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Research Proposal: Local Exchange Trading Schemes
– Why have some failed and others succeeded ?


We are pleased to announce that seed funding for this research project has been donated by the Co-operative Dividend Fund, amounting to £900 in January 2005. Although this is a relatively small amount of money, it indicates support for our organisation from a key Funder, and as such, its value extends beyond the actual monetary amount contributed.

LETSlink UK’s objects (as in its Memorandum and Articles), are the advancement of public education and the promotion of research (and the publication of useful results of such research) in the development and practice of local exchange systems including LETS (Local Exchange Trading Schemes), for community and environmental benefit or for the relief of poverty.

It will be noted that this definition does not exclude groups following the Letsystem model or the Timebank model, and it will be to the advantage of the research to include the broadest possible range of styles. The hallmark of this research is that it is emanating from inside LETSlink UK, with the needs of its member-groups in mind. The research will fall into several distinct stages, starting with an initial fact-finding mission before a more detailed analysis of management styles is possible. At each stage we intend to feed the results back to participant members so that they can be the first to benefit, before the results are applied to any outside agenda.

(I) RE-ESTABLISHING BASIC CONTACTS:
On the face of it this looks like a simple clerical exercise. However, we have not been in touch with some schemes for a long time because lack of resources in LETSlink UK have meant no newsletters or other means of outreaching to members. Therefore when checking up on contacts we may find we need to be sensitive in listening to stories which may emerge about what has been happening in the group, and in following up leads to new contacts which are offered to us, without closing off the opportunity to receiving relevant information for later stages in the research from outgoing organisers. The methods adopted may include telephone calls, manual form-filling, and web-filing of information. Progress of the research will be reflected on the LETSlink UK website by the gradual addition of phone numbers and web-links on the regional pages. This exercise may be linked with invitations to re-subscribe to LETSlink UK to provide internal funding for the research, and rewarding member groups with tangible services supplied by LETSlink.

(II) LOOKING AT THE FORMAL STRUCTURE OF THE LETS GROUPS:
This stage involves recording factual data such as number of people involved, their roles, the reporting lines, the administrative tools they use, and the constitutional structure of the scheme and facts such as history of the group in terms of founding date, currency names, dissolution of groups and/or restructuring such as merging with other groups, changes of names or geographical boundaries etc in response to internal or external factors. Assessing he group as being launched, thriving, in plateau mode, declining, quiescent or folded. Where and how data is held. How members are managed in terms of reputation, credit control, membership renewal, equal or varying time values. Whether currency vouchers are used. How the group encourages trading, eg by arranging social events, trading days, auctions. And so on. From this data we may be able to classify and map groups against opposing criteria in two dimensions, such as hierarchical/flat, and community/commercial, and begin to discern common patterns with regard to the life cycles of groups, and identify particularly successful styles of organisation.

(III) DETAILED FACTUAL STUDIES OF GROUPS: We might continue, with a selection of those groups who are willing, on deeper study of objective structural data such as ages and gender of members, their ethnicity and social classes, their occupations and status with regard to welfare services, residency status, health, and disability, the effects participation in the group has on them, etc. These will be factors that organisers may well have a sense of without having researched the data exactly. Depending on what record systems are in place, groups may or may not know what the turnover of their currency has been in a given period and what the trends are in terms how many long-term defaulters there are, or how rapid the turnover is of actual members. or be able to report qualitatively on the type of trading taking place, and if such information is not known and management systems are offered to groups to measure this data, the research process itself will have influenced the management style of the group. From news of the research, groups may spontaneously decide to adopt different methods in order to stimulate, and manage trade.

(IV) ASSESSING MANAGEMENT STYLES OF GROUPS.
Observable facts will indicate the model of LETS that organisers think they are following but there may be discrepancies between what members think the structure is and are what is actually occurring. Both in the management group and amongst the ordinary membership there may be varying view on whether they are members of a community group or an enterprise. There may be conflicts within the management group as to what methods should be followed, and power struggles may follow, resulting in breakaway groups and failure of the group as a whole. Ordinary members may or may not agree with the methods being used by the management group, and schemes may vary in the extent to which ordinary members can influence decision-making. Looking at what strategies for running LETS have succeeded and what strategies have not succeeded, can we identify a number of different successful strategies? How influential are personal relationships and group pressures - must there be a key individual or can genuine democratic decision-making work? Can we relate those factors to what tends to happen over the lifetime of a LETS - is there a common pattern of rise and fall, and can we identify strategies to sustain the groups, in the face of ongoing entropy?

(V) INDIVIDUAL INTERVIEWS to elucidate participants attitudes to and belief systems around the way the LETS scheme is conducted will be a rich source of detail which will illuminate the purely factual data obtained in the objective surveys of groups.

CONCLUSIONS OF THE RESEARCH: Is there a case for more prescription in running LETS, for training and accreditation? Should there be different styles for different types of situations, eg professional led with client membership (ala Timebanks) as well as user-led more independent democratic styles. Should these different styles be identified so that groups have a choice about which style they adopt? What about groups already established for other purposes of which there is a wide range in both the voluntary and busiiness sectors. Can we identify how best to "add on" a LETS component to their already healthy community activities - or maybe to provide a way of facilitating the management of exchanges that are already taking place?

Other conclusions will no doubt arise.

METHODOLOGY

At all stages research results should be open and available to the participants themselves as well as the wider LETS community on an ongoing basis, perhaps starting with a pilot in one area and moving around to others either in sequence or in parallel. Results should be reported on and discussed by meetings at local level (attendance costs funded), recording changes in management styles of the participants as a result of internal analysis and contact with neighbouring

The attached notes cast more light on the theoretical aspects of the research.

1. Introduction: primary hypotheses
The title given above: LETS: Why do some fail and others succeed is the starting hypothesis. There are enough LETS schemes around, and they have been functioning long enough to have a reasonable sample for asking questions about why some fail and others succeed.
In order to answer such a question, we need to formulate some more detailed hypotheses concerning the factors which lead to success or failure.

2. Theoretical perspectives that could help

The most obvious starting point for such a study is simply a survey of LETS documenting the factors that successful vs. unsuccessful groups have in common.

While qualitative work would indeed be invaluable in uncovering what is going on in LETS, and little so far has been done, without some kind of theoretical framework a great deal of time and effort will have to go into developing a framework de novo.

The most obvious approach from a social psychological point of view is to treat LETS as examples of more or less co-operative groups. Deutsch’s (1985) theory of social relations predicts that a) more egalitarian groups will be more co-operative and b) that more co-operative groups will be more productive (Johnson, Maryuama et al., 1981) – in LETS terms have a higher level of trading.

The theory of relational models (Fiske, 1991, Fiske & Haslam, 1992) predicts that people will use four basic templates to build a model of a social relationship. Having such a model is crucial to establishing a harmonious social group and permitting interaction on the same basis – if I think I am in a social group my norms and values will be quite different from someone who thinks they are in a purely economic exchange relationship. Work in conflict resolution has demonstrated that a major cause of intractable conflict is when parties to an interaction do not hold the same model of the situation. Therefore their success as a social group will be dependent upon their being able to fashion such a model and that model.

Alongside such psychological approaches and complementary to them (since the psychological approach is based on the consonance of social relationship and allocation of resources) are quantitative analyses of resource allocation across the members of a LETS, and analysis of the circulation of resources and currency around the system. A cross sectional approach is unlikely to be sufficient since we need to look at the build-up of credits etc. over time as suggested by anecdotal evidence that participants may withdraw supply when they have a sufficiency of credit, leading to price inflation. (This is in contrast to the conventional economic model in which suggests that oversupply of money results in price inflation).

It is important to realise that people’s perceptions of the allocation are as important as the actual allocation, and the distribution of resources/ model of exchange that people feel is the right one for that situation. These will be part of a larger model of the situation. It must also be remembered that the model people consciously use and argue for may be quite different from the latent model which they also hold.
There will also be the more concrete operational factors particular to how LETS work which can be built up from the experience of the LETSLINK co-ordinator.

3. Methods
There is a limited amount of work already done on barter and alternative exchange systems but further qualitative work would almost certainly repay the effort involved. Any half decent study would do preliminary work in order to design a questionnaire in any case.
Qualitative work could be done on a case study basis with a view to building a model of how LETS operate. This need not necessarily be large scale, say involving about 25 interviews. It could then be used as the basis for developing a questionnaire to be sent to a larger sample.

The input of the LETSLINK co-ordinator would be key to devising a topic guide but there is sufficient theoretical background for a semi-structured approach rather than a purely grounded theory approach (when even theory is taken from the data). Instead the first interviews would be treated as a pilot and the topic guide revised accordingly.

The timescale envisaged for the whole study would also be a crucial determinant of whether and to what extent qualitative work was undertaken. Material from qualitative interviews would need to be at least part transcribed. An alternative to transcription is annotated recording of the key parts of the interview. Verbatim transcripts are expensive and expecting a research assistant (this would be appropriate for Ph.D. work) to do all of it would slow down completion of the project.

This material would then be subject to content analysis for categories of interest, such as co-operative attitudes, model of the situation, hoarding/saving attitudes (and these would ideally be supplemented with behavioural data from the accounts of the LETS), perception of the distribution/circulation of resources and currency. However, good qualitative work really requires more than one coder both for the development of a coding scheme and for reliability purposes.

Interview material would be used to develop a questionnaire and the use of an outside consultant with the appropriate experience might actually be cost effective. The interviews and primary research would also be used to initiate interest in the study, thus improving response rates.

A survey will permit the investigation of both attitudes and demographic factors (both descriptive and explanatory). If possible an interview survey would increase the quality of the data and also allow some open-ended responses which can then be analysed for more detailed material. This would considerably increase the power of the study because of the availability of a greater pool of spontaneous material.

4. Resources
The project as here outlined could easily be done by a single researcher as part of a Ph.D project, supplemented by the use of a post-doctoral researcher for the development of the coding frame and analysis of the data. Complete transcription of interview material is expensive (£30 per hour is considered a standard rate in London). A sharing of resources between the "academic" and the "organisational" partners in the project should enable their various purposes to be achieved - more detail on this to be discussed.

5. Key issues

• The social (psychological) factors affecting LETS group interactions (attitudes etc.)
• Common operational factors
• The interaction between subjective perceptions and concrete circumstances
• The circulation of currency and factors relating to the currency supply


The Research Group

We need to add more on how we combine the resources of LETSlink with CAOS and facilities at LSE and UCL and how we get support for this to make it a fundable proposal. People who could be involved are Mary Fee, Secretary of LETSlink UK (original degree in BA Hons Psychology), Rosamund Stock, Researcher in Social Psychology at LSE, who is looking at a number of new approaches to democratic systems, Colin Williams who headed up an ESRC-funded survey of LETS in 1997- 1999 or thereabouts and is currently Professor of New Styles of Management at Leicester University - we have also had discussions with others. who might wish to be involved.
From this group we need to work out the structure and timescale of the research proposal: • who is looking to do the work and on what financial basis, and will it form part of a thesis, who are in a supervisory role • who are collaborators and what outcomes are they looking for • who are we looking to for funding. How will we organise ourselves in the planning stages? Shall we proceed with the initial survey under the guidance of the supervises in anticipation of more funding to materialise for the later stages of the research? And so on.

First draft as at 29/1/2005 by Rosamund and Mary Fee
Slightly amended at 18/5/2005 for pressentation at the CAOS seminar.

 

QUESTIONNAIRE - the beginnings - DRAFT based on previous questionnaire

Name of LETS Group ______________________________________________________________
May we identify your group in a presentation ? Yes____ No____ (ie only statistics to be given)
Your Catchment Area: County _________Towns _______ Postcodes ______ Region Name ________
Coordinator’s Name___________________________ Phone number/s __________________________
Coordinator’s Postal address____________________________________________________________
Coordinator’s Email address____________________________________________________________
Contact Person’s Name _________________________Phone number/s _________________________
Contact Person’s Email address_________________________________________________________
Year Group was founded or projected launch date ______Current number of paid up members ______
Do your Group’s membership numbers seem to be: Rising ____ Static______ Falling ______
Maximum number of paid up Members you have had at any one time? ______ In which year? _______
Actual or Estimated Total Number of Members who have been involved since the Group started _____
Describe the Events your Group holds (choose any): Planning ___ Social ___ Trading ___ Outreach___
Does the level of recorded trading within your group seem to be: Rising ____ Static ____Falling ____
Total Number of LETS Transactions within your Group in the year April 2002 to April 2003 ________
Your Group’s Total Turnover in sterling-equivalent LETS currency: April 2002 to April 2003 _______
Do you estimate that the level of unrecorded Trade is: Rising _______ Static _______Falling _______
In your opinion is your LETS Group: Prospective ________ Healthy ________Declining __________
Do you keep in touch with other LETS groups in your area? Yes/No ______ Please give details ____:
If you can add any other comments to support the above, or as additional information, that would be helpful, including suggestions for additional survey questions for the next stage of our co-research.

© Published by LETSlink UK, 12 Southcote Road, Tufnell Park, London N19 5BJ