At a time when national currencies are proving vulnerable to ill-considered government policies and fluctuations in the global economy, how can regions establish some degree of economic sovereignty? Local currencies provide a tool for local economic stability in otherwise unstable economic times.
In its early stages BerkShares, a local currency issued in the Berkshire region of Massachusetts, is a simple buy-local program. However it is designed to evolve into an effective citizen tool to foster new import-replacement businesses and grow the local economy in a way that is responsible to the people and landscape of the region. At its full potential as an independent locally-based medium of exchange, BerkShares will calculate exchanges according to a non-inflationary local standard of value.
The Drucker Institute recently named the Schumacher Center as a finalist for the Peter Ducker Award for Non-Profit Innovation for BerkShares. Your tax-deductible contribution to the Schumacher Center will help support the continued evolution of the BerkShares program in its research and development phase.
The following application to the Buckminster Fuller Institute details the vision of the program.
BerkShares Local Currency Project Application Narrative: Urgent Issue of our Time
E. F. Schumacher argued that if we are to achieve a sustainable economic system (what he called an economy of permanence), then the goods consumed in a region should by and large be produced in that region. With shorter supply lines and fewer intermediaries between the producer and consumer, fuel use is less and carbon dioxide emissions decrease. Individuals engaged in their local economy may rely on more trips downtown but on fewer trips across oceans and countries.
Consumers are more likely to tolerate poor labor conditions and environmental degradation when they are made invisible by the distancing effect of the global economy. Incorporating production into the local economy helps to illuminate poor practices and their impact on the community. Ultimately we learn that content workers, sustainable farming practices, and a healthy environment lead to increased productivity and decreased true costs to the consumer.
Accepting the urgent need to change production patterns from global to local, the question becomes, How can concerned citizens help create conditions that foster more self-reliant local economies in a manner that is socially, environmentally, and culturally responsible?
In her book Cities and the Wealth of Nations, Jane Jacobs suggests local currencies as an elegant tool for rebuilding regional economies in a sustainable way. She believed that currencies circulating only in a defined region encourage import-replacing businesses, which in turn create new jobs, foster technological innovation, retain manufacturing skills, and further regional capital.
BerkShares is the local currency developed by the Schumacher Center for the southern Berkshire region of Massachusetts. The notes were first issued in September of 2006 in cooperation with BerkShares, Inc., a non-profit membership organization. The program was designed to create consumer awareness about the consequences of spending practices, to support local businesses, to facilitate the development of new productive capabilities in the local economy, and to serve as a model for other regions.
BerkShares have transformed the way the Berkshire community thinks about money. Over 1.2 million BerkShares have been issued from eleven branch offices of five local banks in its first year of operation. Residents purchase BerkShares at ninety cents on the dollar from one of the exchange banks. Participating businesses accept BerkShares at full dollar value, offering a 10 percent discount incentive to consumers for trading locally. Businesses can then recirculate BerkShares at full value with other businesses, or if more BerkShares are received than can be used, BerkShares may be exchanged back to federal dollars at 90 cents for each BerkShare. Beautifully designed and printed, the currency honors local historic figures and features landscapes, streetscapes, and gardenscapes by local painters. It reflects the culture and values of its place. Residents are proud to
handle and display the notes.
Once in circulation BerkShares provide much-needed support to the local businesses of the region. BerkShares have helped to redevelop relationships between producers, merchants, service providers, and consumers that had been lost to the continued growth of the global economy. People are returning to Main Street and experiencing new conversations about the important role money plays in determining economic policy. They are seeing how BerkShares spent at local businesses circulate through the community, creating value beyond the initial point of purchase.
For both businesses and customers BerkShares provide a talking point about supporting independent business, the importance of local economies, and the possibility of regaining economic sovereignty.
Research and Development
BerkShares currency is in its research and development phase. In the southern Berkshire region with a population of only 15,000, nearly three hundred prominent businesses are formally signed on to accept BerkShares and many more do so informally. Growth in use is steady. Still BerkShares is only at stage twenty of fifty stages in building a truly independent local currency that will be an engine for local sustainable development.
Future plans include identifying new import-replacement business ventures, making loans in BerkShares, fostering greater philanthropy in BerkShares, and eventually creating a local standard for the currency independent of fluctuations in the federal dollar. For example, Buckminster Fuller envisioned a kilowatt hour currency backed by renewable energy sources. These energy sources‹inherently local in scale‹produce a necessary commodity with a relatively fixed value. In this way the value of the currency would be directly tied to the ability of the community to expand local production of renewable energy, creating value within the community for other productive purposes.
Recognizing the importance of innovative sustainable development models, The New York Times, The London Times, ABC World News, CBS, BBC, Reuters, French TV1, NTV (of Moscow), Finnish TV, and Yahoo News have all carried prominent stories on BerkShares. The Schumacher Center has been asked to provide consulting to other communities including the Mayor’s office in Newark, the Martha’s Vineyard Commission, and nonprofit groups in Baltimore, New Orleans, Rhode Island, Houston, Utah, and several California towns.
This international and national attention to the model led the Drucker Institute to name Schumacher Center as a finalist for the Peter Drucker Award for Non-Profit Innovation for its BerkShares program.
All the evolution of the program must occur organically with support of the local community behind it. BerkShares board of directors is deliberately staging this growth.
Our still locally owned banks have proven invaluable partners in the success of the BerkShares program, providing, among other things, eleven brick and mortar offices where the public can exchange federal dollars for BerkShares. Banks are taking the lead in developing BerkShare checking accounts, debit cards, and ATM. These innovations will increase the velocity of BerkShares trade between customers and businesses and from businesses to business. Increased circulation of the currency between businesses is a vital step in the creation of local enterprises producing for local consumption. Our business and banking partners are encouraging BerkShares to expand outside its present area of operations to serve all of Berkshire County requiring additional staffing and community outreach.
The Schumacher Center is seeking additional grant support to develop this model program to its full potential during this research and design phase of implementation. We welcome your contribution to this important effort.
Local currencies represent a trim-tab approach to enacting Jane Jacobs’s and Fritz Schumacher’s vision for sustainable economies. BerkShares are the leading application of the concept. When BerkShares are used it is assured that the highest percentage of each dollar spent will remain circulating in the community. This increase in community capital creates a positive environment for new entrepreneurial ventures. New businesses sprouting from this generation of wealth begin replacing the imported goods that were originally drawing money and resources from the region. Instead of relying on the products of a vulnerable global economy, transported over long distances and using fossil fuels, the region gains greater control over its own economic destiny.
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BerkShares is a research and development project of the Schumacher Center, a 501c3 educational organization, working in cooperation with BerkShares, Inc. Donations to the Schumacher Center are tax-deductible.