What happened to LETS systems? Sue Bell of Mutual Credit Services

Today I’m talking with Sue Bell, who was involved for many years in Brixton LETS and the Brixton Pound. She’s now part of a group called Mutual Credit Services (MCS), formed to build mutual credit clubs and to federate them together to build a new kind of moneyless trading system. I want to talk about LETS systems and mutual credit – the similarities and differences – and what happened to LETS systems.

This is one of a series of interviews that will accompany a book I’m writing, that will be published by Chelsea Green – an employee-owned company, and part of the new economy that the book is describing, built around a mutual credit core. [Here’s more on the book deal and here’s some introductory information about mutual credit.]

Hi Sue. So tell us what LETS is.

It’s a system that allows you to exchange and trade locally. A system is a kind of network, and it has some principles or procedures linked with it. It often has some sort of political, social, cultural implication. What the system does is interacts with the rest of the world and vice versa. The system itself has a common purpose, but you can’t divide that common purpose from where it interacts with the world, particularly with LETS, where what you’re talking about is local people and local businesses. So it works like an accounting system.

How did it work? What tech was used? Did it work well? How were records kept? How did things get traded?

Michael Linton in the 80s created a system in which we could say if we spent and the seller would accept our payment and that gets administered and put into the system.

But it’s not money as in pounds, shillings and pence?

No, it depended on which LETS you were in. It was a unit – whatever you wanted to call it. In Brixton, it got called Bricks. You traded by working out how many Bricks you wanted in return for your goods or services. You’d negotiate in your network, which might be a loose group of people who know each other, or there might be a directory.

How did you work out the value of a Brick? Was it related to sterling?

No. When people said they wanted to join the LETS group, they were asked what they wanted to offer, and they often didn’t know. So they knew what was valuable on the jobs market, but often, in LETS, people didn’t want what was offered on the jobs market. So IT trainers, for example, didn’t get valued much in the LETS system, but if you offered babysitting, that was valuable because lots of people wanted it. That’s largely down to the flavour of the local people involved. It started with a few neighbours, then they started having trading events to offer and find goods and services. Then you got put into a directory. But the problem was that it was skewed – a huge number of therapists. Then the people who found it easy to earn sterling (like plumbers), didn’t use the system as much because they couldn’t find things to spend it on (you can only have so much therapy), or they didn’t have time because they were too busy earning sterling.

When was the heyday? When was all this happening?

Around the early 90s, then again in the early 2000s, when money was a bit scarcer, but after those 2 periods, it slowed down. The adminstration was being done at my house, on my computer. I managed to get some funding to develop the management system. When that funding ran out, we asked what needed to be done next, and the answer was ‘can we find more sterling?’. I said ‘if after a year, and all the work we’ve done, you still believe that sterling is worth more than Bricks, then I’m out’. In 2005, I gave over Brixton LETS – I wasn’t prepared to work in the limited way it was. I didn’t think it was going to be valuable.

Why not? What happened to it?

It died – people didn’t trade, it wasn’t valued, because at that point, money was easily available. You just had to go to the bank, and they’d give you credit. That’s why the crunch happened. When I started giving financial advice, you could only get a mortgage up to 4 times your earnings. In the mid-2000s, you could get a mortgage up to 10 times your earnings.

So the credit boom killed LETS?

It made it appear unnecessary. Not because it was money vs LETS, but people didn’t understand how money works. I also help people work out their relationship with money – to go back and learn where they learnt about it. They don’t learn about banking – they get taken by the hand and get their money out of a cash machine . Nobody explains how the system works. Even now, when I tell people that banks create money from nothing, lend it to you, and when you pay it back, the debt has gone, but you have to pay extra on top (interest), they don’t believe it.

LETS is a type of mutual credit isn’t it? Do you think that only works when money is scarce?

It depends. In Brixton LETS, we ended up with 300 members – some local businesses …

What kind of businesses?

Restaurants, lots of therapists, volunteer bureaus, market stalls, local shops – especially food – Brixton is famous for food. But basically, 300 people couldn’t get to know each other. So if you wanted someone to open up your house for the gas people when you were at work, you needed a trustworthy person. A woman who made the most amazing cakes got to know a woman who lived down the road and helped her to decorate her lounge – for Bricks. But she didn’t want this put in the directory, because she didn’t want to do that for anyone else. Also, with 300 members, some started to be quite a way away – say in Clapham, which was a bit too far for people to go for some things. So how do people feel, trust etc.

So what’s the best size for a group?

Probably around 100-200 people. But it depends on where the group is, are people similar, do they trade similar things, and who are they, as people? Are they very busy, are they single-parent families? In Brixton we had 56 different first languages. So a huge number of cultures. Some of those cultures had schemes where everyone put money into a pot each month, and they took it in turns to take some out for a large-ish expenditure – say a washing machine. There were lots of those kinds of schemes, and still are.

Did those different ethnic groups join Brixton LETS?

Yes and no. Mostly no. Mostly we were white. I think that was because white people didn’t have those cultural groups / natural links.

I guess people didn’t use LETS because they didn’t like the way the money system works – it must have been because they thought it would be good for them?

Yes. Some wanted to get involved with alternatives, but some were desperate – they didn’t have money. In Liverpool, if you became part of a LETS scheme, they’d stop your benefits. That didn’t happen in Brixton, but it did in some places.

You’d lose benefits just by becoming a member of a scheme, whether you traded or not?

Yes.

There was a UK national organisation wasn’t there? Was there / is there a global one? I understand there was a LETSystem Trust and a design manual? Were there different models? What happened – what’s the state of play now?

It’s still around, but in some ways it wasn’t allowed by the dominant system. If we did have an exchange system based in communities that allowed us to trade without needing banks for money – who do you think would be interested in what was happening?

So centralised authority wouldn’t exactly be supportive?

No. They don’t want it, and they’re concerned about the black economy.

When we’re talking about the value of a Brick, why didn’t you just say that one Brick was equivalent to £1, to make it easier for people to understand?

In a way we did, but we weren’t adamant about it, because different people value things in different ways. If I do this work, and I get sterling, and I do this work in Brixton LETS, and get work in Bricks, what does that mean? So let’s have a look at what other people do and what they charge for it in Bricks. So we look at the directory and see what people are expecting in Bricks for what they’re offering.

So if you’re a new member, you look at the directory and see that someone is asking a certain number of Bricks for something that’s roughly equivalent to what I’m offering, so I’ll ask the same.

Or you make contact with people. So you have social events and you meet someone and do an exchange, and work out how to do that.

Timebanks – what are the differences and similarities with LETS?

With timebanks, you can’t choose the unit – it’s hours. So in the New York timebank, you’ll get lawyers providing legal advice – but for them it was free work. Then you get babysitters, but for them it was really valuable, because it was worth a certain amount of someone else’s time.

What do you think about that? The effort that you put into babysitting could just be watching TV, eating crisps while the babies are asleep.

When did you last babysit?

OK, unless the kids decide to play up. But if they’re good and they go to sleep, it could be a really easy gig.

But you still have to be perpetually aware.

Yes. And it’s really valuable to the people who want the babysitting (NB: I chose the wrong example with babysitting, because of the responsibility involved – the ‘worst thing that could happen’ is a lot worse than with other jobs). But I guess some jobs are more difficult than others though – they need lots of preparation, lots of training, they’re heavy, dangerous, cold, wet, lots of things could go wrong, lots of stress. Other jobs could be easy by comparison. How would timebanks take that into consideration?

They don’t. So look at who uses timebanks. Here in Brixton, the council made a huge effort to get timebanks working in Lambeth, and they could only do it on a social basis around a GP surgery. Some ailments needed social support, which could be provided through timebanks. But then you needed brokers. Often what happened is the brokers had to make things happen. When I brokered a trade between someone in Brixton and Clapham, I gave someone a lift to do the job.

And do brokers get paid in hours in the timebank?

Usually they’re funded from outside – from the NHS or the government, as a job, albeit not a particularly well-paid one.

So the government funded timebanks but they blocked LETS. Why did they prefer timebanks to LETS?

It’s not that black and white, but I think it was because timebanks could be seen as social support, and social services. That’s partly why primary care has moved to local authorities rather than the NHS.

So they saw LETS as economic activity, but timebanks as a social benefit, almost like a charity?

Yes.

What’s the aftermath of LETS? Are they still operating, or did people in the groups get to know each other and just do things for each other informally? Where are we now?

I don’t know. You’d have to ask LETSLink UK about that.

Mary Fee?

Yes.

I’ll contact her.

I was asked a couple of years after leaving Brixton LETS to join the local economy group of Transition Town Brixton. We did the first conference about 5 months after that group got together, in the town hall. It went well. People used Bricks for lunch, locally. Some people asked what we could do with the next conference. I didn’t want another conference – I wanted to do something. We ended up with several things – one of which was developing the Brixton Pound.

Like the Bristol Pound, and the Stroud Pound, and the Lewes Pound?

Actually the Lewes and Stroud Pounds came just before the Brixton Pound, and the Bristol Pound learnt from what we did.

I saw a Brixton Pound cash machine in Brixton Market once.

It’s still there.

So the Brixton Pound is still going?

It is, but not in the same way. The difficulty was the people using the Brixton Pound were local businesses, who ended up having two kinds of currency in their till. So if it was market traders, it was quite difficult. At that point, I said that our group needed to find people who knew about business. We launched a Brixton Pound which was backed by sterling. Unless you had sterling, you couldn’t get Brixton Pounds. My personal interest was using a local currency that wasn’t linked to sterling. So once again, I left. I’m very good at leaving things.

So overall, these projects – especially Brixton LETS – have they been beneficial / good for the community?

Absolutely. If nothing else, it’s a process of learning. Alternative currencies are becoming more open, not least because of the credit crunch, and in 2014 with Greece, who didn’t want a loan because they knew it would go straight back to the German and French banks. They knew they were just being given debt, not money. They didn’t want that contract – what they had to do to allow that money to flow from the banks and back again. People are recognising that the old ways of accruing money, like earning it, are becoming limited, and our systems are leaching money away from people using it to people storing it in a variety of ways, like pensions – for example what happened recently with Philip Green – how they were able to leach money out, so that pensioners could no longer be paid. People are becoming aware that the system they believed in isn’t beneficial to them as individuals. It’s becoming much more obvious.

It’s now about how we manage our personal relationship with money, how do we use it in our lives, and how do we work with other people so that we recognise reciprocally, what we give and what we get back in return.

So now you’re involved with Mutual Credit Services – why do you think mutual credit can work when LETS and local currencies didn’t?

It’s another gamble and a personal investment. I’m gambling because of the people involved in MCS – their experience, their abilities and their ideas around building local groups – and those local groups will be different in different places – and enabling people to link together and trust what’s happening, and continue to feel part of it. People have allowed banks to use their money without questioning it. Now they’re beginning to say ‘hang on, I need to take charge of this’. In that sense, it’s a gamble – I’m gambling on the people, and what we can create together. I have hope, and also I’m investing, because I hope that amongst all of this, and the changes that are happening, including Covid, and the drama around it. There’s going to continue to be boom and bust – even the central banks are telling us that. Can we now wonder how we can do this differently – not instead of, but as well as, and in time, develop ways that we can learn how to trade again. We don’t know how to trade at the moment – we just accept prices, and work out if we can afford it. Currently there are 7 ways in which you can accrue money:

1. earn it
2. borrow it
3. be given it
4. find it
5. beg for it
6. steal it
7. sell something

What we tend to think of is that we need to get a job to get money to buy things – own or rent a house etc. We’re going to have to shift, and work out how we can get the things we need. We don’t need to go off-grid – we can retain our connections in society – but we can learn and research how to live and get the things we need. How are we going to do that, together?

I guess with mutual credit, there’s also this federatability – businesses can trade with businesses in other groups, that are networked together. That couldn’t be done with LETS. I think there were attempts, but they failed. Do you think we can attract the range of businesses and the circularity of trade that LETS failed to do?

I do, otherwise I wouldn’t be doing this. However, what I think is essential is that we recognise that it’s the people who use the system that will change it. But unfortunately we don’t have a lot of background. Having lived in Egypt and learnt that when you trade there’s no cost. You don’t ask how much something is, you ask yourself how much it’s worth to you. You have a trading interaction, and work it out together. We just know how to earn and shop. And then in the 60s we started to learn that we don’t even have to earn – it depends on how creditworthy you are. I was working with someone a while back, and they said they’d got £300, and they intended to pay off a debt. I saw that they were paying a lot more interest on another debt. On the debt they intended to pay off, they were paying 3% interest, but on another debt they had, the interest was in effect 3000%.

A payday loan company?

Yes. They realised they could pay off a loan with extortionate interest, and they asked themselves whether they wanted to use money in future that someone charges them so much to use.

Yes, if mutual credit could put a few payday loan companies out of business, that would be a great thing.

Fantastic talking with you Sue. Any questions you have for Sue, you can post them on the blog or on YouTube. Probably a better chance of getting them answered on the blog. This is part of a series of interviews accompanying the book, so if you want to follow them, subscribe to the blog or the YouTube channel.