What Does Local Currency Do?
Local currency enriches everyone within the network by connecting people to other people. It allows individuals to utilise talents which may be unrewarded by the cash economy. It builds community by putting a human face on our economic transactions. It is by its very nature local, and thus it promotes a sense of place and is responsive to the people and the needs of this unique corner of the globe.
Local currencies are based either on a unit of time, referred to as an 'hour' or on a unit of currency roughly equivalent to the national currency, named to reflect the locality. In Bath LETS we trade in olivers. When using a named currency, most groups set a standard rate per hour, and at the last AGM it was decided on 25 olivers per hour. This seems to beg the question - is all work paid at the same rate? Local currency systems are a form of gift economy, and as such are primarily cooperative in nature rather than competitive. In that respect they are naturally more egalitarian than the regular economy. Everyone's work is important, and no one's work is to be devalued.
However, there will always be an argument that in a real economy, some skills are scarcer than others, and that having a uniform rate per hour will not allow members to value their contributions in terms of their level and skill and training. Most schemes using a currency model settle on a standard rate which is equivalent either to the minimum or typical wage, and in the UK this seems to range between 4 units and 10 units per hour. Members whose skills have market scarcity may then ask for more than this, whereas most members will be happy to trade on the standard rate, and this rate sets the value of the currency for national intertrading. Some members have therefore argued that 25 olivers is an anomalous value that inflates the currency. Possibly it reflects the rate that would be charged by therapists in the sterling economy.
It also needs to be recognized that overhead costs for some services can be substantial. Costs such as office rental, travel, research, support personnel, and insurance can make it necessary for someone to charge much higher than the standard rate. We encourage members to include overhead in the rates they charge, and to just try to be fair and reasonable in their analysis of those costs. Sometimes this may mean that a member will charge partly in local currency and partly in national currency (pounds) to cover overhead.
While Bath LETS is in the process of revival, this question has been left for for future debate, and an opportunity will be provided for members to make their views known as soon as possible. Meanwhile, it is a good idea to ask about someone's rates before making an exchange.
Next: History of Bath LETS