Non-monetary economy

Core (or social) economy

The social economy refers to the space between public and private sectors occupied by civil society, including community organizations, volunteering, social enterprises, and cooperatives. The social economy represents “a wide family of initiatives and organisational forms — i.e. a hybridisation of market, non-market (redistribution) and non- monetary (reciprocity) economies”.^[4] Rather than being fringe activities at the margins of the formal economy, this amounts to a significant level of activity: The "civil society" sector of the United Kingdom 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.^[4]

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 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), intervening 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.

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”^[1] and where self-sufficiency is based upon interdependent family or community units (instead of a market economy's atomized individual). This model reduces or eliminates the involuntary dependence that comes with the market economy's 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.^[1]

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, earned through time spent in directly serving the community, e.g. working in the community garden, recycling, repairing leaky faucets, babysitting. 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, though do not negate the importance of a monetary economy or seek a return to systems of barter.^[3]

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.^[4] 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.^[5]

Community building

In 1998, Redefining Progress estimated that housework amounted to $1.911 trillion, roughly one-fourth of the U.S. GDP that year.^[1] As of 2010, the Bureau of Economic Analysis found that household work, if tracked, would increase the GDP by 26%.^[6] 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.

There may be a closed household economy, where a specific (perhaps familial) group of individuals benefits from the work performed.

In extreme cases of survival, the open nature of the household economy is most evident. Food, clothing, toiletries, and basic necessities were often shared or exchanged amongst war-torn, impoverished families in East Europe post-communism.^[7] Cooking, cleaning, clothes-making, and forms of work may seem to be intuitively thought of as work. An Australian study (1992) determined that an estimated 380 million person-hours per week were spent on these types of unpaid activities, compared to 272 million hours per week at paid work.^[8]

A large portion of these hours can be attributed to nurturing. Nurturing can take two forms, in terms of raising children and nursing the sick, elderly, and infirm, both still usually expected from women and girls.^[8] 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. In a greater sense, children are a public good: an investment in which time, energy, and money are spent so that they can become stable adults who share in reducing national debt and contributing to Social Security, thus a public good.^[9] Aschildren mature and learn, they have the potential to benefit society in whatever profession or products they eventually produce.^[10]

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 an immediate manner or a more abstract, macro scale.

The other form of home-based nurturing also serves benefits society as a whole. Care giving provides assistance for those who are elderly, disabled, suffering terminal illness or 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 is largely provided unpaid by friends 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 maintain the dwelling, provide meals, and interact with medical providers and doctors, among other responsibilities. Nearly 80% of labor that keeps seniors out of nursing homes is unpaid labor by families.^[1]

In 1997, the value of work produced by caregivers was estimated at $196 billion. The figure was $375 billion for 2007.^[11] At the time, only $32 billion was spent on formal health care and $83 billion spent on nursing home care by the federal government.^[12] 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.^[12] As of May 2013, the hourly wage was estimated at $9.14 when averaging the minimum wage in Florida^[13] and the median wage for Home Health Aides.^[14] Caregiving requires a large dedication, as much as 22 to 70 hours a week. An estimated 25.8 million people as of 1997 performed these tasks.^[12]

Caregiving has a disproportionate affect on women and white households.^[11] The cost of caregiving is exorbitant, nearly five 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.^[11]

Valuing all work changes perceptions of what constitutes valuable work. Acknowledging a non-monetary economy may 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 accounted for 50 percent of sales for midsize enterprises and 75 percent for large ones.^[15]

United States time banks and the IRS

Organizations that administer time banks, barter networks, or currencies may register for tax-exempt status under section 501(c)(3) as non-profit organizations working to benefit the community.^[16] 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).^[17] 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. 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.^[16]