Banking in the neighbourhood: creative and steadfast

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An exploration of how neighbourhoodd development can profit from local units of currency, ‘time banking’ and co-operatives, new style.
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Banking in the neighbourhood: creative and steadfast

  1. 1. Ellen HollemanBanking in the neighbourhood: creative and steadfastAt a time when ambitious urban development has come to a standstill because ofa lack of investment capital, and when government is increasingly disengaging -innovative forms of collaboration are arising out of necessity. New developmentsare becoming visible which give reason for hope - there seems to be more roomavailable for self-organising systems which are based on trust. In theory and practiceworldwide, alternative economic systems are being worked on which strengthen localcommunities and make them more resilient. These various economic models have incommon that they regard economic and social capital in a different way and appealto reciprocity and a sense of community. What are these inspirational, promisingmodels? And can they also be used as tools in twenty-first century forms of urbandevelopment? This is an exploration of local units of currency, ‘time banking’ and co-operatives, new style.In our society, the system of state-organised trust has gradually been replaced by a system ofstate-organised distrust. In a well-reasoned article, Dorien Pessers writes that the public interesthas always been the business of politics, but with regard to how that interest should be served,government places too much trust in the market and the distrust of the citizen is provoked as aconsequence. Pessers: ‘Every society knows, grosso modo, two moral registers, both based on theprinciple of reciprocity, but in diverse forms. Reciprocity is the ethic of enduring ties and solidarity[…] in which indeterminate obligations on parties are fulfilled back and forth in the expectation thatthere will be a settlement [of any moral or other debt, tr.] in due course. Trust is here the key word.Mutuality is, on the other hand, the ethic of the short-lived bond of the market in which goods andservices are delivered within the strictly defined terms of a contract between two strangers. Here,distrust is the key word.’ 1This shift in society, from trust to distrust, also has huge consequences for urban development,where, since the end of the 1980s, the philosophy of the market has taken the lead and the citizenhas increasingly been seen as client and consumer. The dominant economic reality means that evenin urban development, failure can deliver more - financial - profit than the fulfilment of a contractor social objectives. The demolition of a building (or even whole neighbourhoods) can, accordingto a peculiar, unrepeatable, book-keeping logic, generate more profit than the preservation andreuse of that selfsame building, despite all the social upheaval and the problems which necessarilyaccompany it. In urban development in particular, it is not only that the citizen’s distrust isencouraged, but also the passivity of the ‘consumer’, who expects that government or the ‘marketparticipant’ will solve any problem that presents itselve as part of the agreed contract.A city is not a tree which is made up of branches which do not cross each other. A city is a networkA city is not a tree2made up of multiple relationships between various functions. It consists of complicated systemsof finely woven structures which criss-cross and overlap each other, where functions and services Ellen Holleman Banking in the neighbourhood: creative and steadfast
  2. 2. Window display of The People’s Supermarket, London foto: mermaid99 via Flickr (CC BY-NC-ND 2.0) continually support each other. Jane Jacobs describes this in fine detail and argues that failed city areas are mostly areas where this sort of complicated reciprocal support is lacking.3 She bases her approach on the principle of the reciprocity that exists between organisms: where one feeds from the other or serves as an environment for the other. If good use is made of this reciprocity, neighbourhoods can increase resilience and the value that is created can reinforce itself. The principles which the New Economics Foundation (NEF) promotes in its Ten Steps to Save the Cities are also partially based on this approach.4 Briefly summarised, NEF advises that, in order to restore local economies, the ‘leaks’ from which money drains away in neighbourhoods need to be repaired. In other words, you have to make sure that money and capital (including human capital) remain circulating as much as possible within a neighbourhood. This can be achieved by ensuring that there are distinct functions and sufficient diversity in a neighbourhood. It is therefore important, per region, per task, to diagnose the situation precisely: what is lacking, what are the niches, but also: what is the capital (including social capital) in a neighbourhood, district or larger area, and how can it be employed to best advantage? Reuse of rubbish and waste products, but also the intelligent deployment of the knowledge and experience that is present already, can not only ensure the retention of capital, but also the creation of value, surprising solutions and new enterprises.5 Banking in the neighbourhood: creative and steadfast Ellen Holleman
  3. 3. ‘Launch new forms of money’, is one of NEF’s recommendations. All over the world, there areAlternative economic modelsalready successful models which ensure that local means and resources stay circulating locally andcommunities thereby gain a certain degree of independence6. They offer cheap or free credit whichsupports the local economy.A local currency encourages more spending in local shops. Money remains circulating withina community and is thus invested in a sustainable economic network from which the wholecommunity can benefit.A particular example where there was an explicit attempt to make the social significance ofeconomic transactions within a community visible, was the introduction of a local currency inAmsterdam-Zuidoost, the ‘Bijlmer Euro’. In this project, artist Christian Nold employed technologywhich made it possible to follow the movement of the Bijlmer Euro through the area in a real-time visualisation. By following these movements, connections and relationships which form thebasis for social cohesion within a local community such as the Bijlmer, were made visible from theperspective of an economic network.7Another form of an alternative monetary system is ‘time banking’. Edgar S. Cahn devised the TimeDollars™ in 1980 as a new currency that would offer a solution at a time when there was very littlemoney available for social programmes. He worked his concept out and developed the timebank,a formula where time is used as a currency instead of money. Services are offered in exchange foranother service. Walking the dog for an hour has the same value as expert advice. Time bankingaims to offer an alternative way of providing services and a way to work on social cohesion in aneighbourhood. There are now countless time banks of various types for diverse interest groups.A timebank encourages people to be active in their neighbourhood and it contributes to socialcohesion and security and the generation of social capital.A specific, new form of time banking is the ‘Creative Timebank’. A creative timebank is a cash-freeplatform that facilitates the exchange of skills between creative people and groups. The facilitationand formalisation of an honest, free exchange of knowledge and talent encourages a sustainableand active community. Leeds Creative Timebank is a good example where time banking on thescale of the creative community in Leeds works very well. Talent development, work experienceand even making large-scale productions possible, are unexpected side-effects of this time bank andthese aspects demonstrate how it can be said that there is an increase in value within a timebankcommunity: the knowledge present within the group increases with time.Precisely because contact within a time bank is not driven by conventional sales practices,unexpected collaborations and ideas arise. Coupled with good local knowledge, innovativeinitiatives and enterprises arise which can diversify an economy and make it resilient. Thesignificance of a timebank at a local level and its application in the development of a specificgeographic area is dependent on the particular sense of connection between participants within thetimebank community. As soon as the community gets too big and spreads out too far geographically,this may well be of increased value for the individual participant, but there is less value to thespecific, local community.Co-operatives have been in existence for a long time and in various forms. The co-operative is aCo-operatives 2.0form of self-organisation for producers or users aimed at economies of scale and an increase ineconomic power. Generally, a part of a business’ activities (most often marketing) is carried outfor the benefit and at the risk of the group as a whole, whilst maintaining the independence of the Ellen Holleman Banking in the neighbourhood: creative and steadfast
  4. 4. individual participants. Co-operatives have played an important role in the economic emancipation of large groups of people, particularly at the end of the nineteenth century and the beginning of the twentieth centuries. The model of the co-operative is being reinvented in various places and given a modern twist. It is a development that has already been going for some time in the world of energy companies, where one energy co-operative after another is being set up. The concept of reciprocity is key: energy that has been generated sustainably by private individuals does not just meet these individuals own energy needs, it is supplied to the network which ensures adequate distribution as well. Where time banking organises an exchange of services, the People’s Supermarket in London and the Park Slope Coop in New York provide discounts on products in exchange for work. They are co-operative supermarkets where the members work a number of hours in the shop every month (time!) in exchange for a discount on the purchase of products. In contrast with the principle of charity (like at a food bank, for instance), this principle of reciprocity ensures that members/customers not only enjoy financial benefit, but that they also improve their self-esteem and gain a form of training. The co-operative also encourages the relationship with local suppliers and contributes to the local economy. What can we learn from the examples above and how can we make them productive within a Entrepreneurial urban development strategy for urban development? Cities that have been affected less by the economic recession are often cities where local economies flourish and where there is less dependence on capital from outside. They are often places where entrepreneurship is encouraged and local chains are established. Successful neighbourhoods are familiar with the principle of reciprocity. These examples illustrate how independent initiatives can lead to the creation of value and an increase in social capital within a community. Such a complex system of reciprocal support cannot be imposed from above but it can be encouraged. This is an argument for an adaptive, flexible and, above all, entrepreneurial form of urban development; a strategic approach that is capable of assessing the value of new collaborations and DIY initiatives properly, of facilitating and integrating neighbourhood development, and of harnessing the energy and knowledge that is in a neighbourhood. With this approach, places of significance within neighbourhoods, hubs and economies based on skills and the exchange of knowledge, services and goods, can grow. Alternative, bottom-up models such as time banking can play a valuable role here, working at the local level on the creation of flexible networks in which entrepreneurs and local residents can exchange their knowledge, talents and skills. The rise of online social networks offers abundant opportunities to make intelligent connections between local residents and entrepreneurs. In this form of urban development, the task for government, but also for ‘market participants’ and housing associations, is to support initiatives or to facilitate social confidence thereby realising a certain degree of reciprocity and solidarity - and doing so without wanting to control the process. They need to have the confidence that their efforts will gradually lead to an increase in social capital in neighbourhoods, and will deliver them ‘a return’ in time, as their investments increase in value. Banking in the neighbourhood: creative and steadfast Ellen Holleman
  5. 5. 1. Dorien Pessers in NRC Handelsblad, 23 September 20062 Christopher Alexander, ‘A city is not a tree’, Architectural Forum, 122 (1965) 1, p. 58-62 (Part I),122 (1965) 2, pp. 58-62 (Part II).3 Jane Jacobs, The Death and Life of Great American Cities (New York: Modern Library, 1961)4 David Boyle, Ten Steps to Save the Cities (London: New Economics Foundation, 2011)5 A redefinition of economic value opens the door to new possibilities. A good example is a mushroom farm which usesthe La Place restaurant chain’s kitchen waste (crab) as a substrate for mushrooms. La Place is also a customer for themushrooms. The establishment of such chains generates a win-win situation for many.6 Worldwide, there are about 2,500 experiments with local currency systems.There are also local units of currency that can be exchanged for national monetary units. Some succesful examples areLETS (Local Exchange Trading System), Time Dollars and Ithaca Hours and the introduction of the ‘Gelre’ is currentlybeing workd on in the Netherlands.7 http://www.bijlmereuro.net.The original Dutch version of this essay was published in Balkan in de Polder, Naar organischegebiedsontwikkeling in Nederland? (Balkans in the Polder, Towards organic area development in theNetherlands?), 2012 Mondriaan Fonds Amsterdam, ISBN 978-90-76936-34-5www.mondriaanfonds.nlEllen Holleman 2013 (CC BY-NC 3.0 NL)english translation: Terry Ezra Ellen Holleman Banking in the neighbourhood: creative and steadfast
  6. 6. Banking in the neighbourhood: creative and steadfast Ellen Holleman

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