Implementing Organization:

Local Development Institute (LDI)
c/o Temporary Office
Department of Medical Science, 2nd Building
693 Bumrungmuang Rd.
Promprab District
Bangkok 10100

Mission:

• To strengthen the capacity for self-determination in poor communities by enhancing the effectiveness of Thai NGOs and community development programmes for the poor.

Objectives:

• To promote and strengthen peoples organizations and their networks.
• To promote and strengthen development NGOs and their networks.
• To promote and support cooperation among a broad cross section of local, regional and national organizations and their interests to increase their effectiveness and their impact on programming and public policy. To increase LDIs capacity to manage effectively its human resources, finances, the overall organization and its long term financial sustainability.

Strategies:

• Supporting the national programme to strengthen community learning network.
• Strengthening and promoting partnership among NGOs, GOs, POs, business, and academic institutions at provincial and other levels.
• Formulating model of local institute to mobilise local resources and promote partnership to strengthen community organisations.
• Supporting community organisations and NGOs via grant, loan, training and technical support.
• Establishing information and research network for community development and policy advocacy.
• Promoting of a Development Support Consortium.

Project Managers: Jeff Powell and Menno Salverda

Sponsoring Agencies:

• The Project is being funded with a grant by the Japan Foundation.
• CUSO (Canadian University Service Overseas) will support the salary and benefits of Jeff Powell. CUSO is a Canadian organization which supports alliances for global social justice. CUSO works with people striving for freedom, self-determination, gender and racial equality, and cultural survival.
• VSO (Volunteer Service Overseas) will support the salary and benefits of Menno Salverda. VSO is a British organization which enables men and women to work alongside people in poorer countries in order to share skills, build capabilities and promote international understanding and action, in the pursuit of a more equitable world.

Partner Agencies: The following groups have agreed to provide technical assistance, support project monitoring and evaluation and assist with the dissemination of project findings.

• Appropriate Technology Association (ATA)
• Focus on the Global South (FOCUS)
• NGO-CORD (Coordinating Committee on Rural Development) under the auspices of the Indigenous Knowledge Systems (IKS) working group of the Project Review Committee (PRC)
• Rural Reconstruction Alumni Friends Association (RRAFA)
• Spirit in Education Movement (SEM)
• Thai Volunteer Service (TVS)

Objectives:
To study alternative economic systems in both the Thai and international context, which focus on economic self-reliance of communities. To facilitate information sharing between Thai non- governmental and peoples organizations and their international counterparts, on the role of community currency systems in development. To develop and evaluate a community currency system in Thailand which builds upon both the experience of Thai NGOs in community development and international organizations in community currency systems. To disseminate findings with the aim of exploring the potential for broader application of community currencies in Thailand.

Concept:
Neo-liberal economic policy has cleared the path for an unprecedented flow of goods, services and capital across international boundaries. Consumer choice is rapidly exceeding our ability to even consider all the options available to us. In the world of finance, greenbacks, Deutschmarks and yen change hands at levels which dwarf the actual amount of goods and services available. All the while, gross national product and stock market indexes pause briefly before continuing their steady ascent.

Despite the abundance of money, goods and services, poverty remains. Usually accredited to a lack of resources, increasingly poverty results from a lack of purchasing power. In many regions (and the North is not excluded from this list) poverty is on the rise. Unemployment rates of up to ten percent are considered acceptable. There is no money for social programs. Governments and their customers decry the breakdown of the social fabric and each blames it on the other. Environmental degradation, carried out under the aegis of sound financial analysis, continues at an astonishing pace.

The juxtaposition of these two realities brings us to an obvious conclusion: The omniscient invisible hand is inadequate in an increasingly complex world. A simple mechanism which, its proponents suggest, can be left to solve all of societys ills, is unable to create, distribute or even measure real wealth.

In an attempt to understand why our economic system is failing us, some have pointed to the role that money and the monetary system have played in the commodification of our lives. In its original form, money was simply the oil which let the machine of the economy run. It made trade more convenient. As a source of information, it allowed us the means to trade goods with different use values. However, the introduction of interest rates transformed the measuring stick into that which it measured. Whereas before, wealth depended on the endowments of resources, money turned into a commodity which in itself represented wealth. Those who had money could gain wealth by lending it to those who did not. Fortunes could be made through speculation on the future prices of stocks and commodities, including the price of money itself. With the removal of the gold standard, the floodgates were opened to unrestrained financial speculation, and any notions of equity in the economic system were tossed aside in the headlong rush to maximize the efficiency of monetary flows.

Community currency systems attempt to balance the influence of an efficiency based global monetary system with an equity based community one. An interest-free currency is introduced as a medium of exchange. These currencies exist in name only--there is no banknote. The value of these currencies is determined by members of the community. Variously, the value has been tied to the national currency (Green Dollars in Canada); equated to an hour of labour (Ithaca Hours in Ithaca, N.Y.); or allowed to determine itself through members exchanges (New Berries in Newbury LETS, U.K.). Unlike barter trade, which requires a direct exchange, (my chicken for 10 kg of your bananas), local currencies commit the individual who receives a good or service to supplying goods or services to the community at a future date.

Members accounts start at zero, and each exchange moves the account balance either plus or minus. A minus is not an overdraft, or even a debt, but a normal entry in a community currency account. If member A gives member B 10 units of rice, member B acknowledges this by transferring 10 units from her account to member As. A record of this exchange is sent to a central administrator. As account is now plus 10, while Bs account is minus 10. Later on, member C asks B to repair his motorcycle. They agree that the labour required for the job is worth 30 units. Thirty units is transferred from member Cs to member Bs account. Member Bs account is now plus 20 [(-10) + 30], while member C has a balance of minus 30--a commitment to future exchange in the community.

It is possible for part of the exchange to be made in the conventional currency. For example, in order to repair Cs motorcycle, member B may need to buy parts from a supplier who lives outside the community and therefore can not accept the community currency. Member B and member C could agree on what proportion of the repair job would be paid in local currency and what would be paid in conventional cash. The community currency network does not concern itself with the cash portion of its members transactions.

Without interest, the possibility of using the currency as a store of value is eliminated. Any community member with a need can have it fulfilled, irrespective of their account balance--there is no requirement for a central body or wealthy individuals to issue credit. Currency scarcity is eliminated, but only in so far as there are goods or services available for exchange. Community currency systems can not create resources where there were none before. They may, however, mobilise resources that members did not know they had and allow those members who face conventional money scarcity to trade the future value of their labour for current needs.

The introduction of a community currency offers numerous potential benefits to the community:

Support for locally produced goods and services is encouraged.

As community currency only has value in the community in which it is generated, it stays circulating to create more wealth for members. National and multinational corporations are unlikely to accept local currency in payment, due to the impossibility of repatriating profits. This reduces community economic drain and encourages local import substitution, which, in turn supports community employment.

Traditionally undervalued activities gain greater significance.

Community members themselves decide the value of such things as childcare, artisanal skills or community organizing. In particular, this gives them the opportunity to reassess the value of womens work, either undervalued or unvalued in the larger market economy.

Environmentally destructive activities are discouraged.

Without interest, there is no incentive to cut down a tree today in order to begin accumulating interest from its sale. Indeed, in some systems where a negative interest rate is used, future units of local currency are worth more than those exchanged today. This encourages activities which will facilitate future exchanges, such as planting trees.

Small enterprise development is given a boost.

Rather than relying solely on a high interest commercial loan, entrepreneurs are able to procure at least part of the goods and services they need for startup simply by making a commitment to supplying the fruits of their labour to the community sometime in the future.

Social relationships are strengthened.

While local currency systems have not been proven to have any inherent power to overcome social inequities, it is generally agreed that they do yield tangible social benefits. An intricate social network is reinforced/created as a by-product of members meeting to value and exchange each others goods and services. In an indirect way, it may be exactly these social benefits which determine economic success over the long run.

Why Thailand?

Two decades of efforts directed towards Thailands globalization have resulted in impressive growth in GNP and stock market values. Advances have been made in health, education, transportation and communication. Enormous opportunities for the creation of wealth have been afforded. Luxury automobiles sit bumper to bumper in Bangkok traffic. In rural villages, the neighbour arrives with the latest catalogue of beauty products.

Despite these accomplishments Thailand has the largest income gap in the world. Urban slums multiply as rural labourers are drawn to promises of high-paying jobs. Farmers find themselves in a vicious cycle of debt. Prostitution and the drug trade flourish. The country's forests are gone.

Adding to these social and environmental crises, is the recent collapse of the Thai economy. The overwhelming burden of unproductive investment in the property sector has led to the breakdown of the countrys financial institutions. The government moved quickly to use national resources to bail out those who had so greatly benefited during the previous period of high growth. Money traders took advantage of the situation to force the government to abandon its fixed currency policy, and thereby reap enormous profits from speculation on the Thai baht. Industry, largely dependent on foreign capital, is trapped between self-interest and national financial ruin. Individual exporters do not want to convert foreign earnings to baht for fear of further devaluation; their reluctance to do so further weakens the national currency and increases both the burden of outstanding foreign debt and imported raw material costs. The layoffs have only just begun. Labourers have been told to go back to their farms. It is not clear if there are farms to go back to.

All of this has left many wondering if there is an alternative to dependence on a system which is so utterly beyond ones control.

Numerous strategies have been employed in attempts to stop the haemorrhaging of community economies. Moral persuasion, in the form of strict adherence to the Buddhist precepts, is employed by organizations in their efforts to revive a sense of community. Non- governmental organizations have looked to sustainable agriculture; micro-credit, credit unions and savings groups; and both community enterprise and joint ventures with private capital. Emphasis has been put on food security and income generation as shock absorbers against international financial fluctuations. These mechanisms, however, are to a greater or a lesser degree parasitic on a mainstream economy and, therefore, still exposed to its vagaries. Though they serve to increase community inflows, what is still lacking is a plug--a way to stem the tide of consumerism which draws earnings out of the community in which they originated. What we have yet to see is the development of an economic system which structurally reinforces a community ethic. Community currency systems attempt to fill this void.

The experience of rural communities in Thailand has been that greater participation in the market economy has meant greater vulnerability to forces beyond their control, greater social and gender inequity, environmental degradation, family and community dislocation, and for many people, increased poverty. In other words, the current national scenario writ small. Community currency systems provide a possible alternative. They deserve a well-researched, carefully monitored trial.