Printing Social Currency; Influence vs. Intentions

by Dan Robles on 01/01/2011

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.

{ 5 comments }

CC Banc February 14, 2011 at 4:48 pm

We have developed a virtually delivered real-time complementary currency trading system that operates seamlessly alongside a national currency. Unlike Groupon however which decimates retailers margins our system turns a merchant discount into a tradable currency which is then sold as a goods and services backed derivative to the consumer market. There is a $2T global market out there for such a complementary currency to run alongside national currencies, thus supporting ongoing purchasing power and wealth preservation.

Jan Wyllie (OPEN INTEL) January 3, 2011 at 6:00 am

Hello Dan,

I have looked some more at Ingenesist, notably ‘The New Economic Paradigm: Part 7; Monetization of Knowledge Assets’. The work we were doing in the 90s on ‘intangible value’, ‘knowledge assets, ‘intellectual capital’, ‘information value management’ (IVM) etc. indicated that the “problematique” is much more complex than you assume. You could say that a lot of knowledge capital was invested — many book and reports written, consultations undertaken etc.– but the return so far has not been encouraging.

However, instead of challenging your assumptions, it might be more constructive to ask a couple of questions.

First, there seems to be an assumption that innovation is necessarily a good thing. I used to debate this question with Debra Amidon who invented the term ‘knowledge innovation’ sometime in the 1980s. (See http://www.entovation.com) I asked what is the value of the atomic bomb as an innovation? It is just as easy to argue that it has a negative valuation as a positive one. The same is true of most all innovations, including aeroplanes and cars. I could (and do) argue that the world would be a better place without them, especially now we have an Internet. But that is not my point. My point is that value is not found in assets (whether tangible or intangible), but in relationships, which in turn depend of people’s personal values, interests and perspectives. Gold’s only value is that many people love it. So value is a social artifact, as is currency, which which is why assigning a fair value so very difficult. The absurdity of classical economics in this regard is illustrated by how GDP is measured, and the fact that Bill Gates is worth about 50 billion times more than I am.

While I am at it, I must the the assumption that productivity is always an economic good. Again, productivity is all about the social value of what is produced. Indeed, it could be argued that how to become less productive is one of the greatest challenges of our time.

Gregory Rader January 3, 2011 at 12:18 am

Dan, your distinction between consumption currency and production currency is an interesting one. We might though come to a very different conclusion if we look at how influence is earned rather than how influence is “spent”. Any currency must be both a consumption currency and a production currency if it is to be useful so we need to analyse both sides of its usage. The relevant question then with regard to influence is “How is it earned?”. This is a very different question from “How is it measured?”. Klout/PeerIndex scores may be measured through one’s ability to influence others to take some action, however they are earned well in advance. The act of influencing is in a sense the spending of previously earned influence. If that influence is earned through productive means (providing value to the people influenced) then we are in fact aligned with productivity. If influence is earned through celebrity, unearned authority, extremism or other equally unproductive methods, then we have a less encouraging state of affairs.

I do however share your concern that these particular implementations of influence scoring are being used to encourage frivolous consumption and are themselves redeemable for frivolous consumption (ie Klout is a measure of your ability to get others to consume and having a high klout score is rewarded itself with opportunities to frivolously consume). We might envision alternative influence scores that measure your ability to motivate productive action and likewise reward you with opportunities to work on more exciting projects…

Dan Robles January 2, 2011 at 9:39 am

Jan; Thank you for your generous comment. We do in fact lay out a valuation and measurement system on my website (http://ingenesist.com). I produced a few short videos on the subject in our Specifications for Social Capitalism. What we do is simply replace factors of production (land, labor, access to Capital) with Social, Creative, and intellectual capital and then revise the laws of classical economics accordingly. Our solution for measuring knowledge is to define it as proportional to the rate of change of information with respect to time. We can then simply classify knowledge in a manner quite similar to classification of information – except with observable velocity variables. Most KM people disagree but it really helps when we apply statistical methods for predicting the future value of knowledge assets essential for capitalization and securitization of a social currency. Please feel free to review the short video series on Ingenesist. Please let me know if you feel that your methods and solutions would enhance our own since there will likely be a practical need to develop methodologies in the near future. Again, thank you for your openness and dedication to the profession (I enjoyed your blog). I do look forward to your thoughts.

Jan Wyllie (OPEN INTEL) January 2, 2011 at 5:36 am

A lot of work was done in the 1990s which aimed at valuing and measuring an organisation’s ‘intellectual capital’ (cf. Karl Sveiby, Debra Amidon, David Skyrme, Philip M’Pherson, even myself). I think we found it too difficult a nut to crack. My conclusion at the time was that either we had to fall back on a market mechanism, or people would have to spend considerable time and effort to do what might now be called ‘crowd source valuation’ which they were clearly not willing to do.
As a Trustee for LETSLINK UK, I tried to introduce the concept of knowledge trading to our 450+ community Local Exchange Trading Systems, again with very little success. One success that I can report, though, was that the compilation and publishing of community Directories of Wants and Offers Directories was a very powerful community building tool which indicated where potential value existed in the community. In mutual credit systems, such as LETS, people can only consume on the promise / intention of giving back equal value to the community. People’s trading accounts, therefore, showed the rate of community capital return which sadly was very poor. The main reason why LETS schemes broke down was that too many promises where made that were never fulfilled. To this day, I wrestle with the question: Is it human nature, or was there something wrong with the design?
Of course, at the time complementary currencies could never be more than a side show, so dropping out of the system was an easy option without significant sanctions. If, as you suggest, complementary / social currencies will be the root of a whole new economy, then the threat of exclusion for not contributing would be a much more significant sanction making mutual credit currency design much more robust.
These days, it would be much easier to standardise the Wants and Offers Directory making process using Web 2.0 technology and that a great opportunity exists in that space. (You have just reminded me that we — Open Intelligence Ltd. — have the taxonomy / database tools to do it, not to mention my years of experience with help set up LETS Directories.) I am not surprised however that “the great minds in Social Media” (with the honorable exception of yourself) have not even identified the issue. Among this group, knowledge of anything more than one year to one minute old seems to have been virtually wiped out as labeled as #oldskool. We need to re-create a process for reflection to balance against the ‘woosh’ of novelty and sensation that is flattening the critical mind … but that is another story.

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