Local exchange systems could be employed as a means of building social capital among individuals in a society, unlike conventional forms of exchange systems which proposes a standardized relationship based on monetary interest between the purchaser and the seller. Exchange is implemented via national currencies conventionally. This exchange system poses several social problems related to equity concerns and to social relations domain. These problems stems from the fact that the national currencies are scarce commodities, their intense use in exchange systems brings about a sharp decrease in the purchasing powers of people−especially the ones from lower social strata−, as well as damaging the possibility of any kind of accurate and beneficial representation of their demand in the goods and services market.
As Collom states (2005), there are three notable community currency systems in operation in the US. These are Local Exchange Trading Systems (LETS), Time Banks, Hours Systems. I will evaluate the premises, operations and actions of Ithaca HOURS currency system which is based in Ithaca, New York, US to develop an argument about the characteristics of local currency systems, in which ways they differ or the characteristics they share with the ordinary national currency systems.
Ithaca HOURS is one of the oldest and largest local currency systems used in the US. After 1980s, the increase in the numbers of local currency systems in the US, as well as in UK initiated and provided inspiration for community activist Paul Glover to establish a local currency system based in Ithaca, in the year 1991 (Collom, 2005). There are some special features to mention regarding this currency system before its commonalities with the other local currency systems. First of all, it is defined on an exchange relationship with US national currency, the US dollar, making ten US Dollars equal to one Ithaca HOURS. This notion is adopted from a fact that, it was the hourly pay of a worker in US at the time the system started in the US. To provide an information about its scope, until it has started its operations, it has involved in exchange relations over 400 businesses (as of now, it is stated as being over 900, according to their official web page), most of them being the local ones, exchanging around over $105 000 (105 000 Hours). Currently, their directory named “Hours Town” contains over 1000 listed goods and services to provide its contributors (Ibid.).
Another important way in which the Ithaca Hours system differs from the local currencies and Time Banks is related to the scope of regulation of their internal and external operations. Of course there is a regulationary component named The Circulation Committee of Ithaca HOURS, Inc. Yet, what I mean is that, in Ithaca Hours system, there are less regulations on printing money and there is less administrative labor is used. This feature makes this example a good one in terms of our conceptualization of alternative economies, ranging from worker owned firms to cooperative, having their main concern−also the main roots of criticisms turned towards them−in the directing and regulating the workers and the participators. Thus, the ways they achieve this less costly ways of administration even in such a business of printing money is to be discussed, in a special place among other currencies. The reason for this may be the fact that the population that contributes to this particular currency (young, educated people and people from lower classes, depending on local businesses to subsist), as Collom states (2005) that these characteristics are shared among the cities with local currencies, as well as enabling a city to develop a local currency.
They define their currency system nicely as “backed up by their relationships”, referring both to the reciprocal and the participatory sides of the system. As it is the case with the other usual currencies (especially when we look at the initial formation of the notion of money up until now), they are not backed by the resources of gold or something else− but they exist only with the contributors’ social labor for the currency. They also state that they call their local currency with an emphasize on the word “Hours” as Ithaca HOURS in order to underline that there is an amount of labor-time contributed to the commodity, it cannot be no longer viewed as an independent entity standing on alone itself− the way Marx mentions in commodity fetishism’s roots can be founded here, in the way the ordinary currency systems view the relation of labor/ time to commodity.
The question of why do they need such a local currency system and what is benefited from such initiatives is an important to ask, when it comes to explicate the differences they have from national currency systems. Building social capital through fostering community relations is probably the main feature of these alternative currencies. They initiate this aim by revitalizing the local economies which has forgotten, or worse, has been usurped by the neoliberal aims. In a way it is a scarce commodity, the national currencies prevent the ease of trade, unlike the local ones which are able to build a huge network of people or businesses that cannot find place in bigger markets. This practice is a collective recreation and constant redefinition of means of subsistence, of labor, of economy as a whole. Ithaca Hours currency system share these characteristics with other local currency systems, although it differs from them in several ways as mentioned above.
References
Collom, Ed. “Community Currency in the US: The Social Environment in which it Emerges and Survives”. Environment and Planning, 2005: vol. 37, pages 1565-1587.
Ithaca HOURS. “What are Ithaca Hours?” Web page http://ithacahours.info/about.php. Accesses at 10 August 2015.
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