This is the second story in a series, “From the Ground Up,” chronicling community-level efforts to overcome economic insecurity and establish sustainable and just communities. A joint project of Occupy.com and Commonomics USA, the series features individuals and groups around the U.S. who are taking power into their own hands, in the service of others.

In any given week you’ll find Chong Kee Tan attending meetings in San Francisco with his team of alternative currency advocates, skyping in a call to an ecovillage in Missouri, answering questions about local economic practices in Europe, and talking to people about various bartering systems. Chong Kee has money on his mind, but it’s a different kind of money than we’re used to talking about.

What is Money?

In Paul DiFillipo’s science fiction novella “Spondulix,” a group of slackers takes over a regional economy by using sandwich shop coupons as alternative currency. Because the relationships of the people exchanging the coupons are more real than their relationship to actual paper currency, and because they have things each other wants, the coupons become inscribed with the mutual trust of the community members.

Writing for Roar magazine back in 2014, Jerome Roos pointed out that money is a social relation, not a real thing. “Money” is bound up with trust. Furthermore, since banks create the money they lend, money is inscribed by authority. Currency is simply a symbolic certification of money – a piece of paper, a blip on a computer screen, representing a network of authority and trust.

That inscription is done by authorities who are often very far away, literally and figuratively, from the communities that rely on local economic activity to keep them healthy and autonomous. Corporate capitalism, meanwhile, is parasitic. Shareholders and chain stores remove from local communities the money people spend on goods and services. Outside investors sometimes see financial opportunities in communities, rapidly invest in them, overheating the local economy then pulling out a short time later, leaving those areas in ruins.

Lenders, investors, financiers and capitalists do all this with issued money that represents social relations, trust and authority. Community members, although legally limited from producing sovereign currency, can do the same thing: inscribe their own authority, trust and relationships onto systems of local currency in order to achieve social goals that are different, closer to home, and more sustainable than the goals associated with big money.

Building Sustainable Community Wealth

Enter Bay Bucks, a community currency devoted to helping “local business thrive while promoting collaboration and building community wealth.” The currency’s founders, in the San Francisco Bay Area, set out to “incentivize collaborative and sustainable rather than selfish and destructive behaviors.” According to its website, Bay Bucks only accepts locally owned businesses as members. Even in the best-case scenario for local economies, if dollars are spent on small businesses, about 30% escapes the local economy and makes outside shareholders wealthy at the expense of locals. But with a complimentary alternative currency, spendable only within the community, 100% of that value stays there.

The question now is how to both scale and contain that internal economic activity – a challenge I recently discussed with Chong Kee, who holds a PhD in Chinese Literature from Stanford. Chong Kee doesn’t quite fit the profile of an economist, but after the 2008 economic crash, he began studying financial and monetary systems, which confirmed his intuition that the crises of our times were endemic to capitalism’s drive to extract, exploit and expand. Eventually, he started Bay Bucks, a project of Transition SF, to increase the resiliency of the Bay Area economy.

Chong Kee serves many organizations in different ways. In addition to being on the Board of the International Reciprocal Trade Association, of which Bay Bucks is a member, he’s also on the Board of the Center for Sustainable and Cooperative Culture, and Commonomics USA, the organization which I serve as policy director. Chong Kee is concerned about democratizing wealth, protecting the commons, and creating humane and need-based economic relationships rather than feeding corporate profits. His observations about capitalism, the challenges of local currencies, and the path towards a long-term economic shift are an enlightening merger of theory and practice.

Bay Bucks operates a commercial barter system where businesses with unused inventory or excess capacity can "deposit" their excess into an exchange, and “withdraw” other businesses’ excess goods and services. A digital currency is used for all the transactions, and those “Bay Bucks” can be spent on items in that self-contained marketplace. There is no interest on balances debited to Bay Bucks.

Even absent its revolutionary tendencies, a good local currency system is good for local business. Bay Bucks helps businesses find buyers – other participants in the system – for extra goods and surplus labor. The organization also recruits other businesses into the system to meet the needs expressed by members. And the benefits are, as Chong Kee says, “counter-cyclical.” This means that when the economy is in a downturn, local bartering and the use of local currency increases. During a bust, when cash is in short supply, transactions in complementary currency increase to pick up the slack.

Bypassing Big Capitalism

Alternative currencies supporting small entrepreneurs and local businesses don't constitute “socialism,” just because the system relies on small-scale market activity to work. But Bay Bucks aims to create decentralized, autonomous economic activity that ends several types of exploitation. A robust local currency that works at zero percent interest and incorporates bartering can end the extraction of wealth from local economies by big box chain stores and large corporations. It can also end the extraction of wealth by private banks that charge high interest. By placing value on conserving and sharing resources, Bay Bucks is steering communities away from the excessive extraction of natural resources and getting people to re-think the necessity of infinite growth.

“The message [of local currency] resonates with other sustainability movements,” Chong Kee says. “It supports the goal of the Transition movement for an environmentally sustainable economy because a local currency makes it harder to globally import raw material and export wastes. As production and consumption become more and more localized, their environmental impact will also become more localized and thus visible and actionable.”

A good local currency can also protect communities from the effects of capitalism’s perpetual crises. “Local currencies that use the mutual credit model are more shielded from the excess and then dearth of money during boom-bust cycles,” he says. “During a bust when banks are not lending and there isn't enough money around, businesses can switch to using barter exchanges to continue trading with each other. These businesses are more resilient to economic shock than those who do not have this option.”

On top of all that, Bay Bucks is structured as a cooperative business, building both internal worker democracy and stakeholder – not shareholder – democracy among its membership. And by decreasing overhead and other operation costs for local sustainable businesses, it serves as a firewall against the colonization of neighborhood commerce by large corporations.

Challenges to Local Currencies

Chong Kee reminds me that “our present monetary system is so ingrained that a lot of public education is still needed before local currency can really take off and deliver on its promise.” Legal changes may be needed as well. Local currencies can be treated as “money transmitters” requiring bonding and other strict regulations. Bay Bucks gets around this restriction by defining itself as part of the barter economy. But other, myriad changes in both local and national laws could make life much easier for people choosing to live in sustainable local economies.

There is, however, a problem of scale: there is often a lack of goods and services covered by the local currency, which forces people to use conventional money and purchase at conventional businesses in order to meet their needs, from health care to food to other basic necessities. “At Bay Bucks,” Chong Kee says, “we actively reach out to businesses like organic farms, food producers, doctors, dentists, etc. to meet these basic needs.” But the outreach task is labor-intensive, highlighting a second challenge for Bay Bucks: its low usage rates. Traditional money is very easy to use; credit cards, Internet-based services and banking services are widely available. Using alternative currencies is a little more challenging, and so the usage rate tends to be lower.

The Bay Bucks staff deals with this by doubling down: trying even harder to connect users based on their particular needs for buying and selling goods and services. “We track the usage rate very carefully and find out from all our users things that they need,” adds Chong Kee. “Then we actively match their needs with other members who can meet those needs and help them make the transaction.”

All takes a great deal of work, and many participants, to build and sustain the currency. It’s no surprise that many local currencies fail, either by quickly crashing or slowly burning out. Nevertheless, he says, “quite a few have also persisted for a long time. The granddaddy of them of, the Swiss WIR, was founded in 1934 and is still in operation today.”

Long-term Economic Shifts

Making Bay Bucks “bigger” – that is, increasing the number of participants, businesses and networks of goods and services that use it – is essential for the interest-free barter system to serve not only entrepreneurs, but ordinary working people. One of the biggest criticisms of the so-called “sharing economy” is that not everyone wants to develop great inventions, innovate an artistic spin on products or services, or invent a new and improved thingamajig. Some people merely want to work, hopefully at a job they enjoy, with guaranteed employment rather than the nickel-and-dime starvation of the Uber economy.

Bay Bucks has a long-term plan to address this: once the currency reaches 1,000 member businesses, it will open up membership to individuals as well. (It currently has around 300 business users.) In the meantime, employees of local businesses that use Bay Bucks can receive bonus pay and gifts in the form of the alternative currency, and purchase Bay Bucks with cash. Individuals wishing to work unconventional or “independent” jobs will be able to offer their services for Bay Bucks. It will be a long and slow process, but building a new economy in the shell of the old one requires deliberative steps.

New economic possibilities create the space for cultural and ethical shifts. “We hope that as more people come to realize that money is a means for tracking value exchanged in trade, and not an end in itself,” Chong Kee says, “deeply held attitudes towards money and accumulation might change. I hope using a non-exploitative currency will one day lead to a cultural shift towards deeper economic justice.”

Matt Stannard is Policy Director at Commonomics USA and a member of the Public Banking Institute’s Board of Directors.

If you like what you read and want to see more original reporting on Occupy.com, donate today!