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‘Commitment Pooling’ To Build Economic Commons

Above photo: From Africa Live.

Sixteen years ago, when he moved to Kenya, development economist Will Ruddick realized that many poorer communities are not as helpless as they might think. They may not have as much money to meet their needs, but they do have goods and services to offer each other — cooking, tutoring, bike repair, taxi rides, and so forth. The real problem is the scarcity of a currency to enable exchange; the national currency, the Kenyan shilling, is not so plentiful in many neighborhoods.

So, working with small businesses and households, Ruddick and members of the group he founded, Grassroots Economics, set out to create what he calls “community inclusion currencies.” One of his first experiments in this realm was the Bangla-Pesa currency in Mombasa, a community of 20,000 people on the Kenyan coast. The Bangla-Pesa is essentially a system of credit vouchers whose value is pegged to the Kenyan Shilling, but not convertible to it. Under certain rules, anyone can issue a Bangla-Pesa credit voucher for their goods and services.

As people use the vouchers to buy things, the vouchers begin to circulate and function as a kind of community-based money. The trick is ensuring a critical mass of participants offering a diverse range of goods and services; rules to prevent hoarding; and a brisk circulation of the vouchers. With 218 participating businesses and 87,000 vouchers now in circulation, the Bangla-Pesa mutual credit system helps thousands of people meet many everyday needs. 

Ruddick has gone on to create community currencies in over 80 communities throughout Kenya as well as in Cameroon and South Africa. Over 60,000 households are spending and receiving the equivalent of US $4 million in exchange. 

A key lesson from the projects is that a community can control its means of exchange to advance its own interests without relying on banks, the mainstream economy, or the national currency.  

I recently spoke with Ruddick on my Frontiers of Commoning podcast (Episode #48) to learn more about his experiments with community currency. He explained how his thinking about “re-inventing money” has evolved in recent years.

After working with Indigenous tribes and traditional communities, he has come to appreciate that the social dynamics of a community are at least as important as the technical issues for how one designs a money system. Premodern societies have a lot to teach us. The lessons mostly have to do with the dynamics of social cooperation and relationships. One can call it commoning, but the more formal academic name for it in this context is “rotational labor associations,” or ROLAs.

ROLAs are ancient mutual service practices by which households in a community provide help to each other through reciprocal exchange without any currency involved. So when people need help in harvesting annual crops, building houses, or teaching their children, they help each other and then informally keep track of who owes some reciprocal help to whom.

Ruddick encountered more than 42 different tribal names for these practices, suggesting that mutual aid without money is indeed a spontaneously occurring social phenomenon. Some Indigenous groups practice Mwerya, their name for ancient mutual service traditions — a term that also functioned as a collective noun for people. The Kikuyu in central Kenya call it Gobato. The Luo tribe near Lake Victoria call it Nyoluoro.

“Surprisingly, if you look through anthropology research,” said Ruddick, “this social practice is almost undocumented even though it seems to have been nearly everywhere.” He adds that ROLA-behaviors petered out around the time of colonialism, when colonial and national currencies were introduced. A local saying held that “those who would lose their traditions become slaves” — an apt description of what happens when traditions of mutual aid are supplanted by the wage system using the colonial currency.

However, ROLA-type behaviors have continued in the Global North through “desktop banking” and “banker ladies” groups, which manage the money of people of the African diaspora. The academic term for these groups is ROSCAs, or “Rotational Savings and Credit Associations.” Instead of pooling social commitments, they pool their holdings of the national currency as a way to maintain greater control over their money and avoid race-based discrimination often associated with banks and governments. For more, see my interview with Caroline Shenaz Hossein about ‘Black Banker Ladies,’ in Episode #18.]

To be sure, the anthropologist Marcel Mauss famously called indirect reciprocity, or pooled commitments, “gift economies.” But Ruddick thinks that that term gives an overly idealistic gloss to premodern exchange by implying that the system was animated by personal generosity and altruism. The situation appears to be more complicated and structured than that, Ruddick says. “There was a whole set of social protocols and governance around these practices, and principles guiding a huge amount of reciprocity going on.”

Ruddick has set out to understand the principles that make ancient mutual aid and exchange a stable, sustainable way to build collective and individual wealth. In a recently released working paper, “Commitment Pooling: A Protocol for Grassroots Economics,” Ruddick explains the pooling of commitments as “a mechanism for curating and fairly exchanging resources within communities. This approach hinges on the idea that commitments can be effectively pooled to create a more equitable and collaborative economic system, and echoes traditional mutual service practices.”

What makes Ruddick’s thinking about commitment pooling so fascinating is his determination to extend sharing protocols through digital ledger systems. Digital ledger technology – most famously associated with Bitcoin (a capitalist, speculative currency) and its blockchain software (with versatile applications) – is not really so new, Ruddick says. It’s really quite old; it’s just that the “ledgers” that people once used were the twenty brains of individuals who carefully remembered who owed what to whom. 

This collective algorithm, so to speak, was improved with the invention of tally sticks, and then through a progression of accounting systems. Now, thanks to the Internet and software platforms, said Ruddick, “we have new ways to make it really easy to enable people to authenticate themselves across larger networks, using memory systems, transparency, provability, and interoperability. But it’s essentially a social infrastructure.” 

I’m excited about Ruddick’s thinking about community currency because it shows how commitment pooling, as augmented by digital ledger technologies, can help communities recover greater oversight and control over market behaviors — something that even the modern regulatory state has trouble dealing with.

Commitment pooling protocols make it possible to rein in the relentless abuses and externalization of costs that modern economies routinely generate and permit. Rather than allowing individuals to use money and market transactions to overwhelm and destroy commons, commitment pooling makes it possible to govern markets as “economic commons,” in Ruddick’s words.

Ruddick has identified six organizing principles that he sees as essential to economic commons.  They are: 

1. Care for People – collaboration and vision driven care for oneself and others’ well-being and happiness

2. Care for the Environment – support environmental protection and regeneration, minimize use of finite resources for economic activity, ecosystem management approach to farming and business development.

3. Fairness – fair and secure access to instruments, land, resources, knowledge & care for members from different backgrounds, age, gender and religion.

4. Reciprocity – mutual sharing of risk, cost and surplus.

5. Non-Dominance – no person or association to have dominant rights over another person or association’s resources e.g., data, finances, intellect, materials and freedom.

6. Resilience – capacity to prepare for, address and adapt to economic, political, climate and other events in order to ensure sustainable community based systems/commons.

If you’d like to learn more about community currencies and commitment pooling, check out my podcast interview with Will Ruddick. See also his short blog post on it and his 30-page paper. 

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