22032864

Melissa Jane Knight

Goldsmiths College

New Radical Political Economy

‘Market economics values what is scarce – not the real work of society, which is
caring, loving, being a citizen, a neighbour and a human being.’
Edgar Cahn, 1986 On the Thinking Behind Time Banks1

‘London is one of the richest cities in the history of civilization, but it cannot
‘afford’ the highest standards of achievement of which its own living citizens are
capable, because they do not ‘pay’.’
Keynes 1933, National Self-Sufficiency 2

‘What is called sound economics is very often what mirrors the needs of the
respectably affluent’
Galbraith 1975, Money 3

1
Edgar Cahn, 1986 ‘On the Thinking Behind Time Banks’ in Boyle 2002:225

2
Keynes 1933, ‘National Self-Sufficiency’ in Boyle 2002:17

3
Galbraith 1975 ‘Money’ in Boyle 2002:225

1
22032864

New Radical Political Economy

‘How effective are LETS schemes to creating localised economic activity?’

A Local Exchange Trading System or Scheme (LETS) is a structure of localised trade

in goods and services that are bounded within a locality and usually traded between
the residents of that locality. Although globally there are many LETS structures,
LETS differs from a bartering system of trade between individuals. LETS typically
compose of a shared system of virtual credits and debits that each member owns or
owes that can be spent and earned within the group. This paper intends to evaluate
LETS as a tool that creates localised economic activity by exploring some examples
of successful LETS as well as assessing the problems and barriers that accrue to
inhibit further expansion. The paper also aims to explore localised trade as a
consequence of existing national economic climates - looking at the context of money,
including the role of exchange values and a critique of the gendering of labour as a
hindrance for women and men to become equally successful within the system of
LETS.

According to British LETS organisation, LETSlink UK, a typical British LETS

structure involves each member owning a zero balance account which they trade
goods and services from (www.letslinkuk.net). All transactions are recorded by an
accountant and then regularly published to all members along with a listing of other
goods and services on offer. Subscription costs are paid in sterling, however all other
transaction fees and trade is done using links (or the equivalent name for the
organisation’s currency). The value of local currencies is usually estimated according
to the local or national average hourly wage; for example, LETSlink London estimate
a links rate equivalent to between five and seven pounds per hour of work. Since
LETS are not based on growth, the system does not pay interest on a positive account
but also has no charge for a deficit account (Douthwaite 1999). Rules and regulations
are often set out by a ‘Core Group of elected officers’ who also arrange social
gatherings, planning events and tasks to maintain the functioning of the scheme,

2
highlighting its community focus (LETSlink UK)4. Throughout the 1990s nearly 400
British LETS were set-up (Boyle 2002: 262). LETS mainly developed in English-
speaking nations (Ingelby 1998), however with progress made through organisations
such as the World Social Forum, the United Nations, and UNILETS – the global
LETS initiative, LETS now exist in Brazil, Argentina, India, Chile, Japan, Malaysia,
Peru, several countries in Africa... UNILETS boast ‘2600 LETS’ forms of local
currency ‘in 53 countries’ (www.unilets.org). It seems that the idea of money is
changing. Individuals, groups, and even nations themselves are experimenting with
‘alternative’, ‘complementary’, ‘social’, ‘barter’, and so on, currencies.

LETS was the creation of Michael Linton, who began the first system in 1983, in the
Commox Valley, British Columbia (Raddon 2003: 4). Within a climate of recession,
Comox Valley saw a $300,000 turnover within two years through the trade of
‘vegetables, room rents and dentistry’ (Boyle 2002: 262). Michael Linton and Ernie
Yacub (2000) outline their argument for LETS in their ‘Open Money Manifesto’
(Linton and Yacub 2000, in Boyle 2002:265-267, see also www.openmoney.org).
They explain that money only carries information and unaided holds no real value.
The limited supply of money issued by central banks coupled with the fact money can
go anywhere in the world, sees local economies suffer in a climate of ‘competition
and scarcity, within and between communities’ (Linton and Yacub 2000: 265). There
is little choice other than ‘to scramble for money to survive’ and therefore to ‘rely on
this money’ (Linton and Yacub 2000: ibid). Linton and Yacub highlight three main
problems associated with this form of money: supply – there is no balance between
‘too much and too little’; distribution – there is no medium to determine who has it
and who doesn’t; and costs –‘costs of creation and security, operations and
accounting, the costs of interest, the cost of the courts’ (Linton and Yacub 2000: ibid).

‘There is no good reason for a community to be without money…Any

community, network, business can create their own free money – ‘free’ as in free
speech…but NOT free as in free lunch, or free ride. It’s not something you get
for nothing.’ (Linton and Yacub 2000: 266)

4
Quote from:< www.letslinkuk.net/london/info/definition.htm> [cited 06/02/2006]

3
Unlike faceless national currencies, local currencies carry a familiarity that comes
with living and working inside a community. Local currency is earned, and cannot
multiply from abstraction. For money to ‘work’, it needs to be created ‘in sufficient
supply to meet our needs, and in an open context so that all can contribute and be
acknowledged’ (Linton and Yacub 2000: 266). Open money becomes ‘flat’, owning
no power over others, instead functioning as a tool of individual and local
empowerment (Linton and Yacub 2000: ibid).

‘Open money is money that must be earned to be respected. When you issue it,
you are obliged to redeem it – your money is your word. It’s just a matter of
your reputation in your community… Exploitation is no problem; when you have
your own money, you can’t be bought or sold so easily. You can choose what
you do to earn your money. And there’s no monopoly, all systems co-exist in the
same space.’ (Linton and Yacub 2000 in Boyle 2002: 266)

Linton and Yacub believe ‘the problems that come from conventional money can be
resolved with open money systems’; money thus becomes ‘a simple social
arrangement’ which works if people believe it works (Linton and Yacub 2000: 266,
see also Zelizer 1997).

‘Where conventional money is scarce and expensive, the new money is sufficient
and free. Where conventional money is created by central banks, new money is
issued by us, as promises to redeem – our money is our word. And where
conventional money flows erratically in and out of our communities creating
dependencies that are harmful to the economy, society and nature, the new
complimentary money re-circulates, enabling business and trade.’ (Linton and
Yacub 2000: 267)

Community money can create a world where needs are met without the problems of
‘poverty, exploitation, homelessness, unemployment, fear and stress’, where natural
resources are evenly distributed, and where humanity lives ‘in balance with the
environment’ (Linton and Yacub 2000: 267). But does this argument hold an idyllic
or utopian view of societies? Contrarily, critics argue limitless monetary supplies lose
people’s confidence in money (cited in Bebbington 2000: 3). Critics also suggest that
localised initiatives do not hold the level of security central banks offer. There is no

4
real regulation of LETS members other than ‘moral pressure’ or the belief in the
goodwill of others to return the favour; consequently, members can easily leave owing
a debt (Raddon 2003: 6). However according to Lang (1994) abuse seldom occurs in
LETS since ‘‘most economic crime in our society is against strangers and anonymous
institutes’’ (Lang 1994:83, in Bebbington 2000: 7).

‘‘LETS networks are, in contrast, communities of people: not everyone will

know one other, but they will know where people live and may know something
about them.” (Lang 1994:83, in Bebbington 2000: 7)

The limited powers to enforce fairness can become problematic for LETS initiatives,
undermining confidence which particularly deters businesses from joining (Raddon
2003 :6). Other key problems include a lack of trade taking place and members not
eager to make the initial trade (Bath University). LETS schemes also suffer when
members continue to provide goods and services, accumulating credits without
spending them, thus reducing opportunities for other members to earn. In
‘sophisticated’ LETS, ‘a “demurrage” tax on large static positive or negative balances’
operates to encourage members to increase trade (LETSlink UK)5.

The idea of a demurrage currency is strongly associated with the ideas of Silvio
Gesell, who wrote ‘Why Money Has To Rust’ in 1913 (Boyle 2002: 233). Gesell felt
that by giving money a life span - in which its value would deteriorate the longer the
owner held on to it - the economy would see a faster rate of exchange and hence a
better functioning economy since value within money itself ceases to exist: ‘So we
must make money worse as a commodity if we wish to make it better as a medium of
exchange’ (Gesell 1913: 41). As local currencies, LETS are limited. They cannot be
transferred into national currencies; they must be used within the community (Raddon
2003: ix). It is therefore necessary for members to spend quickly, ensuring a fast
turnover ensures renewed prosperity. This becomes extremely problematic for smaller
LETS groups since they offer less choice of goods and services, making it difficult to
continually trade (Seyfang 2001).

5
Quote from <www.letslinkuk.net/london/info/definition.htm> [cited 06/02/2006]

5
A renowned local currency success story happened in the small Austrian town of
1930s Worgl. Within an economic crisis, the local government found it hard to collect
tax so the Burgomaster (Mayor), Michael Unterguggenburger, ‘created demurrage
money to move their community out of recession’ (Boyle 2002: 236). 30,000
Austrian shillings were issued with a falling 1 per cent shelf life per month until
becoming worthless. Each note was stamped with a specified date to encourage
spending. ‘The currency circulated quickly, taxes were raised, unemployment fell and
Worgl prospered until the Austrian National Bank stepped in to close the system
down’ (Wall 2005: 96).

Hostility from banks (especially towards local currencies born out of recession)
coupled with lacking support of governments, makes it complicated for LETS -
unsupported by law - to improve and expand within the national currency framework.
In London, the trading of links circulates across many local boroughs. Initially set up
in 1993 LETSlink London became a Company Limited by Guarantee with Charitable
Aims in 1997. According to their website, there are ‘over 150 members’, but in 13
years, for a major capital city, this is an extremely small amount of people (LETSlink
London)6. LETSlink London underpins their ideology on much of the literature and
debates that concern organisations such as the European Creative Forum, London
Social Forum, London 21, London Civic Forum, The Network Project, and so on.
This proposes LETSlink London advocate a strong reformist ideology within the
organisation yet nowhere is this explicit on their website. On the contrary, they
outline: ‘We are working within the existing legal framework and therefore do not
officially have a view on reform of the monetary system’ (LETSlink London)7.
LETSlink London and LETSlink UK describe the function of LETS as
‘complementary currencies…

…operating alongside the existing monetary system, and to gain the support of
government and its agencies in so doing, as one way of advancing the
development of sustainable communities and assisting in poverty.’
(LETSlink UK)8

6
Figures from <www.letslinkuk.net/london/info/lll.htm> [cited 06/02/2006]
7
‘Monetary Reform?’ quote from <www.letslinkuk.net/London/info/issues.htm> [cited 06/02/2006]
8
Quote from <www.letslinkuk.net/London/info/issues.htm> [cited 06/02/2006]

6
This suggests that monetary reform has to either conform or look like it conforms,
keeping quiet about any overarching political ideologies and economic plans. This
complex and contradictory standpoint sees LETS remain between a rock and a hard
place, with little political muscle. It is hard to challenge an institution that has the
potential power to improve the development of LETS. As a result many members -
particularly men - leave LETS disheartened that revolutionising the economic
structure is not possible (Barry and Proops 2000: 95).

But simply the existence of LETS questions the appropriateness of the present
monetary system. LETS perform as subtle instruments of monetary reform through
enabling people to exchange goods and services at a local level. This is a
fundamental function within a democratic country. The act of being in control of
one’s finances at such an intimate level creates a localised subculture that is
reinforced through the everyday experiences of repeatedly trading within the locality.
A whole set of benefits not normally associated with trading emerge, such as a sense
of community financial empowerment and a personal meaningful relationship with
currency.

Most LETS studies show multiple reasons why individuals choose to become
involved with LETS. Similarly LETS have differing ways to perceive the ideal way
to organise themselves. Some LETS schemes believe that the model works best when
adequately funded and resourced, while others believe that a ‘grassroots level’ is best
‘when their workload does not include reporting to authority figures on how funding
has been dispersed, cutting out bureaucratic organisation’ (LETSlink UK)9. At one
extreme are LETS run solely with a community-led approach and on the other exist
those with a business-led approach (Barry and Proops 2000: 8): ‘The former would
tend to emphasise accountability to members; the latter would tend to emphasise
efficiency’; though most LETS are structured around the culture of the specific
locality (LETSlink UK)10.

Function also becomes problematic when there is an added national currency cost. At
a member level these costs are reimbursed in national currency and do not enter the

9
Quote from <www.letslinkuk.net/london/info/issues.htm> [cited 20/02/2006]
10
Quote from <www.letslinkuk.net/london/info/issues.htm> [cited 20/02/2006]

7
LETS accounts (www.letslinkuk.net). But at an organisational level, this problem
highlights the inadequacy of local currencies to complement the central banking
system. LETS administration costs can also be charged in national currency and
continuously updating membership details is costly. Many LETS members do not
want to pay wages with national currency and ‘groups vary widely on the extent to
which they are generous in allocating payments in their own local currency to LETS
organisers’ (LETSlink UK)11. Ironically, LETS schemes come to rely on funding from
supporting local government bodies or other organisations to sustain operation, but
funding can often be irregular and inadequate (Williams 2001).

The friction between local and national currencies can collate in the fragmentation of
LETS, with members dissatisfied by the lack of operational functioning. In a speech
to the WSFII12, Mary Fee outlined hindrances to ensure LETS success included being
poorly resourced with inefficient technology (Fee, WSFII, 2 October 2005). Lack of
funding means many LETS have poor quality software, sometimes leading to LETS
trades to be recorded manually; not only a ‘laborious task’, it is also unsecured, and
misinformation causes agitation amongst members (Bath University). In Britain not
all LETS offer regularly available members lists. Bath University found LETS ex-
members cite a lack of regular and up-to-date information as a main reason for
leaving.

Having confidence in the local currency is vital to the success and possible future
expansion of LETS. Within the present monetary system, a successful LETS needs
either sustained national currency funding to build sufficient and efficient software
and pay small groups of full-time staff or a set of dedicated volunteers in each LETS
initiative. Many smaller regions of British LETS rely solely on volunteering to
maintain function (Jeffs 2002), but this can mean exclusion, since powerful positions
of organisation remain in the hands of those who can ‘afford’ to volunteer, i.e. the
middle class (North 2004). Therefore government funding becomes crucial to aid
equal opportunity.

11
Quote from <www.letslinkuk.net/london/info/issues.htm> [cited 20/02/2006]
12
World Summits on Free Information Infrastructures

8
The Government in Britain is not explicit on how the law should deal with LETS:
‘there is a need for greater clarity by central government over how LETS earnings are
to be treated, especially with regard to registered unemployed people, taxation and
social security benefits.’ (Aldridge et al 2001: ix). The issue of tax is an obvious one.
LETSlink UK say that the trading that takes place within the schemes fall well below
tax thresholds. Legally under Inland Revenue regulations non-profit casual trading is
disregarded. The taxable income comes from an individual’s profession.

‘So a solicitor who likes to mend bicycles on the LETS scheme does not have to
declare that in is tax return, but if he chooses to offer his professional services on
the scheme, according to current legislation, that should be included in his tax
return, and for this reason some professional trades are offered with a proportion
charged in sterling, to cover payments which will be due to the Inland Revenue.’
(LETSlink UK)13

The law is more obscure if someone is unemployed and on benefits. There has been
an ongoing campaign by LETSlink UK to amend the ambiguities on Benefits
legislation to distinguish ‘earnings’ and totally disregard all LETS based trade. This
has happened in New Zealand and the Netherlands, and also by British local
authorities in Liverpool and Sheffield eager to use LETS to tackle poverty issues on
seriously deprived housing estates (Boyle 2002:263). LETS are also being used in
some localities to aid government policies like the Anti Poverty Initiative or Local
Agenda 21(LETSlink UK)14.

Since local authorities in Britain interpret the legislation diversely, it becomes difficult
for individuals who may wish to trade but fear their government benefits may be
reduced from those local authorities who disregard the fact there is no national
currency involved. As a result, a report by the DfEE showed evidence that members
‘had left LETS, or had not joined in the first place, due to worries over the benefit
implications’ (Fitzpatrick 1999). Fitzpatrick identifies ‘the main problems associated
with LETS are not due to the schemes themselves but due to their existing
institutional context’:

13
Quote from <www.letslinkuk.net/london/info/definition.htm> [cited 06/02/2006]
14
LETSlink UK <http://www.letslinkuk.net/members/legal.htm> [cited 15/03/2006]

9
 ‘Labour’s assumption that only a jobs-based society can deliver prosperity and
justice leads to an over-worked and over-stressed population whose main duty is
to serve a flexible labour market and to show employers a degree of loyalty that
employers are increasingly poor at reciprocating. The idea that there may be
alternative ways of contributing to society becomes crowded out.’ (Fitzpatrick
1999)

Fitzpatrick argues that New Labour’s focus on full employment actually disregards
the wider social implications. For example, the impact full employment has on single
parents. With the costs of childcare, the benefits of a monthly wage are soon demoted
as people increasingly struggle to survive - emotionally as well as financially - within
the economy. Aldridge et al investigated LETS to possibly constitute as part of the
‘third sector’ in providing unemployed people with jobs (Aldridge et al 2001:6). They
found that as a tool to achieve full employment ‘LETS are relatively ineffective’
(Aldridge et al 2001: ix). Perhaps this is why the Government does not encourage
local currencies. Nevertheless the research argues for the need for governments to
place emphasis on a ‘work ethic’ rather than ‘employment ethic’ (Aldridge et al 2001:
ix):

‘Participants are using LETS as reciprocal exchange networks to construct

alternative means of livelihood. Policy, therefore, needs to follow suit.
Moreover, by recognising and valuing mutual aid, policy would be taking the
first step to recognising that basic material needs and creative desires may be met
just as well by pursuing ‘full engagement’ rather than full employment.’
(Aldridge et al 2001: ix)

The benefits of LETS do not include increased revenue. In 2001 ‘the total UK LETS
membership can be estimated to be 21,816 and the total turnover equivalent to be £1.4
million’ (Aldridge et al 2001: vi-vii) – perhaps another reason why governments are
not keen to invest and advertise LETS. Local initiatives are non-profit, non-growth
organisations that benefit the locality, and hence further undermine central powers.
National government is being pushed from the multinationals above and pulled from
grassroots localisation below. The major concern is that the everyday people remain
last in the pecking order. It is far easier to suppress the local village than a
multinational corporation. In theory, LETS could well thrive, witnessing localities

10
flourish. But without investment to fund software production to improve operational
organisation and functionality, and to enable flexible ‘intertrading’ between localities
to reduce local trade-stagnation, together with pay for full-time staff costs, LETS
remains a marginal system that cannot fully act as an alternative to the national
economy. However government investment is not always needed to create successful
local currency and in some cases, not even wanted.

In 1991, Paul Glover created HOURS, in his town of Ithaca, New York. Glover bases
the local currency on belief that locals will look after their own interests and in doing
so will look after others (Boyle 2002:73).

‘The script can buy food items, construction work, professional services, health
care, and handicrafts. Each Ithaca Hour is worth ten dollars – the average hourly
wage in Tompkins country – so the five thousand Ithaca Hours (or $50,000) in
circulation have increased local economic transactions by several hundred
thousand dollars annually’ (Swann and Witt 1995, in Boyle 2002:215)

Glover argues that Ithaca HOURS work because money is not sucked up by the state
and into the central reserve; HOURS circulate wealth within the locality, offering
opportunities for wealth creation and fairer distribution at a local level. HOURS do
not create interest or negative losses if unused. Glover outlines that the United States
economy is built on unsustainable debt creation, benefiting only those at the top
whilst the average person is exploited and placed into poverty: ‘The Ithaca HOUR is
backed by real goods and skills, while the US dollar is backed by government waste,
bank failure, and debt’ (Glover 1992, in Boyle 2002: 74). Glover believes the cost
from over-consumption and huge US imports (such as oil) means everyday life for the
average person becomes increasingly expensive.

‘This destruction and dependency signals conversion of the United States into a
Third World nation. There are fewer US jobs per person and fewer hours per job,
paid with weaker dollars. One seventh of us are impoverished, one tenth use
food stamps. The Tompkins County paycheck, for trades workers, has eight per
cent less spending power today than in 1980.’ (Glover 1992 in Boyle 2002:74)

11
Glover makes an interesting point about the decreasing value of the dollar. The
minimum wage has not been raised in the United States – the ‘richest’ country in the
world - since 1997. For nearly a decade, people living on minimum wage have had to
constantly shell out for increasing living costs while their average pay packet has
remained the same, and in some cases even reduced! (Spurlock 2005). Since 1996,
the number of individuals in America now ‘living in poverty has increased by 300,000
to 3.9 million’ (Channel 4 website). Each year US Senator Kennedy addresses the
Senate to ratify a legal amendment to increase minimum wage, yet each year Kennedy
is rejected on the account that an increase in wages would reduce productivity,
stagnating economic growth and development (Spurlock 2005).

‘The national minimum wage has not been raised for nine years. To have the
purchasing power it had in 1968 the minimum wage would have to be $9.05/hour
today, $3.90 more than the current minimum wage of $5.15/hour.’
(UUA News, 2005)

Glover argues that both Democrat and Republican governments legitimise this
inefficient and environmentally destructive system. Local currencies work because
they do not ‘promote false beliefs about our economy’ (Glover 1992 in Boyle 2002:
75). Governments condition the public to believe that to maintain domestic jobs,
corporations must be able to pollute the environment; that to keep the economy
healthy and people in jobs America must manufacture ‘huge quantities of useless
playthings’; that goods must be of poor quality to maintain turnover in profit; that
workers are ‘too dumb to run businesses’; and that ‘GNP measures economic strength’
(Glover 1992 in Boyle 2002: 75-76).

Glover counters each false-belief by explaining that there are many businesses who
produce goods without polluting the environment; that a net export on local
production and purchase ‘is sufficient to keep money moving’; that the attentive
creation of resilient goods would keep more people employed for longer periods; that
‘wherever cooperative shop-floor management has been tried, productivity and profits
have risen’; and lastly that ‘GNP measures contraction of the economy, by depletion
of essential raw materials’ not a nation’s wealth (Glover 1992 in Boyle 2002:76).

12
In 1780 when a bond was issued, it was based on the value of money at that time, and
ordered to be paid back with a rate of interest in accordance with the future economic
climate; and because money was unreliable, the bond was also backed by how much
certain goods like Sheep wool, Sole leather, and beef would later cost (Boyle
2002:178). Boyle explains that this contrasts greatly to the incredible reliance we
have upon money today. The existing monetary system sees national currencies
become ‘fiat’ currencies - currencies based upon the debt of the respective
government and even linked to larger debt-based governments like the US. Boyle
furthers that value attaches to whatever you base money upon, even debt! Though
basing money on debt is oxymoronic, and this clear contradiction only functions
because we, as people, believe it is functional: ‘It isn’t very reliable, as the increasing
number of global currency crises implies’ (Boyle 2002:178).

Boyle argues that money needs to retain its three major functions –‘standard of value,
medium of exchange and store of value’- but the balance of these functions needs to
be altered from how they exist today (Boyle 2002:179). This is the part of the
argument where local currencies make their most appealing platform.

‘The idea [of LETS] is not just to increase the medium of exchange, but to
improve the quality rather than just the quantity of the economy, by creating
sustainable patterns of exchange.’ (Boyle 2002:262)

The E F Schumacher society was set up in 1980 by Bob Swann and Susan Witt,
arguing that currencies should be local, underpinned by a variety of goods and
services ‘from human labour or vegetables to energy’ (Boyle 2002:178).

‘…money should be real enough to be useful and safe for ordinary people to use,
so that it doesn’t disappear from the local economy for speculation, or disappear
from catastrophic loss of belief.’ (Boyle 2002:179)

Swann and Witt use a system called SHARE – Self-Help Association for a Regional
Economy. SHARE functions through a loan system whereby local people buy local
currency from a business using US dollars in order for the business to produce some

13
instant cash, for example, for a shop refurbishment or to keep a farm-business
administering out of season.

Through SHARE, local Deli owner Frank Tortoriello raised $5000 within thirty days
to move his restaurant to a different location after the banks refused him a loan
(Swann and Witt 1995 in Boyle 2002:212). The local people knew Mr Tortoriello and
the success of his deli business, so they were happy to invest in the currency, Deli
Dollars. Tortoriello sold his Deli Dollars at eight dollars each and valued each one at
$10, issuing each with a ‘valid from’ date to reduce the risk of over-demand, and
signing them individually to prevent any forgery.

In Berkshire, the Tawczynski family own one of two farms. They went to SHARE to
discuss ways to pay for the heating of their greenhouses throughout the winter.
SHARE advised they partner up with the other farm owners, the Zeigler’s, whose
farm had suffered fire damage. The two farms issued their own currency, the
Berkshire Farm Preserve Note. ‘The notes read ‘In Farms We Trust’ and were sold for
nine dollars each’ (Swann and Witt 1995 in Boyle 2002:213).

‘The farmers received the income (ranging from $3000 to $5000 per farm per
year) from the sale of the notes, and they found a committed base of customers
who would travel out of their way to buy from their local farms rather than
purchase the jet-lagged vegetables from supermarket chains…. The Berkshire
farm preserve notes, Monterey general store notes, and Kintaro notes that
followed gave Berkshire residents a way to vote for the kind of small
independent businesses that help to make a local economy more self-reliant.’
(Swann and Witt 1995, in Boyle 2002:213)

SHARE then decided to work with banks to create an annual Berk-Share as a ten
percent discount currency and offer low interest loans at around 3 per cent (Boyle
2002:214-215). This is still a concept, though the E F Schumacher society
newsletters explain that the year-round currency remains firmly on the agenda (E F
Schumacher society newsletter, 4 May 2004); however they need to raise
US$100,000 to begin planning the scheme (E F Schumacher society newsletter, 10
September 2005). The reliance on funding to significantly challenge the mainstream

14
monetary system remains a fundamental problem for local currencies. In 1980, the E
F Schumacher society functioned on $2,500, it now needs $280,000; funding that
usually comes from small business and entrepreneurs (E F Schumacher society
newsletter 23 December 2005).

One could suggest that more ludicrous than money being made out of money that is
then based on debt, is money to fund money that won’t make lots more money. Since
debt is still counted as an asset, not having more than 3 per cent interest on loans
means having less money in the economy. Low interest loans may benefit small
business and localities, yet unless they pull in bigger benefits, why should banks and
national governments sufficiently invest?

In Britain, local governments do not have the same powers as states within the US;
however they do have some funding rights and could invest more in local currencies
such as the links used by LETSlink UK. Local governments are able to profit from
the social and cultural benefits LETS bring, benefits far richer than money.

‘Local currencies can play a vital role in the development of stable, diversified
regional economies, giving definition and identity to regions, encouraging face-
to-face transactions between neighbours, and helping to revitalize local cultures.
A local currency is not simply an economic tool; it is also a cultural tool.’ (Swann
and Witt 1995 in Boyle 2002:216)

Ironically though, the cultural aspect to local currency can undermine the LETS
structure altogether as Mary Raddon explores in her research on exchange values and
gender relations. Within a cultural framing, money can take on political functions
(Lambark 2001) and emotions (Gussembuhl-Craig 1982): ‘The values of exchange,
practiced in our everyday paying and earning, are a vital expression of human
interconnectedness and interdependence’ (Raddon 2003: x-xi; Raddon also cites Luke
1995). LETS produce a communitarianism that builds relationships with people that
then form into real friendships. As a LETS member, Raddon explains that the
intimacy of LETS becomes contradictory with ‘the dynamics of our growing
friendships…

15
 ‘The balanced reciprocity and record keeping of LETS exchange seemed
inadequate to express feelings between friends of gratitude and affection…we
had to rethink the local currency as compatible with our norms of friendship and
standards of equality.’ (Raddon 2003:xiii)

Raddon explains that one British LETS called their currency ‘favours’ to counteract
guilty feelings from trade that feels like charging friends for favours. The relationship
between local people and local exchange values becomes complex, as altruism
naturally builds with the relationships between many LETS members.

LETS also flag up issues surrounding notions of gender and work. LETS provides a
space for marketing skills that are stereotypically seen as ‘wifely’ chores such as
‘cooking, cleaning, laundry and ironing’ (Raddon 2003:59). Historically attributed to
females, these skills are often left unpaid (Raddon 2003:45-47). ‘“Woman’s work is
typically associated with “caring”, and its undervaluation is justified by considering it
an extension of women’s “natural” reproductive roles’ (Raddon 2003:57; Raddon cites
Biebly and Baron 1986). Consequentially female LETS members are more likely to
undervalue their labour and where friendships form, often work for free (Raddon
2003:58).

It is easy to think of the monetary system as an impersonal, even mystical entity that
cannot be controlled, yet by looking at how people are creating new spaces for new
kinds of money, alternatives to the market are possible. LETS challenge the existing
system by giving some form of ownership and autonomy back to the people. Local
currencies also provide a useful way of keeping money circulating locally and
prohibit the centralisation of money allowing a fairer level of distribution. Though
currently, the extent to which British (and American) local currencies challenge
national markets is minimal, and the rise of LETS on a global scale will need more
time before significantly challenging to the present global monetary system.
Expansions of local currencies as seen with the Schumacher society are stumped by
issues of funding, with national currency being the main obstacle. Though the lack of
national impact should not deter from the wonderful achievements of local currencies,
and in some places such as with Glover’s HOURS there is little need for government
funding, but simply the belief from the people that it works.

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LETS challenge people to think outside of the rigidity of the existing monetary
system, and question the market’s suitability to human elements of kindness,
reciprocity, and altruism. The unquestioned belief in a system that serves to keep the
majority of people with a scarcity of money is dangerous, therefore the financial-
knowledge-empowerment LETS offer is a positive thing. Although the small
population of LETS members suggests this empowerment remains in the minds of a
few.

Raddon’s study shows that when exchange becomes local, emotions tie in to
complicate and challenge the impersonal that exists within mainstream exchange
values. Values now incorporate multiplicities of meanings and the human
interconnectedness that rapidly produces within a LETS highlights just how far the
existing monetary system has rationialised human behaviour to the employment ethic
into little more than an iron-cage that now has digital television inside it. Still, the
emotional function of money complicates the relationship of trade, and can hinder
localised economic activity. In short, LETS reopens a human element that comes
with trade, the ‘gift’, the ‘discount’, the ‘favour’ – giving our time to someone
because they are friends, in some respects LETS highlight the inadequacy of money
altogether. Though ultimately, there is still much development to be done before
LETS truly complements national currency instead of being subjugated by it.

17
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Also thanks to Sabine et al (letssc@yahoogroups.com) for the email debates on monetary

reform and LETS.

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