Time banking is a system of bartering various services for one another using labor-time as a unit of account which was developed by various socialist thinkers based on the labor theory of value. Labor-time units can be credited to a person’s account in the time bank and redeemed for services from other members of the timebank.
Time banking can be considered a form of community currency. However, because 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 does not constitute a form of money in an economic sense outside the inherently limited context of the time bank itself.
- Time banking is a bartering system for services, where people exchange services for labor-time based credits, rather than money.
- The term “Time Banking” was coined and trademarked by American lawyer Edgar Cahn, who advocated its use to supplement government social services.
- Time banking is an intermediate system between a system of monetary indirect exchange and a reciprocal gift economy with some of the pros and cons of each.
Understanding Time Banking
In a time-banking environment, people receive labor-time credits when they provide a service to another member of the timebank (and the member receiving the service is debited an equal amount). Every hour of time is generally valued the same, regardless of the service rendered. In theory, any type of service can be exchanged for another. However, services traded often revolve around simple, low market-value tasks, such as the care of the elderly, social work, and home repair.
Time banking originates from the ideas of various 19th-century socialist thinkers, including Pierre-Joseph Proudhon and Karl Marx, who advocated various versions of labor-time based chartal currencies. Rather than issuing paper notes, modern time banking utilizes electronic recordkeeping of credits and debits for registered members.
The term “Time Bank” was coined and trademarked in the 1980s by Edgar Cahn, an American law professor, and social justice advocate. Cahn promoted Time Banking as a means for community self-help and to fill the gap in public social services during a period when the Reagan administration was pushing cuts to spend on social programs.
In his book No More Throw-Away People, Cahn outlined four core principles for time banking, later adding a fifth. They are:
- We Are All Assets: Everyone has something to contribute
- Redefining Work: Rewards all work, including unpaid and care work
- Reciprocity: Helping each other build strong relationships and community trust
- Social Networks: Belonging to a social network gives our lives more meaning
- Respect: Respect is the basis for a healthy and loving community and lies at the heart of democracy
Over the years, time banking has been adopted in various communities at different times, usually for relatively short periods before eventually shutting down. In some areas, it has managed to persist for several years or longer on a limited scale.
Example of Time Banking
Let’s look at an example of exchanging gardening and computer technical support. Gerald is a keen horticulturist and Lucy is a whiz at fixing computers. Eventually, their paths cross as Gerald needs help with his PC and Lucy would like to grow some vegetables in her back yard and has no clue how to do so.
Using time banking, Gerald helps Lucy with her garden and Lucy helps Gerald with his computer. No money exchanges hands for the services rendered, so the only costs that both absorb are for the materials used to complete the jobs.
Overall, Gerald dedicated three hours to preparing Lucy's garden, while Lucy spent two hours getting Gerald's computer in working order. That means that Gerald emerged from the arrangement with one extra labor-time credit on the account in the time bank to use in the future.
Pros and Cons of Time Banking
Time banking uses modern technology to try to introduce the secondary functions of money (as a unit of account, a store of value, and a means of deferred payment) to formalize and regulate 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. As such, it can have some of the advantages and disadvantages of both types of economic systems.