Creating Wealth

by Gwendolyn Hallsmith

  The critical leverage point for Art Tokens is the same for just about any complementary currency. If a city makes it mandatory for everyone to pay some contribution every year in a form of complementary currency or accepts partial payment in complementary currencies for some regular taxes and fees, the demand for that currency will significantly increase and therefore obtain a value that it has not had previously. Remember, the main systemic reason we universally accept privately created bank-debt dollars right now is that they are the only legal form by which we can pay our taxes. If we expand this mandate to a more democratic form of community currency and no longer grant banks a monopoly in this area, whatever functions that this currency is compensating will predictably flourish.

  City Money in History

  If the idea of a city issuing a currency and accepting it for payments in taxes sounds strange, there are clear historical precedents for it including in the US only a generation ago. For instance, during the depression of the 1930s, cities issued their own currencies as a way of counteracting the economic hardships everyone was experiencing. Scrip was another local currency that appeared spontaneously all over the country, as local businesses and business associations issued currency so that people could continue to exchange products and services and keep the local economy going, even in the face of a national economic crisis and “bank holiday.”

  Figure 2 shows a note issued by the City of Detroit in 1934. Hundreds of cities did the same thing during the bank holidays of that time.

  FIGURE 7.2. City of Detroit note

  FIGURE 7.3. Scrip from local mining company

  Private companies also got into the currency business as a way to provide their customers with a means of exchange. Figure 3 is an example of local scrip from a gold mining company.

  These depression scrips were introduced in full replacement of conventional, centrally controlled dollars. They could be used to pay for any type of activity, competing directly with the dollar. When cities all over the US started to do the same, an Executive Order was issued prohibiting cities from issuing currency even though it was helping to address the economic crisis. What we are talking about in this book is not such a full replacement, but a more narrowly targeted application. Any city can issue tickets for any event it chooses, and impose conditions for people to obtain such tickets. From a legal viewpoint, the city scrips we are recommending would fall into the category of such “tickets.” This is what is being done in Japan with the ecological scrip described in Chapter 8.

  Given their proximity to the people and the role they play in delivering critical public services, cities can help make economic institutions more accountable democratically. It is important to realize that any choice of activities to be rewarded could also be a democratic choice.

  Culture Cards in Flanders

  In Belgium over the last several years, an idea like Art Tokens has taken root, although to date it has not been fully implemented and involves payments in Euros. A proposal was made to take a percentage of regular art subsidies — which are given by the government for a play, an orchestra or another event — and to put their value on a Culture Card — the equivalent of a debit card that would be issued to everyone. Each taxpayer in Flanders could in turn use their Culture Card to buy tickets to cultural events of their choice. The money on the card can only be spent on certified cultural events. The citizen chooses what she or he wants to go to, but within some boundaries. There would be some criteria that applied to how events were certified — for example, you couldn’t use the Culture Card outside the country, and going to a foreign film also might not be eligible.

  Since most artistic work incurs its costs in advance of the actual event, it was important to find ways to help with the production costs. One idea offered was to allow people to subscribe to artistic events and productions in advance using the Culture Card, in much the same way that you would buy a season ticket to the local theater. Obviously, this makes it easier to use the credits on arts that are events, a bit harder to use for things like paintings. Yet going to gallery shows where visual artists present their work would be an eligible activity.

  One beneficial effect of the Culture Card would be that a local production, like a neighborhood group, could have access to funds that normally would go to arts organizations with the wherewithal to do high-level fundraising. It would make arts funding much more accessible to smaller, local productions rather than being reserved exclusively to a small elite. The voice that people would have in the types of creative activities they prefer would also be beneficial insofar as cultural minorities are concerned.

  The Belgian government has been planning to implement the program with stickers embedded with radio signals that would credit the account when a purchase is made. Evolving technology has made it more likely that a mobile telephone payment system will be used when Culture Cards are finally issued. In Flanders, it is already possible to find which artistic events are available locally using a mobile telephone application, so it is not going to be a big leap to have the same list indicate what events and productions are eligible for payment with a Culture Card.

  There are several reasons why the system hasn’t been implemented yet. One issue has been that there are many cards for different purposes in circulation already. Another problem arose during the financial crisis: most governments are cutting costs at this point, so adding the expense of a new system when other things are being cut is harder to do, even if the new system might save a lot of costs over time. In the longer run, the time required to oversee large grant programs could be reduced if payments to artists become more automated.

  Core Support for Artists

  It is clear artists and the arts need a more stable source of support, especially in North America. The creativity required to innovate and to make our world beautiful is not something that should be relegated to the impoverished sidelines. Partly because they are creative, there are some artists who have thought of some new ideas for general support. Here are a few of them.

  United Artists of America Reserve Note

  Joseph Gray and Peter Nelson in Seattle, Washington have designed a large bill with one printed side — the United Artists Reserve Note — and one blank side. The idea is that the bill can be issued to artists, who in turn can decorate the blank side of the note with some of their artwork. The value of the artwork will help determine the value of each note.5 The idea was inspired by an urban legend — that Picasso had lunch with Nelson Rockefeller at the Four Seasons restaurant in New York City. When it came time to pay the rather expensive bill, Picasso suggested that he could pay for lunch by drawing something on the bill and signing it, which would turn the bill itself into something much more valuable than the lunch.

  Fluxus Bucks

  Started by Julienne Paquette in the 1990s, the Fluxus Bucks movement uses dollars as a background stamp for art. They are traded through the mail as a form of mail art and can also be used for purchases in stores that will accept them.6

  The system we use for exchanging goods and services with each other is only limited by our imagination. As artists demonstrate, there are many possibilities for new kinds of notes and exchanges. Value is not based in a governmental promise; it’s based in our own social contract and the agreements we are able to make with each other about value. We created the system, and we can change it.

  CHAPTER 8

  Exchanging Ecologies

  There are no passengers on Spaceship Earth. We are all crew.

  MARSHALL MCLUHAN

  For centuries we humans have been replacing healthy natural ecosystems and environments for less healthy ones. We’ve cut forests, polluted rivers, excavated mountains and generally taken the environmental services offered to us by nature for granted, without concern about maintaining their productive capacity. For most of human history, nature was abundant and humans did not pose a significant ecological threat — it was enough that we managed to survive. The tipping point came with the human population
explosion and the systematic commoditization of products extracted from nature.

  The rate at which we used natural resources has increased markedly over the past half-century, and that in turn has resulted in the increased degradation of our natural environment. Now, another tipping point is rapidly approaching — one in which the atmospheric concentration of greenhouse gases pushes climate change beyond the brink of our control. Instead of exchanging our environment for money to make more money, can we use a new form of money to help renew nature? Could complementary currencies help us on our way to a healthier environment? Absolutely.

  One of the great strengths of complementary currencies is that you can choose to make them local, and local tends to be good for the environment. No matter the specific function of the currency, in this respect local currencies are always greener than bank-debt money. Because they circulate locally among community members and businesses, they encourage the purchase or exchange of local goods and services — exchanges that come from the community or from its immediate surroundings, thus reducing realities such as the carbon footprint of long-haul transportation. The lettuce and tomatoes you buy at the farmers market using a complementary currency, for example, most likely come from a local farm, not from the other side of the planet. Thus you reduce your carbon footprint. Other things being equal, the more we exchange international and national commerce for regional and local commerce, the more we act as responsible stewards for our world.

  We abuse land because we regard it as a commodity belonging to us. When we see land as a community to which we belong, we may begin to use it with love and respect.

  Aldo Leopold, A Sand County Almanac

  Beyond the simple fact that local is more ecologically sustainable, and complementary currencies are usually local, we can also help restore the environment with eco-currencies, including carbon credits associated with a cap and trade system, which can be local, regional, national or international.

  Mitigating Carbon

  We see the impacts of the roller coaster economy every time we pull in to a gas station. The ubiquitous roadside signs announce the cost of a gallon or liter of gas and tell us something about our relationship with the economy. And when it comes to the environment, when we fill our tanks we are also playing our part in pumping into the air more toxins, carcinogens and greenhouse gasses. The burning of fossil fuels is recognized by the vast majority of climate experts as one of the leading causes of climate change. When we fill our tank and then turn the key, we step into the middle of the carbon cycle, initiating an action which results in the release of carbon dioxide (CO2) into the atmosphere. That CO2, in turn, traps the heat from the sun and acts to create a greenhouse effect.

  In a healthy biosphere, the amount of CO2 in the atmosphere would be relatively constant as it cycles from Earth, through living organisms, to the atmosphere and into the ocean — a balanced series of feedback loops. Human ingenuity and advanced technology have allowed us to circumvent the system, however. We remove ancient fossil fuel — coal, oil, natural gas — essentially long-sequestered carbon, from Earth and release it into the atmosphere. And as the human population grows, our appetite for convenience continues in parallel and the supply of fossil fuel diminishes. We find ourselves at the mercy of the market, which is, of course, tied to everything from weather to war, and many things in between.

  In short, the natural world is now at our mercy. So, can we change the equation once more? Can we reestablish ecological balance, and perhaps, in so doing, step off the roller coaster as well?

  At this point, you might well say, “I’d buy a hybrid, if only they were more affordable,” or “I’d walk to work if I could find a job near my home.” In other words, although you possess the power of choice, you do not have sufficient good choices at your disposal. So how do we create a world where environmentally-friendly choices are widely available and a sustainable lifestyle the norm? We can begin by reducing the amount of CO2 in the atmosphere. Could a complementary carbon currency be part of the solution?

  Global Cap and Trade: The Kyoto Treaty

  As of November 2004 the Kyoto Treaty on climate change has been legally binding for 141 countries. Among the developed nations, only Australia and the US have abstained from the treaty. Its Clean Development Mechanism (CDM) allocates a specific amount of carbon credits to various countries and industries, but allows credits to be bought and sold internationally. A company that produces more greenhouse gases than its allocation needs to purchase carbon credits sold by another producer who has reduced emissions beyond what is required. International trading in carbon contracts on the basis of the CDM protocol of the Kyoto treaty has successfully started.

  Reducing Greenhouse Gases Using the Market

  Although the burning of fossil fuel results in the creation of CO2, there are other greenhouse gases (GHGs) including, most notably, methane which have an even stronger atmospheric climate effect. CO2 is just the most prevalent of these gases and has the most recognizable name. Some recent technical approaches to reducing GHGs range from sequestering carbon deep in Earth to capturing the methane produced by livestock in order to generate electricity. Raising animals for food has now surpassed burning fossil fuel as the leading source of GHGs. The two most comprehensive market strategies for reducing GHGs, however, are a trading system known as cap and trade, and the carbon tax. Cap and trade regulates the total supply of carbon credits, letting the market regulate price. A carbon tax raises the price of things that produce CO2 and leaves supply and demand to the market. Both have strengths and weaknesses. Both can be part of the solution.

  The Theory of Cap and Trade

  In Environmental Trading Markets (ETMs), the cap in cap and trade is the limit put on the amount of GHGs that can be released into the atmosphere. This is the strong aspect of cap and trade. It puts limits on emissions up front. Permits to release CO2 or another GHG are made available, usually by the government. These permits can be auctioned or distributed for free to those entities being regulated, usually fossil fuel users or power producers. These are known as upstream producers. Consumers are downstream. There are only a limited number of permits and that number is decreased every year, in theory moving us toward an overall level of CO2 in the atmosphere that stays below 300 parts per million (ppm), the level that historic geological and ice core records show we can’t exceed if we hope to maintain ice caps and glaciers. The trade in cap and trade comes from the fact that the permits can be traded, subject to regulations, among permit holders. So if one producer of GHGs, say a power plant in California, emits less CO2 than expected, i.e., pollutes less, it can sell its extra credits to another power plant in Ohio that hasn’t met expectations and needs more credits. The idea is to create an incentive for greenhouse gas producers to produce less greenhouse gas. The less they produce, the fewer credits or permits they need.

  In theory, it’s a great system. In practice, things get more complicated.

  The value of carbon credits has rapidly increased since the Kyoto Protocols. The World Bank has estimated that the size of the carbon market was $11 billion (£6.6 billion) in 2005, $30 billion in 2006 and $64 billion in 2007.1

  Cap and Trade in Practice

  Like other government policies, cap and trade is subject to the same pressures and interests as other policies. In the United States, California has passed a law that places a cap on carbon production, but no such law exists on a national level at this point. Although there are several functioning carbon exchanges in the US, all of them are either voluntary or in response to the California law, as people and companies who are genuinely concerned about carbon emissions buy credits to offset their use of CO2 for other things.

  Another weakness of cap and trade is the measurement and regulation of GHGs. If one were to try to measure how much GHG-producing fossil fuel was dispensed by all gas stations, propane sellers, households and heating oil supply trucks, the task would be enormous, complex and likely inaccurate. These distributors of f
uel are too far down the supply chain. The most effective regulation takes place as far upstream as possible — at the well head or the coal mine. It is relatively easy, using currently available information, to calculate the amount of GHGs an upstream producer sells (which is the amount that will eventually get released into the atmosphere). But the producers have been successfully lobbying so that this more simple and effective approach isn’t chosen.

  Another crucial aspect of cap and trade is the cost to the consumer. If we cap production of fossil fuel, we cap supply and drive prices up, or so the theory goes. If, however, those permits are sold (rather than giving them away for free as was done in Europe), the system provides a new windfall. Those monies can be used for a variety of things, including rebates to consumers, particularly to those in low-income brackets. Funds can also be used for other green programs like weatherproofing, green job creation, green technology research and development.2

  The Carbon Tax

  A carbon tax places a tax on all activities that produce carbon dioxide. This makes the price of fossil fuels higher (because of the tax), and supply and demand theory would suggest that higher prices will reduce consumption, while the taxes collected can fund programs that mitigate the impacts of climate change. Mitigating programs can include better public transit to replace automobiles and renewable energy installations to reduce GHG emissions. Advocates of a carbon tax often tout it as an alternative to cap and trade. A carbon tax can act as an incentive to use less fossil fuel.

  With higher prices, we might think twice about driving to work alone when we could carpool or take the bus instead. Germany, British Columbia and Quebec have recently implemented different forms of a carbon tax. The primary weakness of a carbon tax is that it doesn’t put limits on the production of GHGs, so it can’t guarantee a given reduction in their levels. A secondary issue with a carbon tax is that it is a regressive tax, which impacts the poor more than the wealthy. This can be addressed, as in British Columbia, with a compensating rebate for the poorer families.3