The legislative proposal of the European Credit Initiative

1. It all begins with the self-image that business is committed to needs and the common good. With the wording “services of general economic interest”, we follow on from existing EU regulations. In EU law, the term refers to economic services which are provided in the public interest beyond market incentives and competition and which are linked to an obligation of common good. In the perspective of the European Credit Initiative, this finally includes all economic activity, if it is no longer carried out in the interest of profit, but for the comprehensive needs of mankind and nature and for all necessary public tasks.

2. A further condition for the new type of financing is that the companies leave the handling of their income to a scheme under public law. This is intended to eliminate the possibility of dumping wages and enormous top earnings. But there is also a principled idea behind this. Work cannot be a commodity and so income should increasingly be understood as a basic human right and not as a “purchase of labour”. Through the perspective of income in this sense, it becomes an object of democratic design.

3. The key point of the proposal is the permanent forgoing of profits. The decision of a company to participate in the new financing option should be a principled one. It is about fulfilling an entrepreneurial task, not about making profit. The proposed free financing, however, is what makes such a decision even possible and should make companies independent of investors and their interests.

 The proposal is also linked to a certain image of the monetary cycle. The money needed by companies for their activities (which in itself has no value) can be can be created through credits and given to the companies because the companies and there coworkers are committed commit themselves to producing something of value.

In the second step, the money gets into the hands of the consumers, i.e. it goes into their incomes and now entitles them to buy the produced values. At the same time, in our division-of-labor based economy, it is the income that makes social participation even possible, and thus also the participation of the individual in the economy. In the act of purchasing, the money that was included in the prices of goods and services flows back and the credits can be repaid. The cycle is closed.

The dominant today’s principle of profit as the goal of the economy ignores the fact that not all areas of the economy can price their expenses into a final product. For many tasks this is not possible. Examples are schools and research, health and care, ecological tasks, infrastructure, etc., areas that are today mainly financed by public funds and often have difficulty in meeting demand under the pressure of profit.

How can the companies and banks that wish to join the proposed profit-independent financing from the European System of Central Banks in future fulfil the above-mentioned public tasks? By ensuring that the necessary financing of the work and also all investments elsewhere are included in the prices as a whole. Surpluses and deficits will be balanced within cooperative associations. In other words, it is not decisive whether the money flows back into the very company to which it was given by credit. What is decisive is that it returns in its entirety, so that all credits can be paid back in total. That is what we want to encourage and make possible with our proposal: A cooperative economy that can become more and more capable of meeting all areas of need.

The proposal of a profit independent way of financing the economy is based on a holistic view of the economy, which requires that the individual concrete decisions are increasingly shaped from the combined, interconnected perception of the whole. This is not only a demand arising from the crisis-ridden ecological situation, but is founded in the shape of the modern economy itself. Today, the economy shows itself to be a holistic system of globally interrelated processes. Everything that is required is ultimately achieved from the whole of all people working together.

However, this shaping out of the whole cannot be done in a dirigiste or centralised manner, but rather through cooperative interaction and decentralised networking. The proposal of the European Credit Initiative also relies on the free decision of companies to take the new path that is to be opened up by profit-independent financing.