Currency Exchange and Capitalizing
on the Lessons at hand

The Village Project Curriculum Notes are Descriptions of Teaching and Learning Situations in Village Written by Teachers Involved in the Program. 

Currency Exchange and Capitalizing on the Lessons at hand, by Amy Shuffelton and Noah Sobe

When a River Runs Through it -- Village Lessons, by Noah Sobe and Amy Shuffelton

Peep Metaphysics -- What is a Peep?, by Amy Shuffelton


by Amy Shuffelton and Noah Sobe

Running a day camp for children and a seminar for teachers at the same time, as we did in Slovakia in August 2001, meant that we had two separate peep towns running simultaneously in the same building.  The towns were built and governed independently; each town also had its own currency and its own corporations.  Both towns were part of the Republic of Peeps, though, and conditions were ripe for trade.  The trade that did arise brought up some challenging questions for economists in the Republic of Peeps.

The children were able to build the town of "PipsYork" outside on real grass in the courtyard.  The teachers built their town of "Pipsovce" inside a classroom on sheets of plywood, as after-school Village programs typically do.  The teachers, who like the kids were all from Eastern Slovakia, arrived to begin their workshop at the beginning of the second week of the three-week summer camp, which meant that the kids had a head-start.  By that point the PipsYork economy was already thriving.  PipsYorkers had a rich array of products that they were already selling among themselves, including pillows, tents, peep plates, tents, their town's newspaper and hedgehogs (pick your color).  Just a couple of days into the teacher workshop, at a point when the teachers had little more than their checkbooks but a growing realization that they wanted hedgehogs, etc. and had a limited time to make them themselves, we organized a market-day.  The residents of the two towns met to exchange goods. 

What happened was interesting, but first a general note about Village economies.  As is sometimes pointed out by older kids, Village economies are not accurate simulations of real, adult economies.  (Incidentally, there's a growing underground movement in the Republic of Peeps to call the non-peep world the 'muggle world'.  'Real' is problematic because it implies that Village's world of peeps is not real, which runs counter to what we all know to be true.)  For one, each town has its own National Store from which all materials that enter the peep town must be purchased or imported.  We make this requirement a national law because we think it's a crucial way to make the peep economy function at all: no one can just bring in wood from home, everything must be purchased in peep money.  This makes earning a salary for work at the peep bank or running a painting business pay off.  (Settlers and peeps start with some initial capital, loaned by the National Bank to peeps who use the land they own as collateral.)  Teachers, who set the store’s prices, have complete control over the prices of raw materials.

In Slovakia that August differences in the economies of the two towns were complex.  A short recap is that each child started with 1000 PipsYork dollars, and each teacher with 1100 Pipsovce dollars, which seems similar until you add that for complicated reasons wood at the National Store in Pipsovce was 250% more expensive than at the Store in PipsYork.  Furthermore, the children had the initial advantage of having a more well-developed economy, in which there were finished products to buy with the money they had.  In essence, then, at the outset a PipsYork dollar went much further than a Pipsovce dollar.

We set up the market day because it would be fun for all but also as an experiment.  What would producers and consumers decide to do?  Keep in mind that opportunities for barter were limited (because the teachers hadn’t made much of anything yet), but that teachers wanted to buy things in PipsYork.  There was also the longer term to consider; because Pipsovce had the more skilled workers and was clearly going to develop its economy soon, PipsYork’s great advantage couldn’t last.  (As someone pointed out, with its natural beauty -- tree, grass and sunshine -- but limited technological development, PipsYork could be aptly compared to Slovakia!)  Seeing this as an opportunity to teach something about economics, especially exchange rates and international trade, we first struggled ourselves to understand the situation and then to determine what we could teach and how to do it.

There was an early call for the national government to set an official exchange rate, but our instinct was that the exchange rate should be settled upon by the peeps themselves according to their needs.  The price of bread equivalence was proposed first until one of the kids pointed out that that bread was more expensive, in terms of Slovak Korun, in Austria than it was in Slovakia (not to mention that there were no bakeries in either peep village).  More and more Slovakia's economy is becoming integrated into the European Union, and awareness of this by both the kids and the teachers added a special significance to our discussions about wealth, currencies and imports & exports. 

At the first market-day most of the kids of PipsYork set their prices in PipsYork dollars since they couldn't see what value Pipsovce dollars would be to them.  The teachers had to find someone who would sell them PipsYork dollars in exchange for Pipsovce dollars.  To initiate exchange, a peep named Synko Disco set up an exchange booth with outrageously bad rates.  He’d sell you 1 PipsYork dollar for 10 Pipsovce dollars; or sell you 4 Pipsovce dollars for 1 PipsYork dollar.  This meant that on every exchange his profits were high, but also that  anyone willing to take a risk could open up a rival exchange with better rates.  (Synko Disco was a citizen of neither town; a roving and shady figure pulling the wool over the eyes of the Republic’s Finance Ministry, he had nothing to lose.)  A kid from PipsYork might do this if she thought that eventually there would be some value to her in having the teachers' Pipsovce dollars.  No one did this, but they did negotiate better rates on a sale-by-sale basis.  At the end of the day, some kids had handfuls of Pipsovce dollars, which they took to the Pipsovce branch of the bank, where they opened accounts.  Later, they were able to use this money to buy teacher-made goods.

That afternoon separate town meetings were held to discuss the financial and trade situation.  The Pipsovce teachers first talked about the necessity of building up the domestic tent and hedgehog industries to compete with PipsYork.  We, as the ultimate organizers of both programs, wanted to find some way to get more sophisticated than a mercantilist economic perspective that viewed imports as lost wealth or exports as the only route to it.  Ultimately, Pipsovce decided against going into direct competition with PipsYork products but did develop a town economic strategy so they could even their balance of trade.  The PipsYork newspaper perhaps benefited most from the expanded market, quickly adding a Pipsovce section and easily becoming the dominant media presence in both towns. 

Do we have to do two Villages at once so there's this kind of trade? some of the teachers attending our seminar asked us.  No, we said, and we explained that economics, currencies and trade had only happened to become a focus of these particular villages.  While every Village program gets children thinking in deeper ways about community life and teaches discussion and communication skills that aid civic participation, there are more specific lessons that vary from Village to Village.  In one town, intellectual property rights questions might come up and the students could learn about civic participation and self-government by working out a patent and copyright system.  In another, some system of representative government might consume their attention, with the children's civic lessons coming through discussing checks-and-balances and experiencing the effects of their design for delegating powers.  As teachers we capitalize on whatever events, conflicts and interests emerge in a particular group.  The economic experiments from the summer of 2001 are one more example Village’s specific and varying lessons.

(December 2001)

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