The Economics Page

by Sarah Ryle

Picture#1: "Bank of Exchange Note: Caricature of smiling plumber
receiving freshly baked pie from granny for fixing faucet:
Caption: "We promise to exchange goods or services to the value
of one Bobbin"
Picture#2: "Corner Shop... cornerstone of successful LETS"
Picture#3: "Disabled access... LETS work for everyone"
Picture#4: "Drumchapel, Glasgow... LETS regenerate"
Picture#5: "Old Lady (Bank of England)... LETS work with main

Graph#1: "The rise of the jobless household: % of households
without work" Source: Centre for Economic Performance (LFS)
Graph#2: "Credit card transactions: Number of transactions,
millions" Source: British Bankers' Association

"ELECTION BATTLEGROUND / Local currencies gain ground in era of

     All sensible people with homes, jobs or pubs to go to have
spent recent days warmly ensconced and not at the sales. But
sense diminishes as cash flow or confidence in credit rises - or
so it would appear from the retailers' and banks' gleeful reports
of shoppers carrying all before them.
     Sooner or later, the authorities will decide that the fun
has to be paid for. Devotion to low inflation will trigger a rise
in interest rates, with economists and the markets betting on
this month, next month, 25 basis points now or 50-plus later.
Mortgages will become more expensive.
     Consumers are presented with a non-choice: spend now and pay
later, or save any disposable income. Either way, they have to go
without at some point. The individual's free will in an economic
context is at best irrelevant.
     Changes in economy-driving factors like communications,
labour relations and financial-sector reforms have chipped away
at the role of the ordinary person. Globalisation means that for
many workers, bosses are thousands of miles away. Electricity and
water services line the pockets of American firms.
     Talk of electronic money baffles many. In the UK, the
increasing number of jobless households means the concept of a
bank account and cheque book, let alone a credit card, is an
alien one.
     To top it all, there is Europe and the single currency which
a large chunk of the public dismisses as too complicated to think
about. Fear of losing control to Euro-bankers or to American
companies is pointless. Control of the economy is arguably more
in the gift of the international money markets than the elected
government, and what is the difference between American firms and
home-grown fat cat bosses?
     Yet people are fearful. Some of this trepidation has taken
human form in the New Moral Army.
     A more useful manifestation of the individual's desire to
regain control, the wish to count for something in this world, is
the explosion of locally run economic systems.
     The number of Local Exchange Trading Systems (LETS) in the
UK is estimated to exceed 300, with many starting up over the
past two years. Small groups with big goals club together to
trade local skills and products ranging from legal advice to
baby-sitting to organic potatoes. Local currencies are developed
to tally the transactions.
     The aim is to regenerate local economies and communities
suffering the ravages of unemployment and income inequality.
Studies have argued that LETS are a godsend for people with no or
low income, and show they have mushroomed during past
     So far, the jibe has been that they appeal only to people
who fit the Hampstead Liberal tradition rather than descendants
of the Jarrow marchers. But schemes have taken root on some of
Britain's most deprived estates. The fact that LETS have become
so much more common since the recession also shows they are a
direct response to unemployment and lower conventional spending
power. Given that the last recession notoriously hit white-collar
workers harder than blue-collar ones, it is not surprising if the
middle classes have been the engine behind the LETS revolution.
     There have been minor slashes with the authorities in the
shape of the Inland Revenue and the Department of Social
Security whose local offices have been known to suspend benefits
for members of LETS. Officials now reckon one unit of local
currency is equivalent to one pound but judge scheme members on a
case-by-case basis.
     There are cases of local money systems in America and
Austria becoming so successful that the central banks felt the
need to crush them (Murray and Collins).
     Schemes in America, Canada, Australia have begun to mirror
the mainstream economy with central computes monitoring
transactions. The LETS in Nova Scotia has even experienced
inflation participants began to demand a bigger percentage of
each transaction in dollars as Maritime Hours became too common.
     In this country, by charming coincidence, there are two
significant monetary meetings due to take place on Jan 15. As
Chancellor Kenneth Clarke meets the Governor of the Bank of
England to debate the macroeconomy and wangle over base rates,
the Manchester LETS will be examining the future of the Bobbin.
     Manchester LETS is one of the biggest in the UK, with 700
members who span age and class distinctions. All transactions are
worth six Bobbins an hour. Although this raises questions about
the Bobbin's similarity to traditional money, which yields
information on supply and demand, the members appear to value
this minimum and maximum wage.
     It is set to become the first LETS in the country to start a
credit union, linking the Bobbin to sterling and - according to
one of the scheme's founders, Siobhan Harpur - increasing its
durability in a post-recession economy. The credit union will
offer loans to help establish micro-businesses which will pay
interest in Bobbins. The administrators, too, will be paid in the
LETS currency.
     There are 11 LETS in Suffolk which are also discussing a
credit union - membership of a LETS fulfills the legal
requirement that all participants of credit unions must have
something in common. But according to the LETS coordinator, Sally
Moxon, it will be run along conventional sterling lines rather
than using their currency, the Talent.
     The aim is to stimulate business and offer personal loans to
low- or no-income households who would otherwise visit
     LETS aim to help the growing number of households without
access to sufficient conventional money, but also to embrace
other people who are on the margins of the mainstream economy.
These include mentally ill and physically disabled people. The
social aspect of LETS is almost as important as their use as a
tool of the economic regeneration.
     Enthusiasts have a long way to go if they want to convince a
family living in poverty that earning LETS currency is worthwhile
when it cannot be used to feed a gas or electricity meter.
     But the bigger they become, the more relevant they will be.
The Manchester and Suffolk schemes are investigating the
potential to link LETS to local authority taxation.
     This has been done in other countries and the security it
provides has attracted a wider range of business ventures into
the the schemes, anchoring LETS as crucial to the local economy.
Councils could extend already-established municipal cards which
give discounted use of facilities and other bonuses.
     Ultimately, it may be the fact that LETS are small, and
manageable, that sustains them. When all the power in the world
is being distilled into the hands of fewer and fewer players, the
human need to assert individuality and local identity is stronger
than ever.

     * "LETS on low-income, New Economics Foundation, and Local
Money and Community Economic Development, Robin Murray and Keith

by Charlotte Denny

     In Brixton there is a butler available for hire (has own
uniform, can do silver service) who takes payment in the local
currency, the Brixton Brick.
     Silver service might not appeal much to the 20 percent of
the area's inhabitants who are unemployed. But for Ann Parnell
McGarry, who is disabled, the services she can buy with Bricks,
the currency of Brixton's Local Exchange and Trade Scheme (LETS),
have made a real difference.
     "I discovered the scheme a year ago and now I use it for
paying a cleaner, a chiropodist, a driver and someone to fix my
computer. I cannot imagine now how I would do without Bricks. It
means I can pay for all the things which social services do not
provide anymore."
     Brixton's is one of many local exchange schemes, or systems,
in the UK which allow members to trade without using real money.
The idea is to stimulate local economic activity in low-income
areas. For someone like Ms. McGarry, whose disability prevents
her from taking on full-time work, Bricks mean she no longer has
to ask friends for favours.
     "It is very hard to keep up your self-respect when you are
always asking for help. When you can offer Bricks you don't have
to be grateful because it is a proper exchange and you know it is
helping them as well."
     Her cleaner uses the Bricks she earns to buy child care from
someone else within the scheme.
     Ms. McGarry makes gin and lemon marmalade, offers advice on
fund-raising and hires out her computer scanner to earn Bricks.
She sees LETS as a way of using all her talents: "I am a jack of
all trades but if I were in a job I would only be using a few of
my skills." She advises people new to the scheme to think
carefully about the things they are good at which might provide
business opportunities and make use of them all.
     New members' needs and wants are listed in a regular
newsletter and directory. Entries in the most recent directory
range from plumbing to psychic healing.
     New members have to make some Bricks before they are issued
with a cheque book. Once they have cheques, they can pay for
goods and services in Bricks. The cheques are sent to one of the
organizing group who enter the debts and credits on a computer.
     Members are not charged interest if they run up overdrafts
but if they get too far into debt, the organizing group will send
a warning letter, and may ultimately withdraw their cheque
     Ms. McGarry says that LETS are easier to organize in rural
areas and villages where people know their neighbours. In
Brixton, LETS provides a sense of community "without the
downside, the lack of privacy."
     There are not many unemployed members, even though Brixton
has a large number of people out of work. According to Ms.
McGarry, many people join because they believe in community or
green politics rather than because they need the income.
     Some local businesses have joined the scheme. But at the
Cafe on the Common, Leah Hargreaves, one of the three women
running the establishment, says that it has had mixed results.
The cafe lets people pay for part of their meals in Bricks, with
a Brick being equal to a pound. The problem came when they hired
people to do building work through the scheme.
     "We only pay ourselves four Bricks an hour but the people we
hire through the scheme sometimes charge 10 Bricks an hour. We
have to pay for our food and other bills in pounds, so it can
prove quite expensive."

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