SPECIAL IDEAS REPORT

Idea of the DayWednesday, July 22, 2009

Use Local Currency

The Samaras Project

Community-based currency -- think of it as a new way to buy local -- is making a comeback. Common at one time, local currencies have fallen in and out of favor throughout history because they couldn't be used over long distances. But these days, that's the attraction. As independent and locally owned businesses increasingly struggle to compete with corporate retailers, some towns have resurrected the idea of using local currency to support neighborhood commerce.

One reason advocates like local currencies is that they keep value that's been created by the community inside the community, instead of passing that value along to faceless corporate headquarters. Take "Ithaca Hours," which were invented in Ithaca, New York, and have been in use for 18 years. Ithaca Hours are initially purchased with U.S. dollars, and can then be redeemed for products or services at more than 900 outlets in town (and not just farmers' markets).

The dollars themselves read "Time is Money" and entitle the bearer to receive a set amount of labor (two hours, a quarter-hour, etc.) or their negotiated value in goods or services. Plans are even being negotiated with the local public-transit system to accept Ithaca Hours as partial payment for bus fares. Of course, some establishments don't accept the dollars, at least not yet -- most doctors and dentists offices for example, or, as NPR's Jon Miller discovered, the recently opened Starbucks and other big-box retailers along Ithaca's main strip. And that's the point.  "Hours are a reaction against this sort of economy," Miller reported.

Other towns have imitated Ithaca's success -- with BerkShares, Burlington Bread, Bay Bucks. Although free-market economists are likely to shrug off these currencies as weak competition, according to Forbes, "local currencies boost the value of resources, such as local labor, that are undervalued in the dollar economy," while also nurturing a sense of civic engagement.  And city councils should take note -- although limited circulation prevents local currencies from significantly impacting the general economy, they do create a new source of revenue that can stimulate local investment.

In a similar development, bartering has also seen a boost during the recession, facilitated by community organizations and online trading sites such as Craigslist. For example, someone might trade babysitting for lawn care, or an old computer monitor for a box spring. This applies to small-business services as well -- dog-walking for a haircut, and so on -- meaning people can use what they already have to get what they need, without cash.

Some critics might consider such developments steps backward, particularly in an age of online purchases and credit cards. But these forms of commerce are far from primitive; in fact, they are actually quite modern, reflecting a growing rejection of impersonal interactions in exchange for the connections that result from community-centered marketplaces. As the recession forces consumers to consider their needs versus their wants, and to become more thoughtful about the ways and places they spend, what could be more contemporary than reinventing currency itself?

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Comments (1)

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I always had the thought that having a single currency spread out over a large area was bad for small backward pockets of the US, think West Virginia, Mississippii, small poor parts.

I do think that this is partly alleviated though by local land values.

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