This is a followup to The Future of Ideas and Money.
Bernard Lietaer reveals the difference between money and currency. What a central authority requires in payment of taxes, thereby imposing it as legal tender, is money. Taxes lock us into money. Money is the Yang. It promotes competition and scarcity created through hierarchy. Currency is whatever a community chooses as a means of payment, thereby accepting it as common tender. Social currency is the Yin.
What Lawrence Lessig writes regarding the nature of the commons applies to common tender just as well as it applies to the Internet. In the previous post, each of these resources was identified as an innovation commons.
Lessig suggests that a resource that has a well-defined function is often best managed by private control (p.89 FOI). However..
if we can’t tell up front how best to use it – then there is more reason to leave it in common, so that many can experiment with different uses.
The essence of a commons (p. 20) is that
no one exercises the core of a property right with respect to these resources – the exclusive right to choose whether the resource is made available to others.
Unlike legal tender, there is no legal right to enforce an obligation with common tender. That might sound like a liability of common tender but it is also true that the cost of using the legal system is a deterrent to recovering for damages.
We’ve talked about the nature of the common tender resource. Let’s focus on the resources that are paid for with common tender.
Lessig makes the distinction between rivalrous and nonrivalrous resources. He draws from Yochai Benkler who says
We consider a good to be nonrival when its consumption by one person does not make it any less available for consumption by another.
Rivalrous resources like property and a person’s time are depleted when they are used. Too much consumption drives the resource to extinction. Nonrivalrous resources like ideas, podcasts, open space talks cannot be depleted. Consumption cannot drive these resources to extinction. Instead, we are just concerned about nonrivalrous resources being driven to extinction by too little incentive to produce them.
Henry Jenkins notes that people create when they are given the opportunity to share their creations. It is an understatement to say that the web has provided that opportunity. Authors and artists deserve compensation, but the often unacknowledged reality is that when we are given good navigation tools, market forces are driving these nonrivalrous resources to a zero price point. Chris Anderson only briefly mentioned this on the last page of his book in the last of his nine rules, Understand the Power of Free:
Ultimately, in abundant markets with loads of competition, prices tend to follow costs. And thanks to the power of digital economics, costs just get lower.
Peter Savich’s Long Tail Rising gave this point more consideration. What does this landscape coupled with the nature of nonrivalrous resources reveal?
If the intention of the currency is to maximize value to the community, then it makes little sense to design a currency that reduces value to the community. One way to reduce value to the community would be to allow an open-space speaker or podcaster to charge per attendee or listener. It doesn’t cost the community anything to allow as many members to attend as possible. Each person who is priced out of the event represents value lost to the community.
Everyone has heard of the Tragedy of the Commons whose lesson, as Lessig notes, is Freedom in a commons brings ruin to us all. This only, but not necessarily, occurs when the commons consists of rivalrous resources. In our example, the resource is nonrivalrous. Raising the bar for participation only hurts the community.
Instead, what we can do is use a common design principle for community mutual credit systems. We make the unit of currency an hour. Currency earned represents hours worked. It’s a clear and simple principle that also recognizes that what is critical to community development and self-reliance is the production of rivalrous resources that are exchanged in peer-to-peer transactions. Building this principle into a currency system makes sure that other people will be providing rivalrous resources (for instance, the time they give to another in a one-to-one payment) instead of trying to score big by providing nonrivalrous resources that are already in abundant supply.