» trade

[Dave Birch] On 27 June 1693, the French Admiral Tourville’s combined Brest and Toulon squadrons ambushed the Smyrna convoy (a fleet of between 200–400 English and allied merchant vessels travelling under escort to the Mediterranean) as it rounded Cape St Vincent. The English and their allies lost nearly a hundred ships with a value of some 30 million livres, the equivalent of total French military spending on the Navy, tens of billions of euros in today’s money. The City of London judged it the worst financial disaster since the Great Fire, 27 years previously, and the financial sector was thrown into turmoil. The responses to this crisis resonate to this day. On the one hand, the government leapt into action and charged a committee to look into the problem of maintaining English sea trade routes in times of war. In 1696, William III set up a body of eight paid Commissioners “for promoting the trade of our Kingdom and for inspecting and improving our plantations in America and elsewhere”. This body was “The Lords Commissioners of Trade and Foreign Plantations” , commonly known as the Board of Trade, which did not constitute a part of the long standing Privy Council “Committee of Privy Council for Trade and Foreign Plantations”‘ , but was set up as a separate body, because that’s how governments do things. Incidentally, the “The Lords Commissioners of Trade and Foreign Plantations” existed until 1970, when it became part of the Department of Trade and Industry (DTI). In contrast, the private sector formed the Bank of England and the bank issued paper money.

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A recent and intriguing announcement coming from Switzerland: a swiss bank recently backed a on-line bartering platform.

easyswap is a new platform that allows to exchange goods and services. The company aims at promoting a different set of values ranging from encouraging the trading of unused goods, allowing exchange between different socio-economic circles and “supplement the market economy”. Which is intriguing when you consider that the project is supported by a local swiss bank (BCV).

The point is that users will have access to an original currency:

“A virtual currency, the swap, not convertible in any currency, but based on the Swiss franc and following a simple rule: 1 swap is equivalent to 1 Swiss franc. Note that the swaps can be purchased, for example, in the form of subsidies by a company in favour of easyswap.org. The swaps cannot be converted into currency and sold.

Swaps can be either transferred from the account of a profit swapper of a service to the account of the swapper providing the same service and/or, from the account of a swapper utilizing the same or temporary service to the account of the owner/swapper of this same service. A swap can be offered by a company financially sponsoring easyswap.org to the accounts of its employees members of easyswap.org, with the double aim of supporting the development of easyswap.org and to bring a surplus in term of service to the employee users of the services of easyswap.org. “

Although the idea of becoming a “swapper” looks strange if you think about the street definition of the word, this project is interesting. It’s really intriguing to look at how they have set a system to evaluate the value of things and services. They for instance defined different scales such as “White, a degree of difficulty and physical requirement and/or intellectual low / Gray, a degree of difficulty and physical requirement and/or intellectual average / Red, a degree of difficulty and physical requirement and/or intellectual high”. There’s also a service search engine!

Of course this kind of platform really needs a critical mass of users to succeed but it looks like a relevant experiment. I wonder about the impact between local and global communities, the role of diasporas and how some peeps will surely try to trick the system

Reading all the content we have produced so far in the train, I am quite amazed by the richness of the material we have. It’s a bit messy but that’s how collaboration is generally made of. Given the schedule we have, I think it’s important to shoot the questionnaire to secondary authors pretty soon. I am not sure whether we should wait for other refinements of issues. The most urgent is to agree on 5 key questions and shoot them over to the others. After browsing the material, we can for instance propose the following 5 key issues:

• Driver for change: what factors, according to you, may change the way we exchange, buy, trade objects and services?
• An ecosystem of currencies: what are the alternative currencies or exchange systems you foresee in the next 10 years? Think about experimental forms of exchange, the role of technologies.
• What are the economic aspects of this? How do disparate groups exchange goods and services without a stabilized and intergroup fungible currency?
• How different social scales will be impacted by this? How nation-states/communities/families/man/woman/kids will change?
• What do you hope/desire for the future?

I tried to clean up and remove some elements (like the
global currency which is unlikely, or the absence of currency) and went straight to the point in terms of the most important questions that came out from our discussion this week. The question may have to be reformulated but I do think they give a clear overview of what we talked about. The last bit (about people’s desire) is important IMO as it aims at grasping secondary authors’ personal impressions. I hope we can get a wide range of insights here. That being said, I wonder about the openness of the question. It’s clearly more valuable to get some open answers but it will require more work on the part of the contacts.

http://www.flickr.com/photos/bradipo/1435739708/

by Joshua Klein

Are digital economies going to be socio-local or geopolitical? Virtual economies are certainly being exploited by real-world ones; modern governments are concerned about online money-laundering, which is widespread and almost impossible to limit. The increase in pervasive mobile technologies means that geolocative relationships will be increasingly integrated into value chains that enter and exit existing (and monitor-able) economic systems, clouding identities and exacerbating the problem.

At the same time, these virtualized systems provide increased means to analyse, understand, and stabilize current established banking systems. For example, German economist Frank Westerhoff and colleagues have used agent models to build realistic markets on which they impose very small taxes on transactions in foreign exchange markets to help to reduce market volatility. They’ve found evidence that it works, but also that it has a surprising sensitivity to small aspects of market mechanics. This sort of analytic capability, when paired with well-monitored transaction tracking, could potentially help prevent catastrophes like the current sub-prime mortgage crisis in the U.S.

Then again, it could not. Virtually sociolocalized groups, like MySpace friends or Stickam clans, could instead keep their economies to themselves. If they kept the value of their currencies tied explicitly to the relationships they represent, then exchange would stay prohibitively expensive. You can’t buy a new house in Second Life with a sword in World of Warcraft unless you cash the latter out for dollars and they buy the former, and in both cases you’re violating the terms of the producers of the game.

http://www.flickr.com/photos/akyan/2818624798/

On the other hand, if a globally available transaction API was made available to provide a market-balanced trading forum for virtualized goods, it may be possible to see the concept of “value” normalized across a global conglomeration of virtual worlds. If that happens, would the so-called “invisible hand” drive emergent economies? Could GeoPets.com cause a drop in the price of Steel Boots in World of Warcraft? Would the discovery of a new world in Eve Online lead to a sudden flush of investment in MarioWorld Karts?

Right now these currencies are limited because they’re not fungible, but their ability to be transacted across systems is getting more and more likely. In fact, “virtualized” systems have historically used non-fungible currencies and interacted with monetized systems just fine. The example of the Hawala system is a good one, in which a reputation-based system builds on a base unit relationship to bring power to bear between strangers. This sort of authentication-based system, rather than one based on verified identity, has direct analogs to modern encryption and authentication systems used online today. Given that, it’s no great surprise to see similar reputation economics in places such as Wikipedia, Digg, MySpace, and others - or to imagine them expanding into (or over) monetized economies.

It’s not just reputation systems, either - explicit virtual economic systems are being increasingly subverted to suit the cultural groups who form their base. In World of Warcraft, “twinking,” or equipping a lower level character with high-powered weapons and armor, is a well-known permutation of the game. Once you’ve hit level 70, there’s nothing left to do but play the game differently or not play at all. At that point players have essentially “won,” but their investment in time and energy to master the skills to play the game well need to be applied differently if they’re to be enjoyed at all. Taken another way, once you’ve maxed out your character all you have to spend your hard-earned cash on is another character.

In the same way, Eve Online - which is a space-faring game essentially about trade - has its own economist to maintain a balance in the in-world economy, and even he observes that “the players themselves have actually created a lot of extra services, which allow them to earn income through in-direct game mechanics. … There are player-run banks that are being established, who provide financial services - people can even live off of the capital that these services earn.” Is Eve Online going to see virtual trust-fund babies exploiting new aspects of the existing economic system to achieve goals well outside the game’s intended industrialist growth? Is this sort of fractal capitalism leading to an integration of virtual to real currencies?

[This graphic is built through http://manyeyes.alphaworks.ibm.com/manyeyes/ service and property of IBM.]

Either way it seems as though the tension in digital economies between sociological versus geopolitical forces is squaring off over the battle for fungibility and integration. Small culture groups are increasingly seeing real value in their virtual labors, and large-scale economic systems are finding it increasingly difficult to capitalize on same. Are these systems going to integrate through a wholesale, flat and unified system, or are they going to go scattershot into a future of radically disassociated economic relationships?

[This graphic is built through http://manyeyes.alphaworks.ibm.com/manyeyes/ service and property of IBM.]

A LETS is a locally initiated, democratically organized, not-for-profit  community enterprise which provides a community information service and records transactions of members exchanging goods and services by using the currency of locally created LETS Credits. The LETS Credit currency does not involve coins, paper money or tokens of any kind but rather acts as a scoring system, keeping track of the value of individual members’ transactions within the system. It is simply a community information system attached to its own market-place.

The attached document deals with the theory and diffusion of Local Exchange Trading Systems and similar communities around the world and includes all necessary information on how it works, who is using it, where the most important communities are located, what are the benefits and the disadvantages. In addition, the documents offers several links guiding you directly to internet websites.

We create our future as much as our past creates us. The relatively new digital world of the internet has offered us new methods of communicating, of discovering and of interacting. We have learned that we don’t have to simply copy familiar physical forms and adapt them to this new environment, but that we can use our collective imagination to invent new forms and tools, as dynamic and holistic as we are.

Friedrich Kiesler in 1939 defined this as co-realism: ‘an exchange of interacting forces’ and situates the idea of expanding human capacities within it. Here is an opportunity to transform our recent past as consumers and producers to that of active co-creators of our collective future— to create something new with all that we have learned from farming culture, academic enlightenment, master craftsmanship and industrial efficiency and use the essential elements to light a path through our new integrated physical/digital world.

Are we prescribing or determining form and behavior? Are we making means for a specific experience, or are we creating conditions for what has been called the experimental exercise of freedom? - Mies van der Rohe

KashKlash is a space to share thoughts on, and to shape, the future; a playground for visionary people like you, who, in a sense, are already living a few years ahead. One particular aspect of the future we are particularly keen to explore is related to exchanges in our culture. Let’s start from the basic consideration that people have always shared and exchanged things. Sure, it comes to us naturally. But today’s digital communication systems are changing and expanding this age-old behaviour: not only are there new things to share — pictures, music, ratings, writings, videos, data and information — but there are now also many more platforms and opportunities for sharing and exchanging to take place.

Can we consider such exchanges to be ‘economical’? Sure we can, as in the original Greek  meaning of “one who manages a household”: although these exchanges often don’t involve money, they are rapidly growing in importance. Yet, our current capitalist economy is based on the assumption that everything has a monetary value, and ought to be traded according to that value. What is challenging our imagination is that the uptake of digital technology is starting to undermine this assumption.

Consider a person uploading a picture on Flickr, with an open license.  She is making a ‘gift’ to the Flickr community in the sense that she does not expect to have any financial compensation in return, but she does get other things instead: e.g. the feeling of belonging to a community of peers, a great potential visibility for her picture, the recognition of the beauty of it, the happiness of having her friends and relatives virtually gathered around that picture, and so on. The exchange has become non-financial and is definitely shaping a different, or if you want, alternative, ecosystem. An alternative to the mainstream.

Of course we know that alternative economies are nothing new: Local communities worldwide have always practised sharing and trading things (both material and immaterial, like time) without the support of money. Even now in 2008 this local practice is still very widely diffused, yet it sits at the margin of the dominant economic model and has a reputation of being naïve. What is new, with respect to a few years ago, is the increased interaction between digital/global and physical/local sharing through digital, especially mobile, communication tools.

Personal/Shared Values vs. Monetary Value

The current world of physical currency offers a degree of anonymity that allows individuals and groups to disassociate what they produce with what they consume. What have we lost in blurring the association between the two? Does the web, rich with connections and openness, offer an opportunity to reclaim this lost territory? What are the implications of this? Can both forms co-exist? In the merging physical/digital world, will other types of compensation - time, skills, services, a sense of belonging, visibility, public recognition, identity and so on - be increasingly important?

What might replace money as it exists now? What could be sharable and what cannot? What impact could this have on people and communities? How could a post-money economy best be organised, especially given the failures of the current economic model? How do communities of sharing shape and maintain themselves? How do they build their values? Do they have explicit or implicit values? What are the differences between global/online and local/physical communities of sharing? To what extent can digital/mobile communication tools help people in both online and physical communities manage their sharing and exchanging practices? What would the rules, rituals and habits of this future world be?

To address these questions, we created KashKlash, a forum to debate, imagine and co-create this future.
It is worth noting here that the focus of this understanding is on a possible future ecosystem, rather than on the technological tools underpinning it. We want the technology to adapt to the landscape we are trying to sketch out, not to be pulled in a certain direction by technology.

We want you to feel free to express your view, even if you feel that it is loosely related to the subject of the discussion: this platform is a simply a playground for ideas coming from people who are in love with the future and we are looking forward to seeing the amazing jigsaw puzzle of insights that results!
Please experiment with your thoughts and transfer them to us through words, images, sounds, videos, whatever medium you prefer.
We know how powerful ideas can be when a suitable space is created for a diverse community of people to express them.

KashKlash is a public domain project, set up by Heather Moore of Vodafone’s User Experience group, where all the content is public and open for all to use, allowing everyone to gain from everyone else’s contributions.
Such an open and spirited climate should not be hampered by Vodafone’s involvement, and it should be clear to everybody that opinions presented within this project are not somehow attached/attachable to Vodafone but are opinions from individuals, belonging to them and to the public domain.