We are commonly told in economic text books that first there was barter, then there was money, then there was credit. In fact, it was credit that came first. There has always been credit. People have always done things for one another and given things to one another with a sense of expecting some return. This may not have been specified always in numerical terms, but humans do tend to have a rather precise sense of what they owe and are owed. This has always been a part of human society.
In modern society this has built up into a vast structure with large organisations build on the basis of people working and expecting a recompense symbolised by paper notes and computer records. These organisations themselves then enter into complex relationships with bodies that we now call banks that act as stores of the notional credit. When things go well the banks can expand the amount of positive activity going on by relying upon the vast store of goodwill that all this credit represents.
The whole thing can, however, turn sour. When goodwill is lost, trust falters. Credit is then called in and not extended to the same degree as formerly. The whole system contracts, often with painful consequences for many people.
What we can see from this is that in all interactions involving credit there is an element of risk. In modern society we try to eliminate risk by having enforceable contracts and by having insurance. However, there is always a shadow side to these measures since they each embody some degree of distrust. They themselves therefore spread the very poison that can destroy the system at the same time as being essential measures if credit, which was originally a relationship between people who knew each other, is to be used among people who are complete strangers.
We have thus been very successful in creating a mass society and a mass economy, but with it comes the risk of mass failures. The risk involved in credit is bound to bite from time to time, as it did in the economic crisis set off by the sub-prime loan scandal in the USA. Such a downturn is triggered by the injection of some bad faith into the system. People extended credit expecting others to bear the risk. It was dishonest, but it was a dishonesty that became possible because people had forgotten the basic facts of credit's nature.
Faith & Merit
What does Buddhism have to say about this? Essentially that the building of faith is the foundation of good human relations and healthy society. In the extreme case this is represented by the person who extends help with no thought of personal gain - who gives without expecting anything in return. Whatever return there is then becomes itself a gift. In this way there is a build up of merit rather than the expectation of credit. The Buddhist merit system is the worldly credit system's mirror image.
Could a whole society be run on merit rather than on credit? It is not impossible in theory, but in practice people have limits to how far their trust will stretch. There have been some historical experiments in this direction such as the primitive Christian Church, communes in Communist countries, kibbutzim. The anarchist activist Proudhon conducted some experiments based upon "the gratuitous nature of credit" for assisting poor people and the extension of the idea of micro-loans in third world countries is substantially built on the same idea. The early Buddhist sangha was another such. People gave to the monks. Soon people were giving more to the monks than the monks could eat and the monks would give away to the poor. In some areas of India the sangha became the social security system. This was a way of redistributing to the poor without need of bureaucracy. People relied upon the discernment of the monks to put help where it was needed. Those who give receive merit. Merit is, as it were, credit from the universe.
Credit has a gratuitous nature, an element of risk, and it rests upon faith and goodwill. Merit similarly. Merit is a belief in the universe as the ultimate bank. The universe does not go bust and does not need government bail outs. It really is too big to fail. Relying upon the good that one does in life to bear ultimate fruit is the essence of the merit system. It involves no contracts and no insurance. Obviously, however, it is also a system that relies upon faith. It is the ultimate extension of the idea. The sangha system works as long as people trust the sangha.
Worthy of Offerings
The basic contract between the sangha and society was and should still be that it is "worthy of offerings". It should be of immaculate conduct so that the people can trust that offerings will be used well and not selfishly. From a sociological, or even economic, perspective, this was the Buddha's great innovation. He amplified the credit/merit system by increasing people's faith by training a body of people to be merit worthy by being of excellent conduct. Among the precepts of the Amida Order we have an injunction to do nothing that will undermine the faith of others. Carried to its logical conclusion, this could be the only precept necessary. All other precepts could be seen as derivative from or as sub-clauses to this one.
Society, right down to its most basic material, economic elements rests upon faith. When faith breaks down, greed, hate and delusion multiplies and the ordinary systems and humane traditions of civil life fragment. We are used to the idea of religions as organisations that try to convert everybody and create a kind of ideological monopoly, but that is really a form of greed. What the Buddha did, first and foremost, was to create a small group of people who could be trusted. They owned next to nothing personally so nobody could think they were on-the-make. If they had more than they needed they gave it away. The basic point was that they evidently could be trusted and it was this trust that worked magic. Once there exist some trustworthy people, this element of faith can act as a leaven in society as a whole. Trust can spread. It takes time, persistence in goodness, patience, and generosity of attitude, but over time the effect ripples out and brings love and peace to people far removed from the origin. By absence of selfishness and gratuitous acts of kindness peace comes to the world.