My mutual credit journey (and how you can join in the fun)

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Posted Aug 8 2018 by Dave Darby of
Why not start your own mutual credit journey?

I often trawl the web just speculatively looking for new people or new ideas, clicking on links from interesting sites. TEDx talks are a favourite. A few years ago I came across an intriguing TEDx talk by Professor Jem Bendell called ‘the Money Myth’. I’d been primed for this, as I’m on Positive Money’s mailing list, so I’d seen their little videos explaining that money doesn’t come from where most people think it comes from – wherever that might be. If you haven’t seen their banking 101 course, it’s well worth it. Here’s the first one.



I, like most people I know these days, am really busy, and so I hadn’t got more involved with Positive Money (although I still intend to – they’re doing a great job of raising awareness of the money system). But there was always something nagging at the back of my mind – that nothing’s really going to change as long as we have a money system that sucks money from ordinary workers, homeowners and taxpayers and continually dumps undeserved and enormous amounts of wealth into the banks. When I saw Jem Bendell’s talk, it made me believe that actually, there must be a way to build an alternative money system based in communities, and not controlled by the banks. Here’s his talk.



From there, links to other things that he’s done brought me to his conversation with a colleague – Tim Jenkin. Tim was a member of the ANC in the apartheid era, and was arrested and held is Pretoria high-security prison, a complex with 10 locked doors from cells to the outside, constantly patrolled by guards and surrounded by compounds containing vicious dogs. One morning the guards came to his cell and he was gone – no tunnel, no holes in walls or ceiling, no unlocked doors. It was a complete mystery – as if he had disappeared into the ether. He explains how he did it in the video below, as if he were talking about making a cup of coffee. It’s truly incredible.



From there, I discovered some of Tim’s writing, and especially this essay, about why ‘what comes after capitalism’ is the wrong question, and which includes a discussion about the history of money, and how mutual credit has a long history.



I was captivated by that essay, and by now I was hooked. I really wanted to find out more about mutual credit. I dug a bit more and found another colleague of Jem’s – Matthew Slater – who had written a white paper on ‘Credit Commons’ – a way of linking together mutual credit schemes to form a global network. That white paper is here:



Now I was really impressed with the ambition of this concept. Mutual credit removes the need for banks, and doesn’t allow wealth concentration, because it doesn’t allow anyone to be rewarded for anyone else’s work but their own – surely a basic moral principle? If you painted a room, then went out, and when the owner arrived, I said I did it and got paid for it, we’d both know that was morally wrong. But in capitalism, taking the credit, or value, for someone else’s work is wrapped up in perfectly respectable terms, like profit, rent or interest. And because of wholesale lack of imagination, many believe that these things are necessary for a functioning economy.

I started to talk with friends about it. In a conversation with Adrian of Wholewoods, he said ‘isn’t this just LETS? That didn’t work, did it?’ Well, he was right that LETS systems work on the same moneyless principles, but they tend to involve activities that might well have been moneyless anyway – babysitting, loft clearances, lifts etc. But the mutual credit idea is commercial – it’s about businesses and trade.

Next came a book that was recommended in the white paper – Tom Greco’s the End of Money and the Future of Civilisation. If I could only recommend one book to anyone, ever, this would be it.



I discovered that Steve Keen (and I’m generally very keen on his ideas) disagrees with Greco about one important thing. Greco points out that as banks create money from nothing, as debt, when the debt is paid back, the money is snuffed out – it disappears. No debt, no money. But the interest isn’t snuffed out. So say for example you buy a house worth £200k. You’ll end up paying back £400k, because of interest. So just to be clear – you will have to work twice as many hours to pay the interest on a loan of money that the bank didn’t have. Those thousands of hours of work will then go to enrich the already wealthy majority shareholders of the bank.

But this isn’t what Keen disagrees about (as far as I know). Greco points out that if lent money is snuffed out when the loan (mortgage) is paid off, all well and good, but where is the additional money going to come from to pay the interest on that loan, if all money is debt (which it is)? It can only come from more debt – so this ensures that global debt increases, and the economy has to perpetually and cancerously grow for that to happen. It’s this cancerous growth that is destroying the biosphere that we need to survive.

So Keen says that that’s not true – in fact, banks spend the interest that they collect back into the economy in one way or another, and it’s the velocity of money that allows homeowners to earn it back, so that they can pay more interest. However, from an environmental perspective, you can increase the velocity of money as much as you like, but the world is still finite. The payment of interest either requires more debt or an increase in the velocity of transactions to provide the funds. But both will force the economy to grow perpetually – which is exactly what is happening, and it’s eating into nature, which isn’t a good idea.

Imagine that the homeowner’s job is driving a van, and that she earns £10 per hour. To repay £200k, she has to work 20,000 hours; but to repay the interest as well (on money the bank didn’t have, just to remind you), she has to drive for 40,000 hours – burning fossil fuels for every one of those extra 20,000 hours. How can that not be ecologically destructive, whatever the velocity of money? And that’s without discussing the morality of it.

I wanted to learn more, and I discovered that Jem Bendell and Matthew Slater had worked together to produce a MOOC (massive open online course) called Money and Society. There was a suggested reading list for the course, including Felix Martin’s, Money: an Unauthorised Biography. The same day, I went to see a friend near Old Street Station, was a bit early so popped into the bookshop at the station, and the first book I saw, at eye level on the closest shelf to the door, was Martin’s book. So I bought it.



It’s an outrageously brilliant history of money, and another book that I recommend wholeheartedly – it’s very unlike Niall Ferguson’s sycophantic tribute to ‘great’ financial innovators. I was ready for the MOOC, which is free, unless you want a certificate at the end of it, which I didn’t. You can sign up to it too – it happens several times a year.



Having just checked the MOOC again, I spotted that the next one starts later this month. I can’t recommend it highly enough. There are four ‘lessons’, consisting of videos and reading material that take around five or six hours to digest properly. Then you get to debate with other students on the MOOC (usually around 150, from all over the world). Each lesson takes 2 weeks to complete (although that may have changed to one – best check). The first is about the theory of money – what it is; the second about history of money; the third about the effects / problems associated with the money system; and the fourth about alternatives.

During the MOOC, I discovered the incredible work of Will Ruddick, setting up mutual credit schemes in Kenya:



Also I met Dil Green and Sophie Paterson on the MOOC, who are now part of a workers’ co-op with me, running and; I wrote a blog article about the venality of banks; I interviewed Matthew Slater for a topic introduction on mutual credit. However, he told me that Jem prefers the term ‘collaborative credit‘, so that’s what I’ve called it (although I’m still not sure about that. Jem is going to visit next time he’s in the country – I’ll ask him why he prefers that term).



Matthew is a perpetual traveller, currently residing in an anarchist enclave in Athens. He’s been to stay with us several times, and we’ve talked about how we might push the mutual credit agenda. On his recommendation, I attended some sessions of the recent conference, where Matthew was speaking.



Joining Matthew in his session was Arthur Brock, who is spearheading a new initiative called Holochain – which can build huge peer-to-peer networks, but completely distributed, without a central server, and without the huge electricity requirements of blockchain. This is right at the limit of my understanding, but I know that it’s perfect for mutual credit, and there are very clever people waiting to implement it.



We’re currently hatching a plan to set up a national mutual credit trading bloc. I’m going to be talking to likely businesses (starting with the 500+ in the Lowimpact Network) to ask them if they’ll join the scheme, to do at least some of their trade in mutual credit. But they wlll have a guaranteed market for what they produce. It could be anything that can be couriered around the country – clothes, furniture, honey, meat boxes, veg boxes, books, leather goods, pottery, metal, wood, textiles or other craft goods (in which case it would be good to find a co-operative courier!); it could be something that people are prepared to travel to do – natural building work, renewable energy installations or rainwater harvesting systems etc; it could be something that people come to you for – yurt holidays, canoe trips, courses etc.; or it could be something you can provide remotely – consultancy, online courses, web design etc. There will be a list of things offered – including by you if you join the scheme – and other members commit to give preference to providers within the scheme for the things that they need. So the hope is that we will build a huge network of producers all trading with each other in mutual credit.

At some point, it would be great if we could invite the Phone Co-op to join, along with Co-op Energy and food co-ops such as SUMA and Infinity. Then, if members are worried that they won’t be able to spend their credit, there’s always telephoney, energy and food – everybody needs those things. After that, local groups could start to develop that trade amongst themselves locally, but also plug into the national network. Members could then to earn credits locally and spend them anywhere in the country. It would be great if housing co-ops came on board too, accepting some rent in credit.

So how about it? Can we talk to you about joining a national mutual credit scheme? Read our topic introduction first, so that you get more of a feel for what we’re suggesting. Initially we’ll just be colllecting information about what you could provide and what you might want to purchase. There’s nothing to lose, and you might be making history. Let us know.

Please share this  and talk to other people who might be interested. I’ll be interviewing Matthew for a blog article very soon – he’ll be able to explain things much better than me.

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