Sharing Is Good: How to Save Money, Time and Resources Through Collaborative Consumption (4 page)

Now, you might be wondering, as I did when first learning about

this ancient currency, how in the world was it was possible for an international economy to operate using seashells? Nowadays, we make jokes about how nice it would be if dollars grew on trees; in 1200

BCE, cowrie shells littered the beaches of China, where they could be collected by the bucketful. This is hard to comprehend given how History of Sharing

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hard most of us work for just enough money to pay our bills and

feed ourselves. How could a successful economy be based around a

unit of currency that washed up on the beach? How can a seashell

be valuable? When I realized the answer, it was a little bit scary, but also very exciting. Are you ready for it?

Money only has value because we say it does.

In modern America, which operates outside of the former gold

standard, we are in the exact same boat as the ancient Chinese. Just like them, we’ve all simply agreed that a dollar has value. Think about that for a second. All the work, all the worry, all the scrambling to get more dollars is based on nothing more than an idea of value. Dollars are just meaningless pieces of paper that we hand back and forth.

Unlike the cattle used in the early bartering systems, you can’t eat a dollar. Unlike the cowries utilized by the Chinese and others, you can’t turn a pile of quarters into a beautiful necklace. So in reality, our money is even less valuable than those primitive forms of currency.

Yet we’ve become slaves to money, spending our entire lives earn-

ing, spending, and saving it — even though it’s virtually meaningless and has no value unless a whole lot of people agree that it does. Scary, right? The good news is that realizing this simple fact about modern money opens up a huge door of opportunity to create something better than our current economic system. Currency doesn’t determine

a thing’s value; we determine the value of currency. If enough people get together and decide that they want to use something else as a form of currency, a new economy is born. Everyone can go on living and working and eating and trading. In fact, alternative currencies are particularly useful in times of economic crisis, when people are unable to get their hands on enough cash to meet their needs.

Alternative Currencies

Bartering is in our blood, and it’s an integral part of our history, but many consider it too difficult and time-consuming for the modern

world. You’re going to find it hard to pay your mortgage or utility bills 8

Sharing is Good

with things you have available for trade, valuable though they may be. But the dollar (or yen or franc) isn’t the only way to gain access to the things you need. In fact, dollars only work as a unit of currency because we all agree to the fantasy that a dollar has value. If an entire community decided to agree that monopoly money had worth, it

could replace the dollar without totally disrupting that community’s economy. It might be difficult to get the utility and cable companies on board, but you get the idea. It
could
happen if
everyone
agreed. To do so would create an alternative currency (or what some call a
complementary currency
when it’s used in an economy that also accepts traditional money). Find that hard to believe? Well, it’s happened many times throughout history, and, thanks to the sharing revolution, alternative currencies are making a comeback.

The biblical record tell us that when Joseph interpreted Pharaoh’s dream to mean that Egypt was headed for seven years of famine,

the country responded by stockpiling food. In his book,
Community
Currencies: A New Tool for the 21st Century,
Bernard Lietaer specu-lates that in addition to being a bright idea, these stockpiles were also the basis of the Egyptian monetary system. “Each farmer who

contributed to the stockpile would receive a piece of pottery having an inscription of the quantity and date of delivery of his contribution, which he could then use to purchase something else,” Lietaer writes. “These receipts, or
ostraca,
have been found by the thousands and were in fact used as currency.” This food-based currency was

used in Egypt for more than a thousand years, until the Romans

forcibly replaced it with their own banking and currency system.

The Great Depression of the 1930s was a global economic cri-

sis, but most people associate it with the United States — and

with good reason. In the United States, the effects of the Great

Depression were particularly severe and long-lasting. Between the years of 1929 and 1938, the United States endured an unemployed

population estimated at over 12 million; approximately 25 percent of all American families had no income whatsoever. There was a

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huge increase in foreclosed farms and houses and evictions from

apartments (in 1930, there were more than 200,000 evictions in

New York City alone).

After the stock market crash in 1929, people had almost no con-

fidence in the rapidly declining value of the dollar. Those who had dollars hoarded them under their mattresses, resulting in even less currency being available for the rest of the populace and a further reduction in the volume of business that could be transacted. Those who didn’t have dollars became migrants, wandering the country in search of work that would prevent their families from starving to death. As we know, desperation is the mother of invention, and many people started to realize that they could still make simple trades and exchanges for things they needed even if they didn’t have dollars.

“Besides learning how to ‘make do, or do without,’ people began

to establish mutual support structures, like workers’ cooperatives, many of which would recycle and repair donated or broken items,”

writes Thomas H. Greco, Jr. “People learned to share what they had, and to bypass the market and financial systems. Most of these measures were considered stop-gaps to be utilized until things ‘got back to normal,’ but in some of them there seemed to be the promise of more permanent improvements. One of these ‘stop-gaps,’ which was

intended to address the problem of the dearth of currency in circula-tion, was the issuance of
scrip.
2 ”

Scrip took many forms and operated in slightly different systems, but no matter where it originated or how it was designed to be used, it was always a locally printed document that could be used in the place of dollars or US coins. According to DepressionScrip.com,

paper, cardboard, wood, metal tokens, leather, clam shells, and even parchment made from fish skin was used. Inscriptions on some of

these items promised that they could be redeemed for “real” money on a future date, while others, like rabbit tails and wooden discs, were simply a vehicle for expressing value so that trade could continue. At one point, the US government considered issuing a nationwide scrip 10

Sharing is Good

on a temporary basis, but that idea was quickly shot down by then Secretary of the Treasury William H. Woodin. The proliferation

and use of scrip died down as soon as the Federal Reserve agreed

to start printing more money and the economy started to recover,

although the use of alternative currencies never died out completely.

Around the same time as the Great Depression was laying waste

to the American economy, nations around the world were feeling the pinch. An Austrian man by the name of Michael Unterguggenberger

came up with a novel idea to help save his small town of Worgl. He persuaded the town’s government to issue paper tickets that were

worth one, five, and ten Austrian schillings a piece. Unemployed

people could earn this “money” by doing good works in the commu-

nity, like repairing bridges or cleaning drains. The tickets could then be spent like money in the shops; in turn, the shopkeepers paid their local taxes and their local suppliers with them.

“This new currency led to a dramatic increase in economic activ-

ity, which was partly due to a special feature of the notes,” writes James Robertson in
The History of Money.
3 “They lost one percent of their value every month, unless their holders attached a stamp bought from the town council. People were eager to spend them

as soon as possible before they lost value — which increased what economists call the ‘velocity of money’; the sooner people spend it, the faster it circulates.” This alternative currency was so popular that soon the Austrian government began to feel like it was losing control over the country’s monetary system, and, as we know, maintaining

control
is very important to the status quo.

So, despite its success, Austria outlawed the scrip in 1933,

right about the time when New York bankers convinced President

Roosevelt to do the same in America. The new bank system that

emerged in both countries was far more centralized and tightly controlled than before. That should tell you something about the power of currency and how significant it can be when people opt out of the socially acceptable monetary systems.

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For the next few decades, local and alternative currencies fell

to the wayside as developed nations experienced relative prosper-

ity. Still, the system that had saved so many communities from ruin was never far from the minds of innovators and activists. In 1973, a Massachusetts economist named Ralph Borsodi devised a currency

called “The Constant.” Protected against inflation by a backing of 30 commodities, Borsodi hoped his alternative currency could be

guaranteed against devaluation. “The idea was exciting enough to the surrounding community that up to $160,000 worth of Constants

were circulating in general use throughout the region, not only in paper currency but in checking deposits at local banks as well,”4

writes Andrew Lowd. “Though he never got around to purchasing

the commodities, the program ran, backed by dollars, for almost two years before Borsodi’s health and old age caused the program to fold.”

Throughout history, local currencies have been used not only as a way to survive during periods of economic uncertainty, but also as a bold way to opt out of a global monetary system that many find ex-clusionary and, in some cases, corrupt. As I’ve mentioned before, the only thing that gives modern money value is the fact that the majority of people agree that it has some value. Of course, people can change their mind about how much value a coin or bill has, and that’s why exchange rates can vary so widely. For those who only have access to very limited amounts of money, these small shifts can be devastating.

This ambiguity can also be viewed as opportunities for the have-nots, however. If a community comes together to replace currency with

another measure of value, they can flourish outside a broken system.

In 1998, the residents of the Palmeira District, a slum in

Fortaleza, Brazil, decided they were tired of living on the bottom rung of a monetary system controlled by a wealthy few. The community came together and created an organization called Association of Neighbours of the District of Palmeira. This Association then

created a new bank — the Bancos des Palmas, or Palm Bank — and

a new currency, the
Palmas.

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Sharing is Good

The bank was set up to fight poverty and improve the living con-

ditions of the residents of the district of Palmeira, but it has achieved much more over its 14 years of existence. Before the bank was set up, local producers rarely sold produce to their neighbors and the local residents tended to buy their goods elsewhere. As participation in the community bank became more widespread, community members slowly altered their consumption and spending habits to take advantage of the bank’s service. Spending on local commerce jumped from 16 percent of purchases to 56 percent. Now, the Palm Bank offers low-interest or no-interest micro-loans to community members to create small businesses and offers the PalmaCard credit card, giving residents the ability to make purchases all month long, further stimulating the local economy. Banco Palmas’ revenue from services covers 85 percent of the Bank’s total income. As an organization, Banco Palmas has grown from 200 to 2100 associates, 60 percent of whom live well below the poverty line.5

Although crises have always encouraged people to embrace “out-

side-the-box” solutions, alternative currencies aren’t always a survival technique. Sometimes, they’re established to make a statement about the status quo and what it really means to live a simpler, more abun-dant life. Across the world, local, alternative, and complementary currencies are appearing; they provide citizens with a way to make a real, instantaneous impact because they force money to bang around inside the local economy for much longer than a normal dollar would.

BerkShares is a local currency created in the Berkshire region

of Massachusetts. Under the BerkShares system, a buyer goes to

one of 12 local banks and pays $95 for $100 worth of BerkShares,

which can be spent in 370 local businesses, including restaurants, pharmacies, nurseries, and law firms. More than $2.5 million in

BerkShares has circulated since 2006. As noted on their website, the currency is meant to provide an alternative to conventional money, not replace it: “The people who choose to use the currency make a conscious commitment to buy local first. They are taking personal History of Sharing

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responsibility for the health and well-being of their community by laying the foundation of a truly vibrant, thriving local economy.”

In the future, BerkShares may offer checking accounts, electronic transfer of funds, ATM machines, and even a loan program to facilitate the creation of new local businesses manufacturing more of the goods that are used locally.