[p2p-research] Updated: All Work Is Created Equal (and other experiments)

[marc fawzi]

Andrei,

Just the type of questions I needed to explore the next stages of the
model's development, so thank you very much for articulating them as
coherently as you have, at this level of detail.

<<
On Mon, Feb 2, 2009 at 6:46 AM, Andrei Nikitchyuk <ASN at engineer.com> wrote:

>  Marc, a couple questions:
>
>
>    1. How do you make sure that the energy investments made to educate
>    professionals over a period of years (such as a teacher or dentist or an
>    engineer) get considered in the exchange with a person who plows their
>    driveway.
>
>
   1. How would you calculate how much energy went into multi-year design
   and subsequent manufacturing of a complex semiconductor chip? They are
   designed by teams of tens and, sometimes hundreds of folks with advanced
   degrees and could cost tens to hundreds of US$m. How would you determine its
   cost to your counter-party in the exchange transaction? How would it be
   determined if you manufacture and sell 2 million of them? What would happen
   if you only manufacture 20?


>>

To answer the above questions, the conditions for sustainable abundance
needed to be defined more tightly and clearly.

The updated list is:

1. Non-Wasteful, On-demand Production (which permits predictive inventory
management so producers don't have to over produce, which causes waste and
inefficiency and is therefore unsustainable, or under produce which causes
shortages and high prices, which is also unsustainable) 2. Decentralized
Production (which assures there's no dependence on a few suppliers) 3.
Renewable Production (which assures there's no dependence on scarce
resources) 4. Scalable Production (which assures that volume is not limited
by the production process) 5. Open Source Production (which assures that the
good or service can be produced by anyone, while enforcing social and moral
rights of the originator, not their right to a monopoly.) 6. Non-Scarce
Qualities (which assures the absence of any scarce qualities that would
justify paying more than the cost of work energy it takes to produce and
deliver the given good or service) *7. Non-Scarce Dependencies (which
assures that there are no dependencies in the cost-of-work-energy
calculation on any goods or services that do not meet the above conditions.)
*
Answer to both questions:

The logic behind 'All Work Is Created Equal' is based on the fact that all
goods and services covered by the model, i.e. those that meet the
aforementioned conditions of sustainable abundance, do not have any scarce
dependencies, such as an expensive (scarce) education in dentistry.

With schools like MIT and Stanford supporting the sustainable abundance of
education by open sourcing their course materials educating an engineer
becomes attainable at the cost in work energy it takes to produce and
deliver the course materials and virtual lab tools etc. That cost is the
only cost the engineer being educated has to pay for (in joule tokens) as
far as education (knowledge) itself. The cost in work energy it takes to
keep the engineer functioning and maintain living conditions, during the
time he or she is learning a given subject/trade/skill, is an investment
being made by them in their future, which the person has to recoup from all
goods and services they produce in the future.

There is also the cost in work energy it takes to keep the person
functioning and maintain living conditions, during the time the person is
producing and delivering a given good or service, and this cost in work
energy, as well as all other costs in work energy involved, would be based
on a relatively simple 'work energy' costing model that provides an average
or baseline cost.

And, finally, there is the cost in work energy it takes to produce a good or
service (ones that meet the aforementioned sustainable abundance conditions)
which can have dependencies (that also meet the aforementioned sustainable
abundance conditions.)

So we have three (4) main inputs to the cost of work energy it takes the
then-educated engineer to produce a chip design, which is carried forward as
an input into the cost of energy it takes to produce and deliver the chip.

So what we're looking at is a tree of costs (in work energy) for each given
good or service (for goods and services that meet aforementioned sustainable
abundance conditions,) where all dependencies (for a given good or service)
and the good or service itself must meet the aforementioned sustainable
abundance conditions. The dependencies have to fit the dependency template
for the given good or service, such that all the main inputs are identified
and the 'work energy' costing models for all those inputs are used, in the
cost estimation software (that's part of the P2P trading application,)
together with user-set parameters for the given production and delivery
processes (which are part of the overall 'work energy' costing model for the
given good or service,) to come up with the total cost in work energy for a
given good or service, which is then fed by each producer of the given good
or service into the Energy Cost Registry (and becomes valuable data for
improving production and delivery processes) and used to calculate the
median cost in work energy for producing and delivering that good or
service, which becomes the price for that good or service, update-able every
10 years or so as production efficiencies increase.

Since the volume of production affects the cost of energy for producing and
delivering a given good or service, the energy costing models used by the
estimation software (that is part of the P2P trading application) should
assume an average volume of production based on historical sales data from
all the producers of the given good or service, as reported by their
inventory management system. In other words, pricing (or costing) is based
on the median cost of energy for producing and delivering a given good or
service at the average volume of production for that good or service.

It's an important consideration for producers to make sure that the total
cost in work energy for producing and delivering a given good or service is
recoup-able in full based on the historical sales data the producer has for
the given good or service, as provided by their inventory system, so that
they don't suffer losses due to over production, especially since losses,
under this model, cannot be recouped from the market(e.g. by dumping excess
at lower-than-cost and killing off competition then raising prices to recoup
the loss.)

So producing a volume (of the given good or service) above predicted
short-term demand, as given by the producer's predictive inventory system,
is a risk the producer must take alone without punishing the consumer or
other producers, and they must do so by making sure that their total cost in
work energy for producing and delivering a given good or service is
recoup-able based on the historical sales data for the given product or
service, as reported by their personal inventory management system, which is
built into the P2P trading application used for trading.)

~~


I hope this reply answers both questions. If there is still vagueness,
please continue with the questioning.

Given that the model development has been based heavily on my answering
questions, replying to arguments, assimilating others' insights, and
clarifying confusion I plan to have a Credits section on the wiki page where
I'll attribute all these contributions, not as an incentive (since people
with interest in the subject are naturally motivated to provide their
feedback) but as an organic FAQ.... so thanks again for these really
excellent question!


Marc


marc fawzi wrote:


Re: discussion on "All Work Is Created Equal"

I've re-written the introductory sections to P2P Energy
Economy<http://p2pfoundation.net/P2P_Energy_Economy>in response to the
latest feedback, and I can't see much wrong with it in
theory but the model itself is very new and experimental, i.e. probably not
realistic at this time, yet still useful as an exercise (with key learning
objectives.)

Whether the model is realistic or not is not determinable through static
judgment, especially as the model continues to evolve based on feedback, and
it's probably time to start build a simulation with actual human users, even
just using a spreadsheet model.

People are most welcome to take the ideas developed so far and remix them as
part of a more realistic model.

The principles of the experiment have been updated per the following:

*All Work Is Created Equal*

Technically speaking, in the P2P Energy Economy, tokens of the currency
(i.e. money) are created in proportion to the increase in the amount of
electric energy flow from nodes with energy surplus to nodes with energy
deficit, including households, charging stations, electric vehicle grid, and
neighboring communities, which is then converted by those nodes into new
work energy, which gives the tokens a real and absolute work value (in
joules) in spent energy, which enables its use in trading the goods and
services defined under this economy, at the cost of energy it takes to
produce and deliver them.

To restate this in plain English, it suffice it to say that in the P2P
Energy Economy all work energy is equal because all work energy is measured
using the same absolute-value unit, i.e. the Joule, so a dentist's work
energy is not any more valuable than a teacher's work energy, while still
allowing those who work harder (produce more work energy) to get more back.
In other words, it values all work energy equally while allowing people to
work as hard and smart as they are capable of and get compensated
proportionately, with increased sales and/or increased profit through higher
production efficiencies.

The conditions of sustainable abundance, given below, must be met for all
goods and services to be traded under this model. These conditions, when
combined with the currency defined under this model, enable a complete
departure from today's scarcity enforcing economic model by allowing
everyone who wishes to get a given good or service to do so at the absolute
work value of the energy it takes to produce and deliver that good or
service.

   1. On-demand production (which permits predictive inventory management so
producers don't have to over produce, which causes waste and inefficiency
and is therefore unsustainable, or under produce which causes shortages and
high prices, which is also unsustainable)

   2. Decentralized production (which assures there's no dependence on a few
suppliers)

   3. Renewable production (which assures there's no dependence on scarce
resources)

   4. Scalable production (which assures that volume is not limited by the
production process)

   5. Open source production and "share alike" licensing (which assures that
the good or service can be produced by anyone, while enforcing social and
moral rights of the originator, not their right to a monopoly.)

When the above conditions are met, for any given good or service, that good
or service should be available to everyone who wishes to have at the cost of
energy it takes to produce and deliver it.

So if health care (as a service) was to meet the above conditions then a
visit to the dentist should not cost more than what it takes in energy to
render that service.

The hard problem here is figuring out the energy costing models for the
types of goods and services that fulfill the sustainable abundance criteria
given above.

We know how much it takes in energy (calories) per day to keep a 25 year old
human being functioning, and we can estimate the other costs of living in
terms of the work energy required to maintain living conditions. We also
know the energy use of various machines used in production. Assuming every
good and service meet the "renewable production" condition (i.e. producible
from renewable resources) then we can measure the energy it takes to produce
and deliver a given good or service, and using historical sales data, we can
adjust that eventually to be based on an average volume of production for
that good or service (instead of raw estimate) and then calculate the median
cost in energy it takes to produce and deliver that good or service per each
instance of that good or service.

It's not impossible, and when it's automated it via cost estimation software
(as part of the P2P trading application) it offers us the opportunity to
understand the real cost of production to ourselves and the environment.

When it comes rewarding those who work harder and smarter, the model full
supports that through two different paths:

1) Those who invest work energy in increasing the efficiency of their
production processes get to have a profit margin (because their good or
service costs less than the median cost in work energy to produce and make,
so they get to keep the difference.)

2) Those who invest work energy in improving an existing good or service get
to sell more of that good or service if they select the right improvements
(but also get to lose if they select the wrong improvements, so this second
path involves educated risk taking.)

*Work Only If You Love Your Work*

The result of trading in goods and services at the cost of work energy it
takes to produce and deliver them is that, unless one manages to produce and
deliver the good and service with less work energy than other producers of
the same good or service, producers will get back the same amount of work
energy in joule tokens as they put in. And since people can sell their own
produced energy, goods or services for joule tokens at the work value of
energy and at cost in work energy it takes to produce and deliver those
goods and services, respectively, and use those joule tokens to get the
goods and services they need at the cost in work energy it takes to produce
and deliver those goods and services, they can go on living indefinitely
without the need to generate 'profits.'

Therefore, the thirst for artificial motivation in the form of profits (i.e.
greed) is out of the picture, which means that people will only do the work
(to produce and deliver a good or service) if and only if they love the
work.

It also means that, since no one has to work unless they love their work, no
one will need -or have any incentive- to work for another person, which
means that most people will be both consumers as well as producers of goods
and services, or "prosumers.

*Things Cost Less Over Time*

Given continuous technological progress, work done today should take less
energy to do in the future.

While that's true for the current economy, the P2P Energy Economy channels
the profit motive (or greed) into achieving higher and higher efficiencies
in the use of energy (in producing and delivering products and services,)
since that is the only way profit can be achieved in the P2P Energy Economy,
so given the currency does not lose its work value in energy more and more
can be purchased with less and less currency.

*Good Things Come to Those Who Care*

In today's economy socially, environmentally and ecologically conscious
producers of goods and services are beginning to see increased sales, but
only in very limited niches and local markets.

In the P2P Energy Economy consumers identify, as part of each purchase of
goods or services, the required attributes (for the given good or service)
as well as their social, environmental and ecological values, which allows
them to find producers (of the given good or service) who support their
values. This means that money flows more in sync with society's values.
*
The More You Share, The More You Have*

In the P2P Energy Economy, in order for producers to grow their revenue they
have to share it with others.

The way it works is by rewarding producers who lend money to others (with no
interest) with bigger access to the market, such that the more they lend the
bigger their to the market.

*Increased Autonomy Through Increased Inter-Dependence*

In the current economy, reliance on one or few major players in each given
market has created an unsustainable system. When the top 2 or 3 investment
banks in each country failed the entire global financial industry collapsed,
which has caused the global economy to falter (search: global economic
meltdown 2008.)

In the P2P Energy Economy, increased autonomy is achieved by putting power
with the whole rather than with one or few major players.

The current economic meltdown (search: global economic meltdown 2008) is a
proof that we have reached or are reaching the limits of sustainability for
the current economic paradigm, and that 'peer production' (the production of
energy, goods and services by individuals as opposed to utilities and
factories,) will make the system dependent on the people as a whole, instead
of on one or few major players, which, as we can see, based on the current
paradigm, makes the people dependent on the system and renders them helpless
in times of instability, thus perpetuating and even deepening their
dependence on the system.

The key concept behind the P2P Energy Economy is that it replaces increased
dependence by the people on the system (i.e. on the major players) with
increased inter-dependence between equally empowered peers, which puts the
power with the whole and allows both the individual and the system to enjoy
true autonomy.

Monopolies are eliminated in the P2P Energy Economy due to the following
conditions:

   1. All goods and services must meet the following criteria for
sustainable abundance:

       a. On-demand production (which permits predictive inventory
management so producers don't have to over produce, which causes waste and
inefficiency and is therefore unsustainable, or under produce which causes
shortages and high prices, which is also unsustainable)

       b. Decentralized production (which assures there's no dependence on a
few suppliers)

       c. Renewable production (which assures there's no dependence on
scarce resources)

       d. Scalable production (which assures that volume is not limited by
the production process)

       e. Open source production and "share alike" licensing (which assures
that the good or service can be produced by anyone, while enforcing social
and moral rights of the originator, not their right to a monopoly.)

   2. Consumers are automatically and anonymously matched to producers based
on the required attributes for the given good or service and the affinity
between the consumer's and the producer's social, ecological and
environmental values.

~~

More at: http://p2pfoundation.net/P2P_Energy_Economy




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