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Gwendolyn Hallsmith has over thirty years of experience in working with municipal, regional, and state governments both in the United States and internationally. She is the author of six books on community resilience and sustainable economics. Gwendolyn founded Vermonters for a New Economy in 2012, a coalition of organizations, businesses, and individuals working to create a new economy for Vermont. She lives in an ecovillage in Cabot, Vermont, called the Headwaters Garden and Learning Center, where she and her husband write topical songs about the new economy for their small musical group called The New Economistas. She has a Master’s degree in Public Policy from Brown University and studied theology at the Andover Newton Theological School.
Gwendolyn spoke during AEMS 2021 about ‘Communal politics for alternative businesses and banks’. Among the topics that were discussed during the session were the power of money, public versus private banks, making money for businesses, the COVID-19 economic crisis, strategies for surviving the crisis and how to move beyond it towards thriving and resilience.
“Money serves as essentially an economic operating system for the economy. It's a lot like a computer operating system, does a lot of the stuff that makes your computer run, but it's largely invisible to you” Gwendolyn pointed out on the role that money plays in the current global economy. Money is an agreement that we use. And the particular form that we've somehow agreed to is 90% privately owned. Most of the money that we use is issued by commercial banks, and they make money by simply creating it. It's step based, money is generated through the issuance of debts when commercial banks give loans to governments, individuals and businesses. That loan has positive interest rates attached to it at the moment of creation. So that means that all of the interest and all of the debt don't actually add up, there's more interest that needs to be paid back than there is money that's been issued to pay it back.
Gwendolyn moved on to speak about public, private and co-operative banking. There are many kinds of public banks. Some are community development finance institutions (CDFIs). In the United States, they typically are run by either local or regional authorities, and they give out low-cost loans for different types of economic development projects. Banking services for the unbanked is another form of public bank. Most notably, there were post office banks in the United States and in Japan, there still are post office banks.
What the COVID economic crisis is going to bring us remains yet to be seen. The last big crash happened in 2008, after the banks were giving out loans to people that weren't able to pay them back. Since COVID has hit, it's not just private loans that aren't being paid back, it's business loans, government loans, rent, it's the average daily consumption patterns of people, all of this has been disrupted. On the impact of Covid-19, Gwendolyn shared - “My opinion is that the economic crisis we're walking into for the rest of this year is much more serious than the last time the world has changed with this pandemic. And the change is occurring rapidly in some cases and slower in? others. But we all need to be attentive to how to deal with our local economy and our own personal economy if we're going to hope to sail through the storms that are ahead”.
Gwendolyn’s session introduced us to various alternative economic models, including banking, housing, agriculture and community living, that are already successfully running in different parts of the world and can be replicated. It was refreshing to hear her talk about these topics with hope and enthusiasm, without being bogged down by skepticism. The community living and local economic measures she advocates have the potential to make a significant change in the way the economy functions. “I believe in systemic change, millennials are the biggest generation in the U.S. and they are driving this change and they were responsible for Trump being voted out. I am hopeful. A small group of people together can bring about a significant change,” Gwendolyn added as her concluding remarks.
Written by: Vallabh Rao and Dorjee Wangmo
Based on the lecture "Communal politics for alternative businesses and banks" by Gwen Hallsmith during the AEMS summer school 2021.