Low-Level Code

All this tiresome talk about accounting systems must seem too detailed or obsessive, but that’s where it all starts. Every one of us works for an accounting system – we’re really that shallow. Because accounting systems are the baseline for our behavior, it’s the high order bit for our design study. Again, our definition of an accounting system, from October 22:

If any set of buyers and sellers reliably moves funds according to published rules, they are implementing an accounting system, whether or not it’s centralized. If, in addition, those participants establish formal financial relationships whereby they reward activities that promote their collective goals, then those helpful activities are rewarded through an accounting system.

We’re not designing an economic utopia because they don’t exist. Our Xpertweb protocols must work in a world of short-sighted, self-centered competitive people. People who care most about the how well the money moves among the participants and how much of it lodges in their account. Once that confidence is established, people will do what they have to do to get their fair share. They may work on their quality, if quality is measured and published.

There are 2 kinds of money that fall out of an Xpertweb transaction:

1. The price paid for the seller’s product or service (cash flow)
2. Fees paid by the buyer and seller to their mentor group (cash flow)
   (5% of the transaction price paid by each – 10% total)

   Both payment types are subject to the payer’s rating of the payee

These payments correlate to the 2 kinds of money common in the larger economy:

1. Purchases and compensation to employees & contractors (cash flow)
2. Capital generated from net profits accumulated by a corporation (assets)
   (this ignores government pensions)

There’s an interesting distinction here. In the traditional model, everybody’s goal is to receive automatic money – money based on capital that shows up as a pension, royalty, residual, dividends, stock sales, etc. All of those exist because some corporation has employed people to generate more cash flow than the people cost, generating retained earnings. The profits themselves may be available to generate automatic money but usually it’s based on the willingness of stock speculators to pay more for a piece of the company than the last owner of that piece paid.

So the interesting money in Ye Olde Economy is not type 1, wages and sales, but the money that wasn’t paid for employees or parts, and was transformed into assets that can be bought, sold, mortgaged and fretted over. It is frozen work, generated by capitalizing a vibrant event – production – and turning it into a static thing. It is the genius of capitalism to develop that financial alchemy, for it made it possible to turn the fruits of past successes into the possibility of new success.

The interesting money in our Xpertweb microeconomy is not static but dynamic. Where in Ye Olde Economy you try to accumulate assets which will pay you a dividend or might increase in value, Xpertweb wealth is the flow of tens or hundreds or thousands of people sending you a dollar or ten each month. These myriad peer-to-peer payments cannot be intercepted or devalued or traded to someone else like assets can. They are not fungible, as the lawyers say – not convertible to another form or easily conveyed to another. Importantly, it is not practical for a clever person to re-direct these myriad payments to themselves. For the successful mentor, having mentored successful others who mentor likewise, these payments are incessant, continuous, and cannot be avoided. Every day, one-thirtieth of their mentee pool deposits a few dollars into their bank account.

This is a change in kind, not just amount. Where we currently seek to amass several significant assets, each of which may rise or fall with the market, Xpertweb proposes to deliver myriad streams of  inconsequential amounts.

Next time we’ll look at the math behind these payments.

8:41:10 PM