Professor Jem Bendell

Notes from a strategist & educator on social & organisational change, now focused on #DeepAdaptation

Archive for the ‘money’ Category

Currency innovations for communities responding to climate emergency

Posted by matslats on November 7, 2019

A guest blog by Matthew Slater, Founder of Community Forge and General Assistant with the Deep Adaptation Forum.

handshakeAs Professor Jem Bendell and I discussed recently on this blog, localisation is an essential element of attempts at adapting to climate change. Reasons include how working at the local level is often easier than at the national level, local initiatives are often more appropriate than initiatives determined at a higher level, and a plethora of local initiatives creates diversity, which means the larger system can become more resilient.

One of the things we don’t often hear about being localised is finance. In the context of relocalising things like food, health, education, infrastructure, governance, localising finance is an obvious complement. That can involve giving local authorities more control over taxation, monetary policy, government debt, investment in infrastructure and the risk management that goes with all that.

It is possible to do all of this with national money, such as the pound, dollar or euro, but not is not optimal because national money is created and made available with somebody else’s intentions and for their profit. Contrary to popular misunderstanding, money is not simply a neutral form of ‘value’, like a lump of metal, that we use to trade. Money is designed to serve the same powerful political and economic interests who have imposed global capitalism on us. This becomes apparent when one comes to understand that in most modern economies, 97% of money is our debt to commercial banks (mortgages, business loans and government borrowing). The quantity, the price and the availability of that money is determined by their commercial interests. This global money has built-in biases which make it very difficult to use it to finance relocalisation, because it determines, through pricing and other mechanisms that, for instance, Chinese manufacturing with all its pollution and poor labour conditions, is ‘more efficient’, while local sourcing, which might entail a more circular economy, local jobs, more responsible waste management, more resilient supply chains, less transportation costs, is ‘unaffordable’.

So in the spirit of imagining ‘deep’ change, let us envisage how an economy with more local financial sovereignty might be different.

First of all, in contrast to global money which is issued (lent) to the least risky most profitable enterprises, local money would more likely be issued to finance local businesses. The choice of which businesses to finance and whether to use equity or debt would be an important political power which, devolved to the local level would enable appropriate decisions about risk. For example if a coastal town wanted to raise its sea defenses, instead of going to the bank and borrowing at commercial rates and paying back twice the amount from taxes, they might prefer other options like spreading the cost amongst the most low lying property owners, creating a financial instrument tied to the property insurance, or factoring in the cost of rehousing those people in later decades. On the other hand a new bakery might be widely expected to succeed unless badly mismanaged, so perhaps a local share issuance would be a good way to share risks and rewards within face-to-face relationships without anonymous intermediaries.

A local currency gives citizens and businesses a way to create credit amongst themselves, i.e. credit that is only acceptable in town. This credit can be used to settle debts incurred through local trade without recourse to borrowing from banks. Flexible amounts of ‘Money’ can be created this way to facilitate trade beneficial to all, as much as creditors are prepared to bare the risk of their neighbour debtors going broke or dying. A thriving local currency which can buy lots of local goods and services, would find itself being accepted in neighbouring communities.

Turning away from the global market would change the mood, attitudes and behaviours of producers and consumers. This could be viewed both positively and negatively. If consumers have less choice and producers would have less competition, this could be seen as correcting one of the injustices of globalisation – but the differences would be more profound than that. Localisation would bind producers and consumers more closely to one another, which would hopefully translate into better relationships and better customer service.

On the macro-scale, locally issued money would create a kind of diversity we are not used to, which provides resilience to national monetary policy made by banks for banks. The next banking crash is feared by some to bring down the whole global economy – a single system which ultimately depends on the dollar, the Federal Reserve, and US domestic policy. While there is no good reason why feckless speculation by hedge funds and others should obstruct the essential and stable process of growing grain, or baking bread and consuming it, because both ‘real’ and ‘speculative’ economies occupy the same marketplace and use the same money, they interfere with each other. We have a financial system which is super-efficient at channelling profits into stagnant money lakes of the tax havens, but a single spanner thrown in the works stops production! If spanners were anticipated and if the long term was seen as important, we would choose a more diverse, less efficient money system in which policy failures were contained, affecting only those markets who voted for those policies.

What would it mean to live in an economy not optimised for efficiency? To offer a very simplistic example: what if, instead of three clicks to summon a product to your doorstep in fifteen minutes, your purchase took more time and effort? Would the extra time be wasted? You might meet the producer, give somebody a lift on the way, talk to them, get some sunlight, exercise your eyes, gain knowledge which can be shared with others, learn something about your locality etc etc. Plus the Deliveroo and Amazon warehouse worker would be freed up to do other things. The increased effort you put into the purchase is dissipated over all the economy like ‘waste’ heat, except it needn’t be seen it as waste. It is greasing relationships, building trust, spreading information, improving mood increasing social and physical health, all of which is more valuable than the difference in price, if you want to measure it that way. The ‘slack’ in the system and the slowness also means the system can better absorb shocks. These ideas are explored more by Helena Norberg Hodge in the Economics of Happiness.

In saying the above I’m not proposing that the economy should slow down so that we can all have a nicer life, indeed that might not be the case. I believe, in spite of the GDP that the real global economy has been slowing down since 2008, and will continue to do so; it would be better for us if our policies and behaviours reflected the reality that global growth is over.

Prof Bendell and I have been fascinated by money for many years, and so we are proposing two monetary innovations for adaptation-oriented policy-makers. Both ideas could help local communities develop local economic resilience in the face of initial phases of climate chaos

  1. The first idea is for local governments, which over the last decade have borne the brunt of the austerity resulting from the 2008 financial crisis. Some local governments have fallen into debt equivalent to many years of tax receipts and are paying significant proportions of their income in interest. With falling budgets and sometimes increased responsibilities, local government has been reduced to deciding which services to cut, and how to supplement taxes through property speculation. Our proposal is that instead of borrowing from commercial lenders at commercial rates of interest, local governments should cut out the middlemen and borrow from taxpayers directly. If they could entice citizens to prepay their taxes both lenders and borrowers would have better rates of interest. The prepaid taxes would be used twice – immediately spent by the local government, while at the same time, taxpayers could pay or receive payments with other taxpayers using taxes paid, but not yet due. In addition to financing local government this would create a government owned payment system and source of liquidity which would survive a catastrophic bank failure. Such an initiative could help develop resilience in the face of increased risks from climate disruption. Read more about Local Future Tax Credits here.
  2. The second idea is a blueprint for an informal ‘solidarity’ money system. One of the problems with mainstream money is that it functions as a medium of exchange and a store of value at the same time. When there is a shortage of money, because people are saving it all, that slows down business, even though businesses only need it for a short time between buying and selling. The practice of reciprocal trade, or business barter, allows businesses to work in groups to buy and sell from each other without money. Commercial systems are widespread in USA and elsewhere, but punitive taxation and competitive dynamics prevent the networks from becoming economically significant, but the mechanism is slowly being recognised as potentially transformative. Portugal has just made allowance for them in law, and in UK there are new socially progressive systems in Birmingham and another supported by the Welsh parliament. Each these clubs struggles to make swapping commercially viable, which is really hard until or unless they become large. Why my protocol, these groups would be able to federate to increase their effectiveness and to try to align their incentives towards cooperation. I published a white paper on this called the Credit Commons and a London-based group called Open Credit Network is working to create and connect these groups to create a moneyless economy at scale.

I know that these innovations are just shallow techo-fixes without deeper changes in the sociopolitical fabric. Their value at the moment is to show that another economy is possible, and bold policy-makers and citizen advocacy is very much required to manifest such ideas in the face of globalised neoliberal economics.

To discuss this, please join the Community Action group on the Professions Network of the Deep Adaptation Forum.


If you liked these ideas, did you know about the other work that Jem Bendell and Matthew Slater have done on the topic of money in the last decade?

The Deep Adaptation Forum would welcome any financial support you can offer via patreon.com.

Posted in Counter-Globalization Movement, deep adaptation, money | 2 Comments »

Why Deep Adaptation needs re-localisation

Posted by matslats on November 2, 2019

By Matthew Slater (Community Forge & Deep Adaptation Forum) and Jem Bendell (University of Cumbria & Deep Adaptation Forum).

assorted fruits and vegetables in baskets for sale in the fruit market

Photo by Armand M on Pexels.com

Deep Adaptation is firstly and mainly about coming to terms with the end of our way of life, and finding in ourselves and each other loving responses in place of fear and blame. Many people, having dwelled in that space for a while, then seek various forms of meaningful action, usually around living more fully and trying to reduce future harm. Increasingly, people are putting energy into re-localising their societies and economies. The rationale for such action is often quite personal. In our experience of engaging with people who are seeking to localise their lives as part of their deep adaptation, the following ideas often come up:

  • there are many links between globalised neoliberal economics and the drivers of the climate crisis
  • there is a long tradition of alternative economics promoting localisation for environmental benefit that goes back to EF Schumacher
  • most people express little to no political agency at the national level, whereas local politics appears much more accessible
  • many people find working face-to-face with neighbours easier and more enjoyable than sporadic collaborations at national levels
  • they consider they are more likely to benefit from results of their own local improvements.

It is not that all globalisation is all bad, but that there has been a huge imbalance in power at the global level, with the interests of corporations and banks shaping the agendas. Progressive internationalists can point to many benefits. For instance, global technical standards make the internet available to everyone, our electronic devices (somewhat) compatible, and other infrastructure like GPS means no-one (carrying a phone) gets lost any more. Global law like the human rights charter is a fantastic political achievement despite many countries’ neglect of it. Intergovernmental cooperation is also essential for both cutting and drawing down carbon emissions, as well as adapting to the effects of extreme weather on our societies. So it is important to clarify which aspects of life most need to be local, and indeed, regional and national.

There is one really important reason why we need to rebuild local life, which has been hollowed out by the needs of the economic machine in recent decades, and indeed centuries: that reason is resilience.

There are growing debates about how society will respond, breakdown or collapse through the impact of global heating. Probably the most referenced theory of previous societal collapses is Joseph Tainter’s theory of complex societies. He alleges that when the base conditions change, the layer and layers of governance, bureaucracy built up during long periods of stability come crashing down. That means that our means of global governance, global infrastructure, and global trade, are at the greatest risk – ironically the very things our prevailing ideologies have been driving us towards, in the name of efficiency.

Of course Tainter’s collapse is an interpretation of history, not necessarily a prediction of the future, but it gives grounds for thought. It suggests that if say food, or fuel were to become generally scarce, flows of resources towards the most abstract, and complex organs of society would wither. From that theory, perhaps the Bretton Woods institutions, complex trade agreements, international law, the most complex financial instruments, airlines, computer hardware and social networks, could be amongst the first things to fail?

This could be a matter of ‘falling back’, but it could be worse if we have come to depend on those things. For example much food is imported by air, interest rates in all mortgages are globally linked to high risk finance, and we may struggle to imagine life without mobile phones and social networks. If national infrastructure should start to crumble, life could become very difficult.

A great explanation for all this vulnerability can be found in a biology / economics study which shows that efficiency and resilience lie at opposite ends of a spectrum. Generally, more diverse systems encourage more redundancy and more linkages between components, and more uses for each component. Imagine running across a tightrope – you can go pretty fast unless you fall off! Running across the safety net is less efficient but you are less likely to die. The authors stressed that this principle applied in economics as in other fields. “Economics seems in pursuit of monistic goals and all too willing to sacrifice everything for the betterment of market efficiency… Preoccupation with efficiency could propel into disaster.” Capitalism has always been about building greater efficiency (maximising GDP for a given population), and within that the regular financial mishaps have been regarded as mere abberations. The theoretical cost of super-efficiency is the risk of super-accidents, which implies that economic globalisation is setting us up for the mother of all collapses.

There are several formulations of resilience in general terms. Key amongst them is the need avoid single points of failure, by distributing the work and the processing throughout the system. A related goal for resilience is that the same functions should be fulfilled by different mechanisms so that when conditions change in unforseeable ways, some mechanisms are likely still to work. Localisation is desirable for many reasons, but it is systemically important for these reasons, so after that somewhat long introduction to the topic of localisation for deep adaptation, in the remainder of this blog we will look closer at what it could involve. If you would like to engage on this topic, we recommend joining the Community Action discussion group of the Deep Adaptation Forum.

The most prominent localisation movement in UK at the moment is the Transition Town network, which grew out of the systemic thinking of permaculture. That movement has thoroughly explored what localisation entails in the modern context, and piloted many projects. Ecovillages also play an important role in pioneering deeply different ways of life, which many of them can do, as intentional communities.

So let’s take a closer look. The Transition movement emphasises several areas of life in need of localisation, which we will now expound upon, sometimes using examples from other movements:

Food
Food is usually the highest priority because humans require lots of it, every day, and it requires months of preparation and often lots of organisation to produce and prepare it. The industrialised food system depends on massive inputs of fossil fuels, both to power machinery and for fertiliser, and results in high waste, pollution and often poor nutrition. And yet by growing food in gardens, allotments or on public land, families and communities can dramatically reduce dependence on imports and industry. In most countries there is a large informal food scene, consisting of farmers’ markets and part-time, self-sufficient growers alongside people drying, preserving, baking and occasionally serving labour intensive foods – and those who wish to pay the price. Those who want to support local growers and eat organic food with the seasons can find more and more veggie box schemes, formally known as Community Supported Agriculture.

Energy
Energy prices are increasing over the long term, and our supplies in the West have depended on militarised subjugation of people in other countries. Much energy generated in power stations is lost in transit. The imperative to reduce or stop fossil fuel consumption can involve four approaches: reducing energy consumption and changing usage patterns, nuclear power to which many object forcefully, massive solar and wind farms, and small scale renewable energy, owned by individuals or local communities.

Government
In these kinds of matters, the hand of government is everywhere from creating minimum standards, to reporting requirements, and market influence through taxes, grants, and subsidies. Governments, especially local governments are under enormous pressure to cut costs and sell assets, and this creates an environment, not accidentally, favourable to enterprises led by large corporations with better access to credit, lobbying power, cheap labour etc. Many elected representatives and civil servants don’t really understand the full extent of this process, or if they do, they don’t or can’t organise, stick their necks out, and change it. A recent phenomenon in UK, dubbed flatpack democracy has seen citizens organise, get themselves elected, and accomplish useful things at the local level.

Finance
Modern capitalism favours large institutions which can spread risk and maximise profit for shareholders, which means that small and local businesses find it very hard to get loans. Other non-commercial community institutions, including government struggle for viability, especially after a decade of austerity. Philanthropic funding increasing comes with demands that revenue streams be developed. UK has a law called ‘community right to bid’ which allows local groups to purchase local assets and amenities like post offices, village shops or community pubs. The Plukett foundation helps communities to organise themselves, and the UK government helps them to issue shares for such purposes. We are watching another initiative which aims to create local care cooperatives as an alternative to crumbling state care system. All of this is a far cry from reversing the centralising effect of the last forty years of capitalism.

Currency
The difficulty of all of these things points towards deeper drivers. A number of local money projects in UK were spawned from Transition Towns initiatives, which helped to show the public that money is not the simple/neutral tool it may appear to be to the casual user, but could be designed differently. But the low traction of these projects also showed just how intractable money and assumptions about it are. We critiqued these projects elsewhere. Other initiatives like LETS and timebanking reimagine non-monetary currencies, supporting value-flows and exchange within communities, without banks, debt or government behind the accounting unit. In a forthcoming blog, we will offer two new ideas for local monetary innovation which build on these efforts, while focusing particularly on currency and payment systems that would survive an economic (and banking) collapse.

Leisure
In an era of fuel scarcity we shall have to re-learn how to holiday and play closer to home. In the UK, hardworking people often escape to the sunshine, but a more resilient attitude might be to focus on building quality relationships and having fun with other people, sometimes called ‘staycationing’. Cultivating musical talent, group activities and festivals, form another thread in the transition culture.

Our minds
For the Transition movement, “inner transition” is the mental, psychological and spiritual processes that accompany the social, economic and political transition to a post-peak oil world. It can be a personal or collective process and bears a lot in common with Deep Adaptation. These practices and ideas can be more intense in intentional communities, where living more closely together requires a higher degree of knowledge of self and trust of others.

Learning from the Limits of Localisation Past
There’s one more reason the localisation agenda chimes with Deep Adaptation. We don’t know how meaningful any of our efforts will be on trajectory of climate or the global response of humanity. Perhaps the future will disagree with Tainter and our society will collapse from the bottom up! So what is important to us about the localisation agenda and the practical things people are doing in relation to it, is that it is about a more vibrant way of living right now. Localisation points towards a more grounded, more connected, more human way of life in contrast with the ‘alienation’ many people feel from their work, families and neighbours. Helena Norberg Hodge promotes it for this reason, calling it “The Economics of Happiness”.

In Western countries, these efforts at environmentally-friendly localisation have been around for decades. So as we reflect on the implications for Deep Adaptation, it is useful to consider the limitations of current and past initiatives. Many of them have failed to spread to economically disadvantaged communities. The accusation then heard from some critics is that movements like Transition are elitist and excluding. While the limited extent or diversity of any movement can seem like an unfair criticism of hard-working, well-meaning volunteers, it is nevertheless a central issue for an agenda as all-encompassing as Deep Adaptation. Therefore, a key question for people interested in localisation to promote resilience for unfolding societal breakdowns and likely collapse is to learn from those limitations.

We can learn from situations in other countries where resilience has been improved in the past. In Cuba, for instance, where the past trade embargo led to self-reliant organic agriculture across the whole country. Or in Kenya, where people living on only a few dollars (equivalent) a day in informal settlements have reduced poverty without foreign aid money by issuing their own currencies. We do not know for certain the reasons for these successes, but the answers might be found in:

a) Community leaders convening those local people with the capacity to explore issues, prioritise actions and implement them in ways that reduce dependence on support from outside.
b) Focusing those initial actions on acknowledging and mobilising existing community assets, in order to collaboratively meet immediate needs.

Unfortunately, when funders get involved, they often start by bringing a deficit mindset, characterising communities by what is lacking. External funders’ agendas and mechanisms then privilege a few people in a community who are best able to look outside the community for answers and, once funded, begin to think on behalf of the funder as much as the community. It is why one of us has argued previously for a more solidarity-based approach from grant makers in the face of climate-induced collapse.

For more on this subject, see the podcast Poetry of Predicament on localisation.


Localisation is for many people an important part of preparing for collapse. Recognising the importance of localisation to Deep Adaptation is one reason why we launched the Deep Adaptation Groups Network, to support local efforts. You can find out about these local groups here, and also consider starting your own.


The Deep Adaptation Forum would welcome any financial support you can offer via patreon.com.

Posted in Counter-Globalization Movement, deep adaptation, money | Tagged: , , , , , , | 4 Comments »