September 29, 2009

COGS Circle of Gifts voluntary currency


Membership is free at this time, just sign up on the COMMUNITY EXCHANGE SYSTEM

Choose “Sweden” as country and “COGS” as the system.


The Point of COGS

COGS stands for Circle of Gifts, and is a complementary currency specifically designed to help local communities re-localise activities. The aim of re-localisation is to provide inhabitants with the possibility of an acceptable quality of life when traditional economic development fails, or their circumstances are against them.

We believe complementary currencies will become more important as energy supplies dwindle and impact the economic growth so essential for interest-based economic systems of nations.

Ideas behind COGS

When discussing sustainable development, many point to the need to re-localise community activities. This includes growing food locally, small scale renewable energy production and local manufacturing.

At the same time local, alternative or complementary currency comes up as a possible way to support this re-localisation. Although there are many successful local currency schemes ongoing in the world, they are still not that widespread or developed to the extent that it is easy to get a hands-on experience.

And there are not many schemes that are dedicated and focussed on supporting re-localisation.

Because of this we decided to develop our own scheme, and to specifically design it act as a complement to legal tender and to help communities organise activities to provide quality of life for those in most need. Our scheme will start off as a test-bed, open to anyone who would like to join from anywhere in the world.

Our currency is one of the GIFT ECONOMY a “pay it forward” scheme.

COGS is all about being part of the community, giving and receiving in a trusting way to ensure everyone has a quality of life whatever their situation.

This is done voluntarily out of love and respect and is not part of a contract. When you participate in COGS scheme you do it as a community member, not an employee or citizen in a formal sense.

This is completely different from the work aspect of life where you enter into a contract and receive wages and pay taxes.

The diagram below visualises the difference.

How volontary currency COGS works

History of COGS

COGS was developed by Stephen Hinton of the AVBP sustainable consultancy in 2005 after extensive discussions with POST CARBON INSTITUTE and members of the Stockholm Oil awareness  meetup group. A lot of information was gathered from the web as well.

The aim of COGS

To encourage and facilitate:

  • Local agriculture and food growing
  • Recycle and Reuse of materials
  • Development of self help in community
  • Local energy production
  • Increase in security
  • Preventative health services and complimentary treatments
  • Local manufacture
  • Development of more sustainable lifestyle

How do COGS work?

  • You do something for me, say bake bread
  • Lets us take an example. You bake bread and give me a loaf. I value the gift as ¼ COG for the loaf, and register 0.25 COGS to you in the system. Now my account is ¼ COG minus, yours is ¼ COG plus
  • I help my neighbor with their computer (3/4 COG ) and register it.
  • I am 1/2 COG in plus
  • My neighbour gives you a cabbage he has grown, you acknowledge this to him with 1/4 COG
  • And so on

How do COGS create ”economic” growth

  • COGS may not stimulate growth in legal tender terms, but it will stimulate people to carry out useful activity in the community which is one aim of economic growth, to increase the good for all. The system is always at zero in total credit and debit (right column)– meaning the community is never owing nor lending to anyone. Note that COGS are created by the people using them and not dependent on Governments or banks to create them (FIAT).
  • Look at the diagram of some transactions.

Account in voluntary currency

  • The vertical column is a measure of activity – the more people participate the more the good being done grows.
  • So activity grows even if economic activity stagnates, and the community can develop their living standard. The system shows how people are increasingly putting in positive activity into the community

How are COGS values created

COGS are for voluntary hours (see diagram above). These calculations are based on Swedish conditions.

  • Under Swedish tax law, all transactions including gifts are valued. We set an average year as containing 1600 working hours and 1040 as “Leisure” time (2-3 hours a day)
  • One hour gift is valued at 85 SEK nominally, to be equivalent to a low average hourly wage (SEK 10,600 /month after tax)

COGS and tax

  • Tax rules in Sweden allow for gifts to any one person of up to 10,000 SEK
  • That means if we have 300 people in the community you can give each 10,000 (total SEK 3 million) before needing to declare for tax. That is 125 COG per person or 37,500.
  • If you spend 2-3 hours a day you can donate 1040 COG to the system or equivalent SEK 83,200
  • And get back the same, at roughly 7,000 a month
  • So it is our belief that COGS are outside the tax system, as are any gifts below SEK 10,000, remembering that you will get back exactly the same equivalent and not make any profit.

How are COGS values determined?

The giver and the acknowledger mutually agree on the COGS equivalent for the gift.

We suggest using time needed to produce the gift as a starting point.

Each person’s time is valued equally. In some cases, like massage, a person needs 1.5 hours to actually produce one hour of massage, so a 1-hour massage would be 1.5 COGS.

How will COGS stimulate re-localisation?

COGS will stimulate the development of Community

  • The origin of the word “community” comes from the Latin munus, which means the gift, and cum, which means together, among each other. So community literally means to give among each other. Therefore I define my community as a group of people who welcome and honor my gifts, and from whom I can reasonably expect to receive gifts in return.

COGS are abundant, limited only by the amount of volunteer hours

COGS is a gift currency and as such is not like legal tender, in limited supply. Anyone can give anyone anything, so COGS are created simply by acknowledging a gift by registering COGS.

The aim of re-localisation is for the community to provide the essentials for all its members instead of relying on outside help of governments and corporations. By starting to use COGS, members will help each other more, utilize and develop essential skills like growing food, repairing equipment, producing essential items.

We believe by using COGS people will start to explore the value of giving and taking in trusting relationships as an antidote to the modern competitive, rat-race mentality where only a few can achieve comfortable living to the detriment of the many.

Why do we need an alternative to legal tender?

  • Jobs are increasingly scarce – creating a burden on the state
  • Development of sustainable life style is going slower than fossil fuels are depleting, something must give at some point and there is no buffer or emergency plan.
  • Economic growth is stagnating
  • Modern life brings much isolation – even worse for those with no legal tender resources. Just getting together with neighbors doing stuff is positive.

What about other complementary currencies?

The diagram below shows some comparisons. See for more information

TABLE comparison complementary currencies

Becoming a COGS member

Membership is free at this time, just sign up on the COMMUNITY EXCHANGE SYSTEM

Choose “Sweden” as country and “COGS” as the system.

COGS is at an experimental stage. Therefore it can be used by Swedish residents for “real services” and for “virtual” and “internet” services globally. For example, any service that can be done over the internet, like translation, or layout, can be COGS related.

Learn more

Discussion and learning from the experiments is on the COMMUNITY EXCHANGE NING SITE.

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