This should be read as an update to Adam’s essay on the valuation of the esteem economy, which we published in excerpts in the last four days. Here, open money advocate Eric Harris-Braun makes a number of valuable distinctions, equating ethical contributions with ‘acknowledge wealth’.

1. The Wealth Typology

“Wealth is access to well-being. There are at least three levels of wealth:

1. Tradable Wealth:

Food, shelter, services, time, are all forms of tradable wealth. We are all familiar with tradable wealth–it is the stuff we need and want, the resources that we compete for. Things we can trade are the products or the components of systems.

2. Measurable Wealth:

My health is non-tradable–I can’t give it to you. I can give you my blood, which may affect both of our health, but I can’t give you my health itself. It is a property of my body as a whole. However, you can measure my health in lots of objective ways: the miles I run or the number of times I see a doctor. Another thing that is non-tradable is the productive capacity of a factory. I can sell you the products of the factory, or the factory itself, but not its productive capacity. But you can measure its productivity by comparing its output to the inputs it requires. Similarly the health of a forest is non-tradable. Its diversity, resilience, etc. can, as with bodily health and productive capacity, be affected and objectively measured, but it can’t be traded. Bodies, factories, and forests are all examples of systems. Things we can measure but not trade are properties of systems as a whole.

3. Acknowledgeable Wealth:

Friendship, beauty, freedom, civility, culture, happiness, integrity, reputation–these are all forms of acknowledgeable wealth. They are neither tradable nor objectively measurable because their impact is only felt subjectively. I can have friendships of different strengths–from an acquaintance to a best buddy–and though I can tell the qualitative difference between them, that difference is not measurable using any external scale. Rather, it is a difference in quality of relationship between one system (me) and two other systems (my acquaintance, and my buddy). Similarly my professional reputation comes from my relationships with my previous clients. As a potential client you can get a subjective sense of my reputation by talking to my previous clients, but there is no one objective standard to go by in making your choice. Those things that we can acknowledge but cannot measure or trade are inter-systemic resonances.”

2. The Need for Wealth Acknowledgement Systems

“When I barter a dozen of my eggs for a pound of your carrots, wealth acknowledgment happens in the act of haggling: It’s where we determined how many eggs for how many carrots. When I pay you a coin for your carrots instead (because you don’t want my eggs), the coin itself is the acknowledgment of the wealth transfer. The advantage is that the wealth-acknowledgment token, the coin, is redeemable elsewhere in the community. And when communities start using paper notes as wealth-acknowledgment tokens instead of precious metal, the number of transactions is no longer limited by the amount of metal available. When communities invent wealth-acknowledgment tokens for investment, like stock certificates sold by entrepreneurs, they further unlock the potential for growth of wealth.

These examples show how the evolution of wealth-acknowledgment systems prepares the ground for the growth of wealth. They also show how wealth-acknowledgment systems are adopted by communities to reduce their risk in making transactions. Bartering is not risky because the wealth is immediately exchanged, but what if I don’t need your carrots? Accepting a token allows me to give without immediately getting wealth in return, because I know I can use the token to get wealth later. Stocks and bonds work similarly in higher-risk situations. Thus wealth-acknowledgment systems evolve in a feedback spiral with social cohesion and trust. They require some level of trust and cohesion to function, but they generate much greater cohesion and trust, which allows new wealth-acknowledgment systems, and the loop continues.

Grant-making, endowments, charitable trusts, and donations (what we call philanthropy), are all efforts to increase measurable or acknowledgeable wealth. Organizations that seek to increase measurable and acknowledgeable wealth in communities almost always suffer from the lack of money. To increase our ability to cultivate these levels of wealth, we need a wealth-acknowledgment system that moves beyond money.”

More on Open Money here.