Today I’m talking with Dil Green, who is a member of the Lowimpact.org co-op. He used to be an architect, and was a founder member of Brixton LETS, and is now on the team of the UK Mutual Credit Network. We’ll be talking about how mutual credit and the viable system model can be used to build a new economy.
Dave: Dil, tell us a bit more about how you got to this point?
Dil: I worked as an architect for 30 years, until a couple of years ago. In my study and practice, I came across Christopher Alexander, who had invented a technique called Pattern Languages, initially for addressing architectural design, but which I quickly realised was a brilliant tool for helping us poor humans to map and approach design problems in all sorts of complex systems, including human economics and finance. That helped me get better at understanding systems, dynamics, complex systems interactions. I’ve always been quite ‘alternative’. I was a founding member of a housing co-op 30 years ago (which didn’t go anywhere), and a founder member of another co-op called Brixton Common Land in the late 90s, trying to offset gentrification in Brixton. It still exists and does own a building, although it didn’t stop gentrification. 2 or 3 years ago, I began to be clear that the coming climate emergency, and probable financial emergency, or slow crash, was coming too quickly for architectural work, no matter how wonderful, to be really able to change anything. I was building eco-buildings, but the number of buildings I was going to be able to complete in the coming 10 years weren’t going to amount to ‘a hill of beans’.
So I decided to spend the rest of my productive life, and apply my skills and experience, at a deeper systemic level. After looking around, it seems pretty clear to me that economic and financial systems are at the root of an awful lot of things that are going wrong at the moment. From working with Brixton LETS 20 years ago, and doing Matthew Slater’s Money & Society MOOC, and reading fairly widely, I saw that work was needed there, and that mutual credit was an important plank of that work.
Dave: Yes, I wanted to talk to you about how we build this new economy that’s required, using mutual credit as an exchange mechanism and the viable system model as a governance system. I’ve worked in the environment field for 25 years. We have to stop damaging nature, otherwise the future is going to hold some horrors for humanity. Nature keeps us alive and healthy. We can’t stop damaging nature as long as we have an economy predicated on constantly increasing consumption. We need a new kind of economy – but how are we going to achieve that? The parliamentary route? Can we vote for a different economy? Violent revolution? Divine intervention? Nothing’s looking likely – so how?
I agree that reformism is probably going to be too slow; violence is too risky, and often ends up with unintended consequences of a fairly unpleasant kind, and divine intervention would be lovely, but I’m not going to hold my breath. It’s holocaust day today, and he didn’t step in to stop that, so maybe he’s had enough of us. So I think it’s up to us. Urgent change is really needed, and we can’t hang about, so as I said, I’m looking for the deepest systemic level at which I have the capacity to do something useful.
There’s a woman called Donella Meadows, who was part of the Club of Rome that wrote the original Limits to Growth report in the early 70s, and who carried on doing that sort of work for the rest of her life, thinking about dynamic system change, complex systems and sustainability. She’s written a really good paper that sets out the various different layers of a system in which you can hope to interact – starting with simple things like changing your own lifestyle, and the deepest thing is to change the culture. Looking at my capacities, and where we’re at, it seems to me that the structural dynamics around the creation of money are conditioning at a very deep level, pretty much everything that this industrialised, global civilisation can do.
Very clever people have come up with other ways of structuring and making the rules for a means of exchange that are just as capable of supporting a complex economy, long supply chains, fancy stuff like the computers and technology that we’re using to record this interview, without requiring endless growth to service debt, and therefore without implying capitalism and extractive, unsustainable modes of production.
That seems to me to be worth spending time on. If we can make mutual credit a viable, complementary alternative for many people to spend some or all of their time in – that, just by itself, will change the nature of their economic relation to consumption.
I’m interested in talking about how we federate the non-extractive economy, rather than growing big institutions. Why have attempts at federation failed?
The sort of economies we want to become the norm are ones that are sustainable, and that means living within our means, not continually growing for the sake of growth. So when people set up co-ops or mutual credit networks or other kinds of non-extractive value-creation systems, whether economic or gift economy, by their nature, they don’t have a need to grow rapaciously. When they get big enough, they slow down. That’s exactly what we want to see – we want people to have enough to live decently, but not to feel the need to accumulate more and more and more.
So great – we want to build these systems, but the problem is that capitalism (and not just ‘fat cat’ capitalism – but the whole system of an industrial economy based on debt-based scarce money that we’ve all been living with for hundreds of years) is growing exponentially, and really, the internet and west-coast US venture-capitalist culture has lit the blue touch paper, and the rate of expansion is just spiralling out of control. So we have a real growth problem, and a problem in reining that in with these non-extractive economic modes that we want to replace them with, because they don’t grow fast. So this is where this word federation comes in. What we want is not a growth of scale, but a growth of impact, involvement. We want the non-extractive sector to grow super-fast, and for people to want to actively step out of the extractive, capitalist, rat-race sector and into this non-extractive sector.
So if we can get, within a reasonable amount of time, millions of people, and within decades, billions of people, getting their subsistence from non-extractive, sustainable economies, then that sector has to grow really fast. But it depends on trust, really, and human scale. So it’s got to grow as a network of human-scale organisations. It can’t be a case of 2 billion people on Facebook. That’s not a human-scale organisation. So this idea of federation, of many, many human-scale organisations being able to interact with each other, using modern technology and sophisticated communications and management techniques, to be able to produce things like computers, mobile phones, high-tech medical equipment, so that we can have a decent standard of living. Those are very complex supply chains, industrial processes – all of those things need to be replicated without the huge machinery of capitalism. So federation – wise and effective interaction has to be the way forward.
So how might basing that federation on a mutual credit exchange system and a viable system model governance system work?
Let’s leave mutual credit to one side for a bit, and talk about this VSM idea – because I know you’ve done an interview with Trevor Hilder, who I know fairly well. VSM stands for viable system model. It’s a fairly nerdy, technical subject, but what it really comes down to is a much more thoughtful and adaptable management model for human institutions, or any system really, than the straightforward management / workers, hierarchical, top-down model that we’ve inherited from the early 19th century, which is very crude. We tend to split people into workers and bosses, and that’s all there is. The VSM is wiser than that in that it says that organisations have to have different modes of operation to be able to persist in their environment and work effectively. There’s production – people doing things; then there’s co-ordination – different sets of people doing things need to be able to work in harmony to produce effectively and without waste. There is of course a command-and-control function there, which communicates to various productive teams what ought to be done next and to make sure that standards and things like that are working.
But as well as those 3 modes that we might understand, it introduces 2 other modes, one of which it calls guardianship, which is about keeping an eye on the reason we’re all engaged in whatever the system is doing in the first place – what is our purpose, why are we doing this? And making sure that short-term goals or environmental buffeting or just inattention, don’t let us go astray, and something we set out thinking was really great might end up existing just for the sake of existing, or existing to make someone rich, or something almost by mistake. So there’s a guardianship function that organisations need. And then there’s another function which is sometimes called future and forward. It’s basically research, sitting back and looking at the wider context, and making sure that surprises, new information from the environment, are incorporated into the action of the organisation in a timely way.
I want to ask specifically how the viable system model works together with mutual credit to bring about this federation of the non-extractive sector.
For me, the VSM model and mutual credit need to also be considered, almost fused together, through this thing that lots of people might have heard of, called the multi-stakeholder co-operative approach, where you look at all the various different players in the system, and you acknowledge that they may have different value propositions – i.e. the reasons they are there are different – and you try to design the functioning of the organisation and the governance of the organisation, so that those different stakeholder groups can all interact together. They all need the organisation to achieve its purpose, so for them to succeed, they need all the other groups to succeed.
Are you talking about the federation itself, that exists as a multi-stakeholder co-op?
This is another key element of the VSM. At every level of the system, you have the same kind of structural thinking. So you have recursion – so within a small work team of 5 people, you might have someone who spends some time remembering the purpose; but when more of those groups come together, you need to have a wider version of all the necessary systems. So if you think of a federation of mutual credit networks, which is what we’re talking about, in order to be able to intertrade between networks, they all have to have access to some accounting system, some trade verification systems, some business directory. Who maintains that? That will be a specialist set of people – stakeholders who will maintain software, deal with handing records to the government and so on, on behalf of all the members. They aren’t the same as an ordinary member who just trades. You get different stakeholders at all the levels of scale. You might have a neighbourhood mutual credit network, a bit like a LETS scheme, where you might trade DIY tools and surplus produce. But then several of those might be joined into a town-sized network with shops and businesses in. Then several towns might be joined in a regional network, and at all levels of this federation you’ve got these different stakeholders. They might be investors – these things will need money to get started. They have very different value propositions from members, and so we need to align all these people very carefully.
There’ll be some things we can’t get from the non-extractive sector yet – like laptops or cars. What do we do then – just suck it up and do the best we can until we can get them from the non-extractive sector?
There isn’t really anything else we can do. At the moment, in the UK, pretty much all the electrical power is generated by huge, international businesses. We’re not going to change that overnight. So for the first couple of phases of building this new economy, we’ll have a mixed economy, where we’re holding our noses and doing business with organisations that we think are probably, on balance, destructive. We have to live. The key for me will be making it as easy as possible at every stage, for the next target group of conventional businesses to be able to transition to mutual credit – either fully or partially, as they go along. I’ve been thinking about this with banks, which are closing branches all over the country. One reason they’re doing that is that they’d really love to have no cash. They’d love to have a cashless society, because it’s very cheap for them to run that – they could sack a huge proportion of their staff, and just run everything with computers and a few hundred people at head office, with everyone using smart cards to pay for everything. But actually, that’s a two-edged sword for them, because mutual credit works purely on information. It doesn’t have physical tokens, like cash. So actually, once the banks implement those systems, then at a certain level of scale, we can invite them to become servicers of mutual credit. They won’t earn interest, so they’ll have to make their money doing something else. But here comes mutual credit – it’s a growing thing. Those sorts of things are fun to think about now, not very seriously, but in the future, that will be the way to think.
I guess a non-extractive economy will involve co-ops of various descriptions, sole traders and public sector workers? Anything else?
Co-ops are the obvious place to start. There are a number of great things about working with co-ops, beyond the obvious reasons. Co-ops have immediate access to members, because all of the workers in a co-op are members of the co-op. We’re planning to start this UK Mutual Credit Network as a business-to-business network, but to expand throughout the economy, it needs to be able to serve individuals, and the individuals within a co-op, that’s in the mutual credit network, will be a great place to start. At the other end of the spectrum, the co-op movement already has access to government – it can go and talk to government and tell it what we need. So the co-op sector’s great.
The public sector is another brilliant target, that we’d be looking at a lot sooner than at energy generation companies, because most of the work that local authorities do is labour power. They employ local people to deliver local services. That’s tailor-made for mutual credit, and in an era of austerity – even if the cash floodgates are opened – it’s still going to take 15 years for local authorities to build their services back up to where they were in 2010. So mutual credit networks can massively leverage the power of local authorities to do great work.
So sole traders – they’re basically individuals on steroids, really. Probably the main issues there will be annoying ones like their regulatory status, and whether this counts as consumer credit. So for sure, all of those sectors should be folded in within a reasonable timescale. Once you get local authorities, you can next look to hospitals etc, then suddenly you’ve turned a huge corner, because those organisations employ tens, hundreds of thousands of people. Once those employers realise what they can do with mutual credit – how it completely unlocks the constraints of scarce money in delivering the services that they strongly believe in as a social good, that will be enormous.
And how do we keep the individual units of this new economy small, and federate them, rather than allow them to grow huge? I’m thinking of the Co-op Bank in particular, which grew huge, stumbled, and got swallowed whole by a hedge fund, and suddenly there’s no co-op bank in the country. If it had been a federation of small, local co-operative banks, then if part of that federation fell over or got bought out, then we’d still have the rest of the federation. How do we keep the units small?
Probably, constant vigilance. On the other hand, it seems clear to me that mutual credit, at least to start with, is going to be less economically useful than the pound in your pocket, which can be spent on anything that’s for sale in this country. In a mutual credit network that’s just starting out, with a few thousand members, you’ll only be able to be spend on the things that those few thousand members provide, and that’s going to be limited. So as a purely economic means of exchange, it’s not going to be as good as pounds for some time to come. So what makes it better? We have to look to things that are not purely economic, and those are: trust, community, solidarity – and it turns out those things are economically useful as well. You’ll give more credit into a network where you know that the people in it are people you’ve met, and you understand their ethos, than you would to an anonymous, corporate exchange network.
So I think there’ll be a natural tendency for these networks not to grow too big. As I’ve said before, the nature of non-extractive economics is that people tend to grow until they’re happy, and then just stop – whereas extractive businesses try to grow and grow and grow.
They have to keep increasing returns to their shareholders, don’t they?
Yeah. And also, because they’re in a competitive environment, even if you run, say, a cafe, and you think you’ll just run it until you retire, because you make a decent living and you like your customers – but suddenly on one side you get a Cafe Nero and on the other a Starbucks, and your business goes. So people feel that they have to grow, even if they don’t want to, in the capitalist sector. So we need to leverage this social side of the mutual credit networks, and that will tend to limit the scale of the individual networks. People will like to be in networks where they know they can trust people, and that will give them a value that adds to the pure economic value of the currency units that you get.
It adds to their quality of life?
Yeah. I was active in Brixton LETS scheme for four years or so – but it stopped being a viable network for me about 20 years ago, and I stopped being an active member. But the acquaintances that I made through the trading that I did over those years have lasted me 20 years, and I’m knitted into the fabric of Brixton. I have this great network of acquaintances, and when I see them, I don’t have to say ‘oh my gosh, we haven’t seen each other for so long – we must meet up more often’ – I can just say ‘hi, haven’t seen you for a few years – how are you doing?’, and you have a chat, and you’re just happy that they’re there. It’s a big thing, in modern society.
What will be the biggest barriers to this kind of approach, do you think, and how might we overcome them, or get round them?
Lots of barriers. The biggest might be the stuff inside people’s heads. We’ve had hundreds of years in the West of scarcity-based money, debt-based money, monopoly-controlled money, commodity ideas about money. Those things have worked their way into the culture. They’re part of the way we grow up, thinking about how money has always worked. When you say to people that it doesn’t have to work like that, they sometimes get a bit leery. If you say: ‘I know more about money than you do – if you join in with this new scheme, it will be very good for you’, people will think ‘hmm, here’s someone talking about something I don’t really understand, and they want me to invest time or effort into it – I think I might get ripped off here’. That would be a standard response that people might have. We’re going to have to develop a lot of soft culture around what mutual credit is.
Maybe we need more accessible information – videos, talks, books, blog articles…
And games, cartoons, stories, comics, films – it’s probably going to take hundreds of years for some of the deeply-ingrained feelings about money that this culture has, to work themselves through.
Also, the extractive sector are going to want to keep extracting, and they have a lot of power. What’s to stop them buying up parts of the federation, or leaning on governments to legislate against us?
First, we have to craft our legal constitutions, checks and balances and governance agreements really carefully. That’s crucial – so that what happened to the building societies can’t happen to us. We have to put these poison pills into our constitutions, that make it not worth the bother for financialising institutions to come and try to rip the value out of the networks. As to legislation, stacking the decks against us, that’s bound to happen. If you look at the history of mutual, solidarity finance institutions that the working classes have built, like building societies, mutual assurance societies etc. – the kinds of things that the disadvantaged tend to group together and build – any of those that become successful tend to attract lots of legislation, which are framed as: ‘there have been some failures in this sector, and some people have lost their savings, so you can run a mutual bank, but you have to have £20 million as collateral before you can open it’. That sort of thing is bound to happen. So what we have to do I think, is to frame the legal structures of our organisations as closely as possible to existing organisations, so that if they try to legislate us out of existence, they’ll also be legislating conventional businesses out of existence.
Where do the resources come from to make this all happen?
We have to sort of build this out of thin air. We’re saying that we’ll build a sector that won’t produce massive profits. It’s a non-extractive sector. That means it will be difficult to get the kind of investment you might think of for building a different kind of business to come in. However, there are some very smart people around. A chap called Chris Cook, who’s on our advisory panel, has come up with this particular approach, which allows investors to get a fixed rate of return, and only on the basis that the project succeeds. So there will be a vehicle for patient investors, who share the same analysis of impending slow crashes in the environment and the financial system, and who want to build a resilience against that, to make hard cash investments that will repay them decently in hard cash terms, as the mutual credit system expands. I think we can design legal and financial systems that will make those investments attractive enough, and safe, in terms of not giving away control or ownership to people who are only putting in cash.
Do you honestly believe that there’s widespread support for a movement like this?
No, I don’t think you could call it widespread. I think the door is there to be pushed open in progressive financial circles – progressive economists, people like Positive Money, Good Money, Rethinking Economics, New Economics Foundation, Kate Raworth’s Doughnut Economics. There’s a lot of new oxygen in economics for non-orthodox apporaches. There’s an amazing woman called Stephanie Kelton in the US who’s pushing modern monetary theory ideas, which are half-way towards mutual credit to be honest, all the way to quite right-wing business people, who are giving mutual credit quite a good reception. So I don’t think the general public, or chief financial officers in business circles, have any real clue what mutual credit is, but I think the chances of us getting good support and constructive engagement with the progressive finance and economics communities are pretty high. And that I think will lead to some investment, and probably to some regulatory simplification. If we get support from people talking to government, that should help.
To be honest, I don’t think widespread support is going to come until people’s friend tell them that their business is trying this new ‘funny money’ stuff, and you know what – it’s working. It’s going to be not so much about support as about people voting with their feet when they hear their friends saying that they’ve joined a scheme, and their turnover is up and their debt payments down.
I guess it will take off when it’s established, and easy to join.
It’s chicken-and-egg – how do you get there from here? We’re going to have to start with enthusiasts, with people who really want it to work, with people who share our analysis, and we’re going to have to plough through a couple or three years of fine-tuning things, pump-priming, building networks, refining the software, the accounting, to make it as easy as possible to use. That’s why I think we need to be thinking about raising finance to get us through those periods. We can’t work in a ‘pull ourselves up by our bootstraps, even if it takes 20 years’ modality, because capitalism’s growing too far and too fast, and the climate’s collapsing too far and too fast.
I suppose if it works, it will be quite exciting to have been an early adopter.
Sure – being an early adoper is always an interesting thing. There are ups and downs, but designs and methods we’re thinking of, allowing businesses to participate in a mutual credit network, are carefully structured to avoid anyone getting seriously burnt.
One final question – do you think we have enough time?
It doesn’t matter – we have to do it anyway. It’s the Transition Town argument – will that kind of thinking save our civilisation? We don’t know, but if we don’t try, it definitely won’t work. And if we do try and it fails, who do you want to have been working with – the people who have been building resilience, or the people who’ve been working to destroy things? I want to be with you guys, whatever happens.
OK Dil, thanks very much for the chat.
NB: Dil would like to encourage readers interested in more detail as to how a federation of mutual credit networks might build a wide and deep economy to read Matthew Slater and Tim Jenkin’s 2016 whitepaper, “The Credit Commons – A Money for the Solidarity Economy.
The sort of economies we want to become the norm are ones that are sustainable, and that means living within our means, not continually growing for the sake of growth.
For me, the VSM model and mutual credit need to also be almost fused together, through the multi-stakeholder co-operative approach.
We have to look to things that are not purely economic, and those are: trust, community, solidarity – and it turns out those things are economically useful as well.