What's the difference between commitment pooling and mutual credit?

DaveDarby

I've always found explanations of commitment pooling quite hard to understand, whereas I found tom greco's explanation of mutual credit easy.
I still don't really see the difference between commitment pooling and mutual credit though.
As far as I know, members of a commitment pool have to state how much they're prepared to provide for their community up front. Other members then give them a positive balance based on that.
But mutual credit is exactly the same. Members will probably know each other and have traded with each other, and will be able to give each other credit limits based on the size of their turnover, past behaviour, reliability, type of business etc.
But – mutual credit is hard to set up with businesses from scratch in the UK – you try explaining to plumbers or restaurant owners that they'll provide goods and services but won't get money (especially if they don't have local suppliers to spend their credits with).
LETS is exactly the same as mutual credit as far as I can see, but was mainly (and often totally) for individuals not businesses – which isn't going to change the economy.
And ultimately, LETS failed anyway, which isn't a good advert for mutual credit. (in fact, when we were building the Open Credit Network, I talked with everyone I could about mutual credit, and they said 'that's LETS isn't it? It didn't work).
So the only way to do it in the UK may be by stealth, via credit clearing, with existing networks of trading businesses who just want to solve cashflow problems, not join a moneyless trading scheme, which sounds too wacky for them?
Or is that just true in the UK?

So anyway, my basic question is: what's the difference between commitment pooling and mutual credit?

Chik

Can you explain a bit more about commitment pooling? When someone states how much they're prepared to provide for their community up front, are they stating the value of their services? And is the balance calculated in their local fiat, but just as a net positive balance?

Chik

When I heard about the immediate efficiency gains of up to 25% for businesses through credit clearing, and using that network to introduce mutual credit, that made perfect sense to me as an on-boarding ramp. If I've understood commitment pooling correctly, I assume it relies on existing trust relationships and implied social consequences to assign value and maintain the network? I thought that mutual credit introduced through credit clearing for businesses could work on a city level network where business owners may not know each other well enough to assess and assign value to each other, hence making it scalable. But I'm basing my comment on what little I know about each.

Julian

I am a numpty with all things financial - a filthy business in all respects; Commons best approach I have seen to finance however ..
Trust is important - in every respect of our social and environmental engagements. I will post something on https://forum.growingthecommons.org/t/utilities-and-transport

DaveDarby

I don't know v much about commitment pooling - only from Will Ruddick's posts. It makes perfect sense, and I think it's doing well in Africa, but again I don't know details. I think it might need a strong community to start with, and as I commented on one of Will's posts, community has been hammered out of most towns in the UK - high streets full of chains, small shops and pubs almost all gone, front gardens paved over, no-one walks, not many use buses. most people stay in and watch tv. But there are still small businesses and people need houses (which is why the focus on credit clearing and housing commons makes sense to me in the UK)

mrauchs

DaveDarby Based on my understanding (see my response below), it could be adapted to the UK context by changing the type of commitments with which the pool can be seeded, and adjusting the corresponding parameters of the four functions/processes. What wouldn't likely work is a 1-1 replication of the Kenyan Mweria system (a specific configuration of the four processes, as per Will's Commitment Pooling protocol).

mrauchs

I think Will Ruddick's recent post clarifies things a bit.

He uses Commitment Pooling as a meta-framework that can be applied to any system which involves promises/commitments of any type—i.e. basically every financial system, product, and/or service. In this sense, it's a protocol based on four functions/processes that introduces a shared language for analysing + implementing + connecting/interfacing different kinds of systems in a coherent way.

I believe the confusion stems from mixing this meta-protocol view with a particular instance or implementation of it—in this case the Sarafu Network by Will's Grassroots Economics Foundation—and its current use, which seems to be primarily based on the Mweria system in Kenya. Though I should hasten to add that this appears to be purely a user choice, and that the system or network can easily support other mechanisms and practices too—as long as they are properly specified and defined using the meta-framework (language) of Commitment Pooling and its four key functions/processes: curation, valuation, limitation, exchange.