CES: A different way to exchange value

CES stands for Community Exchange System. There are many substitute trading systems around the world, known as Community Exchange Systems, Local Exchange Trading Systems (LETS), Mutual Credit trading systems, Trade Exchanges or Time Banks. Most of the info we're discussing today comes from a South African organisation that provides a web-based service to help people organise a CES in their communities. This does not represent an endorsement of this information or system, we're using the information as a jumping-off point for a discussion of how we can exchange value in an economic system.

Questions to start the discussion:
How does money work?
How does an economy work, at basic?
Does money 'exist'?
What is 'barter' and why is it of limited value?
Which came first: currency, barter, or credit?


The Money Gap
There is a 'money gap' between the skills/offers/talents/gifts of sellers on the one hand and the wants/needs/requirements of buyers on the other. Money is supposed to bridge that gap, as a medium of exchange. But what about when you don't have enough money to exchange for what you need, because the skills you can offer don't buy enough money in the markets available to you? How do you get what you need?


The 'Existence' of Money
The main problem with conventional money is that it 'exists', or at least we are encouraged by the commercial banks to believe that it exists so that they can 'lend' it to us at a price! As such it has to be created, distributed and the amount of it restricted and controlled. As money comes into existence when commercial banks grant loans, every unit in existence is based on a unit of debt. This determines the quantity of money, which has nothing to do with the amount of money people require to live decent lives. Such money is also based on speculation, because it is loaned into existence on the premise that it will be paid back in the future with interest.

Despite its modern electronic trappings, our conventional money systems are a relic of history. They are the latter day equivalent of cattle or gold. The debt-based money system was developed for the industrial revolution to provide a rapidly expanding money supply that could not be provided by a money system based on the quantity of precious metals. This introduced intangible money that did not exist in the same way as earlier 'hard' monies, but people continued treating it as a tradable commodity. Money that 'exists' can thus be accumulated like any other commodity. It can also be stolen, traded, collected, destroyed and lost. Its distribution is not based on the delivery of value to others but on the ability of people to 'make money'. Conventional money has no restraints and always flows away from where it is created and needed, towards the 'money centres'.

...The electronics revolution has eliminated the need for an exchange medium. Never before in the history of humankind has it been possible to record accurately who delivers value to whom. Now that this is possible there is no longer a need for an 'existential' money; money can at last truly measure the delivery of value and be based on nothing other than the expenditure of effort by people for others. Money is information - a unit of measure - not a thing.
If money does not need to exist as a thing it does not have to be created and distributed. People will earn money solely on the basis of their delivery of value to others, not through charging interest, trading it in money markets and a multitude of other ways without delivering anything of real value.
Money that does not exist can never be in short supply, but no one can have more of it than the value they can deliver. No one will be able to take more of the social product than they contribute to it, as they do under our current money system. Wealth will remain where it is created and needed, and not leak away to the 'money centres'.


Comparing a CES System to a Money System
The CES is essentially an exchange system. It allows us to exchange our narrow specialisations for the narrow specialisations of others. The regular money system, of which we are so familiar, is another exchange system. Throughout history there have been many different exchange systems. All of them assist us to overcome the inconveniences of direct barter. While the monetary exchange system uses a value representation to mediate exchanges, the CES has no such medium. Instead it uses information as the organising principle. Value is transferred from sellers to buyers and a record is kept of it. These records ensure that buyers 'pay' for what they have received by doing or selling something for/to someone else. This works just as well as money but sets up a completely different relationship between people. In the monetary exchange system production is geared towards maximising the amount of the exchange medium that can be obtained, whereas in the CES production is geared towards the satisfaction of needs. This imparts a completely different logic in our relationships with each other.

Comparing a CES System to a Money System with a really complex metaphor: Two Games of Football


Concluding Statement Reflection Question
How does the way in which we exchange value impact our relationships with other people?





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