Teachers are “threatened” with layoffs. In some cases, the profession is openly mocked. Meanwhile, corporations are staring blankly at the knowledge gap in their industries.  The older generation is retiring, moving on, and taking their knowledge with them.  Teacher’s unions are busted and disappearing. Apprenticeships are a thing of the past.  Everyone is asking “where are the jobs – there is plenty of work to do”

Education is obviously a financial instrument.  Think about that for a minute – it is an investment like any other investment. Wall Street has an arbitrage instrument for every market anomaly – why not education?

What would happen if teachers were given an equity position in their students?  Isn’t this what families do to prepare their kids to take over the family business?  Isn’t this what happens in corporations where executives pick proteges?  Isn’t this what happens in politics where knowledge is traded among a closed group?

A school like Harvard University or MIT certainly hold and equity position in their students. What if every community viewed every child as an asset instead of a liability?

The purpose of this video is demonstrate the scope of influence that Value Games may have in communities.

Each of the following predictions suggest disruption to a current way of storing and exchanging value.

With disruption comes opportunity.

If you are a developer, entrepreneur, or angel who wants to become a co-founder for anyone of these predictions, let’s build the associated Value Game together.  Some are currently under development.

Ultimately, social, creative, and intellectual capital will emulate land, labor, and financial capital of legacy economics.

The difference between market Capitalism and Social Capitalism is that factors of production are reversed.  In Social Capitalism, creative capital, intellectual capital, and social capital are the “tangibles” while land, labor, capital become the “intangibles”.

But the currency for social capitalism must still represent productivity – otherwise nobody would “work” for it.   Productivity is defined as “all the stuff we can make within a certain period of time“.  Market capitalism is built on “stuff” while Social Capital is built on “Time”.   Waste stuff and you’ll lose money.  Waste time and you’ll lose social currency.  Every living person is allocated a certain amount of time on Earth.  Time is impossible to forge, debase, or otherwise counterfeit – unless stolen from someone else – as such, Time makes an excellent currency.

What is the ROI on Land, Labor, and Capital in Social Capitalism?  ROI is wholly dependent on the knowledge assets deployed upon that Land, Labor, or Capital.

So what exactly is the underlying asset that supports Social Currency?

WIKiD Tools introduced the idea that everything we produce will ultimately come as a result of transforming data into information, or transforming information into knowledge, or transforming knowledge into innovation, or transforming innovation into wisdom.  We can articulate a very powerful Equation to model productivity in Social Capitalism.  This equation can be translated as follows:

Wisdom is proportional to the rate of change of innovation with respect to time.  Innovation is proportional to the rate of change of knowledge with respect to time.  Knowledge is proportional to the rate of change of information with respect to time.  And Information is proportional to the rate of change of data with respect to time.

Note that in each case, the “rate of change” (hence, time) is the underlying asset.

The creation of Social Currency:

Sounds complicated?  Well, it happens every day in every city where a person sees an important issue and convenes a conference where they invite relevant speakers and guests into the discussion.  It happens when a manager notices people talking about something important to them and incorporates it into their job description.  It happens when a teacher helps a student to the next level.  It happens when someone spends some of their time so that you can enjoy more of yours.  It happens with stay at home moms.  It happens with volunteerism.  It’s created by mentors, parents, neighbors, civil servants, and everyday citizens. It is created in Communities, not factories.  It is created by time.

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Please Vote for The Ingenesist Project to present at SXSW 2011

The Ingenesist Project specifies an Innovation Economy built on a platform of social media as the next economic paradigm.  60 minute solo presentation in the advanced technical track.  Your help is deeply appreciated. All comments welcome.  Material based on video series here

This video describes a set of predictions for 2020 based on an entirely new form of capitalism whose velocity and voracity will take the world completely by surprise. Nothing is sacred and nobody is immune, not Facebook, not Google, not Wall Street, not even Governance itself….

Part 1

Part 2:

The idea that a mentor may take an equity position in a protege is not new – it happens in families and extended families as elders are fully aware that the children will provide for the family in the future. The connection is not to hard to grasp that it’s in everyone’s best interest to help the kids – all of the kids. This is the social contract.

Somehow that connection gets lost when everyone is competing for the same set of limited jobs and everyone is responding to the pressures of insurmountable debt to banking institutions.

As Social currencies begin to replace the decaying monetary currency, a new set of social instruments will arise. The scope and range of new social contracts is unlimited and should be expected to increase substantially. These social contracts will become tangible in a communities and may he used in a system of trade that stores and transfers knowledge efficiently in a community.

If a father can teach a son how to become successful in the family business, why can’t a community of fathers teach a community of sons to be successful in a community of businesses? This may need to happen whether we like it or not.

Mentors provide expertise to less experienced individuals to help them advance their careers, enhance their education, and build their networks. In many different arenas people have benefited from being part of a mentoring relationship: Freddie Laker mentored Richard Branson, Bach mentored Mozart, Dr. Dre mentored Eminem, Aristotle mentored Alexander the Great, and Obi-wan Kenobi mentored Anakin Skywalker.

Mentorship: a Valuable 2-way Conversation

Suppose that mentorship could be monetized like financial instruments.  Within the structure of an innovation economy specified by The Ingenesist Project; a knowledge inventory, a percentile search engine, and an innovation bank will match the most worthy student to the most worthy mentor in the respective market structure.  The mentor would take an equity position in the protégé, not unlike taking a stock in a corporation.

For example:  A single mid-career mentor could take on 10 protégés with an option to exercise, say, 1% of the students future salary for every year mentoring upon predetermined retirement date. Say that the average mentorship lasts 10 years.  Likewise, each of the protégés also becomes a mentor taking on 10 protégés of their own.  The Master mentor will collect 1% of the revenue that each of the 100 sub-protégés provide to their middle mentors per year.

The Educational Pyramid Scheme

If each protégé becomes at least as successful on average as the mentor, the master mentor can collect the equivalent of their average salary for the duration of their retirement.  If each of the protégés become equally effective mentors, then the master mentor can double their average salary for the duration of their retirement.   A third tier adds another salary to the master mentor.

This is what actually happens in an informal way within companies, government, and Jedi Knighthood; the exception is that social media will enable this to occur outside the construct of a corporation – and such.

Game Theory for the Rest of Us

An interesting social game emerges:  It becomes the best interest of the mentor that each of their protégés is successful in their field and practice high integrity.  It is in the best interest of the mentee to learn as much as they can and become as proficient as they can. It is the best interest for mentees to pick appropriate mentors and it is in the best interest for mentors to take on appropriate mentees.  It is efficient for mentees to form a social network among themselves and for Master Mentors to form a network among themselves. A multiplier effect surges with cross-mentoring.

In aggregate, it is in the best interest for the membership in the social network to cooperate rather than compete because their income would ultimately benefit less from competition than from cooperation.

2.3 Trillion Dollars Market

The American Public education system is in disarray.  Standardized education defies the diversity of the country.  Teacher’s pay has been stagnant. Curriculum takes years to respond to new knowledge. Recent McKinsey research finds that a persistent gap in academic achievement between children in the United States and their counterparts in other countries deprived the US economy of as much as $2.3 trillion in economic output in 2008

None of this has anything to do with the dreams of our children.  None of this has anything to do with the intellect, motivation, and perseverance of our kids.  It has everything to do with Political stalemate and failure of the economic system.  All children can achieve their dreams, and ours, if there were a market for mentors.

As we move away from the ROI valuation model for social media and adopt a more dynamic ‘options’ analysis, a different picture emerges.  People are trading options; that is, the right without the obligation to exercise an action.  The next economic paradigm will emerge as a function of people exercising their options.

What are you doing here?

On the surface, there appears to be a lot of ‘feel-gooding’ on linkedin, Facebook, and Twitter, etc.  It is easy to brush them off as trivial, non-productive, and delusional.  I often fall victim spending too much time on these devices and have asked myself, simply: “why?”

Computer Enabled Society

At second glance, however, I have personally developed a few extremely profound, important and valuable relationships through “computer enabled society”.  People who I have never met in person have stepped way out on a limb to help me along.  As a result, I have given these people the option to access my network and they have done the same for me.  Our common purpose makes each relevant and valuable to the other and each are willing to support, mentor, and elevate the other.  We exercise options together.

Impressive Results

The distinction is that what once was a “first impression” – firmness of handshake, fashion, and physical appearance – has become the “second Impression”.

What was once the “second impression” – intellect, wisdom, talent and generosity – has become the “first impression”.

People exercise their options accordingly; first impressions leads us to action.

Evolution or Revolution?

Social media does not care if you are rich, poor, young or old, beautiful or homely.  It does not care about the color of your skin, fat or thin, physical ability or disability.  It does not care what kind of car you drive, clothes you wear, or the size of your home. Or does it?

For every revolution, there is a corresponding evolution.

The year is 2020, no burning cities, no mass hysteria, no bread lines; the economy is on an exponential growth curve.  The financial crisis of 2008 ended in an anticlimactic sort of way.  Sure, lots of hedge fund bankers were unemployed for a while and many companies once deemed titans of industry have disappeared, but nobody seemed to notice much.

Government debt has been eliminated and Wall Street has become the steward of what has become an Innovation Economy rising from the ashes of debt economics.  The transition, in fact, was surprisingly smooth.  Social Networks figured out a way to make knowledge tangible outside the construct of Wall Street, the central banks, and the traditional corporations.

When the dollar started to fall, people began trading a different currency called the rallod.  The rallod was backed by future productivity resulting from innovation rather than future productivity supporting debt.  The vicious cycle of debt economics was reversed just in time.  When the dollar finally crashed, it pegged to the rallod and the economy began to grow again with an astonishing, yet peaceful, transfer of wealth and power to self-regulating communities, society is general.  It’s still hard to believe what happened.

Today the engines of economic growth are millions of hot new start-ups that exist in the form of “Communities of Practice” related to specific technology areas rather than the old corporation model.  They automatically cluster around a technology and spin off other start-ups at an incredible rate in a strange nesting arrangement called the “tangential innovation” market.  Most innovation is open sourced because the “Patent” (and protectionism in general) is no longer the center of the innovation finance universe, rather, the “secret sauce” of social, creative, and intellectual capital is the most valuable player today.

About 10 years ago, something resembling the human genome project mapped all knowledge in the form of social, creative, and intellectual capital that exists in society to a very high granularity.  A programming language was invented to represent knowledge assets like packets of code that are processed by a community algorithm (The CV/resume is a bar joke now). Thanks to a visionary government, 1st amendment protections were built into this inventory with anonymity laws.

Part of Google was democratized in a public takeover and spun off to design an open source percentile search engine to help entrepreneurs build unique collections of knowledge assets and predict the probability that various combinations of these assets could successfully execute a business plan.  These unique combinations then induce hyper-innovation around a technology and the resulting innovations get spun off to be reabsorbed by different and diverse communities of practice in continuous iterations forming a virtuous vortex of new systems, methods, and solutions.  Sketched out, these arrangements looked like electrical circuits.  Wealth creation is intense.

Instead of having jobs, many people in a geographic area are pinged by a Percentile search engine which calculates the likelihood that their interaction together will increase the probability of successful execution of a business plan when combined with other knowledge assets.  Instead of earning wages, people are paid with micro-royalties specified by contracts on capital asset sub-sections. These micro-royalties add up to substantial residual income enjoying a multiplier effect as their work continues downstream. The government funds social security through it’s own innovation ventures. Service workers such as police, teachers, fire fighters, nurses, local merchants, etc., are key beneficiaries because of their impact on the community is directly associated with productivity.

Many of the senior knowledge workers have determined that they can earn more money by taking an equity position in their students, and the students of their student – such pyramids are in fact sustainable and generate astonishing returns.  Mentors have entered the landscape in vast numbers and apprenticeships have become abundant.  The income potential for the “creating creators” boggles the imagination.   Again, a virtuous circle has formed between the mentor and the student. In aggregate, wisdom is being retained, refined, and transferred efficiently throughout social networks.  Universities have begun doing the same forgoing tuition in exchange for an equity position in students.

University “degrees” have disappeared in favor of unique combinations of knowledge assets that are continually SEO’d for best Percentile Search Engine Placement.  People do not compete directly, rather, they compete with the Percentile Search Engine in the local market place – although virtual work is becoming popular again.  As owners of their knowledge assets, the entrepreneurial spirit is ubiquitous.  No individual has either a monopoly or an identical knowledge set as anyone else.  Everyone has perfect information about the knowledge assets in a market.  People are pinged for different reasons at different times for different rates depending on supply and demand.  Continuous education is a social event in itself often mistaken for recreation!

Since the knowledge inventory has mapped all knowledge and the Percentile Search Engine calculated probabilities and scenarios, the Innovation bank formed to make most worthy and optimal matches between knowledge surplus and knowledge deficit in a community.  Since the probability of innovation success has become predictable, innovation risk is now diversified away.  Innovation insurance products abound. With near-zero innovation risk the cost of venture capital has approached 5-7 % instead of 500-2000% of less than a decade ago.  Banks now issue innovation bonds on the public market to finance innovation in society.  For an investment of such high return and such little risk, participation is near universal.  This created another virtuous circle; the more innovation that occurs, the more money is created.  The more money that is created, the more innovation occurs.

Even the poorest areas of the planet are getting into the action because, by definition, parts of an economy with the highest potential for technological change are the same places that return the highest dividends in an innovation economy.  Arbitrage opportunities between master and oppressor have disappeared worldwide.

Like a neural network, the economic system of tangible knowledge is self-correcting, fault tolerant, and self-regulating.  Governments across the globe tried to stop the social network driven innovation economy – but they eventually gave up.  It was like water; it flowed between the cracks and simply eroded the barriers. China learned to show it’s sense of humor exporting some of the funniest jokes ever conceived.

Oil production has been replaced by superconducting wind turbines, global temperatures have stabilized, all cars are electric or “water leakers” (as the hydro’s are affectionately known), many diseases have been cured, and the list goes on.  It is hard to believe this happened in only 12 years.  Then again, the Internet had only been widely used 12 years prior to 2008.  Did I mention, we’re finally sending a multinational expedition to Mars…