replacing money*

Money has worked pretty well over the years, but it is best suited to zero-sum trading (where, for example, I give you a chair and you give me $50, and then we are both happy.) Money is not so great at modeling other situations though, like chore distribution in a household, or volunteer efforts in a community. In fact there are lots of things we would like to do where money really isn't appropriate, because the nature of the transaction is just different. For instance if I watch a video online, I've gotten entertainment, but I didn't take anything away from the author, not time, not a physical good, so the interaction is not really zero sum.

Charles Stross writes about this topic in the early parts of Accelerando, where Manfred Manx is trying to escape the old zero sum economy altogether by simply doing favors for people and letting them reward him as they see fit. Clay Shirkey talks about large groups of people coming together for non-monetary projects in Here Comes Everybody, but what is missing is a currency... The good will and social capital that is built up within a micro-community is inherently non-transferable to another community, and without the security of being able to quantify and transfer this social good, incentives are low to produce it, and trade remains local and conservative.

In the early days of physical trade, local bartering systems gave way to communal, interchangeable currencies. What we have now is a similar problem, where we have a billion tiny economies of sharing, but no currency to tie them together, no liquidity of volunteerism. In the same way that your net worth in dollars is a measure of how much you own and control, your net worth in the currency of sharing will reflect the strength of your ties to the community, and the community's ties to you. Similarly to money, it will confer real-world benefits. Unlike money, it does not go away when you use it.


*I am not an anarchist or a communist, and in fact I don't think that money will ever quite go away, but I'd like to see a parallel system of currency that is better suited to the future.

5 comments:

  1. "Money has worked pretty well over the years, but it is best suited to zero-sum trading (where, for example, I give you a chair and you give me $50, and then we are both happy.)"

    I'm not sure if this is pedantry or an important correction, but that isn't a zero-sum transaction at all, if the chair was worth more to me than it was to you. We both came out ahead.

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  2. Yeah, it's true that the total utility of the system increases. So in this sense all market transactions (undertaken by rational, non-coerced, full-information actors) are greater than zero sum, in terms of utility.

    I'm being more literal here: the total amount of money in the system does not change, it's still $50. Also, the total number of chairs in the system doesn't change, it's still 1.

    In contrast, if I pay a dollar to download a song, there is still $1, but now there are 2 copies of the song. So, the transaction is asymmetrical; you get to keep your song, but I have to give you my dollar.

    What I'm thinking is that it should be possible to build a different currency system, call it 'magic beans.' I start with one bean. I grant you one bean to download your song, but in doing so I do not lose my bean. So now we each have 1 bean and 1 copy of the song.

    The idea is that beans more fairly and accurately models the utility function for downloading than money does. So yeah, when I describe money as "zero sum," I'm talking about the currency itself, not the underlying utility function.

    Or, money encourages us to think in near-zero-sum terms of ownership, gain and loss, but beans encourage us to think in greater-than-zero-sum terms such as sharing, social networks, and cooperation.

    Ah, buzzwords.

    My hunch is that this kind of currency, in addition to being a good model for sharing on the tubes, is also good for managing volunteer/community labor.

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  3. The trouble is that a currency as you describe it is a recipe for runaway inflation. Brian and I will each agree to repeatedly "buy" something from the other and soon have a million beans.

    In order to have a workable currency system, you can't let your rational non-coerced full-information actors make whatever transactions you like. Somehow you have to have every bean-holder in the world have some kind of collective input on every potential bean transaction.

    It sounds really hard to get the benefit of market forces in this kind of situation!

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  4. "Somehow you have to have every bean-holder in the world have some kind of collective input on every potential bean transaction."

    Exactly. For one thing, unlike money transactions, every bean transaction is recorded online, publicly viewable, publicly squashable. So this enforcement is in fact not unthinkable.

    The scenario you describe is a lot like trying to up-mod yourselves on a community-moderated forum: it's highly visible and highly correctable by the crowd.

    Additional systemic anti-inflation measures might include adding a vesting time to certain transactions, and auto-detecting closed feedback loops and flagging or auto-containing them.

    Yes, inflation is a concern, and the system will be gameable to some extent, but I think it's containable. Since beans represent a shared utility, users face more limits in using them.

    In the same way that the wikipedia community comes to consensus on articles, I expect the bean counters to come to agreement on what kinds of transactions are positive.

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  5. I think there's something to be said for the idea of respect or "social power" as a motivation.

    You've got this intangible thing that people can still certainly gain, lose, and rank others by. It's not necessarily zero-sum, but it is still... relative is the word, I guess. That respect only gives you social power if you've got more of it than the other people in your group, no matter how much respect is in the group collectively (if that makes sense).

    Some people are motivated to only do as much as the rest of the group, at least keeping them in decent standing. And others' competitive natures motivate them to push out and be awesome. The tangible rewards of this power really depend on the group itself and circumstances at the time, but they're there.

    This happens everyday already in social groups; I guess it's a matter of harnessing it and channeling it into projects. Which is tricky because it's still so darn subjective and ethereal and whatnot.

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