A sequel to The Growth Illusion, Short Circuit proposes practical alternatives to the global economy. Each community should build an independent local economy capable of supplying necessary goods and services should the mainstream economy collapse. It details financial structures such as currency schemes and community banks that allow local interest rates and credit terms to differ from those of the world economy as well as efforts to meet local food and energy requirements.
Title: Short Circuit, strengthening local economies for security in an unstable world
Author: Richard Douthwaite
Date: 1996
Publisher: Green Books, Devon England
ISBN: 1-87098-64-1
Pages: 386
Libraries: Alternative
The mainstream economy is based on exploitation: exploitation of workers by the rich in developed countries, and, exploitation of the third world by developed countries. Capitalism's instability is notorious. The American economy crashed regularly in the nineteenth century. After WWI, a stock-market boom fueled an allegedly invincible "new economy" which fell into ruin in 1929, a mistake that was repeated in the 1960's.
Today it's clear that the mainstream economy is built on a house of cards. What are we to do with it? When unemployment rises, we shouldn't curl up and die, but rather, develop a local economy that can supply the essentials of life.
Irish Green Richard Douthwaite has written a comprehensive survey of existing alternative economic structures and prospects for the future. He begins by describing the woes of the global economy since the collapse of the Bretton Woods monetary system in the early 1970's. Exchange and interest rates are battered by the whims of international speculators: cities, towns, and even countries have little control over the supply of of money.
When national currency fails, local currency can fill the gap. Ithaca Hours are one of many types of local currency. Communities in Canada, the US and the UK have implemented Local Exchange Trading Systems (LETS) which allow residents to take out a zero-interest loan by simply writing a check. This isn't freeloading, because it creates new money that circulates, paying workers. Because local currency is worthless outside its region, it isn't affected by international currency speculation. In the 1930's, communities in the US and Germany sustained their economies by circulating notes that automatically decline in value: encouraging people to circulate money rather than hoard it. Around that time, a circle of businesses in Switzerland developed a local trading system to provide cheap capital that has over 60,000 members today.
To support community currency, we need community banking. Millions of Americans get better service and better rates at member-owned credit unions. From Bangladesh to Chicago's South Shore areas, lending to the poor has proved viable, permitting self-sufficiency and preventing urban deterioration. Small businesses have discovered that they can get financing from their customers: A deli in Springfield, Massachusetts financed a move by selling notes which could be later redeemed for food.
Energy is essential for all economic activity, but our current use of fossil fuels is unsustainable. Shrinking supplies, as well as the threat of global warming, will ultimately raise prices. Wind energy is economical in favorable locations, and families in Denmark have led the way by forming cooperatives to purchase wind turbines. Agricultural waste, often an environmental liability, can be converted to energy, and both electricity and liquid fuels can be produced from plantation crops. Because most of the expenses of alternative energy systems are local, local currency can be used to finance the development of alternative systems and reduce the cost relative to the national grid.
A kilowatt saved is better than a kilowatt generated. From Groningen in the Netherlands to Davis, California, communities have reduced the use of cars. Many Germans participate in carpooling and car sharing cooperatives. Douthwaite also includes an interesting case study comparing the costs of truck and horse transport by breweries in the UK, discovering that the cost is nearly identicial.
Food is another essential to life, but our supply of food is threatened by unsustainable mechanized, chemical, and GMO agriculture. Because it doesn't damage the soil, organic agriculture can produce higher yields decade after decade, however, it needs to compete with the cheaper products of industrial agriculture. Some farmers have turned to Community Supported Agriculture, which lets them be financed by consumers who participate in the economic success of the farm. Others have formed local stores and cooperatives to partially escape the global consolidation of the food industry.
It's rare to find a book about the world situation which is as positive and hopeful as Short Circuit. Throughout most of our history, our survival has been based primarily on a local economy. As the global economy collapses under the weight of greed and stupidity, Short Circuit offers the stories of many communities that have regained stability by strengthening their local economies.
