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42-419: Warren embraced the labor theory of value, which says that the value of a commodity is the amount of labor that goes into producing or acquiring it. From this he concluded that it was therefore unethical to charge more labor for a product than the labor required to produce it. Warren summed up this policy in the phrase " Cost the limit of price ," with "cost" referring to the amount of labor one exerted in producing

84-510: A LETSystems Training Pack, and assistance to Michael Linton to visit Western Australia . By 1995 there were 250 LETSystems in Australia, with Western Australia having 43 separate systems serving a population of 2.3 million (although actual participation is by only a tiny fraction of that population), making it then the region with the highest LETS coverage in the world. From around 2007, many Australian LETS groups started trading online using

126-479: A directory of offers and needs and by allowing a line of interest -free credit to each. Members' IOUs are logged in a centralised accounting system which publishes a directory as well as balances visible to all members. In case of a default, the loss of value or units is absorbed equally by all members, which makes it a mutual credit exchange. For instance, a member may earn credit by doing childcare for one person and spend it later on carpentry with another person in

168-553: A form of political protest. After flourishing in the 1990s, the LETS movement waned. Interest in local currency moved on to other designs such as time-based currency and dollar-backed local voucher schemes. On the whole, the movement was slow to adapt to the internet and to the possibility of networking together. Reluctance to engage with technology, a belief in decentralisation/localisation and lack of funds all contributed to this. Examples of LETS networks based on free software are

210-493: A good. Believing that labor is the foundational cost of things, he held that equal amounts of labor should, naturally, receive equal material compensation. He set out to examine if his theories could be put to practice by establishing his "labor for labor store." If his experiment proved to be successful, his plan was to establish various colonies whose participants all agreed to use "cost the limit of price" in all economic transactions, hoping that all of society would eventually adopt

252-417: A telephone, an answering machine and a notebook. Since then, there have been several attempts to improve the process with software, printed notes, and other familiar aspects of traditional currencies. LETS is a full-fledged monetary or exchange system, unlike direct barter . LETS members are able to earn credits from any member and spend them with anyone else on the scheme. Since the details are worked out by

294-622: Is a locally initiated, democratically organised, not-for-profit community enterprise that provides a community information service and records transactions of members exchanging goods and services by using locally created currency. LETS allow people to negotiate the value of their own hours or services, and to keep wealth in the locality where it is created. Similar trading systems around the world are also known as Community Exchange Systems , Mutual Credit trading systems , Clearing Circles , Trade Exchanges or Time Banks . These all use 'metric currencies' – currencies that measure , as opposed to

336-464: Is circulation." While LETS members could decide individually to change the way they value money and life and develop new codes and live by them to a large degree, they were restricted in their ability to sustain this utopia . LETS have limited resources, so when they need mainstream resources, they might be unable to transfer their codes through their network. Local exchange trading systems now exist in many countries. Currency exchange between countries

378-637: Is done automatically through the CES or a similar network. In 2003, the original CES was founded as internet-based LETS in Cape Town , South Africa. By 2011 it had grown into a global network spanning 99 countries. As of March 2019 the following African countries had active communities linked in to the CES network: Botswana 2; Cameroon 1; Ethiopia 1; Kenya 2; Lesotho 2; Liberia 1; Madagascar 1; Namibia 2; Nigeria 2; South Africa 62; Swaziland 1; Uganda 1; Zambia 2; Zimbabwe 2. In Japan ,

420-418: Is the labor theory of value. Tucker explained Warren's views as so: From Smith's principle that labor is the true measure of price – or, as Warren phrased it, that cost is the proper limit of price – these three men [i.e., Josiah Warren , Pierre Proudhon , and Karl Marx ] made the following deductions: that the natural wage of labor is its product; that this wage, or product,

462-430: Is the only just source of income (leaving out, of course, gift, inheritance, etc.); that all who derive income from any other source abstract it directly or indirectly from the natural and just wage of labor; that this abstracting process generally takes one of three forms, – interest, rent, and profit; that these three constitute the trinity of usury , and are simply different methods of levying tribute for

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504-442: Is to stimulate the economies of economically depressed towns that have goods and services, but little official currency: the LETS scheme does not require outside sources of income as stimulus. The environmental benefits of enhanced locals' self-reliance involve less-distance transport (as local goods are substituted for imports) and more evident environmental effects. Moreover, diverse local economies support sustainability by decreasing

546-591: The Fureai kippu (in Japanese ふれあい切符: Caring Relationship Tickets) is a Japanese sectoral currency created in 1995 by the Sawayaka Welfare Foundation so that people could earn credits helping seniors in their community . The Government of Australia , in 1989, allocated AU$ 50,000 for the development of LETSystems, including the running of state conferences, the production of software,

588-515: The Cape Town -based Community Exchange System (CES), which as of March 2019 links to the Geneva -based Community Forge and Spanish IntegralCES. Internet Exchange Trading System was established in 1998 as an idea to spread local exchange tradings systems online and establish a service exchange online platform. It didn't reach critical mass of users and the idea was later abandoned. LETS networks facilitate exchange between members by providing

630-586: The Community Exchange System . This system allows new members to sign up directly, list offers and wants, and enter trades without assistance from the administrator. By 2011 Australia had become the most active country on the Community Exchange System , prompting Tim Jenkin and Annette Loudon to set up the Australian Community Exchange System. As of March 2019 there were 31 communities using CES. In

672-780: The Czech Republic , there are multiple LETS. Rozleťse , operating in the region of city of Brno sharing the same Cyclos3 server with other smaller groups in the regions of Jeseník, Ostrava and Beskydy. The capital, Prague , uses Pralets. In Germany , CES has 11 German communities on its network. In Switzerland an adaption of LETS, the Talent, was established and quite successfully launched in 1992. This spread out in Europe and spawned many other Talent-Groups in other countries. The United Kingdom has many LETS systems, many loosely affiliated to LETSLINK UK and some operating under

714-613: The National Endowment for the Humanities , argued that Anarchism had its roots in 19th America with people like Josiah Warren and the Time Store. Although it goes back to 1827 through 1830, Josiah Warner's "Cincinnati Time Store", which sold merchandise in units of hours of work called "labour notes" which resembled paper money, this was "[p]erhaps ... the anticipator of all future" Local exchange trading systems , and

756-485: The University of Victoria undertook to research his archives as a demonstration of how people react to new ideas that are outside the norms of society. Linton thought that he had failed to communicate his idea adequately. LETS is a new type of money which makes it easy to pursue new Livelihood without the previous wholesale transformation of Capitalism . It is thus regarded as an alternative currency movement, and as

798-580: The fiat currencies used in conventional value exchange. These are all a type of alternative or complementary currency. In the 21st century, the internet-based networks have been used to link individual LETS systems, into national or global networks. Michael Linton may have originated the term "local exchange trading system" in 1983, for a time running the Comox Valley LETSystems in Courtenay, British Columbia . The system he designed

840-478: The just compensation for labor (or for its product) could only be an equivalent amount of labor (or a product embodying an equivalent amount). Thus, profit , rent , and interest were considered unjust economic arrangements. As Samuel Edward Konkin III put it, "The labor theory of value recognizes no distinction between profit and plunder." In keeping with the tradition of Adam Smith 's The Wealth of Nations ,

882-683: The "cost" of labor is considered to be the subjective cost; i.e., the amount of suffering involved in it. The principle was outlined in Warren's Equitable Commerce (among other writings) and has been called a "mainstay of 19th century individualist anarchism ". It was further advocated and popularized by Benjamin Tucker in his individualist anarchist periodical Liberty , and in his books. Tucker explained there are two kinds of Socialism, one authoritarian (ie. Marx) and one libertarian (Proudhon and Warren), yet what both schools of Socialism have in common

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924-525: The CES system, such as North London LETS. In the UK Skillsbox operates an online community system similar to LETS, letting users trade their skills and time for credits which can be spent within the online community. The Flemish part of Belgium has many LETS groups. There is a non profit organization promoting LETS: Lets Vlaanderen vzw. They assist the local groups in starting up, they organize events, they share knowledge. The Suska Kör (Suska Circle)

966-690: The Time Store. Indeed, Owen thereafter opened the National Equitable Labour Exchange , which embodied the same concept and practice. The Cincinnati Time Store experiment in use of labor as a medium of exchange antedated similar European efforts by two decades. Betty Joy Nash noted that, to varying degrees, the time store "communities strived to eliminate discrimination by class, sex, and race, and fostered education and scientific inquiry". The documentary film Anarchism in America (1981), by Pacific Street Films and funded by

1008-696: The fact that they are backed by legal privilege ... Warren put his principle into practice in 1827 by establishing an experimental "equity store", called the Cincinnati Time Store , where trade was facilitated by notes backed by a promise to perform labor. This scheme was exactly that advocated by Pierre Proudhon some years later under the name mutuellisme ; however, it is believed that Proudhon developed his ideas independently. Local exchange trading system A local exchange trading system (also local employment and trading system or local energy transfer system ; abbreviated LETS )

1050-420: The formal market economy, they disengage from it by establishing small, cooperative exchange enclaves in which trust and intimacy relationships are cultivated. And it also means that there is a small range of services available. LETS members must be economically involved outside to meet their needs. LETS also does not effect a 'return' to bartering or the abolition of property. "LETS currency only has value when it

1092-468: The mainstream economy." Michael Linton has stated that such systems are "personal money" networks rather than LETS. A list of services offered by network members is put together to create a LETS scheme, and trading takes place between members using a local currency. The LETS foundation is a virtual currency, a check book, a directory as well as a transparent accounting system built on trust and community regulation. The first LETS required nothing more than

1134-501: The more time a customer spent with Warren resulted in very efficient transactions. Warren said that he was doing more business in one hour than normal businesses do in one day, leading him to close shop part of the day to rest. Though the store was successful, the problem of equal labor times for different difficulties of work was a concern for Warren. He was never able to reconcile the objectivity of his "labor for labor" prescription — treating all labor as essentially fungible goods — with

1176-437: The need to use assets in an inefficient manner to satisfy external consumer demands. That also requires improving the local quality of life without having to make expenditures. LETS can allow for much greater self-direction and flexibility in employment patterns than the mainstream, conventional economy and, in particular, enable the skills of the unemployed to be valued and used. Even though LETS are strongly oriented towards

1218-618: The needs of their local communities in all kinds of ways. For example, in Australia, people have built houses using LETS in place of a bank mortgage , freeing the owner from onerous interest payments. LETS can help revitalise and build community by allowing a wider cross-section of the community —individuals, small businesses, local services and voluntary groups —to save money and resources in cooperation with others and extend their purchasing power. Other benefits may include social contact, health care, tuition and training, support for local enterprise and new businesses. One goal of this approach

1260-674: The payment of all required taxation. This does imply, however, that in situations where national-currency expenditures would be tax-deductible, LETS must be as well. In a number of countries, LETS have been encouraged as a social security initiative. For example, in Australia, Peter Baldwin , a former Minister of Social Security in the Keating government, encouraged LETS as a way of letting welfare recipients borrow against their welfare entitlement for urgent personal needs or to establish themselves in business. Since their commencement over 30 years ago, LETS have been highly innovative in adapting to

1302-422: The peculiar and original method adopted to fix and regulate the amount of the merchant’s compensation. This was determined on the principle of the equal exchange of labor, measured by the time occupied, and exchanged hour for hour with other kinds of labor. Josiah Warren credited Robert Owen with the creation of the idea for the labor-for-labor note . It was Warren, however, that actually put it into practice at

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1344-512: The same network, or they may spend first and earn later. In many countries, the distinction between LETS and timebanking is not clear, as many LETS use time as their unit of account. As per Linton's definition, LETS are generally considered to have the following five fundamental criteria: According to a 1996 survey by LetsLink UK, only 13% of LETS networks actually practise equivalence, with most groups establishing alternative systems of valuation "in order to divorce [themselves] entirely from

1386-429: The store was a successful experiment in "Cost the limit of price." In fact, the store became Cincinnati's most popular at the time. As Cincinnati librarian Steve Kemple noted: When the advantages of the store became known and its method understood, it was the most popular mercantile institution in the city. The people called it the “Time Store,” not because it gave credit or sold goods on installments, but on account of

1428-485: The subjectivity employed in determining how much time used for one type labor entailed the same amount of work exerted during a different amount of time performing another type of labor. He settled to simply credit it with being a matter of individual judgment. Warren closed the store in May 1830 in order to depart to set up colonies based upon the labor-cost principle (the most successful of these being " Utopia "), convinced that

1470-418: The tenet in all economic affairs. In the store, customers could purchase goods with "labor notes" which represented an agreement to perform labor. The items in the store were initially marked up 7% to account for the labor required to bring them to market with the price increasing the longer the time that a customer spent with the shopkeeper, as measured by a timer dial; later this markup was reduced to 4%. Corn

1512-421: The use of capital ; that, capital being simply stored-up labor which has already received its pay in full, its use ought to be gratuitous, on the principle that labor is the only basis of price; that the lender of capital is entitled to its return intact, and nothing more; that the only reason why the banker, the stockholder, the landlord, the manufacturer, and the merchant are able to exact usury from labor lies in

1554-586: The users, there is much variation between schemes. LETS is not a scheme for avoiding the payment of taxation, and generally groups encourage all members to personally undertake their liabilities to the state for all taxation, including income tax and goods and services tax. In a number of countries, various government taxation authorities have examined LETS along with other forms of counter trade , and made rulings concerning their use. Generally for personal arrangements, social arrangements, hobbies or pastimes, there are no taxation implications. This generally covers

1596-421: The vast majority of LETS transactions. Taxation liabilities accrue when a tradesperson or professional person provides his or her professional services in payment for LETS units, or a registered or incorporated business sells part of its product for LETS units. In such cases, the businesses are generally encouraged to sell the service or product partly for LETS units and partly in the national currency, to allow

1638-474: The wall where individuals could post what kind of services they were seeking or had to sell so that others could respond, and trade among each other using labor notes. After a rough initial period, the store proved to be very successful. Warren's goods were much cheaper than competitors', though he maintained that he was not trying to put other stores out of business. Another store in the neighborhood converted to Warren's methods. The fact that prices for goods rose

1680-515: Was even a precursor to modern cryptocurrency . Economist Robert J. Shiller used the perceived failure of the Cincinnati Time Store as an analogy to suggest that cryptocurrencies ( e.g. , Bitcoin ) are a "speculative bubble" waiting to burst. Cost the limit of price " Cost the limit of price " was a maxim coined by Josiah Warren , indicating a (prescriptive) version of the labor theory of value . Warren maintained that

1722-599: Was intended as an adjunct to the national currency , rather than a replacement for it. He called the currency "green dollars" and it was mostly used by a local dentist, but dwindled when he moved away. Linton started at least four more versions, with varying degrees of success, such as the "Community Way Dollars" in 2008. The system's turnover in the first two years amounted to green $ 500,000. There were 5 LETS in Great Britain in 1992. In 1995 this number increased to 350 with 30,000 membership and 2 million turnover. In 2018

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1764-424: Was used as a standard, with 12 pounds of corn being exchangeable with one hour of labor. The result of the system was that no one was able to profit from the labor of another — every individual ostensibly received the "full produce" of his labor. Adjustments were made for the difficulty and disagreeableness of the work performed, so that time was not the only factor taken into consideration. Warren also set up boards on

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