The near future of on-line bartering

by Nicolas Nova

by Nicolas Nova

The reason I enjoy reading science-fiction is not because it features MIT-inspired and glossy technological devices a la Minority Report. Instead, it’s how this genre enables the discussion of the implications of change, be they technological or sociological. For instance, to get back to the topic at hand - the future of value exchange. I find it less intriguing to observe the über geek representation of digital devices that may replace tangible coins than looking at what shape relationships between people would take.

If you read Charles Stross’ Accelerando , you would find a curious character called Manfred, who is supposedly at the “peak of his profession”. Half consultant, half spin-doctor, he delivers ideas and insights to others, who subsequently turn them into loads of money. However, as seen in the novel, Manfred is not paid with cash. The model is very different: essentially coming up with whacky but workable ideas and giving them to people who will make fortunes with them. He does this for free, gratis. In return, he has virtual immunity from the tyranny of cash; money is a symptom of poverty, after all, and Manfred never has to pay for anything. (…) The Internal Revenue Service is continuously investigating him because it doesn’t believe his lifestyle can exist without racketeering.

In design, we would call this person an “extreme user” because that character’s non-revenue model may clearly be unique and limited. Nevertheless, it offers us an interesting extreme case of value exchange. What is important here is not to take Manfred’s job as the sort of activities a normal human would do but rather to think about his business model (or perhaps one should say his life model). Therefore, let’s call Manfred an extreme user of the future. His walk of life is meaningful because of the underlying mechanisms that could be applicable for a more general group of people. We can look at him as a way to provide insights regarding human interests and desires, relevant for foresight outcomes.

What does the “Manfred case” mean for the future of value exchange? Simply, he represents how certain people could live: by trading services instead of cash. While Manfred trades potentially rewarding business ideas against a hotel room and a fresh toothbrush, others could simply barter a bit of help with gardening and get some fresh fruit or vegetables in return. This model is actually not so farfetched or futuristic: it currently exists. It’s called a local exchange trading system (LETS) but the French term is more intriguing. It’s called a SEL (meaning “système d’échange local”, system of local exchange), while “sel” in French also means salt.

I won’t enter into much detail about what the state has to say about that, nor will I try to depict how this reshuffles the notion of value. What I want to delineate here concerns what this would look like in a technologically-mediated environment. To some extent, I am thinking here of a sort of bartering platform where you can trade goods or services. What we need here is two things: a bartering platform and a service layer.

Bartering is the easy thing. Try to picture a second-hand objects marketplace such as eBay in which instead of paying you would offer to trade one or some of your belongings against the artefact you want to get in return. We’re close to that; the first brick of such platforms actually exists. Look for example at folkd or giventake , which offer debuting solutions for that matter. There is a whole ecosystem of modules (such as cclite or sweblets ) and software (xolimited , bartertrainer ) which support bartering mechanisms.

Additionally, we also have the service layer somewhere in the Web2.0 realm: Amazon Mechanical Turk or innocentive are two instances of platforms where you can offer your horsepower online and get something in return, generally money. Turk and innocentive are examples of a new kind of marketplace that enables a web-based program to co-ordinate the use of human resources to perform tasks which computers are unable to do. What we need to facilitate Manfred’s business model is basically a platform that hooks up such a service layer on top of a bartering system so that users can exchange their horsepower against goods or services.

The two examples I’ve chosen here are all but random: while the former is about micro-tasks, the latter is about collective work. Both have interesting characteristics that can serve as a model for a service-based bartering platform. Micro-tasks are indeed pertinent in a collective context because they can enable us to do small things multiplied by big numbers, which can lead to big influence.

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joshua 22/10/2008 06:36:08

I think you’re absolutely on track with regards to bartering being a more flexible and responsive means for trading value, but I don’t think Amazon’s Mechanical Turk is a way to do it. The Turk in particular illustrates on of the larger issues facing international exchange in particular, because it isn’t actually open to anybody. In order to pay anyone anywhere, we in the first world must obtain a bank account number and the equivelant of a social security number for them - both resources most people in the third world don’t have.

This means that labor and value can easily flow from the third world to the first, but not the other way around. In the face of a barter economy, that lack of easy fungibility might mean all manner of disparity of value. Or maybe not - what do you think?

nicolas 22/10/2008 06:42:25

Well, I actually mentioned Amazon’s Turk because it’s the most known example of such platforms, I haven’t any seen other similar systems with this kind of service. I agree with you that the Turk is not optimal and it’s certainly true that its non-openness is problematic. Of course the Lazyweb can be a minimal version but still, it’s a bit too basic to serve as the platform I describe here. However, it would probably fulfill the first step in a bartering process: to make people aware of a certain need. Amazon’s Mechanical Turk goes beyond this by providing users with a platform to support the micro-task process.

Now, regarding the lack of easy fungibility, I indeed wonder about what sorts of goods or services could be bartered from the 3rd world to the 1st world based on such non-openness. Perhaps there are exceptions and each flip of coin (1st/3d) could be specialized in something.

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MorelliN 20/11/2008 08:09:10

I would like to follow up Joshua comment about the Chinese taxation on virtual currencies, (in fact the comment link in his post doesn’t work, but my comment is also relevant to this topic, I think). In fact the Chinese government is not the first one to recognise the value of virtual currencies or bartering. the Danish government has been regulating bartering and Local Exchange Trade System for some years, now. I would like to try and push this issue to the extreme: if we think of a cashless economy, or an economy with different kinds of currencies, how can we think of the taxation system? Someone would possibly argue that there may not be a taxation system at all, but I think that there must be a system for redistributing value among the citizens, whether we call it taxation system of anything else. So far several alternative value creation systems have bypassed taxation, until they became so big that the government could not ignore them any longer. But if alternative value creation systems become the norm it would be interesting to redesign a value distribution governance.

Joshua Klein 22/11/2008 10:31:28

I’m speaking from a position of ignorance here, but aren’t taxes at their base simply a price tag on what the society considers essential rights, guarenteed and provided by government? For example, in Scandinavia health care is universal and funded through tax money, whereas in the US you pay for what you get (albeit through an obtuse and corrupt system of middlemen.) If that’s the case, then isn’t one of the risks of a cashless system that we are simply reduced to individualized costs for services, as opposed to a generalized and distributed system of services which geolocal populations fund?

Nicola Morelli 24/11/2008 02:45:06

Although I’m not an expert either, I think you are right on the spot, Joshua.
You can see the taxation system from two points of view: one is its function of generating services of public utility, but the other is to redistribute the wellbeing created by value-creation. Currencies are a good tool to provide quantitative measurement for the second point of view: you quantify value creation in money, it may not be 100% correct, but it works reasonably. If you get rid of currencies or replace it with more uncertain or qualitative tools, such as solidarity, trust or time, the redistribution of value creation becomes much more complex. Some government have considered this. As I mentioned before, the Danish government is regulating LETS, though I do not know how. For sure I would say that if we consider alternative currencies without considering alternative ways of redistributing added value we risk to end in a US-like individualistic system. This, from my point of view (as a designer) is a very interesting dilemma.

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