The Essence of Balance

It looks as if some of E. F. Schumacher's ideas have begun to grow legs in Milwaukee. The Riverwest and Eastside communities have begun to entertain the possibility of establishing local currency, and they've been getting a fair share of local and national media attention for it too. Newsweek, the Chicago Tribune, and the Milwaukee Journal Sentinel, have each ran articles about it. A local radio station, WTMJ (am620), a local television news station, TMJ4, and a radio station in Baltimore, WBAL (am1090), have also provided coverage of the story. The issue has made an appearance in a number of blogs as well. (cf. The Consumerist)

So far, nearly every news piece that I've read, watched, or listened to, has implicated the current financial crisis as the reason for Riverwest's rising interest in local currency. Consider the opening lines of the Newsweek and Chicago Tribune articles, respectively:

People nationwide may start hoarding their cash as recession fears grow. But in Riverwest—a progressive enclave of Milwaukee—residents have another answer to their money trouble: they'll print their own. The proposed River Currency would be used like cash at local businesses, keeping the area economy humming whatever the health of the country at large. "We can create our own value," explains Sura Faraj, 48, one of the plan's organizers. (Newsweek)

Residents from the Milwaukee neighborhoods of Riverwest and East Side are scheduled to meet Wednesday to discuss printing their own money. The idea is that the local cash could be used at neighborhood stores and businesses, thus encouraging local spending. The result, supporters hope, would be a bustling local economy, even as the rest of the nation deals with a recession. (Chicago Tribune)

The way I see it is that the explanation offered by Newsweek, the Chicago Tribune, et alia is due to the presumption of a logic of economic centralization; rural and certain urban localities, with the labor and resources they provide, are essentially seen to act as tributaries that feed a steady stream of goods and services into larger, central markets, which themselves feed back into their tributaries, as if forming a loop. The presumption is that, so long as the central markets continue to grow, overall wealth should increase for its tributaries as well. Likewise, when larger markets falter, one should expect the same for local communities. Given the logic of centralization and given that the adoption of local currency entails at least a mitigated rejection of centralization, it isn't difficult to imagine that the only type of scenario in which a community would consider adopting local currency would be one in which the central markets fall on hard times. In all other cases, adopting local currency would amount to biting the hand that feeds, which is irrational so long as the hand keeps feeding. However, the current economic crisis must have scared some into believing that sometime soon the hand might actually stop feeding, so naturally these folks have begun to look for another means of sustenance.

Monopoly money? Think twice!

What is one to make of this explanation? Well, the Milwaukee Journal Sentinel article is exceptional in that it depicts Riverwest's interest in local currency as arising from a broader concern for building a stronger, more eco-friendly community. One of its quotes is from a post on Sura Faraj's blog, in which she discusses the various benefits of localizing currency. Faraj is a politically outspoken member of the Riverwest community, and apparently her blog has served as a catalyst for Riverwest's flirtation with developing a local currency. Here's a bit about what she has to say:

Most community currency is based on time and can be used to exchange services in neighborhoods. This promotes local economic strength and community self-reliance. Other benefits include more community involvement and pride, patronage of local businesses (those that participate), and ultimately the reduction of traffic emissions. Because of its positive impact on the environment, local currencies are part of economic strategies of more and more sustainable living supporters. (Sura for Change)

Taking this into account, one can see why a community would want to adopt local currency no matter how well or poorly the larger markets may be doing. By encouraging local productivity and widespread ownership, allotting more control to the community and its members, and providing a counter-balance to national and international businesses who have no qualms with funneling wealth out of local communities, local currency would guarantee more freedom, in the sense that the community becomes less dependent on external financial and economic institutions to meet its needs.