Frequently Asked Questions
It is useful to belong to a LETS or use a local currency for practical purposes, as a way of experimenting with alternatives, and to understand more about how these forms of money operate. However, if we're wanting to make our economic structures fairer and support environmental sustainability, community currencies and labour/local exchange trading systems (LETS) alone can't achieve that. Different LETS and local currencies run on different principles, so we just point out some other problems with common models here.
In Chapter 7 of Life Without Money, 'Non-market socialism', Adam Buick argues that LETS is just a glorified and modern form of barter. Even though it involves multilateral exchange, it is restricted to members. There is no more planned production or exchange than in the mainstream market, so people have very little, if any, more power over how and what things are produced and consumed.
Many LETS and other kinds of informal trading systems present a mirror image of mainstream exchange so, for instance, a child minder might get 10 nuggets an hour and an architect will get 75 nuggets, following wage inequities that exist in the mainstream economy. However, others work in a more radical direction and create a set remuneration, say 20 nuggets per hour, for all forms of work. This makes such alternative currency systems look a bit more like labour credit systems. However, unless they are embedded in more comprehensive environments of social change — such as in the Twin Oaks community in Virginia (USA), discussed in Chapter 9 of Life Without Money — they have very limited effects.
Only a very restricted range of skills, services and goods can be exchanged on LETS, so it can’t be generalised to incorporate ‘means of production’ (e.g. productive land and factories).
Because these currencies exist alongside formal mainstream currencies and markets, people can do what traders have done for centuries and buy cheap in the local system and profit from selling outside it.
People have always been able to extend credit to people they trust using the formal national unit of account so why centralise and formalise something that can be achieved more easily in informal practices? (The rebuttal to this point is that LETS allows for multilateral exchange, although this gets us back to the ‘only in a restricted sphere’ argument.)
Money is not just a medium of exchange, i.e. ‘cash’. In our current social system, capitalism, it is the key unit of account on which all marketed production and exchange occurs. While LETS and local currencies break with some of the problems with national or international currencies as a general medium of exchange, usually they embody the key function of money as an abstract unit of account. This monetary value standardises and contorts real use values of social and environmental goods and services in a price and is a barrier to direct control over the production and exchange of goods according to collective and individual needs.
For more on these different kinds of systems check out:
Informal trading systems and currencies (UK Social Innovator) and the Community Exchange System
If we don’t use money, doesn't that mean going back to barter?
No, not if we are working towards non-market socialism, which implies greater security of food, clothing, shelter and other basic necessities. To ensure such security we need a system of planned and shared use of natural resources, collective production and exchange. Such exchange might be arranged via a gift economy (as outlined by Terry Leahy in 'A gift economy', in Life Without Money) or a compact society (as outlined by Anitra Nelson and Frans Timmerman in 'Global strategy: contract and converge' in Life Without Money), i.e. principles and practices that ensure that everyone’s basic needs are fulfilled by nature and social production. Other exchanges — beyond the satisfaction of basic needs — might be much more informal and simply arranged between individuals on the basis of giving, sharing, give-and-take and mutual credit.
Barter is a one-off exchange of a good or service (or set of goods and services) for another good or service (or set of goods and services), in which money is not used as a medium of exchange. However, where barter occurs within or alongside capitalism today, the exchange is often calculated in terms of market prices of comparable products or services. In other words, monetary calculation — money in its function a unit of account — can still underlie barter. (Monetary theorists often view barter either as the primitive essence of monetary exchange or, conversely, as a deficient form of exchange that prompted monetary exchange. Interestingly, Marx’s theory of money combined both approaches.)
But isn’t using money the most efficient way of organising an economy?
Think again. Do prices reflect social and environmental values? If you landed from Mars you might wonder why people who say that they are seeking fairer and more equitable relations between one another, as well as democracy and sustainability (human life in balance with non-human life), don’t dispense with the monetary system of monetary values and monetary relations that often works against them.
Think about all the time continuously spent trying to achieve more equity and fairness in diverse wage negotiations and welfare policies and how transient those achievements are. Think about all the time spent by people working in financial and trading sectors, whose activities fail to provide us with security and, in fact, are a chief source of insecurity.
Think about the narrow choices we have if we vote, about people’s limited impacts on government’s direction and policies, about how difficult it is to be heard, or engage in productive debate and decision-making. Meanwhile, politicians and bureaucrats spent so much time forming and promoting policies within neo-liberal frameworks focusing on expanding growth, promoting private enterprise, and minimising government charges.
So we just stop using money and everything will be much better?
Our argument is that doing away with money is the necessary but not sufficient step towards a more democratic and sustainable world. We need to build social relationships and structures that ensure greater security in terms of food, clothing, shelter and other basic necessities. We need flexible community-based systems to plan the shared use of natural resources, and collective production and exchange. Such exchange might be arranged via a gift economy — outlined by Terry Leahy in 'A gift economy' in Life Without Money — or the similar compact society, outlined by Anitra Nelson and Frans Timmerman in 'Global stragey: contract and converge' in Life Without Money), i.e. using principles and practices that ensure that everyone’s basic needs are fulfilled by nature and social production. Other exchanges — beyond the satisfaction of basic needs — might be much more informal and simply arranged between individuals on the basis of gifting, sharing, give-and-take and mutual credit.
Does ‘use value’ mean what it sounds like it means?
Use values are the values of a good or service in terms of the use or purpose to which it can be put (either directly, or, say in the case of a tool or machine, indirectly). That means not only material uses, to fulfill needs, but also wants, e.g. aesthetic, pleasurable, ethical, symbolic or philosophical wants. Use values are different for different people, use values depend on how you see or want to use something.
What is ‘exchange value’?
Exchange value is the value of a good or service for the seller, in contrast to a use value, which is the value, use or purpose of a product or service for the person who purchases, holds or uses it.
In a market with a ‘general money’ or ‘universal money’, exchange value is frequently expressed in a monetary unit, in a price. Marx, and certain other economists, have argued that such prices are really just the form of exchange value, the content of which is work or labour-time (measured in the context of the social necessity for the work). Other economists just stress the strong force of market demand on price and leave the explanation there.
In a non-market system an apple is seen and exchanged as an apple, within an exchange the giver and receiver seeing the apple in different ways as performing different functions, or use values, for each of them.
What is a ‘gift economy’?
In a gift economy there is no money. Goods and services are exchanged on the basis of other principles and practices. For more on gift economies, see Terry Leahy’s 'A gift economy' chapter in Life Without Money and his Gift Economy website.
What is ‘labour credit’?
In labour credit systems, the social exchange of services (i.e. work) is conducted on the basis of a non-monetary measure, typically a unit of time. For a living example, see Chapter 9 of Life Without Money, which discusses the system at Twin Oaks intentional community.
What is ‘non-market socialism’?
Like any other ‘ism’ non-market socialism is going to be used by different people in different ways, and people will argue over visions of non-market socialism and ways to achieve it, so it’s an especially good question to ask.
Generally ‘non-market socialism’ means a money-less, market-less, wage-less, class-less and state-less society that also aims to satisfy everyone’s basic needs while power and resources are shared in just and ‘equal’ ways. This implies collective self-management and self-organisation and collective sufficiency.
How might Indigenous peoples and life styles benefit from a world without money?
Indigenous cultures have been eroded through the introduction of trade and production for trade, that is money and capitalist activities. Faced with people who insist on forming monetary relations and values, implementing so-called monetary ‘efficiencies’ through trade and production for trade, many indigenous cultures have been eliminated and contorted through forced compliance, or voluntary compromises, with market forces. For instance, the integrity of native lands and native land ownership is diminished by agreements with companies to exploit minerals for royalties. Much is made about quantitative matters, such as the amount of compensation, but the real damage is the act itself, the qualitative perspective of viewing and valuing the earth and other humans in abstract monetary terms.
In 'The value of a synergistic economy' in Life Without Money, Ariel Salleh points out that women's, peasant, indigenous, and ecological politics already express an alternative eco-socialist non-market future. Such people already only produce as much as they need, and can embrace the ‘good life’ in a ‘synergistic economy’ expressing social justice, cultural autonomy, and eco-sufficiency.
Similarly, in 'The money-free autonomy of Spanish squatters' in Life Without Money, Claudio Cattaneo discusses how squatters and freegans take an ethical stand against the monetary economy, avoiding market transactions and work, and trying to live with as little money as possible.
What do you mean by ‘autonomy’ and 'self-management'?
To have autonomy is to act independently and assertively. Harry Cleaver coined the term ‘autonomous Marxism’ to refer to analyses based on working-class autonomy, collective working-class activity that not only acts independently of capitalists but also independently of and in trade unions and political parties. Accordingly, autonomist Marxists emphasise self-development, self-actualising, self-organising, self-managing practices, in short, what Antonio Negri (1991, Marx Beyond Marx: Lessons on the Grundrisse, 1991, Autonomedia, Pluto Press, New York/London) refers to as ‘self-valorisation’. In Life Without Money, 'Work refusal and self-organisation' Harry Cleaver discusses autonomy and autonomists and Claudio Cattaneo also uses the principle of autonomy to discuss the strategies and achievements of squatters in 'The money-free autonomy of Spanish squatters'.
Self-management refers to people taking direct control of their daily work and other activities. In 'Self-management and efficiency' in Life Without Money (p. 170), Mihailo Markovic explains that 'self-management is the basic structure of socialist society, in economy, politics, and culture'. This requires sophisticated skills in collective organisation.
I haven't heard about running a whole society, or world, without money except in ancient times and in science fiction. Is this a new idea?
No. Thomas More's classic Utopia, first published in 1516, envisaged a world that was not run on monetary principles. Before, and since then, various writers, scholars and political activists have argued for a more decent and democratic life for all which, they argue, can only be achieved by doing away with money. In Life Without Money we include extracts from a sample of such authors. The chapter by John O'Neill, 'Money, markets and ecology' discusses the thought and writings of early 20th century economist Otto Neurath, who argued that socialist principles were irreconcilable with money. The chapter by Anitra Nelson, 'Money versus socialism', discusses debates amongst communist revolutionaries in Russia and Cuba about how, and more particularly when, money would become redundant or disappear because it had outlived its social usefulness. Adam Buick and Harry Cleaver both belong to political currents that have argued for decades that socialism can only be achieved by breaking from monetary relations and values.
Download a few pages on 'How To Help Create Environmentally Sustainable and Self-Reliant Neighbourhoods' here.
For more discussion, see our Life Without Money blog