October 12, 2008

Exchange Economics

Most ways humans have of organizing are adaptations to scarcity and want. Each way carries with it different ways of gaining social status.

The simplest way is the command hierarchy. In command hierarchies, allocation of scarce goods is done by one central authority and backed up by force. Command hierarchies scale very poorly [Mal]; they become increasingly brutal and inefficient as they get larger. For this reason, command hierarchies above the size of an extended family are almost always parasites on a larger economy of a different type. In command hierarchies, social status is primarily determined by access to coercive power.

Our society is predominantly an exchange economy. This is a sophisticated adaptation to scarcity that, unlike the command model, scales quite well. Allocation of scarce goods is done in a decentralized way through trade and voluntary cooperation (and in fact, the dominating effect of competitive desire is to produce cooperative behavior). In an exchange economy, social status is primarily determined by having control of things (not necessarily material things) to use or trade.

Most people have implicit mental models for both of the above, and how they interact with each other.
Government, the military, and organized crime (for example) are command hierarchies parasitic on the broader exchange economy we call ‘the free market’. There’s a third model, however, that is radically different from either and not generally recognized except by anthropologists; the gift culture.
Gift cultures are adaptations not to scarcity but to abundance. They arise in populations that do not have significant material-scarcity problems with survival goods. We can observe gift cultures in action among aboriginal cultures living in ecozones with mild climates and abundant food. We can also observe them in certain strata of our own society, especially in show business and among the very wealthy.

Abundance makes command relationships difficult to sustain and exchange relationships an almost pointless game. In gift cultures, social status is determined not by what you control but by what you give away.

Used source: Homesteading the Noosphere by Eric Steven Raymond\

[Reposted MetaMagazine 2001]

Local Echange Communities
Local Exchange Economies are formed locally worldwide with a Local Exchange Trading System (LETS) which often use their own local currency unit. It is a barter-like network but not only for businesses; also individuals can join. I am member of Keerkring Groningen which is one of the many LETS groups in the Netherlands. See also Letscontact.nl (Dutch).
Another bartering network I joined (aiming at sustainable economy) is Qoin.com.

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Nico said...
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