Interested in the trading network once it’s up and running?  Please let us know as we need to start meeting face to face with interested businesses to explain the system and how it brings more money into your pocket!
 
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David Boyle, a senior research fellow of nef, and his family, have joined us in the Berkshires to further that organizational transformation. At the end of this email David shares his thoughts on nef’s Great Transition report for your information. The full document is at www.neweconomics.org.

The Great Transition The main question we need to know about any vision of the future is what it is that has driven the change. In the case of The Great Transition, it is the rising costs of going back to ‘business-as-usual’, the huge cumulative cost of climate change (they estimate this at $3.75 trillion in the UK by 2050) and the cumulative cost of high levels of inequality (they estimate this at $6.75 trillion for the UK in 2050). Drivers of change are often uncomfortable, and this one is no exception. What is exciting about The Great Transition is that it sets out a believable path whereby Britain can take big, radical steps toward a society and economy that delivers long, happy and equitable lives and fits within the planet’s carrying capacity.

It means that the UK’s conventional GDP will fall by a third. This is offset by making better use of what they have, and by an economic boost from increasing social and environmental value. The costs of climate change can be partly avoided and the costs of social breakdown can be avoided too.

New Economics Foundation policy director Andrew Simms put it like this. “For years we have been told that there is no alternative to an economy that wrecks the environment and worsens inequality. We’ve been told that we live in a time of prosperity, when really we’re no happier than we were thirty years ago. We’ve been told that crashes, bubbles and recessions are all part of the ‘natural cycle’ of economies.

But faced with potentially irreversible climate change and corrosive inequality, these are dangerous fairy tales. The Great Transition shows we have a chance of a better reality.” The point is that, as we know, GDP is a very poor measure of progress: the revenues skimmed off the financial system by traders in the City of London as they built a pyramid of ‘toxic’ derivatives added to GDP. So does cleaning up the effects of pollution and paying the costs of high rates of crime increases. This isn’t just an academic point: what we measure ends up driving what we do.

The Great Transition proposes a move beyond GDP, to start measuring the things which really produce value, for our communities, our societies and our environment. The report sets out seven main interventions. These include: – A Great Revaluing to make sure that prices reflect true social and environmental costs. – A Great Rebalancing that sets out a new productive relationship between markets, society and the state. – A Great Economic Irrigation that helps money and investment flow to where it is most needed. But how do we get there?

The Great Transition suggests a universal Citizen’s Endowment of between £40,000 and £50,000 to give every adult an equal chance in life and the opportunity to invest in education, a business or local productive assets. This would be funded by a phased rise in inheritance tax on all estates up to 67 per cent and would go a long way to reducing the massive inequalities of inherited wealth in the UK. Community land trusts are also central to The Great Transition. The report also proposes redistributing working time by setting out a four-day working week for everyone that would cut GDP by a third without a major loss of jobs.

There would be a major reorganisation of business, with publicly listed companies progressively transferring shares to their staff, giving them real control over the companies where they work. This would lead to the creation of a series of co-operatives, operating in regulated markets, and subject to competition from new companies. This is designed to change power relations within workplaces, creating a form of economic democracy. There would be new variable consumption taxes, replacing income tax, reflecting the social and environmental costs of goods. A windfall tax on the profits of fossil fuel companies, for example, could channel funds into clean energy projects.

There would be government lending for large-scale green energy and transport projects, channelled through a national Green Investment Bank. There would be a new national Housing Bank, more along the lines of those in the USA, offering people the opportunity to transfer a portion of their mortgage debt into equity and paying social rent on the balance. There would be new regulations on the reserve requirements of private banks, which would be related to the social and environmental value of their investments. This is intended to engineer a ‘race to the top’, avoiding the more familiar race to the bottom, at the same time as reducing speculation and credit bubbles. The purpose of The Great Transition is to inspire debate.

It was designed for the UK not the USA. Many of the measures will be controversial. Some will be wholly unacceptable to people who are already steeped in sustainability. But it is a bold and coherent vision, with details and figures ­ using the skills of novelists, as much as the skills of economists, to create a believable world. And it suggests that other kinds of economic worlds are possible. That, in itself, represents hope.

David Boyle may be reached at: davidboyle@smallisbeautiful.org

Over the past year we have all watched in amazement as the old economy unraveled before us‹banks failing, established corporations seeking bankruptcy protection, unemployment increasing, climate change progressing unabated, and governments nervously printing currency hoping to buy their way out of these problems. The urgency of shaping a new economy‹one that is fair and sustainable, that functions within ecological limits, and takes into account people and cultures throughout the world‹has never been clearer. A successful transition to a new economy in which people and the earth have a higher priority than financial return will require a restructuring of institutions and governance frameworks; changes in values and behavior; hard decisions; and decisive actions on the part of individuals, communities, civil society, firms and governments throughout the world. If such a transition is to be successful, it will need to be rooted in robust systemic analysis, employ effective hard-hitting advocacy, and offer proven, practical solutions. In addition, it will require a coherent and encompassing narrative that is both compelling and accessible and that draws together the various components of a complex picture in such a way as to stimulate and support action at all levels. Parts of the new economy are already known and underway. In North America, Wendell Berry is our finest poet of a new vision, describing the mutual support at the heart of a community economics in his stories and essays about rural life. Jane Jacobs vividly paints the picture of vibrant, complex, import-replacing city regions as engines for diversified production in her ³Cities and the Wealth of Nations.² David Morris¹s Institute for Local Self Reliance is developing local and national ordinances that encourage rather than discourage small business development. Judy Wicks has united green entrepreneurs in regional Business Alliances for Local Living Economies. Peter Barnes reminds us that land and air and oceans and minerals are all part of the commons and as such their use should be limited, with income derived from their use distributed to all stakeholders. Gar Alperovitz has long articulated the benefits of distributed ownership and has promoted the tools for accomplishing such shared wealth. Winona LaDuke is re-inventing the economy of tribal nations by regathering lands lost to tribal control and reintroducing traditional production methods. Majora Carter and Van Jones understand that green jobs‹retrofitting homes and workplaces to make them more energy efficient and restoring polluted sites‹can help to renew our inner cities while providing dignified employment opportunities. Amory Lovins¹s Rocky Mountain Institute is exploring technologies for a new economy and how to make such products economically viable. The Center for a New American Dream and Green America are teaching the individual and corporate consumer to change long-established patterns of buying to cause less impact on the Earth. Community Supported Agriculture (CSA) farmers are making the growing of food a visible process and educating a new generation about the importance of sourcing food locally. Wes Jackson¹s Land Institute is challenging our agriculture system¹s dependence on annual crops by breeding perennial grains; his is a 100-year vision. Woody Tasch¹s Slow Money Institute and other innovative social investment groups are devising how to finance a new economy. The Transition Town movement is energizing discussions in town after town about what citizens can do to reduce dependency on global imports and return to using locally sourced goods. Local currencies such as BerkShares have captured the imaginations of activists and economists alike as an effective tool for keeping wealth circulating in a region and effecting greater economic self-determination. Academic institutions such as the Ecological Economics program at the University of Maryland under Herman Daly, Robert Costanza¹s Gund Institute at the University of Vermont, and Neva Goodwin¹s Global Development and Environment Institute at Tufts University are reshaping the study of economics to factor in the social and environmental costs of production. Hazel Henderson, a pioneer thinker on green economics, continues to influence a younger generation to challenge existing financial systems and create change. Joseph Stiglitz is setting an example for fellow economists to rethink all established economic assumptions in order to forge a new economy. Gus Speth, Bill McKibben, David Boyle, Peter Victor, Benjamin Barber, Michael Shuman, David Korten, and Juliet Schor are among a growing list of authors writing about a new economy, and through their writing, building the imagination to get us there. And there are others. What is needed now is some entity to bring these various organizations and individuals together, to frame a common story, to tell it in multiple voices, to strategize the steps towards implementation, and to take collective action to achieve the transition. We see a New Economics Institute as a collaborative, open, inclusive, value-added think tank working closely with existing organizations and research programs to:

1. Identify and fill gaps in knowledge;

2. Package together various presently isolated strands of work into a coherent and encompassing narrative;

3. Present these so as to achieve maximum impact on public and political debate, individual and business behavior, and public policy;

4. Support existing organizations by building the profile of a coherent new economics; and

5. Build a network of fellows from partnering organizations to engage in specific projects, research, or campaigns.

Building a New Economics Institute In “Small Is Beautiful: Economics as if People Mattered” economist Fritz Schumacher drew from a broad palette to develop what he called “an economy of permanence.” He wove together culture, society, ecology, scale, technology, and governance as necessary and related factors in shaping a new economy. The E. F. Schumacher Society in the Berkshire region of western Massachusetts has a thirty year history of building on Schumacher’s interdisciplinary approach to economics‹stewarding his library and archives, providing a venue for new voices in the field, convening conferences, publishing papers, and transforming ideas into action through model economic programs in its home region. It is gaining extensive media recognition for its work on decentralizing and democratizing the institutions of land, labor, and capital. In its twenty-two years of work similarly borne out of Schumacher’s thinking, the New Economics Foundation (nef) in London (www.neweconomics.org), has developed an impressive record of applied research and public policy initiatives at the local, national, and international level. nef is acknowledged by British media as the voice of a New Economics. Its diverse campaigns have gathered organizations together in common cause and have bettered the lives of people in small villages around the world and in the neighborhoods of bustling European cities. The E. F. Schumacher Society and nef recognize that their combined fifty-year history of providing the theory and application of a new economics on both sides of the Atlantic, uniquely positions them to contribute to the building of a new initiative. Accepting this responsibility, the Schumacher Society is partnering with nef to form the New Economics Institute, a US based organization. We will keep you informed of developments. A friend commented that what she likes about the proposed Institute is that it is addressing multiple issues from one root source‹the transformation of our current economic system. That engages and inspires her, as it does us.

See you Saturday!

Ethan

Time MagazineJuly 13, 2009

http://www.time.com/time/magazine/article/0,9171,1908421,00.html

With local economies flailing communities across the U.S. are trying to
drum up more action on Main Street. “Buy Local” campaigns are one way to go.
But many towns–from Ojai, Calif., to Greensboro, N.C.–are considering
going a step further and printing money that can only be spent locally.

Issuing an alternative currency is perfectly legal, as long as it is treated
as taxable income and consists of paper bills rather than coins. In the
U.S., where local currencies were popular during the Depression, the biggest
alterna-cash system is in Massachusetts’ Berkshire County. Go to one of
several banks there, hand a teller $95 and get back $100 worth of
BerkShares, a nice little discount designed to reel in users. BerkShares are
printed on special paper (by a local business, naturally–a subsidiary of
Crane Paper Co., which has been printing U.S. greenbacks since 1879). And
since the program’s inception in 2006, more than $2.5 million in BerkShares
have circulated through bakeries, vets’ offices and some 400 other
businesses that choose to accept the colorful bills, which feature famous
former Berkshire residents, including W.E.B. Du Bois and Norman Rockwell.

What’s the point of all this pretty, community-printed currency? Money spent
at locally owned companies tends to create more business for local
suppliers, accountants, etc. The New Economics Foundation (NEF), a London
think tank, compared the effects of purchasing produce at a supermarket and
at a farmer’s market and found that twice the money stayed in a community
when folks bought locally. A study of Grand Rapids, Mich., released last
fall by consulting firm Civic Economics, concluded that a 10% shift in
market share from chain stores to independents would yield 1,600 new jobs
and pump $137 million into the area. “Money is like blood,” says NEF
researcher David Boyle. Local purchases recirculate it, but patronize
mega-chains or online retailers, he says, and “it flows out like a wound.”

Interest in cash alternatives has skyrocketed in recent months
BerkShares.org logged nearly 42,000 hits a day in April) as the recession
has encouraged more innovation. For example, a Vermont business association
is getting ready to launch a statewide cashless trading network. Ithaca,
N.Y., which has the nation’s longest-running independent currency, agreed in
June to let people start using the 18-year-old bills to buy transit passes.

But how hard is it to manage and maintain these trade boosters? Ed Collom,
an associate professor of sociology at the University of Southern Maine, has
studied volunteer-run programs like Ithaca’s and found that about 80%
failed, chiefly because of administrative burnout. That’s why many newer
models, like BerkShares, are now set up as nonprofits, complete with
administrative support.

Beyond spurring local trade, alternative currencies build awareness about
the effect of consumers’ choices. “It has started a conversation: Why local
currency? Why buy local?” says Oliver Dudok van Heel, who last fall helped
launch the Lewes pound to help a British town become more
self-sustainable.Local currency can generate customer loyalty, but not every
business feels as though it can offer a discount like the one built into
BerkShares. “They just aren’t viable for us,” says Beth Parsons, whose
family owns a grocery store in Lenox, Mass. But as a consumer, she likes the
idea. Parsons recently drove to a nearby town to buy some shoes instead of
getting them online. Afterward, she says, she passed a BerkShares sign “at
the bank and thought, ‘Oh, I should’ve bought BerkShare bucks to save money
on these.’”

Why are Local Currencies so popular?  There are a number of reasons people are going back to local currencies; the main being the push to localization…geographic regions creating bio-regenetive economic, social, and environmental frameworks that promote healthy, sustainable living conditions.   Local Currencies are sprouting up in cities across the country at a staggering rate.  With exposure in this month’s edition of Time Magazine, they’re sure to attract even more attention.