The black economy is thriving – recent reports point to an increase in social welfare fraud. This should come as no surprise – we Irish have always been experts at extracting the maximum possible out of the system. When there was massive long-term unemployment before in the ‘80s, people couldn’t live on the dole alone, and everyone knew it. So, nixers and strokes and compensation claims and favours and cash-in-hand for a day’s work were the order of the day. Not to mention loan sharks or going on the rob or doing a bit of dealing or selling cut-price fags or other stuff from off the back of a lorry. We’ve always done it, and will always do it. We’re a clever, resourceful people who know how to survive. And we have a new influx of hungry migrants who will, no doubt, teach us a thing or two about how to hustle, in the same way we did when we were running the joint in South Boston or Chicago or Kilburn.

One thing matters in an economic depression, and that is that the people suffering from it don’t get depressed. The worst thing about being unemployed is the lack of value that people feel when they aren’t earning a wage, the impotence, the lack of purpose. And yet every one who is unemployed has something they can do for someone else, even if it’s clearing a yard or mowing a lawn or minding kids. When there is no hard cash around, it’s time to make a different kind of wealth, to enable local economies to flourish.
LETS is a scheme whereby people in a community deal with each other in credits, or tokens, or units of currency, that are only exchangeable in that community itself. Each person has an account. The system works by people building up credit in their LETS account by selling goods or services to others with LETS accounts.
Say Mary is great at hairdressing – she can charge 20 tokens to anyone on her estate and it goes from their account into hers. She can then spend her tokens on getting Joan down the road to make a nice dress for her daughter’s birthday party. Joan then spends her tokens on Bernie’s vegetable stall, new season’s potatoes fresh from her garden. Bernie and her neighbours club together and pay a few of the local lads to clear the local bit of wasteland of all rubbish and rubble, so it’s safe enough for the younger kids to play in. One of the lads, Jamie, pays Ali to learn how to use a computer. Ali, a good teacher, gets loads of students of all ages from the local area, and is kept busy. He uses his tokens to get a second-hand bike from a local garage sale for one of his kids for Christmas. The organisers of the garage sale manage to persuade one of the owners of an empty shop to accept payment in tokens, and she in turn uses those tokens to pay some local builders to renovate the dilapidated shop beside it. One of the builders uses his tokens to pay his niece for babysitting in the mornings while he goes back to college part-time. And the babysitter pays 20 tokens to Mary for a decent hairdo.
And so it goes on. On the surface, everyone is officially unemployed. But everyone is busy doing something, and being entrepreneurial, industrious, and getting to know each other while they help each other out.
It wouldn’t take much to get this running. Already, obvious contenders to administer this scheme are local Post Offices, Payzone shops, and Credit Unions. Even mobile phone companies could adapt their billing system. All one would need would be a rechargeable smart card, like for mobile phones or gas cards or tram tickets, but with a PIN, and an associated secure website. Swipe your card, enter your PIN, and enter someone else’s account number at the terminal, the amount you wish to pay them, and out comes a voucher, which you give to the seller instead of cash. After the goods are exchanged, or the services have been rendered, the seller takes that voucher to the terminal, enters their PIN and the voucher’s unique reference number, and their account gets credited.
No one would get rich from this. It would not work outside local communities, because each community would have a different unit of currency. It does not line anyone’s pockets for massive profit, because if a window-cleaner, for example, does a roaring trade in a community, he would have to spend his tokens locally buying goods or services, there would be no interest accruable on his tokens. He couldn’t run away with his profits. Similarly, if a supermarket were to accept payments in local LETS tokens, the profits could not go to, for example, Tesco HQ in London; those tokens would have to be spent in paying local workers or in buying local produce. Apart from a small overdraft facility, to get the system off the ground, no one could get greatly into “token” debt; their card simply wouldn’t work. They’d have to get off their arses and do something for someone else, to get their balance back in credit.
Naturally, the VAT people and the Revenue would be sniffing around. But this would be small-scale stuff, and because the scheme would be officially sanctioned, everyone’s transactions would be above-board and open for inspection. There would of course have to be an upper income threshold; if someone was earning over the average wage in tokens, they’d have to be taken into the tax system somehow. And yet, LETS tokens are not a replacement for euros, for hard currency. There is no value in holding on to large amounts of them, they have to be “spent”. But as long as there was no poverty trap, as long as people were entitled to earn a decent amount in tokens while receiving unemployment benefit, and only gradually had to pay tax, a large part of the untraceable, unaccountable, semi-criminal black economy would disappear. Those who were doing very well out of their LETS scheme would, of course, be prime candidates for a business loan in euros, because they’ve proved themselves a success already, and the most industrious of all will be snapped up by employers post-recession, who know a hard and self-motivated worker when they see one.
LETS schemes, officially sanctioned, are the answer to the credit crunch, because they enable the unemployed to get their dignity back, they start things moving at a grassroots level in terms of economic activity. After the initial investment in the software and smart-cards, and the small continuous cost of establishing and maintaining local dispute resolution committees, LETS schemes help protect the poor from loan sharks and the bailiffs. But, much more than that, they enable people to develop and market their skills, learn how to do business, encourage them to grow food in their gardens.
LETS schemes help people not feel poor when they are unemployed. It’s not magic. It’s not difficult. It’s only a question of imagination, and whether or not one has an interest in ensuring that those who are unemployed feel good about themselves. In strict capitalist terms, they’re not supposed to, they’re supposed to feel hungry and desperate enough to
do the dirty work at the bottom of the food chain. But, hey, capitalism has had its day. Time for something new.