I chimed in with:
When you expand your perspective about currency beyond only medium of exchange / monetary currencies the need for fiat currencies becomes clear.
For example, debiting a University for granting a college degree as reputation currency starts sounding awfully silly. There are quite valid reasons for fiat currencies.
However, if your goal is to create sustained monetary value, that form of issuance tends to be "bad tech." I think we might be able to transcend some of the dogmatic Mac/PC or Fiat/Mutual-Credit posturing if we consider these broader applications they create sharper contrasts and clearer hues so that we can learn which adjustments effect what outcomes.
Imagine analyzing breeds of apples. There are a lot of differences between them, but mostly a lot of similarities when you compare them to all other fruits. It may be that if we want to nourish ourselves effectively, that we shouldn't rule out all other fruits. They each have their own value and there are things to learn from them that may even teach us a few things about apples.
(Yes... You might accuse me of making an apples to oranges comparison here.)
Later Ernie asked: “I would like to know what you mean by this: ...if we consider these broader applications they create sharper contrasts and clearer hues so that we can learn which adjustments affect what outcomes.”
After a few days I responded:
Sorry about my delayed response. Let me try using what I think is an apt metaphor. The design of any currency establishes a range of possible behaviors of the individuals participating in it as well as a trajectory for the user community as a whole (as a sort of collective entity or organism).
I think this is very similar to the role that DNA plays in living creatures.
A currency organizes connections and interactions between groups of people into a kind of collective behavior which creates a kind of living social organism. The design of that currency (the rules about issuance, transaction, conversion/co-function, retirement/expiration, participant classes, governance, etc.) are the DNA of this social organism.
DNA doesn’t tell us exactly what each individual biological critter will do, but it does define a particular range of possibilities and tendencies. We know pigs don’t fly, bats don’t “see,” fish must live in water, and most humans develop language capacities. That doesn’t tell us what sentences a particular human will say, just like the design of a currency doesn’t determine exactly what transactions individuals will do.
Suppose you want to understand human DNA – map the human genome. Scientists have found it VERY useful to learn from non-human creatures for many reasons. Simpler combinations of variables (fewer chromosome pairs), easier experimentation (eugenics / experimental breeding of humans is frowned upon), greater variety (difference between different animals create contrasts which help identify patterns that might be harder to see between humans who are so similar), etc.
I’m suggesting that as currency designers (even if what you want most is to understand monetary currencies) that expanding our definition of currencies to include non-monetary configurations helps in the very same ways that considering non-human DNA helps in mapping human DNA.
- There is greater variety. Contrasts stand out much more starkly. Postage stamps fill a very different niche than grades on tests or bus passes. There are patterns amidst that variety that are direct outcomes of the design of each currency.
- People participate more freely. Consider how many hundreds of millions of people are freely participating in currencies like five-star product ratings, eBay reputation, user participation metrics, certifications, college degrees, performance reviews, stocks, stamps, movie tickets, etc. in contrast to how few are participating in general purpose money substitutes (LETS, Berks, local currencies, and even commercial barter).
- Failures are less costly. The impact on people’s trust, ability to sustain themselves and willingness to participate in another “experimental” community venture are less severe when people don’t expect to make a living from the experiment. With non-monetary currencies, we can experiment without people losing their retirement funds.
- Results can be evaluated faster. One of the things people often expect from a monetary currency is long-term stability as a store of value. But non-monetary alternatives can be used to solve specific problems or meet specific goals then be retired. Even the WIR has barely been running long enough for many to consider it in long-term analysis.
This is what I meant in prior statement you asked about. I think there are many more reasons to consider these non-monetary currencies (such as gift economies are fundamentally more efficient than market economies).
Getting out of the rut of thinking that new “money” is the only real answer yields many opportunities for us. And yes – these broader “currencies” solve real problems that real people are grappling with every day. Money isn’t the only solution to our problems. And as we all know, it is in fact the source of many of them.