We are commonly told in text books hat first there was barter, then there was money, then there was credit. In fact, 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 and these organisations themselves then entering 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 sociaty 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 and we are currently going through one of these phases, triggered by the sub-prime crisis in the USA. Such a downturn as we are experiencing would be triggered in just such a way because that trigger consisted essentially of 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.
What does Buddhism have to say about this? Essentially that the building of faith is the foundation of good human relations and healthy society. That 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, and there have been some historical experiments in this direction. What is needed is a more thorough examination of the practical and theoretical implications. Credit has a gratuitous nature, an element of risk, and it rests upon faith and goodwill. Merit similarly. Those who are interested in Buddhist economics need to give more attention to the theory of merit.
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.