The Festival of Grassroots Economics was last Saturday in Oakland, organized by JASecon. I think it was a big success and so I congratulate Bernard Marszalek, Rick Simon, Heather Young and many others who worked hard at making this event a reality.

There were several remarkable things to this event. First, it was truly completely grassroots, organized by activists, non-profit workers, coop workers and related professional, and with them presenting. Second, it was free for all, which is sadly rare for an event dedicated to change. Last, it was organized in the beautiful setting of the Humanist Hall in Oakland with colorful decor and quotes on the walls such as “The world is my country, to do good is my religion” – Thomas Paine.

Many interesting ideas were discussed but I think the most interesting and realistic one related to small business local investing: how can small business, even coops can open their capital without spending a fortune and staying true to their values, instead of getting in debt, and ultimately how do we realize the vision of a small business local stock exchange. How can people take Warren Buffet “invest in what you understand” literally, and sell their mutual funds invested in large corporations such as McDonald’s and instead invest in funds that invest in businesses they know and shop at.

Behind all the discussions, I think the main theme was: how do we give small businesses and ultimately worker-owners the same tools that large corporations enjoy? how do we use the system to change the system?

The panel on the various styles of coops was particularly enlightening to me: some coops do not allocate shares democratically, but are run democratically, others provide each employee with the same number of shares when they start working, some others (big ones) hire professional managers with a separate compensation package, etc. The common thread though is that responsibility and decision-making is shared equally between all employees.

In a later fun discussion on leveraging legal loophole (which one may call “legal hacks”), a lawyer discussed how a coop can use preferred shares to open the capital, while keeping all voting rights. Another good legal hack is for a non-profit to create a for-profit subsidiary to reap the solar panel tax benefits reserved for for-profit companies.

One thing I missed at this event: art/play as an engine of economic renewal.

In a recent twit, I said:

Continuing debt reduction implies conventional money will buy less of what we really want and more of what we don’t need.

I agree this is a bit cryptic, so I wanted to explain myself.

By debt reduction, I mean people either paying their debt down or walking away from their debt or having their debt being official forgotten. To understand what I mean you must understand that money is fundamentally about power: power to get people who want money to do whatever those with money want. Many people have this power and many others want what these people have. But not everyone can have power over everyone else. Certainly, it is not very motivating to realize that you will never ever get any of that power, while others get it by playing in the market casinos. So attitudes are changing and people will carry less and less debt. This is why I say: as debt is repaid or written off or not paid at all, there is less money in the system, hence less power to get others to do whatever we want. To get others to do something for us, in particular to care about us, money will be increasingly not enough, instead we will have to prove to them that we have done something of value to someone or something that they care about. This is why I say: “money will buy less of what we really want”. What we want is to be acknowledged, to belong, to be cared for, to be loved. All kinds of things money will buy less and less if deflation continues, and to me, this is a good thing.

On the other hand, because we live in such a productive economy, we have a potential for more abundance of what everybody needs for everyone. I am convinced we can thrive, feed everyone, lodge everyone, entertain everyone, etc. In other words, all these things we don’t need in excess (but are produced in excess and maintained in artificial scarcity). This is what I mean when I say that money will buy more of what we don’t need.

What will motivate people to do their best? because they will do what they love to do most and because they will know how well they do by getting acknowledged by those they care about for it on their social network or the whole Web.

So to conclude, I’m not too preoccupied with the concerns of the investment community whose is fundamentally scrambling to determine how to preserve the power of the wealthy. Having some savings myself, I was concerned like everyone else but my intuition tells me that there is not much one can do: anyone with anything that resembles idle money will lose some power in this deflationary process, and from that standpoint I agree with inflationists who worry about lost purchasing power. Equities, cash, gold, bonds, etc. will matter less and less until a balance between the market economy and the gift, reputation-based economy is found. The Web is deflationary and there is nothing we can do against its force. Aside from a diversified portfolio of assets, what one with assets really have to do is to put these to work while they have value to others to help change the system for the better, doing what they do best for the people and the things they truly care about.

Society prefers money to its children

[...] This financial crisis is just one of several lights that turned red [...] I don’t see any place in our living space that isn’t in a crisis as deep as the one you mention in the financial and economic world.

[...] Are you aware of the collapse of knowledge. We don’t teach latin or greek, poetry or literature. The teaching of science is collapsing everywhere.

[...] Philosophers are guilty. They have missed the magnitude of changes in the world. [...] I see all institutions are true dinosaurs.

[...] Our relation to our planet is a one of terrorism. We are currently winning this war against the world, that is to say that we are losing it.

[...] I’d like to talk to you about why dinosaurs disappeared. We love to discuss the reasons why they died. But it’s very simple: they disappeared because they were growing. It’s their size that killed them. Life cannot exceed a certain size. We die of growth. [...] Romans were victim of their greatness. The size of the Roman empire had become so big that it could only collapse. [...] In the history of sciences, we see that there are topics that are a center of gravity at a given time. Before it was mechanics, tomorrow it will be life sciences. Tomorrow, the economy will be centered around life sciences, not mechanics.

[...] All the laws that we want to do with copyrights on the Internet are a joke. The Internet is a space without any Law. In this space without Law, a new kind of Law must emerge. In the world of tomorrow, a new type of Law must emerge. If you want to regulate the world of today with old Law, you will fail, just like we did on the Internet.

[...] (We need a contract with Earth) That’s what I meant when I wrote Le Contrat Naturel. (I cannnot imagine an international organization writing this new Law). I remember a discussion with the previous UN Secretary Boutros Boutros-Ghali. He was telling me that every time he talks about water, everyone tells me that they are not here to talk about water but to fight for the interests of the country they represent. As long as there will be intergovernmental organizations, the Earth will not be represented. [...] We discuss fishing quotas while fishes are disappearing. Fishes do not have the right to speak. I am for this utopia that fishes would have a right to speak. I want a world institution that represent water, earth, fire… life. We need scientists who swear not to represent a country, an ideology, a corporation… and who represent fishes, air and water. International institutions are populated with dinosaurs.

what will most likely emerge as the most powerful currency in the economy of engagement? Emotion. The economy of engagement is also an economy of feelings, in which positive emotions—pride, curiosity, love, and feeling smart—are the ultimate reward for participation.

Emotional Goals of Players

Economist Edward Castranova, who studies massively multiplayer online games [...] argues that most players turn to games specifically to produce the emotional high associated with accomplishing something concrete, feeling capable, and being recognized for their successes.

[...]

Shirky, too, confirms that the pleasures of accomplishment and the feeling of competence are basic drivers of participation in online communities.

[...]
PARC researcher and MMO expert Nick Yee discovered three primary motivations for MMO participation:

• achievement, the desire to advance in the game’s hierarchy, master its mechanics, and compete against other participants;
• social, the desire to have positive interactions with other people and work toward a common goal together;
• and immersion, the desire to exercise imagination, consume compelling content, and think about something other than ordinary, everyday wor

Here are two books that I’ve read that relate to this:

• Rules of play
• Flow, the Psychology of Optimal experience

Mobile technology makes the real world a massive real-time multi-player play ground. This is a unique opportunity to move away from “work and no play” or from the “this for that” of traditional money, towards motivating people to spontaneously provide good experiences, and collectively evolve towards more indirect forms of reciprocity.

Questions Answered:

1. Do achievement badges influence behavior more than monetary rewards?
2. Do people donate more when their donations are publicized to their social networks?
3. Will gifts be taxable?
4. Is scarcity a myth?
5. Can supply and demand be matched in better ways than through the market?
6. What motivates people to do good?
7. How does traditional money play along with new forms of social recognition?
8. How do we avoid social capital bankruptcy?
9. Are reputation based systems necessarily following a power law distribution?
10. Can we avoid the tragedy of the commons by relying less on money?

First of all, it reminded me of an interview of Douglas Rushkoff about his latest book Life Inc where he tells the story of how Middle Age cathedrals were built:

The Vatican and central Rome did NOT build the cathedrals. The funds came from local currency. They were what we would now call “demurrage” currencies that were earned into existence. Towns ended up creating more value than they knew what to do with! They started investing in their infrastructure and their windmills and their water wheels; and also in their future in the form of cathedrals and other tourist attractions.

The second thought I have had recently is that a currency is a unit of contribution to a common goal, and it is this common goal that gives the value to the currency, because the common goal provides a social incentive for everyone to participate in their own way, some by contributing directly to the common goal and being issued currency, others by contributing indirectly to the goal by accepting it for goods/services. In my view, individuals’ common goals or common individual goals are what initially create community, more than anything else.

A public art piece like the Singin-Ringing Tree is such a common goal. It creates long-term value for local businesses like the cathedrals of the middle-age. It creates identity and pride for the local population. It also create jobs.

One approach to funding art is to seek grants from tax-funded government development agencies, but this approach can be viewed as quite inefficient since it requires tax collection, projects competing for funding with other projects, and a hierarchical and highly centralized decision making process.

Another approach could be to use a community currency dedicated to the particular art project. It would work like this:

• The art project would issue acknowledgments for in-kind or monetary donations made to the project. Issuance would be made public.
• Businesses could show their support by accepting some of these acknowledgments for partial payment of goods/services they provide.
• The notes, if printed in paper, could bear an artist rendering of the public art piece to be built.
• After it is built, the public art piece would likely attract tourists to whom the notes could be sold as a “piece” of the art piece, likely for many times the face value in dollar, since originals would be in limited supplies. This would provide a natural way for the currency to disappear from circulation, and be replaced by new ones for new projects.

My personal talk was centered on the inefficiencies of the market processes at creating sustainable abundance and happiness for all, and how mobile Internet technology ability to track our day to day accomplishments and advertise them in our social networks will provide new currencies that will allow those who give a lot to find their needs supported (and more), thus encouraging more people to focus on what they do best and give it away, rather than working for money at an alienating job that they might lose at any time.

My notes:

• Mathew presented a model of trust as concentric networks, with the core circle as most trust-worthy in which a gift economy operates, and outside of this circle the rest of the world, the global economy with global currencies. For Mathew, there is little in between and this is where an intermediate concentric network must emerge with a mix of gift economy with a bit of accounting/reputation and local currencies with less influence of global market forces. He gave as an example the Village Network currency systems, which operate both as a gift-economy and mutual credit currency. He explained that in this system, everything starts with the expression of a need by a member, that others are offering to satisfy (ex. need a ride to the airport), rather than by a marketplaces of products/services offered that can be shopped for.
• We discussed how deeply unsatisfactory exchanges can be, compared to authentic gifts: “billing for necessities makes me feel really bad”, earning $1500 in a WE for a wedding you don’t want to be at, having to asks patients or students for money knowing they don’t have it. Binal Shah of Karma Clinic shared with us in a small group how she provides healthcare to patients on a gift economy basis. Here is what she says to her patients: “What I provided you is worth way more than you can possibly pay for it so I’m going to give it to you”. She simply trusts that the ripple effects of her gifts will come back to her and satisfy her needs. Another attendee, who is an educator, as well as Mathew mentioned how he provides a service on a sliding scale basis, but with a commitment to always says “Yes” even if the patient cannot pay the full price, sustaining their activity by the generous contributions of some clients that allow them to provide service for free to others.
• Someone mentioned how existing platforms such as CouchSurfing could be extended to provide housing and foor for people volunteering (not just for CS, but any volunteering). This is in line with some ideas I introduced in my talk.
• Anthony Di Franco summarized a discussion by saying that our perception of scarcity is a self-realizing phenomena and that we must find ways to change this perception to a perception of abundance, which in turn will entice people to give more.

Other names mentioned I heard for the first time:

• The Green Society and their complementary currency.
• Damanhur

Many people in the community currency business are very keen to put more distance between the forms of money that they devise, the forms of association they are inventing, and the ones with which we are the most familiar and that leads often to quite sectarian struggles over the definition of the relation between the currency and the national currency, whether it should be multiple issuer/member/subscription supplied or supplied from a central fund, whether it should take the form of hours or some kind of currency, whether it should take a scrip form or be entire virtual, and so on, and these things often become a matter of intense debate leading to a kind of sectarian struggle in the movement, which is comparable only in my experience, with that of Trotskyist movement, or the early christians, or the puritans, people who are willing to break up an organization on a matter of principle. And as we learnt in the last session, the problem is less how can new community currency organizations generate themselves on a standalone basis, but how can they be coordinated as part of a wide movement and integrated more effectively into commerce more generally.

Here’s how it would work:

• Alt-transportation users would log their shared rides/bicycle rides/walks using a service like RideSpring, which may provide rideshare matching service. From these logs as well as the type of car that would be used otherwise, carbon emission savings would be computed. Certification might involve a mutual process or a device such as the Freiker or the Zap tracking devices for walkers/bicyclists. Users with would be able to withdraw these carbon offset certificates as printed stickers with a barcode.
• Non-alt transportation users buy carbon offsets certificates issued in proportion to the carbon emissions saved by the tracked usage of alternative transportation. This certificates would be valid for a year and issued as bumper stickers that buyers can proudly stick on their car.
• Businesses would accept payment of their products/services in part with the carbon offset certificate stickers.
• In addition, thanks to the recent Commuter Bicycle Benefit bill, bicycling commuters riding at least 3 times a week would be able to get $20 pre-tax income every month from their employers in the form of additional carbon offset dollars (that could only be spent at bicyclist shops).
• The overall system would be operating by a non-profit charity with a specific additional mission of lobbying for additional tax breaks, in particular for ride sharers not using vanpools.

I need to do the maths, but in the meantime, would love to hear what you think.

There is an interesting parallel here with the Twollars RT syntax: RT 2 twollars @giyom for …

I don’t know exactly how Twollars accounts for ReTweeter being ReTweted (Eiso?), but I like the idea of qualifying a ReTweet.

I see two ways to qualify it:

• a number, positive or negative, indicating how much I like something or not (although the negative number may not be practical)
• a hashtag or something similar, further qualifying my number. (BTW, I noticed that people like to add tags to the things they RT, but it’s not clear to receivers whether these were tags in the original tweet, or the RT only)

Examples:

• Liking the Tweet: RT 2 @giyom … same as RT +2 @giyom same as RT ++ @giyom
• Not liking the Tweet: RT -1 @giyom … same as RT – @giyom
  
• Liking the Tweet for a specific aspect: RT 2 #fun @giyom …
• In addition, a regular RT like RT @giyom would be accounted as +1

Note in the last example that the hastag is before the RTed username, which allows the receiver to see that the hastag was added by the RTer.

A tracker may keep track of balances for each Twitter user, like Twollars or Twitbank does.