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in Local Economy Trading Systems (LETS)
(for post-cataclysmic recovery)
A Blueprint by Bruce Beach
Version 3 - December 24, 2000
changes as of June 3, 2001
In this essay we will be discussing the meaning of “entitlement” and how it should be implemented, along with a description and examples of the operation of LETS. The intention is that this essay should be used as a blueprint, a “How To” manual, in a post-cataclysmic recovery period by those who will be working to reconstruct society. In stable times, most members of society will not bother to examine the justifications or reasons for why things are done the way they are done. But at the time of social collapse and reconstruction these subjects must be addressed so that in rebuilding we do not simply reimplement portions of the structure that may have contributed to the collapse, or that were previously irritating and that we simply accepted along with the entire previous structure. For this reason we will seek to remove some of the veils regarding money and show the justification for redefining the rules for entitlement.
The Meaning of Entitlement A Just Economic System is about entitlement. WHO is entitled to WHAT. All persons, in an abundant society, are entitled to subsistence. That is to say, to sufficient food, shelter, clothing and basic health care, that they will not die. In a less than abundant society, decisions sometimes have to be made between those who can contribute to the survival of society and those who can't or won't. An abundant society that is humane will meet the needs of the handicapped, incapacitated and elderly. Any society should be particularly concerned about the health, welfare and education of its children who are the future. A society of true abundance and justice will provide to ALL its members the opportunity to not only fulfill their material needs, but also the opportunity to develop to the utmost their spiritual capacities.
Some persons feel that in recent decades the term “entitlement” has attained the connotation that the unproductive and irresponsible members of society have a claim on the wealth of those who do produce and exercise personal responsibility. They use the emotional word “irresponsible” where often the word “non-responsible” would be better. Children are non-productive and non-responsible. Likewise the very elderly may be non-productive and non-responsible. The same can be said for mentally retarded and other categories. But, aside from that, the idea of entitlement that is our concern here, is more concerned with production than consumption. It is mainly concerned with who (which entrepreneurs) are entitled to the factors of production (land, labor, capital). The purpose, concern and thrust is to increase production as quickly and efficiently as possible, through the encouragement and support of entrepreneurship, so that there will be an abundant society in which everyone gets cared for, to a standard that allows for personal growth and development to their full potential. It is necessary that distribution of resources will be based upon value judgements as to the future possibilities present in the person and on value judgements regarding the moral quality of their behavior.
JUST Economic Systems A Just Economic System in this world is RELATIVE, that is to say - less than absolutely just. Only God can dispense ABSOLUTE Justice. All human decisions in this world will remain relative because of the frailty of human wisdom and character. The ONLY choice is through LAW and ORDER. The alternative - anarchy - is lawlessness and disorder, and is not a choice for a society that seeks JUSTICE, harmony, security, and abundance. The natural order of life is interdependence and a Just Economic System is a part of a Just Society. It must be a part of a just society. It cannot exist separately from a just society, nor can a society be just - without a just economic system.
A JUST economic system is based upon the Pillars of Reward and Punishment. The carrot and the stick. It should be organized in such a way, (as should society itself) as to:
The Need for LETS LETS are an intermediate step between "household economics" and "national (or international) economics". No claim is made here that LETS should be the only economic system, or that they should replace "traditional monetary systems" at the national and international levels. But they do fill a gap that has been previously ignored. LETS have not had overwhelming success or acceptance (which amounts to the same thing), in the few decades since their inception although there are many hundreds of them. Part of the problem has been the exhaustive missionary and educative process that would be needed to gain acceptance in a culture that has become almost completely identified with the "traditional monetary systems". There have been other problems also, such as the necessity for an initial critical mass of participation for a system to reach a "kindling point" of usefulness and efficiency.
After a societal cataclysm, LETS can be a key factor in the RESTORATION of SOCIETY. In economically underdeveloped societies, and as a matter of lifestyle among some individuals, independence and self-reliance has been a necessary or desired way of life. Recession, depression, and stagnation in large economies have often meant that individual households have had to independently produce what they have not been able to obtain from the larger economy about them. Independence and self-reliance have both their advantages and disadvantages. As an advantage, those who are able to function independently can sometimes use their own resources that would otherwise be idle. As a disadvantage, where there is no cash or exchangeable assets they are often cut off from the larger community and are forced to live without many of the advantages of specialized technologies and services such as advanced medical care. On the whole, independence is at a disadvantage as compared to interdependence, because interdependence generally allows for very great efficiencies of specialization and much more appropriate use of each resource available.
In a money based economy, the only alternative to self-production has been possession of the required currency. Independent barter is generally inefficient because it is difficult to find others willing to exchange the exact goods that one desires, (and in the exact quantity desired) for goods that one has available to exchange. Local trade fairs offer little additional advantage. While they permit one to exhibit their goods to a broader audience, still the medium of acceptable exchange is usually based upon the broader recognized currency. LETS provide an intermediary step, permitting a community to efficiently exchange goods on services on a broader basis than that of an individual household, and thereby more extensively and efficiently utilizing the resources of the entire community.
The Need for Entrepreneurship In the final analysis, all goods are created by what economists recognize as the four factors of production:
The theory is, that the more local that motivated entrepreneurship can be, that is to say that the further down the productive system or chain that we can press it, then the greater the efficiency that there will be attained. What we are talking about is the power of the motivated decisions of the individual in a free economy. Because it is an exchange economy we obtain the efficiency of “relative advantage” that arises out of the differences of land, labor, capital and entrepreneurship, and those which are contributable to specialization and division of labor. Socialists argue that a controlled economy is more efficient, because it eliminates the redundancy of competition and assigns resources on the basis of social need rather than on the basis of individual selfish desires. There must of course be a balance between individual selfish desires and collective social need. Finding a balance between these two philosophies will achieve the benefits of both worlds … and eliminate the tragedy inherent alone in each. To find this balance there must be a new revelation in the thought processes of those participating in the rebirth of the economy. Those in authority must avoid the pitfalls of the past without endangering the future with socio-economic fallacy.
The Establishment of Authority The purpose of this essay, in describing how Entitlement may be determined in LETS, is an entirely practical one. While grand philosophical issues might be discussed, analyzed, and debated, what is presented here is a practical suggestion of how local communities may go forward and recover economically from a cataclysmic upheaval. Indeed, because there can be such difference of opinion as to what is the best course, and because circumstances can vary greatly both through time and from location to location, what is key to determination of Entitlement, is the establishment of THE AUTHORITY to determine the Entitlement. Anyone who comprehends what will be presented here will understand that the two go hand in hand or, better yet, hand in glove, for the one - Entitlement- is clothed with the other, Authority.
Simply put, it is Authority that determines Entitlement. The underlying principle is that the authority of the governors arises from the governed. That the authority of the highest levels ultimately rests in the lowest level groups, through their selection of delegates to the next highest level, and the repeat of that process through to the highest levels. The legitimacy of the authority of the higher levels therefore comes from the right of the governed at the lower levels to choose their governors. I have redundantly expressed this in three ways, so that there can be no doubt about the matter.
The governors, during their terms, need not refer back to any historical documents, no matter how previously revered. They need take into account no previous customs, no matter how long established. So long as there are no established operative authorities above them they need not limit in any way their own actions. Hopefully, at all levels, those implementing policies and rules will be guided by the higher wisdom that has been communicated to mankind in the past by the highest spiritual sources such as the Prophets and other leaders in moral thought. The concern with morals and ethics in economics has a long history. Adam Smith, considered by many as being the father of economics, was a professor of Moral Philosophy and until more recent times the study of economics was always referred to as “Political Economy”.
Justice and Law The success of LETS has a lot to do with the success of the re-establishment or replacement of what is currently considered law and order. Entrepreneurs must have some stability, some assurance that their work will not vanish to either an officially sanctioned or a rogue raid. The higher administrative levels will have to curtail the power of those from within the administrative structure who try to unduly use either their influence as well as those from without who seek by violence to achieve their own ends. Practically, the administrators will have to deal with the specifics when they meet them. The remedies will depend both upon the specifics and their resources for dealing with them.
Both revolutionaries and the establishments justify their actions on the basis that they are the more just and that therefore they are justified in any means to obtain their ends. For this reason the educative process is essential in instilling a sense of high moral value, justice, fair play and so forth. This educative process must be of a higher mentality, emotionality, and spirituality than has ever existed in mankind previously, or the pattern of errors plaguing the past will quickly reverberate all over again. It is a long and difficult process because the veneer of society is very thin and the task is most delicate, but nevertheless it is essential. Unless there is a broad consensus as to what is fair and just, then the entrepreneurs have no principles to play by and no surety that others will be expected to play by the principles. Without such guiding principles there is no justification for hope of reward for taking the risk that is part of being an entrepreneur.
Justice and Rights. There does not need to be the burdening mass of laws, rules and bureaucracy that shackle the present day social innovators in order to preserve the inherited status quo. The decisions in LETS can be made by responsible individuals with souls, rather than by soulless corporations and government bureaucracies guarded and guided by minions of legalists dedicated to specific ends rather than to common sense, readily recognized justice. In the final analysis, despite the existence of laws, that in their printed form occupy hundreds of feet of shelf space, the decision of what is right or wrong comes down to the minds of the judges. Substantiating precedence can be found for most any position by anyone with enough funds to have expensive and capable talent search what are many miles of printed previous decisions. It is seen as excellent justice for the wealthy and often meaningless unfairness for the poor. Often the procedure is just delay until a matter becomes irrelevant. Thus justice delayed is justice denied.
The operation of any system is dependent upon the good will, wisdom and spiritual enlightenment of its administrators. It is encumbent upon the members of groups to select administrators with those qualities. The administrators must in turn seek to assign delegates, with the same qualities, to the higher levels. These individuals can then dispense justice on the basis of Principles of Recognized Rights and Freedoms rather than interpretative arguments regarding syntax in written statements of law. Since economic actions (as well as social ones) will be the responsibility of real persons with souls, rather than the fictitious persons of soulless corporations, the interaction of dialogue can be between the individuals, and the administrators, and any aggrieved parties, on those principles. Educated descendants of the original indigenous inhabitants of North America, and other such native peoples through out the world pointed out how the lack of such commitment to justice in the Western systems was a major shortcoming.
At every level, from the lowest groups, through each level to the highest, there must be the recognition of the responsibility to educate all participants in the need for honesty, trustworthiness, integrity, fair play, equality, tolerance, commitment to freedom, and justice. We need only look about the world at the moment to see how intolerance, fraud, bribes, collusion, arbitrary power, exclusionary interests and such, wreck the opportunity for progress, security, and the benefit of all. A system of intelligence, morality, and spirituality greater than any inspired people before, must be instilled in the survivors of the disasters - or the disaster begins again.
Money. John Maynard Keynes supposedly said, "Money is a veil", although I have not been able to locate the source. In any case, to most people, its nature is a mystery. Money is more than currency or coin. More than cash and checks and the balance that one has in the bank. The line between liquid and non-liquid assets blurs as does that between debt and credit. Various definitions of money exist, such as a medium of exchange, or a store of wealth, but none of that concerns us here. We each have enough sense of the meaning of the term money, to have a notion of what we are talking about.
One of the main issues of ENTITLEMENT is WHO is authorized to create money. In the traditional systems of the 20th century, in many people's minds, it was the government. They saw the printing of currency or coinage as being the creation of money. Gradually most knowledgeable people became aware that cash (i.e. currency and coin) was a very small part of money and that it was actually the banks that created money through loans. Still, some felt that this was controlled through the government through its National Bank, or as in the US, The Federal Reserve (an actual, probably intentional, misnomer). In most capitalistic countries, including the US and Canada, the money creation system was owned and operated by private capital organizations. It was the purview of persons of great wealth and power who were truly hidden behind a veil. Unelected. Uncontrolled. Unaccountable. Unresponsible. And Unresponsive to many of the legitimate needs and concerns of the lower classes of society. .
Neither the history, morality, nor the mechanism of the creation of money in the past need concern us here. What LETS does is put the control of the creation of money in the hands of the individual to a greater degree than in the past. In actuality, it rested there to a degree already, to the extent that individuals were willing to create debt by borrowing or lending money. Sometimes referred to as consumer confidence. Every person who had a credit card was authorized to create money within the limit set on the card. The real issue then becomes, who has the authority (or is entitled) to set the limits on credit cards or to refuse loans. It is not done by the legislatures of a country. It is done by the banks, and the lending, and other, financial institutions. Under the LETS proposed here, we are therefore concerned with establishing the Authority for Setting Limits to Entitlement.
-------added June 03, 2001----->
More than the issue of the quantity of money is that of the quality of money. There will be those who advocate a return to gold and silver or at least 100% metal backed certificates. The thesis here is that there is room for a variety of currencies. The key concept behind LETS is that the mere lack of existing certificates should not be a limiting factor when there is value to be exchanged. There needs only to be authorized entitlement to issue further certification. Should some levels or types of certification come to be more highly appreciated, then in accordance with what is called Gresham's Law, but which is in reality a centuries old principle, the poorer currency will drive out the better. That is to say the less honored currency will be offered first, and the more honored will be hoarded. Under the LETS system, this problem is self rectified by the capacity of traders to issue their own in accordance with their entitlement while the dilligent seeking of more honored currencies will simply be to the enhancement of industry.
Authority to Set Entitlement. Theoretically, in capitalistic countries, the chartered banks got their authority from the government, and the government got its authority from the legislatures and elected representatives of the people, so that ultimately the control of money supposedly rested in the people. In practicality, as most people came to realize, it was the large concentrations of wealth (and consequently power) that actually controlled the programs of the political parties. While immense emotional furor existed regarding the various programs most people realized that there was little difference in their basic tenets and that control ultimately remained with those who controlled (usually inherited) the great concentrations of wealth. For this reason, most people never bothered to devote any great amount of time or personal financial resources in involvement in those processes. Some few did, out of emotional attachment to some philosophy, and some few others because by working within the systems they were able to achieve personal gains. But as stated, most were alienated, because they recognized that they had already been effectively disenfranchised from the centers of power that actually controlled their entitlements.
What is presented here, as an alternative, would under any other circumstance, other than in that of restoration of society after a societal cataclysm, be seen as mere Utopian Daydreaming. But in this particular circumstance people have not only the opportunity, but the necessity, to create a system that will fulfill their needs. They will be well advised in the process to create a JUST system. All authority eventually rests with God. Those who would implement human systems should keep foremost in their minds the objective of being in accordance with God's command for Justice. That being said, and hopefully being conformed to, to the best of human ability, there still exists a wide spectrum of approaches that one might legitimately undertake. There may be a need to paint a house, but one can paint it attractively in any one of a number of different colors or combinations of colors. And likewise, the system presented here is not the only possible system, but is a well thought out and practical one. .
LETS are, as its name says, LOCAL. Families are free to implement within their own families such policies and practices of economic production, sharing, or restraint as they wish, and at the other end of the spectrum there may be international and national economic organization that is very different in policy and practice. LETS are meant to fill the gap in between. And there is a gap. It cannot be filled by individual family activity, and in the past has often not been filled by national or global activity as evidenced by the numerous and widespread pockets of poverty among a world of plenty, and the numerous times that even locales of affluence have become stagnant.
The Mechanics of LETS The mechanics of LETS have been well established through actual usage and practice by many tens of thousands of individuals in hundreds of LETS associations.
Basically one issues to anyone in the system, credits (that is to say - LETS dollars) for having delivered goods or having performed services. One can give (create) these credits to the combined extent that they have received these credits from others for having delivered goods and services to other members, and that they have them in their entitlement.
The facility for tracking LETS transactions has been greatly enhanced by the availability of personal computers. The availability of computers, however, will not be a determining factor of whether or not LETS systems can be implemented because they can even be implemented with a pencil bookkeeping method. While there are specialized LETS accounting programs available, they have no real advantage over any very simple bookkeeping or even spreadsheet program.
Practical experience is the best guide, and it is practice that will give experience. The procedure can be as simple as creating and exchanging checks like most everyone is familiar with in the current banking system. The checks can then be hand cleared and accounts credited or debited at the central LETS office. Just as technology assisted the current banking system in printing, numbering, sorting by account number, and so forth of checks, and the keeping of accounts on computers, so could it benefit LETS if it is, or becomes available.
Very advanced techniques of electronic debit cards can be used, once that technology again becomes available. Yet, simple is as simple does. To avoid security issues such as counterfeiting, forgery, uttering, kiting and other such deviousness, a LETS may need both an internal and external system of checks balances to accompany its authority for overseeing entitlement. These systems, however, should not be over burdensome and should simply meet the practical necessity of the milieu and level of activity of any particular LETS.
What will need to be done in practice, is that those with some skill in these matters, will need to establish the local mechanics and procedures. Hopefully, then, they will be willing to share their art with others in nearby localities where others are also trying to establish LETS. As the popular saying is today - this isn’t rocket science that we are talking about.
Creating Entitlement Entitlement is the real key to the system. It is the ability to create credit or debt. The limit of entitlement is determined by the administrators of the individual LETS, and by the higher levels of administrators, by whatever rules of community standard they wish to apply. Theoretically, they might establish no limits. But then, rather than continually growing in value and usefulness, the credits could become debased and useless by their being over issued by non-producers. Or, for that matter, an entrepreneur of the very best intentions might issue too many credits relative to the resources of the LETS and swamp the system, or worse yet, that entrepreneur might fail and take the LETS with him or her.
At the other extreme, if the administrators are overly conservative, or even if the members of the Groups are overly conservative, and are not willing to take any risk in taking debt and issuing credits, for fear of loss, then the system will collapse equally or more rapidly. One must apply their talents, (as in the Biblical parable) to the best of their ability. Many arrows will miss the target. Numerous seeds won’t sprout. But that is the nature of life. As an analogy, there must be tolerance for those who have a bad or failed crop, whether due to external situations such as the weather or pestilence, or whether due to bad management. In the latter case, it is responsibility of the Groups to share in educating, assisting, and encouraging their members in better management techniques. Sometimes in restraining their members in the use of credits and other times (perhaps oftentimes) encouraging them to use and employ even more. The administrators at the higher levels need to particularly exhibit guidance in these matters.
LETS has never been used anywhere, to this writer’s knowledge, as a primary system. Using it in this way will present new challenges, and also new opportunities. Properly instituted it may be able to provide full employment, and much greater efficiencies, along with better opportunities for social and economic justice, and a more fulfilling approach to life and spiritual growth. While that seems a lot to hope for - it must nevertheless be the goal. LETS as the primary economic structure can provide the higher levels of the accompanying social structure, as described previously, with the resources to fulfill many of these social goals. And, it should be mentioned, without the need for interest or taxes. Once more there must be a cautionary note - LETS, as its name implies, is a LOCAL system. Its principles do not necessarily apply to national and international systems. There, others may see advantages in retaining such institutions as interest and taxes.
Risk and Fraud Once again, let me stress, there must be an appropriate degree of tolerance for failures, and where needed they must be written off without penalty or reflection on those responsible for them. Developing entrepreneurial skills is a learning process and experience, including failure, is often the best teacher. The nature of the world is that it in GREAT abundance rewards the proper combinations of land, labor, and capital. In the financial/industrial world of the past, there were often very great failures, even under the skilled hands of highly trained, motivated and capable managers. That too is part of the nature of the real world. What is needed is the appropriate development of entrepreneurial skills. In a well functioning economy there will be an increasing amount of abundance to risk (I do not wish to say waste) on entrepreneurial training and experimentation.
LETS are rife with the potential for fraud, but so are all other exchange systems. Properly implemented there is less probability of fraud with LETS because at each level, and within each group, there will be numbers of independent and unbiased monitors. Indeed, as compared to the traditional system LETS can be thought of as being almost fraud free, if one comprehends how the old system worked to the advantage of a small privileged class and to the disadvantage of the masses. There is an old saying that he who stole the goose from the commons was caught and punished while he who stole the common from goose was let free. With LETS there may be more opportunity for goose stealing less opportunity for commons stealing. This may be only an idealistic hope, and one will have to wait and see if events actually bear this out. It is prudent to be tolerant of the occasional missing goose, and be thankful if one retains the common.
The Limits of LETS How broad a local community to which one may apply LETS, also has not been determined. The basic LETS unit, as described here, would consist of 10 groups having a total of 500 to 2000 members among them. Small enough to be personal, but large enough to have some efficiency. On the other hand, the overall structure allows higher administrative levels to control interaction between these individual LETS. A fourth or fifth level of combined activity could involve millions of people, but the basic building block would remain LOCAL, just as the basic economic and social unit in society remains the family.
At some higher level, LETS would cease to be local and would become national or international in nature. There may then be a different set of problems, such as the need for national or international currency. Coordination of International Exchange. Matters of jurisdiction over a plethora of international matters such as air waves, air travel, and shipping. Rules, conventions, and standards for measurement, safety, and security. The control of international resources, water, air pollution, and use of the sea. These subjects of national and international commerce are all far beyond the purview of this essay.
Because there may be less mechanization available after a societal cataclysm (because of lack of fuel or power), farm operation may become more labor intensive and the farmer will need access to more labor. In rationing, the farmer will have a very high priority to any fuel or energy available. Alternate sources may have to be developed.
All of this resolves down to entitlement and the farmer will have to have explained to him that he has the entitlement, right and responsibility to issue LETS dollars for these services. His production is the basis of the survival of society. Agriculture must have the necessary resources allocated to it and is the first place where we wish to put to work any idle resources such as labor.
Social Services Come Second The maintainers of order (police, fire, military), health services (doctors, hospitals, community health), infrastructure reconstruction (mail, public transportation, power, telephone, gas), basic reconstruction (roads, rail, bridges, sewers, heavy equipment operators, truck drivers, etc.) and essential industries (food processing, refineries, paper mills, etc.) need to be returned to service as soon as possible. If the existing institutions survive they may be able to do this in several ways. By use of force, etc. However, if they do not survive sufficiently, or are sufficiently flexible, this could and should be achieved by the issuing of LETS dollars by the Higher Administrative Levels as described above.
Scavengers and Entrepreneurs One of the first strategies of recovery and reconstruction will be scavenging. This is an activity that will need to be both encouraged and controlled. The tradition has been Martial Law and the shooting of looters. While that applies to a local tragedy it is not suitable for a universal cataclysm. Scavengers too, need resources and outlets. Authorization by LETS Level and Higher can give them the authority and also the outlet in the way of LETS dollars for delivering their goods. The key to organizing such enterprises lies with entrepreneurs. These need to be identified, recognized and authorized by LETS and higher administrative levels. These levels need to authorize, entitle and legitimatize entrepreneurs, the fourth and often the most essential factor of production. The vitality of non-centralized economic systems, and particularly of LETS lies in the development and release of the entrepreneurial talents and spirit. Indeed, the free entrepreneurial spirit is the single most significant distinction between decentralized and centralized economies, and the demonstrated efficiency of the former. It is for this reason that LETS Higher Level Administrators must authorize and encourage entrepreneurship.
New Production Scavenging is only a temporary solution and possible for a short duration. Eventually new production will be necessary. Establishing new production should then become the prime objective of the Administrative Levels. For this purpose, special accounts with appropriate levels of entitlement may need to be established for individuals who appear to have the necessary qualities and capabilities. In the traditional system this was the function of bank managers. When one looks beyond the veil, they will see that this is also the way in which banks created money. Entitlement to money creation is only one of the forms of entitlement that will be needed by the entrepreneurs. They will also need entitlement to land, and capital (meaning, in the terms of economists - plant, machinery, equipment, etc.). The traditional forms of entitlement being inoperative, the method of entitlement will have to be developed on the fly by the founders of the LETS. This writer’s personal preference is to invest it in individuals, rather than in “soulless” corporations.
New production may begin in cottage industries, even by the re-invocation of some older technologies. There should be considerable liberality in supporting every effort. Repeated failure in such difficult times should not be unexpected and should not be subjectively penalized but should be objectively redirected with love and encouragement. As conditions stabilize then higher standards of performance can be imposed. Experience and increasing maturity will eventually be gained at all levels. Once again, the most beneficial path is to educate and encourage as many as possible in the entrepreneurial skills and spirit. The benefit of LETS is that these skills, as well as the other factors of production, need not lie idle because of external factors outside of the LETS control, as is the situation with local economies at the time of this writing.
In the past there has been a trend towards both vertical and horizontal integration and conglomeration of industry. There are undoubtedly some technological efficiencies to be obtained in such a process. On the other hand a large part of the activity was motivated by the need for access to money capital, or simply the control that was influenced by money capital. This type of control is counter-productive to the initiatives of individual entrepreneurship and it will probably be beneficial, especially in the time of social reorganization, to achieve as much as possible the benefits of that prime factor of production, through as much decentralization as possible. Even in large production facilities, there should be the ability to implement schemes of individualized control, or at least profit sharing, so as encourage individual incentive and entrepreneurship for efficient management.
Other LETS Functions Besides providing entitlement to money and factors of production, the LETS can facilitate the local economy in many ways. It can provide inventories of the skills, services and goods available. It can establish acceptable rates of remuneration. It can witness contracts. It can adjudicate disputes. It can control and prevent abuses.
LETS Administrators should rise above the pedestrian view of being mere bookkeepers or adjudicators within the standards of the current traditional system. They should view themselves as facilitators and educators, servants within a new spirit of economics. Whatever idealistic and philosophical views they may initiate there are many improvements that can be made over the current system. To reiterate, the current writer’s view is that they should seek to encourage saints, guide sinners, and restrain satans. The distribution of such personalities, in every society, follows a Bell Curve. There are few saints and few satans. Most of us are sinners. The curve can shift up or down some ideal spectrum line. If the society improves, the standard for being a saint will be higher. If the society becomes decadent (or continues in its present decadence) the standard of sainthood will be lower. The inverse is true of satanhood.
While economic sainthood is desirable, (defined by this writer as a willingness to devote one’s life in complete service to God and others) one must realize that it will be rare. This station is not some merely abstract form of life where one is living on some spiritual high and not making any real economic contribution to society. The real saints enter the struggle of daily life and wrestle with problems of relative good and evil found in the market place. On the other extreme is the satan who seeks only his personal advantage, to the disadvantage of others. These too, under proper control can serve society. But the ideal remains those who are instrumental in producing great wealth, and then use those same talents in assuring that the wealth is used to the benefit of society.
It may be noted that, in what I shall call the prototype LETS systems of the past, there has been a philosophical objection to both interest and taxes. Theoretically and technically, neither is necessary in a LETS. There are other issues such as inheritance, transference (especially in the case of what are presently large corporations, but which this writer has proposed should be under the entitlement of individuals), and still other matters of entitlement that will have to be dealt with in actual experience.
Some Imagined Examples One of the first things that a LETS might do is to establish a Scavenging Store or Storehouse. Anyone may bring goods to the store and the LETS Administrators could appoint store management with the responsibility of either paying for the goods outright with LETS dollars or taking them on assignment. Goods could be inventoried or Dutch Auctioned to assure rapid turnover and reduce the space needed for inventory. In a Dutch auction the prices are repetitively reduced over some time period until they clear. Individual Entrepreneurs could use their Entitlements to acquire the goods and retail them for LETS dollars. The scavengers would then have been rewarded on a wholesale basis and the retailers would give value added by specializing in particular lines of products. Thus one might know and stock culinary tools and another children’s clothing, just as we see in present day malls. Those seeking something would have the advantage of being able to find it in a specific location and having someone knowledgeable about the products to assist them. It is this type of creative entrepreneurial activity that creates efficiency and value.
Another activity that should be undertaken by LETS is to insure full employment. The LETS or the Administrators at the higher levels should be the employers of last resort. That is to say they should guarantee that everyone has a job. While it is their function to assure that tasks of social purpose, such as fire departments, are staffed with capable people at attractive rates, they should be able to find many social tasks, such as the removal of destruction and waste, that do not require a high level of skill. The latter can be filled, if necessary, at a somewhat lower wage rate, so that those accepting such employment will have incentive to independently find better employment.
The success, or current performance of an economy, can be measured by the FEWNESS of individuals willing to accept the guaranteed low paid positions. One of the major functions of the LETS and the higher level administrators is to educate the members of Groups in how to develop better opportunities and how to become self reliant and capable of managing economic activities on their own. Still, acceptance of guaranteed employment should not be denigrated and where there is a large demand for this type of employment that in itself is indicative that the overall economy is not functioning well.
At the other extreme, if there are too few participants in the offered guaranteed employment, it may be indicative that the higher levels of administration are creating too great a demand for labor resources by over utilizing the labor in activities that they pay directly. Opinion as to the degree to which direct or collective community goals should have priority over the independent entrepreneurial demand for resources is one that will have to be expressed through the collective process of consultation in the groups. Groups can directly express their opinions (but not as a decision) through resolutions publicly or privately directed to any level of administration. However, the power of decision would still remain with the appropriate administration.
With this approach, of workfare rather than welfare, there should be a much reduced need for welfare to those cases which are absolutely physically or emotionally handicapped to the point where they cannot function productively. Even those with severe handicaps should be provided opportunities to contribute to the society in what we presently call “sheltered workshops” because the ability to make positive contribution to society is a part of human dignity and a human right.
There are other extreme situations, such as sociopaths, with which a LETS and the higher levels may have to deal. In an affluent society, such as we have today, there may be the luxury of dealing with such persons in ways that require extensive and expensive use of society’s resources. During the reorganization of society that is recovering from societal cataclysm that luxury may not exist and the methods of dealing with such problems may seem very harsh by today’s standards. Technical details for the application of this principle will have to be left to the time and circumstance.
Group and LETS Organization
Individual groups can be formed in a variety of ways. Church groups. Neighborhood or village groups. Former employees of a large concern. Prior merchant and other associations. People known to each other through sports clubs or almost any social organization where people have had, or have the desire to meet and cooperate together.
In practicality, in the process of recovery from a societal-cataclysmic situation, it may be necessary that the founders have access to any surviving stocks of food, fuel, or other necessities, and that they use these as the incentive to encourage organization and to establish the acceptance of debt and the creation of credit. Initial issuance’s of entitlement may be relatively limited, but on the other hand, in some locales there may be a surfeit of capital resources or other factors of production that should be immediately employed through qualified entrepreneurs, and those individuals should be given the entitlements to do so.
Group size The founders of a LETS may designate the initial minimum and maximum acceptable group size. Some large organizations, such as a large church might provide several groups. Once the groups have formed and have designated their delegates, then the LETS administration can take over the founders’ functions. Once a LETS is operating, there should be little difficulty in attracting additional members to the groups, and additional groups so as to support higher levels.
The remedy for alienation is active participation. The remedy for disenfranchisement is active participation. The path to entitlement is through active participation. The key to active participation is the size of the group. Too large a group and the individual is lost in the crowd. Too small a group and there is not sufficient dynamic. I recommend a group size of between 50 and 200. Any group over 100 should be allowed to autonomously split. Any group over 200 should be required to split.
Group membership LETS may form in locales where there is a remnant of the previous establishment. This can be beneficial or detrimental depending upon how flexible and amicable that remnant is to the establishment of a new way of doing things. Where there is outward opposition to the LETS, or the majority of the citizenry are psychologically attached to conformity to the established system, then there may be little likelihood of success for a LETS.
However, in those locales where LETS are involved in the reconstruction of society, from the ground up, then they may become the basis of general social organization and the group structure on which they are based will become the primary social structure. In that case every individual in the locale, over the age of 15, should be required to belong to a group. If they don’t voluntarily join one of their choosing then they should be assigned to one by some level of administrators in the area.
Groups would be very autonomous over their own memberships. From the acceptance of individuals (except for those assigned to them) to their choice of internal rules. An individual can belong to only one group, but an individual may apply for membership to any group and an individual may apply to change membership from one group to another group. Aside from assigned individuals - group administrators are free to create a group identity with regards to religion, sexual orientation, race, age or any other discrimination they wish.
There can be many groups that I would consider to have a high degree of dysfunctionality because of ignorance, superstition, religious customs, and other causes, but these variations appear in a free society and are even a part of free will. In the relative world there will always be a scale from the least functional to the most functional groups. Function itself, will certainly be defined in various ways by various groups. This variety, in my opinion, is not only something that is be tolerated, but is something that should be appreciated.
Individual Rights and Responsibilities of group membership
All group members shall have the right and responsibility to attend their group’s general meetings and functions. There should be informative reporting available from every administrative level. The method of consultation is one that needs to be developed in a manner such that while there should be full and frank discussion on the reports. The meetings must be conducted with courtesy, and without rancor, and there should be the opportunity for everyone to participate.
All group members, age of fifteen and over, shall be assigned by the LETS a LETS identification number, and a limit of Entitlement in creating LETS dollars. Individuals who feel that their designated level of entitlement is inadequate should have the right to appeal to the LETS and if not satisfied there, to the higher administrative levels. In those areas where the LETS structure also provides the basic social structure the individual would also have the same right of appeal regarding any other administrative decisions.
Rights and Responsibilities of the Group To elect in Group meeting and by secret ballot 10 administrators at a time designated by the LETS. The recommended process of election is as follows: The members should be presented with a list of the names and numbers of all the members in the group. Each member should write down on a secret ballot the name and number of as many individuals as they wish to nominate for administrator. The ballots should be publicly tallied before the whole group and each person receiving one or more nominations should be placed on the ballot. Each nominated person should address the group up to a maximum time agreed upon by the group. Each member should write on a secret ballot the names of 10 different individuals from among those nominated. Any nominee receiving over 50% of the number of ballots cast shall be considered elected. The number of votes for the remaining candidates shall be announced, and those receiving at least one vote on the previous ballot should be voted for in a new secret ballot cast for the remaining number of vacant positions. Again, any nominee receiving over 50% of the number of ballots cast shall be considered elected, and the process reiterated until all ten positions have been filled. While I have not gone into further detail, I do prefer an "open" counting of the ballots. Selecting tellers by lot, or some other suitable method would also be well, but as noted earlier, many of these details are left to the group, and the group may choose a whole different process than what I have described here.
To hold regular group meetings as scheduled by Group Administrators. I would recommend meeting at least weekly but these meetings can be held more or less frequently as the Group Administrators may decide.
To hold group consultation and make recommendations that are non-binding on the Group Administrators.
To execute collectively and individually decisions of the Group Administrators.
Rights and Responsibilities of the Group Administrators. To elect from among themselves a delegate to the LETS. The delegate can thereafter attend the Group Administrator meetings but will not have a vote. It is the responsibility of the delegate to communicate the views of the Group Administration to the LETS and LETS directives and views to the Group Administration.
To educate and encourage the members of the Group in taking advantage of the LETS.
To judge disputes among Group members.
To administer awards and punishments to Group members.
The degree to which the Group will be involved in social policies shall be determined by the Group.
The LETS The LETS is the ESSENTIAL level of the LETS structure.
-------->The span of 7 to 15 is a revision made June 03, 2001 <-----
Each LETS shall be composed of 7 to 15 Groups. When a LETS with 15 Groups wishes to admit another group it must split into two separate LETS. LETS may voluntarily accept new Groups or have new Groups assigned to them by the next higher level.
The members of the LETS shall by secret ballot assign one of their members to the next higher administrative level.
The LETS shall assign ENTITLEMENT levels to individuals in its groups.
The LETS shall provide the mechanics of the trading system.
Higher Administrative Levels Each higher administrative level is comprised of 7 to 15 delegates consisting of one from each member of the immediately lower level. The number of members of each higher level is determined in the same manner as that for the lower levels. The flexibility of there being between 7 and 15 members at each level is a tolerance to permit the implementation, functioning, and replication at each level, through a process of natural growth, units of approximately the same size without being rigid about what comprises a functioning unit.
Each level selects by secret ballot one delegate to assign to the next higher level. That delegate can, and should, then continue to meet with the electing level to communicate to it information from the next higher level, but the delegate will no longer have a vote in the electing level.
Summary of the Principles of Organization The first principle is that of PARTICIPATION, in that those individuals at the lowest level, are few enough in number to be intimately acquainted with each other.
The second principle is that the Administration is selected directly by SECRET ballot, without influence or subterfuge.
The third principle is that the administrative officers are then independent in their decision making. They are supposed to be committed to universal justice rather than some element that voted for them.
At each level, the officers at that level select a delegate to the next higher level. This individual is NOT there to represent the group that elected them to the higher level, but to simply through consultation with the other officers at that level to determine that which is most beneficial and just.
In each case the rules, guidance and where necessary judgement,
come from the next higher level.
Also disputes can be resolved or appealed to the next higher level.
The degree that this structure intertwines with non-economic activities, will be dependent upon the degree to which other social institutions are available.
The overall social structure is in part the determiner of the economic system and the economic system is in part the determiner of the overall social structure. The two are so intertwined that it is impossible to divorce one from the other. It is for this reason that in describing the mechanics and examples of variations in using the LETS that we needed to discuss a sample governing structure.
I might have dealt with a great variety of issues. Such as the re-establishment of complicated industrial processes, the location and development of the necessary elements and talents for highly technical methods of production, and the need for the rationing of scarce resources. I will not belabor those subjects because at this point it would largely be just a matter of imaginative literature. What will be needed, when the reality arises, is creative and flexible response, unfettered by past convention, to deal with circumstances as they present themselves. What I have presented here is a structure, rather than detail, for how we may deal with those circumstances.
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