Disclaimer: not advocating for current system.

What alternative would you propose for providing loans?

My controversial (for Lemmy) take is that loans are good for society. They provide an incentive to not hoard resources, but provide them to those who want to put them into action today for future benefit.

A good loan benefits both parties, ie. An auto loan that allows someone to buy a car to get to a job to earn an income that is above the cost of the loan. Without the loan that person couldn't get to work and whatever service they were providing to society is lost.

All that said - that doesn't mean the way loans work today is the best solution, but the same functionality of trading current and future resources needs to exist. You don't have to call it a loan, and it doesn't have to be performed by private for profit institutions, but if you want a thriving economy I believe you need this function carried out somehow.

The equivalent function in Communism is (or historically has been) a centrally planned resource allocation which very clearly is a horrible idea because of the incentives towards corruption. If you take a literal interpretation of communism (instead of historical) where "the workers own the means of production" trade unions could fulfill this current to future resource allocation function. I do not know if this would create the same corruption as single central authority, but my gut feels is that it would (based on the US labor union and organized crime affiliation of the past.

In short, the current function for trading current and future resources (ie. loans) is far from ideal, but I have not found an alternate that provides more benefits than deficits. I would love to learn about more alternatives, but just saying 'loans R bad' makes it sound like you're advocating getting rid of them with nothing to handle their underlying function, which is a terrible idea.