Transaction network analysis for studying Local Exchange Trading Systems (LETS): Research potentials and limitations

Abstract

The numerous studies of Local Exchange Trading Systems (LETS) have so far been based mostly on qualitative approaches. The aim of this paper is to introduce the method of transaction network analysis as an important complement to these studies, enabling one to quantitatively describe functioning of LETS in terms of the actual flows of currency, materialized transactions and topology of the exchange network, the types of information markedly missing in most of the existing LETS studies. We demonstrate the potentials of the method on the case of the LETS initiative “RozLEŤSe” based in Brno, Czech Republic. Looking at the transaction flows using the network analysis approach, we identify the key members of the group, network characteristics of the exchange system and its development over time. This allows us not only to provide a complex description of the system, but also to simulate certain scenarios (e.g. removal of a key person from the network). Within the discussion of potentials and limitations of applying transaction network analysis for studying LETS and other community currency initiatives (e.g. time banks) on a larger scale, we also provide a free accessible software tool for doing so and invite other researchers to cooperate on the task.