Think Bigger. Aim Higher. Go Further.

Month: August 2012

Evading The Antigen

Over the last 20 years or so, I have spoken all over the United States and many parts of the world about the idea that there may be a single and relatively easy way to correct very evasive flaw in market capitalism.

Fixing this flaw could correct many of the biases and divisions that plague relationships and communities in an otherwise functional social organization system.  The work of the Ingenesist project, of course, is precisely to correct the flaw.

From past experience, I always get one of three reactions to our work:

  1. Some people get it immediately, and engage deeply.
  2. Some people don’t get it and ignore completely,
  3. It triggers an antigen is some people and they attack it.

I learn a great deal from each type of response.  In fact, the vast majority of ideas in the Ingenesist Project come from hundreds of brilliant people who have participated in one of these three ways.  The first two types are self-explanatory, this post is about the third. I call them “the antigens”. Like their namesake, they perceive a threat to the existing body and attempt to neutralize it.

The Flaw in Capitalism is well protected

The antigen is not just a person who disagrees with a fact or feature of our work.  They hold a deep visceral objection that is personal, emotional, physical and always disproportionate to the level, scope, or even the topic of conversation. Much to our astonishment, the antigen is almost always someone who would be expected to embrace our work and ideas.

The problem, I have come to realize, stems from the suggestion that the Zertify knowledge inventory strategy seeks to increase the efficiency of matching the supply and demand of knowledge assets in a community. Instead, the antigen does not believe that there could or should be a better broker than themselves.

If it’s not Broker, don’t fix it

My last two antigen events were particularly interesting:

One was a well known author and lecturer that champions the cause of the common man against the oppression of corporate tyranny.  This individual makes his living selling books, lectures, and endorsements.

Another recent  antigen was a person who runs an “accelerator” for start-up companies whose passion is to identify promising start-ups and match entrepreneurs to funding in the spirit of high tech titans of the past.

On the surface, it would seem that these two people would embrace a comprehensive knowledge inventory and machine enabled means of matching supply and demand for knowledge assets.

Historic perspective  

One would normally think that a less developed country seeking to enter the knowledge economy would embrace the mutual and equal recognition of their engineers to a developed nation’s engineers.  Unfortunately, from our experience (in the early days of NAFTA) it was not in the best interest of the Mexican government to give their engineers “wings” so that they could fly away from grinding bordom working for pennies in a foreign owned sweat shop.

One would think that a company that relies on knowledge workers for the design, manufacture, and support of complex machinery would be chomping at the bit to have a comprehensive knowledge inventory of their workforce.  Unfortunately, corporations that I’ve worked with it is not in management’s best interest to be cut out of the loop of information transmission.

It’s not about right and wrong

The point of this article is not to make the antigen wrong about their response –  it is quite natural and we have all done it.  The Flaw in Market Capitalism is the antigen behavior/reaction itself – not the person demonstrating it.  Our challenge for the future will be to amplify mavens and community organizers to become better at connecting people in collaboration with each other while also identifying and redirecting the antigen response before it is activated.  Because once it emerges, it cannot be put back in the bottle.  

The corollary:

Those who would embrace this work are often have no vested interest in “controlling” others and would therefore appear to be the least likely to accept our work. Likewise, once they emerge, they cannot be put back into the bottle.  This demonstrates the counterintuitive nature of The Ingenesist Project.

The Currency Hack

This is the final post of the Financial System Hack Series.  Contrary to conventional wisdom, the currency is the last hack, not the first.  Only after Zertify, Gamidox and Exoquant are established would it be possible to introduce a currency that could compete, if not hedge the dollar.

With Zertify we can estimate the probability that a collection of knowledge assets will be able to execute a business plan some time in the future.

With Gamidox, The Value Game is played where several communities interact around a shared asset such as a condominium, airplane, school, hospital, road, car, or any “product” that has socially redeeming value.

These interactions are measured such that we can assign “value” to the game with the Exoquant algorithm.

So taken together:

If we can predict the probability that the interactions carried out by communities of people (relative to a product) will have a known value in the future, we can represent it as a “cash flow” with a known volatility (risk).  Now, combining many interactions carried out by many communities around many products with known volatilities, we can pool the predicted cash flows into one large diversified cash flow.  Next, we can  cut the large flow into “bonds”, which we can extrapolate to net present value and to fund the community activities.  This very similar to the way that corporation form and raise money – except without the corporation.  While banks continue to issue Debt Bonds, communities will issue Innovation Bonds in parallel

Here is the hack:

In the old days everyone carried gold around with them to engage in trade.  Since gold was heavy, bankers let people keep the gold in their vaults and they wrote little chits that represented the gold.  After a while, people just traded the chits and it was no longer necessary to convert back to gold with each transaction.  Eventually, the gold standard was eliminated altogether and people just traded the paper that now represents their future productivity (debt), not necessarily gold.

The currency of abundance

Likewise, after a while it would no longer be necessary to convert the community currency into dollars.  As the dollar slowly starts losing it’s value under the weight of the debt load people will just trade community currencies.  All of these values are made visible and validated from Zertify, Gamidox, and Exoquant data.

The antigen will not be triggered because this is exactly the same way that corporations interact with banks to capitalizes and securitizes dollar debt, the difference is that we are capitalizing and securitizing community innovation by measuring data, information, knowledge, innovation, and wisdom.  A currency of abundance can then replace the currency of scarcity.

Nothing Changes and everything changes

Corporations and government can continue activities to the degree that they produce socially redeeming value by simply purchasing innovation bonds from the people with their dollars – if they’ll accept them.

The Wall Street Hack

In the first post of this series, we identified the 5 components of a financial system and suggested that Zertify, Gamidox, and Exoquant would serve to simulate their functions in a parallel economy before ultimately being adopted completely.

In this post we will identify the hack on the Wall Street Financial instrument regime.  Although exoquant is a bit technical, the basic hack is quite simple:

  • Everyone knows that money is created through the creation of debt.
  • Everyone also knows that debt is a promise to produce something more in the future.
Likewise:
  • Everyone also knows that innovations increase human productivity.
  • Everyone also knows that innovation is a promise to produce something more in the future.

Here’s the hack:

Therefore, a currency backed by debt and a currency backed by innovation are both backed by future productivity.  As such, two currencies backed by the same underlying asset are fully convertible with each other.  Water dissolves water and innovation dissolves debt.

Here is how the Wall Street algorithm works: 

  • People produce stuff in exchange for money
  • Bankers do not care about money, they care about the rate of change of money over time.  This is called the “interest” rate.
  • Stockholders do not care about interest rate, they care about the rate of change of interest rate over time, this is called growth rate.
  • Hedge fund managers do not care about growth rate, they care about the rate of change of growth rate over time, this is the margin on their bets; options, and derivatives, etc.
  • CDOs and other financial exotica become increasingly divorced from the fact that people produce stuff for money.

The Exoquant Analogy:

  • The value of information is derived from the rate of change of data over time
  • The value of knowledge is derived from the rate of change of information over time
  • The value of innovation is derived from the rate of change of knowledge over time
  • The value of wisdom is derived from the value of innovation over time.
In order to “see” innovation before it happens, all we need to do is identify and measure rates of change of information in communities…and so on. Technically, this is a derivative, i.e., something whose value is derived from the value of something else.   All of these metrics can be seen quite readily in the Zertify, Gamidox data sets.  Each is a “derivative” backed by the stuff that people produce rather than the fiction of debt.  The ability to predict future productivity is superior with an innovation backed currency and therefore superior to debt forced productivity – often compared to slavery.

The Silver Bullet

Innovation is a magic word.  The hack is true to the Wall Street math as well as American culture.  Anyone running for public office would not attack the proposition of an innovation backed currency.  Therefore, the hack will not trigger an antigen.
 The next and final post, The Currency Hack, will formulate this innovation currency in more detail.

The Institution Hack

In the first post of this series, we identified the 5 components of a financial system and suggested that Zertify, Gamidox, and Exoquant would serve to simulate their functions in a parallel economy before being adopted completely.

In this post we will identify a hack to the vetting institutions and players that are supposed to keep the financial game fair but are in fact complicit with it’s unfairness; these include Libor Scandals, Banks, Insurance, The legal system, etc.  Any institution that sets the rules of play, Gamidox will change the rules.

At first Gamidox resembles a classic MBA analysis and strategy tool called Michael Porters 5 Competitive Forces.  In Porter’s analysis a corporation competes within its own business environment against:

  • Competitive rivalry within an industry
  • Bargaining power of suppliers
  • Threat of new entrants
  • Threat of substitute products
  • Bargaining power of customers

The Zertify Hack swaps out the competitive nature and installs a more efficient collaborative nature.  Revisiting Porters 5 Forces for collaboration, we can say the following would be true of the parallel economic system:

  • Collaboration within an industry
  • Collaboration with suppliers
  • Collaboration with new entrants
  • Innovation of improved products
  • Collaboration with customers

This is already happening.

Social Media is driving many social innovations that act as “institutions” would in the legacy economy.  For example:

  • Vendors use Customer Relationship Management (CRM) systems in nearly every industry.
  • Designers use Supplier Relationship Management (SRM) systems to collaborate Globally.
  • Social Media has spawned the field of Vendor Relationship Management (VRM) where the market tells the producer what to make and how to behave.

Community Relationship Management

But when we combine CRM + SRM + VRM we get Community Relationship Management (CoRM).  In essence CoRM is a Value Game.  Where customers, vendors, and suppliers all acting in the best interest of their constituents are in fact acting in their own best interest.  Cheating gets you thrown out of the game.  The combined analytics provide extensive data to the next hack called Exoquant.

Benign.

Gamidox is an organization that educates, creates, and deploys this new class of business methods where  Communities are encouraged to act in their own best interest when collaborating with other communities.  Jobs are created, things are produced, value is exchanged, and assets are accounted.  Capitalism remains in high gear and the hack will not trigger an antigen.

Playing The Value Game

The Value Game is played wherever 3 or more communities interact with each other to preserve a shared asset rather than consume it.  A Value Game can be built around any sharable asset such as a public corporation, an airplane, a high impact citizen, a condominium building, public infrastructure such as schools, bridges, and health care, etc.

However, A Value Game fails for asset and communities that offer literally no socially redeeming values (that is the point of social redemption, BTW)

The New Value Movement

The Value Game literally manufactures New Value.  As communities interact with each other around a shared asset, they teach and learn from each other – populating the Zertify Hack.  Several layers of vetting and conflict can be eliminated from an economy which will make all many forms of production and associated employment, run faster,  smoother, and more efficiently.

The Accounting System Hack

In the first post of this series, we identified the 5 components of a financial system and suggested that Zertify, Gamidox, and Exoquant would serve to simulate their functions in a parallel economy before taking over completely.

In order to accomplish this, we need to start with an accounting system hack. Fortunately, standard accounting practices are quite robust with double entry balancing of assets and liabilities.  Luckily, the problems only arise with the definition of what is an asset and what is a liability.  That is a relatively easy jailbreak.

The Price Is Wrong

The problem is that we “price” assets from low to high, from bad to good, and from loser to winner, etc., with little regard for proximity, environment, community, or time, etc.   The financial system needs to artificially create losers in order to price the winners.  This is fairly obvious for tangible assets like cars, tomatoes, and real estate, but not so much for so-called intangible assets like people.  This is hugely inefficient on so many levels and therefore vulnerable to attack.

The collaborative advantage

Zertify classifies human knowledge assets on a scale of 1-6 beginning with “teacher” and ending with “student”.  Students and teachers do not compete with each other and therefore intermediate levels represent various degrees of collaboration, not competition.  The teacher bias represents supply of knowledge and student bias represents the demand for knowledge, this establishes a trade vector in our proto economy.

Technically, the 6 segments represent 6 standard deviations on a normal distribution.  This allow for communities to organize around their diversity rather than recoil among their similarity. This arrangement also allows the for the usage of an important body of predictive mathematics.

Benign.

This simple hack is important because it is benign to the current economy and will not trigger an antigen. Corporations, governments, and communities already seek to match the right knowledge asset to the right demand asset for knowledge – this is actually improved under the new accounting system.

Therefore, the hack is true to the math because it provides the existing financial system with an equivalent predictive asset while eliminating irrelevant bias and costly competition.

The Resume Must Die

The objective would then be to move away from the resume system and establishing a community knowledge inventory system under a commons based ontology.  Everyone would have their individual API which they own, manage, control and transact. A person’s CV would be expressed as a string of code that  is anonymous until the point of transaction. A tremendous amount of data will be derived from Zertify which will feed into the next hack called The Value Game.

Hacking the Financial System

Hacking The Financial System is not about some doomsday scenario for the end times, it represents the natural ability for humans to adapt to constraints in their environment.  Right now, the financial system is vulnerable to many new systems and technologies that are reorganizing society. This series hopes to describe the meta dynamics behind these trends and offer ways for all people and institutions to adapt.

The financial System is made up of 5 components; they act as a system.  If any of these components falters or is corrupted, the whole system becomes unstable.

These 5 components are:

  • Markets (demand)
  • Entrepreneurs (supply)
  • Accounting System (inventory)
  • Institutions (to keep the game fair)
  • Currency (storage and exchange of value)

For example:

The dot.com crash was a problem with the accounting system failure. The 2008 crisis was a vetting mechanism failure. Devaluations across the globe are currency failures. Poverty is a market failure.  Corruption is an entrepreneurial failure.   All of these forces are interrelated and any one will have an impact on all of the others.

Curiosumé, The Value Game, and The WIKiD Tools Algorithm are specifically designed to replicate major functions of these 5 components – but in a different way.  Since Finance and Economics are mathematical, and natural systems are also mathematical, we cannot escape the math – our hack needs to be true to the math. For this reason, the work may seem fairly technical.

On the other hand, we have an incredible opportunity to correct many flaws of the old economy.  Anything that has no direct impact on the math also has no impact on performance and function of the 5 components – and can be easily designed OUT of the system.

For example:

  • We have an opportunity to swap out competition for collaboration
  • We have an opportunity to swap out scarcity for abundance
  • We have an opportunity to swap out mass consumption for mass sustainability
  • We also have the opportunity to eliminate a wide range of biases such as gender bias, racial bias, physical bias, social class bias, political bias, and many many more factors that may be irrelevant.

Where’s the Hack?

Every time there is an economic instability of any magnitude, black market currencies tend to form.  We have all heard stories of Levis, cigarettes, or even tulip bulbs being used as currency.  Black market currencies can also be quite subtle, yet no less tradable.

With 21st Century technology and social media, we are witnessing the emergence of what we can only now call “social currency”; such as reputation, referrals, vouches, influence, SEO, community, groups, and various other domains.  These are all black market currencies because they are used for the storage and exchange of the value that people create…what they lack is the rest of the “system”.

The difference now – and perhaps this is the first time in human history – should the so-called black market currency become systemized to the same extent and actually perform better than the currency that it hedges,  “a flip” will occur and the old system will fail to re-boot back to it’s current form as it has after every preceding economic crisis.

That’s the hack.

New Value Movement Session Primer

Thank you for participating in the New Value Movement discussions.

I have compiled this post to help our panelists refresh the basics of The New Value Movement. This is the body of content that we are trying to improve:

If you find them difficult to follow, then that is what needs improvement.  I’ll do a quick review at the sessions as well.

We need to tell an epic story.

New Value Movement Session Primer – Total viewing time is about 33 minutes.

***

SIBOS 2011 (6:39 minutes)  this video is the Launch presentation for the NVM delivered to financial industry professional at SIBOS Innotribe sessions in Toronto 2011.  It introduces ideas corresponding to the Zertify, Gamidox, and Exoquant applications.

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This next video describes The Knowledge Asset Inventory (5:30 Minutes) and corresponds to the Zertify Application concept.  However, the actual methodology is masked and I have not published this openly the web – this is the only secret we keep at this point. The actual methodology will be revealed at the session.

***

The next video describes The Value Game; a system for accounting for new value (12:17 minutes); and corresponds to the Gamidox application. This was originally used to launch a start-up called Social Flights. However, there are several layers of informative examples in this video.

Next: The algorithm for monetizing (making tangible) of intangible value is described in the video below (5:30 minutes) and corresponds to the Exoquant Application.

Finally; predictions 2020 begins to lay out the scope of influence that alternate economics may have if done correctly. As such, this video (3:30 minutes) suggests the scope of audience that the New Value Movement narrative should access.

Again, thank you for your time, effort, experience, and intellect participating on this panel. Dear regular blog readers: please continue to leave comments or connect with me to get involved with the New Value Movement.

New Value Movement Session Primer

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