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This article is part of a series serving as a practical blueprint for starting a local community currency. This article builds on previous articles, which have discussed the value of trade, the value of money, and the creative and destructive forms that money can take.  To read from the beginning of the series, click here.

1. foundations of greatness
2. the wealth-makers
3. the wealth-eaters
4. a wealth-maker economy

In a previous article, we sketched an outline of what a great currency would look like in action.  Here, we look at how a great currency can come to be.  What are the building blocks of a great currency?  What are the underlying social and economic foundations that will support one?  To answer this, we must first make a distinction between two types of economic participants, one which we will call ‘wealth-makers’ and the other, ‘wealth-eaters.’

Wealth-Makers Our first group is made up of individuals who create more wealth than they consume.  They are still certainly consumers of wealth - they just work with a ‘net wealth profit’ and make more than they use up.  Wealth making looks like:

• A Self-Reliant Family Each family member spends a couple hours a day helping upkeep and improve their home.  The family grows a lot of the food they eat, and usually has a surplus.  In addition, each family member has a trade that they work at.

• A Gypsy Gardener Having no land of his own, our friend the gypsy gardener farms the land of others.  He farms in several different locations, and gives them 15% of the produce in return for use of their land and water.  He lives at one of these gardens, where the owner gets a 25% stake in his harvest.

• A Community Investor The community investor inherited a modest chunk of land.  She uses it to be a constructive investor in wealth-building projects.  There are three gypsy gardeners this year, from which she receives 15% of the harvest.  Use of buildings and indoor space works the same way - productive individuals use them in return for a share of their product.  A yoga teacher, for example, uses one of her rooms and gives her 2 free yoga passes to each of her classes.  Our investor can sell, barter, or use these passes.

Everyone in our example is building more wealth than they can consume.  The largely self-reliant family produces most of what they consume.  They are able to live quite well by exchanging the fruits of their individual trades for whatever else they desire.  The gypsy gardener sells and trades his extra produce for everything else he needs.  He also shares in the work and profit of several other group wealth-building projects that interest him.  The community investor shares in the success of other wealth-builders, allowing start-up projects to minimize out-of-pocket infrastructure costs.  Being that she has an interest in seeing them succeed, she also helps connect them with other community resources that help their projects

In a community consisting solely of wealth makers, surplus production is everywhere.  Wealth-makers are the source of ‘plenty’ and, left to themselves, create a community where there is always more than enough to go around.

Wealth-Eaters The second group represents those that consume more wealth than they produce.  Many of these individuals do produce some wealth.  What defines them, however, is their consumption.  They use up more wealth than they make, and so we call them the wealth-eaters:

• The Store Clerk We all know them, some of us have even been them.  These are the people who scan your stuff in the checkout lane and scan your credit card.

• The Cubicle Jockey These are the people immortalized in the movie Office Space.  They crunch numbers, write reports, follow orders, and spend a lot of time surfing the net.

• The Cutthroat Capitalist She makes her living off of things like mergers and acquisitions.  She’ll buy up companies so that she can liquidate them and sell off their assets.  She’s a sort of ‘battle businesswoman’ and her company is highly profitable.

All the wealth-eaters are employed, but they aren’t really creating a lot of value.  They don’t really work with the purpose of creating value; they work to get paid.  With their pay, they purchase what they need to live, but they often aren’t all that clear about how this personal economy of theirs works.  This is because the underlying exchanges don’t, in fact, make any sense.  Their situation is the product of a confused and muddied macro-economy.

To make this point clearer, let’s ask a simple question:  are these individuals creating distinct value that they could trade with others to survive? How many carrots from your garden would you give someone to check you out at the grocery store?  How much labor would you do in return for an hour of cubicle ‘work’ mixed with net-surfing?  What percentage of the harvest you grew would you give to someone to do a hostile takeover of a company?

I’m guessing not much.  And this is how we can identify the wealth-eaters: in a strictly barter economy, they would have a hard time trading their labors for the things they consume.

So how do they survive?  By consuming the excess production of the wealth-makers.  Since we don’t live in a barter economy, the trades we make are complex and obscure.  The complexity and the lack of transparency make it easy to create uneven trades in which one party profits at the expense of another.

In large economies these uneven trades are numerous and diverse, creating webs of economically parasitic activity.

The Wealth-Maker Economy And now we come back to the crux of the matter - the making of a great currency.  In previous articles, we concluded that:

• the central purpose of a currency is to facilitate the building of wealth
• the central action of a currency is to amplify existing economic behavior

So how can this action of currency serve to create an economy that fulfills the wealth-building purpose of currency?  A great economy doesn’t simply amplify all economic behavior - it selectively amplifies the behavior of wealth-makers, while inhibiting the parasitic behavior of wealth-eaters.

This is done through the creation of an exclusive economy, in which only wealth-makers may participate.  The currency of this economy must only have value when exchanged from one wealth-maker to another, and be worthless in the hands of a wealth-eater.  A great currency must be founded on a great economy, and a great economy is one in which all individuals share the united economic purpose of building wealth together.

Having taken the wealth-eaters out of the equation, communities can share amongst themselves the cornucopia of their excess production.  Such richness is core to any real definition of wealth.

The next post starts to look at the mechanics of a great currency, and how a wealth-maker-only economy can be built.

This article is part of a series serving as a practical blueprint for starting a local community currency. This the third part of a three-part post, building on part two, which looked at what seperates a truly great currency from a merely good one.  To start from the beginning of the series, click here.

1. as culture fails, money gets ugly
2. when money rots
3. building value vs. getting money
4. rewarding the con men
5. ‘what’s in it for me?’ - the thin version
6. peddling neighborliness
7. the insanity of ugliness

Money:  The Good, The Great, and The Ugly

Part Three: The Ugly

Earlier on we noted that in order for a currency to be a good one, it must be functional.  This would seem somewhat obvious, but for the fact that the majority of our currencies today are dysfunctional.  What is it that makes a currency ‘ugly?’  As mentioned in the previous article, great currencies are interwoven with a cultural ethos of solidarity.  In this article, we will begin to see that ugly currencies are influenced by culture as well, though in a very upside-down way.

In fact, it might be more accurate to say that ugly currencies gain their support from a generalized weakness of culture, or a failure of culture altogether…

• Monetary Decay Recall, if you will, that one of the reasons money exists is to store value.  Ugly money fails at this, and in an ugly currency system the money quite literally rots.  By this we mean that the money loses value over time and rather than helping to store value aids in the process of its destruction.  Say Jenny had a surplus of peaches 5 years ago, and sold a bushel for ten units of money.  This year her trees frost, and she wants to cash in her stored wealth and buy a bushel.  With monetary decay, Jenny won’t be able to buy a bushel with her ten units - she will have to pay fifteen or twenty units for a similar bushel today.  Her wealth has ‘rotted.’  This decay process betrays currency’s original intent and puts a slow but certain drain on the wealth creation of the community using it.  In an effort to make the putrifcation of wealth more palatable, this process is sometimes called ‘inflation.’

• Aseptic Value In an ugly money system, nobody cares where their money comes from as long as it keeps coming.  In fact, people rarely think about the origins of the money they receive.  Ugly money is all ‘neutral’ - it doesn’t matter if it was earned or stolen, it all spends just the same.  As great money incentivizes the creation of value, ugly money incentivizes the acquisition of money, and few care how it’s acquired

• Rewarding Swindlers Where a great currency rewards the serviceful, ugly money rewards the clever.  The easier you can get your hands on money, the better.  Individuals in the system decide how to live based on a cost-benefit analysis of how much money they can get for how little work.  Cheating is systemically rewarded because ugly money is blind, and cheating is easier and faster than value creation.  Once this gets rolling ‘honest work’ is scoffed at or regarded as inefficient, and the culture starts to encourage its sons and daughters to become brokers and managers of hedge funds and Donald Trumps instead of learning to make useful things with their minds and hands.  Abstract and value-ignorant ‘money markets’ are viewed as the playground of the elite and society becomes blind to the obvious truth:  that such individuals are a looming anvil of dead weight that all the food-growers and energy-producers and producers of real goods must carry.  For how else would these tycoons of finance eat?

• ‘Thin’* WIIFM A currency system that has gone rancid is full of individuals who have a thin WIIFM (What’s-In-It-For-Me) approach to decision making.  We call their view ‘thin’ because they don’t weigh their actions systemically and therefore don’t understand that momentary gains at the expense of others ultimately undermine their personal self-interest.  As we saw in the exploration of sustainability vs. barter, individuals acting alone are poorer than robust communities.  An ugly currency system is one in which most individuals have forgotten that “many hands make for light labor.”  As a result, the labors of all are unnecessarily heavy.

• Selling Neighborliness As ugly money prevails, individuals become reluctant to do anything without overt reward.  All that once fell into the realm of being a good neighbor is now a ‘service’ or an ‘opportunity.’  Want your house watched while you’re away?  Hire a ‘house-sitter.’  Need a little temporary help? Pay a ‘personal assistant.’  Ugly money turns the helpful efforts of the good samaritan into a commodity to be bought and sold.  Interactions between individuals become hollow and calculating, and relationships turn into ‘assets.’

The hallmark of an ugly currency is it’s insanity.  Ugly currencies twist and distort our common perceptions of what is valuable.  They under-reward the making of valuable things and systemically reward the insipid acquisition of money.  With ugly money, even the rich aren’t wealthy, because they exist in in a generalized context of poverty.  As a result, they spend much of their riches defending their riches and themselves against the poor - who, of course, have a high incentive to take their riches.  Ugly money is, quite simply, the systemic destruction of wealth - a context within which even those working every day to create value are forced to swim upstream.

Ugly money and the cultural belief in ‘rugged individualism‘ go hand in hand.  The only wealth possible without robust community is thin* wealth, or ‘riches.’  Even the much-lauded sustainability movement tends towards the fallacy that one individual can be wealthy alone.  This foolish belief is the type of cultural reinforcement that works hand-in-hand with ugly money to create a community-wide engine for the destruction and prevention of deep* wealth.

The more ugly money is used in a community, the harder time people have creating a life that works for them.

NEXT: The Building Blocks of Community Currency

*Credit for the idea of ‘Thin-ness’ goes to my great friend Aaron Heart, who uses the term to describe a ‘hollowing out’ of the most sacred aspects of our nature in an attempt to view them as ‘accomplishments’  our smaller selves can claim.  Think of a ‘fair-weather friend’ who counts you as one of their buddies.  This would be someone with a Thin way of being friendly - trying to get the benefits of claiming you as a friend by telling you what you want to hear,  and then becoming curiously unavailable when,  suddenly, something else strikes their fancy.  The opposite of Thin is ‘Deep.’  Think here of a stalwart friend who consistently tells you the unpopular yet necessary ‘hard truths’ and steadily endeavors to make you stronger.

This article is part of a series serving as a practical blueprint for starting a local community currency. This article builds on previous post, which looked at what makes a currency system a good one.  To start from the beginning of the series, click here.

1. great is not ‘extra good’
2. the goodwill currency
   
3. bad money not taken here
4. predators beware
5. free lunches are for fools
6. service = profit
   
7. good money amplifies; great money purifies

Money:  The Good, The Great, and The Ugly

Part Two: The Great

Great currencies are not just currencies that are ‘extra-good.’  They are actually a different beast altogether.  A great currency has a cultural component along with its economic component.  This cultural aspect is a generalized understanding that an individual cannot be wealthy alone - wealth is the product of a healthy community (as discussed in previous posts).

There is, therefore, a huge incentive for every individual to look out for the interests of all individuals within the community and the integrity of the community as a whole.  Only when this is a practical principle upheld by the community at large can a great currency be supported.

What does that look like?  What follows is a sketch of the character of a great currency.

• Goodwill Uber Alles The first and most important point is that in a great currency system, money is no substitute for neighborliness. If your neighbor needs their house watched while they’re away, you watch their house for them.  If a member of the community gets ill, the community helps keep their house in order until they’re better.  A great currency is mostly just a tool that communities founded on goodwill use to track the productive efforts of individuals.

• The Refusal of Bad Money A great currency is one that rejects ‘bad money.’  Individuals with ill-gotten money find that they have nowhere to spend it.  Every shopkeeper, every craftsman, and every banker defends the integrity of their money by refusing the coin of those who steal or con their way into cash.  Great currency systems, being built on a deep understanding that wealth is ultimately a product of solidarity, completely remove the incentive for individuals to profit at the expense of others.  Coercion creates no value, and thus money gotten by force or by trickery does not represent value and cannot be spent as if it did.

• No Harbor for Predatory Behavior The purpose of adopting a currency system is to create community wealth.  With great currencies, those individuals who are free-riders and do not contribute to building wealth, as well as criminals who disrupt the process of wealth creation are not punished, they are collectively ostracized.  Think of the way a chess club works - anyone who wants to play chess is welcome, anyone else doesn’t really belong there.  Great currencies operate much the same way - anyone who wants to build wealth is welcome, anyone else doesn’t belong.

• TANSTAAFL To borrow from the lunar culture of Heinlein, great currency systems uphold ‘TANSTAAFL,’ or ‘There Ain’t No Such Thing As A Free Lunch.’  Everyone has a livelihood that is centered around doing something valuable.  There are no purely ‘money making’ jobs where people with enough cash just hang around and live off of interest.  Great currencies have no investor class. This is due to usury being largely nonexistent because it violates neighborliness.  The crediting of money is largely a foreign concept - if someone needs help starting a business and it’s a worthy wealth-building business, everyone helps them start it up because they’ll all be better off when it’s up and running.  People in a great money system are suspicious of any offer that implies something for nothing, because the concept makes no damn sense.  If a thing is valuable it’s appropriate to value it.  A thing offered for free is either valueless or the person offering it is a fool.

• Service = Profit The natural result of a great money system is that the more value you are able to create, the wealthier you will be as an individual.  Great money creates a true meritocracy, where individuals have an incentive to innovate new orders of value.  With great money, the path to personal wealth is the path of service.   In communities with great currencies a rising tide lifts all boats, and the wealthy are to be celebrated, for the only way an individual gets rich is by enriching the lives of others.

As stated earlier, great currencies are not just ‘really, really good currencies.’  Good money serves to amplify the speed with which wealth can be created and the length of time lasts.  Great money does this too, but it also does something more:  it systemically purges from a community all behaviors and individuals that would destroy wealth or get in the way of people building wealth.

So we can say that the chief effect of good money is to amplify ecomonic behavior, where the effects of great money both amplify and purify economic behavior.  As such, great money represents an entirely new order of economics - one that clearly allies the incentives of individual actors with that of the community as a whole.

PART THREE:  THE UGLY

photo credit: bogenfreund

This article is part of a series serving as a practical blueprint for starting a local community currency. This article builds on on a previous article, which looked at how currencies can be used as a tool for building community wealth.  To start from the beginning of the series, click here.

1. what makes a good currency?
2. good currency = functional currency
3. good money = better than barter

In the last post, we took a look at the core value that currency can offer over a strict barter system.  The spirit of currency-based exchange is that it allows individuals to store their wealth and facilitates the exchange of goods and services between members of a community.  We concluded that the more a currency serves these core purposes, the better the currency

Building on that theme, here we look at what makes a good currency, how a currency can become great, and what happens when currencies go bad.

Money:  The Good, The Great, and The Ugly

Part One: The Good

In order for a currency to be ‘good,’ it must be functional.  What do we mean by functional?  A functional currency is one that stays true to the spirit of what currencies are for.

• Lasting Wealth Currencies allow people to work and trade their work for units of money.  These units of money represent ‘frozen work.’  To illustrate this, let’s say an individual works for 10 hours and receives an equitable amount of money (say 100 units).  A good currency would hold this value over time, allowing that same 100 units of money to buy 10 hours of equivalent work five, ten, or even twenty years later.  Our laborer’s efforts would have been stored over time by the currency, without losing their value.

• Easy Exchange A good currency also makes exchange easier than barter.  With a good currency, our friend from above would be able to purchase 10 hours of work from anyone of roughly equivalent skill.  This helps increase the flow of exchange amongst a large number of people, allowing two individuals to have repeated one-way exchanges if they want (meaning that if Bob the auto mechanic has consistent plumbing problems, he can purchase the efforts of a plumber over and over, even if the plumber doesn’t own a car and has no use for a mechanic).

What defines a good currency is that it’s better than barter.  Adoption of a currency system is also the adoption of a brand new order of complexity.  As such, currencies have some great advantages, but they also offer new problems.

• Barter is simpler, and thus more transparent.  Both parties of a barter exchange know what they’re getting and usually know a lot about the history of the items they’re trading for.  When a community starts trading money, this changes and transactions become more opaque.
• Money is impersonal, and this makes it easier to steal (when someone steals Joe’s watch, everyone knows who it was, but when someone steals Joe’s money it’s much harder to trace).

The true test of a currency system is whether or not it’s helping a community build wealth faster and easier than simple barter.  This can be known by looking to the aggregate actions of people in the community.   If individuals within a community start to gravitate towards barter transactions instead of using money, someone is probably taking advantage of the chaos and complexity of currency to cheat and make unfair trades.  This cheating may not even be known to the individual actors within a system, but they’ll just get a feeling that barter is a fairer deal and start using less money whenever they can.

Good money is a simple thing.  At it’s roots, it’s really just an extension of barter that allows wealth to be built faster and stored longer.

PART TWO:  THE GREAT

This is the second post in a series serving as a practical blueprint for starting a local community currency. This post builds on the previous article, which looked at how barter between individuals and groups serves to increase the wealth of all involved.

1. why not just barter?
2. barter = inelegant
   
3. money = empowered barter
4. value of money = ability to store wealth + easy trading

Having looked at how barter exchange serves to build wealth, we must now understand how adopting a common currency might further increase wealth of a community.  The use of money can benefit a community, but it doesn’t always.   The following article looks at what happens when it does, and at the advantages a healthy common currency provides over a strictly barter economy.

The Trouble With Barter Our little neighborhood from our previous example is off to a good start, but they have a couple of peculiar problems that sometimes stop them from building as much wealth as they would like.

First off, sometimes a family will want to barter for a specific good (say, tomatoes), but won’t have anything the tomato growing family wants.  The tomato producers (we’ll call them the Toms) has plenty of tomatoes, but they just aren’t interested in any of the goods that the tomato consumers (we’ll call them the Smiths) have at the moment.  When this happens, the Toms and the Smiths have to spend time figuring out what would be a good trade for tomatoes.  For the purposes of illustration, let’s say the Toms need a new cellar door.  The Smiths, not having any barn doors, but still wanting tomatoes, now head off to the carpenter to see if they can barter for a sturdy cellar door.

This presents several problems:

• If the neighborhood carpenter is too busy or needs a week to get the job done, our friends the Smiths must go tomato-less until that time.
• If the Smiths have nothing the carpenter wants, they are in exactly the same pickle.
• A cellar door is worth a hell of a lot of tomatoes.  The Smiths will now need to barter those excess tomatoes in a hurry before they spoil or they will lose a portion of their wealth.

But spoilage isn’t just a problem for the Smiths - many people in the community are producing perishable goods (milk, eggs, bread, etc.).  And unfortunately, the more effective they are at producing it, the more they have and the more they have to worry about bartering it quickly, even if they don’t have anything they need at the moment.

And so we see that a purely barter-based economy is inelegant.  Spoilage and waste are occurring because of difficulty coordinating trades, people are trading for things that they don’t need in order to “spend” their perishables before they go bad, and some people are having to do many trades in order to get what they want instead of just one trade.

Money:  Barter 2.0 The neighborhood in our example is having trouble with two basic things:  how to store their wealth and how to coordinate exchanging the wealth they have.

Here’s where money starts to become a useful idea.  Some families, in an effort to prevent waste, start to trade their goods for items that are durable and won’t spoil or get consumed or degrade over time.  Let’s say the Toms and the Smiths start trading all their excess wealth for iron ingots.  Since the community uses a lot of iron, they figure that eventually the blacksmith will need the iron and they’ll be able to trade it in the future for things that they need.  What’s interesting is that, since both parties are now accustomed to storing their wealth in iron bits, the Smiths can now just offer iron bits to the Toms whenever they want tomatoes.  Even though the Toms don’t have any use for the iron, both families are operating under the same premise of storing wealth, so they are able to exchange with each other for goods fluidly.  Assuming the community at large starts to catch on and start trading their goods for iron bits when they don’t need anything else at the moment, this will greatly increase the speed and ease with which everyone can trade with each other.

This practice turns into a de facto currency when the all families start trading the iron bits amongst themselves as a way to store value, and the practice becomes pervasive.  Once this system is established, the community has a currency with the two elements that are needed for a good currency system:

• durability of value of the monetary unit
• pervasiveness of the currency’s acceptance.

Empowered Barter So how is currency better at creating wealth than strict barter?  Well, in it’s bare essence, currency is just a form of empowered barter that greatly increases everyone’s ability to do two things.

• It allows individuals to easily store value.  With currency, individuals can store their wealth over time.  This is why peanuts don’t really make good currency units - they can go bad, get eaten, or get accidentally destroyed.  Iron or gold avoid these pitfalls and thus make better candidates for functional money.

• Currency facilitates exchange much better than barter.  As in our example above, barter presumes that both parties have something the other wants.  When this is the case, barter suffices.  But when the Toms have something the Smiths want, but Smiths have nothing the Toms want, a barter system turns into a real hassle.  A common currency allows the Smiths to get what they want from the Toms in return for whatever the Toms want later on.

So we can say that currencies are valuable to the degree that they help individuals store their wealth and make exchange easier.

This also gives us a basis for comparing one potential currency with another.  If we are trying to decide between two currency systems for a community, the one which most facilitates exchange and aids in the storage of wealth will be the superior system for that group.

NEXT:  Money: The Good, The Great, The Ugly

photo credit: pfala

This is the first post in a series serving as a practical blueprint for starting a local community currency. The first part of the series aims at providing a deep understanding of how alternative currencies can support the creation of profound community wealth.  The second part of the series provides the reader with a do-it-yourself guideline for starting a robust local currency.

1. goal = blueprint for community currency
   
2. sustainability = poverty
   
3. community + barter = the roots of wealth
4. wealth arises with diversity facilitated by economy

The goal of this series of articles is to provide a do-it-yourself practical blueprint for making a community currency. To better understand what makes a good currency, we first look to the roots of exchange itself and why it’s valuable at all.  After all, not everyone agrees that it is.  There is a strong subculture today who believes that making everything yourself and minimizing any dependence on society offers a better way of life. Communes and sustainability advocates have for years cut themselves off from society and withdrawn from their surrounding communities in an effort to live the good life.

Is that a good idea?  Or is there, perhaps, something that we derive from community that we simply can’t get by ourselves?

Sustainability:  Poverty in Disguise Let’s picture a nuclear family that produces everything they need to get by.  They build their own shelter, grow their own food, get their water from a creek nearby, etc.  They are, for all intents and purposes, sustainable.

Let’s suppose that this family is living on a plot of land that is excellent for producing certain kinds of produce and not others (as is generally the case).  They get lots of sun, so they have abundant tomato and corn harvests, but have trouble growing as much spinach and lettuce as they’d like because it just melts in the sun.

Let’s further suppose that the family has a son that’s skilled at making wooden furniture.  He’s turned it into an art, and the house has rocking chairs and a wonderful kitchen table and lavish furniture in every room.  None of the family is particularly good at the more mundane aspects of carpentry, however, so the rest of their house is “quirky” - the roof leaks, the door doesn’t shut quite right, and the house gets mighty drafty in the winter.

Some things to note about our family:

• Their food supply is not very diverse.  Since they have only their own labor pool and no backup if things go wrong, our family concentrates on high-yield crops that are easy to grow.  Nobody goes hungry, but they eat a lot of the same stuff over and over.  Simply put, their food is boring.
• They are jacks-of-all trades, yet masters of none. Save our furniture making-son, the family all does a little bit of everything and spends a lot of time doing it.
• Mastery is not encouraged.  The son in our example is good at making furniture, but he hasn’t had the time to cultivate it into a high art.  This is because he spends most of his time helping the family’s efforts at sustainability.  While he’ll have a lifelong hobby, he doesn’t have the support to cultivate his craft to the level of a master.
• They have very little security. If something goes wrong with their harvest or a someone falls ill, our family is in serious trouble.  There’s no padding in the sustainable lifestyle.

The family is getting by.  They live simply and have what they need to be self-sufficient.  Our friends are sustainable.  What they are not, however, is wealthy.

Barter: The Beginning of Wealth Now let’s imagine that several other families move in nearby, forming a neighborhood.  Scattered amongst them arrive a metalworker, a roofer, a carpenter, and a rancher.  Additionally, some of the families live on relatively shady plots of land, meaning that their gardens produce an excess of lettuce and leafy greens, but they have trouble growing tomatoes.

What happens next is a naturally emergent system of barter, whereby the sunny families grow the sunny crops for the whole neighborhood and the shady families grow the shady crops.  It turns out that this is less work and less struggle for everyone, and our first family starts to have more varied meals as a result.  In addition, the furniture-making son is now able to barter some of his excess furniture with the carpenter and the roofer to make their house less drafty.  Their house is now more efficient, and the family doesn’t need to gather nearly as much wood for the winter, leaving them more time for pursuing other things.

This is the beginning of wealth.  How come?

• There is systemic efficiency. Our family trades some of their crop to a carpenter who seals up their house and makes it less drafty.  They now have to spend less time each year gathering firewood.  In addition, the neighborhood shares a mule that they use to cultivate the land, so the working fields takes up much less of their attention.
• There’s more free time. Our family now uses their labor to grow and make only those things that they do best.  As the other families are doing the same, a good portion of the struggle to make and grow what they need but aren’t good at is taken out of the collective equation.
• They have more variety. The family’s food is much more diverse than it was before.  Artisan crops like herbs and strawberries are now available because people aren’t focused only on bulk crops.  This diversity extends beyond food, into the realm of tools, children’s toys, etc.
• Mastery is possible. Our furniture making son can now focus on developing his craft into a real art form.  Partially as a result of increased free time, but also because he can now trade his furniture for food.  What was once only able to be his hobby can now be his livelihood.
• Community leads to security. With a group of neighbors, even the destruction of a whole year’s harvest does not pose as large a threat to our family.  If that happens, they can join in cultivating their neighbor’s farm in return for a portion of the produce and make it through the winter.

Barter represents a step forward from simple sustainability into a more alive and organic permeability and is the birth of both community and economy.  Our imaginary neighborhood helps illustrate how community and economic exchange make it easier for everyone to live prosperously

Being interdependent and having a living barter economy helps make the good life possible in a way that zealous independence does not.  The ‘rugged individualist’ that many in our culture hold dear is not exactly a myth - he’s just destined to be overworked and impoverished.

This can perhaps shed some light on why the well-intentioned but generally secluded hippie communes of the sixties and seventies never turned into the glorious Edens that they were envisioned to be.

NEXT:  Money - Barter 2.0

If you think that starting your own alternative currency is too hard, think again.

A group of mothers with young children has come together to create a barter network for babysitting using popsicle sticks as currency.  Each popsicle stick represents 30 minutes of babysitting.  Mothers earn sticks by sitting for other moms in the collective and are then able to spend them later in lieu of hiring a babysitter.

We spoke with one mom who talked about how the exchange has been improving her quality of life,

“If my husband and I want to go to a movie it’s usually not worth it - on top of the cost of the movie, we have to find a sitter and pay her $20-30.  Going out gets really expensive and hard to coordinate.  Trading with the other moms makes it possible.  I have about thirty popsicle sticks right now and I feel like I can do anything!”

What protects this local currency from counterfeit popsicle sticks?  The cooperative uses yahoo groups to organize itself and does periodic audits of their popsicle currency.  Each member must declare how many popsicle sticks she has at the moment, ensuring that the total amount of popsicle sticks remains constant.

photo credit: That Other Paper