[GiftEconomy] Beyond alternative currencies : from Transactional to Gift-based Markets

[Dante-Gabryell Monson]

update, on opencc list ( which I moderate - low traffic till recently )

http://groups.google.com/group/opencc?pli=1

<http://groups.google.com/group/opencc?pli=1>... Eric and Art ( whom are, to
my knowledge, designers of the
http://www.metacurrency.org/content/extensible-game-format-language-xgfl )
express interest in gift economics :)

---------- Forwarded message ----------
From: Eric Harris-Braun <zippy.314.ehb at gmail.com>
Date: Wed, Oct 20, 2010 at 2:37 PM
Subject: Re: [opencc] Re: Beyond alternative currencies : from Transactional
to Gift-based Markets
To: opencc at googlegroups.com


Me too.  I had posted a short reply (which just got approved) onto that
thread to try and take the conversation past the language of gift vs.
exchange.

-e


On Tue, Oct 19, 2010 at 6:08 PM, ArtBrock <artbrock at gmail.com> wrote:

> I love Michel's post about this. I've recently been working on a Prezi
> which I hope will illustrate these principles in very vivid and
> concrete terms.
>
> It's time for currency thought leaders to stop thinking that better
> money will solve our core problems.  We need solutions that go to much
> deeper levels.
>
> I'll post a link to the Prezi when I've got a version worth viewing.
>
> -art
>
> On Oct 14, 3:34 am, Dante-Gabryell Monson <dante.mon... at gmail.com>
> wrote:
> > very interesting !
> >
> > *" Moving from Transactional to Gift-based Markets "*
> >
> > http://blog.p2pfoundation.net/beyond-alternative-currencies-towards-a..
> .)
> >
> > Beyond alternative currencies: towards asymmetric account systems for
> > gift-based markets<
> http://blog.p2pfoundation.net/beyond-alternative-currencies-towards-a...>
> > [image: photo of Michel Bauwens]
> >
> > Michel Bauwens
> > 13th October 2010
> >
> >  I am finding myself increasingly surprised and dismayed at proponents of
> > alternative currency who propose and promote systems that fundamentally
> > offer very little change from our current system. In most cases these
> > “alternatives” are simply non-governmental versions of the same
> > transactional-scarcity model. The majority of innovation occurring
> currently
> > is in inherently abundant informational goods and there is an intrinsic
> > incompatibility between scarce transactional currency and abundant goods.
> > This creates a ripe opportunity for a new model of value accounting that
> is
> > itself abundance based.
> >
> > Great series by Gregory Rader in a posterous
> > blog<http://onthespiral.com/pages/about-me-rxCDk> in
> > which he makes some great points and a fundamental critique of many
> > alternative currencies, especially those that belief a demurrage-based
> > design will solve all problems:
> >
> > (though I feel it’s better to more carefully distinguish between
> > transactional markets, recicprocal gift economies, and non-reciprocal
> > commons contributions, the following introduces very insightful
> distinctions
> > regarding money and non-money mechanisms, for dealing respectively with
> > logics of scarcity vs. abundance)
> >
> > *1. First Argument: We are Moving from Transactional to Gift-based
> Markets*
> >
> > “Greg” on three reasons why the evolution towards gift-based, instead of
> > transactional, markets is
> > inevitable<
> http://onthespiral.com/why-the-gift-economy-will-grow-unnoticed>
> > :
> >
> > *“A shift in productive activity towards reciprocal or gift based markets
> is
> > inevitable:*
> > *
> >
> > Expanded Freedom/Self-Direction:
> >
> > “When discussing the “free market” we often overlook the restrictions
> built
> > into the transactional model. Yet, a transactional market is by its
> nature a
> > contractual market. Once a contractual relationship is entered into, both
> > parties are obligated to follow through. This restricts the freedom of
> all
> > parties and leads to inefficiency in the form of negotiation before the
> fact
> > and potential litigation after the fact. This potential for conflict also
> > creates the need for legal standards that restrict the scope of
> individual
> > freedom further.
> >
> > Gift markets avoid litigiousness by eliminating contractual obligations
> > altogether. In a gift market, producers seeks potential reward rather
> than
> > contracted compensation. Market participants sacrifice guaranteed
> > compensation for the freedom to contribute however they wish and the
> ability
> > to reach a much wider audience. Psychological research and empirical
> > observation both evince the fact that once basic needs are met, the
> ability
> > to pursue intrinsic goals is more motivating than additional (monetary)
> > compensation. To the extent that this is true, productive effort will be
> > drawn away from transactional activity and towards platforms based on
> > reciprocal voluntary gifting.
> >
> > Simplicity:
> >
> > The previous point implies that participation in gift economies is
> simple.
> > Rules and laws are replaced with looser social conventions. Barriers to
> > entry are eliminated. Meritocracy is facilitated because value can be
> > provided without prior agreement on compensation, providing new entrants
> the
> > opportunity to demonstrate value without accessing gatekeepers. Friction
> is
> > reduced at the cost of increased uncertainty, however uncertainty is more
> > easily coped with as reduced friction allows for increased
> experimentation
> > and entrepreneurialism. This simplicity enables efficient redeployment of
> > effort from the transactional market to the gift market.
> >
> > Lack of Competition from Incumbent Currencies:
> >
> > The transactional markets are wedded to traditional state-issued
> currencies.
> > Efforts to innovate on the transactional model will be hamstrung by the
> need
> > to convert people away from traditional currencies. On the other hand,
> gift
> > markets are ripe for innovation because there are no incumbents. Social
> > capital has to date gone largely unmeasured and the demand for a
> compatible
> > accounting system is apparent. Innovation in this area will meet little
> > push-back from traditional incumbent players as most will fail to
> recognize
> > abundance based accounting systems as currency per se. This ability to
> > innovate without resistance will continue to increase the appeal of these
> > markets.
> > *
> >
> > *These three characteristics will increasingly attract new participants
> into
> > informational gift economies and draw productive effort away from
> > transactional markets.”*
> >
> > *2. Second Argument: Therefore, we need Asymmetric Accounting systems to
> > uncover non-reciprocal value creation*
> >
> > Greg <
> http://onthespiral.com/my-story-about-the-future-of-money-asymmetri>:
> >
> > *“I want to introduce the term “asymmetric accounting” to describe
> systems
> > that record and track the provision of value rather than the volume of
> money
> > transacted. Asymmetric accounting mechanisms are congruous with the
> reality
> > that freely given advice or knowledge can be just as valuable as
> purchased
> > knowledge. Such systems would not require a market price in order to
> > recognize value creation and provision. In taking this broader view,
> > asymmetric accounting reconciles our economic notions with the reality
> that
> > value exists independent of whether its recipient is obligated or able to
> > provide equal compensation.”*
> >
> > Citing<
> http://alanrosenblith.blogspot.com/2010/09/currency-design-possibilit...>
> >  *Alan Rosenblith*:
> >
> > *“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.”*
> >
> > Greg continues:
> >
> > *“How would this accounting be accomplished? The challenge is to devise
> > non-invasive mechanisms of value recognition. “Non-invasive” implies that
> > these mechanisms should not create the expectation of reciprocation.
> > Consider for example – How do you react when someone approaches you with
> a
> > “free” offer at the entrance of a store or on a crowded commercial
> street?
> > If you are anything like me, you quickly avoid these overtures
> altogether.
> > You realize that the offer is not really free, that there is an implied
> > expectation. Even if the initial token is free, the goal is to create an
> > implicit obligation.*
> > *
> >
> > When money is our only accounting system and transactions are the only
> > ubiquitous means of reciprocation, we are condemned to this state of
> > affairs. We avoid generosity in order to avoid the obligation to
> > reciprocate. Internet social platforms create new possibilities. Anyone
> can
> > hit a Like button, or subscribe to a blog, or amplify a message. These
> > actions record the recognition of value without requiring any exchange of
> > scarce currency. Over time, accumulated statistics begin to delineate who
> > has provided value in the past and who is likely to provide value in the
> > future. These first experiments with social media will develop eventually
> > into comprehensive tools that record the creation and provision of value
> in
> > many forms.
> >
> > These tools will reframe our notions of for-profit and non-profit,
> enabling
> > more subtle distinctions that better describe new business models. The
> > coarse distinction between for-profit and non-profit is only necessary
> when
> > our notions of value preclude non-monetary value. “For-profit” becomes a
> > misnomer when many businesses dedicate funds to charitable ventures while
> > many others simply fail to generate monetary returns. Ultimately what we
> > mean by “for-profit” is: Seeking symmetric exchange. Seeking to be
> > compensated to a degree commensurate with the value of the products or
> > services delivered and the costs of their production. When the monetary
> > system assumes that all exchange is transactional and symmetric, then a
> new
> > category, “non-profit”, is required for ventures that don’t fit this
> > description. But, these distinctions are not as clear as legal
> distinctions
> > would lead us to believe. Some ventures truly seek symmetric compensation
> > while other ventures, to varying degrees, disproportionately benefit some
> > stakeholders over others: Google is a for-profit corporation funded by
> > investment and ongoing revenue, yet stills outputs far more value to
> users
> > than it will ever gain in revenue (monetary input) Government
> institutions
> > are non-profit yet, in many cases, deliver far less value in output than
> is
> > allocated to them as monetary input Volunteer organizations generally
> > consume very little monetary input and yet often create significant value
> as
> > output Current accounting methods treat $1 million of Google employee
> salary
> > as equal to $1 million of public employee salary, irrespective of the
> value
> > produced by these disparate endeavors. Furthermore, volunteer
> organizations,
> > to the extent that they avoid monetary transactions, are accounted for as
> if
> > they provides no economic value at all.
> > *
> >
> > *Asymmetric mechanisms will remedy these anomalies, providing a more
> subtle
> > and granular interpretation of value. As they become more comprehensive,
> our
> > economic notions will become more consistent with reality and our
> markets,
> > broadly conceived, will better encourage value creation in all its
> disparate
> > forms.”*
> >
> > *3. Third Argument: Demurrage-based currencies cannot solve this shift
> > towards abundance logic*
> >
> > *Greg:*
> >
> > Key thesis<
> http://onthespiral.com/the-role-of-interest-in-future-monetary-syste>
> > by
> > “Greg”: Interest exists because of the underlying conditions of scarcity,
> > not just from monetary design:
> >
> > *1.*
> >
> > *“Interest is the price paid for the use of borrowed money. Money itself
> > does not pay interest…this is money functioning as stored of value, value
> > lent by one party and borrowed by another that can be exchanged for
> > productive assets. The need for borrowing implies scarcity. Therefore we
> can
> > infer that interest is truly the price paid for accelerated access to
> scarce
> > resources. Like all prices, an interest rate is a market signal that
> enables
> > efficient allocation of these scarce resources – in this case resources
> > being allocated through time, between consumption and investment. This
> > analysis implies two preconditions for the existence of interest:*
> > *
> >
> > * Scarce resources
> >
> > * Varying temporal preferences for consumption
> >
> > Critically, these preconditions refer not only to the monetary system but
> to
> > the constituents of the economy itself – its productive capabilities and
> the
> > psychology of its participants. A monetary regime intended to eliminate
> > interest would have to resolve at least one of these conditions in the
> > economy itself.”
> >
> > 2.
> >
> > “This (demurrage) proposal only addresses the currency system without
> > resolving the economic conditions that lead to interest. It seeks to
> > “design” currency without reference to the characteristics of the
> underlying
> > market it must serve as a proxy for. Whereas the gift economy creates
> > compatibility with new types of abundant value creation, demurrage
> currency
> > emulates a world of scarce resources – becoming more scarce
> (depreciating)
> > over time.
> >
> > Given that our current monetary system exhibits behavior quite similar to
> > proposed dumurrage currencies, we can speculate as to whether such a
> system
> > would in fact provide a “disincentive against hoarding money.” What we
> > observe currently is that people do avoid hoarding cash…but instead of
> > circulating that money they transfer (hoard) their savings into
> investments
> > – assets that serve a productive function and appreciate over time. The
> net
> > result is that inflation (demurrage) does nothing to discourage the
> > accumulation of wealth, which is presumably the true goal of demurrage
> > proponents.
> >
> > What does this mean for interest in future monetary systems? Interest
> will
> > persist so long as scarce resources persist and market participants
> endeavor
> > to shift their consumption of those resources through time. Interest will
> > diminish in importance to the degree that productive abundance
> facilitates a
> > shift away from transactional currency altogether.”
> >
> > 3.
> >
> > “The examples used by Rushkoff and others like him all come from
> societies
> > where financial investments are not available. These are societies where
> > there are only two choices – consumption or saving. In modern society we
> > have a third option – investment…and investment provides a financial
> return
> > because it uses scarce resources in the present to produce more scarce
> > resources in the future.
> > *
> >
> > *Once securitized investment enters the equation the demurrage logic
> breaks
> > down. A market participant who previously had to choose between
> consumption
> > or depreciating savings, now chooses between consumption, depreciating
> > savings or appreciating investments. This choice simply shifts hoarding
> in
> > currency to hoarding in investment products. This is exactly what we
> > experience today, inflation (depreciating currency) does not lead to
> > accelerating consumption; instead it leads to investment in inflation
> > protected assets.”*
>
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