Doug, no one really knows whether local money gets people use to thinking about use value, not exchange value, hence has a role of fighting the fetish of money, or whether as you say it only encourages fantasies of local self- reliance.
In an important way, it makes no difference because without an outside/inside struggle against the beast and for alternatives there's no hope for ecosocialism. The outside struggle is needed to develop alternative technologies, work and other organization, the practice of reciprocity (as opposed to exchange), and so on. The outside struggle is empty , however, without the inside struggle to confront and fight the power. The inside struggle by itself is useless because without the outside struggle there are no alternatives being experimented with, etc.
Ideally, both types of struggle are organized by a political org or party, not just develop willy nilly as they do today.
Self-reliance is a big word in American history and can mean many things. I think you mean "ignorance of the fact that there is a division of social labor hence that for most use values we depend on millions of other people." When I meet self-reliance people who define the word as economic autarky, I ask them when was the last they went to Sears and bought a hammer, ar did they forge their own? If that doesn't get a rise, we can move to chain saws, trucks, etc. The only local official commission I ever served on had the purpose of studying the degree to which "local" business/coops (which got credit from the community credit union) was integrated into itself re: inputs/outputs, that is, the degree to which they purchased inputs from the outside and sold outputs likewise. Well, I'll tell you, I couldn't get enough info from the coops and small businesses, which had a near zero interest in the topic of inquiry! So to this day no one knows the answer to this query.
I'm writing a series of essays on global capital and all that. I realized some time ago that the average person interested in the subject gets his or her info., analysis, etc. from the populist writers, or the Nation variety, some within the IPS, and other left of center think tanks, etc. So that unless I developed my account of global capital etc. in the form of a critique of populism today, no one would understand. This is how I got myself into the morass of populist writings in the States. There are many interesting things to say about this subject, for example, the search for a populist theory of society reveals that there populism doesn't have any. Instead there's the wish think that if something is good for labor, the poor, single moms, small farmers, the environment, etc., that it'll be good for capitalism!
Anyway, to get to my main point. Here we have Big Capital with most of the economic wealth in productive forces, etc. There we have Big State with almost all the legitimate authority, i.e., it's got law on its side. The essence of populism, localism, varieties of anarchism, communalism etc. etc. is two fold: first, ignore the monopoly that big capital has on economic productive wealth, and instead, build alternative economies locally; second ignore the monopoly the state has on legitimate coercion and instead "devolve" power via civil society (ignoring the state) to the local level.
This position, held by countless good folks, is crazy beyond words. Unless of course it is balanced by two other types of struggle, within and against capital and within and against the state.
Jim O'Connor