Fair Trade
by Eric Brown
Imagine a community in which the cornerstone of trade is a currency based on faith in your neighbor, not on a government promise to incur debt. Businesses put their profits back into the community, creating local jobs. Locally-produced and purchased goods, services and agriculture are the norm, not the exception. Individuals’ talent, ingenuity and creativity take on new and tradable value. And the minimum wage is $10 an hour.
Sound far-fetched? As big box corporate retailers and agribusinesses gobble up small towns, small businesses, and family farms from coast to coast, a small but growing movement is helping us to rethink the way we exchange goods and services. Bartering, in a variety of forms, is capturing the imagination of communities around the world, providing good jobs at a livable wage, protecting the environment and improving the quality of life for millions of people.
Of course, bartering is nothing new. Neighbors have been exchanging cups of milk for cups of sugar since the invention of the cup. In the past twenty years, however, more and more people have discovered the economic, social and environmental advantages of bartering on a community-wide scale.
Ithaca Hours Pay Off
The most popular form of large scale community bartering in the United States is community currency, of which Ithaca Hours is perhaps the most famous. Developed by Paul Glover for his upstate New York town in 1991, the Ithaca Hour, like most currencies, is backed by trust. (The U.S. dollar, which used to be backed by gold, is now backed by debt. Author and poet Wendell Berry once suggested a local currency for parts of rural Kentucky backed by chickens.) The Ithaca Hour is a “local tender” ten-dollar bill (fully legal, but taxable in U.S. Dollars) equivalent to one hour’s worth of work, which can be used to purchase a wide range of goods and services. The system is quite simple—Ithaca Hours publishes a newsletter listing the goods and services being offered in exchange for Hours notes, and the public does the rest, exchanging at will. As the program grows, currency is added to the system.
Since paper money is only as valuable as the confidence its owner has in his or her ability to redeem it for something else, local currency literally becomes a sign of faith in one’s neighbor. By this measure, the people of Ithaca are a faithful lot. Beginning with 90 individuals and 5 businesses, Ithaca Hours are now accepted by over 400 business establishments and are used by several thousand individuals. It is estimated that several million dollars worth of Ithaca Hours have been exchanged in the past eight years. And slowly but surely, the idea is catching on. Today, about 65 other communities in the United States, Canada, Mexico and France are now using Hours-type currency systems.
The Wide World of Bartering
If community currencies like Ithaca Hours are the best known form of organized bartering in the U.S., they are by no means the only system currently in use around the world. Local Economic Trading Systems, known as LETS, got their start in 1982 in British Columbia, when Michael Linton designed a currency-free credit and debit system to help participants trade goods and services. Instead of exchanging paper notes for work, as in an Hours-based system, transactions are made between network members through a centralized “bank.” LETS systems got a boost with the advent of computer commerce, and now there are over 1,000 such networks around the world. The E.F. Schumacher Society, which promotes local currency, says that the concept has been slow to catch on in the United States because Americans prefer the anonymity, spontaneity and independence offered by currency-based systems.
In the early eighties, noted professor and anti-poverty advocate Edgar Cahn devised a bartering system for volunteerism called Time Dollars. For every hour volunteered, Time Dollars participants earn an hour’s worth of volunteer services in return. Thus, one can use their skills and resources to help others (by providing transportation, elder care, cooking, etc.), receiving Time Dollars in return. Then they can “spend” their accrued Time Dollars on friends, family, neighbors, or even total strangers, who can receive similar services from other program participants. Cahn’s Time Dollars Institute estimates that there are over one hundred Time Dollars systems in place in the United States, Great Britain and Japan, but admits there may be many more, since Time Dollars organizational software is available free on the Institute’s website (www.timedollar.org).
Other forms of bartering include store notes—which are in effect limited-issue bonds—and good old-fashioned direct trading. The store note came into vogue in 1989, when The Deli in Great Barrington, Massachusetts was refused a loan by a local bank to finance a move. With nowhere else to turn, the deli’s owner, Frank Tortoriello, offered his customers an appetizing option. Tortoriello issued “Deli Dollars,” worth ten dollars in food at the new location, for eight dollars. He raised the necessary funds in thirty days, and made good on the Deli Dollars to his loyal investor/customers. Store notes continue to be an innovative way to build on community goodwill to raise capital, and are a particularly useful form of financing in communities that have traditionally been denied access to financial services.
Fair, Green Trade Lifts Up Communities
While bartering, in its many forms, has obvious economic and social advantages, the environmental and economic justice benefits should not be overlooked. Local exchange systems promote the trade of locally-grown food and locally-produced products. Such products require less fuel to transport, and agricultural products require fewer, if any, preservatives. Local products are subject to much higher scrutiny than those produced at great distance, giving the consumer greater access to information about the environmental and ethical standards employed by the producer, and allowing the consumer to have more influence on production practices. Moreover, in Ithaca, for example, many farm workers are paid in Hours, which gives them $10 in buying power for every hour worked, making them perhaps the highest paid agricultural workers on the planet.
Regardless of the methodology, barter systems are helping to build community and change the way people view their own work. Bartering systems could be particularly effective in low-income communities in which access to decent-paying jobs is limited. As Janet Ingraham of Simply Dollars in Columbus, Ohio, points out, “Bartering promotes respect for each person because your work is valued.” Cheryl L. Woerner, the organizer of the Takoma Park, Maryland-based Free Exchange Network agrees. “Bartering is financially empowering,” she says.
Financial empowerment, says Ithaca Hours’ Paul Glover, is the key to the success of Ithaca Hours and programs like it. “Local currency enables people to create practical markets to meet local needs,” Glover told Enough! Contrast this with recent currency troubles in Asia, Russia and South America. “The global market is an abstraction fed by speed-of-light trading of electronic units,” Glover says. “Our marketplace is a real place where people encounter each other not only as traders, but as friends, acquaintances and political allies.”
— Eric Brown is Communications Director for the Center for a New American Dream