How to Humanize Digital Marketplaces

Markets exist to communicate expectations between participants and to build social cohesion — conveying the value of products is secondary. Digital marketplaces must be designed with this understanding.

Psychologically, the way we frame the idea of markets subordinates a major function of markets, the formation and maintenance of trust-based relationships, below their accompanying function, the exchange of goods/services.

This flawed framework has been wholeheartedly applied to digital marketplace design, maximizing material efficiency while destroying most social functions of market exchange. This article delves into the implications of this framework and proposes ways to increase social cohesion and individual well-being through digital marketplaces.

The Insidious Myth of Barter

In his book Debt: The First 5,000 Years, David Graeber debunks what he calls “the myth of barter.” Economists often explain markets and money emerging as a solution to the chunkiness or barter in a way that usually goes something like this:

“One can imagine an old-style farmer bartering with the blacksmith, the tailor, the grocer, and the doctor in his small tow. For simple barter to work, however, there must be a double coincidence of wants… Henry has potatoes and wants shoes, Joshua has an extra pair of shoes and wants potatoes. Bartering can make them both happier. But if Henry has firewood and Joshua does not need any of that, then bartering fr Joshua’s shoes requires one or both of them to go searching for more people in the hope of making a multilateral exchange. Money provides a way to make multilateral exchange much simpler. Henry sells his firewood to someone else for money and uses the money to buy Joshua’s shoes.” (from the textbook Economics by Joseph Stiglitz and John Driffil)

But this type of story of money and markets emerging as a solution to barter is entirely fictional, completely lacking in evidence. Among others, Graeber cites Cambridge anthropologist Caroline Humprey who puts it simply:

“No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing.”

Barter, it seems, was never the primary mode of trade for any society. Rather, early markets used systems of reputation and debt to avoid barter’s ‘double coincidence of wants’ problem. Though they were often messy or complicated, they enabled trade to occur between parties that knew they would have repeat interactions.

Not to say that barter was never used for transactions. It was: but mostly between parties who either didn’t know each other well or didn’t trust each other.

Aside from being empirically unfounded, this myth of barter is the basis for a deeply problematic in the way it shapes our understanding of the core purpose of markets: to serve material needs in the absence of social context.

By repeating a narrative where markets emerge from barter to fulfill an exclusively material need, we downplay (and often completely forget) that building social cohesion & social capital is a critical function of markets — a function necessary to the integrity of society as a whole.

Establishing forms of debt or money and norms surrounding them formalizes the expectations that strengthen a community or civilization as a whole — expectations that build reciprocity, trust and generally increase social cohesion.


Framing Markets Incorrectly Damages Society

We shape our markets and digital marketplaces through how we initially construct them, and over time by reinforcing certain behaviors while dissuading others. By prioritizing the exchange of goods/service above the formation and maintenance of trust-based relationships, we collectively shape markets to squeeze out the very values that make society function and contribute to the emotional well-being of market participants.

Under this paradigm, we create specific marketplaces to maximize the volume of goods/ services they move while only maintaining the bare maintaining minimum levels of communication, trust, and expectation between buyers and sellers. In this current paradigm, we sacrifice social cohesion and social capital for the sake of efficiency and material wealth.

1. Sellers as a Side Note

Consider a digital marketplace like Amazon or eBay. Seller ratings are tucked away in a corner, while product information and price are the most salient. How many clicks does it take you to get a good sense of the seller as an entity? Many more than it takes a good sense of the item.

This design exists for convenience and efficiency, of course, but there is also a feedback loop occurring here. When we create marketplaces where product (and price) optimization always comes first, the seller will always be an afterthought. As time goes on, the product and price gain more importance and the seller gets pushed further and further into the background because the marketplace is designed only to reward product and price improvements, as long as minimum social requirements are fulfilled by the seller. Sure, sellers can easily be compared with one another — but again, the marketplace pushes this information into the background, “telling us” that it is less important.

But is this how markets operated in the past? Is that marketplace design conducive to optimal human utility? To human happiness?

No, of course not. By allowing marketplaces to get us to fixate on product and price, we have allowed them to sanction and accelerate our dismissal of the well-being of sellers and producers.

If you were to visit a physical market today or in the past, the visibility of sellers would be equal to the visibility of their products and prices. This visibility would affect purchasing decisions in a powerful way.

Consider if you’re walking near a park and you see two hot dog vendors. One is frowning, looks tired, and you get the feeling he he may yell at you. The other is energetic and personable. In actuality, even if the grumpy vendor is known to serve incredible hot dogs, you would go to the friendly vendor, maybe even if he charged more.

2. Alienation by Design, for Convenience

This would be especially true if you always walked in that park and always conversed with the friendly vendor, even when you weren’t buying from him. In a physical market, the option of forming relationships is not just possible — it is also highly likely and emotionally rewarding. In an online marketplace, interacting with sellers is not reinforced and is usually associated with something unpleasant, and is always in relation to product and price.

Even after buying the same pair of shoes on Amazon multiple times, I have no idea where any of those pairs of shoes came from or which online store sold it to me. This is very convenient for me. Why should I care?

But this also systemically removes human interaction. It removes even the possibility of forming a relationship with a seller. And humans are social creatures — though interactions may seem inconvenient at the very instant that it occurs, they form the basis of our lives in society.

Now that we’re rapidly doing away with marketplaces that allow social interaction, we have to create marketplaces specifically for social interaction. Social interaction in itself has become an increasingly scarce commodity. Yet under the current paradigm, there are stronger incentives to have a lot of unhappy market participants using many different marketplaces than to just enable richer social interactions on the ones they already use.

This goes a step further. Not only are digital marketplaces impersonal, they also distort the participants themselves.

3. Fragmentation of Market Activity

Today, we have fragmented market activities into multiple marketplaces where each participant primarily conducts only one activity in one place: selling or earning. This makes the possibility of forming relationships significantly more difficult because — unlike in a small community — we have no option of getting to know where a seller spends his or her money or how a buyer earns it.

This is all very nice and private. But again, it systemically removes human interaction and actively prevents people from sharing that information which would normally build social cohesiveness. It is really weird for a merchant to tell a buyers where he spends. It’s also pretty weird for a buyer to tell a merchant how he earns his income.

In most digital marketplaces, most sellers are only sellers and most buyers are only buyers. There is no back-and-forth: no possibility of reciprocity and no extra information with which build relationships.

4. Relationships with Corporations Instead of Actual Humans

In a fragmented market system with alienation built in, our repeated interaction are with corporations rather than actual humans. Eventually, we build trust — if we can call it that — not with the people that give value to the marketplace, but with the corporation that operates it. This corporation may even provide insurance, not so that participants can trust each other but so they will feel comfortable enough to participate in the marketplace — and so that they can trust the corporation.

In a dystopic way, the entities we form lasting relationships with are now the corporations who administer marketplaces rather than the people who give value to them — organizations like Amazon, Lyft, TaskRabbit. Efficient as that may be, it does nothing to make us feel better as humans or build social capital.

Can I invite the entities Amazon, Lyft, or or TaskRabbit out to dinner because I have a trusting relationship with them? Nope.

So we have created marketplaces that are highly-effective at doing exactly what we designed them to do — facilitating the movement of goods/ services and money as efficiently as possible — and they have left us empty.

Markets that exist in physical reality foster human relationships perhaps because they are a slightly less efficient or convenient. Digital marketplaces, however, largely prevent these relationships from forming because of the failure to understand the importance of social factors and to design accordingly.


Humanizing Digital Marketplaces

But what if it were possible to re-instill human aspects and social needs back into digital marketplaces? By recognizing that most market activity is largely a social activity, we can prioritize a few key social aspects in the design of digital marketplaces and ultimately increase social capital through while also providing more rewarding emotional experience to participants.

1. Incentivize Repeated Interactions

Enabling repeated interactions between participants is a critical to forming trust between participants over time. Without this being easy — or if it is impossible — there is little reason for anyone to view a market experience as anything more than a rapid transaction. The person on the other end the transaction is nothing more than a one-time incidental existence, thus there is no reason to build a relationship with him or her.

Repeated interactions are most likely prevented, by design, on many digital marketplace platforms. If I continuously use the same Lyft or Uber driver, wouldn’t both I and the driver eventually realize we’d both come out ahead by cutting out out the middleman? Though it may enrich our lives, too, that would constitute a lost financial opportunity for the corporation. (I’d be willing to guess this has been considered and acted upon.)

Yet if building social capital is more highly prized than financial gain, a digital marketplace can make it easier for me and my driver to have repeat interactions so that we get to know each other. Over time, we may even exchange information that builds value in other domains and benefits both of us over time.

2. Enable Reciprocity

Let’s say, for instance, that this driver enjoys reading a newspaper over coffee every morning. Maybe he goes to a busy Starbucks near his house but realizes through our interactions that I own a cafe a few blocks away (I don’t, in reality, though it would be nice). Since I’ve been riding with him frequently and since it’s just nicer to visit a cafe where the owner knows you, he could change his behavior and start visiting my cafe every morning.

This reciprocation would not only benefit me financially, but it would also make us both feel personally connected to the society we live in. Reciprocating is something people just do, given the correct conditions and fosters the growth of relationships.

In a digital marketplace, one simple way of increasing social capital via reciprocation would be by increasing the visibility of those that a participant has done business with before. For this to work best, marketplaces cannot be completely fragmented — buyers in one domain are sellers in another, so the participant’s identity must carry over between marketplaces.

3. Allow the Sharing of Social Information

Furthermore, it should be possible for marketplace participants to make reciprocated interactions socially visible. With Venmo, for instance, this social information sharing is easy, and when people see that two friends consistently pay for each other’s coffee or dinner, they see reciprocation.

If the driver continuously shares that he’s having coffee in my cafe, this will act as no-cost advertising for my cafe in the form of a testimonial. It also could signal that during these times, he will be in a public space and is open to meeting with friends in the area. Both functions enrich our lives.

4. Design for People First

The techo-utopian voices that make up some of the loudest in society today often are blindsided by (or indifferent to) the social implications of widespread use their technologies. Social media, for instance, is both addictive and also makes us unhappy.

Technology is only a tool — social norms both shape and are shaped by the widespread use of any technology.

So instead of putting the cart before the horse and designing for widespread usage first, hoping or assuming that the complex social implications will positive, we must rather design for people first.

If spending on sustainable-produced goods/services and cannot come out ahead in terms of price at certain times, increasing the visibility of what people buy and the non-monetary impacts of their decisions can provide the extra incentives to make sustainable, pro-social market decisions.

Digital marketplaces have all the potential to incentivize people to do what is best for society as a whole, but in order for this to happen, often-hidden externalities — both positive and negative — must be given value and increase in visibility. Software can make this possible and relatively inexpensive, but only if designed properly.

The days of building marketplaces designed for products are over — we now have to design them for people.


About

I am the Marketplace Coordinator at Ithacash / Main St. Market. Through my travels, research, and efforts, I put my body where my mouth is and work toward sustainable systemic change by bridging the gap between academic knowledge and real bottom-up initiatives.

I also write for Green Living Magazine (Scottsdale, AZ) and Lanka Monthly Digest (Colombo, Sri Lanka) on sustainability, behavioral economics, and all things monetary.

I’ve recently been working with Scott Morris to launch Main St. Market later this year in Tompkins County of Upstate NY. On the surface level, the Main St. Market app resembles most other digital marketplaces: you’ll be able to buy stuff, list products, and find volunteer opportunities — among other standard things. But under the hood, it is a meta-marketplace and every aspect of it will be a working experiment on incentivizing “good” pro-social behavior and increasing social capital through the markets themselves.

There’ll be plenty of dynamics and nuances that we’ll have think through and work on in the future — specially in relation to governance, incentive structures and how to build small (digital) communities — so I’ll be writing a lot more here and on our publication page: medium.com/main-st-market.

Stay tuned, and I welcome any discussion and feedback!