Thread by @duganist

Let's talk about Mutualism and Mutual Credit.

Mutualism is the grandpa of the Libertarianism many Bitcoiners share, from Proudhon to Rothbard, and its also the honorary name of Libertarianism's kid, who will succeed it.

Mutual Credit Clearing is the #3 killer app on Bitcoin.

Mutualism came from Proudhon, a Frenchman and contemporary of Marx, who once famously trolled his book "The Philosophy of Poverty" with "The Poverty of Philosophy". Sick burn. Proudhon had similar sympathies but a different economic model. Both believed in a Labor Theory of Value

Proudhon's LTV was not as mathemtically rigorous and he did not spike the spreadsheet with a math trick to make the importance of Capex amortization (e.g. machinery, computers, grid wire) go away. LTV is roundly disproven by 150 years of economic data. Was also anti-semite.

Despite Proudhon's flaws his modus op. was:

1) Collective organization of labor to get a better deal for workers
2) Get the cost of capital down through credit unions
3) What property rights remain without a State's monopoly on violence? Use-based property rights.

While LTV isn't how economics really works, it's certainly possible to price labor cheap enough that it's exploitative (the opposite is star power consuming most of the value it creates e.g. Hollywood). It's all about price discovery.

Capex Producitivty Theory of Value (CPTV):

I invest in a machine. The machine involves natural resources, factory labor, inputs to build the factory, and intangible "intellectual property" accumulated over decades or centuries of R&D. It has a throughput of production, which generates free cashflow and amortizes.

Much growth of global capitalism, pop. boom, standards of living rise, comes from compound growth in total productivity via accumulation of this tech-infrastructure. Marxists who denied this and made it about labor, suffered economically. Allende didn't respect unit economics.

Proudhon himself had a hard time reconciling the details of property rights with the ideal in his heart, and this is why Rothbard, after hanging with the book club of I guess like 15 Proudhon fans in the 50s/60s, coined the Right-Libertarianism that became eponymous in the US.

However while Marx's ideas were "tried"* (Not Really! It Was Just State Capitalism! 2: Electric Boogaloo) and the results were largely Holdomorific, Proudhon's ideas were also tried, and have gotten 4/5 star reviews on Yelp!

In the 30s, a Swiss bank call the Wir Bank ran smooth!

If you turn lending and currency creation into a Vanguard-style co-op with minimal operating overheads and a management-fee/spread to cover that, pass the savings on to the savers, it works well. Also, Mutual Credit Clearing uses supply chain data/inventory to back money supply.

I was first turned onto this in 2008 when I was pitching my Securitized Renewable Energy start-up, Renewality, to this crazy dude named Steve from Blacklight Ventures. I read the book by Thomas Greco. Started to imagine.

I told my pop about it, was like "agh! lending is risky!"

This was 8 weeks before Boomers would become painfully educated, somehow for the first time, on fractional reserve banking, by the threat of their bank deposits evaporating but for the Grace of Government.

Ohhh so it's a big monopoly licensing scam?

The root of Mutual Credit Clearing is factoring. Invoices are sold to a financier at a discount. The factoring just duration matches delayed payments at a price. A chicken farmer pays his feed vendor 30 days after delivery, this is a form of 0% interest credit the farmer *uses*.

The reason you'd turn around as the feed manufacturer and sell that invoice for 97c is you need the government-banking-monopoly money. But what if you didn't? What if all the businesses in the supply chain just had their own commodity-backed currency and credit lines in it?

Now the various businesses, which can scale down to micro-business if there's data to grade participation, get credit lines in this currency. It has a 0% interest, or slightly negative, a "demurrage" that encourages you to spend it. Secondary tier of retailers use it to buy eggs.

There's a lot of examples of varying success of these kind of currency systems. LETs, Berkshares, Ithica Hours, a city in Brazil near the Paraguay border did it and significantly reduced unemployment. DC's Capitol Hill Babysitting Club.

GDP ignores labor with in-kind payment.

Additionally there are "Buyers Clubs" in the US and Canada that save billions of dollars a year in interest doing wholesale inventory movements on these credit lines. Biz loves it for the savings, their rep. in the network is an asset.

This is what real free markets look like.

All of this is perfectly legal as long as you pay tax on the USD-equivalent value (or w/e the govt. unit is where you live) on the net-profits. It involves no policy changes, no state coercion, it redistributes wealth away from money center banks to small biz and consumers.

The #1 use case of Bitcoin is being a monetary standard that is the Plan B to government aggression through currency debasement to support monopoly cartels and the state's survival, hyperfungibility and seizure/censorship-resistance too.

#2 is decentralized exchange/hedging.

#1 is the haven of the early adopter hodlers, the market mavens, the HFTs, it's not going to help most people by itself if they have no stake.

#2 makes Bitcoin as a ledger into a global agora for fundraising, lower-risk savings, and extends fungibility.

But #3 gets incomes up.

A little forex injection to a farmer's balance sheet by way of an equity-token can help, but the real thing is building networks to facilitate working capital expansion.

Kiva without the Riba.

As we get more supply chain data hashed in, Mutual Credit scoring comes into view.

I wrote about all of this in 2014. BTC is the Power Money (M0), then you get the Derivatives/dCurrency (M1), then the securities, then the mutual credit. I predicted then that mutual credit would become the #1 source of credit growth in the future.

This is how we grow.