Do Local Exchange Trading Schemes work? No, not as well as they are supposed to.
It depends what you mean by “working”. … “their economic role is tiny” and they place “responsibility for dealing with the multifaceted causes of poverty onto the poor themselves”.
LETS trades are few in number and low in value, even in the most successful LETS scheme (Stroud). Many such barters would have happened even if LETS did not exist. The concept of LETS debt discourages the creation of credit through LETS spending, as does the limited range of goods and services available (limited compared both to the demand and to what is available for cash).
ALDRIDGE, T. J. and PATTERSON, A. (2002). LETS get real: constraints on the development of Local Exchange Trading Schemes. Area, 34 (4), 370-381.
In economic terms, LETS “do not appear to create significant new economic opportunities.” due to their small turnover. However, “buyers facilitate a redistribution of income” by hiring poorer members for longer and paying higher rates. Totnes LETS also “appears to have significant community-building impacts.”
The New Barter Economy: An Appraisal of Local Exchange and Trading Systems (LETS), Colin C. Williams, Journal of Public Policy, Vol. 16, No. 1 (Jan. – Apr., 1996), pp. 85-101
“Evidence suggests that the use of LETS local community currency schemes has declined in the UK …”
Alternative Currencies, Parliamentary Office of Science and Technology POSTNOTE 475 August 2014