Sacred Economics: Money, Gift, and Society in the Age of Transition (39 page)

A sacred way of life connects us to the people and places around us. That means that a sacred economy must be in large part a local economy, in which we have multidimensional, personal relationships with the land and people who meet our needs, and whose needs we meet in turn. Otherwise we suffer a divide between the social and the material, in which our social relationships lack substance, and in which our economic relationships are impersonal. It is inevitable, when we purchase generic services from distant strangers and standardized products from distant lands, that we feel a loss of connection, an alienation, and a sense that we, like the things we buy, are replaceable. To the extent that what we provide is standard and impersonal, we
are
replaceable.

One of the effects of a homogeneous national or global currency is the homogenization of culture. As the money realm expands to include more and more of material and social life, our materials and relationships become standardized commodities, the same everywhere that money can reach. Nowhere is this more evident than in the United States, the “landscape of the exit ramp,” where the same stores, same restaurants, and same architecture dominate every locale. And everywhere we are the same employees and consumers, living in thrall to distant economic powers. Local distinctiveness, autonomy, and economic opportunity disappear. Business profits are sucked away to distant corporate headquarters and ultimately to Wall Street. Instead of vibrant, economically diverse communities with their own local character, we have a monoculture where every place is the same.

The money system described so far in this book removes many of the barriers to local economic sovereignty and weakens the pressure toward globalization. Here are three ways:

1. Much global trade is only economic because of hidden social and ecological subsidies, which would be eliminated by the internalization of costs.
   
2. Commons-backed currency relocalizes economic power since many of the commons are local or bioregional in nature.
   
3. Negative-interest money removes the pressure to maintain growth through the conversion of the unique, local relationships and natural wealth of other lands into commodities. Ultimately, local difference stands in the way of commoditization and therefore of growth.
   

However, because the habits and infrastructure of local economy have largely disappeared, additional measures are necessary
to rebuild community-based, place-based economies. This chapter discusses one of these measures: the localization of money itself.

I am not advocating the abandonment of global trade. While many things that should be local, such as food, have become global, there are many realms of collective human creativity that by their nature require a global coordination of labor. Moreover, economists’ doctrines of efficiency of scale and comparative advantage (that some places and cultures are better suited to certain kinds of production) are not entirely without basis.
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In general, though, sacred economics will induce the local sourcing of many commodities that are shipped across oceans and continents today.

While the changes described thus far make globalization less economic, my affinity for local economy is not primarily motivated by economic logic: the maximization of some measurable quantum of well-being. It comes rather from a longing for community. The threads of community are of two types: gift and story, warp and woof. In short, a strong community weaves together social and economic ties. The people we depend on, and who depend on us, are the same people whom we know and who know us. It is just that simple. The same goes for the broader community of all beings:
the land and its ecosystems. Lacking community, we suffer a painful deficit of being, for it is these multidimensional ties that define who we are and expand us beyond the miserable, lonely, separate ego, the “bubble of psychology in a prison of flesh.” We yearn to restore our lost connections, our lost being.

Local economy reverses the millennia-long trend toward the homogenization of culture and connects us to the people and places we see every day. More than fulfilling the longing for community, it also benefits society and the environment. Not only does it entail less energy consumption, it also makes the social and ecological consequences of economic decisions harder to ignore. Today, indeed, it is quite easy to pretend that our economic decisions have no consequences. The things we use with little thought are part and parcel of birth defects in Chinese cities, strip-mining of West Virginia mountains, and the desertification of previously lush regions. But these effects are distant, reaching us only as pixels on a TV screen. Quite naturally, we live as if they weren’t happening. If the people who grow your food and make your stuff live in Haiti or China or Pakistan, then their well-being or suffering is invisible. If they live nearby, you can still exploit them perhaps, but you can’t easily avoid knowing it. Local economy faces us with the consequences of our actions, tightening the circle of karma and fostering a sense of self that includes others. Local economy is therefore aligned with the deep spiritual shift of our time.

Local currency is often proposed as a way to revitalize local economies, insulate them from global market forces, and re-create community. There are at present thousands of them around the world,
unofficial currencies issued by groups of ordinary citizens. In theory, local currency offers several economic benefits:

1. It encourages people to shop at local businesses since only they are willing to accept and use local currency.
   
2. It increases the local money supply, which increases demand and stimulates local production and employment.
   
3. It keeps money within the community since it cannot be extracted to distant corporations.
   
4. It allows individuals and businesses to bypass conventional credit channels and thus offers an alternative source of capital for which the interest (if any) will circulate back to the community.
   
5. It facilitates the circulation of goods and services among people who may not have sufficient access to national currency but who may have time and skills to offer.
   

Say you want to buy a hamburger and have local currency. You might buy it at a locally owned restaurant rather than McDonald’s, even if the price is higher, because McDonald’s won’t accept the local currency. What does the hamburger joint do with the local currency then? Well, it can’t buy beef from the national distribution chain with it, but maybe it could buy beef from a local farmer, or pay part of employees’ wages with it. And what would the farmer or the employees do with it? Buy things from other local suppliers, including people who eat at the hamburger joint. This is how local currencies strengthen local economies.

Unfortunately, the practical results of local currency initiatives have been disappointing. A common pattern is that the currency is launched with much enthusiasm and continues to circulate as long as the founders promote it. But eventually they get burned out, the novelty factor wears off, and people stop using it. According to one study,
as of 2005 some 80 percent of all local currencies launched since 1991 were defunct.
²
Another common pattern is that local money accumulates in the hands of the few local retailers that are willing to accept it and who cannot find ways to spend it. Finally, even where local currencies have been relatively successful, they comprise an insignificant portion of total economic activity.
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If we are to realize the theoretical advantages of local currencies, it is imperative that we acknowledge that they aren’t working today and figure out why. After all, they
did
work quite well in the nineteenth and early twentieth century. In the nineteenth, paper money consisted of “bank notes” issued by local banks and accepted only in the economic region where the banks were located. As recently as the 1930s, local currencies were so successful that central governments actively suppressed them. What has happened since then to make them (with a few notable exceptions) the plaything of social idealists?
⁴

Several factors are at work. The first is that the economy has become so delocalized that it is hard to keep local currency circulating. In the words of one shopkeeper in Germany, speaking of one of the more successful local currencies, the Chiemgauer, “We do accept it, but we don’t know what to do with it.” His acceptance was reluctant—understandable when few of his suppliers are local. Local
currencies are viable only to the extent that producers are making goods and services that are consumed locally by people who themselves produce locally consumed goods and services. In the 1930s, economies were still highly local. People had goods and services to exchange but no money to use as a medium due to bank failures and hoarding. Today, the situation is quite different. Most people provide services that only make sense in a vast, often global, coordination of labor. Local currency cannot facilitate a supply and production chain that involves millions of people in thousands of places.

However, while some products, such as electronics, are inherently global in the nature of their manufacture, many products could be produced locally but are nonetheless part of global production systems. This implies a considerable untapped potential for local currencies. Unfortunately, much of the infrastructure of local production and distribution has disappeared. Local currencies can be part of the rebuilding of that infrastructure, but by themselves they are not enough. If nothing else changes, they are consigned to a very marginal, usually subcritical role. As things stand, local money is not very useful to us because we import nearly everything we use from outside our region.

Why would anyone be willing to accept local currency to begin with? One reason is idealism, but if we are to rely on idealism, then why not just apply that idealism to the existing currency and use it to “buy local”? Why bother with a complementary currency? What we want is to align our ideals with what is practical, not to bear them in opposition. Besides, the recent history of complementary currencies suggests that idealism is not enough, that they stagnate and disappear when that initial idealistic enthusiasm wears off. The question, then, is how local currencies might be aligned with economic self-interest.

We have to see local currency within a larger economic context. If a region has its own currency, yet is so integrated into the global commodity economy that nearly all its production is sold abroad and most of its consumption is purchased from abroad, then it might as well not even bother with its own currency. Under such conditions, the currency must be freely convertible (since economic circulation goes to and from the global market), making it into little more than a proxy currency for the dominant global unit of account (presently the U.S. dollar). Such a place is little more than a colony, and indeed that is what most places have become, especially in the United States, where towns have lost their local character and serve only as production and consumption centers for the global economy. For a region, city, or country to have a robust currency of its own, it must have a robust economy of its own as well. Key to building one is what economist Jane Jacobs called “import replacement”—the sourcing of components and services locally, and the development of the associated skills and infrastructure. Otherwise, a place is subject to the whims of global finance and dependent on commodity prices over which it has no control.

In “developing” countries that still have strong local economic infrastructure, local currencies help to preserve that infrastructure and insulate them from global financial predation. But in highly developed economies dominated by a national or supranational currency, anyone seeking to establish a local currency faces something of a catch-22. Local currencies only work if there is a local system of locally circulating production for which it can mediate exchange. Yet for such a system to grow and withstand the pressures of the global commodity economy, it needs a protected local currency. Import replacement cannot happen if local producers must compete with unrestricted, cheap imports. That is why such an economy can only manifest as
an intentional choice motivated by a new Story of the People that generates shared vision, values, and goals. In other words, it will happen only through some form of democracy, popular action, and a government that responds to the will of its people rather than the will of international banks, investors, and the bond market. These forces are always ready to offer again the old story of the people: competition, growth, separation, conquest, and ascent.

Several historical examples bear this point out. Compare the disastrous results in countries that have “opened their markets” to “free trade” in recent years with the earlier success of Taiwan, South Korea, and Japan, who intentionally fostered local industries with import replacement, tariffs, and industrial planning, while limiting the convertibility of their currencies. I am most familiar with the case of Taiwan, having translated in the 1990s a multivolume history of the development of its small and medium enterprises.
⁵
In the 1950s and 60s, Taiwan placed stringent conditions on foreign investment. Foreign-invested factories were required to purchase a high percentage of components locally, encouraging the development of domestic industry. In Japan, South Korea, and Singapore as well, formal and informal mechanisms gave domestic enterprises a privileged status.
⁶
At the same time, they imposed currency controls and restrictions on the repatriation of profits. Foreign investors could freely convert their currencies into won, Taiwan dollars, and
so on, but they couldn’t convert it back again as freely. Today, these countries have a large middle class, world-class industrial plants, and tremendous overall wealth, despite starting in great poverty after World War II.