From: Eliezer S. Yudkowsky (sentience@pobox.com)
Date: Tue Sep 16 1997 - 20:12:13 MDT
Lee Daniel Crocker wrote...
Well, he wrote a VERY complex post, exactly the kind of response I was looking
for. I'm not quite sure I understood it. I hope he will not hesitate to
correct me.
> I can see the attraction of a system such as you propose, but even if we
> assume that you can make the transaction costs and accounting costs of
> a complex barter system so small that instantly trading any commodity
> is trivial, it's still not as useful as some forms of money.
Money, here, is... what? Not the government-issued green stuff, I assume. A
universal standard of exchange? Somebody accepting, up front, something they
don't need because they know they can trade it for something else, as opposed
to running a hidden cyclic debt cancellation through the barter nexus?
Well, I don't need any gold. So if I (explicitly) trade X for gold, hold that
gold, and trade the gold for Y - instead of trading X for Y directly with the
gold transaction being hidden - then I suppose that's money. But I'm still
not quite sure that's what you mean. Is it a necessary part of something
being "money", the way you use the term, that it have value which is dependent
on it being accepted as a unit of exchange, rather than its intrinsic value to
someone else?
> For example,
> in your economy, there will be data somewhere on "things I want" and
> "things I have to trade". What happens when I'm asleep? Those things I
> have to trade are productive assets even in my absence, so I will likely
> contract with some other entity to trade them on my behalf so that I get
> maximum benefit.
As near as I can work this out, it means that I should invest in stocks, or
(if I accumulate wealth) keep it in a form that can be used to create
additional wealth, or rented out to others who will do so. But then what was
the line "there will be data" about? How does buying and selling link to
wealth accumulation and exponentiation?
> I'll want to pick a trading proxy business (let's call
> it a "bank") that is most effective at producing more of what I want
> from what I have, and it needs some unit of measurement for its ads,
> because everyone wants different things. Some common bartered item may
> serve adequately, but technology changes; yesterday's precious gems are
> tomorrows cheaply-manufactured diamondoid.
Does the 'bank' find me maximally advantageous cyclic debt cancellations? Or
does it convert permanent wealth into wealth-producing format? Or is it a
middleman advertising the things I want?
A brief note about precious gems - what do *I* want precious gems for in a
complex barter economy? They just sit around and do nothing! If I want to
wear them, then they're just as valuable *to* *me* regardless of what someone
else is willing to pay for them, whether $10,000 (gems) or $5 (diamondoid).
Maybe the fashion value will fluctuate, but such losses are part of fashion -
whether you use money or barter.
> If I want to borrow some
> things from that bank because I have an interesting business idea, they
> will want me to pay them back with whatever they want /at the time of my
> repayment/, not at the time of the loan, so they'll have to contract for
> some measure of worth that won't risk being devalued by technological
> changes.
The bank wants marble columns for their front, food for their employees (or,
the cooperators forming the bank want food), programs for their computers,
advertising space for their offers. The advertisers want computer programs to
track viewers. The farmers want computer games to play. The marble
manufacturers also want computer software, or at least their employees do. A
complex barter contract could take place with any of these. Admittedly, the
problem of "loans" is not one I had considered. I might get back to you on
this one, because I'm not sure offhand how it would be handled.
Maybe the problem is the existence of the 'bank' as a separate entity instead
of a middleman. The 'bank' acts as middleman for a farmer with surplus food,
an advertiser with available space, and a landlord with office space, all of
whom are willing to 'risk' their wealth, fractionated into 70 different
business ventures, each with a 500% payoff and a 25% chance of failure.
Alternatively, even if the landlord isn't willing to risk something, another
person might trade for the space. All of these people get paid off in
whatever you produce at profit time, be it hamburgers or widgets, which they
can then trade for whatever else they want. If what you produce isn't
profitable, then they lose their investment.
This is just how it works now, in the sense that each failed loan decreases
the interest on your account by a bit (or would if not for the buffer of the
bank's profits, which insulates you from immediate fluctuations - but return
on investment still determines the payable interest eventually). And if all
the bank loans fail, you lose whatever portion of your income the bank had invested.
> They'll probably issue their own "currency", which is just a
> promise that all dealings with this bank will be measured by these units
> whose value depends only on the reputation of the bank.
I sign a contract that says: "If I give you 50 widgets to invest, and then I
want them back, then you don't have to give me back 50 widgets, but however
many widgets can be bought with the gold you bought with the original 50
widgets." Or suitably modified to account for returns on investment.
With complex barter and complex investment, the contract would be for whatever
I actually "invested" in someone. Whether I sold the widgets and invested
software, or invested widgets directly, I would still get back my contracted
share of whatever the company produced.
> They may want to
> back it with named commodity bundles, but it would be even safer if it
> were backed by contracts that specified commodities and services with
> contingencies for technological change, or methods by which members
> can revalue it by later agreement.
At this point our realities have diverged too far for me to respond. This
bank is too centralized; CB (complex barter) investment may be
controlled/advised from a centralized agency, but it is still distributed in
terms of debt cancellation. If you start bottlenecking everything through one
institution, of course you're going to start needing money. That is *exactly*
the problem!
> "Money" that is explicitly decoupled from actual valuable things--that is
> nothing but a relative measure of worth among traders who agree to use
> it for that purpose--is just too convenient for making long-term deals,
> financial deals with no specific commodities involved, and other free-
> trade uses, that I do not see even your instant-complex-barter being as
> useful or as productive.
Money is also decoupled from reality. Which institutions will survive and
prosper; the ones that actually invest X to produce Y, or the ones that take
your money and promise you a 7% return? At some point somebody has to use
your widgets, or something you traded your widgets for, to produce additional
wealth. If widgets can't be used to produce wealth, then investing widgets
will not produce a 7% return. If widgets can be used to make hamburgers, why
the whole fuss about units of exchange? Send the guy widgets and trade your
hamburgers to a doctor for medical care!
As far as I can tell, what you're saying is: "Well, if you abstract away the
process of creating wealth into investing in a 'bank' and getting 7% back,
then you need money." But why abstract the process of wealth creation, with
attendant inefficiency and information loss? Getting *away* from that is what
complex barter is all about!
--
sentience@pobox.com Eliezer S. Yudkowsky
http://tezcat.com/~eliezer/singularity.html
http://tezcat.com/~eliezer/algernon.html
Disclaimer: Unless otherwise specified, I'm not telling you
everything I think I know.
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