A newsletter of simple
ideas #16 -- July 1999
A Barter Community Recap
At the end of June, I sent invitations to people all around the greater Seattle area, inviting folks to gather and discuss creating a new barter community here in the Emerald City. This month's article will recap what information we covered in terms of what kinds of systems there are out there, and also report on what the general consensus was for the next step.
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Money-Saving
Tip: Ask around. I've gotten lots of stuff for free simply by letting people know that I wanted it. Sometimes they wanted something in exchange, often not. I've gotten a beard-trimmer, a TV, furniture, and dishes just by letting people know that I could use them. (You can start off by checking out Free Market to see what others have to offer, or to submit your own listing.) Comparison shopping is another good way to save money by asking around. Call places that sell what you want to by and see who has the best price. Ask for specials, see if they'll match competitor's prices, and ask if there are any "extras" that they can throw in to sweeten the deal. (It's helpful if you know exactly what you want when comparison shopping..."window shopping" on the phone isn't as effective.) Ask your friends where they got good deals. After all, you aren't the only one in this world looking to save money. Perhaps you can save yourself some effort too...just by asking around. |
Types of Systems
I started out by covering the two basic types of barter systems that are out there: mutual credit systems and fiat currency systems. Fiat currency systems are easier to understand but harder to implement.
Fiat currency is what our federal currency is--dollars. Fiat in Latin means "let it be done." That's how fiat currency comes into being--some group or agency says "make it so" and there is money. The government says there's federal money, so there is. Barter systems like IthicaHours (of Ithica, NY) use this system. The group sponsoring and organizing the currency prints bills, checks, or whatever kind of token to be currency. It then has to regulate the amount of currency in circulation to avoid inflation or deflation of value (like the US Treasury has to do with your handy dollars). That's the problem with fiat barter currency; the proper amount to have in circulation fluctuates depending on factors like the number of people in the barter group, the success of the group, community/business acceptance of the currency, and so on.
Mutual credit works in a way more like how you might keep score of pick-up games of your favorite summer sport or card game. When folks start out as a member of a mutual credit system, their account is equal to zero credits (or units, or whatever you want to call them). When an exchange is made, the value agreed to by both parties is deducted from the account of the person paying in credits, and added to the account of the person being paid. For example, Dawn and Brad both join a mutual credit system at the same time and agree to their first exchange. Brad teaches Dawn a one-hour Spanish lessons for 7 credits. After the transaction is recorded, Brad's account will be at 7 credits, and Dawn's will be at -7 credits.
The sum of all accounts should always be zero, and a person's balance between contributing and receiving can be judged by their balance. Someone who is giving to the system more than they're taking out will build up a large positive account, while a person taking more than giving will build a large negative account. A person doing about the same of each will be close to zero. This system allows the system a sort of self-policing of its members. If Heather wants trade with Hank, but she checks the balance of her potential trading partner (something everyone in a mutual credit system can do) and finds that his account is -1,597 units, she can decide not to trade with him because he seems to be doing an awful lot of taking in comparison to his giving.
Three Systems
Having covered that basic ground, I talked about why I wanted to create a barter system. First, I wanted to create an organization that would help individuals become more self-reliant and community-reliant; an organization that would help folks reconnect with their own skills, creativity, and sense of interdependence and teamwork. Second, I wanted to help folks find creative ways to both save money and reuse or recycle stuff that would ordinarily go into the garbage system. Third, I wanted it to be easy. Since mutual credit systems require very little central authority and no printing of currency, I selected three possible mutual credit systems to present.
Block Barter Bucks were the first. Essentially, it is an extremely simple honor-style mutual credit system. Everyone fills out a sheet with tools they wish to share, skills and they have to offer, and what their needs are. All members get a copy of everyone else's sheet, which becomes the basis for finding what you need. Everyone also gets a grid sheet with two sections: Earned and Spent. When a person does a service, the one receiving the service would initial a number of boxes in his Earned grid. He would, in turn, initial a number of boxes in the Spent section of her grid.
Local Exchange Trading System (LETS) was the next system we looked at. It is a more complex system, but with that complexity comes a number of benefits. There is a central group of people who "run" the system. A record-keeper acts as a third party for transactions, ensuring that all transactions are properly recorded and that everyone's records are accurate. A group of interested members forms an advisory panel for making improvements to the way the system works, airing complaints, and so forth. The Steward acts as a leader for the organization, getting feedback from the advisory panel, acting as liason with the panel, the record-keeper, the members, and folks outside of the group. The Steward basically makes sure that everything is working smoothly and that everyone is satisfied with how things are going.
The units in a LETS are tied to the national currency, making valuation easy. Instead of giving $10 for a haircut, you give 10 units. Like with money, the amount is negotiable. The drawback to this is that if something goes haywire with the national economy, the same thing happens to the local barter economy. (Some systems use the hour as the basis for value. In these systems, an hour is usually a non-negotiable unit--an hour of lawn mowing is equal to an hour of house-painting.)
A big benefit of a LETS is that it's a popular model to use. The "LetSystem Design Manual" is available on the web. Shareware record-keeping software is available for download. Articles on what works and what doesn't work are available. So, a LETSystem would be extremely easy to implement.
Robust Complementary Community Currency System (ROCS) was the third system we discussed. There are a few basic differences between a ROCS and a LETS. The first is that the ROCS uses something called demurrage as an incentive to keep people's balances close to a balanced zero. Demurrage works like a negative interest rate--the larger your account, the more credits you have to pay. These credits are then used to "pay" the record keeper, or act as a reserve fund for the use of the system--for example, if someone with a negative balance bails out of the system, the reserve fund can be used to balance the books.
ROCS credits are tied not to any national currency, but to negotiable hours. That way two people can agree, for example, that for the purposes of their exchange, one hour of legal council is worth four hours of data entry. Exchanging goods can still use this system, perhaps using the average local wage per hour as a starting point for negotiating a credit-based price. Using negotiable hours means that a ROCS will be more stable than a LETS in shaky economic conditions.
The drawback to the ROCSystem is that as far as I've been able to find, nobody has ever set one up. Doing so would be charting new territory. The system might be more stable than a LETS in theory, but there wouldn't be a network of other groups who could help us out.
The Next Step
After talking about the three systems, we talked about where to go from here. The general consensus among attendees was that the best way to proceed was to collect a small group interested in being closely involved with the system's creation. This group might become the advisory board of a LETS, electing a Steward from our members. This group might evaluate other systems before making a choice. We might just choose Block Barter Bucks, arrange an initial meeting, and let individuals take the ball and run with it.
Whatever the outcome, I am taking the names and email addresses of anyone interested in being part of this circle of organizers. (For those not in the Seattle/western Washington area, contact me if you'd like to set up a sister-system in your area.) Please consider becoming part of this seminal group, whatever your interests. If things go really well, we might need someone to do anything from data entry to media contacts, from marketing to workshops on effective negotiation. And if we stay small, we'll probably still be able to use your skills. Simply send me an email with your name, contact information, and your interests.
And heck, everyone could do with a little more self-reliance, greater sense of community, and more creative ways of saving money and reducing waste.
Quote of the Month
"Small service is true service while it lasts:
Of humblest Friends, bright Creature! scorn not one;
The Daisy, by the shadow that it casts,
Protects the lingering dew-drop from the Sun."
--Wordsworth, To a Child
Editor's Notes
You can contact me with
your submissions, suggestions, or comments at:
Michael J. Coffey
PO Box 23221
Seattle, WA 98102
(206) 522-6224
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