Creating local currencies that support the commons

The current crisis is raising fundamental questions about how the way we live and our financial systems threaten our planet and human wellbeing. Alexandra Hayles FRSA explores from the capital of ‘happiness’, the connection between climate change, complementary currencies, the commons regenerated and resilient societies.

February 2020 in Denmark and it is dark, humidity is at 87% and there is a westerly wind of 30 knots. Meanwhile, the winds of change are swirling in our households, leading many people to question some of our social constructs, making new connections between them and redefining their meaning. These include what it means to be middle class, the nature and purpose of our work, how we earn a living and what we are paid. Underpinning a lot of these questions is a broader and deeper recognition that the way we live is threatening our planet and human wellbeing.

Some trends are also changing what we can do. For example, estate agents – amongst other intermediaries – are queuing for artificial intelligence and other new technologies that take their toll. As blockchain adds transparency to transactions, confirming instantaneously the ownership of assets, it renders many jobs that rely on verification unnecessary. This also includes jobs related to bureaucracy and administration; what the US anthropologist, David Graeber, calls bullshit jobs. In a YouGov poll in 2015, 37% of working British adults said their job was not making a meaningful contribution. There are jobs that undermine our home; they are detrimental to the planetary inhabitant’s wellbeing. Jobs that power indiscriminate consumption and speed-up our journey towards overshooting our planetary boundaries.

Societies goals and priorities define the value of the work and that can change rapidly. Covid-19 – at least in the short-term – has drastically changed our priorities. Right now, we can see that the jobs that are deemed as essential are in sectors such as health, food and education, retail and supply chains. The question is whether these priorities will remain. Nevertheless, the basics of our society are suddenly clearly visible and fundamentally essential not just today but tomorrow. At the same time, people around the world have gathered across political and cultural spectrum to act on climate change. Yet, the current pandemic is also exacerbating the impacts of inequality; with calls for action on this in the longer term.

The question now being asked is not just how we recover and the balance between people’s underlying health and the economy; maybe there is no conflict. Maybe it is a question of how we rethink and rebuild the structures we rely on and the systems we live in. One of these is money. The system invests in money for the purpose of money and choices are made to make money.

Take as an example our food industry. Economies are geared to add economic value through the supply chain where processing of foods increases GDP. But low processed foods are more nourishing and emit less CO2. According to the Food and Agriculture Organisation (FAO), highly processed food lacks nourishment: “ultra-processed food intake is consistently associated with both dietary nutrient profiles prone to NCDs [noncommicable diseases], and increased risk of these diseases”. Noncommicable diseases are the leading cause of death globally 71% of all deaths according to WHO. Despite being unhealthy, ultra-processed foods account for over 50% of the UK average household food consumption (Journal for Public Health and Nutrition. 2017). Ultra-processed food consumption also have negative impacts on the environment according to a 2019 Australian study.

Purchasing choices influence where money flows, yet the mechanisms of how money can be multiplied is structural. In the past, money would linger around a bit longer in communities; jumping from one pocket to another in a flow of supporting businesses that employ people. Now it can jump from one personal screen, no longer our pockets, to a company account far away in our pursuit of cheap goods and unlimited choice. Money then runs away to play the grand games of financial investments. In his book of 2018, the British journalist, Nicholas Shaxson found: “A century or more ago, 80% of bank lending went to businesses for genuine investment. Now, less than 4% of financial institutions’ business lending goes to manufacturing; instead, financial institutions are lending mostly to each other, and into housing and commercial real estate.”

Financialisation

The term ‘financialisation’ is sometimes used to describe the development of financial capitalism since the early 1980s, in which debt-to-equity ratios increased and financial services accounted for an increasing share of national income relative to other sectors. The patterns established by the economic system that we all have built is that most households have less money to spend and many will possibly looe it all. The World Inequality Report 2018 states: “In recent decades, income inequality has increased in nearly all countries, but at different speeds.” As we transgress our planetary boundaries and climate change affects our way of living, more people suffer poor living conditions. In the UK coastal areas are affected by floods.

Imagine a world where money is not the aim of life but where the focus is on providing and protecting the 'common good'. Where money, a useful human technology, is a means of transaction to exchange goods and services and managed according to values that support the ability of communities to build resilience. This requires new structures that can support the physical world we live in, the shared assets we all need: ‘the commons’. Elinor Ostrom, the American political economist, referred to the commons as a resource shared by a group of people. This includes natural infrastructure assets, such as land and ocean forests; civic assets, including public education and healthcare; and even culture.

Money based on assets – as opposed to debt – would provide the incentive to strengthen the ‘stock’ of our commons, including jobs that support local commons. This would involve us learning how to become the guardians of those assets that communities value the most, adapting a currency to local needs. Professor Bernard Lietaer, the Belgian engineer and economist who died last year, was an expert on currency systems. He emphasised the importance of establishing flexible, open, adaptive system of currencies. We currently have the technology to support the development of a system that can integrate complex information with local decision-making abilities that is adaptive.

A local commons currency could be based on a local basket of assets decided upon by a community. This could include, for example, natural infrastructure such as biodiversity but also the ‘cultural’ commons such as libraries and museums (physical and online). One could take stock of the commons and give them a rating that reflects the resilience of a community. This rating would determine the amount of currency that could be issued; such an approach could pay for a universal income, for work done in the commons and ideally allow people to pay local taxes.

The currency would include ‘Demurrage’, the inbuilt loss of value of a currency over time, to encourage transactions; just like the Chiemgauer, a regional local currency started in 2003 in Bavaria, Germany, which now operates a network across the country and allows the currency to lose value over time. The inbuilt incentive is to encourage ‘circulation’ through transactions.

Monetary transactions based on the assets that build the resilience of communities could inspire our purchasing choices in support of the ‘commons’ and become commons ‘literate’, learning and supporting what inspires and nourishes. Our current global confinement might lead us to appreciate the joy of living, looking forward to the sea, walking in the park, enjoying fresh air and help us re-evaluate priorities and re-design new structures for society. As a Danish saying goes: The best way to predict the future is to invent it.

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Alexandra Hayles is an artist, sailor and economist living in Copenhagen.