The Shift to Social Capitalism

by Dan Robles on 01/23/2009

7di4bgmqeh1nhbq3ugcoeu52o1_4001As computer enabled society marches toward social capitalism as a result of overburdened financial institutions, a new generation of social media applications will form to emulate those institutions.  Social capital, creative capital, and intellectual capital will increasingly behave like tangible assets.

As an example, this article compares the concept of the financial credit score with an abstract on a social credit score as a means of framing this new shift to social capitalism.

Our credit score is a statistical sampling system in which we compete with ourselves for the cost of money.  We lose some privacy with the credit score, but we accept these terms to the degree that we enjoy the benefit.  After all, we can literally print money today to build a businesses backed by future productivity (financial capitalism).  If this benefit disappears, so too will the paradigm and something else will take its place.

Similarly, we lose privacy with social media; we drop our resume on Monster, we post our profile to Facebook, we express opinion on a Blog, and search engines display this activity.  But we accept these terms to the degree that we enjoy some benefit from our social network.  Whatever that benefit is, we know that it is real, it is tangible, and it has value – otherwise, people would not do it.  This is the nascent domain of Social Capitalism.

Like financial capitalism, social capitalism will be the ability to borrow knowledge assets today to build a business backed by future productivity of those assets.  In order to anticipate how social capitalism may be structured, we continue with the analogy:

The FICO equation churns about 22 variables related to your financial behavior. These variables include debt load, asset value, income, payment history, etc. Input data comes from past lenders for the benefit of future lenders, as well as insurance companies, employers, public disclosure, etc. The credit score predicts the likelihood that your future productivity is worthy thereby allowing the lender to hedge risk accordingly.

If we reconstruct computer enabled society in the same form, we notice some interesting similarities as well as differences.  Instead of 22 financial variables, social variables appear as events demonstrating social, creative, and intellectual capital. Input data comes from Social networking applications such as profiles, blogs, referrals, etc.  Finally, search engine placement registers your social credit score.  Have you Googled your name lately?

As imperfect as this may sound, remember that computer enabled society has not fully developed on the ground. Social Capitalism is in the beginning stages and there is great opportunity in improving this system if we know how it should work because the value of the paradigm, by default, could be in the trillions of dollars.

The next great business opportunities will be in the area of localizing, mobilizing, organizing, vetting, classification, and normalization social capital, creative capital, and intellectual capital.  These elements will contribute to one’s social credit score which buys access to share information and knowledge. Geographic location will become an essential SEO component as diverse communities cluster around technologies and tangential innovations.  Many of the functions that drive a traditional corporation will exist in communities governed by social economic incentives.  As a consequence, not as a cause, social capitalism will reflect social priorities as the term currently implies.

Social Capitalism fueling an innovation economy may become the most powerful engine of economic growth in human history if structured correctly, and a dud if not.  We are much closer than anyone realizes and the path is becoming increasingly clear. There is great cause for optimism in the next few years of social media development and social capitalism.


Mark Harai February 9, 2009 at 1:02 pm

“The Shift to Social Capitalism”

Chuck Staudenmaier January 26, 2009 at 10:12 am

social capitalism theory and transferring the value of connections and content into the new economy. And @jessicahagy too!

hollyrae January 23, 2009 at 7:41 am

@JDeragon’s must read: social FICO score (reminding me of @missrogue’s The Whuffie Factor)

hollyrae January 23, 2009 at 7:38 am

@JDeregon’s must read: social FICO score (reminding me of @missrogue’s The Whuffie Factor)

Adele Michal January 23, 2009 at 7:28 am

@prblogs Love your post on the Relationship Economy & have downloaded your ebook. Thanks for the insights!

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