People in the know always advise us to “follow the money.”
Thanks to the Occupy movement, it’s become plain to a lot more of us that huge amounts of money are concentrated in a very few, very influential hands. Big business interests control politics at every level, and the name of the game is profit for the top managers and owners, with the bare minimum allowed to “trickle down” through taxes and philanthropy.
Nothing new in that picture. But there are some provocative new ideas arising about how to change a system that seems so entirely entrenched that most of us don’t even bother to think too hard about alternatives.
Last night I had dinner with some folks who are working on an alternative local finance program, called Common Good Finance. The idea is somewhat similar to local currencies like, for example, our homegrown BerkShares. But instead of paper money, Common Good will be an electronic credit system, based on R-credits.
One R-credit will equal $1 US, but the use of R-credits will be incentivized: if I spend R-credits rather than dollars, I’ll get a 5% rebate on every purchase, and even better, the merchant will get a 10% kickback for accepting my R-credits. That sure sounds win-win! What’s the catch?
There doesn’t seem to be a catch as far as the ordinary consumer and local vendor is concerned. The ultimate goal of Common Good Finance is to create a local, democratically governed credit union, to which businesses and individuals in a community could apply for low-interest loans and grants. The main criteria for approval would be: would extending this credit line be in the interests of the common good?
Forget about bankers getting rich on those exorbitant interest rates attached to every debt. Forget about too-big-to-fail banks preying on consumers in every town and city in the nation. Forget about municipalities cutting back on social services, including health care, education and affordable housing, because there simply isn’t enough money.
The people behind Common Good Finance believe that scarcity is a convenient fiction created and upheld by the central bankers who control the Federal Reserve. It’s convenient because it keeps the pace of debt constantly accelerating, and it’s the interest on all these debts that provides the profits that line the bankers’ pockets.
Common Good would create a monetary system where money circulates locally, and any surplus in the form of interest is plowed right back into the local community in the form of loans and grants to worthy individuals and causes. The local members of the R-credit system would be the ones to decide democratically, by facilitated consensus-building, who would get what.
As we talked about these intriguing ideas over dinner, the question came up of cronyism and conflict in this collective decision-making process. But asJohn G. Root Jr., one of the founders of the Common Good initiative, put it, “We know the system we have now is not working well for the majority of Americans. Why not try something new?”
In making his case for the R-credit system, John referred often to the American revolutionaries who decided to throw off the yoke of British tyranny and strike off on their own, founding a new country. Now, going on 300 years later, Americans find ourselves under a new yoke: multinational corporate interests that may make judicious grants to communities and non-profits through their well-heeled foundations, but would not want to see communities empowered to divorce themselves from the thrall of big business.
Having R-credits would encourage people to shop local, and it would encourage businesses to source locally too, since they could keep their R-credits in circulation that way and keep earning those 10% kickbacks on every R-credit exchange. Pricechopper and WalMart wouldn’t like this–but who knows, maybe they could be drawn into this network too! Maybe the idea of democratically controlled local finance is an idea whose time has come, an idea could even go global!
As an example, take the Grameen Bank, which was founded in one of the poorest countries in the world to provide poor women with low-interest micro-loans to start local businesses. It has grown exponentially; its founder, Muhammad Yunus, won a Nobel Prize in 2006; and its model is being replicated in many other parts of the world. Why not in the U.S.?
Common Good Finance is not alone in searching for outside-the-box answers to our current financial predicament. Economist David Korten has been working on what he calls “living economies” for about twenty years now; he is one of the leaders of the New Economy Working Group, which includes free thinkers like Gus Speth and Gar Alperovitz. The New Economy mission statement sums up the vision quite well:
“Effective action will shift the economic system’s defining value from money to life, its locus of decision making from global to local, its favored dynamic from competition to cooperation, its defining ethic from externalizing costs to embracing responsibility, and its primary purpose from growing individual financial fortunes for a few to building living community wealth to enhance the health and well-being of everyone. We humans face an epic choice between the certain outcome of continuing business as usual and the possible future it is within our means to create through conscious collective action.”
It does feel like an epic moment, a transition time pregnant with the possibility for positive change.
Let’s follow the money and let the revolution begin!