[p2p-research] Critical to expand perception of Currencies

[Ryan]

  Sent to you by Ryan via Google Reader: Critical to expand perception
of Currencies via New Currency Frontiers by Arthur Brock on 10/29/09
On the Complementary Currency Skype channel we've got going, there was
brief but old standard debate going on about fiat vs. mutual credit
currencies.

I chimed in with:

When you expand your perspective about currency beyond only medium of
exchange / monetary currencies the need for fiat currencies becomes
clear.

For example, debiting a University for granting a college degree as
reputation currency starts sounding awfully silly. There are quite
valid reasons for fiat currencies.

However, if your goal is to create sustained monetary value, that form
of issuance tends to be "bad tech." I think we might be able to
transcend some of the dogmatic Mac/PC or Fiat/Mutual-Credit posturing
if we consider these broader applications they create sharper contrasts
and clearer hues so that we can learn which adjustments effect what
outcomes.

Imagine analyzing breeds of apples. There are a lot of differences
between them, but mostly a lot of similarities when you compare them to
all other fruits. It may be that if we want to nourish ourselves
effectively, that we shouldn't rule out all other fruits. They each
have their own value and there are things to learn from them that may
even teach us a few things about apples.

(Yes... You might accuse me of making an apples to oranges comparison
here.)

Later Ernie asked: “I would like to know what you mean by this: ...if
we consider these broader applications they create sharper contrasts
and clearer hues so that we can learn which adjustments affect what
outcomes.”

After a few days I responded:

Sorry about my delayed response. Let me try using what I think is an
apt metaphor. The design of any currency establishes a range of
possible behaviors of the individuals participating in it as well as a
trajectory for the user community as a whole (as a sort of collective
entity or organism).

I think this is very similar to the role that DNA plays in living
creatures.

A currency organizes connections and interactions between groups of
people into a kind of collective behavior which creates a kind of
living social organism. The design of that currency (the rules about
issuance, transaction, conversion/co-function, retirement/expiration,
participant classes, governance, etc.) are the DNA of this social
organism.

DNA doesn’t tell us exactly what each individual biological critter
will do, but it does define a particular range of possibilities and
tendencies. We know pigs don’t fly, bats don’t “see,” fish must live in
water, and most humans develop language capacities. That doesn’t tell
us what sentences a particular human will say, just like the design of
a currency doesn’t determine exactly what transactions individuals will
do.

Suppose you want to understand human DNA – map the human genome.
Scientists have found it VERY useful to learn from non-human creatures
for many reasons. Simpler combinations of variables (fewer chromosome
pairs), easier experimentation (eugenics / experimental breeding of
humans is frowned upon), greater variety (difference between different
animals create contrasts which help identify patterns that might be
harder to see between humans who are so similar), etc.

I’m suggesting that as currency designers (even if what you want most
is to understand monetary currencies) that expanding our definition of
currencies to include non-monetary configurations helps in the very
same ways that considering non-human DNA helps in mapping human DNA.


- There is greater variety. Contrasts stand out much more starkly.
Postage stamps fill a very different niche than grades on tests or bus
passes. There are patterns amidst that variety that are direct outcomes
of the design of each currency.
- People participate more freely. Consider how many hundreds of
millions of people are freely participating in currencies like
five-star product ratings, eBay reputation, user participation metrics,
certifications, college degrees, performance reviews, stocks, stamps,
movie tickets, etc. in contrast to how few are participating in general
purpose money substitutes (LETS, Berks, local currencies, and even
commercial barter).
- Failures are less costly. The impact on people’s trust, ability to
sustain themselves and willingness to participate in another
“experimental” community venture are less severe when people don’t
expect to make a living from the experiment. With non-monetary
currencies, we can experiment without people losing their retirement
funds.
- Results can be evaluated faster. One of the things people often
expect from a monetary currency is long-term stability as a store of
value. But non-monetary alternatives can be used to solve specific
problems or meet specific goals then be retired. Even the WIR has
barely been running long enough for many to consider it in long-term
analysis.

This is what I meant in prior statement you asked about. I think there
are many more reasons to consider these non-monetary currencies (such
as gift economies are fundamentally more efficient than market
economies).

Getting out of the rut of thinking that new “money” is the only real
answer yields many opportunities for us. And yes – these broader
“currencies” solve real problems that real people are grappling with
every day. Money isn’t the only solution to our problems. And as we all
know, it is in fact the source of many of them.
Things you can do from here:
- Subscribe to New Currency Frontiers using Google Reader
- Get started using Google Reader to easily keep up with all your
favorite sites
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