Sunday, March 02, 2008

Future of market mechanisms

Information is increasingly free. This is causing well-established economic paradigms to reshape, expand and be supplemented to reflect this shift. One example of a new market norm is the open-source software model of free software and fee-based services to implement and maintain the software.

Free access to information pushes the bottleneck higher up the scale to a less entropic, higher resolution value point. What is now valuable is how information is used, and the creation of new information.

Value Creation
An increasing level of productive activity is coming from the many activities people do that have value but are unrelated to their compensated activities. This productive activity is starting to impact and deliver value to others in unprecedented ways. It has not been measured and is outside of the traditional economy. How can these activities be explicitly valued and exchanged via monetary or non-monetary currencies?

Complementary Market Mechanisms
Non-monetary currencies for attributing value initially started with reputation. Now they are becoming more rigorous in their assessment of value and are being used for exchange. Some of the new market mechanisms include attention economies, open money (related event: unMoney Convergence), time banks, social capital markets (related event: Social Capital Markets), open capital and prediction markets.

Transition to a post-scarcity economy (PSE)
A rich pathway to the future involves creating a multi-currency culture to support the different areas in which value is and will be created: finance, ideas, time, information, action, etc. Financial or non-monetary derivatives could be created on top of the new currencies. Imagine a call spread on community cleanup time!

Having multiple currencies would not only reflect the current and near-future state of the world more accurately but would also be good defensive positioning for future volatility and uncertainty regarding technological development and adoption.

Evolving to a multi-currency culture could ease any potential future transition to a post-scarcity economy (PSE) as traditional money will be only one recognized store of value.


xigi said...

im really thinking a lot about this. do you track prediction markets and are you on that google list?

The Guy said...


Don't let the government(s) hear you!

They'll want to tax the favor I do my neighbor when she needs someone to watch her cats. Then they'll tax the ideas I share on your blog.

Speakin' o' which, I figure this one's worth 32 cents. Fork it over ;-)

LaBlogga said...

Hi Kevin/Xigi, thanks for the comment.

Yes, I am on the Prediction Markets Google Group. The leading prediction market Intrade has some interesting U.S. election predictions.

LaBlogga said...

Hi 'the guy' - thanks for the comment. I would really love to trade some options positions on your comments.

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Leona said...

I agree with 'the guy'... I don't want corporates jumping all over this one! :-)

It's an interesting idea that we'd have to figure out a currency for these new economies... or do we? Money isn't really isn't a store of value anyway (it might have started out that way but it's clear that the whole premise has atrophied). The new economies might do better if they steer clear of everything that existing currencies have wrought. Better we start re-learning the value of things (such as person's time, presence, ideas, etc) instead of trying to figure out the 'price' of intangibles in these new economies. Just a thought...

LaBlogga said...

Hi Leona, thanks for the comment. I think what you suggest is exactly what some of these new currencies have in mind, for example time banks equally valuing all hours.