How can people keep working if the economy crashes and there’s just no money around?

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Posted Jun 21 2020 by Dave Darby of
Mutual credit means people can keep working if the economy crashes

Imagine that there’s an enormous economic crash coming. Say, the biggest economic crash in history. Outlandish, I know, but just give it a try.

I want you to imagine that you’re a shopkeeper. What are you going to do? How are you going to sell anything when there’s no money around? Nobody can buy anything if they have no money, and nobody can sell anything if nobody else has any money, can they? That’s obvious, isn’t it? We all have to find some way of getting money, don’t we? Or do we? Could there be other ways to cope, and even to thrive?

Here are some scenarios. See if you can work out ways to keep trade flowing (and ultimately, to prevent poverty and hardship) in each scenario, starting with a really easy one, and getting more complicated.

Scenario 1

Pen : can people keep working if the economy crashes?

You sell mugs, for £1. I want a mug.

I sell pens, for £1. You want a pen.

(These are the first two things I spotted as I started writing this article.)

But neither of us has any money. Oh dear. That means that I can’t buy a mug from you, because I don’t have £1, and you can’t buy a pen from me, because you don’t have £1.

Doesn’t it?

OK, I’m guessing you can see a solution to this problem. We just swap.

A trade takes place, and we both get what we want, without needing money.

But what if you don’t want what I’ve got?

Scenario 2


You sell mugs, for £1. I want a mug.

I sell pens, for £1. You don’t want a pen.

But you do want eggs. I don’t sell eggs.

Someone down the road sells eggs, for £1 a box. They want a pen.

None of us has any money.

What to do now?

Still easy. You give me a mug. The third person gives you eggs, and I give a pen to the third person.

Three trades take place. We all get what we want, without any money.

But what if we want to trade things of different value?

Scenario 3

Princess Diana mug

You have mugs, for £2. I want a mug.

I have pens, for £1. You don’t want a pen.

Someone else has eggs, for £1 a box. You want eggs, and they want a pen.

But now your mug is worth twice as much as a pen or a box of eggs (it’s a souvenir Princess Diana mug). And you only want one box of eggs, and the third person only wants one pen.

What now?

We can do the three-way exchange again. I get a mug, you get eggs, person 3 gets a pen. But then you’re £1 down, because your mugs are worth £2. And we still don’t have any money, so I can’t just give you £1. So what can we do?

Well, I could give you an IOU for £1, to be used next time you want eggs. The egg-seller could use that IOU the next time they want a pen from me. Then my IOU has come back to me, and I can tear it up (I’m not going to use it to ask for something from myself, after all). That might work.

But what if it becomes too complicated for IOUs?

Scenario 4


You have mugs for sale, worth £2 each, and an IOU for £1. You need a taxi ride.

I have pens worth £1. I want a haircut.

Someone else has eggs that now are worth £1.50. They want a mug.

A barber is offering haircuts worth £10. They wants eggs.

A taxi firm is offering rides for £1 per mile. They want 12 pens for their office.

We can all exchange again, but it’s going to get very messy with IOUs. What do we do now?

Well, someone could have the bright idea of getting a notebook, putting a few columns in it for names, buying, selling and totals, and someone can look after the book. Whenever someone trades, they call the person with the book, who records it, and tells them what their balances are.

So for example, I give 12 pens to the taxi firm. We call the book-holder, who puts our names down, records the trade and puts +12 in my total column, and -12 in the taxi firm’s total column.

Then, for example, you (the mug seller) book a 16-mile round trip with the taxi firm. They call the book-keeper, who records it, after which you have a total of -16, I have a total of +12, and the taxi firm has a total of +4.

Two important things to notice here.

First – you can label the balances in pounds if you like, but you don’t have to. We’re not actually using any pounds, because nobody has any. It’s just a handy way to compare the value of things on offer to the value of things on sale in the shops. But really, those totals are just numbers in the book, to keep tally of who has provided what, and who needs to provide what. We can call them credits or debits, depending on whether they’re positive or negative. Your balance is now -16, and because you’re offering mugs at £2 each, that translates to 8 mugs. So you need to provide 8 mugs, in total, to any combination of people in the book, to get back to zero.

Second – if you add up all the positive totals in the book, they are always exactly equal to the negative totals. They have to be, because for someone to get credits (positive numbers) in their account, someone else needs to get debits (negative numbers) in their account (if I sell you a pen, I get 1 credit and you get 1 debit, for example).

But what if it gets too complicated for a notebook?

Scenario 5


Nobody wants mugs just now, so it’s impossible for you to earn any credits to spend on other things. There aren’t enough businesses in the group for people to sell their stuff.

So we invite in some other local people that we know and trust – a baker, a restaurant, a key cutter, a plumber, an accountant, a printer, a shoe shop, a car mechanic, painter and decorator, market gardener and about 20-30 other people in various trades, all selling things at different prices.

The book-keeper throws up their hands and says that they’re not doing this any more – it’s way too complicated.

What now?

Well, this is the 21st century. We don’t need to do things in notebooks any more. What if everyone had an account, on a mobile-friendly website, with a little trading engine that allowed everyone to trade with everyone else, and recorded it, and people could see everyone’s balances? And what if there was a directory that everyone went into, so that everyone could find what they want. And what if everyone had a username and password, to login and change details on their profile, to message people and to trade?

Well, that’s not new. It’s easily available – it exists in the international for-profit ‘barter industry’, and has done for years.

But what if this particular network of businesses were owned by its members, co-operatively? It could be centred around a hub – maybe the local authority or Chamber of Commerce, or maybe around a local accountant? Or perhaps they could appoint a convener, who would look after it and help people to join, set up their profile, help people trade, solve any disputes or other problems. And what if they decided to add a small membership fee and even smaller transaction fees that would build up in a central account, to pay the convener a salary (in credits, that they would then use in the network)?

Then you’d have a ‘mutual credit club’, with its own website and logo, owned by its members, with democratic decision-making about fees, rules, credit and debit limits etc.

But what if you want things that aren’t provided by any business in your club?

Scenario 6

You decide to take up the guitar (I’m just making this up as I go along now), but no-one in your club provides guitars. But someone is selling guitars in the next town’s club.

But they’re not in your club, so what now?

I guess you could get them to look at your club’s website to see if there’s anything they fancy that costs as much as one of their guitars. You could then get it for them with your credits, and take it along to them and swap it for a guitar. That would work, but it’s messy.

What if all the clubs could be federated, and businesses in any club could trade with each other? The local trust would be lost – but you’d know that any business you trade with is also in a local club, and so is trusted by that club’s members, in the same way that you’re trusted by your club’s members.

The problem is that we’d need to get the balance of trade between clubs right – in other words, each club would have to trade with the rest of the federation in exactly the same way that each business trades with the rest of its club. It can’t go too far into debit or credit. It would be in debit sometimes, and in credit sometimes, but overall, it would hover around zero.

That’s tricky, but is part of a network of organisations and individuals that are building the software and the relationships for mutual credit clubs, that will enable their member businesses to trade seamlessly with other businesses in their own club and in other clubs in the UK. At the moment, we’re building these clubs around accountants, social enterprise networks and local authorities. We’ll be launching later this year. Contact us if you work for a local authority, social enterprise or accountancy firm, and you’d like to know more.

But what if you need something that’s not produced in your country?

Scenario 7

Bananas : can people keep working if the economy crashes?

There’s a wholesaler in your club who wants to provide bananas to the shops in the club. But of course, bananas can’t be produced in the UK. That will mean overseas trade, with the added difficulty of different currencies, that shift in value.

We’re stuck now, surely?

Well, also on our team is Matthew Slater, who has been working on the ‘Credit Commons’ idea for several years. He now has a team of coders working with him, and will have the software early next year for clubs to trade seamlessly across national borders, in a truly new and truly global trading system.

This article is just to explain that things don’t have to be the way they are. Economic crashes don’t have to prevent trade, and we don’t have to rely on bank-issued, debt-based money to make the economy work.

Many people, post-covid, now have a sense that a new, sustainable, just world is struggling to be born. If that’s going to happen, the current money system can’t be at the heart of it.

This article is also intended to announce that a new exchange system, to challenge the current money system, is on the way.

Dave DarbyAbout the author: Dave Darby lived at Redfield community from 1996 to 2009. Working on development projects in Romania, he realised they saw Western countries as role models, so decided to try to bring about change in the UK instead. He founded in 2001, spent 3 years on the board of the Ecological Land Co-op and was a founder of and the Open Credit Network.