At Lowimpact.org, we’ve been talking about the potential for mutual credit to bring about necessary, large-scale change for three or four years. Mutual credit is a tool that can help decentralise the economy, boost small businesses at the expense of multinational corporations, build community and shrink the power of banks. Together with associated ideas, it can form the basis for a new kind of economy.

Members of the Lowimpact.org co-op are involved with Mutual Credit Services (MCS), whose mission is to help build local mutual credit ‘clubs’ in the UK and overseas, and to link them together in a global trading network. We’re often asked about the current state of play, and so we’ve put together a series of 6 articles to explain what progress we’ve made.

Here’s the list of articles, starting with this one:

1. Introduction:
   Covid, the birth of Mutual Credit Services, and building a team.
2. Basic explanation of the Credit Commons Protocol:
   The Credit Commons is the mechanism by which mutual credit and other groups all over the world can be connected to form a new global trading system – presented in an easy-to-understand way.
3. Business-to-business ‘Trade Credit Clubs’ and credit clearing: A very simple way to introduce the mutual credit idea to small businesses – trade credit, something they’re already familiar with.
4. Local authorities & anchor institutions: Introducing the concept to local authorities – as a way to help their local businesses that are having cashflow problems.
5. Community groups & individuals: How to allow community networks and individual consumers to play too!
6. Investments, savings and location: How to develop non-extractive, interest-free savings and investments in communities, alongside mutual credit trading; and why physical location is important.

1. Introduction

To really change direction, we’re going to need a new money / exchange system, because our current fiat money is constantly siphoned out of communities and concentrated in very few hands, which makes true democracy (and therefore changing direction) impossible. What we need is an exchange medium that isn’t designed to be stored. Savings and investment can be done separately from the exchange medium, as we’ll see in Part 6.

Although we’re working on mutual credit networks, we’d like to see an ecosystem of alternative monetary ideas – some will work better for some circumstances than others. But it’s important that we provide alternatives to the current banking system that is so damaging to local economies and to ecology. But those alternatives have to be decentralised and community-based, so definitely not Libra / Diem (or anything else Mark Zuckerberg dreams up) or Central Bank Digital Currencies.

And if your idea is based around a ‘gift economy’, then maybe mutual credit could be a stepping stone. But we can’t see a way to get there in one step from our current neoliberal economy and financial system.

We’ve interviewed people involved in building mutual credit networks in Africa, South America and Australia, and there are networks in North America and Europe, notably in Sardinia and Switzerland, as well as a national-scale credit clearing (an idea closely related to mutual credit) network in Slovenia. But we don’t have any local clubs in the UK yet (although there’s a budding network for Wales, and the Open Credit Network that could eventually form the basis of a UK-wide ‘network of networks’).

For non-techies, I promise that these articles will be written in an accessible language. We don’t want to exclude the majority of people by just speaking to coders or financial specialists. Of course if you want to take the free and open-sourced club software and build all the elements of your own club, you’ll need to involve coders; alternatively, MCS can do it for you.

Covid and the birth of Mutual Credit Services

Mutual Credit Services grew out of the Open Credit Network, which was launched in January 2020 by Dil Green and Dave Darby of Lowimpact.org, and Oliver Sylvester-Bradley of Open.coop. It was a Sardex-inspired, business-to-business mutual credit network, open to businesses across the whole of the UK. It had one significant difference from Sardex in that all three of us believed that it had to be a mutually-owned network. We were clear that just because it had worked in Sardinia (currently handling over 50 million euros’ worth of trade per year, without money), that didn’t mean that a similar scheme would work in the UK. Sardinia is a small island with a strong local culture (but even so, they still employ brokers to encourage members to trade).

From the start, OCN members and potential members were telling us that most of their trade was with local suppliers and customers, and they were reluctant to join a national network and move away from trusted trading partners. Also, modern mutual credit pioneer Thomas Greco, in his book the End of Money and the Future of Civilisation, and Mr. Credit Commons Matthew Slater, in his white paper, were both saying clearly that mutual credit groups need to be small and based on trust – and only then should they be federated to the regional, national and global level.

That’s where we were when Covid happened, with its associated lockdowns. We realised that mutual credit networks were going to be essential to support small businesses and communities that were going to have very little money. Oli left to do other good things that deserve support; and Dil and Dave focused on helping build small-scale clubs that can be federated, ready to offer to communities, post-Covid.

Building a team

The idea we had at the time was that in a credit-crunch, post-Covid scenario, there would be lots of businesses operating below their full capacity, and that by coming together with their trading partners and agreeing on a mutual credit approach, they could sell some of that unused capacity into the mutual credit marketplace. We described this ‘capacity clubs’ proposition and invited a range of people that we knew – with skills and experience ranging from finance, coding and business to governance, social enterprise and local authorities – who we thought could help make the idea happen.

Rather than start a new organisation, we asked if people thought this idea had legs, and if they’d participate in some working sessions to talk about how we might make it happen. We were encouraged by the number and quality of the people who wanted to be involved. The first thing we discussed was the possible routes to market for the ‘capacity clubs’ idea. We identified three separate routes:

1. Business-to-business – existing or new business networks.
2. Local authorities and large anchor institutions that are embedded within a particular locality (such as schools, hospitals etc.) that could sponsor a club within a municipality.
3. Community groups.

We then invited people to continue working to develop some service offers that would be real for these target markets – depending on their interests, experience and knowledge. Again, a number of key people agreed to continue. At this point, we started to record hours worked, which would be recognised when there was a surplus to distribute from business activities (i.e. from transaction or membership fees). We called ourselves Mutual Credit Services, and we were convinced that the Credit Commons Protocol would form the basis of our development (here’s an interview that introduces the Credit Commons concept). Matthew and Dil had by now developed the protocol described in the white paper into working software that would manage a local ledger and transactions, and crucially, to link ledgers so that transactions can happen between them.

Next week: a basic explanation of the Credit Commons idea and how it works.