Interestingly enough, the cooperative currency that most people are familiar with is frequent flyer miles, as mentioned in the previous chapter. Such commercial loyalty currencies are the largest complementary currency system in existence today, the most widespread of which are airline reward programs. American Airlines introduced the first of these programs more than 30 years ago as a simple marketing promotion. There are currently about 92 airlines issuing miles. Increasingly, frequent flyer miles are redeemable for a variety of services besides airline tickets, such as long-distance and mobile phone calls, hotels, cruises, and catalog merchandise. They have developed into a corporate scrip— a private currency issued, in this case, by airlines. In fact, about 54 percent of miles are not earned from flying. Instead, credit cards that offer bonus miles with purchases have become the most popular way to earn frequent flyer credits.
Just as frequent flyer programs are highly successful and used quite seamlessly by the general public, other currencies have been created and are working to enhance the business and/or social aspects of their communities, from local neighborhoods to states. For example, Torekes are operational in a mostly recent immigrant neighborhood in Ghent, Belgium, and the Chiemgauer in the prosperous region of Bavaria in southern Germany. There is a time currency that revitalized the Welsh former mining town of Blaengarw, an international currency called the C3 in Brazil and several other Latin American countries, and last but not least, the grandfather of modern business-to-business systems, the WIR in Switzerland.
Most often, cooperative currencies are either mutual credit systems, such as LETS or TimeBanks, both of which are explored later in this chapter. But the possibilities are unlimited: A garbage-backed currency is thriving in Curitiba, Brazil, while other models link their currency to a national currency such as the regio in the Germanic parts of Europe, the BerkShares in New England, and the Totnes or Brixton pounds in the United Kingdom.
The purpose of these cooperative currencies usually falls into one of two distinct categories. One is for social purposes, where the intention is predominantly to motivate people’s behavior and to meet societal objectives, such as creating a more close-knit community and addressing social isolation. A second purpose is to support local businesses, in which the currency is designed principally to circulate and to meet objectives such as stimulating employment or fostering a campaign to buy local products and services.
LETS—MUTUAL CREDIT
The most frequent cooperative currency system in the world today is LETS, an acronym for “Local Exchange Trading System.” It was invented in the formerly economically stable middle-class town of Courtney in the Comotz Valley near Vancouver, Canada, in the early 1980s when it was enduring a 40 percent local unemployment rate.
“We are a town of about 50,000 people, and the major industry was a defense base, plus the town was a dormitory for timber, mining, fishing, and a bit of tourism at that stage. In 1982, everything stopped. The defense base moved, and the Bank of Canada was running at 14 percent prime, and mortgages were approximately 18 to 20 percent in some cases. I was a sole proprietor business teaching the Alexander technique with a clientele of mostly schoolteachers. And obviously, it’s a very selective market. When the sand ran out of the economy, my business dried up in a matter of months, as it did for many others in our area,” remembers Michael Linton.3
He observed that there were plenty of things to be done and a large, skilled labor force willing and needing to work. Needs went unad-dressed, however, as unemployment persisted. The missing link was money. Without money, the requisite transactions simply could not take place. Linton continues: “The greatest deficiency of conventional money is that for too many, it is simply not available. By its very design, there is only a limited amount of it created. And as conventional money must come from somewhere outside the local community, it inherently doesn’t understand or concern itself with the needs of a particular community.” 4
Consequently, LETS was created to facilitate much-needed trade within circuits in local neighborhoods, villages, and towns.
The LETS system can be used for any number of needs and transactions. For instance, Anne cuts hair, John fixes cars, and Lisa is an organic farmer. Anne and John negotiate the price of a haircut and decide on L15 (15 LETS units) and $5. Anne’s account is credited L15, while John’s is debited L15. With her earned LETS credits, hairdresser Anne negotiates with farmer Lisa to get some organic vegetables for L10. Thus, Lisa’s LETS account is credited L10, and Anne’s is now debited L10. Meanwhile, Lisa’s car now needs a tune-up, and she agrees with the mechanic John on a price of L30 for labor and $15 for parts. At the end of these three interactions, Anne has a net positive balance of L5 (L15 earned giving John a haircut minus L10 spent buying organic produce from Lisa). John has a positive balance of L15 (L30 earned working on Lisa’s car minus L15 spent on the haircut by Anne), and Lisa has a negative balance of L20 (L10 earned by Anne’s purchase minus L30 for the tune-up by John). With a LETS system in place, Anne, John, and Lisa were each able to use their skill sets to offset costs and the scarcity of national currencies to afford certain goods and services.
In contrast to conventional money, a negative balance in LETS is not a problem. Rather, it is an indication of community activity, showing that people have been acquiring goods and services from others in their neighborhood. Members with a negative balance can be called on to offer goods or services in return, further increasing the community’s wealth. Some programs set debt limits to avoid abuses, but generally there is a common understanding that debts will be repaid. For instance, citing the example given here, farmer Lisa will pay back her L20, whether through organic produce sales or by some other means she has to offer.
The LETS system is an example of a mutual credit system, whereby currency is created by a simultaneous credit and debit in a transaction. As a mutual credit system, the LETS’ money supply is self-regulating, since members issue their own currency within the framework of their community. It overcomes the limitations imposed by a scarcity of national currency and, instead, promotes sufficiency by enabling participants to use what is already available within their trading community. It is also customarily transparent, with an open record kept of both credits and debits. This self-regulation and transparency promotes greater trust, and people are held more accountable.
Other advantages of LETS include prompting people to use skills they might not have considered valuable, for example, cooking, driving, Web designing, teaching English, or gardening. It also gives access to services that members may not otherwise be able to afford.
The LETS system is now operating in many different parts of the world. Given the highly decentralized nature of the transactions, nobody has been able to tally an accurate number of exchanges, but its spread around the globe testifies to its success. A partial list of nations in which LETS currently operates includes Argentina, Austria, Belgium, Brazil, Canada, Chile, Colombia, El Salvador, Finland, France, Germany, Hungary, India, Indonesia, Ireland, Israel, Japan, New Zealand, Nigeria, Norway, Poland, South Africa, Switzerland, Thailand, and the United States.
Australia has many communities actively trading in LETS. One interesting application is QuipShare. The currency, called the quip, is the medium of exchange that enables people to pay for the use of a piece of equipment without having to buy it. Think about how often one uses a snake for a blocked sink, a jumper cable, or a blow torch. Usually, household, gardening, and do-it-yourself tools just sit in the shed or a drawer unused.
Through QuipShare, one can locate and borrow items, and on the other side of the transaction, lend out various items. By sharing equipment, more use is made of tools and machinery that might otherwise sit idle. All protocols and agreements between the parties are available on their Web site for downloading. This bright idea started at the weekly Tilba Growers Market in Central Tilba, located in the southeast of New South Wales province, and has now spread to other regions.
TIME DOLLARS—TIME-
BACKED CURRENCY
The time dollars system was created by attorney Edgar Cahn. As a Fulbright scholar, cofounder of the National Legal Services, a speech-writer and counsel to former Attorney General Robert F. Kennedy, and a close associate of Sargent Shriver on the War on Poverty and the Peace Corps, Cahn has dedicated much of his life to those less fortunate than himself. He had the idea for the time dollar program while recuperating from an illness.
“There were two separate forces coming together at the time. It was less a matter of coping with my convalescence, but more of my reaction to feeling useless and helpless. I was getting the care I needed, but the notion that I would spend my life as a recipient of services, even affection, was to me not really being alive. I am about making a difference in other people’s lives,” reflected Cahn.
“Secondly, it was 1980. We had a recession. We had all kinds of people being laid off. I understood that they didn’t like feeling useless any more than I did. My opinion was backed by a larger perception that all the advocacy work that my law school had been doing was winning some battles, but basically we were losing the war on the fundamental issues of equity of society, and redress of injustices. We would be championing people who were simply viewed as victims. And as victims they would be fighting over crumbs. But those people would never be perceived as stakeholders or shareholders in a larger society, unless there was some way to value what they could contribute. And in turn, receive in another way than what the market could provide. To the extent that we continued to allow money and the market to define value and contribution, they would always be viewed as redundant, throwaway people.”5
Cahn devised a cooperative medium of exchange backed by time. The basic unit of account is a time dollar, equivalent to one hour of service, which can be spent for goods and services that are available within a given community. This cooperative currency system allows transactions to occur that would likely not otherwise take place and provides a means by which to acknowledge and honor the contributions and skills of people, matching their offerings with the needs of their community. Everyone’s time is valued the same, a reflection of valuing everyone equally.
Dr. Edgar Cahn addressing the Echo Park TimeBank. Photo credit: Zach Lipp.
“While at the London School of Economics, I soon came to realize that we were involved with an ongoing dialogue about the function of interest rates and how that distorted money. Money’s primary value is its external trading value. Furthermore, the price—the amount of money one is willing to pay—is defined by its value and that value is determined by supply and demand. In order words, if a thing is scarce, it is valuable; if it is abundant, it is cheap. If it is truly abundant, it is dirt cheap or worthless. And that means that every capacity that defined you as a human being and enabled the species to survive and evolve is worthless. We have created a monetary and pricing system that has devalued many fundamental human capacities.” 6
In comparison, a cooperative currency operates very differently. It is created in sufficiency, and by its very design, it is spent into existence while connecting unused resources with unmet needs. This affords the opportunity to honor people in entirely new ways.
Lisa Conlan is CEO of TimeBanks USA, which has a nationwide count of some 286 systems. “The first thing that drew me to time dollars was that I was overseeing a family-run advocacy organization in Rhode Island. So part of the support network is unique in that the families with children with behavioral health issues were helping one another. This type of help touched on child welfare, juvenile justice with kids with high levels of behavioral issues, and mental health needs. Two things struck me, however. One, what would happen if we couldn’t find the funding we needed? And how do we really tap into the families’ energy and creativity to truly support one another? In my search, I stumbled on time dollars in 2007.”7
Using time as a unit of account, the families are able to arrange a variety of services and all-important social events. Conlan continues: “Many of our families were isolated, especially due to concerns about their children’s behavior in group settings, but they felt more relaxed with a bunch of people who have the same situation and outlook. Transportation is another big issue—being able to get rides when people needed them. Also respite, a short break for a caregiver when someone covers for them, is also critical to the families. So we have been actually expanding and supporting families beyond children’s behavioral health across the life span, from children with special needs to adults with developmental disabilities to our elders, in providing their caregivers with respite relief. What’s more is that people who are exchanging that support in the TimeBank, they can also get workforce development skills as a bonus.”
Cahn reports that TimeBanking is spreading throughout the United States and globally like wildfire. “On average, five new time banks have started up in the U.S. every week since the beginning of 2012. They are using our model, which is coproduction. This is a partnership between the monetary economy and the economy of community.”8
TimeBanking in Los Angeles. Everyone earned time credits for working for nonprofits and schools as part of a citywide volunteer day. Here the TimeBank members are helping to fix up people’s properties for the Watts House Project. Photo credit: Autumn Rooney.
Meltem Şendağ and her associate Ayşegül Güzel met at the University of Istanbul in their native Turkey when they were both studying international business. On graduating in 2005, both left their country to gain work experience abroad. Meltem went to Ireland to work for Google, and Ayşegül to Barcelona, Spain, to work as an innovation consultant. While in Barcelona, Ayşegül became acquainted with TimeBanking. In 2010 they returned to Istanbul, and founded, using their own funds, a social TimeBanking network that they named Zumbara. Zumbara uses Web 2.0 design and also integrates the next generation of social media platforms, such as Twitter and Face-book. It’s now a community of 5,000 people offering services to one another.
Going to the heart of the matter, Meltem remarks: “We both want to move from the competitive society, which we both experienced working in the corporate world, to one of cooperation. With our former careers, we would have to live with the values that we do not believe in. Our lives were laid out for us if we were to have stayed on that path. Now, with the TimeBanking community, we are experiencing how it would be if the world was designed for generosity. In this cooperative world now, we are experimenting with the idea that we have what we need if we use what we have by trading services and acts of goodwill, thereby emphasizing the values of time, reciprocity and relationships.” 9
Here are some other examples of time dollars operating across the United States:
• In 27 of Chicago’s lowest-ranking elementary schools, fifth- and sixth-graders (many in special education and/or labeled ADD) earned time credits as tutors of first- and second-graders. The need for special education and remediation went down; test scores and school attendance went up; fighting and truancy went down. More than one school ceased to be on academic probation. While there is nothing new about older kids tutoring younger kids, it has proven to be a successful strategy to encourage more students to engage in such a practice.
• In Oakland, California, the Alameda County Department of Public Health funded a TimeBank in a neighborhood beset by racial violence. African Americans are now teaching English to Hispanics, who in turn are teaching Spanish to their neighbors. Violence has gone down. “We see similar bridging of ethnic, national origin, age, gender, and class differences in New York City, where the Visiting Nurse Service has created a Community Exchange with nearly 3,000 members in Chinatown, Washington Heights, the Lower East Side, and Battery Park; 70 percent were born outside the U.S., 100 percent report that their physical health, mental health, and well-being have improved and their trust for others has increased. In Allentown, Pennsylvania, Latino patients ‘pay it forward’ by serving as medical translators for their doctors; with training, they get certification and are hired by the hospital,” Cahn continues
.10
• In upstate New York, the Youth Advocate program has incorporated a pay-it-forward element for youth on probation or subject to confinement at detention centers. Enrolled in a Red Cross–supervised restorative justice program, they earn credits teaching homeless people to use computers and prepare résumés, working in soup kitchens, and collecting canned goods and toiletries. In Washington, D.C., for the past 10 years, teenagers have earned time credits by serving as jurors in the Time Dollar Youth Court, which hears the cases of peers accused of nonviolent crimes. Offenders may be sentenced to community service, life skills classes, an apology, writing an essay—and duty on the jury. Cahn adds: “Recidivism rates are less than 10 percent. The Urban Institute estimates that the district saves $9,000 for every offender who goes to Youth Court instead of the traditional system.”11
• The National Homecomers Academy enrolls people leaving prison as students on a journey of personal development, learning, and service. Community service includes providing safe passage for youth to get to school through gang territory or helping reduce violence by teenagers in a mixed ownership-tenant housing development. Nationally, recidivism for persons returning from prison is in the 60 to 70 percent range within three years. “To the best of my knowledge no one involved in this TimeBanking program has ever returned to prison,” adds Dr. Cahn proudly.12
Rethinking Money Page 9