A Local Exchange Trading System (LETS) is a community-based mutual credit system where members can trade goods and services with one another without the need for money. It is a locally initiated, democratically organized, non-profit community enterprise that provides community information and records transactions of members exchanging goods and services using locally created currency. Instead of using cash or a traditional currency, members use a system of credits or debits that are recorded in a centralized ledger. LETS allow people to negotiate the value of their own hours or services, allowing wealth to stay in the community where it is created.
The system works by allowing members to offer goods or services in exchange for LETS credits, which can then be used to purchase goods or services from other members. Around the world, similar trading systems are known as Community Exchange Systems, Mutual Credit Trading Systems, Clearing Circles, Trade Exchanges, or Time Banks. LETS often operate on a not-for-profit basis, and transactions within the system are usually tax-free. These all use metric currencies, as opposed to fiat currencies, which are used in traditional value exchange. All of these are examples of alternative or complementary currencies.
LETS systems can help to foster a sense of community and social cohesion by encouraging people to share their skills and resources. They can also be a useful way for people to obtain goods and services that they might not be able to afford with traditional currency. Additionally, LETS systems can promote sustainable living by encouraging local production and reducing the carbon footprint associated with transporting goods over long distances.
LETS systems have been established in many parts of the world, including the United States, Canada, the United Kingdom, Australia, and New Zealand. However, the success of LETS systems can depend on a variety of factors, including the size and diversity of the community, the availability of resources, and the willingness of members to participate.
Benefits
LETS can help to revitalize and build community by allowing a broader cross-section of the community—individuals, small businesses, local services, and volunteer groups—to save money and resources in collaboration with others and increase their purchasing power. Other advantages may include social interaction, health care, tuition and training, and assistance with local enterprise and new businesses.
One goal of this approach is to stimulate the economies of economically depressed towns with goods and services but little official currency: the LETS scheme does not require outside sources of income to stimulate the economy. The environmental benefits of increased local self-reliance include less distance traveled (as local goods replace imported goods) and more visible environmental effects.
Limitations
LETS are strongly oriented toward the formal market economy, but they disengage from it by establishing small, cooperative exchange enclaves where trust and intimacy relationships can be fostered. It also implies that there is a limited range of services available. To meet their needs, LETS members must be economically involved outside of the organization. LETS does not also result in a “return” to bartering or the abolition of property.
