One of these activists was Robert Swann, co-author of The Community Land Trust: A Guide to a New Model for Land Tenure in America. In the book he explained that, “Israel has been one of the few countries in the world to be successful in preventing the process of uprooting the poor tenant farmer from taking place. The leasehold system has brought security of land tenure to the small farmer and his family and has prevented the control of land by absentee landlords, speculation in land, and the exploitation of farmworkers by a landowning class.”

After learning about the mechanics of a system that had demonstrably protected communities against these unwanted outcomes, Swann and other members of this group, such as the Albany Movement and Student Nonviolent Coordinating Committee’s Slater King and Charles Sherrod, put their knowledge into practice. They would go on to form the first Community Land Trust (CLT) in the Southern US state of Georgia.

ABOVE: Robert Swann and Charles Sherrod with members of New Communities, Inc. at planning meeting circa 1970

Less than one year after the trip to Israel, New Communities Inc. was registered as a farming co-operative and CLT. It was created as a direct response to the political disenfranchisement and vicious economic retaliation faced by Black communities, with the understanding that banding together and sharing ownership of the land would enable these communities to be more resilient and secure their land more effectively. In the following years, New Communities acquired 5,735 acres of land – 3,000 of which was cultivated farmland. At the time in the late 1960s this was the largest tract of land held by African Americans.

CLTs are legal models that separate the ownership of the land itself from the ownership of anything built (or growing) on the land. Importantly, CLTs effectively remove land from the market and, by democratising decision making and offering leases, ensure that the land is used for purposes that serve the surrounding community. New Communities did exactly this by offering leases that allowed farmers and homesteaders to use and manage the land communally.

New Communities operated for a decade and a half, but by the 1980s they were facing the impacts of drought, mounting debt, and racial discrimination. This prevented the acquisition of emergency loans from the United States Department of Agriculture (USDA), and New Communities had to reluctantly sell its land and farms.

Although slavery officially ended in the US in the mid-1860s, it persisted for well over a century after. Once sharecropping was phased out, many white landowners often retaliated and did everything in their power to prevent African Americans from acquiring and retaining land, even pressuring federal agencies like the USDA to deny resources to Black farmers. In fact, the USDA had to pay $13M in 2010 to members of New Communities after losing a class action lawsuit, in which is was ascertained that there had been widespread racial discrimination with regard to loans for African American farmers.

Yet New Communities was not a failure, but rather a seminal experiment in community economics – one which has been learned from and replicated in various ways by hundreds of CLTs across the US and around the world. Mtamanika Youngblood, an early member of this movement, explained that New Communities took “civil rights one step further into economic independence and economic rights, using agriculture as an economic base.” What was significant was their understanding of the interplay between land, finance, and agriculture.

For a community to be resilient against external shocks and capable of directing its own development, it must be able to allocate sufficient resources to the efforts it sees as critical. This not only necessitates a stable system of land ownership and egalitarian land usage – such as the CLT model – but it also requires consistency and risk-management around agricultural production, in addition to a mechanism or set of mechanisms that allow a community to self-finance its own projects.

It’s no coincidence that experiments in community finance and local currency are often linked to agricultural production – think of the grain banks of Ancient Egypt. Agricultural activity directly produces commodities of value in the form of food and materials, but it requires the ability to pay in advance for seeds, equipment, land, and labour.

Since crops are subject to unpredictable external factors like weather, agriculture carries inherent risk. For a financial system that perceives each loan or investment as isolated, loans that increase food security and the overall health of a local economy are neglected or seen as high risk.

Jim Golden and his draft horses Spike and Rosie. His SHARE loan was to complete a barn for the team.

This is where community finance can play a role. Just as organisations like Kiva, a peer-to-peer microlending platform, enable businesses to take out low or no-interest loans guaranteed by their peers today, the SHARE (Self-Help Association for a Regional Economy) programme enabled community finance during a time of historically high interest rates. From 1981 to 1992, the SHARE programme enabled residents of the Berkshires region of Western Massachusetts to collateralise loans to local business – businesses which would otherwise be rejected for bank loans. At the time, the US Federal Reserve had dramatically increased interest rates to fight rampant inflation. By the summer of 1981, interest rates on business loans was sometimes as high as 20%, yet the share programme enabled small businesses to take out loans at half that rate from their own community.

SHARE’s innovation in community finance continued to be successful and, among other programmes, advised two farms in the region to issue a scrip currency. One of the local farms needed funds to heat their greenhouses during the winter when cash was short; the other needed to repair and recover from fire damage. These farms sold what were called Berkshire Farm Preserve Notes for $9 during the winter. Once the harvest came, they accepted the notes back for $10, effectively giving a 10% discount to customers who pre-purchased farm produce.

Robin Van En (center) and other Indian Line members by Clemens Kalischer.

Yet viewed from the other side, this can be understood as a safe 10% return on investment – paid in farm produce – to those who invested in local agriculture. Analysing this further, this type of scrip currency can be seen as a grassroots financing scheme, one not dissimilar from the Community Supported Agriculture (CSA) model.

Under the CSA model, all risks and rewards are shared with the community rather than absorbed by the farmers alone. Community members finance the operations of a CSA farm by pre-paying for CSA shares – a claim to a portion of the farm’s produce in the upcoming season. During a good year, community members with CSA shares receive high-quality produce below market prices; during a bad year, the financial impacts of the bad harvest are absorbed by the community. Importantly, the community reaps long-term benefits regardless of what happens. By smoothing out a farm’s income and insulating it from market shocks and external risk, the community ensures its own access to nutritional food.

In the same spirit, local currencies can and have given communities the tools to self-finance in times and places when the existing financial system cannot or will not do so. Local currencies serve multiple purposes and, depending on how individual currency programs are designed, each will serve some purposes better than others. It is important not to think of local currencies only as incentive systems that increase regional spending; local currencies can also be democratic systems of finance, tailored to the specific needs of the communities they exist in. These systems can (and already do) extend community credit to efforts which would otherwise not receive loans or funding.

The problem of accessing large-scale investment becomes less and less an issue as a regional currency achieves greater adoption. The Sardex currency system in Sardinia, Italy has been receiving a lot of press recently, and currently clears over €8 million in mutual credit payments between business each month. Another mutual credit system, the WIR in Switzerland, provides the means of over 1.5 billion Swiss francs per year and has been growing since 1934 when it was started to address a lack of access to credit. In Kenya, the Sarafu-Credit programmes operated by Grassroots Economics are also mutual credit systems, and they provide microfinance zero-interest loans in local currency to businesses and vendors who would otherwise have no access to credit.

Sharing a common thread with crowdfunding, lending circles, and even investment through credit unions and public banks, local currencies tap into the latent potential for communities to finance their own development. Just like these other community finance initiatives, any profits generated by endogenous financing from local currencies continue to enrich in the region.

Unassumingly nestled at the bottom of a sleepy hill in South Egremont (also in the Berkshires region), Indian Line Farm exists as an example of what the intersection of land, finance, and agriculture could look like in the new economy. Not only was it the first CSA farm in the United States, but Indian Line accepts the BerkShares regional currency as payment. BerkShares was started in 2006 by the same community that initiated the share programme and Berkshire Farm Preserve Notes, and still circulates today.

BerkShares local currency.

If that weren’t enough, Indian Line Farm also sits on CLT land and the lease requires that land to always be used for farming – it can never be used for any other purpose. In an innovation rare among existing CLTs, the farmers at Indian Line are not only entitled to equity derived from value they add to buildings on the land, but also from the value of perennial stock and organic soil improvements. By including this in the lease, the CLT ensures that the farmers’ economic incentives will always remain in alignment with the long-term environmental goals of the community.

Most often, when CLTs are mentioned in the media, it is in relation to low-income housing. This is because CLTs dealing with affordable housing or neighbourhood restoration have tax exempt status under US federal law. Yet there is nothing that actually requires a community land trust to be used for low-income housing.
In fact it is possible for all types of land to be held by CLTs, and it is also possible for equity to be given to individuals living and working on any type of CLT land.

Though a tax-exempt CLT cannot offer equity to individuals, it can use a two-tier framework to do so, where a subsidiary holding company manages the land and offers equity to those who live and work on it. This framework -commonly used by churches and educational institutions – was developed and acted upon by the Community Land Trust in the Southern Berkshires that holds Indian Line Farm’s land.

(in photo from left to right: Bob Swann, Ursula Cliff, Susan Witt, Frank Lowenstein, Clemens Kalisher, Elizabeth Keen and Al Thorp celebrate the 1999 partnership formed in order to transfer ownership of Indian Line Farm from the estate of Robyn Van En. Photo by Clemens Kalischer.)

This framework allows all types of land to be donated, including land used for commercial purposes, and business owners or other leaseholders are entitled to equity in improvements made to businesses or anything else built on CLT land. As far as land reform goes, this innovation is truly groundbreaking in the way it enables most types of land to be held securely in common.

These three elements – land, agriculture, and finance – fundamentally influence the wealth flows and power dynamics that permeate society and shape it. By using and improving existing models, communities can build a resilient foundation where decommodified land is held in trust, the risks of agriculture are socialised, and regions maximise their ability to self-finance. With a foundation this solid, a community would be primed and equipped to direct its own development in any way it sees fit.

Aaron Fernando is a community currency consultant who has worked with multiple community currencies across the United States, and is also a writer focusing on local movements, new economy initiatives, and behavioural economics.

Lead image Indian Line Farm, by Jason Houston.

The post Beyond Civil Rights: Economic Democracy appeared first on P2P Foundation.

Since the 2008 global financial meltdown and bailouts, trust is disappearing: in banks, stock markets, corporations, governments, religious institutions, experts, academia, political parties’ rhetoric and even the Internet and social media. This mistrust has fueled global populists across the political spectrum, with ubiquitous signs at their rallies, “Where’s MY Bailout?”  We see the rise of cryptocurrencies becoming bubbles, as many seek alternative stores of value and mediums of exchange they hope will prove more trustworthy than central banks’ fiat currencies: dollars, yen, euros, pounds, pesos backed only by their governments’ promises.

Trust is a precious commodity which undergirds all humanity’s markets, trading and exchange. Trust does not scale easily, abiding in face-to-face, handshake interactions in humanly-scaled communities, based on common agreements, shared infrastructure, resources and culture. Trust does not reside in packages of software, apps, AI, big data or social media platforms, as we learned in 2016. So trust was sought in the blockchain platforms first developed by the mysterious computer expert, Satoshi Nakamoto in 2009 for his bitcoin. Now, over 1000 blockchain-based start-up companies and blockchains underlie the over 1,500 cryptocurrencies traded on electronic exchanges including Coinbase. These computer-based distributed ledger blockchains are designed to engender trust by allowing person-to-person ability to verify each transaction or contract with a permanent record open to all.

Crypto promoters aspire to create global-level trust in the value of cryptocurrencies due to this transparency and their protocols limiting finite amounts to be issued, to create artificial scarcity. This vision is sullied by the many cases of criminality, hacking, stealing, frauds and other shenanigans. Nevertheless, faith and trust in these cryptos remains strong, since proponents say central banks also manipulate their fiats — which is true!  We see fiat money being printed on TV shows! Yet fake visuals of cryptos, such as the shiny golden colored coins are also shown with news about bitcoin. This is a “bit-con” since bitcoin is a digital algorithm, a string of computer code which is unlikely to become a ubiquitous medium of exchange or a store of value.

Still, the allure to libertarians, hackers and speculators is that cryptos exist with no middleman, for peer-to-peer global private use with no governments, no banks or financial intermediaries and few outside rules except those imposed by issuers. Millions of hackers worldwide soon began solving the ever more complex mathematical puzzles needed to claim their next block of newly minted bitcoin. These “miners” now use some 30 terawatts annually of fossil-generated electricity, equivalent to the consumption of a country the size of Ireland, plus gobs of computer power. They are now affecting the Earth’s climate as I described in “Hey COP23: Bitcoin Miners Exploding CO2 Emissions!”

The loss of trust in fiat dollars, pounds, yen, euros, pesos we always use to pay each other cannot be replaced by cryptos—in spite of the current hype, as traditional financial markets now trade bitcoin futures and ETFs concocted by eager Wall Street players.  Nations including Russia, North Korea and Venezuela under international sanctions for violating norms, are now issuing their own cryptos to escape financial controls set by governments for fiat currency transactions. How will this war between governments and libertarian hackers’ cryptos versus fiats work out?

Clearly, trust in all forms of money is fading. Today, people barter more goods and services on electronic platforms, swap and match, often directly without any use of currencies on platforms like Freecycle, and for everything from baby-sitting, sharing garden tools, spare rooms, vacation homes to finding their true love matches! The familiar fiat currencies we still spend our lives earning, investing and saving for our retirement are losing their dominance in our lives and with that their role as a promised store of value. For example, few fiat currencies remain stable, as we see on FOREX trading screens daily. Even our US dollar has lost about 80% of its value over the past 30 years— due to inflation, budget deficits, interest payments to bond-holders on our national debt, which recent tax cuts may increase by another $1.5 trillion.

Most US and European citizens register disbelief when they learn that all their national money in circulation is created out of thin air by private banks when they create loans and is therefore only backed by other peoples’ debts, not gold or any other commodity of value! Governments in Britain, the USA and most countries gave their sovereign power to coin their own national money away to their private banks and allowed them to charge interest on their loans as well, as Ellen Brown explains in “Web of Debt”, (2010). Our TV Special “The Money Fix” details on how this happened in the USA with founding of the Federal Reserve in 1913 and the rise of local currencies, barter and credit circles.

Governments’ policies became ever more erratic, swinging between obsolete textbook policy prescriptions: either “stimulation “(quantitative easing QE, i.e. money-printing, tax cuts, lowering interest rates, buying dud mortgage-backed securities) or “austerity “(cutting safety nets, education, healthcare, public services, selling off public assets) while continuing to bail out too-big-to-fail firms without prosecuting their reckless executives. Ethical Markets dissects such obsolete economic policies and offers more realistic alternatives (www.ethicalmarkets.com).

Today, failing policy levers are being bypassed by the rise of cryptos, crowdfunding, peer-to-peer lending, electronic barter, information-based direct trading I describe in “FINTECH: Good and Bad News for Sustainable Finance”.  They reveal the stunning truth: Money Is Not Wealth and worse, it is no longer a reliable store of value!  All those dollars we pinched to save for our retirement are losing their value until we use them to buy something useful, and shift our investing from obsolete, polluting, unsustainable corporations into trustworthy, sustainable, well-managed and transparent enterprises so we can monitor their performance and social impacts ourselves.

As the shock of this reality sets in, it reveals how most financial market players try to make money out of money, trading stocks with each other which are tradeable contracts issued by big companies as explained by law professor Lynn Stout in “The Shareholder Value Myth”, (2012). The latest Wall Street bubbles are index-based stocks and ETFs, reaching additional levels of abstraction. I first unraveled these truths in “Creating Alternative Futures” (1978,1996) and “The Politics of the Solar Age” (1981,1986). I described the essential unpaid tasks underpinning the cash-based sectors measured in GDP and incomes of mostly male “breadwinners”. Textbooks designated their wives to perform all the work of maintaining households, raising the next generation, caring for elders, volunteering in community service —all unpaid, as in this diagram (Cake). Economic textbooks described all this vital productive work I called the Love Economy as “non-economic”!

Feminists emerged worldwide to insist this work be recorded and paid, as in Marilyn Waring’s “If Women Counted” (1990); lawyer Riane Eisler’s Caring Economy campaign and Kate Raworth’s “Doughnut Economics” (2017). I documented how thousands of communities around the world starved by their central governments of fiat currencies by austerity programs, simply created their own local currencies, like the famous “Berkshares” issued by the Schumacher Society and circulated, even by local banks in Great Barrington, MA. These townsfolk realized that using their own local currencies and credit could clear their local markets and employ their people meeting local needs. Photographs of thousands of such local currencies issued all over North America and Mexico are catalogued in, “Depression Scrip of the United States 1930” (1961). They taught a key lesson: money cannot be a store of value –it must circulate in the community in order to meet needs and create jobs and prosperity. To assure these currencies were not saved, but spent, they all carried expiration dates and require stamps to re-validate them regularly affixed until they finally expired.

So this myth of money as a store of value is now threadbare. Electronic platforms open up new possibilities for direct barter, with all the fintech exchanges now disrupting traditional finance and banking. These innovations offer hope that both cryptos and fiats may eventually be properly managed and regulated in the service of decentralized prosperity and focus on the new model; the UN’s Sustainable Development Goals (SDGs) now ratified by 195 governments. Accountants are renovating their models for information-based economies  where services account for some 80% of production: from unpaid voluntary work to intellectual property, R &D, design, brands, networks, “infostructure” (broadband, internet) and institutions, described in “Capitalism Without Capital” (2018). The International Integrated Reporting System (IIRC) models six forms of capital: finance, built facilities, intellectual, social, human and natural capitals, which then measure the extent to which companies and governments enhance or degrade all six forms. This accounting revolution also from the Sustainable Accounting Standards Board (SASB); the Chartered Institute of Management Accountants www.cimaglobal.com, (ICAEW) finally discloses and internalizes all those “externalities” into companies’ balance sheets and provides full spectrum accounting— beyond money as the single metric. Honest money: currencies fully backed 100% for example, by kilowatt hours of renewable electricity, productive assets and services can continue to be useful as mediums of exchange. Expert Shann Turnbull in “Is A Stable Financial System Possible”, shows why currencies cannot be a predictable store of value, i.e. money is not wealth.

Cross-posted with permission from Ethical Markets.

Photo by reynermedia

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