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Friday, August 21, 2009

Why I am going to Socap09: can we re-invent currencies?

This post was originally posted on the Socap09 blog

I read recently on an essay from Douglas Rushkoff entitled "Economics is not a natural science".
In the article, Douglas reminds us that the current economic system we take for granted is a result of history. It goes back to the middle ages, when people went from bartering what they were producing, and the main measure of value was the amount of food that could be produced from an ecosystem, to currencies based on how much gold where held in central banks. Scarcity was no longer in the ends of mother nature, but rather it became disconnected from it, and in the hands of the rulers of the land.
Since then, currencies has evolved to no longer being connected to gold either, they are just an artificial instrument to regulate exchange within and across nations.

Comes the internet, and another phenomenon appears, that Xavier Comtesse describes in his essay on "Direct Territories": we are now living in a world at the intersection of several and often conflicting layers. There is the geographical layer, several government layers (from local to national), a business layer (the corporation that spans across nation), and many other community layers. With the internet, stakeholders from these layers that typically did not have access to the discussion now can have their voice heard and can contribute to the balance of powers. Yochai Benkler in his book "The wealth of networks" gives very good examples of how this power is being re-distributed, and of the opportunities but also the risks it represents.

Today the economic crisis shows us a world where many people are without a job while there is enough work for everybody if we want to fix the issues at hand. Douglas Rushkoff concludes his essay by saying that "the economic model has broken, for good. It's time to stop pretending it describes our world". So what can we do from here?

- From the internet came the Open Source community, that has shown us how a large group of developers who were not bound by any constraint other than their own desire to contribute could self-organize to build and maintain very complex systems.

- And from history, we learn that it is possible to go around the lack of liquidity in situations of crisis by using our own currency: in 1934, and because there was a shortage of cash due to the stock market crash of 1929, a business man in Switzerland created the Swiss Economic Circle, now called WIR Bank. They started with 16 members, and there are now 62,000 businesses strong. They eventually returned to managing real currencies in 1952, but the system worked well to help businesses out of the crisis in the meantime.

One opportunity at Socap09 is to derive from these lessons and to consider what the ideal currency should be used for social capital markets, that would allow us to restore the right balance for a more sustainable world. I am looking forward to having such a discussion...

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