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LETS: The Economic System of Giving

The Problem of Money

As Sholom Aleichem, Jewish fiction writer and humourist, once wrote: "Money is round and rolls away." The conventional dollar economy is in many ways a creation of the Industrial Revolution, and has never been properly re-interpreted in the light of the changing world-view of the Information Revolution. The flaws in the current economy are becoming more and more obvious.

Money was invented to get around the biggest flaw of barter, the previous method of trade, which was that you couldn't always find someone who wanted what you had to offer in exchange for what you wanted from them. Money has solved that problem, but it has introduced new ones, principal among which is that it has become a limited resource in its own right. In a monetary economy, you no longer have to worry about having something worth trading; everyone takes cash. But if you don't have any money, no-one will trade with you.

Thus we have the problems of social welfare (redistributing wealth so that poor people have some money to keep themselves alive), easy credit, fast-money entrepreneurs, credit squeezes, interest rates, inflation, and all the other problems that stem directly from the idea that money is a limited resource and we can charge more money for the use of it. We even have games like forex trading where people play with numbers for a while and then agree who has "made" money and who has "lost" it.

The Problem of Work

A related problem of modern industrialised societies is the definition of work, a subject which has often been addressed in the last decade or so (see Sleepers Wake by Barry Jones, for example) but to little avail. Work is currently defined as what one does to make money, and thus many things are considered work which are negative and destructive to the environment, society or the human soul. Conversely, many useful, positive and constructive things that people do are not classed as work because they do not earn money.

A long-standing problem is that much of the labour that women do has traditionally been unpaid (housework, for example) and thus does not fall into the current definition of "work" and is not measured in the present economic system. This is sexist and unfair, but has proven highly resistant to change.

Finally, as discussed in Sleepers Wake and elsewhere, the increasing mechanisation of industry is decreasing the amount of "work" available and making it harder for people to earn the money they need to live. But preventing mechanisation is no solution when doing so retains less efficient production methods and the most repetitive and soul-deadening jobs. The solution is to redefine work and it is my contention that in order to do that it may also prove necessary to redefine money.

LETS - The Additional Economy: Theory

LETS provides a means by which people can continue trading, can continue working, without having to wait for the social lubricant of money. Everyone creates their own currency. They can continue trading as long as their word is good, thus allowing the local economy to keep moving even when hardly any cash is available.

The general idea is that any person's interaction with society includes both production and consumption. Both of these roles are essential to the economic functioning of society; there must be people who consume more than they produce, or there would be no customers for those who produce more than they consume. It is no social stigma to be a net consumer; indeed, it is expected of a fairly large portion of society (the young and the old, as well as students and the sick).

In a LETSystem, every member of the community agrees to offer goods and skills of their choice to the community in return for an agreement from the rest of the community to do the same for them. A few people perform the administrative functions of recording transactions, issuing statements and publishing a newsletter and a trade directory listing all the goods and skills on offer (and desired) within the community.

LETS in Practice: A Step-by-Step Example

You are a new member of a local LETS group and you decide to buy a bag of apples from another member using LETS units. You negotiate a price with them (for example, ten units) and sign a notification slip to the LETS administration to authorise them to record the transaction. The recipient then drops the slip into the nearest LETS drop-box (or mails it to the administration).

Now you are ten units in commitment to the community, and the other member has ten more units commitment from the community. You agree to assist other members of the community to the best of your ability to the value of ten units at some time in the future, and the community as a whole agrees to assist the other member to the same value.

Later you will receive your statement which will list every transaction you have made since the last statement, just like a bank statement. If your records disagree with the statement you will be able to cross-check with the administration and the other party to the transaction.

Common Worries and Their Answers

The Successes: Landsman, Maleny

LETS has been in existence for over ten years now and already the system is being used internationally. One single mother in the original Canadian LETSystem wrote to tell her story. She had been able to get all sorts of work done around the house during the recession there in return for cooking home-made frozen lasagna for the local community. The LETSystem enabled her to get many things done that she could otherwise never have afforded. It also allowed her to contribute her skills and feel a valued member of the community.

Such luminaries as Bill Mollison support it as a working example of a "permaculture economy". There are dozens of active LETS groups in Australia, the most notable being Maleny in Queensland, where they have also opened a community credit union in conjunction with the LETSystem.

How You Can Get Involved

(updated 14 October 2004)

LETSystems - the Home Page

LETS in Australia


Copyright © April 1992 Andrew Pam <xanni@glasswings.com.au>.