Democratizing Finance

April 7, 2009

Dear Friends,

The incomparable Hazel Henderson has been campaigning and strategizing for a
green economy for the past forty years in her writings and talks, and at
board and government tables. Her pioneering work has led to many of the
programs we now take for granted in the socially and ecologically
responsible investment field. She has worked with both citizen groups and
heads of states around the world. She has created a language for evaluating
the ethical basis of financial programs. Her name is a trademark.

As a new generation puts its imagination to the task of relocalizing
economies community by community, it is important to remember the handful of
shoulders on which this work stands. Hazel Henderson's shoulders are broad,
her intellect fast paced, her contributions prolific.

Following is her recent "Democratizing Finance" detailing how "local
leadership is rising, offering many creative alternatives for communities to
nurture healthier homegrown economies . . ." It is distributed by
InterPress Service and used with the kind permission of Ms. Henderson.

You will find more of her writings at www.ethicalmarkets.com and
www.ethicalmarkets.tv Enjoy rediscovering Hazel Henderson, as we have!

Susan Witt, Sarah Hearn, and Stefan Apse
Staff of the E. F. Schumacher Society
140 Jug End Road
Great Barrington, MA 01230
www.smallisbeautiful.org
www.youtube.com/efsssociety

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Democratizing Finance
By Hazel Henderson
April 2009

© InterPress Service
and Hazel Henderson,
www.hazelhenderson.com

The financial meltdown generated by Wall Street and the “too big to fail”
culture of global money-center banks and financiers is generating local
initiatives and demands to decentralize and democratize finance.

Meanwhile, at the global level, the G-20 countries’ demands to democratize
the voting structures of the IMF and the World Bank are essential to reflect
the changing balance of economic power. The G-7 and G-8 group of countries
are no longer relevant now that the G-20 group (Argentina, Australia,
Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan,
Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United
Kingdom and the United States of America, and also the European Union) has
taken center stage.

While national safety-nets are unraveling due to budget cuts, local
leadership is rising, offering many creative alternatives for communities to
nurture healthier homegrown economies:

• Local barter-clubs, like Freecycle.com, Craigslist and LETS, and scrip
currencies are proliferating – as they always do when central bankers and
the International Monetary Fund fail or apply the wrong remedies and make
matters worse. Some of the most successful complementary currencies are
Switzerland’s WIR and in the USA, BerkShares, with equivalent to $2 million
issued in the first two years and accepted by banks and businesses in
Massachusetts. Similar complementary currencies are matching needs and
resources and clearing local markets in Britain, Canada, Australia,
Argentina, Brazil and other countries.

• People-to-people lending and microfinance projects are booming in many
countries. Women’s World Banking, Grameen Bank in Bangladesh, now emulated
in many countries, FINCA and ACCION in Latin America, as well as the newer
online versions, including Microplace, Kiva, as well as lenders Prosper.com
in the USA and Zopa.com in Britain. Credit unions, operated in Europe and
North America for a century, are becoming more proactive. They are filling
new local needs, reaching out to poorer people and adding microfinance and
lending to small businesses.

• Associations of small local banks and businesses are wielding more
political clout, as are credit unions. In the USA, they are demanding equal
treatment in the government’s TARP, TALF, and other bailout funds currently
showered on the big banks whose reckless lending triggered the financial
mess. Venture capital and venture philanthropy firms, including the Rudolf
Steiner Foundation, Acumen and the foundations of Ebay founders Pierre
Omidyar and Jeffrey Skoll, are investing in social enterprises which meet
social needs while making modest profits. Such social capital is now
creating a new hybrid sector in many economies.

• The Business Alliance for Local Living Economics (BALLE) is such a
network in North America, as well as the New Voice of Business, Green
America, the Social Enterprise Alliance, the Fourth Sector Network and the
Business-NGO Working Group. Entrex.net focuses on helping small businesses
with their Private Company Index (PCI) which outperforms most stock indexes..
Britain’s New Economics Foundation (NEF) has been generating both local
initiatives, such as the Transition Towns movement, as well as its Green New
Deal and alternative indicators to correct GDP, measuring wellbeing and
ecological sustainability. NEF’s proposal to save Britain’s 11,500 postal
offices by adding local banking functions is backed by trade unions, small
businesses, public interest groups and pensioners.

• Time banking, a brainchild of Edgar Cahn in the USA (see
www.ethicalmarkets.tv), is now helping local people connect and share
services in Japan, Europe and other countries. Neighbors contact each other
via a local “time banker” to provide meals and help for shut-ins, babysit
each other’s children, watch over property, mow lawns and share appliances.
Car-sharing has now spawned many new companies such as Zip Car in the USA
and others in Canada and Europe where people can make ride arrangements
rapidly on Blackberrys and laptops.

• China is host to many such local initiatives, linking small businesses
on networks, including Baidu.com, Alibaba.com, as well as Qifang.com which
provides affordable loans to China’s 25 million students. Circle Pleasure,
a private company selling prepaid consumer cards, has formed a joint venture
with Qifang for people-to-people banking, the first private company to
receive a banking license from China’s Central Bank. In many countries in
Africa, cell phone banking has taken off. Cell phones are the basis for the
“phone ladies” in Indian and Bangladeshi villages, who rent out use of their
cell phones to other villages. Rural farmers and fishers can consult prices
being offered in nearby towns and markets on their cell phones to make sure
they take their goods to the best places to sell them.

How far can people-to-people finance go in bypassing big, greedy banks and
ethically challenged Wall Street financiers and their political allies? A
long way, thanks to all the communications tools now widely available.
Using these new information-sharing tools is helping people realize again
what money is: just one form of information. Today it is possible to trade
using pure information exchange. For example, in rural areas in Florida,
radio stations have call-in programs where farmers can say “I have spare
time on my tractor to exchange for fertilizer or pepper, melon, eggplant
seeds.” The farmer gives her phone number and the trades are exchanged
off-line. Similarly, the growth of farmers’ markets and contract-supported
agriculture allows local consumers to buy fresh produce directly from nearby
farms.

All these local solutions and people-to-people safety-nets raise the
question “How did we allow big banks and centralized finance to grow so
large that they become predators on the real living economies which produce
the world’s real wealth”? Local people around the world are realizing that
they can simply bypass big banks, stock exchanges and create all these
services locally. The old, bloated financial sectors must downsize, cut
their bonuses and take the losses from their reckless bets in their global
casino. A truly efficient financial services sector should be less than 10%
of a country’s GDP. Those in Britain and the USA grew to 25% of GDP,
metastasizing with their “financial engineers” preying on the real economy.
Now students are looking for jobs as real engineers, teachers, doctors and
entrepreneurs.

In a very real sense, we humans don’t have a financial crisis but a crisis
of perception. We are beginning to see our world differently than
mainstream media portrays. We see our choices with new eyes. We know that
money is not real wealth. We learn as we watch central bankers printing
money on TV. Real wealth is generated by productive people using the
Earth’s resources wisely. Money is a great invention. When it is managed
properly, locally, nationally, globally or electronically, it is a useful
medium of exchange. Hoarding money is no longer a reliable store of value.
We are all rediscovering the many stores of value in our own communities.
We find wealth beyond money. We can change our values for the new times we
live in and restore the love economies to their central role in our lives.

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Hazel Henderson, author of Ethical Markets: Growing the Green Economy
(2006), is president of Ethical Markets Media, an independent social
enterprise covering local economies, new currencies and the growing green
sectors (www.ethicalmarkets.com). She co-created the Calvert-Henderson
Quality of Life Indicators, updated regularly at www.calvert-henderson.com.
She lives with her husband in St. Augustine, Florida.