This is a draft of the English version of an article on Local Exchange Trading System by Makoto Nishibe, a leading economist of NAM. The original Japanese version was published in Hihyo-Kukan [Critical Space], III-1, September, 2001.

by Makoto Nishibe,

June 23, 2001

1. LETS as NAM’s principle

“Local Exchange Trading System” (LETS) is a local currency originated by Michael Linton in Canada. It is a multilateral settlement system, in which each participant will open his/her account and trade goods and services spontaneously on an over-the-counter basis through change in account balance. There are many other kinds of local currencies than LETS. More than three thousand local currencies have been reportedly introduced all over the world and more than one hundred in Japan. 

LETS has some of the properties similar to those found in “money” or “credit.” Endowed with the properties found in such money as national currencies, it functions as a “means of circulation” to mediate exchange, as a “measure of value” to provide the standard for exchange, as a “means of payment” to allow multilateral settlement, and as a “means of hoarding” to store values. It is a unique currency, on the other hand, which will bear no interest and prevent outflow as well as credit creation, whereby it will not turn into the “money in perpetuum mobile” (Boisguillebert) ––capital. 

However, LETS is not just an economic medium; it is also a social, ethical, and even cultural medium. While LETS has economic purposes such as stimulation of local economy, establishment of cyclic economy, and prevention of credit creation as well as capital accumulation, it also has social, ethical, and cultural purposes: to rebuild cooperative and mutual-help human relations based upon the idea of reciprocal exchange, to bring about trust in region and community, to share values and interests, and to encourage interaction as well as communication. Thus, in LETS, the economic, the social, the ethical, and the cultural are closely interrelated, which itself embodies the principle of the new economic society. LETS is a medium of “intercourse” (Verkehr), or a communication medium, to expand the domain of freedom and rebuild a new space for cooperatives based upon the modern liberalism and individualism. 

LETS is a necessary condition for social movements, particularly for the one like New Associationist Movement (NAM), which pursues an “exscendent” movement to create a society of non-capitalist market economy. For the movement seeking to supersede (aufheben) capital and state needs to be developed by involving not only economic, but social, ethical, and cultural principles in it. LETS provides a pivotal means with such principles of the movement. Karl Polanyi insisted that the alienated market economy in capitalist economy be “re-embedded” within societies. But it could lead to a return to the pre-capitalistic society presuming communal reciprocity. LETS is not to restore merely reciprocal communality, but is a counter-medium exscendent both to capital and state by embedding society within the form of economic exchange. While it basically carries on associationism advocated by Owen and Proudhon, it will overcome its shortcomings and enable us to redevelop it in the contemporary context. 

Many of those who are implementing local currencies in Japan believe that the economic side and the ethical side in local currency contradict each other. They insist that local currency should be used to stimulate the trades of non-market services such as welfare, care, and mutual help volunteer, but not for the trades of the goods and services which are currently traded in the ordinary markets. In short, they try to confine the scope of LETS to the ethical side. This is because, if local currencies were introduced to the goods and services being traded in the ordinary markets, they argue, it would cause competition between the trades in local currencies and the profit-making activities conducted with national currency and bring about friction or confusion, whereby the informal reciprocal relations to be created by local currencies would be impaired. We do not share this view, however. Even if local currencies have not yet revealed their economic power thus far, we should not curtail their potential by adjusting it in line with the current conditions. Rather, we should fully recognize the potential inherent in local currencies and seek ways of embodying the potential. Local currencies, particularly LETS, could be a “counter-cancer” which transforms capitalist economy from within precisely because they are endowed with the dual properties, i.e., the economic and the ethical. Capitalist economy is a complete automatic economic system driven by the perpetual self-valorization in capital; economic motivations in humans, who are posited in such a system, are totally defined by the principle of profit. Therefore, the movement attempting to overcome capitalist economy must be supported by ethical motivations beyond economic utility. With no economic principles, however, such a movement would be powerless and could not be continuous. Moreover, the idea of not introducing local currencies to the goods and services being traded in the normal market is to evade the problems of income tax associated with local currencies. It would consequently make citizens volunteer take care of the domain of welfare and care, which could no longer be provided by state’s social security policy. The movement of NAM, which resists to capital and state, cannot be satisfied by evading conflicts with state or complementing state’s functionality: we need to go beyond the welfare state, which redistributes income and providing social security based upon social democracy. To this end, we need to gradually expand the domain of non-capitalist economy which stands on a principle other than that of capitalist economy. 

2. The Contemporary Implications of Local Currency

Local currency, or “community currency,” is a medium of exchange that circulates only within a particular area or a community and mediates exchanges between goods, service, and volunteers—and bears no interest.

Each local currency has the following common purposes: (1) to aim at a reciprocal exchange on the basis of reliance; (2) to resolve inflation and unemployment by establishing autonomous growth of regional economy through circulation of local currency within a specific region; (3) to prevent credit creation, speculation, and monopolistic accumulation of capital by zero or negative interests in order to stimulate trading of goods and services; (4) to provide structures to evaluate non-market services such as welfare, care and relief volunteer from various viewpoints in order to stimulate these activities; (5) to provide ideas and frameworks to horizontally link between various activities of non-governmental organizations (NGO) and non-profit organizations (NPO) related to labor, consumption, welfare, and environment; (6) not simply to give “relief” and “security” to people but to build up relations of “trust” and “cooperation” between people and to enliven and enrich communications that have been monopolized into monetary exchanges.      

As such, modern local currency looks for its purposes not only in the stimulation of economy but also in the stimulation of communications. The globalization of market economy has resulted in dominance of monetary value and decline of communicative power of people. Local currency may be able to stop this tendency by becoming a medium for multidimensional and open communications. Local currency does not only communicate a monolithic economic value of goods and services but also the medium in itself can communicate “standard platform”-type universal messages, or ideas, such as freedom and responsibility, zero interests, co-ownership, and information disclosure. Selling and buying by means of local currency resembles linguistic communications in a sense that it communicates messages. Each local currency in a real, physical communities like towns and villages can express particularity and specificity of its local’s properness and individuality by the currency’s name and the relationships between the participants. For example, local currencies in Japan, people have adopted currency names that represents each local’s characteristics and ideas like the “ômi” of the Communication Supporting Center of Kusatsu, Shiga Prefecture, which took a place name nearby, the “peanuts” of a Chiba NPO, the Community Supporting Center of Chiba, which took its name from a local product, and the “fôre” of the Town of Shimokawa in Kamikawa, Hokkaido, which was named after the local foresting business. Furthermore, local currency can be formed within “virtual (or semantic) communities” that express a proper interest, value, or thought: for example, if “ecology money” is used for the preservation of natural environment and ecosystems and “volunteer money” for the purpose of service and help, they are shared as a specific message among participants and add to the universal messages, which belong local currency in general. By doing so, monetary exchange by means of local currency furthermore gets closer to linguistic communications. It is needless to say that these communities are not closed ones but open communities of independent individuals who are related to a certain theme of locality.

As a matter of course, local currency can hardly have the complexity of linguistic worlds, although it can be not only an economic medium but also a cultural medium that could communicate value, culture, and thoughts. However, if numerous and various local currencies can be established, people—who have lost linguistic communications—could get a clue to express their own identity, which they have lost due to the monolithic growth of monetary exchanges, by belonging to plural local currencies of their own choices. Local currency could suggest a way of overcoming the difficulty of “understanding” others, not of evading it, by complementing the weakened linguistic communications.

However, local currencies are varied in times and places that they were established in and in their purposes and ideas, and the details of their structures and systems are not necessarily the same. The chart #1 below compares and contrasts national currencies with local currencies of several types.  In local currencies, there are (1) the “concentrated issue” type like Ithaca HOURS, WIR, and RGT, in which managers or committees will issue their bills, and (2) the “dispersive issue” type, or “mutual credit” type, like LETS and Time Dollars, for which managers only record income and outcome in the accounts of both the seller and the buyer in notebooks, and the buyer voluntarily issues currencies. We can also classify them into those that link currency value to labor time (Time Dollars), those that are linked to national currencies (WIR, LETS, and Toronto Dollars), and those that are linked to both above (Ithaca HOURS and LETS), etc. These systematic differences can lead to the differences in their actual possibilities.

3. History of local currencies

Local currency is not necessarily a new thought or movement. Its origin and model may be widely found in the pre-capitalist human history. One of its mutual-help characteristics, for example, is found in “yui” (mutual help conducted in villages during busy periods) or “ko” (mutual loan among people from reserve fund), which have inherited from ancient times and partially existent even today in Japan. These are pre-modern systems implemented almost forcibly in closed communities.  

The origin of a modern local currency should be found in Robert Owen's "labor notes." Local currency arose along with industrial capitalism established through industrial revolution. This tells that local currency was born as a community's counter-movement against capitalism, or what Polanyi calls "community self-defense." Moreover, local currency brought about out of modern civil society has once gone through individualism and liberalism. It is a movement seeking mutual help and cooperatives on the basis of individual autonomy and ethics. 

Although Owen made a success in management of cotton spinners in New Lanark by introducing cooperative principle in management, rational labor management, education of juvenile labor, and coupons to be used at factory stores, he failed in building the cooperative village in New Harmony, Indiana of the United States. After returning to London, Owen established the “Equitable Labour Exchange” and experimented “labor notes” in September 1832. “Labor notes” are the bills with labor time expended on products printed on them. Workers receive “labor notes” at the “Labour Exchange” in exchange for their products, whereby they can buy other products of the same value. A labor note of 6 pence was regarded equivalent to labor of 1 hour, and 8.33 per cent of fee was charged on every transaction in order to make up the operation cost of the Exchange. The experiment, based upon the labor theory of value, was to seek equitable exchange of products. But the computation of value in products on the basis of average labor time was unable to properly evaluate values among heterogeneous labor or complex labor (skills and proficiency), bringing about inequality among products. This proved that the Labour Exchange was unable to adjust demand and supply of necessary goods. Merchants’ speculative trades also made its operation difficult to continue. This clearly demonstrates the fundamental problems behind the idea of directly applying labor time as a basis of equitable exchange like in “labor notes.” There are local currencies which adopts labor time as a measure today. It should be noted, however, that Time Dollar is mainly used for volunteer exchange and that Ithaca HOURS is linked to the national currency in order to raise the minimum wage level in the region (1 Ithaca HOURS = 1 working hour = $10). It should be said that most local currencies today are not based upon labor time. 

Pierre-Joseph Proudhon denied collective authority like state and parliament from the vantage of anarchism and insisted that economic system be innovated by replacing the state with associations of independent producers. In 1849, based upon his “principle of mutual credit,” Proudhon proposed to establish the “Exchange Bank” as an “institution for circulation and credit” in order to correct inequality of exchange. According to his plan, workers would be members of the commercial union called “National Exchange Bank:” the bank required no investment so that they could mutually exchange their products both as producers and consumers for equitable prices computed on the basis of labor time and production expense. The National Exchange Bank would determine prices of products, taking care of trades of products, and issue four kinds of exchange vouchers in exchange for products. Thus, the “Exchange Bank” plan was an attempt to implement Owen’s Labour Exchange in a larger scale. Proudhon’s proposal was rejected by the assembly and not put into practice, however. Proudhon argued that all the products in a modern society were products of an “ensemble” based upon workers’ division of labor and cooperation; capitalists deprived workers of products and appropriated them to themselves with no compensation; therefore, it was unjust theft. Proudhon, while attacking private ownership from this perspective, criticized even the “national workshops” proposed by the communists like Louis Blanc, insisting it is monopoly of properties by the state. Although Proudhon’s idea of associationism and critique of state authoritarianism were correct, there is a fundamental problem in his idea of attempting equitable exchange on the basis of the “constitutive value” of time and cost by regarding money as “symbolical representation of labor” and by abolishing the sovereignty in money. Despite his denial of such collective authority as state, when he regarded the Exchange Bank as the equitable price fixer, the bank would virtually turn out to be a planner and practitioner of collective economic planning. This would lead to denial of market and repression of freedom consequently. Proudhon’s proposal, in this respect, holds self-contradiction in it. It should be evaluated that he regarded money as an indispensable medium of free over-the-counter trades for producers, but we should refuse his collective system, which inevitably requires rational money issuers, price fixer, and planner and practitioner. As we will indicate later, LETS is precisely the system which has inherited from the basic principle of Owen and Proudhon and could overcome their shortcomings.  

During the depressing period of the 1930s after the Great Depression, complementary currencies arose in many parts of the world to supplement the shortage of national currencies. In the first half of the 1930s, local currencies were introduced as a catalyst for intra-regional trade in many communities of Denmark, France, Italy, Austria, Switzerland, Canada, and the United States. Many of them were based upon “stamped-money” proposed by Silvio Gesell in the end of nineteenth century, to which Keynes paid his attention in his General Theory of Employment, Invest, and Money. Gesell, originally from Germany, succeeded as an entrepreneur in Argentina and wrote on free money in later years. “Stamped-money” needs to have a stamp (deed) of a certain amount pasted on it every week or month. It is not valid without stamps. Its value will be depreciated as time passes. Such a minus interest on money was intended to prevent hoarding, to encourage circulation of money, and to stimulate consumption expenditure.  

The municipal body of Woergl, Austria, for example, issued stamped-money for the payment of public enterprise, which would depreciate 1 per cent of its value per month, as a policy measure to solve unemployment. The unemployed who received wage in the form of stamped-money expended the money at stores which accepted it, and those stores paid tax with it, whereby the circulation speed of the money was accelerated by 5 to 6 times. As a result, the employment rate went down and shopping districts became activated. But the National Bank of Austria took a counter-measure to prevent the use of the money, leading the experiment to suffer a setback. In the early 1930s, communities and chambers of commerce in many parts of the United States like Chicago issued coupons called “federal dollar,” which circulated more than three times than the national currency at some point. However, it gradually declined with the implementation of the New Deal and was finally abolished in 1943 due to the supply shortage during the wartime. In contrast to the case that the attempts by Owen and Proudhon were not intervened by the state in 1830-40s, since the central bank was not yet founded at that time, the bill-type local currencies of 1930s had their potentials deprived by the state’s control over money and economy. The movement of local currencies, thus, had been stagnant until 1990s. 

Depreciating currency, which will urge people not to store money, but to encourage consumption, is likely to succeed in relatively small towns and villages. If we attempt to introduce depreciating currency in a national scale, as Gesell planned, however, a legal tender with legal force needs to be depreciated.  However, this will require state power. At any rate, it requires compulsion from above and presupposes the presence of authority. Therefore, depreciating currency, if introduced on a large scale, could bring about “compulsion of consumption,” urging people to consume even what they do not want. It could not only deprive those who do not pursue economic growth of the “freedom of not consuming,” but accompany mass-production, mass-consumption, and mass-scrapping, which are often criticized today. Gesell’s depreciating currency holds self-contradiction in it as Proudhon did in the sense that the currency, while having the positive characteristics as a catalyst for economy, requires state power and has anti-ecological aspects. 

The only local currency, which was originated in 1930s and has survived since then, is WIR. WIR is the cooperative exchange ring organized in 1934 by the medium- and small-sized entrepreneurs and store keepers in Zurich based upon Gesell’s theory of free money, and many workers took part in the attempt. In 1936, its banking institution, the WIR Bank, which was able to create credit, was founded. The bank provided WIR with both dispersive and concentrated issue systems. 1 WIR has been set equal to 1 Swiss Franc. Today, 76,000 firms and stores, including manufacturing firms, hotels, and restaurants, are involved in WIR, accounting for 17 per cent of the total number of firms in the country. Inter-firm transactions are also settled in WIR. Pricing of goods and services needs to be in combination of WIR and Swiss Franc, because salary and international transactions need to be in Swiss Franc and because the federal government and municipalities worried about lowering of tax revenues. Price of commodities is indicated like “1,000 Swiss Franc, with WIR up to 50 %). WIR has survived until today probably because it started as a bankbook-type local currency with no paper to be printed, by which it could evade state intervention, and because it evolved itself into a banking institution. 

The most prevalent local currency today is LETS. LETS, originated in Canada during the recession period of 1983 just like other local currencies, has rapidly spread into such countries as England, France, Netherlands, Germany, the United States, Australia, and New Zealand. The type of local currencies like LETS, which change account balance, is called “Tauschringen” or “SEL” in Germany and France respectively. They began to experiment LETS in such developing countries as Thailand, Mexico, South Africa, and Senegal. LETS is now estimated to be used in more than 2,000 regions. 

The local currency, which is the largest in scale, is La Red Global del Trueque (RGT) in Argentina with more than 500 thousand people involved. The first exchange ring in Argentina was born in Bernal in the suburb of Buenos Aires in April, 1995. As of the end of 1997, there were 500 exchange rings nationwide, which cooperates to compose the national network. After the currency crisis, Argentina followed IMF’s advice and pegged its legal tender, Peso, to US dollar.  Although the measure succeeded in preventing Peso’s value from collapsing, the accompanying deflation pressure led the domestic unemployment rate to exceed 20 per cent. Behind the rapid spread of RGT was such an economic turmoil. 

Most local currencies of the last century, as we have seen, arose during recession periods. All of them were systems attempting to build a reciprocal exchange system denying interest, to create employment opportunities for the unemployed, and to stimulate intra-regional trades of goods and services. Unlike comprehensive economic planning from above, it is a movement which was initiated from daily practices by a few and has been spontaneously organized along with the growth of participants’ networks. Each local currency has its own unique name, devices, and improvements. Such uniqueness and diversity in each local currency have never died out. 

Since the first half of 1990s, local currencies have continued to grow all over the world, reviving after 60 years since the early 1930s. Those periods have particular economic condition in common –– recession. They are contrary, however, in the respect that now is not the time tending toward planning and control over economy, but the period of globalization going toward universalization and liberalization of market. In 1990s, planning thought like collective economic planning of Soviet socialism or Keynesian macro demand management retreated, while market economy covered the entire globe. Nationally, deregulation and privatization of fiscal and public policies were promoted, while trade and investment were liberalized internationally. Today, we see social democracy reviving in Europe, and the currencies and markets were integrated as EU. But it is nothing but to construct a pan-European fortress protecting itself against globalization, while admitting globalization itself; it is not something to stop capital’s globalizing movement toward “free investment” going beyond “free trade.” If so, the tendency toward further expansion and penetration of market would continue well into this century.  

The state socialism and totalitarianism of the twentieth century were the attempts to abolish money out of “hatred” toward money and to control economy; all of the attempts failed, however.  It is obvious now that there is no possibility in getting rid of anarchism through collective planning or constructivism. Furthermore, social democratic welfare state, which focuses on redistribution, is nothing more than a soft form of such attempts and will not fundamentally address the problem. Also, the currency crises observed in Asia, South America, and Russia in 1997-98 as well as the financial crisis in Japan clearly indicated the problems inherent in financial capital like hedge funds which invites repeated formation and burst of bubble. If we could neither abolish nor leave money, we have no way but to preserve the positivity inherent in money, while abolishing its negativity –– supersession of money. To the end, we need to transform total characteristics of market and societies and to prevent capital’s globalization by introducing local currencies which is a de-fetishtized medium of exchange. 

According to Marx, market (commodity economy) begins between communities and gradually dissolves communities, replacing them with commodity relations in the process of reflecting and penetrating into community. With commodification of labor, capitalist economy, which is based upon industrial capital, is established, when any products becomes tradable in market. Polanyi, by adding not only labor, but land and money to fictitious commodities distinguishable from such primary commodities as products, compared the characteristics of market –– penetration into communities and multiplication in them –– to a “cancer.” Economic globalization is expanding and deepening, and now that cancer has spread into the body called the world economy, we could no longer get rid of it by surgery operation like the violence revolution. If so, would that mean it is impossible to overcome capitalism any more? Not necessarily. Creation of a new “counter-cancer,” which has the power of penetrating, spreading, and self-multiplying as in cancer and cannot be done away with because it has gene not easily identified as a cancer, must be able to gradually transform its body from within and change its overall characters by its self-multiplication that the program will bring about. It is through this evolutionary strategies that it becomes possible to abolish commodification of labor (human), land (nature), and money (medium of exchange) and to supersede capital and state. Of course, this does not mean abolishment of money or market itself. Rather, it is to create money or market of a new form, while immanently transforming the properties of the conventional money and market by applying the controlling power of in a “counter-cancer.” 

Seen from this viewpoint, LETS is especially worth paying attention among other local currencies. It is because LETS is endowed with the basic enabling itself to be a “counter-cancer” against capital and state. Such properties cannot be found in other local currencies, and they might be inevitably involved in capitalist economy by complementing national currencies. Under the existing circumstances, it is not necessarily going toward this direction, although LETS is the most prevalent and the most widely implemented local currency in the world. It is not wise, however, to merely admit or negatively evaluate such actual movement. Rather, through inquiring into the basic properties endowed with LETS as the program and questioning what it could bring about in the future, we need to theoretically recognize the quality of LETS as a “counter-cancer” and reorganize the actual movement. This should be underlined, because even the originator himself of LETS is not fully aware of such significances along with the quality, even though LETS has been spread all over the world. In order to understand the theoretical possibilities of LETS, it is essential for us to know the scheme of and the existing circumstances surrounding LETS. 

LETS was initiated by six members including Michael Linton as the leader in Comox Valley, a town with the population of 6,000, in Vancouver Island, British Columbia, Canada. There are currently 450 accounts for the LETS in Comox Valley, 100 out of which are sometimes used; 50 of which regularly; 10 of which frequently. The total amount of monthly trading is between 2,000 and 3,000 green dollars, which could not be called very much, but this is an enough amount of monthly trading to make paid off a handling charge for 25 cents per trade and an issuing fee for 1 dollar per sheet of detailed settlement bills, which should be regularly sent out.

To begin LETS, you have to determine the “registry” and the “trustee.” The registry opens accounts of participants and manages them, records trades, and sends out records of transactions to participants every month. The trustee determines the trading fees, supervises the system, and penalizes anti-social behaviors, while collecting and exchanging information with other LETS and dealing with the development of the system.

The participants (1) open their own accounts starting from zero, (2) list up goods and services that they can offer and what they want, (3) contact other participants when they find the item that they need in the list and negotiate about conditions like price, (4) once a trade is established, contact the registry and ask him or her to record a minus amount of the price in the buyer’s account and a plus of the price in the seller’s account. The participants could know about the other participants’ account balances and past tradings from the registry at the time of their trading. There is no interest imposed upon the account balances and none paid. Lastly, the administration cost is paid for the services from the participants’ accounts by internal currencies.

LETS is based upon each individual’s value— freedom and responsibility that accompanies it —within a community and responsibility that accompanies it. Therefore, LETS has four principles—“agreement,” “zero interests,” “co-ownership,” and “information disclosure.” The agreement means that to participate in and leave a LETS is free and that all exchanges are free exchanges based upon an agreement between the participants; the zero interests means there is no interests imposed either to pluses or to minuses in an account’s balance; the co-ownership means someone of the participants takes care of the supporting service for the LETS on the non-commercial basis, the cost of which every participants will be responsible for; and the information disclosure means that it is guaranteed that a participant will be given information at the time of action. Linton added a fifth principle, which is that they use an internal currency unit that has the same value as the national currency, to these four. Such a LETS in particular could sometimes be called a “LETSystem.” Comox Valley, where Linton began LETS, designated the name of their currency unit as “green dollar” and determined its exchange rate with the cash, or Canadian dollar, to be 1:1. This is for the purpose of being a reference for valuing goods and services, and to make it possible to show, for example, a commodity’s price by cash together with green dollar like “10 dollars (or payable by green dollars up to 20%).”

Let us see the administration method of LETS a little more concretely. If you participate in LETS, you will be handed a plastic card with a printed text of “Comox Valley LETSystem” with green letters. There is the participant’s name printed on the card, which serves as the account number, or the ID#. Participants and stores will receive sheets for recording, on which the date of trading, price (amount), and description of the trade are to be put. Participants will also receive a catalogue of goods and services offered and needed which is regularly issued. Participants will make trades taking a look at it and in a periodically send out a filled-out recording to the registry by fax or mail in a certain interval. The registry will calculate and record the amount of tradings and balances of each participant’s account by inputting them into the computer software for the management of accounts. This is a prototype of LETS. Later on, they attempted an improvement in data input by online systems, the introduction of an automatic processing system of detailed bills of trading, and a development of printout technology and of other functions, and IC cards, electronic wallets, and an electronic money version of LETS by means of card readers have already been realized in Vancouver Island.

The actual exchange will be like the following. A buyer calls the administration office leaving a message in the answering machine like this: “This is David Higgins, #35, and please record the plus of 100 green dollars in the account of Ms. Cathy Macintosh, #220, as a price for a computer lesson.” The registry writes this information in a record book and then inputs it into a computer. As a result, Cathy receives the black of 100 green dollars and David receives the red (or “commitment”) of 100 green dollars. David does not have to have 100 green dollars in his account before he pays them, while Cathy can buy a used Volkswagen van, which she saw on the list, for 1,000 green dollars from Mike, if she is confident that she could expect more income from now on by teaching computer lessons. As a result, Cathy’s account will have a red of 900 green dollars. Furthermore, if Mike asks David to repair his house’s roof for 300 green dollars, as a result of these three trades, Mike’s account balance will be the black of 700 green dollars, and David’s the black of 200 green dollars. The amounts of blacks and reds in each participant’s account will change after each trade, but it should be noted that the total of pluses and minuses of the accounts of all participants will always be zero. (In this example, the total of the accounts of three participants is 200+(-900)+700=0.) Because of this, there will be no credit creation produced in LETS. As each participants mutually gives and shares reds, they make their tradings of money and services smooth. 

(Figure 1)

6. Theoretical Specifics and Significances of LETS

LETS has several features not shared by other local currencies. Even though some of its characteristics resemble (those of ?) ordinary currencies, LETS does not have physical money unlike national currency or bill-type local currency. In addition, LETS is similar to credit such as deposit money; nevertheless, they are not the same. Despite their similarities, LETS is not currency or credit per se.  This seems to be technical and systematic micro differences, but their implications are extremely important both theoretically and in practice, because such micro differences are the key and clue to project a totally different social and economic system from the capitalist market economy. It, therefore, requires following microscopic analyses.

(1) Adoption of “dispersive issue system”—Establishing freedom of currency issuance as the right to issue money and equality of the “right to purchase” 

In contrast to the central bank notes (non-convertible paper money) issued by central banks, or bill-type local currencies by its administration committee, in LETS, each individual creates money when they record a certain amount in their accounts as reds to buy goods and services. Instead of the “concentrated” one, LETS adopts the “dispersive issue system.” In this system, each participant issues money as they need independently of arbitrariness of central banks’ money supplies and monetary policy or of financial institutions’ loan plans. This implies to concede the right to issue money as freedom of money issue to participating individuals.  This fundamental economic human right –– the different kind of right from inviolability of property or freedom of contract –– secures individual’s economic independence and thus, LETS expands the meaning of economic freedom. 

Each account of LETS starts with the balance of zero, however, since it allows reds in the balance, each individual can buy without possessing money beforehand. In other words, unrestrained by the “monetary constraints” given by the amount of money possession, participants can enjoy “the right to purchase” equally at any given moment. As a result, LETS socially guarantees this right, which is monopolized by money as the general equivalent in capitalist market economy. Here money is no longer scarce goods issued and managed by a single subject, but is the commons, which are open to and shared by all individuals. Because the free issuance of money eliminates the scarcity of money, we can expect more active trades. Meanwhile, each participant comes to have the responsibility to take care of his/her own red and the ethical obligation to return it spontaneously to the community. However, when organizations like government, firms, NGOs, NPOs, or cooperatives participate with their own accounts, they could not control the increase in reds just by self-responsibility. Therefore, it is more preferable to have a certain limit in the amount of red, loan funds (debt financing), or vote type of finance (equity financing). 

(2) The Currency That Bears No Interests

LETS is a currency that does not bear interests (and may have minus interests).  As such, it could prevent accumulation of money and self-valorization of capital.  The speed of the circulation of currencies will be accelerated and the absence/minuses of interests could change our time concepts by driving not the “hoarding” but the “use” of money.  When the interest is plus, we underestimate the future by discounting the income in the future.  If the interest is zero, the present income is as highly estimated as the future income, or if the interest is minus, the future income is estimated more highly than the present income, and, therefore, long-term projects that could produce income in the long-run like foresting, culture, academic research, and education are accelerated.  As the participants, therewith, will have to consider not only the present generations but also those of the future, they are supposed to trade with such problems as the global environment issues, culture, and education.

(3) The Formation of the Autonomous Dispersive Market That Can Build Equal Relationships between the Seller and the Buyer

Although LETS is an autonomous dispersive network, like conventional markets and the Internet, it constitutes a market of a new form that is different from ordinary markets that are based on usual money. The LETS market is not formulated by a collective control or a holistic control, but is put into an order in a self-organizing manner as an accumulation of the autonomous processes of individual purchases. The trades in these processes are made between actual individuals in the over-the-counter manner, but they are not barters that require the “double coincidence of wants” and can become highly difficult to realize. LETS is, on the other hand, certainly similar to such trades as those in ordinary markets where money holds a basic initiative, but the absolute privilege that a ordinary money as the equivalent form holds has been removed, as money has already been transformed into a medium that can be freely created and is not scarce any longer. Therefore, the relationship between the buyer and the seller becomes more equal and flat than the asymmetrical power relationship between the relative value form (commodity) and the equivalent value form (money) described by Marx. With the LETS, a “fatal leap” (salto mortale) from commodity to money, which is inherent in selling, is replaced by, as it were, a “small leap.” This also appears in that not only the buyer but also the seller can have the initiative of the trade as a catalogue of things and services, for instance, provides with demands of the buyers as well as offers from the sellers. Pricing of goods and services will take in various values in addition to economic ones referring to customary markets of the past or of the neighborhood. We will see here, therefore, more examples of “the law of various prices” in the dispersive market rather than “the law of one price” in the concentrated market.

In the LETS, like in other local currencies, volunteer activities and mutual help can be quantitatively evaluated and could be paid for them. Volunteer activities, which are called an act of altruism without any compensation, have various problems. Non-reciprocal gift giving does not only psychologically require a return, but also there are not a few cases that the receiver could have an inferiority complex and a sense of debt if he cannot return to the giver. Furthermore, it could, on the contrary, degenerate economic independence and mental, personal independence by pumping up with the receiver’s dependency. On the other hand, the giver can also ask for a personal benefit such as psychological satisfaction or gratitude from the receiver without noticing it. As such, volunteer activities can constitute an unequal?, non-mutual relationship between the two, which could cause a friction or a conflict. As they sometimes could escalate into hate or antipathy, the relationship between them could be damaged to the extent that they cannot be repairable. The acts of gift-giving and returning and of mutual help could produce a strong sense of bond or a communal feeling, but it requires one a sense of belonging and loyalty to a single community and applies communal sanctions like seclusion and disregard to those who do not return for the gift received. Furthermore, as gift-giving and returning are not quantitatively evaluated, there is always a sense of unequal remaining in both sides in those situations where there is a ubiquitous sense of inequality in the market. We don’t necessarily neglect a longing for a “good life” or altruism as a total impossibility, but we don’t think that we should accept the negative side of them, or, in other words, the asymmetry between the two and the antipathy that originates in hidden selfishness and in the sense of equivalence. To correct this, we should neither isolate the relationship between the agents as a creditor-debtor relationship between the two, nor quickly embed them into a reciprocity that is restricted by the holistic structure of the community.

As is said by Nietzsche, a personal sense of indebtedness and a relationship of responsibility and obligation are materialistically and economically based upon a liability relationship like the credit-debt relationship. If so, we should overcome those negative sides of volunteer activities and mutual help by changing this. LETS can give a solution to this problem by replacing a credit-debt relationship with a relationship between individuals by means of multilateral settlements mediated by a community and by expressing it in terms of single-dimensional numerical figures. LETS does not directly indicate balances between individuals, but it quantitatively indicates an individual’s balances to the community by the standard of zero. In this case, the receiver of volunteer services does not directly have to pay to the volunteers but may return to anybody who belongs to the same community, and so he does not have to have a sense of indebtedness to the giver and he could be, on the contrary, more independent by trying to contribute to the community as much as he can. The volunteer, as long as his is not an act of exchange based upon a mere selfishness, can doubly contribute by donating the return he received to the third party, and can show the voluntary nature of his own act by doing so.

As practices of bill-type local currencies, issuing authorities have distributed a certain amount of local currency to senior citizens for them to pay for volunteer services that they received. However, this could only leave the receivers of the services with a sense of indebtedness and of dependency, and the problems that we have seen above cannot necessarily be resolved. Some local currencies like the Ithaca HOURS of the United States, as mentioned above, are linked not only to a national currency but also to “labor time,” but that is not a necessary condition for a local currency and it is highly likely to make it difficult to operate the system sooner or later. It is because those viewpoints like the relationship between individuals mediated by the community and the sense of lending and indebtedness to the community get weaker and the sense of equivalence will become prominent—as long as exchanges are based upon working hours and, as a result, exchanges of equal labor time will be aimed at. You can, of course, refer to “labor time” and “labor value” in over-the-counter trades as one of the standards for a fair exchange and there is indeed such a LETS in England, for instance. However, you don’t have to set it up as a basic standard for exchange with the LETS.

(4) The Multilateral Settlement System of Credits and Debts for the Community

LETS is not only different from the banknotes or bill-type local currencies but also different from checks and bills that are issued by an individual (a natural person) or a juridical person. Those credit currencies like checks and bills circulate among receivers and are paid back when they get back to the issuer. It is at this moment that the issuer’s debt is resolved and the credit currencies are eliminated. On the other hand, a private bank creates credit by issuing deposit money to lend to companies within the limit of a loan preparation rate. In this case as well, the debt is resolved and the same amount of deposit money is eliminated when the loan is returned to the bank, but it is still unknown if that is a return of the same currency that the bank has issued.

The black and red in a LETS are, on the contrary, incessantly newly created as flow during the process of over-the-counter trades between two participants, while they are added to the outstanding blank and red in the two parties’ accounts and will be offset. As or Since the past black and red balances of the whole participants are mixed up with a newly produced black and red and are gradually eliminated through such a chain of over-the-counter trades, those black and red are settled among participants in a multilateral manner. While a check or a bill that an issuer writes will be eliminated when they reach the original issuer (after each of them constitutes a circle), the black and red of the LETS are produced by a participant at any moment constituting numerous circles that take different paths and are gradually eliminated for various time periods. (This process rather looks like an example of the above-mentioned credit creation. The difference is that money appears and vanishes only on the banks’ balance sheets at the time of repayment in the case of credit creation and the difference in interest between lending and deposit will become the profit as a result of it, while money can be issued and vanished in anyone’s account and there is no profit made in the case of the LETS.) What makes it possible is that the black and red balances in LETS are not credits and debts between account holders, as voluntary participants, but are credits and debts to the local community that is the collective of all the participant subjects. Therefore, the black and red are not the relationship of rights and obligations based upon the contracts that are in accord with civil law. The red is rather “a promise or a commitment by the people of the community as well as for the people.” Therefore, even if it seems that an individual directly makes a contract and has a promise with another in an over-the-counter trade, it turns out that they are actually always indirectly related by way of the community they belong to. For the time being, there is no positive law that defines such a relationship between an individual and a community. While each LETS can define a rule about the maximum balance of a red by its own accord, the relationships between participants to a particular LETS should be basically ruled by individual ethics, unless they are controlled by legal restrictions.    

(5) The Principle of Collective Offset (The Zero-Sum Principle)

Each participant in LETS has an account balance in black, in red, or of zero at a particular moment of time, but the total of all these amounts in sum is zero anytime. In a macro perspective, in other words, the financial asset of a community is always zero. This “principle of collective offset”(or the zero-sum principle) is a major characteristic of LETS. One cannot create credit in a plus-sum manner like in the capitalist market economy under the zero-sum principle. An individual or a group can make profit momentarily and sporadically in LETS, but it is impossible for capital, which increases its values ad infinitum, to exist in a long term and in a general manner. By doing so, LETS eliminates the general formula of capital (M-C-M’) and supersede capitalist economy.

One could see, after a large amount of trades and exchanges, that both black and red balances in all the accounts become zero in. If that does take place, it means the very appearance of an economic system that has no money or credit as stock although a currency has indeed mediated many flows of economic trades. This is an “all zero” point where all the numerous circles of reciprocal exchanges have been enclosed and a reciprocal exchange system is established. At this point, the amount of each individual’s income, which equals the amount of consumption, is various and different from each other, but both money and credit completely vanish since there is no credit or debt (gift and its reception) to and from the community by all the participants. The “all zero” point symbolically indicates that a currency within a LETS only exists in a “transcendental” manner. It is also a “regulative idea” as a reference point that ethically restricts individuals’ trades who have too large balances of either black or red due to the desire for an economy without money. However, the “all zero” point can only be attained accidentally and if attained, cannot last, even if all the participants make an effort to minimize their own balances up to zero as much as possible based upon the “regulative idea.” It only exists as an “idea” that ordinarily cannot be attained.

According to the formulation of the quantity theory of money, or MV=PY (M: money supply; V: velocity of money circulation; P: price level; Y: total net yield), the amount of monetary trade on the left side (MV) always corresponds with the total nominal income on the right side (PY). In other words, the M, or either money supply or nominal monetary balance, will be in proportion with the total nominal income, PY. In LETS, however, the sum of red balances of a whole community, which is an equivalent of the nominal monetary balance, is not in proportion with total nominal income, because blacks and reds are multilaterally settled. The relationship between them can be various depending upon the multilateral settlement relationship. This particularly will be clear at the “all zero” point of LETS, where the nominal monetary balance equals zero in each individual account (i.e., in a micro perspective) as well as in the whole community (i.e., in a macro perspective) while the total nominal income is a plus, and so there is no relationship between them. Thus, a society of a new market economy where economic income and wealth are not necessarily related to money, or financial asset, will be attained.

(6) Trust Money and the Reputation Principle

What the zero sum principle indicates is the simple fact that the participants in a particular LETS community support each other through credit and debt to and from the community. This happens regardless of each participant’s own black or red positions and even if the positions may change in the course of the time. However, as we cannot translate the whole situation of black and red balances into the relationship between individuals, it is not clear who supports whom.  Because of these facts – the mutual complement between participants and the impossibility of reducing the balances to individual relations – LETS is the “trust currency” realized by commitment to the community and through trusts between participants. 

The bond between participants is created through the trust to the community, not by direct contact between individuals. Since ethical elements which originate in the relationship between individuals and a community, have already been deeply embedded in the money as an economic medium, the duality of LETS – being economic as well as ethical – will emerge.  This is a nature immanent in the system and not a nature that is brought from without, such as the one that could be used for whatever purpose—economic or ethical. This is another major nature of LETS, which is different from other local currencies.

Because of such a nature of LETS as trust money, the participants are always forced to examine their own positions in terms of their relations to the community. Because of this, an ethical consciousness that one should contribute to the community, not to oneself as individual or to the others will be formed. Such a device is endowed in the LETS. Because of the device, each individual can respect his or her own value by being aware of their being essential to the community and more actively express his or her own creativity or originality in the community. Just by thinking what one can post in the “offer” list, for example, one could not only actively develop and evolve his or her own potentialities, but also those who lost their jobs and confidence in themselves could recognize their abilities and be able to recover confidence in themselves as someone who is able to contribute to the community.

The following opposing questions must rise, however, if I say LETS is trust money. Do those who only accumulate their reds and would not return not show up? How will LETS cope with such a moral hazard? To answer these questions, we should think of two aspects—trust and reputation.

First, the trust in LETS is not created between anonymous individuals or produced out of spontaneous bonds like local connections or blood relations. LETS adopts a membership system, which is different from bill-type local currencies that can be used by anyone. Due to this nature, it may be assumed that those individuals who have agreed with its basic ideals or rules have voluntarily participated. In addition, each LETS has participants who actively agree with various themes and interests such as economic stimulation of a particular region or a formation of a community, environmental protection, or feminism. LETS is formed in a thematic community that consists of individuals who deeply share a particular idea, value, and interest. The more the shared idea, value, and interest have such importance that makes the core of the identity for the individuals, the stronger trust is expected to attain as they cannot easily abandon it. In short, the higher values and ideas the LETS displays, the firmer the bonds created in the community will become. This, in particular, applies to social movements that assume a sharing of high ideas and values such as NAM, a social movement against capital and state. Individualistic betrayal should be checked because of ethics based on one’s own commitment to ideas and values—not of utility like the fear for punishment—in such a community. 

Second, participants’ behaviors are also restricted by the “reputation,” which is evaluation by the others. The information about trades between participants and their accounts is open to pubic, and so trades of accumulators of red balances will be restricted either since the reputations of participants who accumulate too much red balance will become lower or since those of participants who earn much black balances by trading with these will become lower. It should be noted that such a reputation principle is a sort of ethical restriction that itself comes out of a “regulative idea.” The participants would hope to continue accumulating red balances and keep on consuming, but it is—in principle—impossible for all the participants to have red balances due to the zero sum principle. If there is a participant who accumulates red on one hand, the same amount of black should be accumulated in another participant’s account. The holder of black balances sees anything unbeneficial since they could use those blacks without any inconvenience. Since goods and services will never be circulated and black balances, which are purchasing power, will never be produced without those participants who create red balances, it can be said that they indeed contribute to the community in a sense.  In short, there is a systematic nature within LETS, which would not allow the participants to be selfish even though they all may want to be. LETS is a system where nobody can be selfish even though all the members would hope to be, as is different from conventional market economy: ethics is internalized not in individual moralistic emotions or conscientiousness but within the system itself. Despite its surface appearance of vulnerability, therefore, LETS is actually a flexible and strong system that would not collapse even though there may be a certain number of unintentional red balance accumulators and intentional free riders. In the theory of “the tragedy of commons,” the commons will become desolate because all the grasses will be eaten up, if all the members become selfish and leave their sheep as they want to in the commons. This applies to the example of public goods very well. In principle, however, we will not see this kind of problem in LETS since all the members cannot have red balances due to the zero sum principle. The problem arises not from the possibility of the existence of the whole system but rather from each participant’s sense of justice, or what Adam Smith calls “sympathy.” 

Sympathy is a moral emotion that one holds when he puts himself in someone else’s shoes, not a natural sympathy like compassion and fraternity or altruistic humanity. While we repeatedly have such imaginary exchanges of positions through experiences of seeing and being seen, we become able to have a moral judgment on fairness and justice from the perspective of a fair observer. If a person has too large an amount of red balance, the gap from the point of “all zero,” or, for example, the “dispersion” (=total of the square of each account’s black or red balance), will become larger. If it goes beyond the limit of most participants’ sense of fairness, they will note the unfairness of the situation and stop trades or leave such a community. (If there is a person who has a large amount of black balance, there would not be any sense of injustice, since they understand it is a result of having offered goods or services.) LETS will see a crisis at such a moment. Reputation, thus, expresses ethics for the community of each individual who recognizes a deviation from a regulative idea as injustice and does not necessarily represent each individual’s benefit. It is certainly desired to decide rules beforehand in order to have a standard among all the participants since the judgment on how much red is regarded as unfair would be various, even though the sense of justice would work naturally to a certain extent. For example, we make such a rule that a participant cannot make a new purchase until he reduces his red balance by offering goods or services, once his red balance has exceeded a designated limit. 

There are many ways to decide a limit for red balance—there are some cases in which the limit of red balance is the same regardless of the amount of the cumulative total trades; there are other cases in which the limit will be raised according to the amount of that used for all the trades. Either way, LETS can be operated in a more stable manner if we set up such rules on justice.

As such, LETS is an attempt to share a money as commons that has itself dissolved commons—by trust created by the membership system based upon values and interest and by reputation and rules based upon the sense of justice—and to build up trust.

(7) De-fetishism

LETS eliminates the fetishism of money and the accompanying desire to hoard or accumulate, by clearly indicating that the essence of the money does not lie in the physical substance of its materials like gold, or in its scarcity and economic value, but lies in informative record of exchange relations. As long as bill-type local currencies take the form of paper money, or debt notes, it still generates illusions among users that those materials (paper or bill) have values in themselves; hence, it will not completely eliminate the desire to obtain and store them. Moreover, since such local currencies are issued by third-party institutions, like administration committee, we tend to feel that those currencies are not “what we own,” but “what they created” like national currency —the passive consciousness toward money’s “given-ness.” This prevents us from having the ethics that we have responsibility precisely because we are involved in its creation. Further, symbols like pictures or figures printed on each piece of bill-type local currencies visualize the collectivity of a community; hence, it is inevitable that sentimental or sensual characters will be attached. As we can see here, local currencies of these types rather take advantage of the fetishism of money as the source of drive, while LETS eliminates this completely. It is because LETS is a “medium of exchange of the people, for the people, by the people,” indicating most simply and clearly that it is the form of exchange people create by themselves. LETS is, therefore, the de-fetishized and democratic medium.    

(8) The creation of a new market economy through the mixed use of national currency and LETS.

LETS also uses national currency as a transitional measure. Take an example of bread, which was baked with organic wheat. Its price is indicated like “one dollar + one Green dollar:” the cost need to be paid in national currency like fuel and transportation fees is indicated in national currency and other costs in LETS. This procedure allows producers to participate gradually in the sphere of circulation of LETS without excessive burdens from the start. At the beginning, LETS would attract only some portions of agriculture and fishery (the primary industry), or of service, information, distribution, and commerce (the tertiary industry). Along with the extended uses in these fields, however, its sphere of circulation will expand in the primary and tertiary industries, involving manufacturing such as iron, automobile, or computer. During this process of enclosure, LETS will also play the role of complementary currency to national currency. Nevertheless, without surrendering to such a position, participators can change the degree of involvement gradually in accordance with individual free wills. The wider economic spheres LETS encompasses, the more portion participants can pay in LETS. By gradually involving related production of price processes, the sphere of circulation of LETS expands while eroding profit-oriented businesses in ordinary markets. This gradualism is the characteristic of LETS.

Consequently, if we can include both business and volunteer fields to the sphere of circulation of LETS, the boundaries between egotism and altruism and between market and non-market economies will be nullified, and the new non-capitalistic market economy will emerge. LETS is the strategy to pursue associationism that simultaneously realizes both independence of individuals and cooperation (Kyodosei) of society, going beyond the traditional dichotomy of liberalism and communitarianism or of individualism and collectivism. 

(9) Communication media and Non-Anonymity/Information Disclosure

Ordinary currency has produced independent individuals as the subjects to choose in purchase. By securing the anonymity in selling and buying, it has also established the sphere of individual privacy. In this sense, the market economy has built the foundation of liberalism and individualism. Nevertheless, recent biased expansion of freedom as consumers and investors promoted by globalization has brought about decline of linguistic communications.

LETS presents a solution to this problem as well. For example, in Multi-LETS that we will explain in the next section, the very meaning of choice and money possession is diversified. If each LETS forms a thematic community expressing various values, interests or philosophies, the portofolio –– selection of which LETS to possess with what proportion –– is no longer determined from a single viewpoint of maximization of economic value, but also from various cultural, philosophical or normative values. Because LETS is endowed with a characteristic not only as a economic but also as a cultural, social or ethical media, the monetary communication through LETS comes close to the linguistic one. These two communication forms are no longer entirely separated, but rather will be compounded and integrated as a hybrid LETS will aim at enriching communications through the change of the property of money, which itself has jeopardized the linguistic communication.

In spite of the anonymity formed by money, the proliferation of credit cards or debit cards practically diminished the realm of individual privacy—the possession of personal information by credit companies or banks has been threatening it. If this is the case, then, it is plausible that we rather selectively open the large part of anonymity to the public spaces of Multi-LETS. Anonymity or privacy is one of the conditions for passive freedom, yet not an absolute condition for freedom. LETS has often received a criticism on its incapacity to protect privacy, because it discloses the information of transactions and balances of all participants. But this is not the case, since it is completely up to the will of individuals to decide whether they participate in or in which LETS or what transactions they engage. Individuals can determine the degree to which they involve themselves in diverse sphere of circulation called Multi-LETS. Rather, LETS is the system, which expands the meaning and realm of freedom, and prepares a circuit that leads individuals to the multiple public spaces. 

(10) The formation of real/virtual communities and multiple belongings of individuals by multi-LETS  

Because of the membership system in LETS, "blacks and reds"; circulate within the "local" or "community" which is composed of all members. Not only does this mean a "real community," places of residences like a town or a village, but it also includes the “virtual community” formed by the people who share a value or interest. Such community is, therefore, not a closed one, which allows only a single belonging to a natural and passive commonality, such as the kinship or territorial bond.It is rather a topological space, in which various individuals can consciously and actively participate according to their values or concerns. There should be no rule that only a single LETS is allowed for each individual to be part of. They can join several LETS simultaneously at their own choices. This is called Multi-LETS. Each person can express her or his individuality by this multiple belongings in multi-LETS.  Any given two individuals can exchange in any LETS where both of them are members—whether virtual or real. Here the meaning of the “local” is expanded from a “closed community,” which forces single belonging, to a “open community” allowing multiple belonging. The meaning of “freedom” and “responsibility” has also expanded from those as consumers and investors in markets, and now becomes those accompanying the choices of multiple belonging to LETS. Since each LETS reflects a “unique” value or interest, it forms its own space independent of each other, and they are generally incommensurable. Let us explain this point in more details. 

The Figure 2 describes eight spheres of circulation of LETS from A to G and X. 

Now that if each of them has a different circulation realm, it indicates either a real physical space or a virtual one, each of which centres on the sharing of a interest or value. The LETS of a larger circle means the larger participants in number than a smaller one. I will set the one with the largest sphere of circulation on the Figure 2 as X, and the one with the smallest F. These seven LETS from A to G have their own centres and different sizes of sphere of circulation. They exist in a single surface, while some of them are partially overlapped with others. On the other hand, since X includes all these spheres of circulation of LETS in it, all participants belong to it and have accounts in it. This model—this surface as the platform—is implemented by technological devices equipped with the basic settings of LETS, such as Internet or IC cards . Therefore, each LETS has a basic set-up in common, although they are varied in geographical spheres of circulation, value, interest, or administrative methods or contracts (rules like limit of red balance and of participants).As one individual keeps several bank accounts or credit cards, each of us belongs to various LETS at the same time. Which LETS one belongs to characterizes individual personality. For example, a female high school student living in Tokyo, who is interested in ecology and welfare, will participate in LETS-ecology, LETS-welfare, LETS-feminist, LETS-high school, and LETS-Tokyo. On the other hand, a festival-crazed shop owner in Sapporo’s Tanuki-Koji shopping street, who is in need of part-time workers and also interested in nursing, will take part in LETS-Tanuki-Koji shopping street, LETS-festival, LETS-welfare, LETS-part-time job, LETS-Sapporo and so on. 

Let us generalize these examples. The squares a and b in the Figure 2 refer to two individuals. The person a participates in LETS A, D and X; meanwhile, b in five LETS (A, C, D, E and X). The groups of LETS one joins characterize his or her personality. Both a and b belong to A, D, and X, while only b is the member of C and E. This means that they can trade in A, D, or X LETS, but not in C or E. Apparently, any given two individuals (or organizations) can trade only within their common LETS. Among these three LETS (A, D, and X), since the sphere of circulation of A includes that of D (in other words, the sphere of circulation of A has D as its partial set), this local currency covers a wider area than D; so does X against A. The Multi-LETS, which is the compound of local currencies with both real and virtual aspects, forms several layers, many of which partially overlap each other. Thus, the Multi-LETS has not only multiplicity or diversity, but also multi-layeredness, which is generated not by the power of the center, but by spontaneous participations by individuals.

Now, a question concerning the commensurability among LETS would arise: if we can exchange local currency A and local currency D in the Figure 2 with a certain ratio like foreign exchange rate. Say (A : D) is (1 : 2); then, it seems possible for the person a to change the black of 100 in A to the black of 200 in D. However, this will cause the decrease of black in A by 100 and the increase of 200 in D. This goes against the principle of LETS—the “zero-sum principle.” In order to keep this principle, the “exchange” should be allowed only if there are two individuals a and b, who are both the members of A and D, and if they agree upon the “swapping” of each currency. In this case, a and b can swap with whatever the rate they both agree on on an over-the-counter basis. Let’s say a’s account balance is (A, D)=(+500, -200) and b’s (A, D)=(-300, +200) and they agree that with the exchange rate of 1 : 2 they will swap a’s black of 100 in A with b’s black of 200 in D. As a result, a’s balance will be (+400, 0) and b’s (-200, 0); however, the sum of both persons’ balances stays (A,D)=(+200, 0) before and after the trade. Thus, the zero-some principle has sustained. If we determine that this swapping is allowed only for blacks, both persons’ accounts in A and D will come closer to zero. Swap will urge each LETS to come close to the “point of all-zero,” and it forms a movement toward “regulative idea.”  In fact, because of the lack of official setting of exchange rate, A and D are not generally commensurable; but they are commensurable between two individuals (a and b). In other words, rather than having a widely transferable variable phase being shown at once, transactions between individuals discover each time the invariable phases that are only locally transferable. By not connecting different LETS with exchange markets as in dollar or yen, Multi-LETS has quite a unique spatial structure like we have seen. 

Generally, each LETS has geographically different spheres of circulation. A sphere of circulation of LETS can be inclusive to that of another, partially overlapped with others, or possibly completely independent of each other. The structure of such a Multi-LETS is not organized in the form of a tree, but is organized in the form of what Christopher Alexander calls a semi-lattice.

It has not only multiplicity and variety, but also multi-layers. In other words, Multi-LETS is the multiple various bodies—rhizome—developed on a single platform. Each LETS can maintain its own individuality, not completely reduced to others. Moreover, any individual who belongs to various LETS will have his or her unique position in a certain part of this Multi-LETS. In other words, by keeping a unique position in multi-layered, numerous and various circulation spaces, each individual manifests his or her singularity, which cannot be reduced to a single dimension or a space.

(11) The Implementation of Multi-LETS by using virtual money

Although we can implement Multi-LETS in such a conventional manner as recording on bankbooks orbalance sheets, it is more convenient to use electric money (virtual money), such as IC cards or networks. The software to operate and administer LETS on the Internet have been already developed. LETS has, therefore, overcome the limit of physical space and now can be used in a global virtual community. The group led by Ken Suzuki developed the system called Glocal Exchange Trading System (GETS:http://gets.sourceforge.net). 

This system allows, not only a server to automatically handle transaction records, account management or information publications, but also participants to run the registrations of membership, listing of commodities, and settlement of trades on the web. Also NAM’s Q project, led by Ippei Hozumi, developed the prototype of system for LETS called Worldwide Intercourse Network Development System (Winds: http://www.nam21.org/˜q-project/lets/winds.cgi), which has almost the same function as GETS, but is more user-friendly. “Q” is the name given to the unit of local currency original to NAM. The project plans to start the Winds within the year 2001 to start LETS non-NAM members can also join.  

The drastic decrease of troubles for participants to record each transactions or for a registry to maintain accounts is not the only merit of these systems. More importantly, it is remarkable that, no matter where or in which country or region a person lives, people can start LETS at once by forming a virtual community, only if they share values, interests or ideas. Just like mailing-lists, which connects the people around the globe through e-mails, LETS connects people through local currency. When we can provide a free LETS creation website, in which anybody can just start a new LETS simply by registering e-mail addresses, just like today’s free mailing list creation websites, such as FreeML or eGroups, where we can make a new mailing list in some minutes, people can set off and operate a new local currency without much trouble and LETS will start to multiply radically in number. If we can further create a Multi-LETS network by mutually linking LETS on each server, the space for Multi-LETS we have seen in the previous section can be deployed on the Internet.   

In the Figure 2, we drew four participants (a, b, c, and d); however, in reality, the points on the surface of the graph—individuals (or organizations)—could be limitless in numbers.  According to the sets of local currencies to which they belong, each of those individuals can be described as a∈｛A, D, X ｝，b∈｛A, C, D, E, X｝，c∈｛B, X｝，d∈｛X｝.  It is, therefore, possible to describe the account address of each person in relation to servers like e-mail addresses; for example, the author’s account of a local currency will be nishibe@xxx.yyy.zzz , which indicates the server of the LETS.  If I had several LETS, I would have plural account addresses of LETS, such as nishibe@xxx1.yyy1.zzz, nishibe@xxx2.yyy2.zzz2, nishibe@xxx3.yyy3.zzz3. In reverse, we can portray each LETS as the set of participants like A={x│x∈A}={a, b, ...}.

Michael Linton already developed the platform for Multi-LETS and started to use it in Comox Valley and elsewhere. 

This system is comprised of IC cards (smart cards), electric wallets and card readers. 

This IC card allows us to have LETS accounts up to 15. 

The small electric wallets, when we insert two IC cards, can show the balance of each LETS and transfer blacks between two accounts in the same LETS; hence they are used for trades among individuals or between an individual and a shop.  The card readers are used in the same manner as those for credit cards at cashier’s counters.  This platform allows us to pay by the mixture of ordinary currency and LETS.