The underlying principle of community economics is produce for local community consumption first, then for the surrounding area, then for further away. This enriches the producer, the purchaser, the community and the surrounding area, and enables prices to be cheaper than in stores, and makes more for the producer at the same time. Money remains in the local area and does not drain away to towns and cities. A win/win situation.
Various non-monetary trading systems operate successfully within and amongst communities to supplement the more usual forms of monetary incomes. LETS, or local exchange/economic/employment/enterprise trading system, has proven to be one of the most popular and effective.
The Local Exchange/Economic/Employment/Enterprise Trading System is a quantum leap beyond bartering and can enable all community members, including the elderly and children to trade their products, services, skills and wares amongst each other, without the need for money, but through keeping a centralised system of individual debit and credit accounts, to reflect trading on a centralised simple recording system. Many people discover skills they had never thought of using. Young kids have all kinds of abilities, including computer skills. A community can be a place of intense activity and trading, all creating all round community improvement, without having to pay tax.
LETS does not use money but keeps account, in debits and credits, of what good and services each member has purchased from, or sold to each other member. Each person’s account totals show the state of their own trading within the system. Each person is responsible to keep their own account near zero balance, meaning that the total units of goods or services purchased must near equal the units of goods or services sold. People are free to use their various skills and ply their trade, so long as it is not their normal, income-producing profession. The net effect of such a scheme is that people may trade without money changing hands so that members individually benefit, as does the community as a whole. Over 300 sustainable communities run their own LETS systems in Australia.
Some LETS, such as at Maleny, SE Qld, have thousands of members and have gone from strength to strength over decades, enabling enrichment of members individually, and as a group, with corresponding benefits to the local town, which has become far more financially buoyant as a result. LETS credits are non-taxable, as long as they have not been generated through plying a person’s normal, income-producing profession.
Micro financing has been very effective in many indigenous and traditional cultures to enable say, a small group of women, to purchase a sewing machine and materials, and become immediately self-employed. This can be practised in a LETS setting to create a remote community of small traders, plying their skills, and creating a sustainable community without complete dependence on money, which is always scarce, and does not go far.
Cottage Industry Model
India is a billion plus nation of cottage industries that persist, even as it is becoming a global IT super economy. Without commerce happening at the micro level, it would be an economic basket case and a social disaster.
A brilliant, highly successful, NZ Small Cooperative Enterprise scheme that facilitated groups of unemployed people into their own cottage industries, by tailoring small, soft loans and repayment schedules to the needs of each individual enterprise, based on projected productions, sales, trading, P&L and cash flow reports. Loans were made to cover the greatest dip in the cash flow, and repayments could be readjusted, if unfolding reality did not follow predictions.
Maleny Strategic Alliance co-founder Jill Jordan describes Maleny as a bottom up process stimulated and carried forward by community members, and cites the four important elements of this model for the Maleny experience as being:
- Plugging the leaks – that is, developing strategies that produce import substitution to stimulate the local economy;
- Supporting existing local businesses – by both promoting them and encouraging them to respond to local needs and advantages;
- Facilitating the start-up of appropriate new businesses – which involves community agreement on what is ‘appropriate’ and the existence of a mature business support network;
Encouraging the entry or expansion of external businesses that are appropriate to the region and community