Building Local Resilience: The Emergence of the UK Transition Currencies Josh Ryan-Collins new economics foundation IJCCR [email protected] Abstract This paper examines the emergence of a new type of local currency – ‘Transition Currencies’ - in the United Kingdom over the past 4 years. The Transition Currency ‘model’, shared by the initial four schemes, is explained and the theoretical roots of the schemes reviewed. The paper goes on to examine the success and limitations of the currencies and reMlects on potential future developments and how the Transition currencies might upscale and deliver additional social, economic and environmental objectives. Introduction reimagining how settlements and local economies might be able to adapt the shocks One of the most interesting developments in these two phenomenon will inevitably create the UK complementary currency movement without creating major social and economic over the past 4 years has been the emergence dislocation. The notion of resilience is key to of local paper currency schemes in ‘Transition Transition thinking, deMined as: towns’. Following Totnes in 2007, the towns of Lewes, Stroud and Brixton in South London ...the capacity of a system to absorb disturbance have all successfully launched local ‘pounds’, and reorganise while undergoing change, so as the usage of which is restricted to independent to still retain essentially the same function, businesses in their respective areas. Broadly structure, identity and feedbacks (Walker et al, speaking, the goal of the currencies is to help 2004) re-localise production and consumption and To create greater resilience, Transition argues build economic ‘resilience’, a key tenet of the for the re-localisation of many aspects of Transition movement. This paper sets the production and consumption, arguing that Transition currencies in context and reviews losses in narrowly deMined efMiciencies of scale International their progress so far. 1 are made up for in terms of reduced vulnerability to shocks because of greater Journal of diversity, just as in nature. Transition also Community The Transition Network involves collectively imagining a different low- carbon future for the area and the creation of Currency The Transition Network is a global grassroots an energy descent plan (EDAP). movement of communities seeking to create Research greater local resilience and well-being in the The Transition movement is highly face of the twin threats of climate change and decentralised and non-hierarchical in structure peak oil. Transition thinking draws inspiration and culture. Schemes are almost all not-for- www.ijccr.net from permaculture and ecology as the basis for proMit and mainly dependent on volunteer International Journal of Community Currency Research 15 (2011) D 61-67 61 labour. The emphasis is very much open active “The emphasis is very much local participation and identity, positivity, open active local participation innovation, creativity and collective action. There are currently around 270 active and identity, positivity, transition communities across the world, innovation, creativity and mainly in English-speaking countries.2 collective action.” The hard currency model adopted by all four Transition Local Currencies existing transition initiatives is broadly similar: • Notes backed 1 to 1 against UK sterling, with Local Complementary currencies have emerged a one- or two- year validity as initiatives from Transition communities across England, normally from within • Notes in denominations of £1, £5, £10 (and in The UK Transition TheUK Currencies transition groups’ ‘business’ or ‘economy’ sub- the case of Brixton £20 and Lewes £21) with R groups. Three of the transition currencies are multiple security features and featuring in towns in more rural areas - Totnes and attractive and original designs reMlecting local CC Stroud in the South West of England and Lewes celebrities or places IJ in the South East. The fourth, the Brixton • Currency can be accepted only by Pound, is in inner-city London. All four of the ‘independent’ (broadly deined) local schemes previously had active Local Exchange businesses in (part-) payment for any goods Trading Schemes (LETS) in the 1980s or 1990s or services and in some cases the same individuals who run the LETS schemes are involved. There are • Currency is ‘sold’ in to circulation via also a number of ‘nascent’ Transition selected participating businesses (Stroud currencies in the planning stages, including in charges a 3% purchase fee which is donated Bristol, Canterbury and Camden. The schemes to local charities) or given as change share the following broad goals: • Currency can be exchanged back in to UK • To enhance local economic resilience through sterling at a 1 to 1 rate at selected exchange encouraging more local production and points (Stroud only allows registered traders consumption and limiting the ‘leakage’ of to redeem notes and has a 5% redemption money from the local economy fee) • support and protect local independent • Businesses are encouraged to offer discounts businesses 3 which: when customers use the currency to pay for goods, but attempts by Totnes and Lewes to • protects jobs and livelihoods and introduce a compulsory discount were • maintains the diversity and identity of abandoned due to business dissatisfaction. the local area • Each scheme has a website and leaMlet listing • Create stronger connections between local all participating businesses and information people and businesses, boosting social as to how the scheme works capital and cohesion. The Stroud Pound has modelled itself more • Stimulate thinking and discussion about how closely on the Chiemgauer complementary money works and how local economies currency based in Germany (Gelleri, 2009). It function and could be made more sustainable has a ‘demurrage’ feature on the note requiring users to pay a 3% fee and have the note • Promote the area, creating pride for its citizens, a sense of independence and stamped every six months to maintain its value, attracting tourists the aim of which is to further increase the circulation of the note. The Chiemgauer was • Encouraging a self-help model of exchange itself inspired by the writings of Silvio Gesell and mutual support and the highly successful ‘Worgl’ currency that • Reduce carbon emissions through reducing helped rebuild the town of the same name in the transportation of products form long Austria in the 1930s during the Great distances. Depression (Gesell 1958). Stroud also charges a 5% redemption fee and an annual membership fee for users and International Journal of Community Currency Research 15 (2011) D 61-67 62 businesses who join the Stroud Pound effect on total output or aggregate demand cooperative, a percentage of which is donated (Keynes 1936; Hahn 1931). As the transition to a local charity of the consumers’ choice. currencies cannot be ‘banked’, there is greater None of the other three currencies operate fee incentive to circulate them locally, enhancing based membership schemes. Both Brixton and local demand and creating a multiplier effect Lewes have a more informal membership within a deMined ‘local’ area. scheme with members receiving a monthly Within the UK the concept of the ‘local newsletter updating them on the latest news. multiplier’ has been developed by nef (the new In terms of organisational structure, Lewes and economics foundation), the London-based Brixton currency groups have both opted for ‘think-and-do-tank’ which has, through its the Community Interest Company (CIC) limited research and publications, developed the by guarantee status. The CIC model is seen to argument that local economies as prone to The UK Transition TheUK Currencies provide some of the advantages of both ‘leakage’ through taxes, external contractors charitable and limited company status as it and the non-local supply chains and R allows organisations to qualify for charitable shareholders of national and international CC donations but also allows them to make a chain stores. (Ward and Lewis 2002). In IJ surplus as long as that surplus is invested contrast, small independent shops are more solely in the community. The CIC model also likely to employ local Mirms for these kind of provides Directors with limited liability. Totnes services and spend any proits locally (Sacks started the process of registering as an 2002). nef conducted a study in 2002 which Industrial and Provident Society but ran in to suggested only around 10-12 pence of every issues with the Financial Services Authority. pound spent in supermarket chains remained Stroud, again following the Chiemgauer, is a within the local economy, whilst a more recent cooperative and members are charged an study of the West Michigan Economy in the U.S. annual fee. None of the other three currencies concluded that if residents of the area were to operate fee based membership schemes. redirect 10 percent of their total spending from chains to locally owned businesses, the result would be $140 million in new economic Theoretical Roots activity for the region, including 1,600 new jobs and $53 million in additional payroll (Sacks, The intellectual inspiration for the Transition 2002; Civic Economics, 2007). currencies can be found in the work of authors such as Bernard Lietaer and Richard Following this line of argument, the Transition Douthwaite, who wrote on the need for local currencies can be seen as promoting the currencies to support local economies in the ‘medium of exchange’ function of money at the face of globalisation (Douthwaite, 1996; expense of the ‘store of value’ function. The Douthwaite, 2000; Lietaer, 2001). Rob tension between the successful fulMilment of Hopkins, one of the founders of the Totnes these two functions of money within a single Pound, was inspired by a talk he heard by unit of account (the third function) is widely Bernard Lietaer as part of a short course on seen amongst monetary theorists as one of the ‘The Future of Money’ held at Schumacher main causes of instability in the modern Miat- College in 2006 in Totnes, Devon where Lietaer based monetary system (Dodd 1994; speciically referenced the U.S.