Reciprocal Exchange

Typology

David Boyle:

"The main distinction is between two different kinds of reciprocal exchange:

1. Social exchange: designed primarily to motivate people’s behaviour, to meet social objectives.

2. Economic exchange: designed primarily to circulate and to meet economic objectives.

Of course, there are exchange systems in each category which occasionally behave like the others – time credits which circulate among the users, or local currencies which are actually just paid out by the local council to motivate people to behave. But their central purpose is what counts here, and – with some exceptions – the central purpose tends to determine the basic design.

In exchange systems where the social exchange function is predominant, credits can be issued and simply deleted when they are spent. This is not possible in the same way with economic exchange where, to retain their credibility, credits have to add up at the end. The challenge for social exchange systems is persuading people to appreciate credits which might be regarded as basically valueless. The fact that people spend the credits is what gives them value. Examples of these systems include loyalty points, issued by the organisation and then deleted when spent, and time banks, where users’ accounts may be in credit or debt without compromising the sustainability of the system.

In exchange systems where the economic exchange function is predominant, credits need to circulate like money does and have a continuing existence once they are issued. The challenge for these systems is primarily persuading people to trust the credits, so it matters very much what backs them, whether the books balance and that the credits continue to circulate. Examples of these systems include local currencies, which are backed by traditional currencies or local produce, involve a whole range of different users and need to circulate and add up at the end.

Both of these categories can be divided into local projects, which rely partly on personal relationships to achieve their objectives, and broader national or international operations which don’t – and which therefore need to be able to motivate users and to generate the kind of belief and loyalty that will create meaningful exchange volumes." (http://www.nesta.org.uk/library/documents/MorethanMoneyv11.pdf)