David Boyle

Snow, money and the new economics

Lecture to users of the Berkshares currency in Stockbridge, Massachusetts, 20 March 2010.


Thank you so much for coming out on a beautiful Saturday night like this.  I’m very honored to be here and even more so that you’ve ventured out to talk.

My parents live outside Stockbridge in England, so it’s particularly fascinating to be here.  It isn’t completely different, in fact, with a similar wide boulevard down the middle.  Lots of art galleries and pubs.  Rolling hills in the distance. 

So I bring you greeting from your long-lost English cousins from Stockbridge.  Stockbridge in a different dimension.

I also bring you greetings from the English admirers of Berkshares, which is being copied busily in my country with huge enthusiasm, and a great deal of publicity.

It does wonders for my self-esteem, in fact.  I claim a passing acquaintance with Berkshares and people come up to me with cameras and interview me.  I’m very grateful for the attention.

I’ve been fascinated by local currencies for nearly two decades now, and I’ve seen many of them at work.  But I have never lived as long as two months with one, and certainly not such a successful one as Berkshares.

So it was an exciting moment for me when I first went into the bank and said, could I have $50 in Berkshares please.  And they didn’t say, excuse me?  They said, Eileen, customer wants Berkshares!

I had to get some cash out of the ATM machine to do it, and it was snowing heavily at the time.  And I admit, I left my uneaten burrito on the top of the machine. 

I still miss it.

A small sacrifice to be part of a community where people are taking back some control of their spending power.

So what I want to talk about tonight is three things.  Something about money and how we need to change our conception of it.  I’m going to argue for the concept of flow.

Second, I’m going to talk about where we’got to in the global movement to create new forms of exchange.  Where it’s going and what it means.

Third – well, actually first, I wanted to talk a bit about snow.


I had a number of shots at coming up with a title for this talk, and one of them at least included the word ‘snow’.

This isn’t just because I’ve seen more snow over the past two months than I’ve ever seen in my life before.  It’s also because I realize there’s actually a link in my mind between local currencies and snow. 

The only time I’ve ever been ski-ing was on a school trip to Austria when I was 12 – which makes it about 1970.  And the place we went to happened to be Worgl.

I didn’t realize it then, of course.  It looked like any other town in Austria.  Lots of big roofs, dark brown buildings, wood and snow.  But, in fact, Worgl was one of the places which really launched the local currency movement back in 1933.

You may know this story already.  I hesitate before telling it in a pioneering place like the Berkshires.  But for those from further away, it was all down to the local mayor, a man called Michael Unterguggenberger.

This was the height of the Great Depression.  Unterguggenberger had come under the influence of a man called Silvio Gesell, a German trader operating out of Buenas Aires and amateur economist.  He was finance minister for just seven days in the brief revolutionary government of Bavaria in 1919.

Gesell said that, in its natural state, money corrodes – like the things it’s used to buy.  And it ought to.  Otherwise, it’s always better for someone to sit on their money rather than spend it.  It makes economic sense to hoard. 

If everyone invests in speculation rather than productive enterprise, it’s a kind of death.  And if everyone hoards their money in a Depression, it can be – as Keynes put it – like a “perigrination in the catacombs, with a guttering candle”.

Gesell wanted a new kind of local money that rusts, and this is what Unterguggenberger organized.  He guaranteed the first issue with his own money, and the new notes lost value every week. 

You had to go down to the post office and buy a stamp and stick it on the back of each note for it to stay the same value.

It was also amazingly successful.  Within 24 hours, the whole of the first issue of notes had come back to the town hall in tax arrears and gone out again.  It was really circulating.  The town was able to invest.  The shops began to open again.  People paid their local taxes for months in advance.

It also encouraged the issue of what they called Stamp Scrip in the USA, popularised by a very famous economist indeed, Irving Fisher from Yale.  Worgl’s local money was closed down by the Austrian government three years before the merger with Hitler’s Germany.

But I am straying too far from the topic, which is snow.

Worgl made me think, years after my visit, that there’s something that links monetary innovation and cold northern climates. 

That’s why the great money innovators in the world are the Scots and the North Americans. 

Edinburgh’s John Law, whose amazing Mississippi money machine eventually bankrupted the French government.  Benjamin Franklin with his money printing press.  Shays Rebellion round here.  There is also the huge parallel currency known as Wir in Switzerland. 

And now the Berkshires.

It seems to me that there’s a link here and it’s about human ingenuity.  They’re saying: it doesn’t have to be cold.  We can keep ourselves warm. 

We don’t have to wait for spring or the end of the recession.  These things are not seasonal.  They’re not God-given.  We can do it.

Now of course, you’ll find complementary currencies all over the world, and probably most in places which don’t have snow at all – Argentina or South Africa.  Places that have the stability for people to innovate, but where they are not so awed by the economic system as it is that they can’t move.

But these are all inspiring stories of places which say: no, we don’t have to be economically cold. 

We have raw materials.  We have people who want work done for them.  We have people who want to do the work.  All we need is the money – the raw information system that can bring them all together to make things happen. 

So this is a kind of pinnacle moment for me in a career of looking at other people’s currencies.

I first ran across green dollars, as they called them in New Zealand in 1991.  I spent a good decade bringing time banks over to England.  I even helped start a currency which people could use to learn new skills and new languages on buses.

I still think there is huge potential for new learning currencies, but I have to say that this one didn’t work terribly well.  It meant you had to meet your French tutor on precisely the same bus every morning.  Not the one before and not the one after.

But I have met some real pioneers over the years too.  Susan Witt and the Berkshares board here.  Heloise Primavera whose Global Barter Clubs in Argentina kept about two million people alive in the 1990s.

I even had a friend who woke up one morning to find out that his internet currency beanz.com had made him a millionaire.  Six months later, he woke up and found that it hadn’t after all.

Which isn’t to suggest that this is ever easy. It is enormously difficult to generate the belief you need to create your own currency.  There are huge pitfalls along the way.  Which just goes to show how successful you’ve been here.

New kinds of money are chinks in the armor of the technocratic world. 

They are opportunities created by huge imagination, great experimentation and it often tends to attract pioneers who find it hard to get on with each other.

I think you’ve avoided this here, as far as you have, because Berkshares derives from a clear tradition in economics and life.  You don’t have to dig it up by the roots to re-examine the fundamentals every month or so. 

I know there are issues to decide and strategies to weigh.  But what impresses me so much about Berkshares is that you have avoided the curse of big ideas – which is that pioneers aren’t very good at listening to each other. 

That’s because of the genuinely creative people you are, and – if I may pay tribute to my colleagues in the EF Schumacher Society – it is also their clear-headedness which provides a basis on which to build.

It is difficult and complex.  I even find myself absent-mindedly as I drive along trying to convert miles-per-hour into dollars, which is what happens when you get too currency-minded.  But there is a breathtaking simplicity about Berkshares which drives it on and makes it flow.


So, yes, flow.  Because the absence of flow, in a sense, is exactly what the problem is we’re trying to solve.  Money doesn’t irrigate.  It pours into Wall Street and the City of London and the offshore financial centres, and pretty much stays there.

Where it does irrigate a little, it happens by computer program, operated distantly, on dubious assumptions.

When the investigators began looking into the subprime mortgages which cause the bank crash of 2008, they looked down the list of borrowers and – on the very first page – they found one paid to someone called M. Mouse.

Other cartoon characters followed. 

That’s what happens when huge institutions believe they’ve found a way to lend out money risk free to themselves.  It is brutal, anonymous and based on what seems to me to be a kind of a lie.  A kind of theft.

But because money no longer irrigates, its absence lulls us slowly into a sleepy world of inactivity.  Things stop happening.  Life grinds slowly to a halt.

There used to be 144 breweries in New York a hundred years ago.  Now there are six.  There used to be ten thousand local newspapers in my own country in those days.  Now there are about a few hundred. 

The great harbours and rivers that have bustled for a thousand years.  Empty. The farming communities and fields of the world covered with weeds.

Even the great corporations – whatever else we may think of them – shedding all the real work until they are just shells that just do financial services. There’s a great silence descending on the world. It’s the very opposite of life creating, and that’s why I am so excited about seeing Berkshares in action.

That is partly a problem about having one single currency.  Because currencies are kinds of eyeglasses that value things and only see things one way.  Single measures drive out diversity.  They create monoculture.  That’s what I used to say.

It’s still true.  But the real problem is this vacuum cleaner effect that sucks up the available money into the financial world of huge fees and bonuses and unproductive speculation. 

We have lulled ourselves into a dreamworld where those who rule us believe, because it’s easier to believe, that our financial system does what it says on the tin. 

It doesn’t.  It doesn’t funnel loans to local enterprise.  It bleeds ordinary places dry of life.

Two generations ago, the great economist John Maynard Keynes pointed this out.  “Speculators may do no harm as bubbles on a steady stream of enterprise,” he said.  “But the position is serious when enterprise becomes a bubble on a whirlpool of speculation. When the capital development of a countrybecomes a by-product of the activities of a casino, the job is likely to be ill done.”

In 1975 there was $15 billion in foreign exchange speculation every day.  Now there is $3 trillion.  About twenty times the amount of money that goes into goods and services.

As economic power gets more concentrated, we see more and more of this.  A quarter of the global economy is now in the hands of large multinational companies, but they employ only a quarter of one per cent of the world’s population. 

Now we might be able to tackle this in London or Washington.  But when the jobs stimulus package is worth the same as the latest round of Goldman Sachs bonuses, then I wouldn’t bet on it any time soon.

So let’s just assume for a second that we have to solve the problem place by place.  Imagine that being an economist means being a kind of plumber, and you’d call them in to fix problems like this.  What would they say?

Well, I know what I would say.  I’d say: get the money flowing.

First by re-directing what flows you have so that they genuinely irrigate. 

One of the key truths of the new economics, it seems to me, is that it isn’t how much money you have going into an area that counts, it’s how you use it.


You might have places with the same amount of money coming in, but in one of them it gets spent in the Big Box store and then leaves the area straight away.  Wal-mart collects up all their takings every night and sends it to Arkansas.

In another place, the income gets passed on from local business to business, over and over again.  It’s the same money, but every time it changes hands, it creates local wealth. 

So, it isn’t the total amount of money that’s important.  It’s the diversity of business, and maybe even the diversity of people, that matters.  It is diversity, and diverse needs, that keeps money circulating.

This is an idea that began over here and which we tried to develop in London, and we struggled to find a language to describe it that absolutely anyone could understand.

We borrowed the idea of a leaky bucket to explain the way local economies worked.  It never stays full.  That’s the problem.

But we wanted to adapt that to provide an image of different kinds of investment – an umbrella (where all the water just pours off somewhere else) and a funnel (where it pours directly where you need it).

We also used a picture of a bath, which I think took the whole thing rather too far.  I mean, who wants to bathe in money? 

That worked for neighbourhoods, but we wanted something that felt a little more technical for cities and towns to use.  We came up with a formula for estimating where local money gets spent, tracking it through three exchanges, and seeing how much of it stays put.

We called it LM3 (Local Money 3), and you can use it online (lm3online.org), and it is supposed to be a way that cities can weigh up different investment options.  Or measure how healthy their local economy is.  Or businesses.  Or non-profits too.

One of the early advocates was Prince Charles, because we did the original work on this in Cornwall, where – as you probably know – he owns a lot of land.  We found that spending £5 in a big supermarket was about half as useful to the local economy as buying vegetables from a local farm.

The implications of this are pretty far-reaching.  If you have a main street where everything’s owned by big chains, you’re more vulnerable economically than a main street – which might not be nearly as wealthy – but where there are lots of interdependent businesses trading with each other.

One will survive an economic downturn.  One may not. 

So the key questions are.  Can you plug the leaks in the local money with new enterprises and businesses?  Where do you spend your money when you have it?  As an individual or as a town. 

And where do you keep your money?  The state of New Mexico has just taken all its money out of big banks and put it into local banks.

It means a huge amount of money now available for local enterprise. 

My favourite story which combines some of these is in an impoverished concrete housing project outside the rather drab English city of Luton, called Marsh Farm.  There is little enough happening economically there, except perhaps the welfare cheques. 

The money comes in by cheque, and then it goes straight out again.

But the people there did one of our LM3 surveys and they found that, between all the households, they were spending a million pounds of their money every year on fast food outside the estate.

A million pounds leaking out of the bucket.  That’s a hell of a lot for them.

So they started a new business, employing local people, to provide healthy fast food.  Then they leased some unused fields next door from the council and grew some of the ingredients.  And so it goes on.---

When Gar Alperovitz was here a couple of weeks ago, he talked about a much more ambitious project along these lines in Cleveland.

There are two major economic players still active in Cleveland, basically the university and the hospital.  But to understand what’s going on there, we have to look at one of the great success stories of co-operative business, in Mondragon in Spain.

The Mondragon story dates back to just after the Second World War, when the local Catholic priest founded the first worker’s co-op to employ local people and meet local needs.

Half a century on, there are now 256 linked co-operative businesses, employing nearly 100,000 people and with offshoots worldwide, and they have been doing even better during the global downturn.  So much so that the US steelworkers union have signed a long-term agreement to do something similar in North America.

So the Evergreen Project aims to do this in Cleveland, but clustered around and dependent on the hospital, starting with a sustainable laundry business.  The second project is going to be a renewable energy company, starting with installations on the hospital roof.

--- There are lots of things to say about this as a model for cities in the future, which I won’t.  But what it also does is look at money not as a bottom line.  It isn’t about how much you’ve got.  It’s about how it flows.

It looks at local economic recovery not so much in terms of scarce investment, but in terms of making the flow work better. 

So here’s the point.  If money is water, then you can direct it, use it for irrigation, build your mills on the streams.  You don’t just wait around, and wring your hands and say desperately – if only someone would build a river here. 

Which brings us to local currencies.

Because of course it may not be enough to redirect the flow.

I was speaking to Edgar Cahn a couple of nights ago and he told me about the film he had just watched of the president of a Pacific island appealing to the Copenhagen climate talks.

They are in the early stages of building these huge sea defences.  Vastly increasing the height of the coastline so save them from rising sea levels.

The materials were all there on the film.  So was the earth-moving equipment.  But it was all lying idle while the president appealed to the world for the finance to put it to work.

But we know, if the dollars do flow in, there will be international consultants and contractors who will move in and cream it off.  They will do the work, but what will they leave behind?

This is a kind of insanity.  The Irish potato famine which famously hit places hardest on the coast next to seas that were teeming with fish.  Like them. we are sitting amongst huge wealth, vast human riches, as we wait around for international currencies that will allow us to move.  And in the case of the Pacific island, to save ourselves from drowning.

It’s another kind of blindness, and a blindness that seems to me to be a kind of death.  Another peregrination in the catacombs.

It isn’t as stark as that in Great Barrington or Stockbridge.  But it can be in places like Marsh Farm.

I’m not making a legal argument about who creates money. We could talk about that too.  People are sometimes a little negative about money on what I might call the liberal wing of politics. 

Maybe with good reason.  But because it makes things happen, it can also be the very stuff of life.

That is why there is a thrill about using Berkshares for me.  You hold those notes and you say, Can you do this?  Can we just print it?  It seems too simple.

And of course you do need safeguards and imagination to make it work.  But there’s still a moment of breathlessness when you hold these things in your hand.  As if you held life in your hands.

And in a way you are, if I can extend the flow metaphor.  Because money is also like blood.  It circulates around us, and when it disappears somewhere – because of some squall on Wall Street – our lives seize up a little.

Let’s stay with the idea of lifeblood for a moment. Before William Harvey announced his theory about how blood works in 1616, most people thought it was made in the liver and the heart and swallowed up by the other organs.

Harvey showed that it was the circulation of the blood that really mattered. If nothing circulates, the patient dies.

It’s the same with economics, and local economies. If the money goes round, or any medium of exchange, the place lives. If it doesn’t, it dies.  It isn’t the bottom line, it’s the circulation that counts.

But economics hasn’t reached William Harvey yet. It still adds up the bottom line, and if doesn’t work, they get the scalpel out and bleed the patient.

So money is life, and we can make our own.

It is a small liberation to use Berkshares.  A bit like the moment Gandhi made salt for the first time.  A symbolic moment of revolt, using the symbolism of life.

So every time we use one of these notes, it seems to me – and we do have to use them to make this work – it is a moment of liberation.

To run our own lives.

To set us free just a little bit from dependence on the federal government or on Wal-mart.  Or are they the same thing these days?

Of course it isn’t easy. 

I don’t pretend there are no great issues to face, or decisions to make.  I don’t pretend we can ever get there in one leap.  There are always disappointments and frustrations along the way.

But every time we invest in this money and take it out of our pockets, to exchange it for something – looking the storekeeper in the eye as we do so – we are shaping our futures.

We’re also shaping the future of the town, putting into circulation a kind of money that will tend to come back – rather than one that will tend to fly off elsewhere. 

That is what the five per cent pays for.  That’s why it also benefits the store.

It claws back just a little control, on all our behalf, over that great global money system that swirls above us like the gods.

It may just be a bit of paper.  But it’s also a small lever with which we can move the world. 


What it means


So that’s flow.  Now.  There may be some of you who listened, as I did, a couple of weeks ago, to Gar Alperovitz saying how this may be the most exciting period in American history. 

I agree with him, because I believe we’re on the verge of a big shift in power and economics.

That’s an unproven assertion.  In some ways, very little seems to be changing now.  It might all change disastrously, or not change at all.  But I feel increasingly, as he does, that the sheer sclerosis of the main system is a reason why things are going to happen.

People, communities, cities and regions will have to innovate to survive, and they are beginning to do so.

We’re at the beginning of a period as potent as the shift to local government in medieval Europe, and a rather explosive period that was.  It’s easily as innovative as the revolutionary period here.

It may be as important as the shift to Protestantism, and there are some parallels with this.

We have to understand, like the Protestants did, that the outward manifestations of economics – the systems that produce and circulate money – are not God-given. 

They didn’t descend from heaven like the New Jerusalem in the Book of Revelation.  They come from mankind and we can change them if they don’t work any more.

And if we can’t at the moment topple that economic fundamentalism or shift the constipation of politics, then we can start the new system here and now. 

As you’ve done with Berkshares and community supported agriculture, and all the other innovations which – knitted together – provide an outline for the emerging new world.

That’s what’s beginning to happen.  It doesn’t look like one shift.  More like a million different unconnected tweaks and ideas.  My message is that it is actually one.  It’s the outlying ripples of a tidal wave in the way we understand economics.

A Protestant reformation.  No more graven images.  No more obscure texts and formulae that only the economic priests can interpret.  The system is going to be made to work for people and planet.

But, and there is a big BUT.  We have to build it.

Yet it seems to me that you’ve got two huge advantages in the United States that we don’t have in my country.

The first is local banks.  Half of all the money in the US is in small banks.  AMAZING.  We don’t have any left, or hardly any.  Some absolutely tiny credit unions.  A couple of ethical institutions. 

That’s it.  Montagu Norman did for ours in the 1920s in the name of strong banking.  The governor of the Bank of England for 20 years. 

One of Jung’s clients, in fact.  Jung said later that he thought Norman was insane.  He was supposed to have caused the Great Depression personally, along with Benjamin Strong from the Fed – a great conspiracy theory this – meeting on a liner in mid-Atlantic under the name Mr Jackson, and planning to force the world back to the Gold Standard.

I don’t suppose it’s true, but I like the story.

But, thanks to Montagu Norman, we’re wholly dependent on the whims of monstrous institutions, who have IT systems, software and McKinsey metrics at their heart.  Which admit no variation.  No local knowledge.

If Mickey Mouse came from England, they would be pressing mortgages on him even as we speak.

Local banks are the main agency that built this country.  They conjured up the wealth to develop a whole continent.  They’re not perfect, but they are a whole lot better than big banks, I can tell you, and I salute them and wish we had them.

They’re also a crucial ingredient for local innovation and that’s the key.  Many different experiments, like Berkshares, to tackle different problems.  Aware that no one kind of currency or bank can answer every need.

The other huge advantage that you have here, and this is slightly off the traditional liberal message, is a can-do culture and breathtaking imagination. 

You don’t have people, as we do in Europe, waiting around for the government to do something.  You have the energy and optimism to do it yourselves.

So we’re going to need a combination of all these things. New enterprises to plug the money leaks, new business networks, new banks, common good banks, small banks, new currencies of all kinds.

I know Berkshares is a creative work in progress.  Local currencies like this will come of age, it seems to me, when they start making loans.  That’s when they can really provide local solutions.

Low cost money for productive enterprises.  Like Ithaca hours has begun to do.  Like the Wir system does in Switzerland.


And, finally, all these things require belief.  That’s another scarce commodity, I know.  Currencies really need us to believe in them.  Like Tinkerbell in Peter Pan.  If we clap our hands, and shout that we believe, she lives.  If not, the light goes out and the currency plunges.

We may dress it up in fancy words like inflation or deflation, but it’s really about believing or not.

Arthur Miller wrote a musical about the Wall Street Crash called The American Clock, and he imagined that the whole thing was caused by a man who kept his money in his shoes.

Someone sees him taking his shoes off to buy some drinks and they say, you don’t believe in anything, do you?  And the unbelief spreads and the whole edifice comes down.

Every society has a clock running on it, he says.

But the opposite is also true.  If you can conjure the necessary belief in local money or credit, then it comes alive.  It gives life.  That’s what money does, after all, because it’s lifeblood.

So that’s my message, and it isn’t very technical.  The economic system that sustains us is fatally flawed, as much as anything else because too few of us believe in it any more.  We don’t believe in it because it isn’t for us.  It doesn’t work.

But the solution is in our hands, and in Berkshares you have paved a way that many others are going to follow.  I have seen them do so in my country, in Totnes and Lewes and Stroud and Brixton. 

I salute them and I salute you too.


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title: books by David Boyle
Broke Voyages of Discovery Money Matters Blondel's Song Leaves World to Darkness The Little Money Book Funny Money The Tyranny of Numbers