Community Currencies and Open Money
Seedstock is but one of thousands of examples of community currencies currently in existence around the world. Community currency is not a brand new idea; during the Great Depression hundreds of community currencies throughout North America, Europe and other countries helped communities weather the depths of economic depression. Other examples of communities creating their own money supplies to help deal with economic challenges can be found as far back as 200 years ago on the English Channel Island of Guernsey, and if one goes back even further one finds that indeed there was a time when most of the currencies used by humanity were of a much smaller scale than today’s national and supranational currencies.
Community currencies are almost as unique as the communities that create them, with designs based on a great many different models, and developed with many different objectives in mind, from boosting local economic resilience to simple community building. If the objective is to fundamentally begin to repattern the local economy so that supply chains begin to shift towards local sources and a circulating community currency makes financial poverty a thing of the past, not all currencies are equal, however. Unfortunately, most of the community currencies in existence today, including some of the most widely touted such as BerkShares and the Transition currencies in the UK, fall short of being able to achieve such an economic shift due to a fatal design flaw: they are backed by conventional money. This means that people buy the currency with cash that is then stored away in a bank account; sometimes they receive a discount on the local currency as an incentive. After they spend it at local merchants, those merchants have the option of redeeming the currency for the cash that was originally used to purchase it in the first place. Not only does such a scheme do nothing to increase the money supply in its community, but it provides merchants with no real incentives to favour local inputs any more than they did before participating in the community currency!
Seedstock, on the other hand, is based on the Community Way model devised by the community currency pioneer and activist Michael Linton, well known around the world for also having invented the popular LETS mutual credit system in the Comox Valley in 1983, which has since gone on to spread to over 2000 locations around the world. In the Community Way model, currency is backed not by cash, but by the commitments of the businesses and sole proprietors who issue it to honour that currency as a form of payment. This means that Seedstock is truly new currency in the community, not a temporary proxy for the national currency. Seedstock is designed for use in trading the portion of a business’ goods or services that represents local value-added; thus, businesses may accept a portion of payment in Seedstock, and a portion in the national currency. Finally, because Seedstock cannot be redeemed for cash, those who earn it must spend it locally, providing a powerful incentive to form connections with local suppliers and creating the impetus for a truly local economy to emerge.
Seedstock is an instance of Open Money, a theory of money first formulated by the community currency pioneer and LETSystem founder Michael Linton. In a nutshell, Open Money says that if money is treated more as information than as a thing, no community need live in financial poverty; that for an economy to be impeded by a lack of money is as absurd a notion as a carpenter not being able to complete a house for lack of inches.
When money is treated as information, or a unit of measure, the implications are profound; it means that any group of individuals can create its own money for transactions amongst themselves simply by tracking what each one gives and takes on a simple ledger. Money thus created cannot be hoarded; it cannot be inflated or deflated; it cannot be stolen, and it cannot take flight from the community. Open Money is a currency of connection, relationship and flow; it is money that goes ‘round and ‘round in the community, that returns after it is spent.
Seedstock uses an adaptation of Open Money principles to create a low-risk entry point for businesses while generating significant advantages for non-profit community groups and projects. It is our hope that Seedstock will educate more people to the possibilities that Open Money presents, and encourage many other applications of these revolutionary principles in Vancouver and beyond.