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"The LETSystem units are information about an individual's position within a trading community. All accounts begin at zero, but nobody needs to earn before spending, because accounts can have unlimited negative balances. This information is disclosed in the network. If someone goes away leaving a negative balance nothing happens. But people could refuse to trade with that person until he or she has put his/her account into better shape. That is why balance and turnover details are available to all the other people who hold an account in that LETSystem.So LETSystem can be considered an honor system. Most of the other complementary currencies (with the exception of Ithaca HOURS) work in a similar way." | "The LETSystem units are information about an individual's position within a trading community. All accounts begin at zero, but nobody needs to earn before spending, because accounts can have unlimited negative balances. This information is disclosed in the network. If someone goes away leaving a negative balance nothing happens. But people could refuse to trade with that person until he or she has put his/her account into better shape. That is why balance and turnover details are available to all the other people who hold an account in that LETSystem.So LETSystem can be considered an honor system. Most of the other complementary currencies (with the exception of Ithaca HOURS) work in a similar way." | ||
(http://www.kuro5hin.org/story/2003/8/26/172939/637) | (http://www.kuro5hin.org/story/2003/8/26/172939/637) | ||
==Keith Hart: against the isolationist tendency amongst some LETS communities== | |||
Keith Hart: | |||
"There are many problems with making community currencies work. Their principles are simple and general enough, but inserting them into societies made up of existing people and institutions is always complicated. National monopolies of money still have a grip on our minds and behaviour. The organization of money as capital has grown in strength through the last several centuries. Beyond that, the conventional money form has an institutional logic that has been around for thousands of years, ever since agricultural societies invented cities and states. Shifting popular attitudes to money is difficult. A conflict is building up between large corporations who aggressively assert their own private property rights at the expense of those who would defend the cultural commons. Money, long the main source of exclusive private property, should also be seen as a part of the commons to which we all have the right of open access. The movement from national to corporate power in a context of digital revolution thus opens up a space for people to fight back through organizing exchange and money themselves. | |||
The idea of people making their own money when liquidity fails is an old one. There are numerous historical antecedents for community currencies. These include instruments of credit in the pre-industrial states of Africa, Asia and the Islamic world, such as the hawala system; utopian communities in the 19th century; the Social Credit movement in North America during the Great Depression; and European experiments, such as Gesell’s stamp scrip in the same period. The non-western cases reveal institutions of considerable durability, whereas the modern western examples have generally been short-lived. How can today’s community currencies emulate the strengths and avoid the weaknesses of these antecedents? | |||
Any network can constitute itself as a LETS community by nominating a currency and recording all transactions through a central register. The totality of transactions at any time sums to zero, since the circuit is closed. Anyone can get an account which starts at zero — I buy, I sell, giving rise to a negative or positive balance in my account at different times; when I buy, I make a commitment to the network that I am good for the money I have just issued. The loss of individual members with negative balances does not directly affect the ability of the others to trade, as it does when the supply from a single issuer dries up. The currency itself is simply a virtual measure. It has no commodity value, therefore no price (interest), no reason to become scarce nor to be hoarded. Recent developments, especially in the use of information technologies, have made community currencies a fast, cheap and effective means of carrying out normal commerce. Smart cards registering transactions in up to fifteen currencies, linking businesses and non-profit organizations as well as individuals, allow these circuits to become partially integrated into the market economy, opening the way for the banks to handle LETS business (although none has yet done so). | |||
Community currencies vary in the degree of their integration into the national economy. Other sources of variation include: the monetary measure (whether based on the national currency or on hours of work, for example); the degree of reliance on free labour or government grants; digital or material records of payment; involvement of businesses or exchange of services between individuals only; local or virtual association; forms of leadership and participation; and so on. Many LETS associations are reluctant to band together in case their autonomy is compromised. They form boards and committees, are insular and clubby, often only for the poor. Such institutions are usually time-consuming and dogmatic, with a bias against business and for public grants. Their aim appears to be to get away into a separate world of their own, however small. I favour integration into the national and ultimately the world economy. But this is the stuff of schism in the movement. It is fatal for community currencies to think of each circuit as a stand-alone project. In future, many such currencies, reflecting diverse associations and interests, will collaborate and compete for the public’s loyalty. And food-based currencies would have particular advantages in such a context." | |||
(http://www.thememorybank.co.uk/papers/organic-trade/) | |||
Revision as of 01:28, 13 August 2008
Definition
From the main Wikipedia article:
"Local Exchange Trading Systems (LETS) and Schemes are local, non-profit exchange networks in which all kinds of goods and services can be traded without the need for money. A LETS network uses an interest-free local credit or currency so direct swaps do not need to be made. A LETS member may earn local credit by doing childcare or computer work for one person, and spend it later on food, hiring equipment, plumbing, or carpentry with another person on the same network. A LETS is sometimes also referred to as a Mutual Credit system." (http://en.wikipedia.org/wiki/LETS)
Much as P2P-systems, LETS is based on transparency, see the concept of Participation Capture.
Discussion
LETS as an `honor' system
"The LETSystem units are information about an individual's position within a trading community. All accounts begin at zero, but nobody needs to earn before spending, because accounts can have unlimited negative balances. This information is disclosed in the network. If someone goes away leaving a negative balance nothing happens. But people could refuse to trade with that person until he or she has put his/her account into better shape. That is why balance and turnover details are available to all the other people who hold an account in that LETSystem.So LETSystem can be considered an honor system. Most of the other complementary currencies (with the exception of Ithaca HOURS) work in a similar way." (http://www.kuro5hin.org/story/2003/8/26/172939/637)
Keith Hart: against the isolationist tendency amongst some LETS communities
Keith Hart:
"There are many problems with making community currencies work. Their principles are simple and general enough, but inserting them into societies made up of existing people and institutions is always complicated. National monopolies of money still have a grip on our minds and behaviour. The organization of money as capital has grown in strength through the last several centuries. Beyond that, the conventional money form has an institutional logic that has been around for thousands of years, ever since agricultural societies invented cities and states. Shifting popular attitudes to money is difficult. A conflict is building up between large corporations who aggressively assert their own private property rights at the expense of those who would defend the cultural commons. Money, long the main source of exclusive private property, should also be seen as a part of the commons to which we all have the right of open access. The movement from national to corporate power in a context of digital revolution thus opens up a space for people to fight back through organizing exchange and money themselves.
The idea of people making their own money when liquidity fails is an old one. There are numerous historical antecedents for community currencies. These include instruments of credit in the pre-industrial states of Africa, Asia and the Islamic world, such as the hawala system; utopian communities in the 19th century; the Social Credit movement in North America during the Great Depression; and European experiments, such as Gesell’s stamp scrip in the same period. The non-western cases reveal institutions of considerable durability, whereas the modern western examples have generally been short-lived. How can today’s community currencies emulate the strengths and avoid the weaknesses of these antecedents?
Any network can constitute itself as a LETS community by nominating a currency and recording all transactions through a central register. The totality of transactions at any time sums to zero, since the circuit is closed. Anyone can get an account which starts at zero — I buy, I sell, giving rise to a negative or positive balance in my account at different times; when I buy, I make a commitment to the network that I am good for the money I have just issued. The loss of individual members with negative balances does not directly affect the ability of the others to trade, as it does when the supply from a single issuer dries up. The currency itself is simply a virtual measure. It has no commodity value, therefore no price (interest), no reason to become scarce nor to be hoarded. Recent developments, especially in the use of information technologies, have made community currencies a fast, cheap and effective means of carrying out normal commerce. Smart cards registering transactions in up to fifteen currencies, linking businesses and non-profit organizations as well as individuals, allow these circuits to become partially integrated into the market economy, opening the way for the banks to handle LETS business (although none has yet done so).
Community currencies vary in the degree of their integration into the national economy. Other sources of variation include: the monetary measure (whether based on the national currency or on hours of work, for example); the degree of reliance on free labour or government grants; digital or material records of payment; involvement of businesses or exchange of services between individuals only; local or virtual association; forms of leadership and participation; and so on. Many LETS associations are reluctant to band together in case their autonomy is compromised. They form boards and committees, are insular and clubby, often only for the poor. Such institutions are usually time-consuming and dogmatic, with a bias against business and for public grants. Their aim appears to be to get away into a separate world of their own, however small. I favour integration into the national and ultimately the world economy. But this is the stuff of schism in the movement. It is fatal for community currencies to think of each circuit as a stand-alone project. In future, many such currencies, reflecting diverse associations and interests, will collaborate and compete for the public’s loyalty. And food-based currencies would have particular advantages in such a context." (http://www.thememorybank.co.uk/papers/organic-trade/)
Local Exchange Systems vs. non-reciprocal Peer Production
Comment by Michel Bauwens:
"How are the Local Exchange Trading Systems, through which people can trade services and hours of labour, related to peer to peer. Peer production is essentially non-reciprocal: anyone contributes voluntarily and use is open to all. This works fine in spheres of abundance. LETS scheme belong to the gift economy and are a form of exchange. But unlike the market, labour hours are considered equal, and thus the exchange is based on the idea of partnership and sharing. Such peer-informed forms of exchange are ideal for services and probably also for the surviving non-capitalist traditional economies. They will not replace the market however, in the sense that equal labour does not take into account the amount of investment needed to achieve some types of particular labour. Such pricing can take place in a market only."
Key Books to Read
Book: The LETSaholic Twist. By James Taris. 2005
More Information
Websites:
- LETSystems: http://www.gmlets.u-net.com/
- International LETS Groups Directory http://www.lets-linkup.com/
- LETS at transaction.net http://www.transaction.net/money/lets/