Re: Lets, Greshams's Law

["Bruce R. McFarling" <ecbm@xxxxxxxxxxxxxxxxxxx>]

On Thu, 23 Jan 1997 11:48:41 -0500, Doug Henwood,
(dhenwood@xxxxxxxxx) wrote:

> At 10:55 PM 1/22/97, PHILLPS@xxxxxxxxxxxxxxxx wrote:

>>This leads to the conclusion that local currency systems are
>>protectionist -- but THANK GOD THEY ARE PROTECTIONIST -- since
>>they end up protecting local communities from the vagaries of
>>international and national markets, but they also give economic
>>coherence to the concept of economic community

> Come now, can these arrangements ever be anything more than
> marginal? They seem adequate to haircuts, but about scissors
> I'm skeptical, and raw steel, seemingly impossible. They may
> work as coping mechanisms in depressed regions, but they're
> still dependent (e.g. for steel, as in my example) on the
> larger national and world markets. That dependence shows the
> limits of economic community, no?

Two remarks.

     First, I would agree that a LETs system would necessarily be
subsidiary to the national monetary system in question.  But it
does not therefore follow that it will necessarily be marginal.
Assuming, for example, that there are a class of newly produced
primary commodities and productive equipment ("steel" and
"scissors") that are simply not offered for sale within a LETs
circuit, two remarks.

     Active participation in a LETs circuit in a community may
result in a different composition of consumption, favoring goods
available within the LETs circuit.  And there remain used
productive equipment that may be available within the LETs
circuit, especially if the largest component of value added
involves repair and rehabilitation services.  The subsidiary role
of LETs is a logical relationship.  It does not automatically
translate into any specific share of economic activity.
     Now, if LETs is likely to be most important when employment
within the national monetary economy is hardest to come by within
a local community, does that make the "marginal" contribution of
LETs to individuals and families struggling to get by any less
important?  Would improved local capabilities to respond to
economic downturns improve or degrade macroeconomic performance?
Would greater local experience with multiplier impacts increases
or reduce support for sensible national policies?
     My argument here would be that perception of a LETs system as
a logical subsidiary of the national monetary system does not
establish that it is trivial.

     Second,

(appropos the concluding remarks of the seminar paper and I'll
remind people that they only need point their browser to
http://csf.colorado.edu/authors/Mitchell.Bill/title.html for the
proper seminar paper -- or as a fallback ftp the text files
pkswfm01.txt, pkswfm01.tbl and pkswfm01.app from
ftp://csf.colorado.edu/econ/incoming -- to get into the seminar)

isn't a system that can increase service and used equipment
consumption compared to newly produced equipment
consumption a system that we *need* in the present circumstances?
It seems straighforward to me that if we are going to maintain or
improve our standard of living while reducing our material
consumption per capita, we need to reduce the material consumption
associated with a given standard of living.  So a Green response
to "you can buy a haircut with it, but you can't can't buy newly
produced scissors with it" is "Great!".  If the barber's LETs
business expands to the point that the barber is cash strapped for
scissors, and starts looking for someone who can fix up scissors
for LETs ... that's the reversing of the "maximum transport /
throwaway product" society that needs reversing in any event.

Virtually,

Bruce R. McFarling, Newcastle, NSW
ecbm@xxxxxxxxxxxxxxxxxxx