LETSystem development will generally have to face two problems - first a shortage of money and then an excess of it.
Ongoing LETSystems operations themselves are simple and will easily cover their costs if managed with any degree of competence. The task is to enter transactions in a database, and distribute periodic statements to account holders. Charges of 10 pence (25 cents) per transaction , 50 pence ($1) a statement, directly charged to user accounts, is generally enough, with an initial registration fee around £10 ($25) per account. There is no need for an office or full time staff.
However, the development of LETSystems is much more complex. There is still much work involved in opening the general idea into a community, and at the outset, the costs will far exceed revenues. This is a problem, but nothing unusual in the process of establishing any business or organisation.
But if charges in the early stages are simply set at levels that meet the initial costs of development, this will inhibit system growth at the most critical time. And there must be a strategy to manage the surge of revenues that will occur when the operations begin to take off.
The situation is much like going to Niagara Falls with a bucket. If you do get close enough to get some water, you are likely to get far too much. It's like trying to power a light bulb from a high tension cable.
The potential revenues are huge; the matter must be approached without considerable care.
If, in setting up local currencies, you don't arrange good financing and support, you will likely be overtaken by others who do. Many people will see this as a quick way to make easy money, and may be quite willing to put some in to get more out. In the longer run, the ease with which local money systems can be serviced will preclude any monopolist profits, so these currency services will in any case tend towards community commons. It will however be better to get this right from the outset.
There is an urgent need for local money and an outrageous financial potential; a well designed system of incentive will ensure that the results are achieved as quickly as possible, without the distortions that are likely to follow from a "gold rush".
Recommended strategies are outlined in the design manual - which is available in a zip file. Practical details are emerging continually from the various projects already in place - principally those in Manchester and the Comox Valley.
The principles are that
compensation is generous but not excessive
incentive is based on group performance
at least 80% of the revenues generated are directed towards community projects or community banking
Written by Michael Linton of Landsman Community Services Ltd.
Version #004 27-7-96