What if the origin of political division in this country could be traced to a simple glitch of the generally accepted accounting practices?  Let me explain:

The Economist magazine recently wrote an article in favor of airlines unbundling fees; Ancillaries; You Know They Make Sense

“By charging fees, once neglected baggage service departments have become star revenue performers for airlines. Department managers can now justify new technology and equipment. Where before, baggage service only represented a cost, it now provides millions in revenue”.

In other words, charging money for baggage essentially transfers this service from the liability column to the asset column of the accounting statement. As a liability, it can only atrophy under the weight of austerity measures.

And Then The Carousel Starts Spinning

What happens next is quite remarkable.  The airline PR machine twists this into a veiled statement of American individuality, claiming “freedom is about having choices” and touting themselves as the protector of all that is good and great in America.  Then, they BLAME the traveler for expecting that mustachioed Soviet-era entitlement to unlimited [baggage] service.

Just give it a French name 

Passengers will continue to complain about being nickel-and-dimed, but it may be that they are making false comparisons … “When a la carte shopping is successfully implemented, it’s not an evil method. Quite to the contrary, it’s the ultimate compliment to the consumer—it acknowledges their right to choose.”

Roll in the legislators

The resemblance to political discourse about a whole myriad of issues is uncanny and would make anyone suspect a larger conspiracy.  But what if the problems are real simple? What if the genus of political division in this country could be traced to a simple but widespread accounting anomaly?  There is no accounting system for human values.

For example; consider the fact that Motherhood does not count in American Gross Domestic Product, but Day Care services do.  So in order to stimulate economic growth, legislators subsidize day care so a parent can go to work while in the same breath witholding services if the mother “fails” to work. Don’t forget to always blame the customer when things don’t go right.

Gambling With New Value

Similar paradox never seems too far from key social issues such as education, health care, Internet privacy, Immigration, International Trade,  Homeland Security, even Banking and Finance Reform:

From Fox News coverage of the JPO Morgan 2 Billion dollar loss:

The basic problem is that regulators have been working for the last two years to define the difference between hedging and gambling, and can’t. Either the rules would be too severe and shut down banking, or would permit reckless risk taking that could take down a huge bank, and potentially put the taxpayer on the hook to pay off depositors through the FDIC.

A hedge acts on both sides of the accounting balance sheet while a gamble does not.  What if that’s what it’s all about; all the fighting, and slander, and division, and prejudice, and injustice, and violence, etc., caused by a simple accounting system problem.

When we do not have an accounting system for human values, we can only gamble with them.  To hedge, New Value must be must be tangible.  The problem is simple; it is a failure in the accounting system for New Value Movements.


The 3rd Annual Future of Money and Technology Summit was held in San Francisco on April 23rd, 2012.  This was my 3rd appearance at the Summit and I must say that #3 was one of the most profound experiences that I have had a conference.  FOM&T is possibly one of the most important conferences of its kind.

Lunatic Fringe

Several years ago, many ideas that are now becoming mainstream were fringe topics at best.  At one time, the very idea that intangibles may in fact be immensely tangible, drew razor shards of broken glass from the KM community toward anyone who ventured toward such a claim.  Then, modern events such as Arab Spring and Occupy Wall Street demonstrated a direct challenge to very tangible “guns and money” brought by new ways of organizing communities around intangible assets.

The fringe questions of today become mainstream questions tomorrow

Now, what happens if we turn that concept into a means of producing the things that people really need instead of producing things that people don’t really need? What happens when people interact around a shared asset – either tangible or intangible – will they work to preserve the asset or consume it?  What if an economy arose where the Earth is the shared asset?  What if an economy arose where the individual was a shared asset? what if Both happened?  What would that look like?

A Value Game

The New Value Movement Panel came together around those ideas.  When I set this panel up, I created a value game – each of the people has something to gain from the success of the others on the panel.  This  panel shared an intangible asset in the form of a conversation.

The outcome was movement – a new value movement. Please watch this video and contact me with your thoughts – I am deeply interested in your interpretation of what happened here.
Thank you.

I hope to see you all at the next Future of Money and Technology Summit


The following 7 minute talk was presented at the Innotribe Sessions at SIBOS 2011 conference in Toronto Canada.

Here I identify a serious omission in our form of economics which may  inhibit the ability for currency to represent the things that people do and make. I also introduce how a new class of financial instruments could re-connect currency with productivity thereby reintroducing vast amounts of value into the tradable asset (currency) pool.

What if the solution to the great complexity of economic collapse is actually fairly simple – and we don’t find it?  What if the new economy is going to happen whether we want it to or not – and we are not prepared?  What if the tipping point to the New Economy is already past – and we are not in the game?

The only ones to blame would be ourselves for not building the obvious.


The Human Productivity Chart:

Human civilization has progressed through many stages.  Each stage arose from the “integration” of the tools developed in the prior stage.  Believe it or not, the next economic paradigm will arise from the integration of the tools being developed in the current stage of human development. Let me explain:

Hunter -gatherer:

We started as hunter-gathers who traveled from place to place to follow animal migrations and seasonal flora.  People would collect fallen branches and burn them for heat or cooking.  Then people started to sharpen rocks that could be used to hunt food better than a dull rock. They sharpened rocks to chop down trees for warmth and shelter.  Soon they sharpened rocks to till soil.

The agrarians

The arrival of the agrarian age came when the arrow, the axe, and the plow were integrated; that is, the output of one became the input of another – allowing people to conserve energy and increasing productivity. The emergence of communities led to the division of labor as people specialized their skills. People soon developed tools and techniques for forging metals, building structures, and harnessing of forces such as wind, sun, water, and domesticated animals.

City-states

The arrival of City-States arose when division of labor, harnessing forces, and transportation became integrated.  Spare time became available to experiment in ideas such as governance, laws, civil services, and currency. Travel allowed for trade of goods, services, and the spread of knowledge across great distances.

Philosophers

The age of philosophy emerged as the leisure class, knowledge exchange, and civil law integrated such that people began to question existence, spirituality, and test theories about the observations that they constantly witnessed in the natural world.

Scientists

The scientific age emerged from the integration of tools developed during the philosophical age.  Written language, mathematics, geometry, came together as alchemists attempting to turn lead into gold, instead created many other new and useful things from the elements. Astronomy, calculus, the scientific method, and modern finance were born.

Industrialists

The industrial age emerged as an integration of the tools developed by the scientific age.  Eli Whitney demonstrated the “interchangeability of parts” paving the way for modern production. The printing press and cotton gin demonstrated the scalability of machinery while capitalization and securitization of value (finance) allowed a merchant class to allocate land, labor, and capital.

Information

The age of information formed from the integration of tools created by the industrial revolution.  All that machinery created a tremendous amount of data.  Computers were developed for processing data creating information that could be used to make productivity more efficient.

Knowledge

The Knowledge age emerged from the integration of tools developed during the information age. The Internet vastly accelerated the amount of information available from which knowledge could be applied as factors of production in physical systems from weather prediction, space travel, medicine, and new ways for people to organize their selves.

Innovation

The innovation age will emerge from the integration of tools developed by the knowledge age.  So called “social media” is creating thousands of platforms upon which people reorganize themselves around interests, affinities, relationship, and commerce.  As these tools integrate; that is, when the output of one tool becomes the input of another tool (and vice versa), a new economic paradigm will emerge.

Wisdom

Keep in mind that the agrarian economy and all previous stages are still with us today. Keep in mind that elements of future economies also exist today.  Keep in mind that the US dollar has not always been the currency of trade nor should we expect that it will always be with us in the future. We can assume that the productivity inherent in people and communities is not dependent on the currency, rather, currency is dependent on it.  Time is the only scarce resource and everyone has an equal amount of it.  As such, time is the only true currency.


There are some big names getting involved with “badges”.  Modern ideas about badges arise from incentive used by the gaming community to indicate achievement.  Historically, however, badges are older than money itself. Recently, badges are gaining attention in the area of education as a means of indicating achievement.

Badges are steeped deep in our economy and culture

When people write their resume, they “badge” themselves with the names of the companies that they worked for and the schools they attended.  They badge themselves with the market brands of the products that they worked on.  They badge themselves with the trademarks of the technologies that they applied.

People even badge themselves with corporate ideals such that “chronology”, “reasons for leaving” and “no blank spaces” are somehow rational proxies for intellect, creativity, and team working skills. We need a behavior platform, kids. Passion, family, and purpose are merely business disruptions.

There are several directions that this can go

The first is the inevitable collusion between badges and branding.  I am still scratching my head over AMEX hijacking the “Social Currency” badge.  Other badges (or logos) are considered among the most valuable assets that a company can own from Microsoft certifications to the Chuck E Cheese Rat … badges have value – with their own branch of the legal profession to prove it.

The second direction can be quite disruptive to branding.  For example it can cost well over $100K to wear the Harvard “Badge”.  Meanwhile Steve Jobs literally ridiculed Stanford to their collective face(s) with the idea that diverse combinations of knowledge assets are what set the innovation enterprise apart from the old guard.

What if the college degree badge is irrelevant? 

Who is to say and engineer in not an engineer until they take on $2000 more debt for a course in Western Civ.  And, if not Western Civ., then what course denotes the ascension into engineerhood?   A physics major that rules video games, kite surfs, plays in a punk band, and writes decent code is equally, if not more likely, to create a new industry than someone with a CS degree from MIT. Where is that badge?

Badges should be disruptive

What happens when it is no longer important to have “Google” on your resume? Why is it so now? What happens when being a Princeton drop-out is no better or worse than being a drop out from State U?  What happens when people are recognized for their passions and the things that they are naturally good at?  How can a credit score extrapolate success from measuring failure? What happens when there is no badge for the color of one’s skin, physical appearance, or family connections.  What happens when Brands are accountable for the people who wear their badge instead of the other way around?

Badging already exists and in order to improve anything, badges must be disruptive.

So, who is awarding the disruption badges?   

 


If we follow the Wall Street accounting model, the supply and demand for knowledge assets are cast against the factors of production; land, labor, and capital.  The typical corporate human resource department looks to the community for labor units within commuting distance to a factory, and who are willing to rent their time in exchange a minimum amount of money.

But Land is Obsolete

Technology has made the idea of “land” as a factor of production almost obsolete.  Knowledge assets travel over the Internet and can be deployed and organized in many ways across long distances without a factory.  Indeed there are server farms and automation houses where things are made if needed – but these are hardly factors of production as they once were.

What exactly is a Labor unit again?

Machines have replaced much of what we once called “labor”.  I am sitting at Starbucks where a smiling robot is the only thing missing from the age of automated lattes.  The social, creative, and intellectual capital required to create, design, maintain, and serve the technology is what ushers us into the knowledge economy and the associated innovation economy.

Capital is arbitrary

Everyone knows that money is created out of thin air when someone allocates their future productivity to the bankers balance sheet in exchange for a place to sleep.  When this game loses its entertainment value, “capital” as a factor of production will also become obsolete.

The Supply and Demand for Knowledge Assets:

Knowledge assets are deployed by teachers and replicated by student.  Teachers represent the supply of knowledge and students represent the demand for knowledge.  In between these two extremes are collaborations – that is, varying combinations of teaching and learning that ultimately results in a productive outcome such as a latte, automobile, or computer program.

If we sample a population of knowledge assets across some geographic area (Land) we would expect to find something that looks like a bell curve.

If the bell curve has a different shape, this tells us what things can be made and what things cannot (Labor).

So when people allocate their own productivity, they are in effect assigning their productivity to a community balance sheet (Capital).  They are saying “this is what we are willing to make because we have the freedom, liberty, and we intion to pursue our happiness”.

Hardly a Wall Street model.

The result is that the social, creative, and intellectual assets of people must now replace Land, Labor, and Capital as factors of production in the new value economy.  Trying to produce anything less would be inefficient in a Capitalist system – perhaps some may have noticed as much lately.


Engineers are notoriously bad at organizing themselves – or maybe not. 

Engineers tend to stay to themselves and are rarely mentioned in the domains of media, politics, Hollywood, banking, medicine, or law.  Traditional engineering societies are weak and sparse.  Nobody even thinks about paying them royalties for the satellites that carry our smart phone signals.

Some say that Engineers can’t see the forest through the trees.  Others say that Engineers have little tolerance for banter, conjecture, diatribe and all the triviality of mixing with the rest of the world.  Yet, few can argue that Engineers are the ones we all need to show up every day to keep the water clean, the airplanes safe, the code logical, and the law enforceable.

Money is backed by productivity, otherwise, nobody would work for it – think about that for a moment. 

Why would anyone work for something that does not represent what he or she creates?   However, few people notice that productivity is the domain of engineering.  The machines that they create, the bridges that they build, the code they write, and the infrastructure they lay exists for the sole purpose of supporting human productivity.

Whose money is it?

So why are most engineers strangely silent in the emerging discussion about new economies, alternate currencies, and the New Value Movement?  Who are these people and why should we care about them?  I attended a lecture with Charlie Munger, CFO of Berkshire Hathaway who stated in reference to the Enron collapse “it’s bad enough when we lose the accounting profession, but dear God help us if we lose the Engineers”. Charlie cares.

We call them Geeks – but what is really going through their minds?   What would happen if they did organize – or are they already?  Where will they hide all the Value that bankers can’t find anymore? Or has the game already changed? Remember who inherited the hamlet of Hamelin.


The New Economies Panel at SIBOS Innotribe this year in Toronto represents the most important elements of a new economy which many people believe is emerging to replace the old one that continues to crumble around us.

The common message of New Economy movement is the vastly expanded definition for the term “Value’ – far beyond that which can be articulated with money.  Very few organizations hold this idea as explicit to their DNA as The Metacurrency Project.

Few can deny that the Sun delivers all value to our Earth.  The Mass of our Universe provides the rest; Gravity, Motion, and time.  In this context, money is a trivial device that simply articulates the relatively archaic things that humans can manage to conjure and horde from the vast natural resources that are delivered to us for free.

The idea that Energy can exist is many forms cannot be separated from the fact that Value can and must also exist in many forms.  The challenge that we face as a civilization is to build an economy that articulates all Value completely and truthfully.

The Metacurrency Project has become a Worldwide conversation expanding the definition of value and building systems to articulate such value in communities, companies, and society.

I had the opportunity to meet Art Brock at The Future of Money and Technology Summit in San Francisco earlier this year.  Art represents a very important voice in the discussion of new economies at SIBOS/Innotribe on September 19-23 in Toronto.

We look forward to seeing you in Toronto.  If not, then thank you for continued interest and participation in the important subject of New Economies.


I had a discussion with one of my partners that we need 2.5 million users and Social Flights will manage itself.  The partner said, “You mean 2.5 million dollars”.

No, I said, “I need 2.5 million users”.

The partner said tersely, “No, I really think that you need dollars.”

Again, I replied, “I need users…. “

This went on for a while until we both got it: The value of Social Flights is contained within the users, not within the dollars. After that, the conversation could progress in a meaningful way, priorities found their place, and the teams found their roles – including the investors.

Nothing economic can happen until people get together to build something

Financial analysts are aghast at the magnificent valuations that social media applications are delivering; P/E ratios of 1000, valuations of 100 dollars per member, billions of dollars per billion time hours in game play – these are not the ratios that they teach in B-school.  Is this crazy or does it make perfect sense?

The Great Rapture

While highly unlikely, suppose the Almighty Father called upon all good and pious dollars to ascend unto heaven in a glorious rapture of currency – on a single day, all money disappears from the face of the Earth.  What would be left?  What happens next?

At least for a little while, I’ll still be sitting in this café typing a blog post.  The value of the education and social network of the person who I will be meeting for lunch will still be intact.  The value of the roads, bridges, schools, and highways would remain intact.  The value to teachers, firefighters, and doctors will remain.  The sun will shine and gravity will continue to act on matter.  The money may go, but a LOT of value remains.

No Such Thing As Free Lunch

Of course, things will quickly devolve when I tell the café owner that I can’t pay for lunch because my money has been raptured. Of course that would seem like a relatively minor problem given the fact that their money has been raptured too.  In fact, so has their supplier’s money, and their Bank’s money.  Obviously, there can’t be a bail out because the government has no money either.

Each of us would probably stare at each other for a few minutes until somebody asks the other, “well, then, what do you have that I can use?”  Once that conversation is exhausted, we’ll move on to  “Who do you know that has something that I can use?” Etc.

The mother of all hedge funds

If this were a game, the person that knows lots of people who do useful things would stand a greater chance of being served lunch than someone who is isolated and disliked – no matter how much money they once had before the rapture.  Likewise, if you have a lot of money, what “Bank” would you put it in?  What “Stock” would you buy?

This bubble is different.

It may be that the dollar is in a bubble and the true value of our economy is stored and exchanged in communities of people enabled by social media.  Those magnificent valuations in social media companies may actually reflect true value and act like a huge hedge fund on currency in the absence of any other plausible financial instrument.

As our noble politicians continue to play their game of chicken with the productivity of honest, educated, and productive Americans, they fail to see the polarity shifting away from money and into “true value”.

The value is in the people, not in the dollars. now we can have a different conversation about how to manage ourselves.


Social media is progressing in a direction where the SM application controls your information – not you.  This is a game that you cannot win unless they let you win.  Social Flights changes the rules by letting you control your own information.  As such, we are growing in popularity among entrepreneurs who are looking for a game they can win playing by a new set of rules.

Social Flights is comprised of 2 components; Social Flights Corporate and Social Flights Travel Tribes.  The corporate application provides vertical integration while the Travel Tribes provide horizontal integration.  Each is hugely dependent on the other, but the travel tribe is where the value is.

Vertical Integration involves information technology; the collection and formation of system data.  This is the information that helps groups stay in contact with each other giving the origin community a portal into the destination community (and vice versa) for a given flight.  This helps airplane operators schedule flights, and it helps communities become attractive to entrepreneurs and other communities.

The horizontal integration is where information originates and terminates.  The Travel Tribe disseminates information on the ground at both the origin and destination.  What happens in a Travel Tribe, stays in a Travel tribe.

The most important aspect of data and information control is the ability to restrict it from communities who are not part of the transaction. Nobody else can know where you are going except you and the airplane operator – that’s what makes the game private.  Nobody needs to know how much you are paying for a hotel room or travel service except you and the service provider – that’s what makes the game valuable.  Nobody needs to know what you are doing on the ground except you and your friends  – that’s what makes the game social.

A Value Game depends on the control of information.  If someone else controls the information – they control the Value and there can be no game. They also control the use of information and the information technology.  Don’t take this point likely; whoever controls the use of the information also controls the technology (vertical integration), not the other way around.   Technology is deployed to the game – the game is not deployed to the technology.  So, if you control the game, then you control the usage and the deployment of the technology; i.e., you control the value.

(Diagram credit and reference:  Seven Faces of Information Literacy in Higher Education by Christine Bruce)