IJCCR 2012 Jelinek

International Journal of Community Currency Research Volume 16 (2012) Section D 116-123 LOCAL EXCHANGE TRADE SYSTEMS IN CENTRAL EUROPEAN POST COMMUNIST COUNTRIES Petr Jelínek*, Zsuzsanna Eszter Szalay** And Alois Konečný*** *Mendel University, Brno, Czech Republic ** Corvinus University Of Budapest, Hungary *** Masaryk University, Brno, Czech Republic ABSTRACT This paper gives information about Local Exchange Trade Systems in the region of former Czechoslovakia, Poland and Hungary. The transition to a market economy proceeded in different ways in these countries, but similar histories in the last century (communism under Soviet inEluence) led to only small differences among the countries in the level of motivation and power of their civil societies – and subsequently, in the vitality of LETS circles. In the Czech Re- public, the Eirst LETS circle was established in 1999; however, none is active at present. Simi- larly, in the Slovak Republic, out of 10 to 15 LETS circles formed between 2000 and 2005, only one works at the present time. LETS in Poland developed in the early 90’s but soon declined even though a few groups are still active today. LETS in Hungary was very passive, but there have been new signs and initiatives since 2004. The possible reasons for such LETS develop- ments in the so-called Visegrad countries are also discussed in this paper. ACKNOWLEDGEMENTS This article was prepared under the research project MSM 6215648902-04 of The Ministry of Education, Czech Republic and in the framework of speciEic research project of Masaryk university European Einancial systems, Czech Republic. The Hungarian part of the article was sup- ported by TÁMOP-4.2.1/B-09/01/KMR-2010-0005. * Email: [email protected] To cite this article: Jelínek P., Szalay Zs. and Konečný A. (2012) ‘Local Exchange Trading Systems in Central European post-Communist Countries’ International Journal of Community Currency Research 16 (D) 116- 123 <www.ijccr.net> ISSN 1325-9547 International Journal Of Community Currency Research 2012 Volume 16 (D) 116-123 Jelínek Et Al INTRODUCTION northeast and southwest regions, they do not possess moveable, changeable resource reserves. Their equality is From a socio-economic point of view, three facts appear the equality of poverty. Hungary is still paying off the social very important: experience with a democracy or existence cost of its transition into democracy. It is a telling sign that, of a civil society, the indebtedness of a country’s citizens, in Hungarian political and economic language, the expres- and the income inequality between the richest and the sion for transition does not exist; instead, talk revolves poorest within national borders. All countries studied in around system and regime change. (G.Fodor -Kern, 2009) the paper are post-communist with emerging civil societies, possessing shorter, novel experience with capitalism. GOALS AND METHODS There is a small gap between richer and poorer people and the debt of households is relatively small in the Visegrad The goal of this paper is to present current information countries. about the local economic exchange systems (LETS) of Cen- tral Europe. It summarizes all available information con- Total household debt in Hungary, Slovakia and Poland is cerning LETS in Central Europe, i.e., the Czech Republic, under 45% of GDP, and in the Czech republic as little as Slovakia, Poland, and Hungary. This region is a part of the 20% of GDP. In comparison with the countries of the Euro- former Soviet bloc, and the countries became EU members pean Union the level of household indebtedness in propor- at the same time (in 2004), so the group is a subset of the tion to GDP is very low in the Visegrad region (Bittner, EU New Member States (NMSs). The presented work fo- 2011). But the situation is changing – the debt of house- cuses on LETS after the transition of 1989. In addition, a holds is increasing. possible reason for the failure of LETS development in these countries is considered. Kučera (2010) notes the number of individuals in the registry of debtors in the Czech Republic (CZ) rose by 16 per- Its authors collected information from literary sources but cent to almost 868,000 in 2009. The SOLUS organization also from the Internet and by interviewing the active pro- counts the people who now have, or in the past three years, moters of LETS in each country. have had, problems with their repayment obligations. Un- der SOLUS (2010), which keeps track of borrowers in the HISTORY OF UNOFFICIAL ECONOMY IN CENTRAL CZ, the number of unpaid liabilities increased from Decem- EUROPEAN POSTCOMMUNIST COUNTRIES ber 31, 2009 to September 30, 2010 by 12 percent to 1.7 million (out of 10 million inhabitants). The amount of debt Alternative economics is not a recent invention. Histori- for the period approached 30 billion Czech Crowns (CZK), cally, a multitude of local currencies was the rule rather and the number of individuals, to 931,623. From the CZ’s than an exception. But diversity was caused by large num- adult population of nine million, already one out of every bers of local governments that wanted to have their own ten citizens has an entry in the registry. currencies due to the possibilities of currency promulga- tion, expansion. The situation is currently familiar in all Visegrad countries. In Hungary, the problem has been much worse, due to the Other historical reasons for obtaining individual currencies prevalence of lending from foreign currencies. People take arose during crisis situations, e.g., during the First World out loans but cannot pay them back. Concomitantly, they War (Reichel, 2007). Żwawa (2008) cites an example from are deeply tied (especially in Hungary) to the emerging Poland, where the priest of Kochłowice in Silesia issued a global market-economy, from which they put forward all local currency. Other local currencies were issued in the their efforts to increase their earning of mainstream church dioceses of Głogów, with corresponding images of money. Consequently, they retain few resources to help local churches of Tychy, Tarnowski Gory, and Mikołów. each other. Further examples from Poland are known from between 1918 and 1938 (Żwawa, 2008). Cases of an unoficial econ- On the other hand, the Visegrad countries are a part of a omy in Czechoslovakia can be obtained in Johanisova region where the smallest gap exists between richer and (2008), who undertook a historical excursion into the poorer people. According to the ratio of the UNDP (2008), lesser-known aspects of pre-war Czechoslovakian coopera- statistics of income or expenditure shares of the richest tives. As Zagata (2004) has shown, from LETS develop- group to that of the poorest (10% richest to 10% poorest) ments in neighbouring countries (Austria, Poland, Ger- demonstrate that the Czech Republic is the second-most many), one cannot rule out the possibility the currency equal country (UN R/P = 5.2) after Japan (UN R/P = 4.5). systems based on mutual aid emerged in the former The other Visegrad countries also display high income Czechoslovakia between the wars. equality. See, for example, their respective GINI indexes. This is probably an important reason why Local Exchange Economies of real socialism (1945 in Poland; 1947 in Hun- Trade Systems are not widespread in this part of Europe. gary; and 1948 in Czechoslovakia) were based on other conditions than were those of capitalist countries, so de- In Hungary, the antecedents that underlie the same symp- velopment was quite different in Europe. Unequal condi- tom of income equality are slightly different. There are tions and impulses were precipitated, whereas within fairly large geographical differences. This means, although Western countries there was a sizable expansion of local the poorest citizens live closely together in the suburban, currencies as well as the LETS themselves. In Soviet-bloc 117 International Journal Of Community Currency Research 2012 Volume 16 (D) 116-123 Jelínek Et Al countries, such alternatives had not emerged. This changed all, because only the kith of current members could join the after 1989, when conditions in the ex-socialist nations group”. It was founded in 1999 and, at its maximum, had came closer to conditions in other parts of Europe and the about 40 members. In 2006, all activity halted. The cur- world. rency issued, the “letničky” (“little year money” or “little LETS”), was equal to one minute of work, so one “letnička” Zagata (2004) asked whether the formalized systems of was equivalent to one CZK. Balances employed no legal local currencies would also work in a society with commu- limits. nist experience, for the Eirst experiments occurred merely with complementary currencies in the era of the Great De- As Zagata (2005) stated: “All the groups possessed formal pression of Europe and North America. As mentioned, the rules dealing with rights and duties of constituent mem- Visegrad countries form a region where the smallest gap bers. At the same time, there were no observed cases of exists between rich and poor citizenry, even now after 20 actions that would violate any rules of a particular commu- years of changes since 1989. nity. None of the groups formally included in its rules a norm regulating the maximum level of member debt. All LETS IN THE CZECH REPUBLIC the communities kept a 1:1 parity with the ofEicial currency.” Czech LETS, being smaller in scale, had not built up an in- clusive alternative as to how to satisfy everyday needs in In 2007 there were already no LETS in the Czech Republic. an environmentally friendly fashion. A large amount of From our own experience in Brno and discussions with the traded goods and services were related to the eco-friendly organizers of LETS in Prague and České Budějovice lifestyle.

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