Building Adaptive, Resilient, and Persistent Local Economies

Steve Bosserman's picture

What happens when an irresistible force meets an unmovable object? 
What happens to the status quo when millions of people, one by one,
post their views, share their experiences, and cast their votes via
forums and exchanges on the Internet?  Barack Obama is elected
president, climate change becomes a universal concern, and Susan Boyle,
previously unknown, gains global stardom overnight.  Who would have
thought such outcomes were possible in light of conventional wisdom to
the contrary?  Yet, these illustrate the power people have through
Internet forums and social networking tools like Google, Facebook,
Twitter, YouTube, and Ning to inform one another, influence public
perception, and initiate social and political change in the broadest
sense.   

The current global economic crisis is impacting billions of people. 
The prevailing economic theories and systems that got us to this point
are in the crosshairs of mounting frustration, discouragement,
criticism, and anger.  What happens when millions of people use the
Internet to inspire and encourage one another to take collective
action, to reclaim and revitalize their local economic systems, to work
in concert with one another in weaving adaptive, resilient, and
persistent local economies into vast global economic meshnets?

Figure 1 below illustrates how resources in an economic circular flow
move from wealth distribution entities such as institutions,
corporations, and governments to people in their families, businesses,
communities, and causes, then to those same entities for
redistribution.  As long as the flow is governed by justice and fair
play, all is well.  But when it isn't, the system becomes inefficient,
costly, and ultimately, unsustainable.

Figure 1

Managing Local Equity-1

Human social structures possess a natural tendency to globalize
ownership, centralize control, and concentrate wealth.  From an
economic standpoint, the predominance of a few over many feeds a global
economy while starving local economies.  In terms of economic circular
flow, there is a leakage of resources from the local economy to the global economy.  This translates into a depletion of local equity
(the market value of assets that are free and clear of debt and liens)
within a given geographic area.  In other words, when the natural
resources, land, facilities, equipment--the factors of production--are
in the hands of others outside the community, they will expect an
acceptable return on their investment "holdings" with little regard for
the consequence to those who live and work in that locality.

Communities with insufficient local equity risk becoming
unsustainable.  Their survival rests on their capacity to have
resources at their disposal, invest in themselves, and shape their
futures.  Local equity must be managed like any important portfolio, which is the point of Figure 2 below.  Just as the mantra of reduce, reuse, recycle
helped some take greater responsibility for their choices concerning
the environment, a similar approach may be useful to prompt a reversal
of the trend toward loss of local equity:

  • reclaim lost equity
  • retain equity reclaimed
  • reinvest retained equity

In a nutshell, this means local financial institutions and
instruments enable the community to build and invest local equity in
local businesses that produce local goods and provide local services
for local customers whose purchases complete the cycle.  Such local
economic circular flow is the foundation for a healthy and vibrant
community.

Figure 2

Managing Local Equity-2

A simple slogan is insufficient to drive fundamental change of an
entrenched system.  Such a transformation requires a coherent,
comprehensive, and all-engaging strategy and the engagement of many in
an unrelenting effort to adapt the dominant system to changing rules. 
The success metric for their concentrated effort over time is the
capacity to sustain themselves in their places of choice.

In an economic context, this is the equivalent of an irresistible
force meeting an unmovable object.  Figure 3 below offers a five-step
strategy as a possible starting point.  This includes:

  1. Engage in Social Networking: In addition to the ubiquitous Facebook, Google, and Ning, sites like Transition USA and related sites by state such as Transition Ohio, Transition Michigan, Transition Pennsylvania, and Transition West Virginia
    offer excellent opportunities to use social networking to get involved
    with people close to home who are committed to building local
    economies.  The most important point is to sign-up, log-on, and
    participate!
  2. Conduct a Leakage Analysis: The best
    way to engage others, increase momentum, and stay focused on the
    opportunities ahead is to have a growing arsenal of facts.  In this
    case, confirming the main points of leakage in your local system,
    agreeing on the measures to be taken to plug the leaks, and clarifying
    how progress will be marked as leak plugging moves ahead are essential
    considerations.  For further reference, the Business Alliance for Local Living Economies (BALLE) and Solari
    offer processes and tools to conduct leakage analyses.  These
    organizations also provide a social networking support structure that
    assists groups as they embark on strengthening and sustaining their
    local economies.
  3. Develop Cooperatives--Consumer, Producer, Locality:
    A cooperative offers a legal organization structure that functions at a
    local level, enables its members to adhere to a shared set of operating
    rules, retains and reinvests local equity, and improves the efficiency
    of collective effort.  The cooperative structure is quite flexible and
    can be easily formed according to sector, subject, and geographic
    area.  The Center for Cooperatives at the University of Wisconsin is an excellent resource for information about cooperatives in the U.S.
  4. Adopt Multiple Mediums of Exchange:
    The more money remains in circulation within a community the easier it
    is to retain and reinvest local equity.  One way to accomplish this is
    to use an alternative medium of exchange within the community that
    complements money.   Local currencies like Berkshares or Ithaca Hours
    are gaining in popularity in particular areas of the U.S.  Other
    mediums of exchange being adopted by communities include credits for emissions, renewable energy certificates, water quality and land use, etc., and local stock exchanges
  5. Expand Distributed Production: The
    more capacity a community has to complement what is provided through
    the global economy with food it raises and grows, energy it generates,
    goods it manufactures and services it provides, the more adaptive and
    resilient it will be.  Such strong aspect of self-sufficiency is built
    on skills that are taught early, refined by practical, hands-on
    applications, enhanced by developments in technology, and enriched by
    the experiences of others the world over.  Resources to consider
    include the following: Open Source Ecology, Appalachian Center for Economic Networks, and Pennsylvania Association for Sustainable Agriculture (PASA)

 

Figure 3

Managing Local Equity-3

Will exercising these five steps be sufficient to restore and
revitalize local economies?  Like the irresistible force meeting the
unmovable object, the only predictable outcome is uncertainty. 
However, if enough people get involved with social networking forums
and tools, take individual responsibility to understand the economic
realities in their communities, work collaboratively at local levels to
build cooperative structures, adopt mediums of exchange that facilitate
more expansive and flexible utilization of local equity, and initiate
programs that accelerate and broaden local operational portfolios of
food production, energy generation, manufacturing, and service
delivery, IT WILL HAPPEN!  And if it takes several iterations to work
out the kinks, isn't building adaptive, resilient, and persistent local
economies as the cornerstone for viable global economic meshnets worth
the effort?  I would like to think that it is!

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Comments

Steve, as you are already

webadmin's picture

Steve, as you are already aware, I am extremely interested in thinking about ways to make some kind of observatory and processes for local economies and local food systems to address "leakage analysis".

 

What are the factors that need to be analyzed? And, how does data enter the system? And, who gets access to that data? These are at least some of the important questions. 

I hope you might take to time to comment on the "leakage analysis" component of your post when you have a chance. Thanks!