Creating Wealth

Growing Local Economies with Local Currencies

Gwendolyn Hallsmith, Bernard Lietaer

• Publisher: New Society Publishers
• Year: 2011
• ISBN:
  9781550924770
• Topic: Economics
• Subtopic: Monetary Policy
• Index: Economics

Gwen Hallsmith is the director of Planning and Community Development for the City of Montpelier, author of The Key to Sustainable Cities and her international work has included a number of organizations, including the United Nations Environment Program. Bernard Lietaer implemented the ECU, co-founded one of the world's largest currency management firms, GaiaCorp, and in 1992, was named by Business Week "the world's top currency trader."
Bernard's book The Future of Money sold over 50,000 copies.
The world's leading complementary currency authority joins an experienced city planner to demonstrate how cities can introduce local currencies to address the economic crisis. They do this by exploring the capital that communities need: natural, social, human, institutional, cultural, built, and financial.
Offers stories of successful cities, from Burlington, VT to Calgary, AB, as well as some cities in Europe, whose vision of a sustainable future proves economic health is both attainable and manageable.
Both authors are seasoned public speakers, attending between 20-40 conferences a year, and have been featured in prominent media, including Yes!, ODE, Time, CBC and Radio Free Europe.
The authors offer a list of dozens upon dozens of cities and towns in North America that have complementary currency systems.

PART I

LOCAL ECONOMICS

CHAPTER 1

What is Wealth?

Wealth consists not in having great possessions,
but in having few wants.

EPICTETUS

The appeal of big prize lottery tickets comes in part from the fantasy the tickets allow. We imagine all the things we could do, charities, projects, real change that we could help make happen. There is no denying the appeal of vast sums of money. In our dreams, money solves all our problems, gives us resources to meet needs we never knew we had. But is it wealth?

You might have picked up this book because you thought it would tell you something about how you can increase your own personal wealth — and it will. But Creating Wealth is not another get-rich-quick scheme — this book will help you find and create wealth in places you might not expect. It also might show you how wealthy you already are.

Redefining Wealth

Wealth. It’s something we all want. Wealthy is rich, after all — but rich in what? In possessions, money, income? This depends on how you define the word. Its original meaning, from the Old English weal (as in commonweal), was simply prosperity or well-being.”¹ What a notion! How far from the meaning many of us have come to associate with the word. Wealth is more than the accumulation of money and resources, and it can be generated in ways other than through conventional financial means. In order to truly capture the wealth of our societies, our cultures and our environments, we have to pay heed to that older notion of wealth as well-being. We might think that winning the lottery will make us wealthy and that wealth will make us happy, but we also know that it doesn’t always work that way. While it’s true that poverty does make for unhappiness, lots of money doesn’t necessarily buy happiness.

We may have seen cases where someone who has had very low income wins the lottery or obtains a big court settlement — and yet the money often doesn’t manage to improve their lives very much. In many such cases, things get worse as the stress of possessing money and all its new demands take their toll — how to keep it, suddenly meeting relatives and friends you never knew you had, con artists and an army of “investment advisors.”

How do we obtain well-being, if acquiring more money doesn’t do it? When are we happy? We know the answer to this question — we have a sense of well-being when all of our needs are met. Not just the basic needs of food, clothing and shelter. But also the need to be a creative participant in our community, to have a voice in our own destiny, to pursue our own spiritual development unhindered by social sanction, to have time to rest, play and just be with our families. Our needs are multi-faceted, and yet with the dominant emphasis on the consumer economy, the major economic actors — businesses and corporations — are always advertising to convince us to buy our way to fulfillment.

We don’t need money. We need the things that money can buy.

Overweight? Buy a diet plan and an exercise machine. Unhappy? There are lots of self-improvement programs you can buy. Spiritually lost? Buy a book, a videotape, join a successful megachurch or take a vacation at a resort. Our need for self-expression is increasingly met through the clothes we wear, the cars we drive. Arts and music are left to the professionals who have their own goods and services available for sale. And yet after all this we find that the consumer solutions don’t work — the temporary gratification we get from new products only deepens the underlying need. But if we can’t buy our way to happiness, there has to be another way.

We need to redefine wealth as the first step in charting a course towards sustainable wealth. So what is meant by that? Remember the notion of commonweal (public well-being)? Developing real wealth implies making choices that enable all members of the community to attain well-being. Sustainable wealth means projecting that notion into the future, much as the World Commission on Environment and Development did when it defined sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”² If we had sustainable wealth, we would have a community with well-being — a community whose needs were met without borrowing its wealth from future generations.

A Systems Perspective

What are our needs, and how are they satisfied? It is possible to do an empirical evaluation simply by looking around at the different institutions, programs, goods and services that are offered in society. Not that all of them meet real needs — some are obviously there because a want or an artificial need has been created, but taking an inventory of the assets we have — assets being defined as need satisfiers — gives us a good starting point.

Human and Social Development needs: health and well-being

Empowerment needs: equity, conflict resolution, self-determination

Economic needs: income, meaningful work

Material needs: housing, communication systems, transportation, energy, waste management, food

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

FIGURE 1.1. Human Needs and Community Systems

Before we can be a contributing part of any community, we have a need for human development. We need education, healthcare, self-esteem, skills, recreational opportunities. There are assets in our communities that meet these needs — schools, universities, child care programs, wellness and medical services, hospitals, recreation programs and facilities. When the systems are in place to help us all be healthy, productive and happy people, we can also say that our community has sufficient human capital. Human capital can be defined as the capacity communities have to further our development as human beings, along with the aggregate skills, knowledge and abilities people in the community have and can continue to maintain.

We also have social needs — the needs that can only be fulfilled by being part of a community. We need to have a sense of connectedness, a sense of community. We need to feel safe, to express ourselves and enjoy the beauty of our surroundings. We need a sense of meaning and purpose, and meaning is invariably generated only through relationships (relationships to our children, our family, our country, or to our idea of the divine). These human and social needs have given rise over the centuries to many of the religions and spiritual traditions. We need supportive relationships, networks of friends and a sense that we’re contributing to the community. When these needs are satisfied, we can say that we have many social assets. When we have systems in place that insure we can continue to meet our social and cultural needs as a community, we can say that we have sufficient social and cultural capital.

To make decisions, resolve conflict and to insure that we all have a level of equity, we all have a need for empowerment. The institutions we have established to govern ourselves, the programs in the community that help people resolve disputes and the laws and regulations we have to provide a just and peaceful society are the assets we have in this area. The institutional capital in our community is the legal framework and the traditions, structures and other foundations that enable our societies to continue to recreate the institutions they need.

When people think of needs, the first things that often come to mind are the basic needs of food, clothing and shelter. These material needs are obviously important, and the buildings, manufactured products, technology and infrastructure we develop in our communities are the assets we have to satisfy these needs. When we have good affordable housing, safe and healthy drinking water, effective systems for recycling and reusing waste, renewable energy systems, healthy local food production, communication systems that link us up with each other and the rest of the world, we have the built and technological capital we need to prosper.

Our material needs go beyond what we make ourselves, obviously, and so we can also speak of the environmental needs we have. We need clean air to breathe, diverse ecosystems that support a wide variety of plant and animal life, a stable climate, assimilative capacity for our waste products, water to support other forms of life as well as for us to wash, drink and enjoy. We need healthy soils, pollinators; all of these things are the environmental assets that serve as our basic life-support system. When the ecosystem is healthy and productive, the core regenerative capacity of the ecosystem is the natural capital that we need for sustainable communities.

We’ve described several kinds of assets and capital that satisfy the needs we have, and still there has been no mention yet of the financial assets and capital we typically associate with the words money and investment. That’s partly because money is really more of a means to an end than a need in itself. We don’t really need money. We need the things that money can buy. We don’t need financial capital for its own sake if we can obtain the things it buys. The exchange capacity of money is now, and hopefully in the future, one of the key reasons we need it. Money helps us exchange things that are of value to us — like our time and labor — for things that are of value to someone else.

Money, however, is not the only medium of exchange. After all, people have been exchanging goods and services with each other for millennia without using money. You help your neighbor put on a new roof. He fills your cavities and gives you a new crown. You drive your friend’s kids to school. She baby-sits your kids. In both these examples, no money changes hands, but goods and services do. The value of this type of exchange is another asset and a form of capital — potential exchange capital.

Our community systems have developed over centuries, driven by our needs and the necessity of satisfying them. When we speak of a wealthy community, we mean one that has the capacity to meet a wide variety of human needs, one that had invested in all these forms of capital: social, cultural, human, institutional, built, technological, natural, financial and potential exchange. Creating and maintaining these diverse forms of capital over time is the sustainability challenge.

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

More than half of humanity now lives in cities, and this trend is expected to continue for at least another decade. So our community wealth is often the wealth that can be found in our cities. Cities are monuments to collective human endeavor over thousands of years. They form the physical, spatial and even the cognitive structures that meet so many of our needs. Realizing this, the bulk of the concrete examples of wealth creation we discuss will focus on cities.

The Wealth of Cities

To understand alternative paths to individual, community and economic well-being in an urban context, we need to look at how cities work, and we need city leadership to address the critical issues of a sustainable economy. In Cities and the Wealth of Nations, Jane Jacobs identified urban regions as the most important driver of economic growth throughout history. She documented both how cities and regions had the economic clout to import goods from other areas and also how they devised new ways to replace these imports with locally produced goods and services. This import replacement was the key source of urban economic expansion.³

Since the Earth Summit in Rio de Janeiro in 1992, cities all over the world have played a leading role in the efforts to stabilize global climate and address environmental destruction. There have been several different movements — sustainable cities, healthy cities, ecocities, resilient cities and most recently transition towns — and several different new organizations organized to support cities’ efforts. ICLEI was one of the first; it was originally the International Council for Local Environmental Initiatives, but has been renamed ICLEI: Local Governments for Sustainability.⁴

The scope and depth of this movement is confirmed by the proliferation of other organizations that have emerged over the past two decades. This includes, for instance, the Institute for Sustainable Communities, the World Health Organization’s Healthy Cities program, Healthy Cities International, Ecocities International, the Center for Resilient Cities, the Cities PLUS Network, Global Community Initiatives and the largest one of all — United Cities and Local Governments (UCLG) — a new international congress of cities established in 2004 when several global coalitions of cities (The International Union of Local Authorities, Metropolis and the World Federation of United Cities) merged into one organization.⁵ UCLG’s Millennium Cities Campaign embraces the United Nations Millennium Development Goals, which put a sustainable environment and a sustainable local economy on the same page. Cities are increasingly aware that the solutions to climate change and environmental problems are embedded in the economies we have created. These cities are positioned to be key catalysts for large-scale change.

Cities take action on several levels, ranging from broad policy changes like rezoning an area of the city from commercial to industrial to even small actions like buying paper towels for public restrooms. The policies take different forms — long-term planning documents with a vision statement, goals, targets and strategies, operating budgets and...