> Brian Siano wrote:
>
>> How so? It certainly wouldn't work as a substitute for widely-used
>> currencies, that's obvious. But as for developing a smaller, more
>> contained economy to keep trade in the neighborhood, it doesn't
>> strike me as a bad or nostalgic idea. (Hard to see "nostalgia" in the
>> scheme, since I can't recall any time when local currencies actually
>> existed.) What's the argument against it?
>
> What would it accomplish? Local currencies could only be used on a
> very small scale, for the provision of mundane services. Sorry to
> quote myself, but it would be: haircuts yes, scissors maybe, steel
> never. It couldn't at all affect the arrangement of complex
> manufacturing or services. And why is keeping trade in the
> neighborhood so desirable, anyway? That sounds cramped, xenophobic,
> and suffocating.
I agree, it wouldn't work for something like steel, or other large-scale transactions that tend to require trade outside the neighborhood. And I don't think it would affect the arrangement of complex manufacturing, either-- but then, I don't think that's the goal of such a system.
But keeping trade in the neighborhood is definitely desirable, especially if one's neighborhood is facing the influx of a lot of business where the profits and other benefits tend to go outside of the immediate area-- say, Wal-Mart. One might wish to provide support for local businesses to insulate them from competition with such powerful economies of scale. Also, it helps avoid the problems with economic monocultures; if the local trade goes through the local Big Box store, and that chain decides to stop carrying a locally-desired item-- or, less likely, goes out of business-- there would be local alternatives to which residents could turn.
Creation of a local scrip system could encourage residents to direct some of their spending to local establishments which honor it. Obviously, one couldn't create an economy that's hermetically sealed from the rest of the globe; it seems to me that there'd _have_ to be a responsible exchange rate with the prevailing economy.
Obviously this wouldn't be a cure-all, or some kind of revolutionary new principle of economics. But the questions for me are whether it's workable or not, and if it's had a beneficial effect for local economies in the places where it's been tried.