Let’s save our town.

Ted Trainer.

Social Work, University of N.S.W.,

www.arts.unsw.edu.au/tsw/ email F.Trainer@unsw.edu.au

April 2001

The situation.

In virtually all countries rural regions are suffering serious economic decline. In Australia many farmers are forced to leave the land every year and many towns are losing businesses and population. The global trend is towards greater dependence of regional economies on national and international economies Large central corporations are becoming more able to undercut the prices of small local firms and take their business. Towns and rural regions are increasingly dependent on importing the goods and services they need from large and centralised suppliers. Governments are trying to reduce their spending and therefore their ability and willingness to support rural communities is declining.

Above all it is an era in which there is a strong tendency to let market forces settle all social and economic issues and it usually does not suit corporations to locate production in many small rural regions. Production is increasingly being located in very low wage areas of the Third World.

All countries and regions are now highly dependent on their capacity to export. All must import many of the goods and services they need and therefore they are obliged to compete against each other to win scarce export markets. This makes everyone highly vulnerable to swings in commodity prices and world financial markets. The recent Asian meltdown graphically illustrates how the real living standards of a nation’s people can be devastated overnight by sudden changes in the international economy.

Globalisation will surely make the situation worse in coming years. There is a rapid trend towards a single integrated world economy in which there is great freedom for giant corporations and banks to locate production in those few areas which will enable their incomes to be maximised. This means development focuses on the regions most favourable to the corporations while the rest are either ignored or treated primarily as sources of cheap resources. Because the corporations are global they will buy resources only if the prices are competitive compared with those of the lowest suppliers elsewhere in the world.

The Australian government follows all others in the mindless pretence that the key to solving the unemployment problem is to provide more education for unemployed people, when everyone knows that the jobs simply aren’t there. In recent years in Australia there have been about 25 job seekers for every vacancy. Getting all unemployed people to graduate with Ph.D.s would not change the situation at all.

When questions of sustainability are introduced the future becomes even more problematic. Rapid deterioration is taking place in the planet’s biological and physical resources and in the capacity of its ecosystems to cope with the impact of industrial-consumer society. It is highly unlikely that resource availability and environmental impacts will enable present levels of production and consumption to be kept up for long, and it is clearly impossible for rich world “living standards” to be extended to all people in the world. There is an extensive literature arguing that we are entering an era of scarcity and difficulties, especially regarding energy supply, which will have serious consequences for many regions now highly dependent on their capacity to export commodities. (Trainer, 1996a, 1998.)

There is no point pleading for central governments to give more assistance to rural areas because the present situation has emerged over decades in which governments have reflected the judgments of the global economy that few people are needed in rural areas, and that one must not “interfere with market forces.” The cities have known for a long time that there is great suffering in rural areas. They are not suddenly going to begin agreeing to redistribution in favour of rural regions.

The present global economy obviously does not provide for all people. Even in the richest countries the Genuine Progress Indicator research is showing that the quality of life is falling for most people. Many are becoming aware of the need to think about new economic arrangements.

There is therefore considerable reason to expect that the future for most rural regions will see increased neglect and decline, so long as conventional economic strategies are adhered to.

The common response.

Conventional economic wisdom offers three basic strategies for solving the problem. The first is to increase export earnings, either by finding new export items, value-adding, or becoming more efficient in the production of existing items. While some towns and regions do succeed at this from time to time, it is obviously not going to work for all. It is in effect only a recommendation to work harder to become one of the few winners in the competitive export game that all cannot win. If your town produces more efficiently and wins more export sales, some other town loses. There are limited markets and it is not possible for all to prosper by supplying them.

Australia’s future in this competition for exports is quite uncertain given the handicaps set by distance and therefore high transport costs and by wages that are about 70 times those in some Asian countries, yet the official strategy is that we must become so clever and productive that we will be among the winners in the struggle for international trade. Little attention is given to the fact that it is logically impossible for all to get rich by trading because the volume of exports equals the volume of imports; if one country makes a large surplus from trade then some others must have deficits on their trading accounts. Again it is a serious mistake for struggling rural regions to assume that more vigorous export effort is the way for all rural areas to solve their problems.

It is true that the agricultural exports of Europe and the US are subsidised and Australian producers could increase exports if these subsidies were reduced. But that would only put European and US farmers out of business. Again the global economy does not need us all and it is not satisfactory simply to determine to be among the few winners.

The second conventional solution is to persuade a transnational corporation or the government to set up a branch plant or office in your town. Obviously relative few towns can hope for salvation this way. More importantly they will probably get the branch plant only if they offer the corporation more favourable terms than any other town in the world. There are many examples where towns have had to offer a corporation bonanza conditions only to see it relocate somewhere else when the tax holiday expires.

The third strategy conventional economists offer is tourism. Again some regions can prosper this way, but it is not possible for all to do so. There is a limited tourist demand and not all regions are very attractive to tourists. In addition tourism is ecologically problematic, as it is a luxury trade involving high use of non-renewable resources and often significantly damaging the ecological and social conditions of the host region.

Some towns and regions do survive and even prosper through these strategies, but all cannot. The fact is that we are witnessing long term decline in rural towns and regions and there is little reason to think that the conventional economic recommendations will reverse the general trend in coming years.

Conventional economic theory is especially inadequate in those many instances where rural people have become dependent on ecologically problematic activities such as woodchipping. Usually the only solution it can offer is to save a forest by closing down industries and dumping people into unemployment . Little or no attention is given to the possibility of local people setting up small enterprises that might enable them to provide for themselves more of the goods and services they must currently import with earnings from the export of logs.

The alternative perspective.

The argument below is not that the conventional strategies should be completely abandoned. All regions and towns require export income and attention must be always be given to more effective ways of achieving it. However too little attention has been given to the potential for reducing export dependence by reducing the need for imports, i.e., by becoming more self-sufficient. The concern should be to work out how to build more self-sufficient local economies in which the existing and often idle people, talent, labour and capital can be organised to produce more of the basic goods and services that people need, thereby making them more independent of and secure from the outside economy. There is considerable unused scope for communities to take more control over their own economic fate, to provide jobs and to enrich the quality of life of local people, through focusing not on increasing export income but on how their capacity to provide for themselves can be organised.

This general approach is now being explored in a number of areas around the world. The Rocky Mountains Institute based in Colorado has an Economic Renewal Program which has helped many towns this way. A few ventures of this kind are underway in Australia but we urgently need effort to develop a tried and tested strategy for Australian conditions.

This exploring of alternative economic strategies can be seen as part of the Global Ecovillage movement which has emerged in the last decade or so. This movement is based on the conclusion that industrial-consumer society is not sustainable and that more self-sufficient and cooperative social systems must be developed. (For detailed discussion see Trainer, 1995a or 1995b.) Some of the most impressive experimental ventures within the movement are located in Australia. However these mostly involve specially designed small rural communities and this document is concerned with the somewhat different task of working with existing settlements. Richard Douthwaite’s recent book Short Circuit (Dublin, Lilliput, 1996) details the argument that rural regions have no hope unless they turn in this direction. The book’s almost 400 pages discuss many examples of alternative regional economic development.

Many country towns are doing the sorts of things suggested below. However the importance of attempting to increase local self-sufficiency has not been fully recognised.

Two things are obvious and tragic in any economically depressed town.

  • The town will have much unused productive capacity i.e., many unemployed and underemployed people and many firms producing below potential, while at the same time there is great unmet need. Most people in the town are going without things they should be able to have.
  • The town is highly dependent on imports. It will be paying out considerable sums of money to import goods and services which it could be producing for itself, giving jobs to its people.

It is important to recognise what a large volume of potential economic activity these two factors represent. If all people were able to produce what they need for satisfactory living standards town economic turnover might be one-third higher than it is. In addition, imported goods probably constitute more than half of the goods consumed, so if only a small proportion of these were replaced by local production this would make a huge difference to unemployment. Thus the volume of economic activity going on is probably only about half of the possible and desirable level.

Therefore the basic task in economic renewal is to work out how best to set up new firms that will give people jobs producing for themselves and for the town many items that they are going without and/or importing.

The Alternative Strategy

Form a Community Development Cooperative.

A group must come together and form itself into a Community Development Cooperative (hereafter referred to as CDC.) Ideally the CDC will eventually develop into a mechanism for the participatory self-government of the town or suburb, but at first it might involve only a handful of individuals seeking to explore some humble possibilities.

There must be a (small and participatory) central agency of some kind to identify, harness, coordinate and focus the locality’s resources of skill, energy , experience and good will. The spectacular success story of Mondragon in Spain is instructive here. Over several decades many prosperous high-tech industries have been developed in that region, through a highly cooperative approach which has been able to focus all necessary local resources on evaluating and supporting any new proposed venture. Thus the CDC is in a position to identify needs, research possibilities and get new firms off to a much better start than if individuals have to struggle in isolation.

The CDC’s best strategy is to begin with self-help activities for unemployed and disadvantaged people, but it must not be thought of as an agency that is primarily concerned to help unemployed or low income people who are cut off from the mainstream economy of the town or suburb. It should be seen as an organisation working on the economic renewal of the region and therefore in time harnessing the talents and energy of the whole region for its benefit. The CDC’s educational campaigns must endeavour to make this clear. For example although the main beneficiaries from setting up an alternative currency (below)will be people who have little normal money, it will also benefit existing shopkeepers considerably because it will make possible many sales which at present do not take place.

Set up a community garden and workshop.

The first major task the CDC should take on is to set up a community garden and workshop. The aim should not be the usual one of enabling individuals to hobby garden private plots. It should be to establish a cooperative “firm” organised and run by the CDC, especially to “employ” low income receivers in the production of food and other items for their own use. People other than low income receivers could and should be involved, but at first the strategy is primarily about enabling those sidelined by the normal economy to become economically active again. It is absurd that in any town or suburb many people are forced to endure idleness and boredom when they could be working collectively to meet many of their own needs. The CDC must organise this. It must work out what it makes sense for low income people to cooperatively plant or produce. The first concern would be to produce things to distribute among contributors for immediate consumption, but sale of surpluses would generate some cash income.

A garden is the most obviously workable project to begin with, but if possible a simple workshop should be set up at the same time, for instance to enable repair of furniture and appliances for use by participants.

The CDC must then continue to look for areas in which cooperative production could be organised. A very promising early possibility would be bread baking. Once or twice a week a cooperative working bee might produce most of the bread etc the group needs, again selling some to outsiders for cash. Another early possibility would be the repair of furniture, bicycles and appliances. The workshop could become a shop where surpluses are for sale. Scavenging from the locality, especially on council waste collection days, will provide furniture, appliances, bicycle parts, toys to be repaired and materials for use in the workshop. Other possible areas of activity would be house repair and maintenance, nursery production, herbs, poultry, honey, preserves, toys, firewood, slippers and sandals, hats, bags and baskets.

In some cases the workshops and sales outlets can be located at the local garbage tip. Vast quantities of valuable items and materials go into tips so special efforts should be made to arrange with councils for our CDC to set up a recycling operation there. The CDC would also become known as a firm to contact to get odd jobs done.

Later the CDC would look for more complex fields in which it could organise productive activity, such as fast growing trees for fuel wood, aquaculture, house repairing, insulation, recycling and the “gleaning” of local surplus fruit from private back yards.

The time inputs of work by individuals would be recorded so that produce and earnings could be distributed accordingly. This would enable contributions from regular and occasional participants. (At this stage a new currency could be introduced for these and other payments; see below.) These activities would of course also provide important intangible benefits, such as the experience of community and worthwhile activity. The involvement of local people who are not on low incomes would be important, especially gardeners, handymen and retired people. Ideally the garden and workshop would become a lively community centre with information, recycling, and meeting and leisure functions. Specific times in the week should be set when all would try to gather at the site for the working bees, followed by a meal , discussions and social activities.

Establish a local currency, such as a LETSystem.

Contributions to the garden would be paid in a new currency issued by the CDC. This might basically be a LETSystem, although in the beginning payment for work in the garden might have to take the form of credits recorded which some weeks later entitled contributors to a share of the produce their labour helped to grow, or construct. LETSystems are now functioning in many regions and ideally the LETS coordinators would redefine themselves as CDCs, thereby considerably enlarging their vision and the scope of their activities. Alternatively a CDC could work closely with a local LETS, becoming one of the “firms” trading in the existing LETS currency and organising many more activities that will involve LETS transactions.

The CDC would encourage and assist participants in its gardens and workshops, and others in the locality, to begin more producing and trading with each other in LETS currency. It is necessary here to go into the theory of alternative currencies a little.

The major initial task for the CDC is to enable trade between those many people who are presently unable to produce earn and purchase. This cannot be done unless these people acquire money. The normal economy will not enable them to acquire much money because it does not need them as workers. As a result large numbers of people are forced to remain idle when they need things and when at the same time they have among them the time and talent to produce many of those things...because they have no money with which to pay each other. Our solution to this absurd situation is simply to “print” our own money! The LETSystem meets this need elegantly (although what seems to be a better alternative currency system will be recommended later.)

LETS enables people with low cash incomes to trade with each other simply by notifying the central recording agency what amount one party has agreed to be credited for a sale or work done and the other has agreed to have recorded as a reduction in his or her account. The person who has accumulated the credit can then spend it by buying something from another member of the system. Thus many people who have no normal money can trade with each other, paying simply by recording the value of the transactions. You can purchase things before you have earned the money, but obviously this incurs a debt which you must pay off later by working for or selling something to someone else. More than 2000 LETSystems have been established around the world, some with several hundred members.

LETS makes clear the way we should regard money, i.e., mainly as something which enables us to keep track of what we owe and are owed as a result of our trading. It is ridiculous that we allow the absence of a device for doing this to contribute to mass depression and unemployment. That is as if we had a perfect bus system and many people who wanted to travel and could pay but nothing was happening because we didn’t have any bus tickets. If that’s the problem then we should just create something that will do the job.

However it is most important to recognise that an alternative currency like LETS is far from all that is required for regional economic renewal. A LETSystem on its own will make little difference to a local economy. Unfortunately this is not well understood within alternative economic circles. LETS has been unable to become a significant economic force. Indeed LETS transactions rarely make up more than about 5% of the economic activity of the average participant, let alone of the region. (Douthwaite, 1996, p. 76.) Why?

The main problem participants in a LETSystem experience is the difficulty of finding goods or services to buy with their LETS credits, and of finding items they can produce and sell to earn credits. The problem in other words is that participants in general can’t produce many of the things they would like to buy, i.e., the problem is the lack of firms. LETS leaves individuals to look for something they as an individual might be able to sell. Its participants are often people without many skills. The system is not very effective in enabling the formation of productive entities such as a local bakery in which many people with few skills might be able to work and earn satisfactorily as employees. This sets the most important task that the CDC must take on, i.e., the facilitation and at times the establishment of new businesses that will provide jobs and goods. The garden and workshop were parts of the CDC’s first cooperative “firm”. In time some of these firms can be leased to particular families or cooperatives.

Connecting with the normal/old economy; stimulating the town’s internal economy.

So far the discussion has only been about organising low-income and unemployed people to begin producing for themselves some of the things they need, either collectively via the CDC’s gardens and other enterprises or as individuals or in small private firms, and enabling trade between them via LETS or some other new currency. Thus we have created a new sector of economic activity involving some of the many people who previously were relatively poor and unable to work. However there are not that many important items that the people in this new sector can produce for themselves. For example they can’t realistically produce radios for themselves. Thus the next step must be to enable people in this new sector to trade with the normal/old firms that exist within the locality. These firms are selling many goods low income people want but can’t produce for themselves and can’t purchase because they have little “normal” money.

The question then is how can the new and the old economic sectors be connected, so that a) people with low normal money incomes can use new money to purchase from normal/old firms, and b) normal firms can increase their sales and income, by starting to sell to people who previously could not purchase from them. This is not possible unless new money can circulate between the new and old sectors. In other words people in the new money sector can’t buy from old sector firms unless those firms can accept new money as payment for what they sell to new sector people, and old sector firms can’t accept new money unless they can then use the money to buy things. The crucial difficulty is enabling old firms to exchange the new money they take in for something they need.

Yes old sector firms might use the new money to trade among themselves for a while. For example, the restaurant might accept new LETS money from some people in exchange for meals they buy, and then use some of this money to buy some table cloths from another old firm willing to accept it, but at some point it must be possible for the new money to flow back to the new sector from which it came, in payment for something from that sector. Otherwise it will just pile up in the old sector as people in the new sector spend it there on purchases from the old sector firms. (More accurately people in old sector firms will not accept it as payment if they don’t see how they can use it to buy anything they need.)

Clearly people with new money can’t go on buying things from the old firms unless the people in the new money sector are able to produce and sell as much to the old sector as they buy from it. In other words the group of people with little old money can only go on buying meals from old sector restaurants and associated firms, if those restaurants can spend the new money they are paid for meals on the purchase of things produced by the group of people who only have new money.

This is the most important problem the CDC must grapple with. It must study the situation and work out what things the new sector as a whole can start providing to the old sector restaurants etc., and it must think out what new “firms” it has set up to do this.

When the new town economy is eventually functioning well the main thing that the old sector restaurants and other firms will be happy to purchase from the new sector will be labour. People on low old money incomes will be able to pay for their meals from the old restaurants with wages paid to them (in new money) for working in the restaurants. Unfortunately however we can’t expect this to start happening automatically when we first introduce the new money. This is because although those restaurants and firms usually desperately need more customers and more income they very definitely do not need more workers. They are typically underemployed and could supply many more meals before they would need to take on new workers. So the CDC must break this log jam by looking for things the restaurants would want to start buying from the new sector immediately. In the case of restaurants the best answer is likely to be vegetables from the CDC’s cooperative garden (which we would sell to the restaurant for new money thus enabling it to accept payment for meals in new the money.) For some other firms it could be the supply of some material inputs to production that we can acquire via waste recycling, for instance by finding unused outputs or organising retrieval from local waste tips.

The new sector does not have to find something to supply to every firm in the old sector wishing to start using new money. The table cloth supplier in the town can accept new money when selling tablecloths to the restaurant, and use it to pay for a meal there, while not selling anything to new sector people. Thus the new money can circulate among old firms for some time, but it must eventually be able to circulate back to the new sector, and it can only do this as payment for something supplied from the new sector to an old firm. So a few old firms could constitute a narrow channel through which new money flows between new and old sectors, just as a mine is sometimes the channel through which town export earnings of normal money enter a mining town’s economy.

The importance of this general point about circulation must be stressed. The economic renewal of the region does not depend much on the introduction of a new currency, although that is essential. Merely setting up a LETS or a new paper currency will not automatically lead to a significant volume of new economic activity or new jobs for unemployed people. The crucial needs are for new firms in which previously unemployed people can get jobs and incomes, a) producing items they need and b) producing items that can be sold from the new to the old sector, enabling purchase of goods from the old sector. All this will not happen automatically just because low income people now have new money. These processes have to be organised, opportunities will probably be difficult to find, and the CDC is the agency which must find and organise them.

Obviously the CDC would try to avoid setting up a new firm that would compete with a normal/old local firm. The purpose is to help to ensure that all in the locality who want work have it, so there is no point giving work to some by taking it from others.

Old firms take note.

It is in the interests of the old firms to join in and start using new money, because this will enable them to greatly increase their sales and their real incomes. The CDC must make this clear to existing firms. It is especially important that those firms should not see the new sector or the new money as a threat, which sometimes they do. The CDC’s primary goal is to enable more economic activity by local people previously excluded from trading, so it is not interested in taking business from any local firm that is already providing goods and jobs to townspeople. It must explain to old firms that the purpose is to enable them to increase their trade with people who previously were unable to buy from them, but this cannot be done unless old firms start accepting (some) new money for the goods they sell.

Adding on.

What we are doing here is adding on a new sector of economic activity that involves the people previously blocked from working and purchasing. But to repeat, this new sector cannot come into existence unless a) a new currency is created because those people do not have old money, b) new firms are organised or actually set up by the CDC because you can’t expect isolated low income individuals to set up firms, c) the new money can flow back from the old sector to the new sector as payment for goods and services, which means the new sector must find things it can sell to the old sector, and d) the CDC works hard at facilitating and enabling all this, especially at asking the old firms what inputs into their production the new sector might be able to sell to them.

The foregoing paragraphs have dealt with the most important short term concerns in local economic renewal. The CDC’s first task is to get the garden and the workshop going mostly for the immediate and direct benefit of those excluded from the normal economy. Its second and major task is to facilitate and organise trade between the new and the old sectors, so that goods and new money can flow from each to the other. Many other tasks must subsequently be taken up before the region will have reached the required form.

Organise town working bees.

After getting the gardens etc going, the CDC should organise voluntary neighbourhood or town working bees, perhaps occasional at first but eventually occurring at set times. They should be followed by a get together, communal meal and entertainment of some kind. Working bees can be powerful devices for achieving desirable town development and for building community solidarity. In no time valuable and highly visible town improvements can be achieved, including community workshops, public works such as halls, windmills and swimming pools, “edible landscapes” and other commons. Imagine what your neighbourhood might be like now if each second Saturday afternoon for the past year there had been a voluntary working bee building things that would enrich the area.

At first tasks for working bees should be carefully chosen to increase local economic self-sufficiency, rather than to beautify or clean up or do charitable works. In time the focus can widen but at first the top priority should be assisting the new firms and cooperatives to set up, especially by helping to build the premises for new small firms, the market places, commons and gardens. Some of these can then become CDC property bringing in a rental income. Keep in mind that building can be carried out at very low cost if earth is used and designs are kept simple.

A most important goal of the working bees is to build and maintain local commons, i.,e., the many public or communally owned and controlled facilities, devices, buildings, ponds, mills, orchards, woodlots, herb beds, bamboo clumps, clay pits etc that all can have access to for food, materials and leisure. Committees must be established to coordinate the maintenance of these resources, not necessarily to do the work but to let us know when a community working bee is required. Commons can greatly increase solidarity and local economic self-sufficiency, especially by making the area leisure-rich.

In the early stages of the venture working bees are also valuable educational devices. Even if only a few attend the activity can be a highly visible demonstration of aspects of the new way, especially when that work is going into projects that will benefit the community. Signs should be put up and time taken to chat with people passing by. Reports and announcements regarding the next working bee should go into local papers and shop windows.

The market day

Establish a market day to sell CDC produce and products, and so that many people who do not operate firms or work full time for wages can gain income by selling items they produce in small volume through home gardens, craft activity or family businesses. Avoid the sale of unimportant items, trinkets, luxuries and goods imported to the town. Focus mostly on the sale of basic necessities, locally produced, such as food, clothing, toys, furniture, recycled items etc. In other words it should be a producers market, not a traders market, although there is a place for people who bring in and make available basic goods not produced locally. The CDC’s market day committee should decide who can participate. (Difficult cases to be settled by a full town meeting!)

Replacing imports to the town or suburb.

In addition to stimulating the town or suburb’s internal economy by creating the new sector and integrating it with the old the CDC must take on the import replacement problem. The proportion of the town’s consumption that is met by imported goods is typically very high, possibly in the region of 80%. Production somewhere else of goods to be imported represents jobs that are presently not located in the town but which might be, and it means that money is flowing out of the town.

One of the CDC’s most important later tasks is to work out ways of reducing the town’s imports and increasing its economic self-sufficiency and thereby transferring much economic activity from distant locations to within the town. It will have to study the import situation, e.g., by surveying what townspeople are purchasing in order to identify the items the town is most likely to be able to produce. Food is the most obvious item. Another is fire wood, as a replacement for imported coal, oil, gas and electricity. Much money will be flowing out of the town to pay for heating energy and a considerable fraction of this might be eliminated by switching to wood fires and by insulating houses. The CDC must explore how this can best be done and what is necessary to make it happen. Are there existing firms that might be able to replace some imports given particular assistance? Should the CDC itself set up an enterprise to do the job, e.g., to plant fast growing trees and cut them into fire wood? Can we find products local firms could produce competitively in comparison with importers or must we always persuade local people to pay higher than supermarket prices in order to support the town?

The more import replacing enterprises the CDC can set up and operate in new money the greater will be the capacity of the new sector to sell to the old sector of the local economy, thereby increasing the capacity of people with new money to purchase from the old sector firms. Given the significance of that bottleneck it is very important for the CDC to search for import replacing activities some of its participants could take on.

If it were paying normal wages the CDC would be unlikely to produce these import-replacing items as dollar-cheaply as the importing supermarkets can sell them -- that’s why the supermarkets have taken the business in the first place. In most cases the CDC must try to take those sales through a) campaigns to persuade the town that it is better to pay more for these items locally produced, and b) reducing the price below the level that an ordinary firm would charge, by working somewhat harder for somewhat lower pay.

It is important to recognise that this is the basic condition and cost of having jobs and saving the town. Distant corporations can produce more cheaply than we can. We cannot survive unless we work somewhat harder and accept somewhat less income. However it is much better to have to work harder or longer hours, at for example producing food or furniture, compared with people working in a city factory for normal wages, than to have no job at all. That’s the inescapable trade-off.

The conventional economist is happy to condemn to the scrap heap any individual or region which cannot survive in competition against all others in the global economy, including people prepared to work for $1 per day in the Third World. This is justified in terms of “”efficiency”; it is acceptable and proper to the conventional economist that if you can’t produce an item more cheaply than someone else then you are not allowed to produce it or to earn. No one is permitted to plod along at a comfortable pace and no region is allowed to provide for itself in its own “inefficient” way. All must compete with and survive against the most lean and mean producers in the world, or be killed off. Against this we have to assert that we are going to preserve and continue our way of life in our region regardless of what conventional economists think and despite the fact that others can produce more “efficiently” than we can, but we realise that to do it we might have to work somewhat harder and pay more than others to produce and buy the things we need.

However the CDC has some important advantages over the importing firms. Firstly it does not have to pay dividends or profits, and it can build premises through voluntary town working bees. It should have access to credit on favourable terms from the town bank and as a major town institution it has many combined resources to apply to organisation and publicity compared with a single importing firm functioning largely in the interests of outsiders.

It will of course be important for the CDC to work hard at increasing the willingness of townspeople to buy the locally produced goods rather than imports. People must recognise that buying locally produced goods usually involves paying a higher price. If they focus only on minimising their personal expenditure then they will not support local producers. Therefore the task here is to reinforce the consciousness that will motivate people to pay more in order to enable others in the community to have reasonable incomes and in order to sustain the town. Although most rural people are well aware of this the CDC should devote considerable effort to maintaining and increasing this willingness.

The CDC is in the best position to establish import replacing firms because, as in Mondragon, it can harness and focus the town’s resources to research and evaluate possibilities, assist with the establishment of premises and stock, give managerial advice and encourage townspeople to buy from new firms. These are ”business incubator” functions. Some of the assistance, including construction of premises, could be organised via the regular town improvement working bees. Above all a CDC will be more able than any other individual or agency to arrange access to the necessary capital.

Some of these import replacing ventures are likely to become quite viable businesses which the CDC could then lease to families or cooperatives, thereby retaining ownership and final control, while benefiting from these sources of income.

There will be a powerful incentive coming from use of the new currency for shops within the existing old money sector to switch to or add locally produced items. This is because the many people who will only have the new currency can't pay the normal money that must be paid for imported goods.

Reducing the need for money in the first place.

The CDC must constantly focus attention on the importance of living simply, making things yourself, home gardening, repairing and re-using. The fewer goods people consume the less that the town will have to import or provide. The more simple their demands the more likely they can be met from local resources. The more we do without or make for ourselves the less money we need to earn in order to buy things. Every dollar we can cut from our expenditure the less the town needs to export to pay for our lifestyle, and the less we have to work to earn money. Moving towards materially simpler lifestyles can make a very big difference to a household’s economic prospects without reducing the quality of life. So the CDC should encourage simpler lifestyles and more household self-sufficiency, for example by spreading homecraft knowledge to do with gardening, preserving, repairing, knitting, sewing and making things. One of the CDC’s goals must be to reduce buying as a source of personal satisfaction and increase the extent to which people gain enjoyment and leisure opportunities from the household, community activities and local landscape.

The CDC could develop craft groups to increase home production of many items for use within the home. It might organise classes, skill sharing, display days (no prizes!), local sources of materials for pottery, basket making, woodwork, sandal making, weaving, leatherwork, blacksmithing, etc., and the listing of skilled people willing to give advice or run classes. The CDC could develop and make available information on gardening, repairing, and how to cut household costs, including recipes for nutritious but cheap meals mainly using plants that grow well locally.

Leisure, entertainment, celebrations, festivals and culture.

Another committee within the CDC should focus on the possibilities for providing local and cheap entertainment, especially including regular concerts, dances, visiting artists, craft and produce shows, art galleries, picnic days and festivals. For example can we form a drama club, a comedy group, a choir, a gym display troupe? After the Saturday morning market we might establish an afternoon working bee followed by a town meeting, games, evening meal, party and performances of some sort? What regular celebrations, rituals and festivals can be organised? Can we get a group to work on the local history, museum, culture and folklore? How might the town centre be made into a more convivial space that will facilitate informal meeting, discussion and leisure activities?

Capital; Form a town bank (or credit union).

In general little capital should be needed to get the new local economy going because the main enterprises are mostly humble and labour-intensive and do not need elaborate premises or expensive stock. It is important not to approach normal banks for capital if at all possible (because they might make you pay back $3 for every $1 you borrow!) Thought should be given to unorthodox ways of raising capital, e.g., by “pre-selling” meal or swim vouchers long before the restaurant or the swimming pool is built.

The CDC can organise campaigns to accumulate voluntary donations of capital for particular development projects that are important for the town. It can also operate voluntary taxation schemes. (In a sensible world most of the normal tax revenue would be collected locally and spent locally.) Some communities have low or zero interest town development accounts into which those who are willing and able deposit some of their savings because they wish to support desirable local development. Note how those developments can proceed even if only a small number of people support them; it is usually not the case that nothing worthwhile can be done unless all agree.

The town or region should at some stage establish its own bank or credit union. Normal banks take our savings and lend them to corporations far away. Our town bank should have as one of its rules that the savings of local people will only be lent for projects within the region and that top priority will go to borrowers who intend to develop the town in desirable ways. This is what happens in Maleny’s town bank (credit union). We must recognise that this means depositors will probably be subsidising town development. The bank which gives low or zero interest loans to worthwhile ventures and does not make the highest returns on all loans will probably not be able to offer to its depositors interest rates as high as they could get from banks that are only concerned with making as much money as possible. Again this is a price we must be willing to pay in order to make sure that (some of) our savings go into developments that will improve our town.

There is at present considerable interest within Australia in establishing banks to replace normal banks that are leaving town. Unfortunately this will not achieve much if the new banks follow conventional lending patterns. To continue to lend to ventures following the old strategies (export more vigorously, seek more tourists etc.) is to continue the development strategy that led to the decline of the town and the departure of the bank in the first place. Little will be achieved just by substituting our bank for the old one unless this brings with it a new lending and development philosophy, i.e., a recognition that local savings must be directed primarily at the development of local economic-self sufficiency and not at promoting export industries.

Taking control of the region.

In the long term the goal is for the people of the town or suburb to have taken over control of most of the social, economic and cultural activities occurring in the region, via mechanisms that are highly participatory, open and democratic. For ecological reasons and for reasons of economic security, in a sustainable society almost all of the economic decisions that affect you will be made fairly close to where you live. Some important functions might still remain for state governments to carry out, but many important issues will be decided right down at the town or suburban and even at the neighbourhood level.

The core institutions here will be voluntary committees, town meetings, direct votes on issues, and especially informal public discussion in everyday situations. In a sound self-governing community the fundamental political processes take place in cafes, kitchens, town squares and bowls clubs, because this is where the issues can be debated and thought about until the best solution comes to be generally recognised. The chances of a chosen policy working out well depend on how content everyone is with it. Consensus and commitment are best achieved through a slow and sometimes clumsy process of formal and informal consideration in which the real decision making work is done long before the meeting when the vote is taken. So politics will again become part of everyday life, as was the case in Ancient Greece. Ideally the CDC will in time develop these agencies and mechanisms of town self-government.

Moving from a market to a gift economy.

In a satisfactory society there would be much less emphasis put on economic affairs than there is in our present society. The production of all the things we need for a high quality of life within The Simpler Way would be easily and quickly achieved, enabling most of our time to go into more important things.

We would also move as much economic activity as possible out of the market sphere. In addition to the appalling effects markets have on distributions of resources and wealth, and on the inappropriateness of development market transactions are in principle socially damaging. The market involves us in self-interested calculations, often in a hostile and predatory arena. It is not a situation that enables, let alone encourages benevolence or concern with the public good.

A satisfactory economic system would firstly have no more than a small market sector and would place it under firm social control, so that considerations of morality, tradition, justice and ecology would take precedence over the considerations of profit or monetary cost and benefit. Considerations of economic “efficiency” would not be very important; often we would do what was not very profitable or what did not maximise monetary returns on investment, in order to maximise various social, moral or ecological benefits.

More importantly, a good society would have as much economic activity as possible organised in terms of “gift and reciprocity”. We would produce many goods and services and give them to each other and to the community, knowing that many of the things we need would be given to us. Economic activity within good families is based on this principle of giving (rather than getting.) Working bees, recycling systems and voluntary taxes are ways in which we can give to our communities and receive from them. The community commons are gifts we can all take from, and contribute to. In a satisfactory community surpluses are given to others or left in the neighbourhood workshop, and people willingly give their time and skills to each other. The more we give the stronger the feelings of appreciation, debt and reciprocity and therefore the stronger the bonds of good will between people. These many forms of giving build and multiply community solidarity and real social wealth.

Good will, generosity and helpfulness are like knowledge in that the more that any one of these is given away to others, the more of it there is! On the other hand our present economy only deals with zero-sum transactions; if you buy or take something , no one else can have it. For these reasons another important task for the CDC is to work to move the local economy from a monetary towards a “moral” basis.

The vital research and educational functions of the CDC.

The most important functions for the CDC are to do with education. At the start few people in the town will be thinking about the issues being discussed here so the CDC’s basic task will be to gradually build an understanding of and a commitment to the project. This can be combined with its important research task. Various audits will need to be made, especially of what goods are being imported and might be replaced by local products, what items existing firms would be willing to buy locally if they were available, and what attitudes and problems are evident among townspeople. While door knocking to collect this evidence information on the basic renewal project can be communicated and discussed.

Obviously the CDC must work to develop and then to maintain within the town or suburb a clear and strong vision of the project’s goals. As many people as possible must come to understand that they can no longer hope to prosper within the normal global economy (or that if they manage to be among the few winners in that arena many others will have been trashed in the process). They must understand that the goal is for the town to come together to take control over its own economic fate. This must involve people in cooperating to build up the town’s capacity to provide for itself most of the things it needs. We will not succeed unless we are prepared to live more simply, work together and support the town, e.g., by buying locally, coming to meetings and working bees, and often choosing options that will not maximise our personal short term advantage. We will have to accept higher costs and lower standards for many goods and services.

Above all it is important to increase awareness of the global significance of these efforts to transform the local economy. People must be helped to see that only if we develop these new local economies can we solve the major global problems threatening us. The more people are conscious of this connection the more likely they will be to become involved. If they do not see the connection they will understandably think it is silly to be trying to develop local self-sufficiency when anyone can buy better quality products from the supermarket. Therefore developing resources and procedures for increasing the understanding local people have of the global scene should be a high priority for the CDC.

The CDC must therefore make sure that people become clear about the overall goal. It is not “prosperity” conventionally defined. It is not to do with raising the town’s “living standards” defined in terms of GNP per capita. It is not to bring more income into the region. The goals are to enable the town, suburb or region to provide itself with many of the basic goods and services needed to ensure that its people can have a satisfactory quality of life and to enable all those excluded by the old economy to have access to productive activity and incomes, secure from the unreliable and predatory national and international economies.

Conclusion.

If we make it to a sustainable and just world order then the transition will have been begun by tiny groups of people who have taken on this task of working out how they can start to change their towns and suburbs into highly self-sufficient and cooperative local economnies.. The Eco-village Network is well down this experimental track with respect to intentional rural communities but we urgently need more pioneering ventures in existing towns and city suburbs.

No one is an expert on how to do these things. They can’t be done by external officials or corporations. They can only be done in your locality by ordinary people who live there. Even if we had experts in the process they could not come in and start telling your neighbours what to do; that would not work. The process can only take place in a town or suburb if it is led by people who live there . They are the only ones who know that scene, the people, the resources, the landscape, the soil, resources and the problems, and they are the only ones who can work out how best to go about organising within these conditions.

Again we should always keep in mind that the ultimate goal is not just to save our town but to save the planet. Only if we move to forms of settlement and to economies which enable us to live well without consuming much can we hope to eliminate the resource depletion, the Third World deprivation, the environmental destruction, the scarcity conflicts and the social breakdown being caused by the present commitment to affluence and growth. That move cannot be made unless people take up the task of starting to build examples of The Simpler Way where they live.

References

  1. Douthwaite, R., (1996), Short Circuit, Dublin, Lilliput.
  2. Trainer, T., (1995a), The Conserver Society; Alternatives for Sustainability, London, Zed Books.
  3. Trainer, T., (1995b), Towards a Sustainable Economy, Sydney, Envirobooks.
  4. Trainer, T., (1998), Saving The Environment; What It Will Take,Sydney, University of NSW Press.
  5. Trainer, T., (In press.), What Is To Be Done -- Now?

Appendix: notes on local currencies.

Is there a better form of local currency than LETS?

LETS suffers from the inconvenience of having to record each transaction and convey it to the central registry. This is not a huge problem since it is much the same as paying by writing a cheque. (Someday LETS transactions will be processed by electronic credit card.) It is also limited by the fact that participants have to join, which usually means that only a few of the people in the town or region become involved. There is also the problem of trust; i.,e., it is possible for someone to accumulate a debt then leave town. (In practice this has not been a serious problem.)

The CDC should therefore consider other possible alternative currencies, especially issuing its own notes. Many communities have issued their own local paper currencies, more than 200 in the USA. The following scheme is close to that recently introduced in four European countries including Scotland and Ireland, under a $1 million grant from the European Union. (Douthwaite and Wagman, 1999.)

Some local firms can donate sums of money to the CDC, which puts the money into a bank and prints and issues this amount of its own new money notes, each bearing the name of the donor. This “backs” the new currency; everyone knows that they can accept a new note because at any time they can take it to the CDC and exchange it for some of the old money which is sitting there in the bank. All people in the town can then easily start accepting the new money, compared with the few who typically join a LETS, and they can do so without listing goods they want to sell.

The clever part is that in a well organised scheme hardly anyone will ever want to exchange a new note for old money so the donating firm is really not giving any money away to the CDC, it is just setting a sum aside to help provide confidence in the acceptability of the new currency. Firms can contribute in this way for limited periods if they wish and then have the notes with their names on them taken out of circulation, thereby getting back all the money they contributed in the first place. Grants and donations can add to the volume of new money that can be released, earning bank interest for the CDC in the meantime.

The CDC “spends the new money into circulation” mainly by using it to pay for public works, such as for the construction of premises for new local firms or community gardens. As many unemployed people as possible are hired to do the work. Where possible labour-intensive cooperative firms would be preferred, but family businesses would also be a strong priority. In the Scottish scheme the new money is distributed to charities to give to low income people, which means it quickly gets into the hands of those most in need of more purchasing power and is spent thereby stimulating more economic turnover. However it would seem to be better for the CDC to be able to spend it on the purposes most likely to make most long term structural difference to the local economy, especially on setting up new firms. It would pay unemployed people to do the work, using new money.

Remarkably little new money needs to be put into circulation to ginger up a local economy. If for instance the unemployment rate in a town of 3000 is around 20% and these people need to double their real purchasing power, then something in the order of a mere $50,000 in new money might be sufficient, i.,e., assuming this sum was paid in wages and spent each week. The sum only has to be got into circulation once because it would then circulate as payments to firms for additional goods and then as payments to workers as additional wages.

Avoiding the substitution mistake.

A new local currency could be introduced in ways that do little or nothing to increase economic activity. The way it is introduced is crucial. Remember that the focal concern in economic renewal is to add on new economic activity, to enable the emergence of a large new sector involving previously unemployed and low income people. The question then is what is the best way to introduce the new money to have this effect.

Little or nothing will be achieved if the new money just substitutes for old money. If a council begins paying some of its workers with new money instead of old, they will then buy the things they used to buy with new money rather than old. This will not generate any more effective demand or jobs or production. Obviously there's no value in enabling those with plenty of old money to get all of the new money. The new money must somehow become new purchasing power in the hands of people who were previously unemployed or had too little income.

Should the new money have a negative interest rate?

A number of regions which have introduced a new currency have used Gesell's idea of requiring a stamp to be put on a note after period of time for it to remain valid. Because the stamp must be purchased for a small sum, say 2% of the note's value, the value of the note slowly declines. In other words it is as if the new money has a negative interest rate; the longer you hold it the more you lose. The reason for this device is to give people an incentive to spend the new money and not to hoard it or spend normal money first. The underlying concern here is to encourage people to spend the money, i.e., to increase the "velocity of circulation" of money.

In my view this should not be necessary. Money should just be available for everyone to use whenever they wish and in whatever amount they wish, like bus tickets, in order to trade (given that if one spends a lot of it before one has earned it one will have to do a lot of work later in order to earn it.)

A depreciating currency makes some sense if it is in competition with normal money, because then there can be a reason to persuade people to use the new one. But as the next section explains we can avoid that situation.

Is an alternative currency an inferior money?

It is sometimes assumed that the local currency is an inferior form of money, because people would always prefer to have normal money in their pockets. Certainly there will be more things one can purchase with normal money, such as goods imported into the town. (The seller must pay for his purchase of these with normal money, so he has to sell them only for normal money.)

However the new money should not be thought of as inferior, or in competition with the old. It is a form of money that can be used to do things that will not otherwise be done. It enables all those transactions between previously unemployed people. It is the only thing which enables a whole new sphere of economic activity to be added onto the existing, stunted, town economy. Normal money has not been able to do that, partly because many people can't get much of it, and secondly because normal money tends to leave town quickly, to pay for imports. The fact that if one was offered new or old money one would probably take the old money is not really relevant because the main people using the new money will not be in such a situation. Low income receivers will have the option of trading using new money or not trading at all, and old firms in the town will similarly have the option of selling to such people for new money or not selling to them at all.

New money doesn’t leave town.

One of the outstanding merits of local currencies is that they do not flow out of the town. In the present highly interdependent global economy every town or region and nation imports a lot, meaning that much of its income quickly flows out of the area to pay for imports ( and meaning all have to compete desperately against each other to export something to earn the money to pay for all the imports.)

New money can’t leave town, because no one else wants it, because no one outside the town can spend it on anything. So all we have to do is to get it into circulation and it can stay there, facilitating trade, virtually for ever.