Friday, August 21, 2009

Currency Quips for later development

I wrote these responses in the comments thread on this article about The End of Social Movements. There are some currency issues in them that I want to capture for later deeper discussion, so I'm reposting here so I'll know where to find them.

Money and Power Pathologies


Will – I think you make a good point that they’re ability to fool us, does not make them the same thing in essence. And I even like your lunch money metaphor.

So consider this: We start making alternative lunch money. It is only accepted at our own food carts, and participation is completely voluntary. The corporate theives/bullies/thugs/raiders can only use it for lunch in that community and there’s only so much lunch they can eat.

However, if they can’t use it to buy up real estate, bribe politicians, make speculative investments, build their empire of power an anonymity, then it isn’t worth their time and energy to steal.

Humans are susceptible to a particular kind of magical thinking that verges on pathological. Specifically, it has to do with having a magical item that give you a kind of universal power. For alchemists and conquistadors it was gold. For modern Americans it is MONEY.

You can hold it in your hand, and use it to get ANYTHING! This is a temptation that attracts the greedy, the power hungry, the corrupt. Heck, it attracts almost all of us, but some go too far while under its spell.

The sooner we learn that we actually do NOT want our currencies to be universal power objects, the sooner we can get back to having those currencies be designed to fill different niches and meet the needs of our distinct communities and repel the conquistadors.

Rushkoff didn’t say it in this piece, but much of this boils down the the corporatization of our money. It’s time to think for ourselves about currency. The bill of goods they’ve sold us about it is bogus and is designed to feed their hunger and increase their wealth.

We can learn a lot from from nature. Notice that each organism has its own currency / circulatory system. And that the lifeblood is mostly not interchangeable. Human blood is not the same as dog blood or tree sap. The more universal items of value (such as water and air) are not scarce.

What would currencies and economies look like if instead of being designed to benefit a few power-mongers, they were designed to support diverse communities and people?

On Gift Economies


Mika, Rushkoff isn’t saying Pirate Bay doesn’t function well as distribution system, but that it is more anonymous than he’d prefer. He already has the Internet as an efficient distribution system and will give the book to whoever asks for it.

This whole article is about being connected on a human level, staying grounded, not being swept into abstract movements or corporate entities. So his desire to be connected as a human to the people that want his book is completely consistent with his thesis.
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I can't speak for Douglas on this point, but I can speak for myself.

Gift economies function according to different principles than commercial economies. In a commercial transaction no relationship is required nor inherently created. Anyone with 3 bucks can buy a box of nails at the hardware store and remain anonymous if they choose to. It is a tit-for-tat exchange which ends the moment it is done.

However, if I walk across the street and ask my neighbor for a handful of nails, it is a completely different transaction.

- It requires relationship. If I'm a bad neighbor he may not go out of his way for me.

- It is a GIFT, not an exchange. Don't fall for that lazy thinking that *everything* is an exchange. He doesn't want me to hand him 3 bucks or to bring a handful of nails back next week after I bought more. He's not trading it for the "feel-good" or to have me personally indebted to him.

- It is an investment in a SOCIAL CONTRACT. Gift economies function by social contract. If you're a good "citizen" according that contract, then we're good with each other. My neighbor is investing in a neighborhood ethos where we do this stuff for each other. It's a pay it FORWARD, ACROSS and only occasionally BACK economy.

So... why does this matter. Because social contracts exist between PEOPLE WHO KNOW EACH OTHER. Given our current paucity of robust reputation currencies, they have not traditionally scaled beyond family/tribe/village.

But this is a core part of the economic shift we are undergoing! We are using information age technology to create wide-scale social contracts, reputation currencies and gift economies! This completely breaks out of the box of all traditional "economic" models which assume everything is about exchange.

Anyway... these are my words not Douglas', but I'll bet the spirit of it is at the core of his desire to have an actual connection with people he gives his book to.

Anyone who wants to remain anonymous and disconnected can feel free to BUY a copy. But... What's possible if we stop hiding behind money *pretending* to be independent and start acknowledging our joyous interdependence?

When we set the money-making aside, we tend to take pretty good care of each other.

Money and Anti-Inflation


Lastly, this one is a response on a Facebook discussion to a question about value reference currencies.
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One of the primary applications of money is as a MEASURE of value. All other measures have a reference standard which define them. That is why we don't worry about inflation or deflation of meters, inches, liters and grams every year.

By pegging a monetary currency to some standard (whether a sophisticated basket of commodities like the TerraTRC or an everyday commodity like an egg or loaf of bread) we can eliminate one of the vagaries of today's fiat currencies (value fluctuation). This is the primary reason that so many people (Austrian School of Economics and more) want a gold standard.

However, there is a difference between requiring that money actually be backed by a scarce commodity and pegging a currency to a value reference. Just because there is an official meter rod kept in a controlled environment in a laboratory, doesn't mean that you can trade your own meter stick in for it.

When we make a shift toward currency models designed for sufficiency instead of scarcity which don't vary drastically in supply, then currencies can be pegged in practice to eggs without having to actually be redeemed for them. (e.g. mutual credit systems which always have a net zero units in circulation yet the "supply" expands or contracts based on demand as we extend credit to each other).

Specifically to your original question, I find it difficult to believe that corporations will use actual Terra because of its demurrage aspect. You could write an international contract and use Terra as a value reference without ever needing to be in possession of a basket of commodities which is decreasing in value. I think that approach may have greater chances of success in being adopted.

Friday, August 7, 2009

Portland Pursues an Open Platform

Very exciting news from Portland, OR! City Hall has declared interest in building an "open platform" to enable multiple different currency efforts. In the last week three currency related efforts (CEN|PDX, The MotiveSpace Coalition, and the PDX Timebank) have collaborated in drafting a document that defines some basic requirements for such a platform. The city hasn't agreed to these requests yet, but they want to know more. I will most likely be meeting with them next week to discuss it further.

However, even if the city doesn't end up supporting this effort financially, I believe this is still a significant step forward. These three efforts have very different missions and currency designs. And, despite these differences, all have recognized the potential in having a common, open platform upon which to build their systems.


While this specific effort is currently in Portland, I see no reason for it to be limited to any geographic area. I would like to see these basic requirements endorsed by a wide variety of currency efforts around the world, so we can build a strong use case for this approach. Currencies (in the broader sense of currencies) will be stronger when they exist in a global context interlinked in a rich ecosystem of processes rather than as stand alone clubs.


What follows is the text of our document. Please feel free to express support in the comments section if you think this approach would be useful to you.


The Challenge:

Dozens of groups around Portland, including CEN|PDX, the MotiveSpace Coalition, and the PDX Timebank, are developing innovative programs which measure and mobilize resources and capital. We refer to strategies, systems, or programs such as these as "wealth building processes" - that is, as innovative new processes which track the creation and exchange of value, within a specific community of users.


Examples of wealth building processes:

  • Buyer loyalty programs (such as choose local programs, point systems, rebate systems, etc.),
  • Reputation systems (such as user reviews, consumer ratings, etc),
  • Exchange systems (such as commercial barter, CEN|PDX, Time-banking),
  • Asset sharing systems (bike sharing, tool library, car sharing, office space sharing),
  • Cooperative asset building programs (such as MotiveSpace's Community Asset Funds program).
Each of these processes track flows of economic activity, and structure incentives which reward community friendly behavior. One of the largest costs common to all of these processes, is the development of a robust, secure, and user-friendly information infrastructure which enables their programs, and maximizes their reach.

Vision:

To create public infrastructure (a Community Wealth Building Platform) for the city of Portland that reduces the technical costs for groups developing wealth building processes, and allows groups to easily interact with one another in a rich ecosystem of processes. We believe the city of Portland can leverage its interest in creating an open platform to the benefit of numerous groups by embracing the requirements outlined below.


Goals:

  1. The Community Wealth Building Platform must be able to address the specific requirements of existing initiatives such as CEN|PDX, MotiveSpace, PDX Timebank, and others.
  2. It must minimize the cost of adoption by participants, in particular merchants and end-users, which implies leveraging mobile phone, POS payment, and web infrastructures.
  3. Beyond its initial development costs, the Community Wealth Building Platform should look to its own community of users for its administration and maintenance costs.

Basic Requirements:

  • Accessibility: An "open" platform is one where the means by which wealth building processes are created and transacted in are open to all, and not contingent upon participation in any given program. Any organization or individual wishing to devise and track a wealth-building process must have equal access to all Community Wealth Building Platform user interaction interfaces. These interfaces may include but are not limited to, magnetic swipe cards, smart cards, SMS, web interface, and RFID chips. Community buy-in will be leveraged by engaging a broad swath of groups.
  • Configurability: An Community Wealth Building Platform must encourage the creation of new wealth building processes rather than predefine the scope of what is possible. A wealth creation process should be defined by the types of accounts within it, and the relationships and interactions that are possible between those accounts. In the interests of making this platform as easy to use as possible, predefined options should be available, but users wanting to innovate must not be limited by them.
  • Skinability: Not every group will share intent, style, or values. It is therefore paramount that this platform allow groups to brand their use of it however they like, without forced association with other groups.
  • Integratability: Data generated with these wealth building processes should be able to be seamlessly integrated into existing portals.
  • Openness: In addition, the platform itself must be able to evolve to suit the needs of its users so that it can stay relevant in the long run. Making the platform open source and creating open APIs for third party innovation are key to realizing this goal.
  • Organic Cross-Referencing: In order to build the richest possible ecosystem, wealth building processes should be enabled for cross-referencing. In other words, groups or individuals should be able to build wealth-building processes on top of other wealth building processes through reference. For instance, one group’s reputation system measuring a business's performance in sustainability might effect the credit limit of that business in an unaffiliated commercial barter system. Users and groups can choose whether or not and how much of their data to make open. By allowing the users to define the way wealth building processes interact, a rich fabric of interrelated wealth building tools can emerge.
  • Group-specific authentication schemes: Access to the Community Wealth Building Platform should not be contingent upon hard authentication. Rather, authentication should be defined by the groups who use the platform. For instance, a user may be required to give their SS# or EIN# to participate in a commercial barter network, but not have the same requirement for joining a loyalty program or time-bank.
  • Integrated Marketplace Connector: Groups will have specific needs for enabling their marketplaces. For instance, a marketplace for a tool library will have different needs from CEN|PDX. However, these marketplaces should be connected using standard formats whenever possible. This would allow search between marketplaces. An API for third-party developers would allow data to be filtered in a variety of ways. The level to which an offer or request is open to the public should be up to the users.
  • Privacy levels: Data in the system should be able to be restricted to people who are participating in a specific process, or made be open for all to see. Choices about the openness of data should be left to the users and groups. Groups should be able to define multiple layers of privacy specific to their needs.
  • Dollar Cost to Users: Access to the platform should not be contingent upon a fee structure. Individual wealth building processes may have pay-per-use structures, but the platform itself must be entirely free and open to both users and innovators.
  • Maintenance and Administration: The Community Wealth Building Platform provides multiple avenues by which to remunerate administration, and maintenance of the platform. Contributors to the platform should be incentivized using the same processes the platform enables.
  • Distributed Architecture: The Community Wealth Building Platform should be resilient, in that if a single server crashes, this wouldn't affect other servers or the ability to interact within the system as a whole. Similarly it should be easy to add new technologies (POS, 3rd party add-ons, etc) to the platform without affecting other portions of the platform.