Open Money systems are not about market making
Yesterday, I presented the insights and projects of Eric Harris-Braun, who is working on a meta-currency platform.
I already knew Eric as the author of a wealth typology, which explains the urgent need for wealth acknowledgement systems that can recognize the kind of not-directly monetizable wealth that is created by open communities, driven as they are by use value, and not by exchange value. One of the lessons of the current financial meltdown is that a fickle, manipulated, and herd-driven stock market is absolutely not the best way to estimate immaterial wealth creation, so we need something else, and perhaps I did not indicate it sufficiently in my first treatment of Eric’s proposals (and the team that is working with him and other leading monetary designers), are really the missing building block for a p2p society, i.e. the p2p monetary infrastructure, that we need just as much as a p2p ICT infrastructure, a distributed energy grid, and a distributed manufacturing system.
In the contribution that I discussed yesterday, where he explains his motivation for working on open money, I did not mention an important paragraph, which represents an independent thought capsule, that I wanted to cover separately.
In it, he explains why open money systems should be distinguished from market making systems, and I think this represents an important distinction and insight.
Here it is:
“Most community currency software platforms include some kind of market making function. I think this is a substantial mistake from a systemic point of view. I learned from Art that markets are the result of currencies, not the other way around. Grades lead to a market for tutors and Kaplan services. Tickets lead to scalpers. More precisely, wealth-acknowledgment processes naturally evolve group settings that amplify their usability. Thus, systemically it is a big mistake to pre-specify what form those group settings should take. Don’t get me wrong here. I think that markets and market making are HUGELY important. But I’m convinced that they belong in a separate domain. The currency creator intrinsically doesn’t have the requisite variety to know what the market should look like. That is yet another function that is best served by pushing it to the edges, and not controlling it from the center. When you give currency creators control of the marketplace abuses also become tempting. I believe that market making needs it’s own equivalent p2p platform that will make cranking out a new e-bay just as easy as open money makes easy cranking out a new currency, and the way the web makes easy cranking out a new “publication”.”
April 4th, 2009 at 8:15 pm
I had to read through your statement about “missing p2p” several times before I realized you are endorsing Eric’s approach (open money), and not saying that p2p was missing from it. Yes, I agree, it is the missing p2p piece, and Eric, Art and others are architecting something essential in our time.
Thanks for your support.