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ID-18-1 Existing LETSystems. January 8th, 1986
The first LETSystem was initiated in the Comox Valley, on
Vancouver Island, in British Columbia, Canada in January 1983.
The ideas were developed during the fall of 1982 and the first
steps towards the formal organization was a meeting of the first
six members on December 27th, 1982.
This LETSystem now has 550 member accounts and has traded over
$250,000 green.
From the Spring of 1984 onwards, other LETSystems have been begun
in Saltspring Island, Powell River, Duncan, Hornby Island,
Victoria, Campbell River, Seattle, Vancouver, Qualicum and
Arkansas and Denver, Colorado.
Others are either started or under consideration in most major
cities in Canada, and in over a hundred locations across North
America, Europe, Australia and New Zealand.
While almost all the systems so far established demonstrate
valuable results, it cannot be argued, on the evidence to date,
that it is easy to start a LETSystem.
All of the systems so far have evoked a predictable incredulity
in their communities, and the initiators have generally felt it
better to let things grow gradually rather than devote excessive
energy to development.
Only in the Comox Valley has there been any major application to
system development.
This has so far generated a software package, administration
procedures and forms, general development strategies and
information, all of which is made freely available.
However, the actual performance of the Comox Valley LETSystem,
despite all the energy applied, remains far short of potential.
A LETSystem of 550 or so members should be averaging at least
$250,000 per month of total trading. The current monthly
figures are generally $8,000 - $9,000 green, only 3-4% of that
possible.
There are many reasons for this.
Much can be traced to the conservative tradition of a small
community, with a predictable response to new ideas.
More can be attributed to the burden, carried by this system
alone, of the research and development work involved, reflected
both in uncertain and often variable policies and in particular
negative biases in the system accounts themselves.
Some have intimated that the personal style and behaviour of this
writer have been significant. I shall deal with these in due
course.
Landsman Community Services Ltd. ID-18-1 Page 1
ID-18-1 Existing LETSystems. January 8th, 1986
All other things being equal, or ceteris paribus, things develop
and expand as people find value in their use.
It is clear that people find the LETSystem valuable. What
needs to be clarified is why they only find it as valuable as
they do, when so much more is actually available.
The most significant factor in the retarded development of the
Comox Valley LETSystem is the general difficulty that members
still experience in spending green dollars.
To see why this is a factor, how it has come about and how it can
be easily avoided in other systems, we need to consider the
consequences of particular administration procedures adopted at
the outset and maintained to this point.
It was clear from the outset that LETSystems are most feasible if
the administration costs are minimal and fairly distributed among
the membership.
The actual work load of operating a LETSystem can indeed be very
small and does not at the outset justify full time staff or
premises of any significance.
Only when a system is large and highly active need it, and can it
afford to ,take on such overhead.
To do so prematurely requires excessive charges on the
membership, with inevitable drains on performance.
Hence it was decided that research and development costs should
not be charged directly and immediately to the membership.
Rather they should be amortized over several years operations,
including returns from consultancy and distribution.
This decision was entirely correct.
In addition it was clear that the LETSystem itself should never
operate a negative, committed account.
Not being a conventional incorporation, but rather an essential
non-entity, it would be entirely inappropriate for the system
itself, to make promises to itself, in itself.
This definition remains absolutely essential.
Landsman Community Services Ltd. ID-18-1 Page 2
ID-18-1 Existing LETSystems. January 8th, 1986
Further, it was considered that a few months development work
would be sufficient to generate sufficient interest and activity
to sustain the costs of such work thereafter.
In the circumstances, this was unduly optimistic.
However, on the above judgments, we rented an office, installed
telephones, invested in software, advertising and printing, and
went to work.
This turned out to be a big mistake, and established a pattern of
cashflow dependency which has plagued us to this day.
Finally, and with probably the greatest consequence, it was
considered that those engaged on the research and development
could anticipate prompt returns for their efforts as the idea
spread, and were thus able to spend with some freedom in the
system in anticipation of later acknowledgemnt.
This policy has had various consequences in short, medium and
long term considerations.
In the short term, this enabled several people to commit energy
to getting things going, being partly supported in the meantime,
by goods and services from others in the community.
In the medium term, the slow rate of expansion actually realised,
has meant that, as yet, little or no acknowledgement has
available to these members, in green or any other money.
Within the system, these few negative (committed) accounts
necessarily reflect in many small positive accounts.
In a mature system, this would not present any problem.
However, most of the small positive account holders have only
made a few trades, and are intent on spending green before they
earn more.
This diminishes the number of members willing at any time to earn
green and leads to an imbalance with the number of potential and
eager spenders.
This is the condition most generally considered to be a problem
for systems of this nature, and the medium term consequence of
our initial policies clearly reflects in the poor system
performance.
Landsman Community Services Ltd. ID-18-1 Page 3
ID-18-1 Existing LETSystems. January 8th, 1986
The long term consequence of these developments is, however,
entirely positive.
The principal concern raised in LETSystems has always been that
they are prone to abuse by persons who will run up large negative
accounts, fail to contribute, and thus bring down the whole
system.
This criticism, always hypothetical, can now be seen to be less
significant than was supposed.
Consider that, the first LETSystem :
- was initiated with much confusion and inefficiency in a
conservative community,
- enjoys neither institutional nor commercial support,
- is either ignored or deprecated by all leaders of local
prominence,
- has suffered persistent embarrassing and ultimately
unnecessary cashflow problems,
- has, as its principal protagonist, a person generally
considered to have abrasive manners,
- is considerably suppressed by the effect of almost $20,000
( of a total system circulation of $60,000 ) accountable
to Michael Linton in one way or another, who has thus far
been too busy working on the system, to work in it, or
otherwise receive acknowledgement to offset these
accounts.
Notice that, despite all of the above, this LETSystem :
- has enabled over $250,000 green trading to take place
amongst its members,
- records a further $8,000 - $9,000 green per month with an
administration load of only a few hours,
- has effected all this without any instance of fraud, loss,
or any civil litigation,
- has managed to support a research and development program
and the production of highly valuable materials for
general use.
In short, it works.
Landsman Community Services Ltd. ID-18-1 Page 4
ID-18-1 Existing LETSystems. January 8th, 1986
As a first demonstration, this is not equivalent to the first
flight by the Wright brothers.
It would be better compared with the first successful powered
flight taking place in a blizzard with a mule on one wingtip.
Consider then, how such an operation might perform when :
- no significant start-up costs are entailed, for software,
design, writing and promotion, etc.
- no overhead burden need be undertaken,
- the character and committment of the principal initiators
is beyond reproach,
- some degree of involvement with local business is
achieved.
All in all, the experience in the Comox Valley has been a clear
case of the right decisions for the wrong reasons.
Had we made the decision to charge research costs to the initial
membership, through a % commission on trading for instance, no
significant account imbalances would have been generated, and
overall system development might well have been better.
It would however have appeared that it were both legitimate and
indeed necessary to levy large charges on accounts, and this
error would likely persist in much subsequent development.
Furthermore, no guidelines would have emerged to establish the
actual resilience of the system vis-a-vis unresolved
committments.
As it is, we now know that, even under the most extreme
conditions, LETSystems are
- valuable,
people use them with satisfaction,
- viable,
they are cheap and easy to run,
- safe,
nobody need be at risk, and
- highly resilient and persisent,
they will survive almost anything.
Landsman Community Services Ltd. ID-18-1 Page 5
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