THE RESILIENT COMMUNITY: SCRIP

A growing number of communities now use scrip (aka a community currency or loyalty program) as a way to keep business activity local and thereby increase community resilience to economic shocks. Here's how it works. Customers buy scrip that can only be used with local businesses to buy goods and services. This is usually done in response to a community initiative. Businesses that accept scrip can either pay employees with the same (to the extent they accept it), provide it as change to customers (again, limited by acceptance), or exchange this scrip for hard currency (usually at a steep discount). Examples of scrip range from the Ithaca HOURS, Berkshares, to the Totnes Pound. While these attempts at scrip are better than nothing, in almost all cases these efforts have fared about as well as most "green" initiatives:

• participation is meager (it is relegated to a lifestyle choice)
  
• velocity is weak (low turnover),
  
• it is vulnerable to economic contraction (when times are tough, participation among retailers falls off due to a scramble for a dwindling amount of hard global currency)
  

How to Accelerate Scrip
However, despite the spotty record so far, scrip is an extremely powerful means of accelerating local economic activity when nothing else seems possible (in economic extremis). Past experience with depression era scrip like Austria's Worgl indicate that the following will accelerate scrip adoption, velocity, and robustness:

• Allow community members to use it to pay all or part of their tax liabilities to local governments. This instantly establishes a market for the currency. Also, pay local government employees a portion of their wages in scrip.
  
• Deflate the value of the scrip (optimally, one percent per month) to promote immediate use rather than hoarding.
  
• To the extent possible, connect scrip to local production rather than retail. Locally produced food (farmer's markets), energy (via local microgrids), products (personal fabs), and labor/services. Further, work with local banks to establish checking accounts for scrip and to enable conversions hard currencies (at a slight discount).
  

NOTE: Scrip should also be considered to be a part of a 21st century approach to economic development (likely superior to microcredit), (open source) counter-insurgency, and disaster/crisis recovery. For more background read the economist Irving Fisher on depression era scrip. The rambling utopian tract by Silvio Gesell is also interesting.

Comments

[Ben Hyde]

This amused me: http://www.abebooks.com/servlet/SearchResults?sts=t&tn=STAMP+SCRIP&x=38&y=15

[zenpundit]

"Allow community members to use it to pay all or part of their tax liabilities to local governments. This instantly establishes a market for the currency. Also, pay local government employees a portion of their wages in scrip."

Thus transforming Scrip into "Money" or more properly, currency.

Throwback to the pre-Greenback, post-Second bank of the united States era when the Federal Government permitted private and state banks to issue their own banknotes

[katuah]

I have to admit, as the granddaughter of an Appalachian coal miner who was paid in company scrip, it's a bit disconcerting to hear the term used in a positive way. See http://en.wikipedia.org/wiki/Company_scrip if you aren't familiar with the historic connotations. I have on my desk a set of scrip from my grandfather's employer, to remind me of why corporate control of economies is a bad idea.

That said, the (re?)surgence of non-corporate, community-managed local currencies is great, if for nothing more than it enables a certain transitional legitimation to the average "consumer" of what is at the core a traditional village-barter economy. At a minimum, it gets people to think about what is local, and where the "real" money they spend is actually going. Kind of the Swiss Army knife of economic tools.

However, at least in the US, it's not likely that local governments will be able to support such an effort, or that banks will be able to offer accounts, due to laws about what constitutes "legal tender." (*ahem*Liberty Dollar*ahem* http://en.wikipedia.org/wiki/Liberty_Dollar) Unless, of course, the coming economic crisis is such that the government is disempowered from enforcing interstate commerce laws - i.e. we reach Dmitry Orlov's Collapse Stage 3 - at which point local currencies may very well become a primary tool in fending off Orlov's Stage 4. Hence, resilience. (http://cluborlov.blogspot.com/2008/02/five-stages-of-collapse.html)

[gmoke]

A scripless currency is time exchanges. Time Dollars is probably the most widely used of this concept. Barbara Brandt's _Whole Life Economics_ is a good source on both local currencies and time exchanges as well as other economic alternatives. She's just finished the first draft of another book on the Solidarity Economy.

Of course, all of these alternatives to the present, corporate economic system will have to survive the tremendous co-optation methods the present, corporate system can deploy. Remember that ESOT's (Employee Stock Ownership Trusts, were originally conceived of as a way to provide real ownership and second income opportunities for employees of large corporations. Didn't exactly work out that way.

[JHyde]

I believe Douglas Rushkoff (http://rushkoff.com/) is writing a book which at least touches on the subject of local currencies. No idea when it's scheduled to come out though.

[Duncan Kinder]

The India's Naxalite Rage blog is going to be developing the idea of Ghandi's swadeshi as a response to guerrilla disruption.
http://naxaliterage.com/?p=98

Here is a discussion of swadeshi:
http://www.squat.net/caravan/ICC-en/Krrs-en/ghandi-econ-en.htm

quote:

According to the principle of swadeshi, whatever is made or produced in the village must be used first and foremost by the members of the village. Trading among villages and between villages and towns should be minimal, like icing on the cake. Goods and services that cannot be generated within the community can be bought from elsewhere.

Swadeshi avoids economic dependence on external market forces that could make the village community vulnerable. It also avoids unnecessary, unhealthy, wasteful, and therefore environmentally destructive transportation. The village must build a strong economic base to satisfy most of its needs, and all members of the village community should give priority to local goods and services.

Every village community of free India should have its own carpenters, shoemakers, potters, builders, mechanics, farmers, engineers, weavers, teachers, bankers, merchants, traders, musicians, artists, and priests. In other words, each village should be a microcosm of India - a web of loosely inter-connected communities. Gandhi considered these villages so important that he thought they should be given the status of "village republics".

The village community should embody the spirit of the home - an extension of the family rather than a collection of competing individuals. Gandhi's dream was not of personal self-sufficiency, not even family self-sufficiency, but the self-sufficiency of the village community.

:end_of_quote

[Matthew Slater]

You can set up local money for online communities, using the web server to do all the accounting.
http://marketplace.matslats.net

[Mark Herpel]

There is a group in Austin taking an open source digital currency, Time Banks, and have converted it for offline use with a voucher system. Very interesting stuff.
"Brandon Wiley invented an ATM machine this week for complementary currency using QR codes. Writing python code on Google App Engine, he wrote code which can generate a QR code using Google Chart API and an oauth consumer to allow someone to redeem the currency without giving the ATM site the username and password to their account. The transaction was made with the OSCurrency API. Some more API support needs to be done to make the transaction more resistant to counterfeiting, but it already makes a cool demo."
This may work for lets or any time bank.
http://www.stepthreeprofit.com/2009/01/p2p-money-with-app-engine-oauth-and-qr.html
Mark
http://www.mainstreetcash.org