Confronting capitalism through alternative currencies
By Aurora Rojer
The world-renowned economist Bernard Lietaer states, “Money is an agreement within a community to use something as a medium of exchange.” In the United States, we use the dollar. It’s not backed by anything physical; we went off of the gold standard in 1971. So if money is just a medium of exchange that we’ve all agreed to accept, who gets to create it? The bills in our wallets are printed by the federal government. But in our modern economy, printed currency accounts for only three percent of the money in circulation. The rest is digital, represented by numbers in bank accounts. The majority of the money in our economy, as explained by the Bank of England Quarterly Bulletin (another fiat currency) from 2014, is created by commercial banks making loans. And as we know, when banks make loans, they demand the money back, with interest.
Meanwhile, we have a huge wealth gap, as shown by NYU economist Edward Wolff, who calculated exactly how the U.S.’s total wealth was shared by the population: The top one percent owns 35 percent of the U.S.’s net worth, while the bottom 40 percent of the population has a negative net worth, meaning they are in debt. Further, the money shared by the lower 99 percent is then spent in chains and multinationals, filtering its way back up to the top, where it accumulates. Money is created by the wealthiest people in our country for their benefit, while 40 percent of our population has less than nothing, in terms of wealth. But it does not have to be this way.
Once upon a time there lived a lovely little town called Ithaca. In it, residents joined together to resist the oppression of the almighty Dollar. Thousands of people bought hand-knit mittens and organic tea blends from their neighbors, using banknotes featuring Lick Brook, bioregional bugs, and neighborhood children, printed on hemp-based paper.
“We watched Federal dollars come to town, shake a few hands, then leave to buy rainforest lumber and fight wars. Ithaca’s HOURS, by contrast, stay in our region to help us hire each other,” explains Paul Glover, the founder of Ithaca HOURS, an alternative currency created in 1991. “While dollars make us increasingly dependent on transnational corporations and bankers, HOURS reinforce community trading and expand commerce which is more accountable to our concerns for ecology and social justice.” He describes how it works: “the Ithaca HOUR is Ithaca’s $10.00 bill, because ten dollars per hour is the average of wages/salaries in Tompkins County. These HOUR notes, in five denominations, buy plumbing, carpentry, electrical work, roofing, nursing, chiropractic, child care, car and bike repair, food, eyeglasses, firewood, gifts, and thousands of other goods and services.” They were also accepted by restaurants, the bowling alley, Cayuga Medical Center, GreenStar, 55 venders at the Farmers’ Market, and even the local Credit Union for payment of mortgage and loan fees.
HOURS promoted local shopping, kept money in the community, helped to start new businesses and assist nonprofits by making zero-interest loans, and of course increased community ties. Any average Ithacan could pay $10 to buy in and would receive four HOURS, equivalent to $40. From there, they could be listed in the HOURS newspaper for any goods or services they wanted to offer, and could shop around for anything they needed as well. Twice a month, all members were invited to “bargain potluck” dinners where all of the important decisions, such as how much money to print, who to give loans to, and more, were decided. Anyone who accepted HOURS could vote, making it a truly community-run organization. In this way, money was created by the community, for the community, instead of by bankers and politicians far away.
As idyllic as the Ithaca HOURS were, they also took a lot of upkeep; after 17 years of running the show, Glover left Ithaca for Philadelphia in 2008 (where he continues to do awesome activist work—check out his new project: Logan Orchard and Market (LOAM)). The directory of goods and services offered for HOURS shrank and the businesses that stayed on started to accumulate more HOURS than they could spend. Whereas earlier Glover would intervene and help the businesses figure out how to spend their HOURS, without him they lay dormant. People slowly moved back to federal currency and HOURS faded into memory.
In 2013, Scott Morris came to town with a new technology and a social justice-flavored plan. Morris was an employee at Qoin, a “pioneering social enterprise based in Amsterdam, providing Consulting, IT and Managed services on all aspects of setting up community currencies,” according to their website. His original idea was to sell this software/service to Ithaca HOURS, but they were uninterested. It was then that he decided to start his own alternative currency, Ithacash. Singlebrook.com quotes him saying, “I believe that starting fresh will allow for more innovation and more impact in the community, and ultimately, it will be the community that decides what is or is not valuable.”
Ithacash seems at first sight like a natural outgrowth of HOURS. Newer technology, newer terminology, but same basic principle, right? Well, even from first glance, it’s clear that these systems are not entirely aligned. The name “Ithaca HOUR” is based on the idea that an hour of work should be paid for in a fair living wage (which in 1991 was $10). Ithacash’s Ithaca Dollar, in contrast, is written as i$, by which it aligns itself with Apple and the American Dollar, both wildly oppressive capitalist enterprises. Aesthetically, with its bright colors, clipart, and abnormal layout, Ithaca HOURS’s website screams “grassroots community organizing.” The i$ website, in contrast, is sleek. With its toned-down color palette of green, white, and steel-grey, it looks like a PowerPoint presentation in an AEM lecture.
But do these differences really matter? Why should we care if our alternative currency brands itself as a grassroots community organization or a tech-savvy start-up? The answer lies in the intent behind these brands. Community organizing exists to help the community. Whether or not it does that is of course dependent on the organization, but Ithaca HOURS existed for the sole purpose of making our “10 square miles surrounded by reality” a better place. Start-ups, in contrast, exist to make money. Sure, they will wax poetic about saving the world one app at a time, but if they are not a nonprofit, they are a for-profit.
And i$ is no exception. According an article in The Ithacan, “Morris said the biggest problem with Ithaca HOURS is that it does not have a strong enough revenue-generating system to support a full-time employee. ‘People who work for currency systems can’t be expected to work for free,’ Morris said. Ithacash will generate revenue with membership fees from participating businesses.” Of course people who are working full-time for a cause deserve compensation. For that reason, nonprofits can and do pay their employees. But for Morris, that is not enough. On their website, Ithacash states proudly that instead of being a nonprofit, they are a “‘benefit corporation’—a social enterprise which puts priority on the value it produces for the people and the planet right alongside its need to make a profit on the services it provides.” Some might question whether making a profit is really a need in an alternative currency, and if making a profit and helping others are goals that can be aligned.
The answer lies in the theory behind benefit corporations. In what sounds like a quote from a free-market dystopian nightmare, the B Corps website states, “Collectively, B Corps lead a growing global movement of people using business as a force for good™. Through the power of their collective voice, one day all companies will compete to be best for the world™, and society will enjoy a more shared and durable prosperity for all,” (emphasis not added). That’s right. Not only do they claim that more market competition will lead to a better life for us all, but they actually trademarked that phrase. And Morris is entirely in agreement with this mission statement. Jeff Stein of The Ithaca Voice quotes him saying “I’m not trying to demonize [capitalistic society]—all we’re going to do is put an alternative money system on the menu and let the free market work its magic.” Morris believes in the power of the free market. He thinks more capitalism will lead to a better society. i$ does not want to merely make a living for whoever is running it, it wants to make a profit. To create a new currency without denouncing the ills of capitalism is to create a second oppressive structure to go atop the first. Instead of banks skimming off the top, Morris would like to do the honors. i$ may be just another cog in the capitalist machine, but the deeper into neoliberal nonsense our society sinks, the more radical the alternatives can become. Take, for example, a third alternative currency: the Puma, from Seville, Spain.
Like the HOURS, the Puma’s stated goals include increasing communal bonds, mutual empowerment, supporting local businesses and professionals, and taking care of the environment; the goods and services provided are, for the most part, ecological or artisanal, and exchanged locally. But what makes them even more radical than the HOUR is that the system functions without any physical exchange of currency (with the exception of a monthly market). The Puma is based on the Local Exchange Trading System (LETS): money is created as “mutual credit.” Every person in the Puma network has a cartilla, a little card where they record their transactions. Say person A is selling homemade jam, and every jar costs five Pumas. Person B buys the jam for five Pumas. Thus person A’s balance is +five and Person B’s balance is -five. Having a negative balance is no problem for Person B, because she is a yoga instructor, and knows that she’ll be making Pumas in the near future. Anyone can carry a negative balance up to 100 Pumas. In this way, money is spent into existence, and every transaction creates equal credit and debit, so that the overall balance is always zero. Thus the Puma (and other LETS economies) do not depend on the judgment and actions of a central authority.
This may seem like a technicality, but it is actually a huge deal. The Puma is not backed by the Euro. You do not exchange your “real” money for “funny” money, but rather create the funny money as you go. This allows for the exchange of goods and services in a community where there is little official currency. The Puma was created in 2011, when the global economy was in a shambles. Unemployment in Spain was 23 percent, and as high as 50 percent for its workers under 25, according to El Pais, Spain’s leading newspaper. But just because people are unemployed or underemployed, doesn’t mean they don’t have the same wants and needs. Having an alternative currency allows people in the community to exchange their goods and services even when Euros are scarce. Many local businesses accept the Puma, so people can buy food, books, and clothing, all from the money they made giving creative writing lessons or selling handicrafts to other unemployed people. And although according to El Pais, unemployment has since fallen, it is still over 20 percent, and higher for youths, meaning the Puma is just as necessary now as it was in 2011.
The Puma is more than a grassroots organization—it’s downright anarchist. It is independent from the Euro and—this goes without saying—the founders are not trying to rip you off. No one is in charge, and everyone works for the common good. The Puma is part of a larger community project: the Casa Pumarejo. Housed in a palace from the 18th century, this community center is now owned by the city but run entirely by neighborhood volunteers. They host classes, activities, parties, markets, and demonstrations. The center also houses a number of community organizations, including a support group for victims of domestic abuse, an environmental collective that seeks to counter the ills of consumerism, a communal library, and more. The alternative currency is just one of many radical ways in which this neighborhood is strengthening its personal ties and loosening its bonds to the dominant capitalist society.
Money is a social construct, so why shouldn’t it be used for the benefit of society? The i$ claims to be working for the public good, but if it’s out to make a profit, it will be taking resources away from the community for its own gain. We can do better. Indeed, we have done better, with the HOUR. I suspect i$ will not last long; our residents are smart enough to see through BCorp bullshit. And maybe when it fails, we can follow the LETS structure, like the Puma and at least 232 other currencies in Spain and the rest of Europe. The important thing to remember is that our broken system may be what we’ve got, but that doesn’t mean that there is no alternative.