Finance

Finance in the age of climate change and peak oil is a precarious proposition. We live in an integrated, co-dependent economy addicted to growth and to ever greater energy consumption. 75 years ago, community economies were still very much concerned with producing goods and services for local and regional use. More distant demand and supply was important, but not crucial. Now these economies have become but wee nodes in a global supply chain. The processers, warehousers, distributors, and managers (“infrastructure”) that at one time were key to the functioning of community economies have long since closed, been sold off, or moved away.

One pillar of the current, globalized economic system is confidence in money and the ability of banks to keep it flowing. Companies, governments, and households are confident they can borrow money to increase production now, and earn enough from that production to repay the debt (and the interest on that debt) later. As the supply of fossil fuels shrinks and the cost of energy inevitably rises, however, that confidence will begin to unravel. Indeed, it already has. Small- and medium-sized business are increasingly starved of access to credit.

Debt and interest can be repaid only in a growing economy, where people are producing more and profit from sales to rising consumer demand. In a declining economy, none of that holds any longer. Shrinking supplies of fossil fuels and rising energy costs will drive down economic production around the world. Outstanding debt will not be repayable. New credit will almost vanish.

Our communities are highly vulnerable. We have few systems of production, distribution, or finance that are owned and controlled democratically or locally. In other words, our economic resilience is low. We get along, depending on a global financial system that circulates money backed by little more than debt.

CCCR’s approach

To reduce our exposure to this global financial system, our local and regional economies must become more self-reliant. We have to strengthen locally-owned financial organizations and initiatives and bring available investment and credit into closer alignment with local, long-term interests, opportunities, and assets. CCCR focusses its efforts on the following aspects of this task:

• Collaboration with existing intermediaries (especially credit unions, Community Futures Corporations, and aboriginal development organizations) to build their capacity and realign their investment strategies in support of production that increases food, energy and shelter security.
• Equity pools targeting enterprises that increase community resilience. Tax credits are one means to mobilize local investors in support of these enterprises. Another means are initiatives to build pools of venture capital and credit dedicated to long-term, triple bottom-ine investments. (For example, the Slow Food Foundation accumulates capital to finance the rebuilding local food systems.)
• The potential for lending based on fees and savings, not on the borrower’s prospects for repaying the principal plus compound interest. This is key to enabling households to live more affordably and to fostering enterprises that meet a locality’s basic needs sustainably.