Introduction

Community currencies are being used successfully in many parts of the world. The concept is proven, as being a reliable basis of exchange, if implemented in a sound way. Such a community currency has the potential to facilitate the emergence of a thriving local economy, even in the face of a recession in the general economy, but this potential is not being realized. Such currencies have been beneficial to the minority who participate, but the trade in such currencies has remained marginal in relation to the local dollar economy, and the overall prosperity of the communities has not been significantly affected.

In the world of dollar economics, it is well understood that economic development requires investment. With community currencies, however, the approach has typically been to introduce the currency, talk up its use in the community, and then hope that useful exchange somehow materializes. An existing merchant may be willing to trade in the currency, but if they can’t pay their staff and buy their supplies in the currency, their participation can only be limited. Someone may have an idea for developing a profitable new business, based on local supplies and markets, which could trade in the currency – but a considerable dollar investment would be needed to establish the business. Under such circumstances it is very difficult for significant trade in the currency to develop.

Consider how a new dollar-based enterprise is typically launched. First a business plan is developed, showing how the enterprise can operate profitably, and identifying what funding will be needed to get the business off the ground. Then a funding source is sought – either an investor or a bank – who then funds the startup in return either for equity in the new enterprise, or else a commitment by the enterprise to repay the funding with interest out of operations.

The idea behind the Credit Bank model is to view a community-currency economy as a startup enterprise. Instead of a business plan, we need an economic development plan for the community. And instead of profit-maximizing investors, we need local investors who see themselves as partners with the community, and who are willing to wait until the community is thriving before they get back their investment – without interest. With a sound development plan, and appropriate investment, it becomes possible to develop and grow a community-currency economy in a systematic way. This Credit Bank model includes an effective strategy for doing so.

The philosophy and history of the Credit Bank model

Motivation – social transformation

Our modern societies are dysfunctional. They waste resources, exploit people, and create poverty and wars. They serve the interests of wealthy elites and not the interests of ordinary people.

I reached the conclusion some time ago that the path to social transformation must begin in the community. Only there can face-to-face communication have any possibility of overcoming the power of mass media, and the disempowerment of a mass society, where people become isolated individuals whose only voice in society comes from their consumer patterns and their meaningless vote.
 

I reached this conclusion based on how governments have always worked, before I had any idea of how community might actually be achieved. The same isolationism / individualism that disempowers us politically, also makes it very difficult for real community to come into existence.

Group dialog processes

And then I learned about dialog processes. It was a real revelation for me. I had never imagined it was possible for people from our individualistic, competition-oriented culture to do anything creative in a discussion, unless they already were more or less aligned in their thinking. When I found out what good process could do, I could see that this could be the key to bringing people together in a community.
 

So I embarked on a tour of the West Coast, from California up to Washington, where there seems to be a hotbed of leading-edge dialog people. I spent a few days with Tom Atlee in Eugene, who wrote The Tao of Democracy, and a few days with Jim Rough, who invented Dynamic Facilitation, and Wisdom Councils. I learned how the processes work, and what kind of conditions are required for them to achieve breakthrough results. I met Rosa Zubizaretta, and Tree Bressen – two outstanding facilitators – and I spent time with them, learning more of the subtleties of process, and about various other facilitation methods, and when they are most useful. Rosa introduced Creative Insight Councils, as a variation on Wisdom Councils.
 

Wisdom Councils and Creative Insight Councils both use Dynamic Facilitation as their process. And in both cases, following a council, an open public meeting is held, where the participants report their conclusions to the public gathering. The people then get a chance to break up into small groups to discuss their response to the council, and to bring up ideas of their own.
 

The difference between the two has to do with the topic of the council and the selection process for participants. In a Wisdom Council the participants are selected randomly, and they choose their own topic to examine when they convene. In a Creative Insight Council, an important community issue is set as the topic prior to the council, and the selection process is more flexible, so that the the various relevant viewpoints regarding that particular topic can be included in the council.
 

The more I learned, the more convinced I became that 'wise dialog' was the key to transformation. I started thinking about how a small-group process could be leveraged into bringing a whole community together. Creative Insight Councils, seemed to be the right format, and Dynamic Facilitation, seemed to be the ideal process. The basic idea is the principle of the microcosm. If twelve randomly selected people from a community are able to reach a creative consensus, then what they come up with should find some resonance in the community as a whole. If councils are repeated regularly, the community might be able to converge toward a sense of common purpose – We the People could come into existence.
 

I got heavily involved in various Wisdom Council projects, again traveling up the coast several times, as far as Vancouver, Victoria, and beyond. By this time I had written a book and was giving talks about community democracy, dialog, transformation, etc. The more I learned, the more convinced I was that the principles were sound, but I was also increasingly disappointed in the results that were actually being achieved when Wisdom Councils were convened. The councils themselves were successful, with very promising outcomes, but nothing much followed from it. The people who came to the public meeting following the council got all fired up, but the next day it all faded away.
 

It was like we had sure-fire kindling, and a match, but the fire wouldn't catch on. The community as a whole simply wasn't paying attention. There had to be some way to gather the firewood around the kindling – to make the process important to the community, and the outcomes of immediate value to the community. The Creative Insight Council looked like it would serve that purpose better than Wisdom Councils. I worked on that problem for quite a while, and the best I was able to come up with is, Empowered communities – a project proposal.

That document was developed with help of Jim, Rosa and others. I think that approach does have promise, and it may get tried somewhere. I'd certainly support any such efforts. But the approach is still lacking something. It might succeed in getting people in a community onto the same page, but it would be an empty page. Once the people start working together, they'd have to start from scratch figuring out what they need to do to move the community forward.
If there could be something useful on that page, something that could move any community forward, that would be the missing ingredient. Then we'd have a recipe that could get some real momentum going toward transformation at the local level.

The Enneagram

I must now digress and bring in another thread. The Enneagram is an ancient diagram that currently enjoys a rather wide vogue as representing a model of personality, with nine different personality types. If you read about the background of the Enneagram, however, you find that it is a modeling tool for dynamic processes and systems. It was brought to the West by Gurdjieff, along with claims that the Enneagram embodies universal principles of some kind. I could neither understand the obscure principles, nor could I see any relationship between those principles and the personality model.
 

No one else seemed to care about this. They were happy to use the Enneagram and the personality model as some kind of revealed truth. So I embarked on an investigation, which I won't recount here, but which resulted in figuring out how the Enneagram actually works.
 

What I discovered is that the diagram is a map of energy configurations – the nine equilibrium configurations that can exist between two interacting energy fields, each of which can have three states, which I call +1, -1, and 0. The arrows refer to certain pair-wise relationships that always exist in such systems between pairs of equilibrium configurations. With this understanding, I was able to apply the enneagram as a modeling tool, a tool able to reveal the inner workings of such systems. It applies, for example, to the atomic elements. The available slots in each electron shell are eight, the equilibrium configurations available to the electrons. The periodic table has 2x9 columns as a result, with the ninth representing zero electrons in an initially empty shell.
 

I published these results about ten years ago in Enneagram Monthly. I gave them three articles, each applying the enneagram to a different system. No one got it. They were all into psychology, and my kind of analysis was like from another planet, something out of a physics or math journal. But now, a decade later, the editor was looking back through previous issues, and when he came to my articles, he got it. He wanted to use one of my old articles as the lead in the next issue, a 'best of the oldies' kind of thing. He and I entered into a dialog, and I wrote him a new article to go in the same issue. All of this happened in the past six weeks.
 

He called me up for an interview, and as part of that, I started listing examples for him, of what the enneagram might be applied to. One of the examples I came up with was economic development. That started me thinking. If the enneagram really could be applied, I knew the result would be powerful, but whether it applied or not was an open question. It took me about three weeks of non-stop work to figure that out.

The Credit Bank model

Economic development always involves two different economies. There's the new economy that's doing the developing, and then there's the background economy, within which the development is occurring. For example, the thirteen colonies developed their own economies, with the British pound economy as a background. Trade continued in the pound, but more and more, the colonial economies were using their own currencies internally. Those economies then grew and became prosperous, operating independently from the pound economy, apart from a trade relationship. (Britain then outlawed the local currencies, and that's what led to the Revolutionary War.)
 

The two energy fields in the corresponding Enneagram model are the local economy, and its trade with the background (dollar) economy. The local economy can be inflationary, deflationary, or stable (+1, -1, 0). Trade with dollars can be favorable, unfavorable, or in balance (+1, -1, 0). What the Enneagram does, is show us which of these combinations comes first, second, third, etc. if an economy is going to develop in the most optimum way. That's the theory. So I wrote down the nine stages, noted the indicated configurations, and tried to figure out how that made sense in economic terms. It wasn't easy. But after a lot of work, and a lot of learning about economics, it turned out that each of the configurations was ideal for that stage of development.
 

The power of the Enneagram is truly awesome. How, you might ask, does it know that sustainability is critical to an economy? Well, sustainability is just another word for equilibrium. If equilibrium is to be achieved in an economy, then it must have equilibrium with respect to its internal resources, and equilibrium in terms of its external exchange. And the economy must first be able to achieve internal equilibrium before it can seek to achieve trade equilibrium. What seem to be properties unique to economics are actually properties that are true for a whole class of dynamic systems.
 

The Enneagram represents an abstraction of all the common properties of all such dynamic systems. And it turns out that those common properties are rather extensive and complex. Many of those properties are usually not obvious in the domain of the systems themselves. When a system is mapped onto the Enneagram, new insights become visible in that domain. Equilibrium is a powerful principle, that ripples out and pulls all the pieces into coherence.
 

That is where the credit-bank model came from. But of course it has to stand on its own merits. It makes no sense to say that the model is valid because the enneagram says so. After mapping a system onto the enneagram, the next step is to verify that the model actually applies. That's what took the most time. I had to figure out the basic principles of finance in order to see the potential of each of the stages. That turned out to be surprisingly easy. It took about a week. Nine different financial regimes, each bootstrapping the economy up to the next level of utility.

Since then, I've re-examined all sorts of economic theories, and they all now seem narrow, using only a small part of the spectrum of available financial mechanisms. Capitalism, for example, gets stuck in Stage 3, sticking always with the financial regime appropriate to maximizing growth. We've all learned where that leads. Other systems use more of the spectrum, but not systematically. In comparison, they seem like hodgepodges. Like a house with a door, walls, and a roof, but they didn't know about windows or plumbing.
 

Adam Smith was able to work out the financial regime appropriate to maintaining equilibrium in a single economy. He didn't account for sustainability, because in those days all economies were basically sustainable. The industrial revolution, with its insatiable appetite for raw materials, was only just getting started. And he didn't account for birthing an economy, because he was thinking in terms of how to regulate already-existing economies. He didn't factor in trade equilibrium, because economies were mostly domestic, with trade being relatively marginal, particularly in comparison with today's global economy.
 

He did take into account the danger posed by concentration of wealth and power, and that's why his model has never been implemented on a national scale. Rulers like to concentrate wealth. He didn't take account of development either, because growth was mostly incremental. It was the Industrial Revolution that made it possible to undertake wholesale development projects, transforming societies along with their economies. He didn't factor in infrastructures and public services, because he saw those as being more or less constant.
 

Marx and his followers accepted the capitalist development model, with its lack of concern for sustainability, but wanted to change how the benefits would be distributed, and they wanted to inject conscious planning into the development process. But they didn't understand the importance of market dynamics (ie, Adam Smith's model), and thought, erroneously, that people would be capable of managing a healthy economy based on social planning alone. That's like trying to dictate to trees how they should grow. You can provide soil and water, but the tree must do its own growing.
 

C. H. Douglas, of Social Credit fame, understood the value of a market economy, and came up with a simple way of distributing benefits fairly, with a National Dividend pegged to the level of economic productivity. But his political philosophy precludes any role for social planning. He assumes as a given that governance can never be beneficial. As a consequence, his development model – like Adam Smith's – defaults to the random accumulation of changes due to investor and consumer choices.
 

The sustainability folks understand what equilibrium means in terms of resources, and they assume social planning can facilitate sustainability, but they don't have a model of how exchanges and economic incentives operate. They assume a magical transformation of consciousness, where people will know intuitively how to do everything sustainably. Life doesn't work that way. Conscious intent can pave the way for changes, but the popular consciousness appropriate to a new regime emerges out of the experience of living in that regime, not the other way around.

I was aware of these various principles, and of the limitations of the various systems, but without the Enneagram, I didn't have any vision of how one might synthesize a systematic approach to creating an economy that could move efficiently from start-up, through to an optimally productive level of sustainable operation. The Enneagram provided the skeleton of such a synthesis, and figuring out how to put flesh on each part of the skeleton turned out to be a feasible undertaking, though far from easy.

How this all relates back to social transformation

A systematic model for developing a prosperous local economy puts something useful on the page, when people finally get around to being on the same page. And the process of launching and managing such an economy provides an opportunity for people to learn how to get onto the same page.
 

It is important that the launching of the economy does not require the whole community to agree that it is a good idea beforehand. That would be putting the cart before the horse. Achieving universal agreement in a community – on anything complicated – is the hard part in all of this. That's the part we've never been able to accomplish.
 

At the same time, it is important that the economy project be undertaken by responsible and respected local citizens, who understand the long term potential benefit to the community, and who are motivated by wanting to improve the community. Any project undertaken by outsiders, or by self-interested parties, is likely to end up being exploitive, regardless of the principles that they claim to subscribe to.

The Development Oversight Council, with a sound development plan, and sufficient investment, can launch a credit-bank economy, and achieve demonstrable and significant benefit to the community, within a relatively short time. The funding provides the means to give people a strong incentive to participate. And when significant benefits can be demonstrated, that is going to get the attention of the community.
 

When the Oversight Council calls for public participation, and convenes a Creative Insight Council to explore development objectives, there will be no scarcity of people who want to get their two cents in. And those who don't get to participate directly, will be quite concerned about what the council might come up with. When the public meeting is held following the council, you can be sure it will be very well attended.
 

We already know, from the experience of Wisdom Councils, that Dynamic Facilitation enables a group to come up with very creative and sound consensus proposals. And we know, from the experience of the public meetings, that the proposals generally make sense to those who show up at the meeting. In the context of an ongoing development project, where people genuinely care about how it proceeds, we will have the logs, the kindling, and the match, all gathered together.
 

And when people see that the Oversight Council actually listens to them, and adapts the proposals into the development plan, that will really blow their minds. People are so used to being screwed around and ignored by agencies and institutions that claim to be helping them, that they will be very enthusiastic about the process being used to guide the development process.
 

As the Oversight Council begins to convene councils on a regular basis, inviting different cross-sections of citizens to participate, a self-governance process will be emerging. People will be talking about the issues and discussing the outcomes of the councils in their families, and among their friends and associates. When participants come into a council, they'll be bringing in a segment of community opinion with them.
 

People will begin to own the process, and they'll realize that the Oversight Council is simply a channel, that enables what people want to be transformed into effective policy. They'll realize that the insight councils are the mechanism that enables them to discover what they want, as a community. And they'll realize that the Credit Bank is simply a smart accounting system, that is able to do the math necessary to keep the development process in alignment with community-identified objectives.
 

As a final step, the Oversight Council will find a sensible way to rotate people from the community into the Council itself, so that every step of the process is owned by the community, and is no longer the project of those who launched the project. This needs to be done in such a way that no self-interested group can subvert the process to their own advantage. The Oversight Council must find a way to guarantee that its neutrality will be preserved. Creative Insight Councils can be convened to address this very issue directly. The community can own the maintenance of its own democratic process.

Cultural transformation and social transformation

Cultural transformation will be taking place in the community. A consciousness around cooperation, community consensus, and collective empowerment will be emerging out of the experience of participating in these processes. The practice comes first, and the consciousness follows. What we perceive as competitive human nature, is really a result of the conditioning that occurs as we struggle to survive in a competitive society. That is to say, perceived human nature is actually a manifestation of the culture that's operating. It is clear to anthropologists, when examining different societies, that they are studying cultural differences, not differences among gene pools.
 

And just as a change in consciousness follows from new patterns of experience, so does social transformation follow from cultural transformation. That's why revolutions usually end up reproducing the same old forms, only with new rulers and new labels. If the culture doesn't change, the society naturally falls back into its familiar patterns, despite the rhetoric of the new regime. The autocratic Soviet system resembled nothing so much as it resembled Czarist rule.