237
CREA WEA f H- GROWING LO WITH LOCA Gwendolyn Hallsm

Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Embed Size (px)

DESCRIPTION

Bernard Lietaer - Creating Wealth - Intentional Cities, Intentional Economies

Citation preview

Page 1: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CREATINGWEALTH

f

H-

H

fj

GROWING LOCAL ECONOMIES

WITH LOCAL CURRENCIES

Gwendolyn Hallsmith & Bernard Lietacr

Page 2: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Advance Praise for

CREATINGWEALTH

We:ve seen thelocal foodmovement grow and spread, and thelocal energy movement too.Butthelocalmoney ideais just as important; here:s some common sense explanation of why andhow!

— BillMcKibben, author DeepEconomy

Creating Wealth is the mostpractical and comprehensiveguide for creating community wealth.Ithelps cities envision andmodel richer alternatives; healthier, more equitable, sustainablefutures. This timely book desen-es a wide audience.

— HazelHenderson, author EthicalMarkets: Growing

The GreenEconomy andthe GreenTransition Scoreboard®

Two masters have come together to create aninstant classic. Few canhold a candle to GwendolynHallsmithwhenit comes to a systems approach that enables communities to vision a differentfuture. BernardLietaer as an originator of the Euro is without peer whenit comes to both thetheory andpractice of expanding thepossibleby creating new currencies. Together, they share acommitment to renewing cities and creating a sustainable world for all endangered species —

including our own. This is abook thatprovides framework, theory, examples galore andtools.Get it.Useit.For us at TimeBanking andfor our law school courseinSystem Change, this isrequired reading.

Page 3: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

— Edgar S. Calm, PhD, JD, Ashoka Fellow,DistinguishedProfessor of Law,

originator, TimeBanking, Washington, DC

Idare consider this is the single most important reflectionineconomics since Adam Smith.— Dr. Samir Ghabbour, University of Cairo, Chairman,

EgyptianNational Committee for the UNESCOMan andBiosphere Programme (MAB)

Clearly describes the ever-greater role for community- credits, as national currencies evaporate.— PaulGlover, founder of Ithaca HOURS

and author of HometownMoney

Not sinceNaturalCapitalism has abook offerednew ways for wealth to be created; it’s a must

read for city counselors, localpoliticians,business people and even-one who wants a vibranteconomy without destroying theplanet in theprocess.

— Harry7 Blutstein, Founder, The Lighthouse Bureau,Northcote, Australia

Page 4: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

As this book goes to print,we stand at the dawn of a new era on Earth.

Wehope that this work willhelpinsome smaLl wayto build thebridge to abrighter futurefor all of Earth5s children.

Page 5: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Contents

PrefacebyDennisMeadowsForewordbyHunterLovins

Acknowledgments

Introduction: Cities AndEconomies

PARTI: LOCAL ECONOMICSl.What Is Wealth?

2, Crash andBurn Economics3. Community Capitalism

4. The Possibility of Sufficiency and Abundance

FARTII: EXAMPLES OF COMPLEMENTARY CURRENCIES

5. BuildingEquity

6. GrowingIntelligence

7. The Creative Economy8, ExchangingEcologies

Q. Minding the Community’s Business10. Putting the Care Back InHealthcare

li.Honoring Our Elders, CaringFor Children12. EatingMoney

PARTIII:MAKINGIT HAPPEN13. Intentional Cities

14. A Tale of Three Cities

Conclusion: Toward A Monetary Democracy

Appendix: The Community Currency How-To ManualEndnotes

Page 6: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

ResourcesAbout the Authors

Page 7: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Preface

by Dennis Meadows

A century7 fromnow social analysts willlookback with angry7 astonishment at the extent our

generation accepted the economists' fantasy — happiness requires perpetual economic growth.This mayhavebeen true once; definitely nowit is false. Indeed, the exponentially expandinguse

of energy7 and resources brought bypursuit of growthnow erodes the foundations for thehappiness, even threatens thesurvival, of our species.

Thegrowingnumbers of people who recognize this tend to seek technological changes — factorfour improvements inresource use, shifts to renewable energy7 sources, sequestration of carbondioxide, genetic modifications ofplant strains, and others. These arehelpful. However, none ofthese efforts will succeedwithout a fundamental changeinour understanding ofhumanwealth.And that will requireprofound changes inour systems of money.

Those who gainprofit fromthe current global system obviouslywillvigorously resist anyefforts to changeit.Andthey willprevailuntilindustrial society7 collapses. Currentpolicies willbedesperatelypursueduntil they must be changedinresponse to crisis. But individuals, families,communities,perhaps evenregions, can beginnowpTOactively to make the necessary7 changesthat will lead to truehappiness and sustainable wealth.Iknow of no other pair better qualifiedthanBernardLietaer andGwendolynHallsmith to offer

the theoretical understanding and thepractical experience required for usefulinsights on theseissues. This book is an extremely important and very7 unique resource.It offers theoreticalinsights andpractical actions for those who want to respondnow to the most important globalissue of our time.

DENNIS MEADOWSis co-author ofLimits to Growth andBeyond theLimits.

Page 8: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

FOREWORD

Natural CapitalismPlusby Hunter Lovins

Creating Wealthis abook that the worldhas needed for a very longtime.Arguably,if the economists and accountants who have run the world's financial system off a

cliff had read this book, we'd allhave a great deal more wealthnow, and the world wouldnot beintheparlous straits inwhichwe allnow find ourselves.

Its authors know whereof they speak andhavepracticed wealth creation incommunitiesaroundthe world. Bernard, Gwen andIfirst worked together on aproject called LASER — LocalAction for Sustainable Economic Renewal. Gwen andIcame up with the name for theproject on

a very long (and scan7) drive to Belgrade, Yugoslavia from a workshop we'd deliveredinNovi Sad,Serbia. The war inKosovo had just ended, and Serbia was rebuilding their economy fromtheruins. America's Development Foundation(ADF) hadinvitedus to Novi Sadbecause thelocalcommunity resourcepeople neededtraining onhowto foster local economic development inhardtimes. Gwenbrought the expertise she'd developedinsuch challenging economies as

Kazakhstan andthe townships of SouthAfrica.Ibrought economic development lessons fromAfghanistan, Jamaica andthehollows of Appalachia.

We realized during the workshop that people aroundthe worldneeded theideas we were

giving the Serbians. Whenpeoplein a community work together on economic development, theyneed to understand andproductively use several forms of capital.Natural capital — theenvironmental sendees providedby Mother Earth — is critical,but so are the forms ofhuman andsocial capital,historic and cultural capital,built capital. Andthe means we use to make exchangesare also very important. ADF funded the development of aninternationalworkbook and resource

guide so that people trying to jump-start their economy wouldknowhowto begin, andLASERwas born.

Page 9: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

NaturalCapitalism offers the way for businesses to profitbyworking withnatureinstead ofagainst it. Creating Wealth likewiseprovides thebasis for communities to growtheir localeconomies by investinginall the forms of capital that lead to sustainable wealth. Communitycapitalismbuilds community assets so that enterprises, organizations andindividuals can

prosper.NaturalCapitalism is thebusiness model of the 21st centuiy economy, and CreatingWealth is the community economic development model that business and citizens needto besuccessful. The two go handinhand — businesses can’t succeedwithout community investmentin infrastructure, education,health andthe rule of law. Communities can’t succeedwithout theentrepreneurialinitiatives thatprovide us withtheproducts and sendees we need.

Usingthe strategies describedhere,businesses can further expand their profitability as theyimplement environmental stewardship and employee well-being — evenintough times — byfinding alternative means of exchange. The example of the WIR systeminSwitzerland shows us

that complementary currencies make the economy more resilient and significantly reduce thebuilt-ingrowthimperative that drives environmental destruction and economic dislocation.

Growth andprofit arekey elements of the economy. Withthis book, Bernard andGwendemonstrate that far frombeing a neutralmeans of exchange, the financial system serves as analmost invisible driver of unnecessary andunhealthy growth — the ideology of the canceT cell. Byexpanding the diversity of exchanges, we can achieve the growthwe need — growthinintelligence,health, naturalbeauty, the arts, spiritual development, recreation andpeace — andeliminate the unproductive waste and destruction that nowthreatens life on earth.

Welcome to the future. You’regoing to likeliving there.

L. HUNTER LOVINS is President of theNaturalCapitalismInc. fwww.natcamnc.comh Ms. Lovinshas lectured extensively inover 15 countries, including at the WorldEconomic Forum at Davos,The International Symposium on Sustainable Development inShanghai, the GlobalEconomicForum, and the World Summit on Sustainable Development. Shehas consulted for industriesandgovernments worldwide, andhas co-authoredninebooks, including the1999 bookNaturalCapitalism.

Page 10: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Acknowledgments

Even7book comes into beingwithmany hands shapingits birth.Beyond the creative work, thereare also all the trees that provide thepaper, the minerals that provide theink, and the energyneededto giveit life and shape. We aregrateful to all thebright minds that influenced our work,and all of Earth's abundance for makingit possible.

Gwendolynis particularly grateful to Bernard, who has taught her much about the world ofmoney, and whosepatience withher learningprocess has shapedher thinking andhelpedherfindnew ways to initiate new currency projects. Three new currencies are currentlybeing createdand usedinVermont, where she lives withher family. GeorgeHallsmith, Gwendolyn's husband,is a tireless editor andprovides so much support for allher work,it is hardto findwords to

express howmuch anintegralpart of this work heis. Her son, DylanHallsmith, is now studyingInternationalPolitics at GeorgeMasonUniversity,buthis support and tolerance of a mother wholeaves for weeks at a time to get thebook writtenis deeply appreciated.

Perhaps more than anyone, Gwendolyn'sparents andfamily are also worthmentioning.Wesley andJoan Hall set amazing examples ofprincipled, intelligent people who workedhard forwhat they believe. Joan diedin 2007,but Wesley continues to be very7 interestedinandsupportive of Gwendolyn's work (evenifhe does refer to all these complementajy currencies as

“funny money”). Her sisters,Gaylynn and Gretchen, areboth artists and createbeautifulnew

ideas andrealities even7 day. They are aninspiration.The staff at New Society7 Publishers havebeen great to work with — Chris andJudithhavebeen

faithful to this rather unusualbook project, which started out withthe premise that it would takeover three years to write, simply because we wantedto bring some of theprojects we were

developing to fruition. Theykept the faiththat it wouldget written, andit did. Inthe meantime,several new currencies havebeen developedinboth the United States andEurope as aresult ofour collaboration, so this is abook thathas shown real results evenbeforeit went toprint.

BetsyNuse, the editor,has workedhardto get all the editing done quickly andpainlessly. Herassistance withall the vagaries of style and clarity7havebeen enormously helpful.The marketingteam atNew Society7 are also amazing —Iwas never so surprised to findthatpeople could

Page 11: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

purchase advance copies onAmazon.combefore wehad even finishedthe editing.Other editing assistance from Gina Ottoboni came at a critical time whenmy schedule was very

demanding andIneededhelppulling the last pieces together. Finally,Fmgrateful to the BalatonGroup andDennis Meadows, who saw theimportance of what we were talking about andscheduledthe 2010 meetinginIceland. That gave us a reason to travel there and meet with all theactivists who were trying toput that country back onits feet. They also were aninspiration, andwe wish themthebest as the country struggles withreal economic challenges.

Page 12: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

INTRODUCTION

Cities andEconomies

Creatingwealth — theidea catches peopleby surprise. Our systemtends to instill theidea thatour collective wealth adds up to a finitebottomline of financial assets, and the questionis mainlyone of distribution, not of creation. The call for lower taxes, the resistance to higher minimumwages, theidea that wealthheld at thehighest levels“trickles down" all contain this hiddenassumption — thereis only so much wealth out there, andwe all need to struggle to get our pieceof a finite, limitedpie. Yet history and everyday reality tell a different story: weliveina world ofexpandingpies, andwhile some things ontheplanet are finite (theland area available, the fertilesoils, the fresh water and fossil fuels, to name a few) there is no limit to humaningenuity,creativity andimagination.

Our ingenuity andinnovationhave expanded the wealth of thehuman species by orders ofmagnitude, especially over the last century. Wehave collectivelybuilt a remarkable wealthcreationmachine, andyet its construction over timehas made most of us — eventhepeople whoturnits wheels andkeepit inworking order — blindto howit works. This newmarvelhasresultedina middle-class lifestyleinthe developedparts of the worldthat makes some of theroyalty and aristocracy of yesterday look hardscrabbleby comparison.

If time travel werepossible andwe managed to go backbefore theindustrial era to talk aboutcomputers, iPods, theInternet, cellphones, automobiles and airplanes, thepeople there wouldthink we were wizards and witches, and they wouldprobablyburnus at the stake. Centralheatandrunningwater were not commonuntil themid1900s. Tours of the ancient manorialhousesand castles of Europereveal that their relative levels of creature comforts were onpar with themodernmiddle class inEurope, Asia,North and South America.

We create wealth. We do it as a society, not as individuals, despite what the dominant myth ofruggedindividualisminNorth America wouldhave youbelieve. Farmers have ahardtime

Page 13: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

bringingtheir produce to market without decent roads. Merchants depend on a reliable currencyto sell their goods and sendees. Even some of the iconic capitalists of the early 20th century — theRockefellers, Carnegies andMellons — depended ontaxpayer-fundedinfrastructure to amass thevast fortunes that still formthe foundation of companies like Exxon/Mobil, US Steel andAlcan.Even today, Bill Gates wouldbe just another hacker without the laws our governments havepassedprotectingintellectualproperty.

Wealth’s FoundationOne of theprimary mechanisms for the creation of wealthis our banking andmonetary system.We allput our money into thebanks — theblackbox of the economy — and we assume themoney willbe there whenwe go to withdrawit. At least part of our mindprobably believes thatthe money is there. Wereceive statements even- month that say it’s there, and we earninterestonthe deposits.

Yet like the myth of the self-made millionaire, thepresence of our moneyinthebank is an

illusion. Banks use the deposits theyhave to loanmoney out to individuals andbusinesses — thisishowthey earntheinterest they pay on our deposits, after all. The fractional reserve system, thelegal structuregoverninghowbanks operate, requires thatbanks only maintaininthe order of10% of the money wehaveplaced on deposit as a reserve.Inother words, for even- dollar we

deposit, thebank can create an additional $9 in loans to businesses. They have thepower tocreate financialwealthby issuingnewmoney.

So,howis realwealth created? It is not the slips of paper we call cash. History has shown timeand again thatpaper (andnow electronic) representations of wealth are only as good as ourcollective confidenceintheir value. Inthis book, we will showhowthe roots of realwealthlieinour shared values,understanding andinstitutional structures,but also inthe different forms ofcapitalwe generate and regenerate as a community. The word capital carries animplicit meaningthat speaks to a regenerative capacity — it is, as we will explaininChapter 3, an asset that can

produce other assets. Of course, the foundation of all our wealthis the ecologicalintegrity of theplanet we callhome. . . it is the source of all the regenerative capacities we needthe most — land,air, water, food, materials and energy.

The singular form of money wehave created through our laws andinstitutional arrangementshas been a cornerstone of financialwealth through the19th and 20th centuries. But the demandsof the 21st century andthe imperatives of the global challenges of climate change, resource

scarcity and unprecedentedgrowthinhumanpopulations call us to a more comprehensiveunderstanding of wealth andmore democratic andresilient wealth creationprocesses and

Page 14: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

mechanisms. Most of these alternatives canbeinitiated at the locallevelby cities and otherorganizations. City leaders canplay a roleinthe education, funding and structures required to

give us all a voiceinthe creation of sustainable wealth.

Overview of the BookThe original title of this book was Intentional Cities,IntentionalEconomies — to emphasize thelink between the actions cities take and thehealth of their local economies. Cities don:t oftenrecognize this link — or realize that theyhave the capacity to improve their economies. They can

do this by bringing the community together around a sharedvision, settinggoals andidentifyingstrategies to make their local economy more self-reliant, more vibrant. They canhelp theircitizens achievereal andlasting wealth. Inthis way, cities become more intentional, meaning thatthey are movingina directionthey choose rather thanbeingbuffetedby the winds of change.Whenthey focus onthe ways they create wealth, they also choose the focus, theintention, theywant to give to their economies.

PartIof thebook describes theprocess by whichwealthis created and explains the role of theexisting financial systeminthis process. PartIIdescribes a variety of different forms of localcurrencies, circulatinginparallelwiththe official currency, that address specific problems thatcities and communities face. Part IIIis designed as a case study and “howto" manual — itdescribes how several cities have managedto engage their populations inlong-term sustainabilityplanning andhowthese efforts have either supportedlocal currencies or helped create them, as

well as some lessons learned about whenit might notbepossible to succeed.Wehope you findthebook inspiring andthat it gives you enoughinformationto move

forward. Our compendium of community level currencies is not exhaustive — there are manyhundreds wehave not described. But the structures and mechanisms weinclude are all replicablein other domains — they are only limitedby your imagination and the courage you want to take as

a leader. Introducingnewideas is never easy, andwe will see that introducingnewideas aboutmoney has its own unique challenges.More on this intheboohs conclusion — until then, enjoy!

— Gwendolyn andBernardReykjavik, Iceland

Page 15: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

PARTI

LOCAL ECONOMICS

A

*i \

> V5i -r'

r>'

Page 16: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER1

What is Wealth?

Wealth consists not in having greatpossessions,

but in havingfew wants.

EPICTETUS

The appeal ofbigprize lotten7 tickets conies inpart fromthe fantasy the tickets allow. Weimagineall the things we could do, charities,projects, Teal change that we couldhelp makehappen. Thereis no denying the appeal of vast sums of money.Inour dreams, money solves all our problems,gives us resources to meet needs we never knew wehad.But is it wealth?

Youmighthavepickedup this book because youthought it would tell you something abouthowyou canincrease your ownpersonalwealth — andit will.But Creating Wealth is not anotherget-rich-quick scheme — this book willhelpyou find and create wealthinplaces youmight not

expect. It also might showyouhow wealthy you already are.

RedefiningWealthWealth. It:s somethingwe allwant. Wealthy is rich, after all — but richinwhat? Inpossessions,money, income? This depends onhowyou define the word. Its originalmeaning, fromthe Old

English weal (as incommonweal), was simply prosperity or well-being.’'1What a notion! How farfromthe meaningmany of us have come to associate with the word. Wealthis more than the

Page 17: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

accumulation of money andresources, andit canbe generatedinways other thanthroughconventional financial means. Inorder to truly capture the wealth of our societies, our culturesand our environments, wehave to pay heedto that older notion of wealth as well-being. Wemight think that winningthelottery willmake us wealthy and that wealth willmake us happy,butwe also knowthatit doesn't always work that way. While it's true that poverty7 does make forunhappiness, lots of money doesn't necessarily buyhappiness.

We may have seen cases where someone who has hadvery lowincome wins thelottery or

obtains abig court settlement — andyet the money often doesn't manage to improve their livesvery- much.Inmany such cases, things get worse as the stress ofpossessing money and allits new

demands take their toll — howtokeepit, suddenly meeting relatives and friends younever knewyouhad, con artists and an anny of “investment advisors.”

How do we obtain well-being,if acquiring more money doesn't do it? When are wehappy? Weknowthe answer to this question — wehave a sense of well-being when all of our needs are met.Not just thebasic needs of food, clothing and shelter. But also the needto be a creativeparticipant inour community, to have a voiceinour own destiny, to pursue our own spiritualdevelopment unhinderedby social sanction, to have time to rest,play and justbe with ourfamilies. Our needs are multi-faceted, andyet withthe dominant emphasis onthe consumer

economy, the major economic actors — businesses and corporations — are always advertising toconvince us to buy our way to fulfillment.

We don't needmoney. We needthe things that money canbuy.

Overweight? Buy a dietplan and an exercise machine. Unhappy? There are lots ofself-improvementprograms you canbuy. Spiritually lost? Buy abook, a videotape, join a

successfulmegachurch or take a vacation at a resort. Our need for self-expression is increasinglymet through the clothes we wear, the cars we drive. Arts andmusic are left to theprofessionalswho have their owngoods and sendees available for sale. Andyet after all this we findthat theconsumer solutions don't work — the temporary- gratificationwe get fromnewproducts onlydeepens the underlying need. Butif we can't buy our way to happiness, therehas to be anotherway.

We needto redefine wealth as the first stepincharting a course towards sustainable wealth. Sowhat is meantby that? Remember the notion of commonweal (public well-being)? Developing

Page 18: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

real wealthimplies making choices that enable allmembers of the community to attainwell-being. Sustainable wealth means projectingthat notion into the future,much as the WorldCommission on Environment andDevelopment did whenit defined sustainable development as

“meeting the needs of thepresent without compromising the ability7 of futuregenerations to meet

their own needs.”2 If wehad sustainable wealth, we wouldhave a community with well-being — a

community whose needs were met without borrowingits wealth fromfuture generations.

A Systems PerspectiveWhat are our needs, andhow are they satisfied? It is possible to do an empirical evaluationsimply by looking around at the different institutions,programs, goods and sendees that are

offeredinsociety.Not that all of them meet real needs — some are obviously therebecause a

want or an artificial needhas been created,but taking aninventory of the assets wehave — assets

being defined as need satisfiers — gives us a good startingpoint.

Human and Social Development needs:health and well-being

Empowerment needs: equity, conflict resolution, self-determination

f Economic needs: income, meaningful work

1Material needs: housing, communication systems, transportation, energy, waste

management, food

Environmental needs: air, water,biodiversity,pollination, stable climate

FIGURE 1.1. HumanNeeds and Community Systems

Page 19: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Before we canbe a contributingpart of any community, wehave a need for humandevelopment. We need education,healthcare, self-esteem, skills, recreational opportunities.There are assets inour communities that meet these needs — schools, universities, child care

programs, wellness and medical services,hospitals, recreationprograms and facilities. Whenthesystems areinplace to help us allbehealthy,productive andhappypeople, we can also say thatour community- has sufficienthuman capital.Human capital canbe defined as the capacity-communities have to further our development as humanbeings, along with the aggregate skills,knowledge and abilities peopleinthe community7have and can continue to maintain.

We also have social needs — the needs that can onlybe fulfilledby beingpart of a community7.We need to have a sense of connectedness, a sense of community7. We need to feel safe, to

express ourselves and enjoy thebeauty7 of our surroundings. We need a sense of meaning andpurpose, andmeaningis invariably generated only throughrelationships (relationships to our

children, our family, our country7, or to our idea of the divine). Thesehuman and social needshave given rise over the centuries to many of the religions and spiritual traditions. We needsupportive relationships, networks of friends and a sense that we're contributing to thecommunity7. Whenthese needs are satisfied, we can say that wehave many social assets. Whenwehave systems inplace that insure we can continue to meet our social and cultural needs as a

community7, we can say that wehave sufficient social andcultural capital.To make decisions, resolve conflict andto insure that we allhave alevel of equity7, we allhave a

need for empowerment. Theinstitutions wehave establishedto govern ourselves, theprogramsin the community7 that helppeople resolve disputes andthelaws and regulations wehave toprovide a just andpeaceful society7 are the assets wehaveinthis area. The institutional capitalinour community7 is the legal framework andthe traditions, structures and other foundations thatenable our societies to continue to recreate theinstitutions they need.

Whenpeople think of needs, the first things that often come to mind are thebasic needs offood, clothing and shelter. These material needs are obviously7 important, and thebuildings,manufacturedproducts, technology7 andinfrastructure we developinour communities are theassets wehave to satisfy these needs. Whenwehavegood affordablehousing, safe andhealthydrinkingwater, effective systems for recycling and reusing waste, renewable energy7 systems,healthy local foodproduction, communication systems that link us up with each other andtherest of the world, wehave the built and technological capital we need to prosper.

Our material needs go bey7ond what we make ourselves, obviously, and so we can also speak ofthe environmental needs wehave. We need clean air to breathe, diverse ecosystems that support

Page 20: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

a widevariety ofplant and animallife, a stable climate, assimilative capacity for our wasteproducts, water to support other forms of life as well as for us to wash, drink and enjoy. We needhealthy soils,pollinators; all of these things are the environmental assets that serve as our basiclife-support system. Whenthe ecosystemis healthy andproductive, the core regenerativecapacity of the ecosystemis the natural capital that we need for sustainable communities.

We’ve described severalkinds of assets and capital that satisfy the needs wehave, and stilltherehas beenno mentionyet of the financial assets and capitalwe typically associate withthewords money and investment. That’s partly because money is really more of a means to an endthan a needinitself. We don’t really needmoney. We need the things that money canbuy. Wedon’t need financial capital for its own sakeif we can obtain the things it buys. The exchangecapacity of money is now, andhopefully inthe future, one of thekey reasons we needit.Moneyhelps us exchange things that are of value to us — like our time andlabor — for things that are ofvalue to someone else.

Money,however, is not the only medium of exchange. After all,peoplehavebeen exchanginggoods and sendees with each other for millennia without using money. Youhelp your neighborput on a newr roof.He fills your cavities andgives you a new crown. You drive your friend’s kids toschool. Shebaby-sits your kids.Inboththese examples, no money changes hands,but goods andservices do. The value of this type of exchange is another asset and a form of capital — potentialexchange capital.

Our community systems have developed over centuries, drivenby our needs and the necessityof satisfying them. When we speak of a wealthy community, wTe mean one that has the capacity tomeet a wide variety ofhuman needs, one thathadinvestedinall these forms of capital: social,cultural,human, institutional,built, technological, natural, financial andpotential exchange.Creating andmaintaining these diverse forms of capital over timeis the sustainability challenge.

Page 21: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Human NeedGcneral/Spedfic Type of Capital

£ -Network oFfriendi -> 'SocialCornecledneK

Aesthetic Enjoyment & "Arts, Theater, Music -Cultural

Human Development/ "Schools,Colleges,Knowledge and Shills universities. Lifelong

LearningPrograms

Human

"Housing "Built and TechnologicalMateriaÿShelter

Clean Alr/StableClimate

-Forests -ÿÿNatural

Ccisiflitt Resolution hCouriilVlediatlcin Institutional

Exchange of Goods

Exchange of Goods-> Potential Exthangs

* Financial

FIGURE 1.2. How Weeds, Assets and Capital Relate to Each Other

More thanhalf ofhumanity nowlives incities, andthis trendis expected to continue for atleast another decade. So our community wealthis oftenthe wealth that canbe foundinour cities.Cities are monuments to collectivehuman endeavor over thousands of years. They formthephysical, spatial and even the cognitive structures that meet so many of our needs. Realizing this,thebnlh of the concrete examples of wealth creation we discuss will focus on cities.

The Wealth of CitiesTo understand alternativepaths to individual, community and economic well-beinginanurbancontext, we need to look at how cities work, andwe need city leadership to address the criticalissues of a sustainable economy.InCities and the Wealth ofNations, Jane Jacobs identifiedurban regions as the most important driver of economic growth throughout history. Shedocumentedbothhow cities and regions hadthe economic clout to import goods from otherareas and also howthey devisednew ways to replace theseimports withlocally producedgoods

and sendees. This import replacement was thekey source of urban economic expansion.3

Since the EarthSummit inRio de Janeiro in1992, cities all over the worldhaveplayed a

leadingroleinthe efforts to stabilize global climate and address environmental destruction.Therehavebeen several different movements — sustainable cities,healthy cities, ecocities,resilient cities andmost recently transitiontowns — and several different new organizationsorganized to support cities5 efforts. ICLEI was one of the first; it was originally the InternationalCouncil for LocalEnvironmental Initiatives,but has been renamedICLEI: Local Governments

Page 22: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

for Sustainability.4Tlie scope and depth of this movement is confirmedby theproliferation of other organizations

that have emerged over thepast two decades. This includes, for instance, the Institute forSustainable Communities, the WorldHealth Organization’s Healthy Cities program, HealthyCities International, Ecocities International, the Center for Resilient Cities, the Cities PLUSNetwork, Global Community Initiatives and thelargest one of all — United Cities andLocalGovernments (UCLG) — a newinternational congress of cities establishedin2004 when severalglobal coalitions of cities (TheInternationalUnion of LocalAuthorities, Metropolis and the

WorldFederation of UnitedCities) mergedinto one organization.5 UCLG’s MillenniumCitiesCampaign embraces theUnitedNations MillenniumDevelopment Goals, whichput a sustainableenvironment and a sustainablelocal economy on the samepage. Cities are increasingly aware

that the solutions to climate change and environmentalproblems are embeddedintheeconomies wehave created. These cities arepositioned to bekey catalysts for large-scale change.

Cities take action on several levels, ranging frombroadpolicy changes like rezoning an area ofthe city from commercial to industrial to even small actions likebuyingpaper towels for publicrestrooms. Thepolicies take different forms — long-termplanning documents with a visionstatement, goals, targets and strategies, operatingbudgets and capitalplans, ordinances andregulations, annualgoals andpolicies to guide operations such as personnel andpurchasingpolicies. Thelong-termplans guide ordinance changes andbudgets, andinturn, thebudgets,capitalplans and annualgoals shape theimplementation activities that occur even- year. Otherpolicies provide direction for day to day operations.

So, for example, a new city councilor is elected who promised duringher campaign to reducethe carbon emissions and fossil fueluse of the city. Duringher first dayinoffice, she is presentedwith a vehiclepurchaseby thepolice department of a gas-guzzling cai for the new fleet. If shetries to stop thepurchase, she might immediatelybe frustratedby resistance fromthepolice chiefand city manager describing the fact that the vehicle was inthe capitalplan andpart of a

long-termreplacementpolicy,possibly with contracts withlocal car dealers that can’tbebroken.The new city councilor’s objections willprobablybe overruledby the councilors who havebeenserving for many years, and the vehiclepurchase willgo forward. The newest councilmembermight protest “. . .but citizens showedinthis election they wanted to reduce carbon emissionsand fossil fueluse.” Patient smiles andknowinglooks exchangedbetweenthe veterans on staffand the councilwill tellher that idealismwillbe toleratedbut that change at this level — dailyimplementation — is not that easy.

Page 23: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Campaignpromises, regular local elections, referenda andbondvotes form a steady pulse ofnewinformation and citizeninput into city7 government,but significant changes in direction takemore of a concerted effort. Freshly minted city- councilors are oftenblindto theprocesses thatguidelarge-scale implementation, andit's all too easy to getpulledinto the “business as usual”pattern of behavior, especially whenyou consider all the systemic forces that work to keep thingsthe way they are.

Cities are complex engines poweredby union contracts, standingpurchase contracts withsuppliers, experiencedprofessional staff andmaterial and energy7 flows whichhave their own

visible andinvisible infrastructure.Major alterations to theinfrastructure take carefulplanning —youwouldnot cut sewer pipes to stop the flow of waste to the treatment plant if you wanted toreduce a city’s wasteimpact, regardless ofhow easy it might seem at the time.Inthat case, it’sobvious that the unintended consequences of actionwould far outweigh the short-termresults.It’s less obvious,but no less true,inother areas (even, for example, with a gas-guzzlingvehiclethat thepolice department wants).

Along-termvisionguidedby people’s values — what they care deeply about — is aprerequisitefor mobilizing collective action. Once a city7has a long-termvision,however, things do notmagically change.It stillwillbe hard to redirect thepurchase of a vehicle for the fleet unless thelong-termvisionis translatedinto the short-termpolicies andprograms whichguideimplementation. Alarger vision for a walkable city7 with friendly neighborhoods andlesssuburban sprawl still requires changes inthelanduse ordinances before there willbe anymeasurable change indensity7. A larger vision for clean air andreduced climate impacts willhaveto be translatedinto a number ofpolicies — ranging from apurchasingpolicy7 that requiresalternatives to energy-intensiveitems to capitalplanning for renewable energy7production.

Today, very7 few cities have theintegratedlong-termplans andpolicies necessary7 to pursue thetypes of implementation activities that willmove a community7ina more sustainable direction.Often thepolicy7 context is fragmented, short-term andinternally contradictory. The city7 mighthave a master plan or a comprehensiveplan that addresses infrastructure, landuse and economicdevelopment over the next three to five years. If city7 staff and/or the city7 council are orientedtowardintegration, the capitalplanmight actually reflect thegoals of the master plan,but all too

often a city’s capitalplanis a longlist of projects that reflect departmental or councilimperativesin isolation from each other, without a sense ofhow they relate to overarchinglong-termgoalssuch as climate stabilization andpoverty7 eradication. Cities almost never address some of theimportant underlying drivers for thepolicy7 context — a sense of shared values, social andhumandevelopment issues andgovernance structures.

Page 24: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

The actionneededto achievelong-term sustainability goes beyond actions takenby citygovernment, and city7 government actions canbe ineffective if there aren't concurrent andcommensurate changes takingplaceinthelarger community7. A multi-stakeholder process givesindividuals, organizations and other major institutions inthe city7 a role and a voiceinthepreparation of theplan so that later they will also work withintheir own context to findways to

implement it.Inthis way, the city7 and allits independent movingparts will start to work towardthe same ends. Here again,however, this synchronized action doesn't happen onits own — ittakes direction and organization fromthe city7 and the stakeholders.

Integration andlong-termtimehorizons define sustainability7planning, and are more

important for achieving a city's goals thanattentionto single issues such as climate change,health or local economic development. While theseissues are important, action to address themcannot be successfulif it occurs ina silo. Anintegrated approach makes connections across issueareas, across socio-economicboundaries and across city7 departments.

It also helps insure that thepursuit of one objective won’tbe at the expense of another.Environmentalpolicies that marginalize or impoverish a group ofpeople or areainthe city7 (or inanother part of the world) won't succeedin thelongrun. Housingplans that ignore their impactonimportant open space, wetlands and agriculturallandwillhurt the city over thelongterm.

Economic development practices that rely on an unsustainable exploitation of natural resources

or humanpotentialwill also ultimatelyhave the opposite effect — they will further impoverishthe community7 rather than creating real wealth.

If you ask somelocal mayors OT city7 councilors,however, what influence theyhave ontheeconomy, they are likely to give you ablank look. Some mayhave gone as far as tobuildindustrialinfrastructureinthehopes of attractingmanufacturing firms, withtheir 19th and 20thcentury7highlypaid jobs, ignoringglobal trends thathave movedmost manufacturing to otherparts of the world. Others place their hopeinthe marketing efforts of the localChamber ofCommerce that diligently attends trade shows andplaces ads to market thelocality7 as

business-friendly.Some of the moreprogressive city7 governments haveinstitutedrevolvingloanfunds to serve

as a lender of last resort to localbusinesses with cash flow or growthissues. Theybuildincubatorspace, offer business planning services, maybe evenidentity7 sources of venture capital forstart-ups.Many governments are aware of the importance of locally ownedbusinesses,but are

still frightened away fromtaking a stand whenlarge firms threaten to comein and outcompetesmaller local ventures. Most localgovernment think that all jobs are equal and that any and allnewtax bases are sacrosanct. The economy is the master, andlocal communities are the servants

Page 25: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

who bend over backwards to accommodate investors, eveninthe face of questionablebusinesspractices.

Redefining wealth and refocusinglocalinitiatives on meetinghuman needs canhelp localieaaers see the economy as being at the service at their community,not theother way around.There are many forms of capital that demandinvestment for alocal community to thrive, not justfinancial capital. Social capital,human capital, natural capital, institutional capital, technologicalcapital,potential exchange capital,built capital and cultural capital all need to be understood andstrengthened — andthis multidimensional effort is absolutely the domain of local communities.

The Myth (andPotential) ofIndividualWealthSo far, we’ve touched on three things that define what we meanby wealth:

1. The obvious idea of possessing alot of money2. Thepresence of well-beingthroughthe satisfaction of abroad spectrum ofhuman needs3. The community systems wehave developed to provide for many of our needs

True wealthmight be defined as a sum of all three of these. Yet it is possible to feel wealthy withonly thelatter two, andit is possible to be impoverishedif allyouhaveis alot of money,but no

way to meet any of your critical needs andno community systems to support it.TheNorthAmerican mythology of ruggedindividualism tends to make us blindto the fact that

real wealth can only exist incommunit}7. “Self-made millionaires” sometimes happily forget thefact that the context for their enrichment comes out ofpublic infrastructure, institutionalarrangements andparticipationby many other peopleintheir enterprise. They are the first ones

to call for lower taxes — the US Chamber of Commerce spends more onlobbying than any otherlobbyinggroupinWashington. They often don’t seem to recognize that without the rule of law,without water and sewer sendees to industrial areas, without policies that enable their businessesto operate, they wouldnot survive, let alone make aprofit.

If most people areblindto the structures of cities and communities that enablebusinesses andorganizations to operate successfully, we are also blindto the structure of the other importantingredient of individual wealth — money. Most people do not understandthe current monetary7system,hidden as it is frompublic view.If they did, they might have second thoughts aboutwhether or not to blindly trust their financial security7, or insecurity7, exclusively to this particularsystem.

Wehopeinthis book to openyour eyes aboutboth the role of community7inwealth creation

Page 26: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

and also therole of money and other means of exchange. To do this, we needto help yonremove

theblindfoldyou’vebeen wearing(throughno fault of your own) — the monetary systemhasbeen obscuredby the forces thatprofit fromit.After all,before you can create wealth andbuildsustainable, local economies, youneed to understand wealth — what it is andwhat it is based on.

The goodnews is that youtoo have thepower to create wealth, real wealth, for yourself, yourchildren andyour community. Butbefore youbuy more lottery tickets, read onto seehoweffectivelocal action can accomplish the task with alot less risk.

Page 27: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER 2

Crash andBurnEconomics

Almost all systems ofeconomic thought arepremised on the idea ofcontinued economic growth, whichwould befine and dandy ifwe lived on an infiniteplanet, but there’s this small, niggling, inconvenientfact

that theplanet is, infact,finite, and that, unlike economic theory, it is governed byphysicalandbiological reality.

GEORGE MONBIOT

The Roller Coaster EconomyWe allknowthepositive side of our economic history. Our current financial systemhas enabledanindustrial age whichhas provedto be the most impressive wealth creationmachineinhumanhistory, at least for those countries that adoptedindustrialization early on.

However, the financialmarkets also have anunfortunate tendency tohurtle forwardlike a

runaway train, careeninginto valleys of unpredictable recession, then chugginguphills of new

opportunity, only to derail at the slightestbendinthe track — anAsian market blows up, theRussianruble crashes, subprime mortgages trigger a globalbankingmeltdown, etc. The WorldBank has identifiedno less than 96 major banking crises and178 monetary crises over thepast 25

years.1US dollars, European euros andJapanese yen stoke the train's engines, shoveledin to support

financialinterests ineven7 corner of theglobe. To keep the systemgoing, we subsidize ravenousconsumer consumptionthat devours rainforests, guzzles fossil fuels and tops it off withmelted

Page 28: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

ice caps for dessert. Finally,inthe shadow side of our economy we find also all the shadows ofhumanity itself: the operation cloaks international syndicates tradinginviolence, weapons, war,terror, illegal drugs, slaves andprostitution.

Inshort, for better and for worse, the flawed system wehavehas driventhe evolution of thehuman species onthis planet to the state wehave achieved today.

Our financial systeminfluences even-one on theplanet — fromparents, farmers, shopkeepersand students, to all the corporate andpoliticalleaders aroundthe world.Most people accept it on

faith, andyet someinconvenient questions needto be asked: Why do the avowedprinciples ofmost national and state constitutions — likepeace, democracy, ahealthy environment andhealthypeople — diverge so far frompractices we accept as business as usual? Why does thesystembreak down as often as it does? How do rationalpeople withno illintent to humanity or to

Earth’s environment perpetuate a systemthat produces violence,pollution and corruption as itsbyproduct?

Despite the centrality of financial systems to our daily lives, most of us don’t understandthefundamentals of that system. Andhow could we? It is as hidden and complex as the workings of a

secret society. Wehave been told that theprincipia economica behavelikeNewton’s naturallaws,rather thanbeing controlledby the decisions we make. This faithinthe science of economics hasbeen challengedrepeatedly by “unforeseen crises.” Aren’t sciences supposed to be able to predictthe future?

Faulty economic assumptions canhave significant ramifications. For example, many leadeconomists dismiss environmentalpollution as an “externality,” a factor not adequately priced or

otherwise accounted for inthe existing system.Inother words, whenthe theoretical system doesnot account for it, theproblemitself is abit of an anomaly.If the very basis for all economicactivity — the natural resources and ecosystem services we depend on for life — is beingirreparably harmed, andyet this is described as if it were a minor accounting mistake, there is a

serious problemwiththeunderlying theory, not with the facts.If we couldbringthe hiddendrivers of the system that are embeddedinthese theories into the open and redesign them forhealth and realprosperity,it mighthelp turnthe ship around.

Why does the economy appear to be so erratic? Evenif 90% of the time some economicmodels havepredictive value, they turn out to be of littlehelp during the10% of the cases whenstructural change is involved, whichis unfortunately the situationwe find ourselves intoday.After all our history7, why don’t wehave abetter idea abouthowto manage things so there aren’twild fluctuations and sudden changes where some are impoverished while others reaphugeprofits? Evenbankers, CEOs and CFOs who make the real decisions are oftenblindto the

Page 29: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

underlying systemic forces that present them with anincreasingly narrow range of choices.What are the assumptions, frameworks, social decisions andprojections driving the economic

juggernaut? If they are faulty, then are there alternatives? What steps can we take to bring all oftheseinvisible forces into the open so that peopleinevery community canmake consciousdecisions about their own destiny, rather thanblindly accepting a culture that seems to leadto itsown destruction? Now,pleasehold onto your hats — some of theseideas have thepotential tochange the way you see the world. Youmay even discover why Henry Ford, one of the fathers ofmodernmanufacturing, said: “Thepeople mustbehelped to think naturally about money. Theymust be toldwhatit is, andwhat makes it money, and what are thepossible tricks of thepresent

system whichput nations andpeoples under control of the few.”2

False Assumption #1:

The Economy is Beyond Our ControlIna country that has taken so muchprideinits democratic traditions, the wholesale capitulationof basic rights to the doctrine of laissez faire, survival of the fittest, free market ideology is hardto

explain. Yet we:ve livedthrough an era where the gapbetweenthe rich and thepoor has widenedby orders of magnitude. The social contract has changed dramatically inour lifetime; there was a

time when thegovernment was seen as having a legitimate rolein reducinginequality andpromoting social justice. Thelast 20 years have seen a widespread challenge to the legitimacy ofgovernment action of any sort. But thereis hope, eveninthis shift.If it was changed once,it can

be changed again. Why not makeit better thanithas ever been?Therehavebeen several times inUS history where large economic changes havehappened as

a result of democratic intervention — the antitrust laws of the early 1900s, labor unionlaws, theNewDeal under Roosevelt. We needto consider what institutional changes are neededto

eradicatepovertyif we really want to create a more sustainable world.

False Assumption #2:Money is aNeutralMeans of Exchange

Most people do notknow any more about money thanwhat they needto count what's intheirpocket,balance their checkbooks andpay their taxes. They knowthere is never enough ofit foreverything they want and need,but they never stop to ask why. Do they workhard enough?Sometimes people with two andthree jobs can't make ends meet for their families. Didn't theystudyhard enoughinschool? If intelligenceis aprerequisite for highpay, thenwhy do so manyof our teachers qualify for subsidizedhousinginthe communities where they live?

Page 30: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Money is notneutral with respect to affluence andpoverty. Our nationalmonetary systemisbased on debt — every7 dollar that is createdis someone’s debt,beit the government’s,corporation’s or individual's. Every7 dollar comes therefore with abuilt-inexpectation that it willearninterest. Theinterest it earns goes to thebank andthepeople who buy thebonds. Thisautomatically concentrates wealthinthe system. At the same time, the debt basis for money alsoexerts continuous pressure onindividuals and corporations to grow forever at any cost, to stayahead of theinterest payments on thebasic unit of exchange.

Money is notneutral with respect to community economic development. The existence of a

nationalmonetary7 systemina country withregional economies as diverse as the Midwestindustrialbelt, theprairiebreadbasket andtheHollywood creative economy is guaranteed toundermine the economic health of at least someindividual communities.If Mexico is doingbetter thanCosta Rica, the value of their currency7 willreflect this, andMexican citizens willbeable to buy more Costa Ricanproducts withtheir pesos. Whenthis happens, moreproducts inCosta Rica are sold, andtheir economy willimprove.If Hollywoodis doingbetter thanDetroit,however, they areboundto a currency7 with the same value, so no similar balancing act takesplace. Jane Jacobs, the author of Cities and the Wealth ofNations, comparedthis to everyone at asoccer game — theplayers, spectators and referees — using the same set of lungs.

Money is notneutral with respect to competition and cooperation. Our current money creationprocess, with interestbuilt in, systematically promotes competition amongits users, largely dueto the needto pay interest on thebank-debt money that drives the system. The story7 of the

EleventhRoundbelow, takenfrom TheFuture ofMoney,3 illustrates this problem as aparable.

THE ELEVENTH ROUNDOnce upon a time, there was a small village where peopleknew nothing about money or interest. Each marketday, people -wouldbring their chickens, eggs, hams andbreads to the marketplace and enter into thetime-honored ritual of negotiations and exchange for what they needed with one another. At harvests, orwhenever someone’s barn needed repairs after a storm, the villagers simply exercised another age- oldtradition of helping one another, knowing that if they themselveshad a problem one day, others wTould surelycome to their aidin turn.

One market day, a stranger withshiny black shoes and an elegant whitehat cameby and observed thewhole process with a sardonic smile. Whenhe saw one farmer running around to corralsix chickens wTanted inexchange for a bigham, the stranger could not refrain fromlaughing. “Poor people,” he said, “soprimitive.”

Overhearing this, the farmer’s wife challengedhim. “Do you think you can do a better jobhandling

chickens?”

The stranger responded: “Chickens, no. But there is a muchbetter way to eliminate all thehassles. Bring

Page 31: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

me one large cowhide andgather the families. I’llexplain thebetter way.”

As requested, the families gathered, and the stranger took the cowhide, cut perfect leather roundsinit andput an elaborate andgracefullittle stamp on each round. He then gave ten rounds to each family, stating thateach round represented the value of one chicken. “Now you can trade andbargain withthe rounds instead of

those unwieldy chickens.” It seemed to make sense andeverybody wTas quite impressed withthe stranger.

“One more thing,” the stranger added. “In one year's time,Iwillreturn andIwant each of you tobring me

back an extra round, aneleventh round. That eleventh roundis a token of appreciation for the technologicalimprovementIjust made possible inyour lives.”

“But where will that round come from?” asked the wife.

“You'll see,” said the stranger, with a knowing look.Assuming that thepopulation andits annualproduction remained exactly the same during that next year,

what do you think happened? Remember, that eleventh round token was never created, meaning that itdidn't materialize out of thin air. As the stranger had suggested, it was far more convenient to exchangerounds instead of the chickens on market days. But this convenience had a hidden cost beyond the demandedeleventh round — that of generating a systemic undertow of competition among all theparticipants. Theequivalent of one out of each eleven families wTouldhave to lose all of its rounds, evenif everybody managedtheir affairs well,in order toprovide the eleventh round to the stranger.

The following year, when a storm threatenedsome of the farmers, there was a greater reluctance to assistneighbors. The families were now in a wrestling match for that eleventh round, the round that had not beencreated, which actively discouraged the spontaneous cooperation that hadlongbeen the traditionin thevillage.

This story is a simplified description ofhow our money systempits even- user against allits otherusers.It is simplifiedmainly becauseit assumes that thereis no growthinthepopulation,in theproduction andthe money duringthis story. Inreality7, all three of these variables grow over time,obscuring the underlyingprocess. However,it is nevertheless systemically correct that anybody7who pays interest uses someone else’s principal to do so. Evenwithin a single family, moneyissues are the most frequent reason for a familybreakdown. When everythingbecomesmonetized and fosters the same competition driving the currency7, aren’t we losing somethingimportant?

The BuildingBlocks of the Economy:How Assumptions Create Reality7

There are plenty7 of theories inthe economic pantheonthat are worthy of criticism; HermanDaly

Page 32: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

andJohn Cobb characterize the error of faulty economic assumptions as the “fallacy of misplaced

concreteness” intheir bookFor the Common Good.4 They argue that most economists workprimarily with abstractions and are sometimes temptedto adjust reality to their abstractionsrather than developingmore robust explanations whenreality andtheory areinconflict. Thisapplies to economic thinking about prices, the “free” market, the economic behavior ofhumanbeings, resources and just about even7basic tenet of the science of economics.

Assumptions have also guided the construction of frameworks andinstitutions to facilitate theeconomic activities needed for modernhuman commerce. Theseinturnhave shaped our lives,everything fromtheproducts we use to the rapidurbanization of theplanet.If we can identity

thesehidden assumptions anduse the tools available today to reshape the monetary institutions,we are on the road to changing our cities andthe quality of our lives.

The Banking SystemMost people are not aware of the role thatbank financingplays inthe creation of money, or thefact that the creation of money is doneby privatebanks, andthat the systemis not working well.After all, there are all sorts of government logos, symbols and statements onthe dollars we use.

Furthermore, the dollar printingpresses are locatedintheUnited States Mint, and the USDepartment of Treasuiy stores and distributes them for our use. However, contrary7 to what allthis suggests, that doesn't meanthat the government creates money.

You canhave as many dollar bills that youwant, on the condition that your bank can debityour account (todayinelectronic form) for the same amount. Your bank similarly requests dollarbills as needed, andgets its own account debited as well. Dollar bills represent only a very7 smallpercentage of the amount of dollars in circulation. The vast majority of the money that changeshands inthe worldis on computers andledgers, not inactual notes and coins. Even on apersonallevel, very7 few of our typical transactions use cash — we use checks, credit cards, debit cards anddirect transfers from our bank accounts to others.

So how does thegovernment obtain the moneyit needs? Likeyou andme, through income (inthegovernment’s case throughtaxes) andby borrowing.Jÿrj.ev is created for the government bythebanking system whenit incurs debt by issuingbonds aime state andlocallevel, andtreasurysecurities at the federallevel — which are loans that are madeby thebanking system andthensold onthe internationalmarket, with the principal andinterest repayment guaranteedby our tax

system.

THE US GOVERNMENTAL DEBT MAZE

Page 33: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

TheUS federalgovernment also has an array of what it calls non-marketable securities that aren’t traded on

the market likeUS Savings Bonds: intergovernmental debts (when the federalgovernment borrows fromsavings accounts like Social Security) and Certificates ofIndebtedness the Treasury issues that don’t pay

interest. All of these still represent government debt.

Bonds are the long-term debt incurredby all levels of government for long-terminvestment in things likeroads, wastewater treatment systems, water pipes, prisons, libraries and schools. At the federal level, thelong-term debt takes also the form of treasury notes (a one to tenyear debt), treasury bonds (2o to 30 yeardebts) and something called a Treasury Inflation-ProtectedSecurity (or TIPS) which are issued for 5, 10 and20 year debt. At the state andlocal levelbonds legislatures and city councils vote onbonds, and then they arebought by banks and other investors. Typically the low7 interest paid on the municipalbonds is tax-exempt, so

investors can earnincome fromthe interest paid (withstate and local taxes) without paying taxes onit.Short-term debt is also incurredby the government, usually to address the need for cash flow, just as a

business might have a credit line for times whenincomeis less than expenses. At the federal level, short-termdebt is loanedby the banksin the form of treasury bills, which all matureinless than one year. At the state

andlocal level, short-term debt comesin the form of tax anticipation notes andbond anticipation notes, whichare loans from thebanks, usually at a lowT rate that is linked to the rates on the treasury"bills at the federallevel. So when a city issues a bond for a schoolbut they" don’t have the money inhand yet (it takes time to sellthe bonds to thebanks), they" can go to abank for a bondanticipation note. When a city" needs topay" itsbillsbut all its taxes aren’t collected yet, they" go to the bank for a tax anticipation note.

In short, the government triggers the creation of the moneyit needs by goinginto debt. The debtincurredby government is first and foremost to thebanking system. Thebanks do not alwayshave to be US banks — foreignbanks andgovernments also buy US government debt. But despiteconcerns that China, the oil countries and other foreign interests own alot of US debt, themajority7 of the debt is still owedto privatebanks — privatebusinesses that are set up to make a

profit on theprocess of managingmoney. All of this interest paid onthe debt is the equivalent ofaninvisible tax,because all theinterest does ultimately come fromthe taxes wepay, even thoughwe don’t get to vote on theinterest rates.

Internationally, six centralbanks — including the FederalReserveintheUnited States — are

ownedby theprivatebanks althoughmost countries do havepublicly owned centralbanks.5 Itmakes no difference, really, whether the centralbanks are ownedby thepublic or by privatebanks; their functionis still the same. Their main functionis to keep the system working. Theywere established to help avoidbankingpanics and runs onbanks, andto maintain the standing ofthe US currency7in the world. They also play the role of “lender of last resort:” if banks and

Page 34: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

financialmarkets aren’t willingto buy governmentbonds, the Federal Resen-e will do so. Finally,most centralbanks have expandedtheir mission over the years to regulateprivatebanks.However, experiencehas proventhat their intercentions don’t always work the way they hopeitwill.

Government is not the only one to trigger the creation of money by thebanking systeminthisway. Individuals andbusinesses also do the same whenthey takeloans frombanks for theirhomes andbusinesses. So wego tobankers for a loan, they are not opening their vault andtakingmoneyout togive us, iney are creatingnew money based on thefractional reserve system.Whenwe take that moneyandput it into another bank — that other bank counts that moneytowardits reserves, on thebasis it caninturn create more newmoney. It’snot abadbusinessmodel. The single most profitablebusiness inthe US by SEC code, is the centralbank, the

Federal Reserve.6 But most people simply don’tknow that theFederalReserveis barely more

“federal” thanFederalExpress.Money is a lot of things: textbooks describeit as a means of exchange; it is aunit of account, a

store of value and a vehicle for international trade. Wehave combined all these functions intoone instrument, and this instrument is controlledbyprivatebanks that need to earninterest on

theissuance of the money to make their profits. Because all of the money we currently use comes

fromthis system, for the rest of thebook, we will refer to this type of money as bank-debt money.

The “FreeMarket” SystemEvidence ofbothmarkets andmoney predate recordedhistory. Money was used to facilitatemarket exchanges, as provenby the many forms of small tokens (whose most logicaluse wouldbe as a medium of exchange to value an exchange of goods) thathave turnedupin archaeologicaldigs around the world. Arguably, markets represent a characteristic feature ofhuman existence —

we arepartly definedby the fact that we share goods and sendees.No personis independent ofsociety; the trading and sharing we do provide for our needs ina way apparently unique to our

species.Theproblem arises whenwe move the market to the center ofhuman existence, instead of it

being a mechanism withits appropriateplaceina more diverse set ofhumaninstitutions. AmoryLovins capturedthe central issue facing our economic thinkingwhenhe said* . . markets make a

good servant, apoor master and a worse religion.”? Thegiant global experiments withplannedvs.

market economies have demonstrated that the market is a very- efficient and effective way to

allocate goods and sendees,but whenweignoreits failures inother areas and useit as a universal

Page 35: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

panacea for all our problems — from saving endangered species to fostering support of the arts —

we are makingit our master and our religion.Even contemporary environmental economists are notbuckingthis trend. Their antidote to

the warped regulator}7 systemis to start to place financial values on the environmental sendeesofferedby theplanet. Howmuchwouldit cost to replace thepollination sendees bees offer whenthey are extinct? Howmuchwouldit cost to replicate the globalwater cycle to producehealthywater? Can webuy our way to climate stability7, andif not, what wouldit cost to restore our

climate to health? The "objectivity” of the market is still seen as a final arbiter for the needto

inahe Teal value judgments in apluralistic society. But the market is not objective — it is a

contrivance ashumanandvalue-laden as any other institution.A three-day introduction to EnvironmentalEconomics conductedinBulgariain1993

illustrates the values hiddeninour market mechanisms.8 The methodological emphasis was on

cost-benefit and cost-effectiveness analysis to help regulators determine the most appropriatetechnologies to introduce to address problems. Participants also learned something about riskassessment, so government couldbe sure that the issues they faced were, infact, thegreatestrisks to human and environmentalhealth. After learning the newtools for environmentalmanagement, Bulgarian regulators had a gestalt experience: one of their teams determined thatthebest way to handle the case study they were given,inwhich a factor}7ina city7 was belchingwaste thatkilledpeople rather quickly, was to relocate all the native Bulgarians that livedthere to

a cleaner part of the country7 and moveinVietnamese workers, who had aperceivedlower valueintheir society7.Needless to say, thegoal of the workshop was not to teachthis lesson, yetifs not

surprisingthat the fundamental assumptions beingused about theprice of life couldlead to thisoutcome.

When the US Bureau of Labor Statistics foundin2007 that corporate CEOs earn 885 timeswhat minimum wage employees earn (Do they do 885 times more work? Are they 885 timesmore clever?) and 364 times more than the wages of an average employee, can wehear echoes of

aristocrats and feudal serfs, even as we’vebegunthe 21st century?9 Because of theseinherentinequities inmajor economic institutions, the market is not aninvisiblehand drivenby therational decision making of autonomous individuals.It prevents the vast majority7 from obtaininganything that resembles the decent life, liberty7 ora chance at happiness that the USA’s founderspromised.

and self-determinationarebasic humanneeds.Anysociety willbe more stable — lesslikeiy10 oe disruptedby unrest, revolution or other conflict — if all of its institutionsprovide

Page 36: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

pecjfjÿle a voiceintheir owndestinyandinsurealevel of fairnessinallrelationships. This isless mieof economic institutions thangovernanceinstitutions.

no

TheFinancialMarket as a SystemThe termfinancialsystem is used so frequently that we often lose sight of its meaning. Systemshave certain characteristics, andby understandingmore abouthow systems work wegainvaluableinsights into howto improve our local financial system. Eachlocal economy is abit like a

differentkind of car. Eachmake andmodelhas its ownunique features — a convertible roof,cruise control, oneburns diesel while another uses high test gasoline; there arehybrids, electriccars, trucks and vans. But they allhave a transmission, wheels, a steering system, gauges thatgive youanidea of the fuellevel, warninglights. So by understandingwhat all cars haveincommon, you also can understandmore about your particular vehicle.

To start at the most basic level, the definition of a systemis, according to theMerriam-Webster

dictionaiy: “a regularly interacting or interdependent group of items forming a unifiedwhole.”10Ina car, these are all the components, and the unifiedwhole that is formedis greater thanthesum of individualparts.If youlinedup the wheels, the engine, the axles, the steering wheel, thewindshield, the seats, thebody, the mirrors andthegauges alongthe floor of your garage, itwould justbe alargepile of stuff. But once all theparts are workingtogether, the car canroll out

of the driveway and down the street.

A systemis a unifiedwhole withinteractingparts, and theparts have characteristics that allsystems share. Onepart is that system’sflow — somethingthat moves throughthe system andinteracts with other parts (like gasoline moving through the engine andmaking thepistons move

up anddown). Another part is a systemstock — aplaceinthe system where the flowmight tendto accumulate (the gas tank). Whenwe describe theinteractingparts of systems, we assume thatone variableina systemhas an effect on other variables. The word for this effect isfeedback, andinteractions canproduce either positive feedback or negative feedback. Positive feedback is whena changeinone variableproduces a changein another variablein thesame direction (more gas,more speed).Negative feedback is when a changeinone variableproduces a changeinanothervariableinthe opposite direction (morebrake, less speed).

Positive and negative feedback among different variables ina system canproduce a number ofdifferent results. Inour car example, the goal of the systemis equilibrium — the driver of the car

wants to travel at the speedlimit, so there is a combination ofpositive andnegative feedback thatproduces arelatively consistent result. The sameis true in our bodies, where our bodytemperatureis maintained at arelatively constant level of 98.6°F through thepositive feedback

Page 37: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

of metabolism combinedwiththe negative feedback ofperspiration.When there is only positive feedbackina system, or when the sum of all the feedback inthe

systemis positive (just likebasic math, where two negatives can equal apositive), the systemproduces a reinforcing result, where things get worse andworse or better andbetter, dependingonthe variables. There are many examples of this: compoundinginterest inabank account,populationgrowth or someimportant processes inclimate change are just a few of the obviousones.Inthebank, more money means moreinterest is paid, which means thereis more money,and so on — positive feedbackplus morepositive feedback. Withpopulation, moreparentsproduce more offspring, who inturnbecomeparents.

With climate change, more warmth means less whiteice at thepoles to reflect the sunlight,which makes the temperatures there warmer, whichinturn leads to less ice.Inthis example,more C02 makes more warming (positive feedback), more warming means less ice (negative

feedback), less ice means more warming (negative feedback), and the net result is positive,creating a vicious cycle.

These two patterns — a combination ofpositive andnegative feedback that results inequilibrium or inreinforcingincrease or decrease — are called archetypes, which means apatternof behavior over time that canbe seenina variety of different systems. There are many systemarchetypes, and understandinghowpatterns ofbehavior insystems canbe changedis akey to

understanding the economy as well.11The economv:s behavior over time exhibits thecharacteristics of an archetypal systemwithcycles of expansion and contraction drivenbypositive andnegative feedback from different variables. At a very simple level, onekind ofeconomy — theboom andbust natural resource economy of gold rushes andfossil fuels — canbeseen as an archetype calledlimits to growth.Inthis archetypalpattern of behavior,positivefeedback on the right side of Figurelbelowleads to exponential economic growth(the result ofreinforcing feedback), which finallyhits the wall of finite resources ontheleft, whichthen leadsto exponential decline as thepositive feedback of the right reinforcingloop collapses inreverse on

itself.wages and

Profits

\Natural

Resources

Goods andServices

Savings andInvestmentsRB

/KNumber of Jkf'Businesses

Page 38: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

FIGURE 2.1. The Limits to Growth Archetype

Please remember: positive feedback does not mean more, or anincrease — it means thatboth

variables moveinthe same direction.12Obviously, theglobal economy ismore complex thanthis illustration, although on an

aggregate level, this particular pattern of reinforcing feedback andbalancing constraints is true.

Weliveinarelatively finite world, where the only externalinput comes fromthe sun(ignoringmeteorites andthe contributions to science fromthe moon rocks collected 30 years ago), andyetwehave structured our economy as if wehad access to 10 — 20 similar planets. The subject of thearchetype was explored extensively inthebook TheLimits to Growthby Dennis andDonellaMeadows, JorgenRanders andWilliamBehrens in1972 andthenrevisitedby the authors ina

newbook calledLimits to Growth: The30-Year Updatepublishedin 2004.ÿCreating Wealthfocuses more on theinvisible structures of the economy (that drive the exponential increase anddecline on the right side of the diagram) than the very visible limits wehavebeen reaching on theleft.

To consider the economy as a system,it is important to look at the flows through the system,the stocks where things accumulateinthe system, as well as the variables and feedback patternsthat drive changeinthe system. Money is a critically important flowthroughthe economicsystem, and the ways inwhichit accumulates andprovides feedback to all of the other variablescan also beillustratedusingthe language of system dynamics.

When abank issues a loan to abusiness or a mortgage to ahomeowner, they repay theloan athigher rates of interest thanthebank offers onits deposits, one of thebasic equations of thecurrentbankingbusiness model. A system diagram of this interaction wouldbe as follows:

Loans

\+

Interest

EarnedRDeposits

K J+ Interest

Paid

FIGURE 2.2. TheCurrent Banking Business Model

Page 39: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

IllFigure 2, the more deposits abank has, the moreloans it canissue. The moreloans itissues, the moreinterest it earns. The moreinterest it earns, the moreinterest it canpay on thedeposits, whichinturnwill attract more deposits — a simple reinforcingloop withpositivefeedback. Onthis very simple level,banks are endless money machines. Inmuchthe same way,our individual accounts shouldmake us incredibly wealthy with accumulated compoundinginterest over time. The same factors that reduce our compoundinginterest accounts — like thefact that to live we often need to make withdrawals to purchase goods and sendees — also mitigatethebank's profits.Not all loans are repaid. The demandfor loans fluctuates. The banksthemselves need to be attentive to theinterest rates of the centralbank andthebondmarkets.The amount of money on deposit changes with the economy, as people are either saving or

spendingmore.

The net effect of the money machines wehave created when we authorizedbanks to have a

monopoly onthe creation of money is that over time, the realvalue of this bank-debt moneydeclines. Thereis abuilt-in expectation that money needs to earninterest. When even- dollar incirculation cameinto existence with theissuance of debt — either private debt from mortgagesandbusiness loans or pubic debt withbonds andpublicborrowing — those dollars hadbetter beworking as hard as they can to produce a return. This return comes inthe form of interestpayments on deposits or returns on investments madeinproductive enterprises.

If instead ofputtingmy moneyinthebank or investingit inthe stock andbondmarkets,Iputit ina can under my bed at home, the moneyinthat can willbe worthless five years fromnow

thanit is right now. On a larger scale, the decliningvalue of money is factoredinto businessaccounting through the use of a discount rate whichincludes theinterest rate usedto discountfuture cash flows.

Nowlook at it fromthe company side. The company gets aloanfromthebank for its business,andhas to repayit over time withinterest. The cost of theloanis one of the company’s costs ofproduction, along with resource costs, labor costs and other operating costs.InFigure 3, severalkey functions within abusiness organization areidentified, with financebeingpivotal to both thebeginning of abusiness andits ongoingprofitability.

Page 40: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

NaturalResources PriceInterest

CostsLabor Costs Sales

)'Debt

NOperating CostsInvestment

Production MarketingROI

Finance Income

FIGURE 2.3. The Corporate Process

Tlie financing of abusiness is usually a mix of debt andinvestment. The more investment thatis available, theless debt needed,but there are oftenperverseincentivesbuilt into our tax andaccounting systems that make debt more desirable thanit wouldbe otherwise. So evenif it isn’tabsolutely necessary-, businesses will oftenhave debt on their books. Debt comes withinterestpayments, so theinterest — the cost of the money — is deductedprior to determiningwhether or

not thebusiness is profitable. This is illustratedby smaller black feedback loops inFigure 4.The total financing available will drive theproduction capacity, whichin turnis a combination

of the natural resources needed, the labor costs and other operating costs. Once there is a

product,it is sold for aparticular price, andtheincome from sales (after taxes and other costs ofproduction) are deducted. This is what determines the return on investment (ROIinthediagram). ROIis theprofit that is distributedto the investors inthebusiness, and the cycle starts

over again — the moreprofit, the more reinvestment is possible, the moreproduction capacityand (assuming there is demand for theproduct) the more sales.

The external factors that influence the outcome of any business venture are the demandfortheproduct, competition for sales of the same or similar products, the costs ofproduction, taxrates andthe cost of money. Most of these cost factors are directly related to theproduct, andneed to be consideredinthe overallbusiness plan when determiningif the venture willbeprofitable.

Money is the one systemic cost whichinfluences boththeprofit margin on aparticular productand also howprofit is calculated and the total value of the returns. On a systemic level, the cost ofmoney is abigpart of the reason that it is not sufficient merely to make aprofit. Companies needto make aprofit that continues to increase at an increasing rate when the costs of capital and the

Page 41: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

value of money throughout the system areina constant state of inflationary devaluation. Figure

4 illustrates the reinforcingnature of this dynamic.

IndebtedMoney

Demand forProfitable

Investmerits \/* Investment Policiesand PracticesBank loans,

Bonds, andGovernment

j Debt

B1

Depletion ofHuman and

Natural CapitalM o Totfli Value of

Assets and RQI4 Ra+ *-— ProfitInflation/

Discounting

FIGURE 2.4. How Bank Money Interacts with theCorporate Process

Of course, resources andlabor are not unlimited, and so this reinforcing system will eventuallyhit the wall described earlier inFigure1. Peak oil, resource depletion, scarce fresh water, climatechange, exponentialpopulation growth, the wideninggap between the rich andthepoor — all ofthese are symptoms that indicate we are approaching these outer limits to growth. Whenthereare scarcities ofkey resources — oil, water,pollination, food — costs go up. Whenpeople's healthdeteriorates because ofpoor nutrition, lack of safe water,poor health sendees — costs go up. Theprofit derived from a depletion ofhuman andnatural capitalis necessarily a short-termgain at

the cost of long-termwell-being. It’s like spending theprincipalinyour bank account — it mightget yon another meal on ahungry day,but there willbe no more money inthebank tomorrow.

If costs go up as thelimits to growth are reached, thenyet another delayedloop whichprovidesadditional reinforcing feedback to a cycle that was already growing exponentially is addedin.Higher costs mean thatprofit andreturnoninvestment willbe loweT. This in turnwill drive theneed for more debt, more inflationandmorepressure on already limited resources.

Page 42: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Demand forProfitable

investments

Bank-debt

Money

Investment Policiesand PracticesBank Loans,

Bonds andGovernmentt Debt

M H11p7 0ÿTotal Value of

Assets and HOI

B1 ;

Depletion ofHuman and

Matura! Capital

i I

- Profit R3 Hd

/of-Costs*Inflationÿ jQj

Discounting

FIGURE 2.5. Adding Higher Costs

I11our current era, wherehighpricedoil and overleveraged assets triggered an economiccollapse which forced the US government to providehuge “bailout” loans to banks (createdwithgovernmentbonds and debt) and then other huge “stimulus”grants to state andlocalgovernments andbusinesses (also created with government bonds and debt), this systemdynamics hypothesis seems to hold true. As long as the fundamental assumptions and conditionsdon't change, this is a trap — a systemic spiral that threatens not only thehealth of our moneysystem,but also our well-being and thelife-support systems Earthprovides.

This hypothesis isn’t just theoretical — it is provenby the graph inFigure 6. Anytime yonobserve an exponentialgrowth curvelike this, youknowthat there is a reinforcing system ofpositive feedbackbehindit.

The totalUS credit market, i.e.,borrowingby governments, corporations andindividuals, is as

close to a statistical fit of an exponential curve as is scientifically possible. (For those with an

econometricbackground, the R2 value of .9889 means thatit is almost aperfect fit.)1ÿ

Page 43: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

70

60*2=0.9399

SO

Pm 30.ÿÿi

20

10

72 74 76 78 80 32 84 86 88 90 92 94 96 98 00 02 04 06 03

Date/Year

FIGURE 2.6. The ExponentialCurve of Money Creationin theUS. The light line represents aperfectexponential growthcurve. The dark line represents the growthinTotal US CreditMarket Debt. The R2figure represents how closely the trend tracks toperfect exponentialpatterns - 98%. Source:Flow ofFundAccounts of the UnitedStates. Federal Reserve Statistical Release #Z.i, September 17, 2010.

[online], [cited October 23, 2010]. federalre5erve. v /releases[z1icurrentiExponentialgrowthinmoney supply can only endup with an inflationary blowout. We should

rememoer the warning of one of the foremost economists of the 20th century, JohnMaynard

Keynes: “By a continuingprocess of inflation,government can confiscate, secretly and

unobserved, animportantpart of the wealth of their citizens.”15

Systems ChangeWhat are the fundamental assumptions and conditions neededto interveneinthis destructivecycle? Where are the leveragepoints, those interventions where a relatively small amount ofeffort can achieve muchlarger results? Often, a systems diagram canhelp identifypromisingpossibilities. Inthis vicious cycle, there are two important drivers — the bank-debt source of our

monetary system and the economicpolicies wehave enacted to facilitate theprocess ofhumanandnatural capital depletion for the sake of the ever higher profits that the system demands.These are the two variables wherepolicy- interventions couldhave animportant impact onthedestructive force of the system.

Economic Policy7 Change

Page 44: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Thelegal structures andpolicies wehave enacted andthepublic investments wehave made toenable companies to be as profitable as possible number inthe thousands. In much the same wayas cities cannot transformthe monetary system ontheir own, they do not have the ability to

change the dominant policy context. There are a fewpolicies worthmentioning,however, whichdeserveparticular attention as we moveinto a new era.

Lookingback over thelong arch ofhistory, there are several important changes we encounter

in the 2lst century which are significantly different thanprior centuries. Up until thelate 20thcentury,humanbeings livedina worldwhere nature was abundant andhumanbeings were,bycomparison, scarce. The naturalworld was awesome and scan7 — the rawpower of storms,earthquakes, floods, volcanoes, droughts,plagues — allkinds of natural disasters gave humans a

clear sense of their inferiority on the scale of things. It:s no wonder that conquering nature was a

goal (at least for Western civilization — more successful andless violent relationships withnaturehadbeen cultivatedintheEast and amongNorth AmericanFirstNations) whenwe were

regularly defeatedby these overwhelming forces.But nature was also abundant. There were lots of fishinthe sea, and freshwater flowedin

pristine streams downmountains where the air was clear and crisp. Agriculturehadits ups anddowns,but the 20th century dawnedinthe United States with over 80% of our populationlivingonfarms andgrowingtheir ownfood. The wood fromforests had already gone to warships inBritain,butinthe US trees wereplentiful, and the steelindustryhad taken thepressure off thetrees thathadbeenused for ships.

Today,inthe 21st century, we are facing a different world.Natureis increasingly scarce, andhumans are increasingly abundant. Thepolicies that were enactedinan era of abundant natureneed tobe changed. In that era, theprices of natural resource extractionwere at zero cost to a

company, andwere often even subsidizedby government.Machines createdby these resources

did the work of more andmorepeople, and emissions into the air, water and soil were allowedwithout regulatory limits or fines. Arguably, even the mathematics of the banking systemitself,which seems to rely on aninfinite capacity of the world to continue to grow andproduceprofits,needs to be rethought ina new era of obvious limits. Theparadigm of infinitegrowthhas allowedand even fostered the increasing concentration and centralization of wealth through the tacitassumption that there:s more than enough for everyone: a rising tide floats allboats. Yet on thenatural resource side of the equation, the tideis not rising,it's receding, and some oversizedyachts are crushing the canoes intheir wake.

The enablingpolicies whichneedto be addressed to change the system fallinto two maincategories: Earth and corporations. TheEarthpolicies are all those which form andregulate our

Page 45: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

relationship to the natural WOTM. The corporatepolicies are those which structure theheyinstitutions wehave created to foster collective action and wealth creation. This is a tall order,obviously, and full details arebeyond the scope of this book.But the ethic that is needed to shapethesepolicies on any level (local, state andnational) canbe describedherebriefly.

EarthPoliciesThe values and ethics that govern our relationship to Earthneed to embody a deep and abidingsense of respect and care for alllife. Just as the 20th century saw the realization of theHumanRights movement's demands for equality, the 21st century needs to recognize the criticalimportance ofbiodiversity and abandonthosepractices which erode the wealth of species we

need to surviveinto the 22nd century- . Our policies need to make all destructivepracticesprohibitively expensive andmorally impermissible. These include,but are not limitedto,monoculture crops, genetic engineering, destruction ofhabitat, emission and disposal of wastes

beyondEarth's assimilative capacity and extraction of nonrenewable resources fromEarth'scrust.

Theprecautionaryprinciplehas beenintroducedinto several legal systems as one way ofturningback the tide andvaluing theintegrity- of Earth's ecological systems above narrow

corporate goals ofproduction, consumption andprofit. Most legal systems nowplace theburdenofproof onparties who object to a newtechnology7, development project or innovation to

demonstrate thatit does harm. Theintroduction of theprecautionary principle shifts theburdenofproof to theproponent of a newidea, so that they wouldneed to demonstrate that it willnotharmimportantbiological,human or community- systems beforeit was introduced.

Other policies needto beintroducedthat reward activities which enhance the ongoing capacityof ecosystems,human and community7 systems to continue to produce the assets that meet our

needs. Tax breaks for ecosystem restoration, educationalprograms and organic foodproductionare threepossible examples, along withincentives for lowering consumption, reducingpopulation,pavinglivable wages andinvestinginrenewable, local, energy7 generation.

Insummary, thepolicies we need eliminateharmfulpractices, curb theintroduction of new

practices that would do moreharmthangood and encouragepractices that are life-enhancingandpromote moreharmony among all the different inhabitants of theEarth community7.

Corporate Policies

Page 46: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

To followthe modelweVe described for Earthpolicy changes, we needto identify and eliminatepolicies that are destroying the ecosystem, exploitinghumanbeings or undermining democraticgovernance. We thenneedto curtail theintroduction of newideas andpolicies that wouldhaveharmful effects. Most importantly, we need to introducepolicies thatbring corporatelifeintoharmony withthelife-support systems onEarth, so that these two mostpowerfulprocesses donot continue to work at cross-purposes.

The modern corporation emerged at the end of the feudalperiodinWesternhistory, when theEuropeanpowers were exploring other parts of the world and engaginginexpanded colonizationandinternational trade. The original corporate charters enabledindividuals to band together in a

commonbody to undertake enterprises that werebeyondthe capacity of even the wealthyaristocracy of the time. The idea of a corporationbeingits own entity, a legalperson of sorts, goeshundreds of years backintime.

Yet this corporatepersonhoodtook onnew dimensions inindustrialAmerica, as companiesgrew andpeople started to challenge the roles and resources they claimed. Courts have not

always addressed theissue of whether corporations arepersonsinthe same way as individualsare,but a large andgrowingbody of law does afford corporateplaintiffs and defendants many ofthe same rights andprivileges. As recently as 2008, whenthe mercenary firmBlackwater suedthe City of San Diego, California, to get the city to issue a certificate of occupancy for their trainingcenter whenthe firmhadnot followed the correctprocedure for obtaininglandusepermits, the

judge ruledinBlackwaters favor onthebasis of the firm’s constitutional right to dueprocess.16Another more recent example of this is the rulingin2010 onthe rights of corporations to addalmost unlimitedmoney to the electoralprocess intheUS. A Supreme Court case — CitizensUnitedv. FederalElections Commission — upheld a corporately fundednonprofit organization’sFirst Amendment right to invest inandpublicize apolitical documentary targetingthen-presidential candidate Hilary Clinton.

One of theimportant differences betweenlegal entities like corporations and realpeopleis thatrealpeoplehave aninnate ability (barring somekind of mental disorder) to recognize theirinterdependence with other people and withnature. entities which are established to makeaprofit are organizedinstead around overly narrowgoals andignore theimperatives of aninterdependent webof life and sodefy.Thebottomline for for-profit corporationsinthe UnitedStates is theprofit that is returned to shareholders, aphenomenon also known as shareholderprimacy, andthis mandate requires that corporate leaders behaveinsometimes completelyinhuman andunnaturalways that ultimately undermine sodefy’s (and even the company’s)longer-terminterests inreturnfor short-termgains.

Page 47: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Further,if policies incorporating theprecautionaryprinciple wereimplementedinconcert withincentives for investment that enhancedhuman, social and ecological, we would succeedincurtailing further innovations that causeharm andintroducingbeneficialpractices to repair thedamage that's been done. Imagine US Sugar unveiling a long-terminvestment plan that wouldrepair the damage that overdevelopment has causedinthe Everglades becauseifs intheircorporate interest. Or if Freeport-McMoRan Copper & GoldInc., the owners of Climax MineinColorado, restored the mountains inthe Freemont Pass area to their originalpristine state,itwouldbe a massivelong-terminvestment for ecological systems restorationthat would dwarf theoriginalprofits made from strip miningmolybdenuminthe1900s.

On an operationallevel,policies such as life cycle accounting and employee ownership stockoptions wouldhelp the structure of corporate decisionmaking change so that it is systematicallymore accountable to all the social and ecological systems which support it andto the employeesthat makeit work. This wouldbe one way to help change the narrow, short-term focus thatundermines community lifeinfavor ofprofit for distant investors.

Monetary ReformAttempts to change the nationalmoney systeminthe US have a longhistory describedin The

LostScience ofMoney by Stephen Zarlenga, the founder of the AmericanMonetary Institute.1?Inour time, members of Congress such as Dennis Kucinich, a former presidential candidate, are

also pushing for monetary reform at the nationallevel. This wouldhave an enormous impact on

thepublic spending that canbe done and on our effective tax rates. Estimates havebeen madethat theinvisible money tax wepay to cover theinterest costs of the money we use adds severalthousand dollars to the average taxbill eachyear.

There are alternatives to theprivate monopoly on money whichbanks have enjoyed since thecreation of the FederalReserve Systemin1913. Apublic and democratic debate on thealternatives would certainly illuminate what for most USA citizens is unknownterritory. Therehavebeentwo times inUS history,in fact, when thiskind ofprivate, debt-basedmoney was notthemain currency7inuse. During Colonial times, notes knownnow as ColonialScrip were usedfor most transactions. These notes wereissuedby the Colonies based on thelevel of economicactivity they anticipated. The system worked so well, in fact, thatit underminedtheprofits andtaxes collectedby the British, andit was outlawedin1764. Many scholars attributeboth theBostonTea Parly7 and the AmericanRevolution more to theBritishprohibition of Colonial Scripthanto any of the factors taught ingrade schoolhistory7 class.

Page 48: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

During tlie US CivilWar, the costs of the war also madeit imperative for the government toissue notes that weren’t borrowedfromprivatebanks. These wereknown as greenbacks; theywere subsequently discredited as the government returned to thegold standard andthebanksregained control of the money creationprocess.

Another attempt to change the monetary systeminthe US, the Chicago Plan, was madeinthewake of the Great Depression. This planwouldhave divided demand deposits from savingsdeposits and required a 100% resen-e on demand deposits. Bank bonds would cover the resen-e

requirement, and the federalgovernment wouldissue the currency and allmoneys as needed.Itwas introducedinthe House and Senatein1934,but it never madeit out of committee. Peoplehaven’t forgottentheplan, andinour time economists such as MiltonFriedmanhavebeenitsadvocates.

Any plan for monetary reformwouldneed to consider threebasic objectives:l.Endingpractices thathaveprovenharmful to the commongood2. Curtailing further innovations that would add to theharmthat’s alreadybeen done

3. Addingnewpractices thatbring our financial systeminto congruence with thehuman,social, and ecological systems that support life

Thepractices that have nowprovenharmful to the common good are the constellation of forceswhich foster and exacerbate the endless boom andbustbusiness cycle whereby wealthisconsolidatedinto fewer and fewer hands.Monopolistic control of money is at the root of thissystem. For this practice to end, we needto rethink our money system. We are not,however,recommending a solutionthat wouldreproduce the flaws of a monopolistic money systembysimply replacing abank monopoly with a government monopoly.

Jjjÿooly anddemanddrive the invisiblehandof the market,bank-debt money keeps the

mviswlefoot on the accelerator of the growthimperative.

As withagriculture, a monoculture crophas the effect of making everything dependent onitshealth and well-being.If yougrow only one crop, you are more susceptible to the ravages ofinsects andblight.The sameis true of the monetary system wehave adopted. Tÿpÿbooks statethat there are several functions thatmoney serves — it is a means of exchange, a siore of value, a

Page 49: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

unit of account. As history and current experience conclusively prove, all of these functions donoineedto be covered by the same instrument. Our economy would be more resilient to bigchanges andwouldhave fewer disruptions if there were more diversity in the ways inwhich we

make exchanges, store value andkeep our accounts.

The Vortex of UrbanizationWhile the economic roller coaster appears to go up and down — thebusiness cycles, thefluctuations in the stock market — the roller coaster itself is headinginexorably into a centralizedand concentrated vortex, like matter and energy being suckedinto ablack holein space. Thepatterns of behavior visibleinthe economy produce similar forms inother human endeavors,most notablyinthe cities aroundthe world.

On thephysicallevel, the roller coaster is leadingto urbanization on an unprecedentedglobalscale. As stated earlier, the UnitedNations claims that for the first timeinhistory-, more thanhalfthe world'spopulation lives incities. Furthermore, many of these cities in turn arebecomingmegalopolises at a remarkable rate. Megacities of more than10 millionpeople were rare 20 yearsago (there were only ninein1985, most of them with familiar names — Paris, London,New York,Beijing, Istanbul,Moscow); nowthe worldhas 25 of them. Karachi, Dhaka,Manila, Jakarta,Lagos, Shenzhen and Cairo are some of the newer members of the megacity- club. Some citiesgrowby over 10,000 peopleper month and are completely incapable ofprovidingthe necessary7

infrastructure and sendees fast enough to serve the newpopulations.18 This explosion of urbanpopulation has left millions ofpeople livingindangerous andunhealthy slums.

Cities growing at extraordinary7 rates have no choicebut to abandonmost rationalideas abouturbanplanning — there is no way to describe the resultingurban environments except as giganticexperiments, accidents ofhumanmigration. Whole neighborhoods share one filthyportalet,ifthey5re lucky7. There arehuman settlements that live on andinlandfills, their sole economyscavenging the waste of others for their livelihood.Homes made of foundmaterials — cardboard,tin,plastic tarps — are the only7 shelter for over onebillion of Earth's human inhabitants today.No running water, no sanitation, rampant disease, constant hunger, violence, crime andoppression are a way of life.If the current situation continues unabateduntil2020, one out of

every7 fivehumanbeings onEarth — over 2.5 billionpeople — willliveina slum.W

Cities, Democracy7 andEconomic ChangeFor all their difficulties, cities are thelevel of government closest to thepeople, andtheyprovide

Page 50: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

people with thelargest number of critical services — everything from education to wastewatertreatment. They are collectively the largest government onEarth,dwarfing state andnationalgovernments inpublic sendeebudgets and employees. Whileinsomeparts of the world, citybudgets come directly fromnationalgovernment, cities stillneed to be the ones providingthesendees; it is the only way to effectively and efficiently sene the majority7 of thepopulation.

This makes cities the logical nexus for increased democraticpracticeingovernment andmore

democratic economic systems.NewEngland cities andtowns inthe US, for example,havesomething that is closely akin to direct democracy, where their budgets, ordinances and other cityactions need to be ratifiedby voters. IntheTownMeeting form of government, the registeredvoters make up the city legislature every year and deliberate andvote onall city- matters.

Cities need to deepentheir mandate for realdemocratic and economic change. To do this, theyneed to involve their residents ingovernment more effectively — four stories ofhow cities havedone this are includedinChapter 13. Cities needto understandhow each of their economieswork andwhere there are opportunities for making economic improvements. They can do this byconducting aninventory of their assets andidentifyingwhere theyhave unmet needs andunderutilized resources. Cities can also design and sponsor new ways of making exchanges andprovidingincentives to matchtheir assets and resources withthe needs of their residents.Examples of some of the ways local currencies have mobilizedpeople andimproved economicconditions are offeredin Part II.To start projects andidentify thekinds of currencies whichmightbe most useful, city leaders can followthe directions offeredinthe Appendix.

Cities can andwill change the world as they absorb and accommodate the majority of theworld's population. The choice city leaders have to makeis whether to let the forces ofglobalization andpopulation mobilization overtake them, or whether to take theinitiative to

consciously and deliberately plan for a vital and dynamic local economy. Thebuildingblocks fortakingthis initiative are the subject of the next chapter.

Page 51: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER a

Community Capitalism

Ibelieve totally ina Capitalist System,

Ionly wish that someone wouldtry it.FRANK LLOYD WRIGHT

If yonlook up the definition of capitalismin the dictionary,it will say somethinglike this: “aneconomic system characterizedby private or corporate ownership of capitalgoods,byinvestments that are determinedbyprivate decision, andby prices,production, and the

distribution of goods that are determinedmainlyby competitionina free market.”1Inthatcontext, the term community capitalism sounds abit peculiar — are wegoingto talk aboutcommunity- expropriation ofprivateproperty7 inthis chapter? The answer is emphatically no. Yetthere are many forms of capital which are not entirely inprivate ownership, or that benefit fromsendees, infrastructure and other public capital, so this chapter willhelpyouunderstandhow a

community7 manages allits forms of capital to create realwealth for its residents.If youlook at the community7 as an enterprise andits citizens as the owners, the capacity7 the

community7has to create realwealth andwell-being canbe characterized as the communitycapital usedto produce that wealth. One definition of the wordhas been assets available for use

in theproduction of further assets. The word's origin comes from caput, thehead of a cow, from a

time whenpastoral civilizations counted the livestock they owned to determine their wealth.Ifassets are examples of the real wealthwehave to meet our needs, then community7 capitalrepresents the capacity7 to create this realwealth on an ongoingbasis for thebenefit of thecommunity7 andits members.

This generative nature of capitalis ofparticular interest for community7 leaders. Community7

Page 52: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

capital — the generative capacity of a community — forms the foundation of the economy. Athousandboards are assets that might be enoughto build ahouse,but managing a forest forsustainable yield and operating a sawmillwillhelp insure that many morehouses getbuilt.Theforest andthe sawmill are the capitalbase. Their combined capacity to continue to producelumber, alongwiththe forest’s capacity to produce oxygen, to absorb carbon dioxide, to providehabitat for wildlife and to sen-e as a criticalpart of the water cycle, willhelp insure ahealthy andsustainablehuman community can continue to live nearby.

Competent capitalists know that inorder to produce theitems that makeitpossible to earn a

profit and create wealth, they needto maintain their capitalingoodworking order. This means

continually reinvestinginupkeep andmaintenance of the assets,keeping ontop of thelatesttechnology andminimizing the costs ofproduction. The accounting andtaxation systems that are

prevalent inNorth America andEurope systematically account for the capitalreinvestmentneeded — through depreciation schedules that estimate what investment is neededto maintainthe capital’s current valueby compensating for theloss invalue over time, as an asset is usedup.

To begin a local community economic developmentprogramthat will create long-term wealth,it is important to start to think like a community capitalist — to know all the local sources of realwealth and to have aplan for their ongoing care andmaintenance.It is equally important to knowtheir generative capacity over time — the conditions neededto insure that the community capitalcan continue to produce the assets the community needs. Inthe case of the forest, the conditionsmight be adequate rain and sunlight and a conservative managementplanthat attends to the lifecycle regeneration of the trees and their ecosystem. In the case of the sawmill,it might be regularmaintenance onthe machinery along with areplacement schedule for the major equipment. Thelong-term capitalplanwill also include the conditions for the employees — training, wages,opportunities for growth and development. An additional consideration willbe theimpact ofoperations on the community — if the sawmill is routinely fillingthe surrounding environmentwith emissions andwaste, this will obviously work against the neighborhood’s quality of life.

TenTypes of Community CapitalWhat are the different types of community capital we needto achieve real wealth creation? Thecommunity systems and the asset inventory give us insight into the community capitalwehave,and the resultingproductive, or generative, capacities areimportant enoughto highlight whenconsidering the strategy for our community enterprises. Looking at these different systems, thetypes of community capital they use to create assets follow.

Page 53: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Infrastructure

1.Natural CapitalNatural capital is the stock of environmental assets thatproduces more assets; for example, a

healthy forest produces trees,habitat, carbon sequestration, erosion control,beauty, recreationand water purificationif thenatural capitalbase — its essential regenerative capacity — ismaintained. Clearcutting the forest mightproduce some monetary7 income for a short period oftime for a limitednumber of people,but it is spending down the region's capital, just as if youstart to use theprincipal of the savings account that youhaveinthebank instead of taking theinterest income to pay for your expenses. If spending capitalgoes on for too long, you won'thaveany money left. Strengthening our natural capitalinvolves findingways to protect and enhancethose natural systems that provide the environmental sendees we need — air, water, climate, soil,food, waste assimilation,beauty, recreation, materials — without undermining their capacity tocontinue to provide the sendees in the future.

2. Built CapitalBuilt capitalina community includes thebuildings, thephysicalinfrastructure (e.g., roads,electric generation andtransmission,pipes, wires, cables, water and wastewater treatment

plants),housing,parks and recreational facilities, commercial andindustrial facilities and otherconstructed elements of community life. Strengtheningthebuilt capital involves standard capitalplanning, as well as a thorough review ofhowthe existingbuilt capitalis meeting the range ofneeds thathavebeenidentified. A very7 important andproblematic aspect of thebuilt capital, ofcourse, is thelandusepatterns that result fromits development. Sprawl, unserviced areas,squatter settlements . . . all these represent dysfunctional side effects of badly developed andpoorly maintainedbuilt capital. The new approach is to build theinfrastructure needed forcommunity well-being andreal wealth.

A Sustainable Energy7 Plan should also bepart of thebuilt capitalplan. Revolutions in energy7

markets andtechnologies arehappeningbecause of theglobal ecological crisis andpeak oil, so

sustainable energy7 systems arebecomingmore cost-effective. This means that communities willbenefit from a coherent, whole-system approach to energy7 thathasn't been requiredinthepast.

3. Technological CapitalTechnological capitalincludes the ways inwhich communities harness their intellectualresources to create tools, systems, machines, arts, skills and materials that are designed to

Page 54: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

improve our lives.Building on OUT capitalinthis area means supporting the education, creativityand access to materials that are required to createinnovative technologies. For example, ina

depressed townshipinSouthAfrica, a youngmanwho was educatedinphysics has developed an

idea for a solar andbicyclepoweredbattery charger — many of thepeopleinthe settlement use

car batteries to power their homes5 electrical needs.Ifhe cangain access to the materials he needsto develop the new system,his goodidea — whichwouldgenerate incomeinanimpoverishedarea,provide low-cost energy to thepeopleinthe community and reduce C02 emissions all at the

same time — might succeed.

Social andCulturalCapital

4. Social CapitalThe concept of social capital recognizes the economic importance of all the ways we are connectedto each other: the relationships, networks and values we share and the cooperative systems weuse for interacting. The sum of social capital is the capacity for successful and effective collectiveaction. When weTe thinkinginterms ofhow social capitalproduces additional social assets, we

need to bemindful of all the ways that we can enhance the connectedness of our communities.WhenweTe developing other strategies, we need to be carefulnot to do things that inadvertentlyrob our community of these connections. It’s also important to avoid a situation where the socialcapitalinone sector of the community works against the ability of other sectors to haveconnections withthe community as a whole — thebonds between members of the localmafiacouldbe called a form of social capital, yet its roleinthe community does not enhance othersocial assets.

5. Historic and Cultural CapitalOur community’s historic and cultural capital are thehistoric resources wehave that couldbedevelopedinto tourist attractions, the cultural centers that celebrate our music, art, drama, danceand other creative endeavors, theprograms inplace to build andtransmit our culturalunderstandings to others. To buildandmaintainhistoric and cultural capital involves a

multifaceted approach that strengthens leadership qualities, enhances thebuilt environmentwhere cultural activities canhappen, fosters creativity and talent, treasures historical records andinformation andpromotes tolerance andrespect for differences. The creative economyhas now

surpassedthe traditionalmanufacturing sector intheUnited States, so therole of cultural capital

is moreimportant than ever.2

Page 55: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

HumanDevelopment

6. HumanCapitalOur human capital includes all the capabilities that peoplehave to learn, to invent, to create, to

work, to care for each other andto contribute to the community as a whole. To strengthenthehuman capitalinour communities we needto develop strategies that increase capabilities on

every level. People who live up to their potential enhance their lives and the life of theircommunities. Maintainingthese capabilities also involves developing systems that enhancewellness, and that care for people who are sick,physically andmentally challenged, or, forexample, too young or too oldto care for themselves.It means buildingthe caring capacity- of our

communities, so thatpeople feel a sense of belonging andmutual support where familyrelationships and social networks arehealthy for the individuals inthem. This form of capitalused to exist more frequently inrural and small town settings.

7. Institutional CapitalA standard definition of institutional capitalis hard to find — to someit means the financialresources controlledby key institutions andto others it represents the institutional frameworkgoverning the economy. For thepurposes of this book, we defineinstitutional capital as thestructures, organizations, legal and financial frameworks that enable a society7 and an economy tofunction. This includes thelegal system and the rule of law, theinsurance system thathelpscommunities manage risk, the systems that establish different exchange mechanisms (nationaland complementary currencies), the regulatory- structures that protect thenatural environment,humanrights andhumanhealth and well-being and all theinstitutional arrangements thatprovide a foundation for economic activity7.

Economic CapitalWhenyouthink of economic capital, the financial capital needed to undertake any type ofenterpriseis probably what comes to mind. For our purposes however, we will distinguishbetweenthree types of economic capital: financial, entrepreneurial andpotential exchangecapital.

8. Financial CapitalThe financial capital available for the creation of realwealthincludes theloan resources available

Page 56: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

throughthebanking system and the savings andinvestment madeby individuals andinstitutions. Strengthening andincreasing this type of capital always seems like the obvious pathto successful economic development, yet by understandingthe other two forms of capital,it ispossible to identify other critical resources that newventures needto get started.

9. Entrepreneurial CapitalThe entrepreneurial capitalinyour community includes thosebusinesses and organizations thatmobilize all the other types of capital to produce the assets that meet human needs.Entrepreneurial capitalincludes both the for-profit andnonprofit sector — the manufacturers,sendee industry, retail shops,hospitals, daycare centers, architects, engineers,planners,beautyparlors, restaurants, amusementparks, golf courses,hotels, schools,universities, nursinghomes— inshort, all of the employers who put us to work. The sumtotal represents a criticalpart of theproductive capacity inany community, and withoutit the economy wouldn't exist.

10. PotentialExchange CapitalBesides the economic assets which are measuredinbank-debt money (e.g., dollars, euros,pesos,yen), another form of capital that is often overlookedis capital that canbe mobilized throughcomplementaiy currency- systems. This capitalis importantbecauseit contributes to our

well-beingwithout beinglimitedby the scarcity ofbank-debt money. The word economy comesfromthe Greek words oikos andnomos, meaningmanagement of ahousehold. The functions ofahouseholdincludebut also go beyondthose that are capturedinthe monetized exchanges. Totruly understand our economy, we need to lookbeyondthe value that is translatedinto monetaryterms.

All of these forms of capitalproduce the critical flows of assets through the economic system.Capital is the foundation, the reproductive system, thegreenhouse that grows ahealthyeconomy.If youpicture your community as anisland, andmeasure all the flows of money,resources, goods and sendees inand out of the community, it’s easier to understandhowthisworks.If theislandmaintains its natural capital, so that the soils stayproductive, the waterremains abundant and clean, and theplants and animals are allhealthy, thenit canproduce foodfor thepeople that live there, withpossibly some extra agriculturalgoods or products — jams,wool, sweaters, lumber, furniture — to sell to the mainland.

If the money fromthe mainlandis savedinlocalbanks (financial capital), then there are loansavailable to people who want to borrow to start abusiness.If thelocal schools teachpeople to

Page 57: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

foster tlieir creativity andinnovation andunderstand risks, thenthere might be some

entrepreneurs who could figure outhowto makebetter sweaters or furniture (entrepreneurialcapital). They might charter a company (institutional capital) andwork withlocal communityleaders (social capital) to build alarger factory (built capital). A trainingprogram for the workerswouldhelpinsure that therewerepeople with the skills to make theproducts (human capital).

Each asset — the skills of the workers, theincorporationpapers of the company, theentrepreneurialimagination — has abase of experience and collective supportbehindit thatallows it to reproduceitself innew ways. This is the capitalbase. The way all the different forms ofcapitalwork together, andthe flows of different assets through a community and among differentcommunities, formwhat we:ve come to know as the economic system.

Exchange as Social ChangeCouldit be that one of the most profoundthings we could do to foster healthy economic activitywouldbe to use an additionalmedium of exchange, instead of depending onbank-debt moneyfor all our transactions? It seems too simple to be true.

Infact, connecting all the different needs in a community with assets availableis one of themaingoals of any currency. Currency — sharing the same root as the word current — makesthings flow. So, consideration ofhowto start work onthelocallevel designing andimplementingcurrencies that can serve a community (as exchange mechanisms, stores of value andunits ofaccount) begins with aninventory of needs, assets and capital. This inventory would also identifythose needs which are goingunmet and areas where there are resources or assets which are

underutilized.Unmet needs andunderutilizedresources areplaces inthe system where flowispossible,but untapped. This potential exchange capital of any community is thebasis for new

kinds of economic flows andactivityina community. Mobilizing these flows is the essence of a

community currency.There are at least as many different types of exchangepossibleinany given community as

there are underutilized forms of capital. Each set of assets fills different needs anduses differentresources. Flows can movebetweenthe resourcebase, theproductiveprocess andthe consumer

without money — wehave simply become used to using money as the medium. Andwe don’thave to regress to barter — exchanges without any standardizedmedium — to correct thisproblem. We can simply introduce complementary currencies, designedto circulateinparallelwithconventionalmoney.

Tools Available Today

Page 58: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

A complementary currency is an agreement to use something other thanlegal tender (i.e.,

national, or bank debt money) as a medium of exchange, with thepurpose to link unmet needs

with otherwise unusedresources.3 Complementary7 currencies exist onmany levels andfor manypurposes — consider whathas happenedwith frequent flyer miles issuedby the airline industry7aroundthe world. Initially, frequent flyer miles were only a marketinggimmick for eachindividualairline; they could onlybe used to purchase airline tickets of that specific airline.Now,fourteen trillionairline miles havebeenissuedby five major global airline alliances — more than

all the dollars or Euros combined.4 They canbe earned without setting a foot inaplane (e.g.,throughthe use of specific credit cards) andtheyhavebecome redeemable not only for air travel,but for car rentals, long-distancephone services and anincreasing range ofproducts. Forinstance, yÿ of allBritishAirways miles are now cashedin for something other than an airlineticket. Inshort, airline miles havebecome a corporate scrip with a specific commercial aim —

customer loyalty7. They7 mobilize the otherwise unusedresource of an empty7 airline seat toachieve that aim.

Economists will correctlypoint out that matching needs and resources is the function of themarket, even without complementary7 currencies. Andif by the agency7 of some magic wand allhumans ontheplanet suddenlyhad an optimal distribution of money, one could evenimaginethat there wouldn’tbe any unmet needs. The reality7 is clearly7 different. Tjkÿefore, the startingpoint for complementary7 currencies is to meet needs that remainunfulhuea arter transactionsfacilitated withbank-debt moneyhave takenplace. Similarly, unusedresources are those thathaven’t beenusedineconomic transactions mediatedby bank-debt money.

The economics of frequent flyer miles illustrateshowthisprocess works evenin strictlycommercial environments. A wellmanaged frequent flyer mile systemis the one that obtainssomething (customer loyalty7) at the cost of an unused resource (anairline seat that wouldotherwise remain empty7). Community7 currencies simply extrapolate these same concepts to a

broader environment, where thebenefits are chosenby theparticipants themselves.

An Ecology7 of CurrenciesAs needs andresources are identified, thepossibility7 of an ecology ofcurrencies emerges, wheredifferent economic goals couldbe achievedby different types of currency7, complementary7 to eachother — not so many as to makeit impossibly complex and confusing,but just enough. This isparticularly trueinthe US, where the taxation rules around complementary7 currencies oftenrequire there to be different systems for different purposes.

Page 59: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

For example, inMontpelier, Vermont, the city started with a Time Bank system, whichis a tax

exempt form of community currencypioneeredby Edgar Cahn, an attorney who has dedicated

his life to social justice issues.5 Ina Time Bank, members exchange units of time, and allmembers5 timeis worth the same amount — anhour is anhour, whether you5re ahighly skilledcomputer technician orababysitter. The Time Bank is particularly useful for a wide variety ofsocialpurposes such as anti-poverty, elder care, community organizing and alternativetransportation. The fact that the value of the exchanges does not count towardincome (unlikebarter, whichis taxable) means thatpeople can raise their standard of livingwithoutputting atrisk their governmentbenefits like food stamps, subsidizedhousing, daycare andmedicalinsurance. Time Banks willbe discussed further inPart II.

Once the Time Bank was underway, the city started exploring other possible systems. The firstwas a commercialbarter system, where companies can exchange goods and sendees with othercompanies for credits instead of money. Because this is a taxable form of currency,it cannot

intermingle with the Time Bank units.If companies spend as much as they earnincommercialbarter,however, the tax implications are generally negligible, sinceprofit wouldhave to be madeonthe transactions before tax wouldbe imposed. (The US does nothave a value-addedtax.) TheVermont Sustainable Exchange is a new commercialbarter system establishedintheBurlingtonarea, so meetings wereheldbetweenthe Exchange and the Central Vermont Chamber ofCommerce to recruit businesses inCentralVermont to the system. Commercialbarter and otherbusiness purposes willbe discussed further inPart III.

Going further, the CentralVermont Food Systems Councilhas designed a local food currencythat would foster locally grownfoods and support thelocal restaurants that uselocal food,farmers, restaurant workers and foodprocessors. While similar to commercialbarter, the foodcurrency needed to cross the lines betweenbusinesses and employees, andbusinesses andcustomers.It neededto help farmers and restaurants keepgood workers by providing extraincome that wouldhelp relatively lowpaying jobs flourishinthelocal economy.

Taking a stepback fromthese three relatively simple examples, the different flows throughdiscreteparts of the local economy canbe seen. The Time Bank fosters a social flow, wherepeople are connectingwith each other to provide a variety of different sendees on thebasis ofmutual respect and reciprocity. CommercialBarter works inthebusiness sector to increasetransactions which strengthen thebuyingpower of localbusinesses andto give them an edgeagainst larger, more vertically integratedglobal enterprises. This helpsbuildlocalwealth and ahigher level of resilienceinthe face of economic downturns. The Food Currency7 reinforces a

critically important life-support system and raises the standard of living for all of thepeople

Page 60: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

workinginthe food sendee sector which are traditionally low-income jobs, at least inVermont.Allliving systems manage the flows of many different kinds of energy, nourishment, waste,

information and reproduction. By restricting our economy's circulationto one type of moneysystem we makeit less resilient, at higher risk to shocks and other disturbances, and welose a

vast array of economic activity that could servebothhumanity and the naturalworldmore

effectively. Creating an ecology of currencies that is more congruent withthe ecologicalimperatives of Earth and the social andhuman needs of thehuman family canhelpbring theeconomic systemback inline with the survival of our species.

Providing a newbasis to increase the flow of assets throughout the local economic systeminways that meet real needs (while enhancinggenerative capacities) strengthens the foundation,the reproductive system, the greenhouse of the economy called capital.Inthis way, communityand complementary currencies create new capitalby fostering other forms of capitalintheeconomy. A currency that encourages people to save energy, reduce fossil fueluse andloweremissions strengthens the natural capital of the climate regulation system and creates new capitalfor innovationinthe energy sector. Using a local currency to link vocational trainees withhousesthat need renovation creates new capitalinboth thebuilt environment andthehuman capitalsectors.New capital canbe createdinmost areas if we findnew ways to unleash our creativity,interdependence and compassion outside and around the constraints nationalmoney imposes.Abundance and sufficiency are available to us, evenin a finite world.

Page 61: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER g

The Possibility ofSufficiency and Abundance

No complaint is more common

thanthat of a scarcity of money.ADAM SMITH, THE WEALTHOFNATIONS

We fear scarcity, the sense that thereis never goingto be enough for everyone. The sense ofscarcity has drivenhuman competition since the dawn of civilization — for water, for huntingterritory, for women, for land. On Spaceship Earth, scarcity is a fact of life. Fossil fuels areincreasingly scarce, along with Sweetwater, rainforests,precious metals andfine jewels. Otherthings will always be scarce — goodpitching arms, originalRembrandts, Cliff Walk properties inNewport, operatic sopranos, true genius. Whenthere are a lot ofpeople who wantvery scarcethings, the value of the scarce resource goes uprelative to other resources — this is simple supplyand demand economics.

Money is also scarce. There is never enough ofit for everythingpeople need. We all are so

accustomed to moneybeing scarce that it:s hard to imagine a world where there is enoughmoneyfor even-one. One of theimportant lessons all students learninEconomics 101is that whenmoney supply increases, inflation increases, so there's a good reason for money to be scarce — we

don't want its value compromisedby too muchinflation.The specter ofhyperinflation, when a

nationalmoney system spirals out of controlinto ever higher denominations is a real fearassociatedwithtoo muchmoneyincirculation. Zimbabwe was the first country inthe 21st

century- to suffer fromthis with 231millionpercent inflation.But what if inflationis only theresult of too much of aparticularkindof money — this

Page 62: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

bank-debt money we accept without question? There are other units of exchange that aren'travagedby inflationary trends. Is inflation the result of alot of money incirculation, or is the typeof moneyincirculation responsible for inflation? Infact, to retainits value,bank-debt moneyneeds to be scarce.

Demurrage CurrenciesAt least twiceinhistory-, a form of money has existedwhere there was no incentive to accumulateit as a store of valuebecauseit didn't earnpositive interest inbank accounts. Instead,ithad theequivalent of a negative interest rate (known as demurrage) — thelonger youheld on to it, themore youwouldhave to pay — similar to aparking fee on money,his gavepeople who werepaidinthis currency a strongincentive to spendit or to invest it — preferably inthings that wouldcontinue to be valuable over thelong term. The velocity of this type of money,inotheT words,was quitehigh. Sincepeople didn'thoardit,it also was not scarce — thereis strong evidence thatits existence fosteredlongperiods of prosperity7inDynastic Egypt and duringthe CentralMiddleAges (ioth-i3thcenturies) inEurope.

Inthe first example, fromEgypt,people would receive shards of pottery7 with a date on themwhentheyput their graininto the storehouse. Thelonger thegrainwas stored, the more the

charge was for theguards andwaste as thegrain spoiled. Called ostraka,1these shards circulatedalongside theprecious metals rings andbars that were used for trade with foreigners. The Greeks,Egypt’s main tradingpartners at that time, wouldmock theplain clay Egyptian currency7. Yet theEgyptians thought the Greek obsession withmetals was strange, “apiece of local vanity7,

patriotism, or advertisement, with no far-reachingimportance.”2 They would accept Greek coins,but only for their metal content. The ancient Egyptians enjoyed an abundant andprosperous life.They livedina fertile valley,producinggrains, meat, wine andbeer in quantities sufficient for alllevels of society7, and they were well-educated. They investedinquality7public works and theirirrigation systems were the envy7 of the world. When theybuilt something to last, theybuilt it to

last forever — thepyramids and temples of this ancient culture survive today.Thereis evidence that the money they used — this negative interest money made ofplain clay

shards — was at the root of the goodlife they enjoyed. The ostraka system,known as the corn

standard system, was used for over 2,000 years until the Roman conquest of Egypt around 30EC. WhentheRomans replacedthe ostraka with their gold and silver, thelongperiod ofprosperity7 ended. Fromthen on,positive interest charges accrued to Rome. Over time, this inturnchangedEgypt into the equivalent of a developing country7: poverty7 increased, as did the gap

Page 63: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

betweenthe rich andthepoor.The second example of demurrage, or negativeinterest money, was special coinage used for

localpayments duringthe CentralMiddle Ages inEurope. These coins wereproducedbymonasteries,bishops,provincial aristocracy and townships, andbore the resemblance of thecurrent Bishop, Lord or King(seignoriage means fees earnedthrough an authority5s issuance of

standardized currency, andit is derived fromthe OldFrenchseignior, or lord).3 DuringCarolingian times, the coins were changed whenthe rulers changed (apractice calledrenovatiomonetae), and a recoinage tax wouldbe assessed on the coins that were turnedin. So thelastpersonholdingthe coins would endup paying the tax. This provided a strongincentive to spendmoney rather thanhoardingit for the future. However, instead of waiting for a lordto die,renovatio monetae evolved to a system where every five or six years coins wouldbe reissued. Therecoinage dates were not always predictable, andthe abuse of this practice resultedinmore

frequent recalls, the first of whichwas inEnglandwhenHaroldIrecoined only three years afterCnut had done so, and thenHarthcnut didit again two years later. Archbishop Wichmann of

Magdeburg revokedthe money inhis domain twiceper year!4

Like all taxes, the recoinage tax was not likedby thepeople, andyet without their knowingtheexistence of a negative interest currency ledto a flourishingmedieval society, especially duringtheperiodbetween1000-1300 AD. Local coinage was not the onlykindof money — as inEgypt,long-distance trade with other countries (usually for luxuries) required somekind of convertiblecoin,usually made of precious metal. But local coins were animportant medium — or eventhedominant one — for local trading, andits periodic tax gavepeople anincentive to spend money on

productive items rather than to save andhoardit.This increased velocity made the coins lessscarce. As inEgypt,it also led to an era ofbuilding where things were made to last — thegreatcathedrals of Europe were allbuilt duringthis period.

The era came to an end as centralized authority expanded, enabled and further strengthenedby theintroduction of gunpowder inthe1400s. As kingdoms grew, reissuing money becamemore andmore cumbersome. This, combinedwith opposition to thepractice (it was a tax, afterall), as well as its abuses, led to its demise. Rulers likeKingPhilipIV of France turned to

debasement (reducing the metallic content intheprecious metal coins) rather than demurragefor their taxes — an early trigger for inflation. This change, introducedinthe1290s,precededtheeconomic collapse thatprovided fertilegroundfor theplagues that ravagedEuropebeginningin

1347 AD.Thepointhere is not to wax nostalgic for somelost golden eras, as there wereplenty of other

Page 64: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

problems thatpeoplehadto struggle with at those times. Rather, thepurpose is to showthatthere are alternatives to a monopoly of theparticular form of money wehavein existence today.It is also anillustration of thepossibility of separating two functions that money sen-es — thestore of value and the means of exchange — as a way of creating moreprosperity and more

economic activity.

Cooperative and Competitive CurrenciesCooperation and competitiveness are two characteristics of thehuman conditionthat makecivilizationpossible. Weknowthat too much or little of either characteristic leads to its own set ofproblems. Too much competition andboth sides lose when each compromise their own

long-termintegrity to score apoint right now. Too much cooperation, andthere is no roomforthe dialectic of innovation and critique that fosters continualimprovement. There needs to be a

balancebetween the two, andyet thebalanceis always hard to find.Thereis no doubt that the economy of the United States inthe 21st century couldbe called a

competitive economy. Competitioninfree markets is heldup as the only way to get lowpricesand all thebenefits of a well-oiled economic system. Schools are competitive, as students vie witheach other to get thebest grades and to be acceptedinexclusive colleges. Sports are competitive,and even families living onthe same streethavebeenknownto do what it takes to “keep up withtheJoneses.” Competitionprovides the energy most US citizens thrive on, at least on theairwaves andinpublic discourse.

Things are a little different north of the 49thparallel. Although Canada shares many of thecharacteristics of the United States, its economy and culture is somewhat less competitive. Thiscanbe documentedby the large number of cooperative enterprises inCanadaper capita as

compared to theUnited States, and the fact that Canadians successfully managed to create a

nationalhealthcare system, somethingthe US is only now starting. Many other western

industrialized countries exhibit more of abalancebetween competition and cooperation than theUS, as demonstratedinpublicbenefits, inexpensive education systems,high quality nationalhealthcare and other policies that strengthen the commongood, rather thanbeing orientedtoward theindividual.

All currencies do not needto be scarce. For instance, a currency canbe designedto be alwaysin sufficiency,becauseit is created at the moment of exchange as a credit for the seller and as a

debit for thebuyer. Examples of this are mutual credit currencies, which formthebasis of TimeBanks, commercialbarter systems, LocalExchange Trading Systems (LETS) and others. IntheOnionRiver Exchange, Montpelier’s Time Bank for example,ifIneed a ride to the airport and

Page 65: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

you are willing to give me a ride to the airport, weTL agree on an amount of Community Credits(the name of the currencyunits, whichin this case are measuredin time) to exchange for thesendee, and off we go. Community Credits are simply notations ina central computer system andthere are no notes or coins exchanged at all. You don't needto have surplus to make transactions— it is acceptable to have negativebalances inthe system. The optimalbalance,infact, is zero,since that wouldmeanyou are giving as much to the system as you are receiving.

Thereis no inflationinsuch a system, andno worries about overabundance triggeringlowervalues. Let us emphasize that such a currency is sufficient for thepurposeit serves. Cooperationishigh — even- transactioninthe systemis a result from an agreement. There are no price wars

or people trying to secure a monopoly on aparticular good or sendee. The quality of transactionsishigh, and the exchange's reputation spreads moreby word of mouth at the events and socialopportunities whichit organizes.

ATime Bank or mutual credit systemwill never, and shouldnever, take theplace of allmoney.The goalis rather to provide an additionalmeans of exchange that is sufficient to meet our needsfor a variety of goods and sendees.It is fair to say that fossil fuels will never be tradedina mutualcredit system; infact, on that ride to the airport it is likely that youwouldpay some cash for thegas cost, since the airport is a 45 minute drive fromMontpelier.However anythingyou can spendtime onis fair gameina Time Bank. Andthere are always just enoughCommunity Credits to goaround — they only comeinto existence at the moment they're needed.

The Value of Time

Time ain’t money when all yougot is time.

GREG BROWN, FOLKSINGER

The value of time throughhistoryhas been the subject of many economic theories,practices andterms. They include Marx’s labor theoiy of value, opportunity costs, just intime manufacturing,discount rates andminimumwage. Timeis clearly a criticalpiece of the economic system. Thenotion of scarcity casts a shadow on our idea of the value of time. We recognize that there are

people withmore skills andknowledge than wehave, and so wepay more for their time as a

result. Rocket scientists,brain surgeons and sports stars allhave something that is relativelyscarce — a talent or an ability that is highly valued. Jobs that require fewer skills, on the otherhand, don’t command as high apay rate, largely because there are morepeople who can do them.The abundance ofpeople with the skills makes the jobs more competitive, and the wages lower.

Page 66: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

There is only one Oprah,but house cleaners and street sweepers are numerous.

Yet just because there is an abundance of something does not necessarily makeit less valuableto us as a species, evenif its monetary7 valueis relatively low. Even7 day we allneed at least some

of the following: child care, elder care,health sendees, foodpreparation.If wehadto pay moneyfor even7 moment of time that was spent onthis part of our economy, we:d quickly go bankruptevenif thepeople we employed were nothighly compensated.

Timeis a great equalizer. We all only have 24 hours ina day, andhow we choose to spendit islargely dictatedby the economic system wehein.If we'repart of ahunter/gatherer society7,anthropologists have obsen7ed that we spend about 20-30 hours a week inactivities that couldbe classified as work andthe rest of the time playinggames, makingmusic andhanging aroundthe camp.Inthe feudal system during the EuropeanMiddle Ages, thebreakdown ofhoursworked as compared to hours spent doing other things was about the same.Now,inso-calledadvanced civilization, we are spending many morehours per week working for pay and fewerhours inrecreational, social and spiritualpursuits. Why have we chosen thesepriorities inour

society7?Communities and cities run on time. Timeis the glue thatholds themtogether, the oxygen

theybreathe. The time volunteers spend serving ontown committees, the timeit takes citycouncilors to runfor office, the timeit takes citizens to participateingovernment — all of this iscritical to community7 success, and almost none of it is work that comes withcompensation.Sendee clubs who do volunteer work, churchgroups who staff the soupkitchens, foodpantriesand thrift stores, thegirl scouts andboy scouts, the volunteer firefighters: all of thesepeople andtheir timeis what makes community7 more than a spot on a map.

InBali, thepeoplehave recognizedthe value of community7 time for millennia andhave a dualcurrency7 systemthat accounts for the timepeople needto spend on community7 activities.Community7life is rich — eachBalinese spends about 30% of their time on creative endeavors —

dance, artwork, ceremony — that contribute to community7 life,particularly the elaborateceremonies undertakenintheir temples. Thepeople are also part of a community7 group called a

subak,whichmaintains theirrigation systems for riceproduction, and a banjar,whichcoordinates the civic life of the community7, abit likelocalgovernment.

Each Balinese spends timeintwo ways — through conventional jobs inthebusinesses andother money-making enterprises on theisland(beingpaidinRupiah, the national currency7), andalso throughNayahanBanjar, whichtranslated means “work for the common good of theBanjar.” TheNayahanBanjar unit of account is ablock of time, typically about threehours long.EachBanjar initiates between seven and tenprojects per month, and each family is expected to

Page 67: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

contributebothRupiah andtheir time, andboth are accounted for. Thegovernance system of a

banjar canbe described as hyper-democratic: for instance, theKlianBanjar leaders are not onlyelected at a majoritybut can also be un-electedwhenever a majority chooses.

Inmost cases, there is no problem finding enoughpeople to contribute the time needed to

complete an activity; thus contributions of time are not recorded. Insome Banjars,however,where there is a scarcity inthe contribution of time or whenthere are complaints from some

members about thelack of contributionby others, the KlianBanjar records even7 contributionof time. Those who cannot contribute their share of time are askedto send a substituteperson.If neither optionis possible, they must thenpay a charge ofbetween 5,000 and10,000 Rupiah

(approx $1.20 US) for each timeblock missed.5

It may soundinexpensive enough so that youwould assumepeople wouldbuy their way out ofcommunity sendee,but inpractice this is done only occasionally. So, the work goes on, andbothtime andmoneyhelppay for it.

The dual currency inBalimakes itpossible for there to be alot of flexibility withdifferentprojects, depending onthe community. Inwealthier communities wherepeoplehave more

money andless time,projects that cost more are easily approved. But inpoorer villages more timeandless money is available,but elaborate festivals andprojects are stillpossiblebecause thepeople choose to put inmore time. There is less division betweenthe wealthy and thepoor foroccasions like weddings and funerals as a result,because evenpeople who arerelativelypoor inmonetary7 terms canhavebig celebrations for major life events. The community work extends to

other local tasks as well, such as improvements at the school or on roads, especially if thenationalgovernmenthas not doneits part.

Perhaps wehave lost somethinginthe West. Our affluencehas made itpossible to buy our

way out of community sendee, eventhoughwe complainbitterly about all the taxes wepay tolocal and state governments. We don't spend our time oncommunityprojects inany officialway,and that leaves the work to be done for pay, whichis rapidly escalating out of control. On one

level timeisn’t money, andtheintrinsic value of time canbe captured through different exchangesystems likeTime Banks.

Revaluing time can also move us towards a sense of sufficiency7 and abundance, since thethings we needin abundance areimpossible to fully value with a conventionalmoney system.

Page 68: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Child careis lowpaidwork becauseit is abundant, andyet what is more important thanraisingour children? Elder careis lowpaid work for the same reason, andthe abuses and neglect inthatsystem make regular news as a result, a tragedy of epicproportions. Clearly somethingis not

workingwhenthese criticallife functions are systematically devaluedby society. But everymother, father, son and daughter is caught inthe dilemma of the cost of time. How canthey giveup the workpaid at $30 per hour for tasks thatpeople getbarely above minimum wage to

perform?It doesn:t make economic sense — inmost cases takingthe time to do elder care or childcare wouldmean economic hardship for the family. Whileit mightbeimpossible to recreate theculturalnorms that Balihas hadinplace for over one thousandyears in the average US suburb,finding a way to revalue community timeis important for a sustainable community.

The Two-Game EconomyAbalancebetween competition and cooperationis critical for our civilization and our survival. Yeteven7 morning when we get up, make breakfast andgo to work, we areblindly participatinginan

economypropelledby a monetary7 systemthat values only one side — the competitive side of theequation. Even on a sports team, even7 coachknows thathe needs to putin as much effortbuildingthe team as he does helpingthe members have the skills they need to beat theopposition. Players study theplaybook and talk about howthey needto work together on

coordinated action.Games of competition and collaboration are thepolar ends of the wayhumans caninteract.

Another word for these two complementary qualities are Yin and Yang, the fundamental dyadthat Chinesephilosophy applies to all forms of manifestation.InCreating Wealth, we use thewords cooperation and competitionbecause they are more familiar terms for Westernminds,butthese characteristics are less all-encompassing. Yet for our purposes, they serve as a goodreferencepoint giventheir relevance to economic and community life.

What are the different values and characteristics of a system that fosters competitioncompared to one that fosters cooperation? Figurelpresents the tendencies andpatterns on eachside of the game.Values and

Characteristics

Motivation Having,Doing Being

Operation Peak Experience Endurance-Sustainability

Thought Process FormalLogic Dialectical Logic

Competition Cooperation

Page 69: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Causality Linear Non-linear,Cyclical

Problem-Solving Technology InterpersonalRelationships

Organizational Preferences Bigger is Better Smallis Beautiful

Hierarchy Egalitarian

CentralAuthority Decentralized System

Command and ControlMutualTrust and Action

Spirituality TranscendentGod ImmanentDivinity

Figure 4.1. Competition and Cooperation

Obviously, inreallife abalance needs to be struck between these two orientations. An exclusivefocus on either one of thosepoles wouldbe aproblem. Yet the monetary system wehavedeveloped, whichis now theprimary one worldwide, focuses only on the competitive side, andtherefore fosters competition at the expense of cooperation.

THE WAY OF YIN-YANGThe age-oldphilosophical framework of Yin-Yang makesit possible toproride a shorthand description of theentire thesis in this book. Conventional money is an extreme Yang construct: hierarchical, top down,withbuild-in interest which acts as a centralizing (by definition those withmoney get more of it, those without get

less) and competition driving mechanism (see “The Eleventh Round” inChapter 2).

A monopoly of a Yangcurrency ’trill tend to induce a Yangbias in what is beinghonored with that currency.

This explains why all the Yin functions tend tobe underpaidin our societies. HOWT many salaries of an averageschoolteacher fit into an average investment banker's monthly check? Yet wTe entrust these underpaidteachers with what wehold as most precious: our children. Inanenvironment where the monopoly of a Yangcurrency is enforced, all the caring functions — in fact all Yin functions — will systematically tend tobeundervalued.

One irony is that it is government that enforces this monopoly by accepting only privately createdbank-debt money as legal tender inpayment for all fees and taxes. Taxes are what systemically enforce the

demand for a particular currency.& The marginalization of any currency, including any Yin currency, wTouldautomatically stop whenever a government (at whatever level) requests annual contributionspayable only inthat specific currency. That same governmental entity could also issue this Yin currency interest free underwhatever rules andprinciples that it chooses. Nonprofit NGGs wTould be among the logical organizers of the

Page 70: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

programs for which Yincurrency wTouId be issued. Such a dual legal tender currency strategy wTould empowercivilsociety. Democratic control over the entity that has the power to require such a tax is important:it willbe where the balance between the relative importance of the Yin and Yang economies willbe decided. For

instance, up to1/3 of an adult Balinese's time ispart of the Yineconomy, andit has beenproven that it is

essential for a very democratic process toprevail for such a system to work.7

Much of thebalance of Creating Wealth is about currencies which foster cooperativebehaviorthat can counterbalance the existing system. One of thekey questions is whether they canbeintroduced at a speed and scale adequate to face so many global crises. The evidence of theireffectiveness (evenwhen their existence was not introducedby design as in the cases of ancientEgypt, modernday Bali or the CentralMedievalperiodinEurope) would suggest that a

“two-game” economy couldprovide a more resilient prosperity over thelong term. The chaptersinPartIIwill describeindetail theproblems ineach sector of the economy causedby theconstraint of a monopoly ofbank-debt money andthe alternatives that exist to address theseproblems.

Unmet Needs andUnderutilizedResourcesOne of the critical faults of the nationalmoney system’s tendency to value only those things thatare scarce is its propensity to leave many economic resources undervalued and/or underutilized.Introducing complementary7 currencies links underutilized resources withunmet needs — this istheprimary7 way these currencies create new wealth. Empty7 airline seats are transformedintocustomer loyalty7 andhigher profits.Undervaluedtimeis transformedinto critical services neededto help elders beinvolvedintheir communities. Excess inventory7 canbe liberatedto servepeoplewithout theresources to buy it,inexchange for other things highly valuedby the company.

There are a wide variety7 of unmet needs:•Social needs (e.g., elderly care or youthmentoring)

* Economic needs (e.g., unemployment andunderemployment)

* Commercialneeds (e.g.,helping the locally ownedgroceries to better compete against thesupermarket chains)

* Ecological, cultural or educational needs (e.g., supportinglocalnonprofit organizations, andcommunity7 or regional identity7building)

Page 71: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Similarly, underutilized resources canbe foundinthe most unexpectedplaces:•Any unemployedperson who is willing and able to do somethinghas some unused capacities

* The next timeyougo to your neighborhoodrestaurant or moviehouse, count the tables andchairs that are empty: these are all unused resources that couldbe mobilized for your purposes

* Schools or other buildings that are empty duringpart of the week OT the year

* College,university or vocational courses

* Youth organizations and other nonprofits thathavepeople ready to do things if supplies are

provided

Theideais to design complementary currencies that arebackedby or redeemableinsome ofthose underutilized resources and canbe mobilizedto meet unmet needs. Empty stadium seats at

sporting events mightbe offered to people who volunteer to coach student sports or who mentoryouthinother ways. The marginal costs to the sports facility do not increase withmorepeoplefilling the seats, andwhile they would always prefer to sell the seats, the fact remains that an

empty seat is anunsold seat. The sameprinciple applies to empty seats onpublic transportationsystems, seats inthe theater and tickets to public andprivate recreational facilities: amusementparks, sivimmingpools, golf courses and ski areas. Obviously there might be someinterest inmakingthe freepasses available at times whenthe facilities are not at capacity, just as airlinesblack out times when their frequent flyers cannot use the seats.

Thegreatest underutilized resources of all are thepeopleineven- community. Our specializedeconomyhas tended to make each of us focus on one fairly narrow task at work, andyet wehavemeter readers who are talented artists, store clerks who knit awardwinning sweaters and scarves,bankers who are expert cabinetmakers, insurance salespeople who love to teach. When youfactor in thepeople who aren’t working — the unemployed, the elders, the underemployed — thepool of skills,knowledge andtimegrows exponentially. But our current system doesn’t have an

effective way to mobilizepeople, largely because we are so dependent onmoney to do it.

THE CORE ECONOMYA vast amount of services that meet our collective unmet needs are those which constitute what Edgar Cahn,

the founder of Time Banks, calls the “core economy.”8 Here is anexcerpt fromhis blog:

Page 72: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

The Core Economy is not Wall Street or Main Street; it is the economy of family, neighborhood,kith andkin. Recently more and more economists acknowledge that something like 40-50% of productive economicactivity takes place outside of the market andis not measuredby traditional indicators. But even thosepercentages do not begin to convey either the scale or significance of an economic system that ispervasivelyignored. Futurist AlvinToffler captured the implications of what economists overlook with a questionheputsto CEOs of Fortune 500 companies: “HOWT productive do you think your workforce wouldbe if it wTas not toilettrained?” That's a usefulif disconcerting startingpoint for reassessing what wTe value and measure as

productive labor.

A physician at a nationally renowned medical schoolputs this question to first year medical students: Whatgroup of people do you think delivers the most medical care and treatment in this country?” Doctors? No.Nurses? No. Alliedhealthprofessionals? No. The correct answTer is “mothers.” Just compute the number ofdays school children are sick; then addinfant care, preventive medicine, and chronic conditions, and a

different profile of healthcarepractitioners emerges.

Who teaches children to walk? To talk? To obey the rules? To tell the truth? To avoidharmingthemselves? To avoidharming others? Who produces a workforce that gets up in the morning, gets to placeson time, andknowsit is wnong to steal andlie? Mothers, fathers, grandparents, families and those institutionsthat impart moral values.

Who keeps neighborhoods safe, keeps violence down? A $51millionstudy extending over ten yearsbyrenowned researchers from Harvard, Columbia and theUniversity of Michigan finally pinned downthe criticalfactor. They calledit “collective efficacy” — which when translatedinto language wTe all understand turns out

to mean: neighbors stoppingkids frompaintinggraffiti, having fights, hanging out on street corners. It is an

invisible local culture that boils downto looking after each others' kids.

When aneconomist undertook to quantify the replacement value of just one function of this Core Economy,he found that the unpaid wTork doneby family, friends, neighbors andkinfolk tokeep seniors out of nursinghomes totaled $196 billioninl997. By 2000, whenhe updatedhis computation, it had risen to $257 billion.The value of just the informal caregivingportion of the labor producedby the Core Economy wTas six timesgreater [emphasis added] than the money spent in the market economy to purchase formalhomehealthcareservices for the elderly; it is over twice what the federalgovernment spends on nursinghome care. Considerthe monetary implications of even a small dropin theproductivity of the Core Economy andif we wTere

obliged tobuy those services at market prices withincreasedprivate insurance or increased taxes forMedicare and Medicaid.

In recent decades, highly respected economistshaveundertaken to include the value of unpaidhouseholdlabor that does not get includedin the GDP or other standard economic measures of productivity. Rigorous

estimates of the value of householdlabor have ranged from VA to !4 of the GDP.9

Fenfinine economists have tended to focus on Caring Labor as an essential component of productive labormissing from official economic indicators. But there are other kinds of labor that are equally essential andequally absent: Civic Labor, Social Justice Labor and Environmental Labor. And then there is another kind of

Page 73: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

labor that goes into Knowledge Acquisition that might be called Learning Labor.10

Caring, learning, civic engagement, the arts, social justice, a clean environment . . .what wouldour lives belike if people didn’t spendtheir time on these things? Yet the structure of the marketeconomy based on scarce nationalbank-debt money is systematically robbingus of our ability tospend our time onthese activities, evenif we are employed. People are spending more and more

of their time earning abuck, andless andless of their time making aliving.

The Possibility of Sufficiency andAbundanceComplementary currencies that matchunmet needs with underutilized resources canbedescribed as sufficient — inmutual credit systems they comeinto existence as andwhen needed.The supply does not need to be tightly controlledby a central authority, thereis no inflationifthey are correctly designed, there is always enough of themto go around. The idea of enoughcaptures a sense of sufficiency. On thelevel of meetingimportant needs, enoughis exactly right.If we arehungry, we don’t need to overeat.If we are cold, we don’t need to overheat. If we needto

go from our house to the doctor’s office, we don’t needto go back and forththe same day — one

tripis sufficient.Yet finding sufficiencyinmatchingunmet needs withunderutilizedresources creates an

abundance that is otherwise not as available. These transactions are a source of real wealth, andcanliberate all sorts of skills and talents that are otherwiseignored. Thinkingback to thedefinition of wealthinChapter 1, the word refers to well-being. We areinpossession ofwell-beingwhen our needs are met. We canhave all the moneyinthe world,but if we are nothealthy,inalovingrelationship, with access to a civic and culturallife to feed our soul, the moneybecomes useless.

Further, the scarce money we depend on today creates a dynamic allits own thatpulls us awayfromthe things that are really important inlife; howmanypeople spend more time earning or

managing their money thanthey do withtheir families? Howmany days off come andgo wherewe are just too tired to go out and do anything funbecause the workingweek has robbed us of allthe energy we may havehadto do something rewarding and fulfilling? Recapturing the value ofthe cooperative currencies andintegrating theminto our everyday life canrestore thelost balancewe need andmake the circle whole again.

Page 74: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

FARTII

EXAMPLES OFCOMPLEMENTARY

CURRENCIES

i\

\\

sc'1

*

Page 75: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER -

Building Equity

01The reason saving conies before investingis that youneedto

have seedbefore you can sowit inanticipation of aharvest.RAJENDEVADASON

Neo-feudalHousing: TheNewLords and SerfsHome ownershiphas been one of the cornerstones of the American dream for almost a century7.As early as inthe1920s, Better Homes inAmerica, Inc. worked with the Department ofCommerce to promotehousing as an economic development strategy7,knowing that theconstruction ofhomes wouldprovide jobs and other multiplied economic benefits.

It wasn’tuntil1939 that the largest housing subsidyinUS history7 was invented — thededuction onincome taxes for the interest paid onmortgages. This, combinedwith federalmortgageinsurance, the GIBill for soldiers cominghome fromWorldWarIIandthe mass

production of automobiles,has shaped the ways in which our housinghas developed ever since.Our homes are often our only source of equity7 — a cornerstone of the wealth we are able to

accumulateinhope of securing a comfortablelife.In2008, this clever combination of strategies — housing construction that creates jobs,

mortgages thatproduce interest for the financial system andhome ownership as a way to buildwealth — collapsed onthemselves andbrought the rest of the financial systemwiththem,creating the largest economic crisis inthe US since the Great Depression. The genesis of thesub-prime crisis of 2008 illuminates theproblems at the root of the financial system,but alsopoints to a way forward out of the mess.

Every7person who buys ahomeinthe United States triggers the creation of money. We go tothebank and apply for a mortgage. When we do this, somepeople imagine that thebank has the

Page 76: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

money to lendto ns fromtlie savings of other people. It:s just a matter of making an applicationto get themto unlock the vault andhand out the money that’s stored there.Not so. Thebanks are

allowed to lendmoney based onthefractional reserve system, whichmeans that they are onlyrequiredto have10% of the money they loan out inreserve. Whenyou agree to take a mortgagefor $100,000, thebank therefore needs to have only about $10,000 of that onhand. They giveyou a check for the mortgage, whichis then depositedinanother bank, freeing the next bank upto provideloans for up to 90% of that deposit, and on and onit goes.

Whenbanks were deregulated and allowedto start giving mortgages to people who they knewwouldbe unable to keep up with the mortgagepayments over thelongterm, a LOT of money was

created. But the money was only as valuable as thepromises to repay the debt; onceitbecameobvious that alot of the mortgages were not going to be repaid, the whole system came crashingdownlike ahouse of cards.

The financial designers were clever — they packaged all of these mortgage notes intoderivatives and soldbigpackages of derivatives inproducts with different risk levels. Thebuilt-inassumptions were that real estate would continue to go upinvalue andthat all these mortgagenotes wouldbepaidback. Whenreal estate startedto decline andpeople startedto default ontheir mortgages, suddenly no one wantedto touchall of the mortgage-backed financialinstruments incirculation. The result was that the realmarket value of all these derivatives couldnotbe determined. With $1.2 trillionincirculation,it was hard for thebankers to knowwho hadthe worthless ones. This uncertainly7 underminedthebanks’ trust ineach other — they couldn’ttellwhichbanks or financehouses wouldbe liable to fail, so overnight the credit marketevaporated. Banks wouldn’t evenlendto each other overnight, a standardpractice until thatmoment.

The moneyinthe systemthat was createdby all these suddenly worthless pieces ofpaperdisappeared even faster thanit appearedinthe firstplace. The wreckage this has causedisstaggering — in2006, there were 268,532 people who lost their homes to foreclosure,in2007

that number grewto 405,000.1During 2008, more than1,000,000 peoplelost their homes to

foreclosure! In2009, the number grew to 2.82 million,2 andin 2011the current trendwould

appear to indicate that more than 3 millionhomes willgo through theprocess.3Theproblemis not with thepeople who are tryingto buyhomes — everyone needs aplace to

live. Theproblemis with the structure of money.

Sweating the Way to Equity

Page 77: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

The foreclosure crisis left many US cities and towns withwhole neighborhoods of empty houses.The economic crisis also left millions ofpeople without jobs — inearly 2010, the estimatenationwideinthe US was 15 million unemployed, with over 1million discouraged workers,people who hadgivenuplooking for work and so are not countedinthat figure.4

Thehomeless populationgrows alongwithit — before the economic crisis of 2008, theNationalLaw Center onHomelessness andPoverty estimated that each year over 3.5 millionpeople,1.35 million of them children, experiencedhomelessness. Since that time, accurate

statistics arehard to find,but Reuters reportedthat local and statehomeless assistance groups

have seen a 61% riseinhomelessness since the foreclosure crisis began.5Inresponse to the foreclosure crisis, the US Department of Housing andUrbanDevelopment

created a new program — TheNeighborhood StabilizationProgram(NSP) — that is providing $4

billionto cities andtowns.6 The money cannot be used to prevent more foreclosures,butit canbeused to buy up foreclosedproperties,pay thebank, renovate/ repair them andresell them.Ifpublic money is beingusedto purchaseprivatehomes frombanks, this investment couldbe usedto create new wealthby developing a means of exchange for housing that will create jobs while at

the same time movinghomeless peopleback into homes — allwithout spending more realtaxpayer’s dollars.

Amodel for doing this already exists — Habitat for Humanity routinely requires people to

contribute sweat equity as part of their ownhousing development. Sweat equity couldbemobilized on a larger levelif the tax dollars are usedto buy up groups of homes and sell themtononprofit community and economic development organizations that provide job and skilltraining for unemployed workers.

Home renovationinvolves a wide variety of marketable skills: carpentry-,plumbing, electric,renewable energy7, HVAC,interior design, gardening, sewing,painting, decorative arts, just to

name some of the more obvious ones. Professionals engaged for the renovation couldberequiredto provide skills training for people who needwork, and on-the-job experience couldbeprovidedwith thepubliclypurchasedhouses.

Thepeoplebeing trained wouldn’tbe eligible for very7high wages inconventional dollars — jobtrainingprograms usuallypay a small stipend,if anything — but they could also bepaidinsupplemental vouchers based on aproportionaldivision of the value of the renovatedhomes theyhelped to create. The vouchers couldthenbe used as a downpayment on one of thehomes or

tradedwith other people for things that the trainees need — formingthe basis of a localcomplementary7 currency7. This currency7 wouldnotbebased on debt (like our current dollars) but

Page 78: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

rather oil the real value of ahome. The equityproducedby this substantialinfusion of tax dollarswouldthereforebe capturedby thepeople who needit most — rather thangoing to gentrifyneighborhoods and displacelow-income residents.

Community LandTrusts couldplay a vital roleinthis process — by owning theland or otherrealinterests inthehousingthat tax dollars created, they caninsure long-term affordability byhaving a roleinthe future resale of theproperties.

Saving Our Way Out of Poverty7Animproved savings instrument wouldneed to producelong-term value fromthe originalinvestment andbe tangible enough to be readily understood and easily convertible into realgoods and sendees people need.It also shouldideallybebased on actions that canbe taken eitherintheprivate sector for individualbenefit or inthepublic sector for publicbenefit.

Our proposalis to introduce a savings currency7 that is fullybackedby livingtrees. Theirbiologicalgrowthrateprovides for theincreased value over time. Trees offer us so many gifts we

have come to take for granted. They are the lnngs of theplanet, inhalingC02 and exhaling the

oxygen we need to breathe. Their fruit andnuts were our earliest and arguably our best food.Their woodhas provided us withmaterial for homes, fire for heat and cooking, ship making,electricity7, furniture andpaper. If you contemplate wherehumanity7 wouldbe without trees overthelong sweep of history7, you can start to see that people andtrees have truly beenpartners allalong, although the trees havebeen silentpartners and overexploited ones.

The tree savings systemis simple. Thekey ingredients are land, water and seeds or tree

saplings. Alocalgovernment withunderutilizedland couldmake aparcel available to thecommunity7 for treeplanting. Thepeople who do the work andthe landowner — a localgovernment oraprivate citizen — would receive shares in the finalproduct, the trees that wouldgrow over aperiod of time. The currency7 unit is simply a shareinthe value of a forestplantation.

These shares inturn couldbe either used as an inflation-proof savings account or beexchangedinthelocal economy for other goods and sendees — thepeople who earned theminthe first place wonldnotbelimitedto holdingthemuntilmaturity7. They couldbe denominatedinwhatever values wouldbe useful for people, so if the totalvalue of the trees youhadplantedwas

worth $1,000 over time fromy7our initialinvestment of $50 plus thelabor ofplanting andwatering them, you could receive the shares innotes of $1, $5, $10 or $100, whatever wouldbeuseful for you.

Such tree notes wouldbebased on an obvious value — the trees are very7 tangible, andideallythey areinthe neighborhood wherepeople live, strengtheningtheincentives to maintain themin

Page 79: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

goodhealth andto harvest them at a sustainable rate over time.Not all complementary currencies need to have somethingphysically tangible, like real estate

or trees as explainedinthis chapter. There are other currencies that deal withintangible activitieslikelearning or the arts, as willbe shown next.

Page 80: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER 6

Growing Intelligence

[A] good education is another name for happiness.ANN PLATO1

EducatedIndentured ServantsThe student loans providedlargelybyprivatebanks for college anduniversity education are

reminiscent of anhistoric practice. As theUnited States was settled,people oftenbought theirpassage to the newland of opportunity through a relationshipknown as indenturedservitude.They wouldget a ticket on a ship from a wealthier customer inreturn for a contract to be theirservants for a fixedperiod — usually sevenyears. Thepractice was also used for professionaltraining — to gain the skills youneeded to be a shoemaker, for example, youwould sign a

contract withan existing cobbleT that would obligate youto work forhimfor aperiod of time —

typically three to sevenyears, after whichpoint youcouldhangup your own shingle and work foryourself.

Indentured servants were only one small step removed from slavery, another commonpracticeof the time. They couldbebought and sold and didnothave any of the rights under thelaw that

freemen did. Regardless ofhow their employers treatedthem, or their health or the needs of theirfamilies, their obligation to work for their masters was enforcedby the courts.

Collegeloans have replicatedthis relationship, only nowthe serviceis inthe form of debt.Indentured servitude was actually less constraining. The modern equivalent of indenturedservitudelasts alot longer than three to seven years.Inthe US, youngpeople today leave collegeandprofessional school with indebtedness that willhaunt them for most of their professionallives. The fact that their debt is guaranteedby thegovernment makes it impossible for themto getout fromunder theburden regardless of their ability to find jobs that pay the salaries they need to

Page 81: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

makeloanpayments — student loans are tlie one form of debt that is exempt fromtheprotections offeredby US bankruptcy laws.

If we trace thehistory7 of educationbackintime,it began as a lifeprocess where youngpeopleworked alongside their parents and extended family to further the well-being of the group, learncritical survival skills andpractice the customs of social exchange, all of which wouldhavebeenseamlessly integrated with the spiritual traditions and values of the culture. While some

members of the community7 or tribemight have more skill than others, the level of specializationtended to remainlow comparedto modern societies, and the general socialization andtrainingpeople received to enable themto participate fully in the community7 neededto be equitable to

insure thegroup’s survival.The earliest forms of apractice we might recognize as being similar to the educational system

wehave today wereinsacred and spiritualmatters — training for thepriesthood, as healers, as

ceremonialleaders andthenlater as scribes of sacred texts. Throughout the early history7 ofWestern civilization, the church and thelearninginstitutions establishedby the churchprovidedthe majority7 of the formal education availablein society7. The trades also had systems ofapprenticeship andtraining,but these didnot resemble the college anduniversity7 education wehave today.

Today inNorthAmerica, education makes abig financialimpact onlater earnings. As of the2000 US census, those adults over 18 who had ahigh school diploma earned an average of$27,915 per year. Adults withbachelor’s degrees earned an average of $51,206, while those withan advanced degree earned $74,602. Individuals who didnot have ahigh school diploma only

earned $18,734.2 Only four states reportedthat over 90% of their youngpeople earned a diploma.TheNortheast region of the country7had thehighest number of college graduates — 30% of the

population — whereas in the South the number ofhigh schoolgraduates dwindled to 25%.3Inthe 21st century7, the vast majority7 of people do not work on farms anymore.In1800, oveT

90% of the US populationwas rural, with only 6% livingincities. At the turn of the 20th century7,approximately 40% of thepopulationlived and worked on a farm,but in 2009 this figurehad

decreased to only 2% of the US population.4 Agricultural surplus has been supplemented withcreative, technological andintellectual surplus as abasis for non-subsistencelife, andthelevel oftechnological skill requiredto make a meaningful contribution to society7 has increasedexponentially.

A form of education that systematically marginalizes the majority7 of the population canbeseeninthis light as a trendthat will lead to our collective destructionif it is not reversed. Further,

Page 82: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

if those who do manage to navigate thebarriers to learning are saddled with debts that preventthemfrom choosing theland of creative endeavors that wouldutilize their knowledge to itsfullest, this also works against our future.

The structure of college debt also plays a roleinmarginalizing the students who don't manageto climb to the top of the increasingly narrowhill of employment possibilities after college.If youfinish collegeindebt, with average monthlypayments onthe debt (that ranged from $500 to

$1,200 per monthin2009) and don’t find a job right away, youdon’t have alot of choices. Moststudent loans are guaranteedby the federalgovernment, and so they are treatedlike obligationsto the IRS — filingbankruptcy does not lift the ongoing obligation. Courts only grant forgivenessof college debt in cases where thepersonhas apermanent disability that willprevent themfromworking.If you default ontheloan, your wages throughlife canbe garnished, your tax returns

withheld, collection fees andpossibly evenlegal fees imposedif the US Department of Educationtakes you to court. There are deferments, forbearance and consolidationprograms available,butthebottomlineis that the debt never goes away.

Contrast thesepractices to other countries where ahigher tax rate insures that most studentscan attend college anduniversity for little or no cost. Sweden, Venezuela, Qatar, Kuwait andmany of the EasternEuropean countries subsidize college so that it’s free to citizens. Canada, theUK andmost of WesternEurope offer subsidies so that college education costs little enough so

that neither the students themselves nor their parents have to risk losingtheir homes, goodcredit or livelihoods to send their childrento college.

Unfortunately, sometimes schools themselves can’t resist usurious profit, extractinglifetimedebt fromyoungpeople who often don’t knowbetter than to signloan agreements.In 2007, forexample, the Attorney General of the State of Connecticut uncovered a scheme that involved over

50 colleges anduniversities. The schools were givingpreferred status to lenders who providedtheschool faculty withbenefits like cash, gifts and free trips to college staff, andyet these samebanks

were charging students higher rates of interest ontheir student loans than thegoingmarket.5There are even some for-profit colleges that cashinonthe easy money representedby studentloans through deceptive advertising. They claim that lucrative job opportunities wait forgraduates, whenno such opportunities exist.

60Minutes, apopular US televisionnews magazine, did an expose of Brooks College in Long Beach, CA andKatherine Gibbs School, two of the holdings of the Career Education Corporation (CEC). Takingin more than$1billionin annual revenue, with100.000 students at 82 different campuses, CEC couldbe a poster child for

Page 83: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

what shouldbe called an education racket.Brooks College advertised a 9396 jobplacement rate with salaries of $30,000 or more, wThen in fact for the

much lower percentage (38%) of students who finish theprogram, the starting salary wTas less than $11perhour. Katherine Gibbs advertised an 8g% graduation rate, wThen in fact it wTas 2g%. The admissions officers ofthese schools promised youngpeople unattainable results, while at the same time extractingloan agreements

thatput themin debt for life. One admissions officer interviewedby 60Minutes said this:

Inthat way, the job wTas a lot like a used-car lot, because ifIcouldn't close you, my boss wTould come in, tryto close you. . . [The enrollment fee wTas $50.] You need three things...You need $50, apulse and you've

got tobe able to sign your name. That's about it.&

The reasonprospective students needed to sign their nameis to commit themselves to indebtedness — many

students amassed over $80,000 in debt at these schools. The government-backed debt cannot be forgivenwhen thehighly paid job prospects turn out tobe a myth. The result? Lifetime impoverishment on thepart of

the student, while the for-profit schools were clearly misleading their charges.

While this is an extreme example,it illustrates that there is a massiveintergenerational transferof wealth fromthe younger to the older members of society withthe current education financingsystem wehaveintheUnited States. There must be abetter way.

The Learning CurrencyHumanbeings arebornto learn. Learningis the common denominator of our species, thefoundation of all other human needs. As infants andyoung children, we delight infiguringthingsout. Abit of the sparkle gets taken out of learningwhenwe arepushed through an educationsystem designed more for compliance than creativity. But for most of us, the needto learnenough to beproductive and contributingmembers of society drives us on.

One of the few certainties wehave about our future is that it will require a massive amount oflearningby just about everybody, everywhere. Inaddition,ithas been observed that learning —

and even moreimportantly, learningretention — depends less on theperson or the topicsinvolvedthan on the delivery system of theknowledge. Indeed, average learning retention ratesof children or adults are dramatically different depending ontheprocess throughwhichlearning

happens. Inits simplest form, the result is Figure1below.?

Page 84: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

What is strikingis that our formal education systemintently uses the two least effectivelearningmethods available: lecturing andreading,processes through which respectively only 5%and10% of what is being taught willbe remembered. At the other end of the spectrum, a

whopping 90% retentionrate applies to whatever one teaches to others!What wouldbecomepossibleif we reversed our entryinto thelearningpyramidby designing

anincentive system that would encourage chains of learning through teaching? Such a systemcould operateinparallelwith official schooling, as a specialkind of extracurricularintergenerationalgame. Furthermore,it wouldn’t have to dealwith teachers’ unions or ordinary7schoolprocedures and constraints. Although the modelwhich follows was initially designed forBrazil, thereis no reasonto believeit couldn’tbe applied elsewhere.

S%Lecture

0%Reading1

Audio Visual 2$$

3ÿ

P <Dlscussio

««byDoine

FIGURE 6.1. The Learning Pyramid.

Source: NationalTraining Laboratories, Bethel, Maine

The Brazilian SaberWhenBrazilprivatizedits mobile telephone industry7,it introduced a 1% special tax earmarked for

Page 85: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

higher educationalpurposes. By 2004, this education fundhadgrownto more thanus$ibillion.A conventionalway to use the fundwouldbe to copy the GIBill approach usedintheUnitedStates after WorldWar II, through whichgovernment funds were used directly for studentscholarships. However,by introducing a complementary education currency, Bernardproposedthat a substantial learning multiplier couldbe set inmotion, so that a given amount of moneycould facilitate substantially morelearning for a greater number of students. And a currency

would fuel this learningmultiplier without creating any newfinancialpressure onthe economy.Theproposal made to Brazil envisioned aproject initiator called the Saber Administrator,

which couldbe a nonprofit organization or theMinistry of Educationitself. This SaberAdministrator wouldissue a specializedpaper currency, the Saber (pronounced saa-bear,meaning “knowledge" in Portuguese), which could onlybe redeemedto pay for tuition fees atparticipating universities for the academic year printed on the Saber itself — for example, year2010.If the notes were not used to pay for tuitionduring that year, they couldbe exchanged forSabers dated the following year — the year 2011— but with apenalty of 20%, giving a strong

incentive to use the currency on or before the 2010 date.9Let’s assume that the additional enrollment capacity atparticipating universities is estimated at

10,000 students per year and that the average tuitionamounts to 3,000 nationalmoney units pertrimester. The Saber administrator wouldthenmake available 30 million Sabers per trimester,earmarked for each specific year concerned.

These Sabers wouldbe allocatedto primary- schools ineconomically depressed areas wherefunding typically is not available for higher education. They wouldbegivento the youngeststudents (seven-year-olds) on the condition that they choose a mentor from an older class (a

ten-year-old) to work with, the younger student onhis or her weakest school subjects. The Saberswouldbe transferred to the older student incompensation for thehours spent mentoring. The10-year-old could then do the same thingwith a12-year-old, and thelatter with a15-year-old,and so forth.

At the end of this learning chain, the Sabers wouldgo to a17-year-oldwho would thenbe ableto usehis or her accumulated Sabers to pay all or part of university tuition. The university inturn

wouldbe able to exchange the Sabers for conventionalmoney through the Education Fund (see

Figure 2),but at a discount of as much as 50%. This process is possiblebecause most of the costsat a university are fixed, andthe marginal cost of an additional student has little impact on thoseexpenses.

Inthe above example, let us assume that the Saber circulates five times beforeit reaches the

:ÿ

Page 86: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

university. The totallearningmultiplier for the educationbudget allocated to this project wouldthenbe a factor of ten(five times for the exchanges among students of different ages, multipliedby two times for the arrangement between the Ministry of Education andtheuniversity). Inthisway, many more children wouldbenefit from abetter education, from a greater involvement withthelearningprocess and fromthe chance to go to university thanwouldhavebeenpossibleif theeducation fundwere used only for direct student scholarships.

Notice that this process would automatically encourage the spontaneous emergence of chainsof learning by teaching fromthebottomup among children of all ages. The Saber system woulddeliver totallearning of an order of magnitude of $10 billion spending onthe conventionalscholarship model.

Furthermore, factoringinthe change of the learning retentionrate from5-10% (normaleducationprocedure) to 90% (teaching others), another tenfold effect becomes available, raisingthe totallearningby teachingmultiplier to onehundred.Inother words, we estimate thatspending $1billionthrough the Saber system couldproduce a retainedlearning equivalent of$100 billion spent through conventionalmeans . . . these are mind-bogglingpossibilities!

As this system develops, other ways of earning Sabers couldbeintroduced. For example, whynot eradicate illiteracy? Canyouvisualize an army of eight-year-olds proudly teaching theirfreshly learnedreading and writing skills to grandparents? Intheprocess, they wouldbedeveloping ahigher level of reading skill than anyprevious generation. Youngpeople could alsoearn Sabers by helping the elderly and disabled with tasks they need accomplished.

Learningisn't only intellectual,but also about the social reality of the world of others. Learningbeyond schools couldbecome a vast andrichintergenerationalgame. All this would encourageintergenerational relationships and further learning, not to mention creating extra aid for theelderly withoutburdeninggovernmentalbudgets. Given that all countries are expecting ahigherpercentage of elderly people that will require care, thelearning currency could offer one

integrated solutionto two social challenges: education and elder care.

Rapidly changing environmental conditions, thepace of technicalprogress andthe degree towhich working opportunities havebeentransformedinrecent years demand that we findnew

ways to learn andpromote faster learning among all sectors of society.It is not sufficient to

merely repeat andimitate oldpatterns. Learners today must be creating newpatterns andideas.This can onlyhappenif our learning capacity itself is transformed. Theintroduction of alearningcurrency could start this process inareas where acceleratinglearning faces thebiggest challenges.

Page 87: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Phase T Phase 2

Mirtisiry of Education Social Service*

Saber allocationamongschools

Primary and

Secondary Schools

7-year-olds

10-yesr-oldsÿ

15-year-olds

V

Education Fund

t >rHelp for elderly

ant) handicappedpaidrn Saber

CasingIn of Sabersfor flacidftaf currencyat 50% of face value

Universities 17-year-olds

Payment of

University Tuition

FIGURE 6.2. Saber Complementary Currency System = Learning Multiplier.Note: One Saber is equivalent

to one national currency unit redeemable for higher education expenses.

Buckaroos — University of Missouri, Kansas CityBeginningin1999, The University of Missouri, Kansas City (UMKC) introduced an innovativecomplementary currency called Buckaroos (named after the University’s kangaroo mascot).Students earn the Buckaroo notes when they participateincommunity- service activitiesorganizedby area organizations. Students inseveral economics classes have to performcommunity7 service and earnBuckaroos as part of the course requirements. Eachnoteis valued at

one roo hour, representing onehour of a UMKC student’s community7 service. UMKC’s Centerfor FullEmployment andPrice Stability7 were chargedwiththe administration of theprogram andissuingthe notes.

Community7 serviceproviders such as public schools, localgovernment offices andnonprofitorganizations apply to participateintheprogram — tobe accepted they needto meet specificstandards andbe approvedby7 UMKC. The organizations receive a number of Buckaroos tohirestudent workers andpay them one Buckaroo per hour of service. Thereis no maximumrequirement for hours, and there is no need to list the names and servicehours of students whowork for each organization. Each organizationis allowedto attract student workers to fillitsspecific needs for servicehours.

The students can choose from alist ofparticipatingproviders and are able to switch jobs and

Page 88: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

work as many or as fewhours as they choose with approval of theprovider. They are also able to

barter, lend,borrow or purchase earnedBuckaroos with other students — creating another levelof economic activity withinthe system,because students who do not choose to do the community7sendeehavebeenknownto pay cash to other students for the Buckaroo notes. The students needthe notes to pay a tax each semester to UMKC’s treasury; this tax can onlybepaidinBuckaroos.Students may also save Buckaroos for future semesters where courseloads maybe more

restrictive.J'.'Wrrnifjr Crum ActXatr

Dptnrallnf MHDWIKIMH CST

FIGURE 6.3. One Buckaroo

Infact, according to Prof.L. RandallWrav who designed theprogram, the dollar value of theBuckaroo has appreciated over thelife of theprogram, rising from a range of $5-$ioper note to

the current value of $io-$20per note. The valueincreases near the end of each semester, as

procrastinating students scramble to get the notes they needto pay the tax so they canpass theclass — their grades are the finalvalue they get fromthe transaction.

Inthe future,UMKC may offer that aportion of tuition couldbepaidwithBuckaroos. Thiswouldpromotenot only student involvement withinthe community,but a stronger network ofcommunity relations for theuniversity. Students wouldhave a strongincentive to earn

Buckaroos, and the existence of theprogramwouldmake university education more affordable.

Learning Our Way to the FutureIf there willbe a theme to lifeinthe 21st century7, it willbe the needto learn. Rapid changeactually requires a newkindof learning, and so creating new currencies that increaseboth thespeed and capacity of learningis critically important. When social andmaterialreality axe stable,thenlearningbyrepetition and roteis an adequate way to learn — rely onthe experts, do thingsthe way they’vebeen done over alongperiod of timebecause that works. When social andmaterial reality are changing rapidly — climate change, economic dislocation, social upheaval — a

newkindof adaptive andtransformative learningis required.

Page 89: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Adaptive,Transformational

Learning

Q?q,

..9/

&51

1L'

Normal,Incremental

Learning

s:

Time

FIGURE 6.4. Rapid Change Demands New Ways of Learning

Adaptive and transformationallearningis messy, andit requires a new mindset. Unlikenormal, incrementallearning,it does not rely on oldpatterns,but rather creates new ones.

Mistakes formits pedagogy, and so developing a systematicpatience towardmistakes can

facilitate rapidlearning. Thomas Edison capturedthis idea whenhe said: “IfIfind10,000 ways

something won’t work,Ihaven’t failed.”10When systems changeis requiredby the times, learning may involve moving forwardwithout

necessarilyknowing “the right” solution. Creating systems of exchange (which could functioninparallelwithofficial systems) that rewardlearning at alllevels couldhelp stay the course.

Page 90: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER -

The Creative Economy

It is better to create than to belearned,

creatingis the true essence of life.BARTHOLD GEORG NIEBUHR

The Arts: De-cultured SocietyThe arts shape our lives andprovide the waip andweft for our cultures and societies. Without thearts, we wouldnotbehuman. Yet the scarcity causedby our monetary system twists thembeyondrecognition. There are two deephumanneeds metby the arts — our need for self-expression andthe need for aesthetic enjoyment or beauty. The arts formthe footprints ofhuman consciousnessthroughtime. The ancient cavepaintings show our emergence as a creative species, our

connection to divine energy and our aspirations. The graffiti onthe walls of modern cities expressthe artistic voice of a lost generation. The arts open a windowinto our collective soul.

Sacred art inmany religions takes on such symbolic importance that the forms, styles and even

thepaints are so closely prescribedthat incenturies pastbreaking fromtraditional rules couldresult inthe deathpenally- insome societies. Art historians spend alifetime understandingthesubtlegestures encodedinart fromthe eraprior to mass literacy7.

The arts have always played a central roleinour ceremonial customs and forms of worship.The artifacts wehave from ancient times were often created for ceremony — people comingtogether inshared expressions of joy,hope, sorrow,prayer, awe andpoweT. Kings, queens,highpriests andpriestesses, chieftains, sultans andpharaohs all commissioned music, visualspectacles, architecture,poetry, theateT, jewels, clothing and other adornment to demonstratetheir power, their piety andtheir generosity7. Meanwhile, artisans, wives, laborers, children — iftheyhad enough resources and time — createdhouses, furniture, fabric, clothing, lace,

Page 91: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

pillowcases, dishes, utensils and tools that spoke to their own creative sensibility. Wheneverpossible,peoplehave surroundedthemselves withbeautiful things.

Some of our most enduringhuman creations demonstrate thelinkbetween the arts andeverything wehold as sacred. Wehave used our creative energy to cultivate a relationship withgods andgoddesses in the construction of our pyramids, megaBthic stone circles, cathedrals,temples, tombs and statues. These endure while the vast majority ofhuman endeavor has turnedto dust.

Fast forwardto the 21st century7, and the majority of our creative workers no longer dedicatetheir life energy to the creation of enduringbeauty and awe-inspiring celebrations of divineenergy. Poets areput to work writing syrupy stanzas for greeting cards, visual artists are designingweb pages, corporate logos andpublications. Sculptors are employedmakinggravestones,musicians write jingles for television ads andthe most lucrative form of theater is the 30-secondcommercial aired during the Super Bowl. The well-paid artists,inother words, are working forcorporations. Recent statistics show,however, that 55.6% of the rest of the “fine artists, art

directors and animators” inthe workforce are self-employed, comparedto 10% of the rest of the

population.1Career advice for students thinking about majoringinthe arts incollegeis clear:“the number of qualified workers exceeds the number of available openings because the arts

attract many talentedpeople with creative ability.”2Inshort, there are a lot of people who want tobe creative,but a real shortage ofpaidwork for artists.

A study donebyMichaelMaranda, an assistant curator of the Art Gallery7 of York University inToronto, Canada, on theplight of Canadian artists revealed the underlying truth of the near

cliche image of the starving artist. In Canadain 2009, the average income for a visual artist was

$20,000 per year, wellbelowthenational average for allincomes of $28,850.3 Inthe UnitedStates, the situationis similar. The median income of all artists from 2003-2005 was $34,800,but this figureincludes theincome from all sources, not just the artwork they areproducing.Full-time artists earned a median income of $42,200, fully $10,000 less than the $52,500medianincome for other professionals. For the 45% of other artists who do not work full-time allyear, their plight is the same as thoseinCanada, with a medianincome of $20,000. By contrast,office clerks inthe United States earn an averageincome of $27,768, jobs which require a lot less

training andcreativity.4Yet despite these figures, the creative economyhas taken over a leading roleinthe US

employment profileinthelast 20 years.Inthe early 1990s, thepeople with jobs associated withthe creative economy surpassed those employedintraditionalmanufacturing jobs for the first

Page 92: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

timeinhistory. This trendis as much due to the declineinmanufacturing jobs as it is to a new

wave of creative jobs,but the numbers still tell an important story.50

1I

40%

--r'_30%

20%

sx10% __ \ 5“ D

0%1900 1910 1920 1930 1940 1950 i960 1970 19S0 1991 1999

•Creative Class Super Creative Class Working Class

•-Services Class -Q*AgricuIture

FIGURE 7.1. US Class Structure, igoo-iggg {% of Workforce). Source: Academy for Entrepreneurial

Leadership,University of Illinois at Urbana-Champaign

There is no shortage ofpeople who want to do creative work andno shortage of creativity-. What isscarceis the money to pay them.If the creative class were a marginal, fringe sector of oureconomy, this apparent lack of collective value might make some sense on a superficiallevel,butinfact research shows that the creative class is central to economic success.

The shortage of decent livelihoods inthe arts can:t helpbut have animpact onboththeamount and diversity- of art, music, dance, theater and other work available to us. Whenthefor-profit arts take over the television airwaves and the music companies are able to control thecontent of music played onradio stations, the ability7 of smaller artists to have success declines.The increased availability7 ofprofessional art also reduces thepractice of art ingeneral — after all,if you can't singlike Madonna why wouldyou even try7? A society7 awashinpopular culture couldactually be starved for authentic culture. The scarcity producedby an economic systembased on

private money simultaneously homogenizes and eradicates our unique culturalidentities.

Page 93: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Art TokensWhatif it werepossible to pursue creative endeavors without worrying about the moneyrequired? What if every creativepersonhadthe opportunity to followtheir dream andbring a

creative work of some sort into being?Right nowinthe United States,if you are a child who is dying from canceT, theMake a Wish

Foundation raises money to allowyouto experience somethingyounever had a chance to do.Some children, for example, meet their favorite sports hero, some go to Disney World; one youngboy was able to go on a shopping spree at Toys R Us.

It wouldbepossible to extend this model, using a complementary- currency, to the wishes ofother youngpeople andlet them do something creative as akey part of their educationalexperience. Inthe next chapter, the model for doing just that is discussed: theprefecture of Shigain Japanhas introducedit for environmentalimprovements,but their modelhas manyapplications.

For example, your city decides that attractingpeople who areinvolvedinthe Creative Economyis animportant economic development idea. Many cities have already made this decision, sinceresearch shows theimportance of this kind of initiativeinthe 21st century- economy. So, the cityinstitutes anArt Token system. Imagine a scenario where every- taxpayer inthe city wouldneed toturnin at least tenArt Tokens whenthey pay their taxes.

To earnthe Art Tokens, citizens wouldneedto participateinsome type of creative endeavor.This might be taking a class inmusic, art, dance or theater, attending aperformance or

supporting a creative activity a young student was initiating. People withmoney andno timecouldbuy tokens (usingbank-debt money) frompeople with a surplus. Such exchanges couldtakeplace, for instance, through alocal e-Bay type electronic market. Artists, students, theaters,studios andgalleries would all certainly have a surplus. By valuingthe currency7 on the city levelas apartialpayment of somethinglike a tax, the city could create an economyinthe type ofactivity it is trying to encourage.

Notice that this approachwould ensure that more of the creative activity would takeplaceintown, that its creativepeople would obtainincomeindollars,but that this wouldn’t cost the cityany additional dollars. By settingup a foundation, for example, an organization couldmake theArt Tokens even more valuable to its users thanbank-debt dollars.

Livingthe DreamThe city could offset some of its bank-debt dollar costs bypavingpeopleinArt Tokens for work

Page 94: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

that wouldnormally cost dollars. These dollars saved couldgo into a fundto support a foundationin the city that supports the arts. Or those inthe city who provide opportunities for youth couldpay individuals inArt Tokens for participatingintheir activities. Instead of makinggrants to

organizations as the sole way they achieve their goals, the city could sponsor activities wherepeople earn Art Tokens.Inthese ways,both the time andmoney needed to allow students andartists to engageina new creative endeavor couldbe found, where none exists now.

For example, imagine that you are ahigh school student andyour dreamhas beento go toRome to study Michelangelo’s work in the Sistine Chapel. Your high school requires that youundertake a creative or community project as part of the requirements for graduation, and theyassign an adult mentor to work withyou on theproject. At the end of theproject, you are requiredto produce a writtenreport, a work of art, aperformance or someproduct that demonstrates youhave met your learning objectives.

Obviously, travel to Rome requires two things — money for the journey and time of yourmentor to help youunderstand all that is involved. The mentor could earn Art Tokens for theirtime, which frees up some of the adult creative energy you’ll need. The money for the journeycould come out of the fundcreatedby the foundation or fromthe cityby using real dollar offsetsthat other people earning Art Tokens have allowed. Another approach couldbe to have thisfoundation or city collect unused airline miles for this purpose.

As the recipient of the money and timein the Art Token account, youwould engage inacontract for the work. Each contract could reflect thelevel of mentoring and cost required, andyou, the student, wouldneed to contribute as well — either through the more traditional ways ofraising funds (finding sponsors, doing a fundraising event, selling things) or by earningTokensby undertaking activities supporting the arts that normally cause the city, the foundation or thearts organizations inthe community to incur conventionalmoney costs. Everything fromushering at the theater to mentoringyounger children might qualify as a certified activity thatearns youthe Tokens youneed for your dream to be realized.

The critical leveragepoint for Art Tokens is the same for just about any complementarycurrency.If a city makes it mandatory7 for everyone to pay some contribution every7 year ina formof complementary7 currency or accepts partialpayment in complementary7 currencies for some

regular taxes and fees, the demandfor that currency will significantly increase and thereforeobtain a value that it has nothadpreviously. Remember, the main systemic reason we universallyacceptprivately createdbank-debt dollars right nowis that they are the only legal formby whichwe canpay our taxes. If we expand this mandate to a more democratic form of communitycurrency andno longer grantbanks a monopoly inthis area, whatever functions that this

Page 95: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

currency is compensating willpredictably flourish.

CityMoneyinHistoryIf the idea of a city issuing a currency and acceptingit for payments intaxes sounds strange, thereare clear historicalprecedents for it includinginthe US only a generation ago. For instance,during thedepression of the1930s, cities issued their own currencies as a way of counteractingthe economic hardships even-one was experiencing. Scrip was another local currency thatappeared spontaneously all over the country, as localbusinesses andbusiness associationsissued currency so thatpeople could continue to exchangeproducts and sendees andkeep thelocal economy going, eveninthe face of a national economic crisis and “bankholiday.”

Figure 2 shows a note issuedby the City7 of Detroit in1934. Hundreds of cities didthe same

thing duringthe bankholidays of that time._

S 0

FIGURE 7.2. City7 of Detroit note

GM MoouLu ttn* c*. #iK

hMitifwnl t

1v/hrs, 00

FIGURE 7.3. Scrip fromlocal mining company

Private companies also got into the currency7business as a way to provide their customers witha means of exchange. Figure 3 is an example of local scrip from a goldmining company.

These depression scrips wereintroducedinfullreplacement of conventional, centrallycontrolled dollars. They couldbe used to pay for any type of activity7, competing directly with thedollar. When cities all over the US startedto do the same, anExecutive Order was issuedprohibiting cities fromissuing currency7 eventhoughit was helping to address the economic

Page 96: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

crisis. What we are talking about inthis book is not such a full replacement,but a more narrowlytargeted application. Any city canissue tickets for any eventit chooses, andimpose conditions forpeople to obtain such tickets. From alegal viewpoint, the city scrips we are recommending wouldfallinto the categoiv of such “tickets.’1This is what is being done in Japanwiththe ecological scripdescribedin Chapter 8.

Giventheir proximity to thepeople and the Tole they play indelivering criticalpublic sendees,cities canhelp make economic institutions more accountable democratically- It is important torealize that any choice of activities to be rewarded could also be a democratic choice.

Culture Cards inFlandersIn Belgium over thelast several years, anidealike Art Tokens has takenroot, althoughto dateithas notbeen fully implemented andinvolves payments inEuros. Aproposal was made to take a

percentage of regular art subsidies — which are givenby the government for aplay, an orchestraor another event — and toput their value on a Culture Card — the equivalent of a debit card thatwouldbe issuedto everyone. Each taxpayer inFlanders couldinturnuse their Culture Card tobuy tickets to cultural events of their choice. The money on the card can onlybe spent on certifiedcultural events. The citizen chooses what she or he wants to go to,but within someboundaries.There wouldbe some criteria that applied to how events were certified — for example, youcouldn’t use the Culture Card outside the country, andgoing to a foreign film also might not beeligible.

Since most artistic wTork incurs its costs inadvance of the actual event, it was important to findways to help withtheproduction costs. Oneidea offered was to allowpeople to subscribe toartistic events andproductions inadvance using the Culture Card,inmuchthe same way thatyouwouldbuy a season ticket to the local theater. Obviously, this makes it easier to use thecredits on arts that are events, abitharder to use for things likepaintings. Yet going to galleryshows where visual artists present their work wouldbe an eligible activity.

Onebeneficial effect of the Culture Card wouldbe that a localproduction, like a neighborhoodgroup, couldhave access to funds that normally wouldgo to arts organizations with thewherewithal to do high-level fundraising.It wouldmake arts fundingmuchmore accessible to

smaller, localproductions rather thanbeing reserved exclusively to a small elite. The voice thatpeople wouldhaveinthe types of creative activities they prefer would also bebeneficialinsofar as

culturalminorities are concerned.The Belgiangovernment has beenplanningto implement theprogram with stickers embedded

withradio signals that would credit the account when apurchase is made. Evolving technology

Page 97: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

has madeit more likely that a mobile telephonepayment system willbe usedwhenCulture Cardsare finally issued.InFlanders,it is already possible to findwhich artistic events are availablelocally using a mobile telephone application, so it is not goingto be abigleap to have the samelistindicate what events andproductions are eligible for payment with a Culture Card.

There are several reasons why the systemhasn’t beenimplementedyet. Oneissuehas beenthat there are many cards for different purposes incirculation already. Another problem arose

during the financial crisis: most governments are cutting costs at thispoint, so adding theexpense of a new system when other things arebeing cut is harder to do, evenif the new systemmight save alot of costs over time.Inthe longer run, the time required to oversee largegrantprograms couldbe reducedifpayments to artists become more automated.

Core Support for ArtistsIt is clear artists andthe arts need a more stable source of support, especially inNorthAmerica.The creativity required to innovate andto make our worldbeautifulis not something that shouldbe relegated to the impoverished sidelines. Partly because they are creative, there are some artistswho have thought of some newideas for general support.Here are a few of them.

United Artists of America ReserveNoteJoseph Gray andPeter NelsoninSeattle, Washingtonhave designed alargebillwith oneprintedside — theUnited Artists Reserve Note — and oneblank side. The ideais that thebill canbeissuedto artists, who inturn can decorate theblank side of the note with some of their artwork.

The value of the artwork willhelp determine the value of each note.5 Theidea was inspiredby an

urban legend — that Picasso hadlunchwithNelsonRockefeller at the Four Seasons restaurant inNew York City. Whenit came time to pay the rather expensivebill, Picasso suggested that hecouldpay for lunchby drawing something on thebill and signingit,whichwouldturnthebillitself into somethingmuchmore valuable than thelunch.

'

|

H

- |%

Fluxus Bucks

Page 98: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Startedby Julienne Paquetteinthe1990s, the Fluxus Bucks movement uses dollars as a

background stamp for art. They are traded through the mail as a form of mail art and can also be

used for purchases instores that will accept them.6

The system we use for exchanginggoods and sendees with each other is only limitedby ourimagination. As artists demonstrate, there are many possibilities for newkinds of notes andexchanges. Value is not basedina governmentalpromise; it’s basedinour own social contractand the agreements we are able to make with each other about value. We created the system, andwe can changeit.

—'T

2550 Fffty -

MONET'- 125 25tm

Page 99: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTERS

Exchanging Ecologies

There are no passengers on Spaceship Earth. We are all crew.MARSHALL MCLUHAN

For centuries wehumans havebeen replacinghealthy natural ecosystems and environments forless healthy ones. We’ve cut forests,pollutedrivers, excavatedmountains andgenerally taken theenvironmental sendees offeredto us by nature for granted, without concern about maintainingtheir productive capacity. For most ofhumanhistory7, nature was abundant andhumans didnot

pose a significant ecological threat — it was enough that we managed to sundve. The tippingpointcame withthehumanpopulation explosion and the systematic commoditization ofproductsextracted fromnature.

The rate at whichwe usednatural resources has increased markedly over thepasthalf-century7, and that inturnhas resultedintheincreased degradation of our naturalenvironment.Now, another tippingpoint is rapidly approaching — one in whichthe atmosphericconcentration of greenhouse gases pushes climate changebeyondthebrink of our control.Instead of exchanging our environment for money to make more money, can we use a newformof money to help renew nature? Could complementary7 currencies help us on our way to a

healthier environment? Absolutely.One of thegreat strengths of complementary7 currencies is that you can choose to make them

local, andlocal tends to be goodfor the environment.No matter the specific function of thecurrency7,inthis respect local currencies are always greener thanbank-debt money. Because theycirculatelocally among community7 members andbusinesses, they encourage thepurchase or

exchange of localgoods and sendees — exchanges that come fromthe community7 or fromitsimmediate surroundings, thus reducing realities such as the carbon footprint of long-haul

Page 100: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

transportation. The lettuce and tomatoes youbuy at the farmers market using a complementarycurrency, for example, most likely come from alocal farm, not fromthe other side of theplanet.Thus you reduce your carbon footprint. Other things being equal, the more we exchangeinternational andnational commerce for regional andlocal commerce, the more we act as

responsible stewards for OUT world.

We abuselandbecause we regardit as a commoditybelonging to us. When we seeland as a

community to which webelong, we maybegin to useit withlove andrespect.Aldo Leopold, A Sand County Almanac

Beyondthe simple fact that localis more ecologically sustainable, and complementarycurrencies are usually local, we can also help restore the environment with eco-currencies,including carbon credits associatedwith a cap and trade system, which canbe local, regional,national or international.

Mitigating CarbonWe see the impacts of the roller coaster economy even7 time wepullinto a gas station. Theubiquitous roadside signs announce the cost of a gallon or liter of gas and tellus something aboutour relationship withthe economy. Andwhenit comes to the environment, when we fill our

tanks we are also playing our part inpumpinginto the air more toxins, carcinogens andgreenhouse gasses. Theburning of fossil fuels is recognizedby the vast majority of climateexperts as one of the leading causes of climate change. Whenwe fill our tank andthenturnthekey, we stepinto the middle of the carbon cycle, initiatingan actionwhich results inthe release ofcarbon dioxide (C02) into the atmosphere. That C02,in turn, traps theheat fromthe sun and

acts to create a greenhouse effect.Inahealthy biosphere, the amount of C02 inthe atmosphere wouldbe relatively constant as it

cycles fromEarth, throughliving organisms, to the atmosphere andinto the ocean — abalancedseries of feedback loops. Humaningenuity and advanced technology have allowed us tocircumvent the system,however. We remove ancient fossil fuel — coal, oil, naturalgas —

essentially long-sequestered carbon, fromEarth and releaseit into the atmosphere. And as thehumanpopulationgrows, our appetite for convenience continues inparallel and the supply of

Page 101: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

fossil fuel diminishes. We find ourselves at the mercy of the market, whichis, of course, tied toeverything fromweather to war, andmany things inbetween.

Inshort, thenaturalworldis now at our mercy. So, can we change the equation once more?Can we reestablish ecologicalbalance, andperhaps,in so doing, step off the roller coaster as well?

At this point, youmight well say, Tdbuy ahybrid,if only they were more affordable,” or ‘Tdwalk to work ifIcould find a job near myhome.” In other words, althoughyoupossess thepowerof choice, you do not have sufficient good choices at your disposal. So how do we create a worldwhere environmentally-friendly choices are widely available and a sustainablelifestyle the norm?We canbeginby reducingthe amount of C02 inthe atmosphere. Could a complementary carbon

currency bepart of the solution?

Global Cap andTrade: The Kyoto TreatyAs ofNovember 2004 theKyoto Treaty on climate changehas beenlegally binding for 141countries. Amongthe developed nations, only Australia and the US have abstained fromthetreaty. Its CleanDevelopment Mechanism (CDM) allocates a specific amount of carbon credits tovarious countries andindustries,but allows credits to bebought and soldinternationally. Acompany that produces more greenhouse gases thanits allocationneeds to purchase carboncredits soldby another producer who has reduced emissions beyond what is required.International tradingincarbon contracts on thebasis of the CDMprotocol of theKyoto treatyhassuccessfully started.

Reducing Greenhouse Gases Using the MarketAlthoughtheburning of fossil fuel results inthe creation of C02, there are other greenhouse

gases (GHGs) including, most notably, methane whichhave an even stronger atmosphericclimate effect. C02 is just the mostprevalent of these gases andhas the most recognizable name.

Some recent technical approaches to reducing GHGs range from sequestering carbon deepinEarth to capturing the methaneproducedby livestock inorder to generate electricity. Raisinganimals for foodhas now surpassedburningfossil fuel as theleading source of GHGs. The twomost comprehensive market strategies for reducing GHGs,however, are a trading systemknownas cap andtrade, andthe carbon tax. Cap and trade regulates the total supply of carbon credits,lettingthe market regulateprice. A carbon tax raises theprice of things that produce C02 and

leaves supply and demand to the market. Bothhave strengths andweaknesses. Both canbepart

Page 102: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

of the solution.

The Theory of Cap andTradeInEnvironmentalTradingMarkets (ETMs), the capincap and trade is thelimitput ontheamount of GHGs that canbe releasedinto the atmosphere. This is the strong aspect of cap andtrade.It puts limits on emissions up front. Permits to release C02 or another GHG are made

available, usuallyby the government. Thesepermits can be auctioned or distributedfor free tothose entities being regulated, usually fossil fuel users or power producers. These are known as

upstream producers. Consumers are downstrearn. There are only alimitednumber ofpermitsand that number is decreased every year, in theory moving us toward an overall level of C02 in

the atmosphere that stays below 300 parts per million (ppm), thelevel thathistoric geologicalandice core records show we can:t exceedif wehope to maintainice caps andglaciers. The tradein cap andtrade comes fromthe fact that thepermits canbe traded, subject to regulations, amongpermit holders. So if oneproducer of GHGs, say apower plant inCalifornia, emits less C02 than

expected, i.e.,pollutes less,it can sell its extra credits to another power plant in Ohio thathasn'tmet expectations and needs more credits. The ideais to create anincentive for greenhouse gasproducers to produce less greenhouse gas. The less they produce, the fewer credits or permitsthey need.

Intheory,ifs a great system.Inpractice, things get more complicated.The value of carbon credits has rapidly increased since the Kyoto Protocols. The WorldBank

has estimated that the size of the carbon market was $11billion(£6.6billion) in2005, $30 billion

in2006 and $64 billionin 2007.1

Cap andTradeinPracticeLike other governmentpolicies, cap and tradeis subject to the samepressures andinterests as

other policies.Inthe United States, Californiahas passed a law that places a cap on carbonproduction,but no suchlaw exists on a nationallevel at this point. Although there are severalfunctioning carbon exchanges inthe US, all of them are either voluntary or inresponse to theCalifornia law, as people and companies who are genuinely concerned about carbon emissionsbuy credits to offset their use of C02 for other things.

Another weakness of cap andtradeis the measurement and regulation of GHGs.If one were to

Page 103: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

try to measurehow much GHG-produring fossil fuel was dispensedby allgas stations,propanesellers,households andheatingoil supply trucks, the task wouldbe enormous, complex andlikely inaccurate. These distributors of fuel are too far down the supply chain. The most effectiveregulation takes place as far upstream as possible — at the wellhead or the coalmine.It isrelatively easy, using currently availableinformation, to calculate the amount of GHGs an

upstreamproducer sells (whichis the amount that will eventually get releasedinto theatmosphere). But theproducers havebeen successfully lobbying so that this more simple andeffective approachisn’t chosen.

Another crucial aspect of cap andtradeis the cost to the consumer.If we capproduction offossil fuel, we cap supply and driveprices up, or so the theory goes. If,however, thosepermits are

sold (rather thangiving them away for free as was doneinEurope), the systemprovides a new

windfall. Those monies canbe used for a variety of things, includingrebates to consumers,particularly to thosein low-incomebrackets. Funds can also be used for other greenprograms

like weatherproofing, green job creation, green technology research and development.2

The CarbonTaxA carbon tax places a tax on all activities that produce carbon dioxide. This makes theprice offossil fuels higher (because of the tax), and supply and demandtheory would suggest thathigherprices will reduce consumption, while the taxes collected can fundprograms that mitigate theimpacts of climate change. Mitigatingprograms canincludebetter public transit to replaceautomobiles and renewable energy installations to reduce GHG emissions. Advocates of a carbontax often tout it as an alternative to cap and trade. A carbon tax can act as anincentive to use lessfossil fuel.

Withhigher prices, we might think twice about drivingto work alone when we could carpool or

take thebus instead. Germany, BritishColumbia and Quebechaverecently implementeddifferent forms of a carbontax. Theprimary weakness of a carbon tax is thatit doesn’tput limitsontheproduction of GHGs, so it can’t guarantee a given reductionintheir levels. A secondary7issue with a carbontax is that it is a regressive tax, whichimpacts thepoor more thanthe wealthy.This canbe addressed, as inBritish Columbia, with a compensating rebate for thepoorer

families.3

ANew Approach: The Vision of a Carbon Currency7Both cap andtrade andthe carbon tax are tools we shouldhaveinour greentoolbox. But that

Page 104: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

doesn't mean we should simply sit back andwait for the results. What other tools might we

design? What if your carbon-producing and carbon-reducing activities were automaticallycounted andbanked? What if youcould see your net carbon effects simply by swiping a card or

clickingyour mouse? Would that active awareness of your placeinthebiosphere, of your roleinrestoringbalance to our world, not change your actions? Andwhat,if as an addedbonus, a new

carbon currency also created new economic opportunities?

A Carbon Currency System

Carbon currencyÿ wouldbe a voluntary7 carbon reductionprogramwhereby consumers receiveelectronic credits for purchases or investments that contribute to measurable carbon emissionsreductions.It couldmobilizepeople who are already engagedinreducingtheir carbon footprint(for example, they may currently own a fuelefficient car or solar power generator) and also themuchlarger group of consumers who have adopted a wait and see attitude. Furthermore, a

carbon currency7 couldprovide individuals and communities with a reliable way to track andcompare their carbon emission reductions, as all transactions canbe recorded andverified.

Businesses providinggoods and sendees that reduce carbon emissions or those that haveformally engagedin sustainability7 activities (greenbusinesses) could accept carbon currency7

units (CCUs) as a loyalty7 currency7 inpartialpayment for additional carbon-reducinggoods andsendees. Eachbusiness would decide what percentage of aninvoice orbill they are willingto

accept inCCUs (whichinturn couldbe tied to its value on the carbonmarket). An electric or

hybrid car dealer, for example, could decide to accept 10% of thepurchase of a new car inCCUs,whereas a shop selling energy7 efficient lightbulbs or solar panels might accept 20% of theirpayment inthis currency7.

Theparticipatingbusinesses that sell the carbon-reducinggoods or sendees to the customerprovide the data relevant to the transaction — the amount of carbon reduction achieved with thepurchase. For example, a consumer could earn a CCU when they take abus to work inthemorninginstead of driving their car. They wouldpay for the tripindollars, and would swipe theirCCU debit card for the carbon currency7 credit. The transit company wouldhave a standard carbonvalue for bus riders.

Later, the same consumer might go shopping for solar panels to replace electric generationusing fossil fuels.If the consumer had a number of the carbon currency7 units on their card andthe solar panel store accepted up to 10% of thepurchasepriceinthe units, they couldpartiallypay for their panelwith CCUs.

Page 105: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Illturn,participatingbusinesses like a car dealership,hardware store or solar panel distributorwouldhave two options for the use of the CCUs they receive. They couldmakepurchases withother businesses participatingintheprogram(B2B transactions) or sell the CCUs through theprogram's administrator to the carbon market.

Final redemption of CCUs wouldbe at a fixedpricepreviously agreed uponbetween the carbonmarket administrator andthebusinesses. The administrator couldbe any organizationwilling to

pay for carbon emissions. Given additional sales tax generatedby this program,it wouldbeidealif the tax authority of theparticular municipality, county, state or localgovernment that has a

mandatory7 reductionincarbon emissions wouldplay this role.For homes,professional raters could make an evaluation of the carbon credit consumption of

different types of dwellings. (Inthe US, manyhave already been trained and certifiedby the trade

association calledBuildit Green.5) Residentialhomes could thenbe rated onperformancebeyondtheir city/county's energy7 code minimum standards. If ahouse scored 25% better thancode, thenthat fact couldbelogged and certified and corresponding carbon savings are

computed. Addingbetter insulation or double-paned windows, for example, are ways to reduceheatingbills and carbon consumption.

For transportation, the type of car used and any reductioninmileage driven comparedto some

benchmark like the state or city's average vehicle miles traveled, could similarlyproride CCUs to

the consumer. These wouldbe credited to his or her CCU account following a smog test or a

comparison of the driver's previous annual mileage.

Keepingthe SystemHonestTheburgeoningregulatedinternationalmarket for carbon credits is expected to more thandoublein size to about $68.2billionby 2010, with the unregulatedvoluntary sector risingto $4

billion over the sameperiod.6 Yet, companies andindividuals rushing to go greenhavebeenspendingmillions on carbon credit projects that, on deeper inspection, yield fewif anyenvironmentalbenefits.

AFinancial Times investigationhas uncoveredwidespread failings inthe new markets forgreenhouse gases, suggesting some organizations areparing for emissions reductions that do not

takeplace7 Others are meanwhile makingbigprofits from carbon trading for very7 smallexpenditure and,in some cases, for cleanups that wouldhavebeen made anyway.

Incontrast, the CCU approachprorides carbon savings that arelocally certified, canbe tracked

Page 106: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

withinthe vicinity inreal time and whoseuse canbe electronically auditedback to their origin.Each CCUhas its own electronic certificate, through which one can follow where andby whomitwas created, for what specificpurchase and at what time. This gives a muchhigher degree ofverifiability thanis typically available withthe carbon credits tradedunder the Kyoto agreement.Finally, as the CCU systemis electronically integratedinreal time,it enables each community to

announce the carbon savings it has generated,providing on the spot feedback onhowwellit isdoing comparedto other communities. That way, everybodyparticipates throughtheir own dailydecisions.

Advantages Compared to Other ApproachesBesides the advantage ofproviding aninstantaneous tracking systemfor carbon-reducingactivities andleaving an auditable trail of these carbonreductions, the CCUleverages theefficiency of tax dollars to multiply carbon reductions.Inmost existing schemes, a consumer or

business receives a tax credit or subsidy for a carbon-reducinginvestment,but these tax dollarsonlyhave a one-time effect.

Incontrast, CCU are used at least twice, andpossibly more,before they are cashedin.Thesales taxes on these multiple transactions compensate for the cost of their redemption. As alreadynoted above, the cumulative sales taxes can evenbe larger thanthe redemption costs, changingthe carbon reductionprogramfrom a cost itemto anincome-producing one for the tax authority.

Other Ecologically-Positive Currencies:theBiwa Kippu SysteminJapan

Japanhas hundreds of complementary- currencies designed to benefit local communities andtheir needs. Inthe case of the Shiga Prefecture (a Japanese Prefectureis roughly equivalent to a

Countyinthe US) near Kyoto,protectingLake Biwais of criticalimportance to the community.The lake, whichis one of the oldest andmost diverse lakes inthe world, is inextricably linkedwiththe culture andindustry of the area. Poor upstream watershedmanagement,pollution fromindustry-, agriculture andhouseholds andthe arrival of invasive species nowthreaten thelakeandits oncehealthy ecosystem. Enter the Biwa Kippu — a complementary- currency- designedspecifically to rehabilitate the lake. Althoughit is currently inevaluation stage andnot yetimplemented, this is how the Biwa would work onceinplace.

The Biwa system willpromote environmental activities by residents andnonprofitorganizations inShiga Prefecture without creating any additionalbudgetary deficits. Job creation

Page 107: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

and community building, while not direct objectives, are expected as positive side effects.Focusing on residents andnonprofit organizations, and only indirectly on businesses, the systemis designedto be able to expandinboth scope and range over time.

To begin, theprefecturalgovernment would enact an ordinance requiring residents tocontribute a certain amount of environmentalBiwaKippu eachyear, for example10 Biwas perfamily, with appropriate exceptions for special circumstances (e.g.,people with disabilities or

other validgrounds for exception). One Biwa might correspondroughly to onehour ofenvironmental sendee. The Biwa wouldbeissuedby the Prefectureitself (or by an appropriateentity such as the Lake Biwa EnvironmentalResearchInstitute) only for specific measurableenvironmental activities as determined each year by the Prefecture. Residents or nonprofitorganizations that engage insuchwork wouldbe rewarded withBiwaKippu. Biwa obligationscouldnotbepaidinYen, nor would the government set a fixed exchange ratebetweenBiwaKippuandYen. Participants,however, wouldbe free to exchange Biwa Kippu shouldthey choose,including for Yen, on free market principles through an electronic e-Bay type market.

Biwa wouldbeissuedvia mobile telephone and collectedusingthe onlineprefectural taxationsystem.Inaddition, real-timeprogress couldbe tracked and feedback given using the electronicBiwa system.

Aside fromthe obvious advantages of creating a supplementary eco-currency like theBiwaKippu, the systemhas several additionalbenefits. The sale of Biwas to those who haven't earnedenough Biwas through their own environmental activities wouldprovide anincome source forenvironmentalnon-governmental organizations and activists. Researchhas shown that more

people volunteer andthat the turnover of volunteers innonprofit organizations is significantly

reduced when a complementary currency7 is used to reward volunteers.8 Because of these two

effects, more nonprofit organizations that focus on environmental needs will tendto emergespontaneously inShiga Prefecture.

Bybalancing the quantity7 of contributions andthe opportunities for earningBiwas, anecological economy can be activated at whatever scale is deemed appropriate for thePrefecture.

ConclusionInadditionto the specific examples ofhow currencies canbe usedto address the environmentalissues describedhere,it’s important to note that local currencies issuedwithout interesthelpreduce the environmentalimpact of the monetary7 system. They do this by striking at theheart ofthegrowthimperative describedin Chapter 2. This growthimperative drives thepractices thatrequire the environment to be usedup without adequatelypricingthe sendees it provides.

Page 108: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER Q

Mindingthe Community's Business

Do businesses ever look out for anythingbesides thebottomline? The answer is yes.Infact,bothcorporate social responsibility and corporate sustainability are growing movements inthebusiness world, with ahistory that goes back centuries.

Inthe 21st century,businesses — corporations,partnerships, soleproprietors — are

omnipresent. We dorit think twice about being able to find familiar national chain storesthousands of miles from where welive, eveninother countries. Smallbusinesses get a lot of our

attention, too, and alot of our cash. Let’s faceit,withoutbusinesses, most of us wouldn’tbe ableto feed or clothe ourselves, or evenlive under a roof. We rely onbusinesses,big and small, tomake the necessities of life available to us. But this wasn’t always the case. Business of today’sscope and scale is a relatively newphenomenon, andithas changed our most basic relationships— with food, land,housing, clothing, transportation, work and even ourselves.

Before theIndustrialRevolution, industry was usually small scale, andmuchlvas done at

home. Thebigtrading corporations, like the East India Company andtheHudson’s BayCompany, were notable exceptions.

One of the earliest corporations intheUnited States, the Massachusetts Bay Corporation,began as a group of religious refugees,poolingtheir money andresources to begin a newventureina newland. Ledby John Winthrop, who famouslypreached social responsibility and calleduponthe wealthy to help the poor, these Puritans founded a new colony which eventuallybecame the Commonwealth of Massachusetts. (Of course, social responsibility inthe early colonyincludedmandates andpractices that we would consider inappropriately invasive today.)

Page 109: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Since the days of the Puritans, our sense of community andmany of theinstitutions that formit,like our spiritual traditions andthe needto help our neighbors bringintheharvest,havechangedinour modern industrialworld. But our core sense of social responsibilityhas not

changed. Many of us are nowbeginningto expandthe notion of responsibility to community so

that it goes beyondthe responsibility to our fellowhumanbeings to the whole ecologicalcommunity of life. We expect thebusinesses webuy fromto share these values andreflect themintheir supply chains, theproducts they offer and the energy they use.

From SocialResponsibility to SustainabilityGreen sells. Turn on the television, and chances are goodthat youwill see a commercialproclaiming the ways inwhich some company or other is helping the environment. Andmanyare. Insome cases that ad reflects a deeply held corporate value. Inother cases, that 30-secondspot serves boththebottomline and consumers' calls for corporate environmental responsibility.

The notion thatbusinesses have a responsibility to society isn’t new,but the extent and shapeof that responsibility, as well as the rationalebehindit have changed. Some robber barons of thelate19th century were also great philanthropists, foundinguniversities, museums andpubliclibraries.Meanwhile, working conditions insteelmills andmines, shoe factories and sardinecanneries were abominable. The labor movement was bornfrominhumanworking conditions:organized workers demanded fair wages andbetter workplaces, asking management to be sociallyresponsible to at least their employees. The roadfrom childlabor to the corporate sustainabilityreport took just over ahundredyears to travel (the first childlabor laws were introducedinthe1830s).

Our modernidea of corporate social responsibility (CSR) is only about 60 years old and owes

much to the time andplace of its birth.Inthe earlypost-war years, as the ColdWar (abattlebetweentwo economic systems, capitalism and state socialism),began to take shape, the call forcorporate social responsibility was championedby the mostprestigious business schools intheUS. The idea thatbusiness andbusiness managers hadthe aptitude andmeans to positivelyinfluence society, and a responsibility to thepublic,becameingrainedinseveralgenerations ofinfluentialbusinesspeople.

With the advent of the modern environmentalmovement inthe1960s and subsequentregulations,particularly of toxic substances, the expectation that businesses had some

responsibility not to pollute grew. Corporate responsibility was gaining a new face.Inthe1980s thepublic, andparticularly investors,began to pay more attentionto where their

money was going. The idea of socially responsibleinvesting(although again, not new) took off,

Page 110: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

spurredlargelyby the call to end apartheidinSouthAfrica. Wall Street heeded the call, and soon

investors could choose sodally responsible stocks and funds. By 1999, theDowJonesSustainability Indices hadbeen created, and the idea of selling “green” was catching on.

Just as business was beginningto embrace the idea of corporate environmental responsibilityat the end of the 20th centuiy, a shift took place within corporate culture. Managers began to

manage funds to increase their ownprofits, andthose who were most successful rose to the topwhere their salaries andbonuses quickly set them apart. Shareholders, employees and certainlythepublic goodtook aback seat. The excesses of Enron, whose traders mockedtheidea that oldladies were goingto lose their pensions,became the icons of corporateirresponsibility.

Strangely, while many businesses werelosingground whenit came to actualindicators ofsocial responsibility, more andmore were taking onthe challenge of sustainability, whether byordering recycledpaper or supportinggreen causes intheir local communities. And of course,some were doingboth at the same time.But couldyou do good AND make abuck? While manyof us wondered, others got to doing just that — building successful, sustainablebusinesses.

Progressive ProfitabilityIn1983, a small, organic farming andhomesteading schoolinNewHampshire needed a way to

stay afloat. They decided to make and sell organic yogurt. The venture was so successful that theyclosedthe school and devoted themselves full-time to yogurt-making. Today, StonyfieldFarms isa fixture ingrocery stores across the US, with enviableprofits, a firmtrack record ofenvironmentally and socially responsible actions and aplethora of awards to show for it.Althoughtheir rise to success wasn't always smooth, the companypersisted through everythingfromrunny yogurt andmarket flops (prunewliip yogurt) to a serious economic crisis brought on

by aninsolvent supplier.As Stonyfieldgrew,becoming economically more andmore secure, they increasedtheir

commitment to the environment, tackling everything fromglobalwarming to cow emissions.(Yes, their cows nowburpless, emit less andproducemilkhigher inOmega-3s!) In1997, longbefore most peoplehadheard of carbon offsets, Stonyfieldbegan offsetting their carbon footprintand teaching others howto do the same.It turns out that producing a goodproduct, makinggoodmoney and doinggoodwiththat money isn't as hard as we might have thought.It just takes a

littleimagination, a lot ofhardwork and ahealthy dose of persistence.

Businesses that Change the WorldLike Stonyfield, Seventh Generation also models what a company can and shouldbe. From a first

Page 111: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

glance at their website, it’s clear this is no ordinary company, no business as usual. “ProtectingPlanet Home,” is front and center, along with their mission, “help[ing] youprotect VOUT worldwith our naturally safe and effectivehouseholdproducts.” You canparticipatein “AshScienceman,” a Q&A, or purchase a copy of “The Responsibility Revolution.” Seventh Generationisn’t just selling eco-friendly products, they are teachingpeoplehowto stewardEarth. Recently,the company began a crowd-sourceproject to produce an onlinebook featuringbest practices incorporate socialresponsibility and sustainability. Contrast this with alarge, conventionalcompetitor whose websiteproclaims “Everyoneis an innovator” andlists “Investor Relations” as

the first tab.The difference between a conventionalbusiness and a sustainablebusiness isn’t merely

adherence to the triple (economic, social and environmental) bottomline. It’s something deeper:a real commitment to community andthe values that underlieit.This, and thebusiness culturewithinthe company itself, can make all the difference.

Within thebusiness itself, there are elements ofhowit operates that addvalue to theenterprise which arehard to quantify in dollar terms. Often described as intangible assets, thesethings includebrandrecognition, employeeloyalty, intellectualproperly7 and the reputationthecompanyhas inthe community and amongits clients. These intangible assets are fertile groundfor the creation of complementary currencies. Perhaps employees can earnpoints for mentoringother employees into higher levels of leadership andresponsibility. Or they couldget credit fordifferent types of community sendee that canbe exchanged for lunch at the company cafeteria.Ajiytime there are underutilized (or undervalued) resources andunmet needs, there are

opportunities for new ways to mobilizepeople to increaseproductivity and value.

RewardingLoyaltyMaybe you’ve never heard the term loyalty currency,but youknow whatit is.It is ubiquitousthese days. Every7 store seems to have one. The store tracks your spending, encourages more andrewards you for comingback. Rewards cards, frequent-flyer miles, co-op memberships, even

thoselithepunch cards that coffee shops give out — they are allloyalty currencies, and they are

the most widespread type of complementary7 currency today.Although customer loyalty7programs haveproliferatedlately, the granddaddy of loyalty7

currencies, the trading stamp, dates to the1890s, whenmerchants,hungry7 for cash duringthatera’s depression,began to issue stamps as a reward for cashpayment. Eventually most chainsupermarkets, as well as ahost of other retailers, issued stamps to all customers, regardless ofpayment method. The stamps, which retailers bought from a stamp company (like Blue Chip or

Page 112: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

S&H) were issued alongwith one's receipt. They couldthenbepastedinto stampbooks andredeemed for goods at the stamp store. Except for the extensivelicking requiredby theenterprise,it was like getting things for free.

Another older, and still very common,paper-based, loyalty currency is the discount voucher,redeemable for goods or sendees inretail shops and supermarkets. IntheUK, Tesco has grown to

become the largest supermarket chain onthe strength of its loyalty currency- system, whichitdevelopedinto a fully fledged complementary currency- system. Introducedinthe mid-1990s, theTesco loyaltyprogram was so successful thatit forcedrival retailers to follow suit. Onein threeUKhouseholds now are Tesco card members, and the Clubcard magazineis Europe's largest

circulating customer magazine.1Loyalty currencies arebecoming so pervasive that newventures arebeing established that

enablepeople to tradeinthe currencies themselves, without respect to the original company with

whomthepoints or miles was designed to benefit. Whether it's LoyaltyMatchin Canada2 ora

patent filedrecently inthe US that will enable transactions to occur betweenmultiple“non-financialloyalty currencies heldby different loyaltyissuers,”3 these currencies haveintangible value for companies but real value to their customers.

Loyalty currencies are also often used as just another marketing strategy. Butby themselves,they don'tprovide a complete, sustainablebusiness strategy.

Recession-Proof CommerceBack inthe1930s, the world was reeling fromthebanking crash that causedthe Great

Depression. Then as now,banks were cuttingback on their lending, andmoney was scarce; therewere also several instances aroundthe worldwherehyperinflationtook over. For example, thereare many stories ofpeople using suitcases full of money to pay for simple things like aloaf ofbread.

Whenmoney is not available at all, the first optionis a return to barter. Barter is one of theoldest exchange mechanisms inhistory. Withthe advent of currencies though,barter slowly fellout of favor. It's easier, after all, to give the shopkeeper a few coins or bills thanto haul abushelof corn or a squealingpiginto the shop.Now, as we try to recapture community, createsustainability and find stability,barter is making a modern-day comeback. Some ofbarter'spopularity is about lifestyle choices — local choices inparticular — but it is also about economicsecurity inan unpredictable economy.

Likeindividuals,businesses, too, canhave a cash flow shortagebut a surplus of goods. Again

Page 113: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

illthis case, it's not terribly convenient to pay incorn,pigs or saddle shoes. And doing so mightlimit what you canpurchase. The shoelace supplier probably doesn’t want a warehouse full ofshoes.

In1934, a smallgroup of business owners inSwitzerland convened to talk about their troubles.It didn’t take longbefore they realizedthat one of them neededhis credit line fromthebank to

pay a supplier. That supplier’s business inturnneededthe samekind of credit line for similarpurposes. They all decided to work together to create a mutual credit system, where instead ofborrowingmoney frombanks, they issued credits and debits to each other at the moment of an

exchange to keepproduction going so it allwouldbalance out inthe end.Needless to say, thebanks didnot like the idea, andthey triedto stop the new currency, called

the WIR,inits tracks. (WIRis derived fromthe word Wirtschaftsring or economic circle — butwir also means “we” inGerman.) Nevertheless, the system survived. The WIR system evolvedinto a full-scale dual currencybank which manages andlends inbothWIR and Swiss Francs.

Today, over 75 years later, the WIR Bank has growninto a major financialinstitutioninSwitzerland. Some 75,000 small andmedium sizedbusinesses (SMEs) inSwitzerland are

members, VA of the totalnumber ofbusinesses in the country. SMEs make up 99.7% of Swisscompanies andprovide jobs for 66.8% of the workforce. The totalvalue of WIR tradedin2008was over $1.58 billion. The WIRbankinadditionissued 2.74 billion Swiss Francs inloans in

2008.4Notice that,inthe case of the WIR, the complementary- currency- is not convertible into Swiss

Francs: a debt incurredinWIR needs to be compensatedby a saleinWIR of a good or sendee to

another member of the network. The next system considered, Commercial Credit Circuits,improves onthat approachby makingthe complementary currency automatically convertibleinto conventionalnational currency7.

Commercial Credit Circuits (Cÿ)Commercial Credit Circuits, or Cÿs, developed only over thepast decade. They arebased on

businesses paying for goods and sendees completely electronically.Here’s how a Cÿ works. Theprocess starts byhaving oneparticipating small or medium sized

business get insurance on an invoice or other payment claims. This insuredinvoice is then usedas backing for a complementary7 currency7 for the same amount as theinvoice. Theproceeds incomplementary7 currency7 are thenused as aliquidpayment instrument within a

business-to-business network. Each recipient of such aninvoice can either cashit infor

Page 114: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

conventional currency (at the cost ofpayingtheinterest to thematurity of theinvoice) or pass theproceeds on to pay its own suppliers. At the maturity of the invoice, the amount gets paidinconventionalmoney (normallyby the company to whomtheinvoice was issued, or in case ofdefault,by theinsurance company). At thatpoint, all the units that were createdbecome

convertible to conventional money at no cost.

This process injects working capitalinto the members5 network at a cost substantially lower

than what would otherwisebepossible. Given that small andmedium sized firms provide the vastmajority of allprivate jobs, the mechanism systemically contributes to the stability ofboth

employment andthe entire economy. The software for implementingthe C3 approachis open

source, called Cvclos.5If governments,particularly regionalgovernments, would accept currencyinpayment of

taxes (as the country of Uruguayhas nowbegunto do), this wouldnot only encourage all otherbusinesses to accept C3,but would also provide additionalincome to the government fromtransactions that wouldn’t otherwise takeplace. Furthermore, that additionalincome wouldbecome automatically availableinconventionalnational currency at thematurity of the originalinvoice. Thus accepting units does notupset any existingprocurement policies. The first

country thathas agreed to accept units inpayment of all fees andtaxes is Uruguay.6The C3 approachis probably the most dependable way to systemically reduce unemployment,

and accepting units inpayment of taxes is the most effective way for governments to support

the spread of the system. Businesses with an account inthe same regionalnetwork have an

incentive to spendtheir balances with each other, and thus further stimulate the regionaleconomy. provides a win-win environment for allparticipants andthereforepromotes other

collaborative activities amongregionalbusinesses.The win-win approach of also benefits the financial systemitself. As the entire process is

computerized,it significantly streamlines thelending and management for its insurance andloanproviders. SMEs can therebybecome a moreprofitable sector for banks,because credit lines are

negotiated with the entire clearing network,providing the financial sector with automatic riskdiversification amongparticipants inthe network.

A Role for BusinessesBusinesses arepoisedto play a greater roleinthe trade and exchange world — they often are the

Page 115: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

leaders that stepinwhenever monetary systems fail.During the Great Depression,it was oftenindividualbusinesses or business associations that introduced alternative forms of currency(such as scrip) that circulated on a locallevel to keep doors open andpeople employed.Businesses have developed the most widely circulated complementary currencies in the world —

theloyalty currencies — andthe most stable alternative exchange systems. The WIR andthe

systems are clear examples of this.We can do alot to foster ahealthy business climateby expanding the ability of localbusinesses

to use either loyalty or commercialbarter systems innew ways. When our cities and other localgovernments accept units inpayment of taxes and fees, this willbe one of the most effective

ways for localgovernments andbusinesses to collaborateinsolvinglocal economicproblems.

Page 116: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER 10

Putting the CareBack inHealthcare

The greatest wealthis health.VIRGIL

InSickness andinHealthHealthcareinthe US is one of theglaring examples of the failure of money, insurance and theprivatelyheldhealthcare companies5 ability to meethuman needs. The US Constitution affirmsthat we all are created equal — noonebornonEarthis more deserving ofbasic humanrightsthan anyone else. However, the same centripetal forces that consolidate wealth andpower inthemarketplace andinsociety are also at workinthehealthcare system.

The startingpoint shouldbe to recognize that we don't have a healthcare system — instead we

have a medical care system. Furthermore, income for that medical care systemis producedessentially by people who are alive and sick. Therefore only more sick people — nothealthy ones— leadto more growth andincomeinthat sector. With such anincentive scheme, that systemhasbecome remarkably adept at keeping sick people alive. Over 60% of totallifelongmedicalexpenses are typically incurredinthe last three months of apatient’s life; and emergency careisclearly a domaininwhichWesternmedicine excels.

Sickness Treatment vs. Wellness PromotionWhenindustries arebuilt around a medicalmodel that rewards the proliferation of illnessesrather thantheprovision of genuinehealth, there are fewer incentives for participants inthesystem to discover andpromote treatments that willkeeppeoplehealthy. Agood example of thisis the relationship of food to our health. “You are what you eat,” is a statement to be taken

Page 117: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

seriously: nutritionplays apivotal roleinour lifelonghealth. Obesity, cancer,heart disease,diabetes,highbloodpressure, stroke andinfections — all of these are on thelist of the topkillersin our society, and eveiy one of themhas a direct causal relationship to the foodwe eat.

Are doctors andmedical students flockingto nutritionprograms as a result? Far fromit —

nutritionis not even a required courseinmedical school. Few doctors know any more aboutnutrition thanthegeneralpopulation. The response of the sickness treatment industry- to theseepidemics is to create morepatented and expensive drugs for people to take rather than toprovide nutritional advice, to advocate for safer andhealthier foods or to intervene when childrenare beingraised eating junk food.

The number of childreninthe US who regularly take drugs likeRitalin, an amphetamine usedto treathyperactivity and attention deficit disorder whenthereis a clear link betweenthesebehaviors andfoodthat is loaded with sugars, chemicals and artificial colors, is an example ofhow drugs are used as a substitute for common sense. “The science shows that kids5 behaviorimproves whenthese artificial colorings are removed fromtheir diets andworsens when they'readded to their diets,” saidDr.David Schab, author of meta-analysis publishedintheJournal ofDevelopmental andBehavioralPediatrics.1Links between artificial colors and flavors andhyperactivityhavebeenknown for years, yet the amount of these chemicals certifiedby the USFood andDrugAdministration(FDA) for useinfoodincreased from12 mgper personper dayin

1955 to 59 mgper personper day in 2004.2

The Scarcity of HealthHealthis perhaps thebest example of something thathumanbeings needin abundance. There isnever “too much” health. Our spiritual traditions are full of stories ofhealing — it is considered a

form of divineintervention. Being ahealer is one of thehighest callings andhas always been one

of the reveredpositions insociety.We might legitimately hope that when we go to a doctor, the doctor's goalwouldbe to provide

us withthe care we need to get well. The systemisn't calledhealth care for nothing. We expectthe doctor to serve us ina compassionate way, to genuinely care about us as ahumanbeing andto take all the steps necessary7 to help us be whole again. The root of the wordhealthiswholeness. Yet slowly andinsidiously the monetary7incentive scheme wehave developedhastwisted and deformed theinstitutions wehope act as healers into institutions that work morelikehardnosedbusinesspeople than compassionate caregivers. How didthis happen?

Muchhas beenwritten about theproblems with thehealthinsuranceindustry7inthe United

Page 118: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

States. MichaelMoore’s filmSicko, releasedin2004,provided a sometimes humorous butrelentless expose of the number ofpeople withhealthinsurance who are turned away — deniedcoverage — as soon as they get sick. The HealthMaintenance Organization (HMO) industryhasbrought the concerns of aninsuranceindustry right into the doctor’s office. People who enrollinHMOs no longer have the ability to go to specialists who might know more about their conditionwithout thepre-approval ofprimary care doctors who don’t. Theprimary care doctors are oftenintheposition of needing to keep costs down, so testing and specialized care is denied to peoplewhentheir illness is stillinthe early stages, causingmorepeople’s diseases to advance to muchmore serious forms — leading often to more treatments,hospitalization, disability and death.

For a sickness treatment industry,however, the more treatments they provide, the more drugsthat are sold, the morebillablehours doctors, nurses, technicians and other healthcare workersspend withpatients, the more tests that are run, the more of their product is sold. If a

pharmaceutical company invents a drug and then owns thepatent onit,it means theyhave a

monopoly onthe ability to sell that drug anywhereit’s needed.If youhave ever takenEconomics

101, youknowthat monopolypricingis not necessarily fair or competitive — patented drugs can

cost astronomical amounts of money. The companies argue that the costs of the drugs have to

pay for the research andtesting that went into developing the drugs,but inreality thesecompanies spend three or four times more onmarketing their products than on researching anddeveloping them.

Whenyou understandhowthe variables inthe systemrelate to one another — thepositive andnegative feedback — it is also possible to discover ways that interventions could change thesystem for thebetter. Inthe admittedly simplified system diagrambelow, one intervention thatwouldhave abeneficial impact onhumanhealth — andthat would change a vicious cycle into a

virtuous cycle — wouldbe to increase access to treatment. Higher access to (presumablypreventive and early diagnosis) treatment would (because ofposifme feedback) leadto higherindividualhealth, whichinturnwouldlower demandfor (more expensive sickness) treatment(negative feedback), lower costs (positive feedback) and allow for increased access over time as a

result of thelower costs (negative feedback).Access to

Treatmentt

*HealthcareCosts

IndividualHealthR

y* Demand for

Treatment

Page 119: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

FIGURE 10.1 Caption: A Healthcare Feedback Loop

To sumup this section, our healthitself is being systematically underminedby the flawedsystems we are usingto providehealth sendees andpay for them. Theinsurance and sicknesstreatment industries are required toputprofits first inthe sendees they offer, which creates a

vicious cycle wherepeople are getting sicker and needing more expensive forms of treatment

because of a lack ofpreventivehealth sendees.

The Cost of FailingHealthLack ofpreventive care also means higher costs to society. Since 2000, the cost of medical care

increasedby 4%per year in real terms on average across OECD countries, whereas real GDPgrowth averaged just 2.3% per year. This gapled to a further riseinhealthcare spending as a

share of GDP, reaching 8.4% on averagein2001, up from 7.3% in1990 and just over 5%in1970.3For theUS, according to the General Accounting Office, the cost of healthcarehas risen fromus$666.2 Billionin1990 (12.2% of GNP) toUS$1,615.9 Billionin2000 (16.4% of GNP) andisexpected to reach $3.1trillion (17.7% of GNP) by 2012. For Germany, the actual costs inthe

health sector amount to 234.2 BillionEuro and are estimatedto doubleby 2020.4Figure 2 shows the expenses paid for healthcare as a share of GDP inOECD countries — our

peers. The US stands out as spending almost double the average of all industrialized countries.

Page 120: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

14

12

10

na

0

JjplilifllfFjfpWliP= 1 i

FIGURE 10.2 Per Capita Expenditure on Healthcare as a share of GDP. 2006.

Source: OECD Health Data 2006.5

In2004, more than onemillionAmericans were financially ruinedby illness or medicalbills.Most were middle class. Each year, two millionAmericans face the double disaster of illness andbankruptcy. But thebigger surprise is that 3/A of the medically bankrupt hadhealthinsurance.Too sick to work, they suddenly lost their jobs. With the jobs went most of their income andtheirhealthinsurance — VA of all employers cancel coverage the day employees leave work because ofa disablingillness; another VA do so in less than a year.

Bankrupt families lost more than just assets. One out of five went without food. One thirdhadtheir utilities shut off, andnearly skippedneeded doctor or dentist visits. These families arrivedat thebankruptcy courthouse exhausted and emotionally spent,brought lowby a medical systemthat could offer physical cures but that left them financially devastated.

Withoutbetter coverage, millions of more Americans willbehitby medicalbankruptcy over

the next decade.It willnot belimitedto thepoorly educated, thebarely employed or theuninsured. Thepeople financially devastatedby a serious illness are at theheart of the middleclass. Even- 30 seconds intheUnited States, someone files for bankruptcy in the aftermath of a

serious healthproblem.6It is hopedthat thehealthcare reformpassedby the US Congress in2010 willbe able to correct

Page 121: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

some of theseproblems. However, we should consider that the jury is still out onthis topic,because there are systemic forces at work that this reformhas not addressed.

From Sickness Treatment to HealthcareAUS Committee on Capitalizing on Social Science andBehavioralResearch to Improve thePublic’s Health concludedthat “Behavioral and socialinterventions therefore offer great promiseto reduce disease morbidity andmortality,but as yet their potential to improve thepublic’s health

has beenrelatively poorly tapped.”? Approximately V2 of all causes of mortality inthe UnitedStates are linkedto social andbehavioral factors such as smoking, diet, alcohol use, sedentarylifestyle and accidents. However, less than 5% of what is spent annually onhealthcareintheUnited States is devotedto reducing risks posedby thesepreventable conditions.

Theproof that thereis a systemic causeunderlyingthis entireissue canbe foundinevidencefromtraditional Chinese medicine.Until thelate19th century-, very- different monetary- incentiveswere applicable to healthcareinChina. A doctor wouldget paidby apatient as long as he or shewas healthy. But the doctor wouldhave to pay thepatient whenever the latter was sick.Furthermore,if apatient diedwhile under the care of a doctor, a metallicballwas hung at theentrance of that doctor’s office: along string of suchballs would therefore constitute a clearwarning for any new client. Withthis incentive scheme, is it surprising that traditional Chinesemedicine was focusing onpreventive measures andhealing chronic diseases? Or, that typicalChinese medicalinterventions such as acupuncture, moxibustion and evenherbal treatment are

extremely cautious innot generating any negative side effects? This financial enticement explainswhy preventive medicine is emphasized so muchmore systematically intraditionalChinesemedicine thaninthe Western approach.

Studies on employee activity programs reveal that theproductivity of thepeople involved

increasedby 12%,a and absenteeism droppedby up to 45%.9 Estimates of the impact ofhealthcare costs on corporations show a rise from 7% thirty- years ago to up to 50% of thecorporateprofits now. This is why someindividual companies are investinginwellness directly.For instance, Johnson & Johnson spends $4.5 millionper year on staff wellness programs,avoiding thereby medical costs estimated at $13 millionper year. But individual corporatesolutions may notbe the most effective way to solve theproblem.

Wellness Tokens: PromotingPreventive CareWhat systemic solutions canbecome available to help shift society as a whole towards more

Page 122: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

sustainable wellness? Tryingto shift the modernWestern medicalmodel to simply adopt theancient Chineseincentive systemis unrealistic. But another way is available with a

complementary currency7 that is specifically designed to promote wellness, rather than sickness.Today, the conventionalWestern medical system focuses onfour areas:

* Sickness treatment — treatment of diseases andinjuries

* Emergency7 care — treatment for acutehealthproblems that cany7 significant risk of death or

imply severe changes inlifestyle

* Long-term care — treatment for chronic healthproblems

* Elder care — treatment for people who have entered aphase of their life when caring for theirownhealthbecomes a difficult challenge for themto do alone

Inadditionto addressing some of the issues generatedinthese areas, the frameworkproposedbelow would add consideration of three additional domains:

* Prevention — taking actions to keephealthissues from escalatinginto medicalbreakdownsor emergencies. This couldinclude medicalprocedures that might prevent more seriouscomplications inthe future, or alternative treatments thatuse mainly thebody’s own energy7

for healing,like acupuncture and dietary7 changes.

* Wellness — taking actions to maintain ahealthy body andlifestyle that is less susceptible to

many commonhealthproblems. This couldincludepersonalpractices likebetter diets, dailywalks or yoga classes, as well as other healthy habits.

* Holistic/OptimalHealth — taking actions to create a level ofhealth that seems impossible to

many today. Imaginepractices that would allow 8o-year-olds to retainphysicalactivitycomparable to today’s active 40-year-olds, or people livingwellinto their 100s. Such resultshave alreadybeen demonstratedby exceptionalindividuals, and weknow enough about the

humanpotential today10 to conclude that thereis no reason that such results,if considereddesirable, couldnot become more generalizedwiththe appropriate incentive schemes.

Weknowhowfrequent flyer miles can successfully encourageparticular customer behaviorpatterns, i.e., loyalty to aparticular airline alliance.Nowimagine a complementary7 currency7 —

let’s call them Wellness Tokens — that would encouragepeople to take onhealthyhabits andpractices. For example, onehour of exercise at a gym would earn one Wellness Token; or specificpreventive treatments could similarly be encouragedwithWellness Tokens.

Page 123: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

The roleplayedby the airline alliances inissuing and administering frequent flyer miles wouldbeperformedby a Wellness Alliance — an association of organizations whichhave a financial or

other interest inpromotinghealthy behaviors. Such an alliance couldincludehealthinsurancecompanies, HMOs, corporations that want to reduce thehealthcare cost of their employees andtheir families andlocal, state and federalgovernmental agencies.

Theprocess starts with a Wellness AllianceissuingWellness Tokens for two types of activities:

* Help of a non-medicalnature to elderly or handicappedpersons who need chronic support,similar to theFureaiKippu system (and other time currencies) in Japan and the Care BankinVermont (e.g.,helpinshopping, reading to visually disabledpeople,help withhouselivingconditions). Home careprograms typically cost five times less thanhospital care systems. SeeChapter 11for more details.

* Taking an activepart inspecifically qualifiedpreventivehealthprograms (like voluntaryvaccinations; obesity reductionprograms; primary-, secondary- and tertiary- prevention; healtheducationalprograms). The Return onInvestment (ROI) for these activities has been

estimated at a striking 300% to 1000%, depending on theprogram.11

These tokens couldbe redeemedinpart for other sendees or goods that further promotehealth,ranging, for instance, frompartialpayment for preventive therapies to buying or repairing a

bicycle or buying appropriate foods. Another use of the tokens couldbeinpartialpayment for theinsurancepremiums, given thatparticipants inthis system shouldhave alower probability7 ofgetting or remaining sick. This logic is what justifies theElderplanInsurance CompanyinBrooklyn accepting 25% of its health insurancepremiumfor elderly participants ina localTime

Bank.12Thereis ample evidence that support groups for encouraginglong-termwellness activities

(e.g., weight reductiongroups, Alcoholics Anonymous, running or gym exercisebuddies or

simply direct family) areimportant. Therefore, a Wellness Token system couldmeet not only theneeds of individuals,but also those of groups: a family unit, a group of friends,professionalcolleagues or other support groups.

Participants insuch a group would agree to a mutual wellness contract, so that the wholegroup wouldbe affectedby the results of each member.For instance, assuming that a group offivepeople are involvedinan obesity7 reductionprogram,boththeindividual andthegroupweight reduction objectives couldbe used as a criteria for obtainingWellness Tokens.Inthis

Page 124: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

example, independently verifiable, quantitative results could evenbe usedina contract with theWellness Alliance.

Figure10.3 shows schematically the flow of Wellness Tokens through economic circuits forprevention programs andhome care support systems.

Wellness Alliance

lotal cor aerations

* health insurance+ community foundationsiIdeas associations 7

ispye?iwicf redeems tokens.SarH'cfii: data bank and referrals.

defersclients to serviceproviders.Wellness Takers

f \* Prevention Prootiosity TEJI

igramsuction

individuals

/ tokens.

r flrwfdes uretfnessprograms.nWellness Businesses

LVel/ness ftierapresEjfercj'se eortipmentWholesomeÿoea!foodsTransport (bicycles, taxis)

FIGURE 10.3. A Wellness Token System

Businesses or careproviders could accept Wellness Tokens inpartialpayment for theirsendees, and thebalanceinnational currency. Each wellness provider would decide thepercentage they accept inWellness Tokens inpayment for their sendees. The amount that theyaccept inWellness Tokens could also be modulatedto fit their own specific business needs (e.g.,some may want to accept ahigher percentage inWellness Tokens during weekdays when they are

less busy). Others may want to accept larger percentages if it would attract additional customersor because they have a gooduse for tokens themselves.

What canbusinesses or careproviders do themselves with the Wellness Tokens they accept?First of all, the owners or employees of thosebusinesses could use them exactly as anybody else,for their ownhealthimprovement. However, abicycle shop, for instance, may receive moreTokens thanit can usepersonally. That is why businesses accreditedby the Wellness Alliance as

providing valuable sendees wouldhave the option to cashin Wellness Tokens in nationalmoney,

but at a discount calculated to be a win-winbetween all theparties.13

Page 125: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Wellness Tokens wouldhelppeople to become or remainhealthier than they otherwise wouldbe, reducing current and future medical costs. The system would create a wider market for goodsand sendees that promote wellness. Even thepharmaceuticalindustry couldbenefitbyproducingmorepreventive medicineproducts and sendees, as it amplifies their market to the 93% of peoplein the society that are currently healthy.Inthe cases where governments provide universalhealthcare, a Wellness Token system also helps to reduce thepressures ongovernment to go intodeficit for healthcare spending.

For there to be any hope of the adoption of new systems, like Wellness Tokens, where theincentives work to rewardwellness instead of sickness, we need to strengthen theindustries thatare moreprofitable whenpeople are well. Fortunately, this includes the vast majority ofbusinesses inthe country who suffer whenpeople are out of work, or whentheir insurancepremiums increasebecause ofhigher risk employees.

Already, some corporate wellness programs offer incentives to employees who go through a

year without taking a sick day — some workplaces offer cashbonuses to workers with a goodrecord. Others introduce weight reduction competitions withprizes for pounds lost, or mileswalked or health programs attended.In2008 over 60% of the companies inthe US who have

more than10,000 workers offered wellness programs, up from 47%in2005.14

For instance, IBM self-insures its workforce, and spent $1.3 billion onhealthcare for itsemployees, dependents andretirees in2008. Theyhavebeen offering financialincentives to

employees who participateinwellness activities since 2004, andthroughthe end of 2008 hadinvested $133 million to dateinthese incentives. To determine whether or not all this money paidinto wellness was a goodinvestment, the companyhiredtheUniversity of Michigan’s HealthManagement Research Center to analyze their program; the Center foundthat the wellness

programs had saved the company over $80 millioninreducedhealth claims sinceits inception.If that is combined with the reductioninlostproductivity that comes with sickness, and sick anddisability leave for employees who are out sick, theprogram clearly offers benefits to thecompany as a whole.

Inaddition to wellness programs, some companies aregetting alot more serious about makingemployees withunhealthy behaviors pay higher costs for healthinsurance. PepsiCo,NorthwestAirlines, American Financial Group and others charge employees who smokebetween $20 and$50 per month surcharge ontheir healthinsurance. Gannett, which owns 99 newspapers and 21

TV stations in 41states, charges their employees who smoke more than $50 per monthmore for

healthinsurance.16 WhenPepsiCo increased thehealthinsurance surcharge for smokers in

Page 126: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

2oo8,it also added some additional smoking cessationprograms, includingnicotine replacementtherapy such as patches andgum. “The combination of those two elements led to a tenfoldincreaseinparticipation andincreasedthe quit rate from 20% to 34%in2008 over 2007,” said

GregHeaslip, Benefits Vice-president.1?A wide variety of wellness programs havebeen aroundlong enoughnowfor their efficacy to be

well-researched and documented. Severalkinds of incentives havebeen tested and evaluated,and these too havehad sufficient results to understand what works and what doesn’t. Theintroduction of Wellness Tokens is not an experimental, unknown approach; it is rather a new

way to systematize and support what is knownto be a very successful approach to increasedhealth, rather than merely the treatment of disease.

Page 127: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER11

Honoring Qur Elders,

Caring for Children

Ican think of no better way of redeeming this tragic world

today thanlove andlaughter. Too many of the younghave

forgottenhowto laugh, andtoo many of the elders have

forgottenhowtolove. Wouldnot our lives be lightenedif only

we could alllearn to laughmore easily at ourselves

and to love one another?THEODORE HESBURGH

Intraditional cultures, many of which still exist today, children and elders are treasured membersofboth family and community. Thebeginning of life and the end of lifehave a specialplace, as dothose closest to these sacred rites ofpassage.

Throughout most ofhumanhistory7, childlessness has been a serious hardship. Thebiblicalstory7 of thelong-childless Abraham and Sarah, who finally conceived a childwellinto their ninthdecade, is celebrated across three of the world's major religions: Judaism, Christianity7 andIslam.

These two citizens of Ur, an ancient city7,1 received God's miracleinthe form of a child, Isaac, wholater became the father of aroyallineage, that of KingDavid, King Solomon and eventually ofJesus ofNazarethhimself, whosebirthis also consideredmiraculous by the majority7 ofChristians. Abraham's other son, Ishmael (whose mother was Hagar), is believed to be the sharedancestor of the Arab people, and evenpossibly of Muhammadhimself.

Elders play a critically important roleinmost traditional communities. They are wise ones, the

Page 128: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

mediators of conflict, thehealers, the teachers, the spiritualleaders. Yet now,inthe 21st century,they are relegated to the sidelines, discredited “senior citizens,” a termwhich devalues theidea ofan elder. The facilities andprograms created for themfocus onkeepingthem entertained ratherthankeepingthem engaged. Modern society has createdleisure time for elders, with socialsecurity,pensions and retirementprograms whichgive themthepotential to make enormous

contributions to our communities. Unfortunately, deterioratinghealth, isolation andthe cultureof youth, withits inherent disparagement of older people, robs society of the values that eldersoffer.

We need child care and care for our elders inabundance. Yet, childcare workers and elder-careworkers are amongthelowestpaidworkers inour society. As a result, the quality of the care isalso quite low, since theseprofessions do not attract people who are educated andwho have theability to do other things athigher wages.

Inthe United States, there were more than 90 millionpeople over the age of 60 in 2008, closeto v3 of the country's population.More than V2 of thesepeople require somelevel of care, and one

inten jobs are generatedinthis area. According to US Census data, in2005 there were 11millionchildrenunder the age of five. Anyone who has hadto care for a young childknows that at thisage, the optimal ratio for attentionis 1:1. So, ideally there wouldbe11millionpeople engagedinthis level of child care. Yet in2005, 21% of the children under fiveinthe US were cared for bytheir parents, 25% by their grandparents, 23%in a daycare facility, 15%inwhat is described as“non-relative care,” and fully 13% with “no regular arrangement.” The number of child-care

workers in the US ishard to determine with any accuracy, because the census number (456,232

in2002) doesn't include self-employed daycareproviders,pre-school teachers, teacher assistantsand all theparents andgrandparents i.e., the majority of thepeople who are actually doing thiswork today. The meanhourly wage for those who were countedin2002 was $8.32, just over

minimumwageinmost states. The meanhourly wage for elder-care workers inthe same yearwas abithigher, ranging somewherebetween $9.45 per hour and $10.25, depending on thelevel

of skills required.2Thelow wages andlack of quality care for thepeople who traditionally were the most

important members of our community is one important way we neglect them — it is nothinglessthan economic abandonment. The ramifications of this neglect are staggering — the statisticsdescribing child and elder abuseinthe US are truly a national tragedy, as the weakest members ofour society take thebrunt of our dysfunctional economy. Studies done on a nationallevelindicate thatbetween one andtwo millionpeople over the age of 65 havebeeninjured, exploited

Page 129: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

or otherwise mistreatedby someone onwhomthey depended for care or protection.3 Every vear?there are over three millionreports of child abuse — one report even- ten seconds.In 2003, therewere 906,000 comictions of people who abused childreninthe US. Four children die even7 day

as a Tesult of neglect and abuse, withthree out of four of these victims under the age of four.4These raw statistics can:t helpbut break your heart.It ishard to readthemwithout feeling a

sense of despair andhelplessness. Recognition of the systemic underlying causes of this nationalshame wouldbe the startingpoint to correct it.

A Scarcity of CareSeveral converging systemicpatterns formtheroots of the economic vice that squeezes our

children and elders. The time crunch everyone experiences (causedby a competitive currencydominating our exchange system) is akey factor, combinedwith thelow wagespaid for jobs withskills wehaveinabundance, andthelack of value our systemplaces onpeople who are not intheworkforce.

Child care and elder care takes time.It does not typically require years of study or

apprenticeship, althoughhigher skilllevels inissues like nutrition, first aid andhealthcare canmake the differencebetween quality care andneglect. The main factor is time — young childrenand disabled elders can require someone’s focused attention 24 hours a day, seven days a week.In an economy where all able-bodied adults typically need to work full-time to earn enoughdollars to pay for basic necessities, timeis scarce.

The skills and capacities we need to take care of each other are not scarce,however.Humanbeings are richly endowedwiththe capacity to love andnurture each other.It is arguably one ofour innate survival skills — everyoneknowshowto do it,with the rare exception ofpeople whoarebornwithmental disabilities or illnesses that make them sociopaths on somelevel. Inanidealworld, theknowledge and skills we wouldneed to provide adequate nutritionandhealthcarewouldbe somethingwe learned as we matured, since these wouldhavebeenprovidedto us byour parents and extended family.

Yet inthis current economic system all the caring functions, even those neededin abundance,are not valued adequately. Inthe case of child care and elder care, this translates into low wagesfor thepeople who are arguably carrying out some of the most important and sacred tasks inour

lives. Thelow wages paid for these jobs mean that people who do the jobs are oftenthinginpoverty7 themselves.

Page 130: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Time Banks and Care BanksWhenthe effective delivery of animportant sendee requires a substantial amount of time, thecompetitive, scarce exchange systemwillinevitably prove to be inadequate. The clichedexpression “timeis money” states theproblempretty clearly — the more time something takes,the moreit costs.If lots of timeis required, then the costs willbe substantial, andthis grows indirect proportionto the level of skillinvolved.

Raising children challenges even the most intelligent minds, and elder care canbe equallyconfounding. Whenallwe expect of our child-care and elder-careproviders is thebare minimum— physical safety — we take the care fromthe equation. Providing “care” becomes merely a job,performedby low-skill, low-pay workers. WTien the world of a child or elder is allowedto fallintohands that don’t care and don’tknow, that world shrinks,in danger ofbecoming an unbearablemonotony, wherehumanity is forgotten andindividualpotentialignored.

Parents face thehardreality of child care on a dailybasis. It is aproblemthathas become more

pressinginthe last 50 years as opportunities for womenintheprofessionalworkforcehaveexpanded andthe economy has madeitharder andharder to raise children on a single income.Child care co-ops have emergedinlarger cities, where groups of parents arrange their schedulesaround shared child caTe, andwhereparents themselves provide alot of the sendee Tather thanrelegatingit to lower paid child-care workers. Thesebaby-sitting co-ops can actuallybeconsidered as very small scale complementary currency7 systems, with typically one hour ofbaby-sitting as the unit of account. While a co-op is a nice alternative to much of what passes forchild care,it doesn’t work for everyone. What other creative solutions can we find? After all, theneed for child care is not going to go away. We needto turn again to our children as animportantcenter of our purposehere, and stop relegating themto the sidelines.

One way to meet our child-care needs, and alot of other needs as well, is to turn to a TimeBank — a system which allows people to exchange time without using dollars or other forms of

national currency7.5 Time Banks work like this: people signup as members, listingthe sendeesthey are willingto perform andthe sendees they want to receive. Time dollars are exchanged,based on the amount of time spent on the sendee, not on thelevel of skill or perceived economicvalue. All timeis valued the same — anhour for anhour.Ina Time Bank system, timeis the greatequalizer because each of us only has 24 hours ina day. Inthis system,it is consideredthat alltimehas the same value.

Time Banks canbe usedinmany situations and on various scales. A sharedliving facility mightrecordtime dollars on a chalk board, while a city might track time and requests electronically,

Page 131: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

matchingpeople up using a database. Anew county levelTime Bank was recently formedinWisconsin that will coordinate sendees throughout a region. Time Banks can serve a relativelynarrowpurpose, as they do inWashington, DC, where Time Banks are usedin the juvenile justicesystem to motivate youngpeople to get out of trouble andlearn job skills, or they can serve manydifferent goals, as inPortland,Maine, andMontpelier, Vermont, where Time Banks encouragecommunity building, economic development,poverty alleviation and evenhealth serviceprovision.

The core values of Time Bankinggrew out of the anti-poverty work doneinthe1960s by thefounder of the movement, Edgar Cahn. Frustratedby a War onPoverty7 that reinforcedpoverty7bycreating classes ofbeneficiaries andbenefactors, Edgar felt it was important to affirmthe valueand dignity of every7humanbeing, regardless of their economic value to the system. Thisconvictionledto the five coreprinciples that arepart of every7 Time Bank.

PRINCIPLES OF TIME BANKING

Assets

We are all assets.Every humanbeinghas something to contribute.

RedefiningWork

Some work is beyondprice.Work has tobe redefined to value whatever it takes to raise healthy children, build strong families, revitalizeneighborhoods, make democracy work, advance social justice, make theplanet sustainable. That kind of workneeds tobehonored, recorded and rewarded.

Reciprocity7

Helping works better as a two-way street.The question: “How canIhelp you?” needs to change so we ask: “HOWT can wehelp each other build the worldweboth will live in?”

SocialNetworks

We need each other.Networks are stronger thanindividuals. Peoplehelping each other reweave communities of support, strength

Page 132: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

& trust. Community isbuilt upon sinking roots,building trust, creating networks. Special relationships are

built on commitment.

Respect

Every humanbeing matters.Respect underlies freedom of speech, freedom of religion, andeverything we value. Respect supplies theheartandsoul of democracy. When respect is denied to anyone, we all are injured. We must respect where people

are in the moment, not where wTe hope they willbe at some futurepoint.6

While they are not focused on child care or elder care, Time Banks provide a system where care

for children and elders can takeplace more easily. Infact, ahighpercentage of Time Banks findthat child careis one of the things people are seeking when they join. The fact that the activities inTime Banks are officially tax-exempt (which means they do not count towardmembers5 income)

also means that whenpeopleuse sendees through a Time Bank, they do notput income-basedgovernmentbenefits at risk.

In 2009, the concept of TimeBanking was taken a step further, so thatit couldbe used reliablyfor elder care. Through a grant fromthe Ashoka Foundation and the US Administration on

Aging's Community Innovations for AginginPlace (CIA1P) program, theidea of a Care Bank was

born.7 A Care Bank adds an additionallevel of coordination andreliability to theTime Bankmodel.If a Time Bank is like a marketplace, wherepeople enter their offers and requests andtrade them as often as they like, a Care Bank is morelike aninsuranceprogram.Members of a

Care Bank make a commitment of time andmoney to the system eachmonth, andin return theyare able to receive care when they or their family needs it.

Montpelier, the capital city of Vermont,has createdboth a Time Bank and a Care Bank. TheOnionRiver Exchange is a standardTime Bank, where members post their offers and requestsand trade with each other as often as they like. The city also received a federalgrant fromthe USAdministration on Aging to create theRuralElder Assistance for Care andHealth (REACH)

program. REACH expands traditionalTime Bank membership types to include threelevels: basic,assisted and specialized.

At the basic level,REACH works like a Time Bank. Youmake a donationto the organization ofeither $25/year or offer two hours of assistance with a fundraiser for the organization. Thenyoupost the things you are willingto do for theTime Bank — your offers — andthe things youwould

Page 133: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

like someone to do for yon — your requests. Thepostingis made using the Community Weaversoftware developedby Time Banks USA. A central websitekeeps track of all the members, theirrequests, their offers andthe time dollars or,inMontpelier’s case the Community Credits, thatare exchangedby members.

At the assistedlevel, youmake a commitment of time andmoney eachmonth — four hours oftime and $5 per month for each service cluster youneed. So if youwant to have your sidewalkand driveway shoveledinwinter, youwould signup to bepart of the YardWork cluster. Your fourhours of time couldgo to doing something else that was neededby Care Bank members —

perhaps youcould call a neighbor who needs reminding about the medications he or sheis takingon a daily basis. And the Care Bank coordinator wouldmake sure that someone was available toshovelyour walk whenneeded.

At the specializedlevel, youmake ahigher commitment of time andmoney eachmonth —

eight hours of time and $15 per month for each service cluster youneed. This levelhelpsmembers have access to preventive care services andmorehighly specialized skills, like those ofelectricians and carpenters. Thepreventive services include things like massage therapy,chiropractic care, exercise andyoga classes,herbal therapy and other alternative andcomplementary healthcare services. The access to these services attracts abroad spectrum of thecommunity to the system andprovides the Care Bank with a solid foundation ofpeople’s time tocontinue to offer the assistedlevel of care to others.

The Japanese SystemThe Care Bank model shares a lot incommonwiththe time exchange systems that havebeeninexistenceinJapan for over 15 years. The Japanesepopulationis the second fastest agingpopulationinthe world. There are already 800,000 retiredpeople needing dailyhelp and anotherone million who have disabilities. The Japanese Ministry of Health forecasts a vast increase in

these numbers inthe foreseeable future.8In order to address this rapidly risingproblem, the Japanesehaveimplemented severalnew

time exchange currencies.9 Inthese systems, thehours that a volunteer spends helping older or

handicappedpersons with their daily routine are creditedto that volunteer’s time account. Timeaccounts are managedlike a savings account, except that the unit of account is hours of serviceinstead of Yen. Time account credits are also available to complement normalhealthinsuranceprograms. One of these time exchange systems is runon a nationallevelby the SawayakaFoundationinJapan. It’s called theFureaiKippu system andhas alot to teach us about how

Page 134: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

complementary currencies can address serious social issues.IntheFureaiKippu system, different values apply to different kinds of tasks. For instance, a

meal servedbetween 9 am and 5 pm canhave a lower credit value than those served outside thattime slot because they don’t conflict with family dinners. Household chores and shoppinghave a

lower credit value thanpersonalbody care.

Thesehealthcare credits are guaranteedto be available to the volunteers themselves, or to

someone else of their choice, within or outside of the family, whenever they may need similarhelp. Two electronic clearinghouses ensure thatif someone canprovidehelpinTokyo, the timecredits become available to his or her parents anywhere elseinthe country. Many people justvolunteer the work andhope they will never needit. Others not only volunteer,but also give theirtime credits away to people who they think need them.Inthese cases, it amounts to doublingtheir gifts of time: for every- credit hour of sendee, the amount of careprovided to society- is twohours.

Most significantly, this type of sendee is also preferredby the elderlyparticipants themselvesbecause the caring quality- of the sendee turns out to behigher thanthose obtained fromYen-paid social sendee workers. The meaning ofFureaiKippu (CaringRelationship Ticket) spellsout its agenda. The system also provides a more comfortable emotional space for elders, whowould othenvisebe embarrassedto ask for free sendees.

The Japanese also report a significant increaseinvolunteer help, evenby people who do notbother to open their owntime accounts. The reason may be that ina community7 where thissystemis operational, volunteeringis simply more acknowledged. The same effects were foundin

a US study by the University7 of Mandand Center of Aging.10 These findings shouldput to restconcerns that paying volunteers with complementary7 currency7 might inhibit those not gettingpaid fromvolunteering.

As of end 2005 there were over 487 municipallevelhealthcare, time-credit systems in Japan,most runbyprivate initiatives such as the Sawayaka Welfare Institute, the WacAc (WonderfulAging Club, Active Club) andtheJapan Care System(a nonprofit with somegovernmentalfunding). They rangeinsize from a few families and small organizations of up to 50 people tolarge, nationwideprograms that are runby labor unions. One estimate of thelevel of transactionsthat takeplace with this type of complementary7 currency7 stated:

As for the number of participants ineach community7 currency7 system, the groups with ‘lessthan50 members’ and ‘50 to 100 members’ account for 60 percent of the total, indicating thatsmall-scale systems are widely recognizedinJapan. As for the extent of circulation of

Page 135: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

community currency- relatedgoods, circulationwithinthe municipality accounts for abouthalf

of all transactions.11

If weinNorthAmerica couldbuildthese caring, relational transactions so that they amounted toahigher percentage of the exchanges we made eachday, this would certainly start to balance theeffects of the competitive currency- inour economy and our lives.InBali, a very- different societyhas emerged with about of an adult Balinese's time spent inthe cooperative economy. Thesame social change — one that captures ancient values like honoring elders and treasuringchildrenwhile embracing a newlevel of consciousness to extend our idea of connectedness to thewholehuman and sentient family — is possibleinour time.

Page 136: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER 12

Eating Money

Food for allis a necessity. Food shouldnotbe a merchandise,

to bebought and sold as jewels arebought and soldby those

who have the money to buy. Foodis ahumannecessity,

like water and air,it shouldbe available.PEARL BUCK

A SharedMealAmongthe !Kungpeople of Botswana, a successfulhunt used to mean a shared communitymeal. When one family got a largekill, the expectation was that they would shareit withthe rest

of thepeoplein their circle of homes, whichwere arranged around a common centralhearth, withthe doors facing towards the center. Archeological research has revealed that this camplayouthasbeen unchanged for over 10,000 years, earning the IKungs the title of the most conservativepeople onEarth.

Because the IKungmaintainedtheir traditionalhunter-gatherer way of lifeuntillateinthe20th century, anthropologists were able to study themin depth and document whathappenedwhenthis traditional culture was exposedto “modern” life. (This process inspired apopularmovie called The GodsMustBe Crazy.) Before modern society arrived ontheir doorstep, evenfamily living space was visible fromthe circle ofhomes through open doors. Everyone could see

what everyone else was doing.Inthe1970s and1980s, the government of Botswana startedpromoting trade amongthe

villages inthe Kalahari, and for the first time, money was introduced to the !Kung. Thisseemingly small change — theintroduction of money — had an enormous impact on !Kung

Page 137: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

society andtheir social interactions. Theybegan to use money to buy glass beads and othervaluables, which they lockedin newmetalboxes in their homes. Within five years,people soughtprivacy rather thanintimacy7, and eventhe way they laid out their homes changed.No longerwere doors open towards a commonhearth; instead they faced away fromthe circle ofhomes.People startedhoardinginstead of depending on others, andthehunter-gatherer way of life thathad shaped !Kung society over hundreds of generations gave way to totally different lifepatterns

much closer to our own.1This true story illustrates one of thelinks between the monetary exchange system weuse, the

economics of food and trade and the socialpractices that are shapedbyboth of them.Inoneculture, sharingis thenorm; in another,hoardingis the norm. Away of life canbe transformed

and/or intentionally moldedby theintroduction of a new sodally-constructedpolity7,program or

monetary7 instrument.Hunter-gatherer sodeties hadto work together inorder to have a successfulhunt, and once

thehunt was over, cooperation was requiredto drag dinner back to camp and skin, clean andcook or cureit. Sharingin thebounty made good sense, espedally before refrigeration. Theintroduction of agriculture tended to change this, as food thenbecame aproduct ofprivateproperly7. Food couldbehoarded and stored,particularlyby large landowners or those withthemeans to buy and store grain, includingrity-states, which sought to insure survival duringdrought and famine.Infact, some of the earliest forms of money canbe traced to the storage ofagriculturalproducts.

Food andwater arebasic human needs, and depending upon the systems that drive our

society, we see them either as critical for our individual survival or our collective survival. But,intruth, our individual survivalis very much linkedto the collectiveinthe end. Until recently, waterhas been considered apublic resource. Through our governance systems wehave developed waysto shareit with each other. Over thelast 20 years,however, water is becomingincreasinglyprivatized as companies purchase water supplies and systems andprofit fromthe sale of water.What will theimpact of this changebe? We might ask, thinking about the !Kungpeople, whethertheprivatization of water might be the modern equivalent of theprivatization of food? Perhaps inour distant history — too early for written documents to record — foodwas also a communityproduct, shared for the commongood?

From Subsistence to SurplusAs first mentionedinChapter 4, there were two different kinds of money inDynastic Egypt, theprecious metals that were used for long-distance trade (includingwith other countries) and a

Page 138: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

different currency used for local exchange. The local currency was actually based on ostraka(singular ostrakon), shards ofpottery used as inventory receipts, where dates and quantities were

inscribedwhenfarmers put their excess productionincollective storageplaces attached to

temples. The Egyptians charged a modest fee for the storage, and so the value of these shards ofpotteiy declined over time.

This storage fee served as a negativeinterest rate, or demurrage fee, on thelocalmoney. Sincethe shards were used for local exchanges, it was inthebest interest of thepersonholdingit tospendit as quickly as possible (to avoidits inevitablepenally7 over time), which added more

quantity andvelocity to the local economic exchanges. The abundance of economic exchanges,driveninpart by this money that didnot serve as a store of value,helpedmake Dynastic Egyptian

society aprosperous one for thousands of years.2Inthe time since Dynastic Egypt, foodhas playedmany roles insociety. Surplus has been

stored and traded everywhere, inall agrarian societies throughout history7. Yet regular andreliable food surpluses are for the most parthistorical anomaly. Until the1950s, a majority ofpeople onEarth did their own subsistence farming, whichmeant that at least onthe family level,foodwas a shared resource.

Yet the dramatic reductioninfamily and subsistence farming, and subsequent urbanizationbrought onby anunprecedentedmigration to cities inthelate 20th centuiy,has changed all this.

Today, over V2 the world'spopulationlives incities, comparedwith only 13% a century ago.3 Thishas changed our relationship to food as dramatically asit has changedthe landscape. Mostpeopleno longer grow or raise their own food and are forcedinstead to buyit from a market that ismediatedby a single form of currency7 — nationalmoney. So when foodprices go up,people gohungry7because they no longer have the ability to stock their ownlarder.

Inthe US throughthe1800s, over 80% ofpeople livedon a farm. The farmmay havebeenenough to feedtheir ownfamily, or mighthavebeenlarge enough so that there wereproducts to

trade,but farmlife was the country’s core economic activity. Subsistence agriculture is fairlysimple — peoplegrow foodbased on the amount of land, labor, animals and seeds theyhave. Theharvest reflects theinputs, with the vagaries of weather andpests addedin to complicate things.Whenthe foodis harvested, the amount available to consumeis somewhat dependent ontheprocessing and storage capacity available. Thehealth andwelfare of thepeople who consume thefoodwill aLso partly determine theinputs the followingyear. As showninFigure1, the wholeprocess canbe described as a simplepositive feedback system.

Page 139: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Harvest

+ 1 +>

Local inputs: seeds,

composÿ animals, plabor,land

Food processingStorage capacity1

/* HeaFthy

consumers

FIGURE 12.1. A Subsistence Agriculture Feedback System

Tliere areproblems when subsistence agriculture is the dominant form of agriculture. Foodcan spoil, and so findingways to insure that theharvest canbepreservedis animportant strategy.Landishardto obtain (unless youinherit it), and so goodlandis inhigh demand.

Inthe modernworld we are no longer at the mercy of plague andfamine,but we are at themercy- of the market. Inthe1970s, inflationof the US dollar ledto rising foodprices, whichled toapolitical crisis for theNixon administration.Nixon respondedby imposingwage andpricecontrols inAugust 1971at the same timehe decoupled the dollar fromthe gold standard, whichwas designedto help check theinevitable rise inprices that resulted fromthelower dollar valueontheinternationaL market. Heimposedprice controls againin1973,but they faileddramatically. Farmers drowned their chickens rather than selling them at theprevailinglowprices.

ButNixontook further steps, appointingEarlButz (who haduntil thenbeen onboards ofseveral agribusiness firms) as Secretaiy of Agriculture.Nixon toldButz to do everythinginhispower to increase foodproduction, andButz did. He dismantled theNewDealpolicies that were

designed to protect farmers and consumers by regulatingbothprice andthe overuse of land —

measures aimed at preventing another dustbowl.Heprovidedgenerous new subsidies for largeagribusiness concerns, whereas before this, the legacy7 of FranklinDelano Roosevelt protectedsmall farmers fromthe consolidating force of corporate farms.

Inaddition to the subsidies providedby government for agribusiness, thelarge corporatefarms found other allies intheir expansive drive — thebankers themselves. Seeingit as a way tofinally loosen the shackles of a system that limitedthebanks to specific states,bigbanks likeCiticoTp movedinto provide financing for the agribusiness firms. By 1985, the financiallinksbetweenthebigbanks and corporate farms ledto a landmark court case where interstatebankingwas declared constitutionalby the US Supreme Court, overturning thelimits whichhadbeeneffectively imposedby Roosevelt-era restrictions.Inhis opinion onthe case, Chief Justice

Page 140: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Rehnquist specifically cited tlie fact that Citicorp was providing financing on a national scale.“Citicorp offers financial sendees to consumers andbusinesses nationally through its bank and

nonbank subsidiaries.’ÿ

TheHidden Cost of CheapFoodIn the1980s, a combination of the overproduction andlower prices brought onby these newpolicies and a spikeininterest rates hit farmers like a one-two punch, and thousands of smallfarms went out of business. “Throughout the GrainBelt, abandoned farmhouses wereburned to

theground, cleared, andincorporatedinto ever larger corn and soy fields.”5 Mass agriculturalproductionby larger andlarger corporations became the rule, rather than the exception, and thefewremaining small farms had ahardtime competing. Many of these farms wereinareas wherelarge-scale agriculture was aLmost impossible — rough terrain andpoor soils intheNortheastmeant that small farms either stayed small or sold out to subdivision developers.

EvenintheNortheast, the federalgovernment encouraged the consolidation andloss of familyfarms by instituting the dam- herdbuy-outprogramin1985. TheNortheast farmers fought backandgot the US Congress to pass theNortheast Dairy Compact, whichimposed a surcharge onmilk cominginto the region,paying farmers inNewEngland a new subsidy that helpedkeeptheminbusiness despite the competition fromlarge farms out west. This program was eventuallychallengedby Canada, who threatenedto challenge the Compact at the WorldTradeOrganization. The Compact no longer exists.

Today, the cheap foodpolicies of the last 40 years have created a globally integrated foodsystem that routinely uses ten caLories of fossil fuel to bring one calorie of food to supermarketshelves. By contrast, as recently as 1940, for even7 calorie of fossil fuelusedinthe US, 2.3 caloriesof food wereproduced. The unchecked overproduction of the agribusiness firms has ledcommodityprices on a race to thebottomworldwide, forcing 200 million of the world’s 400millionfarmers to fivebelow thepoverty line.

The subsidies drivingthe agribusiness expansion represent one of the largest corporate welfareprograms in the world.Inthe years 2003, 2004 and 2005, subsidies for cornproducers inthe US

were over $20.5 billion, fully 26% of their market revenue.6 Inthe 2008 FarmBill, corn, soy,wheat, rice and cottonwere slated to receive $7.5 billion.Three cotton farms inCalifornia were

promisedthe equivalent of the entire US budget for organic food research and extension. Fivecorn farmers intheMidwest were allocated the equivalent of the entire US budget for farmers’

markets.?

Page 141: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Cheap commodities are routinely dumped on foreign countries inthe name of internationalassistance, whichis how the overproductioninthe US affects poverty7 elsewhere. The US provides60% of international food aid, spendingbillions of dollars onit even7 year. To a casual observer,this might seemgenerous and charitable,but a closer examination shows the self-serving natureof the aid. Virtually all of the money spent is usedto purchase surplus commodities fromUSagribusiness firms.Rather than supporting theproduction of foodincountries where foodhasbecome scarce,it undermines localproductionbecause farmers can’t compete with food that isfree.Incontrast, Canada implemented apolity7 whereby at least 50% of its food aid wouldbe usedto purchase locally produced foodbecause of their recognitionthat this is a more effective form ofassistance.

A September 2005 report, The Development Effectiveness of FoodAid,producedby theParis-based Organization for Economic Cooperation andDevelopment concluded that foreignassistance shippedinthe form of food often arrives late, disrupts localmarkets, and costs up to

50% more to deliver than cash. Edward Clay, author of the report and a fellow at the OverseasDevelopment Institute,points out that U.S. food aidbeing shippedto famine-struckNiger willlikely coincide with abumper harvest inthe region, thereby competing directly with area

farmers.8

This samephenomenon occurs within the United States as well. Inthe name of inexpensiveschoollunches, the Department of Agriculture ships commodities to schools around the country7.InNewJersey alone, this programprovides 30 millionpounds of food, valued at nearly $20million, to 700 participating school districts, adult daycare centers, summer foodprograms,

camps and charitable institutions.9 While this helps schools afford to serve free andreducedlunches to low-income students,it serves as an additional subsidy for unsustainable agriculturalpractices andmakes it difficult for schools to cooperate withlocal farmers.

Theglut of low quality calories has produced another unanticipatedresult for people across theUnited States — an obesity epidemic thatbrings withit an unprecedentedburden ofhealthproblems. Adult onset, or type 2 diabetes, is nowbeing foundinchildren and adolescents, a

problemwhichthe US Centers for Disease Controlhas characterized as “sizable andgrowing,”saying that “approval of oralhypoglycemic agents (to loweT blood sugar) is urgently required for

Page 142: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

children and adolescents.”10 This recommendation appears to ignore the obvious linkbetweendiet andhealth — seeing theproblem as something requiringmore drugs rather than sweepingnutritional changes.

Theglobal foodindustryprovides clear examples of theproblems that arise fromthe vortex ofcentralization and sole emphasis on efficiency. Where once foodwas a shared communityresource, then a shared family resource, nowit is primarily a commodity soldinmarkets whichare systematically distortedby national subsidies andmonopoly pricing.Foodhas traveled thedistance frombeingproducedinaprimarily cooperative systemto one that is competitive at theextreme andin which the largest and strongest actors eliminate their smaller andweakeropponents. The corner store is allbut goneinmost places, replacedby a corporate store thatlooks the same as the one 500 miles away.

Despite the overwhelming crush ofbig food, many people are trying to turn the tide. Thelocalvore (after herbivore or omnivore) movement, which champions locally grown food as themain dietary staple,has taken onnational significanceinthe US.InEurope, the SlowFoodMovement, first championedby anItalian farmer named Carlo Petrini,has becomepopular. SlowFood found a financial championinWoody Tasch, the Chairman of the Investors Circle, who haswritten abook about slowmoney,inwhichhe acknowledges the role that financeplays inthe

food system,but stops short of looking at the structure of money itself.11As wehave seen, the nature of money, andparticularlybank-debt money,played animportant

roleinthe consolidation of the modern foodindustryinthe1980s.It linkedthe sharedinterestsof thebanks and those of agribusiness, allowing their growth at the expense of the family farm,which faced the dual challenge of thebank's highinterest rates andthe undercutting of marketprices bybig agribusiness farms. Indebtedness andhigh interest rates were the direct cause ofthousands of farms with traditional family ownershipbeinglost during that sameperiod.Notcoincidentally, this was also theperiodinwhichthe savings andloan crisis drove many localbanks out ofbusiness, allowing the largeinterstatebanks to consolidate their control ofbankingnationwide. The resulting control of land, food andmoneyhas givenlarge corporations an

inordinate amount of power and systematically robbedlocal communities of their ability to create

their own food.Although this discussionhas touched on one aspect of the global foodindustry — food

production onfarms — it is only apart of thepower puzzle. Whenyou consider thecomprehensive reach of vertically integrated foodprocessing and distribution, the fullimpact offood consolidation overwhelms theimagination. The costs of this consolidation — to our health,

Page 143: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

our wealth and our future — havebeenincremental andlargelyhidden frompublic view. We are

like the proverbial froginthepot — theheat was turnedup slowly over time so that we didn’tnotice the change. Thebrittleness of this hyper-efficient food system willbecome obvious withthe first onslaughts of climate change. Then we may be fully cooked, like theprocessed food thatlines the shelves of the supermarket and constitutes so much of our modern diet.

TheExpandingRole of DebtInrv---.-

tLocal inputs: seeds, Loans and —compost, animals, investment’'1''ÿ processing

labor, lard o capacityR

V Profit

FIGURE 12.2 Debt’s Place inAdvanced Agriculture

As agriculture evolved over millennia,its variables — theinputs, theharvest, theprocessing andstorage capacity — were subject to “improvements.” People lookedfor ways to grow more food,harvest more, transport it further andmakeit last longer. On the small scale of subsistenceagriculture, investinginimprovements is fairly simple. Advanced agriculture,however, requires a

sophisticatedmonetary systemto fundits expansion of machinery andinvestment intechnology.Farmers borrowedmoney to buy machines to increase theplanting and speed up theharvest.

Companies developedproducts to controlpests, to fertilize soil, to process and store food — to doall thehardwork of farming. Agriculturalproductionincreased. . . andkept increasing. Foodinsome regions exceeded the demandfor food, andprices fell. Fallingprices meant that farmershad two choices — to reduce costs and/ or to expandproduction — inorder to stayprofitable. Sotheybought larger machines, larger storage andprocessing capacities, resultingineven more

production andlower prices. Amajor study doneby the Sustainability Institutein 2003characterized this trendinagricultural commodities as a “race to thebottom,” documentedby

risingproduction and fallingprices ineven- commodities market worldwide.12In mostproductionprocesses, fallingprices andincreasedproduction forceproducers out of

the market. Yet withimproved transportation and standardization, the surpluses in one region

Page 144: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

couldbe exported to another region. Governments intervenedinfoodpricing andproduction —

curtailingproduction of some products, controllingprices, limiting entry into the foodbusiness,buying surplus, shipping food outside the country, subsidizing farm expansion, creating new

markets for all the foodbeingproduced. All these “improvements’1have created a colossalnew

systeminwhichthe Sustainability Instituteidentifiedthree outcomes as “traps:” resource

depletion, environmentalpollution and community decline. Abundant foodleaves most farmersimpoverished, soils and water supplies arebeing depleted at alarming rates andtheenvironmentalimpacts are too numerous to listhere — one significant statistic is that, in theUS,

foodproduction accounts for up to 40% of our carbon emissions.1ÿ

The role that moneyplays is pivotal. As mentioned earlier, it was no coincidence that banksand agriculture expanded dramatically duringthe1970s intheUnited States. As Nixon changedthe foodproduction system, thebanking system was modifiedto accommodate the enormous

agribusiness firms that emerged fromthe consolidation. All of the investment indebt-basedmoney drove agriculture out of a system that was largely dependent on localproduction capacityinto a systemthat was truly globalin scope andimpact.

FoodCurrenciesFood-based currencies are obviously not new. Wehave already describeddynastic Egypt’ssophisticatedEgyptian food currency earlier inthis chapter. Similarly, at thebeginning of the17thcentury, Japan did a thoroughinventory of all thericeit produced andmeasuredit inkoku, one

kokubeing equal to the amount neededto feed oneperson for one year (whichturns out to beapproximately fivebushels, or 48 gallons of rice). Fromthis inventory, they determinedthat thecountry’s wealth was equivalent to 28,000,000 kokus. Large landowners in Japan issued notesfor the rice andmaintained storehouses so that the notebearers could redeem therice atharvesttime. They soon discovered that all the rice wasn’t being redeemed. Just as was the case withgoldsmiths inventingthe fractional reserve system, the landowners also startedissuing notesabove the amount of rice they actually had, causinginflationin the currency. By 1760, abuse of

rice currency was widespread and the government bannedthepractice of issuing excess notes.14

Right aroundthis same time,in1739, the colony of South Carolina madeit possible to paytaxes inrice. In1740, they collected1.2 millionpounds of rice. People who were owed moneybythe colony were given rice orders, which were redeemable at a rate of 30 shillings per 100 poundsof rice. The rice orders circulated as a form of currency — people usedthe slips ofpaper for other

purchases outside of the South Carolina government.

Page 145: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Today, the idea of food as currencyhas been resurrectedby the residents of the small,northern California town of Willits. Mendo Credits arebackedby food — a stash of rice andbeansin alocal warehouseis thebank, for example.Mendo Credits canbepurchased at severalparticipatingbusinesses, andthe notes circulate just like nationalmoneyinthelocal stores. Fullybackedby commodity food, this is money you can eat. While Mendo Credits are not a true

complementary- cmrency-, insofar as people use money to buy theminthe first place, they do

offer an alternative store of value for money that inturn supports the food system.16

SystemicInterventionsFood currencies canplay animportant rolein reversing the effects of the global commoditiesmarketbyprovidinglocal farmers with a source of income that is not reliant onthe debt andinvestment cycle whichhas driven the global foodindustry to thebrink of economic andecological collapse. Alocal food currency- can mobilizepeople and resources without using moneyand start to rebuild a system that relies more onlocal capacity andless on global supply chains.

To accomplish this goal, a complete circuit needs to be constructed, so that local food workers,farmers, grocers, restaurants and theprocessing, distribution and storage companies circulate thefood currency among themselves as partialpayment for the food they grow and use. Thestructure of die currency couldbe somethinglike the Mendo Credits mentioned earlier, wherefoodinstorage serves as the store of value andthe coupons circulate with theknowledge thatthey can always be redeemedfor food. Or, a food currency- could take onmore of thecharacteristics of a commercialbarter system, where businesses involvedin food andrelatedindustries have a system of credits and debits among themselves that wouldbeindependent ofnationalmoney — similar to the WIR systeminGermany.

Ineither model, the addition of local food currency couldmobilize local resources andbuildreal wealthinthelocal food sector. Food workers wouldhave additionalincome to supplementtheir wages. Farmers wouldhave additionalincome to supplement the money they get for theircrops. Perhaps most importantly, localgrocers,processors and restaurants wouldbe able to paycomparableprices in dollars for localproduce to offset the competition of the cheap importedfoodfromthe global commodity system,payingthe differenceinalocal currency.

The two systems wouldbe complementary-,insofar as they would exist together and work to

maximize theincome andwealth of thepeopleinthe food sector. By addressing one of the criticaleconomic traps of the commodity food system, resources could also be more available to addressresource depletion and environmentalpollution. Most of the depletion andpollution canbeaddressedwithmore laboT, and so the availability of a local currency to mobilize more of the labor

Page 146: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

pool to, for example, construct wetlands to manage agricultural runoff, to plant trees inareas

which havebeenharvested, to compost foodwaste to rebuild depleted soils — none of thesolutions to theseproblems needs to be capitalintensive.

Inevery area of the world, there are people who need work.Inevery agricultural operation,thereis endless work that needs to be done. The main cause of unemployment inthe face ofcritical work tasks is a shortage of money to pay the workers. The shortage of money, as wehavesaidbefore, is a function of the structure of the monetary system wehave constructed, not an

inherent lack ofhumaningenuity or motivation.Inthis system, the national debt-basedmoney plays its role, andthelocal currency

supplements it andmobilizes more local workers to help offset the need for temporary immigrantlabor onfarms. Abalance canbe foundbetween the two systems thatbenefits the agriculturalproducers, the communities that rely on their productivity and the environment we allrely ontocontinue to provide us with the food andwater we needto survive.

Farm Stand: Vermont’s Food CurrencyThe Central Vermont Food Systems Council was establishedby the City ofMontpelier in 2008 todevelop aplanfor increasedlocal foodproduction and food security. The CouncilTecruitedrepresentatives from all the differentparts of the food systemto form committees andresearchthe needs andgoals of each sector. Committees were formed on foodproduction, foodinfrastructure (processing, storage and distribution), foodpolity7, food justice, food education,consumers andhouseholds, and Gwendolyn chaired a food currency7 committee to explore whatpossibilities there mightbe for alocal currency to help achieve the goals of the Council.

[ Harvest ]External outputs: Temporary

investmert'jl' * *oil,fertilizer, pest immigrantsI control, machinery

ILoans

Local farmlabor

Local inputs:seeds,compost,

animals

Storage

capacityIndebted

money

Production Products

Localcurrency |Local consumers ]

Processing, j/cheapfoodMarketing, imports

Distribution

Exports

SalesFinance

Page 147: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

FIGURE 12.3. AComplementary FoodCurrency System

For any system,it takes time to discernliow a currency might work to connect underutilizedresources withunmet needs, and so theFoodCurrency committee didn’t really get movinguntillatein2009. The December meeting that year featured apresentation on a new statewideinitiative to understandhowto strengthen the food system’s Tolein the economy, and at thismeeting some of the local farms describedhow they currently had extra food storage capacity thatwas going unused.

Thelightbulb went on, and theideas for alocal food currency started to gel. If there was

underutilized food storage capacity inthe region andif food storageingeneral was somethingwe

wantedto foster to developbetter local food security, then this might provide thebasis for a

currency. Willits, Californiahas shownthatpeople were willingto invest infood storage as a

backing for a local currency — Mendo Credits arebasedinfood.If a similar system were usedinVermont, this mightprovide alocal currency to circulatelocally,but also couldhelpbuildadditional food storage capacity.

Severalpeople who had attendedthe Food Systems Councilmeetingkept talking about thepossibilities afterward. Another recurring theme that emerged was the need farmers have tounderstand their markets andto have dedicated customers in advance of their season even7 year.One farmer on the committee thought it wouldbe a goodidea to get people together to figure out

how to organize abuying co-op, so that consumer demand couldbe aggregated for local farmers,giving them a morepredictable market.

The two needs — food storage and aggregated consumer demand — gave rise to the idea of an

onlineFarm Stand, a website where farmers couldpost products theyhave available, consumers

couldpost the needs they have for food and other products and sendees that support the foodeconomy could also participate, all facilitatedby alocal currency7.

Local farmers are more open to using an alternative currency system as long as they are stillable to havepart of the costs paidindollars. The Farm Standwebsite offers three alternatives forpayment: dollars, food storage units and food credits. The food storage units arepurchased withdollars,but then they can continue to circulate as currency7 — thebuyers of the units know thattheir currency7is ultimatelybackedby foodthat is in storage locally. The food credits are not

purchasedwith dollars or backedby food storage — they are more of apure complementary7currency7 that is backedby thegoods and sendees availableinthe system.

Farmers canpost items for sale for dollars, or for a mix of dollars and the two types of food

Page 148: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

currency. Consumers can ask for different products and offer to pay dollars or a mix ofcurrencies. One of theimportant features of the systemis thatpeople can offer farmlabor for a

mix of currencies. This helps farmers loweT their real costs, whichin turn can makeit easier for

themto accept the different forms of food currency for their products.1?Foodis such abasic humanneedthat it is imperative that we findways to support thepeople

who growit so that they are not livingbelow thepoverty level. A food currency is not the wholeanswer to this question,but it:s a start.Farmingpractices that are more decentralized, that use

lower levels of non-renewable resources, thatprotect the resourcebase onwhichthey dependneed to berewarded, andthe destructivepractices inplace now need to end. One of the ways tointervenein this systemis to change the way the rewards andpenalties work. Changing themarket — the mediator of rewards andpenalties — needs to be doneinbothbank-debt moneyand complementary currencies.

Page 149: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

FARTIII

MAKINGITHAPPEN

f' f

\

\

J9

Page 150: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER 12

Intentional Cities

Ultimately,humanintentionality

is the most powerful evolutionary force

onthis planet,GEORGE E. LEONARD

Cities can take aleadership roleincreatingwealth,but they need to findnew ways to mobilizetheir residents around a common agenda. All of the currency strategies wehave discussed so farrequire someone’s vision, aplan, and specific strategic actions thatbring themto fruition. Thedifferent solutions thathavebeenproposedin theprevious chapters will allbehighly empoweredand effectiveif a city decides to create an explicit sharedvision: what we call an intentional city.Cities often undertakepublicplanningprojects that offer the opportunity to create these aspectsof collective action,but most cityplans have remainedinthe domain of experts, rather thanengaging residents and other stakeholders. This chapter andthe next tell the tales of four citieswhich took theinitiative to create along-termvision, to identifyhow needs are met in theircommunity, and to articulate a sustainable strategy for the future. All of the cities describedincluded complementary currency interventions in their plans.

MobilizingCollective ActionWhat we are calling collective action — one aspect of whichis politicalwill — is basedultimately inwhat wehold dear, the things andvalues we care about as apeople.If we value freedom, the legaland economic systems we create allow for it.If we value justice, thereis a reliable rule of law,corrections for inequities, andfair, reciprocal checks andbalances for thegovernment. Values

Page 151: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

themselves contain a goal, or a vision, of an endresult.The challenge for society has alwaysbeen to findenough common ground among competing

values to exercise thepoliticalwillneededto create systems andinstitutions that reflect andsustain the underlyingideals of the culture. A corollary challengehas been tohold true to our

deepest values evenwhen convenience, greed, fear,hardship andpower threaten to derail theoriginalintent ofparticular initiatives. This is thepower of vision; communities needto come

together to craft one that is compelling enough to have stayingpower, with strong shared values,so that it overcomes the usualbumps inthe road.

Infact,businesses havelong recognizedthe importance of creating andfollowing a vision.There are thousands ofhigh-level executive seminars on the topic, andthe more successfulenterprises are continuously refining andtesting their actions against their vision. Since thevision approach to business cameinto fashionbackinthe1980s, researchhas demonstratedthatthose companies who have managedtheir business around a vision are more successful thantheir competitors.

One example is Whole Foods Market, whichis committedto a visionthat goes beyondbeingjust a grocery store. “They actually want to change apart of the worldinwhichthey operate. Eventhoughthey don't obsess over thebottomline, their earnings growthrateis triple that of theindustryinwhich they operate. Andtheir stock price over thepast two years has more than

doubled.”1

Choice of theMethodologyA number of different ways are available to tackle the complexity of sustainability planning. Letus onlybriefly mentionhere well-known ones, such as theNatural Step, the Agenda 21, the LocalEnvironmentalActionProgram (LEAP) and the WorldHealthOrganization’s Healthy Citiesprogram. TheNatural Step was developedby Karl-Henrik Robert, aphysicianinSweden who was

alarmed at theincreasing rates of cancer inthe country andworkedbackward to determine whatthe root causes were.Heposed four system conditions that need to be met for a sustainableworld, and offered a methodology for cities and companies to achieve these system conditions.

Local Agenda 21was thelocalgovernment response to the EarthSummit inRio, whichculminatedin Agenda 21, aprogram for theplanet to achieve environmental sustainability andcommunity development. While its scope was originally broader than the environmental agenda,as it has been implemented over thepast 20 years, theprograms thathave tendedto beimplemented as LocalAgenda 21in cities arelocal recycling campaigns and other environmentalprojects. Local Agenda 21offers few tools for systematically considering the economy, the

Page 152: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

governance systems or the social development of a community.LEAP uses a comparative risk assessment methodology to determine the impacts of different

environmental threats, and then offers aprogramfor addressing theproblems.Healthy Citiesencourages cities to study thehealth conditions of their populations as a way of makingplans forenvironmentalprotection and social andhuman development.

Each of theseprograms have their specific strengths and advantages,but youwillhave noticedthat they haveincommonthe tendency to focus on only some of the dimensions involvedinsustainable community development.

The approach describedinCreating Wealth is originalinthat it attempts to be more

comprehensive, to approach along-termvision andintegratedplanthat deals with all dimensionsneededto create anintentional city. While this may appear overly ambitious, some cities havemanagedto achieve this aim. Each of the four cities describedhere realizedthat they needed totake anintegrated approach to planning rather than continuingto look for solutions to isolatedproblems.

The cities hadleaders who appreciated theinsights that system dynamics andtheEarthCharter could offer cityplanning, andwereinspiredto take the approach Gwendolyn advocatedin

her previous book TheKey to Sustainable Cities.2 The four cities are very different, ranging froma very small state capital of 8,000 people to a small, impoverished city ontheHudsonRiver, a

regional center of commerce and one of the wealthiest cities inNorthAmerica with over

1,000,000 people.

Visionary- Cities —CreatingExcitement andMomentum

Unlikebusinesses, where the visionis oftenintroducedbyhigh-levelmanagement, the most

effective city visioningprocesses engage abroad cross section of city- residents,businesses,educationalinstitutions and other stakeholders in an extendedplanningprocess that defines avision and also includes specific actions that needto be taken to make the vision a reality7. Thefour cities we use as examples have engagedin a visionprocess with a strong emphasis on

long-term sustainability7. They have asked their residents to imagine their city7 30-100 years inthefuture. After this, they set intermediate goals and objectives, designed strategies to meet thegoalsand established ways to measure and report onprogress toward the vision over time.

Inabusiness, customers, clients, market andproduct lines limit the range of possibilities for ashared vision.Incities, where all dimensions ofhumanlife are expressed, there are a number ofchallenges whenit comes to creating anything that couldbe called a “sharedvision.” One of the

Page 153: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

important questions to ask is mhose visionis it? A statement that is issuedunilaterally by peopleinpower is not likely to capture the values of the whole community, and evenless mobilize themto take the necessary- initiatives to achieveit.

If the goalis to create a vision statement that does reflect the values of the whole community,how do youget the whole community involved? Most city leaders hold traditionalpublic hearingsonpolicy- initiatives, to try- to encouragepublic input. They draft thepolicy- proposal, and they askthepublic to comment onit beforeit becomes official. They complain of community- apathy whenonly a smallgroup ofpeople show up for ahearing, typically at City7 Hall. Cities thathave done a

good job of community7 engagement havelearnedto attract morepeople to their policy7discussions by structuring thepossibilities for public input as the kindof activities that peoplenormally like to attend, like sporting events, celebrations and cultural events. If youmake thepolicy7 process funinstead ofbeing wonkish andboring, you are morelikely to have morepeopleparticipate.

So inCalgaiy7, thepublic outreach staff for theimagineCALGARYprocess showedup at a visitby the Queen — a crowd of 10,000 — andhanded out brightly colored surveys for people tocomplete. InNewburgh, the city7 namedtheir long-termplanningprocess “Plan-ItNewburgh”andprinted t-shirts andbuttons for people who attended a festivekickoff event scheduled at thesame time as the regular Arts Celebration onthe first SaturdayinSeptember.InBurlington,balloons with “Pmpart of the Legacy7” were made for thekickoff ceremony,held onChurchStreet, abusy pedestrianmallintheheart of the downtown on abusy SaturdayinSeptember.

These cities sent a message to thepublic that city7planningis fun andinteresting, andinallcases, people respondedby gettinginvolved, either by simply fillingout the visioning surveys orby joining stakeholder groups. Some took their interests a step further and steppedup to serve on

the City7 Council or Planning Commissions.A second challenge for cities trying to develop a sharedvision for the futureis the subject

matter of the vision statement. Vague generalities about being a livable city7 aren’t enough to cany7

more difficult policy7 agendas forward whenpriorities are set andtrade-offs needto be made. Anoverarching viewis important,but the vision needs to be detailed enough so that directionisclear. For this reason, the cities describedinthese chapters have usedlong-term sustainability7 as

a methodology7, a system that involves looking closely at the question ofhowhuman needs are

met today without denying futuregenerations the ability7 to meet their needs. The needsthemselves can frame the vision and the goals, as assets areinventoried, systemic patternsuncovered andleveragepoints to changeproblematicbehavior of meta-systems identifiedforstrategic intervention. Thebalance of this chapter describes four case studies, different intheir

Page 154: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

scale andmeans available, different also interms of objectives pursued.

Tlie Legacy Project: Burlington, VermontIn1998, Peter ClaveHe, thenmayor of Burlington, decidedthat it was time for the city to come

together around a shared vision. The city was already a leader ina number of different areas —

the arts, education,poverty alleviation,housingurbanrevitalization and energy efficiency — andcould count on different groups who knew alot about different aspects of urban sustainability.What the city lackedwas a sharedunderstanding ofhow all theparts fit together. Conflictsaround a large affordablehousing developmentplannedfor an open field, aplanned expansion ofa food co-op as the anchor grocery storeinthe downtownwere skirmishes among differentgroups that illustrated alack of understanding about all the various aspects of creating a

sustainable future.The city partneredwiththeInstitute for Sustainable Communities and obtained funding from

the US EnvironmentalProtection Agency andprivate foundations to create along-termsustainabilityplan for the city.MayoT Clavelle calledit the Legacy Project, framingtheprocessaroundwhatkind of city current residents wrouldleave for their grandchildren. He definedhisvision of anintegratedplan as theFour Es of sustainability — Education, Equity, Economics andEnvironment.

To create a community-wide vision, the mayor convened agroup of stakeholders that rangedfrom executives of thelocalbanks,presidents of the University of Vermont and ChamplainCollege (bothlocatedinthe city), the CEO of thehospital, advocacy groups like the Peace andJustice Center and the FoodBank, localdevelopers and ordinary citizens. The stakeholdersagreed to meet on a monthly basis to discuss theplanninginitiative andmake decisions about itsoverall direction.

The funding allowedthe city and the Institute to hire several staff for theproject, including two

Americorps volunteers who would organize a lot of thepublic outreach activities; one staff personwho workedfor the City of Burlington; and another staffperson — Gwendolyn — who workedfortheInstitute for Sustainable Communities at the time. Creating a vision was a goal,but an even

moreimportant goal was for the staff and stakeholders to draft an actionplan that wouldhelp thecity achieve the vision.Inaddition, theInstitute for Sustainable Communities would compile a

directory ofbest practices inuseinBurlington, so other cities couldlearn fromtheir example.Theproject was scheduled to last 18 months — at the end a citywide vote was planned on any

elements of theplan that requiredvoter ratification.Inaddition, a largegathering was held —

modeled after traditionalNewEnglandTownMeetings — to getpeopleinthe community to help

Page 155: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

set thepriorities for the actionplan.Inadditionto the monthly stakeholder meetings, theAmericorps volunteers participatedineven7public event they could fit on their calendars. Theytabled at festivals, marchedinparades, visited schools, organizations and anywherepeoplegathered to ask four simple questions:

l.What do youvalue about Burlingtonthat youwant to pass onto future generations?2. What do youwant to change?3. What ideas do youhave for the city’s future?

4.How canyouhelp make the city abetter place?

The answers to the questions were compiled, andthe vision statement for the city was writtenfromtheresults of the survey and a series of neighborhoodmeetings, focus groups and otherpublic events that wereheld as part of the engagement process.

The Legacy VisionFive major themes emergedinthe commonvisionthat Burlington residents hold for the future ofthe city. These are:

* MaintainingBurlington as a regionalpopulation, government, cul-tural and economic centerwithlivable-wage jobs, full employment, social supports andhousing that matches job growthandfamily incomes

* Improving quality of lifeinneighborhoods

* Increasingparticipationincommunity decision making* Providingyouth withhigh-quality education and social supports, andlifelonglearningopportunities for all

* Preserving environmentalhealth

Inaddition, the staff worked with four stakeholder committees toput together an actionplanwithgoals, strategies andindicators that wouldbe measured and reportedby the University ofVermont, and animplementationplanto be monitoredby the stakeholders with annualmeetingsinto the future.

Page 156: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Committees and City SystemsFour committees werebased on a modifiedversion of theFour E approach to sustainability:Environment,Economy, Education, andEquity. As the feedback had comeinfromthe surveys,itbecame obvious that the Four Es originally proposed were not enoughto capture all thedimensions of community life thatpeople valued. At first, the staff tried to add Es for things likeEntertainment (the arts were a criticalpart of the community not expressedinthe originalformula), Eternity (people's spirituallife was also important to them) andEtcetera (for all thosethings that didn't lendthemselves to an easy E).

Fromthe chaos, aninteresting order emergedthat included and expanded on abasic truth theEs touched on — thekey systems at work inevery- community. Education was animportant partof the systems thatprovide social andhuman development. Inadditionto education, wehaveneeds inthis area that other activities have traditionally satisfied. Our need for aestheticenjoyment and self-expressiongives rise to the artistic and culturallifeinany community. Ourneed for a sense of meaning,purpose and connectedness expresses itself inour wisdomtraditions and spiritualpractices. Our need for recreation, for safety, for caring relationships — allof these needs are met through the community’s social andhumandevelopment systems.

Equity is also animportant need — for fairness, for justice. Our need for equity — for alevel ofself-determination, for systems thathelp us manage conflict — gives rise to thegovernancesystems wehave developed over time — the ways in whichwe usepower. Power is anotherimportant systemic flowincommunities. Understandinghowto meet people's needs forempowerment insustainable ways is a critical question for community leaders. Too often, thelimitedpower that leadershipbrings makes peopleinpositions of leadershipblindto the needtoshareit widely, to cultivate leadershipinneighborhoods,incivic organizations,inthe faithcommunity, so that the city itself is stronger andmore resilient to the changes that the 21st

Century7brings.So the four committees of the Legacy7 Projectproduced aplan for theEconomy,

Neighborhoods, Governance, Youth andLife Skills andtheNaturalEnvironment. Each section oftheplan contained specific goals, a short list ofpriority actions, indicators that wouldbemeasured over time to track progress towardthe goals and examples of some of theinitiativesthat have alreadybeen takeninthe area. The final section of theplan outlined specific roles andresponsibilities of the entire community, with stakeholders taking onparticular elements of theplan as their institutionalmission. The mayor was clear fromthe start that the city itself would

Page 157: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

notbe the sole entity responsible for theplan's implementation. That was abigreason forconvening alarge stakeholder process to beginwith — the mayor truly wantedthe Legacy Plan to

be aplan for the whole community, not just city government.

The ActionTakenLike anyplan, some of the actions identifiedmoved along fasteT than others. Some are more

controversial, evenwith abroadbasedpublic planningprocess, and canget snarledinpolitics or

fundingissues. Several elements of the Legacy Planwere implementedinthe first couple of yearsfollowingits adoptionby City Council, some failed to get off theground and others are stillinlimbo. Still others took on alife of their own andhavehad success that goes far beyondwhat thestakeholders imagined whenthey draftedtheplan.

Coming out of the gate, there were controversial elements of theplan. Anissue that got alot ofink for the first year after theplanwas completed was theplan's orientation towardurbangrowth.The mayor and several stakeholders sawthe sprawlinggrowthpatterns inChittenden County andrecognized that one way to change thepattern of thelast 20 years was to take a moreproactiveorientationtowardgrowth within the city limits. One of the first goals intheplan reflectedthis as

a major themeinherent increating a vibrant urban center, saying:

In2030,Burlingtonhas absorbedthe greater portion of the region's population growth,expanding to as much as 65,000. The city is the center of culture, commerce, education,health

care, andgovernment. Housing and job growthhavekeptpace withthepopulation.3

Given that in1999 when theplan was written, thepopulationinBurlingtonwas approximately35,000, this was an audacious goalwhichwould almost double thepopulation. Also, unlikevirtually even- other goalintheplan,it didnot come fromtheinput received during the outreachprocess,but rather fromthe mayor. More couldhavebeen done duringthepublic inputprocessto have a discussion about growth; this mighthave reducedthe challenges to thelegitimacy of thegoal that immediately surfaced andunfortunatelybecameidentifiedwiththeplan as it movedforward.

Two of thepriority actions under the Governance goal couldhavebeen controversial,butdidn't runinto any real opposition as the mayor moved them forward. Since these actions

Page 158: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

involved changing the city's charter — the document that forms the constitution for the city —

there were severallegalprotocols to follow, which also couldhaveprovided opponents with a

place to stop them. Two of these were:

Increasediversity — includingyouths andminorities — on decision-makingboards of all typesandprovide a regular “report card” onprogress.

Reorganize city government to makeit more responsive and accountable to the voters, withthe mayor overseeing city departments whilebalancing stronginput from commissioners and

other committed citizen volunteers. Implement more effective and centralizedmanagement.4

The City Charter was changed and was approvedby the Vermont State Legislaturein 2001. Thecharter changes included addingyouth representatives to cityboards and commissions, such as

the Planning Commission, City Council and Conservation Commission.It also included a

provisionthat gave the mayor hiring andfiringpower over department heads. Prior to the charterchange, individual commissions — thehighway commission, thepolice commission — hired andfired department heads. This meant that the mayor didnot have animportant tool athis disposalto make the departments accountable to the citizens; hehadbeen alightening rodfor complaints,but didnot have the ultimate authority neededto solveproblems. As a chief elected official,hewas also accountable to the voters, whereas the appointedheads of the commissions were not.

Legacy ProjectsIn additionto the structural changes made to city7 government as a result of the Legacy7 Project,severalprojects havebeen undertaken since thento meet thegoals. Each y7ear, the stakeholdersget together for a review of theprogress toward the goals and to play a roleinestablishingprojectsthat canbe doneinthe current year. Theprojects to dateinclude:

The BurlingtonFoodCouncilThe BurlingtonFoodCouncil (BFC) is an open community7 group exploring ways to ensure thatBurlington creates andnurtures ahealthy, equitable and sustainable food system for allmembers

Page 159: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

of the community. To accomplish this missionthe BurlingtonFood Councilprovides networking,partnership building and educational opportunities aroundfoodissues andprovides strategicrecommendations for decision makers. The BFC also works to serve as a model and source ofinnovation for the many groups involvedincreating andnurturing ahealthy, sustainable andequitable food systemfor the City of Burlington.

One of themainprojects of the BFCis theBurlington SchoolFoodProject (BSFP), a citywidecollaborative formedto address theintegration of local foods into school meals and foodinsecurity7 among school aged childrenin Burlington, Vermont. Partners inthe BSFPincludeShelburne Farms, VT FEED,NOFA VT, the Intervale Center, the Burlington SchoolDistrict Food

Sendee, City7Market/OnionRiver Co-op andHealthy City7 YouthFarm.5

The FoodCouncil andthe SchoolFoodProject worked closely withlocal schools to give theschool mealprograms access to locally grown organic food. This was more difficult than firstimagined,partlybecause the food sendees inthe schools didnothave the staff or the time for thefoodpreparationinvolved. Most school lunches come as prepared foods, not foods that needpeeling, chopping and cooking. The students andparents helped design a systemfor foodpreparation, and the students helped the food sendeeby designing recipes that would use theproduce fromlocal farms, to make theintegration of the new food as easy and cost-effective as

possible.

No Idling CampaignLegacy launchedits No IdlingCampaigninApril 2007 withpublic outreach, education andpolicyadvocacy efforts to reduce unnecessary7 vehicleidling as a way to improve air quality7 and overall

quality7 of life for everyone who lives, works andplays inBurlington.6 The campaignworkedwiththe city7 to enforce a city7 policy7 already on thebooks about city7 vehicles idling, andproposed an

idling ordinance for the city7 to adopt. InMarch of 2008, the City7 Councilpassed a resolutiondirecting the Public Works Commissionto amend their parking ordinances to accommodate theanti-idling requirements.

Energy7 andEnvironment Coordinating CommitteeThe Mayors Energy andEnvironmental Coordinating committee (E2C2) was formedin

mid-2007 andis composed of citizenrepresentatives, government officials and others concernedwithandinvolvedinenvironmentalissues.It is charged with recommendingprojects,programsandideas to the City Council that canimprove air quality7 and significantly reduce the City's

greenhouse gas emissions, themain culprit responsible for global warming.?InMay of 2008, theE2C2 presented City7 Councilwith several recommendations about making the transportation

Page 160: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

sector of the city more sustainable over time. These recommendations included:l.Increase accessibility to transit with15-minutebus sendee on major roads into and out ofdowntown and freebus sendee withinthe downtown.2. Establish a streetcar line from City outskirts to downtownpoints,possibly originating at Exit

14-3. Design andbuild apark andpublic transit facility- at Exit 14 with seamless transitconnections to area employment centers, as recommendedin the CCMPO RegionalPark andRidePlan (February7 2004).

4. Design andbuild a surfaceparkinglot using the existing ChamplainParkway right-of-waynear the I-189/Route 7intersection. Collaborate with City7 of SouthBurlington.5. Investigate a garbage contracting systemby allowinghaulers tobid for exclusive sendeeindistricts of the City7.6. Investigateincreasing thepercentage of biodieselblendinthe City's summer fleet from 20%to 80% or higher.7. Continue to strengthen and advance educational, outreach, incentive and recognition

programs that promote walking,biking and car efficiency7 efforts.8Social Equity7 Investment ProjectThe mission of the Social Equity7 Investment Project (SEIP) is to identify and support leadershipin the Burlington community7inorder to facilitate sustainable and effective social change. SEIPdoes this throughleadership development, social equity7 focus groups, the development of a

coordination andinfluence network, financial development, andgeneral education andawareness of social equity7 issues as Burlington moves beyond a crossroads of cultural and social

shifting andgrowth.9The Social Equity7 Investment Project does alot through the coordinator workinginthe

community7 to promote diversity7. To do this, she works with a wide variety7 of community7organizations to increase the representationintheir leadership groups by people who are nottraditionally inleadershippositions — people of color,people who arephysically challenged andpeople who havelowincomes. Workshops are offered on subjects like “A Solutionto CulturalShifting,” and the coordinator supports projects runby Burlington's Center for Community7 andNeighborhoods such as the Inclusive Community7 Initiative and the We AllBelongInitiative.

A 2007-2008 report listed the following actions as the recommended next steps for theprogram:

1. Develop, extend and connect local community7 development capacity7 to ensure all thepeople

Page 161: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

have an opportunity to give voice to the future of their communities2. Support increased capacitybuilding efforts to improve theparticipation of marginalizedgroups inpolicy design3. Support increased capacitybuilding efforts to improve data collection, monitoring andevaluation of local, state and federalprograms

4. Support increased capacitybuildingto find,lift up andbringto scaleprograms that work5. Identify and stabilize funding to support community leaders through access to leadershiproles and opportunities6. Localgovernment leadership will contribute resources andparticipateinplanning andaction steps which support existingleadership to provide ongoinginformedcultural dialogue,consultation and social resources

7. Identify methods to strengthen the city of Burlington collective work to more effectivelyachieve an equitable sustainable community 8. Maintain discussion and activity which fosterawareness of and commitment to providingnew emergingleadership the necessary tools to beeffective

9. Continue to organize and facilitate discussion/gatherings with ethnic and culturally diverseand existingleadership at localgovernment,business andnon-profit sector to allow for greateropportunities to recognize commonality, valuable social connections and welcome strategiesfor successfully communicating andworkingwithpeople across lines of different backgrounds10. Encourage more socialinsight, short termvisionplanning and communitybaseddiscussion from existingleadership within CEDO andlocalgovernment11. Establish the City of Burlington as a leader inthe recruitment, retention and support foremployment of ethnic and culturally diverseinleadership and other positions across all Citydepartments12. Increase direct participation and representation of ethnic and culturally diverse, andeconomically oppressedpopulations on City of Burlingtonboards and commissions

13. Increase andpromote equal access to allCity of Burlington services andprograms withthoughtful and strategic outreach and educational activities

14. Encourage and support community-based organizing around ethnic and culturally diversebarriers, racism andimmigrant issues

15. Visibly, technically and financially support diversity initiatives and curriculumthroughoutthe Burlington SchoolDistrict and other educational outlets in the City of Burlington,including alternative schools, early educationprograms, and colleges anduniversities16. Work withUVM andbusiness community on offering customer service trainingto

Page 162: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

retail/restaurant staff to better serve a diverse customer base

17. Work with Stakeholders, localgovernment and existingleadership about sharingpower,restructuring racial equity lens “who gets to decide”,being alearning community of leadership“not abinding community” and support ethnic and culturally diverse leadershipparticipation

intheir own decision making.10

The SocialEquity Investment Project, and all the goals and targets the city set for governance andsocial well-being, represent a significant contributionby the city to ongoing discussions aboutsustainability. Burlington was the first city to address issues of equity and justiceinaplanningproject that otherwise wouldhavebeen seen as having only an environmental and economicfocus. Sustainabilityhad traditionally beenpresented as a three-legged stool, withlegs ofenvironment, economy and abroad category of subjects lumpedunder a “social” heading. Withthe emphasis on equity andgovernanceissues, Burlington added a fourthleg to the stool,effectively dividing thebroad social category7 into two — socialwell-being andgovernance.

OnMarch16, 2009inWashingtonDC, the City of Burlingtonwas honoredwith the runner-up

2009 City CulturalDiversityAwardby theNationalBlack Caucus of LocalElected Officials andNationalLeague of Cities. Burlington was honored for implementingtheinnovativeprogram, theSocialEquity Investment Project, andpromoting the necessary7 cultural diversity leadershipincommunity governance to make theprogram a success,

BurlingtonBreadThelocal currency7 that theBurlington community created, calledBurlingtonBread, was not a

direct result of the Legacy7 Project; it was already incirculation whenthe Legacy7 Project began.Modeled after Ithaca Hours, Burlington Bread was a.fiat currency — a form of currency7 that isissuedinnotes and acceptedinstores and sendee businesses around the city.

The currency7 was reinvigoratedinthe years immediately followingthe conclusion of theLegacy7 Project, when Gwendolyn organized aninternational conference onSustainableCommunities inBurlingtonin2004. Anewnote design was created, and student interns at theGundInstitute for EcologicalEconomics, foundedby Robert Costanza, fanned out across the cityto encourage newbusinesses to accept it.The conferenceprovided a marketingtool for thecurrency7 — participants inthe conference were providedwith Burlington Bread as part of theirconference materials and encouragedto find stores to spendit inwhile they wereintown.

Page 163: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Ultimately, the administrativeburden and cost of maintaining apaper currency spelled thedemise of BurlingtonBread, andit doesn't exist today.It was replacedinBurlington with a TimeBank system that serves theNorth end of town, a traditionally low-income area, and a new

commercialbarter system called the Vermont Sustainable Exchange. Sinceboth of these systemsare structured as mutual credit systems, they are easier to manage andhavepromise for longlife.

TheEarth CharterAt the same time that Burlington was completing their plan, another globalproject was underwaythat had come to the same conclusion about the needto include social justice, equity anddemocraticpracticein any discussion about long-term environmental sustainability: the EarthCharter. Back in1992, the first globalEarth Summit heldinRio de Janeiro, Brazil, was convened,and thehope was that a Charter wouldbe drafted to capture the compellinginterest all nationshadinprotectingthe global environment. The Rio EarthSummit markedthe first time that worldleaders — presidents,premiers,prime ministers,kings, queens, despots, dictators and otherheads of nation states — got together withthe express purpose of discussing the degradation oftheglobal environment

During the summit, no consensus about the Charter was reached, and so the summit created a

new Commission to study the subject, draft a Charter and reportback to theUnitedNations. TheCommission was chairedby Maurice Strong — a former under-secretary general of theUNwhohad chaired the Earth Summit,MichaelGorbachev, former head of the Soviet Union and StevenRockefeller, a collegeprofessor andphilanthropist fromthe United States. Inthe first sevenyearsfollowingthe summit, an ambitious and massiveglobal dialogue was undertaken, withrepresentative committees in52 different countries engagingpeople from all walks of life to askthe fundamental questions about what is required to create a just and sustainable future for theEarth and for futuregenerations.

This effort was completedin1997, and all theinput was sent onto a drafting committee thathadbeen createdby the EarthCharter Commissionin1996. Professor Rockefeller was appointedby the Commission to chair the drafting committee, and the committeeheldmeetings withgroups of experts, including scientists, internationallawyers and religious leaders andthencirculatednumerous drafts back to all thenational committees, focalpoints and organizations inthe countries that had engagedinthe dialogue for comment. At theRio +5 Forumin1997, a

benchmark draft of theEarth Charter was released for circulation and comment. In2000, theEarth Charter Commission came to consensus on the document ina meetingheld at theUNESCO Headquarters inParis. A formallaunch of the Earth Charter was heldinthe Peace

Page 164: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

PalaceinThe Hague.

Cities andTowns Support the CharterThelaunchkicked off another large-scaleglobal effort to endorse and adopt the EarthCharter,and one of the first groups ofpeople identifiedby the Commission as important partners were

cities andlocalgovernments. The EarthCharter was presented to theICLEI World Congress in2000, whichis a coalition of localgovernments all over the worldwhohavebeen implementingLocalAgenda 21, another major agreement that came out of the EarthSummit inRio. ICLEIendorsedtheEarth Charter andmade a commitment to use its resources to move the Chartertoward adoption at the Summit on Sustainable Development inJohannesburgin2002.

Gwendolyn attended the ICLEIWorld Congress in2000, andwas inspiredby the connectionbetweenwhat shehad seen on the grassroots levelinBurlington and onthe globallevelwiththeEarth Charter — the similarities betweenthe two processes were a clear indicationthat there was

something universalinthe aspirations sharedby people all over the worldthat transcended allpolitical, religious, national and culturalboundaries. When she got back to Vermont, sheimmediately startedwork to bringtheEarth Charter to people andlocalgovernments there.

Part of this effort was workingincooperationwith some Vermont artists who hadbeeninspiredby the Earth Charter to organize a celebration event in 2001. Another part of the workwas through a campaign to ask Vermont TownMeetings to demonstrate to the worldgrassrootssupport for theEarth Charter by endorsingit at their annualmeetings inMarch of 2002.

Vermont TownMeetings arepure democracy inaction; inthose towns, the citizens themselvesvoted for the endorsement.

InMarch of 2002, 23 cities andtowns inVermont voted to endorse the EarthCharter, andGwendolyn was invitedto speak at the World Summit on Sustainable Development inJohannesburg to talk about this campaign. The LocalGovernment Summit that was held as partof the World Summit included a reference to theEarth Charter intheir political statementpresented to theleaders of the World Summit, andICLEI also went on to adopt the Earth Charteras guidingprinciples at the followingWorldCongress theyheldinAthens in2003.

TheTownMeeting campaign and the Local Government Summit madeit obvious thatif localgovernments supportedthe Charter, they wouldneed tools to turn their support into concrete

actionplans.It is one thingto endorse a set ofprinciples;it is another thing altogether to use theprinciples to shape localgovernmentpolicy andimplementation efforts. Working with StevenRockefeller and the WorldResources Institute, this idea about a tool for localgovernments gave

Page 165: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

birth to aproject called the EarthCharter Community ActionTool (EarthCAT). StevenRockefeller convened a committee of Earth Charter supporters from all over the world to developthe tool, and over the next two years GCI andWRI formed apartnership to developboth a

workbook and a web-based management support system.

A Community ActionToolEarthCAT combined theprinciples of the Earth Charter and theinsights fromthe BurlingtonLegacy7project about the importance of using abroad spectrum ofhuman needs and theircorresponding city systems as a startingpoint for long-term sustainability planning. The workinBurlingtonhad explored and articulated the sustainability of five critical systems incities — socialandhuman development, governance, economics andlivelihoods, thebuilt environment andinfrastructure andthenatural environment. The Earth Charter provides a set of globalprinciplesthat can formthe ethical and sustainableguidelines for all these systems as well as hope that theywill to continue to provide for our needs and the needs of alllife onEarthinto the future.

Cities can easily see thelink betweenthekey themes which formthe categories of principles oftheEarth Charter andtheir city systems:

* Respect and care for the community of life

* Social and economic justice

* Environmentalintegrity

* Democracy7, non-violence andpeace.

The daily work of cities involves all of these themes, and our municipal systems reflect the way we

address all of theseissues as ahuman community. This makes alink betweenthe EarthCharterand city planning conceptually coherent,but thepolitics were far from easy. Some of theadvocates of theEarth Charter inthe United States were targetedby the John Birch Society andother right-wingideologues. The artwork createdby the artists celebrating theEarth Charter — a

beautiful Ark of Hope — was defacedwhileit was on exhibit inthe Midwest. InVermont,Gwendolyn receivedhundreds of letters and messages ofhate mail duringthe campaign she ran

to get local towns to endorse the Charter. A slick, magazine-quality piece of JohnBirchpropaganda was distributed that likened the artists and advocates of the Earth Charter to theanti-Christ, andinVermont the members of the society toured communities to alert themto the“dangers” of the document.

Page 166: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

To avoid other cityplanners andlocal leaders being targetedina similar way, the EarthCATmethodology does not make thelinks to the Earth Charter obvious enoughto attract thiskind ofnegative attention. Rather than structuring theplanningprocess principlebyprinciple, theprinciples are embeddedinthe methodology itself. References inthe margins alert planners tothekey links, and the entire approachis designedto emphasize theintegration and connectionamong the actions taken to insure environmentalintegrity, democratic practice, social andeconomic justice andthe underlying respect and care for the community of life. This wholesystem approachpioneered animportant alternative to the dominantpractice of considering eacharea of work separately, dividinggovernment into silos of expertise that cannot understand otherimperatives.

After thepreparation of the EarthCAT workbook and management support system, the next

step was to make cities andtowns aware of theimportance of sustainabilityplanning. To this end,Gwendolyn and an organization that she foundedin 2001called GlobalCommunity Initiativesorganized an international conference calledSustainable CommunitiesinJuly of 2004 inBurlington, Vermont. Over 500 people from 48 different countries attendedthe conference,where workshops and conference structure mirrored the EarthCAT materials and methodologyandincluded an officiallaunch of the workbook and website as a session at the conference.

Since that time, more than 50 cities, towns, regions and other organizations around the worldhave usedthe EarthCAT workbook and website to complete their long-term sustainabilityplans.InChapter 14, we describe three cities who usedEarthCAT to complete their plans, alongwiththelinks between the unmet needs they identified as part of theplanningmethodology and thepossibilities these needs offer for new complementary currencies.

Page 167: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CHAPTER14

A Tale of Three Cities

The axis of the earth sticks out visibly

through the centre of each and every town or city.OLIVER WENDELL HOLMES, SR.

Amongthe 50 cities that have already used the EarthCAT approach, the following three were

chosen as case studies because they are veiy different from one another — different in size,different inmeans, different in the objectives pursued. They are respectively Calgary in Canada;NewburginNew York state andMontpelier, Vermont. A detailed account of these threeinitiatives is also possiblebecauseGwendolyn worked with each of themto cam7 out theirplanningprojects.Many of the other cities usingEarthCAT do it ontheir own — the workbook isdetailed enough for cities to use without thehelp of a consultant.

Calgary’s 100 Year PlanIn2004, the Mayor of Calgary, Albertaplayed apivotal rolein reaching further thanwas typical ofcityplanning anywhereinthe world at the time: he challengedthe city to create a100 year plan.He mighthavebeen challengedby ahealthy sense of competition with the nearby city ofVancouver, BC, thathad justprepared a similar plan, andhe certainly saw synchronicity inthefact that Calgary was about to turn100 years old. Taking a look forward100 years into the futureat the same time the city wouldbe celebratingits centennialhad a symmetry that was irresistible.

Theinitiative was pursued at the outset by the city’s environmental department,but was

quickly transferredto theplanning department as thelinks betweenthe sustainability orientationof a100 year plan andthe city’s other planning responsibilities became clear. As they started tocontemplatehowTto execute such an outlandishprogram as a100 year city plan, Calgaiy’s

Page 168: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

planners looked aroundfor resources that couldhelp. Gwendolynhad spoken earlier that yearabout the Earth Charter and the BurlingtonLegacy project at Globe 2004, a large conferenceheldbiennially inVancouver, andthe staff of the mayor and the environmental department attendedthe talk andhadboughther book.

Later that year, she was sittinginaparkinglot inBurlington,having just left a meeting aboutthe Sustainable Communities conference, when she got a call from Calgary, asking questionsabout how they mightproceed with theplanning exercise. Themulti-stakeholder approachBurlingtonhadtaken was allwell andgood for a city of 35,000,but couldit work for a city7 of a

millionpeople? Howwould they insurebroad representation? How wouldthey reach thedifferent neighborhoods? Gwendolyn spoke ofbreaking thepublic outreachpart of theprojectdowninto manageableparts, andmentionedtheEarthCAT workbook as a resource, offeringto

come to Calgary- andtrain the staff at somepoint inthe future. Over the wavering signal of a

patchy cellphone, apartnership was born.The challenges of an effectivepublic outreach campaign in a city of a millionpeople were not

the only issue theplanningteamin Calgary hadto face. It’s a lot more complicated to achievepoliticalbuy-in and ongoing support in the multi-dimensional city7 that is home to the Canadianoilindustry7 thanit is ina small,politicallyprogressive college townlikeBurlington. Eventheproject methodology hadto be carefully considered, and the city7 convened apeer review sessionto insure that all the different possibilities for howto proceedwere effectively integratedinto theplanningprocess. Several consultants were invitedfrom all over Canada. Gwendolyn came fromtheUS, and out of all theinput, an approach andpeer concurrence on the methodology emerged.

The EarthCAT workbook was theprimary7 material to be usedin theplanningprocess,butCalgary7 added some activities andperspectives from other experiences as well — a charrette fromthe Vancouver project and a few other enhancements. This made the approachuniquelyCalgary7’s, whichgave the city7 a greater sense of ownership of the methodology7.

InCalgary7, the relationship ofprinciples to planning methodology7 was clarifiedina way thathadn’t occurredbefore. The city7 considered adopting the Earth Charter,but since there were so

many elements of the document that didn’t directly apply to cities — it called for aban on space

weapons, for example — they opted for the more city7-orientedMelbourne Principles instead.1The city7 sawtheprinciples as guardrails — as the framework withinwhich theplanning andactionwould takeplace. But more thanprinciples were needed to effectively address all thecomplex issues cities face. The integration ofboth aprincipled approach and the rigorousmethodology7basedinsystems dymamics that was offeredby EarthCAT gave Calgary7 a new andrelevant way to proceed.

Page 169: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Integration andWhole SystemsA couple of flawedhabits of thought haveledus to our current unsustainable trajectory7. The firstis our obsessiveprioritization of short-termresults over long-term outcomes. While this flawlargely defines the standard operatingprocedure for corporations, governments are not immuneto short-termism either (thepolitician’s version ofNIMBYis NIMTO — Not InMy Term OfOffice). The EarthCAT method calls for along-termtimehorizon for planning, looking out

30-100 years instead of the usual 3-5 year time frame.This longer-term approachhas two key advantages. First,it asks city7 leaders to think beyond

thelife of their current infrastructure, whichhelps focus the question onmore sustainablealternatives. Second, when stakeholders are asked about thekind of world they want for theirgrandchildren,it doesn’t matter if they are Democrats, Republicans, Progressives, Socialists,Communists, Conservatives, Liberals,NDPs or Greens; it turns out that they allwant the same

thing. They want ahealthy environment andgood job opportunities. They want theirgrandchildren to have a voicein their own destiny, to have safe,high quality7housing, cleanwater, friendly neighborhoods andgoodhealth. So whenyou start aplanningprocess withquestions about longer-term outcomes instead of theusual short-termproblem solving, youtendto start from aplace of agreement rather thanconflict.

The second flaw traces its origins back to the scientific revolution andthe advent of empirical,analytical thinking. The gift of rigorous analysis has ledto afragmentation ofknowledge thatnowforms a significant obstacle to a more complete understanding of integrated, complexsystems. W7e havelost the forest for the trees. At the same time our PhDs know more andmoreabout less andless, our government departments havebeen organizedinsilos where one team ofbureaucrats works directly against the interests of other teams, andthereis no one whounderstands the whole system well enough to helpit become more thanthe sum of its parts.Whentheparts are working at cross-purposes, the synergy that would otherwisebepossible isseriously compromised.

Integration andwhole systems understanding are the antidotes to fragmentation,but giventhe culture of specializationpromotedby our educational system andtheincreasing complexity7of the world weinhabit, these are not easy to achieve. It’shardto know enough about the widevariety7 of issues cities face eveiy7 day to see the links and tie the strands together so that theysupport each other. How does wastewater treatment relate to chronic, intergenerationalpoverty7?Do property7 rights have an impact onbiodiversity7? Do some strategies we use to solveproblemsmake themworse? Principles alone don’t help answer these questions,but learning something

Page 170: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

about whole system dynamics, complexity and even chaos theory canhelp.The EarthCAT workbook walks city leaders through aprocess of considering all theissues they

face as part of a larger system. Some rudimentary exercises andtools help them make theconnections, althoughit is difficult to teach a short courseinsystems dynamics in a workbookformat — it really requires moreintensive,hands-ontraining. Calgary had allocated $2.5 millionto theplanningprocess, and so GwendolynprovidedtheimagineCALGARYplanning staff a set oftraining sessions on city system dynamics and technical assistanceinapplyingtheinsights fromsystem dynamics to the issues in Calgary.

Roundtables, Stakeholders andWorkingGroupsIna city7 of a millionpeople, the organization of theplanningproject was initself a complexsystem. There were a wide variety of constituencies to involve, allwiththeir own agendas anddegrees of influence onthe outcome. As a startingpoint, the mayor convened a group of peoplewho would serve as his advisory team — theMayor’s Panel onLong-Term Sustainability. Thepanel members advised the mayor on stakeholder selection, the measures of success and thecontributions of their own organizations to theproject. Thepanel also provided feedback on thequestion onhowimagineCALGARY wouldbe sustained after theplanningproject was complete.

The mayor’s panelhelpedidentify some of thekey constituents who were theninvitedto bepart of theRoundTable, a stakeholder group that served as the steering committee for theproject.Members were chosen from all walks of life and also fromkey organizations that wouldneed to partner withthe city to implement theplan. The members of the RoundTable didn’tnecessarily represent thegroups and organizations they werepart of,but their affiliationwith theconstituencies helpedthembring that perspective to the dialogue. This RoundTable made a

commitment to meet at least monthly throughout theproject and oversawthe work onthe visionstatement, the goals, targets and strategies for theplan.

The thirdkey set ofparticipants were members of the Working Groups. These were formedaround each of thekey city systems — social, economic, governance andthenatural andbuiltenvironments. Here, experts were invitedto participate withthe RoundTable members, andinan exemplary effort to insure that integration was part of each dialogue, specialists from eachsystem were also part of even- other workinggroup. So thegovernance committeehadrepresentation fromthenatural environment,built environment, economic and social systemsgroups, and the other committees hadrepresentation fromgovernance.

Stakeholder Training

Page 171: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

The groups started their work withtraining on the way theimagine-CALGARYprocess was goingto work. The trainingincluded a timeline and a detailed schedule of meetings, withpreliminaiyagendas for all of the meetings included. This providedboth the staff andthe stakeholders with a

sense of certainty; even whenthey were movinginto unchartedwaters, they at leasthad a map.Italso gavepeople alot of food for thought,because the questions to be answeredinthe meetingswere not so easy. The training also included somebackgroundinformation about Calgary and an

overview ofhow systems dynamics would apply to their planningprocess.Itbecame clear at thebeginningthat there were different levels of trainingneeded for different

participants, at least interms of the ways inwhichlessons from systems dynamics wouldbe used.Three levels emerged — the advanced, intermediate andbeginner level — that guidedthe contentof the trainingthat was offered. Systems dynamics is a vast subject area, withmanypossibleschools of thought ranging from what is characterized as hard systems dynamics (the world ofcomputer modelers andmathematical formulas) to soft systems thinking (where diagrams andstories are used to convey the ideas andhard datais not used). Calgary7 was unusualinsofar as italready was usinghard systems models to manageits traffic planning, so they had experts on

staff. TheimagineCALGARYproject, on the other hand, was primarily using soft systemsthinking, where causal loop diagrams were used to convey theinterrelationship of differentvariables to each other bothwithinandbetween city systems.

Thebeginner level traininginsystems thinking was given to the RoundTable and workinggroupparticipants. At this level,participants needed to understand that systems dynamics was

part of the methodologybeing used, andif systems diagrams werepresented to themby the staffor consultants, they neededto understandthe diagrams.If they hadmore understanding thanthis — and some of them did — it was fine,but the majority of themwouldnot.Gwendolynprovided some of the training to this group,but the city also invitedinlocal experts todemonstrate why systems dynamics wereimportant — one of the first RoundTable meetingsfeatured a speaker from alocalinstitute that made connections through a discussion of locallygrown food.

Theintermediatelevel trainingwas givento the consulting teamthat Calgan7hired to managethe Working Groups. Two facilitators were assignedto eachgroup, one to leadthe discussion andone to keep a record of their work.Inaddition, the team members fromtheplanning office alsoattended eachmeeting. At this level, the facilitators andrecordkeepers needed to be able to not

only understand the diagrams and the logic of systems dynamics that was presentedto the group,but they neededto be able to explainit to other people. The workshops for this group were

designed as morehands-on training, so they workedwithdifferent systems diagrams and were

Page 172: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

givenmorepractice applying the ideas to reallife situations.Finally, the advancedlevel trainingwas providedto the core staff of the imagineCalgaiy team.

For this group,it was important that they be able to use an understanding of systems to bothdescribe the existing situation and to identify possible interventions that couldbe made to

improve things. This team was provided alot of material on systems archetypes, and they usedthe different archetypes to analyze trends over time and describe the causalpatterns for different

situations inCalgary.2 Thenthey were also giveninstruction onhowto identify leveragepoints inthe systems that were causingproblems. Leveragepoints are a seductive idea for planners — theyoffer thehope that small changes can lead to big results. The challenge of leverageis that oftenthe “small” changes needed are quite countercultural or expensive, evenif inthe larger scheme ofthings they aren’t significant.

The traininghelpedmake a challengingproject — developing a100 year plan for a city —

something thatpeople frommany different disciplines, from allpolitical stripes couldunderstand.It established a common language to use, defined a set of goals and created a map tofollowthrough a long series of meetings where controversialissues wouldbe discussed. In manyways, the training and early project organization created a safe space to discuss difficult issues,and the newlanguage of systems also provided some tools to diagnoseintractableproblems innew ways.

For example, some of the more difficult issues inCalgary- andinother cities are thoseassociatedwith economics andlivelihoods, since any discussion about poverty- andwealth can

immediately turninto apolitically charged debate. Yet there are systemic patterns of behaviorwithinthe economy that canbe describedwith systems diagrams to giveparticipants a new way oflooking at a story7 which otherwise mightbelayeredwithideologicalmisinformation. The staffand workinggroup onthe economyinCalgaiy came up with a diagram to describe aproblematicpatternthat leads to ahighlevel of economic inequity- ; this diagram also openedup a gooddiscussion about ways inwhich different interventions mighthelp reduce the resultingsystematic impoverishment.

The story they outlinedis simple, really, describinghowmoney andpower interact to keepmore resources flowing to people who already have money and to deny incomepotential topeople who don’t alreadyhaveit.In a society- where themyth of upward mobility- andindividualsuccess is powerful, this story is oftenhardto discuss ina group ofpeople who don’t share thesame political orientation. A discussion of the need for more economic equity7 quickly devolvesinto labeling andideologicalpositions that tendto obscure realissues. While diagrammingthesystems does not completely eliminate this tendency7, thepatterns of behavior and feedback loops

Page 173: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

do provide a newlens withwhich to viewthe story.Successful Policy Changes

\Minimum Wage and

Collective Barg&iningRights

Power to Change

Wages and LaborPoliciesR

\

Workers’Income

Investors’Income

FIGURE 14.1. Flows ofMoney and PowTer

InFigure1, the feedback loops describe a common system archetypeknown as Success to theSuccessful. This pattern of behavior occurs inmany places insociety, includingbright childreninschoolgettingmore attention fromteachers or people movingup theladder within a corporation.There is no denying that it is easier to be successful whenyou already have some advantages.What the archetypical diagram demonstrates,however, is that whenpeople who are alreadysuccessful aregainingthe resources their success allocates to them, this canturninto a zero sum

game where others are deniedthe same resources. So, inthis case of money flow, the systemiceconomic imperatives work ina reinforcing feedback loop that makes the situation go more andmoreinthe direction of the accumulation of wealth on one side andimpoverishment on theother.

If you start at thebottom of the diagram,people who have income fromtheir investments tendto have morepower to influence the rules of a given society. Movingupwardinthe diagram, sincewages are a cost for enterprises, and sinceprofit depends on the revenue from sales beingmore

thanthe costs ofproduction, thereis a lot of pressure withinour systemto reduce costs andkeepwages low. Thelower wages are, the moreincomepeople can make frominvestments. So policychanges are made to reduce or eliminate minimum wages andrestrict collectivebargainingrightsbypeople who have more influence. As this book goes to print, the state of Wisconsinhas beenmakingheadlines for severalmonths where theRepublican leadership there is trying to strippublic employees of their collective bargainingrights. So thepressure exists inboth thepublicandprivate sectors to keep wages low.

It follows, therefore, that more income from existinginvestments directly influences thelevel

Page 174: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

of wages paidto workers. The more income goingto the investors, thelower the wages are for theworkers. Lower wages mean lower possibilities for workers to invest themselves so that they can

benefit from aprofitable enterprise. The lower the investment possibilities there are for theworkers, the more income frominvestments flowto thepeople who are already benefiting fromthe system. This pattern forms a vicious cycle where the richget richer and thepoor get poorer.

Figure1also suggests ways that the system might be fixed.Inthis particular system,if therewere a way to allow workers to have access to investment income that would supplement theirwages, it wouldhelpbreak the cycle of impoverishment. There are many ways to do this —

throughEmployee Stock Ownership Programs (ESOPs), cooperative ownership structures, smallbusiness loans and entrepreneurial training. This also illustrates theidea of leverage — one of theleveragepoints inany system may slow or reverse thepositive reinforcing feedback loops.Finding ways to interveneinthis system might involve adding a variable that changes thefeedback. If more income from existinginvestments, for example, meant anincreaseinprofitsharingplans for workers, the system couldbe changed so that the increasinginequity couldbereversed. This couldbe facilitated with complementary currencies withinbusinesses or

governmental agencies that rewardedinnovation and cost-cutting.Traininginhow systems workprovides planners and stakeholders with a new way to look at

strategy development and sustainabilityplanning.It isn’t apanacea,but combined with: l) theintegratedprinciples of theEarth Charter, 2) a comprehensive framework ofhuman needs sothat city issues canbe considered as a whole system and 3) along-termtimehorizon for a visionandgoals, these four methodological elements canput city plans on a more sustainablepath thanthe currentplanningparadigm.

Principles serve as theguardrails, theguidelines for action within the constraints ofecosystems and social justice. The systems orientation andhuman needs frameworkprovide thevehicle that gives theplanninginitiative focus and structure to move forward — a series ofimportant questions to ask and anintegrated way for the questions to be answered. Thelong-termvision andgoals give the vehiclebothits drive andits destination. Bob Miller, a

strategicplanner inthe City Manager’s officeinCalgary, summarizedit this way: “The systemsview creates connectedpathways; the focus onhumanneeds energizes andgrounds the ‘why we

are doingthis planninginitiative at all’ — providing the urgency andmomentumto move

forward.”3

CaLgaiy’s Vision

Page 175: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

While the stakeholders and workinggroups were starting their work considering the existingcondition of the different city systems and settinggoals for the future, another major effort was

underway to involve as many of Calgary’s citizens as possibleincreating a vision for the future.As happenedinBurlington, the city7 staff askedpeople to answer five open-ended questionsdesigned to elicit people’s values — the things they cared about that make Calgajy special. Thesequestions were:

* WTiat do youvalue about Calgary?

* WTiat is it like for you to livehere?

* WTiat changes wouldyoumost like to see?

* WTiat are your hopes and dreams for the next 100 years?

* How canyouhelp make this happen?4

Posing the questions is relatively easy; finding ways to makepeople aware that the questions are

being asked andgetting themto answer is alot more difficult, especially in a city of a millionpeople. It’s a challenge facedby more than city leadership — each daybillions of dollars inmarketing campaigns try to do the same thing, to getpeople to pay attentionto aproduct or

sendee that is offered and respond to it. City leaders canlearn fromthese marketing campaigns at

the same time as all the commercialmessages occupy the space that more important questionsmight have. City leaders can also learn from other activities that engagepeople — after all,peopleturnout inlarge crowds for events like the Calgary Stampede, for the arts, for celebrations, to

practice their spiritual and faith traditions and for competitions and contests. Even the name oftheinitiative — imagineCalgary — was designedto be a way to interest peoplein the effort.

A special team onthe Calgary staff was taskedwithreaching out to the community. This team

spent alot of time developing materials, going to events and dreamingup new ways to reachpeople. One of theprinciples for public outreach and engagement that was includedinthetraining session onthe methodology at the outset was that cities need to go wherepeople are, not

simply to expect people to come to them. So the special team set uplemonade stands onthepedestrianmall andhad alocal team mascot there to enticepeople to come over and fill out thesurvey. They developed a specialguidebook for Imagineering Sessions that neighborhoodgroupscould use to have coffee table discussions about their collective future. They sponsored aphotocontest, turnedup at the cross-country7 solar car race and foundlots of new andinnovative waysto reach out to people who normally wouldn’tbeinvolvedinanything as specialized as cityplanning.

Page 176: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Illthe end, over 18,000 peopleparticipatedin creating the vision statement, one of the largestpublic outreach campaigns by a city inhistory. Even the effort made inNew York City to solicitcitizeninput into the redesign of downtown Manhattan after the WorldTrade Center attacks onlymanagedto reach 5,000 peopleinthe end. The way the city summarized all of this outreachintheir finalplanprovides a flavor of the enormity of the effort.

Developing the vision was a celebration of community participation andimagination! It was an

adventureinexploring values,building on assets andincorporating citizens5 hopes and dreamsfor the next 100 years. Based upon the success of Imagine Chicago and other communitymovements around the world, imagineCALGARY reached out to Calgarians using a variety ofstrategies. Over 18,000 responded via:

* theimagineCALGARY Web site (includingthe opportunity to complete the questions onlineinnine languages)

* imagineCALGARYbooths at more than a dozen festivals and approximately 364 events

* over 40 youthvolunteers spent approximately 425 hours interviewing150 communityleaders

* focused visioning sessions with oveT 60 groups from a range of diversity communities(ethno-cultural, seniors, low-income, urban aboriginals, disability groups)

* focused visioning sessions with 70 youthgroups

* about 30 sessions withCity of Calgary internalgroups; and

* over 40 CalgaiyQuest sessions (scenario explorationtool).5

Once all the responses werein, the next challenge was to compile them andtranslate all theinputinto a coherent, inspirational and above all concise vision statement. The city used a couple ofdifferent tools to do this. One was a computerized database of all the answers that couldbe

searchedby keyword so that themes inall the answers couldbeidentified.6 People were able to

enter their answers directly into an on-line survey,but one of thelessons learned fromtheproject was howfewparticipants actually didit this way. The city’s consultants workedto compilethe themes andproduced a report on the collective vision for the RoundTable and the staff.

The next step was to craft a statement that reflected the themes andwas inspirational enoughto serve as a collective value statement for the city. A small committee fromtheRoundTable was

Page 177: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

convened, and alocalpoet was hired to help do this. Many drafts wentback and forth; there was

much wordsmithing and revision to arrive at the final result.

Our vision for CalgaryFor thousands of years,peoplehave met at the confluence of two vital rivers to imagine andrealize their futures. Together, wehavebuilt a city of energy,born of apowerful convergence ofpeople, ideas andplace. Together, we continue to imagine Calgary-,making a community- inwhich

* We are each connectedto one another. Our diverse skills andheritageinterweave to create a

resilient communal fabric, while our collective spirit generates opportunity7,prosperity7 andchoice for us all.

* We are each connectedto our places. We treasure andprotect our natural environment.Magnificent mountainvistas andboundless prairie skies inspire each of us tobuild spacesworthy of their surroundings.•We are each connectedto our communities. Whether social, cultural or physical, thesecommunities are mixed, safe and just. They welcome meaningfulparticipation from everyoneandpeople move freelybetweenthem.

* We are each connectedbeyond our boundaries. We understand our impacts upon andresponsibilities to others. Our talent and caring, combined with a truly Canadian sense ofcitizenship, makepositive change across Alberta, throughout Canada and aroundthe world.

We canmakeithappen!

Withpurpose, drive andpassion, Calgary7 willbe a model city7, one that looks after the needs oftoday’s citizens andthose to come. We make imagination real; it’s the Calgary7 way. It’s whatwe’ve always done andwill always do.

Calgary7: a great place to make a living, a great place to make a life.?

The vision statement was further elaboratedby goals, which were organized around each of thehumanneeds within the different city7 systems. The goals articulated the endstate that Calgary7

Page 178: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

wantedto achievein100 years. Each of the goals was thenput into action through a series of10,

20 and 30 year targets, which were measurable steps to the goal, and thesein turn eachhad a set

of strategies to be usedto achieve the targets. All of this was writtenupin theImagineCALGARYLongRange Plan for Urban Sustainability, alongwith aplan to institutionalize theprocess,bothwithincity government andinthe community. To launchtheplan, Calgan7 attended the WorldUrbanForuminVancouver inthe spring of 2006, whereit was featured as a leader for urbansustainability for cities all over the world.

AwardWinningPlanSince the adoption of theplan, Calgary has won several awards for its work inthis area. TheCanadianUrbanInstitutepresentedimagine-CALGARY withits 2009Natural City Awardtorecognize the role theplanhas playedincreating a sustainable future for the community. Otherawards the city receivedinclude the Municipal Sustainability Innovator Community Award fromthe AlbertaUrbanMunicipalities Association andthe CH2MHillSustainable CommunitiesAward fromthe Federation of CanadianMunicipalities.

At the time of this writing,it is too early to say much about theimplementation of theplan,although work has been done to institutionalizeit into city governmentby creating a

Sustainability Coordinator inthe City Manager's office and to establish a formal organizationoutside of city government that willkeep community efforts going. The new coordinator's job isintentionally low-key; thegoal was not to develop a new department for sustainability, whichhasthe unfortunate unintended consequence of allowing other departments to assume that the job isbeingtaken care of without their involvement. Thepositionwillinstead continue to integrate thework of thebroad range of city departments and toholdtheir feet to the fire withrespect to thetargets that were set and refinedby the City Councilinto a shorter termwork plan for the city.

Calgary7 DollarsAs was the caseinBurlington, the City of Calgary- already had a complementary- currency- whenimagineCALGARYbegan. Called Calgary- Dollars, the currency- is a taxable currency- that existsbothinprinted andinelectronic form. Theproject is supportedby the Arusha Center, an

organization dedicated to social justice, the UnitedWay of Calgary7, andthe City of Calgary7 Family

and Community Support Sendees.8One of thebenefits to Calgary7 Dollars of theimagineCALGARY project was that its importance

Page 179: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

to the different goals and objectives the city established was articulatedinthelong-termplanthecity developed. This raised awareness among abroader range of stakeholders about the currencyandlinkedit to city objectives.

Plan-ItNewburghAt the same time Calgary was moving forwardwithits 100 year plan, another small city ontheHudsonRiver inNew York State — Newburgh — hired a new City Manager. Jean-AnnMcGranehadbeen aprofessor who taught sustainable developmentbefore she workedinNewburgh. Shewas interestedto hear what alocal organization called SustainableHudson Valley, ledbyMelissaEverett,hadto say about thepossibility ofproducing the state's first sustainable Master Plan.Gwendolyn was invitedto speak to department heads inthe city about the work that Burlingtonhad done, and a newpartnership was formedto beginwork on a stakeholder process inNewburgh.

The story of the two planninginitiatives inCalgary andNewburgh couldbe a tale of two cities,because they couldn't be more different.It was thebest of times inCalgary,it was the worst oftimes inNewburgh. Calgary7 was a wealthy city and couldbudget $2.4 million simply to producetheplanitself. They had a worker shortage and were looking for immigrants to fill over 16,000jobs that were available.Newburgh was animpoverished,boardedup, crime ridden pocket ofurbanblight — the construction of an interstatehighwaybypassedits downtowninthe1970s,

and the city hadbeenindecline ever since.Newburgh suffered fromhigh unemployment, doubledigit teenage pregnancy7 rates, a longhistory7 of corruption and almost feudalgovernance thatallowed a smallhandful of elites to use the city's resources to enrich themselves. An urbanrenewalprograminthe1960s hadbeenthe flagship of this effort;it displaced the AfricanAmericanpopulationwithout ever completing theprojects that werepromised, creating an openwoundinthe city that still festered 40 years later.

Thepopulation ofNewburgh was split three ways — AfricanAmerican, over % Hispanic(undocumentedillegalimmigrants made this statistic abit slippery7) and alittle less than v3 white.The city had a totalpopulation of about 32,000, so it was similar in size to Burlington. There was

enormous tension amongthe different groups, everything from serious gang warfareinthestreets to a take-no-prisoners approach to localpolitics that dominated City Councilmeetings.Convening a group of stakeholders that were truly representative of the differentparts of thecommunity and creating a shared vision was goingto be difficult. Gwendolyn figuredthat if shecould do it inNewburgh,it couldbe done anywhere.

Page 180: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Stakeholder RecruitmentFollowing theinstructions intheEarthCATbook, the first stepinNewburgh was to recruit a CoreTeam ofpeople who representedthe various constituencies inthe city. InCalgaiy, this grouphadbeen the advisory panel to the Mayor; inNewburghthis group representedtrustedmembersfrom each of the ethnic groups who managed to rise above ongoing strife.Nuns fromthe CatholicChurchhad already heard of the EarthCharter and were eager to help. The daughter of a

prominent pastor inthe AfricanAmerican community and a few other key citizens volunteeredto

help recruit stakeholders.The city planned a two-day training for the stakeholders, which was ledby Gwendolyn and

Melissa. The training covered the methodology for theprocess,but also included animportantsection onconflict management, listening skills, facilitation skills and dialogue.It also gave all theparticipants a lot of opportunity to interact with each other and to get to know everyone there —

plenty of smallgroup work andhands-on exercises demonstrating everything from cooperationand teamwork to systems dynamics.

The first group of stakeholders met for the training on a sunny dayinthe spring of 2005. Thelocalbank, whichhad a meeting roomthat offered abeautiful view of theHudsonRiver, madethe training space available — it was to become the main meeting room for the stakeholders forthe entireprocess. There were about 50 people there, representing everyone fromthelocalpolicedepartment to theleaders of a localgroup of street poets and rappers who wereknown for beingvocal opponents of citypolicies.

Even- training started withintroductions, despite objections fromthe staff inNewburghthat itwouldtake too long for 50 people to say a few words about themselves. Animportantprinciple ofadult educationis that people needto identify themselves to the group; they can’t be anonymous.Given the volatilepolitical situationinthe city, this was moreimportant than ever. People stoodin a circle and were asked to give their names, either where they worked or lived andto say one

thing aboutNewburgh that they thought was hopeful for the future. We also askedthemto thinkabout who was missing fromthe training and theplanningprocess that shouldbe there andto

make suggestions to us before the end of the training.This method of recruiting stakeholders came to be namedthe concentric circleprocess,

becauseit turned out to be so successfulinNewburgh. The trainees at the first session didsuggest other people to the city staffperson, Betsy McKean, who was thebackbone of theprojectas it moved forward. So after the first training, 50 more trainees wereinvited to the second, who

Page 181: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

illturnwere asked to suggest people for the training. A thirdtraining was held, and a fourth.Finally, during the fourth trainingthe stakeholders suggested that more youthbeinvolved, and a

special youthtraining was scheduled — by this timeit was summer and so a localyouthgroupcouldbe recruitedto accomplish this.

Inhindsight, whileit was a great idea to have more youthinvolved,it was a real challenge to

manage an entire training session filledwithinner city teenagers. At first,it was likepulling teethto get them engaged — the trainingwas so dependent onhands-on, smallgroup work thatengagement was not optional. Gwendolyn finally figured out that severalkids thought that theywereinthis session as somekind ofpunishment. This called for a changeinthe approach. Shereassured themthat, to the contrary, they were taking the trainingbecause someoneinthe citythought they might make goodleaders. She abandoned one of the modules scheduled for the firstmorning and walked them all over to City Hallwhere she gave them a chance to sit inthe seatsoccupiedby the City Council andlet thempretend to be the mayor. This impressedthem, andhelped thembe alittle more cooperative for the rest of the two days they spent with the trainers.

Lessonlearned: it is critically important to involve youthinthe training,but do it when a wholeroom of adults canhelpkeep them on taskbyhaving themparticipateinthe same training as theadults. The fact that the adults were required to take the same trainingwas one of theimportantpieces of information Gwendolyngave the youthgroup — this raised eyebrows andgot themto situp abit straighten Of course,beingin the same training as the adults would accomplish this samegoal.

Visioning QuestionsNewburgh foundthat the questions Calgary asked were relevant to their community, so theybegan apublic outreachprocess to ask citizens to answer them:

* What do youvalue about Newburgh?

* WTiat is it like for you to livehere?•What changes wouldyoumost like to see?

* WTiat are your hopes and dreams for the next too years?

* How canyouhelp make this happen?

It was a challenge to findways to reach out inNewburgh's roughinner city context. The localteam assembled to manage theproject included SarahFasti, a local advocate from across the river

Page 182: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

illBeacon and a couple of local residents who could devote time to outreach and committeeattendance. The Special Projects coordinator fromthe city was a contact personto helpcoordinate the group, along with thehardworking City Clerk.

Creative ideas abouthowto do the outreachincluded akickoff event during the annual fall arts

festival, using abus to visit the neighborhoods and do some canvassing, visitinglocal communitygroups and asking all of the stakeholders to participatebybringing the surveys to thepeople theyknew. Abasketballgame was heldbetween thepolice andthe school team, andthe cityprintedbuttons andt-shirts withthe Plan-ItNewburghlogo. (Plan-Itbeing ahomonymfor Planet — itwas a mild joke about the city)- Alocal team of activists was hiredto help with the outreachefforts, andtheypulledtogether an outreachplanto reach all the diverse and often dangerouslycompetitive sectors of the community. Community outreach canbe very challengingina citywheregangviolenceis high; truces have to be declaredbefore weddings that involvepeople fromdifferent neighborhoods canbeheldpeacefully.

The School SurpriseDespite all these efforts, severalmonths passedinthe fall, andnot a lot of surveys hadbeenreturned. People werebusy, some of theinitial enthusiasm for theproject hadfaded and thestakeholders hadn't really taken ownership of the visioningprocess. The December meetingarrived, and the staff of theproject weregetting nervous that there wouldn’t be enough surveys to

be credible as a statementby thepeople of the city about their values and aspirations.What we didn’t know was that while the rest of the stakeholders wereprocrastinating, one

young student namedVinny Gaetano took on theproject of getting student input into theplanquite seriously. Hehadgone to his principal, who inturn directedhimto the schoolboardtoobtainpermissionto distribute thesurveys to all the childreninthe schools. The schoolboardhadgivenhimthe OK, andhehadpersonally visited a lot of the schools with the surveysinhand.

He got up to speak at the meeting,holdinghundreds of completedsurveys fromthe schools.The stakeholders spontaneously brokeinto applause — you could feel the mixture of excitementand embarrassment as even-one realizedthat Vinny, age 14,had done more work than any of theadults to find answers to the questions. Fromthis moment on, things changed. The surveysbegan to comein from all quarters as people foundnew ways to circulate themto their peers andin their workplaces. The city decided to extend theperiod of time to collect the answers, to allowmore of themto be returned, andinthe end they had answers frommore than 2% of thepopulation — alevel that indicates that just about everyonehadbeengiven an opportunity to

Page 183: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

participate.

The VisionA small committee of stakeholders was formedto review all the surveys and draft a visionstatement for the city.It was a diverse committee, and the statement went throughmany drafts,some whichhadwordingthat spoke morepowerfully about the need for economic justice thanthe one finally ratifiedby thegroup.But given the challenges and divisions that continued to run

through city relations, the simple fact that such a diverse group of people settled on a sharedvision was a real accomplishment inNewburgh.

Newburgh, Queen City of theHudsonRiver Valley, offers spectacular views,historicarchitecture, and a vibrant culturalblend. We share a vision of justice andprosperity for all,health andvitality for our people, and our own distinctiveplaceinthe world.

Establishedby immigrants seekingliberty and opportunity, the city is a natural transportationhub — the river, rails,highways and airport continue to shape our economy and OUT lives. Builton accomplishments of thepast 300 years,Newburgh will foster the achievements of manyfuture generations.

Our city continues to renewitself as a clean, safe and caring city, where community thrives andindividuals flourish. A respected environment, an enterprising spirit, and the diversity of our

citizens will shape our future.Newburgh andits people willbeknownfor creativity,

compassion,prosperity andpeace.19

Even as the visionwas being drafted, changes inthe dynamics of localgovernment were

underway. Wheninterviewedby a local cable station during one of the events sponsoredby theproject, the City Manager describedhow the stakeholder traininghad changed the tenor ofdialogue at City Councilmeetings. She said that while a take-no-prisoners approachhadbeen therulein thepast, the level of respectfullistening and dialogue “changedthepolitical culture of the

Page 184: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

city.”10She wasn’t as happy about the changes a fewmonths later, whenthe newly empowered

stakeholders organizedinopposition to a decision the city hadmade about the location of a newcourthouse. One of theinevitable (and even desired) outcomes of aprocess wherepeople from a

city work together on a shared vision over timeis a renewed sense of cohesion that empowerspeople to take action andhold city leadership’s feet to the fire whenit comes to implementing thegoals of theplan. For the first time, a diversegroup ofpeople got together and successfullychallenged a decisionby the city that was seen as contrary- to their vision. An outside mediatorwas brought into facilitate a dialoguebetween the stakeholders and the officials fromthe city,and the decision was reversed.

The Power of CultureNothing short of culturaL change was requiredinNewburgh to make alasting differenceintheway the city worked, and cultural change does not happen overnight. Theplanningproject left a

legacy- of improved social capital that continuedto serve the city as it moved forwardwithmajorplans to redevelop the waterfront. Yet at the same time, the corrosive force of corruption andinequitablepower relationships underminedthelegitimacy and credibility of city government.

One of the clear recommendations fromtheprocess, for example, was a city charter changethat would eliminate at-large city council representation and realign councilors withthe old wardsystem. This would almost certainly increase thediversity of the council, since the city was

segregatedinto ethnic areas. The at-large system continuedto meanthat thepercentage ofrelatively wealthy, white councilors was higher than their proportionalpopulationinthe city.Sinceit is a rare moment whenpeople voluntarily give up their power base, this idea failedinNewburgh, and the Council refusedto move forwardwith this change.

On another front, a scandal erupted when one of thekey staffpeoplein the Code Enforcementdepartment was accused of sexualharassmentby a city employee who hadbeen activeinthestakeholder group. The evidence againsthim was compelling, andyet when presentedwith all theinformation, the City Manager chose to defend the supervisor rather than taking appropriatedisciplinary- action. Perhaps more than any other misstep, this underminedher credibility amongthoseinvolvedintheproject. The Code Enforcement employeeleft the city within a fewmonthsof the accusations,but not before the damage hadbeen done.

Newburghwent onto draft a Sustainable Master Planthat was adoptedby the City CouncilinDecember of 2008. One monthlater, the City Manager was fired; the scandals andbroken

Page 185: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

promises of tliepast combinedwithanunfavorable audit ongrants the city managed fromthe USDepartment of Housing andUrbanDevelopment (HUD) ultimately ledto her demise. A quotefrom one of the councilors illustrates the dilemma many leaders face whenmoving forwardwith a

substantial change agenda:

McGraneis “aperson of tremendous vision,” Bell saidTuesday. But Bell and others hadcomplainedthe ex-city manager triedto forceher vision forward, evenif that meant

circumventingthe council. “Imposeher will — that was Jean-AnnMcGrane,” Bello said.11

It is not sufficient to have a vision as a leader. Leaders mustknowhowto mobilize the wholecommunity- to establish a sense of collective vision, andthen they mustbe willing to move withthe community- toward a commongoal. This is necessarily a longer process than simply movingforwardwith an agenda of your own; it can:t be forced.It is possible to patiently rest assured thatthe final outcome willbe consistent with a sustainability7 agendaprovidingthat at the outset,people agree to frame theprocess as along-termplan, looking ahead 20-100 y7ears. This,combined with a reliance on collectiveknowledge and aspirations — the wisdom of the crowd —

shouldbe enoughto moderatehidden agendas andunsustainablehabits that tend to drive city7planninginthe wrong direction.

Newburgh's Complementary7 CurrenciesDuring the time of the Plan-ItNewburghproject, two different complementary7 currencies were

introduced. Edgar Cahn, the founder of the Time Bank system, workedwiththe city7 socialsendees department to start a Time Bank. Gwendolyn andBernard also workedwith the city7 todevelop ahousing currency7 of akinddescribedinChapter 5. Unfortunately, the corruptionscandals that dominated the city7 madeit very7 difficult if not impossible to actually implementtheseprojects. Onelessonwelearnedfromthis experience is that, no matter how effectively youbringpeople together,if the city7 government cannot be trusted, no innovative initiatives willwork.

envisioningMontpelierInJuly of 2006, Gwendolynhadreturnedfromthe WorldUrbanForumwhere Calgary7had

Page 186: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

unveiled their 100 year plan.Newburgh's planningprocess was drawing to a close as well, withthe actionplan duebefore the end of the year. Shepickedup thepaper one morning andnoticedthat theplanning director inMontpelier, whichis where she lives, was leaving. Montpelier is thecapital of Vermont, a small city of 8,000 people. Unlikelarger cities,Montpelier was unlikely tocallinconsultants to help them withlong-range planning — there just wasn't the money for it. Anattempt to do this a couple years earlier hadresultedina scandal as theprice of consulting timeflashedintheheadlines and contracts were cancelled.

Yet over thepast five years, Gwendolynhadnoticedthat the city wouldbenefit from a differentapproach to long-rangeplanning. Aproposal for housingin an open fieldto the east of the cityhad created an enormous public outcry as the neighborhood aroundthe fieldclamoredto save

the open space for parkland. To stop theproposed development, interim zoning was adopted andthe master plan was amended — all symptoms of anunderlyingplanningprocess that might notreflect the aspirations of thepeople. As a resident of the city since 2004, Gwendolynhadn'tbeenaware of any real outreach on thepart of theplanning office or the city to get residents involved.So she applied for the job and started work as the Director of Planning and CommunityDevelopment inMontpelier inNovember of 2006.

As it happened, Montpelier's Master Plan was long overdue for a major rewrite. The last timetheplanhadbeen updated with any level ofpublic engagement was in1995. The PlanningCommission welcomed theintroduction of aplanningprocess that broughtinahigh level ofstakeholder involvement, andthe enVisionMontpelier projectbeganin the earlypart of 2007. Atthe same time thePlanning Commissionproposed a new way of doingtheMaster Plan, the citywas threatenedwith flooding as anunusualice jaminthe downtown formed — the result ofincreasingly erratic climatepatterns. The need to approach city government differently inchanging times resonatedwithcity leaders inwaysit might not havebefore.

Fromthebeginning, enVisionMontpelier was framed as a learningprocess rather than a

traditionalplanningprocess, a new approach that resulted fromreflection about the workGwendolynhad doneinthe other cities andtowns where she hadworked. Rapid changeinthe21st century is already the rule, and so taking the traditional approach to planning — relying on

experts to provide short-term strategies based on what workedinthepast — willbeincreasinglyirrelevant as thelevel of chaotic change increases. Old solutions won't work inthe new worldwe

find ourselves in, and so the most important dimension of any sustainability planningprocess isto make all the stakeholders conscious of learning. Adults don'tparticularly like to be learners —welike to beknowers andteachers. Taking alearningposture to cityplanningis muchmore

challenging thanit might seem onthe surface — city planninghas traditionally been left to

Page 187: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

experts.

Learning our Way to the FutureAs inBurlington, Calgary andNewburgh, stakeholders were recruited and organizedintosubcommittees. The recruitment process was openedup to thepublic, andimmediately over 100

people signedup to participate. Some targeted recruitment was done to try- andinvolve minority-voices, elders, youth andkey organizational stakeholders,but evenhere a wide net was cast. TwoVISTA volunteers werehiredthroughthe Vermont YouthBureau, and their main charge was

youthinvolvement, so there was a special focus onrecruitingpeopleinhigh school and college.The subcommittees eachhad a member of the Planning Commission as a co-chair, andthen

the committees elected another co-chair usingtheSociocratic methodfor elections.12 All of theelected co-chairs, tworepresentatives fromthe PlanningCommission andthree representativesfromthe City Council formedthe Steering Committee for the enVisionprocess, whichwas

chairedby theMayor (as one of the City7 Council representatives).Each of the committees startedtheir workby creating a set of learning objectives, a list of

things they wantedto learn about the area of city7 life theyhad as a subject area. The sixcommittees for the first phase of theprocess included Social Systems, HumanDevelopment,Governance, Economics andLivelihoods,Built Environment andInfrastructure andNaturalEnvironment. As time went on, the Social Systems andHumanDevelopment committeesmerged,partly due to the overlapintheir subject areas andpartly due to the newinitiative to

create a Time Bank ledby the Social Systems committee that took all the members onto its new

Board of Directors.Thelearning objectives each committee developed framed the earlypart of their work, as they

identified different ways to learn what they neededto know about the assets andissues intheSocial Systems inMontpelier, for example, and to set goals for the different needs that wereidentified. The committees invitedprofessionals to come to their meetings and talk about theirwork; they readmaterial that was developed for themby the VISTA volunteers; they sponsoredcommunity7 forums on topics such as howthe faith community7 couldwork together or what thedemocratic townmeeting traditionwas likeinSwitzerland.

Each committee took responsibility7 for themonthly stakeholder meeting agendas as well,which were opportunities to invite speakers to give presentations or conduct exercises withthestakeholders to learnmore about a topic. So at the first stakeholder meeting about EconomicsandLivelihoods, the local, director of the Chamber of Commerce and a state expert on economic

Page 188: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

development were invitedto talk about their views of the economyinthe future. This resultedinthe Chamber director becoming an active stakeholder in theprocess, whichhelpedinsure a

balanced viewpoint inthe discussions.By the end of the first year of theproject, each subcommittee had drafted a set of goals for each

of thehuman needs includedintheir area, and thegoals reflectedboth the work they had donelearning about the topics and the visionthat hadbeengenerated for the city by the massivepublicoutreach campaign that was done duringthe sameperiod. During the secondyear of theproject,the committees took the goals and drafted targets and strategies that would enable the city to

achieve thegoals. Once this was complete, andthe descriptive work was compiled to describecurrent conditions, theMaster Planmoved forwardinto the adoptionprocess.

Montpelier’s Complementary CurrenciesThe three currencies thatMontpelier designed andimplemented as a direct result of the enVisionMontpelier project were describedinChapters 10 and11 — two different projects based ontheTime Bank model and a food currency. Businesses inMontpelier were also made aware of thenew Vermont Sustainable Exchange that is being developedinBurlington, so it:s possible forbusinesses to join a commercialbarteT system as well. Thereis no questioninMontpelier’s case

that the sharedvision for the future and the collective actionthat was mobilized as a result waskey to the success of these currency interventions.

MovingFromVisionto ActionAll of the cities discussedinthis chapter have followed apattern of activity that facilitates taking a

long-termvision andturningit into concrete actions to move a community toward the vision. Thevision often sounds too ideal for morepracticalpeople. One City Councilor inMontpelier was

always shakinghis head at the “utopian” ideal that the Master Plan was presenting to the city. Yetonce clear goals are defined andthen further refinedinto measurable targets and achievablestrategies, the vision comes into focus.PlanningPhaseTimeFrame Stakeholders

Visioning 6months-1year Broad crosssectionof thepublic

Goal Setting 6 months -1year Committees, withpublic input

6months-1year Committees, withpublic inputTargets

Strategies 6months -1year Committees andkeypartners

Page 189: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

FIGURE 14.1Planning — Activities and Timelines

Theinvolvement of key partners inthe strategy phase is one of the first steps to mobilizingtheresources needed toimplement theplan. Theplanneeds to account for activities that are alreadyunderway — it canbe a resource that describes the overall level of effort ina community towardthegoals. Thereis no needto reinvent the wheel. If the local college is alreadypulling an arts

calendar together, this canbe one of the strategies describedintheplanunder the appropriatetarget.If thelocalhomeless shelter is working to findtransitionalhousing for peopleinits care,be sure to mentionit inthe overallplan. Recognitionby the city of all the diverse efforts beingundertakenis actually a goalinitself,because a compendium of strategies citywide can also be a

resource that makes it easier to identity where gaps exist.One result of these efforts was a Montpelier City Master Plan, with ahorizon of100 years, that

was formally approvedby the City CouncilinSeptember 2010 andratifiedby the CentralVermont RegionalPlanningCommisioninNovember of 2010.

Community andResource MobilizationMaking real change takes time andmoney. The types of strategies we describeinCreating Wealthmobilize underutilized resources to meet unmet needs throughthe use of complementary7currencies, which can make thelimited funds youhave go alot further.There is never enoughmoney to do everything we want to do,but there often arehidden resources that can take theplace of money to implement important strategies.

If cities are going to play a roleinwealth creation for their residents, establishing thepolicy7framework that supports this role and clearly identifying strategies that incorporatecomplementary7 currencies sets the stage for successful city action. The planningprocessesdescribedin this chapter obviously address more than the issues complementary7 currencies can

help address,but theseprocesses are very7 important — they create a context whereinnovativestrategies whichrelyheavily on collective action arepossible.

Page 190: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

CONCLUSION

Toward a Monetary

Democracy

It is not the creation of wealth that is wrong,

but thelove of money for its own sake.MARGARET THATCHER

Localgovernments all over the world are struggling to promote economic development to providebetter jobs for their citizens, to create a more valuable tax base and to improve municipal services.Yet the ways inwhichlocalgovernments pursue economic development ofteninadvertentlyundermines thelong-term security of their community. The money andtime spent recruitinglarge, outside companies (in thehope of driving economic growth) oftenbackfires, leadinginsteadto the closure of locally ownedbusinesses, while at the same time redirectingprofits fromthelocal community to those of large corporations.

The resulting trends are well-known — large,big-box stores undermine small, downtownshops. Thepressure ofhigher insurance rates, labor costs and regulations, increased shippingcosts andthelack of economies of scalepushmore andmore smallbusinesses into the “failed”columnevery year. Whenthis happens, localmunicipalities areleft with alower revenuebase,whichinturn drives up taxes, the costs of water and sewer fees androadmaintenance for thelocalpopulation. When their low-income residents can’t pay, municipal officials have fewalternatives except to discontinue sendees or initiate tax sales onproperties.

Other troublingtrends exacerbate theproblem. Fewer people are joining civic and religiousorganizations, traditionally theglue that holds communities together. Thepervasiveness oftelevision andisolating entertainments like video games and computers undermine the socialstructures that supported community lifeinthepast.Newideas andnewinstitutions are needed

Page 191: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

to reinvigorate tlie social system andget peopleback out into the community, connecting witheach other and creating networks of support for everyone.

Localgovernments need ways to increase employment and to pay for local sendees likeeducation, child care,healthcare, waste management, fire andpoliceprotection, infrastructureand administration. Even after all exchanges facilitated through conventional moneyhavebeencompleted, there remain clearly a variety of unmet needs inour communities, and at the same

time there are underutilizedresources available that couldmeet those needs. As wehaveexplained earlier in Creating Wealth, complementary7 currencies allowlocalities andregions to

link suchunmet needs withunusedresources andthereby create additionalwealthinthelocaleconomy. They also provide a mechanism that ensures that this wealthwillbenefit localpeople,rather thanbeing siphoned off to distantheadquarters.

Wehave allbeen trained to believe that an economy requires a monopoly of a single currency7,

and thatbank-debt money is the only type of currency7 that is appropriate for a modern economy.Furthermore, anybody who has taken a coursein economic theory7 is convinced that money is a

passive mediumthat simply facilitates exchanges that wouldhavehappened otherwise anyway.Inother words, theimplicit hypothesis underlyingthe entire economic theory7 from Adam Smithto today is that differentkinds of money wouldn’t encourage different types of exchanges, don’taffect the relationships among their users or motivate different types of investments.Inshort, fora conventional economist, using another type of money doesn’t make any sense. That is of coursetrue when one compares the use of different national currencies: they7 are allgeneratedthroughbank-debt withinterest, i.e., they are all of the same type. But thereis plenty of empiricalevidence fromthe thousands of complementary7 currency7 systems in existence today that usingdifferent types of currencies does encourage differentkinds of exchanges, and/or significantly

changes therelationships among their users.1Many complementary7 currency7 systems areinfactintroducedwith the specific aim of changing relationships ina community, andthese systemshave demonstrated suchbehavior changes inpractice as well.

There are two ways to dealwiththis blind spot that afflicts our collectiveperception of money.The first way is to dealwithit explicitly7 by7providing empirical evidence; andthe secondis tobypass this entire issueby selective use of vocabulary7. There are two classical arguments to justify7the existing monopoly ofbank-debt money. The first is efficiency7; andthe secondis thatcomplementary7 currencies haveremainedinvariably marginal compared to the use of “real”money.

The Efficiency7 Argument

Page 192: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

The first argument runs as follows: having a single currency is more efficient interms ofpriceformation and of market exchanges. It:s easier and faster if everyone uses the same exchangeunit. This argument appears to be valid when first considered,because thebenefits of efficiencyare easily understood. However,it ignores theproblems that excessive emphasis on efficiencybrings. We can nowprove that too much efficiencybrings ahidden cost inthe form of thestructuralinstability of the entire financial system, of which the 2008 crashis only one recent

and spectacular example. As stated earlier, the WorldBank has identifiedno less than 97banking

crashes previous to that one, and178 monetary crises over a recent 25 year period!2Let us imagine that we introduce a law to enforceglobalmonoculture of a specific type of tree.

For instance,becausepines are consideredthe most efficient trees interms of growth, weban anyother type of tree worldwide. Weintuitively can feel that such abanwouldbe a recipe for disaster.Predictably, there wouldbe a fire, aninsect epidemic, a new disease — somethingwouldhappenthat would counteract this unnatural strategy. Suchmonocultureis nevertheless what we imposeinthe monetary domain.

Let us emphasize that comparing an economy and a natural ecosystemis not just a metaphorora reductionist comparison of two very different systems. Thereis one important characteristicthat a financial system, an economy and a natural ecosystemhaveincommon: they are allcomplex flownetworks. Abreakthrough research findingpublishedinpeer-reviewedliteraturehas demonstratedthat we cannowmeasure with a single metric the sustainability of any complexflownetwork independently of the nature of what flows through the system — beitbiomass ina

natural ecosystem, informationinanimmune system, electrons inapower distributionnetwork

or money in an economy.3 The reason is that sustainability requires an appropriatebalancebetweentwo emergent properties of such networks:

* Efficiency (the capacity for a systemto process volumes of whatever flows through thenetwork)

* Resilience (the capacity for a system to survive a shock or disease, or adapt to a changingenvironment)

This framework has been testedusing 25 years of quantitative data collected about howbiomassflows throughnatural ecosystems.Natural ecosystems happen to be our best examples oflarge-scale complex flow networks thathaveproven their sustainability over millions of years. Itturns out thatboth efficiency and resilience dependinturn ontwo structuralvariables of a

Page 193: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

complex flownetwork: diversity andinterconnectivity. Increasing efficiencies typically involvestreamlining theprocess, i.e., reducing diversity7 andinterconnectivity.

Inthe opposite direction,higher diversity andinterconnectivity7 tendto increase resilience. Asa consequence of this push-pullin opposite directions, a complex flownetwork willbesustainableif and only if its diversity andinterconnectivitybe within a fairly narrow range, a

window ofvitality.In other words,if thereis too little diversity andinterconnectivity, thenetwork will collapseina crash; if too muchit willbecome stagnant. Because thesekey variablesof diversity andinterconnectivity areboth structural, any complex flownetwork withthe same

structure will exhibit the same characteristics of (un)sustainability.These network properties explain why thebehavior of natural ecosystems is not a simple

metaphor of our money or economic system. The fact that our current money systemis a

monocultureis therefore apredictable structural cause for its instability.4 This anaLysis also turns

the efficiency argument onits head, as it is precisely the excessive emphasis on efficiency7 thatcauses lack of resilience. Similarly,blind emphasis ongreater economic efficiencies — whichfavor largest companies at the expense of the smaller local ones — explains theproblems that

local economies experience today.5 These articles provide scientific evidence for the claimthatthe stability of our financial andmonetary7 systems requires theintroduction of complementary7currencies.

MarginalRole of Complementary7 CurrenciesIt is a fact that for more than a century7, complementary7 currencies havebeenplaying only a

marginal role. However, this is not due to an intrinsic flaw of these media of exchange,but adirect result of policies activelypursuedby centralbanks to enforce the monopoly of bank-debtmoney. Whenever complementary7 currency7 systems become successful,political andideologicalstrings arepulledinorder to eliminate this “competition” by makingthemillegal. This happened

on alarge scale, for instance, in the1930s inthe US, Germany andAustria.6 And the sameattitudeis stillpresent today.For instance, a detailed study of the regional currency7 movement inGermany was performedby the department of economics of the Bundesbank, the German centralbank. Init,Dr. Rosl showedthat current regional currencies represent only a fraction of 1% of thetotalmoney supplyinthe country7 and therefore weren’t worth eliminating.Inother words,ifthey ever were to growbeyondmarginality, the assumption was that action shouldbe taken to get

rid of them.77Thereis,however, another more permanent mechanismto maintain the monopoly of

Page 194: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

bank-debt money as legal tender. Economist JohnMaynardKeynes made thepoint thatbank-debt money wouldhave disappeared a long time ago if it weren’t for the fact thatgovernments require all taxes and fees to bepayable onlyinthatparticular currency. Theirony ofcourse is that this rule can cripple governments as they needto borrow any funds fromthefinancial systeminorder to obtain the money that they can’t raiseintaxes. Thereis a wholeschool of economic thinking — the Chartalist School — thatproposes that the monopoly of

creating money shouldbe exclusively a governmentalprerogative.Althoughwe can sympathize with the Chartalist criticismthatit is an anomaly that the creation

of money — something that should clearly be considered as a commons — has beenprivatizedinfavor of thebanking system, their solution of creating a monetary7 monopoly infavor of thegovernment doesn’t address our finding that we need a diversity7 of currency7 systems. We claimthat replacing aprivate monopoly with a governmentally controlledmonopoly wouldnot resolvethe structural instability7 of our monetary7 system. Instead, a structural solutionrequires a

democratic monetary7 ecology7, where a diversity7 of currency7 systems of different scales andfunctions wouldthrive.

Therefore, our recommendationis to keep thebank-debt money sy7steminplace, withwhatever reforms that are judgeduseful.But thereis no reasonthat governments, including city7governments, couldn’t require some taxes to bepayable only ina currency7 thatit issues itself,without interest, to address specific needs. That is also why the most effective way for a

governmental entity at any level to encourage the acceptance of any complementary7 currency7 isto require thatitbe used for payment of a tax. As showninChapter 9 with the example of the

business-to-business complementary7 currency7, the first country7 to have followed this strategy7was Uruguay.

3

The Bypass ApproachThere is another approach which avoids the entire theoretical debate about complementary7currencies, andthereby does not draw the attention of theinstitutions incharge of guarding themonetary7 monopoly. After all, the airline industry7has successfully launched andmanaged fordecades the frequent flyer miles systems and without ever usingthe words “money” or

“currency7.” These loyalty7 currencies are nowthe largest complementary7 currency7 systems in the

world andhavegrownwithout any interferenceby monetary7 authorities.9Inretrospect,it might bebetter to describe complementary7 currency7 systems as “information

systems,” “social incentive schemes” or something else that doesn’t include the words money or

Page 195: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

currency. As everybody agrees that we are moving towards aninformation society, doesn't itmake sense for us to equip ourselves with some additionalinformation gathering mechanismsthat go beyond the oldindustrial agebank-debt money system?

A Vision for a Vibrant LocalEconomyWe finishedwriting this book inReykjavik, Iceland,ina country whichhadrecently experiencedone of the first 2lst century monetary system crashes inthe wake of the 2008 stock marketdisaster. As a result, a newpoliticalparty andmany informal adhoc groups had startedto askquestions about the financial system and to propose ways inwhichit mightbe changed. Therewas talk about organizing a symbolic AIthirtgi — the world's oldest continuously operatingParliament which took place as ahuge annualgathering at Thingvelleir for more than a thousandyears — to declare the world's first Monetary Democracy.Onegrouphadtheidea that the City ofReykjavik could establishits ownbank so that the city could take advantage of thelowinterestrates offered to the regular banks by the centralbank. A city ownedbank would secure the city a

line of credit fromthe centralbank. The city then could use the credit to pay back its loans thathavehigher interest rates thanthe centralbank and save the difference. Just a drop of 1%ininterest rate couldmean significant savings for the city andits inhabitants. Still another groupwas taking alook at the country’s constitution, to try to restructure the way the financial systemworked. There were lots of questions being asked as people struggledwithhigher mortgage andtax payments andhigher unemployment than the countryhadknowninhumanmemory.

Intheland of ice and fire,perhaps people will achieve their vision of a more democraticmonetary system. Givenhow accustomed we are to the current system, it’s hardto imagine whata new one might look like, especially inlight of all the questions whichwould challengeit asittries to beborn. Yet eveninIceland, there are deep memories of earlier days whenmoney didn'tdominatepeople's idea of wealth. Weheard stories of breadmoney, wherepeople wouldbringtheir corn to thebaker and receive tokens they could exchange for breadlater on. The tokenscirculatedlike regular currency, as people tradedthemfor other things they needed. The timewhengovernmenthad set thebarter rates for the exchange of agriculturalproducts and fish —

howmany fish were the equivalent of a lamb, for example — wasn't too distant a memoir.Moneyas weknowit was seeninthe not-too-distant past as another product of trade — people neededitto buy things from overseas,but they didn't needit toliveintheir own communities. So they“bought” money frompeople who traded overseas with theproducts that served as the currencyinIceland — fish, wool, mutton andlamb.

Perhaps the next time we visit Reykjavik, they willhave recreated their own democratic ecology

Page 196: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

of currencies, instead of the monocnlture/monopoly ofbank-debt money thathas brought themso muchhardship. To reduce unemployment andrevalue all of their residents, the city7 may haveintroduced a mandatory7 time contribution, not paidinbank-debt money,but rather using an

electronic time currency7 similar to the JapaneseFureaiKippu, as a way7 to simultaneously7 reducetaxes andgivepeople work to do. A time currency7 reduces taxes becausepeople spendtheir timedoing things government pays money for — education, senior care, child care,healthcare,keeping theparks andthe streets clean, community7 justice systems where mediation reduces theloadinthe courts. Time currency7 reduces unemployment because not eveiy7one can spend timeonthese things. People who are willing and able to work above andbey7ond the time requirementcouldbepaid for their timeby those who are not. An e Bay type electronic market could emergewhere the city’s time currency7 couldbe sold for bank-debt money or whatever elsepeople are

interestedinexchanging.Meanwhile, the time exchange system could also include many goods and sendees thatpeople

needintheir lives.It wouldn’tbelimited to tasks thelocalgovernment needed to perform. So ifLeifur enjoys givingpiano lessons but doesn’t enjoy weedinghis garden,he could offer lessons inexchange for gardenwork. Or perhaps Bjork makes very7beautifulhandcrafts — she could offerthehandcrafts for a mix of time andmoney. Bjork could then spend the timeportiononwork sheneededto have done repairingher house, and the money couldpay for the materials.

As we walk down Reykjavik’s main shopping streets during this hypothetical future visit, wecan see that the merchants are prospering, and there are no obviously unemployedpeoplehanging around, looking as if they hadtoo muchto drink the night before. This is because thebusinesses have come together to form a commercialbarter systemlike the onein Switzerland,whereinstead of takingbank loans to meet theiT cash flowneeds, they exchange debits andcredits with each other at minimal or no interest,knowing that the systemwillbalance out intheend. Their new commercialbarter bank, named after Sigridur, the woman who steadfastlyrefusedto cooperate with foreign investors who wantedto turnGulfoss (a spectacular waterfallinthe southernpart of the country7) into ahydroelectric dam, offers loans to help businesses getstarted andfor thepurchase of real estate. Businesses are no longer burdenedwithhighinterestdebt, so their owners are muchmoreprosperous as a result andhave more time to enjoy thescenic beauty7 of the spectacular island.

Another reasonthatpeopleinReykjavik look healthy — we notice that there are a lot fewerpeople smoking cigarettes than thelast time we werehere — is because of the wellness tokensystem that was introducedby the nationalhealthinsurance sy7stemback after the declaration ofmonetary7 democracy7. People who engage inhealthy habits get tokens they can cashinfor

Page 197: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

reduced taxes. So many people quit smoking, exercise regularly,bicycle to work, eat healthy foodand follow doctors orders onhealth regimes.

Greenhouses heatedby the abundant geothermal energy availablehere are everywhere, andfoodthat is growninthese greenhouses has replaced food that the country usedto import. A foodcurrency system similar to thebreadmoney of oldmakes it possible for all thepeople who workin the foodindustry- to make a good thingand makes the cost of foodfor peopleinIcelandmuchlower inmonetary- terms.

Thelocal currencies have also madeitpossible for theisland state to dramatically reduce theirdependence onforeign oil, as local renewable energy7 has increasedinvalue. This is a result of thecarbon credits and energy credit trading system that was introduced on a national scale, whichpayspeople for doing things with alow carbonimpact. The newfund created with this energy7

currency7has madeit possible for innovators andinventors to come up withnew ways to use thenatural energy7 on theislandfor transportation (electric cars andbikes are everywhere, andthereis a thriving cottage industry7 convertingnormal cars andbikes to electric vehicles), for electricity7and for heat.

This visionis within reach, not only inIceland. Allit takes is a group ofpeople with enoughenergy7 and courage to start something new andkeep at it despite the obstacles that arise. Wemust remember what Margaret Mead said:

Never doubt that a smallgroup of committedpeople can change the world. Indeed,it is theonly thing that ever has.

Page 198: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

APPENDIX

The Community CurrencyHow-to Manual

To create a community currency, you needto:l.Do an assessment of your community in whichyouidentify thepriorities for matchingunmet needs withunderutilizedresources — this will determine the objective of thecomplementary currency7project you do.2. Buildlocal support for the community currency7 system, which means finding a group ofpeople at the outset who canhelp with different aspects of theproject.

3. Reviewthe different complementary currencies mechanisms that are available, and choosethe type or types that best suit your needs.4. Establish a system for managing transactions inyour community — this system cantakemany forms, depending onthelocalresources available and the type of currency7 you select.

As describedinearlier chapters, complementary7 currencies canhave a social or business purpose.Identifyingthe needs youhave, thepurpose for the currencies youplan to introduce andthesystems youneed to haveinplace to make them work are the first steps inestablishing thesecurrencies inyour local community7.

Evaluating Currencies to Meet Your Needs

There are a wide variety7 of unmet needs-.•Social needs such as elder care or youthmentoring

* Economic needs like unemployment and underemployment

Page 199: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

* Commercialneeds likehelpingthelocally ownedbusinesses to better compete against themultinational chains

* Ecological, cultural or educational needs like supportinglocalnonprofit organizations,community or regionalidentitybuilding.

Similarly, underutilized resources canbe foundinthe most unexpectedplaces:

* Any unemployedperson who is willing and able to do somethinghas some unused capacities

* The next timeyougo to your neighborhoodrestaurant or moviehouse, count the tables andchairs that are empty: these are all unused resources that couldbe mobilized for your purposes

* Schools or other buildings that are empty duringpart of the week or the year

* College,university or vocational courses

* Youth organizations and other nonprofits thathavepeople ready to do things if supplies are

provided

Theideais to design complementary currencies that use the underutilizedresources andmobilizeto meet the unmet needs of your community.

Remember, the startingpoint for complementary currencies is to meet needs that remainunfulfilled after transactions facilitated with conventional moneyhave takenplace. Similarly,unused resources are those thathaven't beenusedin economic transactions mediatedbyconventionalmoney.

Beginning Currency- DesignThere is not one “ideal” design for a complementary currency7. Almost even7 design characteristichas advantages under certain circumstances that canbecome disadvantages in others. Thebestdesign for your community depends on what the objectives youhave set for the medium ofexchange and the conditions undeT whichithas to operate. Various objectives canberelevant to

implement a currency7 system, such as the functions the currency7 is supposed to serve, the type ofconcern it addresses or thepeopleit aims to involveinexchanges.

LegalTender

Legal tender is the currency7 that the government of a country7 accepts as payment in taxes.1For

Page 200: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

example: “This noteis legal tender for all debts public andprivate’1isprinted on even- US dollarbill. What this means is thatif you owe someone money inthe US and she refuses your offer to

pay withUS dollar bills, you canwalk away and simply declare your debt void.If needed, thecourts willback youinsuch a declaration. Oneparticularly important type of debt that almosteverybodyincurs is taxes, andtherefore legal tender means inthis context that the government ofthe country- inquestion accepts only this type of currency- inpayment for taxes.Normally, only

conventionalnational currencies are defined as legal tender.2Theprincipal coercive feature of legal tender is that no matter howmuch exchange value you

earnin various types of complementary7 currencies,if you can’t pay your taxes in them, youhaveto find a way to earn legal tender.It gets worse, of course,if transactions in complementary7currency7 incur taxes inlegal tender.Inthe United States,bothcommercialbarter andinformalbarter systems generate what is considered taxableincome, so this taxationhas served as a

disincentive to their use.

CommercialPurpose CurrenciesThere are a wide variety7 of commercialpurpose currencies that are definedby the kind ofexchange relationships they are designed to encourage. The four main categories are:

* Business to Business (B2B)

* Consumer to Consumer (C2C)

* Business to Consumer (B2C)

* Consumer to Business (C2B)

They typically take electronic forms (see classificationby support mediumbelow), offeringdramatic cost reductions due to dataprocessing technologies over thepast decades.

B2BThese complementary7 currencies usually are exchange units createdbybusinesses to facilitateexchanges with suppliers and wholesale customers. For instance all the contemporary7commercial barter currencies fallinto this category7. There are well over 500 such commercialbarter systems,particularly intheUS, regrouped under two trade associations: the InternationalReciprocalTrade Association (IRTA) and the Corporate Barter Council (CBC).

Page 201: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

B2CThe most widespread category of complementary currencies today is loyalty currency issuedby a

business or a group ofbusinesses to encourage clients to return to them. Frequent flyer miles are

thelargest such system today, with1.5 trillionmiles issuedyearly worldwideby five major airlinealliances. One older and still very- commonpaper-basedvariety- of such systemis the ubiquitousdiscount voucher redeemable for goods or sendees inretail shops and supermarkets.

C2CAt somelevel, one can describe animportant part of the conventionalpayment system managedby thebanks (i.e., checks, cashpayments) as a commercial C2C system. Outside of thebankingsector, the PayPal™payment systemis a successful example of this approach extensively usedbythe e-Bay online auction system, althoughit exchanges only conventionalmoney at this point.

C2BAninterestinginnovationby StrohalmFoundationintroducedinAmsterdam, theNetherlands,

El Salvador, Uruguay andinthe SouthBrazil is called Consumer and Commerce Circuits or Cÿ.3It is anInternet-based systeminwhich somebasic rules guarantee soundperformance andinter-Cÿ-exchange,but most of the details inany system are decidedlocally. Consumers buy

vouchers with a locally establishedpremium(varyingbetween zero and10% to encourageconsumers to join) withconventionalmoney fromthe network. The vouchers are used to pay

for goods and sendees providedby member businesses. Thebusinesses can use the vouchers to

pay other businesses members of the network or can cash theminat against a small fee

(similar to the Save Australiaproject).Usingthis system,businesses obtain customers they wouldn’t get otherwise andimprove

customer loyalty ingeneral. The float (inconventionalmoney) accumulatedinthe systemishandledby a localbank which uses it to offer low-cost financing for member businesses or

projects. Consumers get loy7alty discounts andhelp make decisions about the way their money isbeinginvestedinthe community7because consumers andbusinesses allget an equalvoteinthemanagement of the system; and there are more consumers thanbusinesses. This, and the factthat consumers areinitiatingthe creation of the complementary7 currency7by buyingthevouchers, justify labeling this approach as a newtype of commercial application: a Consumer toBusiness (C2B) financialproduct.

Combinations of the Above

Page 202: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

There are also successful combinations of the above like currencies issuedbybusinesses that are

used amongindividuals as well. For instance, the WIR systeminSwitzerland or the WAT system

inJapanfallinthis category.4

Social Purpose CurrenciesThebulk of socialpurpose currencies arehighly focused on specificproblems or social classes,ranging from elder care to employment or education. Here are some examples.

Elder CareThe very firstpost WorldWarIIcomplementary currency systems were conceivedin1950 by and

for women5 in Japan for the care of elderly, children and disabledpersons. These women alsocreated the first Volunteer Labor Bankin1978, aprototype that was later reinventedinthe West(in the US and theUKinparticular) as Time Banks.InJapan, theFureaiKippu systemis todaythe direct descendant of those earlier pioneering systems.

RetireesSome of the first Time Bank applications in the US were implementedby Edgar Cahninretirement homes and encouraged self-help activities among retirees. The time currency alsocreated stronger community ties.

EmploymentThe first LETS systems originatedinCanadain1982 aiming specifically at currency scarcity inareas withhighunemployment. Still today, most LETS systems tend to flourish in areas withhighunemployment.

EducationThe Brazilian Saber describedin Chapter 6 is a complementary7 currency7 designed to stimulatelearning and teachingby youngsters among each other.

ChildCare (Baby-sitting)There is a long tradition of more or less formalbut small scale localbabysittinggroupsconstitutedby families who in turntake care of each other's children. Alarge, national-scaleInternet-based systemis being designednowinHolland, under the name of “Care Miles.” Its aimis to help the 2.3 millionfamilies who have trouble finding access to care centers,particularly for

the 0-4 year olds.6Community7 Building

Page 203: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Communityhealing and rebuilding are the most popular reasons for starting complementarycurrency systems in neighborhoods where there are no major unemployment or economic stress

situations. Various designs havebeen used for suchpurpose, includingTime Bank systems,LETS andIthaca HOURS. The Balinese time currency describedin Chapter 4 could also beconsidered a well-established system of this nature, operational for more than1,000 years.

Identity ReinforcementReinforcing the feeling of belongingto aparticular community or areais one of the secondaryreasons that some complementary currencies were introduced. For example, the logos onIthacaHOURS proudly claims “InIthaca we trust,” andmost paper-based complementary currenciesprominently featurelocallandmarks,plants or history as a means to reinforcelocalidentity,

EcologyApplications of complementary currencies specifically for ecologicalpurposes have remainedsurprisingly rare so far. One exampleis theNU smart card system usedinRotterdam,Netherlands to reward ecologicalbehavior (usingpublic transport,buyingmore energy efficientdevices,buying abicycle) Green-points are charged on a smartcard, and thesepoints canbe usedto get discounts inthe same type of activities, thereby creating a doubleincentive to behaveinan

ecologically responsible way. Aless successful modelis the Earthdaymoney project intheShibuya neighborhood of Tokyo inJapan, startedby a major advertising firmto honor peoplewho are contributingto the ecological sustainability of the area. A Japanese currency called

“ecomortey”7has played animportant roleinthe acceptance and use of complementarycurrencies inJapan,becauseits originator, Kato-san, was originally working for theMITI(Ministry of InternationaL Trade andIndustry), andthereby obtained substantialmulti-yearfunding fromthegovernment. Over 40 substantialprojects were launchedin this way, thathadincommonto be operated for 3 years as experimentalprojects. As far as weknow, therehas notbeen apublicly available analysis of the results of all these experiments. However, despiteitsname, thepurposes of the currencies vary, and only a few of them are specifically for ecologicalpurposes. One exception of an ecologicalproject was the use of eco-money to give an incentiveand track the reduction of the useplastic bags during thebig 2005 internationalexhibitioninAichiPrefecture.

Other SocialPurposeOne could theoretically continue almost adinfinitum alist of specialized social functions forwhich complementary currencies couldbe implemented. Indeed, the whole field ofcomplementary currencies is sometimes labeled as “social money.” So the above list is mostly

Page 204: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

indicative ofprojects that already do exist somewhereinthe world, rather than what couldbedesignedin the future.

Mixed Social PurposeOne could of course easily combine several social objectives, such as having thepossibility to earn

credits through ecological support activities, anduse themfor obtainingbaby-sittinghours or

other combinations of the above list.

Critical Organization, Skills andPracticesOnce youhave chosen VOUT objective, youneedto recruit a team ofpeople who canhelpimplement theproject. The teamwillbe suggestedby the objective itself, since thepeople youwillneed for implementationmusthave connections with the needs and resources identifiedintheobjective. Here are some examples:

Social Purpose Currencies

Elder CareThe teamyouwill needincludes organizations that:

* are currently involvedwith care for the elderly* recruit and deploy volunteers

* have other underutilizedresources relatedto the elderly — fitness facilities, restaurants,beautyparlors, educationalprograms

* have older people as members or clients

EmploymentThe team shouldinclude:

•state serviceproviders for the unemployed

* unemployedpeople* organizations that recruit and deploy volunteers

* businesses andgovernment employers

CommercialPurpose Currencies

Business to Business (B2B)The teamyouwill needincludes:

Page 205: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

* business leaders

* business organizations — the Chamber of Commerce, industry associations

* localgovernment,•business support centers — incubators, industrialparks•businesses that specializeinbusiness services — temp agencies, accounting firms

Business to Consumer (B2C)The teamyouwill needincludes:

* business organizations

* civic groups — Rotaiy Clubs, churches,hobby clubs

* retailbusinesses•localgovernment

The teamis neededbecause one of the critical elements of success for a community currency isdirect contact with andinvolvement of the target audience.If your objective is to have a realimpact on the social or commercial sector youhaveidentified, the stakeholders inthat sector

need to be actively involvedin the design andimplementation of the currency. As ideas come to

fruition, youwill discover other people youneed on the team, likebankers,printers or othercompanies. Don’t hesitate to expand the group — the morepeople who have a voiceinhowthesystem willultimately work, the morelikelyit is that it willbe successful.

Workingwith a team, especially a teamwith diversebackgrounds andperspectives, canbe a

challenge — there are many skills that can make the work more effective. Alothas been writtenabout leadership, listening, conflict management, meeting facilitation andintroducinginnovation, and there is no need to repeat it allhere. GlobalCommunity Initiatives offers a free

resource guide to all of these community organizing skills.3

SelectingMechanisms for Complementary CurrenciesOnce youhave convenedthe Community Currency7 Team, there are several aspects of thecurrency7 youneed to consider to design the system youneed:

1. Support Medium

Page 206: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

2.Function

3. Issuing Process

4. Cost Recovery Mechanism

Each of these considerations will first be defined, andthenwe:ll identify the choices availablewithin each category7. We will also briefly identify advantages and disadvantages of each one ofthese choices. Inthe conclusion of this appendix, we willmap some real-life currency7 systemsaccording to their characteristics.

The startingpoint for a general typology of complementary7 currencies systems is our workingdefinition of currency7 as “an agreement within a community7 to use something as a medium ofexchange.” On thebasis of this definition, one can identify as currencies a wide range of socialtools thathadbeen, are currently or couldbe used as medium of exchangein the world.

Support MediumThe support(s) used for issuing or handling a currency7is one of the easiest features to grasp — we

are familiar withthe various forms that currency7 comes in — notes, coins andplastic cards, giventhat conventional money uses practically all of themtoday. These supports fallinto the followingtypes:

Commodity7 MoneyCommodity7 moneyinhistory7 took an extraordinary7 wide variety7 of forms. For centuries, societieshave successfully used salt, eggs, cattle, textiles, various handicrafts, ingots of various metals anddozens of other items as currencies.Inmodern times, duringWorldWarIIcigarettes were usedas currency7inprison camps inmany7places. Today, the charcoal currency7 of Osaka, Japanis a

contemporary7 example of that tradition.

Page 207: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Paper and Coins

Paper and coins are tlie most familiar form of money today. Paper is the most popular form forcontemporary complementary currencies becauseit is both easy to carry andhandle andcomparatively cheap to produce (e.g., Ithaca HOURS, WATbills of exchange, LETS accountbooklets).

Electronic MediaElectronic media include smartcards, a central computer runningthe accounts or Internetnetworks — or for large systems, mainframe computer systems. Over thepast four to fivedecades, most conventionalmoney has takenthe form of computer bites, and complementarycurrency systems havebeen following this path as well.

MixedMediaWhen several media are used for the same currency, this provides maximumflexibility. Thehistorical evolution of conventionalmoney has traced alogical sequence towards moreconvenience: currency started withphysical commodity money (such as precious metal coins),but nowit is more convenient to handlepaper receipts withpromises to pay that physicalcommodity (“Iwillpay to thebearer the sum of one Pound Sterling” is stillwritten on the Englishcurrency bills). And of course,if the appropriate technologicalinfrastructure is available,electronic bits are even cheaper to move around thanpaper currency. The same currency can andoften does tahe different forms depending on the media that supports it.National currency takesmany forms: electronicbits,paper or coins.

The advantages and disadvantages of each of these media arerelatively straightforward.Commodity currencieshave an advantage that one doesn’t need alot of social or legal

infrastructure to make them work — it is the only currency that can operateinextreme

circumstances such as civilwar, social or economic chaos. Such currency canbeliterallyconsumed directly by the recipient as a last resort, andit is also most impervious to

counterfeiting. Its inconveniences are also clear: it may notbe easy to create, andit canbeinconvenient to store,handle andtransport as well.

Paper currencies,in contrast, are among the easiest to handle and are cheap to produce. Buttheyhave as downside — they can also more easilybe counterfeited. Withhigh qualityphotocopying equipment available to almost anybody today, security is aperpetualissue forpaper currencies. Even for complementary currencies, this issue needs to be addressed as soon as

a currencybecome successful enoughto makeit worthwhile for someone to counterfeit.Electronic media are fairly familiar by now. PCs are the most common support for small to

Page 208: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

medium-sized complementary currency systems, and are satisfactory- if onehas access tophonesand other communication means to convey theinformation to thepersonhandling the PC. Thedownside of these media is that processing the transactions canbelabor intensive. Internetconnections inwhich the users update their owntransactions reduce the cost of overheadbutcreate additional risks for fraud, andnot everybody has an easy access to a computer. Smartcardscombine the advantages ofboth,but require readers that areboth expensive andnot commonlyfound anywherebutinEurope at this point. Thebest electronic solution wouldbe to have thecomplementary7 currency7piggyback on another smartcard application, such as apublic transportorabank smartcard. That way the marginal cost of adding the complementary7 currency7

applicationbecomes very7 reasonable.Mixedmedia is of course ideal,because one cantailor the advantages of each formto whatever

the specific application of the currency7. But as a downside one should remember that,particularlyfrom a security7 viewpoint, the weakest media will endup as the weakest linkinthe entire chain.

Functional ConsiderationsThe three most important functions of money according to classical economics are standard ofvalue, medium of exchange and store of value.In most ofhistory7 these three functions were notplayedby the same currencies. For instance, many cultures havehad standards of value differentfromthe medium of exchange. One important unit of valueinancient Europe usedto be cattLe —

Homer (8th century7 BC) wouldinvariably express values inoxen. However,payments were oftenmade ina morepractical media such as standardizedbronze ingots,gold or silver bars andlatercoins.

All currencies can thereforebe classifiedinterms of the number andkinds of functions theyare designed to fulfill: Standard of Value,Medium of Exchange, and Store of Value.

Standard of ValueThe first classical function of money is as a standard of value that enables one to comparepricesof theproverbial apples and oranges. The majority7 of complementary7 currencies actually don’tattempt to set standards of value at all; their unit of account is denominatedinterms ofconventionalmoney, leavingthe standard of value function entirely to conventionalnationalcurrency. There are of course exceptions, examples of whichwillbelistedbelow. Since the end ofBrettonWoods sy7stemin1971, thereis no longer a singleinternational standard of value.

All currencies canbe classified as follows interms of their function as a standard of value.

Page 209: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Reference to ConventionalMoneyMany local complementary currencies use as unit of account a conventionalnational currency,Most systems use logically the currency of their own country as reference,but in case of troublewiththenational currency some other country’s can also be used. The former is the case forinstance for most LETS-type systems (e.g., GreenDollars inCanada or Australia, or Bobbins inManchester) and also for themajority of the systems wherelocalbusinesses participate.Examples of thelatter include the dollar being usedin South America or theEuro inthe formerYugoslavia,

Time DenominationCurrencies denominatedintime (hours, minutes) are the secondmost popular unit of account,

Its systemis the one usedby Time Bank systems andby the JapaneseFureaiKippu.

PhysicalUnit DenominationCurrencies canbe denominatedinsome physicalunit.Inthebest known commercial loyaltycurrency, the airlinemile system, theunit of account is a flight of the distance of one mile.Among other contemporary examples let us mention some Japanese models: the WAT (whoseunit is equivalent to the value oflkWh of electrical current generatedby citizens’ cooperativesthroughrenewable energies such as wind, water, sun), thegram of charcoal used as bio-regionalunit inOsaka or the crop denominated currencies of the “leaf ”unit inYokohama or Kobe.Historically, the Wara currencyinGermany inthe1920s and early 1930s was similarly

denominatedinkg of coal.9

Comparative Advantages of Different Standards of ValueCurrencies which refer to conventionalnational currencieshave familiarity as their mainadvantage. They also avoid forcing shops andbusinesses to deal withmultiplepricing systems —

oneindollars, one inlocalunits. Particularly when the national currency is a stable one, such a

choice makes alot of sense (e.g., the WIR currency inSwitzerland equivalent to one Swiss Franc).The downsideis of course that if the national currency gets into a major crisis (e.g., theRussianRublein1998), the complementary currency risks going downwiththenational currency.

Currencies using time as unit ofaccount make most sense when sendees are the most typicaluse of the complementary7 currency7. Sometimes there is a misunderstanding that “everybody’stime is supposed to be of the same value” for such a unit to work well. This isn’t actually true:nothingimpedes a dentist to ask customers for instance fivehour units for onehour of work as

her or his activity7 requires longer training and expensive equipment compared to onehour of“unskilled” labor.

Page 210: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Time currencies also automatically avoidbeing caught upina crash of the national currencyand can make it easier to make exchanges with other time-based systems. Their downside is thatit may require multiplepricing (how many hours for a dozen eggs?), something thatbusinessesinparticular don't like. One easy way to solve this problemis to ensure that the timeunit isroughly equivalent to aroundvalueinconventional money (that is why oneIthacaHour isequivalent to US$10 or one WATinJapan to 100 Yen).

Currencies using aphysicalunit ofaccount such as miles, grams or kilos of somethinghaveadvantages similar to the time currencies. Often suchunits provide a ‘Tealphysical connection,”andif theproduct involvedis widely used andproducedin an area, it makes the currency logicallybioregional. Whilephysicalunit currencies have the same issues withpricing as time currencies,thepotential solutionis also the same.

Medium of ExchangeFor currencies that are not playing the role of standard of value (i.e., the majority of thecomplementary currency systems), the function of medium of exchangeis the most importantone. The ease and costs of their use as medium of exchange depends predominantly on thesupport medium usedinthe currency. Hence, this aspect has alreadybeen dealt with above,whenwe described different supports.

Store of ValueThe last classical function of money is as store of value. As notedbefore,it maybe desirable tohave as complementary currency one that is not used as a store of value. Currency was indeednot

thepreferred store of valueinmost civilizations. For example, the word capital derives fromtheLatin capus whichmeans head. This word referredto heads of cattle andis still usedtoday inTexas or among the WatutsiinAfrica: “Heis worth1,000 head.” Inthe Westernworld, fromEgyptian times through the Middle Ages anduntil the late18th century, wealth was storedmainlyin land andimprovements, that's why it’s calledRealEstate (irrigations,plantations).

Specifically, if one desires to encourage circulation of a currency, one goodway to do so is to

discourage thehoarding of that currency throughvarious mechanisms such as demurrage or

expiration deadlines. Therefore, classifying currencies interms of their function of store of valueis infact the same as analyzing the way they relate to time.

Interest Bearing CurrenciesOne way to encouragepeople to saveinthe form of a currency is topay interest. This is the typicalsituation with all conventional currencies because they are createdby bank debt. Interest is a

charge that is proportional to thelength of timeinvolvedinthe transaction.Inthis type of

Page 211: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

currency, one receives interest by making a deposit inthat currency; and one canborrowmoneybypayinginterest.

Zero-InterestThe vast majority of complementajy7 currencies simply operate without interest. For example,loyalty currencies or mutual credit systems don’t accrue interest, and for those systems whereone canborrow complementary currency typically no interest is charged either.

Demurrage Charged CurrenciesThe opposite of aninterestbearing currency is a demurrage-charged currency. Demurrage is a

time related charge on outstandingbalances of a currency7.It operates exactly like a negativeinterest rate andis used as a disincentive to hoard the currency- . JohnMaynardKeynes, SilvioGesell, IrvingFisher andDieter Suhr provided a strong theoretical foundation for this approach,andit was extensively implementedin the form of stamp scripin the1930s. Today, the most

successfulgrassroots complementary currency inJapan, the Peanuts, charges a demurrage of 1%

per month.

Currencies withTime-Related Step Function ValuationsThere are also currencies that are characterizedby stepfunctions triggeredby time, a crude formof demurrage. For instance, duringthe CentralMiddle Ages, thepractice of renovatio monetae

was widespread.It meant that (for instance) every five years, the old currency wouldbewithdrawn andthree newpennies wouldbegiveninexchange for four old ones, implying a tax of

25% onthe value of the currency-. This process producedincome for the local currency- authority(typically a locallord,bishop or monastery-) andgave anincentive not to hoard this type ofcurrency. Stamp scrip systems — whereby aperiodic stamphas to bepurchased and applied on

the currency7 for it to keepits value — are modern applications of this principle.

Currencies withExpirationDatesThe most radical step functionis for a currency7 to have an expiration date. This process isequivalent to a 100% tax on the date of the expiration.

Trade-offs Available BetweenFunctionsIf one desires to encourage the circulation of a currency7 as medium of exchange, one can achievethis most effectivelyby charging a “parking fee” of demurrage, or the simpler forms of stepfunctions or expirationdates.

The advantage of interestbearing currencies is that they provide anincome to those whocreate the currency7 (calledseigniorage). Its disadvantage is that it implies a systematic moneytransfer frompeople who don’t have money to those who do, so thatit tends to concentrate

Page 212: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

wealth.It also gives ailincentive to saveinthe form of currency as opposedto real assets. Finally,itprovides a systematic incentive to think only short-term, as incomegeneratedinthe distantfutureis discountedto irrelevance withpositiveinterest-rate currencies.

Incontrast, demurrage-charged currencies provide anincentive to circulate currency as

opposedto accumulatingit.It also motivates holders tobe concerned about long-termimplications,particularly for investments. The Terra currency is a currencyproposal specifically

designed with this latter objectiveinmind.10The currencies with time-related step functions or expiration dates canbe seen as cruder and

more radical forms of demurrage-charged currencies.

GeneralPurposeGeneralpurpose currencies are designedto fulfill all three classical functions of money (standardof value, medium of exchange and store of value). Historically, many traditional currencies used

locally would fallinto this category.11Today, conventionalnational currency is by far the most

important general currency.However, there exists animplicit contradictionbetweenthe function of store of value and

medium of exchange: notionally when someone accumulates moneyhe or she also deprivesothers fromusingit as a medium of exchange.12 This is why some currencies are actuallydesignedpurposely to separate those functions.

Ingeneral, complementary currencies are typically designed with a narrow and specificpurposeinmind. Although a successful complementary currency7 systemtends to graduallyexpandits applicability over time, today no complementary currency- has reachedthepoint whereit cantruly be considered a “generalpurpose” local or regional currency-. But this couldhappeninthe future.

IssuingProceduresThis is perhaps theleast familiar of all four dimensions of this classification system,but isnevertheless also one of the most important. Errors in designing theissuingprocess are the mostcommon reason for dramatic failures of complementary currency7 systems (consider the fate ofthe Argentinian creditos for instance). There are seven major ways of issuing a currency7.

Backed CurrenciesThe strongest currencies are those that are fullybackedby a good or service, and are directly andlegally redeemable for them. Historically, many currencies were inventory7 receipts, with100%

Page 213: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

backing securedby aphysicalinventory of a good(e.g., the wheat currency inDynastic Egypt).Some contemporary complementary currencies use conventional money as backing, others some

specific goods or sendees.

Borrowing withLegal CollateralThis is the way thebulk of the conventional currency is created: throughbank loanbackedbycollateral such as a mortgage on ahouse or inventories for businesses. Loan-created currency can

be considered as a form of abacked currency,but its redemption requires legal action (seizure ofthe collateral) whichis normally an exception rather thanthe rule. Some complementary7currencies, most notoriously the WIRinSwitzerland, exactly reproduce the conventionalbankingmodelinthis sense.

Purchased andRedeemable VouchersVouchers that arepurchased directly withnational currency7, and that are circulating as a mediumof exchange, and are redeemable at somepre-determined conditions into national currency7

again. Current examples of this include Save Australia vouchers, Berkshares inGreat Barrington,MA, Capital CashinMontpelier,VT, the Swiss Cliiemgauer andToronto dollars.

CommercialVouchersThese are similar to purchasedvouchers, except that they are not redeemableback intoconventionalmoney. They may be given for free (for example as coupons innewspaper ads) or

canbepurchased at a discount. They are not redeemable for cash,but typically are redeemableinto some good or service instead. They tendto be used onlybetweentheissueT andthecustomer, and rarely circulate as payment device among customers. Atypical exampleis thesupermarket discount token.

Loyalty7 CurrenciesLoyalty7 currencies are commercial complementary7 currencies that areissuedbybusinesses to

customers inproportion to their purchases inconventionalmoney.It is a form of corporate scriptypically redeemable for goods or sendees inthe same corporation or ina consortium ofparticipatingbusinesses. Frequent flyer miles issuedby airlines created the first large-scalesystem; Tesco:s loyalty7 currency intheUKis probably one of the most successful of suchsystems.

MutualCreditMoney issuedby a simultaneous debit and credit betweenparticipants ina transaction createmutual credit currency7. Examples of Mutual Credit Systems include LETS andTimeBanks. Forinstance,inTimeBankingif Julia renders a service of onehour to James, she gets a credit for one

Page 214: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

hour, andJames gets a debit for onehour. They have therefore created the currency necessaryfor their transactionby agreeing on the transaction itself. The main advantage of mutual creditsystems is that they self-regulate to always have sufficient currency available.

BorrowingWithout CollateralA currency canbe issued as a credit,but without formal collateral of any sort (other thanperhapsaninformalpromise to provide a good or sendeeinthe future).Infact, mutual credit canbe seen

as a form ofborrowing amongtheparticipants themselves without collateral. There are alsosystems whichpermitborrowingwithout collateral from a central office whichplays a role similarto a complementary currency bank (e.g.,Bia KudKuminThailand).

CentralDistributionOne of the simplest ways to issue a currency is to have a central office distributingit to everybodyor to everybody who qualifies. This is the way major currency7 reforms are typically introducedwhen a radical departure is necessary7 (e.g., the German Wahrungsreform after WorldWar II, thecredito systeminArgentina or thepurchase coupon experiment usedinJapanin1999).

MixedProcessesSome systems combine features of various issuing approaches described above. For exampleWIR is issuedboth as mutual credit and from a central office withlegal collateral. Some socialpurpose complementary7 currencies are also acceptedinpartialpayment by localbusinesses as a

loyalty7 currency7.

Advantages andDisadvantages of IssuingProceduresHere again, one can identify7 some advantages and disadvantages for each system. There tends to

be a systematic trade-off between the ease of creating a currency7 and the effort needed to gainandmaintainits credibility7. Finding an appropriatebalancebetweenthese two objectives is keyfor a robust currency7 design. All things being equal, as one goes down the abovelist of thedifferent ways to issue the currency7 (frombacked currencies to central distribution),it becomeseasier for participants to create the currency7; butit simultaneously requires more discipline tomaintain the currency’s credibility7.

Currencies thathave alegally enforceable collateral (as is supposedto be the case for themajority7 of the national currencies issued), currencies that are fullybackedby a good or servicethat is inbroad demand or that arepurchased andbackedwithnational currency7 logically have an

easier time gaining credibility7. But on the downside, often the very7people who don’t have thenecessary7 collateral or cash wouldbenefit most from a complementary7 currency7.

Loyalty7 currencies have the reputation of thebusinesses that issue them as their main

Page 215: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

backing.Mutual credit has as significant advantage: the quantity of money createdby definitionalways perfectly matches need. There are also no risks of inflationin mutual credit systems. Evcontrast, overissuingis thebiggest risk runby currencies that are createdbyborrowingwithoutcollateral or by centralissue.It is important withtheselatter models to cautiously control thequantity of currency issued, otherwise its depreciation andloss of credibility is apredictableoutcome.

Cost Recovery7 MechanismsAllpayment systems cost somehuman effort to bekept in operation; there are typically alsoinfrastructure expenses. While some costs may be coveredinthe complementary7 currency7 itself(typically labor), thereis often ahard currency7 component (computers, internet sendee or

telephone expenses) that needto be covered one way or the other. Whenthat aspect hasn:t beenthought through, the operation andmaintenance of the currency7 system tendto graduallydeteriorate, sendeeis providedinahaphazard way and users become more andmore unhappywiththe system.Inshort, unless someincomeis generated to pay for workperformed, thecomplementary currency7 systemis probably not goingto be sustainableinthelongrun.

The first step is to clearly separate what costs need to be coveredinconventionalmoney fromcosts which canbe coveredwiththe complementary7 currency7. There are two types ofbudgets tobe madein each of these currencies: a start-up and an ongoing operationalbudget.

Next, choose options to generate income for each type of currency7 involved. These options are

limited; what follows is an exhaustivelist.

No Recovery7The first optionis not to recover any of the costs. For the complementary7 currency7 component ofthe costs, most mutual credit systems simply open an account for “general overhead,” peopledoing work for the system are credited andthis overhead account is debited.

For other systems, or for the conventional currency7 component, not recovering any costs issustainable onlyif the systemis designed so that no such costs areincurredinthe first place — or

if thereis a sugar-daddy organization that is willing to either provide or raise funds to make thesystem operational andkeepit going. Somepeer-to-peer systems are actually designedto incurno costs, andtherefore do not need membership or recovery7 mechanism either. That is the case,for instance, with the WAT systemin Japan,based onbills of trade issuedby businesses amongeach other.

Page 216: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Flat FeeThe second classical option is to have a flat fee. That canbe aperiodicalmembership fee (typicallyyearly or quarterly) or an entry fee thatparticipants pay to the central operation to be able to

participate.Insome cases, there arehigher membership fees for businesses thanfor individuals.This is usually done to cover the conventional money component of costs.

TransactionFeeTransaction fees fallintwo categories: those that arebased on a smallpercentage of the amount

involved, and those that are a flat amount for each transaction. They are typically levied at themoment of the transaction, although some systems compile a monthly totalinstead. Transactionfees are normally leviedinthe same currency as the transactionitself.

Interest, Demurrage and Other Time-related ChargesInthe section on store of value we discussedthe issues aroundinterest, demurrage, stepfunctions or expiration deadline currencies. Of course, such time-related charges produce anincome — although only inthe type of currency involvedinthe transaction — and that incomeis a

perfect candidate to cover the running expenses.

CombinationMany complementary- currency systems use a combination of the above ways to cover costs.Typical examples of such combinations include:

* Charges onbothpositive and negativebalances beyond a certainlevel (i.e., demurrage andinterest).

* Membership fees usedto cover conventional money expenses, while other mechanismsdealing with the complementary7 currency7 costs.

Advantages andDisadvantages of Cost Recovery7MechanismsOf course,keeping costs as low as possible is thebest approach of all. Particularlyif costs inconventional currency7 arehigh, a complementary7 currency7 systemis predictably goingto havedifficulties over time. Costs in complementary7 currencies are easier to deal withbecause,particularly withmutual credit systems, the recovery7problem canbe dealt with easily within thesystemitself.

Whenever cost recovery7 mechanisms are needed, there are some advantages anddisadvantages inthe different solutions listed above. Try7 to use cost recovery7 as anincentive thatis linedup withthe objectives of the system.Inthis sense, the worst recovery7 mechanismis atransaction fee, as itprovides anincentive not to trade with the currency7. Incontrast,membership fees and demurrage fees bothgiveincentive to trade and are thereforepreferable.

Page 217: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Factor

MarketsFactor

Paymentsincome

tares

rGovernmerits !>:yr

>jlpayments K

Firms Householdsinterests w

dividends"ÿinterestBanks Sc Financial

Institutions;o SEIVTnÿs

Sales

ReceiptsConsumptionExpenditure

ProductMarkets

FIGURE A.i.Cycles of Economic Activity

Establishing a System for CirculationAt thispoint, youhave chosen an objective, recruited a Community Currency Team and selectedthe various mechanisms that the currency will need. The last stepindesigning a communitycurrency is to make sure that youhave a complete systeminplace for circulation.

Circulation — the worditself implies akey consideration for this phase. To be successful as a

medium of exchange, currency needs to travel through the community in circles — closedloops,complete cycles.If yon were an electrical engineer, you;dbelooking for a “complete circuit.” Asimple concept,but yet this is where alot of community currencies have failedinthepast. Theyhave neglected to establish complete circulationpatterns, and as a result, there are somepeoplewho start usingit, a fewbusinesses perhaps,but the currency tends topoolin differentparts oftown,people who are usingit get frustrated andit tends to deteriorate.

Our money systems functions incycles, andthese cycles arepartly responsible for themultiplier effect that is so wellknownineconomics. Whenmoney circulates through a

community, is storedinbanks for future use and thebanks lendthe money out to homeownersandbusinesses, thenthe totalvalue that is inuseinthe community is greater than the absolutevalue that people feel they have — and the economy expands. Withinthese cycles, there are

Page 218: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

several important points whichinvolve different people and organizations:Households: Consumers, Employees, Savers, InvestorsFirms: Businesses, Organizations, Producers, Service Providers, Employers, InvestorsGovernment: Taxes andFees, Sendee Delivery, Employment SupportBanks andFinancialInstitutions: Savings, Investment, LoansFactor Markets: LaboT Rates — Wages and Salary LevelsProductMarkets: RawMaterials andFinishedProducts

If you show all the circulation of currency that occurs betweenthese different points,it mightlook likeFigure 1.

Whenyou are designing the system for circulation of a community currency, youwant to makesure that all of thepoints inthis figure are involvedinsome way, so that the currency can

circulate successfully.

Currency Design Questionsl.What are the unmet needs youwouldlike to address?2. Are there underutilized resources that offer themselves as apossible resource?

3. What is the objective of the currency youwouldlike to design?

4. What support mediumwillyouuse to circulate the currency?

5. What function(s) will the currency serve?6. What issuingprocedures will youuse?

7. What will your cost recovery mechanisms be?8. Draw a circulation diagramfor the currency youpropose.

Case Histories

KatadhinTimeDollar ExchangeKen Andersongrewupina rural communityinMichigan during the1950s and1960s. Ken grewup watchinghis father, a full-time farmer,barter skills to accomplish daily activities, leaving theflow of cashinthe community to be maintainedby those who wouldn’tparticipateinthe systemof exchange. For example, instead ofpayingthebutcher to cut uphis venison after huntingseason, Ken:s father might shoe thebutcher’s horses.No money was exchanged.

While the example above was not very formalized or part of any community-wideprogram,

Page 219: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Kennowparticipates inthe KatahdinTime Dollar Exchange. Inthis more formalbarteringsystem, one time dollar is credited for eachhour of sendeeperformed. Whether the sendeeis a

professional sendee, mowing alawn,helpingto clean a stream or playing cards with seniors at a

localnursinghome, for every hour yougive, youget anhour back. These time dollars canberedeemedlater inthe form of sendees that youmay need from someone else.

Inthe spirit ofhelping a neighbor inneed, the KTDEbrings people together for mutualbenefit. Inaddition, its members perform community sendees for the greater benefit of the

Katahdin, Maine region.13

Barter Systems Inc.Barter Systems, Inc.is a commercialbarter organization which aims to offers business owners

andprofessionals other means of meeting many of their ongoingbusiness andpersonalneedswithout using cash. BSI clients have the ability to exchange trade dollars earnedby selling theirproducts or sendees to other BSI client companies or to member companies belonging to otherbarter exchanges located throughoutNorthAmerica, the Caribbean, Europe, Australia andSouthAmerica.

Satisfiedmembers report that they havegainednew customers andnewincome,but also used

trade dollars to host companyparties,purchase medical sendees and reward employees.14

LocalExchange Trading System (LETS)Prior to the early 1980s, the small town of Courtenay, British Columbia was heavily dependent on

a local air forcebase and a timber mill.Unfortunately for local residents, when some staff at thebase relocated and themill closed, the local economy plummeted. As a result, unemployment was

high andpeople were experiencing significant financialhardship.The LETS program was established around1983, introducingthe green dollar (the LETS

currency). This system allowedpeople to exchange goods and sendees with one another even

whenthey didn’t have access a lot of officialCanadian dollars. The LETS network allowedmembers to participateinthe economy without needing an employer or havingmoney to spend.An additionalpositive aspect of LETS inCourtenay was that the use of green dollars freedupmore Canadian dollars for other uses.It was also an efficient andinexpensive way for localbusinesses to advertise, sinceparticipatingbusinesses werelistedina local directory-.

Page 220: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Resources

GeneralFrameworkGlobalCommunityInitiatives, global-commiinity.org.

Currency Solutionsfor a Wiser World, lietaer.com.

CommercialBarter SystemsBarter Systems, Inc website, [online], [citedDecember 28, 2010].bartersys.com/index.asm Aleader inthe commercialbarter industry7 which offers exchangeby way of goods and servicesandno cash.ColinHarrison.ProjectProposal: CyberTroc — A Barter Systemfor theInformation Society.[online], [citedDecember 28, 2010]. ict-21.ch/ICT.SATW.CH/IMG/doc/ProjectProposalCyberTroc_c.doc. An article about CyberTroc,a type of internet-basedbarter system.Hazel, Henderson.Paradigms inProgress: LifeBeyondEconomics (Indianapolis: KnowledgeSystems Inc.1991)

Hazel, Henderson.EthicalMarkets:Growing the GreenEconomy (Vermont: Chelsea GreenPublishing. 2006)

Mutual Credit SystemsThomas H. Greco, Jr. “Chapter 12: Community7 Empowerment throughMutual CreditSystems"NewMoneyforHealthy Communities, [online], [citedDecember 28, 2010].raticaLorg/many worlds /cc/NMfHC/chui2.html.Complementary7 Currency7 Resource Center website, [online], [citedDecember 28, 2010].complementarvcurrencv.org.

Page 221: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

LETS SystemsLETSystems — TheHomePage, [online], [citedDecember 28, 2010]. www.gmlets.u-net.com.An excellent source,prodding severallinks to sites withinformation about issues,administration software, organization and user materials.LETS-LinkupInternationalLETSDirectory. [online], [citedDecember 28, 2010].lets-linkup.com. AninternationalLETS groups directory with a guide to over 1,500 LETS

groups from 39 countries.TransactionNet: LocalExchange Trading Systems — LETS, [online], [citedDecember 28,2010]. transaction.net/money/lets. A complete description andglossary of terms related to

LETS and other currency systems.John “The Anti-Poverty Engineer” Turmel website, [online], [citedDecember 28, 2010].cvberclass.net/turmel. Links to many LETS currency press reports and articles.

Time BanksThe TimeKeeper Organization. What is theTimeDollar Network? [online], [citedDecember28, 2010]. www.timekeeuer.0rg/whatis.html. Information about what drives theTimeDollarandhowit canbenefit the economy.Time Banks USA website, [online], [citedDecember 28, 2010]. timebanks.org/- Anorganizationwhichworks towards buildinglocal economies and communities that rewarddecency, caring and apassion for justice throughits Time Banks system.Time Dollar Tutoring, [online], [citedDecember 28, 2010]. timedollartutoring.blogsuot.cotn.

An organization which works with students using a Time Banking systemto track the timethey give as tutors.San Antonio Time Dollar Community Connections website, [online], [citedDecember 28,2010]. mc-sa.org/uartners/neighborhood/timedonar.asu-

Local CurrenciesE. F. Schumacher Society.LocalCurrencies, [online], [citedDecember 28, 2010].smallisbeautiful.org/local currencies.html.TransactionNet. Complementary Community Currency Systems andLocalExchange

Page 222: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Networks, [online], [citedDecember 28, 2010].transaction.net/money/community/index.html.Roy Davies. “Alternative Currency Systems: Local andInterest-Free Currencies, Social Credit,Social Lending andMicrocredit etc.BMoney — Past.Present&Future, [online], [citedDecember 28, 2010].urojects.exeter.ac.uk/RDavies /arian/local.html.IthacaHonrs — Local Currency — Ithaca.New York, [online], [citedDecember 28, 2010].itliacahoursxom/.

Economic Development and Community CurrencyCreating a community currency is not the only way to strengthenyour local economy andbuildreal wealth. There are many other aspects of community life that needto be addressed as well.

GlobalCommunity Initiatives has workedinpartnership withNatural Capitalism Solutionsand the America’s Development Foundation to create a new workbook for local communities to

revitalize and develop their local economies inways thatbuild realwealth, enhance the quality oflife andprotect and restore thenatural environment. The workbook is calledLASER — LocalActionfor SustainableEconomicRenewal.

LASER is designed to helpyouinitiate economic renewal activities inyour local community.Each ideainthe workbook is accompaniedby a step-by-step tool thathelps youput the ideas intopractice. The Guide is based ontheidea that we can satisfy our commonhumanneeds bybuilding on our strengths, intervening at the systemlevel andintegrating all the different parts ofcommunity lifeinto a wholepackage, rather than tryingto tinker with differentproblems inisolation.

Theprinciples and activities outlinedinLASER are relevant whether youlivein a rural villagein Afghanistan oraneighborhoodina modernwestern city. The details will obviously differ,butthebroad opportunities exist everywhere. Allit takes is you.LASER describes howyou cantakecontrol of your own future andbegin to create the sort of economy that willbringreal jobs, realprosperity and ahigh quality of life to you andyour family.

Please visit our website at global-communiri-.org or theLASER website at global-laser.org formoreinformation.

Page 223: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Notes

Chapterll. CollinsEnglish Dictionary, Complete andUnabridged.HarperCollins, 2003, s.v. “wealth.”

2. UnitedNations General Assembly. Report of the World Commission on Environment andDevelopment.A/RES/42/1S7, 11December, 1987. [online], [cited October 15, 2010].un.0rg/documents /ga/res /42 /are542-187.htm.

3. Jane Jacobs. Cities and the Wealth ofNations:Principles ofEconomicLife. Random House, 1984.4. 7CLEJ: Local Governmentsfor Susfaina&i/ifp. [online], [cited October 19, 2010]. iclei.org/.

5. United Cities andLocal Governments official website, [online], [cited October 19, 2010].

cities-localgovernments.org/.

Chapter 2

1. G. Caprio and D. Khngelbiel. “Bank Insolvencies: Cross Country Experience.” Policy Research WorkingPapers #1620. World Bank, Policy and Research Department, 1996; J. Frahkel and A. Rose. “CurrencyCrashes inEmergingMarkets: an Empirical Treatment.” Journal ofInternationalEconomics (1996), VoL4, PP- 351-366', G. Kaminsky and C. Reinhart. “The Twin Crisis: the Causes of Banking and Balance of

Payment Problems.” American Economic Review, VoL 89 #3 (1999),pp. 473-500.2. Henry Ford.MyLife and Work. Doubleday, Page & Company, 1922,p. 179.3. Bernard Lietaer. TheFuture ofMoney: CreatingNew Wealth, Work and a Wiser World. Century,

2002, pp. 50-51.

4. Herman E. Daly and John B. Cobb. For the Common Good:Revitalizing theEconomy Toward

Community, theEnvironment, and a SustainableFuture, 2nd ed. Beacon Press, 1994.

5. Marjorie Deane and Robert Pringle. The CentralBanks. Viking, 1995.6. Quoting a speech madeby Michael SchumaninVermont in the winter of 2007.

7. Amory Lovins. “NaturalCapitalism.” Resurgence #198 ( January7/February 2000). [online], [cited

October 23, 2010]. resurgenee.0rg/magazine/article1806-natural- capitalism.html.

8. The environmental crises in the regionpromptedEastern Europeangovernments to request assistance

Page 224: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

from theUS EPA. The Institute for Sustainable Communities (ISC) worked with the EPA to establishEnvironmental Management Training Centers inseveral countries — Poland, Bulgaria, Hungary, Ukraineand Russia — so that the regulators in these countries couldlearn fromtheir wTestern counterparts. One of

us worked for ISC at the time.

9. US Bureau of Labor Statistics website: bls.gov.

10.Merriam-Webster Dictionary, [online], [cited January 17, 2011]. merriam-

~creb5ter.com. dictionary svstem.

11. For more information about all the system archetypes, there are many good resources. Onehelpfulsource is:MentalModelMusings. [online], [cited October 24, 201a]. 5v51ems-1linking,0rg. To seehow thearchetypes apply" to community" development: “Conducting and Understanding a Trend Analysis 'LocalActionfor SustainableEconomic Renewal (LASER), [online], [cited October 24, 2010].global-laser.org/resources /trend analvsis.pdf.

12. Insystems diagrams, the feedback between variables, representedby the arrows,is either positive or

negative. Positivefeedback (marked as a +) means that the next variable changes in the same direction astheprevious one, soif you’re talking about healthcare, lower access to treatment leading to lowerindividualhealthispositive feedback.Negativefeedback (marked as a o) means the next variable changesin the opposite direction as theprevious one, so lower healthleading to a higher demand for treatment isnegative feedback. The important thingis the effect of the feedback — the wordshigher and lower are usedhere for illustration. Another important symbolillustrates when there is a delay" in the feedback; in thesediagrams, delay is indicatedby two lines: jo/.

When the combination of feedback in a systemispositive, this creates a reinforcingfeedback loop,symbolizedhere with an R. Reinforcing feedback is a vicious or virtuous cy"cle — things are getting worseand worse, or better andbetter. When the combination of feedback in the systemis negative, this creates abalancingfeedback loop, symbolizedhere with a B. In these systems, there is equilibrium — the systembehaves asif it were seeking a goal of stayinginbalance. When there is delay" in the timing of feedbackbetween variables, systems can change frombeing reinforcing to balancing and vice versa over time; whenthere is a number next to the B or the R, it means that after delay, the system dymamic has changed.

Sometimes there are several changes in the system, which wouldbe illustratedby Rl, B2, R3 and so on.

13. Dennis and Donella Meadows, Jorgen Randers and William Behrens. TheLimits to Growth. Signet,

1972;Donella H. Meadows, Jorgen Randers and Dennis L. Meadows.Limits to Growth: The 30-YearUpdate. Chelsea Green, 2004.

14. R2 calculation courtesy" of ChrisMartenson, from a presentationhe made inReykjavik, Iceland for theBalaton Groupin September of 2010.

15. John Maynard Keynes. Economic Consequences of the Peace. Harcourt Brace, 1920, chapter 6.

16. Blackwater Lodge and Training Center,Inc. v. Broughton et ai, and Cifp ofSan Diego v.BlackwaterLodge and Training Center, Inc. [online], [cited January" 17, 2011].dockets.iustia.com/docket /calif0rnia/casdce / 2oo8cvooQ26 /271oS2 /.

Page 225: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Y]. StephenA. Zarlenga. TheLost Science ofMoney: TheMythology ofMoney, The Story ofPower.

AmericanMonetary Institute, 2002.

IS. Personal conversations withcity leaders over thepast 20 years.

ig. Calculatedby the authors from the MilenniumDevelopment Goals.

Chapter 31. Merriam Webster dictionary, s.v. “capitalism” [online], [cited October 25, 2010].

merriam-webster.com/dictionarv /capitalism.

2. See Figure 1inChapter 7 for details.

3. See a full development of this approachin: Bernard A. Lietaer. TheFuture ofMoney: CreatingNew

Wealth, Work and a Wiser World. Random House, 2001.

4. Total volume of outstanding Frequent Flyer Miles is estimated at 14 trillion, worth about US$700 billion:Jenni Roth. “Die schlummernde Weltwahrung: Fluggaste haben14 Billionen Bonusmeilen angesammelt.”

Der Tagesspiegel (17 Januar 2005].

5. Time Bank is a trademarked term of Time Banks USA and willbe capitalized throughout this book.

Chapter 41. Bernard Lietaer. TheMystery ofMoney. Riemann Verlag, 2000, p. 1S2.

2. M. I. Finley. TheAncient Economy, Sather Classical Lectures Volume 43.University of California Press,igS5- CitedinLietaer,p. 166.

3. Lietaer, p. 2og.

4. Lietaer, p. 173.

5. Bernard Lietaer and Stephen Belgin. OfHuman Wealth: Beyond Greed andScarcity.Human Wealth

Books and Talks, 2005.6. See L. Randall Wray. Understanding Modern Money: theKey to FullEmployment andPriceStability.

Edward Elgar Publishing, 2006.

7. See Bernard Lietaer and StephenDe Meulenaere. “Sustaining cultural vitality in a globalizing world: theBalinese example.” InternationalJournal ofSocialEconomics, Vol 30#g (September 2003).

8. The term comes from renowmed economist Neva Goodwin, who felt it important to give apositive name

to that portion of the “non-market” economy.

g. In tgSi, the value of the economic productionby households wTas estimatedby Robert Eisner andhiscolleagues at NorthwTestern to total $i,7og billion. That amounted to 37.5% of the “extended GNP” of

Page 226: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

$4,56° billion. IniggS, Redefining Progress, a nonprofit organizationbasedin San Francisco, pegged thevalue of household work in1998 at a total of $1.911trillion — about V4 the size of theUS gross domesticproduct (GDP) that year.

10. Edgar Cahn.Its the CoreEconomy stupid; An Open Letter to theNon-Pro/if Community, [online].

[cited October 27, 2010]. timebanks.org/documents/CoreEconomvOp-Ed ooo.pdf.

Chapter 51. RealtyTrac.® USForeclosureMarket Report, November 13,2008. [online], realtvtrac.com.

2. Lynn Adler. “US 2009 Foreclosures Shatter Record Despite Aid.”ReutersNews Service, January 14,

2010. [online], [cited September 6, 2010]. reuters.com. article. idUSIRE6oDoLZ2QlOOll_.

3. RealtyTrac.® USForeclosureMarketReport, August, 2010. [online], [cited September 6, 20ioj.

browse.realtvtrac.com/20io/fQreclosures/.4.United States Department of Labor. Bureau of Labor Statistics website: bls.gov.

5. Ross Colvin. “Family Homelessness Risingin theUnited States.” ReutersNews,November 12, 2008.

6. US HUD, Community Planning andDevelopment.NeighborhoodStabilizationProgram Grants.

[online], [cited October 28, 2010].hud.gov /offices /cpd/communitydevelopment/programs /neigh-

borhoodspg/.

Chapter 61. A Native American and African Americanpoet from Hartford, CT. Bornin 1820, she is the first woman

tohave published a book of poems and essays in theUnited States.

2. US Census BureauNews. “College DegreeNearly Doubles Annual Earnings.” Census Bureau Reports,

March 28, 2005.3. US Census data.

4. 2000 US Census.

5. Grace E.Merritt. “College-Loan Ploys Probed.” Hartford Courant, June 25, 2007.6. Steve Kroft. “For-Profit Colleges: Costly Lesson.” 60Minutes. CBS News, January" 30, 2005.

7. With gratitude to David Orr for contributing this component. See also: Beyond Bells and Whistles.RetentionRateModel, [online], [citedNovember 2, 2010].cofc.edu/bellsandwhistles /research/retentionmodel.html: TheNational Learning Laboratory, [online].[citedNovember 2, 2010]. know.org.

8. The original funding source was finally not used for this purpose. See Bernard Lietaer. “A Proposal for a

Brazilian EducationComplementary Currency".” Paper presented for publicationin theInternational

Page 227: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Journalfor Community CurrencyResearch, VbL 10 (2006). [online], [citedNovember 2, 2010].nr1,vw.uea.ac.uk. env. iiccr. abstracts. voliofAYlietaer.html.

9. Such an expirationpenalty is a form of demurrage. See Chapter 4 and Bernard Lietaer and StephenBelgin. OfHuman Wealth:Beyond Greed andScarcity. Human Wealth Books and Talks, 2005, pp.

104-110.10.Encyclopaedia Britannica.

Chapter 71. NationalEndowment for the Arts.Artists in the Workforce:1990-2005. Research Report #48 (May

2008).

2. CoTIegeGrad.com. CareerInformation — Artists andRelated Workers, [online], [cited April 15, 2009].

coUegegrad.com/careers /proft21.shtml.

3. Murray Whyte. “‘Starving Artist' Image Only Too True.” Toronto Star,March 31, 2009.

4. International Average Salary Income Database. UnitedStatesAverage Salaries andExpenditures.

[online], [cited April 15, 2009]. woridsalaiies.org. usa.shtml.

5. United Artists Reserve Note, [online], [cited August 30, 201a]. artistreservenote.com.

6. US Bailout. FlwcusBucks theNext Currency?March 14, 2009. [online], [cited August 30, 2010].

usabailout.blogspot.com/2ooQ /o /fluxus-huclcs-next-currencv.html.

Chapter 81. Martin Cohen. “Beyond Debate?” The TimesHigher Education, December 10, 2009. [online], [cited

December 17, 2010]. timeshighereducation.co.uk/storv.asp?storvcode=4o0454.2. Alan Durning withAnna Fahey, Eric de Place, Lisa Stiffler and Clark Williams-Derry. Cap and Trade101:A ClimatePolicyPrimer, July 2009 Federal Policy edition. Sightline Institute, [online], [cited

November 4, 2010]. sightline.org. research, energy, res pubs, cap- and- trade-101.

3. Ibid.,pp. 27-28.4. This carbon currency system was developed withsubstantial input fromDavid Johnston, founder and

President of What's Working Iwhatsworking.coml.5. See their wTebsite: huilditgreen.org.

6. Fiona Harvey and Stephen Fidler. “Industry caught in carbon ‘smokescreen.'” Financial Times, April 25,

2007. [online], [citedJanuary 10, 2011]. ft.com/cms/5/o/48e224ce-f2SS-iidb-Q84c;-00obsdf10621.html#ixzz1QibUUwWe.

Page 228: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

7. Ibid.8. See Lietaer, TheFuture ofMoney, note onpage 71: “See Kobayashi, Kazunori Community7 Currency

(Unpublished Senior Thesis, May 9,1999)... ”

Chapter 91. CliveHumby, Terry Hunt and TimPhillips. ScoringPoints:How Tesco Continues to Win Customer

Loyalty, 2nd ed. Kogan Page, 2008.

2. LoyaltyMatchwebsite, [online], [citedNovember 5, 2010]. lovaltvmatch.com.

3. Patent application title: Point Of Interaction Loyally7 Currency Redemptionin a Transaction, [online].

[citedNovember 5, 2010]. faqs.0rg/patents /app /2o1oo21146Q.4. Swissinfo.ch. Cash substitute preases business wheels. October 21, 2009. [online], [cited December 12,

2010]. swissinfo.ch/eng/business /Cash substitute greases business wheels.html?cid=76iq8io.

5. Cyclos Project, [online], [citedNovember 8, 2010]. proiect.cvclos.org/.6. Chartered Banker. “Complementary7 Currencies: Hands Up for a Money7 Revolution.” [online], [citedJanuary 22, 2011]. www.charteredbanker.com/Home/Member and Students /Chartered Banker Mag¬

azine/December 2010 January 2011/Dec Jan Features /Dec Jan Money Revolution/.

Chapter 10

1. David Schab andNhi-Ha T. Trinh. “Do Artificial Food Colors Promote Hyperactivity7in Children withHyperactive Syndromes? AMeta-Analysis of Double-Blind Placebo-Controlled Trials.” Journal ofDevelopmental andBehavioralPediatrics, Vol. 25#6 (December 2004), pp. 423-434.2. Stephen Daniells. “FDA urged to ban artificial colors linked to hyperactivity7.” Foodnavigator — USA

website, June 4, 2008. [online], [citedDecember 8, 2010].

3. OECD Directorate for Employment, Labour and Social Affairs.Health at a Glance 2003 — OECD

Countries Struggle withRising Demandfor Health Spending, [online], [cited December 8, 2010].0ecd.0rg/document/6/Q.2q4o.en 2640 16S60422 111 i.oo.html.

4. Ernst & Young. Gesundheitsversorgung 2020. Frankfurt, 2005. [online], [cited December 8, 2010].rsf.uni-greifswald.de. fileadmin, mediapool. lehrstuehle. flessa. Gesundheitsversorgung 202020.pdf.

5. OECDHealth Data 2006:How Does the UnitedStates Compare, [online], [cited October 16, 2009.oecd.org/dataoecd/2Q/g2/q6Q6ooqg.pdf.

6. All data onbankruptcy7 through medicalbills comes from Elizabeth Warren. “Sick and Broke.” TheWashington Post, Wednesday, February 9, 2005,p. A23. [online], [cited December 8, 2010].

Page 229: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

washingtonpost.com.- vrp-dvn. articles. AQ_rr-2QQsFebS.html.

7. B. D. Smedley and S. L. Syme, eds. PromotingHealth: Intervention StrategiesfromSocial and

BehavioralResearch. Institute of Medicine, 2000.

3. J. E. Fielding. “Getting Smarter and Maybe Wiser.” American Journal ofHealthPromotion, VoL 11#2

(November-December 1996), pp. 109-111.9. IRSA, Association of Quality Clubs. “The Economic Benefits of Employee Fitness.” 1992. fitresource.com.

10. Michael Murphy. TheFuture of theBody:ExplorationsInto theFurther Evolution OfHumanNature.

Tarcher, 1992.11. Thebenefit is mainly manifestinginsuchprograms after the second or thirdyear. So 100 dollars or

Euros spent in anpreventive care program for employees each year willhave a return after the third yearof 300 dollars or euros. R. Z. Goetzelet aL “What is ROI? A Systematic ReviewT of Return on InvestmentStudies of CorporateHealth andProductivity Management Initiatives.” AWHP’s WorksiteHealth, VoL 6,1999; J. C. Erfurt, A. Foote, M. A. Heirich. “ The cost effectiveness of worksite wellness programs forhypertensioncontrol, weight loss, smoking cessation and exercise.” PersonnelPsychology, Vol. 45#1,March 1992, pp. 5-27; L. Chapman.ProofPositive:AnAnalysis of the CostEffectiveness ofWorksiteWellness, 6th ed. Chapman Institute, 2008; Don R. Powefl. “Characteristics of SuccessfulWellnessPrograms.” EmployeeBenefits Journal, September 1999, pp. 15-21; S. G. Aldana. “Financial Impact ofWorksite Health Promotion and Methodological Quality of the Evidence.” TheArt ofHealth Promotion,Vol 2#i,March-April, 1998; L. Chapman. “Methods for Determining Economic Return.” The Art ofHealthPromotion, Vol 4#6, January-February 2001; L. Chapman. “Meta Evaluation of WorksiteHealthPromotion Economic Return Studies.” The Art ofHealthPromotion, Vol. 6#6, January-February, 2003.12. Time Bank Models — Elder Care, [online], [citedJanuary7 22, 2011].besttimebank.0rg/Links /TimeDollar /ElderCare.htm:David Boyle. “The Co-Production Principle and TimeDollars.” [online], [cited January 22, 2011]. timebanks.org. documents. Co-ProductionPrinciple.pdf.

13. This cash-in option deserves more explanation. Businesses providing goods or services that are

supportingpreventive healthcare couldbecome certified through a formal evaluationprocess thatdetermines the economic impact on future medical costs. Basically, any7 thing or sendee that has been ableto convincingly7 demonstrate an impact on reducing future medical care costs could qualify7 for this process.

The discount and conditions for cashing-inshouldbe designed tobe coveredby a reductionin medicalcosts made possibleby thepreventive programs andby home care activities (which reduce the length of ahospital stay for example). Furthermore, there shouldbe some discount in cashingin the Tokens to

encourage business owners andpreventivehealthcareproviders to use them rather than always cashingthemin. The cost of the cashing-inprogram shouldbepaidby those entities that derive the direct financialbenefits (reductionin costs) from a healthy7 society (e.g., HMOs, businesses, insurance companies andgovernments).

14. Laura Petreccca. “Cost conscious companies re-evaluate wTellness programs.” USA Today,June 19,

2009.

Page 230: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

15. Ibid.16. “Should Smoker s Pay a Surcharge? 'HR.ELR.com. April 7, 2006. [online], [cited October 26, 2009].

hr.blr.com/news,aspx?id=17027.

17. Petrecca, “Cost Conscious.”

Chapter 11

1. Recent archaeological discoveries have found the remains ofUr; it’s called Tell-y-Mukayyar andis

located near the city ofNasiriyah, south of Baghdadinmodern Iraq.

2. All data in this paragraph fromUS Censuses from 2002 and 2005.

3. National Research Council Panel toReview Risk and Prevalence of Elder Abuse andNeglect. Elder

Mistreatment: Abuse,Neglect, andExploitation in an Aging America.National Academies Press, 2002.

4. ChildMaltreatment 2003. Administration for Children and Families, US Department of Health andHuman Services, 2005.5. Time Bank® is a trademark of TimeBanksUSA. Instead ofputting the little ® next to all the references,we have capitalized the words instead.6. TimeBanks website. “The Five Core Values of Time Banking.” [online], [cited December 7, 2010].

timebanks.0rg/five-core- values.htm.

7. Care Bank® is also a trademark of TimeBanks USA.

8. National Institute of Population and Social Security Research. SelectedDemographic IndicatorsforJapan, [online], [citedJanuary 22, 2011]. ipss.go.ip/p-info/e/S D LTndip.html.

9. A Vecoute du Japon — Information Bulletin of the Japanese Mission to the European Union. July 3,

1995, PP- 7-S.10. Robert Wood Johnson Foundation. Service Credit Banking Project Site Summaries. University of

Maryland Center of Aging, 1990.11. Junko Edahiro. “Locally Sustainable Economy Supportedby Community Currency.” Via3Net website.[online], [citedNovember 30, 2009].viaÿ.net /pooled/articles /BF DOCART/view.asp?Q=BF DOCART I'mSQ.

Chapter 12

1. J. E. Yellen. “The Transformation of the Kalahari IKung.” Scientific American, VoL 262#4. 1990, pp.

96-105.2. Bernard Lietaer and Steven Belgin. OfHuman Wealth:Beyond Greed andSeareify. Human Wealth

Page 231: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

Books and Talks, 2005.

3. UnitedNations Department of Economic and Social Affairs, Population Division. World UrbanizationProspects: The 2005Revision.[online], [citedNovember 13, 2008].un.org. esa. population, publications. tVUPsooy. 200.y.vup.htm.

4.Northeast Bankcorp, Inc. v. Governors,FRS, 472 U.S. 159 (1585) at 165.5. Tom Philpott. “A reflection on the lasting legacy of 1970s USDA Secretary Earl Buts.” Grisf;EnvironmentalNews and Commentary, February7 7, 2008. [online], [citedNovember 13, 2008].grist.org/comments /f00d/2008 /02 /07/.6. Bruce A Babcock. “Cheap Food and Farm Subsidies: Policy Impacts of aMythicalConnection.” Iowa Ag

Review (Spring, 2006).

7. Institute for Food and Development Policy. “Food, Fuel, and Green Revolutions: TheU.S. 2007 FarmBill Slogs Forward.”FoodFirst:News and Views, October 5, 2007. [online], [citedNovember 11, 2008].foodfir5t.org/en/node/i777.

8. International Relations Center. “Congress Rejects Food Aid for LocalDevelopment.” GlobalPolicyForum, [online], [citedNovember 14, 2008].globalpolicv.org. socecon. hunger, relief. 2007. iQ2icongr.htm.

9. State of New Jersey Department of Agriculture. “School LunchCommodity Distribution Program.”

[online], [citedNovember 14, 2008]. wtvw.state.ni.us/agriculture/diuisions/fn/fooddistrih/slcd.html.

10. Centers for Disease Control and Prevention. Children andDiabetes — MoreInformation, [online].

[cited December 10, 2010]. cdc.gov/diabetes/proiects /cda2.htm.11. Woody7 Tasch. inquiriesInto theNature ofSlowMoney: Investing as ifFood,Farms, andFertility

Mattered. Chelsea Green, 2010.

12. Elizabeth Saivin et al. Commodify System Challenges:Moving Sustainability into theMainstream ofNaturalResource Economies. Sustainability Institute Report, 2003. [online], [cited December 13, 2010].sustainer.org. pubs. 5ustainableCommoditv5vs.2.l.pdf.

13. Michael Pollan. “Why Bother.”New York TimesMagazine, April 20,2008.

14. Leesa Woodhouse.Rice as Currency. October 2006. [online], [cited December 11, 2009].

e- articles.info /e /a/title/Rice-Currencv /.15. Ibid.

16. Jason Bradford. “Food-backed LocalMoney.” The OilDrum:Campfire website, March 4, 2009.[online], [citedJanuary 11, 2011]. campfire.theoildrum.com/node/s1s3.

17. Farm Stand website: vtfarmstand.org.

Chapter 13

Page 232: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

1. Mark Lipton (Guiding Growth:How Vision .Keeps Companies On Course. Harvard Business Press,2003) in an interview withMartha Lagace. Harvard Business School Working Knowledge for BusinessLeaders, February 24, 2003. [online], [cited December 14, 2010].wiki,aalto.fijdownload:attachments /44 Lagace ±f2oo I±Why£Vision-Matters-M0re-Than-Ever.pdf?version=1&modificationDate =1272 61748ooo.2. Gwendolyn Hallsmith. TheKey to Sustainable Cities:MeetingHumanNeeds, Transforming

Community Systems. New Society, 2003.

3. Burlington Legacy Plan, p. 10. [online], [cited December 13, 2010].

cedo .ci.burlington.vt.us /legacy/BurlingtonLegacvFlan.pdf.

4. Ibid,p. 26.

5. Burlington Legacy Project. Projects andActivities, [online], [cited December 13, 2010].

cedo.ci.burlington.vt.us /legacv/proiects.html.

6. Ibid.

7. City of Burlington Energy and Environment CoordinatingCommittee. Suggestions to AdvanceSustainable Transportation inBurlington, [online], [cited December 13, 2010].cedo.ci.burlington.vt.us /legacv/CitvCouncilRecsUpdateMav12.pdf.

8. Ibid.

9. Burlington Legacy Project. Projects andActivities.

10. Wanda Hines. SocialEquity InvestmentProject AnnualReport 2007-2008. City of Burlington.

[online], [citedMay 19, 2009]. cedo.ci.burlington.vt.us /legacv/SElP2oo8AnnualRep0rt.pdf.

Chapter 141. The Melbourne Principles had a link to the Earth Charter in their embryonic stages — even though theprinciples were named after the City of Melbourne, Australia they had their genesis inToronto, Ontario in2002, where UNEP sponsored a meeting about sustainable city planning. Gwendolyn was invited to thismeeting andpresented the EarthCharter’shistory andhowT it inspired the cities and towns in Vermont to

endorse it, along withinformation about the Burlingtonproject. The idea of a set of principles to guide cityplanning caught on, but instead of simply adopting the Earth Charter, the team from UNEP decided to

create something new. TheMelbourne Principles hold a lot in common with the Earth Charter, and weregoing to reference the document in the second and final draft, but the final draft never got printed as thepersonalities involved went off in different directions. Unlike the Earth Charter, the Melbourne Principlesdo not have abroadbase of support from a global audience, nor do they have an ongoing educational efforttokeep them relevant. ICLEI Oceania.MelbournePrinciplesfor Sustainable Cities, [online], [citedDecember 14, 2010]. wwiv.iclei.org/index.php?id=44QO.

2. Through all this work, a richset of resources onhow to apply systems thinking to cities was created.

Page 233: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

This material is all available now on the LASER -website (more about LASERin Chapter 3), which you can

readby going directly to: global-laser.org/resources /trend analvsis.pdf.

3. Noted downby Gwendolynduring a joint lecture for theCities PLUS Network at the WorldUrbanForuminJune of 2006.

4. ImagineCALGARY Plan for Long Range Urban Sustainability. June 2006,p. 192. [online], [cited

December 16, 2010]. imaginecalsarv.ca. imagineCALGARY long range plan.pdf.

5. Ibid.p. ig4.

6. Calgary had enough funding for theproject to develop their own, but a free version of it is available on

the EarthCAT wTebsite: earthcat.org.

7. ImagineCALGARY Plan for Long Range Urban Sustainability,p. 1.

8. More information about the currency canbe found on the -website calgarvdollars.ca.

9.Plan-ItNewburgh; SustainableMaster Plan, Adopted December 8, 2008,p. 8 [online], [cited

December 17, 2o1o]. cityofnewhurgh-ny.gov/master plan/docs/MasterPlan2006-9-10.pdf.

10. Jean-Ann McGrane in a video interview at thekickoff event for Plan-ItNewburgh.

ll.Doyle Murphy. “Newhurgh Begins Search for New City7 Manager.” TimesHerald-Record, January 14,

2009.12. Sociocracy: The Organization ofDecision-Makingis the title of a book by7 Gerard Endenburg (Eburon,199S), about a unique model of groupprocesshe developed for his manufacturingbusiness in theNetherlands. It has been further articulated and developed by7 many social change professionals. Thestructure of enVision Montpelier — with two interlinking chairs for each committee, one appointed fromthe main decision makingbody and one elected from the group — reflects one of theprinciples Endenburgadvocates. The electionprocess is aparticularly good one for sustainability7 planning (and other publicpurposes). To conduct anelection, everyone nominates someone, writing their nominee on a piece of paperwith their ownname onit too. The election is facilitatedby7 either a neutralparty or by someone whovolunteers from the group, and the facilitator collects the nominations and reads them out loud. After this,eachperson talks about why they nominated theperson they7 offered. Then each of the nomineeshave achance to say7 a few wTords (including whether or not they are wilting to serve). After this, a decision makingroundis held, where eachpersonstates whether they7 have changed their mind, andif they have, whomthey wTould like to lead the group. It is an excellent wTay tobringpeople forwardinto leadership who mightnot be ones who usually volunteer for these positions.

Conclusion.1. See various examples of such evidence, for instance, in any issue of theInternationalJournal ofCommunity CurrencyResearch, [online], [cited December 20, 2010]. uea.ac.uk/env/iiccr/.2. See Chapter 2.

Page 234: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

3. Robert Ulanowicz, Sally Goerner, Bernard Lietaer, Rocio Gomez. “Quantifying Sustainability: Resilience,Efficiency and the Return of Information Theory7.” Ecological Complexity Vol 6 #1(March 2009), pp.

27-36.4. Bernard Lietaer, Robert Ulanowicz and Sally Goerner. “Is Our Monetary Structure a Systemic Cause forFinancial Instability7? Evidence and Remedies fromNature.” Journal ofFuture Studies (April 2010);Bernard Lietaer, Robert Ulanowicz and Sally Goerner. “Options for Managing Systemic Financial Crisis.”Sapiens Vol 2 #i (March 2009).

5. Sally7 Goerner, Bernard Lietaer, Robert Ulanowicz. “Quantifying Economic Sustainability: Implicationsfor Free Enterprise Theory, Policy and Practice.” EcologicalEconomics Vol 69 #1(October 2009), pp.

76-81.6. See Chapter 7.

7. Gerhard Rosl. Regional Currencies in Germany:Local Competitionfor theEuro?Deutsche BundesbankDiscussion Paper Series 1: Economic Studies, No. 43/2006. [online], [cited December 20, 2010].bundesbanh.de. download. volksviitschaft. dkp. 2006. 2Q064idkp en.pdf.

8. Chartalism was developedby economist G. F. Knapp into the 1920s.It was influential on the 1930Treatise onMoney by John Maynard Keymes — Knapp and Chartalism are cited approvingly inits openingpages. Chartalismexperienced a revival under Abba P. Lerner in TheEconomics ofControl (1944) andlater in TheEconomics ofEmployment (1951). It also has a number of modernproponents who largelyidentify7 as post-Keynesian economists. Agood recent symthesis isprovidedby7 L. RandallWray inUnderstanding ModernMoney: TheKey to FullEmployment andPriceStability. Edward Elgar, 2006.

9. See Chapter 9.10. See Chapter 11.

Appendix1. It was Chartalist Georg Friedrich Knapp who defined money7 as anything that the government declaresas acceptable inpayment for taxes. See Georg Friedrich Knapp. The State Theory ofMoney. AugustusM.Kelley, 1924 and L. Randall Wray7. Understanding ModernMoney: TheKey to FullEmployment andPriceStability. Edward Edgar, 2006.

2. There are nevertheless exceptions,but they7 tend tobe temporary7 in today7’s world: for instance, inRussia the government accepted commodities and goods from corporationsinpayment of taxes after thecollapse of the Ruble in1998.3. See Chapter 9.

4. Ibid.

5. The first (in chronological order) post-war complementary currency pioneer was Teruko Mizushima,who wasbornin1920 in Osaka. In1950 she wrote a visionary7 article about a “Labor Bank,” apaper that

Page 235: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

was honored at that time with theNewspaper Companies' Prize.6. The organization involvedis called Regeltante: see regeltante.nl.

7. For more information on all the Japanese currency projects, see Bernard Lietaer. “ComplementaryCurrencies inJapan Today: History, Originality and Relevance.” InternationalJournal ofCommunityCurrency Research, VoL 8 (2004), pp.1-23 [online], [citedDecember 21, 2010].uea.ac.uk /env/iiccr /ahstreets /vo!8(1llietaer.html.

8. GlobalCommunity Initiatives, [online], [cited December 20, 2010]. global- communitv.org/.

9. History ofMoney:1930-1933. [online], [citedJanuary 16, 2011].

mindcontagion.org/monev/hmiQ2Q.html.

10. The Terra (TRC) Trade Reference Currency, [online], [cited December 22, 2010]. terratrc.org/.

ll.The Department of Economic History of Bocconi University inMilan, Italy, has undertaken a

systematic study of suchhistorical complementary currencies. They have discovered many such currencieswidely used locally inEurope fromthe 8th century to the 18th. Such currencies wTere circulatinginparallelwith centrally issued currency, some wTere evenissuedby central authorities, but they wTere not acceptedfor payment in taxesby the centralgovernment (royal or imperial). See Luca Fantacci Storia dellamoneta immaginaria.MarsiBo Editore, 2004; Jacques Labrot. Une histoire economique etpopulaire duMayen-Age: lesjetons et les mereaux. Editions Errance, 1989.12. Thebanking systempartially resolves that problemby relending funds that people deposit with them.But, particularly from a regional viewpoint, there is no guarantee that the money willbecome availablewithin the same conmunity or area whereit originated.

13. Ken Anderson. “Ratahdin TimeDollar Exchange.”Magic CityMorning Star, May 18, 2005. [online].[cited December 27, 2010]. magic-city-news.com. Community Katahdin Time Dollar Exchange gSSggSSg.shtml.

14. Barter Systems, Inc. Success Stories, [online], [cited December 27, 2010]. bartersvs.com/success.asp.

Page 236: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

About the Authors

3 /TJ1-i US

SiwGWENDOLYN HALLSMITH, The Director of Planning and Community Development for the City ofMontpelier and founder and director of GlobalCommunity Initiatives,is author of 77ieKey to

Sustainable Cities, TakingAction: theEarthCATGuide to CommunityDevelopment, andLocalActionfor SustainableEconomicRenewal,has over 20 years of experience working withmunicipal, regional and state government inthe United States andinternationally. Shehasserved as the TownManager of Randolph, Vermont, theRegionalPlanningDirector inFranklinCounty,MA, as a Senior Planner for the Massachusetts Executive Office of Energy Resources, as

theDeputy Secretary of the Vermont Agency- ofNaturalResources and for over tenyears as an

international specialist on sustainable community development.Her international experiencehas included work withtheUnitedNations Environment

Program, theUnitedNations Development Program, the Institute for Sustainable Communities,theInternationalCity/County Management Association andEarth Charter International. Shehas aMaster's degreeinPublic Policy fromBrownUniversity and studied at the Andover NewtonTheological School, exploring thelinks between our wisdomtraditions, spirituality andwork on

the community level.

Page 237: Bernard Lietaer - Intentional Cities, Intentional Economies - Creating Wealth

\

fmBERNARD LlETAER, the author of TheFuture ofMoney:Beyond Greed andScarcity and theforthcoming OfHuman Wealth,has been activeinthe realm of money systems ina widevarietyof functions for close to 40 years. Withthepublication ofhis post-graduate thesis atMITin1971(whichincluded a description offloating exchanges) and theNixonShock of that same yearwhich eradicated the BrettonWoods systemby unhinging the US dollar value fromits goldstandard andinauguratedthe new era of universal floating exchanges (previous to that time theonly floating exchanges involved some exotic currencies inLatin America), the fledglingmanagement consultant suddenly foundhimself at the center of the financial world's attention.

The techniques thathehad developed for those marginalLatin American currencies were

overnight the only systematic researchwhich couldbe usedto deal with all of the majorcurrencies of the world. Amajor US bank negotiated exclusive rights to Bernard's approach,which requiredthathebegin another career. While at the centralbank inBelgium(NationalBank of Belgium) heimplementedthe convergence mechanism (ECU) to the single Europeancurrency7 system. During that period,he also served as President of Belgium's Electronic PaymentSystem. His experience as a consultant inmonetary7 matters on four continents ranges frommultinational corporations to developing countries.

Bernard co-founded one of thelargest andmost successful currency7 management firms,GaiaCorp, and managed an offshore currency7 fund (Gaia Hedge II) which was the world’stop-performing managed currency7 fund during theperiod (1987-1991) he ranit.Business Weekmagazine namedhim “the world's top currency7 trader” in1992.