The Open Credit Network asks: why can't we, the people, create credit for and amongst ourselves? We could save both money and the planet

from NonCorporate.org

We’re delighted to run this piece by Oliver Sylvester-Bradley, founder of Open Coop (featured here many times), announcing the alpha launch of the Open Credit Network. More below:

System change demands economic change

Oliver Sylvester-Bradley, OCN

E. C. Riegel recognised over 70 years ago, "Money must be seen as the means of mastery of all economic and political problems. Until we have mastered money we shall not master any of our problems."

As Bill McKibben, the founder of 350.org, outlines in his excellent article Money Is the Oxygen on Which the Fire of Global Warming Burns, the major global financial institutions and insurance companies are still supporting fossil fuel projects – far more than low-carbon solutions [see our blog on McKibben].

Bill suggests that moving our money to ethical suppliers '“could, in fact, become one of the final great campaigns of the climate movement.” Let’s hope so.

But on its own, moving our money will not be enough – because it ignores what Buckminster Fuller taught us: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” 

Bill’s article also ignores another fundamental truth. Our economy is built on the flawed premise that we can continually extract value and pollute our life-supporting environment without any ramifications.

This model, the “extractive economy”, has created the climate emergency – and we will not be able to fix the climate until we change our economic model.

If we want to stop the climate crisis, and address the other problems the economy is causing, we have to change the way that money is created.

Banks have had a monopoly on credit creation for too long. Instead of relying on banks to create toxic, debt-based money for us, we can create credit ourselves - and avoid paying interest too.

By using our power to create credit we can bypass the extractive economy and pave the way for other changes, like the way we account for carbon emission. Because, in a new, collaborative economy which is owned and governed by its members, we the people collectively decide how things work.

Money does not have to be created as interest-bearing debt by banks. There is no law stopping us allocating credit among ourselves, and our businesses, and trading outside the extractive economy.

Money is simply an agreement – so if we want new money, we only need to make new agreements.

This is the theory that E. C. Riegel recognised. Riegel’s ideas, from the 1930s, suggest that a simple and dependable means of exchange would do more to enhance the dignity and well-being of the common man than any political reform.

“When man has mastered money he shall have mastered not only his economic problem of prosperity but also his political problem. For he will see that money has no place in state functions. And with the money power being entirely in his own hands, he will easily master the state and clearly define its services.

“Thus money must be seen as the means of mastery of all economic and political problems. Until we have mastered money we shall not master any of our problems.”

A step towards a radically regenerative economy

This theory is now being put into practice by The Open Credit Network. As part of the alpha launch of their new mutual credit network, they are offering the first 350 businesses to sign up free membership for life.

The Open Credit Network is a new kind of trading network built on trust. Members can trade with each other without the need for conventional money by using mutual credit.

Mutual credit is a tried and tested method of trading which provides interest-free credit, avoids bank charges, provides greater liquidity, avoids discounting and saves cash for essential purchases (find out more about the benefits of mutual credit).

As soon as a business adds their offers and wants to the directory, the OCN software automatically proposes new suppliers and customers for that business, helping them grow whilst also offering them interest-free credit. The OCN Membership Agreement is an example of a new agreement that provides an alternative to conventional money.

OCN has lofty plans. To start with, the credits that members trade are equivalent to £1 GBP, making it easy for members to price their goods and services. But in the future OCN will look to move away from GBP as a measure of value, possibly using a basket of indicators instead. This is in order to avoid the negative effects of any inflation or deflation of the pound.

OCN is a unique mutual credit system that has been designed using free/open source software and cooperative governance, giving the members full control over the way the network evolves, fees, pricing and all other aspects of governance.

These key decisions mean that the network will evolve for the benefit of its members, providing a genuinely alternative means of trading with fundamentally different objectives to the present, extractive economy.

Mutual credit alone will not be enough to stem the rapacious growth of capitalism or change the entire economic model. But it does provide a unique and essential starting point for a truly alternative, democratic economy which puts people and planet before profit.

As membership grows and trading expands, OCN aims to help establish other networks in other communities and countries, using the same free/open source software and compatible, cooperative membership agreements, paving the way for a fully federated global credit commons.

With enough members on board it would then become possible to leverage these communities to launch other economic products. For example, a cooperative bond - acting as a store of value and providing the much-needed capital to launch other democratically-governed platform co-ops.

As with all system-level interventions, The Open Credit Network seems like a highly ambitious plan with no guarantee of succeeding. But given the multitude of system-level issues currently plaguing the planet and the complete lack of successful system-level interventions, such ambition seems essential.

As a range of top-level capitalist companies expect climate change to cost them $1 trillion in 5 years, now seems like the perfect time to explore alternatives. Especially those that provide a genuine mechanism to change the fundamental nature of our economies - instead of offering ‘sticking-plasters’ and other low-level interventions and greenwash dressed up as genuine change.

Building Riegel’s vision using free/open source software and cooperative governance has never been tried before. If the businesses that recognise change is essential are really prepared to create the change then perhaps we will see them sign up and start accepting mutual credit, as a step towards a radically different, regenerative economy.

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The Open Credit Network has a very useful About page - and the video below explains the idea of mutual credit at the heart of this scheme: