An overview of local credit systems and their implications

Credit and debt are bound to play a central and challenging role in a post-growth economy, seen as an economy that seeks to stabilize or downscale production and consumption for more well-being and sustainability. This is so because on one hand the current credit system is widely seen as the major engine behind the unsustainable imperative of growth. On the other hand, access to credit is essential for the survival of countless low-income households worldwide. In this context, what kind of credit arrangement is compatible with a sustainable and equitable economy? This paper provides the first preliminary overview of the main types of local credit systems—classical as well as alternative—with an eye on their implications for post-growth. Traditional credit, bank credit, icrocredit, credit unions, negative interest credit, social credit and mutual credit are in turn briefly examined with some historical examples. The interest rate, the kind of currency and the prospect for reciprocity between creditors and debtors all play a crucial role in the possibility of a post-growth economy. Alternative credit arrangements may develop through different stages and levels. Here and now, building and reinforcing local mutual-credit systems are a way forward provided that it is also adequately politicized. With the worsening of the debt crises and the increasing difficulties for further growth to occur, post-growth-friendly credit systems are likely to come back on the agenda of community economies.