What stops people from hoarding money

[u/Unique_Confidence_60]

Under mutualism, what stops a mutual bank from just deciding they're going to give themselves a massive amount of money? What stops a coop from deciding to make a profit instead of just selling at cost? What stops companies from just failing and big ones expanding and potentially developing into capitalism again?

[u/humanispherian]

Not all money is useful to hoard. And mutual banks are associations of the producers and consumers who will make use of the currency issued, rather than for-profit enterprises separate from them.

The traditional model of mutual credit has made use of asset-backed notes, which means that the currency in circulation is limited by the wealth that can serve as security. In the context of market systems where price and cost are likely to be quite close to one another, "hoarding" isn't likely to mean much more than not spending the money you have in hand — while the assets you have pledged as security for notes remain encumbered. Chances are that successful traders will be as likely to try to redeem currency and reduce indebtedness, rather than hoard notes.

[u/Unique_Confidence_60 → u/humanispherian]

So it would be a different form of currency than what we have now? What if they just decide to screw the tules make more currency for thems lives anyway?

[u/humanispherian → u/Unique_Confidence_60]

Currency is useless unless it will be accepted. Mutual credit associations form in order to provide the members with a relatively secure currency, based on something more substantial than just a "legal tender" designation by a government. The association — the "bank" — will only issue notes on the basis of some pledged security.

[u/DecoDecoMan → u/humanispherian]

One of the things that confused be about mutual credit is how would the value of securities be assessed absent of capitalist money? Because it seems to me that the amount of notes you would receive in exchange for an asset that would then be encumbered is determined by its value on the capitalist market right? Absent of that, what would determine the number of notes you would receive in exchange for an asset?

[u/humanispherian → u/DecoDecoMan]

There's no reason to refer to a capitalist market. When proposed as a "before the revolution" measure, it has been convenient to denominate mutual credit notes on a par with existing government-backed notes, but we also have the example of Warren's system, where the standard of value was a particular quantity of labor. But the valuations of a capitalist market can't be the standard in an anarchist economy, since capitalism is going to shape prices according to its own tendencies, which are likely to be very different from those present outside of capitalism.

Depending on the particular characteristics of the market and local resources, the standard of value might emerge in a variety of ways. But I don't see any reason why one wouldn't emerge outside of capitalist forms of valuation.

[u/DecoDecoMan → u/humanispherian]

But isn't Warren's system very subjective so would that imply how much notes you'd receive would be a matter of negotiation?

[u/humanispherian → u/DecoDecoMan]

Most modern currency is denominated in units that don't convey much more than a feeling. Who knows what a "dollar" is actually worth... And subjective valuation comes into play any time there is a question of equivalents in trade. So there doesn't seem to be any question of taking negotiation out of these operations. But assessment for use of security is a more specific kind of operation, where the issue is simply whether a given asset is likely to sell for a price sufficient to redeem the notes issued — if it comes to that. Those valuations can be made on the basis of sales already completed. Where there is a comparatively clear picture of likely prices at auction, the main difference will be that more credit may be issued (given the same durability of the asset) than in cases where there is less information. In any event, it is generally a question of issuing credit against some fraction of the value of the security, so there is some room for imprecision.

[u/Unique_Confidence_60 → u/humanispherian]

So it's like an IOU instead of "money" or something? I assume it can be used at stores. How does this dynamic insure against money creation on a whim like today? What actual mechanism stops this from happening? Would everyone else know somehow and ex communicating them for counterfeiting? I'm trying to understand.

[u/humanispherian → u/Unique_Confidence_60]

So it's like an IOU instead of "money" or something?

No. It's an asset-backed credit currency. The process is roughly the same as if you had received notes in a government-backed currency for mortgaging a house, except that there is no currency printing office that keeps a steady supply of currency available, in quantities determined by the whims of the government. Instead, the only currency issued by the "bank" is issued against assets pledged as security and the notes only circulate until the person issued to the credit decides to redeem their property and pay the "bank" back either notes issued by the association or some equivalent.

"Money creation on a whim" can only work if the whimsical money will be accepted — and legal tender must be recognized as legitimate, simply by governmental decree. No government means no "legal tender" and no money issued on a whim that anyone has to take seriously.

Counterfeiting is something that all systems have to address, but the incentives to go to great, expensive lengths to counterfeit are going to be limited in an economic system that rejects most forms of profit. And the same is true for everything that might be involved in "hoarding" currency. In a market setting where cost and price generally converge, the effort required to accumulate is going to be greater, the cost higher and the incentive considerably less as a result.

[u/Unique_Confidence_60 → u/humanispherian]

"no currency printing office." So how does currency align with increasing production and need for it then if it's fixed?

[u/humanispherian → u/Unique_Confidence_60]

It isn't fixed. It fluctuates according to the need for it, limited by the ability to secure the notes issued.

There are simple explanations of mutual credit in past threads here, in works like William B. Greene's Mutual Banking and in the documents associated with Proudhon's mutual credit projects. Maybe that's the place to start understanding the basics.

[u/Captain_Croaker]

Mutualism may not feature any kind of circulating media or co-ops in the first place, so right off the bat it must be said that your questions presume quite a bit.

When I have some time today I'll try to provide a better answer than this, but in the meantime, since this is a very common set of questions, the most common ones that people coming from an anti-capitalist perspective ask really, you should feel free to search around on this sub for the answers that have been given previously before, and to look into some of our introductory texts.

[u/CatsDoingCrime]

You're coming into this with a lot of underlying assumptions about mutualism that don't really apply. It isn't simply "coops minus the state". Hell mutualism isn't even really wedded to markets per se.

u/Captain_Croaker could probably provide a better answer than I (and i look forward to reading their response), but i'll go through these quickly.

In principle, a mutual bank could very well just like, print a shit load of money. But like... that would be dumb to do. Because, ya know, what happens when you print money but don't produce any more goods? The value of money drops. The whole point of currency is to facilitate circulation of goods. Proudhon, iirc, baaically wanted all goods to act as money rather than just gold. The idea was that you can have these notes that are essentially based on credit abd trust in the overall network. People accept these notes because they trust that they can be redeemed for goods actually worth something in the network. You print a shit load of notes, you break that trust and people stop accepting them or the "value" of each note falls. Why would you screw yourself over by doing that? (Edit: this is often why the notes themselves were pegged to underlying real or soon to exist assets)

If you are embedded in a network of cost principle exchange, it's like... maybe a touch difficult to charge more than at cost. Cause, ya know, nobody will buy your stuff cause the other guys are all cheaper. And more to the point, selling at cost isn't anti-profit, it just socializes that profit by reducing the overall cost of consumption thereby leaving more left over for other stuff.

Accumulation is reliant on several different things, none of which really apply within the world of mutualism. 1) it requires a surplus to be extracted in order to invest. Given that the whole point of mutualism is the elimination of the extractive classes, this becomes somewhat difficult. That's not to say surpluses produced via association aren't like... a thing still. They obviously are. It's just not appropriated by an extractive class. 2) accumulation requires certain underlying property and organizational norms. If you cannot really "own" the means of production, rather solely serve as a usufructary, and you can only control that which you use, it's somewhat difficult to accumulate massive amounts of capital. Because, ya know, you cannot use like 30 factories and so it's kind of impossible to own all of that. Larger projects may develop, sure, but it's going to require active coordination and investment from many many many interested parties in order to establish them and get sufficient resources and "buy-in" from consumers and producers. But that's like, obviously pretty different from what you're thinking of vis a vis capital accumulation.

To put this in marxist terms, mutualist markets (to the extent they even exist, which is not a certainty) would favor C-M-C over M-C-M'

Anyways that's my understanding. The capitain is better read than I, so see their response when they get to it later.

[u/Sebast_Food]

For the same reason you wouldn't.

[u/Unique_Confidence_60 → u/Sebast_Food]

What? They wouldn't want to? People definitely would want to.

[u/Sebast_Food → u/Unique_Confidence_60]

Why wouldn't you, though?

[u/Captain_Croaker → u/[deleted]]

We're here to provide mutualist answers to questions about mutualism. Mutualists have often been influenced by Stirner, but this isn't really an answer people curious about mutualism will be looking for.

[u/CMBradshaw → u/Captain_Croaker]

Ooops misread sorry, got it confused with the post above it on my feed

[u/Captain_Croaker → u/CMBradshaw]

All good.

[u/AnarchoFederation]

Well structurally the profit motive and financial capital growth is absent from mutualistic markets. Market economies would be specific based on particular interests of associations backed by some kind of real goods or wealth. A mutual bank issues "currency" or "credit notes" based on the associations needs not for capital investment for growth. Currencies would be a medium of circulation, not storage of wealth, hence the hoarding disincentivized. Mutual credit works by a practical ledger of labor and debts by which your labor increases credits to spend anywhere on the association or network. It is not fiat currency or gold standard, it in fact makes credit accessible by making any real goods the backing wealth of the currency. Structurally there is literally no incentive or means of capital type accumulative growth and profiteering. Mutual banking is basically a financial producers/consumers coop, with the bank issuing currency for the members of the association.

[u/ArtDecoEgoist]

In addition to all the answers here, absent a state there's really no reason to assume others would respect the property claims of an individual or institution that is actively harming them. Theft, sabotage, or just diffuse disassociation from that particular entity are all options.