Currencies

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Quid pro quo is Latin for “something for something.” It implies an exchange of goods or services that are more or less equal in value. A key underlying assumption in monetary currencies is that once you accept it for something, it will buy something of equal value from someone else who accepts it. Even in a mutual credit system, your balance is a way keeping track of where you are in the quid pro quo game. But, is the quid pro quo game the most efficient way of allocating resources?

Gift economies come in many forms, but usually what we mean by a “gift” is when quid is less tied to quo. Clearly, this is a matter of degree as there are many possible social contracts around gifts.

For gift economies to function properly a certain degree of familiarity and intimacy must exist among the participants. For instance, very few parents keep accounts on how many breakfasts they have given their children with the expectation of equal reciprocity. For parents, caring for their children is its own reward, and we think poorly of parents when this stops being the case.

When you are dealing with people who aren’t as close to you, the quid pro quo game comes more into play. Imagine, for example, two tribes coming together to trade. Each tribe operates with a gift economy inside its membrane, but when trading outside the membrane, there is an expectation of equal reciprocity in trade.

Until the industrial revolution, the majority of economic interactions were in the gift economy. Money has, of course, been around for thousands of years, but most of what people needed was satisfied through the gift economy on the village level. Think barn-raisings, shared child-care, borrowing tools, etc. Only when goods were needed from outside the community did the quid pro quo money game come into play.

Now, we can wax nostalgic about bygone eras, but there are good reasons why this all ended. The biggest reason is that this social architecture has not been able to scale. When a person lives in an urban environment, they tend to lack intimacy and familiarity with most people around them. In place of this intimacy, we make monetary exchanges. It must also be noted that a rich and impressive human culture has been built around quid pro quo social architecture.

However, while the gift economy has not yet been feasible on a large scale, on a small scale, it is actually far more efficient. Imagine how much wealth would be lost if you began to charge your children for breakfast. When and how would that debt be paid off?

What would happen if the gift economy could scale? Would it possibly serve as a far more efficient way to allocate goods and resources? What would it mean to actually live in the much talked about global village?

Quid Pro Quo as a pioneer species

A pioneer species is a species that shows up on new or recently disturbed land. They are quick to arrive, and they create the conditions for other species to thrive. As other species arrive, these pioneers are quickly outcompeted. Pioneer plants will leave their seeds in the soil for when the next disturbance occurs. This kind of succession ecology has worked extremely well for our biosphere.

I would contend that the quid pro quo social contract is a pioneer species in the social realm. Imagine you are meeting someone for the first time. Early interactions with this person are most likely in the quid pro quo space. Perhaps you try to talk for no more than half of the time. Perhaps you alternate who pays for the meals you eat out together. Perhaps you trade a ride to the airport for a day of dog sitting. In all cases, quid pro quo is used because you aren’t familiar with the person yet. As you become more familiar with each other, the ride to the airport probably doesn’t have strings attached, the meals become less formally tracked, and conversation may ebb and flow more naturally. Quid pro quo created the conditions for the other more advanced social contracts to emerge.

So how can we create the conditions for the global gift economy to emerge? What are your thoughts?

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I am going to make a bold claim. If we want the new modes of economic production we’ve seen thus far in the information age to become deeply ingrained in our cultural fabric, we must apply these modes of production to currency itself.

I take as my starting point for this contention a recent post by a musician who’s music I have long enjoyed: DJ Shadow. For those who don’t read his entire critique of music in the age of file sharing, it basically says musicians need to be reimbursed for their work if they are going to keep making good music. And he is right in this assertion. If we want to have a culture where people can specialize in being musicians, we must develop viable ways for musicians (and other artists) to be valued and supported.

One contention of what I will loosely call the “open movement” (even though that is mostly a misnomer), has been that anything information-based tends towards being free because there is virtually no cost to producing it at a large scale, and because information is a “non-rival” good (meaning that if I have it, I don’t prevent others from having it). I believe this logic is correct when it comes to valuing information-based resources in scarcity-based currencies such as the dollar. However, just because a resource such as music is no longer inherently scarce, doesn’t mean these resources shouldn’t be valued.

I fear that we may be accidentally walking into a trap in the crowd-sourcing / wikipedia age of "open." We are correctly realizing that scarce money cannot measure the value of that which is not scarce, but we haven’t yet collectively adopted currencies that can. If we want anything more interesting than the most mediocre culture to survive this transition, we must develop currencies that can enable our collective support of musicians / artists without the need for scarcity as the measuring stick.

Our money forces us into valuing only that which is scarce. I believe the fact that music has stopped being scarce is a VERY good thing, but if we can’t find ways of valuing musicians (and other content producers) in the post-scarcity era, I fear the cost of “open” will far outweigh the benefits.

Already we are seeing a global backlash to this new “open” culture because producers of content of all kinds aren’t being valued. Douglas Rushkoff at a recent web 2.0 convention contended that this culture of “open” (or "free") was largely a way for Google to profit off of the hard work of content producers. In the context of a scarce money system, I am afraid I must concur.

For me, the principles embedded in the “open movement” represent nothing less than the future of human civilization. If we want to see any of the real benefits of this future, we MUST MUST MUST apply the logic of “open” to currency itself. Only then will society have the tools it needs to appropriately value musicians and other content producers.

Societies are complex adaptive networks, and like all complex adaptive networks, that which provides value to the network MUST be reinforced. This reinforcement does NOT have to be done with a scarce currency that forces us into pathological competition with each other. Nor does this reinforcement even have to be done with a quid-pro-quo kind of monetary currency. But the reinforcement MUST occur if we want to encourage the production of value. The time is now for OPEN CURRENCY.

Non-differentiation, differentiation, dissociation, reintegration. These four steps come up again and again in disciplines as diverse psychology, semiotics, philosophy, ecology, and evolution among others. Spiritual teachings from many cultures describe the ONE slowly breaking into MANY, only to ultimately return to the ONE.

There have been three major economic eras (with a fourth emerging now): hunter-gatherer, agrarian, industrial, and now information. Since we are at the beginning of the information age, it might be useful to have a sense of how our economics will change in the coming years. One lens we have been using in the metacurrency world to look at this question has been mapping these four eras to the aforementioned four steps.

Hunter-gatherers might be considered non-differentiated since their main source of economic well-being was derived primarily from Nature (or land) directly. In the Agrarian Age, labor was mixed with land to produce more food, permanent shelter, domesticated animals, etc. By mixing our labor with the land, the land was able to support a much larger population. During this time we begin to see a clear differentiation of human world from the rest of Nature as well as the emergence of written language. In the Industrial Age, the primary mode of production was capital. Capital is the stuff from which other stuff is made (tools, factories, and ultimately money). While we certainly used tools in the two previous eras, the drive to control the means of production was not the primary economic engine. And, it is no coincidence that the human world became almost completely dissociated from Nature during this era. Before we get into how the information age portends a reintegration of the human and natural worlds, let’s take a quick look at one trait that makes the human species unique on the planet.

Humans, more than any other species, are aware of, create and use symbols. What makes a symbol a symbol is that it signifies something other than itself. The alphabet, for instance, signifies phonemes. If you weren’t aware of how the letters are matched to sounds, you wouldn’t be able to guess by just the letters themselves. This is what makes them symbols. Symbols can have complex interrelationships. Natural language is a means of generating highly complex relationships between symbols to communicate a given idea. While other animals may have a rudimentary capacity for making symbols, there is no evidence that they do so on anything even close to the level of complexity we do.

This ability we have to create and use symbols is EXTREMELY powerful. Symbols are a shorthand for making sense of the world. Since the real world is so unbelievably complex, having a dumbed down set of symbols allows us to gain some degree of mastery over it no matter how ultimately illusory that mastery may be. And this is the key point: symbols are not the things they stand for. As the Buddha said, “Don’t mistake my finger pointing at the moon for the moon itself.”

Humans (and especially Industrial Age humans) have a peculiar relationship with their symbols. While having the capacity to manipulate symbols gives us great power, we have become lost in them. And, this is only possible because there is a feedback loop between our symbols and our actions. Put simply, we frequently treat symbols as more real than reality itself, mistaking the finger for the moon.

While there are examples of this kind of folly everywhere in the industrialized world, the so-called Copenhagen Accord really stands out for me. During this two week debacle, we saw how the symbol of money (and the economic growth implied in its design), has become more important to world leaders than the biosphere itself. I could not imagine a more dissociated worldview if I tried.

We tell stories using symbols of all kinds, and the symbols we use to mark flows are what we on this blog refer to as currency. Currencies help us interact with the world around us, and as such are a VERY powerful kind of symbol. Currencies are frequently so powerful that we care more about the symbol than what we are supposedly symbolizing. Because we treat the symbol AS reality, we create a self-perpetuating feedback loop. This isn’t necessarily a bad thing; if we didn’t base our actions on symbols to at least some degree, we would quickly suffer paralysis as the real world is far too complicated to make sense of. If the currency symbols we create allow us to engage in healthy feedback loops, that is positively great!

So what about the Information Age? Some folks who claim to be ecologically minded reject information technology as a further dissociation between the human and natural realms. While I sympathize with the urge to heal our dissociation, I fundamentally disagree with the notion that information technology is an obstacle to achieving this goal. In fact, I think it may be the best way we have to effectively reintegrate the human and natural worlds.

In the hunter-gather world, a tribe created their system of symbols together. Since these cultures usually had no writing, each person co-created the culture through the telling and retelling of stories. Collectively, a system of symbols was co-created that helped the tribe make sense of the world around them. What’s more, this system of symbols was constantly evolving with the natural world. While some of these stories may seem anthropomorphic, magical, or otherwise childish to us now, it is important to realize that when there isn’t much differentiation between the human and natural realms, anthropomorphism is an identification with rather than a imposition on the natural world.

Currencies used in hunter-gatherer culture were largely status oriented. A talisman to signify being a masterful hunter, a gift that got passed from tribe to tribe to signify peaceful relations, and so on. These currencies were probably co-created in much the same way that the tribe’s oral traditions were, and probably evolved accordingly to fit natural circumstances.

Writing came on the scene at about the same time as the Agricultural Revolution. In almost every culture that evolved writing, it was originally a way of keeping accounts. For example, I give you two cows this season and we draw two cows on a cliff to record the transaction. Over time, this became a way recording what was said.

Writing was important for many more reasons than we can get into here, but one of the most important things about early writing was that only a few elites were literate. And these elites had the power to make their system of symbols immortal. Can you imagine how powerful that must have seemed to an oral culture? Agrarian culture tended to be ordered very hierarchically as the sets of socially accepted symbols were controlled by an elite few. However, since most of the population was illiterate and living on the land, these symbols lacked the power to fully dissociate the human and natural realms.

The Agrarian era was also when the first widespread use of money evolved. While, originally, money may have been a product of spontaneous organization in a market setting, these Agrarian Age monetary currencies usually evolved into being declared exclusively by the sovereign (or his proxy) and many times had his picture on them. Monetary currencies were primarily used for quid pro quo trades (and for taxes), which were becoming more necessary as human settlements got large enough to have anonymous interactions between the inhabitants.

The dawn of the Industrial Age more or less coincided with the invention of the printing press in 1440, although industrialism didn’t gain full steam until several centuries later. This era saw the spread of science, democracy, and capitalism. These were all HUGE advances in the complexity of human symbol systems. The realm of human symbols started to become so complex that people could forget that humans had anything to do with the natural realm at all. While science made nature its central focus of inquiry, it was only capable of studying nature from the outside as observer, fully dissociated.

The printing press enabled universal literacy, so the written realm of symbols slowly became the purview of the general population. However, the power to create new symbol systems remained fairly concentrated in the hands of an economic elite. And their power increased as more people began to live their lives almost entirely in the world of symbols. The merchant class took over the creation of monetary currency in this era with the invention of fractional reserve banking. Consequently, the use of money in the general population increased exponentially, and people increasingly depended on these symbols for their very lives.

In the Information Age, we have the growing capacity for everyone to generate and disseminate symbol sets as networks gain primacy over hierarchies. We have already seen the popularity of blogs, social networks, p2p file sharing, and so on. While these phenomena have all had profound cultural ramifications, I believe the reintegration of the human and natural worlds will be primarily made possible by how we create and use currencies.

We are destroying the biosphere by participating in deeply dysfunctional and unhealthy flows. Since currency affords us a chance to consciously interact with flows, I believe this to be one of the most fruitful avenues to pursue as we evolve. And, as we pursue new currencies, we must look to nature for successful patterns of flow to emulate. Nature likes variety. Clearly, we can’t replace one mono-currency with another and hope that will somehow solve our problems. Nature forms ecosystems rather than zoos, so the variety of currencies we create in the coming years will have to be able to form rich spontaneous interrelationships rather than be segregated from each other in fits of xenophobia. And Nature finds opportunities to build collective wealth whenever possible by virtue of being “open” (Nature is a commons). The design principles used in creating these systems will be also be open (as we have explored frequently on this blog).

The less people are dependent on industrial age money for their survival, the more they will be able to experiment with new currency symbol sets. Many of these will engender harmonious flows in and between the human and natural worlds. And, I would also guess that these symbol sets will have a much better chance of survival than those that lead to the wholesale destruction of the biosphere. How many more small family farms would there be with currencies that weren’t exclusively interested in the short-term? How many more forests? How many fewer GMOs?

To reiterate, this is not about going back to being hunter-gatherers or about giving up the comforts of modern life. Our development as a species, while often troubled, has NOT been something we can undo. As we emerge into species-maturity in this remarkable time, I celebrate the development that has led us to where we are.