The previous articles in this series have outlined some of the problems with the US economic system and some of the challenges in trying to improve upon the economic system. In this final part of the series, I'll take a look at what we are doing here to experiment with a solution. Note that the bold numbers in parenthesis refer to the chart below.
In our January 2000 retreat, Dancing Rabbit decided to implement DR Hours, an entirely voluntary alternative currency system. We hope that by using DR Hours as much as possible, we will stimulate local trade and encourage everyone to pay an equitable wage.
DR Hours will be partially funded, which means that if there is funding money available, people will sometimes be able to exchange DR Hours for US dollars. This will be made possible by essentially "selling" DR Hours for US dollars to the alternative currency bank. We consider $7/hour to be a fair living wage in this area right now, so for the moment, we'll be buying and selling DR Hours for $7. You can think of buying DR Hours as agreeing to hire someone at $7/hour.
No one will have to give up their US dollars to use DR Hours, and no one will have to accept DR Hours as payment if they don't want to. I hope that people will see DR Hours as representing access to the combined skills of Dancing Rabbit members.
Dancing Rabbit will need to bring in a small amount of income from outside our community for a long time to come, because the land trust has to pay off its mortgage. Beyond that, the DRVC uses a lot of money to maintain and buy cars, so the more people drive, the more people will need to earn US dollars. Our alternative currency system isn't a magic wand that we can wave and make our financial needs go away, but it will encourage us to pay attention when we're consuming goods from outside our community.
Dancing Rabbit isn't the first community to use alternative currency. If you're interested in an example of another successful alternative currency, check out Ithaca Hours. Ithaca has been using Ithaca Hours for quite a while, and a wide variety of businesses accept them. You can find out more about them at their website or through postal mail at HOUR Town, Box 6578, Ithaca, NY, 14851.
Explaining the Currency System Obviously this whole concept can get pretty confusing -- and at first glance this chart only confirms it! Note the purple numbers; these correspond to the parenthetical numbers in the text of the article. Use the chart as a reference point while reading the article to help clarify concepts.
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How it works
The entity doing the buying and selling of DR Hours will be called the Alternative Currency Pool (this is a pretty uninspiring name, so if you have a suggestion for a better name, please let us know!). The ACP will print physical DR Hours, issue them to people, and keep track of people's balances.
There are two ways people can pay for things with DR Hours. They can pay with paper currency, or they can write a check. Everyone will start off with a zero balance, but they'll be allowed to have a negative balance. We've decided to give everyone a line of credit of 40 Hours, that is, people can have a balance as low as -40 Hours. The total balance of DR Hours should stay close to zero, though, because any time one person makes their balance smaller, another person's balance will increase.
To illustrate how the system works, here are a few simple examples of transactions made with DR Hours. The ACP loans Jeffrey 5 DR Hours, Jeffrey has 5 DR Hours on hand, but a balance of -5 DR Hours with the ACP (1). Then if Jeffrey gets an Alline massage, and pays Alline 1 DR Hour (2), Jeffrey has 4 DR Hours on hand, -5 with the ACP, and Alline has 1. The total balance is zero. Next, Alline writes a check to Kalen for 3 hours for some of his pottery. When Kalen deposits the check, Jeffrey has 4 cash hours and a balance of -5 with the ACP, Alline has 1 cash hour and a balance of -3 with the ACP, and Kalen has a balance of +3 with the ACP, all adding up to zero.
What we're using DR Hours for
Last summer, non-Skyhouse members eating with Skyhouse started using an alternative system of paying for food. Instead of requiring people to pay for their food in US dollars, Skyhouse agreed that people could pay in hours. This worked well for Skyhouse, because Skyhouse needs lots of help building its buildings, and it worked well for the people eating with us, because it gave them a way to pay for their food without having to work income jobs outside of Dancing Rabbit.
This year, Skyhouse is no longer going to run an eating program, instead, we're creating a separate co-op (we've been calling it the Eating Association, or EA) that will provide food for anyone interested in participating. The EA will continue to accept hours as payment (3), but this year the EA is hiring a gardener full time (4) for the growing season. It would be unreasonable to expect our gardener to never drive anywhere, or never make any phones calls, both of which require US dollars to pay for, so our gardener needs to get paid at least partly in US dollars, not just DR Hours.
This is where the partial funding of DR Hours comes in. Skyhouse still needs people to help us build our buildings, so it's happy to buy DR Hours with US dollars (5), then the gardener can trade DR Hours for the dollars that the pool has (6). The gardener will be able to spend DR Hours to buy things that don't have to be imported from outside the community and then people who accept those hours as payment can spend them on the EA. Our local economy is off and running!
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