The next great transition will be to the Solidarity Economy with a mutual credit exchange system

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Posted Feb 26 2018 by Dave Darby of

I’ve been working in the environmental field for over 20 years, and I believe, like the National Academy of Sciences of the USA, that we’re headed for ‘biological annihilation’, and like the good folk at the Dark Mountain Project, that a crash is coming that we may or may not recover from, but if we do, it will be at a much lower level of technology than the one at which we’re currently operating. Humans have destroyed habitat and devastated wildlife for thousands of years, but in the last couple of hundred, the size of our population and our economy has put so much stress on the biosphere of our home planet that we may have established patterns and processes that are already impossible to reverse. Attempting to extract so much from the biosphere means that we’re now in the latter states of a Jenga-type game that may cause our extinction when it falls over.

The best we can do now, I think, is to try to put things in place that will delay the inevitable, mitigate its effects, and provide the means for the continued survival of our species after it happens. Since 2001, has been building a network of specialists to provide information, books, courses, online courses, products and services to inspire and train the public to build natural homes, install renewables, grow things, forage things, make, fix, preserve and maintain things, so that as individuals, we might not be quite so helpless in a low-tech world.

We’ve helped many thousands of people to do these things, which is great – but it’s not enough, when:

  1. only a minority of people are interested, and the rest are distracted by ever-more sophisticated bread and circuses
  2. we have an economic system that is predicated on perpetual growth
  3. our economic system also perpetually concentrates wealth, which overflows into our political systems to ensure that ultimately, we don’t have the power to change direction.

System change is required, but not to the kind of system that so scares the right – centralised, big-state socialism – whether implemented by violence or by voting. The trouble with violence (if it’s not obvious already) is that people get hurt, and soldiers are required to seize power, then to re-distribute it. History has given us plenty of examples of the former, but none of the latter. Soldiers (of either left or right forces) don’t distribute power when they’ve seized it. If the 20th century taught us anything, surely it taught us that.

Voting and political parties aren’t the solution either – which would be fine if they didn’t take such an inordinate amount of our time and mental space. If we manage to elect a government that will genuinely challenge corporate power and distribute it to communities and individuals, it will be punished via capital flight. Corporations and corporate investors will not keep their money in countries that don’t roll out the red carpet for them. Why should they when they have so many other governments desperate to court them? A genuinely anti-corporate government will last one term, if that, before a pro-corporate government replaces them, and their policies. We will continue to steer towards disaster, tacking slightly left or right, depending on the flavour of party that won the last election. Not a solution in the long run. These problems are a stumbling block for the left – but not for a new system that is neither left nor right.

If we study the way in which the last great system transition happened – the one between feudalism and capitalism – we can see that it wasn’t down to violent revolution (the French Revolution was just the culmination of something that had happened peacefully and more thoroughly in England 100 years previously) and of course not down to parliamentary shenanigans. No, capitalism started to grow in the cracks in feudalism – providing the things that fedualism couldn’t or wouldn’t provide. The moneylenders and the merchants were not the most respected people, and the thought that given time, they would knock the monarchy, the aristocracy and the church off the top of the hierarchy would have sounded absurd at the time. As the late, great Ursula LeGuin said:

“We live in capitalism. Its power seems inescapable. So did the divine right of kings.”

Ursula Le Guin

And so it is in the cracks in capitalism – and there are plenty of them – that the next system will grow. And that next system will be the ‘Solidarity Economy’, whose productive units are non-hierarchical. Now this is currently a stumbling block for the right, who don’t believe that a non-hierarchical system is possible. This has become entrenched since the right’s latest darling, Jordan Peterson (although he says that he’s not of the right, and I believe him) has traced hierarchy, and the seratonin boosts that climbing it bring, back through 350 million years of evolution, to lobsters (human antidepressants work on lobsters, apparently). But that would mean that we can never achieve gender equality, because it’s never happened before, or that we can’t fly or travel underwater, because that’s not what we’ve evolved to do. He’s a fan of agency, but this is denying agency. We can build the kind of society we want, and I suggest that it should include gender and racial equality, but not hierarchy. Hierarchy and the attempts to climb it have brought us to the brink of extinction, and it’s time to jettison it.

Jordan Peterson

But to reiterate, the next system will be neither left nor right – that is a battle that can never be won. The Solidarity Economy is free-market anti-capitalism. The hope is that the left will be attracted by the anti-capitalism, and the right will be attracted by the free market. And so they should – capitalism will expand until there is no room for a functioning biosphere, and then burst, almost definitely taking us with it. And a free market would be an excellent replacement for the extremely unfree market that we have now, dominated and twisted as it is by corporate and financial interests, with help from their state accomplices.

The Solidarity Economy is comprised of businesses and institutions that don’t extract wealth from communities, as corporate branches do. Examples include worker and housing co-operatives, community energy, community-supported agriculture, credit unions, free & open source software, community land trusts, self-employment and mutual credit (more on this last one later). These things have grown, and are still growing in the cracks. Wikipedia is a classic example of this. A seed was sown in a crack, and it has now grown to such a size that it appears impossible that any corporate entity will ever be able to profit from the world of encyclopedias ever again. The trick is to work out how to replace multinational corporations in all sectors of the economy.

The death of the encyclopedia industry.

The Solidarity Economy is already being built, and I know it will succeed because of the quality of the people involved. I intend to do everything I can to help them, and to try to persuade you to do the same. This is a huge step in the right direction, but I can already see that, again, it won’t be enough – because of the money system. I believe that we need a mutual credit exchange system attached to the Solidarity Economy, because money always concentrates, and is doing so now in the corporate and banking sectors, building up a fund that will be used to block the growth of alternatives.

As Douglas Rushkoff points out in Throwing Rocks at the Google Bus, modern capitalism is not about the production and sale of goods and services. That’s all very 19th century. Now, the derivatives market comprises over 90% of the global economy. The world’s most powerful algorithms, on the world’s fastest computers, owned by the world’s wealthiest investment houses, intercept bids from less powerful algorithms on slower computers, buy up their targeted stock a few nanoseconds before they get to it, then immediately sell it to them for a few pennies more than they would have paid had they got to the seller first. The few pennies don’t make much difference to each sale, but the combined reward for such activity globally is in the hundreds of billions.

Douglas Rushkoff

Meanwhile governments provide banks with monopoly powers to create money from nothing at all (we have zero-reserve banking in the UK), so that they can borrow from them to fund their ever-growing expenditure, and taxpayers pick up the bill for the interest. This same monopoly power allows banks to charge 300k interest on a 300k mortgage, and demand the interest first. This is a bizarre way to run an economy, and it has concentrated enormous power in the corporate sector, and especially the banks. Indeed, it was designed to do just that. Trump’s cabinet – the boardroom of the world – is filled with moneylenders and merchants, not educators, artists, scientists, judges, philosophers or doctors.

I’ve read, in great detail, ideas put forward by superb people to replace this absurd system with one that provides an exchange mechanism that doesn’t allow wealth to be creamed off by banks, corporations and professional politicians with seats on corporate boards. Murray Bookchin’s libertarian municipalism, and Michael Albert’s Parecon systems are tours de force that could indeed seed and grow in the cracks in capitalism – that is, if they weren’t so complicated, and if they didn’t involve endless meetings. Now, how many of you relish weekends and evenings with community meetings on how to allocate resources? Exactly.

Michael Albert

Over the last year or so, I’ve discovered mutual credit. I read Tom Greco’s The End of Money and the Future of Civilisation, the Credit Commons White Paper by Matthew Slater and Tim Jenkin, and I participated in the Money and Society MOOC. I’ve become convinced that this idea, or something very much like it, will become the money system for the Solidarity Economy, and that the Solidarity Economy will be the thing that grows in the ever-widening cracks in capitalism to eventually replace it.

Tomorrow on this blog, I will be interviewing Matthew Slater, one of the authors of the Credit Commons White Paper. Here is a basic primer for mutual / collaborative credit, but I will be asking Matthew more in-depth questions about how it might work, how we spread it, how it can provide the means of exchange for the Solidarity Economy and what we can do as individuals to help. You can join in too, in the comments section, and in a webinar that we’ll be running about the mutual credit idea. We’ll run this on March 10th. More details tomorrow.