[p2p-research] excellent contribution on flow money by Martien van Steenbergen

[Martien van Steenbergen]

Ryan,

First of all, apologies for the elaborate reply.

On 26 May 2009, at 16:52 , Ryan Lanham wrote:

> Martien:
>
> I agree with what Michel wrote, first, and also reiterate his same  
> questions.
>
> Second, you say we made the rules for money once, we can remake them  
> again...This I am having trouble with.  When did we "make" the rules  
> for money?  Is it not a more spontaneous self-ordering ecosystem?    
> There were dozens of currencies in the Colonial US plus Sterling  
> plus Spanish money, etc.  Money happens.

You're right. Money happens. Simply because it is so practical. I  
doubt that it is a spontaneous self-ordering ecosystem. If money  
happens, then what monetary systems do we have in our body? And which  
of them have traits similar to our current monetary system? Cancer- 
like systems always self-destroy, by nature, by definition. An  
uncontrolled chain reaction just burns up the host. And we're burning  
up our planet likewise.

We humans have thought up the rules of monetary systems (without  
sufficiently biomimicry-ing nature). Someone (a gold smith?) once came  
up with the thought that compound positive interest was a good idea  
and implemented it. And giving out more money than could be covered  
was another idea that has been implemented.

It now becomes apparent, and to a growing number of people, that our  
current monetary system does not serve us all too well. So, collect  
some smart and wise people (ecosophists), use a set of creativity  
techniques, an excellent facilitator, and innovate our monetary system  
for the better.

There is more than one way to design a system. The system should match  
its zeitgeist and culture. Remember Conway's Law: organization and the  
architecture (system design) of the product are isomorphic. Therefore,  
make sure the organization is compatible with the product  
architecture. Our organization is global now. Yet, we also need things  
on smaller scales (holarchic). So we need a scale-free system design.

The dozen currencies that sprung up over the past centuries all had a  
practical sparkle indeed. Too bad that the system with cancer built in  
has won so far. We might as well have opted for the Egyptian Giro  
systems that date back at least to Ptolemaic Egypt in the 4th century  
BC. State granary deposits functioned as an early banking system, in  
which giro payments were accepted, with a central bank in Alexandria.  
Giro was a common method of money transfer in early banking. Look at  
the heritage the Egyptians left us. The pyramids still ‘make money’.  
The Egyptians in that time had a good, abundant, and exalted lif, and  
they expressed it in great long-term cultural heritage.

In this context, allow me to quote governor Mervyn King, Governor of  
Bank of England, from a lecture in 1999:

“Is it possible that advances in technology will mean that (...) the  
world may come to resemble a pure exchange economy? Electronic  
transactions in real time hold out that possibility. There is no  
reason, in principle, why final settlements could not be carried out  
by the private sector without the need for clearing through the  
central bank. (...) [T]here is no conceptual obstacle to the idea that  
two individuals engaged in a transaction could settle by a transfer of  
wealth from one electronic account to another in real time. (...) The  
same system could match demands and supplies of financial assets,  
determine prices and make settlements. Financial assets and real goods  
and services would be priced in terms of a unit of account. Final  
settlement could be made without any recourse to the central bank. 
(...) Without such a role in settlements, central banks, in their  
present form, would no longer exist; nor would money.”

Oh, how peer-to-peer. I'll share his complete speech in a separate  
message.

On spontaneous self-ordering: Self-organization ‘happens’ or emerges  
due to a (relatively small) number of smart and simple rules. These  
rules comprise the potential emergence of a system.

Consider a flock of birds, unordered, chaotic. Now, have each of the  
birds adopt three simple rules:

Cohesion: Move towards other nearby birds, unless the other is too  
close.
Alignment: Fly in the same general direction as your neighbours, give  
or take a some degrees in any direction.
Separation: Keep approximately the length of one bird disctance to  
your neigbours, so not to bump into them.

These rules will make them flock, and a swarm will emerge. Think about  
how the swarm will behave if you remove one of the rules. Think about  
how the swarm will behave if you add a rule like: Lazyness: Try not to  
fly at the head of the swarm.

Dee Hock puts it succinctly:

“Simple, clear purpose and principles give rise to complex,  
intelligent behavior.
Complex rules and regulations give rise to simple, stupid behavior.”
— Dee Hock, VISA

We humans have the creativity and power to invent, design, and  
implement rules. We constantly do so. Many of them end up in laws and  
contracts. Even de peer-to-peer principles can be viewed as such.

What are the new rules for the new economy? (And, before that, what is  
our paradigm and what are our goals that those rules ought to  
facilitate?)

Try and ‘think roundabout’. On normal crossings you have to give way  
to cars coming from the right (or left, depending on your country).  
It's the law. On a roundabout you suddenly have to give way to cars  
coming from the left! Takes a while to get used to when first  
encountered. A simple rule change with a profound positive effect:  
completely self-organizing, less accidents, and near-zero maintenance  
(very cost-effective).

 From a systemic point of view: every system has its limits beyond  
which the system does not function properly. Open all doors and  
windows in mid-winter, and your heating system is not able to cope,  
might even burn-out.

> I accept that many ecosystems need to be "gardened" to be made more  
> manageable, but I doubt you would succeed in convincing anyone to  
> implement a monetary system where money cannot be hoarded.

Well, would you be willing to adopt it? I certainly would, since it  
will make the rich richer, and the poor rich. Richer, wealthier, in  
the non-financial sense of the word.

If everyone is wealthy and we have found ways to repair Earth (we  
excell in the art of cradle to cradle), then even for the already  
wealthy their world has become wealthier. A lot less crime and war, no  
poverty, less (or no) theft, abundance of nature, culture, etc.

What would we lose if we'd switch (or migrate) to such a system?

We need to transcend and include our malfunctioning current system.

I'd like to have systems that require minimal gardening, i.e. that are  
self-gardening. Nature is a good example.

>   Do you think such a system would be voluntarily accepted?

Yes. Would you? Why?

> Why would people accede to a system where they cannot transfer  
> wealth to their children

Good question. They can enable their children to grow their trustwidth  
in their parenting period by transferring from their to their  
children's account. They can also (gradually) transfer ownership of  
real estate or other valuables to their kids.

In a good brainstorming process we can even come up with a lot more  
ways to do this.

Also, we need to ask ourselves the question why we would want this in  
the first place. What is the need? What do we lose if we cannot. From  
an end-game perspective, the need for this may even be obliviated.  
Since there can be no more money-hoarding, it simply does not make  
sense anymore.

Why do kids deserve such an (unfair?) privilege over other kids?  
Shouldn't they also demonstrate their willingness and ability to be a  
good citizen? If they are as good as their parents, they'll be able to  
achieve similar levels of trust.

I admit, this area definitely needs work. So, let's get get  
crackin' (preferrably on a seperate thread).

> , or hold wealth for an emergency, etc.,

There is no need to hold wealth for emergencies, since if we keep the  
feet of our neighbours dry when they have a bad time, they will return  
the favor.

Also, clever ways to design flow money, the small percentage (of your  
saldo or trustwidth) that trickles away into a holarchy of community  
funds, can potentially replace the tax and insurance system as we know  
it, and enable us to do the things that we as a community can but as  
an individual cannot do. Precisely where these systems are designed  
for in the first place. Something we also tend to forget very often.

Tax translated to Dutch is ‘belasting’, translated back to English  
meaning  ‘burdening’. But tax effectively alleviates the burden to  
build (rail)roads, police, medical care, etc. May I suggest to use the  
word ‘verlichting’ (enlightenment) instead? Since that is what it  
effectivly does.

> and would there always be commodity wealth hoarding anyway?

> Gold, diamonds, paintings by Picasso, useful machines, etc?

Probably. But if you want to buy a painting from Picasso, you must  
have the trustwidth to do so. The trustwidth reflects your life-long  
good citizenship until now. If you can afford a Picasso painting,  
you've probably, no, provably, contributed quite a lot to the  
community. Please note that community is a scale-free connotation  
here; it scales from small communities to villages to regios to  
counties to countries to continents to our planet.

> Why would anyone ever give up personal security to participate in a  
> system?

What do you exactly mean by personal security?

> Would you compel them?

That's almost a philisophical question. One of Dee Hock's principles  
is to educe rather than compel, and I, for one, am a strong supporter  
of this principle. Then again, if a community drafts a number of  
overarching values and founding principles, it is expected that  
everyone in the community adheres to them and is expected to keep each  
other sharp in this respect. These principles are, in fact, a number  
of rules, and rules help a system emerge and organizes (or orders) the  
community. As such, they also compel behaviour.

New entrants in the community (immigrants) are compelled to adopt the  
community's culture and values and principles and laws and regulations  
or perish. This although I dislike the word and meaning of compel.

On the other hand, when a potential immigrant tends to migrate to  
another country and culture, it is a conscious decision and as such  
educes certain behavior from the immigrant. The immigrant will  
evaluate the different cultures to choose from and pick the one that  
resonates the most.

Note that values shape principles, principles shape constitution and  
constitution shapes law and regulation, and in that order.

Succes en plezier,

Martien.
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