Ritical Literature Review: Alternate forms of currency

This paper is a critical Lit review about alternate forms of currency. Here is some info to get you going.

In recent years, there has been a proliferation of reciprocal exchange movements throughout the United States. Local exchange trading systems (LETS) also known as time banking and complementary currencies, are one type of reciprocal exchange systems. Many communities have begun to rely on local currencies as a way of combating the economic recession during the end of the first decade of the twenty first century. Local currencies, also known as alternative or community currencies, are emerging as a substantial social movement all over the world, and are promoted as a means to empower the economically marginalized and to revitalize local economies and communities. At its most basic, the function of complementary currencies is to create an alternative means of exchange a?with a boundary around ita? (Glover: 1995). This paper reviews the current state of knowledge of the benefits and limitations of multiple exchange movements as well as noting areas for future research.


In our economy we take money for granted. When goods are scarce, prices go up and when they are plentiful, the prices go back down. Unfortunately, money, in and of itself, is nothing. It can be a pound of salt, a metal coin, or a piece of paper with an image, but the value that people place on it has nothing to do with the physical value of the money. Money derives its value by being a medium of exchange, a unit of measurement and a storehouse for wealth. National currencies, like the US Dollar, are now loaned into existence, requiring their repayment with interest to a bank or financial institution whereas local currencies exist solely to facilitate commerce within a community and to preserve and restore the social nature of trade and business (Bnote). Although money is our primary source for purchasing goods and services, other forms of currency exist that benefit communities. Instead of formal, bureaucratic employment relations based on economic capital, reciprocal exchange systems redefine the idea of a?work, promoting exchange within the community while gaining the advantages of strengthened internal exchange in wealth, social capital and local preservation of resources.

Time Banking:

The concept of a?time banksa? aims to do just this by rewarding participation in community activities, or help for neighbors, with time credits, which can be saved up and then donated or spent on services from other participants. Reciprocal support relationships based on equality are built up that value work which is normally unrewarded and people who are on the margins of conventional economic systems. These projects have been growing in the UK for four years and have attracted government support, developing in a range of settings where involvement of residents and service users can have beneficial impacts, for example health care, regeneration, education and community development. In the US, time banking is becoming a vital force for social change, particularly in deprived areas: fuelling community development programs, rewarding peer-tutoring projects in Chicago schools and boosting attendance and attainment levels, offering access to GPs and health care for time dollars and so on (Boyle, 1999).
a? Time Dollars are not an attempt to create an alternative to market. They are designed to rebuild a fundamentally different economy, the economy of home, family, neighborhood and community. And there is nothing alternative about home and family and neighborhood. Home, family and neighborhood are not an alternative economy. They are the Core Economy. The Core Economy exists side-by-side with the world of commerce, regardless of the medium of exchanges used to consummate transactions in that world.
a? The Core Economy of home, neighborhood and community is complementary, not alternative. It functions on different principles of production and distribution and it supplies the foundation on which the market economy is built in much the same way that both the Market and the Core Economy are built upon the Servicessupplied by the economy of nature that ecological economists have analyzed.
Time Dollarsa financial support comes from this capacity to generate social capital (by mobilizing consumer input, client input, student input, patient input, tenant input, community input, citizen input) on a sustained basis and on the scale. It may be called Co-production,the labor supplied by the ultimate consumer a whether that consumer be labeled client, recipient, beneficiary, or citizenry. It is the need for that participatory labor from the consumer, the client, the citizen that has led government and foundations to underwrite Time Dollars programs and to make Time Dollar exchanges tax-exempt (Cahn).
Trust and Reciprocity
Time banks are seen as a means to rebuild communities socially by creating a?networks of reciprocitya?. Consequently, research on time banks is dominated by consideration of the social (Seyfang & Smith, 2002) and argues that time banks can generate social, economic and political citizenship by facilitating reciprocal relationships. Subsequently Seyfang (2004) explains that time credits can be seen to be a?a radical challenge to existing structures and values by creating an economic space for social inclusion outside the mainstream where social, environmental and ethical rationales drive exchange behavior, in addition to economic rationalitya?.

a? Time Dollar programs donat purport to provide the kinds of skilled labor that people want so badly.a?
a? Time Dollar programs are probably more labor intensive to operate because of the requirement for a Time Dollar Coordinator.
a? Time Dollar programs seem to require a warm, almost charismatic presence to generate requests for service, make matches, recruit a steady stream of members.a?
a? Time Dollars lack price as a way to ration what is scarce. How can you have a currency that treats every hour as equal when everyone knows that some activities are more valuable than others? Doesnat that insure that people will try to provide the less valuable services and purchase the more valuable ones?a?
Local Currency:
By reinforcing local exchange, alternative currencies are an effective way for a community to resist the resource drain associated with a global market dominated by large, transnational corporations. Stated briefly, the argument is that, while they are commonly viewed as a venue for development, a?big boxa? stores siphon more out of a community than they bring in. Critics maintain that such corporations are given significant advantages within the community in regards to the use, and abuse of local resources and adherence to various rules and standards. Although they do generate economic activity by way of employment and affordable goods to the market, they bring in mainly low-end, non-secure and unskilled service jobs, while the profits they generate leave the community to go to some unspecified corporate headquarters (Korten 1995). Referencing the Untied Statesa economy, Shuman writes: a?The principal affliction of poor communities in the United States is not the absence of money, but its systematic exita? (1998:107). Local currency by contrast, moves entirely in and for the community allowing wealth to stay local.
a? In 1991, the town of Ithaca New York, home to Cornell University, became a town with more than one currency. The concept behind incorporating an alternate form of currency was taken from the idea of a?scripsa?, which was used during the Great Depression of the 1930as. Ithacaas currency, called the HOUR, was not issued by any legal, financial, or political authority and was meant to circulate on a voluntary and consensual basis, parallel to the U.S. currency.
a? LETSa primary focus is on building a local economy that keeps currency in community and provides a market advantage for local shopkeepers and entrepreneurs. LETS is expressly a currency designed to create an alternative e