NO MONEY DOWN:
Can barter system's cashless transactions catch on?
By Ken MacQueen, Southam News
- As the federal government pushes ahead with
its pervasive goods and services tax, a group on Vancouver Island
is marketing a computerized barter system meant to reduce the
need for money altogether.
Proponents of LETS (Local Economic (jct:Employment) Trading
Systems) says the trading networks aren't a tax avoidance scheme,
just an alternative to currency. (jct: Interest avoidance)
"Money, the nasty stuff," says Geoff Slater, turning up his nose
as though the smell of cash was leaking from a visitor's wallet.
"It has no sense of morals whatsoever." Slater, 49, is sitting in
the ground floor office of a home in the scenic Vancouver Island
community of Courtenay, sorting a steady trickle of inquiries
from around the world.
It was here on Johnston Avenue - during the depths of the
recession seven years ago - that an under-employed MBA graduate
named Michael Linton developed the LETS system. He and his young
family had no money. A huge swath of Vancouver Island residents,
including Geoff Slater, had no jobs. Linton devised an elaborate
community work exchange program and a mythical currency called
The system goes beyond the typical suburban baby-sitting
exchange, or a one-to-one barter, where Tom builds Jerry's fence
in exchange for Jerry fixing Tom's truck. Linton's system
recognizes that the chance of Jerry needing a new fence at the
same time that Tom's truck is broken is remote. Instead, services
are exchanged among a group. Debts and credits (measured in green
dollars) are tracked in a computer and registered against the
network at large.
Slater, who is working with Linton, 44, in an uphill battle
to market the non-profit system, offers a typical example of a
cashless transaction. Unable to afford a piano for his teenaged
children after he was laid off from his job as a store manager in
Duncan, B.C., he bought one from a LETS member for 400 green
dollars. Slater, in turn, paid his debt by working in the
community, installing wood stoves and delivering firewood for
other members. He later sold the piano to people on Cortez Island
in exchange for accommodation when he visits the island, music
lessons and lessons in harvesting seafood and shellfish.
To many economists, such systems are the financial
equivalent of cold fission, producing more bubbles than heat. To
the government, such systems are part of the dreaded underground
economy, a world of under-the-table cash transactions and
bartering that escapes the clutches of the tax man.
Linton says that proponents of LETS aren't avoiding taxes,
they are trying to avoid money. Traders in the system are advised
that their transactions in green dollars are as taxable as those
conducted in real currency. In practice, however, many of the
smaller transactions go unrecorded.
Linton's system has received national and international
attention. It was featured on "Venture," CBC's television
business show. It has been profiled in magazines as diverse as
"Canadian Living" and the California-based "Whole Earth Review."
It has not, however, caught fire.
At one point during the recession, there were 10 LETS
networks on Vancouver Island. A food bank and church in
Charlottetown, P.E.I., received a federal grant to establish a
system in 1987. Many of those networks have withered in today's
more prosperous times as wage jobs are easier to find.
Still, Linton has exported the concept to several
communities in Australia. And he has spent much of September in
Toronto, where he hopes to start a network by the new year. For
$25 - real dollars - he sends out a start-up package including
the computer disks needed to establish an accounting system.
The concept has the endorsement of Abraham Rotstein, an
economics professor at the University of Toronto who has studied
alternate economies. He says the creation of a second local
economy should be encouraged by government, especially in areas
of high unemployment. "They can mobilize and involve people and
resources that otherwise get left out of the main (economic)
system because of lack of income or lack of jobs," Rotstein says.
a comment to John Turmel