A Bank for Co-ops
Via Ecodema:
Such cooperative banking is severely limited, unfortunately, by laws which restrict banking co-ops to the same capitalist rules as the rest of the banking system.
The ideal would be a mutual bank as described by William Greene and Benjamin Tucker, which could issue interest-free credit against any form of collateral acceptable to the membership--perhaps based on the membership of a LETS system.
But the state's banking laws, like licensing and capitalisation requirements, uphold the money monopoly by creating entry barriers and enabling the issuers of credit to charge a monopoly price for it.
There are many ways to provide investment capital specifically to cooperatives and cooperation driven businesses. If we are to build a democratic economy, this kind of organization must become more and more important. It's not enough to talk about cooperation : we need the institutions that will bring in initial capital.
Such cooperative banking is severely limited, unfortunately, by laws which restrict banking co-ops to the same capitalist rules as the rest of the banking system.
The ideal would be a mutual bank as described by William Greene and Benjamin Tucker, which could issue interest-free credit against any form of collateral acceptable to the membership--perhaps based on the membership of a LETS system.
But the state's banking laws, like licensing and capitalisation requirements, uphold the money monopoly by creating entry barriers and enabling the issuers of credit to charge a monopoly price for it.
posted by Kevin Carson | 4:44 PM
7 Comments:
Good work, Kevin.
SM
Thanks!
Under the present system, secured "loans" and second mortgages aren't really loans at all. They simply transform the property of the "borrower" into liquid form, and substitute the credit of the "lending" institution for that of the "borrower."
If it weren't for the state's licensing, capitalization requirements, and other market entry barriers, any group of private individuals could form a mutual bank to perform the very same service for themselves, at cost, on a cooperative basis. The mutual bank would issue mutual banknotes against any form of property that the membership agreed to accept as collateral, for the cost of administration (less than 1%), on the condition that anyone receiving such a "loan" would have to accept the mutual banknotes of other members in payment for his own goods and services. Such a system might operate parallel to a LETS system, with the businesses and trades participating in the LETS agreeing to accept the mutual banknotes.
Since the state's banking regulations make such operations illegal, and artificially restrict the number of firms competing to perform this service, capitalist banks are able to charge a monopoly price in the form of usury.
William Greene's *Mutual Banking* is available online at The Portal (see Links), and also linked from the Suggested Reading of my Mutualist.Org site.
We have credit unions.
What we need is equity funds, mutual funds for providing the direct owner financing of neighborhood improvement projects and inter-neighborhood collaboration on projects of a larger scale.
Yes Mike, we have credit unions. Yes Mike, we need "equity unions." I believe there is ample provision for this even in the law, specifically the Investment Company Act of 1940. It's called a Business Development Company.
The comments to this post (from 08) don't reflect this, but may I blithely assume that by this point you're familiar with the Common Good Bank? I'd love to hear your thoughts on their model.
Thanks, Bert. I just checked it out, and I'll probably look into it more deeply for the section of my forthcoming book on money and credit infrastructures.
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