Post by Rob
Making Our Money Green
As producer-members of FRESH, we tend to be aware of the role that farmers play at the intersection of ecology and economics. This is often difficult territory to traverse; doing the right thing by the land is usually more labor-intensive and and/or costly than the end-arounds of conventional agriculture, inevitably making our product more expensive.
We are quite used to thinking about our farms wholistically and ecologically; should we not also be thinking ecologically about the larger economy of which our farms are a part? It's been observed many times that rates of economic growth under modern capitalism are not consonant with those of any stable biological system, and that current trajectories of consumption point us toward a number of possible global catastrophes -- most prominently for farmers, climate disruption and the beggaring of biodiversity in the living communities on which we depend. What would it look like to use an “ecological” form of money that could not be used to over-exploit the earth's resources? How would that money, and the economy it mediated, function in comparison to our own?
These are some of the fascinating questions explored by economist Bernard Lietaer at a day-long workshop in Madison last month. While movements like Slow Money advocate investors simply settling for lower rates of return, Lietaer envisages something far more radical: redesigning money itself so that market participants behave less accumulatively with it.
The one-time currency trader, central banker and designer of the European monetary integration has proposed basing monetary design on quantifiable ecological parameters like energy throughput (efficiency) and adaptive response to perturbation (resilience). These inversely related properties tend to fall into specific, defined ranges for stable ecosystems, even those occurring in the most disparate environments on the planet. Resilience, a hallmark of what we call “sustainability,” can be further parsed into the two correlated properties, interconnectivity and diversity.
When comparative ecologists quantify these traits, it becomes apparent that stable biological systems universally place much higher emphasis on resilience and less on efficiency than modern central-bank based economies do. Specifically, the standard reliance of modern economies on a single form of currency (rather than a diversity of them) to translate value between participants was seen as central to the frailty of modern capitalist markets with their repeated speculations and collapses in value.
As a farmer, I felt right at home with such talk. I know I risk my livelihood if I try to force the living systems I work with to produce beyond their capacity. I was thrilled to hear a major economist recognize, in so many words, that his discipline is essentially a branch of thermodynamics applied to the human ecosphere. Economics basically traces energy transfer through the human social organism.
In farming this is particularly obvious; we watch the incoming energy of the sun get stored as starches, fats, vitamins, the DNA of next year's seed and so on, and know that the value of the product we sell comes from its useful, stored energy – both that of the sun directly and ourselves as mediators in the process. Money is the devise by which we measure the worth of all forms of stored energy and translate that worth between us so that we can more easily depend on each other's labor. Money should always represent work-done, so problems obviously arise when money can be lent at interest – then it starts to accrue and concentrate without additional inputs of labor being necessary. As Lietaer is quick to point out, almost the entirety of the world's daily economic transactions (98% or better) take place in the financial sector, much of it in the form of speculation on currency. We arguably have two orders of magnitude more spending power circulating among humans than the earth's resources and people can ever possibly make good on.
The solution? Return money to the control of those who create the value that backs it.
Lietaer has been a vocal proponent of supplemental, citizen-issued currencies that are not loaned into circulation and cant be lent at interest. These scrips bolster the federal money supply regionally to drive up local wages and employment in the same way the Fed does nationally. Local money has a market advantage for local transactions; it tends not to be scarce because it stays in local circulation and is less susceptible to concentration. In this way it can re-advantage local productive capacity over distant “cheaper” labor. No-interest loans can be made available to facilitate entrepreneurship. Because there is supplemental spending power for locally produced goods, relative price levels for those goods are able to increase. Labor-intensive products like fresh food become proportionately better remunerated the more the money used to purchase them is labor- or energy-based rather than profit- or interest-based.
Imagine receiving 30% or 40% more for the produce you sell, with the extra income in local currency. With extra spending-power in people's pockets, perhaps a local tool manufacture is able to start up and supply the local hardware store. The local feed-mill begins to accept the currency, allowing them to purchase more from local organic suppliers, who can in turn increase their production. The local restaurant takes the scrip and is therefore able to purchase more from local farmers and less from Sysco. The insurance company, and movie theater, and health clinic, and power company all take the local money – they don't have local product to purvey, but all have local labor costs, and their employees clamor for additional pay in scrip since they can spend it in so many places.
It's in this way – when entire local economies can re-adjust to a money-supply adequate to matching demand with potential local capacity – that the general cost of living goes down for those who consume locally. Essentially we remove the cumulative cost of interest from everything we're able to produce locally, so we can save dollars to pay for that cost on goods from further away. And we reassert our right as producers of value to control the instrument which carries that value around the economy.
Our farm has accepted local currency (Madison Hours) for our produce for many years – it's particularly satisfying, and we hope its circulation can be reinvigorated as Hours combines efforts with Dane County Timebank, another local trade scheme. That process is ongoing. A strategy session toward a combined, multi-modal (electronic credit and paper currency) will take place in May, probably on the 16th. I can guarantee at least one farmer will be there, but we can always use more.