See yesterday’s blog post for an introduction to this article. This is an interview with Matthew Slater, who co-authored the Money & Society MOOC, a free masters level multidisciplinary online course. He co-drafted the Credit Commons white paper, a proposal for a global solidarity economy money system, based on mutual credit principles. He lives as a nomad and largely without money. We’ll be running a webinar with Matthew on March 10th, at 11am GMT – see the bottom of this article for more details.
Here’s a primer on mutual / collaborative credit for those who don’t know what it is. A short description is that it’s a trading system that doesn’t use money as we know it – but uses credit and debit in an account instead. That way, the means of exchange can’t be hoarded, and it takes power away from banks. It involves trust, and helps to build real communities, and the Solidarity Economy, that is starting to provide an alternative to multinational corporations.
Grassroots Economics is a group building mutual credit schemes among poor traders in Kenya. The Bangla-pesa is an i.o.u. that is issued, rather than an online account, but it doesn’t have to be purchased, and so represents mutual credit rather than a fiat-backed local currency.
Dave Darby: Give me an elevator pitch for mutual credit / credit commons – i.e. you have 30 seconds in a lift / elevator with an eccentric billionaire who might fund your work. What do you say?
Matthew Slater: We have a network of 20,000+ users who are all using their own local platforms. and they’re all connected, but the software is going out of date. We want to upgrade our systems so all these local communities will be able to use standard software and standard protocols to reach across from one community to another. In this way, we can start to think about building not only collaborative credit communities, but also a global movement.
DD: What’s the problem with using money?
MS: The people who decide who has access to money (which is to say, who has access to bank credit) is the banks. The banks are not under democratic control – they’re motivated by how much money they can lend and collect interest on. That’s quite anti-social. So the problem with money at the moment is that it’s been effectively privatised, like everything else that the government used to control, and it’s being abused by the world’s wealthiest people in order to centralise their wealth and power. The profit from lending money, and the decisions about who to lend to, are in very few hands. So money, that is fundamentally a public good, is totally in the service of private actors.
DD: What do you see as the ultimate potential of mutual / collaborative credit?
MS: It depends on how realistic you want to be. I could say that we’re trying to restructure the global economy on the basis of everyone being able to issue credit in proportion to how much they are trusted, then the potential is that we could have a money system that was virtually free to run. That would mean – well, not totally interest-free credit, as there’s a bit of risk and there’s a bit of admin, but it might mean that instead of paying for your house three times over, you might pay for it just 1.1 times. That would make a huge difference to the lives of ordinary people. Also, there wouldn’t be the ready finance for the extractive fossil fuel industry, which is very close to the banks, because the issuance of money would more closely reflect the values of ordinary people. So the great shift that’s required in greening the economy would be much, much easier if credit were being issued on a more democratic basis.
DD: And how realistic do you think this kind of widespread change is, or is it just a crazy dream?
MS: If I’m honest, I think it’s a crazy dream. These ideas about how to build a better world have been around since Plato, and we’re running out of time now. The methane cannons are firing up, species extinctions are accelerating etc. Civilisation is becoming extremely complex and fragile, and it’s likely to collapse in on itself. I think it’s probably too late to do anything. But I’m fulfilling my obligations to the groups I’m helping, and guarding my reputation for a very uncertain world that’s coming. It might be a good idea to do a webinar about it, and to weigh up the options for what might happen. It’s very difficult to work it out. There are so many variables to take into consideration – for example, nuclear power stations. In case of any kind of societal collapse, if they’re not maintained every day, or properly shut down, they’re going to kill almost everything. Some people are prioritising that.
DD: Do you think there’s the slightest chance that this crazy dream might come true?
MS: I don’t want to say what the probability is, because I don’t know. I’ve been overly alarmed by the state of the economy since 2008. The alternative press were right about the fragility of the economy, but they underestimated the ability of governments and the banks to hold it together. I think my alarm was right, but it’s all still going, so we underestimated the resilience of the current system – at least until now. I don’t know how long we’ve got. I don’t know about tipping points. I don’t know about the claim that you’ve only got to get 3% onside to start a revolution. These theories don’t mean much to me. I do know that it’s extremely urgent though – and I don’t know if we really have time to think about anything else but the survival of our species.
DD: Are we talking about mutual credit or collaborative credit, or are they the same thing?
MS: The main focus is on community-building and doing things for each other. The way that we do the accounting, to record who’s done what for who, and who needs to do what for who, to restore balance, is mutual credit. We can also talk about collaborative credit as way that people can share things with each other and do things for each other ahead of time. The terms aren’t really well-defined. Mutual credit has been used for a long time in the community currency movement, and may sound a bit more technical, whereas collaborative credit might sound a bit more friendly to people coming across the concept for the first time. Also, the word collaborative indicates that everyone in the communtiy has a say in governance – more so than ‘mutual’. But essentially, they’re the same thing. But mutual / collaborative credit is not like a local currency, like the Brixton or Bristol pound. That’s a currency that is redeemable for sterling, and there’s no credit involved.
DD: How did you get into all this?
MS: Having made a decision about devoting my life to meaningful work, and not worrying about getting paid, as long as I could eat, I was living in Cambridge, and noticed that the local LETS group was about a decade behind in its web presence, and that I had the skills to give them online accounting and a primitive social network, which is really what a LETS wants to be. They were photocopying lists and posting things to each other. It all needed to be on a website with a database behind it. And so I set about doing that. I got deeper into the subject. No-one in the field seemed to be saying anything about free / open source software, and no-one seemed to be thinking ahead to the new generation of platforms that were coming out – e.g. Drupal was becoming very popular then. Systems that existed tended to be hand-coded from scratch. So I had a message for the whole movement that was very simple – why don’t you use a content management framework, and you’ll find that your software is much more maintainable. I had a partner in Geneva who was able to promote my software within the movement, and so we started to pick up communities that were using it, and to scale up. Those groups depended on me, and I was firmly in the movement.
The End of Money and the Future of Civilisation is an accessible introduction to the problems that our money system cause, and how mutual credit could solve them.
DD: So where do we start – what can individuals do?
MS: There are ways to campaign for wider change, and there are ways to change your own behaviour – which is good on a small scale, but you’re also prototyping and setting new patterns. So first, in business, it’s about trying to find ways to minimise the use of official money, and therefore to set up bilateral and multilateral exchange relationships. In today’s world, you can’t set up closed circles – you’re always going to need a bit of kit from Taiwan, or a phone connection that has to be paid with in fiat money. But it can be done in degrees, and the bigger a circle gets, the more useful it gets, and the more you can lean on it. Then we can start joining the circles together.
DD: So imagine I’m a plumber in Northampton (say) – what can I do?
MS: You can get together a group of people to provide services for each other. You’ll be sharing clients, and you won’t be invoicing each other. When you provide services, before you give them the bill, you ask them if they have anything that they can give to you in exchange – either that you can use, or other people in the group can use, or that you can exchange on. So for example, you might find someone who is brewing beer, and they can pay a certain percent of the bill in beer. You can offer to install a shower or new bathroom suite on the same basis. If you have a car mechanic in the group, they might offer to fix people’s car – not now, if the cars aren’t broken – but a promise to fix someone’s car, in the future.
DD: Then how do we spread the idea?
MS: I’m not an expert on idea-spreading, but everyone has their own social network – online and offline. Insurance can be a good starting point. Groups of people who trust each other reasonably well could insure our own houses against fire, or our cars against theft. Instead of paying a company, we can provide insurance amongst our peers. I met a guy in Holland who set up a mutual insurance scheme amongst his peer group for mobile phones. Commercial rates were about £10 per month, and he charged £2 per month, because that’s the going rate when profit is taken out. If someone loses or breaks a phone, the fund buys them a new one. You don’t even need a monthly subscription, as long as people promise to chip in and buy someone a phone if necessary. It’s a trust building exercise, and if mutual credit is going to work, we need to rebuild trust in communities. Plus money is diverted from multinational finance institutions to people’s pockets.
DD: How do we link these local schemes together to form a global system?
MS: It’s a bit far off at the moment, but there need to be software protocols to do that, but also social protocols. If groups want to trade with each other, they have to build trusting relationships, and they have to have software in place to allow trades to take place. The software needs to be open, to connect with other groups who are using mutual credit, so that they can all trade with each other. In plain language, it means that someone who is part of a group in, say, Northampton, can go on holiday to any community that has a scheme in the system – say in Scotland – and pay for accommodation, food, drinks, gifts etc. using mutual credit, and because the system is multilateral, someone else (i.e. not from Scotland) can go to Northampton and spend their credits. It works anywhere in the world, as long as the local group is in the system. All groups need to be able to offer things to every other group, and to be able to make payments to every other group.
DD: But that doesn’t mean that every group in the system has to make a ‘trade deal’ with every other group, surely?
MS: No – we’d need to build ‘groups of groups’ – so that groups in London for example, would ‘nest’ so that that group of groups could trade with all the groups in Scotland, Devon or Belgium, for example. Those relationships would then be encoded into the global grid. This global grid is the Credit Commons.
DD: Say some more about how the global Credit Commons would work.
MS: We’d need to have those agreements between all of the groups, and local groups will be members of wider groups, so that globally, there’s a hierarchical, or more accurately, nested structure, and those agreements need to have a parallel in the software that enables frictionless payments between groups. Insofar as you can meet your needs in your community through exchange with others in the community, you don’t need to use money.
DD: Here are some basic questions that we’ve been asked since we started promoting mutual credit. First, how are exchanges registered?
MS: Each local group can have its own ledger, its own technology and its own choice of software, as long as that software is then able to talk, using the Credit Commons protocol, to other groups. We offer a Drupal system, for example, that allows local groups to trade internally. It doesn’t just take payments – it also has message boards / wants / offers etc.
DD: And what if you walked into a local bakery that was part of your local scheme – how do you pay for a loaf of bread?
MS: We haven’t got very far with commercial payments yet, because most of the members of groups we work with are non-commercial. It’s more about neighbours helping each other. Groups like the Brixton Pound have got a bit further with this, and have SMS technology, and an app, which enables you to make payments.
DD: How is fraud prevented?
MS: It depends on the technology used – but people log in with a username and password, so it’s the same procedure for preventing any kind of identity theft. Mutual credit ‘money’ can’t be stolen in the way that ordinary money can. Ordinary money is ‘stuff’, and if you own it, it’s yours. With mutual credit, there isn’t any stuff – only a record of what you did and what you’re owed. There’s nothing to steal.
DD: What about old or sick people – what kind of social security could there be?
MS: Every group is free to distribute credit according to whatever governance system they have. A local group could decide to ‘tax’ themselves to look after infirm members – say, a 2% tax on each transaction to pay for visits to old or ill people twice a day. Governance systems would be decided by local groups – governance could be left to one or two trusted people, or there could be an elected committee, or decisions could be made using sociocratic techniques, or Loomio. The governance system doesn’t affect the accounting – it just ensures that decisions are made in the interests of the members.
DD: There are limits on how far people can go into credit or debit?
MS: Almost definitely, yes – in case people take products or services, but don’t come back. The limits have to be on both sides – some people are better at earning than spending, and vice versa. Everybody needs to spend or earn their way back towards zero. It doesn’t matter exactly what the limit is, as long as people can get back to zero.
DD: How would people buy a house?
MS: For house purchasing, you’d have to have quite a big system. You would go through the governance system to obtain something resembling an overdraft, to allow you to pay credits over several years, to buy the house. Your local community will know and trust you, and recognise that you can provide useful products or services to the system to earn the credits to pay for the house over time. There would have to be house builders in your community of course – or people with homes who are willing to sell them for credit. This would need to happen gradually.
DD: And save?
MS: The problem with saving is that it has to be offset by other people who are borrowing. The governance system could manage that, or say that that particular scheme is for liquidity only, and savings have to be in a different medium / asset / set of rules. However, if you could obtain what you need from your community, and your community will look after you when you need it, you may not need to save so much. But something else could happen – some members of the scheme could set up a savings bank. You’d need to clear an extension to your credit limit with the governance system, and then you’d save those credits in the bank. The bank wouldn’t be issuing credit, just managing credit between borrowers and savers. This could be a way for borrowers to buy a house. The bank could charge a fee for their services (in credits), but what they wouldn’t do is charge interest.
We are running a webinar, on March 10th, at 11am GMT. Matthew will answer any questions you have directly, and respond to your ideas / concerns. The webinar will last for an hour, and registration will be restricted to the first 15 people to sign up. We ask for donations, so that we can continue to promote the idea. But if you don’t have money, just email me and you can join for free. To register:
- Donate here to secure your place. We’ll use all donations to reach more people / provide information / attempt to change the money system. We’ll leave the amount up to you (maybe an hour’s wages? But if you don’t have any money, then don’t worry – you can join for free).
- Also, email me – dave at lowimpact dot org – to register. More details will be emailed after registration.
- The webinar will take place in a Zoom room.
Please share this amongst friends who you think might be interested.
Also if you want to go deeper, watch out for the next run of the free “Money & Society” MOOC (unfortunately, one has just started, but there’s another one in August).
Matthew Slater develops software for complementary currencies. He co-founded Community Forge, which free hosts software for collaborative credit schemes; he co-authored the Money & Society MOOC, a free masters level multidisciplinary online course. He co-drafted the Credit Commons white paper, a proposal for a global solidarity economy money system, based on mutual credit principles
The views expressed in our blog are those of the author and not necessarily lowimpact.org's
1Dil Green February 27th, 2018
Thanks for this – really like the clear answers to the first few questions – setting out the situation with clarity.
I’m less convinced by the stuff about the plumber in Northampton and the phone insurance example.
For this reason: capitalism is by far the most dynamic and adaptive cultural machinery humans have ever invented. As Hayek argued, capitalism plus free markets have become a mindless but immensely powerful ‘computer’ to which society has delegated all sorts of decision-making power about where human energy should go. Markets are by far the best planning mechanism we have – planned economies are currently beyond us – see this article: http://crookedtimber.org/2012/05/30/in-soviet-union-optimization-problem-solves-you/.
One thing I like about mutual-credit is that it is not antagonistic to markets – only to capitalist accumulation and debt-based single-issuer money that distorts markets. [NB: We can and must attack the planning problem, but this is a deeply hard, long-term issue – one thing we can do is adopt the nesting approach which is mentioned – reduced complexity increases the power of our intentions – note that this is not so much attempting detailed planning as it is doing process and protocol design which increases our agency within the complexity. Nevertheless, the exchanges between the sub-systems re-introduce complexity with an exponential effect that is unavoidable if we wish to sustain a diverse society.]
Any construction of markets in spaces which are framed in terms which capitalism has analogues for is likely to be undermined and/or enclosed.
So, participation in public, general economy LETS schemes has failed as a model. Huge energy in the 1990s has gradually petered out – for all sorts of reasons, but essentially, because those in the developed economies have found it of only marginal utility. The Northampton plumber answer simply doesn’t happen – I have lived this. The approach is undermined by the enormous cultural momentum that debt-based, ubiquitously fungible money systems have achieved.
And construction of niche-cases that operate on a ‘this is cheaper’ promise simply build business cases for disintermediating new-tech capitalist businesses to use when fundraising – or get bought out (http://nymag.com/selectall/2017/04/gett-buys-juno-but-drivers-arent-happy-with-stock-payout.html). This will be the case for platform co-ops that are not extremely carefully designed.
I have become convinced that we must look for the spaces where capitalism disdains to tread – where deep human needs are going un-met, and which cannot be satisfied with money. Problems that debt-currency+capitalism doesn’t want to fix, or which it structurally cannot fix.
If we can build viable markets there, using mutual credit, these will be valuable to their users, and strong community will be built (mutual credit is great because the act of using it automatically knits one into a community, as this is where the trust resides), and capitalism won’t be interested, or simply ignores, because it is confused (as it is by wikipedia).
There are all sorts of such spaces – because capitalism is not a human system, it maps onto humans rather badly (otherwise we wouldn’t hate it so much, and it wouldn’t depress, kill and maim so many of us).
But we have to be careful, because some apparent niches like this are just ones that capitalism hasn’t discovered yet, and which it will readily colonise once the way is opened. New technology has opened new pathways for capitalism, as well as for social activists.
2Paul Jennings February 27th, 2018
Sorry, Dave, I just remain unconvinced by this as the big way out of our current fix. Even Matthew seems fairly certain we’re screwed, and admits several times in the interview that important questions have yet to be answered. Then there is the incontrovertible point made by Dil in the first comment. A huge amount of hope was vested in LETS in the 1990s, it was taught as an important part of the first Permaculture course I attended,in London in 1992, and yet here we are, very few of us paying for anything with anything but fiat currency.
We are just as if not more likely, I believe, to flip into a disaster communism situation than we are to build a mutual economy through the purposeful attempt to construct a solidarity economy. This doesn’t mean that people shouldn’t bother of course, if communities are served by systems like these then that is great, but it is the existence of the resilient communities which is the essential precondition to a post-capitalist future. Does solidarity economics offer a way to actually build the lifeboat communities we will need? Maybe. That’s a modest enough, even realistic ambition. Is it alone in offering a means to build such lifeboats? No. Community gardens, CSA’s, Permaculture groups, co-operatives, activist and affinity groups all offer other ways forward as times become hard.
I wouldn’t like to try to argue that Matthew’s ideas might be the next big thing. They might be part of the way some groups get by.
3Dave Darby February 27th, 2018
The trouble is, we do need a ‘big thing’, because the crash that’s coming is going to be big. If you show me something else I should be doing, and explain why it’s got a better chance of delaying the crash and creating a softer landing, then I’ll do it. But I can’t see anything – at all – except the Solidarity economy (and community gardens, CSAs, individuals growing food and certainly co-operatives are all part of the Solidarity Economy – are we talking about the same thing?), but I don’t believe that the S.E. or anything else is going to work with the vampire finance sector we currently have. Come on, give it a shot. Who wouldn’t relish giving bankers a kicking these days? It could be really popular if it could get a teeny bit of traction. Where that traction might come from – don’t know, but it could come. That might be a step towards your marketless future, who knows? But I feel sure that we can’t take a step towards that, or away from disaster, without building something in the cracks in capitalism – something sustainable, community-building and non-extractive. What would have to happen before you’d give it some support? And what’s the worst that could happen if we all got behind it and it failed? Stronger communities?
4Dave Darby February 27th, 2018
I could be wrong about this, but I don’t believe that ‘Do this – it will build more resilient communities’ is going to get enough people enthused. It’s why Transition and Permaculture are still marginal, and will stay that way I think, and why LETS failed and why local currencies probably will. I’ve heard that shopkeepers aren’t overly excited to receive local currencies, generally.
It will need a better slogan than that, imho – nothing less than ‘Do this – it could make history’. Then if you can see a global network developing, it makes your local efforts seem worthwhile and even exciting. Yes, like Matthew, I do think it’s a crazy dream, but I’m a dreamer, and a bit crazy. You have to be, with this system, unless you refuse to think about it, and hope that everything will be OK.
(ps if it all falls over with nothing in place to catch it, there won’t be disaster communism, there’ll be warlords, as usual).
5Dave Darby February 27th, 2018
Don’t you think that there’s potential to grow mutual credit in parts of the world where capitalism has pushed people into sweatshops and plantations? Surely if you had to get out of bed every morning to do that, you’d give something a go if it could provide for your needs some other way?
And – if we get to the niches first and asset lock them, how would capitalism buy them out? It could use force, ultimately I guess, like it does in poorer parts of the world, but we could build something that could be defended in the meantime.
6Paul Jennings February 27th, 2018
I don’t want to be the guy who always disagrees with stuff. I’m not down on local solidarity initiatives at all, and alternative trading or economic systems make loads of sense. From what I have read though, I am cautious about overselling or being oversold these ideas. Maybe the ‘big thing’ is actually the small things. That is all I’m saying I suppose. It doesn’t matter how resilient communities are built they must be built. So what we are after is a cultural change, and a social movement built around values which we do not see reflected in the destructive mainstream. In some places that might start with a LETS scheme, in others with a CSA……. in some places it might be something like the kind of nested Transition stuff or the rise of an activist group, a successful IWW group in a workplace.
I’m not dreaming about the big stuff. Maybe we should all stop dreaming about the big stuff. Maybe dreaming about the big stuff is where nightmares come from.
P.S Disaster communism is just something people do. And yes, warlords will be a problem, but that is why we need new cultural building blocks here and now…. radically democratic, face-to-face building blocks. #itsnoteasyandthetroubleweareinisverydeep
7Dave Darby February 27th, 2018
Yeah, we’re after the same kind of world, I know. I suppose what I’m saying is that things seem to peter out unless there’s a whiff of system change – of revolution if you like, when it becomes exciting and gains traction. It’s exciting to be part of a revolution, isn’t it? That’s why it’s always misused in corporate advertising – you know, when changing the thickness of your glasses frames, or adding another blade to your razor becomes ‘revolutionary’. Yes, revolutions often (usually even) go horribly wrong, but they’re exciting nonetheless. I don’t see any potential for genocide or forced collectivisation in the solidarity / mutual credit revolution though, fortunately. But asking people to get behind something and stick with it because it ‘builds community’ isn’t going to cut it, imho. I’m not saying that building community isn’t crucial, because it is, but don’t you think it needs a shot at changing the world before something can get mass take-up? The corporate sector understands this – which is why a McDonalds is always the same, wherever you are – it makes people feel as though they’re part of something global. Something global and shitty seems to be by-the-by – it’s just the global thing that seems to be important. So let’s tap into that?
Btw, a mutual credit / credit commons world would be a bit, you know, the a-word. Let’s not mention that unless the overton window moves though.
8matslats February 28th, 2018
I agree that the strategy I describe does involve conscious choice to use smaller, less convenient markets, and its a strategy that didn’t work with LETS. The hope is that there will be new energy, and new impetus towards solidarity. The approach of concentrating on the markets that capitalist money doesn’t nurture means targeting the poor, I think as many social movements, like timebanking, do, and sometimes even government. This is a viable approach but the merciful work of helping the poor needs to be understood always in the context of bringing about systemic change.
Most of what I talk about is an ideal way of keeping account for exchange. In some ways it is less important that all the real stuff – the food production, the relationship building, the resilience etc, and in other ways how we exchange strikes at the dark heart of our economic and political malaise. Dave wants to work with that theory of change around this, as LETS did, and should be possible to build on LETS shortcomings, but we understand that the change we want is much greater than just how the symbols are manipulated.
9Andrew Rollinson February 28th, 2018
I have thought about something like this, mentioned it before, and wanted to get involved for many years. The problem I have had is linking in with a network of likeminded people or starting such a network. This blog mentions “…We have a network of 20,000+ users…” but having re-read it a couple of times, I can’t find any links to this “network”. Does one exist, or is this blog describing a concept and explaining that we have to start up our own local networks?
10Dave Darby February 28th, 2018
I think this is the network Matthew is talking about – https://www.community-exchange.org/home/cen-statistics/
although the network members tend to be non-commercial, LETS-type schemes (babysitting, loft clearances, lifts etc.).
The trick is to commercialise it -ie. to get plumbers, butchers, bakers & candlestick makers involved – to change the economy, as well as build community.
11matslats March 1st, 2018
Hi Andrew, the network I’m talking about is CES + Community Forge. and you can see a map of it here: http://creditcommons.net/map along with similar networks.