Currencies as a Catalyst for Cultural Evolution (Part 1): Patterns of Social Organization
As was laid out in About Living Systems Network-Part I, the Living Systems Network, or “LSN”, is made up of several project nodes, one of which is our alternative currency node — “cocurrency”. As part of our efforts to expand our cocurrency node, we are researching work done by a variety of individuals and organizations to make sense of the emerging ecosystem of alternative currencies, including the tools, technology and theories that enable them. In particular, we’ve been diving deep into the work of The Metacurrency Project and Commons Engine, including taking their online Udemy course, Introduction to Currency Design. This post is the first in a series about these explorations, musing on relevance, application, and our own journey in understanding and applying what we learn.
About the Currency Design Course
Both The Metacurrency Project and Commons Engine are pioneering new economic models for the emerging information economy we are transitioning into as we move beyond the current industrial economy. A major part of this transition is exploring broader definitions and applications of currencies as well as novel accounting methods enabled by advancements in information technology. Working through their online course provided a glimpse of the major theoretical and practical components for engaging in this emerging space. We also learned from a number of alternative currency experts, one of whom is Arthur Brock, whose work we will be referencing throughout this series (he is also one of the founders of Holochain, a decentralized internet technology which we will explore in more depth in subsequent articles). Although we are just at the tip of this exciting iceberg, we’d like to share what we’ve learned so far and where we think we’re headed.
One of the key take-aways from the online currency design course is that currencies are social technologies used to help solve certain problems, especially in regards to group coordination. With this in mind, our goal is to eventually test and implement at least one targeted currency within our broader LSN community in the hopes of solving a specific problem, addressing a particular need, or, at the very least, as an experimental learning process. In our attempt to accomplish this goal, we plan to document our efforts and understanding as we go, contributing to the growing epistemic commons that will help communities pioneer new ways of cooperating and lay the foundation for a regenerative economy and culture.
This series will be split into several parts, each focusing on different aspects of understanding currencies and the role they play in catalyzing a regenerative economic and cultural transformation. In this first part, we will do a deep dive into the principles behind social organization and the invisible architectures that steer our individual and collective behaviour. This framing orients our thinking around currencies towards value creation rather than exploitation.
Invisible structures of incentives
We typically don’t think too deeply about the invisible forces that shape our individual and collective behavior. However, when we go about our day, we make countless decisions based on different incentives. These incentives shape what we do in a day, how we perceive ourselves and others, and ultimately give rise to communities and societies in their current form. If we think of society as a game we all play together, these structures of incentives effectively make up the rules of the game.
Here are some tangible examples of invisible structures of incentives and the behaviors that they shape:
- we have to make money so that we can pay our rent
- we want a degree from a reputable university so that we can get hired at a good company
- we study hard for a test to get a good grade
- we read amazon product reviews/ratings before buying something
- we check people’s follower/like counts to judge their social status
- we check food labels (for example, “organic”, “GMO free”, etc) to inform our purchasing decisions
- we shop with certain cards or at specific places to collect points and reap the rewards they offer
Although these seem like separate scenarios, they are related in that they all involve different forms of currencies. We’ll get into the details of what currencies are and how to think about them in part 2 of this series. For now, just having a broader understanding of currencies can help us understand the incentive systems governing our collective behaviour. With a better understanding of these structures, we can start to change them or even design new ones altogether.
Models of Incentives and Levels of Consciousness
We all respond to incentives in different ways and make our decisions for different reasons. Without getting too deep into psychology and the science of decision making (although, stay tuned for future posts on that topic), the currency design course offers a number of helpful high-level models for understanding key considerations behind our behaviour.
The folks at The Metacurrency Project like to think of individual and group motivation falling into three main categories:
- Survive and thrive
- Fun and pleasure
- Learning
In terms of currency design the ‘survive and thrive’ layer is the level we’re primarily concerned with, as it has to do with incentive structures which can be targeted or shaped with currencies. We’ll give a summary here of the two models they introduce (four imperatives and spiral dynamics) and how they are correlated.
The Four Imperatives
The first model is the four imperative quadrant model, which roughly maps the ‘survive and thrive’ layer of human motivation. This model is helpful for understanding the main categories that influence how one might respond to certain incentives.
Let’s dive into each quadrant with some examples.
Economic imperative:
This is all about our own physical survival. It could be about paying rent to ensure you have shelter, but it could also be about buying the cheapest possible food option (trying not to waste money so that basic needs can be met). When decisions are made from this imperative, it is all about survival and well-being of the individual, usually without consideration of many other factors or people.
Tribal Imperative:
This is about the needs of our community (including friends and family). In this quadrant, the needs of the community are put ahead of our individual needs. This could look like doing favours for friends, participating in community governance, or volunteer work. The tribal imperative motivates us to do things that we think are best for the people we identify with most closely and interact with most regularly.
Social Imperative:
This is not a physical need, but all about how others perceive us. For example, the status that comes along with getting a degree from a highly reputable school or even how we dress and look in public. Decisions made from this imperative are usually about social validation and our desire to have a good social reputation.
Moral Imperative:
This is about doing what we think is right according to our values and principles. For example, someone may buy locally grown food even though it is more expensive than the conventional alternative, because they think that supporting local farmers is important, even if it is at a personal financial disadvantage to them. This imperative motivates us because it leads our actions to more closely align with our deeper values in life.
Thought experiment: next time you make a decision to do something, think about which of the four quadrants are involved, and in what proportions.
Spiral Dynamics
Another model, known as spiral dynamics, is useful for understanding why the four imperatives might motivate different people in different ways. Spiral dynamics is a theory of human development and is helpful model for understanding various stages of development or levels of consciousness which one might experience throughout life.
Different levels of development in spiral dynamics can correlate to the different imperatives, which means we can infer the different imperatives that may influence someone based on their perceived level of development, or vise-versa, inferring someone’s level of development based on how they respond to the various imperatives.
Implications for currency design
There is a lot more depth to all of this and we would encourage you to read more about it here. The key point is that it’s important to consider these different forms of imperatives when designing a currency, such that each quadrant can be appropriately aligned with the varying levels of development/consciousness in the user base of the currency.
For example, if no one cared about organically grown food, there would be no point in having that label (aka, currency) as it would not influence behaviour in any meaningful way. Since currencies are social tools that influence behaviour, it’s important when designing currencies to at least have a few models for understanding why and how we behave in certain ways.
Now that we’ve identified that society is made up of many structures of incentives and how to think about the different reasons why incentives motivate people, let’s go into what’s wrong with current structures of incentives and why this is important for designing currencies.
The problem with current structures of incentives
As mentioned earlier, structures of incentives give rise to societies in their current form and make up the rules of the games we play together. This is an important point to recognize because most, if not all, of the human-caused problems in the world result from the ways we organize ourselves — which also means that solving them will require us to organize ourselves in different ways.
Lessons from nature
The economy is like one big game of resource coordination with an accompanying set of rules, where resources like materials, energy and information flow according to certain rules we’ve collectively agreed to and which accrue over time. In its current form, the rules of the game lead corporations (a form of social organization) to extract resources for maximum monetary profit rather than sharing resources cooperatively. When this extractive maximalism occurs in nature, we call it cancer, but in the case of human economic systems we call it corporate business sense. In the cancer analogy, cancerous growths steal resources from other cells instead of sharing them, leading to the death of the organism. It increasingly seems that the task of the present and coming generations is to unlearn the cancerous behaviour our economy incentivizes to avoid fatal consequences for our ecosystems and ourselves. Such a task will involve tapping into deeper dimensions of wealth in formalized ways and unlocking flows of value that maintain the integrity of our entire human and ecological systems.
Drawing analogies between economics and nature is not trivial. For billions of years, life has been evolving, adapting to countless unpredictable environmental changes. During this time, life has managed to produce organisms made up of trillions of cells that all work together to maintain the health of the emergent organism (including us!). Somehow, nature is able to coordinate resources (materials, energy, information) in highly effective ways across all scales, from sharing resources among the trillions of cells within one organism to sharing resources among different species within an ecosystem.
How can we replicate the patterns of organization observed in nature such that billions of humans can coordinate with the same efficiency and effectiveness as the trillions of cells within our own bodies (while avoiding cancerous patterns)? The key likely lies in creating rule-sets that guide our behaviour within society as DNA guides a cell’s behaviour within a multi-cellular organism. Effectively, we need a kind of social DNA.
The importance of open rules
When we play games, we probably want to be aware of the rules and also understand them. Not only that, we probably also want to have some say in how the rules are controlled or changed. However, for some of the most important games we participate in every day, we are confronted with seemingly impenetrable opacity with regards to the rules. Just think about the entire monetary system for a minute. Money is one of the most pervasive incentive structures guiding our daily behaviour, yet we hardly think about how the monetary systems actually work. For example, how is money issued? What does it even mean to issue money? Who gets to create money and under what conditions? Who benefits the most from the way the monetary system operates? For something that is so influential to our daily lives and collective behaviour it’s surprising how little we inspect the fundamental properties of our current monetary system.
The massive information asymmetry about the rules of the monetary game leads to seriously undesirable outcomes for most people. For one, only banks and governments are able to issue money, even though we are the creators of the value money is supposed to represent and coordinate. In this case, a more reasonable set of rules would ensure that the creators of value benefit the most, rather than an extractive intermediary. Additionally, it would make more sense if the players of this game had the ability to alter the rules (particularly around the issuance and use of money). So long as the rules of the money game are shrouded in mystery, those with the greater access to the rulebook can continue to play the game in their favour. Imagine not knowing the rules of chess and trying to play against someone who does know the rules. If you are curious about how banks create money and how the current predominant monetary system works, we recommend watching the documentary Money as Debt.
We also see a similar pattern on social media platforms. Users are the creators of value (all of our time spent on the platform and the data we generate) but we don’t benefit nearly as much from the value we create as the big tech companies do. When we lack transparency about the rules of the games we play and the accessibility for altering them, it opens the door for unchecked exploitation.
These are only a couple examples of the major problems that exist in how we primarily organize ourselves in modern society. At the end of the day, many of our most pressing global problems come back to the rules of the economic ‘games’ we play and how they are managed. Unfortunately, the current game we play mostly promotes incentives targeting economic and social imperatives, rewarding the accumulation of money and fame over community and moral development.
Changing the rules of the game
We fundamentally need new ways to organize ourselves — at all scales — in ways that don’t reproduce the same problems outlined above. Patterns of organization observed in nature give us a glimpse of what is possible. At a practical level, though, we need to better understand the incentive structures that make up our societies as well as have the ability to shape and change them. Put another way, we need to be able to alter the rules of the games we play so that they are more fun and fair for everyone.
Managing the rules of the game in a coherent way is difficult, especially if we want the power to change these rules to be distributed among the participants (so that power doesn’t centralize in a compounding manner, exacerbating inequality). However, with advancements in information technology, we are beginning to see new ways to manage a set of rules in a completely distributed way. One project we are especially excited about is Holochain.
With technology like Holochain, communities will be able to create and manage their own set of rules that shape the way they organize themselves and coordinate — the kind of rules that ensure the creators of value benefit the most from it. Hopefully, our current game of “more for me, less for you” turns into a game of “when all thrive, everyone benefits”.
Here at LSN, we are committed to exploring and experimenting with novel forms of social organizing. This includes playing different games with different rules and leveraging technologies like Holochain where we can. Our hope is to align ourselves with the broader regenerative cultural transformation, adapting to our local context when necessary and sharing our learning along the way.
In the next article, we will explore more specifically what currencies are and the role they can play in shaping structures of incentives. Additionally, we will explore the key differences between currency and money as well as the necessary ontological perspectives for enabling the full potential of currencies.
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So concludes Part 1 of our series on Currency Design Theory. The story continues in: Currencies as a Catalyst for Cultural Evolution (Part 2): Reimagining Currency in the Information Economy
