Friday, November 23, 2012

Society 2.0: In Depth Discussion of Reputation Economics

So, some of you are probably wondering what I meant in the last Society 2.0 post about rep economics. Here is where I explain that, and how to set it up.
The following material is flagged Red Level. It deals with the blogger's original ideas, personal beliefs, and delusions; and might not be believed by any expert in any field anywhere.
It is apparent at a glance that our current intellectual property distribution system is broken. The way it currently works is that IP is exchanged like physical goods, with prices artificially inflated by legally enforced monopolies (copyright, patent, trade secret, and so forth). This is how things have to work in a monetary economy for artists to eat, since IP is infinitely replicable and as such would otherwise have zero market value. But this system has flaws. On the one hand, digital piracy and bootlegging are inevitable: the work can be duplicated and duplicates can be distributed. Even if a perfect and absolutely unbreakable means of copy-protection could be invented, the output of any IP meant for humans is memetic and can be recorded by any technology capable of storing things that humans can perceive; and underlying algorithms can be analyzed. On the other hand, the system as it exists can be exploited by content creators, or those who it recognizes as such, at any rate. "Patent trolls" buy a monopoly and use the right to the monopoly to stifle any innovation involving the patent, while themselves producing nothing. Disney famously lobbies for extension of the right to these monopolies, preventing any legal redistribution of works that were created by someone long dead.

But if this is how it must work in a monetary economy, what else can we do?

Simple. Base the economy on something other than money.

Note: If anyone reading this has any background whatsoever in economics, even just having declared it as your minor the semester before you dropped out, please comment and tell me what you think of this. I have no background in economics beyond having taken a class in it in high school from a teacher who apparently considered pushing a Libertarian agenda more important than actually teaching.

Plan: A Society 2.0 economy has two parts: a monetary economy that is used mainly for the exchange of material goods, and a reputation economy that is used mainly for the exchange of IP. (Services can fit easily into either.) It is the second which I will discuss here.

Any piece of IP is distributed with full attribution. Derivative works are published with whatever attribution the original work had, as well as whatever attribution is appropriate to it specifically. In this way, creators of popular works gain fame simply from having the work distributed.

So how does this benefit them, since they can't eat fame? Simple. In a reputation economy, fame itself is a kind of currency. Payment for goods and services can be rendered in fame, or more specifically in endorsements.

Each person (thanks to universal communications tech paid for by the basic income)  has some kind of social media feed, that they can use to recommend services that they use, with more famous people naturally having more influence. People accept this form of payment because being endorsed makes them more famous( and therefore their own endorsements worth more), and they have reason to "save" endorsements because the more endorsements they make over a short period of time, the less each endorsement is worth (because that person's endorsements are less scarce).

 This works for IP and services, but how does it interact with the goods economy? Simple. Anyone in a goods economy needs to advertise, and fame is inherently a kind of advertisement, as has been demonstrated repeatedly in our current society.

Implementation: First, a digression.

If you have any money on hand, please take it out and look at it. What gives it value?

What you have in your hand right now are pieces of paper and small cylinders of metal. Are these worth what they claim to be worth? Yes. Are they inherently worth anything? Probably not outside of some specialized purposes, such as electronics.

It has been said that at one time (at least in the United States), all of what was in your hand could be exchanged for gold and silver, and that is the source of its worth (with what it currently is worth being a result of The Gummit saying it is worth that much). But is that strictly true? What can you do with gold or silver, that you cannot do with copper (besides high-conductivity or non-corroding circuitry)?

Let us look at this from another angle: what is value?

Suppose you decide that you will take what you had in your pocket, and buy a sandwich. A given collection of those coins and papers is not worth a given number of some arbitrary unit of value; it is worth one sandwich. It is worth that because you will be given a sandwich in exchange for it. Someone will give you the sandwich because xe accepts the value of the currency you have given xim. Xe accepts the value because xe can obtain sandwiches (or other goods, or services, or IP) with it. And so on. In other words, the value of any currency, whether gold or dollar bills or reputation or fnords, exists because people in general agree that it exists, or decide that it is convenient for it to exist.

So, from that perspective, how can we implement a reputation economy?

Simple. Reputation simply needs to become an accepted currency, and then it will have value. So,in order to create a reputation economy, we need to make reputation accepted as a form of payment. We can do this by using social media, blogs, and so forth, to recommend IP and services we use, as though a reputation economy already existed. (This is not to say, of course, that rep should be the only payment, unless you are dealing with someone who accepts rep as payment!)

Another part of this can be to accept reputation as a form of payment. When you sell services or IP, consider asking that people recommend your service or IP in exchange for a discount.

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