Dick Racey, a Canadian of
northern “bootstrap” character was born in 1933 in the depths of the
Depression. In 1985 he published a book that has a distinctive character
derived from its origins, his basement workshop in Schumacher, Ontario. Dick
Racey’s book is titled: “An Idea For The Times – A Future For Our Young.”
For many years Dick Racey had
focused upon money and instititutions built upon it such as interest (usury)
and taxes. He has dug into the books and found a number of writers who have
much to criticize in our monetary system.
Dick had made himself
acquainted with the work of Soddy, Eisler, Gesell, and Douglas the founder of
Social Credit. Dick claims that his book “An Idea For The Times” is not based
upon the work of any of the above monetary architects but rather it is rooted
in ‘bits and pieces’ of psychology, anthropology, his – as well as a dash of
The main hypothesis of his
book may be stated quite simply: “Change the natire of money, and you’ll change
the nature of society – its institutions, values, and the behavious of its
Dick maintains that the
individual rather than the banking institutions ought to create the money and
put it into circulation. Dick points out in this article “Bootstrap Economics
For Hard-Pressed Communities” the most important single section is not anything
he wrote, but the quotation from the single mother, because it reflects the
psychological and social aspect of the changes wrought by a change in the
nature of money.
Dick believes that when the
individual creates money instead of the banks, the individual is liberated and
he found support for his thesis when he examined the LETSystem in operation
since 1983 in the Comox Valley on Vancouver Island in British Columbia.
Dick encourages communities
all across Canada to “install” local LETSystems so that people can experience
how different things c an be if they so choose to participate. Dick has made a
commitment to help Michael Linton expand the concept of LETSystems for he
believes that this unique approach to economics of LETSystems for he believes
that this unique approach to economics will be far more effective than relying
on politicians to solve our economic woes.
NOTE: I am currently focusing my
energies on encouraging SDI entrepreneurs to study the usuryfree time currency
model that uses the “hours and minutes” units of currency that exist as debits
or credits and are issued by participating members rather than the banks.
The money in this proposed
usuryfree time currency system for SDI entrepreneurs will be backed by the
pledge of the individual member to other members within the database (system)
that he or she will deliver an equivalent value in the form of talents, skills,
labour, products and/or services.
No usury would be exacted on accounts in “debit”
and no usury would be paid on those accounts in “credit.” A fair membership fee
and a small monthly fee would be levied against members in “usuryfree time
currency” to defray the administrative costs of operating an office to serve
the members participating in the system.
I am convinced that the
respective SDI communities can generate an outstanding variety of talents,
skills, services and products that can be exchanged within a barter system. SDI
entrepreneurs have additional skills, talents, products and/or services to
offer besides those purchased from their SDI “home office” supplier.
Bootstrap Economics For Hard-Pressed Communities
The telephone message
recorder blurted out the previous evening’s transactions: “John Smith, No. 237
acknowledge Eric Nelson, No. 415, $125 green for auto repair. Good night.” Then
a different voice: “Lois Carpenter, No. 211. Acknowledge Louise Edwards, No.
455, $23. Green, for handcrafted dolls. Bye now.” Yet another: “Ron Carroll,
No. 184, acknowledge Jimmy Turner, No. 79, $12. Green, for fixing my sink.”
Several different voices in succession, each delivering a brief report of a
As the reports of the
previous evening’s transactions came in to the LETSystem office in Courtenay,
B.C., Ann Scott, seated before the cathode ray tube, keyboarded the entries
into the computer’s memory. A few minutes later, she was finished. She then
reset the message recorder to collect a fresh batch of transactions from the
LETSystem stands for “Local
Exchange Trading System” – the brainchild of Michael Linton, founder of
Landsman Community Services Ltd. – a research, development, and consulting
group organized along co-operative lines. The computer at the LETS office is
the nerve centre of what amounts to a “miniature self-contained economy” –
complete with its own currency, called “greendollars.”
A sprinkling of such
economies now dot Vacnouver Island in small centres like Courtenay (with over
500 members), Hornby Island (about 110), Campbell River (about 30), and the
idea has also spread to Victoria – as well as Powell River, and even to
Vancouver on the mainland.
Like many communities in
Canada, with economies differing little from those in the Third World – in that
the products may be lumber or copper instead of sugar cane or bananas – those
on Vancouver Island have suffered from declining world demand for their
When recession strikes, so
much money disappears from the local economy that even transactions involving
local labour and resources, like home repairs or firewood, come to a grinding
halt. The LETSystem, based entirely upon the value of local labour, overcomes
this economic blight by its circulation of the “greendollar.”
The greendollar, by mutual
agreement roughly equivalent to the “federal dollar,” is created, not by
chartered banks in the process of lending, but by individual members of each
LETSystem – on the strength of an implicit pledge to reciprocate with an
equivalent contribution in goods or services. The greendollar is created in the
act of spending it – in transactions conducted over the telephone to a 24-hour
Greendollars are in reality
debits and credits in the LETS computer – for all intents and purposes like
entries in a bank ledger. In small centres like Powell River, the computer is
replaced by a hand-written ledger. The system works. It permits a multitude of
transactions which would be impossible were members exclusively dependent upon
money coming in from the depressed world market for their resource-based
The LETSystem has a second
function: its members receive a monthly “offers and requests” listing of goods
and services available for greendollars, or for a combination of greendollars
and federal dollars.
An astonishing variety of
goods and services are available: firewood, agricultural produce, language and
dancing lessons, clothing, marriage counseling, carpentry and plumbing,
gardening services, hand-crafted ceramics, second-hand vehicles, furniture, and
gardening implements – even dentistry. And the list goes on and on. A small
charge is levied against members, in greendollars, for their advertisements;
these partially defray the administrative cost of the system.
Because greendollars are a
local currency, they have limited utility with local retailers – who must
purchase their stock, at wholesale level, in federal dollars. Thus “foreign
exchange” is still needed for many transactions. Nonetheless, some local
merchants have co-operated in quoting part of their mark-up in greendollars.
This has usually resulted in an increase in their turnover – and has improved
the utility on the local currency.
Greendollars have even, in
part, served to capitalize a small business – a restaurant called “The Joy of
Cooking” – on Hornby Island, in addition to helping capitalize the LETSystem
itself. Although it hasn’t been tried yet, greendollars can also serve to
capitalize co-operative ventures.
The benefits have not been
purely “economic,” but social and psychological as well – a touch of “community
therapy.” One member, a single mother, relates:
“Without this system our
Christmas would have been very bleak. The children were given handcrafted toys,
and other family members were given pottery, jewelry, and candles. All of my
and my children’s clothing now comes through LETS. We get some of our feed
I feel that I am valued in
the community for the work that I provide. I like to have my small children
exposed to this alternative monetary system; they now check out if goods are
available for abroad as well. Inquiries are coming in at the
rate of two a day – from all over the North American continent as well as from
Meanwhile the LETSystem is
gearing for rapid propagation. Soon it will be possible to download, into
personal computers, all the software Linton has developed thus far – virtually
anywhere in the world.
Instantaneous “updates” on
methods and local experience will also become available through telephone
links, shared by member LETSystems – who must operate on a non-profit basis as
a condition of membership. A “hard-copy” information kit is also available from
Landsman – available to any individual or community interested in the idea.
Just as intriguing as the
LETSystem itself, are the principles under which it functions, and even thrives
– when the conventional “market economy” flounders. An enlarged application of
its principles could have monumental impact upon a system which has left 1.4
million out of work in Canada – many in the lineups at soup kitchens and food
LETSystems function without
interest ((usury), without banks or bankers, without “capital,” without
investors, without government grants – although grants help during the “setting
up” phase. LETSystems completely annihilate conventional notions of what
“effective demand” is all about.
Members do not disappear from
the economists’ calculations of “supply and demand” simply because they have
run out of “federal dollars:” to the extent that greendollars can provide for
their needs, they are no longer at the mercy of the “market economy” – subject
to blind forces beyond their control.
Even as “economies in
miniature,” LETSystems also annihilate conventional notions as to the
motivations underlying “market behavior.” Goods and services are not delivered
in anticipation of a “market reward,” but rather in honour of obligations
individually undertaken by their members.
Entirely aside from their
immediate benefits to stricken communities, they are a miniature proving ground
for principles that could spell an adieu to those founded upon the work of Adam
Smith and David Ricardo, not to mention those considered sacred by Milton
Friedman and the Farser Institute. Applied, eventually, to national life, these
principles could spell an end to government by “Sound Financial Rules,” and
provide an alternative to an economy that will not, indeed cannot function
without catering to the avarice of the few.
Other articles by Dick Racey: