I have a degree in Business Economics, the reading was quite challenging. The book could have used less colloquialisms plus a good glossary. I’ll try to supply some basics so that you can get through this article:
- National currency – the one you’ve always known. In the U.S. it’s dollars and cents; in Peter North’s England it’s the British pound and shillings and pence.
- Alternative currency / complementary currency / local currency – a secondary system designed to parallel the national currency, set up for a specific reason (and Transition isn’t the only reason people set these up). Examples: Totnes pound, BerkShare.
- Money – physical things you hold in your hand that are widely embraced as units of exchange. Examples: a paper dollar bill, a copper penny. Thus barter, LETS, and time banking aren’t money, even though North doesn’t make that very clear.
- Barter – simple exchange of goods or services between two people without the use of money.
- LETS and time banking – basically, sophisticated barter. Two somewhat-similar systems designed to add greater, community-wide diversity to bartering selections. In time banking the trades are based on time or hours, and in LETSystems the unit of exchange is defined by the community.
- Local finance -- a broad term that might include local bonds, community investment vehicles, microcredit, land trusts, LETSystems, time banks, and local money.
When you get serious about setting up a local currency, there is a whole new language to learn, including fiat, demurrage, security features, circulation, mutual credit, backed currencies, and more. You’ll have to weigh each of these characteristics as you design your local system.
Peter North’s Local Money is very useful in that it shows how each of seven or so different alternative currency systems wrestled with these issues, how they succeeded and how they fell short. In his words, “It’s worth remembering that our local currency models are still in their infancy, more like Wright’s biplane than a Boeing 747.” In other words, there is no perfect model out there at this point in time for you to copy. But as North points out ...
The [example] of Argentina shows that millions of people can be bounced through the most acute financial crisis with an alternative currency that was flawed, but met short-term emergency needs.
HOW TO
If you are considering setting up an alternative currency for your community, definitely get a copy of Local Money. But then read it out of order.
North begins with a great introduction to money, its shortfalls, and localization (he uses the British spellings). Then he gets sidetracked, and plunges into his detailed analysis of specific local currencies, one by one.
For the excellent bullet-point list “Decide why you want to set up a complementary currency,” you’ll have to skip back to page 192, chapter 15. The How-To chapter is frustratingly brief (a mere 7 sparse pages, or 3% of the book), which kind of calls into question why the book was subtitled as it was. But Local Money does touch on many of the things you should consider when designing your system. Once you understand that list of Why points, I think you are better equipped to wade through the specific examples.
One serious shortcoming of the How To section is that it downplays the cost of setting up a local money system. From what I have seen in my own research, establishing a physical local currency and doing it well – getting a network of businesses involved, printing security features, publicity, etc. -- can run $10,000 to $25,000, no small sum. North never reveals what the three launches of Totnes’ currency cost. The few cost figures he does mention are not particularly well identified (£5,000 for the Lewes pound or approximately $8,500, sounds like for printing alone; and £6,000 to "produce" the Brixton pound, approximately $10,200). And he hardly bothers to caution his readers that entree into a Local Money project is diving head-first into the most complex and most expensive end of the local-finance spectrum of solutions.
I'll highlight his small (buried) caution:
Just because Totnes and Lewes have decided to run a paper currency, that is not necessarily a good reason for following them. One of the other models of currency, or a new one entirely, might be better.
The “Decide why you want to set up a complementary currency” section can help clarify which model might be the best place for your local community to start.
From our Los Angeles experience, there are many local-finance things a community could do to encourage localization which are far easier and far less expensive to set up. Some of them may already be happening in your community and your Transition initiative can simply piggyback and help promote their use. (more on these other sharing solutions later).
DETAILED ANALYSIS OF LOCAL CURRENCIES
North’s list of local currencies is far from exhaustive, but he does seem to hit the major ones that you’ll hear referred to as outstanding examples. He throws in a few that will probably be unknown to American readers, such as Argentina’s Redes de Trueque of 1997-2003 (literally translates to “barter network” although it did not fit the definition of barter), and German regiogeld (“regional money”).
As said previously, North is quite candid in his review of the successes and mistakes of each local currency.
At the end of each vignette, North presents a graphic “scorecard” which rates that local system for whether it circulates widely or locally; its effectiveness for business exchange versus a community exchange; its “moneyness,” or how closely it looks and works like the national money the public is familiar with. He also includes a “hard/soft” variable; his application of the terms isn’t making a lot of sense to me no matter how many times I read it. I would have liked to see a variable on how much it costs to set up that particular type of system, perhaps some scorecard on circulation so we could know if the example was a big system or a small one, and how difficult it is to set up and administer.
One thing that is lacking across all of the alt currency vignettes is a response to the critique I have heard launched at the Totnes pound – its lack of demographic penetration. North only briefly alludes to the concept of buy-in, which is a significant issue with regards to alt currencies (and his brief mention is buried in the regiogeld section). Buy-in means you have to purchase your way into the system – thus you have to already have money in order to enter the game. You have to take your British pounds to the exchange counter and turn them in, in order to buy Totnes pounds. That means if you are poor or broke and don’t have the disposable income to dedicate to this experimental system, you can’t take part; you are excluded and the alt currency becomes a private club. A system that requires buy-in will, at the inception, limit itself to the affluent, thus perpetuating some of the diversity issues for which the Transition movement has been criticized.
By contrast, a system without buy-in, such as time banking or LETS, means anyone with an hour to spare – regardless of whether they’re a ditch-digger or a doctor – has the means to participate in the system. If your local community is quite diverse economically or has high unemployment, buy-in is, in my opinion, a very important issue to consider as you make your decisions about which type of system will be your initial foray into local-financial vehicles.
DEEPENING THE LOCAL FINANCIAL INFRASTRUCTURE
In one particularly brilliant passage, North shares
We can see a LETS scheme or time bank being used for local production and exchange of things we can produce at home or in a local community ... More complex goods would be produced by local businesses, perhaps using a local or regional scrip ... or a business-to-business exchange. More local production could be developed using local currency loans, or through a local bank ... Special-purpose currencies could finance local food production and Community Supported Agriculture, and local power generation ...
He lays out a brilliant vision of multiplicity – that in the future a given community might not have just ONE of these local-finance systems, but several. Thus the question for you, as you read Local Money, becomes “For my local community, where is it best to start? Which one should we put in place FIRST?” I think North gives you a lot of what you should think about in order to answer those questions. Ultimately, only your local team will know the answer that is right for your community.
In that vein, let me add my own two cents, which is that while North gives a good overview of the most sophisticated portions of the local-finance spectrum, he is writing about local money, not community finances in general. The scope of his book does not include the low-hanging-fruit -- the easy to set up, free to establish vehicles which hold enormous community-building potential. Group purchasing, garden sharing, carpooling, tool libraries, seed swaps, barter fairs and more – these fill in the most intimate, colorful portion of the spectrum in the vision of a multifaceted local financial infrastructure.
For these, you’ll need to turn to another excellent book, The Sharing Solution by Emily Doskow and Janelle Orsi. The Sharing Solution covers topics that Local Money does not, and vice versa. Taken together they create a toolkit to launch your local community toward a complimentary and much more resilient way of handling their everyday transactions.
RESOURCES
- Local Money is available in the U.S. through Chelsea Green Publishers (They’re the only publisher I know of that has a Transition booklist)
THE PROBLEMS
NON-MONETARY COMMUNITY-BASED FINANCES
Joanne Poyourow is a blogger at Transition US. She is the initiator who brought Transition ideas to many areas of Los Angeles. She is active on the core team of Transition Los Angeles, and she cofounded its predecessor organization, the Environmental Change-Makers. Before her involvement in the Transition movement, Joanne was a Certified Public Accountant in public practice, specializing in taxation, multistate business, and expatriate taxation.
Read the original review here...
A Review of ‘Local Money’ by Peter North
Here is a review of ‘Local Money’ by Jeremy over at MakeWealthHistory. The book can be ordered here. It was also mentioned recently by Lucy Siegle in the Observer.
“I’ve really enjoyed the last three books to come out of the Transition Books stable, so I was pleased to see the latest instalment was out: Local Money – how to make it happen in your community. It’s another big square book, following Local Food, and it’s got the same practical, inspiring, can-do approach. This time, it’s all about creating local money networks.
The Transition Towns movement is all about resilience – preparing towns for the challenges of climate change and peak oil. What’s money got to do with it, you may well ask, but money is a valuable tool in relocalisation. Our current money system doesn’t serve us very well. It is beyond our control, in the hands of bankers and politicians and people we might hesitate to trust. It flows in vast quantities to people who don’t seem to do very much to earn it, while others work hard for very little. It is endlessly available for some tasks, and in short supply for other very necessary things. Most of all, it has an unpleasant habit of vanishing out of the places where we live and ending up in London and New York. Local money is a way of re-imagining money as the tool it should be, rather than the master it often becomes.
Read the entire review...
View Cart
