A convincing case is made by Thomas Greco:
“It is widely acknowledged that, in comparison to large corporations, small and medium enterprises (SMEs) contribute proportionately more to the economy in jobs, productivity, and innovation. According to the Organization for Economic Cooperation and Development (OECD), “SMEs play a major role in economic growth in the OECD area, providing the source for most new jobs. Over 95% of OECD enterprises are SMEs, which account for 60%-70% of employment in most countries. As larger firms downsize and outsource more functions, the weight of SMEs in the economy is increasing. In addition, productivity growth — and consequently economic growth — is strongly influenced by the competition inherent in the birth and death, entry and exit of smaller firms.” The same pattern would seem to hold in other parts of the world, including America.
Doesn’t it therefore make more sense to nurture the businesses that are already part of the local economy? Doesn’t it make sense to support those companies that are locally owned or managed and have a stake in the prosperity and quality of life in their home communities? Communities that have a high quality of life, an able workforce, and a clean and pleasant environment do not need to offer bribes to outsiders. Relocalization efforts cannot get very far without the creation of metasystems that support buying locally, selling locally, investing locally, and saving locally. Conventional political forms of money, and huge banking companies that are owned and managed by remote entities, by their very nature militate against relocalization. There is no need for antagonistic opposition to those entities; they can be made less relevant and less destructive by implementing creative methods that localize control over both exchange and finance.
I propose that groups and organizations that seek to promote healthy, sustainable local economies should make it a priority to organize regional mutual credit clearing associations as the centerpiece of a comprehensive program. As these associations develop and grow, they will provide their regions with an increasing measure of independence from the outside forces that control conventional money and banking, enabling communities to rise above “the race to the bottom” that has resulted from the kind of globalization that has been architected and forced upon the world by the World Trade Organization, the International Monetary Fund, and the World Bank. The credit clearing exchange is the key element that enables a community to develop a sustainable economy under local control and to maintain a high standard of living and quality of life.
The possibilities inherent in such a plan should not be judged by past experience with local currencies and other exchange alternatives. Just as a modern jet aircraft bears little resemblance to the Wright brothers’ first airplane, so too are the more optimized exchange structures proposed in my book unlike any community currency, LETS, or commercial “barter” exchange with which people might be familiar. Based on the principles we have outlined, it is now possible to engineer and build exchange systems to carry heavy economic loads within local bioregions and to operate them according to sound business principles.
This is a multistage project that will proceed in the following sequence:
1. Institute measures that promote import substitution.
2. Provide an alternative payment medium, independent of any political currency and banking establishment.
3. Issue a supplemental regional currency.
4. Develop basic support structures that strengthen the local
economy and enhance the community’s quality of life.
5. Develop an independent value standard and unit of account.
Thomas’ article details these five steps.