As this is Fairtrade fortnight and so many people talk of local food/produce being an adaptation or progression of the original concept. This was to help impoverished farmers suffering due to the inherent problems of the free market mainly in foods (but also cotton.... don't get me started). It seems to me that there is an good reason for this opinion (I won't argue about that as it has to evolve).
But I would say it may need to move one step forwards as so it remains true to the meaning. Perhaps 'LETS' may be the vehicle to provide this. Local Exchange Trading Systems are not new, I remember Brixton 'Brix' but according to Les Moore they are now due for a major new lease of life as technology enables far simpler transactions.
So how could this help Fairtrade? The 'E' in LETS originally meant 'Employment'. That is the means of production and not necessarily purely exchange. By aiming for the production and installing an alternative system for reward this may go to the heart of the matter and should, in its ideal, be a value that is as set by the two most important people in the 'chain', that is the producer and the consumer. It also encourages direct links which I also consider the most wonderful part of fairtrade, that you get to understand far more of the producer wherever they may be.
As an example we used to sell Equal Exchange Cashew nut butter and very good it was too. Fairtraded with farmers in Mozambique which was suffering at the time due to the revolution. Not only taught me a lot about the politics of developing nations but also about a very unusual nut we take for granted..............
The
cashew, Anacardium occidentale, is a tree in the family Anacardiaceae.
Its English name derives from the Portuguese name for the fruit of the
cashew tree, caju, which itself is derived from the indigenous Tupi
name, acajú. Wikipedia
Scientific name: Anacardium occidentale
The
20 Most Asked Questions About LETS
(This document was prepared by John Croft, of the Gaia Foundation. It has been editted slightly. It describes the why, the how and the what of LETS schemes.)
(This document was prepared by John Croft, of the Gaia Foundation. It has been editted slightly. It describes the why, the how and the what of LETS schemes.)
We hope
the following questions and answers meet all your requirements, and encourage
you to be an active trader in your LETSystem.
Q.1 What
is a LETSystem?
A LETSystem
is a locally initiated, democratically organised, not-for-profit community
enterprise which provides a community information service and records
transactions of members exchanging goods and services by using the currency
of locally created LETS Credits. The LETS Credit currency does not involve
coins, paper money or tokens of any kind but rather acts as a scoring
system, keeping track of the value of individual members' transactions
within the system. It is simply a community information system attached
to its own market-place. Different LETSystems call their LETS Credits
by different names, adding a "local flavour".
Q.2 How
does LETS work?
LETS
works a little like a baby-sitting club, where members earn credits by
baby-sitting other people's children, spending whenever they need child
minding. Unlike a baby-sitting club, however, LETS extends the range of
services to whatever is available locally. A successful LETSystem can
provide members with food, clothing, housing, transport, health and legal
services, repairs, equipment, business services, entertainment and much
more, at a reduced or no cost in Federal dollars, through the operation
of a community based credit economy.
* It
is available to anyone who is a member of the community and who joins
a LETSystem.
* Individuals and businesses can use it to advertise goods or locate what they want, either by telephone, mail or in person.
* Information is updated regularly, added to or deleted at any time, and circulated regularly to members.
* There are no limitations or obligations on use. LETS is its name and "lets" is its nature!
* Individuals and businesses can use it to advertise goods or locate what they want, either by telephone, mail or in person.
* Information is updated regularly, added to or deleted at any time, and circulated regularly to members.
* There are no limitations or obligations on use. LETS is its name and "lets" is its nature!
Upon
paying a small registration fee members are issued with a Registration
Number which acts as a license to trade. On joining, members also list
goods and services they are prepared to offer to, or require from the
LETS community. In most systems, members also elect a LETSystem Committee
or Board of Advisers at an Annual General Meeting, and establish a system
to maintain LETS accounts and update trading sheets, advertising the goods
and services available or needed.
Q.3 Why
start a LETSystem?
When
ordinary money is in short supply, needed community projects are put on
indefinite hold, local businesses fail, people become unemployed, and
individuals and families suffer, not because they have nothing to offer,
or because they lack skills and abilities, but simply because there is
not enough money to go around.
LETSystems
helps develop and free local markets by operating like a community bank,
in which members open an account. Unlike a bank, however, it gives unlimited
interest-free credit, generated at the point of sale, to facilitate trading
with other members. In this way, LETS acts like a supplementary currency,
creating an additional system of value in a community. By supplementing
conventional cash flow with a local currency, a community can maintain
full employment, and protect itself from changes and fluctuations in the
money supply.
Q.4 What
other benefits are there in starting a LETSystem?
There
are many benefits to LETSystems. Some others are ...
- Mobilising
the Real Wealth of a Community: The knowledge and skills of its people
is the real wealth of a community. A local currency keeps this wealth
working in the community, even while conventional money drains away, generating
employment and income for all involved. People who have accumulated a
wide range of skills and abilities suddenly become once again highly valued
members of the community.
- Helping
Community Groups: LETSystems help other local communit organisations by
giving them access to resources to extend their services to customers
or clients currently not gaining access. Volunteer burn-out is reduced
as LETS helps organisations recognise and acknowledge donated time and
effort, allowing volunteers to meet their own needs while meeting the
needs of others.
- Fostering
Self-Reliance & Self Esteem: In our communities, unemployment is growing
at the same time increasing numbers of people are unable to get their
needs met. Supporting single-parents may need respite care or other services
for their children. Elderly pensioners also need a range of specialised
services or may simply require company to combat loneliness. At present
a person's ability to access these and other services is proportional
to their purchasing power. LETS breaks this bottleneck, by making it more
possible to match someone's need with another's available labour. People
are no longer dependent upon welfare or charity, and everyone's self esteem
benefits.
- Increased
Personal Savings & Disposable Income: Because members can get local goods
and services through a LETSystem, members can substitute LETS for Federal
dollars. The disposable income in Federal dollars, available after basic
needs are met, actually increases. For those involved who are regularly
trading in LETS will find they have more money left in their pockets at
the end of each week. The rate of community savings, and therefore of
community investment capital generation, and with it the quality of life
of everyone, will improve.
- Opportunities
for Businesses: LETS adds a new tier to a local economy and generates
wealth that is not able to be accessed through the conventional monetary
system. This wealth creates new opportunities for expansion of existing
local businesses, or even markets for new goods and services that previously
were not available.
- Creating
Local Economic Control: LETS helps to plug the leaky bucket of the local
economy, by creating a local currency that cannot leave the community,
thereby reducing uncontrolled and activity limiting capital outflows.
As LETS credits only have value in the community in which they were generated,
they stay circulating to create more wealth for everyone. LETS gives community
members a powerful new tool with which to "steer" the local economy in
directions which benefit everyone.
- Support
to Buy Local: At present, economies of scale, transfer pricing, and capitalising
on cheap Third World labour or raw materials enables larger multinational
and interstate manufacturers and retailers to tip the so-called "level
playing field" in their direction, to the detriment of local businesses.
LETS provides an Federal dollar discount to those using local businesses,
manufacturers and retailers, while not sacrificing total income in the
hope of making it up through increased business. Local businesses thrive.
- Building
Community Support Networks: Because LETS plugs members into a local information
network, it provides new or isolated residents living in a local community
with an instantaneous community support system, which avoids the embarrassment
of introductions to strangers. Through the LETS network all members have
a ready reason for calling for support or help. Elderly pensioners, unemployed
youth, supporting parents, new arrivals, and single-income families with
partners "trapped" in a dormitory suburb, can all build firm friendships
on relationships established through a LETS connection.
- Fostering
Social Justice & Equality: Because the value attached to one's time and
commitment is set individually amongst the participating members, a LETSystem
equalises the wage differential that exists in the value attached in the
conventional economy to the work of women as compared to the work of men.
This greater equality helps to prevent the polarisation of the community
between those that "have" compared to the "have-nots". There is no value
in accumulating LETS credits, as they cannot earn interest. It is only
by putting them to productive work that the individual or the community
benefits. LETS fosters local participation in the community at all levels.
- Helping
Community Projects: There are many worthy and worthwhile community projects
and activities that languish for lack of money. By donating LETS credits
to a community chest, major community initiatives for local improvement
or charitable work can be generated, without putting a severe strain on
one's Federal dollar income. Because the local LETS credits remain in
the local community, the wealth donated will circle back to the donor
as a form of long-term "money back guarantee", to generate demand for
the goods and services they are providing to their community.
- Building
a Sense of Community: The increasingly transient, temporary and mobile
lifestyle in Australia has greatly damaged our sense of belonging to a
meaningful community. Because a LETSystem builds local relationships it
is a powerful means of regenerating a sense of trust among members, a
necessary component to the health of any community. As communities become
more self-aware and self-reliant as the result of a LETSystem, community
isolation, fear and loneliness diminishes and everyone benefits.
Q.5 What
is Multi-LETS?
A Multi-LETSystem
is a LETSystem like any other. Like any other LETS, a Multi-LETS provides
a register of members, in which transactions are recorded, statements
and accounts are prepared, and a notice-board or trading sheet of offers
and requests are prepared.
A Multi-LETS,
in addition, has the facility for a number of separate networks to exist
within the single registry. These networks resemble separate LETSystems,
in that they charge their own membership fees, that members of a particular
network may trade goods and services in their own local currency, according
to the rules and conditions upon which members agree, they may provide
their own separate list of offers and requests, and their own newsletter.
Again, like a LETSystem, the LETS Credit units cannot be transferred outside
of their membership base or taken out of the system.
The difference
with a conventional LETSystem is that in Multi-LETS, people initially
join the general register, specifying which networks they would like to
participate in. In return they receive a single trading Registration Number
which can be used in the general register, and in any network to which
they may belong. People then have the choice whether to record the transaction
within the general system, or at the level of a particular network.
In a
Multi-LETS, all transactions are recorded at the level of the Multi-LETS
register, so networks can have the advantages of a LETSystem, without
needing to worry about the recording of transactions, or the issuing of
statements. This can be an immense advantage to a particular club or group
who do not have any members interested in "running the system" but who
wish to use LETS for their own purpose, without necessarily wanting to
go through the hassle of starting their own separate LETSystem. Their
members also gain access to a wider range of goods and services through
the general register than they would in a smaller system of their own
network. In a Multi-LETS people have greater freedom of choice, as they
can choose which networks they want to participate in and which local
causes, clubs or groups they want to support whilst trading in LETS.
Q.6 How
do I join a LETSystem?
Each
LETSystem is independent and has its own contact person or mailing address.
Once you have made a decision about which LETSystem or systems you want
to join, make contact and they will tell you how much it costs. Generally
people then fill in a sheet of offers and requests, their name, mailing
address and phone number. The LETSystem will then inform the new member
of their Registration Number within that system, which acts as their license
to begin trading. Different LETSystems have different ways of renewing
memberships, but generally members have to renew their membership once
a year.
Q.7 What
happens with my list of offers and requests?
You have
already listed what you want to receive from the LETS Community, and what
you are prepared to contribute to that community in return. These are
incorporated with those of others into the Trading Sheet. There is a charge
of a proportion of a LETS Credit per line for listings in each trading
sheet (to pay the Trustee who updates the listing). Your account may head
backwards, therefore, if you are not trading.
It is
a good idea, therefore, to regularly check your list to make sure that
it does reflect what you are prepared to provide, or prepared to receive.
As you will discover, it can be frustrating to members to have to make
a large number of phone calls before they find a "genuine" trader in that
item, or if they discover that it was sold 6 months ago! This can be overcome
in part by keeping your list up-to-date. This is your responsibility.
It does not cost you to delete an item, and will save your account the
expense of listing unwanted or no-longer-traded goods and services.
Q.8 What
should I do now? How do I start trading?
Your
LETSystem, like all LETSystems, works best through your participation.
Rather than waiting for someone to contact you about your listings, your
LETSystem will best meet your needs if you use it actively, rather than
passively. Contact someone perhaps who is requesting some good or service
that you can offer. It may be something that you did not even consider
listing in your offers in the trading sheet, something that you never
considered before. Whatever it is the person you phone will be glad to
make a new LETS contact.
This
will give you a taste of trading, and show you how it is done. If that
person is interested in your assistance, make sure that you clearly establish
exactly how many LETS Credits you propose to charge. This may result in
some friendly "haggling", but do not proceed until a mutually agreeable
"price" has been set. Make sure that both parties to the transaction have
the correct name, registration number, and amount before completing the
cheque tab, or phoning the transaction through to the Trustees.
Q.9 How
do I get most personal benefit from my LETSystem?
Your
LETSystem will have the greatest economic use to you if you look at where
you currently spend money. Have you built a personal relationship with
the people involved, or is it only a commercial transaction? If you can
recruit to the system individuals with whom you normally spend Federal
Dollars, you will find that being able to buy the same goods and services
in part for LETS will have a big effect on increasing your savings and
disposable income. For instance, if you can buy local foodstuffs and groceries
for LETS it will have a big impact upon your spending patterns and you
may save Federal Dollars! If you want help enrolling someone into the
LETSystem, ask your area coordinator, Trustee or LETS Committee. If successful,
you can start to spend local currency more widely, so creating more jobs
and increasing the wealth of your local community!
Try to
develop the LETS habit by using LETS first, Federal Dollars second, only
if you have to! LETS gives people a chance to meet their neighbours in
a new way, enriches your community life and provides you with a community
support network of great strength and durability.
Q.10
How much is a LETS Credit worth?
For most
business transactions it is easiest to equate one LETS Credit to one federal
dollar. Business people find it hard to cope with a system of value that
varies widely between different times and different people trading.
Most
transactions in a LETSystem, however, are for goods and services that
would be called personal arrangements, social arrangements, hobbies or
pass-times. For these, people are free to set their own value scale, which
can vary wildly between times of the day, depending upon the amount of
free-time one has, or the nature of other pressures or demands they may
have on their time.
As a
result, in a LETSystem, you may find a wider range of pricing than you
would in a conventional market system. Prices for such items are negotiated
freely between the two people engaging in the transaction, and there is
rarely a "set take-it-or-leave-it" price as one finds in a conventional
money purchase. This helps the relationship building nature of a LETSystem.
Because
people attach their own value to what they change, many of the inequalities
that exist within the normal economy are not found in a LETSystem. The
gap in hourly wage rates between professional and labouring work, between
the work of men and the work of women, and between tasks that would be
normally considered voluntary or unpaid, and those that are paid for,
are narrowed or do not exist. Generally, a person's purchasing power in
a LETSystem is equal to the purchasing power of anyone else, although
the demand for their services may vary widely.
Q.11
Can I charge part LETS Credits/part federal Dollars in a Transaction?
Yes.
If in providing that service you will have to pay federal dollars for
providing part of what is requested (eg. for paint, petrol, your tax (if
you are a tradesperson or professional exercising their regular occupation))
you can ask for dollars to cover this needed component. Make sure that
the other person understands why you are charging dollars, as this helps
make sure that they feel what you are charging is fair.
Q.12
How should I charge in LETS if I run a business?
If you
run a business, a useful way to start is to offer what you think would
be a fair percentage in LETS Credits and federal dollars. The other person
in the transaction is free to accept or reject, as in LETS, there is no
obligation. LETS is its name and LETS is its nature!
The only
requirement is that you are prepared to consider trading in LETS Credits
for whole or part of the transaction. Make sure that the other person
understands in advance of providing the goods or services if you are not
trading any item for LETS. Not doing so will come as a nasty shock to
your customer, and may lead to them telling others of their unfortunate
experience, with the result that you may find you do little trading in
the future!
If you
are running a business and wish to trade in LETS, ask us about the "LETS
Do Business" information. We can explain how you can record transactions
in part LETS part dollars in an easy and reliable fashion. Members of
a LETSystem would prefer to trade in local currency, so you will probably
find that your number of sales, and your total cash turnover will increase
as your business joins the local system.
Q.13
Do I have to be in credit before starting to buy?
No. You
do not have to be in credit before making your first buying transaction.
In this way your LETS Account is very different from a conventional Bank
Account! If you wish to purchase a good or service from the LETSystem,
you can do so straight away, as when you go into debit (which in LETS
is a measure of your future commitment to the system), someone else will
go into credit. The system will in this way stay balanced at zero.
It is
by buying that "new LETS Credits" enter the system, creating more wealth
in the local trading community. As the LETS Credit cannot leave your LETSystem,
eventually they will come back to you in the form of someone who wants
what you provide. A debit (or commitment) thus is a "money back guarantee".
This is very different to money.
Q.14
What happens if I leave the area?
It is
a good idea to inform the Trustees or your area coordinator immediately
you shift residence. This helps make sure that they can send any future
trading sheets or newsletters to the correct address.
If you
are shifting out of the region of the LETSystem, you have a number of
options.
Firstly,
you can keep your account open, in case you visit the area and want to
do some trading, or if you are prepared to provide services to your LETS
members who visit your new place of residence.
Secondly,
you can close your account. This can be best achieved by returning your
balance to zero. Your area coordinator or LETSystem Trustees can help
show you how this may be done.
Thirdly,
if you leave with either a credit or a debit balance, you should not worry
too much, as the LETSystem as a whole will still be balanced at zero,
and the LETS Credits, unlike federal dollars, can never leave the area.
People will still be able to trade, and get their needs met.
Obviously,
if everyone left your LETSystem, it would become inactivated, and transactions
would dry-up. This has happened to LETSystems in the past, but nothing
is lost, and no-one is hurt by the process (again, unlike the conventional
money system).
Q.15
How can a person "rip-off" the LETSystem?
Forget
it. They cannot. Surprisingly LETS Credits provide one of the only theft-proof,
non-rip-off-able currency systems possible in the world. Its simple rules
operate in a fashion entirely different to conventional money, which can
be stolen, and is often "ripped off". LETS Credits operate in a fashion
wholly different to federal dollars.
Consider,
for instance, the question of debt. If I borrow 100 federal dollars from
you, then I effectively have $100 of your money which you cannot spend
until I pay back. This is inconvenient to you, and, as a measure of this
inconvenience you charge me interest (I may have to pay back $110 eventually).
In LETS
if my account is 100 LETS Credits in debit, it means I have already paid
someone 100 LETS Credits! No-one is inconvenienced, and so there is no
interest. I can discharge my commitment whenever it is most convenient
to me to do so. LETS by name and LETS by nature!
Q.16
What about Tax? Do I have to pay tax on LETS Credits?
The Australian
Taxation Office ruling on LETS, released in February 13th 1991 states
that there are no Taxation implications for personal arrangements, social
arrangements, hobbies or pass- times. These constitute about 70 to 80%
of all LETS transactions.
Only
if I am a tradesperson, a professional, a business, or a retailer or wholesaler
and I am trading in my business is there any implication for tax. In such
cases, "Income" is income, and I have to pay tax on my LETS Credit earnings
just as I do on my federal Dollar earnings. At present you should estimate
the amount of tax you would have to pay on the transaction and charge
that as part of the federal Dollars component to the person purchasing
your services or buying your goods. The "LETS Do Business" guide will
help you keep track of the amount you need to charge. These dollars you
collect will have to be paid, eventually, to the Taxman, just as you do
with any federal Dollar earnings. There is no difference with LETS.
LETSystems
across Australia, while agreeing recommend to their members to abide by
the Taxation ruling, also think it unfair. Tax on LETS should be paid
for in LETS - Tax on Dollars, paid for in Dollars. This has the effect
on keeping taxes collected on local transactions in the local community.
If you would like to help your LETSystem lobby the government on this
matter, get in touch with your Trustees or area coordinator.
Your
LETSystem believes that tax is an individual matter, and an individual
responsibility. LETS is not a Taxation Avoidance Scheme. Your LETSystem
takes no responsibility for collecting or policing tax, and will not act
as an agent of the Taxation Office. Under law, it cannot prevent the Taxation
Office obtaining legal right to view our documents.
Q.17
What about insurance?
Your
LETSystem does not provide insurance, workers compensation, public liability
nor any other coverage. These are individual matters and should be checked,
if required, between the individuals involved in the transaction. If insurance
is required, you may have to pay federal Dollars to help the other person
cover the cost of the premiums (unless the LETSystem has managed to enrol
an Insurance Company! If you would like to help enrol an Insurance Company,
contact the Trustees or the area coordinator!)
Q.18
What about Social Security?
It is
a matter of interpretation whether and what degree LETS is "valuable consideration"
under the Social Security Act. If you are concerned about Social Security,
it is a good idea to keep your LETS account as balanced as much as possible,
close to zero. For each positive transaction, try to provide a negative
one balancing up as soon as you can. If Social Security becomes a matter
of concern, contact your LETSystem, or ask Social Security about the Appeals
Procedure, as an appeal against any Social Security ruling that is open
to interpretation is your right under the Act. In Western Australia 50%
of appeals are found in favour of the appellant, and Social Security have
to reimburse any payments lost.
If you
receive Unemployment Benefit, and you wish to continue to do so, you should
not allow your involvement in the LETSystem interfere with your ability
to seek full time or part time work. After- hours involvement is probably
best.
Q.19
How are decisions determined within this LETSystem?
LETSystems
are democratic organisations, controlled by their members. Your LETSystem
will probably have an annual general meeting for the election of office
bearers and committee members. Committee meetings are usually open to
members and all are invited to participate. If you are interested in participating
in either the administration or development of this LETSystem, you should
get in touch with the local contact or LETS Committee. Increasingly, all
work done for LETS Administration or Development will be acknowledged
and paid through the system!
Q.20
Where can I get more information?
The Community
Development Branch of the Department of Commerce and Trade have a LETSystems
Training Pack which provides groups and individuals interested in LETS
with the all information required to start their own system ($25.00 +
$3.70 postage & handling). There is also a video available.
