Die Neue Zeit
12th April 2009, 08:12
Local Autonomy and Alternative Local Currencies
"However, what can be included in the programme and can, at least indirectly, serve as a hint of what may not be said directly is the following demand: 'Complete self-government in the provinces, districts and communes through officials elected by universal suffrage. The abolition of all local and provincial authorities appointed by the state.'" (Frederick Engels)
In spite of my criticism of decentralization fetishes in Chapter 4, there is a crucial difference between such fetishes and the modern, toned-down definition of autonomia, which the current Dalai Lama used as his stated objective for Tibet within modern China. The aforementioned demand for people’s militias is to a certain extent one for local autonomy from overbearing police and domestic military reserve operations. In regards to the above remarks by Engels on the Erfurt Program, a clear-cut example of this demand can be seen in Venezuela, as explained in 2007 by Josh Lerner of Z Magazine:
By 2005 most of the Local Public Planning Councils had become mired in bureaucracy and dominated by politicians, paving the way for communal councils. These new councils are organized at a much more local level, usually a few blocks. They are responsible for bringing together grassroots groups, creating community development plans, implementing projects to address local needs, and monitoring government and community activities.
[...]
The law recommends that each urban council contain 200-400 families, each rural council at least 20 families, and each indigenous council at least 10 families. All decisions are to be made in citizen assemblies with a minimum of 10 percent of residents over age 15. These assemblies are to elect executive, financial management, and monitoring committees, as well as thematic committees based on local priorities (health, education, recreation, land, safety, etc.).
Perhaps most importantly, money can flow into and out of the councils. By law, they can receive funds directly from the national, state, or city governments, from their own fundraising, or from donations. In turn, the councils can award grants for community projects. If they set up a communal bank with neighboring councils, they can also make loans to cooperatives or other activities.
This genuine extension of local autonomy through the initiative of local development has gone as far as to lead to the development of local currency alternatives to the Venezuelan currency. As reported later that year by Gregory Wilpert of Venezuelanalysis.com:
Such as system would allow “the poor to possibility of acquiring products via exchange with an intermediary currency that could circulate, for example, in a determinate territory or would have validity for a determinate time,” explained Chavez.
[...]
Local currencies have been used in many parts of the world, often in times of economic crisis or in areas with depressed economic activity. In addition to Mexico and Brazil, they have also been used during Argentina’s economic crisis, in the U.S., and in Europe.
The best-known example in the U.S. is the “Ithaca Hour,” in Ithaca, New York, which establishes that one hour of work is equal to one Ithaca Hour. The currency is issued locally every time someone provides a service for someone else. As such, it does not require an influx of money from outside the community for transactions within the community to take place and ensures an equal hourly wage, no matter the type of work. Also, such a system can make inflation and inequality based on capital ownership practically impossible.
In Britain, Australia, and in many other countries around the world similar systems, which are not necessarily based on one hour of labor, are known as “Local Exchange and Trading Systems” (LETS).
Because of the recent economic crisis, indeed even mainstream news sources have acknowledged the value of local currency alternatives to government money. As reported by Tony Dokoupil of Newsweek in early 2009:
It's all perfectly legal (except for coins) as long as it's not for profit and the bizarro dinero doesn't resemble the real thing. Dozens of such systems flourished during the Great Depression. In the 1990s, they re-emerged as a way to fight globalization by keeping wealth in local hands. Now the dream of homespun cash is back because it keeps people liquid even if they're unemployed or short on traditional dollars. (The U.S. Treasury declined to comment on the burgeoning interest in local currency systems.)
In the past month, Steve Burke, who runs Ithaca Hours, a currency system in upstate New York founded in 1991, has fielded calls from a half-dozen organizers hoping to mint their own money in Vermont, Hawaii and Michigan, among other places. Meanwhile, Susan Witt, who directs the nonprofit behind the BerkShares currency in Berkshire County, Mass., has heard from groups in New York, California and New Jersey, where last year Newark's city hall asked for advice on potential Newark Bucks.
Local currency alternatives to government money are not without their shortcomings, however. According to Paul Cockshott, there are indeed inflationary effects, contrary to proponents of such currencies. On the one hand, local groups with seigniorage power may issue these currencies without sufficient coordination, thereby devaluing them relative to the main currency, itself fiat money. On the other hand, state backing could lead to a devaluation of the main currency itself, while opportunities for financial fraud would arise during the appropriation of resources for major issuances of these currencies.
In short, local currency alternatives to government money would have to be an additional, subordinate form of the latter, also contrary to the highly reactionary fantasies of backing such currencies with precious metals, like as if they were hard money. The proliferation of one such hard money – the “liberty dollar” – warranted an FBI and Secret Service response in 2007 for overstepping local limits and competing directly with the US dollar, not to mention the possibility of dubious financial transactions surrounding the distribution of this rather private currency.
Meanwhile, Cockshott stressed a specific shortcoming in regards to tying these alternatives to labour time under capitalism like the “labour money” scheme of the anarchist Pierre-Joseph Proudhon (known most notably for his assertion that “Property is Theft”):
The basic object of Marx and Engels's critique might be described as a naive "socialist" appropriation of the Ricardian theory of value. If only, the reformers argue, we could impose the condition that all commodities really exchange according to the labour embodied in them, then surely exploitation would be ruled out [...] From the standpoint of Marx and Engels, such schemes, however, honourable the intentions of their propagators, represent a Utopian and indeed reactionary attempt to turn back the clock to a word of "simple commodity production" and exchange between independent producers owning their own means of production [...] Although labour content governs the long-run equilibrium exchange ratios of commodities under capitalism, the mechanism whereby production is continually adjusted in line with changing demand, and in the light of changing technologies, under the market system, relies on the divergence of market prices from their long-run equilibrium values [...] If such divergence is ruled out by fiat, and the signalling mechanism of market prices is hence disabled, there will be chaos, with shortages and surpluses of specific commodities arising everywhere.
[...]
The proponents of labour money want to short-circuit this process, to act as if all labour were immediately social. The effects within commodity-producing society cannot but be disastrous.
[Note: Given the above critique of Proudhon and the content of Appendix B, there is justification for using the lengthy phrase “local currency alternatives to government money,” with emphasis on the words “government” and especially “money.”]
With all the considerations above, does this reform facilitate the issuance of either intermediate or threshold demands? First, as mentioned earlier, the demand for people’s militias may be met by means of pursuing this struggle for local autonomy. Second, considering that this extended autonomy is already of a “working” form and not a traditionally municipal form (let alone a parliamentary one), there would be potential for horizontal expansion based on localities, thus further facilitating grassroots initiatives for local development – thus certainly meeting the Hahnel criterion. Third, the realization of such “working” form would open the possibility of vertical expansion based on higher levels of legislation and administration, part of one of the central demands for the working class to become the ruling class.
Does this reform enable the basic principles to be “kept consciously in view”? In 2008, Martin Bright of the New Statesman unwittingly stressed the imperative of class struggle as a political struggle (with the proliferation of local currency alternatives to government money raising the possibility of mass currency strikes) and the political self-emancipation of the working class in his review of Paul Ginsborg’s Democracy: Crisis and Renewal:
Could such a model be adopted in Britain as a way of breathing life into local politics? Well, it has been tried, in the leafy outer London borough of Harrow, of all places. In spring 2005, in collaboration with Helena Kennedy's Power inquiry into political participation, the Harrow Open Budget Process brought together 300 residents to discuss priorities for the 2006/2007 budget and elect a panel to monitor how local politicians responded.
Ginsborg's book ends with an imagined conversation today between Marx and Mill about the merits of the Harrow experiment. Curious to know what had become of it, I called Harrow Council's press office. It has yet to get back to me. A report I found online showed that 94 per cent of those who took part thought it was a "good" or "very good" experience, and 74 per cent suggested it should be repeated. So what did happen? The Conservatives seized control of Harrow and the idea was scrapped. One thing you can rely on in Britain is that the dead hand of local politics will always throttle anything approaching genuine participation.
REFERENCES:
A Critique of the Draft Social-Democratic Program of 1891 by Frederick Engels [http://www.marxists.org/archive/marx/works/1891/06/29.htm]
Communal Councils in Venezuela: Can 200 Families Revolutionize Democracy? by Josh Lerner [http://www.venezuelanalysis.com/analysis/2257]
Venezuela to Introduce Local Currencies by Gregory Wilpert, Venezuelanalysis.com [http://www.venezuelanalysis.com/news/2310]
A Plan For Hard Times: Print Cash by Tony Dokoupil, Newsweek [http://www.newsweek.com/id/170372]
The new Venezuelan law on community currencies by Paul Cockshott [http://21stcenturysocialism.blogspot.com/2008/08/new-venezuelan-law-on-community.html]
Liberty Dollars Not Legal Tender, United States Mint Warns Consumers:
Justice Determines Use of Liberty Dollar Medallions as Money is a Crime by the United States Mint [http://www.usmint.gov/pressroom/index.cfm?flash=yes&action=press_release&id=710]
A critical look at market socialism by Paul Cockshott [http://21stcenturysocialism.blogspot.com/2009/03/critical-look-at-market-socialism.html]
Labour vouchers and credits: immediate issues http://www.revleft.com/vb/labour-vouchers-and-t103826/index.html
When Marx met Mill by Martin Bright, New Statesman [http://www.newstatesman.com/uk-politics/2008/07/ginsborg-book-democracy-marx]
"However, what can be included in the programme and can, at least indirectly, serve as a hint of what may not be said directly is the following demand: 'Complete self-government in the provinces, districts and communes through officials elected by universal suffrage. The abolition of all local and provincial authorities appointed by the state.'" (Frederick Engels)
In spite of my criticism of decentralization fetishes in Chapter 4, there is a crucial difference between such fetishes and the modern, toned-down definition of autonomia, which the current Dalai Lama used as his stated objective for Tibet within modern China. The aforementioned demand for people’s militias is to a certain extent one for local autonomy from overbearing police and domestic military reserve operations. In regards to the above remarks by Engels on the Erfurt Program, a clear-cut example of this demand can be seen in Venezuela, as explained in 2007 by Josh Lerner of Z Magazine:
By 2005 most of the Local Public Planning Councils had become mired in bureaucracy and dominated by politicians, paving the way for communal councils. These new councils are organized at a much more local level, usually a few blocks. They are responsible for bringing together grassroots groups, creating community development plans, implementing projects to address local needs, and monitoring government and community activities.
[...]
The law recommends that each urban council contain 200-400 families, each rural council at least 20 families, and each indigenous council at least 10 families. All decisions are to be made in citizen assemblies with a minimum of 10 percent of residents over age 15. These assemblies are to elect executive, financial management, and monitoring committees, as well as thematic committees based on local priorities (health, education, recreation, land, safety, etc.).
Perhaps most importantly, money can flow into and out of the councils. By law, they can receive funds directly from the national, state, or city governments, from their own fundraising, or from donations. In turn, the councils can award grants for community projects. If they set up a communal bank with neighboring councils, they can also make loans to cooperatives or other activities.
This genuine extension of local autonomy through the initiative of local development has gone as far as to lead to the development of local currency alternatives to the Venezuelan currency. As reported later that year by Gregory Wilpert of Venezuelanalysis.com:
Such as system would allow “the poor to possibility of acquiring products via exchange with an intermediary currency that could circulate, for example, in a determinate territory or would have validity for a determinate time,” explained Chavez.
[...]
Local currencies have been used in many parts of the world, often in times of economic crisis or in areas with depressed economic activity. In addition to Mexico and Brazil, they have also been used during Argentina’s economic crisis, in the U.S., and in Europe.
The best-known example in the U.S. is the “Ithaca Hour,” in Ithaca, New York, which establishes that one hour of work is equal to one Ithaca Hour. The currency is issued locally every time someone provides a service for someone else. As such, it does not require an influx of money from outside the community for transactions within the community to take place and ensures an equal hourly wage, no matter the type of work. Also, such a system can make inflation and inequality based on capital ownership practically impossible.
In Britain, Australia, and in many other countries around the world similar systems, which are not necessarily based on one hour of labor, are known as “Local Exchange and Trading Systems” (LETS).
Because of the recent economic crisis, indeed even mainstream news sources have acknowledged the value of local currency alternatives to government money. As reported by Tony Dokoupil of Newsweek in early 2009:
It's all perfectly legal (except for coins) as long as it's not for profit and the bizarro dinero doesn't resemble the real thing. Dozens of such systems flourished during the Great Depression. In the 1990s, they re-emerged as a way to fight globalization by keeping wealth in local hands. Now the dream of homespun cash is back because it keeps people liquid even if they're unemployed or short on traditional dollars. (The U.S. Treasury declined to comment on the burgeoning interest in local currency systems.)
In the past month, Steve Burke, who runs Ithaca Hours, a currency system in upstate New York founded in 1991, has fielded calls from a half-dozen organizers hoping to mint their own money in Vermont, Hawaii and Michigan, among other places. Meanwhile, Susan Witt, who directs the nonprofit behind the BerkShares currency in Berkshire County, Mass., has heard from groups in New York, California and New Jersey, where last year Newark's city hall asked for advice on potential Newark Bucks.
Local currency alternatives to government money are not without their shortcomings, however. According to Paul Cockshott, there are indeed inflationary effects, contrary to proponents of such currencies. On the one hand, local groups with seigniorage power may issue these currencies without sufficient coordination, thereby devaluing them relative to the main currency, itself fiat money. On the other hand, state backing could lead to a devaluation of the main currency itself, while opportunities for financial fraud would arise during the appropriation of resources for major issuances of these currencies.
In short, local currency alternatives to government money would have to be an additional, subordinate form of the latter, also contrary to the highly reactionary fantasies of backing such currencies with precious metals, like as if they were hard money. The proliferation of one such hard money – the “liberty dollar” – warranted an FBI and Secret Service response in 2007 for overstepping local limits and competing directly with the US dollar, not to mention the possibility of dubious financial transactions surrounding the distribution of this rather private currency.
Meanwhile, Cockshott stressed a specific shortcoming in regards to tying these alternatives to labour time under capitalism like the “labour money” scheme of the anarchist Pierre-Joseph Proudhon (known most notably for his assertion that “Property is Theft”):
The basic object of Marx and Engels's critique might be described as a naive "socialist" appropriation of the Ricardian theory of value. If only, the reformers argue, we could impose the condition that all commodities really exchange according to the labour embodied in them, then surely exploitation would be ruled out [...] From the standpoint of Marx and Engels, such schemes, however, honourable the intentions of their propagators, represent a Utopian and indeed reactionary attempt to turn back the clock to a word of "simple commodity production" and exchange between independent producers owning their own means of production [...] Although labour content governs the long-run equilibrium exchange ratios of commodities under capitalism, the mechanism whereby production is continually adjusted in line with changing demand, and in the light of changing technologies, under the market system, relies on the divergence of market prices from their long-run equilibrium values [...] If such divergence is ruled out by fiat, and the signalling mechanism of market prices is hence disabled, there will be chaos, with shortages and surpluses of specific commodities arising everywhere.
[...]
The proponents of labour money want to short-circuit this process, to act as if all labour were immediately social. The effects within commodity-producing society cannot but be disastrous.
[Note: Given the above critique of Proudhon and the content of Appendix B, there is justification for using the lengthy phrase “local currency alternatives to government money,” with emphasis on the words “government” and especially “money.”]
With all the considerations above, does this reform facilitate the issuance of either intermediate or threshold demands? First, as mentioned earlier, the demand for people’s militias may be met by means of pursuing this struggle for local autonomy. Second, considering that this extended autonomy is already of a “working” form and not a traditionally municipal form (let alone a parliamentary one), there would be potential for horizontal expansion based on localities, thus further facilitating grassroots initiatives for local development – thus certainly meeting the Hahnel criterion. Third, the realization of such “working” form would open the possibility of vertical expansion based on higher levels of legislation and administration, part of one of the central demands for the working class to become the ruling class.
Does this reform enable the basic principles to be “kept consciously in view”? In 2008, Martin Bright of the New Statesman unwittingly stressed the imperative of class struggle as a political struggle (with the proliferation of local currency alternatives to government money raising the possibility of mass currency strikes) and the political self-emancipation of the working class in his review of Paul Ginsborg’s Democracy: Crisis and Renewal:
Could such a model be adopted in Britain as a way of breathing life into local politics? Well, it has been tried, in the leafy outer London borough of Harrow, of all places. In spring 2005, in collaboration with Helena Kennedy's Power inquiry into political participation, the Harrow Open Budget Process brought together 300 residents to discuss priorities for the 2006/2007 budget and elect a panel to monitor how local politicians responded.
Ginsborg's book ends with an imagined conversation today between Marx and Mill about the merits of the Harrow experiment. Curious to know what had become of it, I called Harrow Council's press office. It has yet to get back to me. A report I found online showed that 94 per cent of those who took part thought it was a "good" or "very good" experience, and 74 per cent suggested it should be repeated. So what did happen? The Conservatives seized control of Harrow and the idea was scrapped. One thing you can rely on in Britain is that the dead hand of local politics will always throttle anything approaching genuine participation.
REFERENCES:
A Critique of the Draft Social-Democratic Program of 1891 by Frederick Engels [http://www.marxists.org/archive/marx/works/1891/06/29.htm]
Communal Councils in Venezuela: Can 200 Families Revolutionize Democracy? by Josh Lerner [http://www.venezuelanalysis.com/analysis/2257]
Venezuela to Introduce Local Currencies by Gregory Wilpert, Venezuelanalysis.com [http://www.venezuelanalysis.com/news/2310]
A Plan For Hard Times: Print Cash by Tony Dokoupil, Newsweek [http://www.newsweek.com/id/170372]
The new Venezuelan law on community currencies by Paul Cockshott [http://21stcenturysocialism.blogspot.com/2008/08/new-venezuelan-law-on-community.html]
Liberty Dollars Not Legal Tender, United States Mint Warns Consumers:
Justice Determines Use of Liberty Dollar Medallions as Money is a Crime by the United States Mint [http://www.usmint.gov/pressroom/index.cfm?flash=yes&action=press_release&id=710]
A critical look at market socialism by Paul Cockshott [http://21stcenturysocialism.blogspot.com/2009/03/critical-look-at-market-socialism.html]
Labour vouchers and credits: immediate issues http://www.revleft.com/vb/labour-vouchers-and-t103826/index.html
When Marx met Mill by Martin Bright, New Statesman [http://www.newstatesman.com/uk-politics/2008/07/ginsborg-book-democracy-marx]