Time Banking

What Is Time Banking?

Time banking is a system of bartering different services for each other utilizing labor-time as a unit of account which was developed by different socialist scholars in view of the labor theory of value. Labor-time units can be credited to an individual's account in the time bank and reclaimed for services from different members of the time bank. Time banking can be viewed as a form of community currency. Nonetheless, in light of the fact that the labor-time units of account are not generally accepted outside the membership of the time bank, nor for general goods traded in the market other than specific labor services, it doesn't comprise a form of money from an economic perspective outside the inherently limited setting of the time bank itself.

Understanding Time Banking

In a period banking environment, individuals receive labor-time credits when they offer a support to one more member of the time bank (and the member getting the service is charged an equivalent amount). Each hour of time is generally valued something very similar, no matter what the service delivered. In theory, any type of service can be exchanged for another. Notwithstanding, services traded frequently rotate around simple, low market-value tasks, like the care of the elderly, social work, and home repair.

Time banking begins from the thoughts of different nineteenth century socialist masterminds, including Pierre-Joseph Proudhon and Karl Marx, who advocated different renditions of labor-time based chartal currencies. Instead of giving paper notes, modern time banking uses electronic recordkeeping of credits and debits for registered members.

Time credits can hypothetically be registered on paper, in spite of the fact that computer data sets are generally used to keep records.

The term "Time Bank" was authored and reserved during the 1980s by Edgar Cahn, an American law teacher and social justice advocate. Cahn advanced Time Banking as a means for community self improvement and to fill the gap in public social services during a period when the Reagan administration was pushing cuts to spending on social programs.

In his book No More Throw-Away People, Cahn illustrated four core principles for time banking, later adding a fifth. They are:

• We Are All Assets: Everyone has something to contribute
• Rethinking Work: Rewards all work, including unpaid and care work
• Correspondence: Helping each other build strong connections and community trust
• Social Networks: Belonging to a social network gives our lives really meaning
• Respect: Respect is the basis for a sound and cherishing community and lies at the core of a majority rules government

Throughout the long term, time banking has been adopted in different networks at various times, for the most part for relatively short periods before at last closing down. In certain areas it has managed to continue for quite some time or longer on a limited scale.

In 2018, there were around 120 time banks in the United States.

Illustration of Time Banking

We should take a gander at an instance of trading gardening and computer technical support. Gerald is a sharp horticulturist and Lucy is a master at fixing computers. In the end, their ways cross as Gerald needs assistance with his PC and Lucy might want to develop a few vegetables in her back yard and has no idea how to do as such.

Utilizing time banking, Gerald assists Lucy with her nursery and Lucy assists Gerald with his computer. No money exchanges hands for the services delivered, so the main costs that both assimilate are for the materials used to complete the positions.

Overall, Gerald dedicated three hours to setting up Lucy's nursery, while Lucy endured two hours getting Gerald's computer in working order. That means that Gerald arose out of the arrangement with one extra labor-time credit on account in the time bank to use from here on out.

Upsides and downsides of Time Banking

Time banking utilizes modern technology to try to present the secondary functions of money (as a unit of account, a store of value, and a means of deferred payment) to formalize and manage the practice of trading favors and mutual or social obligations. It functions as a hybrid system between a true monetary economy of indirect exchange and a reciprocal gift economy characteristic of informal, pre-capitalist, and primitive economies. Accordingly, it can have a portion of the advantages and disadvantages of the two types of economic systems.

The advocates of time banking, from the early socialist authors to introduce day defenders, underscore its advantages in building (or reestablishing) community, inclusion, volunteerism, and social assistance. It is elevated as assisting with fostering community ties and encourage individuals who wouldn't typically engage in traditional chipping in. It tries to beat the problems of the social and economic alienation among producers and consumers that is widely accepted to describe industrial capitalist economies and has frequently formed the reasoning for social turmoil and progressive communism. It formally and unmistakably perceives the economic value of labor services that are not traditionally traded in the formal monetary economy (or would be reduced thusly) however that frequently form the basis of important social capital. Most importantly, it has been supported for empowering individuals with low incomes to access services that would be unreasonably expensive to them in the traditional market economy.

Anyway the overhead costs, problems with dealing with the relative prices of various services, and difficulty of keeping up with participation in effective competition with the bigger money economy frequently spell problems for time banking systems. The operations of the time bank itself must in some way be financed, especially those that require goods and services which can't be purchased with time bank-gave labor-time credits. This means both an initial and continuous requirement for some source of outer funding in outside money, which can become restrictive.

Pricing of labor-time units for different various services and types of labor is a diligent problem for time banking. On the off chance that the value of the credits is allowed to float as per voluntary, mutual terms of exchange between participants (or priced proportionate to market wages in the nearby currency) the time bank turns out to be just a contending (inferior) form of currency, one debilitated by its own deliberate limits of worthiness.

On the off chance that the prices in labor-time-credits are set when bank, then, at that point, the system will ultimately run facing a similar information, calculation, and incentive problems faced by any halfway arranged economy, which will strongly limit its scale and reasonability. Forthright Fisher, an American economist who taught economics at the Massachusetts Institute of Technology (MIT) from 1960 to 2004, anticipated during the 1980s that this would distort market powers and challenged person the economy, involving Soviet Russia for instance.

In conclusion, if the value of labor-time credits is locked in at parity for a wide range of services and labor, then the system will face a gigantic adverse selection problem. Those with the least valued labor-time (like baby sitters) will energetically take an interest and those with the most exceptionally valued labor-time (like doctors) will opt out and sell their services for money all things considered.

Since the inherent limits of the idea of time banking impose these overhead and pricing issues, the time banking system surrenders a large part of the economic advantage that a system of indirect monetary exchange makes conceivable. Its acceptance will be limited and it will continuously rely upon the presence of a more extensive money-based economy utilizing another currency, inside which it needs to function. Except if imposed by law on the population (as advocated by early socialist defenders), time banking will more often than not be bound to relatively small networks or social networks, trading in a limited selection of labor services.

Features

• The term "Time Banking" was begat and reserved by American lawyer Edgar Cahn, who advocated its utilization to supplement government social services.
• Time banking is an intermediate system between a system of monetary indirect exchange and a reciprocal gift economy with a portion of the upsides and downsides of each.
• Time banking is a bartering system for services, where individuals exchange services for labor-time based credits, as opposed to money.