Mutual Credit Systems and the Commons Problem: Why Community Currency Systems such as LETS Need Not Collapse Under Opportunistic Behaviour

This paper analyses theoretically how the Mutual Credit System (MCS) is affected by the Commons Problem. The MCS is defined as a pure accounting system of exchange, of which the Local Exchange and Trading System is a real life example. The Commons problem is caused by the incentive of members to issue units without the intention to repay this ‘debt’. This can potentially cause an MCS to collapse. It is found that eight institutional design principles for overcoming the Commons problem can also be applied to the MCS. Moreover, the dynamic interaction of economically motivated members of the MCS is analysed. This yields the conclusion that the MCS can provide a robust and stable alternative to the Central Money Supply System, whilst preserving its important special feature of an endogenous supply of money.

Jorim Schraven Volume 5(2001) 4

IJCCR Vol 5 (2001) 4 Schraven

To cite this article: Schraven, J. (2001) ‘Mutual Credit Systems and the Commons Problem: Why Community Currency Systems such as LETS Need Not Collapse Under Opportunistic Behaviour’ International Journal of Community Currency Research 5 <www.ijccr.net> ISSN  1325-9547 http://dx.doi.org/10.15133/j.ijccr.2001.002

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The Role of the Third Sector in Paving a ‘Third Way’: Some Lessons From Local Exchange and Trading Schemes (LETS) in the United Kingdom

Despite declarations that the third sector is to play a prominent role in paving a Third Way, there remains much confusion about what constitutes this Third Way and the role of the third sector in bringing it about. Evaluating Local Exchange and Trading Schemes (LETS) as a prominent third sector initiative, the aim of this paper is to analyse its effectiveness in fulfilling various roles being assigned to it. This reveals that although many view the role of the third sector in paving a Third Way to lie in its ability to create jobs and improve employability in order to achieve ‘full-employment’, these initiatives are most effective at facilitating community self-help and thus means of livelihood beyond employment. We thus conclude that for the third sector to be used effectively and the Third Way to become a distinct and radical departure from the past, there will need to be a shift from both an ’employment-ethic’ to a ‘work ethic’ and a ‘full-employment’ to a ‘full-engagement’ vision.

Colin C Williams, Theresa Aldridge, Roger Lee, Andrew Leyshon, Nigel Thrift and Jane Tooke Volume 5(2001) 3

IJCCR Vol 5 (2001) 3 Williams et al

To cite this article: Williams, C.; Aldridge, T.; Lee, R.; Leyshon, A.; Thrift, N.; Tooke, J. (2001) ‘The Role of the Third Sector in Paving a ‘Third Way’: Some Lessons From Local Exchange and Trading Schemes (LETS) in the United Kingdom’ International Journal of Community Currency Research 5 <www.ijccr.net> ISSN  1325-9547 http://dx.doi.org/10.15133/j.ijccr.2001.003

On LETS and Time Dollars

A comparative analysis of LETS and Time Dollars seeks to identify their distinctive strengths and shortcomings, makes a plea for collaboration. The piece argues that most of the differences stem from their purpose: LETS is seeking to create an alternative economy to market; Time Dollars are seeking to rebuild what is termed the Core Economy, rooted in family, extended family, neighbors and civil society. While both seek to build community and counter the external costs of the global economy, LETS seeks to do so by returning the world of commerce to a local basis, while Time Dollars expressly seeks to do so by rebuilding the Core Economy, purged of the elements of subordination, discrimination and exploitation that characterized the functioning of that economy in the past. Both have important contributions to make and the challenge is to make sure that future relationships are in cooperation rather than competition.

Edgar Cahn Volume 5(2001) 2

IJCCR Vol 5 (2001) 2 Cahn

To cite this article: Cahn, E. (2001) ‘On LETS and Time Dollars’ International Journal of Community Currency Research 5 <www.ijccr.net> ISSN  1325-9547 http://dx.doi.org/10.15133/j.ijccr.2001.004

LETS and Benefit Claiming in the UK: Results of a Pilot Project

One of the most contentious aspects of the debate about Local Exchange and Trading Systems (LETS) concerns the benefit system. Whereas other nations have amended the rules of their social security systems in order to facilitate participation in LETS, this has not been the case in the UK. This article is based upon a short, pilot project conducted at the turn of the millennium. It involved a series of interviews with LETS members and with national politicians who had publicly expressed an interest in LETS because of the benefit implications, whether real or perceived. We found evidence of claimants either not joining LETS or, of those who did join or became claimants whilst belonging to a LETS, keeping their LETS-related activities at a modest level. LETS members are clear that the benefit system must change to accommodate their needs and interests.

Tony Fitzpatrick Volume 4(2000) 6

IJCCR Vol 4 (2000) 6 Fitzpatrick

To cite this article: Fitzpatrick, T. (2000) ‘LETS and Benefit Claiming in the UK: Results of a Pilot Project’ International Journal of Community Currency Research 4 <www.ijccr.net> ISSN  1325-9547 http://dx.doi.org/10.15133/j.ijccr.2000.002

The Economics of Local Exchange and Trading Systems: a Theoretical Perspective

This paper sets out to describe and analyse Local Exchange and Trading Systems (LETS) in economic terms. A LETS performs three main functions: the provision of transaction management services, credit, and market matching. LETS is an alternative form of money. A LETS is in (economic) theory attractive because: it provides cheap and flexible credit; allows the marketing of labour time in small disperse quantities without the need for an employer or capital; and, because its money function is locally contained, it can potentially alleviate some of the welfare implications of external shocks and structural interregional trade-imbalances. This feature operates through reviving local exchange of non-tradables by providing a medium of exchange. Unfortunately, current research does not provide a good basis for testing the validity of these potential functions of LETS because LETS is a heterotopia, of which the membership is neither representative of the population, nor primarily economically motivated.

Jorim Schraven Volume 4(2000) 5

IJCCR Vol 4 (2000) 5 Schraven

Community-based LETSystems in Australia: Localised Barter in a Sophisticated Western Economy

Modern domestic barter systems are operating in Australia and other high income countries at the local community level, and at the national level for business exchanges. These exchange regimes appear to have become institutionalised in a macro-marketing system that is organised on the primacy of market exchange based on price as the co-ordinating device. This points to widespread imperfections in various markets at the local level, and in particular, in markets for credit and labour. In this paper, the nature of Australian community-based LETSystems is discussed and some results from a national survey in Australia of LETS members are presented. The interface between LETSystems, the federal taxation system and the social security system in Australia is introduced.

Peter W. Liesch and Dawn Birch Volume 4(2000) 2

IJCCR Vol 4 (2000) 2 Liesch and Birch

To cite this article: Liesch, P.W.; Birch, D. (2000) ‘Community-based LETSystems in Australia: Localised Barter in a Sophisticated Western Economy’ International Journal of Community Currency Research 4 <www.ijccr.net> ISSN  1325-9547 http://dx.doi.org/10.15133/j.ijccr.2000.005

Why Do People Join Local Exchange Trading Systems?

The literature dealing with LETS has regarded them primarily as economic associations and, in so doing, may have overlooked other features of LETS that are equally important. This paper aims to rectify some of that neglect by focusing upon the motivational values of LETS members. Whilst it has been recognised that a significant proportion of their membership can be identified as ‘Green’, the radical consequences of this membership has been neither fully recognised nor explored. This paper offers a taxonomy that enables us to locate and classify members’ motivations and does so with particular reference to Green ideals. It argues that to dismiss LETS as simply an expression of an alternative lifestyle may ignore the fact that a significant proportion of members are aware of, and wish to promote, the radical Green potential of these schemes. Given the current lack of practical Green alternatives within social policy this potential should not go unrecognised and the paper is presented as an attempt to open up areas for further debate.

Caron Caldwell Volume 4(2000) 1

IJCCR Vol 4 (2000) 1 Caldwell

To cite this article: Caldwell, C. (2000) ‘Why Do People Join Local Exchange Trading Systems?’ International Journal of Community Currency Research 4 <www.ijccr.net> ISSN  1325-9547 http://dx.doi.org/10.15133/j.ijccr.2000.006