The UsuryFree Eye Opener: Bootstrap Economics For Hard-Pressed Communities

Preface:

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 economics.

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 citizens.”

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 (1985)

By Dick Racey

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 transaction.

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 telephone.

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 forestry porducts.

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 answering device.

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 products.

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 through LETS.

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 European countries.

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 banks.

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.