The Moral Economy of Parallel Currencies

. This article offers a monetary analysis of Local Exchange Trading Systems (LETS) and examines both their moral and economic significance as well as the way in which these two aspects may conflict. After considering LETS' principles and history, I review three monetary theories in order to ascertain how one might best explore these phenomena. By drawing on the “Chartalist” tradition in monetary theory, I show (1) how strongly oriented LETS are to the formal market economy, from which, it is held, they detach themselves, and (2) that they do not effect a return to barter or an abolition of money, as is sometimes claimed. Both points become clear when one pays due attention to the primary function of money as money‐of‐account. In the final section, I consider LETS empirically and compare their structural potentials with their concrete form. LETS' members are motivated less by pecuniary gain than by the desire to build community and realize certain values. Participants have little motivation to expand LETS, which are therefore destined to remain small and ineffectual in offering an alternative to the unemployed and less well‐off. Indeed, were LETS to grow in size, the moral commitment required of members would come into conflict with the growing financial interests at stake.