Jonathan Dawson on Findhorn's community currency

I had the opportunity to hear some of the latest thinking of Jonathan Dawson, President of the Global Eco-Village Network (GEN) and Executive Secretary of GEN-Europe, at an historical event during the week of March 22-29 at the Findhorn Foundation Community in Northern Scotland. The event was a conference entitled “Positive Energy: Creative Community Responses to Peak Oil and Climate Change,” for which Jonathan was the “focalizer,” or coordinator and MC. During the conference, Jonathan hosted an Open Space discussion on community currencies. In the following question and answer, Jonathan, a resident of Findhorn, explains his interest in community currencies and the Findhorn community currency called the “EKO.”

Jonathan, are there investigations that you are prioritizing right now?

There are, and one is community currencies. I am persuaded that community currencies are one of the most important areas that we can focus on right now; I am certainly prioritizing it. I have been involved in our own community currency project here and it could work a lot better. A commitment I made about a year ago, and I am still on track, is to deeply research community currencies so that we can maximize their use, to really get to the bottom of them and discover what the factors are that we can tweak to make them run better. So far, scale is the most important factor and I think we are too small. Here at Findhorn, we have a relatively small population of 450-500, but with 3000 visitors every year coming to the training programs, it works. It could work even better.

Briefly, how does Findhorn’s community currency work?

We have our own currency called the EKO. One EKO equals one pound. Effectively, we use them exactly as we use regular money. The way that EKO’s come into existence is that we sell them. It works like a bank. Ecopia, our “bank,” has taken responsibility for printing 15 K EKOs, which means we have 15 K pounds in the bank, and we use this to make low interest loans, to the wind park, for example. The EKO’s are continually circulating. People are encouraged to take a proportion of their salaries in EKOs. These go to the Phoenix (the local store), the Phoenix pays for its electricity from the wind park, and its water services from the Findhorn Foundation, the Findhorn Foundation buys printing services from a community service, and so on.

Why did you decide to use this system rather than donate the currency into existence, as was done in Ithaca, or use a LETS system (Local Exchange Trading System)?

In Ithaca, they simply gave the Ithaca hours away to local charities, and then people spent them and they came into circulation. They got 20% of the local businesses to participate. That is one system and I think it is the ideal system. We chose our system for a couple of reasons. First, it is expedient and short-term. The second reason is that we formerly had a LETS scheme and the problem was that there wasn’t a wide enough range of skills and services in the community, so it meant that some of the businesses had so many credits that they couldn’t spend them; there are only so many aromatherapy sessions, massages and astrology sessions one needs. People really wanted carpenters and plumbers and blue collar people who worked in the bigger system. So, in order to persuade people to participate, we needed to assure them that if it didn’t work and they were left with EKO’s, we could refund them. So this is the other big reason we decided to do it this way. LET’s systems work well in communities where there is a high level of enlightenment as to the value purpose of doing it, and where people are time rich and money poor. With a note, one needs only the conviction that once could spend it on a wide enough range of services.

What are the advantages of having a community currency system at Findhorn?

Community currencies build community allegiance and turn a slow vicious circle into a slow virtuous circle. There are at least four big tangible advantages to community currency at Findhorn. The biggest one is that they are “un-traveler’s checks.” You can only spend them locally. So rather than leaving the local pocket they stay in local circulation continually. If you go to a supermarket, typically 90% of the money you spend immediately leaves the local economy. There may be a few local purchases which they give a song and dance about to give people the idea that it is localization, but it is a fraction of the amount spent. If you can keep the currency in the community circulating, purchasing power stays local. So that is the primary reason people create them. Secondly, we save an estimated thousand pounds annually on bank charges. Instead of paying checks, businesses and people in the community pay each other. Thirdly, the 15 K pounds that we have from them we use for safe, secure loans for small community businesses at low interest rates. So, effectively we are making the money work twice. By giving these low interest rates to community businesses, the businesses also make a substantial savings on what they would have to pay on the loans to the bank. Another benefit is that most community currencies are really beautiful, partly because we are artistic folk and we want to make the world a more beautiful place, and partly because people buy them as souvenirs, Christmas presents, or gift certificates. They are also an excellent educational tool.

Are there any obstacles or pitfalls, such as counterfeiting, runs on the bank, or problems paying taxes?

The first step, of course, is to build community and the second is to get enough businesses to be willing to take the notes. Other than the challenge I mentioned previously of scale, and the difficulty of persuading people to use them, I cannot see a downside. We have a very clever anti-counterfeiting technology which is a serial number, except that it is the same serial number on all of the notes (that’s a joke). The reality is that the local economy is so small that it would not be worth someone counterfeiting. As far as a run on the bank, as long as our loans come back, at any stage we can reproduce the money, and they are very safe loans. The whole current money system is based on the assumption that not everyone will come to the banks at the same time.

We did accrue a lot of lawyer’s fees at the start to find some breaks in the legislation to make the system legal, but Findhorn has already done a lot of the research, so there is no need for other communities to incur large lawyer’s bills. This differs from country to country. In our system, the notes are considered “vouchers,” and paying taxes is not a problem, because there is a one-to-one correspondence between dollars and EKO’s; and we simply declare our income as if it were pounds. The LETS system can be more ambiguous. The interesting thing in terms of the history of community currencies is that as long as they remain among the economically poor, governments have turned a blind eye, but at those moments where it is threatened, where it has become important, governments tend to intervene.

Is there any danger to the community currency movement getting too large and becoming a threat to the government?

I would say there is a real possibility that we would have a rather sudden collapse in the economy. Community currency systems tend to proliferate in periods of crisis in the formal economy. So at the moment, certainly in Latin America for example, there is lots of experimentation because of the economic crises there. There has been over the last couple of decades. Now, if there is a long slow descent in the formal system and a long slow ascent in the informal system, there is plenty of potential for conflict. However, it seems to me more likely that whole formal system is such a huge bubble that I see a real possibility that there will be collapse. And if that is the case, the bubble is expanding at such a rate that the little currencies at the bottom are of no significance at all, but they will become highly significant after the crash, if there is one. So, I think that we shouldn’t necessarily worry too much about community currency movements protecting themselves against the formal system. The other thing is that, increasingly with the contradictions in capitalism, there is growing proportions of the global, and even of national populations falling into poverty where really they are just not being reached, where they are becoming a real problem. And my feeling is that in that context, official authorities may be more open to encouraging them, or certainly at least not persecuting them, because they are serving a useful function, keeping the lid on the revolution.