The Miracle of WoerglObviously, not every town could introduce such a system and see it work: if more and more towns had followed suit, eventually they would all be back to square one. However, it shows that recession is not all doom and gloom if you know how to manipulate money.
The story begins in July 1932 with one Michael Unterguggenberger, who, despite having a name that sounds like a horse vomiting, had won the mayorship of the town. It wasn't going to be much fun, though, because apparently nobody could pay their taxes, so the council or Corporation or whatever they had back then was in dire straits; roads, buildings going unrepaired, that sort of thing. A full third of the townspeople were unemployed and Woergl was threatened with the catastrophic reversal of its fast growth during the prior two decades. Thankfully, Michael was a working-class man; he had made the leap to local government via being a trade union leader.
Everyone knows the economy can recover easily from a recession if everyone put out a bit more and started spending, but obviously no-one wants to as vital provisions, not to mention luxuries, get more and more expensive. Influenced by Silvio Gesell's "Natural Order", he decided to make a local currency. It seems weird to the modern ear, but back in the day it was all about city-states, and the international linkage between very concentrated local economies. The crucial element of this local currency was it was a demurrage currency.
This means, even though it was worth the same as a normal Austrian shilling, everyone had to go to the post office every month and pay to get their money stamped. Without a stamp, the money became valueless from that date onwards. What the mayor had done was essentially to tax savings. What's more, all the money people did end up paying for stamps went into an emergency fund. So everyone started to pay their taxes on time, and despite some hardship, the town quickly got better.
Not only that, they even managed to build a friggin' ski jump.
And this turn-around took only one year. In fact, by the following September, the central bank had forced the system to shut down. It had recognised that the alternative local model was taking power out of their hands and returning it to the people.
The story is no secret, and today a good number of towns boast their own currency. In the U.K., my home town, Stroud, is the third town behind Totnes (2007) and Lewes (2008) to have benefited from the initiative by Transition Towns (currently applying the concept to the urban area of Brixton). Stroud is a particularly hippy place inhabited by lots of middle-class artists, but the Stroud pound has almost entirely failed to take off. This is mainly due to the reluctance of already hard-up local businesses to join the scheme.
The main problem here is due to the lack of consortium between businesses in the capitalist system. Nobody wants to make the first move because it allows for them to be exploited, and, as a result, the local economy runs down even faster than the national economy, and everyone loses out. It is not so much the unwillingness of customers to avoid national chains and pay at a premium. Stroud, along with much of the south of England, is a highly middle-class, leftist place where people believe in the integrity of the local economy: Stroud has seen protests against branches of Tesco (1989), Apollo Cinemas (2003) and McDonalds (2004) opening in the town. It is more to do with the reduced liquidity of the banknotes themselves: traders have to go to the trouble of cashing them in and losing a percentage if they want to replenish stock from their suppliers elsewhere.
However, there is one possibility. I know that the price of an item seems negligible and more worth it below a certain level; this is the same reason why we price items at 95 and 99 pence. Could it not be possible to sell items at a discounted rate for people who are paying with the local currency in a time where prices are perceived to be rising fast with respect to earnings? True, it would cost the shop a few pennies here and there, but it would bring in those with very little disposable income as well as the richer folk. Overall, turnover would increase. The revenue cut coupled with the loss from cashing in the banknotes would hopefully be offset in the medium term by increasing trends for spending locally and word of mouth. Convenience often equates to cost for consumers, but if this were turned on its head there is a chance for trade itself to grow.
Another way of achieving this is via consortium. Basically, offer people money-off vouchers at other shops in the area. The key here for businesses is to ally with others that attract the same customers, but provide a different service. Thus, the record shop might offer money off entry to the rock club or the tattoo parlour. For a period in Stroud last year businesses tried out this model but it wasn't very successful: there don't seem to be the forums for businesses to communicate properly. They tend to be suspicious of each other. Also, there was no fanfare about it like there was about the currency, no dedicated promoters.
The pervasive, utopian idea of a village shop at the heart of a community is what local shops must aim for. It's maybe not something that would benefit convenience stores as such - I'm thinking more gift shops, record shops, bookshops, restaurants, which have the capability to become an icon for the town. The proprietor with a positive outlook will organise events: our local record shop used to run little gigs in there, all free and genuinely for the love of music. Similarly, hippy cafes often have random poetry readings and story-tellers, pubs have bands playing ... all these have potential to stimulate of the local economy and to make everyone feel happy and grounded. Our society is miles too big and unnatural, therefore unfriendly. Localisation is the way forward into the new era of austerity.
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