Barter
Barter is the most ancient form of economic exchange whereby people simply swap goods and services and it is perhaps the most obvious alternative to money. Indeed, it requires no special organisation or infrastructure, which is an advantage not only for primitive and developing economies but also during various crises. However, barter shows significant drawbacks which slow up considerably the entire
economic activity.
Commercial -barter- networks
Despite high costs, commercial -barter- networks dealing exclusively with businesses have experienced a steady growth in the USA, Canada, Europe and Australia. In 1991, the International Reciprocal Trade Association (5) reported $ 5.9 billion trading among 240,000 clients in 450 systems. The increase to $ 10 billion in 1993 proves that economic recession is not a fatality. Countertrade is commonly used by Eastern and developing countries. Such a system requires the Western trader to import in return some goods and services of the buyer's country, thus reducing its need for hard currencies. Even if Western companies prefer traditional trading, they consider countertrade to be better than not trading at all.
Local currencies
Local currencies have existed for millenaries and are favoured by communities faced with external disturbances such as wars. They do not display the drawbacks of barter and Michael Linton considers them to be an interesting way of complementing conventional money. LETS are a particular type of local currency.
Community
A community is a finite group of people who regard themselves as such and ideally help and support each other with a sense of confidence. Any person can belong to several communities: with neighbours, with colleagues, with fellow students, within a leisure activity group, etc., some of them being smaller or more localised geographically than others. LETS are communities of members trading goods and skills among themselves and can be set up in any existing community. They aim to serve their members as well as their entire communities. The LETS directory does not only enable users to propose their skills and goods and to contact each other, they are also a visible mark of the community.
Personal money
LETS members trade by means of a local currency each member can issue according to his or her needs and without limit, hence the expression personal money. All accounts start at zero and a negative balance is merely the acknowledgement of a commitment to pay back to the community in the way and at the time most convenient for the account holder. LETS are closed systems and their overall balance remains at zero, which means that they are self-sufficient and no real money is created. In
fact the money on positive accounts is created by the users who have a negative balance. For this reason, it is perfectly acceptable, and indeed necessary for the schemes to work, that a part of the members are in commitment at any time.
Cost of service
LETS are non-profit schemes with a strong ethical basis and no intention of profit. The idea of cost of service excludes commissions and profit-taking for everyone. However, the quality of service has to be professional if LETS are to discourage companies with better organisation skills from taking advantage of the concept in order to transform it into a commercial one . The best way of insuring a professional approach in the long term is to reward the members involved in administration and operation of LETS at a reasonable rate with local currency.
Consent
LETS are based on consent in many respects. Each member must be aware of it and adhere to this ethos before joining such a scheme. Becoming a member implies consent to make commitments to the community, i.e. to trade within the community and to keep to one's promise to -repay- when having a negative balance. Consent also leads to the flat start of all accounts and is needed for each transaction, i.e. there is never any obligation to trade with any user. Finally, the consent of the account holder is required before debiting money from his or her account.
Disclosure
Users' confidence in the system and in each other is of paramount importance for LETS to operate efficiently (9) . This is achieved by the disclosure of information concerning the other members. Each user has the ability to ask for the balance and total amount of trade of any other account. This discourages abuses and shows everyone's level of participation.
Equivalence
LETS currencies are equivalent to national currencies. This practical feature ensures easier access to the system. Users can immediately trade without having to learn a different system and to start by converting into sterling as when travelling abroad. Moreover, businesses would be inclined to stay away from LETS because of considerable accounting and tax problems if there was no equivalence.
No interest
-LETSystems money exists solely to allow exchange. It arises from people's promises to one another and there can be no profit in storing it up or treating it as a commodity. Interest is an idea which is alien to the way the system works. The principle of no interest applies to positive balances as well as negative ones.- (10)
Role of Landsman Community Services
Landsman want networks to spread easily and quickly. They therefore encourage people to circulate information broadly. The first page of the LETSystem Design Manual contains this unusual statement:
System administration.
Minimum running costs and maximum efficiency have been achieved by LETS which exhibit the following pattern (14) .A Recording Co-ordinator or Registry is responsible for account-keeping, i.e. he takes care of the smooth running of the accounting work which can actually be carried out by other members and paid for in local currency. His task consists in controlling the entries, disclosing accounting information to members who ask for it, ensuring that the administration account remains at zero, levying charges and dealing with the Steward's requests.
A Steward (sometimes called a Trustee) is answerable for the integrity of the system. He or she is generally a volunteer and should intervene as little as possible. The Steward's roles are to set charges in counsultation with the other administrators, to -police [...] the system- (for instance by suspending an account in case of anti-social behaviour in order to defend the interests of the other members), to take part with the Advisory Group in the solving of complaints about stewardship and finally to stay in contact with other groups and to monitor development.
An Advisory Group is formed by LETS members otherwise not dealing with administration tasks. They are volunteers and act as observers of the system and advisors to the Steward and the Recording Ro-ordinator. The group has an important communication role in that it has to listen carefully to users' feedback in order to inform the other members of the network's administration.
Directory
The directory -sometimes called noticeboard- should be prepared by a group which remains independent from the administration. Costs should be recovered by a part of the fees levied by the Registry.
EthicaLETS
EthicaLETS are systems with an -ethical value added-. Each member is committed to one or more particular criteria such as pay equity. the principle of time dollar systems. In this case, a standard hour rate is fixed for all the account holders. EthicaLETS can also chose a focus by including or excluding some activities or behaviour, such as cruelty towards animals. Such schemes can operate as a part of multiLETS.
LETSupport
The principle of a LETSupport is to operate as a conventional LETS but to allocate a small percentage of all its transactions to a particular cause. They can be used for a large variety of causes like community schools, local clubs, etc. LETSupport can be part of a multiLETS.
It is possible to reach a finer focus by setting several characteristics in order to tailor a LETS. It is perfectly possible to decide to reinforce the impact of an ethicaLETs by adding to it a LETSupport approach. This would be the case of a child-care system with both an equal hourly rate and a tithe for a charity looking after children.
LETShare
LETShare are designed to keep records within a group of the participation of each member in time or money, either simply to ensure a fair share of work or to allocate rewards when available. This makes it possible to identify differences which would otherwise not be taken into account. LETShare can be used within charities in order to keep track of voluntary work. Such a record may prevent unfair loads of work which over time can discourage volunteers. They can also be used for the development of projects which will eventually be profitable but require a considerable input at the beginning that cannot be paid for immediately. Community and business projects can be envisaged through a LETShare. This is the
pattern Landsman Community Services recommends for LETs regional development programmes.
CapitaLETS
CapitaLETS are a form of community -sweat equity- (15) where some people effectively contribute to a project by making promises to provide their services for free in the future without ever actually working on the project. These promises are used to pay the people who carry it out. CapitaLETS can be used either to ensure the contribution of a large number of people without direct reward or to attribute ownership.MultiLETSLETS members may wish to establish several focused LETS meeting their various specific needs within an existing scheme, hence the term MultiLETS. The process is relatively easy. The initial LETS remains neutral and is called local registry (16) . Its money becomes the primary currency and all account holders still register to it. They can then choose to affiliate to or set up one or more special systems with their own characteristics (unit of exchange, organisation, terms of trade, ethos, etc.). The local registry offers operational support as well as registration and account holding facilities to all the new systems. It also issues the different statements. EthicaLETS or LETSupport schemes can easily fit in MultiLETS.
Landsman Community Services are convinced that registries are bound to happen. This is why they have issued recommendations reflecting their recent work. Registries should be self-financing and restrict their activities to operational support, i.e. registration of individuals, organisation and supervision of account recording facilities and finally maintaining of the authenticity and integrity of registry activities. Registries should not deal with promotion or community information like listings, newsletters, directories, etc.
Aims and principles
Landsman Community Services consider that the viability of LETS has already been demonstrated. Their ethical approach is of paramount importance to the designers who want to pre-empt commercial competition. The next step is to co-ordinate development in order to further improve the concept and for the environment's sake to increase the number of systems significantly over a short period of time. Four principles have been defined for an efficient development strategy (17).- a co-ordinated approach of the people contributing to LETS development in order to ensure a comprehensive view in different countries;- a world-wide scale with regional development groups of registries sharing work and rewards;- separate financing of development strategy and systems administration in order to be able to keep to the cost of service principle;- development funding from businesses through what Landsman call Contribution to Community.
Contribution to Community
Development work involves considerable costs in the early stages before reaching an equilibrium and becoming beneficial to many people. This is accepted in marketing where a company wishing to launch a new product is prepared to invest a lot of money in development and advertising without expecting it to reach its break-even point immediately. Landsman's strategy resides in the assumptions that MultiLETS will spread virtually everywhere and that -every business worth considering will be using local money [in] several systems-. This means many schemes offering cheap services, hence difficulties putting the cost of service principle into practice. It would be a strong deterrent to ask the first few businesses joining to pay high fees. It would also be difficult for a new LETS to ask higher fees than those already operating for a long time. In order to solve this problem and to highlight the social ethos of the systems, an original approach called Contribution to Community has been developed.
Basically, businesses joining a scheme will be asked to show their intention to be committed to the community by making a donation. The proposed rate is 50 sterling and 50 local currency units. The major part of this contribution to community would be donated to a local charity, a community project or a loan fund according to the donor's wishes. The remaining small proportion of the money would consist of a fund-raising fee allocated to LETS development, thus making it possible to recover investments according to the cost of service principle.
Regional development groups
Regional development groups are formed to speed up the adoption of LETS in their regions. Landsman have made projections for LETS regional development budget according to various figures (18) . As I have outlined, an important input is needed at early stages when no money is coming in. As LETS development does not rely on volunteers, funding should be external. For this reason, regional groups are advised to incorporate (this is possible through an existing incorporation) in order to be able to borrow money. Some local social investors may also be willing to provide guarantees for an overdraft against a risk-related compensation. Material investment should be kept to a minimum through the leasing of hardware and premises or through local support, but not in the form of a grant. Thus the viability of the system can be demonstrated. A LETShare should be used to record the input of each participant and allocate rewards when money eventually comes in.
Letslink UK
The network fulfils five important roles. It promotes LETS nationally in the media, thus completing local initiatives with easier access in major newspapers, magazines as well as television and radio programmes. It also acts as a contact address for enquiries (24) which can then be redirected towards local systems or - LETS experts- in a precise field if necessary. It publishes a quarterly magazine called Lets-Link. It provides starters and existing schemes with support in the form of start-up material, computer software, information on specific issues like taxation or data protection and assistance when needed. Finally, it acts as a co-ordinator for all national networks throughout Europe and the Third World.