[p2p-research] The Case for Energy As P2P Currency

[Stan Rhodes]

On Mon, Dec 29, 2008 at 3:36 PM, marc fawzi <marc.fawzi at gmail.com> wrote:
> The
> issue not discussed in current P2P theory is how do we assure the flow of
> energy through all nodes of the economy in such a way that we get maximum
> "globally sustainable" productivity from every node. The thesis in this
> model is simple: in order for nodes to have maximum "globally sustainable"
> productivity they must give and take in equal amount, i.e near unity for
> exchange ratio (i.e. exchange of products, services and assets for energy,
> which in our reactor example means providing the maintenance service, which
> costs energy, and getting paid back in a tokenized form of universally
> utilitarian energy, e.g. electricity.) If a given node gives more than it
> takes in energy then it stops to function eventually (see: Thermoeconomics:
> Laws of Thermodynamics: Implications) If a given node gives less than it
> takes in energy then it is taking this extra energy from some other node,
> and that's because energy is conserved, i.e. if a given node takes more than
> it gives then it's ultimately taking from another node, not from some
> cost-free fountain of energy (see: Thermoeconomics: Laws of Thermodynamics:
> Definitions)

Marc,

The different perspectives on "peer production" (Bauwens, Benkler,
Shirky), which generally do not include the exchange of goods and
services, aka the realm of markets.  I say "generally" because I think
there's a lot of fuzziness.

In the body of economic theory, the flow of energy through "nodes" of
agents in the economy is built into the cost in some way.  Where
theories place it--and what they term it--varies (e.g. cost of
production, full-cost pricing, etc).  As a basic example, food, which
usually exists because of some energy input from the sun into some
substance here on Earth, powers human labor.  Food can also be
combusted to generate mechanical labor, which could also be used to
generate electricity. Where ever we look in human living, there are
supplies (products/substances that have energy in the cost) and
demands.

The free market, in theory, is the closest we've come to solving the
supply and demand issue: under the right conditions the market tends
toward pareto optimality or better; exchange chases market equilibrium
(I assume that's what you mean by "unity").  However, as Yogi Berra
says, "In theory, there is no difference between theory and practice.
But, in practice, there is."  It turns out that there are classes of
markets that humans find market equilibrium in easily and naturally
(even with imperfect information!), and ones they do not: they're not
so good at asset markets, such as the stock market.  This opens an
area of continuing debate between theory and reality, which is huge,
and outside this email.

The problems of information asymmetries and
externalities--essentially, the absences of pieces of information that
are needed for good decision-making--are present in the modern day
economy, just as they are present in your proposal.  These factors
make sustainability hard.  However, it's no easier in either your
proposal or the modern day economy.  You've essentially found that, no
matter how you shuffle the backing of the units of exchange, the same
problems pop right back up.  If you don't see that as a big problem
yet, you eventually will.

A common solution is calling for "regulation."  However, this doesn't
solve the problem, it just gives it a name and puts in into the hands
of an authority.  Each component piece of regulation--with the overall
goal of resource management, as identified by people such as Elinor
Ostrom, and others in the field of common pool resources--has a
practical cost.  A quick list (from Ostrom, via Wikipedia, edited a
little):
# Clearly defined boundaries
# Congruence between appropriation and provision rules and local conditions
# Collective-choice arrangements allowing for the participation of
most of the appropriators in the decision-making process
# Effective monitoring by monitors who are part of, or accountable to,
the appropriators
# Graduated sanctions for appropriators who do not respect rules
# Conflict-resolution mechanisms
# Recognition of the rights of agents to organize

You've touched on the sustainability problem in your subsection on
"Anti-Dumping and Anti-Monopoly Caps for Energy Production," but not
covered the real costs of management--the hard problems--as mentioned
above.  They are not insurmountable, but they are more mountain than
molehill.

Some % of the population will be probing for ways to game any system,
but the advantages of a free market system--depending on the class of
market--is that people close in on equilibrium by interacting as
humans normally do.  They don't realize they are reaching equilibrium,
but they are.  Vernon Smith, in particular, has contributed to a rich
body of literature exploring this in experiments.  Smith was also
consulted for energy markets in New Zealand and Australia, too, so you
might find his perspective on electric power markets useful.

The point of my original critique was to question some of your
proposal's basic assumptions, leading to further exploration of
concepts you might feel you'd already covered sufficiently.  In short,
I'm again suggesting that you are rediscovering economic problems
discussed in depth in the body of economic thought, but not
recognizing that they are the same because the language is different
(even between schools of thought within economics!).  I say this from
my own personal experience in building a unified understanding of
these and related issues, which was (and is) often frustrating,
sometimes humbling, frequently exhausting, and always fascinating.

In closing, I would like to bring up this question:
What is the problem we wish to solve when we try to construct a
rational economic order?  For your consideration, Hayek's exploration
of this question: http://www.econlib.org/library/Essays/hykKnw1.html

-- Stan