Sunday, June 28, 2009

Open Letter to the folks at River HOURS

Today I received an email from the good folks at the Gorge Local Currency Cooperative in Hood River OR. They had just finished putting on a public screening of THE MONEY FIX in their community. Their currency, the RiverHOUR (modeled off of IthacaHOURS), is featured in THE MONEY FIX. For those of you who haven't seen the film, there is a clip of Francis Ayley (of Fourth Corner Exchange) criticizing the fact that these types of currencies have a central issuance, and as such may accidentally create scarcity. It seems that some members of the GLCC steering committee were concerned about the negative portrayal of their system.

I struggled with how to respond to this. I have the deepest respect for this group, and learned a great deal during the process of filming them. It was certainly not my intention to cut down any of their efforts, but rather to foster open and frank discussion about what sorts of social contracts (aka currency) people choose to live under. I believe the response I ended up writing might also be of value to the broader currency community, so in the spirit of openness, I am sharing it now:

"...There are several points to make here that might help illuminate my reason for putting in Francis Ayley's less-than-glowing critique of RiverHOURS. I offer these in the spirit of building towards what I am assuming is our shared goal of creating a space in which the dysfunction in our social body caused by the monetary system (and in particular artificial scarcity) might be collectively addressed and healed.

"I have observed that the currency community at large usually frames its discussions in terms of comparing the relative merits of different currency designs. This is, IMO, a very healthy thing to be discussing as long as it is within a broader context of embracing multiplicity. However, this debate usually takes place within an unconscious assumption that there is A single best alternative to FRDs. In other words, currency designers compete to create THE alternative to money. As a result, fierce ideological, and often less than friendly, competition emerges within the currency community.

"I believe that this competition emerges from the shared (and largely unquestioned) perception that there is a scarcity of early adopters, and that we in the currency world must compete for their attention. Sometimes there are several groups doing currency within a given community, and they enter into a competitive relationship for capturing "market share" (people willing to adopt a new form of currency). This type of competition leads to sectarianism and group-think where basic assumptions often go unchallenged and all involved systems stagnate. This, in turn, leads to what I call "mutually assured irrelevance." To put it simply, I have observed that the same fundamental assumptions about scarcity are often just as rampant inside the currency community as they are anywhere else.

"IMHO, one cannot replace a monoculture with a monoculture. One of the primary dysfunctions of our current system is that it discourages creativity. We get our money from THEM. THEY are the experts. THEY tell us what social contracts to live by. Replacing one THEM with another THEM is of no interest to me. I think it is fair to say that no one has figured out how to do currency on any kind of wide scale. The VAST overwhelming majority of currency systems quickly fail. It would be enormously misleading to pretend otherwise. Instead, I see new forms of currency as being in their infancy (perhaps akin to early aviators who were viewed by the general public at the time as doing something curious, but of no great value). Seen from this point of view, early plane designs were quickly shed in favor of THOUSANDS of more effective designs.

"So, to me, rather than using THE MONEY FIX as a form of advertisement, which attempts to hide the dysfunction of most of these early systems, I revamped the film with the goal of inspiring people to imagine new forms of collective social agreements (aka money). I believe we in the currency community can no longer afford to be committed to AN alternative or A particular design. Instead, I see our role as supporting the emergence of THOUSANDS of new designs that will form healthy ecosystems as they interact.

"Why have an assumption about the scarcity of people willing to adopt new ideas? We use credit cards, frequent flyer miles, movie tickets, bridge tokens and hundreds of other forms of currency every day without even noticing. I don't see why community currencies should be any different unless they are couched in ideologically off-putting rhetoric. From the context of multiplicity, negative critiques of a given design are no problem at all, but rather help foster the emergence of better designs.

"For an expanded discussion on this point I recommend you read this blog post:

"I put in the remark about RiverHOURS because statistically, systems patterned after IthacaHOURS don't tend to last that long. RiverHOURS seems to be one of the most successful of this kind in the world (which is a testament to the awesomeness of all of you). However, systems based on mutual credit have had a higher success rate (although also quite low), so I wanted to encourage people in the direction most likely to succeed based on the data we have so far. That having been said, I believe systems based on mutual credit are not the be all and end all. I am actually most interested these days in currencies designed to foster scalar gift economies such as has been exhibited on Wikipedia (but that is a whole other discussion).

"But rather than be drawn into a debate about the relative merits therein, I would invite everyone (HOURS based, and mutual-credit based alike) to drop the notion that there is AN approach, and embrace the fact that there can and should be MANY approaches to building healthy social agreement structures for exchange within the communities that they serve. As currency practitioners, I believe it is our job to support the empowered collective emergence of AS MANY AS WE WANT OR NEED..."

I go on to say that I hope that THE MONEY FIX can be part of fostering an ongoing conversation within any and all communities as they look towards adopting new social agreements that allow them to build wealth together. It seems to me that the conversation about multiplicity is one that is long overdue in the broader currency community.


Guillaume Lebleu said...

+1 Alan

John Rogers said...

Thanks for starting this discussion Alan. You make lots of very good points about the need for diversity.

I see currency diversity as equivalent to bio-diversity, which ecologists tell us is essential for eco-system health.

I have tried to approach this by taking a step back from all of the existing models and asking what a currency design language might look like that makes no prior assumptions about any particular approach being 'better' or 'worse'.

There is just a set of design choices from a number of features that determine what the system is focussed on achieving, how it is likely to perform and what other kinds of actions might be necessary if you make a particular choice. For instance, neither the local fiat model of Ithaca HOURS/Berkshares/Totnes Pound OR the mutual credit model is *perfect*. Both require particular kinds of brokering or management to get them to work optimally.

Currency design involves posing a series of key questions at the earliest stages of development to make sure you think through all the potential issues. And that currency design process itself needs to be embedded in an ongoing community development process of engaging those who may use the currency, finding out their problems, needs and goals and designing the currency to suit those.

I have developed some simple processes to get new groups going on these issues here:

The Community Currency Design Manual I have written goes into much greater detail with checklists and detailed discussions of the key issues.

Anyhow, good luck with your efforts of awareness raising and getting people to see the bigger picture.

King of the Paupers said...

"The VAST overwhelming majority of currency systems quickly fail."

Jct: A database of time-based IOUs does not fail, trading may, but the accounts do not. They'll be rolled into the UNILETS database the day time-trading goes world-wide.
There is an ideal system. Time-based since everyone has time to trade like almost no one has gold.
Best of all, when the local currency is pegged to the Time Standard of Money (how many dollars/hour child labor) Hours earned locally can be intertraded with other timebanks globally! In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours.
U.N. Millennium Declaration UNILETS Resolution C6 to governments is for a time-based currency to restructure the global financial architecture.
See my banking systems engineering analysis at