Beyond Civil Rights: Economic Democracy

The following article by Aaron Fernando was originally published in STIR, Issue 21, Spring 2018, a quarterly magazine of new economics in the UK.  It is reprinted with STIR’s generous permission. You can order a copy here.  Aaron, a former colleague, identifies the thread that weaves through the multiple programs of the Schumacher Center. We are pleased to share this article with you.

 


 

Beyond Civil Rights: Economic Democracy

 

In June 1968, a group of eight American civil rights and land reform activists travelled to Israel with a plan that was ambitious, if not outright radical. They made the journey in order to study the legal foundations and management practices behind the Jewish National Fund's leasehold system, and to use this knowledge to advance the civil rights movement and broad-based land reform.

One of these activists was Robert Swann, co-author of The Community Land Trust: A Guide to a New Model for Land Tenure in America. In the book he explained that, "Israel has been one of the few countries in the world to be successful in preventing the process of uprooting the poor tenant farmer from taking place. The leasehold system has brought security of land tenure to the small farmer and his family and has prevented the control of land by absentee landlords, speculation in land, and the exploitation of farmworkers by a landowning class."

After learning about the mechanics of a system that had demonstrably protected communities against these unwanted outcomes, Swann and other members of this group, such as the Albany Movement and Student Nonviolent Coordinating Committee's Slater King and Charles Sherrod, put their knowledge into practice. They would go on to form the first Community Land Trust (CLT) in the Southern US state of Georgia.

 


Robert Swann and Charles Sherrod with members of New Communities, Inc. at planning meeting circa 1970.

 
Less than one year after the trip to Israel, New Communities Inc. was registered as a farming co-operative and CLT. It was created as a direct response to the political disenfranchisement and vicious economic retaliation faced by Black communities, with the understanding that banding together and sharing ownership of the land would enable these communities to be more resilient and secure their land more effectively. In the following years, New Communities acquired 5,735 acres of land - 3,000 of which was cultivated farmland. At the time in the late 1960s this was the largest tract of land held by African Americans.
 
CLTs are legal models that separate the ownership of the land itself from the ownership of anything built (or growing) on the land. Importantly, CLTs effectively remove land from the market and, by democratising decision making and offering leases, ensure that the land is used for purposes that serve the surrounding community. New Communities did exactly this by offering leases that allowed farmers and homesteaders to use and manage the land communally.
 
New Communities operated for a decade and a half, but by the 1980s they were facing the impacts of drought, mounting debt, and racial discrimination. This prevented the acquisition of emergency loans from the United States Department of Agriculture (USDA), and New Communities had to reluctantly sell its land and farms.

Although slavery officially ended in the US in the mid-1860s, it persisted for well over a century after. Once sharecropping was phased out, many white landowners often retaliated and did everything in their power to prevent African Americans from acquiring and retaining land, even pressuring federal agencies like the USDA to deny resources to Black farmers. In fact, the USDA had to pay $13M in 2010 to members of New Communities after losing a class action lawsuit, in which is was ascertained that there had been widespread racial discrimination with regard to loans for African American farmers.
 
Yet New Communities was not a failure, but rather a seminal experiment in community economics - one which has been learned from and replicated in various ways by hundreds of CLTs across the US and around the world. Mtamanika Youngblood, an early member of this movement, explained that New Communities took "civil rights one step further into economic independence and economic rights, using agriculture as an economic base." What was significant was their understanding of the interplay between land, finance, and agriculture.
 
For a community to be resilient against external shocks and capable of directing its own development, it must be able to allocate sufficient resources to the efforts it sees as critical. This not only necessitates a stable system of land ownership and egalitarian land usage - such as the CLT model - but it also requires consistency and risk-management around agricultural production, in addition to a mechanism or set of mechanisms that allow a community to self-finance its own projects.
 
It's no coincidence that experiments in community finance and local currency are often linked to agricultural production - think of the grain banks of Ancient Egypt. Agricultural activity directly produces commodities of value in the form of food and materials, but it requires the ability to pay in advance for seeds, equipment, land, and labour.
 
Since crops are subject to unpredictable external factors like weather, agriculture carries inherent risk. For a financial system that perceives each loan or investment as isolated, loans that increase food security and the overall health of a local economy are neglected or seen as high risk.
 
 
Jim Golden and his draft horses Spike and Rosie. His SHARE loan was to complete a barn for the team.
 
This is where community finance can play a role. Just as organisations like Kiva, a peer-to-peer microlending platform, enable businesses to take out low or no-interest loans guaranteed by their peers today, the SHARE (Self-Help Association for a Regional Economy) programme enabled community finance during a time of historically high interest rates. From 1981 to 1992, the SHARE programme enabled residents of the Berkshires region of Western Massachusetts to collateralise loans to local business - businesses which would otherwise be rejected for bank loans. At the time, the US Federal Reserve had dramatically increased interest rates to fight rampant inflation. By the summer of 1981, interest rates on business loans was sometimes as high as 20%, yet the share programme enabled small businesses to take out loans at half that rate from their own community.
 
SHARE's innovation in community finance continued to be successful and, among other programmes, advised two farms in the region to issue a scrip currency. One of the local farms needed funds to heat their greenhouses during the winter when cash was short; the other needed to repair and recover from fire damage. These farms sold what were called Berkshire Farm Preserve Notes for $9 during the winter. Once the harvest came, they accepted the notes back for $10, effectively giving a 10% discount to customers who pre-purchased farm produce.
 
 
Robyn Van En (center) and farm crew at Indian Line Farm in South Egremont, Massachusetts,
the first Community Supported Agriculture farm in the United States, taken by Clemens Kalischer
 
 
Yet viewed from the other side, this can be understood as a safe 10% return on investment - paid in farm produce - to those who invested in local agriculture. Analysing this further, this type of scrip currency can be seen as a grassroots financing scheme, one not dissimilar from the Community Supported Agriculture(CSA) model.
 
Under the CSA model, all risks and rewards are shared with the community rather than absorbed by the farmers alone. Community members finance the operations of a CSA farm by pre-paying for CSA shares - a claim to a portion of the farm's produce in the upcoming season. During a good year, community members with CSA shares receive high-quality produce below market prices; during a bad year, the financial impacts of the bad harvest are absorbed by the community. Importantly, the community reaps long-term benefits regardless of what happens. By smoothing out a farm's income and insulating it from market shocks and external risk, the community ensures its own access to nutritional food.
 
In the same spirit, local currencies can and have given communities the tools to self-finance in times and places when the existing financial system cannot or will not do so. Local currencies serve multiple purposes and, depending on how individual currency programs are designed, each will serve some purposes better than others. It is important not to think of local currencies only as incentive systems that increase regional spending; local currencies can also be democratic systems of finance, tailored to the specific needs of the communities they exist in. These systems can (and already do) extend community credit to efforts which would otherwise not receive loans or funding.
 
The problem of accessing large-scale investment becomes less and less an issue as a regional currency achieves greater adoption. The Sardex currency system in Sardinia, Italy has been receiving a lot of press recently, and currently clears over €8 million in mutual credit payments between business each month. Another mutual credit system, the WIR in Switzerland, provides the means of over 1.5 billion Swiss francs per year and has been growing since 1934 when it was started to address a lack of access to credit. In Kenya, the Sarafu-Credit programmes operated by Grassroots Economics are also mutual credit systems, and they provide microfinance zero-interest loans in local currency to businesses and vendors who would otherwise have no access to credit.
 
Sharing a common thread with crowdfunding, lending circles, and even investment through credit unions and public banks, local currencies tap into the latent potential for communities to finance their own development. Just like these other community finance initiatives, any profits generated by endogenous financing from local currencies continue to enrich in the region.
 
Unassumingly nestled at the bottom of a sleepy hill in South Egremont (also in the Berkshires region), Indian Line Farm exists as an example of what the intersection of land, finance, and agriculture could look like in the new economy. Not only was it the first CSA farm in the United States, but Indian Line accepts the BerkShares regional currency as payment. BerkShares was started in 2006 by the same community that initiated the share programme and Berkshire Farm Preserve Notes, and still circulates today.
 
 
BerkShares local currency.
 
 
If that weren't enough, Indian Line Farm also sits on CLT land and the lease requires that land to always be used for farming - it can never be used for any other purpose. In an innovation rare among existing CLTs, the farmers at Indian Line are not only entitled to equity derived from value they add to buildings on the land, but also from the value of perennial stock and organic soil improvements. By including this in the lease, the CLT ensures that the farmers' economic incentives will always remain in alignment with the long-term environmental goals of the community.
 
Most often, when CLTs are mentioned in the media, it is in relation to low-income housing. This is because CLTs dealing with affordable housing or neighbourhood restoration have tax exempt status under US federal law. Yet there is nothing that actually requires a community land trust to be used for low-income housing. In fact it is possible for all types of land to be held by CLTs, and it is also possible for equity to be given to individuals living and working on any type of CLT land.
 
Though a tax-exempt CLT cannot offer equity to individuals, it can use a two-tier framework to do so, where a subsidiary holding company manages the land and offers equity to those who live and work on it. This framework - commonly used by churches and educational institutions - was developed and acted upon by the Community Land Trust in the Southern Berkshires that holds Indian Line Farm's land.
 
 
 
(in photo from left to right: Bob Swann, Ursula Cliff, Susan Witt, Frank Lowenstein, Clemens Kalisher, Elizabeth Keen and Al Thorp celebrate the 1999 partnership formed in order to transfer ownership of Indian Line Farm from the estate of Robyn Van En. Photo by Clemens Kalischer.)

 

This framework allows all types of land to be donated, including land used for commercial purposes, and business owners or other leaseholders are entitled to equity in improvements made to businesses or anything else built on CLT land. As far as land reform goes, this innovation is truly groundbreaking in the way it enables most types of land to be held securely in common.

These three elements - land, agriculture, and finance - fundamentally influence the wealth flows and power dynamics that permeate society and shape it. By using and improving existing models, communities can build a resilient foundation where decommodified land is held in trust, the risks of agriculture are socialised, and regions maximise their ability to self-finance. With a foundation this solid, a community would be primed and equipped to direct its own development in any way it sees fit.

 

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Aaron Fernando is a community currency consultant who has worked with multiple community currencies across the United States, and is also a writer focusing on local movements, new economy initiatives, and behavioural economics.

 


 

Join us for two upcoming events in Great Barrington, Massachusetts:
 
 
 
 
May 18th— Andreas Weber will present a talk titled “Aliveness as the Heart of Economics, Ecology, and Commoning” as part of the Schumacher Center’s Reimaging the Commons Program.  Weber is a German philosopher and author of Matter and Desire.  7:30 PM, Great Hall at Saint James Place, 352 Main Street, Great Barrington, MA.  Admission is free. 

To pre-register email schumacher@centerforneweconomics.org or call 413 528 1737. The event is co-sponsored by the Good Work InstituteKosmos JournalThe Myrin Institute, and Orion Magazine.
 
 
 
 
 
June 3rd— Mary Berry will describe the work of The Berry Center in Henry County, Kentucky.  The Berry Center is putting Wendell Berry’s writings to work by advocating for farmers, land conserving communities, and healthy regional economies. The talk will take place at 7:30 PM at Great Hall at Saint James Place, 352 Main Street, Great Barrington, MA.  Admission is free. More information will be posted in the coming weeks on our website.
 
 
 
 

 

 

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There are four summer internship opportunities available at the Schumacher Center:  Annual Lectures Internship;  Audio Archives InternshipCommunity Land Trust Internship; and Local Currency Internship.



For more information about the scope of the work and candidate requirements, please visit the individual links above.