I had posted this over at the Soap project thread but I am copying it here since I think it is relevant.

Just to let everyone know, the banana program works like this with the group craft production and I assume would be similar in other projects.

A member earns 1 banana for every 2 hours they work on group production of beads and jewelry during the month.

At the end of the month the group production jewelry is bought on market day.

All the bananas are added up and the amount of money earned is divided by the number of bananas given. This determines the value of 1 banana.

example: 500,000 shillings are paid for the jewelry.

125 bananas have been earned by the group

therefore, each banana = 4000 shillings.

so if

mary has 15 bananas, she would get 60,000

Susan has 9 bananas, she would get 36,000

George has 3 bananas, he would get 12,000

Everyone gets paid for their level of participation and participation is strictly voluntary. The value of a banana is dependent on the productivity of the group.

I do not know if they can exchange for other things other than cash.

With the soap project the total profit would be divided by the number of bananas given to determine the value of each banana. The more soap sold, the more value to the banana. This is why is it so important to have the guidelines for how many bananas will be awarded ironed out before we start.

Evvy said:

This is why is it so important to have the guidelines for how many bananas will be awarded ironed out before we start.

A successful "alternative" or "complementary" or "targeted" currency will have a number of characteristics leading the people using it to trust in its value.

I don't like plans that just say "one banana is X shillings" unless that is also tied to always being able to buy Y for one banana and that is a better deal than you can get for X shillings in the market.

If you separate out bead making bananas, soap making bananas, and earned internet hours bananas - you don't have a valuation problem. soap making bananas = value of soap made/# of bananas issued. Then, if someone wants to trade their soap making bananas for internet hours bananas, those parties can negotiate among themselves.

For the SHC I used 1 share = 1 hour semi-skilled labor. Then, theoretically, if someone works half as fast as the average semi-skilled laborer they would be entitled to 1/2 share per hour and "the community" could negotiate more shares per hour for higher skill levels.

That all develops from the goal of the community.

If the goal is to become "wealthy in shillings" we would set one set of parameters on the internal currency.

If the goal is a spherically integrated production system - producing everything the community needed in the way of food, clothing, shelter, education and health care - once the basic resources were acquired and paid for, there would be no further need for production for market - and a different set of parameters is appropriate.

Most likely, it would not be advisable or feasible to attempt total spherical integration. So we will be concerned with community members needing cash. From SHC:

The ultimate goal of the corporation is to make it possible for a worker to obtain all the necessities of life from working for the corporation. The only necessity not discussed above is clothing. There would probably also be some demand for modern conveniences such as home furnishings, electonics, music and videos. For these other items, I see four possibilities: 1)The worker takes part time or temporary jobs when necessary, 2)the corporation purchases these types of items wholesale and trades them to workers for shares, 3)the corporation offers a program of redeeming a certain number of shares for cash, or 4)the worker is able to sell shares for cash to others interested in purchasing goods or services from the corporation. Some combination of two or more of the above seems reasonable.

Number 4 is the most interesting to me. If there is an active market in bananas, we can expect a relative valuation based on the ability of the community to produce abundance of particular goods and services: From Economics of Integrated Production:

the difference between use value and monetary value

• where increased abundance reduces monetary value per unit
• whereas, the right to partake of increased abundance, represented by the share, increases in value.

I know that is a lot to absorb all at once - feel free to ask questions - point out errors - disagree with my premise. This opportunity is too important to let pass.

For years and years and years I tried to explain the banana concept in terms of an alternative currency that could be earned in a variety of ways. I never found the language skills to do so effectively, and awarding bananas for various non-income generating tasks was a persistent problem. That said, if there was ever a good time to change the system, now would be a good time. I'm thrilled to have other people give a go at refining the bananas system.

It's a lot like Time Dollars in concept I think. Maybe AMB can share a little about the whole Time Dollars thing.

David, thank you for starting this and it is something I plan on studying very carefully and look forward to more discussion.

I am going to be absolutely honest. 5 years ago, I sat in the little LiA office in Kampala and listened to Christina explain her vision of 'bananas'. Truthfully, at that time, I thought the girl had lost her mind. Yep, she had finally slipped over the edge to think that anyone would be willing to work for an imaginary banana. I did not get it. The concept of an alternative currency was just so out of my realm of thought that I was sure it was pure fantasy. Then too, I thought that maybe I was just too ignorant of economics to understand.

Now, I am scaring myself because I am really starting to understand the concept. Even more, I am liking it. I am seeing that it does and can work by watching the group craft production and the other community actions in Uganda. I also see that we are barely scratching the surface of the possibilities. The mere thought of using bananas within the community to trade, barter and negotiate for items or services needed is enormous.

I am really looking forward to exploring this idea more and learning how to make this more of a reality. YOU and Christina have my mind spinning with ideas.

The island Meron (a bookkeeper by trade) lives on also has their own beautiful currency:

http://www.saltspringdollars.com /

People buy it. It expires. It can only be spent with certain businesses on the island. Unredeemed money goes into local orgs that benefit the community.

Evvy said:

The concept of an alternative currency was just so out of my realm of thought that I was sure it was pure fantasy.

You are not alone. We are so used to valuing everything in money that we have forgotten the value of that which we do for ourselves and that which we do as a favor.

However, there were whole civilizations of Africans (and other peoples) that were built and thrived without the knowledge of money. It is a simple fact that it does not take money to create value - it only takes money to exchange value. So, if it is the lack of money that is preventing the creation of value, then we should be able to find an alternative medium of exchange.

From Denver CIE:

CIE is an investment in lowering your cost of living and increasing your quality of life. As a member of a community, there is always the opportunity to do a favor for a neighbor and have a neighbor do a favor for you. The more things you accomplish through favors, the fewer things you have to pay for thereby lowering your cost of living. The more favors you give and receive, the more you get to know your neighbors and the higher your quality of life. CIE keeps track of those favors,

the foregoing is the time dollars part

creating an incentive to do more of them, and accumulates the tools to make those favors easy to perform.

this is the function of the organization part that does not exist in time dollars. The additional function is further described there as:

CIE treats contributions of labor as capital contributions and issues shares for that labor. Anyone holding shares owns a percentage interest in the assets of CIE and shareholder voting rights. You can also spend your shares for goods and services offered by CIE – collecting on your favors. All transactions in shares trade at cost to CIE whereas those same goods and services are available at market prices for money. Share transactions represent a reduced cost of living for the shareholder and the money transactions allow CIE to acquire buildings, tools, equipment and supplies to further increase the incentives for contributions of labor.

I have been talking to Art Brock about the software to run a community investment enterprise and I have been working with Art and John Connell locally on implementing target currency systems. I will invite both of them to participate here.

David, et al. -

one HUGE favor... but an urgent one because this is an important, yet complex issue.

please lets try to target our vocabulary and sentence structure in this thread to a non-native-english speaking African audience, so that our friends in Uganda who might use the currency we're discussing will be able to understand it well enough to follow, and even explain it to others. (I am already getting lost in terminology, so I can only imagine what my non-native english speaking friends must be going through!)

Let's target a 12 year old... we need to pare it down to very simple language and concepts or the concepts may never get further than the page. What is it Meron always says? KISS!

Christina said:

we need to pare it down to very simple language and concepts or the concepts may never get further than the page.

Now there is a challenge. Perhaps it would be best to start a work space where we can put this into a step by step in concrete terms . . . ?

Something along the lines:

Joe grows chickens and vegetables . . .

Jane likes to cook . . .

John knows how to teach kids reading, writing and math . . .

Judy has a car . . .

No one has any money. Do they let no money keep them from helping each other - or do they find a way to trade what they can do to make life better for everyone . . .

Along those lines?

Intereting thread.i have an Idea.

When ya earn let me say 4 bananas and its time for the payments say at the end of the month.the 4 bananas and the the 10%of the banana is deducted of which goes to saving.this is also intended to promote the spirit of saving on small scale as members develop.

hope this too might work well.

You could turn it into fruit salad.

• Bananas for bead making
• Passion Fruit for soap (I had my first passion fruit in Uganda....and fell in love!)

:-)

~Mark said:

The island Meron (a bookkeeper by trade) lives on also has their own beautiful currency:

http://www.saltspringdollars.com /

People buy it. It expires. It can only be spent with certain businesses on the island. Unredeemed money goes into local orgs that benefit the community.~

SaltSpring Dollars on WiserEarth

Confession, one of my fantasies has been for the SaltSpring Monetary Foundation to create a special edition currency for the Gardens of Hope. Same principle, after expire date the money that hasn't been redeemed would go to support gardening projects in Africa.

it does not take money to create value - it only takes money to exchange value

If I do something for Fred, and he gives me money, I can then get what I want from Howard, even if Howard doesn't know or care what I did for Fred.

If Fred has what I want, and I have what he wants, we don't need money to exchange value. If Fred and Howard live together we could sit and discuss a threeway exchange without money. Money allows me to connect Fred and Howard, without those two ever meeting. That is its power.

Favors, compliments, good behavior, seniority, approval, and inspiration are all value exchange systems as well. But they don't connect people who don't interact directly.

I'm wondering if everything we don't like about money also stems from this same feature which makes money so popular. Other exchange systems that are portable like money (e.g. credit scores, college degrees, olympic gold medals) these also seem to have the same problems money has, namely,

1. the rich get richer while the poor get poorer, and
2. people do unethical things to win.

People who move every year rarely plant fruit trees!

David Frayne said:

Money allows me to connect Fred and Howard, without those two ever meeting. That is its power.

Money only has that power so long as We trust that Howard will accept the "tokens" that Fred gave me. The Salt Springs Dollars are accepted by Salt Springs merchants (and can be used in conjunction with discounts - like coupons - to attract new business) so people buy them. Ned Uganda bananas have value where they represent a share in profits of a particular activity. Most mutual credit exchange systems never gain wide acceptance because they never gain a widely accepted level of trust. (never understood why gold had monetary value - sometimes I wonder about the "full faith and credit" of the US government). The Self-help Corporation model is based on an ownership concept in the same way that Bill Gates or Pierre Omidyar are wealthy:

I have called this substitute measure "shares" but they can also be thought of as an internal currency. Like other currencies, they will only have value to the extent that they are redeemable for goods and services. The corporation would start with basic services that are 1) marketable to the general public and 2) useful to the participants. These services include preparation of food, laundry services and child care services. See Economics of Integrated Production.

The shares also carry the traditional function of stock in a company. To the extent a worker does not redeem all of their shares, they have voting rights. At a minimum, the worker/shareholders would be able to elect members of a Board of Directors. The corporation could, however, be structured to be much more democratic than a typical business corporation. In addition, the shares will carry rights in the assets in the event of liquidation that will give assurances to workers that they can safely save shares they have earned for later use.

Something I dont understand - if:

A member earns 1 banana for every 2 hours they work on group production of beads and jewelry during the month

What happenes if one member makes twice as many beads an hour, or makes beads much better or worse than the others? Why make bananas= time?

Well, they do work on different things. Some could be rolling the beads, some stringing them up, some varnishing, some sorting, and some actually stringing the finished product. Its not just one step and each step requires a different amount of time. I actually think they are pretty good at policing themselves so to speak. They take their bananas pretty seriously so I think the time formula works pretty good for them.

That's no different than Starbucks employees getting paid the same per hour as Walmart and Home Depot employees, who also get the same pay as Habitat For Humanity employees.

Specialisation is also emphasised in this communities.

This is because we make varieties of things,so one is made to make a choice on what he or she does best.and at the end all works out.

Except David, its not tru that at Starbucks and Walmart that the wages are fixed by job. Wages increase as one matures, improves, or proves consitancy. More expereinced and proven workers there do get paid more than those just starting or even long timers that are less reliable.

I understand bananas as a form of community equity, so that kind of makse sense to me. I just wonder if LiA expands into more and more commercial activities if the system can flex as well as basic currency, or currency with a banana kicker.

The two issues that have to be dealt with in a "community currency" are relative value and fairness. Bananas and CIE shares can be valued at what is produced by the average person spending a certain amount of time doing a particular task. That is a better formula than tying to a "national currency" because national currencies fluctuate in value based on factors out of control of the community - however, it is fair that some "tasks" are paid more in community currency than others based on what "value" is delivered to the community.

Which then brings in the most interesting aspect - where a community can produce an abundance of a particular good or service: (from Economics of Integrated Production)

• the difference between use value and monetary value - where increased abundance reduces monetary value per unit - whereas, the right to partake of increased abundance, represented by the share, increases in value.
• pricing in shares can be thought of as internal transactions trading at cost - while dollar transactions trade at market value. The difference between the cash cost of the goods sold (including unredeemed shares for labor) and the market price received is available to reinvest in assets to increase production.

Which leads to some interesting possibilities for a market in the national currency for the community currency - and having that set the relative value.

If we build the current banana system into the new ned Uganda group production plan for making more locally useful products, then bananas earned by people who make/earn stuff could be paid out in cash (like now) or used to buy products. When we are making jewelry, that's not very interesting. But if we are making things the producers themselves can use then it might be.

So imagine I work a bit on making soap and candles and earn 10 bananas (ie, 5 afternoons of participating in group production work). At the end of the month I can get those bananas paid in cash and maybe they amount to shs 4,000; alternatively, I could use my bananas to buy soap and candles. I guess the trick is figuring out how many bananas it takes to make quantity x of soap or x number of candles. I think it would also only be attractive if it worked out "cheaper" for the producer to buy the products from ned than to buy equal products in a shop somewhere.

But then there are also indeed market linkages emerging in the community - particularly in Gulu. with Onet loan funds one lady bought baby clothes and sells them regularly to the other community mothers. Another bought African fabrics that I've seen passed around on group production day. Robert Oketa's bricks financed with a Kiva loan have been used in the new center renovations; 6 bags of charcoal made from some of the felled trees at Opok Farm were all purchased by women in the Gulu community last week who have charcoal selling businesses at home.

On community crafted products (ie soap/candles) I think we possibly could figure out how many bananas to sell them for, but it occurs to me there would have to be a powerful incentive for people to start trading with each other in bananas as long as cashing them into shillings is still an option. In the original concept, bananas were not tied to money like they are now - somewhere along the way it made sense to help the community see bananas in terms of cash. I'd love to see the community economy develop in a diversified enough way that bananas would not be convertible to cash, but products/services only.

Assuming that may take a while, but acknowledging that we are in a transition period right now where things are being re-designed, I'm wondering what the next steps might be right now to nudge it further in that direction.

Christina said:

I'd love to see the community economy develop in a diversified enough way that bananas would not be convertible to cash, but products/services only.

I agree that this is preferable - my reason has to do with ownership of "productive assets" - facilities, tools, equipment, raw materials, etc. If the community/corporation/capital partnership (ccc) owns the assets:

• individuals can use the assets to produce goods and services in exchange for bananas
• and then exchange bananas for any of the goods or services produced by the ccc (other members?).

In that transaction, labor is not a "cost" of production and the only calculation that has to be made is the relative value of one task over another. Further, goods and services can also be produced for sale to people who do not have bananas. Those transactions are for shillings at market price. If the ccc owns the assets and what is produced:

• the cost of labor is the shilling cost of the goods and services consumed in exchange for bananas (the cost of material for example).
• the shillings received for goods and services in the market - less the shilling cost of goods and services consumed in exchange for bananas - is available to invest in additional productive assets.
• in that scenario, there is a value differential between purchasing the same good or service in bananas as opposed to shillings - so anyone holding bananas that needed shillings would be able to sell bananas to those with shillings who wanted to take advantage of the value differential
• that creates a market that would determine the relative value between bananas and shillings - and give ccc workers liquidity. (sorry I don't know how to say that in simple language).

Assuming that may take a while, but acknowledging that we are in a transition period right now where things are being re-designed, I'm wondering what the next steps might be right now to nudge it further in that direction.

I think of it as a process of having more and more people producing more and more different goods and services - looking to make complete production and consumption loops within the ccc as explained in this comment in the soap thread.

I would focus on services such as cooking, cleaning, laundry, child care, and teaching because that is where the greatest shilling/banana prices differential can be realized - due to the minimal shilling cost. After that I would look at providing additional and improved food, clothing and shelter through things like landscape services (permaculture everywhere), building services, sewing services, etc. - again, due to the favorable shilling cost/ labor ratio.

In all of this, things like soap, candles, jewelry and other marketable products can be pursued but they will have a reduced internal market and, in some cases, higher material costs and therefore produce a smaller differential between bananas and shillings.

As may be obvious, I could ramble on further - but I think I will stop there and ask if you have any questions.

I would like to thank everyone for their cotributions and the only thing I can think of now about bananas , will be to talk to members and see what they think will work best, given the different ideas that have been given here, they can be given to them and see what they have to say, because as I know , for now save for those who joined earlier, they still think of bananas as monetary value, but when they are made to understand all the different options that bananas can turn into, they can also give views on how it may work.