Scale of social structures

I advise the reader not to consider this paper as a theoretical essay. This is only my effort to bring to my own consciousness the tacit knowledge that I am using in my efforts to help the development of the open value network model, and of the Sensorica.co network/community, which is an instantiation of this model. This is part of a larger oeuvre that I now call Economic action.

Acknowledgement
For inspiration

I draw my knowledge about this subject from my activities in Sensorica, collaborating with a large network of passionate individuals working on the open value network model. 

I extend my thanks to:

• Arthur Brock for having inspired me with his work on currencies and current-sees.

• Kurt Laitner for his ideas on value, contribution accounting systems, metrics for evaluation, benefit redistribution algorithms.

• Bob and Lynn for putting ideas for network resource planning into code.

• Michel Bauwens for his sustained attention and public appreciation of our work on open value networks, for maintaining a knowledge base of p2p theory and practices, and for his role as connector within the p2p community.

For feedback

• Radu Seserman: spelling, new ideas, constructive criticism 

• Bayle Shanks: spelling, grammar, style.

• Stephen Sillett: stimulating me to connect my ideas on complexity from science to p2p economics. 

 Conditions of scale

In other words, to be successful as a group we need to adopt a type of organisation that is adapted to the number of individuals in the group, to geographical conditions, to the volatility of the environment, etc. A particular organization can become inappropriate when conditions change. In this case, the effectiveness of the group can diminish. Sometimes people discover new ways to organize that allow them to migrate to different conditions (form much larger groups for example). Different sets of values, relations and roles, norms and rules, protocols and tools characterize the organisation and affect its capacity to provide a larger advantage to the group, as compared to the sum of its constituants. These sets dictate the maximal scale of a human society, in terms of population and geographical distribution. Together, they form a framework that allows people in groups to deal with their contextual reality. They constitute an interface between people and their environment, through which environmental processes are interpreted and controlled. They relate to the inner-workings of an organization seen as a living system in constant evolution.  They evolve through scientific, technological, spiritual and cultural breakthroughs, which can be seen as mutations, sometimes triggering profound socioeconomic transitions (ex. the passage from monarchies to the republic, from guilds to corporations and markets). In doing so, they allow a re-simplification of socioeconomic interactions as organizations adapt to new conditions.

Up until a few centuries ago, the great majority of the global population lived and died within a few tens of kilometres away from their place of birth, around their village. The world was largely disconnected. Our most stable socioeconomic structures were at village scale, followed by fortified cities and fragile kingdoms. Culture and spirituality were important factors that bounded people accros vast geographical regions. Trade and seasonal migrations were the most important reasons for contact between people accros space, other than milliary campaigns. Large empires were formed and some persisted for centuries. Their stability was mainly supported by bureaucracy, military institutions and trade, overlaid on top of the conquered societies, which maintained a great deal of autonomy to manage their local affairs, preserving their local culture, language and religion. Today, transportation accros the planet is affordable and conviant. People's mobility accros the globe is higher than ever, trade is truly global. As we come to understand the finite nature of global resources and our technological ability to make our planet unlivable, we realize the urgency to put in place a new socioeconomic structure that can sustain life at planetary scale. The Internet provides access to information from remote regions and the ability to forge relations with people anywhere on the planet. The world is accessible to everyone, cultures are mixing, the conditions have changed, a global society can exist. This new global socioeconomic structure is emerging, displacing old socioeconomic structures, which is not without frictions.

In this essay I am trying to uncover the principes underlying the evolution of human society and prescribe a path towards a global society that respects human dignity.

Generation of benefits

The hypothesis put forward in this essay is that socioeconomic structures evolve in relation to their potential to generate benefits for the individuals that compose them. 

Individuals seek various types of benefits within groups, be it tangible or intangible. If the group can’t generate these benefits, for various reasons (costs, misalignment in values, external threats, etc.) and if these individuals have an alternative, they will simply abandon the group. This hypothesis was formulated differently by Ronald Coase, in terms of transaction cost theory, to explain why firms exist (in the economic realm), their ceiling (maximum size) and their floor (minimum size). Here I'm extending Coase's analysis to any form of socioeconomic structure where cost (i.e. effort or capital/resources deployed to transact among producers in order to generate a surplus) is not the only determinant factor.

Throughout the long history of humanity, the number of individuals that live in a relation of interdependence to benefit from their collective output has increased, as socioeconomic structures have evolved from the family, to the clan or tribe, to various types of formal organisations (guilds, firms, associations, etc.), to kingdoms, to states and empires, to continental and global treaties. Over time, we have evolved new ways to operate as larger groups, expanding our activities over larger and diverse geographical areas, extracting more benefits. This evolution has not been continuous, smooth or homogeneous. It is evolution at work, with its irregularities and setbacks, its cyclic patterns of emergence, growth and internal corruption, subject to the pressures of creative and destructive competition, not to mention natural catastrophes. 

First, the natural conditions of socioeconomic growth must be in place. In the ancient world, the mastering of plant and animal farming had unleashed a new possibility of scale by solving an essential problem, food supply stability. Collaborating to work the fields and herding animals produces a surplus that can sustain population growth and at the same time frees us time to attend to other activities. Some people took social support roles to become priests, politicians, soldiers, administrators, animators, philosophers and scientists. Together, through this new capacity, they built and maintained mutualized social infrastructure to support socioeconomic activity at higher scales. The invention of representative or descriptive scripts (writing) has made possible the recording of information, which enables reliable communication and effective coordination of action over large geographical areas and through time. Quantitative symbolic systems (mathematics) have enabled bookkeeping and complex systems of redistribution and exchange of resources. Culture (values), social norms and laws have also evolved to sustain life in large cities. We created institutions of all sorts to crystallize canonical social relations and processes, to make them more transparent, ubiquitous, to order flows in our societies. 

A new technology opens new possibilities, governance and culture model new human behavior and habits to complete a new transition to a new socioeconomic structure. After that, the new society goes through a period of consolidation, followed by decline, and even demise (a cyclical pattern). But the new ways don’t die with the declining civilization. They are picked up by newly emerging societies, they are remixed with other ways, and the process repeats itself, over and over again, in small or large increments depending on how disruptive is the technology that instills the next evolution.

Redistribution of benefits

One necessary but not sufficient condition for larger socioeconomic structures to exist is their capacity to generate benefits for their members. Another necessary condition is a mechanism for  redistribution of benefits within the group, be it a small community or a continental economic alliance, benefits that members collectively generate, call it redistribution of social production if you will. There is a physiological component to this mechanism, to provide a sense of fairness, by respecting the needs and aspirations of individuals and their collectives, at least to the ones that are in a position of power, capable of maintaining the social order, but ideally to the majority. As hypothesized above, if the group doesn’t provide for its members, its cohesion is weak and it can collapse, can be destroyed from within, or can be absorbed by en external group. Benefits in this context can be materials (food, shelter, clothing, tools) and immaterials (knowledge, culture, etc.), tangibles and intangibles (love, purpose, spirituality, sense of belonging, recognition, etc.).

Over the course of our history, we have implemented various solutions to this problem of redistribution, various protocols that are supported by tools (ex. ledgers, money, etc.) and processes (more below), striking a balance between being a resilient and potent society (surviving nature and the threats from other groups) and creating a livable and enjoyable environment for its members, or at least for a critical number of them, enough to maintain social stability. This redistribution is about flows of benefits (tangible and intangible). We may jump on the idea that these flows transit through institutions (organizations), but what's really important are the individuals, which are the substrate of any social structure.

Systems of redistribution of benefits have been shaped by the compromise between what individuals desire for themselves and what the others accept or tolerate to be taken or consumed from the collective pool (the sense of fairness mentioned above). Egalitarian systems thrive on communal sharing (see below), they assume that individuals voluntarily moderate their desires to create a general sense of fairness: everyone has equal access but no one should abuse. On the other hand, we find hierarchical systems that thrive on authority ranking (see below), where the redistribution is dictated by those on top. History shows that both these systems can degenerate into informal of formal tyranny. In larger anonymous groups, where at any given moment one can't have enough information about every other individual's contributions to society and consumption, meritocratic systems have been implemented. They thrive on equality matching, i.e. everyone takes in proportion to his contribution. These systems require some metrics and evaluation mechanisms in order to restore a sense of fairness from the tension between individual desires and the other individuals' acceptance. At even larger scales, quantitative measures have been implemented to coordinate production and redistribution, with the creation of markets. In my opinion, today we see another structural emergence that may be very instrumental to coordinate socioeconomic processes at global scale, and to address global problems, which is based on stigmergy, using a broadband system of signalling, not just relying on price as a signal, as it is the case in markets. 

I acknowledge that this is an oversimplification. In reality, we find mixed systems interlaced together, with exceptions towards one extreme or the other.

About property

The notion of property is an essential component of a protocol of redistribution. It lays at the core of what we call an economy, as it also determines relations of production. As Jeremy Bentham pointed out, property is not an object or thing, but a relationship: the bundle of rights and obligations which connect the subject individual to an object, such as land (real property) or increasingly, knowledge (intellectual property). These relations are public in nature. They are institutionalized, meaning that they are codified as norms or rules or laws, and universally accepted by everyone in a social setting. While there are many types of rights and obligations, this proposal identifies four key classes:

• Use – exclusive or otherwise

• Usufruct – the fruits of use

• Management

• Custody – stewardship.

Property also has its psychological roots as attachment, possessiveness, security, need of control, self-identity, personal investment (time, energy, skills), sense of belonging, etc. People seek to satisfy their primary psychological needs by forming relations with other people concerning the access, use or control of things. These relations can also be formalized as between individuals and abstractions, such as an organization (ex. a corporation) or the State. Once formalized as norms, rules or laws, they essentially instantiate rights of individual(s) over a thing. The notion is intimately related to the notion of responsibility, which speaks about limitations in exercising our rights over a thing.

The most common forms of property are: private, public and shared. Note that private property can be declined into shared private property, where more than one agent can exercise the same rights and responsibilities over a thing. Ex. condominium (multiple individuals own a portion of a thing) and time-sharing (multiple individuals take turns in exercising rights over the same thing). 

Shared property has various forms:

• commons

• common pool resources

• pool of shareables

• nondominium or self-ownership.

Let's see how different property regimes can affect redistribution models. Suppose that a group adopts private property. The flow of resources in this context becomes:

• Permanent transfers of property, i.e the title, all rights and responsibilities that are associated with a thing, is passed from one individual to another together with the thing: gift, exchange.

• Temporary transfer of responsibilities and limited rights of use: borrowing/lending, renting.

These flows are performed through deeds, which are any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed, commonly associated with transferring (conveyancing) title to property.

Suppose that someone owns a pasture and someone else owns caws. Private property confers them independent control over their assets. If the cows' owner wants to use the pasture he needs to enter into some sort of agreement with the owner of the pasture. The owner of the pasture can impose conditions that only depend on his will. They can reach a mutual agreement of rent, i.e. the cows' owner can access the pasture in exchange of some other type of benefit that the pasture owner decides, be it money, cows, milk, some other service. The transaction happens only if both actors agree, which in ideal conditions of individual sovereignty means that both actors experience a sense of fairness. These ideal conditions are not the norm among humans though. The key idea here is that the pasture owner's conditions are independent of the cow's owner. This independence is inherited from the properties of the private property relations, which confers absolute rights to the owner, independent of others.

Suppose now that the group adopts a shared property regime, say commons. Following the previous example, the pasture can be stewarded by the group, which includes the caws owner. In this case, the access to graze depends on the rules that the community has erected in contest for this shared asset, not on a particular individual, since no one in particular has exclusive rights over the pasture. 

A subjective, qualitative system of redistribution

I vividly remember my vacations in my mother's village in Romania (context), back in the 80'. The community engaged in an economy of subsistence, mostly based on agriculture, which was still largely powered by animal force and human hard labour. Houses (under private property regime) were built with the help of neighbours (time-sharing), using local materials (under commons, public or private property regimes). Clothing was still made by women, using locally produced fibres (local DIY production, non-transactional production, bypassing market).

A typical family (organization) had a house with a large enough yard, a farmyard to keep a variety of animals, a vegetable garden, an orchard, a vineyard, and a hay field (under private property regime, ownership of means of production). The family affairs were planned and managed by the man of the house, the grandfather or the father (relations of production, planning, leadership, governance). The older son was groomed to take over from the elder (benefits, incentives). In absence of a strong male figure, the older woman of the house was in charge.

The family head used positive rewards and punishments (relations, incentives, motivation) to align the activity of other family members towards a sustainable life (group benefits), all that wrapped around the local culture, moral values and social norms (organizational structural dimensions). These rewards and punishments were very much linked to the resources produced and used by the family (benefits). Hard workers, i.e. those who contributed in any positive way to the well-being of the family, were treated well. In the long run, they were promised property rights (benefits). Those who were not contributing to the daily chores or had a negative impact on the family's well being or wealth were given less privileges. I remember situations when someone was denied food for dinner for not having done what was expected or for having infringed the family norms or rules (gouvernance, mechanisms, norms and rules governing distribution of benefits). 

At the village level, an informal reputation system operated to modulate access to benefits. This was coupled with different forms of currencies based on individual assets such as knowledge, wisdom, ability to entertain, etc. Those who contributed to the community in a tangible or intangible way were publicly acknowledged, called to examine problems and to make decisions, to mediate conflicts, … Marriage (ritual, institution) was heavily influenced by the status (social structure) of the family within the village, and by the reputation of the individual in question.

Religion (spirituality, values, culture) was very present and took an important role in regulating family and community activities. The village culture was fine-tuned to its economic reality. People knew almost instinctively what behaviour was appropriate nor not, and more often than not, the appropriate behaviour could be associated with an outcome that increases the potential of the family or of the village. Thus helping someone in need was a given. This was done without the conscious reasoning that if everyone helps everyone else the community was stronger. No, it was just normal, integrated behaviour, part of the shared culture.

When it comes to production, the village was using a very elaborate system of time-sharing, debt and barter. For example, a group of families were gathering their cows (private property) in a large herd every day, and were taking turns grazing them on the village's pasture (commons). As a kid, I remember waking up before the sun and spending the entire day on the pasture, until sunset. It was a lot of fun, I had a lot of time to think, to read, and to play with other kids. Not so funny when a cow entered someone's corn field (private property), or joined another herd, or simply vanished from sight.

My involvement (personal contribution) in grazing the village's cows (herd, collection of private property) was structured by cultural aspects and social norms, and incentivized. Remarks about being a good or a bad kid, about having done a good job with the cows or not, were part of daily exchanges with adults (reward). This sustained focus on behaviour that establishes a constant feedback is an evolved cultural particularity. These people could have had other interests, they could have been focused on other aspects of my behaviour, or other aspects of my personality. But their main concerns were mainly clustered around issues that affected the village's life and prosperity (shared benefits).

     “He's a good kid, see how well fed the cows are today!”

This is how I got to understand what was socially acceptable or not, what made me earn reputation and gave me access to goodies and privileges (individual benefits). After a good day of work, the greatest reward was being invited by my uncle to visit someone in the village for dinner, to eat well. It filled my stomach and it also made me feel a man, sharing the meal with the other adults, taking part in discussions about the family and the village (individual benefits).

When my grandfather built his second house (private property), he did it with other family members and with the help of neighbours (time-sharing). The men were doing the construction work, the women were cooking (collaboration). At the end of the day, we all gathered around the table to eat (reward, individual benefits plus sense of community, sense of belonging, mutual appreciation). Helping someone to build a house meant that you could expect some sort of return of a perceived equivalent importance in the future, from the same individual (equality matching). That is a form of obligation. There was no formal bookkeeping for favours, but everyone kept a tab about everyone else in their minds. Since these activities were also witnessed by others, reciprocation was somewhat enforced by peer pressure, gossip, coupled to an informal reputation system. You don't reciprocate, you're a bad person, not worth other people's help (punishment).

In the autumn, everyone needed a lot of help for harvesting and for making the winter preparations. The work was done based on a time-sharing scheme (equality matching). One day, everyone goes to help someone, the next day everyone again goes to help someone else. Some people were also paid in products. Others were just returning a favour for something else they benefited from in the past. Very rarely people were paid with money, although I witnessed that myself a few times.

The village also had its own social support mechanisms. I don’t know of anyone who died of starvation, be it old or sick, lonely or with a family. I remember the unfortunate passing by my grandparents' house and being offered food (gift) or something to drink, being offered advice, understanding and encouragement (mutual support, social support structure).

The villagers used money only to buy a few things once in awhile from the only store in the village (transactions: commerce, market, monetary currency). They were getting money by selling their production surplus in the city (commerce), or from government pensions for the elderly (State-supported social benefits). Some young people had jobs in town, or were working for a state-owned agricultural cooperative nearby (labour market, transactional).

People cooperated at the family level and at the village level to produce goods for themselves and a shared well-being. At the family level, benefits were redistributed based on an informal system, based on a qualitative, subjective appreciation of everyone's involvement (mix of communal sharing, authority ranking and equality matching). At the village level, time-sharing, obligations and barter facilitated production and redistribution, the allocation of work, and the flow of goods (mostly equality matching). Other types of currencies related to intangible human assets were also informally used. This is the case of the priest, of the one who makes people laugh, of the wise, who had a reputation and were granted all sorts of privileges and gifts. Things were flowing, the village was sustainable and resilient, people were happy and very little money went around. A multi-currency system, mostly based on information about everyone’s contribution stored in everyone’s memory, constantly revised and adjusted through witnessed events and gossip, and codified as moral predicaments, social norms or culture was keeping everyone alive and happy. 

I believe that ancient human settlements functioned in a similar way. The most important characteristic of this system of production and redistribution of benefits is that the flow of benefits back to the individuals is directly related to the activities of these individuals. This is an account of a mix of communal sharing, authority ranking and equality matching, with a rudimentary quantitative system based on memory-based bookkeeping, lacking the formalization of a well-constituted market.  This system is far from being perfect and free of injustice. I am not trying to idealize or to romanticize the traditional ways. I am merely surfacing my conviction that redistribution of resources was intimately related (directly linked) to the activity of every individual.

A quantitative system of redistribution

From wet memory, to clay tablets, to abstractions

We can consider the informal time-sharing, debt/obligation and barter that I experienced in my mom's village as a precursor of a quantitative system of redistribution (a well formulated market). We transact (exchange, share, give) while trying to establish (to agree upon) a loose sense of fairness (equivalence, or other), we keep a tab of our transactions and in some cases expect reciprocation. This informal quantitative system can be mixed with a qualitative system that operates mostly in small social settings, to include non-quantifiable or intangible benefits or contributions. For example, in my mother's village the guy who usually played the flute during the “hora”, a social gathering in the middle of the village where people dance, eat and drink, where the young guys size each other to impress the young girls, was rewarded in various ways for creating the atmosphere. The same was true for the priest and the wise people who were providing other types of immaterial and/or intangible benefits to the community. But it also happens that people give to the poor individual in the village, without expecting something in return, which is a form of gratitude, moved by altruism. In this case, people may keep a tab about what other people in the village give to this same individual, and judge if his/her needs are met, or perhaps he/she already got too much.   

To loss of memory

Being able to record information on a material support, to store it and to retrieve it when needed expands the utility of the traditional, subjective methods used for redistribution of benefits. But as the town gets larger and as towns start interacting (ex. trading, pooling resources for military defense, etc.) with each others it become more and more difficult to store, retrieve and transfer information in effective time, since this information system relied on a heavy material support, clay tablets, that had to be stored in a central location, and could only be used by a small number of skilled individuals who knew how to read, write, and perform mathematical calculations. Something else had to be invented in order to allow societies to function at a larger scale.

In my opinion, this is why the coin was created, money or monetary currency, a token that represents something to which we attribute value. Its primary function is to facilitate exchange. We all know how it works, because we grew up with money: someone who has something can give it to someone else in exchange for a number of coins. He can later use the coins to acquire or gain access to something else, from someone else. Coins are used as intermediaries for exchange and it works best for material goods. One possible use would be to exchange a cow for coins and use these coins to get two pigs, 10 chickens and a bag of flour. Since these coins had a material representation, they behave like the material goods that are transacted, the good goes one way and the coins go the other way. People make other uses of it, fr example one could give a lesson in geometry to someone else in exchange for coins. But in this particular case a problem appears: giving a lesson in geometry to one individual or to two individuals requires essentially the same effort, so should the teacher charge both or only once and divide in two? The problem comes from the fact that teaching is a non-rival act (to a certain extent), not a material thing. There are other problems with coins in mediating socioeconomic transactions, in other words, it cannot be conceived as an universal tool for redistribution. Apart from these other problems, a fundamental flaw is that by itself it cannot guarantee that those who have access to coins are only those who are playing the game right, that are playing by the rules, or that are making a positive contribution to the community or society. In other words, the sense of fairness can be broken when someone pays with stolen coins.  

The coin is a quantitative system because for the thing that is exchanged we need to agree on the number of coins to represent it, on a price, which is a quantity. This is called valuation, i.e. assigning a number of coins to a thing, based on some properties of that thing, such as quantity, quality, convenience, etc. Traditionally, prices have been fixed by an authority or by market dynamics, or a combination of the two.

The coin, or monetary currency, is almost a pure system of exchange, meaning that reciprocation is immediate; “here's the product, give me the money”. No need to keep tabs anymore, the deal is done, there is no residual obligation, it's settled, everyone leaves with something. More flexibility was added with the notion of debt, or “get it now and pay me later”. This brings back the need for bookkeeping, or for keeping a tab, but it makes the system much more efficient because it relaxes the constraint to reciprocate immediately when the probability of getting paid later is high, which would otherwise be a loss of opportunity, a missed deal with potential benefits for both parties, and when aggregated at large scale, with benefits for the entire society. This is why the banking system was born, not just to store sound money (or tokens representing some tangible resource) in a safe place, but also to lend money to be paid later and for keeping the records. Debt requires bookkeeping of obligations for a latter settlement. 

The coin system offers important advantages. It allows accumulation – traditionally called a store of value. This accumulation creates a large potential, which can be used for good (building infrastructure, cultural centers, supporting scientific exploration, etc.), as well as for bad (projecting power, corruption of governance, mass killing, etc.). It also allows coordination of economic activity over large geographic areas, because the coin is lightweight and non-perishable, and can be transported over large distances. Thus, very distant towns can trade with each other. If controlled by a central authority, whenever used with care, the monetary currency becomes a huge leverage to steer the bulk of the economic activity through monetary and fiscal policy. Large empires were built on this system.

The major problem with using coins in a system of redistribution is that the coin is detached from the activity that leads to its creation or possession. The coin has no memory. The assumption that one can only get coins by making a positive contribution to the family, the clan, the community or the society at large is often false. Coins can be stolen for example, or someone can get coins for betraying, or for killing someone for someone else. This is a fundamental departure from the informal bookkeeping system that relies on the memory of group members, usually mediated by an authority figure. In informational terms, bookkeeping stores metadata, it keeps information about past interaction events. The ancient system rewarded generally accepted behavior and punished unaccepted behavior. The coin system can reward unacceptable behavior and thus it creates an incentive for stealing and corruption, which is a source of evil in modern society. In these conditions, a strong justice system is needed to punish stealing (create extra costs), which is not a perfect solution because the same memory-less coins can also support the administration of the justice system.

Over time, the coin became increasingly cut off from economic activity and turned into a pure abstract entity. It gained a life of its own, shifting people's attention from activities that have a beneficial impact on the community, to speculative activities that only focus on generating more coins using coins. In modern times, this money fetishism operated a shift from a managerial economy (focusing on building sustainable enterprises) to a financial economy (focusing on raising the price of shares in a company in view of a profitable exit on the stock market) and led to a series of financial bubbles.

Some things that make you successful can kill you later. 

This applies to the coin when used for redistribution. It made humanity great until it developed into something that corrupted the entire system to the point of collapse. The modern traditional reaction to this problem is government intervention and regulatory mechanisms, which haven't changed the situation much. Fortunately, new solutions are emerging today, because we are in a period of great technological advancement that opens new possibilities.

To digital memory

The Internet acts as a huge database where we can store information about economic activity. Mobile technology gives everyone the possibility to input and to retrieve this information in real time, from anywhere. Instead of using clay tablets to keep records about who does what, who produces what, and who owes what to someone else, we can now put that data on the Internet, which can also include how things are done. Moreover, the blockchain technology makes this data immutable and censorship resistant, and eliminates asymmetric informational advantage. The new digital technology makes it possible to go back to the qualitative system, to the village context, by associating intangibles to tangibles, the how with the how much. It becomes possible again to reward positive involvement and to punish non accepted behaviour, because data describing socioeconomic activity of individuals can now also be easily recorded, stored and retrieved. This is not the Big Brother/Mother society where someone has visibility over everyone else and everyone else only sees its neighbours (see panoptism). In the scenario that I am describing everyone has the same visibility over everyone else, like in a village situation. I am describing a peer to peer (p2p) society (see holoptism and anoptism). The same way you can now get a quick idea about someone that you just met by exploring this individual’s social profile on social networks like Facebook, you will be able to form an idea about the socioeconomic role of this same individual.

Note that I do not consider that Facebook and Google are aligned with the p2p society. Yes, they allow people to get easier access to each other, to a certain extent. But Facebook doesn't make public the social network and Google doesn't make public the web of interests. They keep the overall picture that they extract from our aggregated activity for themselves and thus they benefit from this asymmetrical informational advantage. They monetize these things.  

Open value networks

Since 2008 I have been involved in building infrastructure for commons-based peer production. In the open value network model that we propose, the economic activity of all the network affiliates operating in a peer production network is recorded,  activities are compared and weighted against each others based on metrics that are agreed upon democratically. The redistribution of benefits is in part quantitative, turning someone's efforts into tokens, which can represent equity or debt and can be later used to get tangible benefits. Qualitative characteristics of economic contributions and behaviour are also taken into consideration, based on how the contribution is made, on different dimensions of reputation of the affiliate, etc. All this is packaged into an IT tool, a network resource planning and contribution accounting system (NRP-CAS), an algorithm for computing the redistribution of benefits. This represents a social contract among affiliates, designed to generate a sense of fairness among them and to render the economic activity effective and efficient.

This system for capturing, recording and comparing economic activity has been implemented in Sensorica, the first open value network. The same system can also be applied to other types of organizations, more or less networked, more or less open (with respect to access to participation) or transparent (with respect to access to information).

This system has profound consequences on how the global economy works. Let's enumerate a few of them.

When I was in my teenage years, I worked on a farm situated a few kilometres north of Montreal, Canada, picking blueberries and strawberries. We were paid by the weight of fruit that we picked. Throughout the day, we would bring our fruit baskets to a tractor, where they were weighed, and a record was produced. At the end of the day, everyone was paid according to the total weight gathered (a metric for economic activity). Some were making a lot more than others. It was a purely meritocratic redistribution scheme for a simple economic activity, using a very simple metric. This is very different from the normal employment setting, where employees are paid a fixed, negotiated and agreed upon salary, formalized as a job contract. The employer agrees to pay a certain number of tokens to an employee before even starting working. This requires some diligence from the employer, which comes in a form of a filter, a job interview. Moreover, this also requires constant monitoring of the employees' contribution to the company. Companies engage in time management and regular performance reviews. There are at least two important setbacks in this employment setting compared to the first one. For one, the managerial overhead for time management and performance monitoring. Second, the inability of the company to dynamically adjust its workforce and talent base, because of the heavy filtering mechanisms and the contractual agreements in place. We will expand on this below. In the raspberry picking case, the payment is proportional to the production, therefore the need to filter and for time management is less stringent. The reward is directly related to the production. This case presupposes the existence of means to evaluate contributions. The activity that doesn't result in a positive contribution, or that causes damage can be dealt with in various ways. For raspberry picking, the evaluation scheme is obvious: total weight of the picked fruit. The new information technology allows us to go far beyond this simple case, to deal with the complexity of numerous and various tasks involved in our normal workday. A contribution accounting system coupled to a benefit redistribution algorithm gives flexibility to organizations of all sorts and help them reduce costs.

Another important consequence of this technology is that it allows an organization to tap into the world's massive human resources in a very dynamic way. At any given moment, there is someone on this planet that has the solution to your problem. Finding this individual or a group of individuals is one important hurdle. But once that hurdle is passed, we need to be able to effectively integrate this new talent into the stream of activities and its associated reward mechanisms. The possible contributor can be far away, which means hard to identify and authenticate, hard to monitor, hard to reprehend, … In these circumstances, the classical mode of employment is long, costly, and sometimes even impossible if we take into consideration all the geopolitical hurdles in place. These opportunities are lost most of the time, and the company is obliged to work with what it has. Different crowdsourcing platforms have emerged as an interface between companies and the crowd, but in my opinion their value proposition is not resonating well with the crowd. Crowd-based problem solving schemes work very well in open source projects and in projects with a great social impact, They are not performing well when only corporate interest is behind the problem. Companies can develop less exploitative and less alienating mechanisms for managing their own crowd-based activities. In order to do so, they must move away from contractual relationships and time management, to interface directly with the crowd by using tools for contribution accounting and evaluation.

There are other important consequences that we can discuss here, but I think we should jump directly to the one that has, by far, the most disruptive effects on our global economic system. That is the possibility to put information about past economic activity back into the system of redistribution of resources, to create currencies with memory.

A dollar bill that you receive from someone doesn’t come with a description about how this individual acquired it, or about how this individual is seen by his peers in a context of work. It could have been earned honestly or dishonestly.

• The NRP-CAS implemented in the Sensorica open value network reward participants with tokens, representing equity or debt, based on past economic activity. This data accumulated for every affiliate can be distilled into a socioeconomic profile that can be consulted by anyone around the world. It is very dangerous to allow all this information to be gathered and controlled by private interests. These systems should not be deployed by organizations like Facebook or Google. They must be developed on top of p2p infrastructures like blockchain for example. That is precisely what we are striving to do with the open value network infrastructure.

Sensoricans designed and experimented with a system that allows redistribution of benefits and privileges, eliminating the problem of the traditional monetary token, for being detached from the role of the individual in society. This is very similar to the situation in my mother’s village. The system can be scaled and it is using digital technology instead of clay tablets, which makes it easy to gather, store, analyze and retrieve information about socioeconomic activity in real time, with no spatial barriers. This is not a Big Brother situation if applied according to p2p principles. 

We are in the middle of a socioeconomic revolution. It is still unclear what the future will look like. In order to inform this transformation we need to revisit a fundamental concept that is used in all these approaches, value.

Reconsider the notion of value

The new digital technology introduces new possibilities that transform the way we, as a society, consume, produce and distribute things. We need to rethink how individuals can now participate in the global networked economy and how resources can be redistributed. At the core of this endeavor rests the notion of value.

We don't have a coherent concept of value and this results into ineffective designs of tools and processes to deal with our new economic reality. Here I propose a psychological perspective on value, which I think helps us better deal with the emerging p2p economy.

What's wrong with our current notion of value?

We often hear: ''Gold is valuable.''

Is value something that resides in things? Is value a property of things that we all perceive and can quantify, like the weight of a material object? 

I can definitely agree with a member of an amazonian tribe that a rock is heavy enough to be carried by two people. Weight is independent of our subjectivity, it is something that resides in things, that we can measure. But we might completely disagree on the evaluation of an ounce of gold. In fact, the tribe man might not attach any value at all to gold, if he has no use for it, or if gold has no cultural significance. He might value more the necklace of his daughter, made with skill, care and devotion, from various colorful local seeds and shells.

We rarely agree on the “value of things”. This would not be so if value was a property of things like weight, that anyone can estimate or measure and agree on. Value is something about us in relation with things.

We also say: ''Gold is more valuable than iron''

Is value something that can be compared? The color of an object is a perception and it depends on the properties of objects, on the light that shines on them, and on our visual sensory system. Even though the latter varies from one individual to another, we can agree most of the time that a tomato is more red than an orange.

Let's imagine a scenario. Bob and his beloved Lynn are in their house. Suddenly, they realize that the house is on fire. They both rush to salvage a few things that they care about and run outside for safety. I can imagine a lot of different scenarios that seem very realistic to me where Bob's collection of salvaged things is different from Lynn's. We rarely agree on how to compare things based on their attributed value. We don't have a scale to sort things according to how valuable they are to us.

We often hear: ''I create a lot of value for my company”.

This implies that value can be created, externalized, or transferred, and accumulated somewhere.

Is value something that can be created? We can create tools or artistic artifacts. Some of these things can end up in Lynn's and Bob's house. They might be part of the things left behind to burn, or part of the things they salvaged. Both options are plausible for almost any object, with anyone. If value is not a property of things and if we can’t compare it, can we really say that we can create it, or do we confuse value with tangible things? If we adopt the idea that value can be created, we must accept that this thing called value is not the same for everyone. That is a very strange thing that might or might not exist depending on who you ask. It is probably better to say that we attribute value to things that we create, rather than saying that we create value.

We cannot say that value can be created, externalized, or transferred to someone else. 

We can transfer resources from one individual to another. Suppose that Lynn sees an apple. If Lynn wants to eat an apple at that moment, or if she knows that she will want to eat an apple in the near future, she will attribute value to the apple at that particular moment. Imagine now that Lynn wants to give the apple to her friend Bob, who hates apples. If we could say “Lynn transfers value to Bob”, this would imply some sort of correlation between Lynn’s experience and Bob’s experience when this transfer takes place. But in this case, Bob is not moved by an apple, he doesn't want one, even if it comes from his beloved Lynn. Moreover, we know that in general this correlation is rare, because our desire for an apple varies from person to person and in time. The concept of a “transfer” supposes that something leaves Lynn and at least a portion of it reaches Bob. The apple does that. But if value is that something it would have to be of a strange nature that cannot be quantified or followed in its movements and that can change depending on individual, on the time of the day, or on the season. The phrase “Lynn transfers value to Bob” is meaningless, it doesn’t convey any information about what is really happening between Lynn and Bob.

Instead, we can say that “Lynn gives an apple to Bob”, and that “Lynn transfers a resource to Bob”, and we can add that they both attribute value to that apple in a different way.

Unless a magician is involved in the process, transferring an apple from one individual to another one is considered an obvious fact. Everyone agrees on it. Saying that an individual attributes value to an apple requires that individual's input. We need some information about that individual's inner experience. It's like saying “someone loves you”.

So why are we thinking of currencies as flows of value when it seems to be clear that value doesn't flow?

We can continue with these examples, but I think we got the idea. Our language about value is incoherent and vague. So what is value?

My working definition

Value is what moves human beings into action.

Value is a subjective experience or process, it originates in us, it is not a property of things, it cannot be created, externalized, accumulated, measured or compared. There is no such thing as intrinsic value. Value is subjective and contextual.

Note that this definition doesn't imply a positive connotation to value. It is something that moves us, that puts us into action, either to run towards something that we like or away from something that we dislike. It is also something that drives us towards things that make us thrive, and sometimes towards our own destruction.

Also note that this definition of value can be extended to non human beings, perhaps to all living systems. We can say that a bacterium is attracted to something because of some internal mechanism that creates a simple meaning of that thing, within the context of its life, which might translate into something like food, or protection.

In the following sections I will systematically apply this definition of value. We are going to develop a more coherent language about resources and about processes that create resources and move them throughout human societies.

Value is like love. We can love someone. Someone can love us. We can love each others, but we can't give our love to someone. We can't compare how much we love each other. We can't create love and store it somewhere for later.

See new developments on my working definition of value.

More formally speaking, we can think of value as a triadic relation between a valuable (a reality), a token (can be money, but also a symbol that doesn't represent a monetary currency) that stands for it, and a valuation, which is in part subjective and in part inter-subjective, i.e. shared, through culture and socialization. This follows the same pattern as Peirce's theory of semiotics, the triangle of reference or semiotic triangle. In this case, the token is a representation of a desire/need that can be matched with a representation of anther desire/need. This definition can model non-monetary transactions like barter, as well as exchanges mediated by a monetary currency, like a purchase.

Valuation of something is an imaginary process by which an individual projects him/herself into the future trying to imagine how moved he or she would be by that same thing, or into the past, trying to remember an experience where he/she as moved by the same thing, modulated by present predispositions towards the same thing. The result of this process is circumstantial and characteristic to that specific individual. Note that the valuation in our definition doesn't try to avoid mental states, such as desires and needs, which is something that modern economists try to avoid, only considering preferences, which they wrongfully equate with choices. There are good philosophical reasons to distinguish preferences from choices and also problems with empirical representations of preferences from observed behavior. I believe that economics is not a positive science. I also question economics as a science, in the sense that there are no such things as laws of economics that can form the basis of explanation of observed economic phenomena. Moreover, economic events cannot be causally linked to past economic events. Furthermore, empirical observation of economic processes, based on statistics for example, undetermined any economic state, which is subject to multiple variables, some of which cannot even be known. There is no such a thing as a controlled experiment in economics. The prediction power of economic theories are always called into question, considering all the past bobbles and black swan events. Sometimes irrationality, human greed, and other personal motives or defects are better suited to explain such events. We cannot take the human out of economics, i.e. we cannot make abstraction of mental states in economics.

On resources

Tangible resources

Tangible resources are things that we can create, store, transfer, use or consume. They can be delineated and identified. Tangible resources can be material or immaterial. For example, an apple is a material resource that I can eat to feed myself or use to make jam. An ebook is an immaterial resource that I can use to acquire new information about something.

Intangible assets

Intangibles are immaterial, meaning that we cannot put our finger on them, move them in space, and pass them to someone else. Examples are reputation, culture, social network density, organizational well-being, etc.

More on value

It is improper to say that we create value or that we use value. We can say that we create and use/consume resources. Same as with love, we can't store or transfer value to someone else, but we can store and transfer resources. 

We can remember some gratification experienced from a thing in the past and attribute value to the processes that created it, by directly supporting or engaging in the process or by acting towards the preservation of this process in order to maintain the possibility of future reproduction of that same experience. The attribution of value to a thing that exists in the present, that we believe will exist in the future, or that we experienced in the past, is identifiable by our actions towards this thing, even if it is just about paying attention to it for a fraction of a second.

Value resides in us, not in things. We can say that we attribute value to things, to all sorts of things, material and immaterial, tangible and intangible.

When we face something, or even imagine something, we feel something. This feeling might be pleasure, satisfaction, desire or their opposites. If these feelings push us to act we can say that we attribute value to that thing. When I say that “I like ice cream” I declare my feeling towards it, which also communicates a certain probability that I might do something to get some, now or in the future. When I say that “I desire ice cream now” I communicate a higher probability of me doing something to get some. For a salesman, ''I like ice cream'' tells him that I am a potential customer; ''I desire ice cream now'' tells him that if he facilitates the process for me getting some, there's a very high probability to make a sale. The action of getting up and going to the store to get some ice cream is a tangible manifestation of my value attribution to ice cream. The effort I am willing to put into getting some ice cream is another indication of my value attribution. This effort can come in the form of the price I am willing to pay, and this is where we recuperate the classical economy into our new theory. The amount of ice cream I buy and eat per month is adding more to my value attribution to ice cream. But all these manifestations and indications aren't properties of the ice cream itself, or aren't fixed for me. Tomorrow I might have an aversion to ice cream because of some intoxication, or I might have an interdiction to eat ice cream from my doctor and my attitude towards it might completely change, temporarily or forever. If the doctor forbids me to eat ice cream, I might still experience the desire for it, I will still remember the pleasure that I experiences in the past eating ice cream, but I will not act towards getting some for myself. I might continue to attribute value to it, for example by projecting my desire for ice cream to my niece and offering her one. Or I might take part in a social movement to prevent the government from banning ice cream.

It is also important to note that value is not just an individual subjective experience. There is an intersubjective space through which we communicate and influence each others on how we attribute value to things. Modern neurosciences have revealed the role and the importance of mirror neurons in coordinating our emotions and ethical/moral values. Through our experiences and education within our families and our communities we come to appreciate certain types of foods, objects, artistic artifacts, ideas, … Value, as a subjective experience towards things is innate, when it comes to things that are essential to our survival, but it is also acquired. 

Our ability to influence each others is extremely important. Without it society would not exist, humans would not be able to form organizations, to collaborate or cooperate together, companies would not exist. Value moves the individual and moves individuals together. Any group of any type is a number of individuals that act together towards a goal. There's something very central to the group that moves everyone. When we state the mission for our modern organizations this is precisely what we want to broadcast, in order to attract those who are already susceptible to vibrate to the mission. Organizations also put in place mechanisms for harmonizing the way their members feel towards the mission, and to reinforce these feelings. Today, organizational architects work on values, purpose and culture, which again are ways to achieve a higher degree of coherence and coordination in how members attribute value to important aspects of the organization, its products, its customers, etc.

The social dimensions of value, the fact that other individuals or institutions can influence how we attribute value to things is important in production, as it forms the glue of any type of organization. But we should also analyze its importance on the side of consumption, traditionally called the market side. The fashion industry has refined the art of generating ''waves of values'', meaning stimulating crowds to shift their value attribution from one category of things to another one. This is why teenagers throw away their year-old clothes to buy the new ones that are fashionable today. They use role models, new features, or simply beautiful stories to generate new desires in us, powerful enough to push us to action, to buy the new thing. The new pair of shoes can be as functional as the old one, it can satisfy the same need, but our value attribution can be modulated by the marketing campaign.

These “waves of value” also help to shape our behavior for a greater good. For example, as we become more conscious about our ecological problems people try to consume less or to appreciate more products that minimize the environmental impact. 

Since value is also intersubjective, since the way we attribute value to things can be modulated by others or by institutions in which we operate, it is important to understand how we must take this into consideration when we design new systems of production and redistribution of things.

Tangible resource flows

There are different ways to acquire resources.

Primary processes / Access:

• Gathering - Involves nature and at least one beneficiary; the least resource and effort intensive. 

• Hunting, cultivating, extracting or making - Involves nature, at least one beneficiary that puts in some effort, labor, skills, ... Leads to the notion of property in some cases, since effort and skills, which are also acquired through effort, aren't taken lightly by people, who want to protect their acquisitions or gains. Leads to the need for cooperation and/or collaboration in cases where the thing cannot be acquired by a single individual, and further it leads to the creation of organizations of all sorts involving relations, roles, and rules. The free rider appears, the individual who wants to acquire the stuff with the least effort possible. Exploitation can also appear, which is in essence a powerful free rider using force or intellectual superiority to live off the backs of others.

Can be governed by rules related to characteristics such as: 

• Abundance or scarcity - Relates to the quantity available for consumption or use. For example a low-debit water well as opposed to a river. Depletion, externality are forms of access that are destructive and can lead to the demise of the resource. People can decide to create norms around access in order to preserve the resource, sustainable access (consumption or use). These norms can be abused, creating a situation of unfair access. There are also examples of capture, i.e. artificially turning an abundant scarce into a scarcity. 

• Centralized or ubiquitous - Relates to the distribution of the resource, geographically or other. For example, a water well in the middle of the dessert can provide water in abundance (relative to the local population), but it only exists in one location, as opposed to a river. Monopolization is a form unfair access through control of centralized resources, which can be enforced by force, legal means  (State - enforced monopoly for example) or others. Unfair access to centralized resources can be established by physically blocking access (using force) or keeping the location secret.  Ubiquitous resources, like air, cannot be monopolized, although some efforts for unfair access have been used in the past, for example conversive laws that make it illegal to accumulate rain water.

• Difficult or easy access - Relates to the efforts, costs, knowledge and tools required for access, use or consumption.  For example metals, which can be found in abundance in a region, but require knowledge and other types of resources to extraction and purification. Unfair access can be established by controlling the conditions of access, such as keeping knowledge secret, controlling tools / means, manipulating costs.

• Rivalrous, non-rivalrous or anti-rivalrous - Relates to the possibility of simultaneous (parallel) or sequential (mutually-exclusive) access to the resource. Rivalrous means that its use/consumption by one individual prevents simultaneous consumption by another, or if consumption by one reduces the ability of another to consume it. Non-rivalrous means that multiple individuals can access simultaneously, or that the cost of making this resource accessible to a marginal (additional) individual is zero. Anti-rivalrous and "inclusive" means that each person benefits more when other people use/consume it (ex. data, information. knowledge, language). People create norms, rules and protocols for accessing to rivalrous (ex. first came first served, with priority exceptions), which can be corrupted (ex. favoritisme). Enclosure, leads to unfair access by artificially turning non-rivalrous and even anti-rivalrous resources into a rivalrous one.  

Secondary processes / Transactions:

They are transfers of tangible resources between individuals, which presupposes that some level of effort has already been deployed or some other resources have been already used or consumed in order to acquire these resources that are transferred.

• Donation, gift - Involves at least two parties, the giver and the receiver, and can be chained (the receiver can become the giver, by donating the same thing to a third party). It is a one-sided transfer from one party to the other, different from sharing and exchange. Comes out of the affect of sympathizing with others. This is a mechanism through which disparity is reduced, also the basis of solidarity mechanisms in our society like charity, social benefits, etc.

  • • Extortion, exploitation, theft, fraud - Is the opposite of donation or gift. Involves at least two parties, the taker and the victim. Comes out of human greed, laziness, psychological troubles, and sometimes out of necessity or vengeance.

• Exchange – Involves two parties and can be chained (one of the things exchanged can be further exchanged). Can be implemented through different mechanisms like barter or purchasing using a monetary currency. It is a bi-directional transfer. In the case of purchasing, the seller and the buyer possess something before the exchange, which presupposes some level of effort already deployed on both sides. Requires the establishment of some sort of equivalence between what is given and what is received, which can also be established through different mechanisms, either the individual evaluation of both parties, a decision made by a superior authority, market dynamics, etc. The equivalence can be established based on different criteria such as the effort deployed to acquire the things that are exchanged (the Marxist notion of value as labour), the attachment or subjective appreciation someone has for the thing (better seen in exchanging a piece of art), the utility for the individual or for the community that is procured by that thing, the scarcity of that thing at the moment of the exchange, etc. Exchange dominates our modern economy and has been extended to other things in life in general, as we've grown to see human interactions as transactional. Exchanges aren't always fair, meaning that the sentiment of having equivalence between what is given and what is received is not always shared by the two parties, especially if the two parties do not operate with the same value theory.

  • • Unfair exchange arises when one party has an asymmetric advantage: informational advantage, monopoly, exploration, externality

• Sharing - Involves at least two parties, all parties benefiting from the same thing. There is no transfer (of ownership, only transfer of custodianship or stewardship, i.e. responsibility). Requires some rules for access, use, maintenance... Comes out of the necessity of doing more with less, or reducing waste, or building social tissue, ... Requires different forms of property such as public, commons, or new ones like pools of shareables and nondominium that are implemented in the open value network model.

  • • Freeriding occurs when someone abuses sharing, by taking more than offering. 

Can be governed by rules based on fairness, with patterns like communal sharing, authority ranking and equality matching, market pricing or stigmergy. 

There are debates about taxation, as some argue that it should be perceived as a gift in order to support solidarity mechanisms in society, and others argue that it is theft, as it is imposed by a corrupt government unfairly on some citizens. There are good theoretical grounds that help us to conceive taxation as an in between. The best system, in my opinion, would be a totally transparent one, offering different options and the possibility to opt out, renouncing the benefits that are promised in exchange.

Some anomalies observed today

Some resources are abundant in nature and they are artificially treated as scarce. This is the case of digital artifacts, in the form of ebooks, designs of all sorts, movies, music, etc. These abundant resources are co-created by relatively few individuals and can be gathered by many. This is also the case with technology, packaged as intellectual property.

New possibilities brought by the digital technology

• Barter becomes possible at large scale.

• Co-creation becomes possible at a large scale.

• New forms of property can now exist, like pools of shareables and true commons (as understood within the open value network model), and nondominium (ownership is not granted to individuals, or not granted to any entity at all, but access is guaranteed according to some set of rules).

Monetary currencies

[NOTE ! this section needs some cleaning...]

Money is a tokens, a thing that stands for other things. The creation of money constitutes a revolution that took us out of a system of redistribution of resources and privileges that was predominantly subjective and allowed us to scale our economies. 

The token was first designed to stand for tangible or material goods. It was used as an intermediary for exchange. By design, it models the behavior of these goods. If someone sells an apple, he has an apple less. He can get in return a token, which was also a physical thing, a gold coin for example, which behaves in the same way. Very rapidly, money started to be used for other things that exhibit a very different behavior, which introduced all sorts of problems. For example coins were also used to get a lesson in geometry. But the problem is that knowledge doesn’t behave like an apple. If I teach a lesson in math to someone I don’t impoverish myself in knowledge. In fact, the more I teach the more I gain in reputation and notoriety. People were also giving coins to the priest to gain the affection of gods. But selling access to God to one individual or to thousands of individuals at the time doesn’t make much difference to the priest. The coin, designed to behave like a material good is not the appropriate means for these types of transactions. The chicken grower must produce other chickens after having sold some. The problems with this design appeared early on in the form of abuse. Those who sold things that didn’t require production were able to amass large fortunes, faster than the farmer or the artizan.

Is money value? Some say that money is pure value. Nonsense. When was the last time you wanted to work for a piece of paper with some funny head on it? But people kill for money. People hoard money. The wealth of a person in estimated in the amount of money that person has. What is money and what does the price of a thing represents? Let's get our language straight, because we cannot ignore the fact that people go to the extreme for money.

How we get money?

We get money from participating in economic activity such as production (working as an employee), commerce (selling a good or a service), by charity (getting a donation), debt (getting a loan), extortion, fraud or stealing someone, ... We use money to acquire something, or to gain access to almost anything.

The price of something

As a quantitative means of exchange, which is one mechanism by which resources get redistributed in society, money stand for, or represent something by their amount, or quantity. That is the price.

Is the price always right? Is everyone always satisfied with the price we pay for things, as in feeling that the amount of loss incurred by giving a number of coins in exchange of something is always fair? Obviously not.

The common understanding is that the price of something (a quantity of money) represents the value of that thing. There is this underlying assumption that value resides in things and we can agree on how to quantify it. There is also the naive understanding of money as a substance that we use to represent the price, meaning that the price, which would be the value of a thing, is represented by a quantity of that substance, the amount of money. This naive image is enforced by our past use of gold as money, a real substance. A quantity of gold represents the ''value of something''.

How are prices fixed?

The trivial case is price fixing by an authority. This relies on one individual’s appreciation or evaluation of goods, or on that individual’s goals and ambitions, which can be very far from how others attribute value to the same goods. We can agree that this undemocratic case adds even more bias into the system of redistribution of resources and leads to other problems.

A more complex and widely used case is a market-based process. In this case, the price represents an equilibrium between the average effort people (consumers) are willing to deploy to get something and the producer’s desire to increase benefits, while taking into consideration that he might not be the only one to offer that thing, his relations and reputation within the community, the relations and the reputation of the buyer, context, or local economic conditions, norms imposed by the community, etc. This equilibrium is expressed in terms of a quantity of coins, the market price. Classical economics speaks about supply and demand, but although this is an important pattern in exchange processes, it is still an oversimplification. Needless to say, the market price makes almost everyone involved in an exchange unhappy, because it doesn't reflect the value every individual attributes to that thing. Pricing based on market dynamics is a collective process, not a one on one process with a lot of room for subjectivity and other intangibles to be included in the equation.

People say that money is a form of “objective value”, that it objectifies value by the intersubjective process in the marketplace, which leads to a collective acceptance of a price. People say that money helps to “quantify value” through different pricing mechanisms. But we now believe that value is subjective and cannot be objectified nor quantified. We conclude that monetary currency is not a good way to represent value and this must be the root of many modern problems.

Using our new definition of value we can say that the price someone is willing to pay for something somehow indicates how much value he or she attributes to that thing. Is this really case? A more complex statement would be that the price reflects a level of effort on behalf of the receiver at which a transfer of property or gaining access to something becomes likely, assuming that the provider also accepts the conditions.

First, we cannot measure value. Second, we can't even compare the value attributed by two individuals.

We cannot equate money with value. Since money are transferable we are mislead into believing that value is also transferable, and that value flows. Originally, money was a material token that stood for something else. It was designed to behave like the things we exchange using it: I give you an apple, I have an apple less, you give me a coin, you have a coin less. If gold is used as money, it's weight can stand for something, it can be the quantity representing that thing. Today, we can use paper banknotes that used to stand for gold. With the debasing of our monetary currencies and the fractional reserve banking system these banknotes stand for something very abstract and very difficult to measure. They are just pieces of paper that people agree to use because their use is enforced by law, legal tender, or because people trust the authorities that control it. 

Money is simply a tool that we use for exchange. It is part of a larger mechanism of redistribution of resources. So as long as people agree on a mechanism to transfer resources they will want access to this mechanism. People attribute value to money, for what they allow us to do once we have them.

Our classical economy is dominated by exchange for production and redistribution of resources. The exchange can be direct as in barter (a good against another good), or it can be mediated by a currency, usually a monetary currency.

But first, lets analyze a bit further the place of exchanges in our economy. One important remark is that the bulk of our production relies on exchange: individuals exchange their labor against money, the salary, with the company they work for. At the first glance, when we look at a classical company, we see people cooperating to produce something. In fact, they all work for the company, which is designed to disproportionately benefit some individuals, those who are at the top of the hierarchy. Employees sell their skills and their time to the company for the direct benefit of those on top, and also give away other creations that can be generative for the company (i.e. continue to have a positive impact even after the employee is gone) like intellectual property, methods and processes, social cohesion, vision and orientation, etc. Employment, in our current society, is built on an exchange process, skills and labor against wages, which is much in favor of a few privileged individuals at the top.

Another remark is that the great majority of things that we need or we desire in life are accessible only through an exchange using money as a medium. The exclusivity of money as legal tender is actually enforced by law. This leaves very little room to other exchange possibilities.

Money takes a very important role in our society. I would say that it plays a very heavy role, choking other possible alternatives for the creation and redistribution of resources. In order to be able to imagine alternative systems of redistribution of resources we need to deconstruct money.

Money is a mechanism of a type exchange. We can also transfer resources as gifts, for example, and the reasons for it might be love, empathy or pity. We can also share with others to nurture social relation, or in order to increase our access to more resources, etc.. Money is part of the most popular mechanism of resource transfer. Still today, it is the most effective mechanism that can scale to global proportions, in a society without advanced information systems. Things are about to change now, as information technology advances and we can better account for and keep track of resources and processes. People are scaling sharing and barter systems for example, using social networks and sharing platforms on the Internet. Time banks are also on the rise, which are accounting systems for time spent doing something specific for someone else, using time as a metric for evaluating contributions to a community.

Money is a simple mechanism, a simplistic mechanism, but it is very effective at large scale notwithstanding its shortcomings. It has evolved as an optimal solution for the problem of large scale resource redistribution? Optimal doesn't mean the best. It is the result of many compromises. First, it is applied too widely, even in areas where it doesn't fit, for things to which we attribute sentimental, or cultural, or historical value, i.e. for things that we experience in a way that doesn't relate to their utility or quantity. Some even think they can buy love or happiness with money, which shows the symptoms of a system that has reached its expiry date. It shows that something is wrong with the way we apply money, that we went beyond their domain of applicability before creating social problems. Second, we saw above that money, as a means for transfer of resources coupled to diverse mechanisms of price fixing, are far from being perfect because it leaves people very often unhappy about the exchange, since the market price of things doesn't always reflect a feeling of fairness. We can say that without money two individuals might not be able to reach a feeling of fairness in an effective time. The market price acts as a norm to smooth exchanges, to reduce the tension in the negotiation process, to make markets more efficient. Since the market mechanisms relies on many people, since it is not about a price dictated by a single authority, by a monopoly, it appears to be democratic, therefore it is widely accepted as a norm.

If money doesn't represent value, why do we want it? Our desire for money is in fact a feeling of wanting access to the process of resource transfer, in order to get something. People are also capable of abstract thinking and of anticipating the unseen. So even if we don't have something precise in mind to get at the moment someone offers us money, we are still happy to take it, in anticipation of something that we might want to get in the future. It doesn't mean that money have value, or that I attribute value to that piece of paper. Abstract thinking allows us to be moved by the potential of getting something in the future, even if that thing is not a defined object of our desire at that particular moment. We attribute value to money i.e. to a widely accepted mechanism that gives us access to things that we really want and desire.

In the end, what is important is to get access to the things we want and need. Since in society we want to create relations between our input in society and how much access we get to things, we also use money to reward inputs, as in contributions to production and to the well-being of everyone around.

Money and property

It is important to note that buying or gaining access to something by paying for it involves a notion of property. Payment is a collectively accepted mechanism for gaining access to someone's property or assets under some conditions.

Money, as an exchange mechanism, and its associated mechanisms for price fixing are enforced by the notion of private property. This means that if things are individually owned, I can decide what I ask in exchange of some thing.

Money can be seen as an exchange mechanism enforced by private property. Since we individually own things, we decide what we exchange them for, thinking about maximizing our benefits. (These benefits are not just money. Someone can decide to sell for a lower price, even for free, because he thinks he can compensate with other things like social capital or another favor at a later time.) But what if private property doesn't apply to some things? What if someone can't claim exclusivity over some thing? Product ideas in the public domain are not exchanged using money, but patents can be. This doesn't mean that people don't attribute value to them. They are accessible for use for free. Value and money are indeed separate things. Moreover, we also see how property can totally change the nature of the transfer/exchange. If I create a design and release it as creative commons BY SA, no one will be able to control the use of that thing, everyone will have free access to it. Money, as a mechanism to gain access to it loses its raison d'être. We can also take the example of a tribe that has a culture of hunting in group and sharing the kill. The distribution is regulated by some rules, and since the kill is not considered the property of a single individual, the distribution will not be mediated by money, but rather by needs, social status and merits.

Money, as a means of exchange is intertwined with the notion of private property. Moreover, prices are set by a process whereby an equilibrium is established between the producer and the consumer. This can be done in a monopoly setting, in a regulated monopoly setting, in a free market setting, or a combination of those. We can argue which setting produces results that are perceived as fair or equitable. In any case, the price doesn't reflect the value that we attribute to things, which is a subjective process in context, at a given time. Sometimes we feel that it is worth it, sometimes we feel the opposite.

Money and enslavement

Money as a tool for smooth enslavement - give the example of slaves and the coal mined in Georgia, USA.

Old text / ideas

Money can be acquired by performing some effort somewhere, by producing something, if we make abstraction of central banks who can just issue money out of thin air. Therefore people do understand money as effort. We can always translate the price of an apple in a fraction of an hour of work, which has also an equivalent in money.

Current-see

I borrow this concept from Art Brook. 

More to come... 

Signaling systems for redistribution of resources

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Command and control, chaordic structures  and stigmergy

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