Tuesday, 24 June 2008

THE RESILIENT COMMUNITY: SCRIP

by John
Robb

A growing number of communities now use scrip (aka a community
currency or loyalty program) as a way to keep business activity
local and thereby increase community resilience to economic shocks.
Here's how it works. Customers buy scrip that can only be used with
local businesses to buy goods and services. This is usually done in
response to a community initiative. Businesses that accept scrip
can either pay employees with the same (to the extent they accept
it), provide it as change to customers (again, limited by
acceptance), or exchange this scrip for hard currency (usually at a
steep discount).

Examples of scrip range from the Ithaca HOURS, Berkshares, to the
Totnes Pound. While these attempts at scrip are better than
nothing, in almost all cases these efforts have fared about as well
as most "green" initiatives:

* participation is meager (it is relegated to a lifestyle choice) *
velocity is weak (low turnover), * it is vulnerable to economic
contraction (when times are tough, participation among retailers
falls off due to a scramble for a dwindling amount of hard global
currency)

How to Accelerate Scrip

However, despite the spotty record so far, scrip is an extremely
powerful means of accelerating local economic activity when nothing
else seems possible (in economic extremis). Past experience with
depression era scrip Abschein_vornelike Austria's Worgl indicate
that the following will accelerate scrip adoption, velocity, and
robustness:

* Allow community members to use it to pay all or part of their tax
liabilities to local governments. This instantly establishes a
market for the currency. Also, pay local government employees a
portion of their wages in scrip.

* Deflate the value of the scrip (optimally, one percent per month)
to promote immediate use rather than hoarding.

* To the extent possible, connect scrip to local production rather
than retail. Locally produced food (farmer's markets), energy (via
local microgrids), products (personal fabs), and labor/services.
Further, work with local banks to establish checking accounts for
scrip and to enable conversions hard currencies (at a slight
discount).

NOTE: Scrip should also be considered to be a part of a 21st
century approach to economic development (likely superior to
microcredit), (open source) counter-insurgency, and disaster/crisis
recovery. For more background read the economist Irving Fisher on
depression era scrip. The rambling utopian tract by Silvio Gesell
is also interesting.

"http://globalguerrillas.typepad.com/globalguerrillas/2008/06/the-resilient-c.html">
Posted by John Robb on Tuesday, 24 June 2008 at 03:10 PM |
Permalink TrackBack