Sitting In the Counting House

Ross Mayfield noted my Social Software post and added the important insight that what we’re doing, when web services start counting things previously uncountable, is like the arrival of coins in the days of barter:

“Harkening back to the days of yore, in the medieval bazaar, some crazy guy was probably going around trying to get everyone to agree on the concept of coinage. Initially people resisted.  A cow is a cow and a sheep is a sheep and never the twain shall meet. If I think gold is worth one thing and you think its something else and lord knows what it will be tomorrow, how can one commodify? But, lo and behold, you can carry a coin in your pocket and a cow only with great difficulty.

People are in constant pursuit of the commoditzation of everything.  Not just goods, mind you.  We abstract concepts in commonly digestible forms.  We archetype and then debate over value.  Things must be simplified to be social or we end up talking about different things.

  • A rating is a price.  We define a good and deliberate over its value through signals.  Sometimes we express price not for transaction but to communicate value in its simplest form (a guy at Stanford won a Nobel Prize on this).  A price is the simplest method of communicating value.
  • A rating is a mode of communication.  What I value when.  When I send a smiley to someone, its a rating.
  • A rating is a signal of trust.  Whom I value when.  Trust is credit and credit is priced.

If there is a theme that indicates we need new counting tools its when things become too complex and when we need to simplify through the language of a rating.”

Bingo! When things get too complicated, we need new counting tools to simplify through the language of a rating. This design study intends to implement a peer economy because clearly, the big-E Economy has grown too complicated. It’s complicated because complexity suits the purposes of people better able to make the rules and hire analysts and lawyers and accounting firms to follow, and bend, the rules. That’s why the stock market systematically moves funds from the less informed to the better informed.

Data is the Basis of Economic Complexity

As one of my favorite economists, Tom Robbins said,

“During periods of so-called economic depression, societies suffer for want of all manner of essential goods, yet investigation almost invariably discloses that there are plenty of goods available. Plenty of coal in the ground, corn in the fields, wool on the sheep. What is missing is not materials but an abstract unit of measurement called ‘money.’ It is akin to a starving woman with a sweet tooth lamenting that she can’t bake a cake because she doesn’t have any ounces. She has butter, flour, eggs, milk, and sugar, she just doesn’t have any ounces, any pinches, any pints.” *

That’s complexity at work. But just recognizing complexity isn’t enough for our design study. We need to get our hands around the choke point that’s preventing the right things from being counted. I suggest that the check point is who controls the data and thus the character of the data kept. We assume that data is always kept by the seller, but is that so?

Consider this:

  • Whenever a seller and a buyer intersect, the data is maintained by the seller, as we expect.
  • Whenever an employer and an employee intersect, the data is maintained by the employer.
    (Who is the buyer of the services.)

In the first case, the data keeper is the seller, not the customer. In the second, though, the keeper of the data is the customer, purchasing the employee’s work. So it’s not about the roles of the players, It’s about size and who is the designer of the transaction. Data is the asset of the designer of the business agreement, and a liability to the other party to the agreement, who’s subservient to the keeper’s records.

I emphasize designer of the transaction because transactions are designed ad hoc, one-at-a-time, like component parts in machines before Eli Whitney invented standardized parts. Perhaps our economy has become too complicated to let transactions be designed for the sole benefit of whoever thinks it up first and has superior data resources.

Proprietary Data is the Basis of Tyranny

Perhaps we need a systems approach, where we conceive a model transaction, one that serves both parties equally, and removes the data dominance factor. Of course, that’s the purpose of our little design study. We think we’ve come up with the 6 essential states in every transaction (Discover, Identify, Specify, Negotiate, Invoice, Evaluate); and we think we’ve identified the Atomic Elements of transactions (People, Products & Tasks).

If we’re right, and our standard transaction model simplifies selling and buying, then it might lead to more and better buying and selling. In any event, we’ll be counting some things that haven’t counted before. Like Quality ratings.

You can count on it.

11:23:34 PM    

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