International Alliance for Localization: Local Futures

In the Times, Ed Conway, economics editor of Sky News, describes problems arising from the complexity of globalisation, ‘the hallmark of 21st-century life’ and the International Alliance for Localization records examples of new modes of development and progress. He concludes: “Globalisation, once a means of boosting everyone’s income, has instead evolved into an excellent vehicle to help the rich get richer”.

The International Alliance for Localization sees that the building of more resilient economies will require a rethinking of the financial system, and its Planet Local series has been turning the spotlight on some inspiring examples of ethical banking:

* In Maine, USA, a local resident with money to invest  is providing nearby small farmers with loans whose interest is paid exclusively in the form of farm products.

* Brazil’s Banco Palmas, governed and managed by residents of the impoverished Palmeiras neighborhood in the city of Fortaleza, has issued a local currency, dramatically shifted spending patterns to keep money circulating locally, and extended basic financial services to people shut out of the mainstream banking system.

* In Croatia, the democratically-owned Ebanka functions as a non-profit bank, in stark contrast to most financial institutions worldwide. Their loans are given without interest, and every member has an equal voice when it comes to voting on big decisions, regardless of the value of their deposit.?

Visit IAL’s growing library of localization initiatives

 LWM is a member of IAL, a cross-cultural network of thinkers, activists and NGOs from 58 different countries.

 

 

 

 

A lesson for Britain: Brazil promotes food security and local food procurement, strengthening family farming

graziano da silvaVested interests replacing the now defunct Flying Matters, a lobby group funded by the aviation industry, vigorously defend the profitable import of food from countries with malnourished people. A better way forward, socially, economically and environmentally is offered by the Director General of the UN’s Food and Agriculture Organization, Jose Graziano da Silva (Extraordinary Minister for Food Security), one of the champions of the Zero Hunger project in Brazil, which raised 28 million people above the poverty line during the 8 years of the Lula administration.

Small-scale family farmers, who accounted for a significant percentage of the agriculture/livestock production in Brazil particularly of staple food items, were usually excluded from agricultural policy discussions. They mobilised and a national program, the Pronaf, was created in 1995, offering the first credit line specifically designed for family farming in Brazil.

Local food procurement, a success in Brazil today

school meal brazilA School Meal Law (Pnae) was passed, requiring 30% of the public food purchases for school meals to be made locally from family farmers. It strengthened local and regional markets, fostered the circulation of profits in the region, recovered regional food habits and promoted the establishment of associations or cooperatives, which play an instrumental role in organizing food production and protecting the economy of the poorest sectors of the population.

Da Silva commented: “This ensures stable markets for farmers and at the same time ensures culturally-acceptable, nutritious and fresh meals for school-going children.

zero hunger coverA Family Agriculture Food Acquisition Program was set up and generates income for poor family farmers (household income not exceeding R$ 110,000) by selling their surplus food produce to the federal government and encouraging the creation or development of marketing channels for family farming products. It also provided a price guarantee tool for part of their produce.

A range of initiatives, included crop insurance and special credit lines were created for young people, women, organic crops, working capital and shares in cooperatives, agroindustrial projects, rural tourism, environmental recovery and semiarid regions.

The farmers’ organizations financed and set up stocks of products of the current harvest, strengthening food security systems and keeping food products in their localities, allowing any surplus to be sold when prices are more rewarding for farmers. Read more here and in the book (right) co-authored by Dr da Silva.

Several countries in Latin America, the Caribbean and Africa are adopting similar approaches.

modi da silva agric

 Dr. Jose Graziano da Silva recently met India’s Prime Minister Narendra Modi in New Delhi and discussed India’s National Food Security Mission. Both agreed that food security comes first and national governments must have the flexibility to put in place suitable mechanisms to achieve it. Modi sought the FAO’s cooperation in designing a campaign for women which would highlight ways to improve families’ nutritional value and food habits. They discussed ways of linking family farming production to school meal programmes by creating local food procurement programmes and increasing the nutritional value of the mid-day meal scheme for school children.

Meanwhile, British farmers are encouraged by their unions and government agencies to produce more food for export, though prices then inevitably fall as supply rises, and the global market consistently rewards only the speculator or the unproductive middleman.

‘Local Liquidity: From Ineffective Demand to Community Currencies’

greenhouse_small

molly scott cato 3Dr Molly Scott Cato opens her Green House paper, which may be downloaded here, by asking how our ongoing financial and economic crisis is to be understood and resolved.

The mainstream view is that we need economic growth – and austerity – because of the vast government deficit and stagnant economy.

Others say that we must invest and borrow more now in order to resume growth. Both sides are assuming ‘growthism’ as an unquestioned dogma.

She continues:

“The aim of the Green House Post-Growth project is to challenge the common-sense that assumes that it is ‘bad news’ when the economy doesn’t grow and to analyse what it is about the structure of our economic system that means growth must always be prioritised. We need to set out an attractive, attainable vision of what one country would look like, once we deliberately gave up growth-mania – and of how to get there. And we need to find ways of communicating this to people that make sense, and that motivate change”.

Attempts to restart economic growth have been unsuccessful; local economies are suffering from the large-scale withdrawal of liquidity that the public spending cuts represent. Local currencies across the world offer a different type of liquidity, “but one that has suffered from lack of credibility and from an absence of political support”.

Scott Cato recommends local authorities to generate truly ‘effective demand’ in their communities

This can be done by introducing local currencies into their fiscal administration on a staged basis, beginning with local services, as partial payment of local tax, and eventually for the payment of staff – note the voluntary example of the mayor of Bristol.

Her verdict on ‘queasing’:

“The government’s creation of money through its quantitative easing programme has only created ‘ineffective demand’ because it has been sucked into banking debts; by contrast money spent into the local economy as a local currency could help to revive local economies and build resilient communities and thus constitute genuinely effective demand”.

Community currencies exist in Brazil, USA, Argentina, Japan, Switzerland, Germany, France, Austria, the Netherlands and the UK

Across the world, community currencies exist in countries with widely contrasting economies and levels of wealth ‘as conventionally measured’. Citizens are taking control of the medium of exchange and issuing their own money in Brazil, USA, Argentina, Japan, Switzerland, Germany, France, the Netherlands and the UK. Scott Cato notes:

“Local currencies have provided a way for people to work and make a contribution to their local community even when conventional jobs paid in the national currency are not available. In this way many social needs have been met that would otherwise have been left unresolved”.

She looks at community currencies used in the past and those currently used in other countries. Two examples are summarised here:

“The Chiemgauer was launched in the Salzburg town of Chiemgau in 2003 and is accepted by around 150 shops and service providers including the optician and pizzeria. Chiemgauers to the value of €60,000 were spent in the first year of the scheme, which was started by a local economics teacher. To add credibility the currency is effectively backed one-for-one by euros, since the money is bought directly in exchange for the European currency, which is deposited in a local bank before Chiemgauers are issued. They can be exchanged back but for a 5% fee”.

The Chimegauer has an initial validity of three months, after which its value can only be extended by purchasing a stamp costing 2% of its value. Since it earns no interest there is no incentive to hoard or invest, meaning that the currency will instead be spent, increasing economic activity.

“The Chiemgauer is now very widely used. It has 600 shops participating in the scheme, 1800 consumer members and 200 charitable associations who receive donations every time the local currency is purchased. Around 430,000 Chiemgauers are in circulation, generating a transaction volume value of more than €4m”.

She notes that Japanese local currencies are also time limited:

“(They) tend to be designed as coupons which are received in return for voluntary work and can then be spent in local shops. They have a long history and are widespread. The first Japanese currencies were organised as ‘voluntary labour banks’ similar to time dollars. In 2001 these were joined by ‘eco-money’ designed by former MITI employee Toshiharu Kato.

A few points from Dr Scott Cato’s conclusion

“From a green perspective, the building of a sustainable society requires a transition towards a system of self-reliant local economies, where the majority of our needs are met from genuinely local production.

“Green economists see the lengthy supply chains of the global economy as wasteful of energy, as well as leaving us vulnerable in the face of rising fuel prices and more unpredictable weather resulting from climate change.

“Rather than increasing growth for the sake of it, local currencies can shift economic activity out of the globalised economy and into the local economies on which we will all come to rely.

“In a globalised economy local authorities often feel powerless to act to support the economies which support their citizenry, but they are not. Local authorities across the world have the power to support local currencies and enable them to underpin struggling local economies of both production and distribution”.

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A resource centre of papers on complementary currencies from around the world is available here: http://complementarycurrency.org/materials.php

 

Some countries are weaning themselves off their export dependence – should we?

LWM’s co-founder Colin Hines writes, “The old idea was that we can compete in export markets to strengthen our economy. That increasingly looks like clutching at straws”.

Barriers to destructive flows of capital

In developing countries barriers to destructive flows of capital are being erected. Brazil, Argentina and Costa Rica have used various measures, including Brazil’s insistence that short-term investors deposit funds with the central bank for a year which the mainstream media – including the FT – has not reported -perhaps fearing ‘copy-cat’ action. See Deloitte’s website.

These countries seek long-term, job-generating capital, rather than the casino bets of the feckless financial herd. Long-term investment in the real economy encourages and enables countries to rebuild and re-diversify their economies by limiting what goods they let in and what funds they choose to enter or leave the country.

Most importantly, in the process they will wean themselves off their export dependence. This will allow space for domestic funding and business to meet most of the needs of the majority in society.

Europe could do this

Of course such a radical change in economic direction could not be introduced in one country alone, since the money markets would ferociously destabilise such a challenge to their present dominance of the world economy.

Europe – though facing huge threats from the forces of international finance – would be powerful enough to implement such a programme.

Should the politically active start to campaign for such radical change?

To read a detailed treatment of this subject, click on www.compassonline.org.uk