I think an economy of formalized trust or reputation is a very interesting concept. Instead of money we would interact with reputation scores or something similar. So your capital is basically your reputation or more precise your historical input to output ratio. The key aspect is that a reputation transaction is not zero sum while an economic transaction is. So i.e. releasing a patent would raise the inventors reputation without lowering reputation of the users of the idea. The economy has at its best increasing returns dynamics, but the monetary system is based on a stone age analogy of giving a X for a Y. Which is kind of weird!
There are countries like China were reputation is more central then in the West. A powerful person who sufficiently ruins their repuation gets thrown into jail in China. A huge problem with this is that it sets up incentives to kill free speech and is one of the key reasons why you have less free speech in China then in the West.
I was also under the impression that China, and many other Asian countries where status and “face” is highly important were generally considered low trust cultures—meaning you expect your neighbor to behave opportunistically if you’re not watching closely.
It is an interesting point that there is something non-zero-sum about a reputation transaction. “The hippie” mentioned in the essay worked very much on this assumption. By being extremely trustworthy he creates a reputation that expands his network of trust, so he can get more help with things he needs done etc; but being helped by him also raised my reputation, as I got his stamp of approval. (This can happen in a market transaction as well, since markets and relationships of trust bleed into each other.)
But I wonder how that can be formalized without being game:able? I’m a bit fascinated by experiments in the blockchain community, like bitclout, were peoples reputation (or whatever to call it) is a token that can be traded, so there is an incentive to invest in people who one precieves will grow in reputation. But I can’t wrap my head around how a system like that would behave if you pour in people and have them figure out ways to game it.
What’s your intuition as to how one would implement what you suggested?
Well I’m working on a longer text on the subject, but the short version is analogous to the situation between nations with sovereign currencies. How is this trade possible if you don’t only send goods but money? If there is a solution for this situation there must be something that should, at least in theory, work for individuals.
One important point is that reputation is public and that it is not isolated to one situation. But a sketch is that my own reputation is affected depending on whom i interact with. So optimally i trade with people of good intent. Good intent would be to maximize not ones own value but aim for the social optimum. This is not however possible with ordinary money since transactions are zero sum. We need a system that can handle something similar to the clark pivot.
MMT is actually a step in this direction, since allows a trusted party (the state) produce money in certain areas where we have increasing return dynamics, thus not creating inflation. It has other drawbacks though.
I’m also playing with the thought of using reported utility as trust. Since you cannot experience more than a limited amount of “happiness” per time it acts as a trust guard. That would lead to the possibility of a system that creates a utilitarian optimum. It would strike the “optimal” balance between redistribution and incentives. Long story short...
I think an economy of formalized trust or reputation is a very interesting concept. Instead of money we would interact with reputation scores or something similar. So your capital is basically your reputation or more precise your historical input to output ratio. The key aspect is that a reputation transaction is not zero sum while an economic transaction is. So i.e. releasing a patent would raise the inventors reputation without lowering reputation of the users of the idea. The economy has at its best increasing returns dynamics, but the monetary system is based on a stone age analogy of giving a X for a Y. Which is kind of weird!
There are countries like China were reputation is more central then in the West. A powerful person who sufficiently ruins their repuation gets thrown into jail in China. A huge problem with this is that it sets up incentives to kill free speech and is one of the key reasons why you have less free speech in China then in the West.
I was also under the impression that China, and many other Asian countries where status and “face” is highly important were generally considered low trust cultures—meaning you expect your neighbor to behave opportunistically if you’re not watching closely.
Could you expand on this thought?
It is an interesting point that there is something non-zero-sum about a reputation transaction. “The hippie” mentioned in the essay worked very much on this assumption. By being extremely trustworthy he creates a reputation that expands his network of trust, so he can get more help with things he needs done etc; but being helped by him also raised my reputation, as I got his stamp of approval. (This can happen in a market transaction as well, since markets and relationships of trust bleed into each other.)
But I wonder how that can be formalized without being game:able? I’m a bit fascinated by experiments in the blockchain community, like bitclout, were peoples reputation (or whatever to call it) is a token that can be traded, so there is an incentive to invest in people who one precieves will grow in reputation. But I can’t wrap my head around how a system like that would behave if you pour in people and have them figure out ways to game it.
What’s your intuition as to how one would implement what you suggested?
Well I’m working on a longer text on the subject, but the short version is analogous to the situation between nations with sovereign currencies. How is this trade possible if you don’t only send goods but money? If there is a solution for this situation there must be something that should, at least in theory, work for individuals.
One important point is that reputation is public and that it is not isolated to one situation. But a sketch is that my own reputation is affected depending on whom i interact with. So optimally i trade with people of good intent. Good intent would be to maximize not ones own value but aim for the social optimum. This is not however possible with ordinary money since transactions are zero sum. We need a system that can handle something similar to the clark pivot.
MMT is actually a step in this direction, since allows a trusted party (the state) produce money in certain areas where we have increasing return dynamics, thus not creating inflation. It has other drawbacks though.
I’m also playing with the thought of using reported utility as trust. Since you cannot experience more than a limited amount of “happiness” per time it acts as a trust guard. That would lead to the possibility of a system that creates a utilitarian optimum. It would strike the “optimal” balance between redistribution and incentives. Long story short...