meme-of-the week: money as information part II -- wealth literacy
Since we are claiming that a fundamental open money meme is that money is information, then a number of things should follow from that. What follows are two representations of such a consequence. I've created both a visual table, as well as a narrative to go along with it, that describe another way of thinking about what open money is trying to achieve: wealth literacy. [Please note that by literacy I don't mean it in the broad sense (i.e. being well versed in a subject matter) but rather I mean literacy in it's literal meaning, i.e. the capacity to read and write!]
(Full sized version.)
When I was growing up in Ecuador, I remember being in the marketplace where I saw a man sitting at a table with a pen and paper. He was listening to a customer and was writing away like mad. I remember not understanding what that man was selling. Was he composing a poem on the spot? I couldn't imagine the visibly poor customer wanting a poem. So I asked my parents who told me that he was selling the writing itself; that the customer was illiterate and needed to send a letter and so would pay the man to write the letter. I remember being amazed by this at the time, but then forgot about it pretty quickly. This story comes back to me now that I've come to understand that almost all of us in the world are doing exactly the same thing as those illiterate customers I saw in my youth. We are illiterate and don't even know it. We don't recognize that there is a form of "writing" we hire others to do for us but could learn ourselves. This form of writing is the writing of wealth acknowledgments, and what we call it is money.
Okay, that's a big claim, isn't it: Money is a form of writing. So let me walk you through how this is so. The writing that you are reading has one central purpose: to extend the range of transmission of ideas both through space, but more importantly through time. Writing fixes ideas so they can travel great distances and through time. This capacity is based on a collective community action, that of holding a shared agreement on the meanings of arbitrary symbols. You should already be getting the idea of how money could be a form of writing. It serves a structurally almost identical purpose, that of extending the range of transmission of something through space and time. Also, its capacity to do so is based on a very similar collective community action. Money allows us to transmit well-being across distance and time, and this capacity is based on a community action of holding a shared agreement on the meaning of symbols. But in the case of money what is symbolized is value.
How does money allow us to transmit well-being across time and space? It's a simple story that is easily understood by examining the most basic system of transmitting well-being: barter. If I raise chickens and you grow carrots, and we barter a dozen of my eggs for 5 pounds of your carrots, our mutual well-being is increased because both of us are better off. But notice that the well-being of the situation isn't in the carrots or the eggs themselves, because if I were also growing carrots, or you were also raising eggs, then we couldn't make an exchange that makes us better off! The central act of a barter exchange is haggling, or coming to agreement on the relative value of what is to be exchanged. The determination is that it's 5 pounds of carrots, not 3 or 6, that you'll give me for my dozen eggs. Let's call that act the wealth acknowledgment. To barter is to acknowledge the wealth that we will both gain by doing the exchange and then making it. Money stands in for that wealth acknowledgment when one party doesn't actually have something that will increase the other's well-being directly. So if you happened to raise chickens as well as grow carrots, I could acknowledge the wealth I receive from your carrots by using something rare, like a shell, or some shiny metal that everyone in the community agrees is a token of something "valuable." You then could take that wealth acknowledgment token to a third party who would give you something you want. Thus could my capacity to produce well-being by raising eggs be transmitted through time and space.
But why do I call this process a form of writing? In the writing of ideas, the first and simplest solution is to draw a picture of the idea you want to convey. The first writing systems were pictographic. In pictographic forms of writing, the symbols are not arbitrary at all. They are directly representational. Though this form of writing certainly achieves the central purpose of writing, transmitting ideas over distance and time, it is has some pretty big practical problems. The first is that it's quite hard to express abstract concepts. What is a drawing of "belief" or of the pronoun "you"? Of course you can always choose a picture of something that might invoke the abstract concept (i.e., hands together praying = believer?), or just pick something arbitrary for the harder words. But this has a very interesting side effect. It means that in strictly pictographic forms of writing it's very easy to learn to read (and probably to write) simple nouns. But to learn to write the more complex words is quite a task because you have to memorize each separate arbitrary symbol. It was a huge step in the evolution of civilization to jump to regularized systems of arbitrary symbols. Humans did this in two ways, through ideograms and alphabets.
Now we can return to money. My central claim is that the reason we don't see that money is a form of writing is because as we have currently structured it, it's still a "pictographic" form of writing. Even our modern paper and electronic money, as abstract as it seems, is still actually a "pictogram" of value. It's not a true abstraction. To draw the analogy explicitly: if I want to transmit the idea of a carrot, I can draw the picture of a carrot. This will surely transmit the idea because the carrotyness is directly represented in the drawn shape. Now if I want to transmit the value of a carrot, I can similarly use something that will directly represent the value of the carrot. The easiest and most directly representational concept of value is that which is rare, or scarce; thus the choice of the rare shell or the precious metal. Again: The "Idea of Carrot" is transmitted by visual representation of the carrot's shape. The "Value of Carrot" is transmitted by a material representation of the carrot's scarcity.
But we've already seen that in the transmission of ideas, we don't actually have to use something that looks like the carrot to write about the carrot. Do any of these letters look like a carrot to you? C A R R O T. (Uh-oh, the A) The same is also true for money. We don't actually have to use something material that is as scarce as a carrot to transmit the value of a carrot. This is how: instead of using the scarce metal as the wealth acknowledgment token, I could simply write down on a slip of paper that I have received the well-being value of a pound of carrots from you and I promise to give similar value to someone else in the community some time later. That slip of paper then becomes the wealth acknowledgment token. This is a kind of IOU wealth acknowledgment. But note that it really it isn't an I-owe-you--it is an I-owe-us. As long as people make good on their promises, this system will work identically to one in which we use a rare thing as the token. Because the underlying truth is that they are both just tokens. The practical differences in the two systems, however, are quite amazing. On the one side, as already mentioned, if the members in the community using the IOU tokens are apt to cheat or lie by not producing as promised, the system will quickly fail. On the other, the community that chooses to use a rare commodity limits its capacity to transmit well-being to the total amount of the rare token chosen! This is a surprising consequence. In fact the evolution of money from gold coins to the electronic bits of today is all about the dynamics of these two facts. Humanity has a much greater potential to create well-being (and thus the need to transmit it) than there is a good match of something rare to represent the value of all that well-being. The whole mechanics of the federal-reserve bank adjusting interest rates is all about trying desperately to match the scarcity of the tokens to the amount of well-being being generated by the economy so that those tokens will continue to retain their "value" (as something scarce). (The fact of inflation is proof that it's not systemically possible to really do that according the rules we've set up for conventional money.)
But more importantly, using these purely symbolic tokens allows us to transmit forms of wealth that aren't readily encodable with material scarcity. An example of this is reputation. If I engage in a transaction with a given seller, part of the value of that interaction depends on the integrity of the seller. Sellers get reputations for integrity or lack thereof. That reputation is not encodable in scarce objects. It doesn't diminish as it is used. So how could I acknowledge the seller for that well-being using money? I can't, really, though we sometimes try. But, with a symbolic token, we can. We call such tokens ratings. Along with giving the seller of carrots my IOU, I could also give him or her a rating of 5 out of 5 integrity stars. We are all familiar with this process on eBay. We know how it works there to transmit that form of wealth to other people, and thereby generate a marketplace with increased trustability. Just as in the case with conventional money transmitting the "value" of the scarce carrots, the rating score transmits the value of the integrity of the transaction, both of which are part of the wealth these token systems are in place to generate at the social scale.
Ok, so by now the mapping should be pretty clear. Money is a form of writing. It's writing that acknowledges wealth generation. But money is stuck in a primitive "pictogram" form. So what could be the "alphabet" of money that could get it unstuck? How do we jump to an informational rather than representational form of money? Let's look at the development of the alphabet to see if there aren't any lessons there for us. Well, the alphabet is a systematic method for representing all possible words. And it's really terribly simple. All you have to do is learn the mapping of 26 letters on to all the phonemes that we speak, and you're done. All of a sudden you can transmit any concept you can speak. Even a child who gets the phoneme mapping partly wrong and writes: "I had a scarry jream last night" is actually succeeding in the fundamental goal of transmitting the concepts over space and time! So what's the equivalent trick for money? What simplified systematic method is there for representing all possible forms of wealth acknowledgment? At first the problem seems impossible. So let's break down this analogy: in the case of writing we first had to identify the phonemes that are the common parts of all our spoken words. So what are the phonemes, the common parts, of all wealth acknowledgments? Here's a list to start with:
- There is a declarer of the wealth acknowledgment (the purchaser)
- There is an accepter of the declaration (the seller)
- There are units of measure ($, pounds of wheat, kwH, "stars")
- There is a statements of acknowledgment in the units of measure ($2, 10lb, 500kwh, 5 out of 4 stars)
- There may be specific conditions on making declarations and acceptances (see below for examples)
- The aggregate history of acknowledgments may be meaningful to making future acknowledgments (balances, credit-history, overall-rating)
With these components we can describe in the abstract what a wealth acknowledgment will look like. It will have a form that basically looks like this:
A declares that B has provided a measure C of wealth D and, optionally, some conditions E were satisfied.
Some simple examples:
Anne declares that Bob has provided her one hour's worth of massage.
Albert declares that Bertha has provided $80 worth of skilled labor, and (satisfying the "credit-limit" condition of this currency) Albert's declaration/acceptance balance does not exceed $10,000.
Amy declares that Bert's musical performance was a 4 out 5 stars performance.
Andrew declares that Bertram provided $100 worth of rare stamps, and rates the transaction as 3 out of 5 stars for slow shipping.
Acme, Inc. declares that it has received the benefit of putting 10,000 lb of carbon into the commons, and (satisfying the "carbon-limit" condition of this currency) Acme's declaration monthly average is not more than 20,000 lb.
So these if these A, B, C, D & E are our phonemes, then our alphabet will be a set of symbolic forms that can represent items from those slots. The open money platform simply formalizes these slots, in the same way that the letter B is a formalized representation of some sounds. The open money formalizations for
A & B: are the open money account names in a namespace
C & D: are the data fields, (i.e. amount/description)
E: is the currency specification language (a programming language in which to state things like credit limit = $10,000)
So where does all this leave us? The move from pictograms to an alphabet is a phase shift that resulted in a whole new landscape of possibility. It's a simplification that allows for universal literacy, which is the fundamental precursor of democracy, among other things. There is another phase shift awaiting us which can lead to literacy in this other form of writing. This phase shift likewise will result in another whole new landscape of possibility, one that has the potential to solve the great wealth dilemmas or our age, most pressingly that of creating an economic system that doesn't destroy the commons. When we learn to make our own wealth acknowledgments, instead of just passing around the tokens created by someone else, like getting a letter written for us in the marketplace, then, just as democracy gave us political self-governance, we might achieve economic self-governance.
(Full sized version.)
When I was growing up in Ecuador, I remember being in the marketplace where I saw a man sitting at a table with a pen and paper. He was listening to a customer and was writing away like mad. I remember not understanding what that man was selling. Was he composing a poem on the spot? I couldn't imagine the visibly poor customer wanting a poem. So I asked my parents who told me that he was selling the writing itself; that the customer was illiterate and needed to send a letter and so would pay the man to write the letter. I remember being amazed by this at the time, but then forgot about it pretty quickly. This story comes back to me now that I've come to understand that almost all of us in the world are doing exactly the same thing as those illiterate customers I saw in my youth. We are illiterate and don't even know it. We don't recognize that there is a form of "writing" we hire others to do for us but could learn ourselves. This form of writing is the writing of wealth acknowledgments, and what we call it is money.
Okay, that's a big claim, isn't it: Money is a form of writing. So let me walk you through how this is so. The writing that you are reading has one central purpose: to extend the range of transmission of ideas both through space, but more importantly through time. Writing fixes ideas so they can travel great distances and through time. This capacity is based on a collective community action, that of holding a shared agreement on the meanings of arbitrary symbols. You should already be getting the idea of how money could be a form of writing. It serves a structurally almost identical purpose, that of extending the range of transmission of something through space and time. Also, its capacity to do so is based on a very similar collective community action. Money allows us to transmit well-being across distance and time, and this capacity is based on a community action of holding a shared agreement on the meaning of symbols. But in the case of money what is symbolized is value.
How does money allow us to transmit well-being across time and space? It's a simple story that is easily understood by examining the most basic system of transmitting well-being: barter. If I raise chickens and you grow carrots, and we barter a dozen of my eggs for 5 pounds of your carrots, our mutual well-being is increased because both of us are better off. But notice that the well-being of the situation isn't in the carrots or the eggs themselves, because if I were also growing carrots, or you were also raising eggs, then we couldn't make an exchange that makes us better off! The central act of a barter exchange is haggling, or coming to agreement on the relative value of what is to be exchanged. The determination is that it's 5 pounds of carrots, not 3 or 6, that you'll give me for my dozen eggs. Let's call that act the wealth acknowledgment. To barter is to acknowledge the wealth that we will both gain by doing the exchange and then making it. Money stands in for that wealth acknowledgment when one party doesn't actually have something that will increase the other's well-being directly. So if you happened to raise chickens as well as grow carrots, I could acknowledge the wealth I receive from your carrots by using something rare, like a shell, or some shiny metal that everyone in the community agrees is a token of something "valuable." You then could take that wealth acknowledgment token to a third party who would give you something you want. Thus could my capacity to produce well-being by raising eggs be transmitted through time and space.
But why do I call this process a form of writing? In the writing of ideas, the first and simplest solution is to draw a picture of the idea you want to convey. The first writing systems were pictographic. In pictographic forms of writing, the symbols are not arbitrary at all. They are directly representational. Though this form of writing certainly achieves the central purpose of writing, transmitting ideas over distance and time, it is has some pretty big practical problems. The first is that it's quite hard to express abstract concepts. What is a drawing of "belief" or of the pronoun "you"? Of course you can always choose a picture of something that might invoke the abstract concept (i.e., hands together praying = believer?), or just pick something arbitrary for the harder words. But this has a very interesting side effect. It means that in strictly pictographic forms of writing it's very easy to learn to read (and probably to write) simple nouns. But to learn to write the more complex words is quite a task because you have to memorize each separate arbitrary symbol. It was a huge step in the evolution of civilization to jump to regularized systems of arbitrary symbols. Humans did this in two ways, through ideograms and alphabets.
Now we can return to money. My central claim is that the reason we don't see that money is a form of writing is because as we have currently structured it, it's still a "pictographic" form of writing. Even our modern paper and electronic money, as abstract as it seems, is still actually a "pictogram" of value. It's not a true abstraction. To draw the analogy explicitly: if I want to transmit the idea of a carrot, I can draw the picture of a carrot. This will surely transmit the idea because the carrotyness is directly represented in the drawn shape. Now if I want to transmit the value of a carrot, I can similarly use something that will directly represent the value of the carrot. The easiest and most directly representational concept of value is that which is rare, or scarce; thus the choice of the rare shell or the precious metal. Again: The "Idea of Carrot" is transmitted by visual representation of the carrot's shape. The "Value of Carrot" is transmitted by a material representation of the carrot's scarcity.
But we've already seen that in the transmission of ideas, we don't actually have to use something that looks like the carrot to write about the carrot. Do any of these letters look like a carrot to you? C A R R O T. (Uh-oh, the A) The same is also true for money. We don't actually have to use something material that is as scarce as a carrot to transmit the value of a carrot. This is how: instead of using the scarce metal as the wealth acknowledgment token, I could simply write down on a slip of paper that I have received the well-being value of a pound of carrots from you and I promise to give similar value to someone else in the community some time later. That slip of paper then becomes the wealth acknowledgment token. This is a kind of IOU wealth acknowledgment. But note that it really it isn't an I-owe-you--it is an I-owe-us. As long as people make good on their promises, this system will work identically to one in which we use a rare thing as the token. Because the underlying truth is that they are both just tokens. The practical differences in the two systems, however, are quite amazing. On the one side, as already mentioned, if the members in the community using the IOU tokens are apt to cheat or lie by not producing as promised, the system will quickly fail. On the other, the community that chooses to use a rare commodity limits its capacity to transmit well-being to the total amount of the rare token chosen! This is a surprising consequence. In fact the evolution of money from gold coins to the electronic bits of today is all about the dynamics of these two facts. Humanity has a much greater potential to create well-being (and thus the need to transmit it) than there is a good match of something rare to represent the value of all that well-being. The whole mechanics of the federal-reserve bank adjusting interest rates is all about trying desperately to match the scarcity of the tokens to the amount of well-being being generated by the economy so that those tokens will continue to retain their "value" (as something scarce). (The fact of inflation is proof that it's not systemically possible to really do that according the rules we've set up for conventional money.)
But more importantly, using these purely symbolic tokens allows us to transmit forms of wealth that aren't readily encodable with material scarcity. An example of this is reputation. If I engage in a transaction with a given seller, part of the value of that interaction depends on the integrity of the seller. Sellers get reputations for integrity or lack thereof. That reputation is not encodable in scarce objects. It doesn't diminish as it is used. So how could I acknowledge the seller for that well-being using money? I can't, really, though we sometimes try. But, with a symbolic token, we can. We call such tokens ratings. Along with giving the seller of carrots my IOU, I could also give him or her a rating of 5 out of 5 integrity stars. We are all familiar with this process on eBay. We know how it works there to transmit that form of wealth to other people, and thereby generate a marketplace with increased trustability. Just as in the case with conventional money transmitting the "value" of the scarce carrots, the rating score transmits the value of the integrity of the transaction, both of which are part of the wealth these token systems are in place to generate at the social scale.
Ok, so by now the mapping should be pretty clear. Money is a form of writing. It's writing that acknowledges wealth generation. But money is stuck in a primitive "pictogram" form. So what could be the "alphabet" of money that could get it unstuck? How do we jump to an informational rather than representational form of money? Let's look at the development of the alphabet to see if there aren't any lessons there for us. Well, the alphabet is a systematic method for representing all possible words. And it's really terribly simple. All you have to do is learn the mapping of 26 letters on to all the phonemes that we speak, and you're done. All of a sudden you can transmit any concept you can speak. Even a child who gets the phoneme mapping partly wrong and writes: "I had a scarry jream last night" is actually succeeding in the fundamental goal of transmitting the concepts over space and time! So what's the equivalent trick for money? What simplified systematic method is there for representing all possible forms of wealth acknowledgment? At first the problem seems impossible. So let's break down this analogy: in the case of writing we first had to identify the phonemes that are the common parts of all our spoken words. So what are the phonemes, the common parts, of all wealth acknowledgments? Here's a list to start with:
- There is a declarer of the wealth acknowledgment (the purchaser)
- There is an accepter of the declaration (the seller)
- There are units of measure ($, pounds of wheat, kwH, "stars")
- There is a statements of acknowledgment in the units of measure ($2, 10lb, 500kwh, 5 out of 4 stars)
- There may be specific conditions on making declarations and acceptances (see below for examples)
- The aggregate history of acknowledgments may be meaningful to making future acknowledgments (balances, credit-history, overall-rating)
With these components we can describe in the abstract what a wealth acknowledgment will look like. It will have a form that basically looks like this:
A declares that B has provided a measure C of wealth D and, optionally, some conditions E were satisfied.
Some simple examples:
Anne declares that Bob has provided her one hour's worth of massage.
Albert declares that Bertha has provided $80 worth of skilled labor, and (satisfying the "credit-limit" condition of this currency) Albert's declaration/acceptance balance does not exceed $10,000.
Amy declares that Bert's musical performance was a 4 out 5 stars performance.
Andrew declares that Bertram provided $100 worth of rare stamps, and rates the transaction as 3 out of 5 stars for slow shipping.
Acme, Inc. declares that it has received the benefit of putting 10,000 lb of carbon into the commons, and (satisfying the "carbon-limit" condition of this currency) Acme's declaration monthly average is not more than 20,000 lb.
So these if these A, B, C, D & E are our phonemes, then our alphabet will be a set of symbolic forms that can represent items from those slots. The open money platform simply formalizes these slots, in the same way that the letter B is a formalized representation of some sounds. The open money formalizations for
A & B: are the open money account names in a namespace
C & D: are the data fields, (i.e. amount/description)
E: is the currency specification language (a programming language in which to state things like credit limit = $10,000)
So where does all this leave us? The move from pictograms to an alphabet is a phase shift that resulted in a whole new landscape of possibility. It's a simplification that allows for universal literacy, which is the fundamental precursor of democracy, among other things. There is another phase shift awaiting us which can lead to literacy in this other form of writing. This phase shift likewise will result in another whole new landscape of possibility, one that has the potential to solve the great wealth dilemmas or our age, most pressingly that of creating an economic system that doesn't destroy the commons. When we learn to make our own wealth acknowledgments, instead of just passing around the tokens created by someone else, like getting a letter written for us in the marketplace, then, just as democracy gave us political self-governance, we might achieve economic self-governance.
Replies to This Discussion
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Permalink Reply by Gerry on -
One problem though, the theory that knowledge is at base a rational enterprise where knowledge is constructed concept by concept as a structure may be built with bricks.
I'm reading a very fascinating book that hypothesizes that the foundations of language and ideas is in the emotional connection in the caregiver relationship. We first learn to communicate emotion and intentionality with our face and voice in intimate and fundamentally emotional exchanges. Higher level constructs like concepts come much later in the development process.
Likewise with wealth is built on deeper foundations than the exchange of valuables. Where did the valuables come from in the first place? Production depends on many social processes going back to when our hominid ancestors first created stone tools and began to search for sights with the right kinds of rock. The very fact that a particular type of stone is valuable is tied to the fact that it can be made into a tool.
Our thinking about currencies has to be grounded in the social networks that are the sites for exchange. Our task must be understood as an intervention in the dynamics of those very social networks, and the purpose of those enhancements is to improve production. Note that this is not necessarily to improve output or efficiency, that is what has come about because we have gotten into the habit of measuring everything by a single kind of currency. I won't go into why, I'm sure this group know much of those arguments. The way they demand constant growth to survive and inexorably concentrate monetary wealth need to be seen as problematic.
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Permalink Reply by Gerry on
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One thing I am very unclear on with respect to how open money is being conceptualized, do we need to distinguish some broad classes of currency. It seems to me that tradable currencies must remain a distinct class the requires very special treatment. We are all familiar with problems caused when the issue of a currency is out of balance with redemptions. In the worst cases there is a fraud involved where value is removed by insiders with preferred access, and many others end up with worthless currency.
The question I have is whether we have an effective theory that describes what the rules and properties of a sound currency must be, or at least gives us some tools for analysis.
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Permalink Reply by Eric Harris-Braun on -
To answer your question, I'll go back to the analogy with writing. You could have been asking: do we have to distinguish some broad classes of written work? Well, when designing the alphabet, the answer is absolutely not. Of course once we have the alphabet we certainly will in practice. There's poetry, novels, essays, prose, "text-books," etc. These classes of writing depend in part on the purpose. The types of "understanding" generated by the conversation, are broad ranged. Poetry generates a very different kind of understanding than does a text-book. And certainly the same thing will happen with classes of currency.
But what I think is absolutely key is that this is not an a-priori task. The alphabet wasn't invented because we knew we wanted to create "mystery novels" as a particular class of writing. It was created because expressing abstract concepts in pictograms is at best tedious. Likewise, I have no clue what all of the classes of currencies will be. But I do know that it's hard to acknowledge non-tradable wealth using conventional currency.
As to your question about effective theory: the answer is a resounding no. A major purpose behind open money (and any meta system for that mater) comes from the fact that such theories are developed post-facto from empirical evidence. Or to make another analogy, I pose this question: "is there an effective theory that describes what the rules and properties of a sound web-site must be?" Well perhaps yes, but if you are at the stage of designing HTTP and HTML that question doesn't apply. It's at a different logical level, and keeping the levels separate is fundamental. The difference between the phone-network, and the internet, is two networks where the logical levels weren't kept separate.
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Permalink Reply by Michael Linton on
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Very nice Geoff, particularly the relation between value flow and wealth. But please note that not all value flows will necessarily result in wealth increase. There are social / moral issues to be considered, and they aren't entirely determined by the systems of value accounting.
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Permalink Reply by Geoff on -
You're right, Michael, of course. Sometimes flows can be injurious or have unintended consequences (just as exercise can, as I learned the hard way not so long ago). For the kinds of wealth whose increase is measurable, I think we can also measure decrease when that occurs. As you say, there some kinds of wealth whose increase and decrease are immeasurable for accounting purposes.
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Permalink Reply by Gerry on
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Thanks, yes I agree, and I would point to broad classes of language that are in fact very specialized. Mathematics (and science but this gets complicated by differing schools and traditions from different fields) and now computer languages including the ones you mention.
Yes, I can begin to enumerate the properties that languages in each of these categories must have, and I know we can start to do the same with currencies. I mentioned some properties in another thread, things like stability and good trust mechanisms (they can be implemented with classes of related non-tradable currencies that might provide measures of risk and quality for trade transactions).
Yes, I understand why you want the expansive definitions and thinking at the platform design time, but I think there are also specialized requirements for certain sub-classes of open currencies that we would do well to explore at the beginning of the design cycle. The details will still be left for later and to be subjected to experimental validation, etc., but you might design yourselves into a corner if you don't explicitly consider it and document the existence of future interfaces at the earliest possible points.
And, I am really interested in the theory level. Clearly the need to explore this experimentally with real systems is great, but I do think we need initial models and preliminary theories and hypothetical points that we intend to explore and expand. If you want to sequester this from some of the practical discussion, I certainly understand and support that.
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Permalink Reply by Gerry on
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If I understood correctly in my conversation with Michael, the intention is that the LETS system would have a special place because it has some properties that make it good for exchange. I would think of a LETS instance as just a set of accounts, denominated in the local "official" currency, linked as with a currency peg used by some national currencies.
One of the possible transaction would be to pay off a LETS obligation in cash, or to give someone cash and they would accept a LETS obligation (reduce or make their balance more negative). Doesn't this lead to the system acting sort of like a distributed bank with a cash balance?
Another concern I have is that once you free up the balances from the "stay positive" restriction, how do you keep someone from just "going negative", spending and spending and never producing? Are the balances visible before and after the transaction? To the parties, to the community or everyone?
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Permalink Reply by Geoff on
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Two people, A and B, are out hiking on a hot day, and they meet on the trail. A has a bottle of water, and B has none. Who is wealthy, in the sense of well-being? Before they met, A was wealthy, because he had the means to meet the challenge of this hot day; B was less wealthy, because he didn't know how he would make it through the heat of the day. Now suppose A passes his water to B, and in exchange, B gives some kind of wealth-acknowledgement token to A. It makes no sense to me, to say that B has transmitted well-being to A, so that now A has more well-being and B has less well-being than they had before the exchange. It makes much more sense to me, to say that B has received something of value from A; something of value has flowed from A to B. Otherwise, we are promoting the same argument by which poor nations are convinced they would be better off (they would increase their well-being) by converting their agriculture to export crops and diminishing their self-sufficiency. Follow the ball, I always say! Money is a shadow that passes in the direction opposite to the flow of value. Value and wealth are not the same thing; value flows, while wealth waxes and wanes. Just as the strength of a muscle increases with exercise (moving the ball), the wealth of a network increases with the exercise of value flowing through it. Both A and B might even learn to care about each other enough, so that they share the water bottle, each drinks only as much as he needs, and both get home safely.
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Permalink Reply by Gerry on
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Interesting post, good example. I wonder if any of you know of "the gospel of slack". Slack is a property that is a lot like health and wealth in that you can't transfer it, it isn't additive, you don't get twice as healthy if you have a whole bottle of water vs. half a bottle. If you planned ahead and have plenty of slack because you carried along enough water for your expected needs and contingencies and you meet a cousin on the trail through dessert terrain and your cousin has either not planned ahead or had some problems (maybe her water bottle had an unknown leak). You have in fact encountered a contingency, someone you care about in need.
If that person is your enemy, then no amount of money or barter value will make a trade happen. The only thing that will make that transaction happen is the charity represented by the story of the Good Samaritan. It is a deeply human act to help someone even when know value is offered in return, when there is virtually no possibility that the act will be reciprocated.
I think the real point of this is that the exchange of value and acknowledgment has its foundations at the right side of the acknowledgment diagram, on gifts, not on trade. Trade is an adaptation for fair exchange of value between individuals who do not have deep bonds of kinship or loyalty. This situation also shows the breakdown of the concept of fairness. Market trades cannot be said to be fair or unfair, only coerced or not. If you are without water and meet a stranger in the dessert, what would you offer him for a drink? It may be worth your life and so the stranger giving you water, even at what would be the going price when you get back to the nearest town you might owe that person your life. The exchange of a few coins is meaningless in such a transaction. The demand for a price that cannot be paid or impoverishes the buyer is not trade. We call that extortion.
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Permalink Reply by David Braden on -
I like the parallel between writing and wealth acknowledgment. And I can see the application to information such as trust worthiness. My problem with following the shift from a scarce medium of exchange to a purely representational one - has to do with relative valuations - how do we decide what a wealth acknowledgment issued in the past entitles the holder to receive in the present?
I think that issue derives from viewing transactions as a double flow. As Geoff says - money flows one way and value flows the other way.
Those flows can also be thought of as being part of production and consumption cycles. Money represents a claim on the right to consume some part of what is produced. Wealth, however, is "ownership" of the capacity to produce value. (I suppose a wealthy person could hold all their assets in cash - but I don't know anyone who does that) Educational degrees, certifications, licenses, land titles, and corporate stock all represent a conversion of money into ownership of the capacity to produce value.
If we think of all of the members of a society as owning a right to a share of production based on what each has contributed - does the proposed alphabet encompass that information?
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Permalink Reply by Geoff on
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Right on, David! Scarcity-based valuation makes sense only in the context of ownership, entitlement, rights and claims. In that case, wealth is ownership of capacity. On the other hand, generosity-based valuation makes sense with and/or without ownership. In that case, wealth is capacity (including the capacity of both that which is owned and that which cannot be owned), as distinct from ownership of capacity. There is a word that has the potential to bring these two viewpoints closer together: equity. Equity can mean ownership, and it can mean fairness; share ownership or fair share. In the end it comes down to choosing forms of accounting that align with our understanding of what it means to share, aligning valuations with our values.
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