Local Exchange Trading Schemes LETS

The most common type of complementary currency in the UK is LETS, Local Exchange Trading Schemes. This was developed in Canada, and introduced to the UK at The Other Economic Summit in 1985, out of which grew the New Economics Foundation. The first UK LETS was established in Norwich in 1986. A LETS operates a virtual currency to enable members to exchange goods and services without using cash, using local credits instead. LETS emerged in Canada as a response to the negative impacts of globalisation and economic restructuring, bringing unemployment and social fragmentation. This type of local money system was specifically designed to address the first two failings in mainstream money outlined above: namely that an abundant medium of exchange is required for a community to trade amongst itself, which circulates locally and cannot leave the area. LETS also seek to build community and create 'convivial' economies, embedded in local social relations. They aim to enable people to help themselves through work and exchange, without suffering externally-imposed limitations such as that of the systematic withdrawal of money (Lang, 1994; Croall, 1997).

Members of a LETS list their 'wants' and 'offers' in a local directory then contact each other and arrange their trades, recording credits and debits with the system accountant. The currencies often have locally-relevant, idiosyncratic names such as 'shells' in Kings Lynn, or 'bricks' in Brixton, and aim to instil a sense of local identity. No interest is charged or paid, so there is no incentive to hoard credits, and exchange becomes the primary objective. Most LETS are small, voluntary organisations run by local activists, but they have increasingly been championed (and sometimes funded) by local authorities under the aegis of Local Agenda 21 as a tool for local economic renewal, community-building and environmental sustain-

ability. LETS has grown to about 300 schemes in operation at present, with an estimated 22,000 people involved and an annual turnover equivalent of £1.4 million (Williams et al., 2001).

Figure 7.1 Nick's bicycle repairs on LETS encourage sustainable transport

The localisation impacts of LETS are evident in its design: this local money system was designed as a response to global restructuring, specifically to provide an abundant medium of exchange for a community to trade amongst itself, which circulates locally and cannot leave the area - so boosting the local multiplier (Douthwaite, 1996). Research has shown that LETS deliver small, but significant, economic benefits to members, providing new opportunities for informal employment and gaining skills, and enabling localised economic activity to take place that would not otherwise have occurred, and prompting some import-substitution (Williams et al., 2001; Seyfang, 2001c). Some LETS have evolved to issue local currency notes, enabling the currency to spread further in the area - even through local businesses in some areas. There is some evidence that LETS can help people to reduce their environmental footprint. They promote local suppliers of food and other goods, reducing 'food miles' and the hidden costs of international transport associated with the conventional economy; they promote shared resources among members of a community, and so cut individual consumption, for example lift-sharing, hiring equipment and facilities; and they encourage recycling of goods, as members find a market for their unwanted items (Seyfang, 2001a). In these ways, LETS can be seen as a tool for building more self-reliant, socially-embedded local economies; indeed LETS has been championed as a tool for building green economies (Douthwaite, 1996).

The social and community-building impacts of LETS are very significant, as are intended to build community and create 'convivial' economies, embedded in local social relations. Where local notes are issued, they often affirm 'in each other we trust', 'in community we trust' (rather than 'in god we trust' as seen on US dollar notes). Research has found that they build social networks, generate friendships and boost personal confidence, in addition to being socially inclusive: they offer interest-free credit to financially excluded groups (Williams et al., 2001; Seyfang, 2001c). Despite this strong community-building ethos, LETS is an individualistic tool, and does not presently appear to have any potential to influence collective or institutional consumption. Finally, LETS is constituted as a complementary money system, and attempts to redefine the institutions of exchange in the following ways: some LETS operate on a principle of increased wage equality (though this is not a requirement); the medium of exchange is abundant rather than scarce; and the money is locally bounded (North, 2006; Lee et al., 2004).

However, despite this potential, LETS have remained small and marginal in economic terms, due to a number of internal and external factors limiting their growth: there are large 'skills gaps' which mean it is difficult to access staple goods and services through LETS; they tend to operate in 'green niches', attracting people who agree with the principle but have little time to participate, and indirectly excluding others; and government regulations deter benefit-recipients from participating by counting LETS earnings as equivalent to cash income and so potentially threatening means-tested benefits when levels exceed a given limit (Seyfang, 2001a, c; Williams et al., 2001).

Getting Started With Solar

Getting Started With Solar

Do we really want the one thing that gives us its resources unconditionally to suffer even more than it is suffering now? Nature, is a part of our being from the earliest human days. We respect Nature and it gives us its bounty, but in the recent past greedy money hungry corporations have made us all so destructive, so wasteful.

Get My Free Ebook

Post a comment