Slow progress

Happy 2012 everyone!

I have to apologize for being MIA for so long. Everyday schedule is simply too full to work on on this project.

I did take some time to browse trough some of the source code and made some early design decisions, but the project is on hold until I manage to get rid of some obligations.

But as a new years resolution I signed up as a true fan of opensourceecology.org, which is a project for creating open source tools that are needed for a modern civilization. If you are interested in it, watch the 4 minutes video introduction to the project. Also here is the website with how to contribute money, knowledge, materials or time.

A vision of a OneFreeSociety

Since the proposed governing mechanism is a direct democracy I think there can be any number of models of a free society. What does the society I would like to live in looks like? Let me list some key points:

1. direct democracy for policy and law making decisions
2. goal oriented and fixed amount of taxation that is voted on trough mechanics of direct democracy
3. government that does not make policies, only implements them
4. there are no credit issuing banks - each individual is credited by his network of friends, based on trust and automatically economically rated by a the system of currency
5. each creditor shares the responsibility with the debtor for the debt to get repaid
6. there can be a mechanics of limited bailout the creditor in case of debtor's death or major illness
7. community detects defaults of its participants and helps them to reach self-sustainability
8. small local exchange and currency hubs that are networked together to form a global market and global currency
9. each hub does represent a community with its own rules and its own exchange 
10. each hub has its own policies on social justice and handling of defaults (just a emphasis on points 1 and 9)
11. mechanics of circular compensations can be used to create a global currency and enable global exchange of goods and services

The banks replaced by your friends

The main revolutionary idea is that the creditor is equally responsible for debt repayment as the debtor listed as point 5. It means that it is in the best interest of the creditor and the debtor to repay the debt as quickly as possible. The creditor needs to get his assets back as he is risking loosing them and the debtor has to repay the debt to repair his credit rating. Because the currency not being limited, the debtor can always repay the debt even if there is some interest applied.


The producer is the creditor

Some say that producers to be also creditors will prevent any production, that nobody will go produce if there is no warranty to get paid. Let me point out that this same mechanics are currently separated between producers and banks and all I suggest here is to get rid of the middle man.

The mechanics of producer being a creditor also already exists in a form of a contract or other promise of paying up. I merely suggest to transfer this mechanics from corporate level down onto a peer to peer level and let it replace current centrally managed currencies.

An idea arises that to ease the risk of not getting repaid, we could temporary implement a stability tax, that is used to partially cover some debt if the debtor dies or looses the ability to work. While this idea does have an impact on stability it also does introduce collective responsibility which in the long run leads to corruption and power abuse, but it might be a necessary compromise.


Taking care of the weaker members of the community

The society should take care of those people that can not take care of themselves as a part of insurance for any participant of that society. This would be much easier to do in the proposed system, since the plan is to reach higher efficiency in production of goods and services and free the people of unnecessary work. As said in the previous post about individual versus collective needs there are also common needs that also need to be taken care of. Either trough donations or taxation.


Accumulation of money versus zero debt policy

My guess is that most problems in current society come from low production or wasteful and unnecessary micro management. The whole system is conditioned by the profit oriented policies. And profit rewards and promotes markets where the supply and demand are not balanced, thus the companies and society is rewarding the elites for creating a situation where the needs of people are not met. I have already written about this in the post about economics of open source projects.

Zero debt policy is a pressure on both the creditor and the debtor to repay the debt, as it was already explained above.

What about individual versus collective needs

We all have some common needs. And as already stated in the post about economics of opensource projects, collaboration is a mechanism that is highly efficient, so promoting individual freedoms without mechanics that allow for open collaboration is not worth anything.

As open source projects already have proven, it is up consensus of individuals to pursue an efficient way of fulfilling the common needs like building a sewer system or a road. As shown by the history people can be forced to cooperate and provide for common good (mechanics of slavery, wages or taxation). The video below dos ilustrate the position of an individual quite well:

However this video and the success of Linux on the top 500 supercomputers list where different flavors of Linux account for over 90% of installations, do suggest that voluntary participation is more efficient then any forced initiative. The thought of basing a society on volunteer participation sounds quite utopian and thus I will leave it up to the reader to decide whether this practice could be relied upon.

However I am a strong believer that people have to be treated equally and thus I do hate the current system of people allowing concentration of wealth to happen for some individuals and after the society is taking revenge by charging higher taxes to the rich. Why should a visit to a doctor cost differently for a rich person then a pour person. Here I am not taking sides with the rich, all I am saying is the elite should not exist in a balanced society. The mechanics of taxation is false justice and it even suits the elite since it separates them from the rest of the crowd and provides them with higher status in society and thus better services (as an example: better hospitals in rich neighbourhoods). I believe that a balanced system the filthy rich could not happen, this is possible only trough limitation and exploration of the pour.

If we are to prolong the usage of mechanics of taxation, I do suggest that taxes should be equal for all and purpose oriented. I do not like that we have to pay direct and generic taxes to the government and even pay additional taxes trough the mechanics of inflation. The government uses and abuses their power to distribute wealth collected trough taxes. A big portion of that wealth gets wasted or even stolen trough mechanics of corruption.

If we are ever to have a government for the people the taxes should be purpose oriented as this reverses the roles in a state and the people become the bosses of their government. Since we, the people, are already paying for the government, let us take the executive power and become employers of the government instead of being it's servants .

This post concludes the basics of the proposed value system. I will now start studying the existing open source projects code so this blog might quiet down a bit. Any comments and suggestions you might have are more then very welcome.

How to implement a new value system

In my previous post I promised to reveal how do I imagine a replacement system for money. The goals of proposed new system are listed in my third post. Here I will talk about my proposal on how to implement those goals. The listed proposals are mostly just a collection of good ideas I found all over the web which I try to combine into a workable and better system then the ones I was able to find until now.

Goals and the means of implementation:

• the value in the new system has to be unlimited, but it also has to retain value
• Gold standard was coping moderately well with the task of retaining value, but the gold scarcity is very limiting and thus it did limit the availability of money. Also worth noting is that gold itself is a bad substitute for value. It has some practical use in manufacture of microchips and in medicine, but mostly it is used to produce vanity items with very little practical value. Especially in the times of war its value drops to its levels of usefulness (uselessness).
• In my opinion fiat currency is a failed attempt to provide an unlimited money - the excessive printing of bonds backed money is decreasing its value and accelerating its accumulation in the hands of the elite.
• Third path is taken by many time banks. Those use a currency that is based on the value of potential to do some work. This is the option I am cheering for.

• the new system has to be inclusive, it has to let anybody to participate
• What is the commodity that anyone can trade with and is quite stable in value? It is a work hour. Many people are already participating in online time banks, but those do not fulfill all the requirements to provide a free and fair money. That is why I hope to extend the Cyclos project to be even better tool then what it already is.

• balanced risks and consequences in trade
• Trade has to be balanced - that means that there is both way dependency between the trading parties. The currency in the value system proposed here is just an intermediate state of debt, that both parties have to work on to eliminate it. I am greatly impressed by a concept of friend2friend payment network called Ripple. In Ripple there is only as much imbalance as the trading parties allow it to be. Some more explanation on how Ripple works is on youtube. Another implementation of the concept is Circular Multilateral Barter (multiswap.net) project on sourceforge with huge potential.A successful trade in my view is a closed trade that does not create debt imbalance.

• the value in new system has to be immune to stealing
• Each person in the new system of value will have a balance sheet of his assets and liabilities instead of money balance. Since there is no neutral currency, there is just a list of work time owing and being owed, the currency itself can not be stolen, it is also less attractive for fraud.

• the new transactions will always be traceable, thus easing crime and abuse detection
• Having all trades recorded and available for public review will allow the society to detect and roll back criminal activities or abuses.

• the new system has to prevent unnecessary global financial turbulences
• There is no need for banks in a friend2friend currency, each individual is credited by his friends with a certain level of trust. Thus the shortage of credit can only be a consequence of bad business practices and / or lack of trust. This way the shortage of credit will always impact only a single person.

• the new system has to increase personal freedom of participants
• Since the creditors are each persons friends, there is no need for banks, accumulation of power and no possibility of global bullying.
• There should not be any obstacles when any two participants decide to trade, not lack of credit and no authority that would prevent the trade. Note that I do not believe there is any way to prevent illegal transactions, we can only try to detect them and request that the perpetrators do repair the damage they have done.

• the new system has to reduce systematic abuse by enforcing direct and personal responsibility
• There should be no delegation of responsibilities. We can have shared property, but delegation to any abstract entity like a corporation should not exist.Especially no limited corporations should exist, the responsibility has to be full and equal for all participants.

The text above is written in layman terminology, since I am one, but I strongly believe that the points listed are still valid. Feel free to point out any errors or start a discussion in comments. Since I am hoping for an open process of development any contribution to this noble goal will be welcome.

Creativity and open collaboration for a new value system

Finding new solutions is quite hard. We all heard the phrase "we need to think outside the box", but most people probably do not know what that really means. This phrase implies that we are somehow limited in thinking. What could those obstacles be? Most of the time the obstacle is our knowledge or our believes that converges our thinking towards the same known or similar solutions.

We are very well educated in the field of following instructions to solve problems, not so much in the field of finding new solutions. Sir Ken Robinson claims we get educated out of our creativity. To understand this claim watch his funny and eye-opening talk:

and another:

This two videos should help us to be more aware of our limitations and thus stepping out of the box.

While knowledge does help us to solve our everyday problems, expanding that knowledge and to improve the processes of our problem solving is much harder. Also note that any established system implies some resistance to change

In compliance of open development model I do wish to challenge the reader, to come up with their ideas and proposals. If you were to design a new society from scratch, how and what would you do? Please take some time to think about it. I am very interested to hear your ideas.

Next time I will present what I have came up with up until now.