Local Exchange Trading Systems (lets) have been welcomed by many as a possible solution to the poverty, disempowerment and social exclusion suffered by the unemployed, as a practical and inexpensive stimulus for local economic regeneration, as the basis for stable, sustainable, and self-reliant community economies, and as a valuable complement to an increasingly over-stretched welfare state.footnote¹ Given better publicity, financial backing, and government and local authority support, it is thought that lets could significantly improve the quality of life for the residents of low-income neighbourhoods.footnote² This essay evaluates the economic, social and ecological merits of lets, assesses the theoretical positions that have been developed in their defence, and proposes a path for their future development.

The original ‘letsystem’ was set up in 1983 on Vancouver Island, off the west coast of British Colombia, by a Scot who migrated to Canada’s Pacific rim in the 1970s. A Cambridge graduate in electrical engineering, Michael Linton opted for a less conventional career and lifestyle when he settled in the town of Courtenay in the Comox Valley and began practising Alexander Technique. His venture was disrupted, however, when recession hit the timber industry at the beginning of the 1980s and a nearby us Air Force base was relocated to another province. As the region’s two biggest employers disappeared and local purchasing power collapsed, Linton not only witnessed the dangers faced by communities which are heavily dependent on market forces and geo-political interests lying beyond their control, he also had a personal incentive to invent a system of exchange enabling him to continue treating clients with insufficient cash.

By 1985, membership of the Courtenay letsystem had grown from half-a-dozen to over 500 people. In the same year, Linton, who by then had formed a registered consultancy to promote the letsystem world-wide, brought his project to the attention of British economists and social policy thinkers when he delivered a paper at the second meeting of a continuing series of annual conferences called ‘The Other Economic Summit’ (toes).footnote³ Held at the same time and in the same city as the yearly g7 Economic Summit, this alternative forum was designed to widen the parameters of economic debate, addressing much-neglected social, cultural and environmental issues, and outlining human-scale solutions to the problems raised. It was out of the 1985 summit that the London-based New Economics Foundation was formed.footnote⁴

Various forms of lets have subsequently spread across Canada and the us, and have been keenly promoted in Australia and New Zealand, where government social security departments have taken a relatively benign attitude towards unemployed benefit claimants who participate in lets.footnote⁵ According to Lee, the first uk system was established in Norwich in 1985.footnote⁶ The number of British lets in operation subsequently mushroomed in the 1990s, aided by widespread coverage in the local and national press, from just five in early 1992 to an estimated 400 or more today. Membership varies from a mere handful to several hundred—the biggest is Manchester lets which has a current membership of 700, while in Australia the largest system boasted 2,000 members in Spring 1997. Although the level of trading in most uk lets is modest, and many systems in Britain have not created sufficient interest to be self-maintaining, some 30,000 people are estimated to be members of uk schemes, with an annual turnover of trade equivalent to £2.1 million.footnote⁷

The few surveys that have been conducted show that, although the employed and self-employed make up the biggest group of lets members, membership rates for the unemployed are higher than both local and national unemployment rates.footnote⁸ Although this does indicate that unemployed people make proportionately greater use of lets than other groups, this must be viewed alongside the evidence that the vast majority of lets are based in relatively affluent areas,footnote⁹ and that attempts to develop lets in poorer communities have met significant difficulties.footnote¹⁰ Moreover, the evidence that membership of lets is dominated by people with explicit environmental interests and alternative lifestyle philosophies, along with the ‘disenfranchised middle class’—in Williams’s study of Manchester lets, 63 per cent of unemployed respondents held a degree or higher qualification—suggests that lets are failing to attract those who are culturally and educationally as well as materially deprived.footnote¹¹

To join a lets, the applicant fills in a membership form and signs a member’s agreement or constitution outlining the basic rules, principles and aims of the system. A subscription fee of around £10 is normally charged, often renewed on an annual basis. This pays for management and administration costs that require sterling—the purchase of stamps, envelopes, paper, photocopying. The applicant provides a short description of those goods and services he or she wants to buy, and those he or she is offering to sell. A price is usually included with the details.

Once the application has been processed, the new member receives a lets chequebook and a directory of offers and wants. The directory, which is periodically updated as new members join and as supply and demand changes, contains contact details of every participant. It is designed to be used like a telephone directory, and is often supplemented by short-life advertisements displayed on notice boards in participating shops, cafés, or in local libraries. Symbols may be used to signify those members who have an urgent desire to trade. Members search the catalogue of offers and wants until they find a suitable match. It is then up to them to contact the buyer or seller, agree on the time, place and price of the good or service, and ensure that the transaction is completed with the exchange of a lets cheque.