Non-monetary economy

The non-monetary economy represents work such as household labor, care giving and civic activity that does not have a monetary value but remains a vitally important part of the economy.^[1] With respect to the current economic situation labor that results in monetary compensation becomes more highly valued than unpaid labor. Yet nearly half of American productive work goes on outside of the market economy and is not represented in production measures such as the GDP.^[2]

The non-monetary economy seeks to reward and value work that benefits society (whether through producing services, products, or making investments) that the monetary economy does not recognize.^[3] An economic as well as a social imperative drives the work done in this economy. This method of valuing work would challenge ways in which unemployment and the labor force are all currently measured and generally restructure the way in which labor and work are constructed in America.

The non-monetary economy also works to make the labor market more inclusive by valuing previously ignored forms of work.^[4] Some acknowledge the non-monetary economy as having a moral or socially conscious philosophy that attempts to end social exclusion by including poor and unemployed individuals economic opportunities and access to services and goods.^[5] Such community-based and grassroots movements encourage the community to be more participatory, thus providing a more democratic economic structures.^[6]

Much of non-monetary work is categorized as either civic work or housework. These two types of work are critical to the operation of daily life and are largely taken for granted and undervalued. Both of these categories encompass many different types of work and are discussed below.

It is important to point the microscope on these two areas because only certain people are very civically engaged and very frequently a certain group of people tend to do housework. Non-monetary economic systems hope to make community members more active, thus more democratic with more balanced representation, and to value housework that is commonly done by women and less valued.

Forms of the non-monetary economy

Core (or social) economy

The social economy refers to the space between public and private sectors (sometimes called the "third sector") occupied by civil society, including community organizations, volunteering, social enterprises, and cooperatives. In academic circles the term represents “a wide family of initiatives and organisational forms – i.e. a hybridisation of market, non-market (redistribution) and non- monetary (reciprocity) economies”.^[7] Rather than being fringe activities at the margins of the formal economy, this amounts to a significant level of activity, as a range of studies indicate. UK civil society sector for example employs the equivalent of 1.4 million full-time employees (5% of the economically active population) and benefits from the unpaid efforts of the equivalent of 1.7 million full-time volunteers (5.6% of the economically active population), and contributes 6.8% of GDP.^[8]

US civil rights litigator and founder of the time bank, Edgar S. Cahn developed the concept of the core economy to describe the informal social networks that he considered the bedrock of society, which he felt were eroding as monetary economies de-legitimized them. The core economy as he defined it consists of social capital, and generates collective efficacy that's of critical importance to the core economy.

Collective efficacy: Collective efficacy refers to the effectiveness of informal mechanisms by which residents themselves achieve public order. More specifically, this is the shared vision or fusion of shared willingness of residents to intervene and create social trust (the sense of engagement and ownership of public spaces). An example may be the willingness of residents to intervene in the lives of other residents to counter crime, increase voting, or encourage residents to recycle. These informal mechanisms are what he calls 'social capital', a public good provided by citizens who participate to build up their communities (from raising children and taking care of the elderly to volunteer work). This kind of work is essential to a democratic and stable society.

The Critical Importance of the Core Economy: The core economy forms the foundation for a community economy. Unlike a market economy, the core economy relies on specialization reinforced by a "do-it-yourself" attitude that “Builds self-esteem and a voluntary interdependence that replaces involuntary dependence that comes w/ industrial and market specialization”^[9] and where self-sufficiency is based upon interdependent family/ community units (instead of a market economy's atomized individual). This model thus purports to reduce and/or eliminate the involuntary dependence that comes with the market economies strict division of labor. It also focuses on alternative distribution mechanisms to pricing, using instead normative considerations like need, fairness, altruism, moral obligation, or contribution.^[10]

Collective efficacy and social capital are central to two very successful examples of civic-based, non-monetary economies: time banks and local exchange trading systems (LETS). These work systems provide alternative forms of currency that are gained through time spent in the community through community gardening, recycling, repairing leaky faucets, babysitting, and other forms of work. These units of time can be used to ask other members of work systems to do jobs they need or may act as a forum in which special jobs or needs can be communicated and traded. These systems operate to a large degree outside of the monetary economy but do not negate the importance of a monetary economy or ask to a return to bartering systems.^[11]

Time banks

A time bank is a community-based organization which brings people and local organizations together to help each other, utilizing previously untapped resources and skills, valuing work which is normally unrewarded, and valuing people who find themselves marginalized from the conventional economy.^[12] These are things that family or friends might normally do for each other, but in the absence of supportive reciprocal networks, the time bank recreates those connections. These interactions are based upon the exchange of hours spent on an activity, where time dollars are the unit of measure/ currency. They are traded for hours of labour, and are redeemable for services from other members.^[13] There are two main types of bank structure:

Neighbor-to-neighbor : These time banks involve individuals in the same neighborhood.

Specialized : These time banks either limit membership (for example, students within a school district, or members within an organization) or the scope of activities (like tutoring or babysitting).

Benefits of time banks include that:

• Can provide individuals with services that they might not otherwise be able to access (making up for gaps in social services), such as medical practitioners providing services to individuals without health insurance.^[14]
• Recognizes and promote the value of work (unlike with barter systems, in many cases time banks may be considered exempt from taxation [see final segment])
• May provide savings to sponsor organizations; for example, in the case of Elderplan, Metropolitan Jewish Health System’s Social HMO (located in Brooklyn, New York. In its Member-to-Member (M2M) program, participants help one another with errands, transportation to medical appointments, minor home repairs, language translation, social visits, etc. A multiyear evaluation of the M2M program released by Elderplan in 2003 showed that time banks could help HMOs deliver long-term care effectively to many elderly patients while postponing their move to nursing facilities. (Although the sample size of the M2M evaluation was too small for statistically significant results, the time bank also appeared to improve members’ mental health and to decrease loneliness.).^[15]
• Vehicle for social change, since benefits include increased self-esteem and confidence, gaining skills, growing social networks and building friendships, getting more involved in the community, and meeting needs – overcoming social exclusion and enabling active citizenship
• Redefines value of individuals and their work, since all services are valued equally (and is much more inclusive: the involvement of for instance people with disabilities in community activities through time banking is first of all an effective form of occupational therapy, building confidence and skills, and second, only possible in many cases because of the high levels of support offered)
• Fosters reciprocity
• Builds social capital through relationships, trust, and support networks
• Enables a broad spectrum of people to meet (and specifically are set up to reach traditionally disadvantaged communities, since participants are usually among the most socially excluded groups in society, and those least-likely to be involved in traditional volunteering)^[16]

Community building

The Household Economy: In 1998 non-profit organization Redefining Progress estimated that housework amounted to $1.911 trillion, roughly a fourth of the U.S. GDP that year.^[17] As of 2010, the Bureau of Economic Analysis found that household work would increase GDP by 26%.^[18] More than a decade later, household work continues to provide a key source of foundational support to the domestic economy. Such household work includes cleaning, cooking, care giving, and educating children among others.

The household economy may incite the idea of an intimate group of individuals that benefit from the work done in the home, a closed household economy. One can argue in numerous ways that the household economy where goods can be traded and services can be shared or traded. This type of economy exists today and benefits the community at large.

In extreme cases of survival the open nature of the household economy is most evident. Sharing of foods, clothes items, toiletries, and basic necessities were often shared or exchanged amongst war-torn, impoverished families in East Europe post-communism.^[19] Cooking, cleaning, clothes-making, and forms of work may seem to be intuitively thought of as work. Not all work done within the home is seen as work. When labor is enjoyable such as watching movie with one’s children, exercising, or entertaining the activities may not readily be seen as work. Yet an estimated 380 million hours are spent on these types of unpaid activities (work) and 272 million hours per week are spent doing paid work as found in 1992 from a sample of research participants in Australia (these hours are the aggregate hours of all Australians).^[20]

A large portion of these hours can be attributed to nurturing. Nurturing can take two forms in terms of raising children and cursing the sick, elderly, and infirm both kinds of which both types of work are still moderately gendered types of work.^[21] Children represent not only a product of a household but an asset to the community as a whole. In the home, kids may provide help in the form of chores and so are an asset to other members of the household. However, a larger argument can be made that children are a public good. Children are an investment in which time, energy, and money are spent on children so that they can become stable adults who contribute to reducing national debt and contributing to Social Security, thus a public good.^[22] Children not only act as economic investments but also have great utility to society as plumbers, mathematicians, sociologists, botanists, postal workers, and whatever profession or products they produce in the future.^[23]

The products and services produced within a home are open to the non-market economy at large. Society as a whole benefits from this unpaid work whether in a tangible manner or a more abstract, macro scale. The other form of nurturing done within the home, caregiving, also serves as a benefit to society as a whole.

Care giving: Care giving refers to providing assistance for those who are elderly, disabled, suffer terminal illness, chronic illness, or are generally frail or in need of assistance. Someone who cares for someone in any of these positions is a caregiver. This kind of assistance is largely unpaid and conducted by friends and/or family of the patient.

Care giving often exceeds the nursing tasks that come with caring for someone who is ill or recovering from surgery. Often, caregivers also must clean the occupancy of the patient, provide meals, and speak with medical providers, doctors, among other responsibilities. To put the extent of work performed in the non-monetary economy into context, nearly 80% of labor that keeps seniors out of nursing homes is unpaid labor by families.^[24]

In 1997, estimates predicted that the value of work produced by caregivers amounted to $196 billion. Current estimates put the value of work at $375 billion for 2007.^[25] At the time, only $32 billion spent on formal health care and $83 billion spent on nursing home care by the federal government.^[26] According to these statistics, only half as much money is spent on nursing and home health care as is necessary. These numbers do not take into account the financial burden as well as emotion work that is an inescapable part of this work.

The same research estimated that in 1997, caregivers would have received $8.18 as the hourly wage by averaging the national minimum wage and the median was for Home Health Aides.^[27] As of May 2013, the hourly wage can be estimated at $9.14 when averaging the minimum wage in Florida^[28] and the median wage for Home Health Aides.^[29] Caregiving requires a large dedication, as much as 22 to 70 hours a week. Most incredible is the number of people performing this work, an estimated 25.8 million people as of 1997.^[30]

It is also important to note that caregiving has a disproportionate affect on women and white households.^[31] The cost of caregiving is exorbitant, nearly 5 times what Medicaid would have spent on long term care, meaning only wealthy families can afford to do this type of in-home care. The intersection of class and race in this phenomenon is an important place to explore as less advantaged families will have to rely on government care, potentially at the risk of having less quality care. These statistics also highlight a differential effect on women, showing that women disproportionately do caregiving work.^[32]

Understanding the non-monetary economy is important for a number of reasons. Valuing all work changes perceptions of valuable work. Acknowledging a non-monetary economy may potentially change the ways in which the unemployed, poor, women, and other stigmatized persons’ work is valued. It can allow citizens to see their community as a more cohesive, intertwined system that deserves their time and energy. Exploring this economy also exposes numerous areas of help that do not have enough support from the public and private sectors. Education and caregiving in particular highlight were assistance is needed and often not provided.

Barter economies

Barter Economies also constitute an important form of non-monetized interaction, although for the most part this kind of interaction is viewed largely as a temporary fix as an economic system is in transition. It is also usually considered a side effect of a tight monetary policy, such as in a liquidity crisis like that of 1990s Russia where barter transactions in Russia accounted for an astonishing 50 percent of sales for midsize enterprises and 75 percent for large ones.^[33]

Policy implications

The UK in particular has been targeted by the government since the New Labor administration of the mid-1990s onwards—the social economy has been developed as a means of delivering effective public services, and mobilizing active citizenship. In 2002, for example, the Department for Trade and Industry (DTI) 2002 launched the Strategy for Social Enterprise to develop “the government’s vision ... of dynamic and sustainable social enterprise strengthening an inclusive and growing economy”, which aims to create an enabling policy environment for social enterprise, make social enterprises better businesses, and establish the value of social enterprise, in order that the sector may help to deliver on a range of policy agendas: productivity and competitiveness; contributing to socially inclusive wealth creation; neighborhood regeneration; public service reform; and developing an inclusive society and active citizenship.^[34]

However, by and large current policy does not reflect the implications of a system that does not validate actions that transmit community values, provide support, generates consensus, etc. These actions in the past were subsidized by cheap or free labor derived from subordinate groups, like women and ethnic/ racial minorities, who as a result of entering the workforce to receive monetary validation negate these positive public goods.^[35]

The biggest issue that time bank coordinators face, as a result, is funding. Time banks do not rely on volunteers, but require financial support to pay the time broker’s salary, for a publicly accessible drop-in office, for marketing costs, etc. for time banks to successfully attract socially excluded people in deprived neighborhoods. Many UK time banks have been supported by grant funding from the National Lottery, over time it becomes harder to secure ongoing funding, or to increase the funding available for time banks overall, and established projects close while new ones are begun elsewhere.^[36]

Time banks in the US and the IRS

Tax exemptions for organizations that administer time banks, barter networks, or currencies consider them 501(c)(3) (making it a tax-exempt non-profit), whereby a nonprofit organization is exempt from federal income tax if its activities have the following purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering amateur sports competition, or preventing cruelty to children or animals.^[37] The IRS has recognized some time banks as tax exempt; it is harder to obtain exemptions for a barter network or local currency, as they are harder to prove as operating purely on a basis of service to the community.

Being a time bank, alone, does not enable an organization to obtain tax exemption under 501(c)(3).^[38] If, instead of a time bank, an organization operates a local currency or barter network, such an organization may be deemed to be operating for the private benefit of individuals, even if those individuals are members of a charitable class. Grounds for 501(c)(3) considerations include

• A focus on relief for the poor, distressed, or underprivileged (as recognized by the IRS); an exchange platform that is designed for use of the broader community, and not specifically for a charitable class, may not be considered a tax-exempt activity for a 501(c)(3) organization.^[39]
• Or a focus on education: Time banks provide an experiential learning opportunity for people, helping them learn how to trade and exchange without money, which may otherwise be difficult to learn and practice. However, if the time bank grew to provide for a lot of people on a regular basis, then the time bank might be considered larger than necessary to carry out its educational purposes.^[40]

See also

References