The Credit Commons Protocol is designed to enable communities worldwide to use mutual credit as a basis for collaborative exchange. These groups can use the same protocol to recursively federate across a number of layers to form a fractal-like ‘tree’ arrangement. Individual members can be thought of as ‘leaves’; the associations they form (at the town and district scale) as ‘twigs’, through regional and bio-regional ‘branches’ to continent-scale branches connected to a global ‘trunk’. This structure is intended to simultaneously provide two qualities previously considered antithetical — strong local trust on the one hand, and large-scale economic network effects on the other.
Mutual Credit Service’s business model is designed around widespread adoption of the Credit Commons Protocol (alongside our other collaborative finance mechanisms). The only growth model which makes sense for the Credit Commons is one which is widely described as ‘scale out’, as contrasted with ‘scale up’. In the latter mode, a single network aims to achieve a dominant position in its sector. This model is often described as ‘viral’ or ‘memetic’ in nature. There are two strong reasons why this approach cannot followed in the development of a Credit Commons economy:
The behaviour change required is ‘complex’, meaning that a core condition for ‘viral’ grassroots adoption is not met;
The requirement for Credit Commons groups to be bounded ‘locals’ does not support it.
The scaling out growth model is both more difficult to achieve, and more enduring in its impact. It proceeds by formation of new nodes, which are linked together by some shared set of understandings. These require significant social reinforcement to achieve lasting adoption.
The Credit Commons economy will see most value-producing members — businesses of all kinds — connected into local trading groups and networks with other businesses with which they have some commonality (of place, industry, sector etc.). An important feature of these networks, if trading trust and social reinforcement are to be maximised, is that these groups are fully mutual in character — mutually owned and mutually governed. There will also need to be Credit Commons layers operating at the community level which will interact strongly with the B2B networks, but the latter are considered by MCS as the basis for commercial viability.
These networks will be numerous — local groups, groups of groups, and regional and inter-regional exchange networks with larger businesses as direct members. Although all tiers of the network will carry transactions using the Credit Commons Protocol, the character of networks of different scope will differ: local and regional networks will consist mainly of value-producing SMEs and groups of these, whilst members of the largest tiers will be groups representing thousands of value producers.
At the same time, it is likely that many of these groups will lack some of the required attributes (desire, technical experience, and other capacities) to self-manage all aspects of their network.
The context to which MCS’ business model must be fitted is therefore the existence of a large number (many tens of thousands) of B2B networks — each owned and governed by its members, linked recursively into groups of groups across multiple tiers, with varying needs. To match this decentralised structure, we intend to become a social franchise — empowering local entrepreneurs to adopt and adapt our models to suit the needs of their context. We will therefore act as ‘founder’ and ‘service’ members of all sorts of networks, earning fees for whatever services the group, through its mutual governance processes, chooses to outsource. Of course, at the outset, most, if not all, local MCS teams will be principal co-founders, and thus these groups will, by default, use MCS’ services.
However, offering services to a single local business group — with transaction fees that are competitive with more typical financial service providers such as banks — is not likely to provide sufficient income to support an enterprise. It is at the regional level that viability for MCS franchises will likely be achieved, since working as the service member across several sub-regional tiers is expected to deliver a viable income for a small business with several employees. At around this size, economies of scale and transaction volume will coincide to provide a ‘sweet spot’ for the lowest tier franchises.
Higher-tier networks that connect regional tiers will operate as transaction routing exchanges. Numbers of transactions will be high, and the volume of trade will mean that very low transaction fees will provide significant revenue, which will be required in order to provide necessary levels of service, reliability, and ongoing development work. These ‘main branch’ and ‘trunk’ networks will require significant and consistent services of a professional character, just as would be expected of a major global financial institution — in the fields of technology, economics, policy and legal development, dispute handling, political advice, guardianship, and custodianship. This structure provides for ‘career progression’, and also suggests the welcome prospect that, as the network grows, it will begin to support educational, training, and professional associations (some of which operate outside the MCS social franchise) to develop these capacities.
A core value proposition for a local trading group to associate with an MCS-supported Credit Commons network — beyond the simple access to a larger and more diverse selection of trading partners — will therefore be the availability of support across these ‘service expertise’ areas, which would not be economical to provide at their own level. A group needing help with a situation beyond their capacity will have access to support from the MCS business serving the higher network tier of which they are a member.
It is considered essential, though, for the widest and fastest spread of the Credit Commons economy, for all of these service relationships to be contractual, subject to variation and cancellation. Indeed, it is assumed that, on the one hand, groups will in some cases choose to be entirely self-managing, and on the other hand that competitors offering similar services will arise.
Although higher-tier MCS networks will also be constituted as mutuals, and services likewise provided on a contractual basis, it is unlikely that the founder service members will be replaced — cost and risk will be too great. This will mean that, as the founder of the first such global network, MCS will not likely be removed. This does not, though, mean that it will be possible for MCS to achieve a monopoly position — the open-source nature of the Credit Commons Protocol, and the autonomy of the twigs and branches of the network, will mean that competitors will be able to build other large networks, ensuring choice.
These conditions make ‘opting in’ to the Credit Commons economy a low risk, net-positive choice for any business/business network, combining as they do mutual control and ownership with a choice of expert service provision. They will not be so willing to engage if it becomes clear that, far from regaining and building economic sovereignty with their peers, they are in fact contributing to the construction of yet another extractive walled garden which treats them as ‘cash cows’.
Similarly, it is worth noting that several of the services described above require some ‘distance’ from immediate commercial concerns. The health and sustainability of the economy as a whole, and its relationship to the environment — both human society and the biosphere — require outside perspectives. In designing the governance and power distribution across the MCS businesses and the networks they support, we will look to the Credit Commons Society, and to clear definitions of powers and rights between modes.
Ultimately, the Credit Commons economy is not something that can be ‘built’, but rather something which can only ‘emerge’ from a network of trade with the right characteristics. A biological analogue here is a forest — it is possible to plant millions of trees, but whether a forest that lives will emerge is not guaranteed. For this economy to grow, to be viable, the right conditions must be offered, developed, maintained. In return, as with forest gardening, growth will provide a return on investment, and sustainability will provide a resilient, good living. Success will mean that the Credit Commons Protocol becomes a ‘Visa for the 21st Century’—achieving a version of the ‘chaordic commons’ envisaged by Visa’s founder, Dee Hock.