Governance is a process, not a thing. In recognising this, and given that our projects are in their early days, we know that our understanding of governance processes is not fully developed.
On the other hand, we have sufficient experience of a wide variety of organisations to know that failing to plan around governance issues from the outset is a mistake. Once an emergency arises, it is too late to discuss governance structures.
Accordingly, we have developed some core governance considerations and assumptions, to provide a foundation.
In brief, we pay attention to Viable System Model thinking, and introduce sociocratic techniques to implement varieties of Elinor Ostrom’s commons governance principles.
Governance for all projects is developed as part of the co-design process, but we start with some base assumptions:
Governance works best at human scale – with people, directly interested in, and affected by, the outcome of the work in social settings.
While a group is small, this can involve all members who care enough to take part. As group size grows, different approaches are possible to maintain human-scale conditions. These need to be carefully designed to avoid issues like group-think, management or clique capture, and decision fatigue.
Thankfully there is ample literature and experience of such approaches from deliberative democracy.
A base assumption for Mutual Credit Services is that economic contexts should be owned and governed by their members on an equitable basis, with mutual agreements as the basis for membership. This establishes several important things:
Members have rights and responsibilities as members, distinct from non-members – the context is bounded;
It puts in place a baseline of equal status;
Control lies in the hands of the membership – although they might choose to delegate some or all decision-making and operational control, it is always possible to ‘take back control’;
It emphasises that the value of the context lies in the voluntary association of all the members;
Need for/imposition of state regulation is decreased – members are not deemed to be in need of protection from a possibly negligent or corrupt centralised controller.
Common Pool Resource
Economic contexts as developed with groups by MCS are considered to have the characteristics described by Ostrom as ‘Common Pool Resource’ (CPR) conditions. In brief, these exist where there is a resource which members of the context ‘manage’, in order to ‘exploit’ – such exploitation presenting the risk of vitiation. In our work, we typically describe this resource as ‘trust’ or ‘willingness to collaborate’.
In Governing the Commons, Ostrom, on the basis of extensive research into many functioning commons contexts worldwide, identifies key ‘Design principles for Common Pool Resource institutions’, as follows:
Clearly defining the group boundaries (and effective exclusion of external un-entitled parties) and the contents of the CPR;
The appropriation and provision of common resources that are adapted to local conditions;
Collective-choice arrangements that allow most resource appropriators to participate in the decision-making process;
Effective monitoring by monitors who are part of or accountable to the appropriators;
A scale of graduated sanctions for resource appropriators who violate community rules;
Mechanisms of conflict resolution that are cheap and of easy access;
Self-determination of the community recognised by higher-level authorities; and
In the case of larger CPRs, organisation in the form of multiple layers of nested enterprises, with small local CPRs at the base level.
Governing the Commons, Elinor Ostrom, 2015, Cambridge University Press.
Nondominium, P2P Foundation Wiki, wiki.p2pfoundation.net.
The Viable Systems Model Guide, Jon Walker, 2020.
Membership Agreement – Alpha Phase, Open Credit Network, opencredit.network.