money – Looking Forward

[This is a continuation of my previous blog post about the changing meaning of money in the Internet age.]

In the movie “Star Trek IV: The Voyage Home”, this bit of conversation took place –

Gillian: Don’t tell me they don’t use money in the 23rd century.

Kirk: Well, we don’t.

The implication of this dialogue is that in two centuries we will have evolved from a monetized economy to something different. But what is that? Is it like the sharing economy?

This is a huge topic and one that is hard to get a handle on.

There have, of course, been scholars of the phenomenon. Rachel Botsman and Roo Rogers brought initial intellectual focus on the phenomenon with their excellent and wide-ranging 2010 book, titled “What’s Mine Is Yours: The Rise Of Collaborative Consumption”. (Unlike many others, the book covered or at least touched on the questions I ask in the rest of this post.) She extended these ideas to larger companies in the Harvard Business Review – “Sharing’s Not Just For Startups”.

More recently, New York University Professor Arun Sundararajan, has been the academic leader on the sharing economy. You can see his views at NYU and in his talk, “Our Collaborative Future? Ownership, Equity and Growth in the Sharing Economy”. He has also launched an experimental platform, PeerCollaborative.

But part of the problem in understanding the “sharing economy” is that the phrase has been used in different contexts.

First, to go back to Star Trek, there is the idea of an economy without money. One could assume this is based on some form of barter or non-monetary rewards. Historically, of course, barter economies don’t go far. Rewards that don’t include money have been a prominent feature in the Internet, with the people who write and edit Wikipedia entries as the most obvious example.

In his book, “Who Owns The Future”, Jason Lanier asks how people will be compensated in a digital age where so much of value is in the form of ideas (and observation of human behavior). His solution is a system of micro-payments whenever one of our ideas or patterns of behavior is used for some other form of business. Thus, if someone used one of your creative products, they would have to pay a small fee. If Google sold some advertising based on data about your life that you made available to them, you would get a piece of that ad revenue.

There are all kinds of issues and weaknesses in Lanier’s book – which he mostly admits to. But it’s worth noting that his aim is admirable: he hopes to monetize these Internet activities to preserve enough income for everyone so that the middle class survives the growing inequality that seems to have accompanied the ascendance of the Internet.

Despite its noble aims, there have been numerous critiques of his proposal. Among the more interesting are “Jaron Lanier’s Strange Fantasy” and “Facebookers of the World, Unite!”. But what replaces monetary compensation still remains an outstanding issue. Can we live on sharing alone?

Time banks and time-based currency is another form of non-monetary payment, although it predates the widespread use of the Internet. In its simplest version, people exchange their time – an hour of plumbing for an hour of web design, for example. The example of sharing and collaboration on the Internet has provided additional justification for the advocates of time banking. So there has been new attention to it, as you can see from this ABC News report earlier this year and more recently this TV story, “Forget Bitcoins, what about time as currency?”.

And then there’s what has come to dominate the meaning of “sharing economy” – for-profit business services like Uber and AirBnB. One sharing aspect of these businesses comes about because not everyone has to buy an asset, like a car, for it to be available. Another way is when a person makes available – “shares” – an asset he/she owns, like an apartment.

The growth of these “sharing” services has not been without complaints about:

Abuses of the people delivering services – like the complaints against Uber by drivers who feel insufficiently compensated;
Abuses of the people receiving services – like the fear of attacks by guests of AirBnB hosts or the trashing of the host’s apartments;
Various violations of state and local regulations intended to protect consumers and ensure properly functioning markets. (You might want to see the recent, November 19, session of Legal Hackers NYC and Launch LM concerning “Legal Issues in the Sharing Economy”

To an extent, I’d chalk up these problems to the newness of this approach to business.

For me, though, the longer term issue is whether these services are as transformative as their advocates claim. Are these “sharing economy” businesses more than just another example of the way that the Internet can help decentralize business activity and decompose hierarchies?

While decentralization is not unimportant, the answer would seem to be no. These businesses, by and large, have not fundamentally changed the role of money nor set out to provide a way to measure the increasing share of human activity that is intangible services and digital products.

Perhaps a version of Bitcoin is needed that is not merely another currency that can be exchanged for dollars or euros, but can instead be used as a measure of time given, resources shared, and data or creative product provided. Whatever the answer is, I hope we don’t have to wait until the 23^rd century to figure that out.

[http://njacknis.tumblr.com/post/104245965715/a-sharing-economy]

Two hundred years ago in an era dominated by agriculture, most of the people in the US had little use for money. Then the industrial era arrived and a majority of Americans were paid for their labor in cash and used it to obtain the necessities of life.

Now we are in another transition. So how should we think about money in the Internet age? How is the traditional role of the dollar, pound, euro, etc. being disrupted by the changes the Internet is bringing to the economy?

I’m referring to money as a form of exchange of value which can be easily transferred. There have been barter exchanges for many years, even before the Internet. That’s not what this post is about.

Below are some of the answers I found.

First there’s Bitcoin. Despite the woes of the Bitcoin exchanges earlier this year, Bitcoin has been, in some quarters, proposed as the Internet’s new version of money. However, its major difference from traditional currencies is its independence of government control. Beyond that not unimportant aspect, Bitcoin doesn’t seem to be based on a fundamental difference in how money is viewed or used.

While the Internet made it possible, Bitcoin hasn’t so far really answered the question: what is the Internet doing to money? What is money in an Internet economy?

Last year, in his book “Who Owns The Future”, Jason Lanier focused on what he described as “off the books” activities in the Internet. In other words, things we do that used to have a monetary value, but are not now monetized. (More on Lanier’s proposals in another blog post.)

I’ve also mentioned before the inadequacy of GDP as a measure of economic activity, when much of it is not monetized. Continuing that theme of a need for a different kind of accounting, in its Networked Society City Index 2014 report released this month, the Ericsson company states: “GDP will be redefined to capture a new understanding of sustainable value creation and wealth in cities and in nations.”

Then, in a recently posted TED video, Michael Green presented his alternative Social Progress Index, which is intended to capture some of that non-monetized value by assessing the quality of life. But how can people measure this so it can support individual exchanges and thus provide incentives for more social progress?

The TimeBanks movement is, in a sense, in the business of creating a currency based on social progress. For almost two decades, this group has been getting people to provide and receive social services through a system of credits based on the number of hours of service a person provides.

Value can go beyond social contributions to social reputation. More than ten years ago, Cory Doctorow, the science fiction writer, coined the term “Whuffie” for a currency based on social reputation. As social media have developed, the idea has been recurrent, more recently – as in this article “Why Social Accountability Will Be the New Currency of the Web”. There was even a short-lived Whuffie Bank.

Perhaps the most far reaching approach to design a form of money for the Internet age has been Dan Robles’ Ingenesist Project. His focus is on measuring the intangible value of the Internet’s products – its social connections, knowledge and creativity. And then using that as a form of currency that could be exchanged. His goal is nothing less ambitious than “to solve the under-mining problem that there is no accounting system for intangible assets. Only then can there be intrinsic value in the conservation of those assets.”

I’d suggest going to his website for more detail and the many videos which I can’t begin to elaborate in this short post.

What we do about measuring the products and services that are generated in the digital world is still unclear. Perhaps one of the ideas I’ve listed will lead to the world’s dominant form of currency or perhaps something else will arise. But I would expect that the way we’ve thought about and used our money in the past will indeed be changed – and not all that far into the future.

[http://njacknis.tumblr.com/post/103042523997/whats-money-in-an-internet-economy]

Tag: money

What’s Money In An Internet Economy?