Three Types of Economic Interaction

Economic interactions can be boiled down to three core patterns. I will make no attempt to take an ethical stance on any of them, though their ethical implications are obvious. Let me also say that this post is a gross over-simplification. However, sometimes, over-simplifications can be valuable tools for helping us see where opportunities for innovation lie. That is my intention here.

Pattern 1: You’ll do that

Otherwise known as brute force. Basically the point is to get someone else to do something that benefits you by threatening violence. Examples include slavery, serfdom, empire building, and extortion. People who engage in this behavior calculate, consciously or otherwise, that the *other* is so different from them that the trust needed for reciprocal trade is impossible. Since even the most rudimentary trades are based on unconscious cultural assumptions, one can see why the threat of violence might appear an easier way of getting value from people. However, violence requires the perpetrator to expend considerable resources in the process of forcing themselves on the other. While in the short term, the resources expended may seem worth it, this strategy is, overall, a relatively low-yield investment. History has shown again and again that societies that are built on this kind of economic interaction ultimately wind up self-destructing.

Pattern 2: I’ll do this IF you’ll do that

Otherwise known as trading. As people began to develop a basic trust in the *other*, they learned that they could expend considerably fewer resources to get things of value by engaging in reciprocal exchange. Once, long ago, this process was done with direct trade (asparagus for shirts). About five thousand years ago, we learned to substitute information tokens for actual goods, and money was born. Using this method of economic interaction requires that we share enough context with the “other” to trust that they won’t take what they want by force or flake on their end of the deal. Strong governmental institutions have helped establish this kind of trust. Today this is the primary way we interact with society at large. But even with today’s light speed monetary transactions, the core remains about parting with something of value to get something of value.

I don’t want to talk this pattern down too much as it is a huge improvement from the “You’ll do that” way of doing things. However, there is still much inefficiency in a reciprocal economy. For instance, economic interaction doesn’t happen without agreeing on what each party will part with. And such blocks routinely prevent what would be valuable interactions. Also, this zero-sum logic usually results in people looking to get the most from others for the least of their own.

Pattern 3: I’ll do this

Otherwise known as gifting. Examples include tribal cultures, small villages, and what’s left of that today, families. When people share enough context and identity that the wellbeing of the other is seen as part of the wellbeing of the self, then gift economies become the most efficient way of interacting. Gone are any of the inefficiencies of force, or of haggling out a deal. When people are on the same team working for the same goal, reciprocity becomes irrelevant. How many times do you see basketball players striking deals on the court: “I’ll pass you the ball now, but you have to promise to pass it to me next time.” When people share common goals, reciprocity just gets in the way. This isn’t to say that some people on the team don’t pull more weight than others. In fact, when contributions are severely mismatched, other kinds of inefficiencies crop up. However, on a team everyone tends to see what everyone else contributes, so the process is highly self-regulating.

I believe this kind of economic interaction represents the future of the global economy. We must recognize our shared identity on this planet, both in terms of the impact we are having on the broader environment, and in terms of the impact we are having on each other. We must recognize ourselves as team humanity, and develop the information systems needed to make this third mode of economic interaction the primary driving force in the economy.

Innovation and Compensation

Here's one thing I know: in the next hundred years we have to fundamentally remake civilization to live in harmony with the planet while 2 billion people climb out of poverty. This is, without a doubt, the biggest challenge humanity has EVER faced, and no one really knows how to get from here to there. There has never been a greater need for innovation, redesigning, rethinking, and experimentation in all realms of knowledge and society.

Here's another thing I know: 99% or more of innovations fail. There is nothing wrong with that; it's just the way innovation works. In nature, 99% or more of biological experiments fail, so why should cultural evolution be any different?

Let's connect these two thoughts. We need vast amounts of innovation if we are to survive the next hundred years, and most attempts at this innovation will fail. It should follow from this that we need to attract as many people as possible to innovation, since only 1% will wind up producing innovations that are adopted. As anyone who has tried to support themselves by thinking outside the box knows, these are not attractive odds.

What we need more than ever is to relieve some of this pressure on the very people who may come up with the solutions we so badly need. If 99% of innovations fail simply because that's what innovation is, then perhaps we should think about decoupling the success of innovations from the compensation people receive to take care of their basic needs.

Also, we know that releasing innovations into the commons allows them to spread and adapt most efficiently. Why then are we hobbling potential innovators by forcing them to create an artificial scarcity of access to their innovations just so they can take care of their basic needs? Shouldn’t we be providing the support these people need to do their work and contribute to the collective good?

I believe that we need to develop some kind of innovators stipend, that can take the pressure of meeting basic needs off those who would devote themselves to helping us survive the next 100 years. What's more, receiving support from this stipend should NOT be dependent on success, since if it were only 1% would actually receive the compensation they need to survive. Instead, people should be encouraged to grow and develop as whole people. After all, it's never easy to admit failure when your paycheck is riding on success.

I don't pretend that this kind of support would work for everyone. Some people really do need incentives to do more than play kickball in the park. However, I know dozens if not hundreds of people who want nothing more than the freedom to be tackling our most pressing challenges. It's time to remove the monetary tit-for-tat boot from our throats, and embrace the fact that while most of what innovators come up with will be total fluff, a little tiny bit might actually save the world. It’s really anyone’s guess where and when it may emerge.

Thoughts on the NY Times

The NY Times latest attempt to return to the 20th century is, at best, absurd. There are a number of troubling aspects to this development, but what really gets me is that even after ten years of light-speed growth in digital culture, some people still think it is both possible and desirable to return to the good old days of mass media.

But rather than complain, I would instead like to offer some ideas about how the NY Times could keep the lights on without behaving like it's still a 1960 Mad Men kind of world.

1) Offer a really awesomely designed iPad app for $7-$10 that a customer pays for once, which gives them access to all their content forever. I for one would pay that much on a one time basis for news eye candy. While their iPad app is decent right now, it could still be way better.

2) Offer articles for free if people fill out a ~20 question demographics survey, so that advertisements could be better targeted. I still see ton of ads on the NY Times site that I have absolutely no interest in. A well-designed survey like this could greatly improve the ability for the NY Times to match me with their advertisers.

3) Do suggestion 2, but instead of / in addition to a survey, offer articles for free if a reader agrees to allow the NY Times to use machine learning to predict what their interest in products might be. Netflix and Amazon do this already, and since the NY Times has been following my choices for 12 years, they certainly should be able to figure out what I might be interested in ad-wise. Why the heck am I still seeing ads for Steuben's Glass???

4) Give people a chance to buy ads off the page. Some people might feel creepy about their reading habits being tracked, so why not simply offer them a choice to read the articles without ads for a modest fee. I probably wouldn't go this direction myself, but there certainly are many who would.

5) Do all of the above, and preserve the current idea that modest use of the site would not require an account.

Anyway, that is my two cents. Thoughts?

Symbionomics, the word

Here is a little video I just put together explaining why we made up the "symbionomics."
Enjoy

Symbionomics, the word from alan rosenblith on Vimeo.

A Symbionomics Media Experience

Part of what Jay and I hope to accomplish in the long run with the Symbionomics project is making a feature length film. However, we believe the experience the audience has with the film is just as important as the content of the film itself. Today, the options for experiencing a feature length film are somewhat limited, so it may be time for a big redesign.

To get a lay of the land, let’s start with the current popular ways films are experienced. DVDs are totally unsocial. You sit there and you watch the film with no idea of who else has watched it or what they thought about it. You also have no way to contribute your own thoughts or enter into any kind of dialog other than with those who are physically present in the screening room. That seems a little last century to me.

Also, since DVDs are physical objects, once they are burned they do not change. While the extras on DVDs do make an attempt to provide additional context (such as commentary tracks), this material is just as unchanging as the film itself. This means that as new information and perspectives come to light, eventually the DVD becomes a historical artifact as opposed to a living document.

The rise of web video services such as YouTube or Vimeo has done much to address these fundamental shortcomings. However, while YouTube and Vimeo are awesome for short videos, you can only comment on the video as a whole. That may be fine if there are only a few ideas in the video, but for longer format films this limitation means only the shallowest of conversations can arise.

Netflix’s streaming service has certainly grown more robust over the last year, yet it still has only a few social elements. The viewing process itself still feels more like a lecture than a seminar. I watch a film, I give it a rating, and maybe I write a review if I am highly motivated.

Jay and I have been playing with how to take a quantum leap forward in audience participation. Think Soundcloud for video. Soundcloud is my favorite music platform by far. I majored in music composition in undergrad, and one of my favorite parts of that experience was getting and giving critiques. In a good composition class, your fellow students help you reach your highest potential by offering support, camaraderie, and constructive criticism. Soundcloud does this very effectively by allowing users to make comments at specific points in the timeline. In other words, if I, as a musician, decide to add a drum beat at 2:23, folks can make comments that appear precisely at that time. The result is a highly focused critique of the composition, which in turn leads to a supportive community of musicians who learn and grow together.

We want our audience to have the same kind of experience with the Symbionomics film. Imagine watching a finished film where any frame in the timeline can be commented on. If some expert in the film makes an interesting point, and you have a burning desire to respond, just add a video comment to that frame. These comments could be threaded to allow for dialog between different commentators. Comments could also include links to relevant external media sources, such as someone’s TED talk.

By allowing an ongoing dialog to emerge in specific response to moments in the film, we create the possibility for a living document. If new perspectives come to light on a given topic, people can add links to the latest and best web talks. The result is a collaboratively created way to drill into specific topics and ideas presented in the timeline of the film.

We want to hear your thoughts. What would make you want to participate in this kind of dialog? What features would you want to see?

Symbionomics Themes

What follows is a synopsis of the major themes we are exploring with the Symbionomics project (see kickstarter link on the right). Obviously, this is just a starting point. We are open to these concepts growing and evolving as this process unfolds.

With each theme, we are seeding an online video discussion (as linked to in the titles). Ultimately, we will have video forums for each theme.

1. New Media: In the last twenty years, a wave of new tools has transformed the way we communicate. As Clay Shirky points out in his seminal book Here Comes Everybody, 20th century media tools took the form of one-to-many. Today, with the advent of social media, we can, for the first time, communicate on a large scale in a many-to-many pattern. What’s more, this new ability has profoundly affected how the economy is organized. We will explore how tools like blogs, social media, and Wikipedia have transformed the way people live and work.
2. Networks: These new forms of communication have enabled the geometry of our organizations to evolve from pyramidal to networked. In the past we needed top-down hierarchical organizations to organize on any scale larger than a village. Today, we are seeing organizations become more effective as they have embraced networked culture. We will explore how living in a networked world changes the incentives for economic interaction.
3. Letting Go of Control: As we have transformed into a networked culture, we have developed new ways of deriving value from our work. We used to depend on capturing value through the ownership of assets and the control of production. Now that access to information is only ever a few connections away, many people are loosening control over their property in favor of sharing amongst their networks. We will explore how new social contracts of ownership and control have gained traction in an age of hyper-connectivity.
4. Open Production: As individuals and organizations have loosened their grasp on their products, an entirely new form of production has emerged. In contrast to the industrial production models of the 20th century, today, open source software, Wikipedia, and Creative Commons have proven that open production is both viable and effective. We will explore the success and future possibilities of this new mode of production.
5. Motivation: With new modes of production come new motivations for participation and value creation. Since both monetary reward and power over others are largely non-existent in the open production model, motivation has shifted from extrinsic to intrinsic. What’s more, as Daniel Pink points out in his book Drive, intrinsic motivation is far more successful at educing creative problem solving in individuals. We will explore this new motivational landscape and find out exactly why people do contribute at such large scales to Wikipedia and other such projects.
6. Post-Scarcity Economics: In the old economy, the surest way to profit was to be controlling a scarce resource. However, many of the products of the digital age are virtually free to reproduce and distribute. Industries such as newspapers and music have been slow to embrace this new reality, and have fallen into decline. We will explore the economic logic of a world where the primary driver of the economy is no longer scarce.
7. The Future Work: Our new communications tools have also changed the way we organize at the workplace. The rise of co-working environments such as The Hub has brought into question whether the 20th century conception of employment is still a necessary foundation to the economy. Agile developer teams that spontaneously arise to build open source software have proven that successful teamwork no longer depends on an employer. We will explore this shifting landscape around how we organize ourselves into effective teams.
8. Social Gaming: The recent explosion of smart phone technology has also seen an unprecedented integration of gaming into everyday life. Services such as Foursquare, SCVNGR, and CheckPoints, have provided new ways of coordinating economic activity, supporting local businesses in the process. What’s more, thought leaders such as Jane McGonigal and Jessie Schell have emphasized using game dynamics for social benefit. We will explore the power and potential of social gaming.
9. Collaborative Consumption: In addition to new modes of production emerging in the economy, we are also seeing the rise of new forms of consumption. Rachel Botsman in her recent book, What’s Mine Is Yours, has documented a massive surge in services such as Zip Car, CouchSurfing, and NeighborGoods which use information technology to make more efficient use of physical resources. We will explore how this new trend in consumption is affecting the broader economic landscape.
10. Making and Growing: New economic patterns of the information age are no longer limited to the Internet as the rise of maker communities and DIY demonstrates. The rise of 3D printing has made decentralized manufacturing a real possibility, with designs shared in a global knowledge commons. On the agricultural side, gardening has surged in popularity as the economy continues to languish. We will explore how we can use the same patterns Wikipedia has proved so successful in the broader economy.
11. The Future of Currency: As our economy transforms, conventional forms of money may no longer be serving our needs. In many cases, online reputation systems have reduced people’s dependency on money to facilitate transactions. Much of the new economy is outside of the market entirely, which begs the question, what will replace money as an economic coordinating system? We will explore how 21st century information systems are beginning to reduce the need for conventional money to get things done.
12. Collective Intelligence: As our civilization goes through this massive transformation, we are also seeing the intelligence of organizations rising to meet 21st century challenges. Where the 20th century was about smart individuals, the 21st century will be about creating smart organizations on all scales. We will explore the power and future possibilities of collective organization.

Asymmetric Accounting & Adaptive Networks

In this recent post, Gregory Rader explores the implications of asymmetric accounting. For those who need a quick catch up, asymmetric accounting is when two parties in a transaction account for the transaction differently. This process is a little different than we are accustomed to, as the concept of "price" generally ensures there is a symmetry in accounting between buyer and seller. Here are a few additional thoughts for your consideration.

Let's consider an adaptive neural network. The basic rule in any adaptive network is: try a bunch of different configurations, and strengthen those connections that lead to a preferred result. While our brains are one example of an adaptive network, this pattern also manifests in the evolution of ecosystems and even our social systems. In fact, our economy as a whole could be thought of as an adaptive network that reinforces configurations (innovations) that add value, and eliminates those that don't.

So what does this have to do with asymmetric accounting? If we were to consciously design an algorithm for the economy's adaptive network to function by, I would argue that insisting on symmetric accounting is a big mistake. Let's assume that our goal is to encourage lots of innovation / experimentation and provide reinforcement for the production of goods / services that add value to people's lives. By this logic we would want to measure the value-add of any good or service provided. However, you will notice that the price is agreed upon before any value is added to the economy. Consider for a moment how much distortion this causes. As a buyer, I might be suckered in by advertising that promises some great value-add for my life, only to discover that the product in question causes me nothing but grief.

Also consider that the buyer has every incentive to understate the amount of value they expect to receive, as this expression takes the form of them parting with their hard-earned money.

In order to overcome these two major barriers to a well-functioning adaptive network, I propose the following. First, we eliminate the concept of expected value as expressed through "price" entirely, and shift to a model where we are measuring the real value of the good or service received. There are, of course, many ways we could accomplish this, ranging from hard data derived from sensors to subjective reviews and ratings systems. The second would be remove any incentive for either buyer or seller to express anything other than their authentic experience around the transaction. And we all know that experiences can be asymmetrical.

Taken together, the picture this paints of the economy is quite different. In the interests of not rambling on for too much longer, I would assert that this algorithm would likely enable the kind of economy I described in this blog post from August.