Wednesday, March 25, 2009

Why the "currency" in the the meta-currency project?

In this blog post, Guillaume Lebleu takes a stab at defining the word currency, and recommends keeping it fairly tightly bound to its traditional meaning around "a form of payment in a trade". So I thought it would be helpful to say some words about why in the meta-currency project we use the term currency in different and broader sense.

First a short digression to build a metaphor: There are three realms of the physical world that on the surface appear quite different: light, sound, and waves on water. Under the surface, however, they are united by the general patterns described by the mathematics of wave mechanics. Once wave mechanics was understood, and we had a language to express those patterns, not only could we look at these phenomena with totally new eyes, it also meant that we could engineer physical systems that do incredible things to synthesize these realms: sound can be converted to into physical or electric representations, recorded on wax cylinders, transmitted over light waves, etc. etc.

What we are claiming in the meta-currency project, is that the seemingly different social phenomena of monetary exchange, eBay reputation points, grades, coupons, airline-miles, etc.., are similarly expressions of a common pattern. They are all:

formal information systems that allow communities to interact with flows

And we call those systems currencies, i.e. trade currencies, reputation currencies, loyalty currencies, performance metric currencies, etc. In each case the flows they interact with, or the ways they interact with flows may be in different realms of social manifestation, just as sound, light and water waves all have wave properties in different realms of physical manifestation. But what we have found, is that once we recognize this common pattern, we experience a paradigm shift: we change our focus from the information tokens, to the flows themselves. We begin to actually be able to see these flows, and see how the flows are what create wealth, and how the information tokens just help us interact with the flows.

Thus, the goal of the meta-currency project is to create a new expressive capacity, a "flow mechanics" that amplifies our ability to see and shape the flows that underlie healthy social systems. This is much like how "wave mechanics" is an expressive capacity that gave us amplifies our ability to build physical systems.

In an e-mail to me Guillaume created a metaphor to illustrate the difference between currency and reputation systems as part of describing why he's not comfortable using the word currency for both. He said: "currency is the water in the conduit, the reputation is the filter in the conduit, but the filter isn't fluid." This metaphor certainly works to an extent, but it doesn't reflect the paradigm shift that I've described above. I think the metaphor is more powerful if it is expanded thus:

The flow of water is necessary to life in a house. We need lots of integrated tools to shape how that water flows. We need pipes to direct where the flow goes, we need valves to keep the flow going in the right direction and in the correct amounts, we need filters to keep out crud from the flow, etc... All together, we call this plumbing. It's an integrated system.

Our goal is to create a platform that will allow communities to build the social plumbing that allows them to interact in all the necessary ways with the many types of flows that will make them radiant and healthy communities. I am totally convinced that such a platform must be flexible enough to carry information about more types of interactions than just trade, precisely because the paradigm shift that I have experienced is about the underlying unity of the patterns and processes involved.

So, my current sense is that claiming an expanded use of the word currency is a powerful strategic move to help awaken the understanding of this paradigm shift. Using old words in new ways is a time honored technique to get us to change our thinking, and that's exactly what's needed. Guillaume does make an excellent point in the post about the how the word currency when translated into other languages doesn't carry with it the flow connotations we have for it in English. That is a serious strategic issue, but I'm not sure how important it is that if we expand the meaning of currency in English that we also have to do so in all other languages. If it doesn't work in a particular language why not find a different word in that language that does? Strategics I think are always language and culture specific. But please note, that I'm not wedded to forcing the word currency into talking about all these types of flow shaping tools. It's just the best I've heard so far. The point is that what I want to focus on is flow shaping information systems for communities to build wealth at all levels, because they are all integrated. But who knows, maybe the best strategic move is to call it the meta-plumbing project!

I want to reiterate that I'm not talking about using this language to explain how to use Twollars, or time banks, or eBay ratings, or any particular currency that is created using the platform. That makes no more sense than talking about wave mechanics when trying to explain how to use a microphone. But to build and design a microphone and the devices it is attached to, we had to have developed and gained fluency in the language of wave mechanics.

Just one more thing: This sounds like an overwhelming task, and really long term. At one level it is, in that the fullness of what will come of it is huge and will only appear in the long term. But getting started is not that hard, or that long term. I believe that at the very least, the crucial components of the kind of expressive capacity or language of flow needed to build this kind of plumbing are actually achievable short term. That, actually, it is like wave mechanics which boils down to some very simple relationships. There are few underlying basic relationships out of which all such flow token systems (including money exchange ones) can be built. These relationships become the basis of the meta-currency technical platform we are building, at the heart of which is the meta-currency protocol. More on that very soon...


Guillaume said...

Thanks for the continuing dialog, Eric. Perhaps what all these social phenomena have in common is that they are all formal systems of indirect reciprocity. In healthy societies, people give real wealth like time and intellectual capital to others with no direct/instant return, hoping to get equivalent or more real wealth in return later on (whether directly to them or to their loved one). Formal systems of indirect reciprocity allow to track these gifts and returns more precisely, in ways that look like a monetary currency (which is accepted so widely that we view a trade of real wealth for money as reciprocal).

Alan Rosenblith said...

I want to add something here which I may expand into a whole post, but I wanted to get it out while it was fresh.

Good permaculturalists observe all the flows of energy, nutrients, wind, water, etc on the land before altering it in any way. When agronomists compare factory farming with local small family farms, they usually say that factory farms are "more efficient." This is because they only measure efficiency in terms of labor. Per hour of labor, factory farms are the most efficient. However, if you measure efficiency in terms of calories in for calories out, or in terms of amount of food per acre, they are hopelessly inefficient. The reason agronomists can't see this and permaculturalists can is that permaculturalists are looking at agriculture as a whole system of interrelated flows, and the agronomist is concerned with only a few isolated flows.

Anytime when one narrows the focus of attention to a single flow pathway, one cannot effectively engage the system as a whole. To me, good currency designers are permaculturalists in the domain of economic meaning. This means that in order to engage effectively with any economy, a currency designer must consider and work with a great many interrelated flows. Fundamentally this is why it is important to either expand the definition of the word "currency" or stop using it altogether. I prefer the former.

Alan Rosenblith said...

btw, great post Eric!

Nicolas Bemrond said...

Totally agree, the dillemm is : I speak about currency, money, monnaie monedad... who is a magical and marketing word or maybe we have to invent a new word but not known without meaning => evangelyze the world
I have often this question how i can convert the meta currency, and who fix the market. It's a totally different scheme where the value is based on reputation. Maybe this money has to be check to give you as google your reputation / recommandation Rank who certify your generosity and your skill.
Maybe a part of digital passport

Sorry for my french english...