The LETSystem Design Manual

1.2 Currency and Values


Money is the nothing we take for something before we can get anything.

Is money really real?

To paraphrase Frederick Soddy, you have something that's real, you exchange it for money that isn't , so you can get something else that is.

It helps to see how money can be used simply as a measure of value. People have value, things have value, but to say that money in itself has value is to confuse the issue.

We can use inches to measure height and kilos to measure apples. But do inches have height? Or do the kilos themselves have weight? It's the apples that have the weight., not the kilos

Conventional money, on the other hand, confuses valuations. Because conventional money is scarce, it has more than just a trading value, it also has a commodity value. Effectively, it is considered and treated as real.

Notice how people are anxious to get as much as they can and spend as little as possible. They may value something highly, but they still want to spend as little as possible to get it. Everybody else thinks this way, and anyone who doesn't play the same game loses out.

You may feel guilty about getting trapped in this yourself, but what can you do? Personal valuations tend to follow the general "market" rates simply because, like everyone else, you can't afford to throw the stuff around.

That problem arises from the scarcity of the currency, not from anything to do with the unit of measure. With local money, whatever the unit of measure, you have the room to work at different rates. You can create and spend more freely, as it's coming back anyway. And also, the person you want to hire is equally able to issue his/her own money and is thus not going to put up with being exploited. There is a built in balance between the giver and the receiver, the seller and the buyer.

The determining factors are the sufficiency of the local money, and the patterns of trading that it creates. Rescaling, delinking or "floating" the unit of measure makes no difference beyond adding to the confusion.

Choosing the measure

A currency unit, to be useful, needs to represent a commonly agreed unit of measure. That measure can be arbitrary. Ten inches of spaghetti is as good as 24.4 centimeters of spaghetti., or 0.244 meters and so on. Once you get clear about the units, you can get on with spaghetti. That's what local money allows us to do.

The Bank of England doesn't determine the value you put on your time. You do that. Just as you ascribe the value you put on the time and skill of others. A bottle of coke is worth nothing to someone who hates the stuff. Would you pay 20,000 for a car? What is the value to you of your donations to charity?

Choosing the pound sterling as a unit of measure for our local unit, still allows us to adopt our own methods of valuing others, methods which are independent of the conventional "market". And we have the advantage of a commonly understood measure.

Floating free from the pound sterling will do nothing to redress values within the community. It will certainly do nothing to deter the actions of the tax office. But it does effectively prevent many traders, particularly businesses, from participating in your system.

This is our experience. In systems where the local unit has the same measure as the national one (the pound , the dollar etc) we have seen valuations moving naturally to accommodate the wishes of the community. As Philip Revell of Autur Dyfi Economi Gwynnedd (ADEG) has reported:

People have values, currency measures do not. Local currency, unlike conventional money, is not a scarce commodity for which we have to compete. LETS therefore encourages much more co- operative modes of behaviour.

This is reflected in our experiences with ADEG. The "market rates" for skills traded within the system are often quite different from those prevailing generally, with lower differentials between skills.

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Landsman Community Services Ltd Paper No. 1.2 Version No 1.3 17 August 94
Written by Michael Linton of Landsman Community Services Ltd. and Angus Soutar of Robert Soutar Ltd.
Compiled 10-01-95 by Andy Blunt and Adrian Steele of LETSgo Manchester