The Ingenesist Project

The Next Economic Paradigm

Tag: consumption

Collaborative Production, Consumption, or Destruction?

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On January 11, 2011

In General Information

Many important ideas are emerging related to collaborative consumption and the sharing of physical assets.   The primary idea is that communities can save money and conserve natural resources. The most powerful byproduct of collaborative consumption, in my opinion, is that communities can organize around physical assets to produce what they actually need, not what they are told to need.

The idea of collaborative production is generally referenced around a host of enterprise collaboration tools.  However, many of these tools are designed to benefit the for-profit enterprise allowing them to collect high value knowledge assets while eliminating high risk employment liabilities under the noble flag of “Crowd Sourcing”.

Collaborative Production

True collaborative production is related more to the idea that communities decide what to produce. In classical economics, the merchant class allocates land, labor, and capital and largely decides what will be brought to market but also what can be withheld from a market.  Collaborative Production starts with the idea that a community allocates it’s own knowledge resources to produce what they need and withhold what they don’t need.

This distinction is actually quite important.  Combining some sugar with fat and stirring in a lot of advertising to produce candy is much faster and easier to do than raise carrots, for example.  While the farming community may prefer to raise carrots, profit margins on carrots are driven by supply and demand for calories – as such, carrots compete directly with candy.

Have you ever seen a commercial advertisement for Carrots?

Ultimately what gets produced is that which is easiest and cheapest to produce, store, and transport – not necessarily what a community needs to be cheaply and easily produced.  Eventually the knowledge assets required to grow carrots begin to atrophy by the process of collaborative destruction.

Collaborative Destruction

Today, many communities are trapped behind closed doors.  People do not know their neighbors.  They are unable to reach an agreement about what they can build together.  When they lose their “Jobs” they lose their identity and direction and they attach to whatever idealism crosses their fear threshold.

The greatest challenge ahead of us – and the greatest opportunity as well, will be to interact with each other.  We need to know what the other people around us know and find a place for our own knowledge assets in our community.  Communities need to collaborate outside the construct of a corporation and produce the things that they need.  Social Media provides an astonishing tool for a new form of social organization if and only if it can be used to beat the effects of collaborative destruction.

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Printing Social Currency; Influence vs. Intentions

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On December 29, 2010

In General Information

What is more valuable, their Influence or their intentions?

The heat is on to discover a new currency

Obviously, money is supposed to represent productivity otherwise why would people work for it?  But, everyone is pretty much resigned to the fact that the dollar – and indeed most global currency – is irreversibly divorced from actual productivity.

No Alternative  Algorithm?

The reason why people must trade dollars is that there is no other alternative, and the computer algorithms that control the value of the currency have yet to tell us otherwise.  That’s it, really.  The questions remain, how, why, and when will people stop working for it and what will they work for which can replace it?

This will not be as simple as living in yurts, trading cheese cultures and tweeting about it. Complex infrastructure like a judicial system, transportation, medical care, clean water, energy and food production rely on a financial system that can capitalize and securitize whatever the replacement currency may be.

Influence vs. intention

The latest twist in the new currency movement is the idea that on-line influence can be used to support a currency.  There is no shortage of noble leaders aspiring to “define the standard” in their own image as a service to the lesser masses who seek their respective place in the great new economic void.  PeerIndex and Klout are the two main players that promote a social score based on influence, obstensibly to mimic the credit score upon which all currency depends.

Bad Influence is worse than no influence

Unfortunately, influence is a flawed measure.  Marketers are the target beneficiaries of such influence which is clearly defined as the ability to get other people to take action on a marketing message. My ability to influence others to buy Twinkies does not an economy make. In other words – influence is a consumption currency, not a production currency.

A far better marker is “intention”

For comparison; today, money is conjured into existance by banks based on the signature of a loan candidate who states in writing their intention to produce enough value by their future words and actions to exceed the value of the currency being borrowed (created from thin air) plus interest.  That’s how debt works.  That “intention” is then capitalized, combined with the intentions of others, and securitized into bonds that finance important social services and institutions that support those intensions.

Likewise, a social currency may be similarly conjured into existence – based on a person’s promise to increase human productivity in the future, not however, to increase human consumption in the future.  The social marker for the next currency must be an intension to produce something, not an intension to consume something.  The real danger, of course, is if we define the next currency as just another consumption currency or whether it can truly be married to productivity.

Obviously, it would be helpful to have an inventory of what value an individual is willing and able to produce in the future since this is the best marker of intensions.  It would be even more helpful if there were a public knowledge inventory of what value people in a community are able and willing to produce together.  I’ll stop here because a knowledge inventory for communities does not exist – and curiously, none of the great minds in Social Media are clamoring to define that standard.

Likewise, that is where the great opportunity for the future resides.

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The Interesting Thing About Interest Rates

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On February 17, 2010

In General Information

Money represents human productivity, but the interest on money represents risk. This means that the lender collects interest because that represents the risk that they assume in departing from their money. Meanwhile productivity fluctuates naturally and can be affected by a many external forces.

The problem is that risk can never be negative, therefore interest rates can never be negative – that is called “breaking he buck”. Risk is a measure of volatility, or, “deviations from what is considered normal”. While there is certainly good deviations and bad deviations, there can never be a “negative” deviation from normal – it is a mathematical impossibility, a glitch.

The result is that productivity must always be driven up and up and up – sometimes in unnatural ways, such as forcing consumption. Constant production is unacceptable – it must always increase. Vacations, free time, family time, and leisure are not acceptable. What if we had a currency that could accommodate a negative interest rate?

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Buddhist Economics

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On June 2, 2009

In General Information

Back atcha!

Everything is Connected:

The economic models and theories that prevailed through the 20th century are rapidly falling apart. Economists scramble to offer explanations and solutions. However, much of what has gone wrong was anticipated years ago by E. F. Schumacher (1911-1977), an Oxford economist and protégé of John Maynard Keynes who proposed a theory of “Buddhist Economics” following his interest and studies in Asian philosophies.

Schumacher was among the first to argue that economic production was too wasteful of the environment and non-renewable resources. But even more than that, he saw decades ago that ever-increasing production and consumption — the foundation of the modern economy — is unsustainable.

Never see what has been done; only see what remains to be done.

Schumacher wrote that western economics measures “standard of living” by “consumption” and assumes a person who consumes more is better off than one who consumes less. He also discusses the fact that employers consider their workers to be an “expense” to be reduced as much as possible.  He questioned the theory that some amount of unemployment might be better “for the economy.”

What we think, we become.

Schumacher argued that an economy should exist to serve the needs of people. But in a “materialist” economy, people exist to serve the economy.  Notably, he argued that labor should be about more than production because a person’s work has psychological and spiritual value that must be respected.

Instead we consider goods as more important than people and consumption as more important than creative activity. It means shifting the emphasis from the worker to the product of work, that is, “from the human to the subhuman.”  We have outsourced our soul.

Three things cannot be long hidden: the sun, the moon, and the truth.

Today, many enterprises – some entire industries – are failing and they cannot understand why.  Over time, they have crossed that philosophical line and now serve advertisers, not their customers.

Traditional media and journalism are an example; they scare people, feed on their anxieties, promote insecurities, and stoke desire.  Demographers trespass into people’s homes, collect statistics, run numbers, and design messages that steal the things people love about their self and sell it back for the price of the product.

We end up with no end of entertaining consumer products that soon end up in landfills, but we fail to provide for some basic human needs, like health care for everyone.

A jug fills drop by drop:

Top News in Business Week Print Edition v. Growth Rate for print media:

•    Pending Home Sales Rise for Third Straight Month
•    GM: A View from the Back Seat
•    U.S. Corporations Size Up Their Carbon Footprints
•    Move Over, Amazon? Google Aims to Sell e-Books

Top News in Business Week Exchange – Reader Chosen Topics vs. Growth rate.

•    Social Networking

•    Global Economy
•    US Economy
•    Green Energy

The Editor selected topics in the top chart are aligned with corporations, consumption, and large bailout efforts.  Meanwhile, the reader selected topics in the second category screams: “Hey, where are we and where are we going?”

It would seem that mainstream media should be asking the same question.

(ed note: special thanks Barbara O’Brian at about.com)

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