We’ve lived so long under the spell of heirarchy – from god-kings to feudal lords to party bosses – that only recently have we awakened to see not only that ‘regular’ citizens have the capacity for self-governance, but that without their engagement our huge global crises cannot be addressed. The changes needed for human society to survive, let alone thrive, are so profound that the only way we will move toward them is if we ourselves, regular citizens, feel meaningful ownership of solutions through direct engagement. Our problems are too big, interrelated, and pervasive to yield to directives from on high.
- Francis Moore Lappé, Time for Progressives to Grow Up

We’ve covered plenty of topics relating to the ‘problems’ facing humanity, and some talk about solutions. Local food growing, in particular, is definitely necessary, and we have covered a few topics relating to organic growing and permaculture.

Now lets think about economics. A large part of our problems is the fact that financial elites have too much say in how our societies are structured, who is in power via government, what we see in the media, and what kind of ‘developments’ manage to secure finance and so actually get off the ground. This is not conspiracy theory, it is simply that we live in a world where ‘money makes the world go round’ and so, people with more money have more power and influence over the rest of us.

This situation is not going to change over night, but there are two little ideas, that work very well on a local level, and can give local people a bit of extra control over their own local economies.

Credit Unions

Credit Unions are local co-operative financial institutions, owned and controlled by their members. Basically you set one up with your neighbours. You each pledge to save/invest a few quid each week/month. Normally you set a threshold, over which members have to save, before they can start borrowing from the union.

Wikipedia says that credit unions are:

A credit union is a cooperative financial institution that is owned and controlled by its members, and operated for the purpose of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members.[1] Many credit unions exist to further community development[2] or sustainable international development on a local level.[3] Worldwide, credit union systems vary significantly in terms of total system assets and average institution asset size[4] since credit unions exist in a wide range of sizes, ranging from volunteer operations with a handful of members to institutions with several billion dollars in assets and hundreds of thousands of members. Credit unions nonetheless remain typically smaller than banks with, for example, the average U.S. credit union having $93 million in assets versus $1.53 billion in assets for the average U.S. bank, as of 2007.

We think that credit unions could be very useful in helping to rebuild local economies. We are going to need lots of new local infrastructure, and much of it, at least while resources are still available, will cost money. Borrowing from banks would entail high interest repayments, while grant funding either isn’t available for this kind of project or would involve huge amounts of bureacracy. What better idea than to start saving with your freinds and neighbours into a fund which will then be available as loans to individuals, or to small local businesses to benefit the local people.

There are legal regulations relating to credit unions and there will be some paperwork involved. But there are also support organisations to help getting them set up. They are not-for-profit organisations. That means that although the union aims to make a small surplus from its activities, making a profit (to pay shareholders dividends) is not the primary purpose, which is in fact to benefit its members. Perhaps you could even include an ‘improve the local natural environment for the benefit of members, local people and nature’ clause?

Not-for-profit status and the need for a surplus

In the credit union context, the term “not-for-profit” should not be confused with “non-profit” charities or similar organizations.[24] Credit unions are “not-for-profit” because they operate to serve their members rather than to maximize profits.[25] Credit unions are not charities or similar organizations that rely on donations; to the contrary, credit unions are financial institutions that must turn what is, in economic terms, a small profit (i.e. “surplus”) to be able to continue to serve their members.[26] According to WOCCU, a credit union’s revenues (from loans and investments) do need to exceed its operating expenses and dividends (interest paid on deposits) in order to maintain capital and solvency[27] and “credit unions use excess earnings to offer members more affordable loans, a higher return on savings, lower fees or new products and services.”[28]

Usually it is easier for a person to obtain a credit card or a loan from a credit union of which he is member than from a bank. This is especially true for people who have no credit or whose credit has been hampered. The fact that a credit union makes surplus also helps such people build credit or re-establish it. Credit unions are a good way of securing a credit card in order to build your history.

United Kingdom Credit Unions

In the United Kingdom credit unions are regulated by the Financial Services Authority, or FSA. UK credit unions are classified under two types: type 1 are the smaller CUs while type 2 are larger. From November 2006 many type 2 CUs began offering their members debit card accounts which enabled CU members to obtain funds from any Link ATM. UK credit unions do not offer cheques as these are generally being phased out in UK financial transactions.

Credit unions in the UK now offer a wide range of services to their members; from direct debits to payroll deductions, from being able to send standing orders from their accounts to paying members bills to providing cheaper insurance facilities.

In the U.K. one of the benefits of joining a credit union is the life insurance CU’s provide their members free of charge. Also, if a member were to die then their loan value is wiped out with no further charge to the member’s account or their family; further, in many cases their savings with the CU are doubled and passed to the next of kin. As recent history has shown, with the Christmas ‘savings club’ Farepak going bust in 2006 (very unfortunately un-regulated, and not protected by UK law) and hundreds of Farepak customers losing all their savings, the real alternative of a regulated and protected CU is a able to provide both good savings rates and very affordable loans, in the safe knowledge that all CU customers savings are protected, if the worst happens.

Currently there is a government financial initiative mainly being operated by credit unions to bring financial services to the economically disadvantaged members of society. One aim is to significantly reduce the influence of door step lenders (and illegal “loan sharks”) where a £300 loan over 30 weeks may involve paying back around £450; a credit union loan would typically require paying back around £325.

The Association of British Credit Unions Ltd has a website, which includes much info about credit unions in the UK and a searchable database of credit unions. There may already be one in your area, that you can join and encourage to start making loans in relation to peak oil and climate change.

The first step, then, is to contact ABCUL, find out if there is a credit union in your area, and whether it will serve your purposes. If not, then start looking into how to set one up.

United States Credit Unions.

In the United States, credit unions have 86 million members, which is 43.47% of the economically active population.[33] U.S. credit unions are not-for-profit, cooperative, tax-exempt organizations.

The National Credit Union Administration is the federal body overseeing credit unions in the USA. There are also state organisations responsible for credit unions in some states. There is a lot of information on the NCUA website, including the ability to find credit unions near you. Again, check out any local unions, assess whether they can help, or not.

To be honest, it may be worthwhile setting up new small credit unions to financially support you and your neighbours in your transition efforts, because then you will be in control of a small local organisation and your endeavours won’t get swallowed up within a larger organisation.

LETS or local currency.

This is another great idea. Wikipedia says:

Local Exchange Trading Systems (LETS) also known as LETSystems are local, non-profit exchange networks in which goods and services can be traded without the need for printed currency. In some places, e.g. Toronto, the scheme has been called the Local Employment and Trading System.

LETS networks use interest-free local credit so direct swaps do not need to be made. For instance, a member may earn credit by doing childcare for one person and spend it later on carpentry with another person in the same network. In LETS, unlike other local currencies, no scrip is issued, but rather transactions are recorded in a central location open to all members. As credit is issued by the network members, for the benefit of the members themselves, LETS are considered mutual credit systems.

Because they are local, they vary greatly in how they operate and the ‘rules’. We consider that the most fair way to run them would be if everyone’s time is valued the same, because an hour of anyone’s life is simply that an hour, regardless of whether the skills are valued more highly in the monetary system. We have found that people tend to bring civilisation’s values into LETS and credit unions, but especially LETS schemes, where an accountant may feel his time is more valuable than that of say a babysitter. We disagree, but obviously it is up to you and your group to decide how to run it. Thats the joy of local, every scheme will differ from every other, increasing diversity, rather than a central body dictating the rules.

How LETS works
Local people set up a club to trade between themselves, keeping their own record of accounts.
A directory of members’ offers and requests—goods, services or items for hire, priced in local LETS units—is compiled and circulated.
Members use the directory to contact one another whenever they wish. They pay for any service or goods by writing a LETS cheque or credit note for an agreed amount of LETS units, or by exchanging printed LETS notes.
If applicable, the credit note is sent to the LETS bookkeeper who adjusts both members’ accounts accordingly.

Since its commencement over 20 years ago, LETSystems have been highly innovative in adapting to the needs of their local communities in all kinds of ways. For example in Australia, people have built houses using LETS in place of a bank mortgage, freeing the owner from onerous interest payments.[citation needed]

LETS is a fully fledged “monetary system”, unlike direct barter, with LETS members able to earn credits from any member and spend them with anyone else on the scheme.

In a perfect world, we would all do things for each other out of love, without the need to ‘keep score’, but we must remember that we are coming from a competitive system, and many of us would find it hard to co-operate just for the joy of helping each other. We regard LETS schemes to be a useful transition tool, encouraging people to work for each other without financial rewards, but still with the ability to ‘pay’ each other and to even accumulate wealth of sorts.

Criticism of LETS

LETSystems often have all of the problems confronting any voluntary, not-for-profit, non governmental, community based organisation. LETS organisers often complain of being overworked, and may suffer burnout. Many schemes have ceased operation as a result.[5] Many of these problems can be overcome through effective community organisation and development.[citation needed]

LETSystems, whilst generally appealing to people supporting a general communitarian or environmental ideology, have in many places[citation needed] managed to successfully translate themselves as social welfare initiatives. There are far fewer systems that have managed to communicate and translate themselves into a local business initiative catering to locally owned small to medium businesses. This is generally considered to be an unfortunate weakness of LETSystems to date by the initiators, as they feel that LETS potentially has the capacity to allow small business to compete on a level playing field with larger national and transnational business corporations.

A number of people have problems adjusting to the different ways of operating using a LETSystem. A conventional national currency, is generally hard to earn but easy to spend. To date LETSystems are comparatively easy to earn but harder to spend. The success of a LETSystem is therefore determined by the ease with which a person can spend their LETS credits, and improve their quality of life by participation. Placing difficult arrangements or undue service fees in the way of LETS members will produce difficulties in the future.

Perhaps initially you and your neighbours could run a LETS scheme to help faciliate co-operation. You may find that over time, more and more of you simply help each other out without a using your local currency. But, also, you may find that as the membership grows your neighbourhood will start cooperating with other streets or villages, collectively, and using LETS to organise this. Ideally LETS schemes need local businesses to join so that real ‘goods’ can be ‘bought’.

LETSLink UK is the lead body supporting Local Exchange Trading Systems in the UK. Their website includes a page of regional links to LETS schemes. There may already be one near you that will fulfill your needs. If not, why not set one up. It could be a good way to start your neighbours working with you towards the aim of real community. LETSLink UK also supplies an information pack for a small fee.

LETS-Linkup is a strange website, but contains a directory of worldwide local LETS schemes. Heres the list for the USA.

Happy cooperating. These two systems are not perfect, and we regard them as transition tools, towards a free, egalitarian, cooperative, local future. You may find that groups set up in your area are too full of people who have brought civilisation and its heirarchies into the organisations (but maybe not!) If this is the case, think about whether they would be useful to your efforts of cooperation with people around you, and get a group of neighbours together to set up a new scheme. We will undoubtedly need a lot of differing ideas and networks as civilisations endgame plays out, and economic entities removed from the minstream financial system may actually save our lives or at least make them a little easier.

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