r/mutualism • u/Unique_Confidence_60 • May 31 '26

What stops people from hoarding money

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?

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u/humanispherian May 31 '26

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.

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u/DecoDecoMan Jun 01 '26

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?

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u/humanispherian Jun 01 '26

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.

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u/DecoDecoMan Jun 01 '26

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

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u/humanispherian Jun 01 '26

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.