I've been deep in the alternative currency community for the last five years or so. Unfortunately, even after the economic crisis of 2008, our movement still hasn't had anything more than anecdotal success. To tell you the truth, this has on occasion gotten me down. There is something deeply unsettling about the mismatch between what is obviously so (the unsustainable nature of conventional money), and how people behave in reality.
Recently, however, I have been feeling a lot more upbeat about the prospects of creating a new economy. I started feeling better when I realized that it wasn't about ME, as a currency designer, creating a new kind of economy. There is an often unspoken assumption for many of us in the currency design world that good currency design is what gets people to behave in new and more sustainable ways. In essence, if you can get enough people to participate in a well designed currency, their behaviors will be incentivized in ever more sustainable and virtuous directions. The more I have become aware of this assumption, the more I have grown wary of it.
The core problem in this assumption is that currencies DO NOT create behaviors. Currency designers DO NOT play puppet master to the unsuspecting and largely ignorant masses. Currencies are adopted and adapted because they support existing behaviors. For instance, when we made the shift to fractional reserve banking, the merchant class already needed a form of money less controlled by monarchs to support an emerging industrial production model. The evolution in currency happened because it supported an ascending pattern of economic production.
So, where do we see an ascending pattern of economic behavior today? While there are lots of experiments in local artisanal production, IMHO these are dwarfed in significance by what Yochai Benkler has called "commons based peer production." This kind of production has been most famously embodied in Wikipedia, open source software, and Creative Commons licensing. Commons based peer production is global in scale, and is made possible by the many-to-many communications technology of the Internet.
The main question for us then, as currency designers, is not how to get people to buy local, or how to incentivize more sustainable behavior. The main question should be how to support the growth of this entirely new type of economic production. Now, in no way I am discouraging folks from experimenting with different incentive structures for the existing economy. I am simply saying the sea-change we need to catalyze will be founded upon an entirely new pattern of production. Imagine what would happen if manufacturing was organized in the same way as Wikipedia. This is not as far fetched as it sounds now that the cost of 3d printing is dropping into reach of everyday folks.
What's most important about this new mode of production is that it is NOT about the quid-pro-quo, something-for-something social contract. The primary motivation for participation is intrinsic rather than extrinsic. Therefore, in the most fundamental way, this new currency will NOT be based on the quid-pro-quo social contract. This is difficult for us to conceive of since all modern money is based on the assumption that producers of value should be incentivized with rewards as determined by the market. Even most alternative money substitutes simply recapitulate this basic pattern. The logic of the quid-pro-quo market goes something like this "I'll provide my service at $50/hour but not $30/hour, and if you can afford it, you are worthy of my time."
Instead, these new currencies will be about making it easy to find the right place to put one's own efforts based not on extrinsic reward, but on intrinsic value. In other words, where will my efforts be the most fulfilling to me and most in harmony with my community? This is about right placement, and about being in economic communication with people all around the globe.
I am highly optimistic that this kind of world is not only possible, but inevitable.
As I sit here writing to prospective wwoof hosts I'm nodding my head in agreement. However, I can't shake the feeling that those that feel this way are a very small minority and may very well stay that way. I sincerely hope I am wrong.
ReplyDeleteHello; Wonderful article and I deeply appreciate your humility in this difficult objective that you have taken on.
ReplyDeletePlease take a look at The Ingenesist Project. We have written specifications for Social Capitalism which includes a currency design - actually it is a securitized innovation bond that will back a social currency.
Please see this video series http://ingenesist.com/introduction and contact me directly if you wish.
Many social currencies fail because they cannot be capitalized or securitized. This requires that the institutions that support the currency must be designed and operational long before the currency is specified.
The key that we found is that the dollar is backed by debt. Debt is a promise of future productivity. Innovation is also a promise of future productivity gains so a currency backed by innovation is fully convertible to a currency backed by debt.
From this we specify a form of capitalism - with all the benefits of capitalism - where factors of product land labor and financial capital are replaced with factors of production social, creative, and intellectual capital. Then we develop the analogy across the financial sector.
Let me know if this makes sense to you - we really are a lot closer than many people would think...
Dan
Steward, The Ingenesist Project
Seattle
Hi Alan,
ReplyDeleteThis is an extremely insightful and important post. I hope the implications of your analysis are not lost on other readers, primarily that competing with thoroughly entrenched and ubiquitous existing currencies will be a very difficult endeavor. The opportunity lies in capitalizing on new economic models that are not served efficiently by existing currencies. That is where the uptake will occur naturally.
I have recently begun writing about these same issues from a very similar perspective. My most recent post (http://bit.ly/by8D5e) analyzes the environmental factors that will encourage the usage of abundance based currency models (rather than new currencies based on the same transactional/scarcity model).
I look forward to many productive conversations in the future.
@GregoryJRader
Hello, glad to find this blog. I have have been working on what I describe as LETS 2.0. LETS 1.0 is actually a local version of the debt based monetary paradigm used by privatized banking and particularly centralized privately controlled banking. I am familiar enough monetary history to know that people do change particularly when the innovations aid improvesd the capacities and reduces their efforts to survive and prosper. The adoption of innovations follow the same adoption folloed in the adoption of technologies: innovators, early adopter, early majority adoters, late majority adopters, late adopters, and laggards.
ReplyDeleteThe level of economic and monetary literacy in the US in profoundly low, and often the value of community/local-centrism is confused with the actual value of the community currencies (Ccs: using paper currency) or the Community exchanges (Cxs: using a website). The absence of an economic and monetary literacy among community advocates of various types basically opens the door to snake oil peddlers and embezzlers. Cooperatives for instance have been intiated more out a reaction against the dominant corporate paradigm rather than in favor of a well thought out alternative and of operational models.
part two is entered below Tadit
This comment has been removed by a blog administrator.
ReplyDeletePart of the process requires understanding how actually socializing change and innovation happens. The short answer is that it requires building up a culture of practice foremost. Part of the process require also education and self reliance toward problem solving. In a context where decision making is based upon policy manuals, the capacity for problem solving vanishes. Economic and financial literacy have generally not been an important part of the advocacy among Cc/Cx advocates.
ReplyDeleteIn times of stress and wage deflation people are probably most welcoming of an altenative. Again, there are also no established best practices, making collapse likely. Often, the acceptance of a particular Cc or Cx is based more upon public relation than the process. The most interesting example is the Boston area merchants of American colonial times particularly prior to 1775. Much of the Massachusetts Bay Colony's economy was based upon barter due to a lack of currency. The book "The House of Hancock" tells about the process through examining the ledgers of Thomas Hancock, uncle to John Hancock.
At the innovation of currency in the west in Lydia which then spread through the region was also about democratizing the established "gift" based economy, read as "feudalist." In than era this change took about 100 years to be generally accepted.
Coming back to the LETS 1.0 model it is very much like Andrew Jackson's battle against the Second Bank of the US which ended in the 2nd US Bank dissolving and Jackson allowing a variety of monetary libertarianism also known as the Free Banking period which until recently held the record fot banking fraud per capita. By 1860 the US had over 7000 different and locally promoted currencies usually based o local banks.. Greco for instance goes heavy of the libertarian ideologyand the repetitition of the words "free" and "community," and seems mia in regard to actually being serious about integrating the related body of knowledge.
My point with all of this is that people do change often out of necessity and sometines based upon information. To Dan Stewart, while your approach is interesting, it would be enhanced more by understanding monetary history and the varieties of economics which are social by nature, Georggist econmics for example, and chartalism is another. There is a substantial history of engineers branching into monetary issues. One major reason is that monetary economics has been an orphan domain relative to most academic economics departments. However, there are monetary historians and economists of a serious nature which need to be considered rather than simply being swept away in an exterior reframing process. I agree with your Sell-ibrity critique and comparison to a outcome based analysis and perspective. Comparing the Highlander Folk School's approach to community organizing against the Industrial Areas Foundation celebrity approach to social change should enhance your argument. The term "social capital" has been used in a number of different ways over the past 100 years or so.
We (Re-Imagining Economics) are working toward a program based upon Drupal modules, that has been slow going due to our primary progarmmer person having other projects also demanding his time.
LETS 2.0 is a product of my reading everything I could get my hands on related to either monetary history or monetary economics. In the process the domain of finctional economics. Much of the model is congruent with post-Keynesian economics and it uses the American Monetary Institute proposal for monetary reform. Please, visit the following link to an overview of the LETS 2.0 model. I would appreciate your comments.
in cooperation, Tadit Anderson ideasinc@ee.net
http://www.economics.arawakcity.org/node/699
Ok the progam here or Google is preventing my appending the rest of what I wrote as a second message, What a bit of interferencesee
ReplyDeletesee the document at this url http://www.economics.arawakcity.org/node/699
for our LETS 2.0
Sorry folks I didn't mean to trash out the place, the processing of the entries seems to be a crawl speed and my fingers operate several steps about. Now I whidh that this thing had an edit function dop that I could remove the doubled entries. I apologize Tadit
ReplyDelete