ucos:use-credit_obligations

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ucos:use-credit_obligations [2025/12/17 04:30] – external edit 127.0.0.1ucos:use-credit_obligations [2026/04/20 19:43] (current) – external edit 127.0.0.1
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-# Use-credit obligations+This topic is part of [[gt:economy|Economy & finance]]. 
 +====== Use-credit obligations ======
  
  
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-## What are use-credit obligations?+===== What are use-credit obligations? =====
  
 A use-credit obligation (UCO) is essentially a voucher that will be accepted as payment for future supply of goods and services. They’re most useful as ways of funding [commons](/comg/commoning) infrastructure (fundamental things that communities need, like housing, energy, water supply and food, owned by the community, not by private individuals, corporations or the state). A use-credit obligation (UCO) is essentially a voucher that will be accepted as payment for future supply of goods and services. They’re most useful as ways of funding [commons](/comg/commoning) infrastructure (fundamental things that communities need, like housing, energy, water supply and food, owned by the community, not by private individuals, corporations or the state).
  
-### How they work+==== How they work ====
  
 Imagine a group of local people or a community energy scheme who want to build a wind turbine or install solar panels on roofs to provide the community with electricity, but they don’t have the money to do it. Currently, they could go into debt or set up a company and give away part of it as equity, neither of which is ideal. Imagine a group of local people or a community energy scheme who want to build a wind turbine or install solar panels on roofs to provide the community with electricity, but they don’t have the money to do it. Currently, they could go into debt or set up a company and give away part of it as equity, neither of which is ideal.
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-### UCOs as savings+==== UCOs as savings ====
  
 If people believe that the price of electricity is going to rise, they will want to buy expensive future electricity at today’s prices. If people believe that the price of electricity is going to rise, they will want to buy expensive future electricity at today’s prices.
  
 This is why they’re such a good savings instrument – and particularly if you have a ‘basket’ of them. If you only have kWh UCOs, then when you retire, you’ll have to sell some to buy food and other necessities; but if you live in a community where you can buy energy, rent, water and food credit obligations, and maybe even care credit obligations, then you’ll have real security – all the things you need, at less than current prices. And if you don’t need some of those UCOs, you can sell them at the current price of what they represent. This is why they’re such a good savings instrument – and particularly if you have a ‘basket’ of them. If you only have kWh UCOs, then when you retire, you’ll have to sell some to buy food and other necessities; but if you live in a community where you can buy energy, rent, water and food credit obligations, and maybe even care credit obligations, then you’ll have real security – all the things you need, at less than current prices. And if you don’t need some of those UCOs, you can sell them at the current price of what they represent.
-### History+==== History ====
  
 The basic idea isn’t new. Medieval ‘market money’ vouchers / tokens (see video) were in effect UCOs. The basic idea isn’t new. Medieval ‘market money’ vouchers / tokens (see video) were in effect UCOs.
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-### Avoiding 'regulatory capture'+==== Avoiding 'regulatory capture' ====
  
 Another important Chris Cook invention was to make UCOs assignable, not transferable. To explain: a £10 note is transferable. Anyone who gets it can spend it, and it doesn’t matter where they got it from. They might have found it, or got it from someone who stole it – but they can still spend it. No-one will question where they got it. Transferable is clean and anonymous. That’s not the same for a cheque, which has someone’s name on it. It used to be that cheques were assignable – you could cross out the name on the cheque and write another one. The banks didn’t like this, as circulating cheques meant that people needed to borrow less money from banks. Plus it made the money supply hard to control, and there were fraud issues etc. But you could make a cheque non-assignable by drawing two lines through it. That was called a crossed cheque. Now, crosses are automatically printed on cheque books. So cheques became non-assignable _and_ non-transferable. Banks were very happy to make cheques non-assignable, because it increased their hold on everyone’s finances. Another important Chris Cook invention was to make UCOs assignable, not transferable. To explain: a £10 note is transferable. Anyone who gets it can spend it, and it doesn’t matter where they got it from. They might have found it, or got it from someone who stole it – but they can still spend it. No-one will question where they got it. Transferable is clean and anonymous. That’s not the same for a cheque, which has someone’s name on it. It used to be that cheques were assignable – you could cross out the name on the cheque and write another one. The banks didn’t like this, as circulating cheques meant that people needed to borrow less money from banks. Plus it made the money supply hard to control, and there were fraud issues etc. But you could make a cheque non-assignable by drawing two lines through it. That was called a crossed cheque. Now, crosses are automatically printed on cheque books. So cheques became non-assignable _and_ non-transferable. Banks were very happy to make cheques non-assignable, because it increased their hold on everyone’s finances.
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 </WRAP> </WRAP>
  
-### What UCOs can be used for+==== What UCOs can be used for ====
  
 UCOs can help build the commons in all sectors, including housing (rent-credit obligations), land, water, food, digital infrastructure (broadband connection, mobile masts and a commons wifi connection for the town, that can be accessed by everyone) etc. Some are more complicated than others. Energy is denominated in kWh, but food isn’t standard – a loaf of bread and a pound of apples are completely different. So what do we denominate food-credit obligations in? There could be a UCO for a standard weekly [veg box](/vegb/veg_box_schemes) delivery, or there could be a standard ‘staple food basket’. It’s harder, but not impossible. UCOs can help build the commons in all sectors, including housing (rent-credit obligations), land, water, food, digital infrastructure (broadband connection, mobile masts and a commons wifi connection for the town, that can be accessed by everyone) etc. Some are more complicated than others. Energy is denominated in kWh, but food isn’t standard – a loaf of bread and a pound of apples are completely different. So what do we denominate food-credit obligations in? There could be a UCO for a standard weekly [veg box](/vegb/veg_box_schemes) delivery, or there could be a standard ‘staple food basket’. It’s harder, but not impossible.
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-## What are the benefits of use-credit obligations?+===== What are the benefits of use-credit obligations? =====
  
-### Help build the commons+==== Help build the commons ====
  
 Commons groups don’t have to go into debt or give away equity – a sure-fire way of delivering infrastructure back to the capitalist world. A UCO costs nothing for the issuer to provide. The commons sector hasn’t been able to grow to obtain infrastructure, because they’d have to go into debt or give away equity; then they’d have to make a profit to pay back the debt and to pay shareholders; wealth would leave the community and they wouldn’t be a commons any more. UCOs offer a savings instrument for the new economy that is non-extractive (if they’re managed well – i.e. they’re assignable not transferable), because they don’t give investors power. Investors can’t corner the market, because the commons group can just issue more, and they can also refuse to sell to individuals or companies that have too many already. Commons groups don’t have to go into debt or give away equity – a sure-fire way of delivering infrastructure back to the capitalist world. A UCO costs nothing for the issuer to provide. The commons sector hasn’t been able to grow to obtain infrastructure, because they’d have to go into debt or give away equity; then they’d have to make a profit to pay back the debt and to pay shareholders; wealth would leave the community and they wouldn’t be a commons any more. UCOs offer a savings instrument for the new economy that is non-extractive (if they’re managed well – i.e. they’re assignable not transferable), because they don’t give investors power. Investors can’t corner the market, because the commons group can just issue more, and they can also refuse to sell to individuals or companies that have too many already.
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 </WRAP> </WRAP>
  
-### Safe investments+==== Safe investments ====
  
 It’s the 2-stage investment process outlined above that make them safer than crowdfunding, which is quite high-risk, because there’s nothing to purchase with them straight away. If you don’t like what you eventually get – i.e. if it doesn’t live up to expectations, you might not get your money back. It’s the 2-stage investment process outlined above that make them safer than crowdfunding, which is quite high-risk, because there’s nothing to purchase with them straight away. If you don’t like what you eventually get – i.e. if it doesn’t live up to expectations, you might not get your money back.
  
-### Inflation-proof savings+==== Inflation-proof savings ====
  
 They’re a very interesting form of savings, because they’re not denominated in national currency, but in useful things, like energy, food, rent for housing or office space, haulage, or any product or service. Energy-credit obligations are denominated in kWh, for example. This means that this kind of saving is inflation-proof, because a kWh now is the same as a kWh in 10 years’ time. The UCO will be good for the kilowatt-hours specified, any time in the future, whatever happens to the price of electricity. They’re a very interesting form of savings, because they’re not denominated in national currency, but in useful things, like energy, food, rent for housing or office space, haulage, or any product or service. Energy-credit obligations are denominated in kWh, for example. This means that this kind of saving is inflation-proof, because a kWh now is the same as a kWh in 10 years’ time. The UCO will be good for the kilowatt-hours specified, any time in the future, whatever happens to the price of electricity.
  
-### Don’t invoke ‘Jevons Paradox’+==== Don’t invoke ‘Jevons Paradox’ ====
  
 [Jevons Paradox](http://lowimpactorg.onyx-sites.io/posts/do-energy-saving-measures-actually-increase-overall-energy-use) describes attempts to conserve a resource that end up increasing its use. If you insulate your house and so your energy bill goes down, you might spend the money you save on being a bit warmer, therefore increasing energy use again. But if you’ve pre-paid for your electricity by purchasing ECOs, you might see them as savings, so you’re more likely to want them to last, and be less inclined to turn up the heat, because your savings will start to disappear. [Jevons Paradox](http://lowimpactorg.onyx-sites.io/posts/do-energy-saving-measures-actually-increase-overall-energy-use) describes attempts to conserve a resource that end up increasing its use. If you insulate your house and so your energy bill goes down, you might spend the money you save on being a bit warmer, therefore increasing energy use again. But if you’ve pre-paid for your electricity by purchasing ECOs, you might see them as savings, so you’re more likely to want them to last, and be less inclined to turn up the heat, because your savings will start to disappear.
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 </WRAP> </WRAP>
  
-### Can outcompete the corporate sector+==== Can outcompete the corporate sector ====
  
 There’s nothing to stop corporations from selling UCOs, but they’d face barriers that community groups wouldn’t. For example, community groups would be able to offer lower prices or annual rebates / dividends that corporations wouldn’t because of the need to generate profit for shareholders. So community groups would offer better value. The community sector hasn’t been able to compete with the corporate sector before, because of the difficulty in obtaining investment. UCOs change that. Also, community groups can be membership orgs in ways that corporations can’t, and so can avoid regulatory capture. We can start to build the commons in ways that have been impossible for co-ops, mutuals, community land trusts etc. because of the problem of debt. There’s nothing to stop corporations from selling UCOs, but they’d face barriers that community groups wouldn’t. For example, community groups would be able to offer lower prices or annual rebates / dividends that corporations wouldn’t because of the need to generate profit for shareholders. So community groups would offer better value. The community sector hasn’t been able to compete with the corporate sector before, because of the difficulty in obtaining investment. UCOs change that. Also, community groups can be membership orgs in ways that corporations can’t, and so can avoid regulatory capture. We can start to build the commons in ways that have been impossible for co-ops, mutuals, community land trusts etc. because of the problem of debt.
  
-### Sustainability+==== Sustainability ====
  
 Commons groups can provide sustainable infrastructure – renewable energy, natural buildings, compost toilets and reed beds for sewage, organic food etc. Commons groups can provide sustainable infrastructure – renewable energy, natural buildings, compost toilets and reed beds for sewage, organic food etc.
  
  
-## What can I do?+===== What can I do? =====
  
 Think about what UCOs could be used for in your community. Apart from the examples above, they could be for something specific like an independent cinema / hotel / leisure centre. [Contact us](http://lowimpactorg.onyx-sites.io/about/contact) to let us know what you’d like to see in your community, and what would be your potential role. Would you like more community-based savings? Are you keen on renewables, local smallholdings or commons housing? Are you interested as a potential consumer, investor or commons builder? We’ll collect contact details for possible projects. Tell your friends about this too. Think about what UCOs could be used for in your community. Apart from the examples above, they could be for something specific like an independent cinema / hotel / leisure centre. [Contact us](http://lowimpactorg.onyx-sites.io/about/contact) to let us know what you’d like to see in your community, and what would be your potential role. Would you like more community-based savings? Are you keen on renewables, local smallholdings or commons housing? Are you interested as a potential consumer, investor or commons builder? We’ll collect contact details for possible projects. Tell your friends about this too.
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-## Further resources+===== Forum =====
  
 +This topic belongs to the section [[gt:economy|Economy & finance]]. You can ask questions or add information on the corresponding [Forum section](https://forum.growingthecommons.org/t/economy).
  
 +===== Further resources =====
  
-## Specialist curators of this topic+- [Growing the Commons Forum](https://forum.growingthecommons.org/categories) - post queries on the commons 
 +- [Growing the Commons Blog](https://growingcommons.substack.com/) - subscribe for commons news 
 +- [Split tally sticks](https://www.core77.com/posts/67600/A-Medieval-British-Anti-Counterfeiting-System-Split-Tally-Sticks) - medieval anti-counterfeiting system 
 +- [Mutual Credit Services](https://www.mutualcredit.services/) - designing commons models via UCOs 
 +- [Deli Dollars](https://www.independent.co.uk/news/business/delidollar-offers-route-to-business-funding-1071370.html) - a type of UCO used in Massachusetts 
 +- [Island Power](https://www.island-power.net/) - installing renewable energy using UCOs 
 +- [Stroud Housing Commons](https://stroudcommons.org/housing-commons/) developing housing using rent-credit obligations 
 + 
 +===== Related topics ===== 
 + 
 +- [[hoco:Housing commons]] 
 +- [[crcl:Credit clearing]] 
 +- [[crco:Credit commons]] 
 +- [Collaborative finance](cofi:collaborative_finance) 
 +- [[mucr:Mutual credit]] 
 +- [[comg:Commoning]] 
 +- [[syst:System change]] 
 +- [[csas:Community-supported agriculture]] 
 +- [[comy:Community]] 
 +- [[coec:Commons economy]] 
 + 
 + 
 + 
 + 
 +===== Specialist curators of this topic =====
  
  
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