In economics, a time-based currency is an alternative currency or exchange system where the unit of account/value is the person-hour or some other time unit. Some time-based currencies value everyone’s contributions equally: one hour equals one service credit. In these systems, one person volunteers to work for an hour for another person; thus, they are credited with one hour, which they can redeem for an hour of service from another volunteer. Others use time units that might be fractions of an hour (e.g. minutes, ten minutes – 6 units/hour, or 15 minutes – 4 units/hour). While most time-based exchange systems are service exchanges in that most exchange involves the provision of services that can be measured in a time unit, it is also possible to exchange goods by 'pricing' them in terms of the average national hourly wage rate (e.g. if the average hourly rate is $20/hour, then a commodity valued at $20 in the national currency would be equivalent to 1 hour).
Time-based currency exchanges date back to the early 19th century. The National Equitable Labour Exchange was founded by Robert Owen, a Welsh socialist and labor reformer in London, England, in 1832. It was established in Birmingham, England, before folding in 1834. It issued "Labour Notes" similar to banknotes, denominated in units of 1, 2, 5, 10, 20, 40, and 80 hours. John Gray, a socialist economist, worked with Owen and later with Ricardian Socialists and postulated a National Chamber of Commerce as a central bank issuing a labour currency.
In 1848, the socialist and first self-designated anarchist Pierre-Joseph Proudhon postulated a system of time chits. In 1875, Karl Marx wrote of "Labor Certificates" (Arbeitszertifikaten) in his Critique of the Gotha Program of a "certificate from society that [the labourer] has furnished such and such an amount of labour", which can be used to draw "from the social stock of means of consumption as much as costs the same amount of labour." Josiah Warren published a book describing labor notes in 1852.
Edgar S. Cahn coined the term "Time Dollars" in Time Dollars: The New Currency That Enables Americans to Turn Their Hidden Resource-Time-Into Personal Security & Community Renewal, a book co-authored with Jonathan Rowe in 1992. He also went on to trademark the terms "Time Bank" and "Time Credit".
Time banking is a community development tool and works by facilitating the exchange of skills and experience within a community. It aims to build the 'core economy' of family and community by valuing and rewarding the work done in it. The world's first time bank was started in Japan by Teruko Mizushima in 1973 with the idea that participants could earn time credits which they could spend any time during their lives. She based her bank on the simple concept that each hour of time given as services to others could earn reciprocal hours of services for the giver at some stage in the future, particularly in old age when they might need it most. In the 1940s, Mizushima had already foreseen the emerging problems of an ageing society such as seen today. In the 1990s the movement took off in the USA, with Dr Edgar Cahn pioneering it there, and in the United Kingdom, with Martin Simon from Timebanking UK.
According to Edgar S. Cahn, time banking had its roots in a time when "money for social programs [had] dried up" and no dominant approach to social service in the U.S. was coming up with creative ways to solve the problem. He would later write that "Americans face at least three interlocking sets of problems: growing inequality in access by those at the bottom to the most basic goods and services; increasing social problems stemming from the need to rebuild family, neighborhood and community; and a growing disillusion with public programs designed to address these problems" and that "the crisis in support for efforts to address social problems stems directly from the failure of . . . piecemeal efforts to rebuild genuine community." In particular Cahn focused on the top-down attitude prevalent in social services. He believed that one of the major failings of many social service organizations was their unwillingness to enroll the help of those people they were trying to help. He called this a deficit based approach to social service, where organizations view the people they were trying to help only in terms of their needs, as opposed to an asset based approach, which focuses on the contributions towards their communities that everyone can make. He theorized that a system like time banking could "[rebuild] the infrastructure of trust and caring that can strengthen families and communities." He hoped that the system "would enable individuals and communities to become more self-sufficient, to insulate themselves from the vagaries of politics and to tap the capacity of individuals who were in effect being relegated to the scrap heap and dismissed as freeloaders."
- Everyone is an asset
- Some work is beyond a monetary price
- Reciprocity in helping
- Social networks are necessary
- A respect for all human beings
Ideally, time banking builds community. Time Bank members sometimes refer to this as a return to simpler times when the community was there for its individuals. An interview at a time bank in the Gorbals neighbourhood of Glasgow revealed the following sentiment:
[the time bank] involves everybody coming together as a community . . . the Gorbals has never — not for a long time — had a lot of community spirit. Way back, years ago, it had a lot of community spirit, but now you see that in some areas, people won't even go to the chap next door for a some sugar . . . that's what I think the project's doing, trying to bring that back, that community sense . . .
Time dollars are a tax-exempt complementary currency used as a means of providing mutual credit in Time Banking. They are typically called "time credits" or "service credits" outside the United States. Time Bank members exchange services for Time Dollars. Each exchange is recorded as a corresponding credit and debit in the accounts of the participants. One hour of time is worth one Time Dollar, regardless of the service provided in one hour or how much skill is required to perform the task during that hour. This "one-for-one" system that relies on an abundant resource is designed to both recognize and encourage reciprocal community service, resist inflation, avoid hoarding, enable trade, and encourage cooperation among participants.
Time banks have been established in 34 countries, with at least 300 time banks established in 40 US states and 300 throughout the United Kingdom. Time Banks also have a significant presence in Japan, South Korea, New Zealand, Taiwan, Senegal, Argentina, Israel, Greece, and Spain. Time Banks have been used to reduce recidivism rates with diversionary programs for first-time juvenile offenders; facilitate re-entry of for ex-convicts; deliver health care, job training and social services in public housing complexes; facilitate substance abuse recovery; prevent institutionalization of severely disabled children through parental support networks; provide transportation for homebound seniors in rural areas; deliver elder care, community health services and hospice care; and foster women's rights initiatives in Senegal.
Time banking is a pattern of reciprocal service exchange that uses units of time as currency. It is an example of a complementary monetary system. A time bank, also known as a service exchange, is a community that practices time banking. The unit of currency, always valued at an hour's worth of any person's labor, used by these groups has various names but is generally known as a time dollar in the USA and a time credit in the UK. Time banking is primarily used to provide incentives and rewards for work such as mentoring children, caring for the elderly, being neighborly—work usually done on a volunteer basis—which a pure market system devalues. Essentially, the "time" one spends providing these types of community services earns "time" that one can spend to receive services. As well as gaining credits, participating individuals, particularly those more used to being recipients in other parts of their lives, can potentially gain confidence, social contact and skills through giving to others. Communities therefore use time banking as a tool to forge stronger intra-community connections, a process known as "building social capital". Time banking had its intellectual genesis in the USA in the early 1980s. By 1990, the Robert Wood Johnson Foundation had invested USD 1.2 million to pilot time banking in the context of senior care. Today, 26 countries have active Time Banks. There are 250 Time Banks active in the UK and over 276 Time Banks in the U.S.
Time banking and the time bank
Time bank members earn credit in Time Dollars for each hour they spend helping other members of the community. Services offered by members in Time Banks include: Child Care, Legal Assistance, Language Lessons, Home Repair, and Respite Care for caregivers, among other things. Time Dollars earned are then recorded at the Time Bank to be accessed when desired. A Time Bank can theoretically be as simple as a pad of paper, but the system was originally intended to take advantage of computer databases for record keeping. Some Time Banks employ a paid coordinator to keep track of transactions and to match requests for services with those who can provide them. Other Time Banks select a member or a group of members to handle these tasks. Various organizations provide specialized software to help local Time Banks manage exchanges. The same organizations also often offer consulting services, training, and other materials for individuals or organizations looking to start Time Banks of their own.
|Child care||Legal assistance||Language lessons|
|Home repair||Respite care||Account management|
|Writing||Odd jobs||Office/business support|
The mission of an individual time bank influences exactly which services are offered. In some places, time banking is adopted as a means to strengthen the community as a whole. Other time banks are more oriented towards social service, systems change, and helping underprivileged groups. In some time banks, both are acknowledged goals.
The time dollar
The time dollar is the fundamental unit of exchange in a time bank, equal to one hour of a person's labor. In traditional time banks, one hour of one person's time is equal to one hour of another's. Time dollars are earned for providing services and spent receiving services. Upon earning a Time Dollar, a person does not need to spend it right away: they can save it indefinitely. However, since the value of a Time Dollar is fixed at one hour, it resists inflation and does not earn interest. In these ways it is intentionally designed to differ from the traditional fiat currency used in most countries. Consequently, it does little good to hoard Time Dollars and, in practice, many time banks also encourage the donation of excess Time Dollars to a community pool which is then spent for those in need or on community events.
Some criticisms of time banking have focused on the time dollar's inadequacies as a form of currency and as a market information mechanism. Frank Fisher of MIT predicted in the 80s that such a currency "would lead to the kind of distortion of market forces which had crippled Russia's economy." It is precisely the non-commercial, not-for-profit, noncontractual, and non-monetary value of time dollars which exempts them from taxation in the United States; were they to be used as a substitute for money, they would simply be another form of exchange.
Dr. Gill Seyfang's study of the Gorbals Time Bank—one of the few studies of time banking done by the academic community—listed several other non-theoretical problems with time banking. The first is the difficulty of communicating to potential members exactly what makes time banking different, or "getting people to understand the difference between Time Banking and traditional volunteering." She also notes that there is no guarantee that every person's needs will be provided for by a Time Bank by dint of the fact that the supply of certain skills may be lacking in a community.
One of the most stringent criticisms of Time Banking is its organizational sustainability. While some member-run Time Banks with relatively low overhead costs do exist, others pay a staff to keep the organization running. This can be quite expensive for smaller organizations and without a long-term source of funding, they may fold.
Time banking around the world
Global time banking
The Community Exchange System (CES) is a global network of communities using alternative exchange systems, many of which use time banks. Time banks can trade with each other wherever they are, as well as with mutual credit exchanges. The system uses a base 'currency' of one hour, and the conversion rates between the different exchange groups are based on national average hourly wage rates. This allows time banks to trade with mutual credit exchanges in the same or different countries.
Studies and examples
Elderplan was a social HMO which incorporated Time Banking as a way to promote active, engaged lifestyles for its older members. Funding for the "social" part of social HMOs has since dried up and much of the program has been cut, but at its height, members were able to pay portions of their premiums in Time Dollars instead of hard currency. The idea was to encourage older people to become more engaged in their communities while also to ask for help more often and "[foster] dignity by allowing people to contribute services as well as receive them."
Gorbals time bank study
In 2004, Dr. Gill Seyfang published a study in the Community Development Journal about the effects of a Time Bank located in the Gorbals area of Glasgow, Scotland, "an inner-city estate characterized by high levels of deprivation, poverty, unemployment, poor health and low educational attainment." The Gorbals Time Bank is run by a local charity with the intent to combat the social ills that face the region. Seyfang concluded that the Time Bank was effective at "building community capacity" and "promoting social inclusion." She highlights the Time Bank's success at "[re-stitching] the social fabric of the Gorbals." by "[boosting] engagement in existing projects and activities" in a variety of projects including a community safety network, a library, a healthy living project, and a theatre. She writes that "the time bank had enabled people to access help they otherwise would have had to do without," help which included home repair, gardening, a funeral, and tuition paid in Time Dollars to a continuing education course.
- Community currency
- Local exchange trading system
- Community Exchange System (CES)
- Collaborative finance
- Coproduction of public services by service users and communities
- Fiscal localism
- Labour theory of value
- Labour-time voucher
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- e.g., the Hour Exchange Portland
- e.g., the Cape Ann Time Bank
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