[p2p-research] anti-microfinance movement in nicaragua protests usury

[Kevin Carson]

On 11/19/09, Ryan Lanham <rlanham1963 at gmail.com> wrote:

> Default risk is everything with credit.  Since the day money was founded,
> people have lent it and others have defaulted.  The only way to monetize
> labor is the risk of effective slavery.

I don't think default risk would be that significant in one of Greco's
mutual credit-clearing systems.  In his system, members are permitted
to run negative balances on a regular basis, up to whatever limit the
local membership decides to impose (he suggests the equivalent of two
month's services or sales).  If a member continues to run a negative
balance close to the equivalent of two months' wages for his labor,
but the account continues to turn over, that's fine under the terms of
the system.  And if he simply stops selling goods and services, and
his balance ceases to turn over, it's no great loss to the system.
Also:  in a society following the collapse of the official currency
and the capitalist credit system, where such credit-clearing systems
were the main source of liquidity and credit, there would be strong
incentives to maintain good standing as a necessity for being able to
participate in the local economy.  So the incentives would be much
like those against "skipping out on obs" in Russell's "And Then There
Were None."

> For now, value, collateral, interest and money just seem too elegant, simple
> and obvious to not continue.

But local currency and credit systems tend to proliferate in times of
severe economic downturn, when there's a shortage of conventional
money from the larger economy.  When people with productive
capabilities to exchange but no money in hand need some source of
liquidity, a credit-clearing system would be made to order.

-- 
Kevin Carson
Center for a Stateless Society http://c4ss.org
Mutualist Blog:  Free Market Anti-Capitalism
http://mutualist.blogspot.com
Studies in Mutualist Political Economy
http://www.mutualist.org/id47.html
Organization Theory:  A Libertarian Perspective
http://mutualist.blogspot.com/2005/12/studies-in-anarchist-theory-of.html